Director of Public Prosecutions v Cini
[2014] VCC 1347
•20 August 2014
| IN THE COUNTY COURT OF VICTORIA | Revised Not Restricted Suitable for Publication |
AT MELBOURNE
CRIMINAL DIVISION
Case No. CR-14-00555
| DIRECTOR OF PUBLIC PROSECUTIONS |
| v |
| CARLO ANTONIO CINI |
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JUDGE: | HIS HONOUR JUDGE GRANT | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 31 July 2014 and 1 August 2014 | |
DATE OF SENTENCE: | 20 August 2014 | |
CASE MAY BE CITED AS: | ||
MEDIUM NEUTRAL CITATION: | [2014] VCC 1347 | |
REASONS FOR SENTENCE
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APPEARANCES: | Counsel | Solicitors |
| For the DPP | Mr K. Armstrong (Plea) Ms H. Rountos (Sentence) | CDPP |
| For the Accused | Mr J.P. Wheelahan (Plea) | Robert Stary Lawyers |
Mr T. Schocker (Sentence)
HIS HONOUR:
1 Carlo Cini, you have pleaded guilty to ten charges of obtaining property by deception, eleven charges of obtaining a financial advantage by deception, and one charge of fraudulently inducing persons to invest money.
2 The maximum penalty on Charge 11 is ordinarily 15 years imprisonment, and on the remaining charges, ten years. However, as a result of convictions on Counts 2 and 3, and by virtue of the operation of ss. 6H and 6I of the Sentencing Act 1991, the maximum penalty for Charges 4, 5, 7, 9, 10, 14, 15, 16, 18, 20 and 21 is 20 years imprisonment. By the combined operation of various legislative provisions, the maximum penalty on Charge 11 is 25 years imprisonment. A ten year maximum applies to the remaining charges.
3 The prosecutor presented a summary of your offending. It is not my intention to repeat that summary. It is attached to these sentencing remarks as Exhibit “A”.
4 Briefly, between 2 July 1999 and 14 August 2008, you were the sole director and secretary of C Cini and Company Pty Ltd.
5 During this period, the company was involved in a number of business ventures. These included a local and interstate truck haulage business, mortgage broking, property development, a local courier business, the provision of short-term finance to individuals and entities to “invest” in the company and the procurement of loans from individuals and entities to “invest” in the various sectors of the company’s operations.
6 On 14 August 2008 the company was placed into liquidation.
7 On 1 September, you were made bankrupt for a period of three years. In 2011, the period was extended until 2016.
8 Investigations by the liquidator reveal that the company was in dire financial straits by mid-2006. The full extent of the company’s difficulties is set out in in Paragraph 10 of Exhibit A. You tried to cover these financial difficulties by inducing people to invest significant amounts of money in your company. In making your inducements, you capitalised on the trust you had built up over many years of working in the Williamstown community. Some of those who invested in your company regarded you as a friend. You had no qualms about exploiting friendships.
9 Between 20 February 2007 and 7 February 2008, you obtained ten cheques totalling $1,040,582.90 by deception from seven investors. These were people you knew. They all trusted you. You betrayed their trust. To obtain their money, you falsely advised them that the cheques they provided would be invested in the company’s property development business. This behaviour is the subject of Charges 1, 2, 4 to 10 and 14. With the exception of $87,440, the cheque proceeds were used by you on expenses unrelated to the stated purpose, including repayments to other investors in the company, payments to family members, and repayments on personal loans, credit cards and business expenses unrelated to property development.
10 In October 2007, you induced two further investors (Patricia and Ronald Allaway) to enter into a loan agreement in the sum of $750,000 in favour of your company, by the reckless making of a statement, promise of forecast, which was misleading, false or deceptive. This behaviour is the subject of Charge 11. You already had a relationship with these investors. They had previously borrowed $420,000 to invest in your company. The $750,000 was a refinancing of the original loan that they had obtained. For the purpose of sentencing on this charge, the prosecution concedes that the effective “loss” is $420,000 not $750,000. This is reflected in the compensation order that has been applied for on this charge.
11 The remaining charges relate to you passing ten valueless cheques totalling $651,082.90, and one unauthorised cheque in the sum of $50,000 to various investors in purported repayment of monies owed to them by the company.
12 All your victims have suffered considerably as a result of your criminal behaviour.
13 I have already referred to the $420,000 lost by the Allaways. As a result of that loss, they were forced to sell their home.
14 Barry Michael Swettenham was a friend of yours. He lost $60,000.
15 Andrew Forbes has provided a victim impact statement that details how his emotional and psychological health has suffered as a result of his loss. His family has suffered. The significant financial debt that he carries continues to affect his life and his well-being.
16 David Forbes and Robyn Forbes agreed to invest $385,000 in your company as a result of your false representations. They borrowed the money. The funds they invested have not been repaid. As a result of your dishonesty, they were forced to sell their business.
17 Ian and Meriam Rodgers regarded you as a good friend. Their victim impact statement details how you betrayed them. It is depressing to read how you treated them. You preyed upon their friendship and you were shameless in the way you lied to them. They lost $100,000. In addition, the quality of their lives has been diminished.
18 Margaret Harris lost $252,582.90. She has provided a victim impact statement. It is fair to say that her loss has ruined her financially. It has also profoundly diminished the quality of her life.
19 Mr Cini, this is serious offending. It extends over a period of 18 months. During this time, you obtained over $1.4 million from nine investors knowing that there was no realistic possibility of the money being repaid to them.
20 You used your company to legitimise your false representations. You used the funds that you obtained through the false representations to try and prop up your collapsing financial empire, to make payments to family members and to maintain your lifestyle.
21 The victims trusted you. All of the victims have suffered significantly as a result of your shameless dishonesty.
22 You compounded the criminality by passing valueless cheques to some of your victims.
23 In this case general deterrence, punishment and denunciation must be given significant weight in sentencing.
24 Your counsel raised a number of matters in mitigation. The first is your plea of guilty.
Plea of Guilty
25 You have entered an early plea of guilty. An intention to plead guilty was communicated to the prosecution on the first day of the committal hearing on 24 March 2014. After some discussions between your counsel and the prosecution, and after cross-examination of the liquidator, you formally pleaded guilty at the Magistrates’ Court on 27 of March 2014.
26 You will be given credit for your early plea of guilty.
27 The plea has saved the victims from the trauma of giving evidence and saved the community the expense associated with a lengthy trial.
28 Your counsel maintained that you are remorseful for your offending. That was not apparent from your initial dealings with the liquidator. You failed to provide all the business records to him, and you filtered off money from the company account to your personal account. Nor, in the time that has elapsed since the offending, have you apologised to those who were the victims of your dishonesty. As I have already said, some of them were your friends.
29 In the report from Ms Lechner, there is no mention of the names of any of the creditors. Nor is there any recognition of the extent of their losses. The report conveys the impression of a man who is keen to offer an explanation of why he got into financial difficulty. I accept that when giving evidence before me on this issue, you stated that you felt ashamed and embarrassed about what had happened to your friends. However, you were also keen to remind me of the losses you had suffered. You have shown some remorse, but it is does not seem to me that it is a predominant factor in your thinking about the offending. You are still focused to a significant degree on your own sufferings.
Previous good character and good prospects of rehabilitation
30 The second matter raised in mitigation was your previous good character, and your good prospects for rehabilitation.
31 Your counsel noted that prior to this offending you had led a blameless life for some 50 years. You were a man who had made significant contributions to the Williamstown community. These facts are true.
32 It is also true that since the last offence in August 2008, there has been no further offending.
33 Your counsel says that you are a good prospect for rehabilitation. I am sure that you are. It is unlikely that you will offend again. Of course, it is also highly unlikely that you will ever again be in a position where you can abuse the trust of others.
34 Mr Cini, in respect to your prior good conduct and your prospects for rehabilitation, you are no different to the great majority of what are called “white-collar” criminals.
35 Obviously, prior good conduct and good prospects for rehabilitation must be given appropriate weight. However, they must be given less weight than the factor of general deterrence.
Delay
36 The third matter raised in mitigation was delay.
37 Your last offence was committed in August 2008. This was nearly five years before you were charged on 29 May 2013.
38 I am not satisfied that the delay in this case is extraordinary or inordinate.
39 I was provided with a chronology of events by the prosecution. It is attached to my sentencing remarks as Exhibit B.
40 This was a complex investigation, made more so because of your failure initially, to provide adequate financial records to the auditor.
41 However, I do consider the delay to be relevant in two ways. First, it has confirmed the assessment that you are a good prospect for rehabilitation. Second, notwithstanding the complexity of the investigation, you have still had this matter hanging over your head for a lengthy period of time.
42 There should be some amelioration of sentence to reflect the lengthy time between investigation and charging.
Disqualification from holding office
43 Another matter raised in mitigation of penalty was the disqualification that you will suffer from holding office.
44 You will be disqualified from holding office pursuant to s.206B of the Corporations Act 2001. This is a punishment that I am obliged to take into account. Given the circumstances of your offending, and the need for general deterrence, this disqualification does not weigh heavily in your favour.
Sentencing and other orders
45 I now move onto sentencing and other orders. Will you please stand Mr Cini.
46 Mr Cini, as I said at the outset of these remarks, the penalties on some of these offences are increased because of the operation of particular provisions within the Sentencing Act 1991. It is appropriate therefore to impose greater penalties on those offences, as opposed to the penalties to be imposed on the offences that are not covered by those provisions.
47 It is proper to order some accumulation of sentence. In determining the best way to approach this issue, I have taken account of the large number of charges and considered the overall impact of the sentence upon you. The law requires me to avoid imposing a crushing sentence and ensure the total sentence is proportionate to the totality of the offending.
48 Mr Cini, on Charge 11, you are convicted and sentenced to be imprisoned for three years and six months. This is the base sentence.
49 On Charges 5, 9 and 14, you are convicted and sentenced to three years imprisonment on each charge.
50 On Charges 4, 7, and 20, you are convicted and sentenced to two and a half years imprisonment on each charge.
51 On Charges 10, 15, 16, 18 and 21, you are convicted and sentenced to two years imprisonment on each charge.
52 On Charges 1, 2, 3, 6, and 8, you are convicted and sentenced to 12 months imprisonment on each charge.
53 On the remaining charges, namely, Charges 12, 13, 17, 19 and 22, you are convicted and sentenced to six months imprisonment on each charge.
54 Charge 14 is a serious example of the offence of obtaining property by deception. I order that 15 months of the sentence on Charge 14 be served cumulatively upon the sentence imposed on Charge 11.
55 Charge 20 is a serious example of the offence of obtaining financial advantage by deception. I order that six months of the sentence on Charge 20 be served cumulatively upon the sentences imposed on Charges 11 and 14.
56 This makes a total effective sentence of five years and three months. I fix a minimum term of three years and three months before you will be eligible for release on parole.
57 If you had been found guilty after trial, I would have sentenced you to an effective term of seven years and six months imprisonment, with a minimum of five years and six months.
58 I declare that you have served 20 days by way of pre-sentence detention.
59 Pursuant to s.6J of the Sentencing Act 1991, I declare that in respect of Charges 4, 5, 7, 9, 10, 14, 15, 16, 18, 20 and 21, you have been sentenced as a continuing criminal enterprise offender and that fact will be entered in the records of the court.
60 Pursuant to s.86 of the Sentencing Act 1991, I order you pay the following sums in compensation, to Barry Swettenham - $60,000; to Ian and Meriam Rodgers - $100,000; to Andrew Forbes - $180,000; to David and Robyn Forbes - $378,000; to Patricia Allaway - $420,000; and to Margaret Olive Harris - $252,582.90.
61 You can be seated there. Are there any other matters?
62 MS ROUNTOS: No Your Honour.
63 MR FERGUSON: No Your Honour.
64 HIS HONOUR: The prisoner can be removed.
- - -
Exhibit A:
IN THE COUNTY COURT
OF VICTORIA
AT MELBOURNE
CR-14-00555
THE QUEEN
-V-
CARLO ANTONIO CINI
AGREED STATEMENT OF FACTS
OVERVIEW
Charges 1, 2, 4 to 10, 14 (Obtaining property by deception)
The Prisoner, Carlo Antonio Cini, is the sole director of C. Cini & Company Pty Ltd (hereafter referred to as “the company”). Between 20 February 2007 and 7 February 2008, the Prisoner dishonestly obtained ten cheques totalling $1,040,582.90 by deception from seven investors in the company.[1] The Prisoner falsely advised each investor that the cheque proceeds would be applied by the company towards a specific purpose, in particular, that they would be invested in the company’s property development business (and in respect of one investor[2], for the settlement of property). In respect of four of the seven investors, the Prisoner nominated specific properties purportedly purchased by the Prisoner or the company for development. With the exception of an amount of $87,440 which has been identified as having been applied by the Prisoner towards property renovations and a property settlement, the remaining cheque proceeds were used by the Prisoner on expenses unrelated to his stated purpose, including repayments to other investors in the company, payments to family members, repayments on personal loans and credit cards and business expenses unrelated to property development. Enquires with the Land Titles Office of Victoria reveal that neither the Prisoner nor the company have ever been registered on title in respect of the properties nominated by the Prisoner as having been purchased by him or the company.[3]
On 14 August 2008, the company was placed into liquidation. Investigations by the company’s liquidators into the affairs of the company have revealed that the company was technically insolvent since at least 30 June 2006 and unable to pay its debts when they fell due in 2006, 2007 and 2008.
The dishonest obtaining of cheques totalling $1,040,582.90 by the Prisoner by deception is the subject of charges 1, 2, 4 to 10 and 14, which are State charges contrary to sub-section 81(1) of the Crimes Act 1958 (Vic). The maximum penalty in respect of this offence is 10 years imprisonment.
[1] namely investors Barry Swettenham, Ian Rodgers, Meriam Rodgers, Andrew Forbes, David Forbes, Robyn Forbes and Margaret Harris.
[2] Margaret Harris
[3] Although the Accused may have contributed towards the purchase of properties at 1 Werona Street Bentleigh and 6 Henry Street Williamstown as part of an arrangement with Vince Cuce, the registered owner at various times (at a time when the Company was insolvent), he did not contribute towards the property at 4 Carlton Street Bentleigh.
Charge 11 (Fraudulently inducing persons to invest money)
In about October 2007, the Prisoner induced two further investors[4] to enter into a loan agreement in the sum of $750,000 in favour of the company, by the reckless making of a statement, promise or forecast which was misleading, false or deceptive.
The reckless making of a false or misleading statement, promise or forecast to induce an investor to enter into a loan agreement is the subject of charge 11 which is a State charge contrary to sub-section 191(1) of the Crimes Act 1958 (Vic). The maximum penalty in respect of this offence is 15 years imprisonment.
[4] Patricia and Ronald Allaway
Charges 12, 13, 15 to 22 (Obtaining a financial advantage by deception)
It is further alleged that between 20 April 2007 and 3 August 2008, the Prisoner dishonestly obtained a financial advantage for the company, namely the evasion of debts totalling $701,082.90, by providing ten valueless cheques totalling $651,082.90 (and one unauthorised cheque in the sum of $50,000) to the said investors in purported repayment of monies owed to them by the company.
The provision of valueless cheques to investors in the company is the subject of charges 12, 13, 15 to 22, which are State charges contrary to sub-section 82(1) of the Crimes Act 1958 (Vic). Charge 3 is also a State charge contrary to sub-section 82(1) of the Crimes Act 1958 (Vic) and concerns the unauthorised provision by the Prisoner of a cheque (for the purchase of shares) drawn on a third party account in purported payment of a debt owing to an investor. The maximum penalty in respect of this offence is 10 years imprisonment.
C. CINI & COMPANY PTY LTD
C. Cini & Company Pty Ltd was incorporated on 2 July 1999. Between 2 July 1999 and 14 August 2008, the Prisoner was the sole director and secretary of the company and the sole shareholder in the company from April 2006. Prior to April 2006, the Prisoner’s wife, Concetta Cini, was the sole shareholder in the company.
The registered office of the company is situated at Walker & Company, 23 Dudley Street, Eltham. From approximately 2003, the company operated primarily from offices at level 1, 35 Fergusson Street, Williamstown.[5]
[5] Statements of Bernard Cooney at tab 5 and Paul Burness at tab 3 of Key Documents Folder.
Between July 1999 and August 2008, the company was involved in a number of business ventures which included a local and interstate truck haulage business, mortgage broking, property development, a local courier business (trading as "Big Apple Couriers"), the provision of short-term finance to individuals and entities to “invest” in the company and the procurement of loans from individuals and entities to "invest" in the various sectors of the company's operations.[6]
[6] Burness tab 3
BANK ACCOUNTS
During the relevant period, the company operated a number of bank accounts which included the following two accounts:
a. Bendigo Bank account number 633 000 10949 8014 held in the name of C. Cini & Company Pty Ltd between 12 July 1999 and 10 July 2008 (“the Bendigo account”). The Prisoner and his wife were signatories to the Bendigo account during the relevant period and the Prisoner was authorised to operate the account individually during the relevant period.
b. St George Bank Limited Freedom Business account number 113 879 00178 4273 held in the name of C. Cini & Company Pty Ltd between 29 September 2003 and 18 August 2008 (“the St George account”). The Prisoner and his son, Michael Cini, were signatories to the account and were each authorised to operate the account individually during the relevant period.[7]
[7] Company bank statements are located at tabs 15 and 16 of the Key Documents Folder.
THE LIQUIDATOR’S REPORT
On 14 August 2008, the company was placed into liquidation. Paul Burness and Matthew Jess of Worrells Solvency and Forensic Accountants (Vic) Pty Ltd were appointed as the company’s liquidators.
On 1 September 2008, the Prisoner was made bankrupt for a period of 3 years. In 2011, the period of the bankruptcy was extended to 2016 upon application by the Prisoner’s trustee in bankruptcy.
10. Investigations by the liquidators into the affairs of the company reveal the following[8]:
[8] Burness tab 3
a. Throughout its trading history, the company failed to maintain adequate books and records. There was no apparent accounting system utilised to regularly record all Company transactions, whether electronic or manual.
b. The company had a significant running deficit with the Australian Taxation Office (“ATO”) and outstanding lodgements with the ATO.
c. During the period of the charges, the company had insufficient working capital, which led to substantial cash flow constraints, as evidenced by the significant number of bounced cheques issued by the company (since at least 2005).
d. The company had significant shortfall in assets compared with liabilities in its trading history. The continued trading of the trucking business and attainment of new trucks and vehicles exacerbated the net liability position of the company. The company was making losses of around $50,000 per month on the trucking operations (such losses having occurred since approximately August 2006).
e. The liquidator’s reconstruction indicates that the company was technically insolvent since at least 30 June 2006.
f. The company’s externally prepared financial statements show that the company had a significant deficiency in net assets and traded at a loss for both the 2006 and 2007 financial years. The liquidator’s reconstructed financial statements for the financial years ending 30 June 2007, 30 June 2008 and 14 August 2008 (the date of liquidation), indicate that the company had net liabilities of: $302,108 in June 2007, $3,479,521 in June 2008 and $4,943,206 in August 2008.
g. The company had a working capital deficiency of $522,430 in June 2006, $1,585,048 in June 2007, $3,961,705 in June 2008 and $5,148,806 in August 2008 (and was therefore unable to pay its debts as and when they fell due).
h. The Prisoner financed trade losses by borrowing funds from multiple investors/creditors and offering unrealistic returns to those investors/creditors. The company borrowed funds from one investor/creditor to meet repayments to another.
i. As at 30 June 2006, there was a minimum $522,000 owing to other investors. As at 30 June 2007, the amount owing to investors had increased to $1.6 million. As at 14 August 2008, the amount owing to investors had increased to almost $4 million.
j. The company offered investments with interest rates significantly greater than other conventional investments. As the company’s financial position worsened, the interest offered to creditors increased. The company increased its rate of interest from an average rate of 10 to 15 per cent per annum in 2004 and 2005, to an average rate of 80 to 90 per cent per annum in the months prior to liquidation.
k. The company procured investor loans to fund trading of the company at a time when the company was insolvent. The company procured an increasing balance of investor loans in the lead up to liquidation.
l. The company accounted for investor loans through a “shareholder liability loan account” (with the Prisoner being the sole shareholder) which does not accurately represent the balance owed to investors. The loans were understated, recorded inaccurately through the shareholders loan account and do not account for substantial interest which was accruing[9].
m. Payment defaults on Company car leases occurred from 2005. From July 2007 and onwards, the company was pursued for defaulting on a truck finance loan.[10]
n. The “cash at bank” amounts as listed in the company’s financial statements did not mirror the respective balances in the bank statements.
o. Funds relating to the Prisoner’s personal matters flowed through the company accounts.
p. In relation to the ability of the company to pay its debts, as at August 2008, it was not expected that there would be any dividend paid to unsecured creditors.
[9] For example, not all investor funds were accounted for, but when they were, they were recorded as if they were a loan from the Prisoner to the Company.
[10] In August 2007, the Company was in default on a loan facility of approximately $83,000 with DJ Capital Solutions Pty Ltd, a short term lending company. Notices of Default were issued on the Company and on 3 December 2007, the Company paid $94,681.03 (including interest) to DJ Capital Solutions Pty Ltd.
11. The liquidators conducted a retrospective review of all known investors in the company who were unpaid as at the date of liquidation (August 2008). As at 30 June 2006, known investor loans totalling at least $522,000 remained unpaid by the company. As at 30 June 2007, known investor loans totalling at least $1,600,500 remained unpaid by the company. As at 30 June 2008, known investor loans totalling at least $3,955,790 remained unpaid by the company. These outstanding investor loans include the nine investors referred to in the charges and an additional twenty-seven investors who, as at August 2008, were owed at least $1.96 million by the company.
12. On 14 August 2008, the Prisoner completed a Report as to Affairs of the company (“RATA”). While the RATA disclosed net creditors of $3,407,000 as at August 2008[11], actual creditors at this date are conservatively estimated at $5,150,349 by the liquidator.[12]
[11] including Cheryl (and Andrew) Forbes, David Forbes, Ian and Meriam Rodgers, Margaret Harris and Patricia Allaway
[12] RATA located at tab 18 of the Key Documents Folder.
INVESTOR BARRY SWETTENHAM (Charges 1 to 3)
13. In about January 2007, the Prisoner offered Barry Swettenham (“Swettenham”) an opportunity to invest in property renovations with the company. The Prisoner said he required about $200,000 which would be applied by him to renovations on properties purchased by the Prisoner or his Company at 1 Werona Street Bentleigh, 4 Carlton Street Bentleigh and one other property in Williamstown. He said the renovations would be undertaken by builder Vince Cuce (“Cuce”) and that once completed, the properties would be sold. The Prisoner stated that Swettenham would receive a minimum of $50,000 profit on each of the said properties when sold, in addition to the return of the capital invested. Upon inspecting the property at 1 Werona Street Bentleigh and based on the Prisoner’s representations, on 20 February 2007, Swettenham gave the Prisoner two cheques totalling $110,000 namely, a Westpac cheque in the sum of $40,000 and a St George cheque in the sum of $70,000.[13] Both cheques were drawn payable to the company, as directed by the Prisoner (charges 1 and 2).[14]
[13] number 400665 and 000283 respectively
[14] Statement of Barry Swettenham and exhibits at tab 14. Swettenham invested a total of $150,000 with the Company, comprising a cheque in the sum of $28,000 on 1 February 2007, two cheques totalling $110,000 on 20 February 2007 and an amount of $12,000 which the Accused owed Swettenham but which was reinvested with the Company.
14. On or about 20 February 2007, the Prisoner provided Swettenham with a handwritten memorandum on Company letterhead stating: “I confirm receipt of 2 cheques totalling $110,000 to be used for private investment regarding construction of properties in Bentleigh. Private contract to follow”.[15] A private contract was not provided to Swettenham.
[15] CIN.0014.0001.0005 at tab 14
15. On 20 February 2007, the cheques were deposited into the company’s Bendigo account. Prior to the deposit, the company’s Bendigo account was in debit in the amount of $22,547. The deposit of the two cheques placed the account in credit to the amount of $87,452.37.
16. The remaining cheque proceeds were debited by the Prisoner over a period of three days on personal and family related expenses including repayments on personal home loans, fuel payments for the company, payments for the purchase of a vehicle and repayments to other investors in the company.[16]
[16] Statements of George Apostolos tab 2 and Glenn Childs tab 4. Reconstruction spreadsheet at tab 17 (CIN.0003.0014.0002).
17. While an amount of $17,400 of cheque proceeds has been identified as having been applied by the company towards renovations on 1 Werona Street, Bentleigh[17], the remaining funds in the Bendigo account were used by the Prisoner for purposes unrelated to property renovations. By way of example, on 20 February 2007, an amount of $17,275 was debited from the account for a deposit on the purchase of residential property by the Prisoner’s son, Christopher Cini. On 21 February 2007, $18,646.63 was debited from the account to pay the company’s BP fuel account. On 23 February 2007, $12,500 was debited from the account as part-payment for the purchase of a 2006 Pajero wagon by Vince Cuce. In February 2007, $3,874.55 was debited from the account to repay a personal loan held in the names of the Prisoner and his wife and a further $4,000 was withdrawn to repay the Prisoner’s credit card.
[17] recorded in the shareholder loan account as a payment from the Company which reduced the Company’s outstanding loan liability.
18. In about April 2007, the Prisoner advised Swettenham that he had sold 1 Werona Street Bentleigh for over $1 million and provided Swettenham with a cheque for $50,000 representing Swettenham’s share of profits from the sale. The cheque was made payable to “Australian Petroleum Pty Ltd” (“Australian Petroleum”) and was drawn on a bank account in the name of Cuce. By way of explanation, the Prisoner stated that he knew Swettenham had wanted to invest in Australian Petroleum and that he had asked Cuce to draw the cheque to fund Swettenham’s investment in Australian Petroleum. Cuce did not authorise the provision of the cheque to Swettenham for the purchase of shares in Australian Petroleum by Swettenham (charge 3). Swettenham used the proceeds of the cheque to buy $50,000 worth of shares in Australian Petroleum, however Cuce later successfully sued Swettenham for the return of $50,000.[18]
[18] Statement of Vincent Cuce tab 6.
19. In mid-2008, the Prisoner signed a written acknowledgment on behalf of the company that Swettenham had invested funds with the company for the re-development of 4 Carlton Street Bentleigh and 6 Henry Street Williamstown.[19] He confirmed the profit scheme for investment at $50,000 per property on the sale or finalisation of each property and also indicated that in the event that the investment was discontinued, the invested funds would be returned. The Prisoner subsequently informed Swettenham that 6 Henry Street Williamstown had been sold at a small loss.[20]
[19] CIN.0014.0001.0001-.0002 tab 14
[20] On 15 December 2008, the Prisoner advised liquidators that he was unable to develop 6 Henry Street Williamstown as another investor (Andrew Forbes) wanted his money refunded and the property was sold unrenovated for its original purchase price CIN.0020.0001.0084 tab 3.
20. Enquires with the Land Titles Office of Victoria show that neither the Prisoner nor the company were registered as proprietors of 1 Werona Street Bentleigh, 4 Carlton Street Bentleigh or 6 Henry Street Williamstown. Cuce and his wife Megean Cuce (“the Cuces”) were registered as joint proprietors of the said properties as outlined in the table below:
| PROPERTY | DATE OF TRANSFER | PURCHASE PRICE | DATE PROPERTY TRANSFERRED BY CUCES TO THIRD PARTY | SALE PRICE |
| 1 Werona St Bentleigh | 22.09.06 (registered on 26.09.06) | $503,500 | 24.05.07 (registered on 13.06.07) | $1,002,500 |
| 4 Carlton St Bentleigh | 07.05.07 (registered on 18.05.07) | $515,000 | 13.03.09 (registered on 20.03.09) | $863,000 |
| 6 Henry St Williamstown | 04.09.07 (registered on 18.09.07) | $720,000 | 09.06.08 (registered on 19.09.08) | $730,000 |
21. The Cuces were registered as joint proprietors of 1 Werona Street Bentleigh on 26 September 2006. The consideration paid for the purchase of the property was $503,500. The Prisoner contributed about $136,000 towards the purchase of 1 Werona Street and told Cuce he did not want his name on the title as he was “banked up”.[21] On 24 May 2007, the property was transferred by the Cuces to an unrelated third party for $1,002,500.
[21] Cuce tab 6
22. The Cuces were registered as joint proprietors of 4 Carlton Street Bentleigh on 18 May 2007. The consideration paid for the purchase of the property was $515,000. The Prisoner did not contribute any funds towards the purchase of the property as it was intended to be the Cuce’s matrimonial home. Neither the Prisoner nor the company were involved in developing 4 Carlton Street Bentleigh. On 13 March 2009, the property was transferred by the Cuces to an unrelated third party for $863,000.
23. The Cuces were registered as joint proprietors of 6 Henry Street Williamstown on 18 September 2007. The consideration paid for the purchase of the property was $720,000. The liquidators have identified a payment of $36,000 from the company for the deposit of the property on 17 May 2007 but no other payments from the company. The Prisoner told Cuce he did not want his name on the title as he was “banked up”. On 19 September 2008, the property was transferred by the Cuces to an unrelated third party for $730,000.
24. At a meeting with the company’s liquidators on 27 January 2009, the Prisoner provided the liquidators with a list which he stated contained all properties developed by the Prisoner personally or by the company since 1999.[22] Relevant to the charges, the Prisoner identified two properties, namely 1 Werona Street Bentleigh and 6 Henry Street Williamstown, as personal developments and not developments of the company. According to the list, the only property developments the company was involved in was in Portland which commenced in 2003. The list does not include 4 Carlton Street Bentleigh although the Prisoner had previously referred to Carlton Street Bentleigh as a property which he had developed.[23]
[22] CIN.0020.0001.0106 titled “Full list of properties built/developed since 1999” (last page of tab 3).
[23] CIN.0020.0001.0095 liquidator’s notes (tab 3 p855)
25. The funds invested by Swettenham have not been repaid. Swettenham was sued by Cuce for the return of $50,000 (which Swettenham had applied by using Cuce’s cheque for the purchase of shares in Australian Petroleum). In about August 2008, the Prisoner’s sons transferred $50,000 worth of shares to Swettenham in purported part-payment of outstanding monies.
26. The total property obtained by deception in relation to investor Swettenham is $110,000. The total financial advantage obtained by deception is $50,000.
INVESTORS IAN RODGERS AND MERIAM RODGERS (charge 4)
27. In early 2007, Ian Rodgers and his wife Meriam Rodgers (“the Rodgers”) approached the Prisoner to discuss finance for an investment property. In a meeting with the Prisoner in May 2007, the Prisoner offered them a chance to invest in his property development business (instead of purchasing an investment property) as he considered them “special friends”. He said he usually reserved these opportunities for family members, but he had recently encountered some difficulties dealing with them. He stated that the company had substantial assets that provided security to guarantee any loans made by investors and that he had a small and privileged group of investors involved in the company. The Prisoner showed them photographs of apartments and houses renovated by him and his business partners.
28. Between May 2007 and June 2007, the Prisoner repeatedly contacted the Rodgers to enquire whether they would invest, stating that this was a special offer and only available for a limited time.
29. The Rodgers agreed in principal to invest $100,000. In a meeting with the Prisoner in July 2007, the Prisoner requested that they invest $250,000 instead of $100,000, which they refused. The Prisoner stated that the investment term would be three months with a return of 10 per cent at the end of the investment. This equates to a return of 40 per cent per annum.
30. On 19 July 2007, the Rodgers attended the Prisoner’s Williamstown office and provided the Prisoner with a Bendigo Bank cheque in the sum of $100,000.[24] The cheque was drawn payable to the company, as instructed by the Prisoner. When Ian Rodgers sought confirmation as to the purpose of the investment, the Prisoner stated the company had “several million dollars in equity” and that they should not worry about how the funds were invested “because either way you get your return”. Ian Rodgers informed the Prisoner that they were only investing on the grounds the money would be used for the property development business and removed the cheque from the Prisoner’s desk, at which time the Prisoner agreed that the funds would be used for the company’s property development business. The Prisoner stated that the funds invested would be used to build two units on a block of land in Williamstown (charge 4).[25] The Prisoner provided the Rodgers with a document titled “private contract” which identified the borrower as “C. Cini & Company Pty Ltd” and which stated the said funds were loaned for a period of three months.
[24]number 000143
[25] Statements of Ian and Meriam Rodgers and exhibits tabs 12 &13.
31. On 19 July 2007, the cheque was deposited to the company’s Bendigo account. Prior to the deposit of the cheque, the company’s Bendigo account was $19,202 in credit. Over a period of eight days, over $103,000 was debited from the account by the Prisoner on personal expenses, car lease and loan repayments and payments to other investors in the company.[26] While an amount of $5,000 was used on property renovations, the remaining funds (including funds invested by the Rodgers) were used for purposes unrelated to the company’s property development business. By way of example, on 20 July 2007, an amount of $40,000 was debited from the account and paid to an unrelated investor, Anthony Carlile. On the same day, $9,907.39 was withdrawn from the account and paid on a truck finance loan held by the company. On 24 July 2007 and 25 July 2007, over $18,499 was debited from the account and used to repay Company car leases. On 24 July 2007, $1,150 was paid on a personal loan held in the names of the Prisoner’s wife and two others and $2,500 was used to establish a mortgage broking business for the Prisoner and his accountant, Chris El Moussalli.[27]. In July 2007, a total of $8,550 was used by the Prisoner for the benefit of his sons, Christopher and Michael Cini.
[26] Statements of Apostolos and Childs tabs 2 &4. Reconstruction spreadsheet tab 17.
[27] Statement of Chris El Moussalli tab 7.
32. From October 2007, the Rodgers began chasing Cini for re-payment of the monies they had invested for a three month period. The Prisoner advised that payment would be forthcoming and offered various explanations as to why payment was delayed. In November 2007, the Prisoner advised that settlement funds were likely to clear by the end of the month but they could roll the interest payment due to the next payment. The Prisoner indicated that the business “was booming” and he had significant personal assets to call upon if required and there was nothing to worry about. The property at 6 Henry Street Williamstown was sold by the Cuce’s in June 2008 and, according to information provided by Cuce to investigators, no profit was made on the sale of the property as no renovation work was undertaken on the property before it was sold. No other Williamstown properties were disclosed to liquidators by the Prisoner for the period 2007 to 2008.
33. In February 2008, the Prisoner stated he was experiencing problems with his trucking business. When questioned by the Rodgers about the relevance of this to their investment, the Prisoner stated it was not relevant and highlighted that he had equity in the company and the property development business. Other explanations offered by the Prisoner for delayed repayment of the investment included that his wife was battling with cancer, the death of relatives, a car accident and a number of minor heart attacks that kept him off work. On one occasion in early 2008, the Prisoner visited Meriam Rodgers at her home and stated that the property development had done well and that there had been a great profit on the sold property but there was an issue with settlement and the receipt of funds had been delayed.
34. Between February 2008 and May 2008, the Prisoner provided the Rodgers with six cheques totalling $301,500 in purported re-payment of the funds invested however the cheques were dishonoured on presentation.[28]
[28] These cheques are not the subject of charges and are not relied upon by the Crown as uncharged acts.
35. In May 2008, the Prisoner stated in a letter that he would provide Ian Rodgers with title to five properties as nominated in the letter with a value of $1.8 million if the funds invested by the Rodgers were not repaid by June 2008. Title searches undertaken by solicitors engaged on behalf of the Rodgers on the properties nominated by the Prisoner in his letter revealed that none of the said properties were owned by the Prisoner or the company. The properties nominated by the Prisoner included units 1 and 2 of 3 North Road Newport (“units 1 and 2”). As at May 2008, units 1 and 2 were owned by the Prisoner’s sons, Christopher and Michael Cini[29]. By way of explanation, the Prisoner stated the units had mistakenly been included in the letter. The Prisoner subsequently agreed to provide a financial guarantee on another property, however the details initially provided by the Prisoner in respect of that property were also incorrect.
[29]Unit 1 was owned by the Accused personally until December 2007. Unit 2 was owned by the Company until December 2007. On 10 December 2007, both units were transferred to the Accused’s sons by purported gift.
36. The funds invested by the Rodgers have not been repaid.
37. The total property obtained by deception in relation to investors Ian and Meriam Rodgers is $100,000.
INVESTOR ANDREW FORBES (charges 5, 12, 13, 16 and 20)
38. In July 2007, Andrew Forbes (“A. Forbes”) met with the Prisoner to discuss an investment opportunity. The Prisoner stated that any funds advanced by A. Forbes would be invested in property development and that the funds would be applied to the development of properties situated in Henry Street Williamstown or 4 Carlton Street McKinnon. The Prisoner also stated that A. Forbes would receive a fixed sum of $20,000 every three months for every $100,000 invested in the company.
39. On 27 July 2007, A. Forbes attended the Prisoner’s office in Williamstown and provided the Prisoner with a Westpac bank cheque in the sum of $200,000 (charge 5).[30] A one page document titled “private contract” signed by the Prisoner as director of the company acknowledged receipt of $200,000 with a term of 3 months and a fee of $40,000. The document identifies the borrower as “C. Cini & Company Pty Ltd” with the lender described as Cheryl Forbes, the wife of A. Forbes.
[30] Cheque number 430660. Statement of Andrew Forbes and exhibits at tab 8.
40. On 27 July 2007, the Prisoner deposited the cheque into the company’s Bendigo account. Prior to the deposit, the company’s Bendigo account was in credit in the amount of $11,321. The proceeds of the cheque were debited from the account by the Prisoner over a period of ten days on payments unrelated to the company’s property development business, including personal and family related expenses, fuel and car lease repayments and repayments to other investors in the company.[31] By way of example, on 27 July 2007 and 1 August 2007, over $129,000 of the proceeds of the said cheque was paid to other investors in the company. On 31 July 2007 and 1 August 2007, over $5,000 was used to repay Company car lease arrears. Between 31 July 2007 and 1 August 2007, a total of $7,835.54 was applied for the benefit of the Prisoner and his family as repayments on personal loans and $1,110.86 was applied as a repayment on a loan held in the name of Companies Plus Pty Ltd. At the time of the payment, the Prisoner was the sole director of Companies Plus Pty Ltd. On 2 August 2007, $10,000 was paid to the credit card of the Prisoner’s wife and on 3 August 2007, $12,800 was applied to refurbishment work on unit 1, 3 North Road, Newport. As at August 2007, unit 1 was owned personally by the Prisoner.
[31] Statements of Apostolos, Childs at tabs 2 & 4 and reconstruction spreadsheet at tab 17.
41. Neither the Prisoner nor the company were involved in developing 4 Carlton Street Bentleigh at any time.[32] The property was not included by the Prisoner in the list provided by the Prisoner to the liquidators on 27 January 2009 (of properties built or developed by the Prisoner or the company since 1999) although initially nominated by the Prisoner as one of his property developments.[33] Enquires with the Land Titles Office of Victoria show that neither the Prisoner nor the company were registered as proprietors of 4 Carlton Street Bentleigh or 6 Henry Street Williamstown.
[32] Statement of Cuce tab 6
[33] CIN.0020.0001.0095, CIN.0020.0001.0106 tab 3
42. The liquidators have identified a payment of $36,000 from the company for the deposit of 6 Henry Street Williamstown on 17 May 2007 but no other payments from the company. The Williamstown property was not developed and was sold in 2008. No other Williamstown or Bentleigh properties were disclosed to liquidators by the Prisoner for the period 2007 to 2008.
43. Between October 2007 and March 2008, A. Forbes made numerous attempts to obtain from the Prisoner the overdue quarterly interest payments on his investment. During this period, he received $10,000 cash along with three cheques totalling $110,000 which were dishonoured on presentation (charges 12, 13, 16).
44. Between April 2008 and August 2008, the Prisoner undertook to return the invested funds. On 23 May 2008, the Prisoner promised to deposit $200,000 into the bank account of A. Forbes however this did not occur. On 30 May 2008, the Prisoner handed A. Forbes $10,000 in cash which he said was part of the proceeds of the sale of the house in Henry Street Williamstown (the Prisoner had previously told investor Barry Swettenham that the property had been sold at a small loss and told the liquidators that the property was sold unrenovated for its original purchase price). In June and July 2008, the Prisoner promised to return the invested funds via an equity loan on the property at 4 Carlton Street Bentleigh which he claimed had been recently renovated. In July 2008, the Prisoner handed A. Forbes a cheque for $200,000 which he stated was from the equity in the Carlton Street property which was dishonoured on presentation (charge 20). When A. Forbes advised the Prisoner in July 2008 that the cheque had been dishonoured, the Prisoner stated his business partner had frozen the cheque and that he needed to organise another loan on the Carlton Street property. He also stated that the Carlton Street property had been listed for sale by Hocking Stuart. However enquires by A. Forbes indicated that the Carlton Street property had not been renovated or listed for sale by Hocking Stuart.
45. In about July 2008, the Prisoner attempted to offer A. Forbes another personal cheque for $200,000 however A. Forbes refused to accept it as the previous personal cheques offered by the Prisoner had been dishonoured. By 14 August 2008, the company had been placed in liquidation.
46. Apart from cash payments totalling $20,000, the funds invested by A. Forbes have not been repaid.
47. The total property obtained by deception in relation to investor Andrew Forbes is $200,000. The total financial advantage obtained by deception is $310,000.
INVESTORS DAVID FORBES AND ROBYN FORBES (charges 6-10, 18, 22)
48. In about June or July 2007, the Prisoner met with David and Robyn Forbes (“the Forbes”) to discuss an investment opportunity with them. The Prisoner spoke generally about his property developments and stated that he had recently bought a property at 4 Carlton Street, Bentleigh which he had commenced renovating. He said it had cost $500,000 to $600,000 to purchase. The Prisoner stated that any funds invested by the Forbes would be used to assist in completing the renovations on 4 Carlton Street, Bentleigh. The Prisoner suggested they borrow funds for the investment using their shop at 36 Douglas Parade, Williamstown (“the shop”) as security, which they agreed to do.
49. Approximately two weeks later, the Prisoner met with the Forbes and advised them that he could arrange for them to borrow $385,000 secured against the shop. The Prisoner stated that if they agreed to invest this amount with him, the funds would be applied to renovations on 4 Carlton Street, Bentleigh, that he would guarantee a return on the investment of $20,000 a quarter, and that he would also meet the monthly interest payments on the amount borrowed. The Prisoner indicated that the renovations would take around six months and the property would then be put up for sale. The Prisoner stated they could roll their investment to other property developments at the end of the term if they wished or the funds would be returned on request. Based on these representations, the Forbes agreed to invest $385,000 in the company.
50. The Prisoner subsequently arranged for the Forbes to borrow $385,000 secured against the shop. In August 2007, at the Prisoner’s request, five cheques totalling $378,000 were handed to the Prisoner; three cheques totalling $140,000 were drawn payable to third parties as directed by the Prisoner[34] (charges 6, 7 and 8) and two cheques in the sum of $188,000 and $50,000 were drawn payable to the company (charges 9 and 10).[35] A total of $378,000 was invested by the Forbes to be applied to renovations on 4 Carlton Street, Bentleigh (with the remaining loan funds applied towards disbursements).
[34] payable to C. C. Spokes, Tate Muer Pty Ltd and V&A Chipman respectively.
[35] Statements of David Forbes, Robyn Forbes and exhibits at tabs 9 and 10.
51. On 22 August 2007 and 24 August 2007, the Prisoner deposited the cheques in the sum of $188,000 and $50,000 respectively into the company’s Bendigo account. Prior to the deposit of $188,000 on 22 August 2007, the Bendigo account was in debit to the amount of $12,243. The funds invested by the Forbes were debited by the Prisoner over a period of ten days on personal and family related expenses, fuel and car lease repayments and payments to other investors in the company, such payments unrelated to the company’s property development business or 4 Carlton Street, Bentleigh.[36] By way of example, on 23 August 2007, $22,600 was debited from the account by the Prisoner for the purchase of a 2000 Mitsubishi Pajero by Joe Basilone, an investor in the company. A further $25,000 was debited from the account the same day and paid to investor Margaret Harris. On 24 August 2007, an amount of $72,234.19 was debited from the account and paid towards the company’s car lease arrears, and a further $21,695.98 was used to purchase tyres for the company. On 24 August 2007, a further $19,000 was paid to investor Charbel Raffoul. Between 23 August 2007 and 29 August 2007, funds totalling $11,410 were withdrawn from the account for the benefit of the Prisoner’s children, to pay horse racing fees and for the benefit of Gerratts Pty Ltd, a company controlled by the Prisoner.
[36] Statements of Apostolos, Childs at tabs 2 & 4 and reconstruction spread sheet at tab 17.
52. The Prisoner made monthly loan interest payments on behalf of the Forbes until mid-2008. Between December 2007 and August 2008, the Forbes sought payments of interest on their investment. The Prisoner stated that the property at 4 Carlton Street Bentleigh property had not been sold.
53. Enquires with the Land Titles Office of Victoria show that neither the Prisoner nor the company were registered as proprietors of 4 Carlton Street Bentleigh which, as at July 2007, was owned by the Cuces. Neither the Prisoner nor the company were involved in developing 4 Carlton Street Bentleigh and contributed no funds towards the purchase of the property which was intended to be the Cuce’s matrimonial home. The property was not included by the Prisoner in the list provided by the Prisoner to the liquidator on 27 January 2009 (of properties he or his Company had built or developed since 1999). However funds borrowed by the Prisoner from investors (including the Forbes) between February 2007 and August 2007 for the purported development of 4 Carlton Street Bentleigh total $688,000.
54. In December 2007, David Forbes contacted the Prisoner about the first interest payment of $20,000 on the investment which was overdue. The Prisoner stated that the property had not sold and that he would not be able to make the payment until it sold. The Forbes made numerous further attempts to contact the Prisoner which were unsuccessful. In late 2008, Robyn Forbes contacted the Prisoner who stated that he owned a garage in Mason Street Newport and a house in Henry Street Williamstown which he would sell and then be able to repay the invested funds. Enquires with the Land Titles Office of Victoria reveal that the Prisoner and his wife were registered as tenants in common of one of three equal undivided shares in a property located at 148-150 Mason Street Newport from December 2000 until June 2008. In June 2008, the property was transferred to an unrelated third party. The property at 6 Henry Street Williamstown was sold by the Cuces in June 2008 and, according to information provided by Cuce to investigators, no profit was made on the sale of the property as no renovation work was undertaken on the property before it was sold. No other Williamstown properties were disclosed to liquidators by the Prisoner for the period 2007 to 2008.
55. The Prisoner made a cash payment of $10,000 to the Forbes in March 2008 (representing a partial interest payment owing to the Forbes). The funds invested by the Forbes have not been repaid. On 1 April 2008 and 3 August 2008, the Prisoner provided the Forbes with cheques in the sum of $90,000 and $20,000 in purported part-payment of funds invested by the Forbes, however both cheques were dishonoured on presentation (charges 18 and 22).
56.The Forbes were forced to sell the shop as they were unable to meet the monthly loan repayments. On inspecting the property at 4 Carlton Street Bentleigh in about August 2008, the Forbes discovered that the house did not appear to have been renovated.
57. The total property obtained by deception in relation to investors David and Robyn Forbes is $378,000. The total financial advantage obtained by deception is $110,000.
INVESTORS PATRICIA AND RONALD ALLAWAY (charges 11 and 17)
58. In late 2006, Patricia Allaway and her now deceased husband Ronald Allaway (“the Allaways”) discussed with the Prisoner the option of sub-dividing their residential property in Williamstown (“the Williamstown property”) which they owned outright, instead of selling their property. The Prisoner stated that they “were sitting on a gold mine” and offered to organise the finance to fund the project using their residential property as security. An initial drawdown of $420,000 was suggested by the Prisoner which was to be paid to the company and made available to the Allaways when requested, with the Prisoner meeting the ongoing interest payments from Company funds. The Prisoner indicated that he would use some of the funds for business related purposes such as on-lending to clients but indicated that the full amount would ultimately be repaid.
59. On about 18 October 2006, the Allaways provided the Prisoner with a bank cheque in the sum of $420,000 payable to the company which was deposited into the company’s Bendigo account.
60. Prior to the deposit of $420,000, the account held a debit balance of $14,527. Between 19 October 2006 and 25 October 2006, the cheque proceeds were withdrawn by the Prisoner on both business and personal expenses which included the repayment of other investors, Company fuel payments and an amount of $130,000 which was withdrawn by the Prisoner by cheque made payable to Vince and Megean Cuce. In relation to the payment of $130,000, the Prisoner advised liquidators that $50,000 was applied toward 1 Werona Street Bentleigh and $80,000 was a repayment on a loan made to the Prisoner by Cuce. On 25 October 2006 an amount of $11,000 was cashed for the benefit of Christopher Cini and on 26 October 2006 an amount of $30,000 was loaned to a third party to pay a tax debt.
61. Between October 2006 and about October 2007, the Prisoner met the interest payments on the loan and provided the Allaways with funds totalling $80,000 on request.
62. In October 2007, the Prisoner advised Patricia Allaway that he needed to refinance the loan with Perpetual Limited. The Prisoner stated that the Allaways would need to meet the ongoing monthly interest payments for the refinanced loan. When the Allaways advised that this was not acceptable as they were pensioners and did not have the income to meet the payments, the Prisoner stated that they should not worry and that he could invest the loan funds into the company’s business and this would generate returns to cover the interest. The Prisoner advised that the funds would be repayable to the Allaways upon request. The new loan amount was for $750,000 (charge 11).[37]
[37] Statement of Patricia Allaway tab 1.
63. The Prisoner made interest payments on the refinanced loan until February 2008 via a direct debit facility. From February 2008, interest payments were not met by the Prisoner. As the Allaways could not service the mortgage, the property was sold by the mortgagee in May 2009 and the outstanding loan to the bank was repaid in full, being an amount of $782,897.62.
64. Apart from payments totalling $83,000, the funds have not been repaid. On or about 11 March 2008, the Prisoner provided the Patricia Allaway with a cheque in the sum of $10,000 in purported repayment of some of the loaned funds however the cheque was dishonoured on presentation (charge 17).
65. The proposed subdivision did not proceed beyond the planning stage as the Allaways could not obtain further funds from the Prisoner to progress the subdivision.
66. The total amount which is the subject of charge 11 is $750,000. The total amount which is the subject of charge 17 is $10,000.
INVESTOR MARGARET OLIVE HARRIS (charges 14, 15, 19, 21)
67. In about February 2008, the Prisoner contacted Margaret Harris (“Harris”) and stated he required around $250,000 for an “in-house property settlement” which he promised to repay in full two weeks from the investment date with a return of $50,000 (in addition to the return of the capital invested). Based on the above representations, on 7 February 2008 Harris deposited a bank cheque in the sum of $252,582.90 to the company’s St George bank account (charge 14).[38]
[38] Statement of Margaret Harris and exhibits tab 11. This bank cheque was payable to Harris following the settlement of her residential property in Williamstown which she endorsed payable to the Company.
68. Prior to the deposit of $252,582.90, the company’s St George bank account held a balance of $3,100. While an amount of $65,040 of the funds invested by Harris was used by the Prisoner towards the settlement of property at 2 Prescott Place, Avondale Heights[39], the remaining funds were debited by the Prisoner over twelve days for the benefit of other Company investors, for his personal benefit and for the benefit of his family, such payments unrelated to “property settlement”.[40] By way of example, on 8 February 2008, $60,000 was debited from the account and paid to investor George Seranis. On 11 February 2008, $20,000 was withdrawn from the account in cash and paid to investor Anthony Carlile. Between 8 February 2008 and 14 February 2008, a total of $8,106.44 was used by the Prisoner for his own benefit, to assist his wife and to pay the Rotary Club of Altona. On 18 February 2008, $20,000 was paid to the Prisoner’s accountant in repayment of a personal loan.[41]
[39] This property was sold by Gary Au (an unrelated person) to Antonio Valente, another investor in the Company.
[40] Statements of Apostolos, Childs and exhibits tabs 2 & 4. Reconstruction spreadsheet at tab 17.
[41] Statement of El Moussalli tab 7.
69. On 7 February 2008, Harris received a Company cheque in the sum of $97,582.90 in purported repayment of funds previously invested by Harris in the company, however the cheque was dishonoured on presentation (charge 15).[42] On 7 July 2008, Harris received a Company cheque in the sum of $99,000 from the Prisoner, however the cheque was also dishonoured on presentation (charge 21). [43]
[42] Tab 11 (CIN.0008.0001.0216 and CIN.0016.0001.0022).
[43] Tab 11 (CIN.0008.0001.0238-.0239, CIN.0013.0001.0365 and CIN.0008.0001.0249-.0251).
70. In a meeting with the Prisoner at Harris’ home in June 2008, the Prisoner signed a document titled “Private Contract” (as director of the company) in which he acknowledged the company owed Harris a total of $710,000. This amount includes the funds which are the subject of charge 14 and other investments by Harris in the company totalling over $450,000 which are not the subject of charges.[44]
[44] Tab 11 (CIN.0008.0001.0247)
71. On about 30 June 2008, the Prisoner paid Harris an amount of $34,000. Apart from this payment, the funds invested by Harris have not been repaid. Harris did not receive the return of $50,000 promised by the Prisoner nor the return of the capital as promised within two weeks.
72. Harris encountered further financial duress as she had taken two mortgages in early 2008 to fund property purchases in Inverloch and Mirboo. Harris had discussed these property purchases with the Prisoner and in April 2008, the Prisoner drew a cheque on her behalf in the sum of $24,500 for a deposit on one of the properties (as the Prisoner still owed Harris money). This cheque was dishonoured on presentation (charge 19).[45]
[45] Tab 11 (CIN.0008.0001.0238, CIN.0008.0001.0239, CIN.0013.0001.0365)
73. As at February 2008 when the representations which are the subject of charge 14 were made, the company had a working capital deficiency of more than $1.5 million (and was therefore unable to pay its debts as and when they fell due). The company’s externally prepared financial statements prepared on the Prisoner’s instructions show that as at 30 June 2007, the company had net liabilities of $584,602 and was trading at a loss of $325,921. As at 30 June 2007, investor loans totalling $1.6 million remained unpaid. As at 30 June 2008, investor loans totalling $3.95 million remained unpaid. According to the liquidator’s reconstruction, the company was technically insolvent since at least 30 June 2006.[46]
[46] Burness tab 3
74. The total property obtained by deception in relation to investor Margaret Harris is $252,582.90. The total financial advantage obtained by deception is $221,082.90.
REPORT AS TO AFFAIRS
75. In about August 2008, the Prisoner provided the liquidator with a completed Report as to Affairs (“RATA”) dated 14 August 2008 relating to affairs of the company.[47]
[47] Burness tab 3. Report as to Affairs at tab 18.
76. The RATA failed to include:
a. Company debtors valued at least $355,000;
b. Six Company motor vehicles;
c. A trailer commission arrangement with the St George Bank Limited, payable to the company on an ongoing basis.[48]
d. A significant number of Company creditors with a combined value exceeding $1,000,000.
[48] Since the date of liquidation, the liquidators have recovered $26,807.67 in commissions as at July 2011.
DIRECTOR’S QUESTIONNAIRE
77. On 11 September 2008, the Prisoner completed a questionnaire in relation to the affairs of the company.[49] The Prisoner was asked what steps he took to ensure the books and records of the company were properly kept. He replied “day to day control and met with accountant at least 5 times a year to do BAS and tax returns” (question 24). The Prisoner stated that the balance sheets and profit and loss accounts were prepared annually by the accountant (question 28). As to what steps he took to satisfy himself they were correct he replied “prepared in consultation with me”. As to what figures were compiled by him or presented to him to show the financial position of the company, he replied “annual accounts” and that he knew the company’s financial position at any time via “manual records” (question 29). He stated that he first realised the company might have to go into external administration in mid-2008 because of cash flow strain (question 56) and that creditors began pressing the company for payment six months earlier (question 57).
[49] Director’s questionnaire at tab 19 (CIN.0020.0001.0027)
78. In a meeting held with the liquidators on 15 December 2008, the Prisoner had a very good recollection of many of the debits from the company’s bank accounts and was able to provide basic information regarding the payees of various cheque numbers. As advised by the Prisoner, the majority of transactions on the company’s accounts related to payments of various home loans, finance leases, investor payments, personal payments and a number of cash transactions, some of which could not be explained by the Prisoner.
79. Chris El Moussalli of Walker & Co provided accountancy services to the company between 2003 and August 2008. In relation to the company’s banks accounts, he states that the Prisoner had a good knowledge of what the debits and credits in his Company’s bank accounts related to and that he would enter those details as advised by the Prisoner into an electronic Walker & Co ledger. He states the Prisoner did not bring any supporting documentation with him and the company did not maintain its own detailed accounting record system. The Prisoner advised El Moussalli that he was obtaining loans from investors “to assist with the company’s cash flow”. The Prisoner stated that El Moussalli need not worry about these investor loans too much as the Prisoner maintained some form of handwritten record of all loans and funds obtained from investors. A handwritten record of funds obtained from investors has never been provided by the Prisoner to either El Moussalli or to the liquidators.
80. The Prisoner did not provide the liquidators with records relating to any of the company’s purported property development activities, with the exception of one joint venture property development in Portland, Victoria in 2003 and the list provided to the liquidators on 27 January 2009 which identified Henry Street Williamstown and Werona Street Bentleigh as personal properties of the Prisoner. The Prisoner told liquidators on 27 January 2009 that Cuce, not the Prisoner, appeared on title in respect of the Henry Street and Werona Street properties.
HISTORY OF PROCEEDINGS
81. The Prisoner was charged on 29 May 2013. He was arrested on 14 June 2013 and bailed the same day. He has remained on bail since that date.
82. On 6 September 2013, a committal mention was adjourned to 18 October 2013 at the request of the Prisoner’s legal representatives.
83. On 18 October 2013, leave was granted to cross-examine witnesses including investor witnesses. The matter was set down for a 4 day contested committal hearing commencing on 24 March 2014.
84. On 24 March 2014 (the first day of the committal), the Prisoner communicated to the Office of the CDPP an intention to plead guilty to the charges contained on the Indictment.
85. On 27 March 2014, the Prisoner was committed on the charges the subject of the Indictment.
CRIMINAL HISTORY
86. No criminal history is alleged.
PRE-SENTENCE DETENTION
87. The Prisoner has served one day of pre-sentence detention as at the date of the plea hearing.
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