?? Outback Money Laundering ??

I grew up in a sparsely populated area of #Australia called the Northern Territory (NT). It’s an interesting place, beautiful in it's own way, with a tendency to produce fascinating characters, which is how it inspired larger-than-life film character Mick ‘Crocodile' Dundee. In case your memory needs a jog - and even if it doesn't, because it's such a great scene - I'm talking about this guy:

But put aside lovable larrikin Crocodile Dundee and you'll notice that little else escapes the NT - it's news seldom achieves National attention. Despite covering more than half a million square miles it has just under a quarter million residents, making the whole vast landmass the equivalent of a large satellite city in the South from a population standpoint.

Case in point is the town of Tennant Creek, which only has a population of about 3000 but is nevertheless a significant township in Territory terms. It derives this significance partly from acting as a “hub” for all the tiny communities around it, and mostly because it’s one of the only stops on the Stuart Highway. This highway is one of Australia's longest roads and bisects the NT and indeed Australia, running from Darwin in the North right the way down to South Australia, coast to coast. If you drive this long and lonely road you’ll pass through Tennant Creek, and while 3000 sounds tiny now you'll be thankful anyway for the 'vast metropolis' the township represents in all that nothingness.

It's a very odd place by almost any standards, and an especially odd place for nearly half a million dollars to be stolen and then laundered through the business it was stolen from, but that's exactly what occurred between March 2019 and May 2021 through the Tennant Creek Australia Post office.

Let's back up a minute for non-Aussies, and those of us needing a refresh. Australia Post (AusPost for short) is Australia’s mail service, which is ran like a private company with independently managed branches while still being ultimately government owned.

Due to the generally large number of Post Offices and the broad geographical expanse that is Australia, AusPost have struck a deal with our biggest banks to offer some financial services on their behalf. For instance, you can pay your bills and even deposit cash into accounts for banks and other financial institutions - for whom AusPost acts as the de facto agent - while posting a parcel and buying some stationery.

In tiny townships like Tennant Creek this is not just a convenience, it's a necessity. Of the Australian "Big 4" banks, our largest consumer bank the Commonwealth Bank & our largest business bank 澳洲国民银行 don't have any presence at all in Tennant Creek (or within hundreds of miles). Westpac do slightly better, with a single ATM in the town, but 澳新银行 are the only one of our banks to actually have a functioning (albeit sun-bleached) branch in town. Here's that branch in all it's glory, right next to 'Cafe Buzz Bean':

It's hardly a flagship store, and it's seen better days, but you have to give ANZ credit for supporting rural Aussies by supporting a branch there at all.

And if you live in Tennant Creek, want financial services without a several hour drive, and don't want to be an ANZ customer? You're in luck: the AusPost branch is ~500 metres away and serves as the agent of all the Big Banks.

That's where the trouble begins.

What Happened?

Between March 2019 and May 2021, Rebecca Liebelt, the manager of the Tennant Creek Australia Post branch, ‘stole’ more than $425,000 from Australia Post.

The bulk of the theft occurred through initiating 72 fake deposits totalling $404,749.95 through the AusPost branch, with the remainder having been stolen directly from the till in the form of cold hard cash.

What this is, in effect, is fraud - there never were actual funds involved in the majority of those 72 deposits. Liebelt simply told the AusPost system that funds had been received and to credit any of 7 bank accounts she held at four different banks - or she used funds that had previously been obtained from the scheme. The money, which mostly never existed and had therefore never been deposited, was then paid out by AusPost.

Of note, the Lady Liebelt does not appear to have acted alone - some of the accounts used for receiving the faked payments were owned jointly by her husband, Greg Liebelt, who was also charged with aggravated stealing and obtaining a benefit by deception. Greg is interesting in a few ways, in that he is the former branch chair of the Country Liberal Party (the NT's slightly different version of the Aussie Liberal Party) for the NT electoral division of Barkly, as well as a member of the Party Management Committee.

If we stop the story here, it's already remarkable: the wife of a prominent Territory political figure used her own Post Office to steal and then launder funds. Although Mrs Liebelt did re-deposit and feed through the AusPost branch some of the money, the fact is that AusPost would have to eventually notice that they'd paid out far more than they received, and pinpoint the location, which brings us to the second part of how this case stands out... the sheer audacity.

Along with stealing what must have been a huge portion of the cash float, Liebelt fabricated an average of $14,990 of fake or recycled deposits per month, or presumably more if she was stood down when the internal investigation commenced in January 2021. And she did this in a tiny township, every month for about 2 years!

If that's not audacious enough, let's consider for a brief moment the physical address where these offences occurred, compared with Tennant Creek Police Station and Tennant Creek Court House...

That's right - literally right next door.

So at this stage, you might be wondering "if the crime was so blatant, how was she able to get along with it for so long?" Great question!

How did they do it?

The specifics are quite interesting, but it boils down to the fact that as the Post Office manager, Mrs Liebelt had all the access she needed to manipulate and evade internal monitoring systems. Or at least most of them.

The trial judge remarked in sentencing that of the funds misappropriated, "$138,000 of that money went into your own bank account and $266,749 went into joint bank accounts. You also stole a further $21,000 in cash by accumulating till takings that did not need to be accounted for."

After the fake/inflated 'deposits' were paid by Australia Post to the Libelts' accounts, the laundering commenced. According to the trial judge, "[Liebelt] moved the stolen funds around repeatedly and withdrew cash from ATMs across Tennant Creek, thereby overcoming the $2000 cash withdrawal limits."

If you're wondering if any internal alarms were set off at AusPost (aside from by noticing 22 cumulative months of 'financial irregularities') the answer is no. That's because, as manager of the branch, Liebelt was in a unique position that typical 'customers' aren't to undermine monitoring software. AusPost have partnered with leading RegTech firms to combat financial crime in the past, but even the grandest technology solution cannot stand up to transactions it can't see. And while the rest of the scheme was quite sharp, for this part, Liebelt relied on an approach that's as blunt as a hammer - by having "unplugged the internet modem to cause system issues to avoid detection."

On the laundering front, it is interesting to note that the oldest technique in the book was used here too: co-mingling of funds. Of course as the only Post Office in the vicinity there were legitimate earnings, and of course as the manager and licensee Liebelt was entitled to a cut of these earnings, which were also paid out by the same means and into the same accounts. One has to have some sympathy for the 4 banks concerned here - to look at this and catch it you would need to make a convincing argument that a long history of Post Office payments from a Post Office Manager were not within what would be 'expected'.

Once she got the funds Liebelt funded some travel and some personal bills and purchases, but for the most part she actually funnelled them repeatedly through the AusPost branch she ran or invested in it's success. In fact, although the total amount stolen approached half a million dollars, due to the fact that proceeds were 'funnelled back' to AusPost through the laundering scheme only $79,732.74 of the stolen money remained outstanding at the time of trial, according to auditors.

The real damage, AusPost says, lies elsewhere though: as remarked by the judge in sentencing, Australia Post's had incurred an additional?$365,000 in operating costs as they struggled?to find a new licensee, as well as significant lease and licensee break fees.

Lessons to learn

Who watches the watchers?

When it comes to managing risk, the age old saying of "who watches the watchers" is evergreen. Put simply your biggest threat may be insider risk, rather than completely external, for the exact reasons that Liebelt highlights. Access to controls should be tightly constrained, and any employees who have access to "knock the plug out of the wall" - or who are in charge of a branch or function where that regularly occurs - should be watched closely.

Financial audit cadence matters

It is unclear from the facts when exactly AusPost were alerted to the full scale of the deception here, but it seems that they took action in January 2021. That's a staggering 22 months into the scheme, which speaks among other things to the paucity of internal fraud controls and regular audits at the government-owned entity. Once finally properly investigated, the fraud took only 5 weeks to go from investigation to formal police complaint, and a few months later, to guilty plea. All of this really underscores just how long the ball was allowed to be dropped for.

Financial investigations are complex, messy, and difficult.

One fascinating remark made by the judge during sentencing appears to have escaped broader discussion until now, which is the concession that even after investigation the extent of Liebelt's offending was unknown to investigators.

The Crown case against you was, however, very strong and your plea is really an acceptance of the inevitable. You made full admissions in relation to your offending, including admissions as to offending about which the investigators were unaware.

This expands on a remark from case law mentioned by the sentencing judge, which notes that "the investigation and prosecution of fraud consumes considerable public resources."

Reliance risky is real

The lessons about trusting others are clear here; the town of Tennant Creek left relatively high and dry without a post office, AusPost is left without an easily sourced replacement manager, and the Banks who rely so heavily on AusPost should perhaps question whether they've placed their trust in an organisation with poor or non-existent protections in place to prevent employee abuse.

Employee Due Diligence only gets you so far

AusPost should have conducted a National Criminal History Check before getting into business with Liebelt - which actually would have happened when she started working for the Katherine NT AusPost branch in 2016-2017 without incident. But a police report, or even relying on her prior employment conduct, were evidently not enough. As remarked by the judge at sentencing:

You have no prior criminal history. I have received six character references for you from long-term friends of yours. Those references say that this offending was out of character for you. I am prepared to accept that you are a person of prior good character

This underscores an old truth: due diligence and monitoring is continuous, not a point in time exercise. Straight arrows can still bend, so you need to keep checking!

Crime doesn't have a 'type'

This one is perhaps the most important. For anyone who make statements like "no criminal would be so blatant about crime," or "these are respected community members so don't think they could do something like this," the Liebelts serve as a stark reminder. Would-be investigators and even employers should note that you can't judge a book by it's cover, and that no party is above reasonable monitoring. I've more than 13 years experience in fighting financial crime and when I look at Rebecca and Greg Liebelt the word "criminals" doesn't leap to mind...

An Interesting Conclusion

After relaying such a bold crime it's quite a challenge for me to leave you with a satisfying ending; reviewing 'what's next' for the parties involved will have to do.

Mrs Liebelt has been sentenced to four years and six months in jail, with a mandatory 6 months behind bars. After that time she will be eligible to serve a further 12 months under house arrest, following which the remainder of her sentence would be suspended.

Australia Post is reportedly struggling to find a new (and more trusted) partner to manage the Post Office, which imperils not only the roles of the 5 other employees there but the township of Tennant Creek itself. But further and more generally, as the trial judge remarked, "public confidence in Australia Post is also most likely to have been affected by [Mrs Liebelt's] offending." One has to wonder whether banking partners relying on AusPost may also have a few pointed questions.

As for the Territory, well it's likely to fade from view for a bit for those of us who don't live there, and keep on as it always has: producing larger than life characters, and incredible, unbelievable stories of both the fact and fiction varieties.