Director of Public Prosecutions v Cheng
[2020] VCC 655
•19 March 2020
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE CRIMINAL DIVISION | Revised Not Restricted Suitable for Publication |
Case No. CR-18-02611
DIRECTOR OF PUBLIC PROSECUTIONS
| v |
| LAWRENCE CHENG |
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JUDGE: | O’CONNELL | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 13 March 2020 | |
DATE OF SENTENCE: | 19 March 2020 | |
CASE MAY BE CITED AS: | DPP v Cheng | |
MEDIUM NEUTRAL CITATION: | [2020] VCC 655 | |
REASONS FOR SENTENCE
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Subject: CRIMINAL LAW
Catchwords: Obtain financial advantage by deception; Financial advantage obtained of approximately $1.5 million; Director of company; Breach of fiduciary duty; Continuing criminal enterprise offences; No evidence of enrichment; Plea of guilty; Extraordinary delay; COVID-19 sentencing considerations; Greater utilitarian value of plea; Prison more burdensome; General deterrence; Denunciation.
Legislation Cited: Crimes Act 1958; Sentencing Act 1991.
Cases Cited:DPP v Beattie [2020] VSC 229; Poursanidis v The Queen [2016] VSCA 164, Porcaro v The Queen [2015] VSCA 244,The Queen v Munt [2015] VSC 132, Hoy v The Queen [2012] VSCA 49, Yusuf v The Queen [2010] VSCA 266 and The Queen v Fernandez [2006] VSCA 38; DPP v Bulfin [1991] 4 VR 114.
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APPEARANCES: | Counsel | Solicitors |
| For the DPP | Mr D Hannan | Office of Public Prosecutions |
| For the Accused | Mr G Casement | Victoria Legal Aid |
HIS HONOUR:
Overview
1 Lawrence Cheng, you have pleaded guilty to three charges of obtaining a financial advantage by deception during the period 1 July 2010 to 30 June 2013. The total amount alleged to have been fraudulently obtained is $1,512,444.48.
2 You were the director of the subsidiary of a Chinese company known as China Dalian International Cooperation (Group) Holdings Ltd (‘CDIG’). CDIG Australia Co Pty Ltd (‘CDIGA’) was registered in order to conduct trading in products such as wine, olefin liquid wax and similar products. It was your role to further the business operations of the company in Australia by negotiating trade deals and referring business to CDIGA.
3 You have lived in Australia since 1981 and had some business experience in this jurisdiction. Although you were a director of the company, you were not employed by CDIGA or its parent company, and you had no authority to sign or enter into agreements on their behalf. Whilst there was no written agreement ever made between you and CDIGA or CDIG, it was common ground that you were to earn a 50% commission on any net profit made by CDIGA.
4 Over the three financial years spanning 1 July 2010 to 30 June 2013, you employed a number of misrepresentations that enabled you to gain access to approximately $16,000,000 of CDIGA’s funds which had been released by the parent company. You used that money to provide trade finance to a business from which you sought to personally profit by charging interest.
5 The bulk of the money you obtained from CDIGA was paid back, and for that reason your fraud remained undetected for some time. However, financial difficulties experienced by the business you financed resulted in shortfalls accruing each financial year. The sum total of those shortfalls in each financial year accounts for the loss caused to CDIGA and constitutes the financial advantage in each of the charges to which you have pleaded guilty.
6 On your plea, Mr Hannan, who appeared on behalf of the Victorian Director of Public Prosecutions, tendered a summary of prosecution opening for plea which set out details of your offending. That summary was accepted by your counsel, Mr Casement, as accurate and will form the factual basis for the sentence that must be imposed this case. What is set out below attempts to describe the salient features of your offending.
Background to offending
7 In April 2008, CDIG registered as its subsidiary, CDIGA. You were appointed a director together with Mr Li (Tony) Ding, who was an officer of the parent company CDIG.
8 CDIGA had a business operating account with the Bank of China with a maximum credit facility of $6,000,000, although that limit varied over time. You were never an authorised signatory of that account and had no authority to operate it. You were required to send accounts/invoices to your superiors in China who would sign the necessary authorisations for payment from the Bank of China.
9 In August 2010, you had a meeting with Dinesh Parmar, the general manager of a legitimate food trading company, Matthews-Shiloh Proprietary Limited (‘Matthews-Shiloh’). During that meeting you made an agreement to provide finance to that company. You saw an opportunity to earn money from the interest payments made by Matthews-Shiloh by deceiving CDIGA as to the use of its funds. Your intention was to utilise the $6,000,000 credit facility available to CDIGA.
10 To achieve this deception, you needed to persuade those who had the authority to release funds that CDIGA was entering into genuine contracts for the buying and selling of products. You also needed to establish a bank account where those funds could be deposited and controlled by you.
11 In 2009 or 2010, you met and formed a relationship with Peter Bromilow, who was the director of a company which was involved in promoting and marketing a range of organic food products. The name of his company was Prestige Proprietary Limited (‘Prestige’), which you described to him as having good ‘feng suey’. In his dealings with you, Mr Bromilow formed the view that you were a financier of businesses and that if he was able to assist you he would be able to earn a commission for himself.
Charge 1: Obtaining a financial advantage by deception (rolled-up charge)
12 On or about 30 November 2010, you created a fraudulent purchase order in the name of CDIGA. This order purported to record the purchase of $117,000 worth of A2 organic milk by CDIGA from Prestige. It is alleged that you then faxed the fictitious purchase contract to Mr Li in order to deceive him, that is CDIG, to obtain payment.
13 On about the same date, you created a fraudulent sales contract which listed CDIGA as the seller of $123,000 worth of A2 organic milk to Matthew Shiloh Australia Proprietary Limited (‘Matthew Shiloh Australia’)[1], thus purporting to make a profit of $6000. The sales contract stipulated that the A2 milk was to be supplied weekly for six months. In fact, no A2 milk was ever purchased or sold, indeed A2 milk was not available in Australia at the relevant time.
[1] You were a director of ‘Matthew Shiloh Australia Proprietary Limited’ which is to be distinguished from
‘Matthews-Shiloh Proprietary Limited’.
14 The following day, you filled out a Bank of China corporate remittance application form requesting that the bank remit the $117,000 from CDIGA’s credit facility to Prestige. However, the bank account number listed in the application form was actually for an account in the name of Lin Hua Company Proprietary Limited (‘Lin Hua’) which was controlled by you and your wife.
15 The corporate remittance application form contained the signature of Kevin Li who was authorised to release funds for CDGIA’s credit facility. On the basis of the form presented to it, the bank transferred $117,000 to the bank account of Lin Hua. The bank did not reconcile the listed bank account number with the payee nominated on the form.
16 During the financial year 2010 – 2011, 21 fraudulent transactions were conducted in a similar fashion. On each of those occasions, you created fraudulent purchase orders, sales contracts, Bank of China corporate remittance application forms and commercial invoices. On each of those occasions, monies were authorised to be transferred to the bank account controlled by you based upon the accuracy of the information you presented. On some occasions, the corporate remittance application forms were signed by Kevin Li and sent back to you for production to the bank, however, on other occasions, you used a pre-signed form that Kevin Li had left at the office of CDIGA when he visited. It appears that on no occasion did the bank check that the account to which monies were transferred matched the listed payee name on the corporate remittance application form.
17 Charge 1 is a rolled-up charge encompassing the 21 fraudulent transactions that were carried out in this way during the financial year 1 July 2010 – 30 June 2011. As a result, $2,457,000 was deposited into an account which you controlled. However, you continued to pay a majority of those fraudulently obtained funds back to CDIGA when received. Accordingly, your fraud remained undetected. A forensic accountant from Victoria Police, Mr John Rhoden, calculated the actual shortfall to CDIGA from these fraudulent transactions as $211,965. It is that latter amount which constitutes the financial advantage obtained by deception in respect of Charge 1.
Charge 2: Obtaining a financial advantage by deception (rolled-up charge)
18 Glen Valley Speciality Foods Proprietary Limited (‘Glen Valley’) was a company involved in the distribution of bread and other products which operated out of an address in Kilsyth, Victoria. On about 18 August 2011, you contacted Mr Li advising him of a contract you had allegedly set up with a similarly named company which was not registered with ASIC - Glen Valley T/A Natural Health Co (‘Natural Health’). You created a fraudulent contract/purchase order purporting to show that CDIGA had agreed to purchase bread and other bakery products from Natural Health. You faxed a fictitious contract to Mr Li in order to obtain payment for $117,487 supposedly for the order of bread. Ultimately, you obtained the necessary authorisation which was accepted by the Bank of China as genuine.
19 Like the frauds you committed with respect to Prestige, these Natural Health (Glen Valley) frauds continued on a weekly basis and involved the transactions particularised in Part 2 of Schedule B on the Indictment.
20 To be clear, Matthews-Shiloh never spent $117,000 each week on bread as the fraudulent contracts suggested. Rather, the monies obtained in this way were primarily used to, instead, provide trade finance to Matthews-Shiloh.
21 In addition to the Natural Health fraudulent transactions for the purchase of bread, you continued the fraudulent transactions relating to the purchase of A2 milk from Prestige throughout the financial year 1 July 2011 to 30 June 2012. The transactions relevant to the continuing A2 milk fraud during this period are particularised in Part 1 of Schedule B on the Indictment.
22 In total $7,742,471 was transferred from CDIGA into four different accounts operated by you through 66 transactions. However, because you continued to make payments to CDIGA, the actual shortfall identified for that financial year totalled $658,944.29. It is that latter figure which constitutes the financial advantage obtained by deception in respect of Charge 2.
Charge 3: Obtaining a financial advantage by deception (rolled-up charge)
23 On 1 June 2012, Fusion Nutrition & Wellbeing Proprietary Limited (‘Fusion’) was registered with ASIC. The idea behind the creation of this new company came about after you expressed interest in taking over some of Matthews-Shiloh operations relating to vitamins and dietary supplements. You convinced the general manager of that company, Dinesh Parmer, that CDIGA’s parent company in China was very interested in producing vitamins in Australia for export to China. You told Mr Parmer that the word ‘Fusion’ should be included in the name of the business for marketing purposes to represent a ‘fusion of eastern and western medicine’. Mr Parmer agreed to act as director for the new company.
24 You drew up a master agreement between CDIGA and Matthews-Shiloh stating that CDIGA would be the sole supplier of these vitamins.
25 On 20 June 2012, Mr Parmer opened a bank account for the company in the name of Fusion. You, as Chief Financial Officer, and Mr Parmer were recorded as signatories to the account. In his statement to investigators, Mr Parmer indicated that although he opened that bank account, you were in possession of the dongle required to login and transfer funds.
26 On about 14 August 2012, you provided a contract to Mr Li which suggested that Fusion was to provide CDIGA with vitamins and dietary supplements to the value of $231,358.50. In so doing, you deceived him into authorising the bank to transfer that money to Fusion’s bank account.
27 Between 14 August 2012 and 4 October 2012, you submitted eight separate false invoices to Mr Li in respect of the fictitious arrangements associated with Fusion. Those transactions totalled $1,180,457.31 and are particularised in Part 3 of Schedule C of the Indictment.
28 Mr Parmer became aware of the funds that had been deposited into Fusion’s bank account and questioned you about them. You responded that CDIGA had made a mistake and that you would fix the problem. To that end, you registered a new company on 20 September 2012 called Majenda Enterprise Proprietary Limited (‘Majenda’). You were listed as the sole director and the company’s business address was your home address. On 5 October 2012, you opened a bank account in the name of Majenda of which you were the only signatory.
29 Between 2 November 2012 and 21 December 2012, you submitted five separate false invoices to Mr Li in respect of the fictitious deal associated with Fusion which totalled $695,636.67. These payments were directed into the Majenda bank account which you controlled. Those transactions are also particularised in Part 3 of Schedule C of the Indictment.
30 Alongside the Fusion transactions, the fraudulent arrangements concerning Prestige and also Natural Health (Glen Valley) continued during the 2013 financial year. Part 1 of Schedule C on the Indictment particularises the transactions relevant to Prestige. Part 2 of Schedule C on the Indictment particularises the transactions relevant to Natural Health.
31 In total, $5,505,375.84 was transferred from CDIGA during the financial year 2013 as a result of all of the fraudulent transactions involving Prestige, Natural Health and Fusion. This money was transferred to bank accounts which you controlled and which you utilised to support your business financing arrangements. You continued to make payments to CDIGA, however, the total shortfall to that company amounted to $641,535.19 during that financial year. That amount constitutes the financial advantage which you obtained by deception encompassed by Charge 3.
32 As I indicated earlier, the total shortfall suffered by CDIGA over these three years as a result of your fraud amounted to $1,512,444.48.
Investigation
33 By July 2012, a senior officer from CDIG in China, Fei Ping Han, had noticed that CDIGA was encountering a number of financial problems because its apparent customers were falling behind in their payments and breaching their contracts. In reality, you had fallen behind in paying back the illegitimately loaned funds which you had been using to fund Matthews-Shiloh’s operations. Mr Han indicated to you that he would seek a legal remedy to make good the outstanding payments.
34 In January 2013, Mr Han travelled to Australia with a number of other executives of CDIG. A meeting was held at Moores Legal, solicitors, as to the recovery of debts owed to CDIGA by various companies but, particularly Matthew Shiloh Australia. During that first meeting a solicitor, Ms Jennifer Barrett, performed a company search that revealed you as a director of Matthew Shiloh Australia. When this was announced to the meeting, you feigned no knowledge and rhetorically asked how this could have happened.
35 In later meetings at Moores Legal, you admitted your role in defrauding CDIGA. Forensic accountants were called in to investigate and the police were soon notified.
36 On 11 April 2014, police executed a search warrant at your home address in Doncaster. A number of highly relevant and incriminating materials were located including documents which had been altered using ‘white-out’ and photocopied signatures.
Interviews
37 You were first interviewed by police on 14 April 2014. In that interview, you admitted that the contracts you prepared and sent to CDIG in China misrepresented what was actually done with the money. You admitted that CDIGA’s money was paid into accounts controlled by you. You said you only reported to Kevin Li in China and did not initially tell him about what you were doing.
38 You further admitted that the weekly purchases of milk from Prestige ran for about two years and that the contracts suggested this milk was being sold to Matthews-Shiloh for roughly 6-8% profit. You said you hoped to make more profit but that did not happen. You had intended to make a larger profit by charging Matthews-Shiloh 5% upfront on money lent, with an extra 5% payable each month together with other penalty rates.
39 You said that you owned Matthew Shiloh Australia on your own account and explained that you were acting like a bank through trade finance agreements in which you hoped to make 10% profit. You said the main reason for doing this was to get extra profit out of it without CDIGA’s knowledge.
40 You explained that as a whole you made nothing out of these arrangements because the money coming back from customers was used to pay back CDIGA, but money was lost in Matthews-Shiloh.
41 You knew that what you had done was wrong, but it was a way to generate income for the company in circumstances where similar products were to be purchased, just from a different company. You said you were not honest about what you had done because you did not want to lose face, but you did bring business to the company.
42 You were again interviewed by police on 21 December 2015. On that occasion you were questioned in much greater detail as to your fraudulent business activities. You made extensive admissions as to the various banking arrangements that you had put in place and as to the alteration of documents that were necessary to carry out the fraud.
43 You said that Matthew Shiloh Australia was created to receive the money that was being paid by the customers and clients of Mathews-Shiloh. You told investigators that you could not itemise all of the items that were purchased for Matthews-Shiloh because it had hundreds of suppliers. You maintained that you told Kevin Li within six months of starting the purchase contracts what you were doing, although it does not appear that you mentioned the trade finance arrangements. This was conveyed verbally, there was no written record. It appears that you believed that provided that monies were coming back into CDIGA at a profit, there should be no problem.
44 As to the loss incurred by CDIGA, you were asked where that money had gone, to which you replied that you did not know but that it would have gone through Matthews-Shiloh and for all you knew Dinesh Parmar could have been losing money every day.
45 You were also asked why you did not produce paperwork to CDIGA that accurately represented what you were doing. You stated that you thought of doing that in the beginning, however you were told by Tony Ding and Kevin Li to create something that you could control so that the Australian side of the business was all clean. You stated that if you had waited for signatures:
Probably you got to wait until the sun go down to the west. By the time they sign it the business gone, no business.
It’s very normal practice for the Chinese way of doing things.
46 You said that in the beginning you did not tell CDIG in China that the money was being used for different products. After some months you say you did tell them that the money was being used to purchase similar products on the invoices only in different quantities. You said that Kevin Li said ‘as long as you pay back in time’ he didn’t have a problem with what you were doing. However, you did not mention the fact that you are entering into trade finance arrangements with CDIG’s money.
Maximum penalties
47 The offence of obtaining a financial advantage by deception contrary to s 82 of the Crimes Act 1958 is ordinarily punishable by a maximum penalty of 10 years imprisonment. However, where the value of the financial advantage obtained is $50,000 or more, as is the case with respect to all three offences on this Indictment, then Schedule 1A of the Sentencing Act 1991 (‘the Act’) operates to define the offence as a continuing criminal enterprise offence. Section 6H(c) of the Act defines a continuing criminal enterprise offender as an offender who is found guilty of three or more continuing criminal enterprise offences. You are such an offender and I will declare that your status as such be entered in the records of the Court.
48 Further, s 6I of the Act provides that a continuing criminal enterprise offender is liable to be sentenced for a continuing criminal enterprise offence to a maximum sentence which is twice the length of the maximum term prescribed. The effect of that provision is to render each of the charges to which you have pleaded guilty punishable by a maximum term of imprisonment of 20 years imprisonment[2].
[2]R v Roussety [2008] VSCA 259; Per Nettle JA at paragraphs [33 – 36]
Victim impact
49 On the plea I was informed that an opportunity had been provided to CDIG to provide a victim impact statement. That offer was declined.
Procedural history
50 In order to better understand some of the submissions made on your behalf I will set out below the procedural history of this matter:
1 July 2010 Commencement of offending 30 June 2013 End of offending 2013 Offending detected April 2014 Execution of search warrant and initial police interview 21 December 2014 Second police interview Mid-2017 Charged with offending 20 July 2017 Filing hearing 7 September 2017 Committal mention (adjourned) 10 November 2017 Committal mention - fixed for committal 6 August 2018 Committal (not reached) 17 – 19 December 2018 Committal hearing – committed PNG 20 December 2018 Initial directions hearing 8 February 2019 Long trials directions hearing 7 August 2019 Long trials directions hearing 21 August 2019 Long trials directions hearing – listed for trial (8 week estimate) 11 October 2019 Final directions hearing 29 November 2019 Mention 13 December 2019 Arraignment – Pleas of guilty entered 13 March 2020 Plea hearing
51 Two submissions made on your behalf were grounded in that history.
52 First, as Mr Casement pointed out, it is now between seven and 10 years since you committed these offences. You fall to be sentenced in 2020 for offending which you had admitted in substance as early as 2013 and 2014. You were not charged until mid-2017. On any view, you have had this matter hanging over your head for the best part of seven years and the ongoing anxiety that has created is a substantial mitigatory consideration.
53 Moreover, it was submitted that you have used that time to constructively to rehabilitate yourself. Indeed, the manner in which you have conducted yourself during those seven years demonstrates, it was said, not simply that you had good prospects for rehabilitation, but more accurately that you have in fact rehabilitated. I will deal with the steps that you have taken in this respect when I turn to your personal history shortly.
54 The second submission related to your plea of guilty. It was submitted that it was difficult to overstate the utilitarian benefit of your plea of guilty. The plea has saved the considerable expense and resources associated with the running of a number of lengthy and unusually complex jury trials. It was made in circumstances in which it was open to you to legitimately put in issue important aspects of the Crown case. In particular, I note that Kevin Li refused to provide a statement to investigators and that you assert that part of your business arrangements were carried out with his knowledge and acquiescence.
55 Although the timing of your plea of guilty could not be characterised as early, I am aware as the judge whose task it was to manage your case through the Long Trials List, that a good deal of time was spent in settling the Indictment and resolving the difficult questions as to quantum and other matters. The resolution achieved, it was submitted, indicated an attitude on your part which was very much consistent with a genuine willingness to facilitate the course of justice.
56 It was also submitted that your admissions from an early point, your co-operation with investigators and the concrete rehabilitative steps you have taken throughout the time taken for this matter to be heard demonstrate that you have a genuine remorse for your involvement in these offences.
57 Mr Casement contended that the lengthy delay attending this matter and your plea of guilty, made in the circumstances I have described, should result in a substantial and tangible reduction in the sentence that would otherwise be imposed.
Personal history
58 It is necessary now to say something about your personal history.
59 You were born in Sibu in the Malaysian part of Borneo on 29 January 1964 and are now 56 years of age. You were between 46 and 49 during the time of your offending. You have no prior convictions.
60 Your parents were of Chinese heritage. Whilst your father has passed away, your elderly mother, two sisters and two brothers all reside in Malaysia. You maintain contact with them and last visited Malaysia about four years ago. Since being charged with these offences in mid-July 2017, you have not been able to travel to see them.
61 When you were 17 years of age you came to Australia as a student. You initially lived with a host family for two months or so before finding shared independent accommodation in Clayton. You first commenced an intensive English language course at La Trobe University. You then studied year 11 at Maranatha Christian School in Endeavour Hills and completed year 12 at Mazenod College in Mulgrave. You supported yourself by working in restaurants as a kitchen hand.
62 You then enrolled in an Information Science course at RMIT where you completed two years of the three year course. By your third year of tertiary study, you were spending long hours operating a Chinese restaurant in Little Bourke street known as Oriental Gourmet. Eventually, the owner sold the business to you and a partner when you were just 23 years of age. The business apparently prospered and branched out into importing items such as computers.
63 You became an Australian citizen in 1991.
64 In 1990, you married Shirley Leong Cheng and there are two daughters of the marriage born in 1993 and 1995. They were all present in Court at the plea hearing to support you.
65 Your counsel explained that shortly after the casino opened in Melbourne, your wife borrowed some funds utilising the equity in the family home for gambling purposes. Unfortunately, this caused a number of financial problems, not least of which was the loss of the family home. I should add that it is not suggested that gambling by you or your wife provided the motivation for the offending the subject of these charges.
66 Thereafter, you started a new business which assisted Taiwanese migrants to immigrate to Australia and that was later expanded to involve the making and importing of clothing for retail stores in Australia.
Submissions on offending
67 Mr Casement contended that throughout the time of the offending your financial well-being was inextricably bound up with that of CDIGA. As long as CDIGA succeeded financially, so would you. Provided the companies with whom you dealt kept up their obligations to repay CDIGA, the company received a profit, as did you. It was only when those companies experienced difficulties that you became exposed. One flaw in the scheme you implemented was the failure to secure the funds used as finance.
68 It was submitted that this offending was unusual in that it was your intention for CDIGA to profit from the business you generated in addition to your own profits. It was your position that Kevin Li acquiesced in many of the arrangements you made because of the business being generated. I note that the Crown was not in a position to dispute that assertion. The prosecutor confirmed that Kevin Li had refused to make a statement or otherwise co-operate with investigators. He was not cross-examined at committal as your legal advisors had sought.
69 These considerations, it was argued, qualify the breach of trust involved in your offending, lessen its objective gravity and reduces your moral culpability.
70 That said, it was acknowledged that you had clearly exceeded the scope of your authority by lending CDIGA’s funds to engage in trade finance. It was also conceded, appropriately in my view, that the deceptive arrangements you had made were quite sophisticated and spanned a lengthy period of three years.
71 Despite a thorough investigation, there was no suggestion that you had anything to show from this offending. There was no evidence of enrichment and your financial circumstances have remained parlous throughout the currency of the investigation and charge period. As counsel put it in his written submissions:
It is submitted that [this] Court can sentence Mr. Cheng as a person who was not motivated by frank greed at the expense of CDIG, but someone whose desire to advance and make profit for the company and himself, saw him carry out the offending in a way which was financially injudicious and lacking business acumen.
Response to detection
72 Mr Casement argued that since your offending came to the attention of the company, its lawyers and the police, you have taken some significant steps towards your rehabilitation:
· You have not reoffended;
· You have ceased working in business;
· You have commenced studying a Certificate III in Individual Support to assist you in your work in the aged care industry;
· You have volunteered each Monday and Friday at the Manningham City Council where you assist with office administration and with a lifestyle and leisure program for elderly people who suffer from dementia;
· Because of your work with the council, you have been offered paid employment as a Lifestyle Officer with an agency known as MannaCare, but did not feel you could accept this employment whilst this matter remained outstanding. You therefore remain on a Newstart allowance;
· You have been heavily involved with the Melbourne Evangelical Church where you volunteer to assist the elderly members of the congregation;
· You have involved yourself in the local Manningham Neighbourhood Watch program; and
· You have voluntarily completed a series of counselling sessions with Ross Evans, counsellor, to deal with the anxiety and depression arising from these proceedings.
73 These submissions were supported with the following evidence:
· A letter to your psychologist from your GP Dr Assad of 23 September 2019 confirms your history of anxiety and depression;
· A letter from Mr Geoff Kloot of 16 August 2019 confirms that you have volunteered for the Manningham Neighbourhood Watch program since January 2018;
· A letter from Tanya Warms of MannaCare confirms that you volunteer with that agency and that your contribution is valued; and
· A reference was tendered from James Chua from Go Evangelical Church who had known you since you arrived in Australia in 1981. Mr Chua speaks highly of your personal character despite knowing that you were pleading guilty to these offences.
74 Mr Casement submitted that I should be confident that you will not re-offend. You have taken responsibility for this offending, retrained for another career, given back to the community and wholeheartedly changed your life for the better.
Prosecution submissions
75 Mr Hannan submitted in response that these were sophisticated deceptions extending over a three year period involving a substantial amount of money. It was said that as a director of CDIGA, you had fiduciary duty to the company and your conduct thus constituted a significant breach of trust.
76 This sort of offending is difficult to detect, particularly when such elaborate misrepresentations are made. It was said there was an opportunity to consider the dishonesty employed at the time you engaged in each transaction, yet you persisted.
77 General deterrence should figure prominently because of the importance of discouraging those minded to breach their duties in similar ways. It was submitted that nothing short of an immediate term of imprisonment with a non-parole period would adequately address that sentencing purpose.
Sentencing considerations relevant to COVID-19
78 After the plea was conducted on 13 March 2020, the COVID-19 crisis emerged as an important sentencing consideration. Accordingly, I invited the parties to make written submissions.
79 Mr Casement submitted that the considerations relevant to the emergency influenced the sentencing process in four ways.
80 First, the plea of guilty acquires even greater utilitarian value. Where the operations of this court have been severely disrupted, a plea of guilty which saves so much time and resources becomes all the more valuable.
81 Second, your time in custody is likely to be far more difficult. Upon entering the prison system you would be quarantined for 14 days. Thereafter, you are likely to spend longer periods in lockdown than would previously have been the case. Access to work, educational and rehabilitative programs will be denied. Your capacity to undertake religious observance, which I accept is a matter of importance to you, is likely to be restricted. Moreover, you will not be able to receive visits from your wife and daughters. It is submitted that you will feel that last restriction acutely.
82 Third, by entering prison you will experience a heightened level of anxiety because of the understandable concern that you will be at greater risk of contracting the disease.
83 Fourth, it is said that you will experience additional stress because of the effects the emergency will have on your elderly mother in Malaysia and your family here in Australia.
84 In response, Mr Hannan fairly conceded that the resolution of these sorts of cases (complex frauds) reduces the burden on the criminal justice system and is to be encouraged through tangible sentencing discounts, all the more so given the delays and logistical problems thrown up by the COVID-19 crisis.
85 It was also acknowledged that this would be your first term of imprisonment and the current restrictions will make it all the more onerous. That said, the whole of the Australian community are enduring heavily restricted routines, and so the further restrictions that you will endure need to be seen in that context. Nonetheless, some allowance, it was accepted, should be made for the extra restrictions.
86 Similarly, your anxiety about contracting the virus and your concern for your family are matters that have some relevance and can be taken into account, but they ‘should only be given some effect in mitigation’.
Consideration
87 In considering these submissions, I will deal firstly with the COVID-19 sentencing considerations. I was referred by Mr Casement to Lasry J’s sentencing remarks in the decision of DPP v Beattie[3] as a recent synthesis of those considerations. To pick up a point raised in that decision, I do not think it is speculative to have regard to the likely consequences of an outbreak in the prison system. It would mean an even greater level of restrictions and further add to the burden of imprisonment. It seems to me, as at 19 May 2020, that prospect remains very real.
[3] [2020] VSC 229, (‘Beattie’).
88 In my view, Mr Casement’s first two points with respect to the greater utilitarian value of the plea and the more onerous conditions you will endure in prison, experiencing it as you will for the first time at the age of 56, are points well-made and should meaningfully mitigate your position.
89 Your anxiety as to contracting the illness in prison – an environment in which you will have no real autonomy or control – is, as cases like Beattie recognise, also a factor which deserves to be given real weight. Although your concern as to the effect on your family also weighs in the sentencing calculus, in your case it does so to a lesser degree.
90 Turning to the offending itself, I acknowledge that there are some unusual features which take this matter somewhat out of the ordinary. Those features include the following four matters in particular.
91 First, I accept that you saw your fortunes were very much aligned with those of CDGIA, and that in carrying out these frauds, you hoped to further the company’s interests in addition to your own.
92 Second, the lack of co-operation with investigators from Kevin Li, who was a pivotal character in many of these fraudulent arrangements and who you assert knew of some of the misrepresentations, tends to qualify the extent to which this offending involves a breach of trust.
93 Third, the simple company search which revealed you to be the director of the company that owed much of the money to CDIGA, which in turn revealed your fraud, likewise undermines the submission that this offending was difficult to detect.
94 Fourth, there is no evidence of enrichment, lavish lifestyle or profiting in any marked way.
95 Those considerations do, in my view, tend to lessen, to some extent, the objective gravity of your offending and your moral culpability. An examination of comparative cases involving larger quanta fortifies that conclusion[4].
[4] Poursanidis v The Queen [2016] VSCA 164, Porcaro v The Queen [2015] VSCA 244,The Queen v Munt [2015] VSC 132, Hoy v The Queen [2012] VSCA 49, Yusuf v The Queen [2010] VSCA 266 and The Queen v Fernandez [2006 VSCA 38.
96 That said, having regard to the nature and scope of these three offences there seems to be no alternative but to accept the Crown submission that an immediate term of imprisonment with a non-parole period must be imposed. The sophistication of the deceptions and the lengths to which you went to cover them up compels that conclusion. Moreover, whatever the state of knowledge of Kevin Li, you owed CDIG Australia a clear fiduciary duty not to use its money in ways which were not authorised. I therefore accept Mr Hannan’s submission that this offending still involved a significant breach of trust, irrespective of whether another officer of the company acquiesced in aspects of your wrongdoing.
97 In my view, the total of the financial advantage obtained of about $1.5 million viewed against a background of unauthorised use of millions of dollars of company funds constitutes conduct which must be deterred and roundly denounced.
98 Mr Casement understandably emphasised the matters personal to you which tell very much in your favour. You have no previous or subsequent convictions. You have otherwise behaved as an exemplary citizen. You have the support of your family. I accept that you are very remorseful. You have done much to rehabilitate yourself and I accept that you are very unlikely to re-offend.
99 I am conscious of what was said by Charles JA in DPP v Bulfin[5] to the effect that the prevalence of otherwise good character in white collar offenders may have a tendency to distract attention from the importance of general deterrence.[6] However, I take the view that you are nevertheless entitled to draw on the very solid contribution you have made to the community in support of your plea for leniency.
[5] [1998] 4 VR 114.
[6] Ibid n 1, at [131] – [132].
100 Beyond those considerations were the two submissions arising out of the procedural history of this matter, as to your plea of guilty and the delay attaching this proceeding.
101 First, as to your plea of guilty, I am satisfied that it should attract a very substantial discount to the sentence that would otherwise be imposed. I do so for the reasons articulated by your counsel, not least of which include the significant utilitarian benefit of the plea, your willingness to facilitate the course of justice, your willingness to take responsibility for your offending and the accompanying remorse which I find to be genuine.
102 Second, I find that the fact of a delay of seven or so years since this fraud was discovered, and six or so years since you were first interviewed by police, until finalisation, is a factor which strongly mitigates your position. Very little if any of that delay appears to be attributable to you, if that were relevant. I take it as a given that offending of this kind naturally takes a long time to investigate and process. Nevertheless, even for this kind of offending, the delay is extraordinary. The effect of that delay in placing your life in a suspended state of anxiety is one aspect of the basis for mitigation. Another basis flows from the steps you have taken during this delay to rehabilitate yourself. They were impressive and show that you have been prepared to give back to the community.
103 Important as those considerations are they must be balanced against the two sentencing purposes I have already identified as being particularly important in your case, namely; general deterrence and denunciation. I simply cannot overlook the need to demonstrate to those who might be minded to misuse funds in similar circumstances, that such conduct will be justly and appropriately punished.
104 Accordingly, whilst the sentence imposed will be significantly moderated by the combination of mitigating factors to which I have referred, your sentence will be as follows:
Sentence
105 On Charge 1, you are convicted and sentenced to 2 years’ imprisonment.
106 On Charge 2, you are convicted and sentenced to 2 years’ imprisonment.
107 On Charge 3, you are convicted and sentenced to 2 years’ imprisonment.
108 I will direct that 6 months of the sentence imposed on Charge 1, and 6 months of the sentence imposed on Charge 2 be served cumulatively upon the sentence imposed on Charge 3, rendering a Total Effective Sentence of 3 years’ imprisonment.
109 I will fix a period of 18 months before you will be eligible for parole.
110 I will declare that you have been sentenced as a Continuing Criminal Enterprise Offender and I will cause that declaration to be noted in the records of the Court.
111 I will further declare pursuant to s 6AAA of the Sentencing Act 1991 that but for your plea of guilty you would have been sentenced to a Total Effective Sentence of 5 years’ imprisonment with a Non-Parole Period of 3 years, and I will likewise cause that declaration to be noted in the records of the Court.
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