Dragons' Den star, Paul Webb, convicted of tax evasion

Paul Webb starred on the TV series Dragons' Den. Photo / File

A Dragons' Den star, his associate, a mystery businessman, and their marina-related companies have been found guilty of tax evasion.

The convictions came after a judge-alone trial before Justice Mary Peters in the High Court at Auckland and years of legal battles in New Zealand's upper courts.

Paul Webb, who rose to prominence in 2006 as a dragon on the entrepreneurial reality TV show Dragons' Den, along with his business partner David Tauber, a Mr X, and companies Honk Barges Ltd (HBL) and Honk Marine Ltd (HML) were found guilty on a raft of criminal charges.

Webb reportedly made his millions during the 1990s through residential property developments and with airline City Jet. However, he was declared bankrupt at the turn of the century.

In 2008, the Inland Revenue Department (IRD) began its investigations into the tax affairs of Webb and Tauber, a former tax partner at Ernst & Young. Then, in March 2011, IRD raided the pair.

It led to a series of failed appeals over the legality of the search warrants after a child's bedroom was searched and an open underwear drawer was photographed.

However, according to evidence filed by the IRD, the photo was taken because inside
the drawer was a BlackBerry phone.

Webb sought a court order for IRD to return the seized documents and destroy any photographs or videos taken.

Webb and his wife, Rosemary Webb, were later convicted and fined $15,000 each for obstructing the taxman's search of their home.

In late May this year, Webb, Tauber, a businessman known only as Mr X, HBL and HML went to trial over a total of 36 tax evasion charges.

Court documents released to the Herald, following Justice Peters' decision, show Webb was found guilty of three of nine charges, Mr X guilty of six of nine charges, and Tauber guilty of all the charges he faced.

HML was also found guilty of four charges, and HBL of five.

HML was providing false information to IRD in its income tax returns for the financial years ending from 2007 to 2010, Justice Peters found.

The returns were false after HML claimed deductions for interest on loans of $3.62m, $3m and $2.65m, made in July 2006, September 2007 and September 2008.

"HML incurred interest on those loans for short periods only, as the loans were promptly repaid. HML claims to have incurred interest beyond the date of repayment were false," the judge said.

"I have likewise found that HBL provided false information to the Commissioner [of IRD] in its income tax returns for the years ended March 31, 2007 to 2011."

Justice Peters said she was satisfied Webb intentionally aided or abetted the offending.

"I am also satisfied that the Crown has proved against Mr Webb all other elements of secondary or party liability on those [three] charges," the decision reads.

"I have discharged Mr Webb on all other charges as I am not satisfied that he aided and abetted the offending covered by those charges."

The judge also found Tauber and Mr X knew the claims were false and intended the information to be provided to IRD to evade both companies' tax.

Each income tax return was submitted with a declaration that it was true and correct, with Tauber making the declaration in every return, with the exception of HBL's for one year.

"By doing so, Mr Tauber provided false information to the Commissioner," Justice Peters said.

"That, coupled with his knowledge and intention, renders Mr Tauber guilty as a principal offender on each charge with the exception of [one] charge.

Tauber was still guilty as a party to HBL's offending on that charge.

Mr X did not provide any of the returns to IRD, Justice Peters said.

"Given that, X could be guilty only as a party.

"I am satisfied that X aided or abetted the offending covered by [six charges] and did so intentionally. I am also satisfied that the Crown has proved against X all other elements of secondary or party liability on those charges.

"The Crown has not proved that X aided or abetted any offending. That is why I have found X not guilty of [three charges]."

The group will be sentenced next month.