Director of Public Prosecutions v Angeleri

[2015] VCC 592

IN THE COUNTY COURT OF VICTORIA Revised
Not Restricted
Suitable for Publication

AT MELBOURNE
CRIMINAL JURISDICTION

CR 12-00994/CR-13-01686

DIRECTOR OF PUBLIC PROSECUTIONS

v

DENIS ANGELERI

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JUDGE:	HIS HONOUR JUDGE LACAVA
WHERE HELD:	Melbourne
DATE OF HEARING:	4 and 5 May 2015
DATE OF SENTENCE:	11 May 2015
CASE MAY BE CITED AS:	DPP v Angeleri
MEDIUM NEUTRAL CITATION:	[2015] VCC 592

REASONS FOR SENTENCE
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Subject:
Conspiracy to defraud, obtain property by deception.
Continuing criminal enterprise.
13 years imprisonment .  Non-parole eight and a half years.

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APPEARANCES:	Counsel	Solicitors
For the Director	Mr D. Porceddu with Ms E. Ramsay
For the Accused	Mr A. Lewis

HIS HONOUR:

1Denis Angeleri, you have pleaded guilty to two charges of conspiracy to defraud.  The maximum penalty for this offence is 15 years imprisonment.  You have also pleaded guilty to one charge of theft for which the maximum penalty is ten years imprisonment.  These charges are contained in indictment C1308887.2, which I will refer to as the “conspiracy indictment”.

2On a separate indictment, C1108169.1 which I will refer to as the “deception indictment”, you pleaded guilty to four charges of obtaining property for yourself or another by deception and four charges of obtaining financial advantage for yourself or another by deception.  The maximum penalty for each of these offences is also ten years imprisonment.

3Further, each of the offences that you have pleaded guilty to, in the circumstances of this case, is a continuing criminal enterprise offence within Schedule 1A of the Sentencing Act 1991 (herein “the Act”). 

4That means that for the purposes of sentencing on these charges, other than the conspiracy charges, the maximum penalty is doubled. 

5Where conspiracy to defraud is a continuing criminal enterprise offence (as here) the maximum penalty is raised to 25 years' imprisonment.  See s.6I of the Act.

6I am required to have entered into the records of the court the fact I sentence you as a continuing criminal enterprise offender for these continuing criminal enterprise offences and I direct that be done.

7The circumstances of your offending are contained in two prosecution summaries which were tendered in evidence and read in open court by the prosecutor Mr Porceddu.  With a few corrections, they were accepted by your counsel Mr Lewis as being accurate and as forming a proper factual basis upon which I can proceed to sentence you.  These sentencing remarks need necessarily to be read with the prosecution summaries to understand the full picture of your offending.

8You are an intelligent man, now aged 51 years.  You have tertiary qualifications in law and at the time of this offending, you practised as a solicitor as well as pursuing various other business interests.

9By your pleas to the conspiracy charges, you have admitted conspiring with Ian Russell Brindley and Michael O’Brien to defraud firstly, the National Australia Bank (“NAB”) between 1 January 2003 and 16 May 2007, a period of nearly four and a half years  (Charge 1), and secondly, Adelaide Bank Limited (“ABL”) between 25 August 2006 and 23 January 2009, a period of two years and five months (Charge 2).  Together, both conspiracies which operated in the same way proceeded for nearly seven years.

10Brindley has pleaded not guilty to the charges and his trial before a jury will commence shortly.

11In the 1990s, you had been employed by Norwich as Chief Legal Counsel.  Through business you met O’Brien.  You had identified a business opportunity to make a profit by financing sub-prime borrowers who wished to purchase second hand motor vehicles.

12Together with O’Brien and Brindley you set up  a corporate structure, which I will collectively call Australian Motor Finance or AMF, through which the business idea conceived by you would operate.  You and O’Brien occupied positions at the heart of that structure and Brindley was a director of companies also involved in the structure.

13AMF was under capitalised, but as conceived and set up by you and, those involved with you commenced as a legitimate business arrangement.  The concept was that AMF would enter into an agreement with a financier such as the NAB or ABL as the source of funds for money ultimately loaned to
sub-prime borrowers.  The borrowers were introduced to AMF through recognised car dealers and finance brokers.  AMF would arrange such loans and service them.  AMF entered into all arrangements with the borrowers and collected the repayments by direct debit from borrowers bank accounts.  The idea was that AMF would profit from the differential in interest rates between the interest charged by the financier and the interest rate at which AMF was able to obtain from the borrower.

14From a purely business point of view the business concept was sound but required a lot of work to establish and maintain and employed a number of people.  This all cost money and the business cost a lot of money to set up and run.  Further, the concept was to some extent, subject to the economic cycle.  The NAB funded the loans until May 2007.

15For various reasons, by late 2003 AMF had run out of money.  Unless there was an injection of money into AMF to enable it to keep operating, it would be insolvent and would have to cease trading.  Instead of taking either of these options, you conceived of the idea to create false loans and channel the funds derived, first from the NAB and later from ABL into accounts controlled by you and your fellow conspirators.  In this way, money ostensibly loaned by the banks to borrowers for car loans was funnelled into the AMF structure thus enabling it to continue to operate.

16In late 2003, you discussed your idea with O’Brien at a meeting in a café and according to the prosecution case you also discussed your idea with Brindley on the same day.  Both agreed to co-operate in the plan which effectively was to use the NAB, at that time, as a source of overdraft to AMF.  The money received from the NAB and later from ABL would be disguised as legitimate loans to sub-prime borrowers.

17The original plan to defraud the NAB in this way was that it was to be a short term arrangement for only so long as AMF became more established.  But as time went on and, more and more false loans were processed, they required more and more time to service and more and more money to service the repayments at high interest rates because the money defrauded was ostensibly being borrowed by sub-prime borrowers who borrowed at high rates of interest.

18The plan was elaborate, sophisticated and well planned and no stone was left unturned to avoid detection either by the banks themselves or by auditors.  In this way, the offending proceeded unabated and undetected for nearly seven years.  The enormity of the fraud meant that the false loans were monitored on a daily basis by those involved in the fraud including you. 

19The fraud was a gross breach of trust placed upon you as a director of AMF through the complex financing agreements entered into by AMF with both banks.  When ABL took over as the principal financier in May 2007, paying out the NAB, nothing was said which would have revealed the fraud that had hitherto progressed to that point against the NAB.  So well implemented was the fraud that I have assumed that whatever due diligence that may have been carried out by ABL at that point, did not give a hint of the fraud that you and others had perpetrated.

20The fraud required identifying false loan borrowers, completing and submitting false loan applications supported by false documents reflecting the false sale and false purchase of a motor vehicle, setting up and servicing accounts to receive the money derived and to make monthly repayments.  In addition, all of this had to be done in a way that could and did, withstand external audit.  Porcaro was involved only to the extent of falsifying documents identified as being necessary for audit purposes.

21The prosecution case is that you conceived of the whole idea and were given daily briefings by the others once the scheme to defraud was underway and that once implemented, O’Brien and Brindley embraced your plan and made sure that the false loans were obtained and that those loans were serviced so as to perpetuate the appearance that they were legitimate.

22The first false loan was in the name of DeAngelis who also features as a victim in the deception charges.  He was an acquaintance of yours.  On
9 December 2003, you used his personal details to identify him as the borrower for the purposes of the first false loan.

23At the start of the defrauding of the NAB, the names and identities of the borrowers used were relatives or acquaintances of yourself or Mr Porcaro, another criminal associate of yours involved in your deception charges.  Other people whose identity you used for your fraud were persons who had previously unsuccessfully made a loan application but in respect of whom you had all personal information so as to use their identity.

24Once false loan applications were submitted and approved, money received from the NAB was deposited into accounts controlled by you and O’Brien from where it was used to prop up financially the AMF business and for other purposes including repayment of the false loans.  Mr Lewis properly drew my attention to p.4004 of the depositions, which is p.20 of a witness statement of a forensic accountant Mr Corcoran, where at paragraph 38 he sets out in more detail the accounts into which the false loan funds flowed.  I marked that page as Exhibit 4 on the plea.

25By this means over the period of both Charges 1 and 2, a total of 885 false loans were submitted to both banks involved so that they were collectively defrauded of $24,729,759.  The enormity of your offending and the reason why it spiralled out of control is reflected in the facts that in May 2007, when ABL took over as the financier, the monthly repayments to service the false loans was $243,000.  That in itself is a large amount of money.  However, by December 2008, when ABL refused to provide further funding and had become suspicious of the arrangement, the monthly amount alone required to service the false loans had risen to $729,000. 

26During the course of the plea I was provided with an annexure to the prosecution opening directed to the issue of how much money was lost to the banks involved, given that a large sum of the money was being channelled back to the banks in a robbing Peter to pay Paul manner.  That annexure which Mr Lewis accepted as accurate reveals that the total amount of the false loans was $24,752,624.87 of which, as at 31 December 2008, $22,413,250.78 then remained outstanding.

27ABL appears to have recovered $20,000,000 either by civil action or contractually from other parties including auditors and an earlier financial subscriber to AMF, namely Absolute Capital.  That is to its good fortune but it does not diminish or mitigate your criminality in any way.  According to the evidence that I received, ABL expended more than $8,000,000 in recovery action and it remains more than $12,000,000 out of pocket.

28ABL was dissatisfied with data it was receiving from AMF by mid-2008 and began investigating anomalies.  It ceased funding the arrangement on
20 December 2008 and appointed a Receiver to the group on
23 January 2009. 

29No doubt mindful of the appointment of a Receiver was nigh, you and your
co-offenders removed loan files and computers from the place of business of AMF in an attempt to conceal evidence from the Receiver.

30On the day before the appointment of the Receiver, you stole the money, the subject of Charge 3, which was siphoned off to accounts controlled by you and your co-offenders.  Fortunately most of that money was recovered.

31On any view, the circumstances of your offending in the charges on the conspiracy indictment, it is a fraud on the banks involved on a large scale.  Your offending has few, if any, redeeming features about it.  As a qualified and practising lawyer at the time and company director, your moral culpability in this offending was extremely high.  Your behaviour was thoroughly deceptive, dishonest and disgraceful.  Your offending is a very serious example of serious offences, towards the top end of the scale in my opinion.

32The charges on the deception indictment did not involve either O’Brien or Brindley.  In the circumstances here, you offended with Mr Porcaro.  Again the circumstances are contained in the prosecution summary which your counsel did not dispute.  You and Porcaro were involved in a Ponzi scheme, although your involvement in the eight charges you have pleaded guilty to is not as great as was that of Mr Porcaro, who has pleaded guilty to 49 similar charges that include the eight that you have pleaded guilty to.  But the recipient of the money raised by this means appears to have been companies and business ventures controlled by you.

33On eight occasions between May 2004 and October 2008, you and Porcaro induced people to invest a total of $900,000 by making false representations about the terms and conditions of investment they were making and the form and nature of security that would be provided to them.  Virtually everything they were told by you and or Porcaro with your knowledge was false.

34This offending was also very serious.  The offences extended over four and half years and each instance was a gross breach of trust placed in you by the hapless investors.

35I admitted into evidence a number of victim impact statements in a folder.  A number of those victims suffer because of what you and others did in the conspiracy offences.  They have had their identities used by you and others for the purposes of the false loans.  They have suffered because their credit rating has suffered bringing much hardship to them.  At first I was somewhat sceptical about such claims but the fact remains your conduct and that of others involved with you has meant that the persons whose identity you used without their knowledge or permission have suffered greatly because of what you did.  Other victims were involved in the deception offending.  Some have lost everything they had at your hands.  Instead of having a comfortable life in retirement, they have lost retirement assets.  Their only mistake was that they trusted you and Porcaro and you breached that trust.

36You were first charged with offences that are now on the deception indictment on 20 September 2011.  There was a contested committal with Porcaro on
14 June 2012 at which you were unrepresented.  The deception charges were listed to commence in this court on 15 July 2013, but that trial date was vacated at your request.  That was because the deception charges were somewhat overtaken by the conspiracy charges which were laid on
20 January 2013. 

37There was no contested committal in the conspiracy charges and you pleaded not guilty to those charges at committal mention on 4 September 2009.

38O’Brien indicated an intention to plead guilty to charges at an early stage of the investigation and he has pleaded guilty to substantive charges.  He made a detailed statement implicating you and Brindley on 15 October 2013.  This statement was served on you at a directions hearing on 24 October 2013 and both trials were listed to commence before me on 13 April of this year.  However, both matters resolved into a plea and you were arraigned and pleaded guilty to all charges on 23 March 2015.

39On 22 May 2014, His Honour Chief Judge Rozenes heard a plea on behalf of O’Brien who pleaded guilty to ten charges of obtaining property by deception and one charge of theft. 

40The deception charges that O’Brien pleaded guilty to covered a period between May 2007 and December 2008 and were substantive charges that related to the fraud on ABL although the amounts of money in total are the same as in your offending.  The charges cover a shorter period of offending than those covered by your conspiracy charges.  The charge of theft that O’Brien pleaded guilty to, mirrors the charge of theft that you have pleaded guilty to on the conspiracy indictment.  O’Brien was not charged with and, not involved in the offending covered by the offences on the deception indictment.

41As I have indicated, O’Brien indicated his intention to plead guilty at an early stage and gave a detailed statement to the investigating police. 
Pre-empanelment in the Brindley trial, he has given evidence and has been cross-examined by Mr Brindley and he will be the principal witness against him.

42The learned Chief Judge sentenced O’Brien to a total effective sentence of nine years' imprisonment and ordered that he serve a minimum term of five years and four months before being eligible for release on parole.  His Honour imposed an aggregate sentence on a number of deception charges of seven years and cumulated two years of a sentence of six years imposed on the corresponding theft charge, in reaching the total effective sentence of nine years.

43His Honour made a declaration for the purposes of s 6AAA of the Act of 15 years' imprisonment with an 11 year minimum.  In sentencing O’Brien,
His Honour noted that in addition to the benefit of a plea of guilty at an early stage, O’Brien was entitled to the maximum benefit for co-operating with authorities and giving evidence against others.  O’Brien would have given evidence against you as well as Brindley.

44You have pleaded guilty to the charges and that is in your favour and you are entitled to a reduction in sentence because of that fact and this will be reflected in the sentences that I will shortly pass.  By your pleas of guilty, you have saved the time and costs of two trials which may have been a lengthy process and which would have been expensive to run.  I accept these could have been large trials which have been avoided in your case because of your guilty pleas.  One only has to look at the number of witnesses to be called and the fact the hand-up brief exceeds 90,000 pages to be satisfied about that matter.

45In addition, I am satisfied that your pleas of guilty evidence genuine remorse on your part for your offending.  Having heard a lot about you on the plea and the effects that this offending has had upon you and your family, I am satisfied that it is highly unlikely that you will offend in this way again and I am satisfied that your prospects for full rehabilitation are good.

46But your position is different to that of O’Brien.  Although I am satisfied that once the conspiracy had taken hold and the banks were being defrauded each of you and O’Brien played equal roles, you conceived of the idea in the first place and AMF was very much a business conceived and promoted by you.  The prosecution case is that you were very much the ring leader of the conspiracy with others acting very much as lieutenants and, on the facts, that conclusion is very hard to resist.  I was told that over the seven year life of AMF, you and O’Brien and Brindley drew annual salaries that commenced at about $180,000 per annum which increased to $320,000 per annum.  Given the company appears to have been under funded from inception and had to survive for nearly seven years on the proceeds of an elaborate fraud, these salaries seem exceedingly generous to say the least. 

47Obviously, you cannot expect to receive the reduction in sentence that was afforded to O’Brien by virtue of he having agreed to give evidence against you and Brindley.

48In very helpful written submissions, your counsel argued Mr O’Brien pleaded guilty to a larger number, “of more seriously framed charges”.  True it was that there were a larger number of charges but I cannot agree they were more serious than the charges you have pleaded guilty to.  In my view, when all the facts are revealed, Mr O’Brien’s offending was on a par with your offending in the conspiracy indictment.  Whilst I am mindful of the sentence imposed on O’Brien when sentencing you, in my opinion that sentence does not guide this sentence that I will impose because there are important distinguishing factors that I have endeavoured to set out above.

49Mr Lewis further argued that you are entitled to the benefit of the delay between the date of charging and the date of resolution of this plea.  He described the delay as “significant” and submitted it was not caused by you.  The delay in resolving the deception charges has been about three and a half years and the delay in resolving  the conspiracy charges has been of the order of two years and three months.  I agree that the delay is not attributable to you.  Some of the delay may be attributable to the size of the police investigation and the thoroughness of it.  I said earlier that the deception charges which were laid first were overtaken by the conspiracy charges later filed.  I understand the position adopted by you to adjourn the deception trial whilst you had legal advice to examine the conspiracy charges.  That was a sensible approach.  I accept that you have had these charges hanging over your head now in one way or another for at least three and a half years and that this has affected the way in which you have been forced to conduct your life without being able to put this offending behind you and move on.  I accept this has affected your family and your ability to earn a living.  Save for an unrelated matter, you have not re-offended and I accept you have commenced to rehabilitate.  I have taken the delay into account in arriving at an appropriate overall sentence.

50I turn to your background circumstances.  As I have said, you are 51 years of age, divorced with two children who are full time students at university level.  You have no prior convictions.

51I admitted into evidence a psychological report prepared by Carla Lechner dated 30 April 2015.  Mr Lewis relied upon much of the factual matters written about by Ms Lechner in that report.  You told Ms Lechner that you accept responsibility for your actions and expressed deep shame for your dishonesty.

52You were born in Australia of Italian parents.  Your upbringing appears to have been unremarkable.  You had a good primary and secondary education and later attended Monash University where you graduated Bachelor of Laws.  You played some football and did part time work to earn money.  You completed articles and later became a corporate lawyer with Norwich Union Insurance group.  In 1994 you became chief legal counsel and in 1997 you were appointed General Manager of Retail Investments for the group.  These were not insignificant positions.

53In 1998, you left Norwich to form your own business and pursue various business interests.  This eventually led into some property development and brought you into contact with the finance industry from which the idea that became the AMF business was conceived.  Up until this offending, you appear to have had a good record for hard work and achieved much in your life.

54I admitted into evidence a reference from a friend and neighbour of long standing, Dr Charles Last.  In his reference he speaks highly of you and of your positive contribution in a number of ways to the local community.  He also speaks of the effects this offending has had upon you and what he describes as the “destruction” of your family in consequence and of the blow you felt in no longer being able to practice law.  I have no doubt the matters he has addressed in his reference accurately reflect the position.  In summary, he speaks about your fall from grace and the significant effect that has had upon you.  In passing sentence I accept all of that to be the case.

55Ms Lechner was of the opinion that you do not have any pre-morbid health issues but that since being charged you have suffered both moderate depression and anxiety to varying degrees in response to your changed circumstances and this plea pending.  Based upon what you said to her she expressed the opinion  that your offending appeared to be a function of a desperate desire to have your business plan come to fruition and a lack of humility in admitting defeat.  She was of the opinion that you present with positive rehabilitation prospects because you have insight into your offending and the reasons for it but would benefit from counselling supports.  I accept that opinion.

56It was not argued and, nor was there any basis for doing so that there were any Verdins case issues at play here which could or should influence the sentencing discretion.

57The basic purposes for which a court may impose a sentence are punishment, deterrence (both specific and general), rehabilitation, denunciation and protection of the community.

58In sentencing I must have regard to a number of matters such as the seriousness of the offences involved, your culpability for it, your personal circumstances and those of the victim if any.  I am required to balance the interests of the community in denouncing criminal conduct with the interests of the community in seeking to ensure that as far as possible, offenders are rehabilitated and reintegrated into society.

59While deception sentences can vary widely in seriousness, offending that is committed in breach of trust, involving large quantities of money, over an extended period of time normally attracts a significant sentence of imprisonment.  All of these features are present here.  As the Chief Judge noted when sentencing Mr O’Brien, the monetary value of your offending is greater than anything previously recorded in Victoria, involving as it did a high level of planning, sophistication, endeavour and persistence.

60This kind of offending calls for a stern sentence because of the need to apply general deterrence and to adequately reflect denunciation for your offending.  This kind of offending strikes at the heart of this area of commerce which concerns commercial business borrowing from financial institutions.  It almost always involves a breach of trust, as here.  That is why stern sentences are called for as a deterrent.  This kind of fraud is difficult to detect and investigate and such investigations are costly and time consuming.  They take up a lot of resources in investigation and prosecution, as had been the case here.  At the centre of the crime rests the fact that the loans were false and the borrowers and motor vehicles purportedly financed, non-existent.  In the result, the lender has no security to fall back on and the money loaned is invariably lost.  In your case, the offending lasted in total over many years.  For these reasons, a lengthy term of imprisonment must be imposed on you and your counsel did not submit otherwise.

61The two conspiracy charges are founded on the same facts or form and are of the same criminal character.  So too are the eight charges on the deception indictment.  In sentencing you, I will impose an aggregate sentence on the two charges of conspiracy and on the charges on the deception indictment.

62Would you please stand, Mr Angeleri.

63On the charges of conspiracy, Charges 1 and 2 on the conspiracy indictment, you are convicted and sentenced to an aggregate sentence of nine years' imprisonment.

64On the charge of theft on the conspiracy indictment, you are convicted and sentenced to a term of imprisonment of six years.

65On the charges on the deception indictment, you are convicted and sentenced to an aggregate sentence of five years' imprisonment.

66I direct that two years of the sentence imposed on Charge 3 on the conspiracy indictment and two years of the aggregate sentence imposed on the charges in the deception indictment, cumulate upon the aggregate sentence imposed on Charges 1 and 2 in the conspiracy indictment and upon each other, making a total effective sentence of 13 years' imprisonment.

67I direct that you serve a minimum of eight and a half  years imprisonment before being eligible for release on parole.

68I direct that seven days pre-sentence detention be reckoned as having been already served under the sentences passed this day and be deducted administratively.

69For the purposes of s 6AAA of the Act I state that had it not been for your pleas of guilty to the charges I would have imposed a total effective sentence of 17 years imprisonment and I would have directed that you serve a minimum term of eleven and a half  years imprisonment.

70I direct the fact I have sentenced you on each of these charges as a continuing enterprise offender for continuing enterprise offences be entered into the records of the court.

71The prosecution seeks the making of an order under s 464ZF of the Crimes Act 1958 for the taking of a forensic sample from your body.  The offences of which you have been convicted, although very serious are not forensic sample offences in Schedule 8 of the relevant Act.  I decline to make that order.

72The prosecution seeks the making of a compensation order in favour of ABL.  That application was not opposed by your counsel and I will accordingly sign that order.

73Any matters arising out of that?

74MR LEWIS:  No, Your Honour.  No matters arising.  Thank you.

75HIS HONOUR:  Mr Porceddu?

76MR PORCEDDU:  No, Your Honour.

77HIS HONOUR:  Do you have the compensation order?

78MR PORCEDDU:  No, Your Honour.  They'll have to be sent through.  We will do that sometime today.

79HIS HONOUR:  Very well.  Could you remove Mr Angeleri please?  Adjourn the court until 12 o'clock.

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