His son, Adam Cranston, was arrested last night for his alleged involvement with the syndicate.
Ms Close said the police will allege the conspirators were involved in running a legitimate payroll company and accepted money from clients to process payroll on their behalf.
Michael Cranston was expected to appear in Sydney's Downing Centre Court on 13 June.
Deputy Commissioner of the Australian Tax Office Michael Cranston allegedly sought to pressure colleagues to cut a deal with his son after learning he was the subject of a major tax fraud investigation, sources said.
Mr Cranston, 58, was issued a court attendance notice for allegedly publicly abusing his position as a senior official of the Commonwealth, after an eight-month investigation by the Australian Federal Police.
The arrests were made following an eight-month investigation in co-operation with the tax office.
As deputy commissioner of the Australian Tax Office (ATO), Michael Cranston investigated high-profile fraud cases and regularly featured in the media.
Nearly 300 federal police (AFP) officers raided 28 properties, arresting nine people and seizing 25 cars, 18 residential properties, two planes, guns, AU$1 million in cash, vintage wine and artworks.
Adam was arrested at Bondi while his sister was arrested in Picton during 27 raids on homes and businesses across Sydney on Wednesday.
The ATO bill for this fraudulent behaviour dating back to June past year is estimated at $165 million, but could be much more.
"A $165 million alleged fraud pales into insignificance when you consider the trillion dollars that could be at stake with the Panama Papers in terms of alleged tax evasion".
But their payments were transferred to subcontractors controlled by syndicate members who pocketed the money instead of sending it to the ATO.
"The threat posed by this syndicate to the revenue stream is demonstrated by the fact that $165 million was removed from the tax system, ultimately removing it from possible use by the community", she said.
"We have zero tolerance for this type of conspiracy, this type of fraud, this type of abuse of public office", Australian Prime Minister Malcolm Turnbull said Thursday after a series of raids by the Australian Federal Police, an agency similar to the Federal Bureau of Investigation in the U.S.
She added that the scale of the alleged fraud was "unprecedented" for the AFP.
It's alleged Adam used that cash for luxury properties, boats, high-end sports cars, and even to fund a professional racing team.
They set up seven sub-contracted companies, or tier 2 companies, in mid 2016 and recruited unwitting drug addicts and welfare recipients to act as "straw directors" who provided a front for the syndicate.
Part of his biography on his LinkedIn account reads: "My personal philosophy is that the tax system belongs to all Australians and we all need to work closely together to ensure that it is administered fairly, efficiently and causes the least pain for all that participate".
These second tier companies are alleged to have not paid the full amount of Pay-As-You-Go tax required by the ATO, and instead funds were siphoned off back into the syndicate, to the tune of $165 million.