By Chris Vedelago, Cameron Houston, Michaela Whitbourn
Nobody had dealt with the two mysterious men before, and they didn't like answering questions about their business.
But they bought a lot of gold. And they paid in cash.
The duo would fly around the eastern states and buy bars and coins by the kilogram, sometimes spending more than $100,000 at a time.
They'd move from dealer to dealer in a capital city, eventually collecting enough bullion to fill a carry-on suitcase. With dozens of gold traders in Melbourne, Brisbane and Sydney, there were plenty to choose from.
This was early 2015. After their week-long buying spree, they'd disappear again, only to do the same thing the following month.
Even for the murky world of private gold trading, a free-wheeling market prized by legitimate investors and criminals alike for its secrecy and lax regulation, these big cash transactions attracted a lot of attention.
Why? Because, since 2012, authorities have realised that the gold industry is at the epicentre of one of the biggest tax frauds in Australian history. They estimate it's already cost the public more than $550 million. And, despite an exhaustive, four-year investigation, it seems virtually impossible to stop.
The scam is laughably simple, but very lucrative.
When someone buys investment-grade gold bullion that has been stamped into bars and coins, no GST is payable. But the 10 per cent tax does apply to so-called "scrap" gold, which can be anything from cheap jewellery to fragments of 24-carat (pure) gold.
The fraudsters figured out that stamped, GST-free bullion could be smashed into pieces or melted down into scrap, making it suddenly eligible for GST when it was sold on to precious metals dealers and jewellers. The 10 per cent tax was paid by the new buyer, then pocketed by the seller, never reaching the Australian Taxation Office.
These so-called "missing traders" found they could easily reap profits of $1500 to $2500 a kilogram of gold, industry sources say.
But the scam grew exponentially when established players in the gold industry realised it was also possible to claim a GST tax credit after buying bullion that had been melted or even just re-labelled as scrap.