Masala case: Jailed Auckland restaurant boss loses sentence appeal over tax evasion and money laundering

Jailed businessman Rupinder Singh Chahil attempts to hide himself from the camera outside the Auckland District Court in 2015. Photo / NZ Herald

An Auckland restaurant boss has failed to covert his prison sentence to home detention for a sophisticated money laundering and tax evasion scheme.

The Court of Appeal has also said it is unlikely the precise loss will ever be known because Rupinder Singh Chahil's fraudulent activity spanned several years and there is an absence of reliable financial records filed by the Masala group of companies.

Chahil, who started the Masala Indian restaurant chain and has been in the hospitality industry since 2000, pleaded guilty to 34 tax evasion charges and nine charges of money laundering on the second day of his trial last October.

He was then imprisoned for three years and two months and fined $50,000 by Justice Ian Gault in February.

Chahil argued at the Court of Appeal last month he should've been granted further discounts, which may have resulted in a home detention sentence.

Chahil's legal team of Nicolette Levy QC and Tony Bamford said further discounts could have been awarded for guilty pleas and a reduction for a multi-million civil settlement.

The High Court settlement saw $8 million in property forfeited in 2017 by those involved in the Auckland restaurant chain.

However, the Court of Appeal dismissed Chahil's claims in a decision released last Friday.

"Mr Chahil was an undischarged bankrupt at the time the assets were initially restrained in the criminal proceeds recovery proceedings on 9 December 2015. His personal assets were not restrained. He was never a party to those proceedings, nor were any of the Masala companies," the judgment read.

"Moreover, there is no evidence of any involvement by Mr Chahil in reaching the settlement. It would therefore be something of a stretch to say that he should be treated as having made any offer of amends or as having entered into an agreement to remedy the losses he caused. The most that can be said is that such an agreement was reached by others in relation to their assets enabling recovery of most of the losses."

The Court of Appeal added Chahil had a "high level of culpability" and did not simply use the proceeds of his crimes.

"He was actively engaged in arranging for the money to be laundered in order to conceal the source of these funds, all for his own benefit."

Chahil's offending included him handing bags of cash to an accountant, which were then sent around the world and washed through foreign exchange transactions and forex trading.

"It is unlikely that the precise loss will ever be known given Mr Chahil's fraudulent activity spanned many years, the absence of reliable records and his persistent failure to ensure income tax returns were filed by the 17 Masala companies," Justice Murray Gilbert, Justice Susan Thomas and Justice Rachel Dunningham's decision read.

The judges also noted Chahil was "perhaps fortunate" to receive a three-month discount for the fact he was sentenced to six months' home detention in 2016 for providing false and misleading information to Immigration New Zealand.

Chahil has also previously served time behind bars for kidnapping and violence offences against ex workers.

His systemic tax evasion and immigration-related offending was discovered during an investigation by IRD, Immigration NZ and the Department of Labour, which began in 2012.

Joti Jain and Rajwinder Grewal, pictured in 2015. Photo / Dean Purcell

With the assistance of Joti Jain, who was in a personal relationship with Chahil at the time of the offending, the pair concealed some $6.5m in primarily cash sales between April 2008 and April 2014.

Chahil and Jain's plot caused the Masala related companies to file 115 GST returns which contained false or misleading sales figures and a GST tax shortfall of $702,667.

Jain was sentenced to home detention for her part in the scheme.

Between January 2012 and April 2013, the dirty proceeds of the tax scam were laundered by Chahil and Vijay Kumar Gupta. It is estimated at least $524,000 was involved in money laundering transactions during that period.

Gupta was also sentenced alongside Chahil in February to 10 months' home detention and ordered to pay $5000 in reparations after admitting nine money laundering charges.

The Masala chain of 13 restaurants was also the scene of the exploitation and chronic underpayment of migrant workers, which included offences by Chahil, Jain and Rajwinder Singh Grewal, who managed the Bucklands Beach Masala.

In 2016, Jain and Grewal were also found in contempt of court and fined after they failed to deliver documents to liquidators.