CDirector of Public Prosecutions v Ballintine
[2020] VCC 211
•5 March 2020
| IN THE COUNTY COURT OF VICTORIA | Revised Not Restricted Suitable for Publication |
AT MELBOURNE
CRIMINAL JURISDICTIONCR-18-01958
CR-18-01959
| THE COMMONWEALTH DIRECTOR OF PUBLIC PROSECUTIONS |
| v |
| ADRIAN BALLINTINE JASON CULLEN |
---
| JUDGE: | HER HONOUR JUDGE DAWES |
| WHERE HELD: | Melbourne |
| DATE OF HEARING: | 14 February 2020 |
| DATE OF SENTENCE: | 5 March 2020 |
| CASE MAY BE CITED AS: | CDPP v Ballintine & Anor |
| MEDIUM NEUTRAL CITATION: | [2020] VCC 211 |
REASONS FOR SENTENCE
---Subject:
Catchwords: Making or authorising the making of a false or misleading statement in a document required by or for the purposes of the Corporations Act 2001 (Cth) contrary to s.1308(2) of the Corporations Act 2001 (Cth).
Legislation Cited: s.19B of the Crimes Act 1914 (Cth).
Cases Cited:
Sentence:---
APPEARANCES: | Counsel | Solicitors |
| For the Commonwealth Director of Public Prosecutions | Mr S. Moglia (For Plea) Mr S. Young (For Sentence) | Commonwealth Director of Public Prosecutions |
| For Accused Ballintine | Mr C. Morgan (For Plea) Mr N. McKenzie-McHarg (For Sentence) | Gadens Lawyers |
| For Accused Cullen | Mr J. Shaw | Tien Tran Solicitors |
HER HONOUR:
1Adrian Ballintine and Jason Cullen, you have pleaded guilty to offences of making or authorising the making of a statement in an invoice, knowing it to be false or misleading, contrary to s.1308(2) of the Corporations Act 2001. The maximum penalty for each offence is five years' imprisonment and/or 200 penalty units.
2A prosecution opening has been provided, which outlines the facts relied on (Exhibit A). Each accused, through his counsel has agreed that the summary is an accurate account of events. I will provide a general summary of the offending and then address your individual circumstances.
3The invoices in question were raised in 2012 by financial services firm BMK Partners and issued against NewSat Ltd. NewSat Ltd was a public company. At the time, Adrian Ballintine, you were the CEO of NewSat. BMK Partners was an accounting and financial advice firm that provided services, including accounting services. Jason Cullen, you were the accountant at BMK responsible for the work done for NewSat. The charges relate to three invoices: the January invoice, the August invoice and the September invoice.
January invoice
4On or around 17 January 2012, Adrian Ballintine, you asked Jason Cullen to raise a BMK invoice for $110,000 for “financial services” against NewSat, for payment of money intended for your own personal use. You did not have permission to obtain the payment for your personal benefit. On 17 January, Jason Cullen, you emailed Adrian Ballintine a draft of the January invoice saying, 'Let me know if you need anything further added to the invoice'. Adrian Ballintine, you replied, 'Fine'.
5On 19 January, Adrian Ballintine, you forwarded the January invoice to NewSat finance staff for payment. Your email stated that the invoice was approved for immediate payment. The next day, NewSat's bank transferred 110,000 to BMK. Subsequently BMK transferred the same amount, less GST, to Cresta Motor Yachts, a public company, in three instalments. Adrian Ballintine, you owned 73 per cent of Cresta both directly and through a company that you owned with your wife. Jason Cullen, you managed the company's finances. Both of you were directors of Cresta.
August invoice
6On 8 August 2012, Adrian Ballintine, you requested Jason Cullen to raise a BMK invoice against NewSat for $150,000 for “accounting fees” so that you could obtain an advance on your bonus. On the same day, Adrian Ballintine, you emailed NewSat finance staff that an invoice in the amount of $150,000 for accounting services “would be received from BMK, that it has been approved and is guaranteed by my bonus. Kindly remit to BMK asap”. On 9 August, the August invoice was issued. On 10 August NewSat's bank paid $165,000 to BMK, who then paid that amount less GST to Cresta in two instalments.
September invoice
7On 15 September 2012, Adrian Ballintine, you emailed Jason Cullen requesting BMK to bill NewSat for $75,000 as per the last invoice and then transfer the moneys to Cresta as soon as possible. You stated, 'My bonus is due and payable at the end of the month and I will take this as an advance. This should hold us until receipt of Swan Hill monies'.
8On 17 September, Adrian Ballintine, you authorised payment on the September invoice in an email to the chief financial officer saying:
'I am in urgent need of a little more cash, as my investment dividend of $3m is not due until 8 October and I have commitments mounting. Whatever balance on my performance is due on 1 October, but in the meantime I need $75,000. …I have asked BMK to invoice for $75,000 tomorrow and request same day funds transfer'.
9Adrian Ballintine, you received a response cautioning you about the invoice and payment, as NewSat had a liquidity crisis which could cause serious trouble with a number of major suppliers. On 18 September, Adrian Ballintine, you directed BMK Partners to raise the $75,000 invoice, having stressed to the CFO the importance of payment of the invoice. Jason Cullen, you were away when the September invoice was issued. The invoice was received and the amount of $82,500 was paid by NewSat's bank that day. BMK then paid $75,000 to Cresta on 19 September 2012.
10In 2014 an audit of NewSat was undertaken. In the course of an extensive investigation, the three invoices were identified and investigated. The offences here were committed when the false statements were made or authorised to be made. It is not alleged by the prosecution that the money obtained was theft or obtained dishonesty by deception. Any entitlement you had to amounts of money, by way of bonuses, is not determinative of culpability for these offences. The actual gain made by the recipient is not an element of this offence.
11The purpose of this provision is to protect creditors, investors, shareholders and the public generally from the effects of misleading information being provided to ASIC. Accuracy in the information provided is fundamental to ensuring public confidence. Both of you held positions of trust with respect to NewSat. Your duty was to protect the interests of NewSat and not to engage in conduct in conflict with that duty.
12The misleading records were directly related to money paid by NewSat to Cresta Motor Yachts, a company in which you both had a direct interest. The offending conduct was knowingly dishonest. The work described in the relevant records had not been done. This was known to both of you.
13There has been a delay in the investigation of this matter, which the prosecution acknowledge is significant. You are to be sentenced approximately eight years after the offences were committed. The offending took place in 2012. The broad-ranging investigation into NewSat was in 2014. You were not charged until November 2017. While company audits and investigation of matters such as these can often be a lengthy process, the uncertainty of your situation must have been the cause of unease and trepidation for both of you.
14You both elected to contest the charges at a committal proceeding before ultimately entering your pleas of guilty. The course you chose did not expedite the resolution of this case. Whilst you should not be penalised for exploring whether you had a legitimate defence to these charges, this has added to the delay. I accept that the delay overall has been a source of anxiety for you. The prosecution concede that despite the potential impact of this kind of offending, in both your cases, a term of imprisonment would not be an appropriate outcome in all the circumstances.
Adrian Ballintine
15Adrian Ballintine, you have pleaded guilty to one rolled-up charge covering all three invoices. In 2014, as part of a general audit into NewSat, the invoices were investigated. In 2015, NewSat went into receivership and your position as CEO was terminated. In 2016 Cresta was liquidated.
16On 18 October 2016 you were interviewed by ASIC, where you admitted that the BMK invoices related to loan payments on your behalf. You accepted that the BMK invoices falsely described that they were for advisory services when they were, in fact, effectively loan payments made to you, to be offset against your future bonuses.
17You agreed that you had authorised the preparation of the January invoice and that the narrative on the invoice was false. You admitted to investigators that the August invoice was raised on your request and that it was false. You also admitted that any bonus should not have been paid by way of the September invoice.
18Relevantly, records confirm that a prohibition against related party transactions was drawn to your attention on 23 March 2011. You forwarded that information to Jason Cullen the next day, saying, 'You will find the below interesting reading'. In the course of the record of interview, you stated that you were not aware at the time that the invoices were, in fact, related party transactions, such transactions having disclosure obligations. You now admit that you were aware of the significance of the falsity of the invoices. The motivation for your offending was financial, that is to achieve an early payment of money that you anticipated you were entitled to receive.
19The charges against you were authorised on 27 November 2017. On 20 September 2018 you participated in the committal hearing. You were committed to stand trial due to commence on 23 September 2019. On 23 August 2019, you pleaded guilty to one rolled-up charge covering all three invoices. Your plea of guilty was entered one month before the trial was due to commence. It was not entered at an early stage. Your plea, however, still has a significant utilitarian benefit. You have saved the court and the community the time and expense of running a trial. In those circumstances you have facilitated the efficient administration of justice and are entitled to a benefit for that.
20It is submitted that remorse can be inferred from your plea of guilty. While you did admit in the record of interview that the invoices related to loan payments on your behalf, you also made comments that you were only doing as others had told you. You said that you had nothing to do with generating the invoices. It appears that you were attempting to minimise your culpability.
21Some of the references tendered on your behalf refer to your conduct as a genuine error, a mistake, a one-off or as a matter that somehow slipped through the cracks. One refers to you being under significant pressure at the time of the breach. I do not accept that these descriptions or justifications for your conduct are evidence of remorse. You are described as being embarrassed and upset by your actions, which I am sure is accurate.
22NewSat went into liquidation in 2015. The issuing of the false invoices was not a catalyst for the demise of NewSat. Some of the money provided to you would not have been received as a result of NewSat's ultimate demise. Any money that did you did receive as a result of this offending that would not have come your way has now been repaid.
23While not directly related to the circumstances of this offending, the demise of the company has created significant media interest and you have been the subject of reporting from the time the investigation commenced. I am told that some of the media reporting has been inaccurate, which has caused you great concern. The eventual liquidation of the company has affected your reputation, with media reports focusing on your conduct. As the CEO of a public company, it is inevitable that there will be a level of public scrutiny upon its demise.
24I accept that any inaccurate reporting may have been frustrating and unfair, although the reporting by the media of your offending conduct is a legitimate topic. The community has an interest in people who have a professional responsibility being held accountable for their conduct. Offending of this kind undermines public confidence.
25You have not worked since being charged with these offences. You have been reluctant to take on any positions or business opportunities in light of the level of publicity involved with the demise of NewSat. You have no prior convictions and you have not offended since the date of these transactions. The references provided are from people who know you in both a professional and personal capacity. You are still highly regarded by them and they all attest to your good character. This is to your credit.
26It is conceded, however, that evidence of your good character and standing in the community is of less significance in cases of white collar crime, as your standing in the community placed you in the position of trust from which you committed the offence. I accept that your prospects of rehabilitation are good.
27You were born on 20 November 1955 and are now 64 years of age. After completing Year 12, you commenced working at Nunawading Council as an administrative officer. In 1974 you began studying by correspondence and completed your town clerk’s certificate in 1980. Between 1980 and 1983 you worked in local government in administrative roles in various municipalities. Between 1983 and 1987 you had a senior role with an ASX-listed technology company, before working as a venture capitalist in technology ventures between 1987 and 1999.
28In 1999, you listed the entity then known as Multi E Media Ltd on the Australian Stock Exchange. In 2005, the company was renamed NewSat. The liquidation of NewSat had a financial impact on you, resulting in the loss of your home. You and your wife currently reside in a rental property in Yaroomba, Queensland. Your wife suffers from a lung condition, hypergammaglobulinemia. You have her support as well as the support of your business associates and friends who have written to the court. Whilst you do not currently earn an income, there is no evidence that you are suffering from financial hardship.
29It has been submitted by your counsel that an undertaking under s.19B of the Crimes Act (Cth) may be an appropriate disposition. This is the only non-conviction disposition in the federal jurisdiction. I am told that if you are convicted of this offence, you will be unable to take on the role of a director of a corporation for a period of five years.
30In considering whether a s.19B disposition is appropriate I am required to undertake a two-stage process of reasoning before imposing such a disposition.
‘(1)Where:
(a) a person is charged before a court with a federal offence or federal offences; and
(b) the court is satisfied, in respect of that charge or more than one of those charges, that the charge is proved, but is of the opinion, having regard to:
(i)the character, antecedents, age, health or mental condition of the person;
(ii)the extent (if any) to which the offence is of a trivial nature; or
(iii)the extent (if any) to which the offence was committed under extenuating circumstances;
that it is inexpedient to inflict any punishment, or to inflict any punishment other than a nominal punishment, or that it is expedient to release the offender on probation’.
31The first stage involves the identification of a factor or factors of the character specified in sub-paragraphs (i), (ii) or (iii). The second stage is the determination that, having regard to the factors so identified, 'It is inexpedient to inflict any punishment [beyond] a nominal punishment'.
32Your counsel submitted that sub-paragraphs (i) and (iii) are applicable. In light of your good character, your lack of prior convictions and of any subsequent offending, as well as your age, being 56 years old at the time and now 64, that it is appropriate to consider this disposition. It was also submitted that the extent, if any, to which the offences were committed under extenuating circumstances may be relevant.
33There is no evidence that these offences were committed under extenuating circumstances. You concede that your motivation for offending was in order to have early access to sums of money. The reasons put forward for the operation of a s.19B are not compelling. Evidence of your good character and your standing in the community are of less significance, as these characteristics enabled your offending. In those circumstances I am not satisfied that these factors are sufficient to trigger the operation of s.19B.
34Even if I am mistaken about that, I do not accept that it is appropriate to impose a nominal punishment or to release you on probation for your conduct. This one rolled-up offence is made up of three separate invoices that were created over a period of 10 months, in order to obtain early access to large sums of money. This is not an aberration or a one-off offence. The offending reflects a course of conduct. While they were documented in invoices between the parties, the descriptions of the transactions were misleading. Your criminal conduct was not discovered until an audit was conducted two years after the transactions took place
35You held a position of trust at NewSat as its CEO. As such, you had a duty to protect the interest of NewSat and not to engage in conduct that conflicted with that duty. The misleading records related directly to money paid to Cresta, a company in which you had a direct interest. The offending conduct was done intentionally, knowing it to be dishonest. This type of offending has the potential to erode public confidence in the integrity of companies listed on the stock market. It is essential that those who provide misleading information are held accountable.
36The principle of general deterrence is of primary importance and I am satisfied that the imposition of a conviction for the offending is appropriate. I do not think that there is an additional need for specific deterrence in light of the impact that the investigation and criminal process has had on you over a protracted period.
37I take into account the maximum penalties for this offence. I have considered the principles outlined in the cases, to which I was referred by the prosecution. I am satisfied that a financial penalty is the appropriate disposition.
38Would you please stand, Mr Ballintine.
39Mr Ballintine, you are convicted and fined $15,000. Have a seat, please.
Jason Cullen
40Jason Cullen, you have pleaded guilty to two individual charges relating to the January and August invoices. In the course of a record of interview conducted on 10 June 2016, you admitted that you made or authorised the making of the invoices and that you knew at the time that the description on those invoices was false. Both these invoices came to light in the course of the audit that was conducted in 2014. Charges against you were authorised on 27 November 2017.
41On 20 September 2018, you also took part in a contested two-day committal hearing. You were committed to stand trial in the County Court, being due to commence on 23 September 2019. On 16 July 20198, however, you indicated that this matter would not proceed to trial. Your guilty plea was entered on 23 July 2019. Your plea has a significant utilitarian benefit. You have saved the court and the community the time and expense of running a lengthy trial. In those circumstances you have facilitated the efficient administration of justice and are entitled to a benefit for that.
42Your plea of guilty was not entered at an early stage; it was, however, entered before that of your co-accused. It has been submitted that your plea is consistent with remorse. This submission is based on your cooperation with ASIC and the admissions you made to the investigators, notwithstanding that these charges were contested at a committal hearing.
43A bundle of references has been tendered on your behalf. It is difficult to reconcile that submission with some of the references, where it suggested that you followed your clients' instructions or that you have paid a high price for naively believing your clients' claims. When interviewed by ASIC, you did however, make full admissions to your knowledge that the descriptions on the invoices were false.
44Your referees confirm that the laying of charges has had an impact on you both professionally and personally. You have struggled with stress, grief and anxiety as a result of your conduct since these matters first came to light.
45You have no prior convictions. You have not committed any offences since 2012. You are a married man with three dependent children. You have the support of your family. You have continued in your employment with BMK as a senior accountant where you have worked for the past 17 years. Your current income is approximately $80,000 per year. I find that your prospects for rehabilitation are good. You will be required to disclose the outcome of this case to the supervisory body of your profession. You have not received any indication of the effect that it will have on your capacity to continue in your employment as a chartered accountant.
46You have pleaded guilty to two offences. The prosecution concede that your level of culpability is lower than that of your co-accused. They agree that you should not be disadvantaged by pleading guilty to two charges when the primary offender has pleaded guilty to one rolled-up charge. In those circumstances, it is agreed by the prosecution and your counsel that you ought to be sentenced as if the maximum penalty for the offending were the same as your co-accused. That is a fine of $22,000.
47It is conceded by your counsel that a financial penalty is within the appropriate penalty range for this offending. At the time, you were a practising account who had a professional relationship with your co-accused as well as having a friendship with him, which played a role in your offending. It is conceded that the benefit received by you was limited to your having a direct interest in the company Cresta Motor Yachts. You were a director of Cresta and managed its finances. It was acknowledged that while it would be unusual to receive a s.19B bond as your offending occurred in your professional capacity, it may still be an option.
48The nature of the dishonesty is the primary consideration here. Your conduct was not careless or negligent. The gravity of the offending is as a result of your knowingly creating invoices and having them paid when the invoices were false. The acts demonstrate intentional dishonesty. I accept that any loss to a company or gain to an offender is not an element of these offences.
49The principle of general deterrence is a primary consideration in sentence. Offences such as these are difficult to detect. Whilst your offending was disclosed via emails and invoices, a false description was given for the reason for the transfer of funds. It was not until the audit had been undertaken that your offending came to light. This type of offending has the capacity to erode public confidence in the integrity of the stock market, particularly if the records of corporations are not accurate. It is essential that those who provide regulated information are accountable for providing misleading information.
50I turn now to your personal circumstances. You emigrated to Australia from Ireland in 2001. You were qualified as an accountant before you arrived in this country and you have worked as such since that time. You and your family are permanent residents in Australia. Your offending occurred in the course of your employment with BMK Partners. You have maintained your employment since these events came to light.
51The references that have been tendered are from people who know you in both a personal and professional capacity. They confirm that you have maintained their view that you are a respected, hardworking and trustworthy person. You are regarded as an honest man of great integrity. This is to your credit. Your referees express their surprise at your current situation. You are also a contributor to your community, demonstrating an active interest in your three children and in their sporting activities as well as in your local parish.
52Notwithstanding your previous good character, your lack of prior and subsequent convictions and your age, I am not persuaded that a s.19B disposition is appropriate. This evidence carries less significance in cases such as these, where these characteristics enable your offending. You have pleaded guilty to two charges of deliberate dishonesty committed in a professional capacity.
53General deterrence must be given significant weight in the sentencing process. I do not think there is an additional need for specific deterrence, given the delay between your course of conduct and the ultimate resolution in this case. I am aware that you have been the subject of media interest which has added to the stress associated with these proceedings. I take into account the principle of parity when fixing sentence for you and your co-accused. Mr Ballintine had an elevated position and was involved in three transactions rather than two.
54Mr Cullen, would you please stand.
55Taking all of these matters into account, you are convicted and fined an aggregate of $7,500. Be seated please.
56In relation to both of you I grant a stay of 28 days for the payment of the fines before they are referred to Fines Victoria.
57Mr Young, are there any further orders sought?
58MR YOUNG: No, Your Honour.
59HER HONOUR: Is there anything further, Mr McKenzie-McHarg?
60MR McKENZIE-McHARG: No, Your Honour.
61HER HONOUR: Mr Shaw?
62MR SHAW: No, Your Honour, thank you.
63HER HONOUR: Thank you, I'll adjourn the court.
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