Director of Public Prosecutions v Aitchison
[2015] VCC 225
•17 February 2015
| IN THE COUNTY COURT OF VICTORIA | Revised Not Restricted Suitable for Publication |
AT MELBOURNE
CRIMINAL DIVISION
Case No. CR-14-01355
| DIRECTOR OF PUBLIC PROSECUTIONS |
| V |
| MARTIN AITCHISON |
---
JUDGE: | Her Honour Judge Sexton | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 28 November 2014, 4 February 2015 | |
DATE OF SENTENCE: | 17 February 2015 | |
CASE MAY BE CITED AS: | DPP v Aitchison | |
MEDIUM NEUTRAL CITATION: | [2015] VCC 225 | |
REASONS FOR SENTENCE
---
Subject: Obtain financial advantage by deception
Catchwords: Financial advantage by deception
Legislation Cited:
Cases Cited:
Sentence: Total effective sentence 8 years’ imprisonment, starting 17 February 2015. Released on a recognisance release order after service 5 years, to be of good behaviour for 3 years, in the recognisance amount of $2,000.
---
APPEARANCES: | Counsel | Solicitors |
| For the DPP | Mr D. Sewell | CDPP |
| Ms. J. McGillivray | ||
| For the Accused | Mr T. Alexander | Mirko Bagaric Lawyers |
HER HONOUR:
1 Martin Aitchison, you have pleaded guilty to three charges of obtaining a financial advantage by deception from a Commonwealth entity, and one charge of attempting to do so, all of which offences carry a maximum sentence of 10 years’ imprisonment.
2 I proceed to sentence you on the basis of the Prosecution Opening[1] which was accepted by your counsel, with the exception of one matter which is corrected in paragraph 3 of the written submissions made by counsel on your behalf[2].
[1] Exhibit A
[2] Exhibit 1
3 I will briefly summarise your offending.
4 In 2005, you set up a company, Aitchison Heavy Haulage Proprietary Limited (AHH) and a trust, The Trustee for the Aitchison Family Trust trading as AHH.
5 Between October 2008 and January 2013, the Trust lodged 18 Business Activity Statements (BAS) prepared by you, fraudulently claiming refunds for fuel purchased by AHH in vast amounts. A total of $5,853,709 was paid by the Australian Tax Office (ATO) into a bank account in the name of The Trustee for the Aitchison Family Trust trading as Aitchison Heavy Haulage Proprietary Limited. This represents the financial advantage to you which was dishonestly obtained by your deception over three periods of time in four years (Charges 1-3), with an attempt to obtain a further financial advantage on a fourth occasion after that (Charge 4).
6 Charge 1 relates to a period between 3 October 2008 and 23 April 2009, when three false BAS were lodged by you on behalf of the Trust and refunds were paid by the ATO in the amount $406,694 purportedly as refunds for fuel used in the business of AHH. In April 2009, a review was undertaken by the ATO on the third of these BAS and you were contacted and asked to supply documents to substantiate the purchases of fuel. You created and supplied false invoices and the refund claimed on that particular BAS was confirmed.
7 Charge 2 relates to a period between 3 July 2009 and 4 April 2011, when eight false BAS were lodged by you and refunds for fuel purchases were paid in the amount $2,391,935. In May 2011, a review was conducted on the last of these BAS. You were again contacted and asked to supply documents to substantiate the purchases of fuel. You again created and supplied false invoices and the refund claimed on that particular BAS was confirmed.
8 Charge 3 relates to a period between 7 July 2011 and 12 October 2012, when six false BAS were lodged by you and refunds for fuel purchases were paid in the amount $3,055,180.
9 In November 2012, the ATO began an audit in respect of all the BAS submitted by the Trust. It was discovered that the invoices supplied in 2011 were false.
10 On 7 January 2013, a false BAS was lodged by you, claiming a refund of $600,515 (Charge 4). The ATO auditor contacted you and over the next few days, made requests for documents to substantiate the purchases of fuel.
11 On 10 January, the auditor spoke to you on the telephone, and you said a number of things about AHH including that the business involved 100-200 trucks, that the fuel tax credits were claimed for diesel used in these trucks, and that the fuel was purchased in bulk from Mobil and stored in large tanks at the business premises. These were all false statements.
12 On 16 January, you were told by the ATO auditor that an audit was underway. You did not supply any documents to substantiate the claim made in the BAS of 7 January, and on 22 February, the claim was refused.
13 The audit of all the BAS resulted in all the claims being disallowed and the entire claim revised to zero.
14 On 23 April, 2013, liquidators were appointed to AHH following your attendance on a solicitor.
15 On 18 June, 2013, warrants were executed at your home address by the ATO and a number of items and documents were seized.
16 The reality was that you were not involved in a company with up to 200 trucks; you were working for yourself, and had one truck and a trailer for hauling heavy machinery, both purchased through finance.
17 You spent the money you fraudulently obtained on business expenses and on supporting family members, which on the one hand could be said not to be using the money to live a luxurious lifestyle. On the other hand, during this period, your expenses far outweighed your funds, even though you were working very long hours as a truck driver, as well as receiving these very substantial refunds. To that extent, you were not living a modest lifestyle.
18 Indeed, you sold the house you and your wife lived in and with the proceeds of that sale and your fraud on the ATO, you bought a large home for the extended family to live in, as well as a 2004 Mercedes for your wife, a houseboat, two jet skis, a property on the Gold Coast and a house in New Zealand for your ill sister and her husband. You also set up another company, American Dream Machines Pty Ltd and purchased classic cars and parts from the USA to refurbish and sell as a form of superannuation.
19 The offences are very serious indeed. Not only did you defraud the ATO and cause nearly $6 million loss in revenue to the Australian Government, money that would otherwise be used to fund services for other Australians, but you also misled your family, who apparently thought that you could afford all this largesse on a hard-working truck driver’s salary.
20 The liquidation has not provided full reparation of your dishonestly obtained funds, and you and your wife have lost everything you legitimately built up in your life together before 2005. As a result, your family now are far worse off, emotionally and materially, than if they had never been provided with the lifestyle you funded by committing these crimes. The home in which the extended family were living was sold, and the family are now living in rented accommodation. It should not be lost on you that stealing from the Commonwealth means that the government has less to spend on services such as the payment of the part-pension that your wife will now receive.
21 The offences are aggravated by the facts that you continued your criminal activity after the requests were made for documentation, you supplied false documentation on two occasions, and you made false statements to the auditor in a futile attempt to avoid the exposure of your criminal activity which you must have known was imminent.
22 You committed these offences at the ages of about 59 to 62 years, the first time you had been involved in crime. The question arises: how could a man commit such serious offences after leading an exemplary life to that point?
23 Your counsel put forward explanations, which he carefully stated were not excuses, arising from your circumstances leading up to the offending: viz. that you were personally and financially under stress, and that once you had successfully defrauded the ATO in the first period, you found it allowed you to do all the things you wanted to do for your family, and you continued the criminal activity until your fraud was discovered.
24 I turn then to summarise your background and the personal circumstances said to lead to the offending. You were born in New Zealand and grew up with adoptive parents. In 1967, you began an apprenticeship as a diesel mechanic at the age of 17 with Freightways, a company to which you returned after completing your compulsory military service, and where you became the workshop foreman. In your mid-20s, you bought your own truck to operate in the fleet and spent some years driving. You worked your way up to becoming the National Workshop manager by 1976. When the company sold the workshops you became the National Operations manager.
25 You married for the first time in your 20s and had two children. The marriage broke down when you were aged 35 years and you are now estranged from the children as a result of your former wife making it difficult for you to see them. You married again the following year, but this marriage also did not last.
26 Freightways was sold to Mayne Nickless and you apparently felt left out of the new management, and so left the job, and the country, coming to Australia in 1989. You successfully sold trucks as your first job in this country. Later that year, you met your current wife. A third marriage for both of you, it has been a loving, successful relationship, unlike the first and second marriages of each of you. Between 1991 and about 1997, you worked in Queensland, Tasmania and Victoria, with jobs of increasing responsibility and workload, all in the transport industry. By 2000, you were ‘burnt out’, and you returned to truck driving to make a living.
27 In 2001, you and your wife bought a house in Frankston, with financial assistance from her parents, and a mortgage. You were then aged about 51.
28 In the 25 years that you have known your wife’s family, you have always provided support and help when needed. You have always been close to her son and daughter from her first marriage, but particularly to her daughter, and you are a much loved father or grandfather figure to her two daughters, who are estranged from their father. Your stepdaughter was having difficulties with her husband, and at some stage, she and her two daughters moved in to live with you and your wife.
29 In 2005, you started AHH, working for yourself, but barely breaking even. In the same year, your father died in New Zealand, and you reported becoming depressed following his death. You continued to work long hours driving your truck, and tried to increase your earning capacity by obtaining finance to purchase a trailer to haul machinery, and a new truck.
30 In 2008, you began the American Dream Machines company in an apparent attempt to supplement your income. This was bad timing, as the global financial crisis began in that year. The company you were doing haulage for got into financial difficulties, but you kept working for them as they kept promising payment. I am told that eventually you were owed $100,000, and then the company went into liquidation. I was not told if you ever received your back pay.
31 You were struggling with the financial pressure of business costs, including repayments on the truck and trailer, as well as the care and upkeep of the extended family, which I was told alone led to expenses of $10,000 to $12,000 per month. I was told that on an annual basis, there was a shortfall between your income and total expenses of about $90,000.
32 Your wife had worked for many years as a nurse, but by then was working only two days a week due to the onset of arthritis, and was also caring full time for her aged parents; your step-daughter suffered from depression and was not working; her daughters were, I believe, teenagers at that time; and your stepdaughter’s new husband describes you as taking him in when he needed help; all of these people were living in your house and apparently dependent on you.
33 Added to this, your sister in New Zealand was ill, and you spent time and money on flights to New Zealand to sort out her situation. You, yourself, were not well, being then morbidly obese and suffering from ongoing depression, high blood pressure, high cholesterol, and diabetes. In 2010, you had lap band surgery for obesity.
34 And so it was that you came for the first time to overstate the litres of fuel purchased on the BAS lodged in October 2008. You were able to pay some debts with this ill-gotten money, but then the cycle of repayments falling due continued, and having got away with it once, you proceeded to make false claims until you were caught 4 years later.
35 As I previously said, the choices you made in spending the money you fraudulently obtained were not the most modest choices you could have made in helping out your family. While you may have had their interests at heart when you began committing the offences, I am satisfied that you demonstrated a level of greed, both by the type of expenditure, and the continuation of the offending.
36 There are a number of matters that I must take into account in your favour.
37 First, I take into account that you pleaded guilty to these offences and that you did so at an early stage of the prosecution. By your plea, you have saved the community the cost of a trial, and have facilitated the course of justice.
38 Next, I accept that by your early plea, you have shown contrition for your offending. You also showed contrition by voluntarily going into liquidation in an attempt to make reparation for the loss to the Commonwealth. The process of liquidation was described by you as ‘living punishment’ and by your counsel as a harrowing existence, and I accept that it has not been an easy process for you and the family. It realised about $2m, with the liquidators’ fees yet to be deducted, and so will fall far short of full reparation. I also accept the letter you wrote to the court[3] as a sign of your contrition, and also your consent to the court making an order for repayment.
[3] Included in Exhibit 2
39 Next, I take into account that you are now aged 64 years, and that you continue to suffer from depression as well as the physical health problems I referred to before, other than obesity. In late 2013, while the offending was being investigated, you were admitted to hospital thought to have suffered a stroke, but this was not confirmed.
40 I heard evidence from your general practitioner, Dr Beaumont, and I received reports from her and from Dr Sullivan.[4] Dr Beaumont considered you to be “severely depressed” when she saw you after your admission to hospital and prescribed antidepressants as well as monitoring you closely. Dr Sullivan formed the likely diagnosis of recurrent depressive disorder, mild to moderate in severity. He reported that you had not persisted with medication, although it is not clear if this was the prescription from Dr Beaumont. Dr Sullivan was of the view that given your age, ill health and persistent mood disorder, it is likely that you will find imprisonment more burdensome than if you were in good mental health.
[4] Included in Exhibit 2
41 I take into account that your depression will make imprisonment more burdensome for you, and that the burden is made heavier by your concerns for your wife in particular, but also the rest of the family, as to how they will cope in your absence.
42 You have no prior convictions and I accept that before these offences were committed, your general reputation in the community was good. I therefore sentence you as a person of previous good character. However, as noted in many cases, whilst previous good character remains of relevance, it does not shift the main considerations in sentencing for white collar crime from general deterrence and denunciation, because people who commit these types of crimes usually can do so because of their good character and reputation.
43 Because of your age, and the remorse you have shown, and your acknowledgment of the impact of your offending on your family, I am satisfied that the chances of your rehabilitation are very good, and the risk that you will re-offend very low.
44 However, as well as those matters personal to you to which I have referred, I must also take into account the need for my sentence to deter others from committing this sort of crime, which is of considerable importance in a case such as this, as the taxation system relies on people putting forward genuine claims, and the loss of revenue from fraudulent claims affects all taxpayers, and potentially affects those receiving services paid for by federal government revenue. I do not consider that there is a need by my sentence to deter you from re-offending, as your passage through the justice system and the fall-out from your offending will already have achieved that aim.
45 I turn now to consider the probable effect on your family of you being imprisoned for a considerable period. The law is that this factor can only be taken into account in mitigation of sentence where the circumstances are exceptional. I heard evidence from Dr Beaumont about your wife’s health, and that of your stepdaughter and granddaughters, and received reports from her on these family members[5]. The case was adjourned to obtain a further psychological report about your wife, and I received two reports in February this year[6]. I also received a letter from Mrs Aitchison.[7]
[5] Included in Exhibit 2
[6] Added to Exhibit 2
[7] Added to Exhibit 2
46 Your counsel urged me to find that the impact on your wife is exceptional, and that as a result, there should be some leniency in your sentence. The prosecutor submitted that the material provided did not meet the test for exceptional circumstances.
47 Mrs Aitchison has been diagnosed with severe major depressive disorder with mixed anxiety features, and the opinion of both her treating general practitioner, Dr Beaumont, and the forensic psychologist, David Ball, is that this condition commenced after she became aware of your offending, and deteriorated with the liquidation of your assets, and after you were charged with these offences, with the realisation that you would serve time in prison. Mr Ball also said that because of the dependant features in her personality Mrs Aitchison’s personality functioning is likely to deteriorate following your imprisonment.
48 Mr Ball referred Mrs Aitchison for immediate entry into treatment with psychologist Kim Dowse, as he formed the view that she would benefit from counselling, mood management and therapy. Ms Dowse has so far seen Mrs Aitchison twice, with her daughter and one granddaughter attending for half of one of the sessions. Ms Dowse convinced Mrs Aitchison to begin the course of anti-depressants which had been prescribed, and found that she was less distressed at the second session. While there were still symptoms, Mrs Aitchison was able to discuss things to keep her occupied while you are imprisoned.
49 Your counsel submitted that this was an exceptional case as it is rare for the court to deal with someone of your age facing a serious and possibly lengthy term of imprisonment and a wife in ill-health at the age of 71. He posed the question: would you have a life together beyond the term of imprisonment?
50 This case is yet another example of the ripple effect of a crime; while the perpetrator must be punished appropriately, family members who have done nothing wrong can suffer immensely from the fallout of the crimes as has happened in this case. The letters from the rest of the extended family also attest to this impact.
51 Although this is hard for the family to hear, I do not find that these are exceptional circumstances. The law has set a very high test, and examples from other cases where the test has not been met demonstrate this[8].
[8]Markovic v R; Pantelic v R (2010) 30 VR 589
52 However, I will reduce the sentence from what would otherwise have been imposed because of the impact on you of worrying about the effect of your crimes on your family, and particularly your wife. This worry will make prison even more burdensome for you.
53 These are serious offences. I must weigh in the balance the length of time and amount of money involved in your offending against the matters to be taken into account in your favour. Doing the best I can to reflect the community’s denunciation of your crime, and provide just punishment, while recognising your physical and mental health issues, I intend to impose a total effective sentence of 8 years’ imprisonment. Because of your very good prospects of rehabilitation with almost no risk of re-offending, I have decided that a recognisance release order is appropriate, and I propose to order your release on recognisance to be of good behaviour after 5 years.
54 Now, could I just pause there in the sentence and just hand this down to counsel. You will see there the proposed structure of the sentence, and I will just pause whilst you read that.
55 MS McGILLIVRAY: Your Honour, normally, a sentence that exceeds three years would be a non-parole and a straight sentence situation rather than a recognisance release.
56 HER HONOUR: Recognisance release is available.
57 MS McGILLIVRAY: Yes. It is, Your Honour.
58 HER HONOUR: I formed the view that Mr Aitchison did not require supervision.
59 MS McGILLIVRAY: Require supervision.
60 HER HONOUR: Yes.
61 MS McGILLIVRAY: Your Honour, I believe the maths is correct, if that was the first aspect.
62 HER HONOUR: That’s the first question, yes. Thank you. That’s a good start.
63 MS McGILLIVRAY: If Your Honour would just give me a moment, though, to check the issue in relation to the recognisance.
64 HER HONOUR: Yes. Thank you.
65 MS McGILLIVRAY: Yes, Your Honour. The legislation is mandatory in terms of where it’s less than three years, but does leave open the option, Your Honour is correct, in relation to a sentence greater than three years, under 19AB of the Crimes Act. Does Your Honour’s associate have the relevant order on – I have a draft.
66 HER HONOUR: If you have got a draft there. Can I just ask you before I proceed further, I couldn’t find anything to say that the recognisance release order could not be in the amount of time that I’ve said, even though sentence on two of the charges will not yet have started, if you follow what I’m saying.
67 MS McGILLIVRAY: The recognisance release order applies to the total effective sentence, so Your Honour has set that out in the paragraphs handed down to us. And so the order basically is that a sentence of eight years has been imposed and that release is ordered after serving five years, and then there needs to be a period of recognisance and an amount of the recognisance. And s.20(1)(b) picks up and applies s.21A, which sets out the conditions that are available for a recognisance, which includes a period of good behaviour up to five years and other conditions. Obviously Your Honour is not intending to impose any other form of condition other than the behaviour.
68 HER HONOUR: No. The good behaviour and the amount of recognisance. So thank you for that. So the amount of the recognisance will be $2000 and I will return to my formal sentence in a moment, but I just indicate that that amount is not to be paid unless there is a breach of the condition to be of good behaviour.
69 MS McGILLIVRAY: Is Your Honour intending that the period of good behaviour be the balance of the sentence?
70 HER HONOUR: Yes.
71 MS McGILLIVRAY: Thank you, Your Honour.
72 HER HONOUR: Does that need to be expressed as three years or the balance of the sentence?
73 MS McGILLIVRAY: Three years, Your Honour. Just as a housekeeping matter, Your Honour, also given that the prisoner has been on remand, there are 13 days excluding today in pre-sentence detention.
74 HER HONOUR: Yes, thank you very much. Mr Alexander, do you agree with all of that?
75 MR ALEXANDER: Yes, I do, Your Honour, thank you.
76 HER HONOUR: Thank you. Yes. Could you stand up, please, Mr Aitchison.
77 You are convicted and sentenced as follows:
78 Charge 3 – 5 years’ imprisonment. That sentence starts today.
79 Charge 2 – 4 years’ imprisonment. That sentence starts on 17 August 2017.
80 Charge 1 – 2 years’ imprisonment. That sentence starts on 17 August 2020.
81 Charge 4 – 18 months’ imprisonment. That sentence starts on 17 August 2021.
82 That makes a total effective sentence of 8 years’ imprisonment. I direct that you be released on a recognisance release order after serving 5 years to be of good behaviour for three years, in the recognisance amount of $2000.
83 I declare that you have served 13 days in pre-sentence detention not including today and direct that these be deducted administratively from your sentence.
84 I order that you make reparation to the Commissioner of Taxation in the amount $5,853,709.
85 If you had not pleaded guilty, but had been found guilty after a trial, the sentence I would have imposed is 11 years’ imprisonment with a non-parole period of 7½ years.
86 Just take a seat, Mr Aitchison. It is necessary for you to sign the recognisance, so we just need to prepare, and then I also will sign it. So just take a seat.
87 MS McGILLIVRAY: Your Honour, just for the record, to confirm the reparation is not to be a condition of the recognisance?
88 HER HONOUR: No.
89 MS McGILLIVRAY: Thank you, Your Honour. Your Honour, the standard form refers to the term to be served to be expressed in months, so in the body of the order it’s expressed as 60 months, but further down it’s much clearer that it’s a sentence of eight years to serve five.
90 HER HONOUR: Yes. Yes, I have seen that in the form, thank you.
91 MS McGILLIVRAY: Thank you, Your Honour. There are the draft orders.
92 HER HONOUR: Thank you. All right. So Mr Aitchison, if you wouldn’t mind just standing up again.
93 So just so that we’re clear the order that I’m going to sign and which if you agree will sign the recognisance, is to say that after serving a period of five years you are to be released on the condition that you be of good behaviour for the next three years – so that would be the balance of your sentence – and that you will be required, if you are not of good behaviour, to forfeit the sum of $2000, as well, of course, as there being proceedings for whatever it is that has led you to not be of good behaviour.
94 The order may be discharged or varied under a section of the Crimes Act. If you wanted to do that then you would need to get legal advice. So if you agree to be bound by that order then I will sign it, then I will ask you to sign it, and a copy will be provided either to you or to you, Mr Alexander. Would that be preferable?
95 MR ALEXANDER: Yes, thank you.
96 HER HONOUR: Yes. All right. Yes. So, Mr Aitchison, do you understand?
97 PRISONER: Yes, I do.
98 HER HONOUR: And do you agree to bound by this order?
99 PRISONER: I do.
100 HER HONOUR: Yes. If you could just take that up to Mr Aitchison and ask him to sign where indicated on the second page. So the first page just includes the orders that I’ve just explained to you, and then the second page is where, if you agree to be bound, you would sign. Yes. I will have copies made of that for both the Prosecution and the Defence. And that will be in the hands of your legal practitioners rather than it going with you now, Mr Aitchison.
101 Could I just indicate to counsel that I won’t formally enter the order into the record until the end of today. So if there is any second thoughts on the mathematics or the format, then please let my associate know and the amendment can be made. Can I thank you both for your assistance.
102 COUNSEL: Thank you, Your Honour.
103 HER HONOUR: Could I also thank everyone in court for the way in which they have conducted themselves in such difficult circumstances. Yes, thank you. Mr Aitchison may be removed. Thank you. I will stand down until 10.30.
---
1