Director of Public Prosecutions v Aizen
[2014] VCC 844
•5 June 2014
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE CRIMINAL DIVISION | Revised Not Restricted Suitable for Publication |
CR-13-01536
| DIRECTOR OF PUBLIC PROSECUTIONS |
| v |
| LEIGH AIZEN |
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JUDGE: | HER HONOUR JUDGE CANNON | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 20 May 2014 | |
DATE OF SENTENCE: | 5 June 2014 | |
CASE MAY BE CITED AS: | DPP v Aizen | |
MEDIUM NEUTRAL CITATION: | [2014] VCC 844 | |
REASONS FOR SENTENCE
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Subject: CRIMINAL LAW
Catchwords: Sentence – Plea of guilty – Obtain a financial advantage by deception – Past moderate to severe depression
Cases Cited: R v Pulham (2000) 109 A Crim R 541
Sentence: Total Effective Sentence 3 years’ imprisonment; Non-parole period 15 months’ imprisonment; s.6AAA Sentencing Act 1991 declaration; Ancillary orders
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APPEARANCES: | Counsel | Solicitors |
| For the DPP | Mr P Pickering | Mr C. Hyland, Solicitor for Office Public Prosecutions |
| For the Accused | Mr D L Brustman SC | Lethbridges |
HER HONOUR:
1 Leigh Aizen, you have pleaded guilty to one charge of obtaining a financial advantage by deception which has a maximum penalty of 10 years' imprisonment.
2 Your offending was opened as follows:
3 You were 22 years old when the offending commenced and 27 when it ended. You are also known by the name Elias Kalatheris. From 2002 you were employed by a particular real estate company but in early December 2005, the rental business of that company was purchased by “Run Property Pty Ltd” (“Run Property”). You became property manager at Run Property from December 2005 and remained in that position until July 2011.
4 Your role as property manager was to manage a portfolio of 600 properties on behalf of a number of landlords. I understand that the properties were in the nature of commercial buildings rather than individual dwellings.
5 During the time of your employment, you operated two bank accounts – one was a CBA account into which your salary was paid, whilst the other was a Bank of Cyprus account which was operated by you under the name Elias Kalatheris. I understand that, as a child, you had changed your surname from Kalatheris to Aizen, upon your mother marrying your stepfather who had that surname.
6 In July 2011, a supplier who was seeking payment of an invoice, contacted a fellow employee, Sally Purcell, informing her that she had received a personal cheque from you to pay the invoice but that this had been dishonoured. The information was conveyed to the national manager of Run Property, which sparked an internal investigation because of the irregularity of paying a supplier in this way.
7 This investigation identified four suppliers for which suspicious payments had been made from December 2005 until 2011. These were:
(a)Creative Pty Ltd;
(b)The Door and Window Exchange Pty Ltd;
(c)SJ Property Maintenance; and
(d)Shan-Teng Pty Ltd.
8 Run Property identified that the bank account details on the invoices for Creative Pty Ltd were the same as your CBA bank account details and that the bank account details on invoices for The Door and Window Exchange Pty Ltd and SJ Property Maintenance Pty Ltd were the same as your Cyprus account details. The national manager and chief financial officer for Run Properties met with you on 8 July 2011 to discuss their findings. You did not deny that payments had been made into your accounts but said that, in most cases, the landlords would have known about the payments into your account and that the work had been sub-contracted by you. This was not so.
9 When asked about the Shan-Teng Pty Ltd invoices, you said that there must have been an error.
10 You tendered your resignation on 13 July 2011. I was told by the prosecutor that the indictment period extends to 10 November 2011 as there was one false invoice for which payment was received as at that time.
11 Run Properties subsequently engaged an accounting firm to audit invoices paid to Creative Pty Ltd, The Door and Window Exchange Pty Ltd and SJ Property Maintenance. The audit found that there was a total of $541,740 paid to these businesses.
12 The matter was then referred to the police – their investigation revealed the following matters.
13 In relation to Creative Pty Ltd:
(a)that between 4 December 2005 and 4 April 2011, Run Property received 45 invoices from Creative Pty Ltd and made 39 payments, totalling $99,426.10 into your bank account;
(b)that the account number on the invoices was the same as your CBA account details;
(c)that the post office address of Creative Pty Ltd recorded on the Run Property master file was a post office box address registered to you but using the name Elias Kalatheris;
(d)that the post office box address of Creative Pty Ltd on the invoices was a post office box number registered to a business associated with your then partner, and further:
(e)that ASIC searches revealed that there was no registered company (Creative Pty Ltd).
14 Police investigations into invoices from SJ Property Maintenance showed:
(a)that between 5 December 2005 and 30 June 2006, Run Property received 335 invoices from SJ Property Maintenance Pty Ltd and made 20 payments, totalling $162,559.60 to your Bank of Cyprus account;
(b)that the account details on the invoices were the same as your Bank of Cyprus account;
(c)that the post office box address of SJ Property Maintenance on the invoices was the same as that registered to a business associated with your then partner;
(d)that there was no ASIC or Victorian business name registration of the name “SJ Property Maintenance" with the particular ABN number which was recited in the prosecution opening.
(e)that the account details on the Run Property master file were changed to your Bank of Cyprus account on the same day as the payment by you to your account, being 20 December 2005;
(f)that there were 86 identical invoices for the sum of $210.65 with an invoice date of 6 December 2005, and with the same work description, but each invoice gave a different rental address;
(g)that there were 112 identical invoices for the sum of $376.75 with the invoice dated 19 December 2005, and with the same work description, but each invoice had a different rental address; and
(h)that there were 108 identical invoices submitted for the sum of $355.14 with invoices dates all of 21 January 2006 and with the same work description, but each invoice gave a different rental address.
15 Police investigations into invoices from The Door and Window Exchange Pty Ltd showed that:
(a)Between 3 January 2007 and 17 March 2007, Run Property received 58 invoices from The Door and Window Exchange Pty Ltd and made 44 payments totalling $318,675.85 into your Bank of Cyprus account;
(b)that the account details on the invoices were the same as your Bank of Cyprus account;
(c)that the post office box address on the invoices was a post office box address registered to you under the name of Elias Kalatheris;
(d)that the company was registered and performed legitimate work on two properties at your request, but the company had had no contact with you after payment of their invoice on 18 August 2006;
(e)that the account details on the property master file were changed to your Bank of Cyprus account on the day before the first payment by you to your account, being 3 January 2007.
16 Investigation into invoices from Shan-Teng Pty Ltd showed that between 28 April 2011 and 6 July 2011, Run Property received six invoices from Shan Teng for work and made 6 payments totalling $32,899.
17 The investigation also showed that you had advised Vicky Joseph, a director of the business, to submit two invoices for a property in South Yarra, where the work was performed, saying you would pay these overnight, but you said to put other addresses on the remaining invoices.
18 When you failed to make payment for the remaining invoices, the director of this business demanded payment but the cheque was paid directly from your Bank of Cyprus account and was dishonoured. This was the trigger for Run Property’s investigation, to which I have previously referred, which led to your undoing.
19 You were interviewed by police on 20 April 2012 and made admissions as follows:
20 That you would arrange maintenance of properties on behalf of tenants and would organise contractors and the invoices would be addressed to Run Property. You told police that the clients never questioned the repairs and that you were the contact person for Creative Pty Ltd, which was used to contract out work to sub-contractors. You said you prepared the invoices from Creative Pty Ltd. Otherwise, you made “no comment” answers to questions put by police, on the advice of your lawyers.
21 The financial advantage obtained by you was $580,661.55 in total. Since the offences, you have repaid $450,000 by way of compensation. I was told that a compensation order for the balance, being $130,661 was not opposed by you.
22 Mr Aizen, your offending is serious, involving 438 separate false invoices of significant sums of money on numerous occasions, throughout a period of about 5 ½ years. Your offending was of a rather elaborate and sophisticated nature. This was not a case of setting up a fraud and letting it snowball unattended. Over a significant period and on numerous occasions, you actively attended to fraudulent transactions, albeit that it appears that you might have done so in bulk on three separate occasions in December 2005/January 2006. Further, you were entrusted with a most responsible managerial role, where no-one oversaw your work, therefore, this was a serious breach of trust which your employer had placed in you. Mr Brustman of Senior Counsel, who appeared on your behalf, expressed surprise that your offending was not discovered sooner by your employer, but this may well have had something to do with the fact that they trusted you to do the right thing by them. I note that you did not choose to desist from your fraudulent conduct – rather, it took company representatives to question you about an irregularity which led to your downfall. Even then, you did not tell company representatives the truth. No doubt, you were in self-preservation mode, which is not something for which I punish you; however, you were not indicating anything in the way of remorse at that time.
23 Your offending is deserving of the imposition of a punishment which is just in all of the circumstances and your criminal conduct must be denounced. Further, significant weight must be placed on general deterrence in a bid to deter others from offending in the way that you have.
24 Mr Brustman submitted that you committed the offences in the context of a relationship in which you felt pressured to contribute financially at a higher level than that which your legitimate income would allow. At the time you were in a long term relationship with a person who had become extremely successful in his chosen profession. You had met your partner at school, although at that time, I was told that he bullied you and you were not on friendly terms. However, as adults, an intimate relationship developed in which you played an intensive role as housekeeper, as well as attending to your employment with Run Property and performing many tasks in a property development venture which you conducted with your former partner.
25 I was told that you were and that you still are somewhat naïve and had some difficulty in asserting yourself in your relationship. You were unable to keep up with work and financial demands placed upon you by your then partner in the context of leading an extravagant lifestyle with him. The property development business in which you were involved with him, involved buying properties, renovating them and selling them once more at maximum profit. These were upmarket properties and you had the task of spotting appropriate places to develop in this way. I was told that your various work and home activities placed a significant strain upon you. Mr Brustman said that you were out of your depth.
26 I take these matters into account in sentencing you, although at the end of the day, it was your decision to remain in the relationship with your former partner and to commit the offences for which I now sentence you. Although these various pressures help to explain your motivation, they do not reduce your moral culpability which I regard as high. As the learned prosecutor submitted, part of the motivation for your offending was to contribute to an extravagant lifestyle which was to your own benefit, a lifestyle which you had the option to walk away from. Having said this, I have also factored in your youthfulness and personal circumstances when you commenced the offending and your relative young age and circumstances when it ended.
27 I take into account that your relationship was a difficult one however, in which you were often denigrated by your partner and that the pressure on you to contribute financially led to your offending which snowballed in terms of its pace, size and frequency. But, as I have previously said, this was not snowballing without regular input by you.
28 I accept that you are an enterprising and entrepreneurial young man, who appeared to have the capacity to do well from an early age. Such capacity ought stand you in good stead in finding work in the future which is relevant to your prospects of rehabilitation.
29 I take into account in your favour that you have now taken responsibility for your fraudulent actions and that this was done at an early stage, without the need for a contested committal hearing. In those circumstances, you are entitled to a significant discount in the sentence you would otherwise receive as you have saved the witnesses the time and trouble of giving evidence and you have saved the community the time and expense of contested proceedings. Further, you have paid back $450,000 which is a significant sum of the total sum taken, which further indicates your willingness to take responsibility for your actions. In this regard, I was told that you had become embroiled in a bitter and hotly contested court case between you and your former partner. The money derived from the property dispute was used to make payment toward compensation and I was also told that you owe legal representatives and the Australian Taxation Office a good deal of money, arising out of property dealings at the time.
30 Since the offending and family law proceedings which left you in a poor financial state, you have managed to rebuild yourself and are now doing well. However, you remain indebted to the tune of hundreds of thousands of dollars. A report had been prepared by Mr Healey, psychologist. However, your counsel placed no reliance on this and it was the joint position of the parties that I ought not take the report into account. Therefore I have put this to one side. Reliance was placed on the report of Dr Pamela Mathews which was prepared following her examination of you on 16 May 2014.
31 Mr Brustman drew my attention to aspects of her report which were principally matters of background. I take the background matters into account, which were as follows:
32 That you are now 31 years old; that you lived with your mother, twin brother and natural father up until you were four years old when your parents separated. You had no further contact with your father after this time, although Mr Brustman seemed to indicate that there was some contact in more recent times up until two to three years ago. In any event, this has never been a meaningful relationship between you and your natural father and you have clearly looked to Mr Aizen as your father figure. Your mother is 54 and lives in Montreal where she has been for the past eight years. You have frequent contact with her via Skype or similar.
33 Your mother commenced living with Mr Aizen when you were five years old and separated when you were a teenager. According to Mr Aizen, they separated when you were in Year 11. However, you recounted to Pamela Mathews that the separation occurred when you were halfway through Year 12 exams. In any event, the separation occurred at a rather challenging time for you as a teenager and school student. You recall a happy childhood during the time that your mother and Mr Aizen lived together and it impacted on you quite severely when separation occurred.
34 After finishing school, you commenced a property and construction course at RMIT but deferred the course because of better opportunities afforded you in the real estate industry. Mr Brustman said that it was germane to the plea that the culture that you experienced in this industry was one based on, as he said, “all show” and appearances – that much effort was required to give effect to this. This being so, it seems to me that some of the pressures which you experienced to make money may well have been self-imposed. I was told that you loved working in the real estate industry. However, before you commenced working for Run Property, you were earning $45,000 per annum.
35 In 2005, you were head hunted by Run Property who wanted to have you continue working for them. You earned between $60,000 and $65,000 which was not a great deal, especially when compared with your former partner’s income. In May 2011, Run Property offered you a higher income and superannuation but this only lasted until July when your offending was discovered and you resigned. You then returned to the real estate company you had worked for previously. However, Run Property advised this company of your offending. I was told that this was due to their concern that you might purloin some of their clients, although it may well be they were concerned about your dishonesty and the risks associated with another real estate company taking you on. In this regard, it would appear that you did not declare any wrongdoing to your subsequent employer.
36 At the same time that these events were occurring, you were embroiled in acrimonious family law proceedings which resulted in some unfortunate publicity. I was told that at one point during this period, your former partner drove his car into your car, resulting in him being charged.
37 You then obtained employment with another company which lasted until 12 April 2012 after a newspaper article was aired in respect of allegations giving rise to the charge before me. It appears from the newspaper article in “The Age” in April 2012, that you were the subject of Supreme Court civil proceedings commenced by Run Property in a bid to recover the moneys which had been fraudulently taken by you.
38 After leaving your job with Boral, you lived on unemployment benefits from time to time before moving to Sydney. In 2013, you obtained an administration position with a business there and you also commenced doing charity work. Your present work relates to commercial and retail properties but I understand that your work does not involve property management as such.
39 Your present employers do not know about your offending. When I raised concerns about this, Mr Brustman said that you had put your head in the sand about the reality of your situation and you were also aware that if you declared your wrongdoing to your current employer, this would end your job. You are currently earning $135,000 and you earn a 15 per cent incentive when you obtain results for the business. I was told that you were on probation with this business until 8 July this year and that you were likely to be kept on if not incarcerated.
40 In terms of your personal relationships, after you left school, you first lived with your twin brother and his girlfriend in Albert Park before commencing a relationship with your former partner, which endured from 2005 to 2010. At present, you are in a relationship of sorts with a male in Sydney who owns various businesses there. As I said, you perform voluntary work there with the Salvation Army which you have found to be therapeutic and quite enjoyable. Until recently, you were assisting with looking after a child of a person who suffers a severe mental illness.
41 I have also taken into account the character evidence which you have relied upon.
42 Your stepfather, who had been married to your mother for about 13 years, spoke most highly of you. He said that whilst your twin brother chose not to take on his surname, that you did. You were a young boy when he commenced his relationship with your mother and you were in Year 11, he said, when separation took place. Despite an acrimonious divorce, you have remained fairly close to Mr Aizen.
43 He said that as you were growing up, you were always industrious, caring and close to your mother. While you were at school, you also took a job at a take-away food outlet and engaged fully in school activities such as drama, appearing in school musicals and plays. He told me that you were not academically gifted. However, you had always been diligent and persevered in all that you did through your schooling years. Once you had left school, you found employment quickly at a real estate company in Richmond. You did very well there and were poached by another real estate company. You started but did not complete a degree whilst at RMIT. He said that he was very proud of your achievements over the years and that he had maintained contact with you following his separation from his then wife. He spoke in admirable terms of your property development activities. At no stage did you ask him for financial advice during this time.
44 Mr Aizen said that you showed a degree of naivety in the time that he had known you, as you appeared to be overly impressed with other people and were easily led. He remarked that he did not think you felt equal to the company that you kept and were very impressed by others, including your former partner.
45 He said that had he been aware of your illegal conduct, he would have counselled you to desist immediately; that he just could not understand how you had come to offend in this way. He said that you were very generous and that at one stage, you had bought a car for your mother out of your earnings and you had looked after your grandmother after your grandfather had died.
46 In cross-examination, Mr Aizen said that you had bought a car for your mother at the end of 2005 which was at a time when you were defrauding from Run Property. However, this was clarified by Mr Brustman on instruction from you that you had only paid the deposit for a car at this time, albeit that this was still during the period of your offending.
47 In support of your character I also heard from a Mr David Medwin. He is a clothing designer and friend of yours. He has known you were since you were 19 years old, having become acquainted with your mother. He also spoke of your strong work ethic and generous spirit. He spoke of your strong loyalty to your friends and family, giving an instance of your kindness toward him.
48 He gave evidence which confirmed the matters put to me by your Counsel as to the way in which you were treated by your former partner, and how you put up with this without complaint.
49 He also expressed surprise as to your offending and said that he believed that you were remorseful about your situation. When cross-examined, Mr Medwin accepted that it was possible that the first time he knew about the amount of money taken by you was when he gave evidence before her Honour Judge Cotterell, who subsequently disqualified herself from this matter. He had not appreciated before this time that there were 438 separate false invoices involved in your offending.
50 I also heard character evidence from a Fay Rutko in support of your character. She also provided a written character reference in support of you. She has known you for 13 years, having met you through your employment with a real estate agency. She spoke of your diligence and kindness as a property manager as well as your great helpfulness in selling a property with a view to maximising profit. You went on to assist her and other members of her family in the property market and management of property. She said that you were like an adopted son to her and she never had any reason to doubt your honesty or integrity.
51 She also said she was shocked when you told her of your offending and that you had told her that you were very sorry that you had ever embarked upon this. She also said that you were most embarrassed about this and she had no doubt that you had a genuine intention to repay all that you owed.
52 When cross-examined she accepted that she was not aware of the number of invoices involved or the period over which you offended. She also agreed that before coming to Court in December last year, she did not know the detail of your offending.
53 Mr Aizen, I accept that, apart from this offending, you are a man of otherwise good character.
54 I accept that you have facilitated justice, avoiding the need for a lengthy trial and, as previously indicated, you are entitled to a significant discount for this. However, as the learned prosecutor indicated, this was not a case where your facilitation of justice went beyond this, for example, that you passed up the availability of an arguable defence.
55 I accept that you are remorseful for your conduct in that it has caused you a great deal of embarrassment and anxiety, but I am not convinced that you have complete heartfelt remorse for what you did to your employer. This was no spur of the moment decision which you later regretted but a lengthy course of conduct which you continued until you were discovered. Notwithstanding this, I accept that you have a degree of contrition and certainly you have taken responsibility for your actions by paying a great deal of the monies back already.
56 As I have said, I accept that you are of otherwise good character. Further, you have no prior convictions and you have support in the community to look to, as well as a sound capacity for work. All of these matters go positively to your prospects of rehabilitation which I find are good. In these circumstances, but taking into account the extent of your offending over a protracted period, I place some weight on specific deterrence but not a great deal in all of the circumstances.
57 I have also taken into the account the diagnosis and opinion of Ms Matthews who found that your personality has a childlike quality to it; that you appear to suffer from attachment disturbance due to your family history, and you have suffered from low self-esteem and moderate to severe depression in the past few years. However, when she saw you your mood and self-esteem had begun to settle. Ms Mathews said that a term of imprisonment would likely cause your recovery to regress and that you would be vulnerable to emotional and psychological decompensating in gaol.
58 Mr Brustman submitted that it would be appropriate in your case to impose a wholly suspended sentence of imprisonment, citing Appeal Justice Batt’s remarks in R v Pulham (2000) 109 A Crim R 541 at paragraph 4, where his Honour said that a wholly suspended sentence of imprisonment is to be taken as a sentence of imprisonment for all relevant purposes and is to be treated as having a deterrent effect – that it was not a “mere exercise in leniency”.
59 Mr Brustman said that your facilitation of justice in pleading guilty at a stage where there was no need for a lengthy trial and that, in view of your remorse and other matters in mitigation, a wholly suspended sentence was open in your case. He also submitted that I might have a degree of confidence you could repay the debt in full if you did not go to prison, although he did not rely on this in anything other than a pragmatic sense. As I said to Mr Brustman at the time, I do not regard such pragmatism as relevant to my sentencing task.
60 The Crown submitted that in all of the circumstances, and especially in light of the seriousness of your offending and the weight which needed to be applied to general deterrence, a sentence of immediate imprisonment was the only appropriate course.
61 Mr Aizen, I am afraid that notwithstanding the matters put in your favour, which I have taken into account and given appropriate weight to, the only appropriate sentence in your case is one of an immediate jail term. In imposing sentence, I have borne in mind that this will be your first term of imprisonment which will be no doubt a salutary experience for you, especially in view of the matters raised by Ms Matthews in her report. Those concerns, with your consent, will be conveyed to the prison authorities.
62 Would you please stand up, Mr Aizen.
A.You are convicted of the charge on the indictment.
B.I make an order for compensation in the terms set out in the draft document which is not opposed by you.
C.I make a disposal order in the terms set out in the document provided.
63 You are sentenced to three years' imprisonment and I order that you are to serve 15 months’ imprisonment before becoming eligible for parole.
64 If not for your plea of guilty, I would have sentenced you to 4 years' imprisonment with a non-parole period of 2 years 10 months’ imprisonment.
65 Take a seat for a moment, please, Mr Aizen.
66 Mr Brustman, do I have your client's authority to pass on Mr Matthew's report and concerns there might be in that?
67 MR BRUSTMAN: I would imagine so, but might my instructor get instructions?
68 HER HONOUR: Yes.
69 MR BRUSTMAN: Yes, Your Honour.
70 HER HONOUR: Very well, they will be conveyed to the authorities. Anything arising further out of this sentence?
71 MR PICKERING: No, Your Honour.
72 HER HONOUR: Thank you. You can remove Mr Aizen.
73 We will now adjourn.
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