Sandey Macfarlane is one of a number of people that fell prey to former Melbourne tax agent Richard Hogg who, in 2018, was jailed for five years for his crimes.

He pleaded guilty to stealing more than $4.1 million from his clients and the Australian Taxation Office, and is currently serving out his sentence at Fulham Correctional Centre in Sale, Victoria.

This should have been the end of the story. But many of the victims do not feel it is.

There are 50 victims all up, but 15 who testified about Hogg's crimes to the court, and the court ordered $1.1 million in compensation for 13 of them.

The compensation orders were supposed to make their lives easier, but have proved useless.

While Mr Hogg was charged for crimes between 2010 and 2016, the ATO is chasing tax debts from Hogg's 50 victims that, in some cases, span back almost 20 years.

"Some people have retired and have no income to pay off debt," Ms Marcfarlane said.

"They are faced with bankruptcy. Others are very ill from the stress. There's been no justice at all."

The bogus tax scheme

The offence that Mr Hogg was charged with was that, for six years, he asked a number of his clients for upfront payments for his bogus tax minimisation schemes.

He would lie to the clients, telling them that if they paid their money into a "unit trust" or purchased "company losses", they could decrease their tax liability.

The clients believed the man who they thought was their trusted adviser (it was later revealed in court Mr Hogg was not a chartered accountant) and ended up with big tax debts.

Rather than pay the ATO the money Mr Hogg took from the clients, he would pocket it.

Richard Hogg used the money he stole from victims for property, overseas trips and gambling ( Supplied )

The ATO never saw a cent. The money Mr Hogg stole was used to purchase a number of investment properties, expensive cars (he drove a Maserati), several overseas holidays, and for gambling.

"He [Mr Hogg] left a widespread trail of financial and psychological destruction," Ms Macfarlane said.

"The financial cost to the victims in legal and accounting fees is currently in the hundreds of thousands of dollars. Their taxation arrears are in the millions."

"The psychological pain is palpable. Some victims describe thoughts of suicide, family breakdowns due to the shame, guilt, anger, shock, and disbelief. Others have developed serious medical conditions. Many have sought counselling. Some have been hospitalised."

'Useless' compensation orders

The key reason the victims cannot get their court-ordered compensation payouts is because of a law that some experts have labelled as "draconian".

It is called the Proceeds of Crime Law and is heralded as taking the "financial profit out of crime".

The law is designed to help the Australian Federal Police tackle serious organised crime by allowing it to seize assets that were obtained as a result of the crime.

But for victims, like Ms Macfarlane, it is useless.

"We have been robbed and defrauded by Hogg, hunted by the ATO and misled … as to our rights to enforce the compensation orders," she said.

Ms Macfarlane said Hogg stole $66,000 from her, and that is the exact amount of compensation that the County Court had ordered. She wants this amount waived from her ATO debt of more than $130,000.

She is considering heading back to court to test the proceeds of crime law but has been told, in a letter from the AFP, to urgently drop the action or risk suffering costs.

"The victims have been processed with a 'slap' by the Commonwealth, under the Tax Evasion Act, despite not being tax evaders, but victims of tax evasion crimes, and then they have been 'hugged' by the Commonwealth, issued compensation orders, which are useless," Ms Macfarlane said.

'Life on hold until we sort this out'

Cinematographer Wayne Aistrope, another one of Mr Hogg's victims, has also been left with big tax debts.

Wayne and Tracey Aistrope are still fighting the tax debts. ( Supplied )

He said the psychological stress has been so severe that he has stopped dealing with the ATO, and instead his pregnant wife Tracey has had to step in and negotiate.

Mr Aistrope's ATO debt, that also came about as a result of Mr Hogg's bogus tax minimisation scheme, is $175,000. His compensation order is for $61,000.

He said the ATO had offered to waive the interest on the debt until they can work out what to do, but he is hoping the agency will waive the theft part of the debt, which was $84,000 (slightly higher than the compensation order as he was using Hogg's services over a longer period than the six years that Hogg was charged for).

"This is all because I trusted my accountant and the guy completely robbed me. We assumed the money was being paid to the ATO."

The whole incident, he said, had uprooted his life.

"It's just unfair. Really unfair," he said.

"I have been self-employed for 26 years. We've got a 9-year-old daughter. Tracey is 24 weeks pregnant.

"I am now 53, and we are facing financial hardship. We are not making enough to survive. I've had to go see a psychologist. I have sleep problems. It's just one of those things that won't go away. Our life is on hold until we can sort this out with the ATO."

ATO says it is trying for 'fair' outcomes

During sentencing, County Court Judge Duncan Allen noted the "indescribable devastation caused to victims by Hogg's misconduct".

He also questioned why the ATO was still chasing the debts, saying, "How the Taxation Department, could have claimed that these people should repay these funds … when they [the ATO] were already on notice of the real risk that you [Mr Hogg] were putting in fraudulent claims on behalf of your clients, is a loss to me."

An ATO spokesman said in a statement that the ATO does work with victims to "achieve fair and equitable outcomes".

He said the agency does not seek to recover tax from a taxpayer where the amount of that tax has been seized by the AFP.

"However, where there are numerous taxpayers affected, the amount seized by the AFP may be insufficient to cover all liabilities, and there are legal limits as to the ATO's power to offset funds seized by the AFP against existing ATO debts," it said.

It added that, when the AFP seizes an amount of money in these cases, "we can only consider waiving debts as a proportion of the seized amounts, if all of the affected taxpayers all agree not to run separate actions".

He said the ATO was providing "support to all affected taxpayers in this matter, while minimising any adverse impact to them".

"The ATO is not currently taking any enforced collection action in order to provide time for taxpayers to contact us to discuss options," he said.

"Options may include long-term interest-free payment arrangements and other avenues provided under the law including release from the liability if payment will cause serious financial hardship."

He noted affected taxpayers may also be able to apply for a waiver to Department of Finance, which has power to waive debts owing to the Commonwealth.

Time to change 'draconian' law?

Melbourne tax barrister Graeme Halperin, who has acted for Ms Macfarlane and several other victims, said the trouble the victims face is that the Proceeds of Crime Act is not administered by the ATO, but the AFP.

"The Proceeds of Crime Act is not designed to facilitate compensation or restitution for victims," he said.

"The whole idea of the act is to snare the assets of the offender. Those assets can be restrained and in due course confiscated by the state. In other words, they go into the Federal Government's coffers."

He suggests the law could be amended to allow victims to be compensated where court orders are in place.

"In my view it needs to be broadened," he said.

"It's fairly draconian legislation. It needs to be broadened with a degree of sympathy and empathy towards the victims."

University of Western Australia Professor in law Natalie Skead also wants a wide-ranging review of the legislation to look at the impact on innocent third parties.

"This particular case is a stark illustration of the potentially very harsh outcomes of the legislation and it has been described by many, including courts, as a draconian and harsh," she said.

Despite there being other cases of "tragic outcomes flowing from the legislation" she said there is "there's just no appetite — no political will — to amend the legislation because they don't want to be seen as though they are not tough on crime".

The AFP told ABC News that changing the law was a matter for government, but Ms Skead said legislatures would be reluctant to make amendments, particularly if it has the risk of opening up the floodgates and eroding the AFP's powers.

"Legislatures are quick to jump and amend legislation that is not seen as watertight," she said.

"But we don't often see legislatures amending legislation to make it more equitable and fair."