Director of Public Prosecutions v Fleming (a pseudonym)
[2020] VCC 1860
•23 November 2020
| IN THE COUNTY COURT OF VICTORIA | Revised Not Restricted Suitable for Publication |
AT MELBOURNE
CRIMINAL JURISDICTION
CR-18-01337
| THE COMMONWEALTH DIRECTOR OF PUBLIC PROSECUTIONS |
| v |
| Trevor FLEMING (a pseudonym) |
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| JUDGE: | HIS HONOUR JUDGE CAHILL |
| WHERE HELD: | Melbourne |
| DATE OF HEARING: | 29 January, 13 October & 23 November 2020 |
| DATE OF SENTENCE: | 23 November 2020 |
| CASE MAY BE CITED AS: | DPP v Fleming (a pseudonym) |
| MEDIUM NEUTRAL CITATION: | [2020] VCC 1860 |
REASONS FOR SENTENCE
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Subject: Conspiracy to dishonestly obtain gain from Commonwealth
Catchwords: Guilty plea – GST fraud - 2 years of offending - $5.12 million of GST refunds claimed – $2.54 million paid by ATO – senior partner in the conspiracy – no relevant criminal history – 8 year delay in prosecution – relevant subsequent dishonesty offending – remorse – guarded prospects of rehabilitation – parity and totality considerations
Legislation Cited: Commonwealth Crimes Act 1914 (Cth); Sentencing Act 1991
Cases Cited:Director of Public Prosecutions (Cth) v Rowson [2007] VSCA 176, Liles v The Queen [2014] NSWCCA 289, Hili v The Queen (2010) 242 CLR 520, DPP v Gregory (2011) 211 A Crim R 147.
Sentence: 5 years imprisonment with a minimum non-parole period of 3 years
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APPEARANCES: | Counsel | Solicitors |
| For the Commonwealth | Ms S. Thomas Ms A. Haban-Beer | Commonwealth Director of Public Prosecutions |
| For the Accused | Mr A. Patton | Haines & Polites |
HIS HONOUR:
1Trevor Fleming[1], you have pleaded guilty to one count of conspiracy to dishonestly obtain a gain from the Commonwealth contrary to s.135.4(1) of the Commonwealth Criminal Code. The maximum penalty is 10 years' imprisonment.
[1]A pseudonym.
2The circumstances of your crime are set out in the detailed prosecution summary.[2]
[2]Exhibit A.
3Your offending occurred between 12 November 2010 and 14 December 2012. Your co-conspirators were Mr Daniel Steele[3], Ms Cassandra Brett[4] and Ms Kiara Leach.[5] Mr Steele and you were associates, Ms Brett was your partner, and Ms Leach worked at the Australian Taxation Office (‘ATO’).
[3]A pseudonym.
[4]A pseudonym.
[5]A pseudonym.
4In November 2010, you agreed with Mr Steele to dishonestly obtaining GST refunds by lodging false business activity statements with the taxation office.
5Mr Steele was the architect of the scheme; he was a qualified accountant and had been a registered tax agent who provided accounting and tax expertise to set up the fraudulent scheme.
6In 2005, he had also committed the same type of Goods and Services Tax (‘GST’) fraud, for which he was sentenced to four and a half years' imprisonment. With Mr Steele, you were a senior partner in the conspiracy and his right hand man. Ms Brett joined the conspiracy in November 2011. Ms Leach joined in January 2012.
7In furtherance of the conspiracy, Mr Steele, with help from you, set up more than 100 false business entities and registered them for GST with the ATO. Mr Steele and you, with help from Ms Brett, opened more than 100 bank accounts using false identity documents. You created the first bogus accounts in November 2010 in the name of ‘Newman’ and other bank accounts in the names of ‘Madden’ and ‘Mendel’. You recruited Ms Leach, who provided you with confidential tax payer details for which Mr Steele paid him, and which were used to set up false entities and lodge false GST claims.
8Between you, Mr Steele and you lodged more than 300 fraudulent business activity statements claiming GST refunds. Mr Steele and you appropriated the GST refunds which were paid into false bank accounts.
9In all, during the conspiracy, fraudulent GST claims totalling $5,124,109.15 were lodged with the ATO. The ATO paid GST refunds totalling $2,547,544.15 and other fraudulent GST claims totalling $2,576,565 were not paid.
10Mr Steele was absent from the conspiracy from 19 February 2012 to
22 May 2012. During his involvement in the conspiracy, fraudulent GST claims totalling $2,559,823.15 were lodge with the tax office, the tax office paid GST refunds totalling $2,207,717.15 and other GST claims totalling $352,106 were not paid.11In February 2012, Brett and you had a falling out with Mr Steele over money.
12In late March and early April, you obtained confidential information, including tax file numbers of 40 tax payers from Ms Leach, which you used to make false GST claims. Between February and May 2012, when Mr Steele was not involved, you lodged fraudulent GST claims totalling $2,564,286 with the taxation office. The tax office paid $339,829 in GST refunds, and other GST claims totalling $2,224,459 were not paid.
13In late May 2012, Mr Steele and you decided to work together again.
14Ms Brett and Ms Leach had lesser roles.
15Ms Brett opened bogus bank accounts in November 2011 in the name of ‘Satay’. She asked Ms Leach to open a bank account to receive cash payments and she sent information to you in relation to some of the false bank accounts.
16Ms Leach copied 723 legitimate tax payers tax file numbers from ATO records into a spreadsheet, which he showed to you and thereafter, he gave you tax file numbers and personal details of more than 100 tax payers. Mr Steele paid him for 60 of them, the other 40 were provided to Ms Brett and you when you had your falling out with Mr Steele.
Investigation
17In March 2012, a taxpayer discovered her personal details, including her tax file number, on the spreadsheets on the ‘editgrid.com’ website. She reported her discovery to police. The ATO was notified and commenced an investigation with the Australian Federal Police (‘AFP’).
18Ms Leach was identified as the source of the tax payers details.
19Ms Brett’s telephone communications were intercepted.
20On 21 September 2012, investigators searched Mr Steele’s home. Behind a bathroom cupboard, they found a computer hard drive and a USB. They also located a large amount of cash. On various devices, he had stored spreadsheets which contained information relating to the sham business, bogus bank accounts and fraudulent GST claims lodged after Leach joined the conspiracy.
21On 29 January 2013, police searched the apartment where you were living with Brett. They seized a laptop and other electronic devices which contained false identity documents using Mr Steele’s image, Ms Brett’s image and yours.
22On 15 May 2013, police searched Ms Leach’s residence. They seized a number of electronic devices, and on them they found a spreadsheet very similar to the one found on ‘EditGrid’, together with details of sham entities you had registered with the ATO after your falling out with Mr Steele.
23Ms Leach was charged on 7 November 2013.
24Mr Steele was charged on 5 June 2017.
25Ms Brett was charged on 7 June 2017.
26You were charged on 13 June 2017.
Court Chronology
27In June 2018, after a committal hearing, you, with Mr Steele and Ms Brett, were committed to stand trial.
28On 22 March 2019, you made a plea offer. On 6 November 2019, you were charged with unrelated State offences and remanded in custody.
29On 29 January 2020, you were arraigned and pleaded guilty to the charge before this court.
30On 17 February 2020, you pleaded guilty to the State offences and were bailed until 26 February 2020 for sentence. When you failed to appear on that day a warrant was issued for your arrest.
31On 15 August 2020, you were arrested and remanded in custody.
32Your plea hearing proceeded in this Court on 13 October 2020.
Criminal History
33You have admitted a prior criminal record of one appearance in Werribee Magistrates' Court on 17 January 2007, when a charge of criminal damage was adjourned for 12 months without conviction.
34You have also admitted a number of subsequent convictions between 22 August 2011 and 7 February 2020 for dishonesty, drug and driving offences.
35On 19 August 2014, you were sentenced to 12 months' imprisonment, to be released after three months for obtaining property by deception, attempting to obtain property by deception and dealing with property suspected of being proceeds of crime.
36On 23 March 2017, you were convicted of offences of making a false document, dealing with property suspected of being proceeds of crime and other offences and sentenced to 180 days' imprisonment and a community correction order for 18 months.
37On 8 May 2019, you were sentenced to seven months’ imprisonment for dishonesty offences.
Personal Circumstances
38You were born on 30 January 1982. You were aged 28 years when your offending commenced and nearly 31 when it ended. You are now aged 38 years.
39Your personal circumstances are set out in the psychological report of Sandra Cocharillo, who assessed you on 2 October 2020. You were born in Melbourne and raised by your mother and stepfather. You mother had another son and daughter with your stepfather. You have never known your biological father.
40You childhood was unremarkable.
41You got on well with all your family and with your peers and teachers at school. In Year 11, you got work as a concreter. After eight years working for your original employer, you set up your own business.
42In 2009, after a major customer failed to pay you a quarter of a million dollars, your business collapsed. You were angry, as through no fault of your own, you had lost your business and friends and could not pay your employers. Before your business failed, you had been smoking methamphetamine daily.
43After your business failed, your drug use escalated and you fell into dealing to support your habit. Since then, you have been in and out of gaol and relied on Centrelink benefits and crime to support yourself. Your decline is reflected in your subsequent criminal record.
44You told Ms Cocharillo you have smoked ice daily for the last 15 years or so. You said you have only stopped when you are imprisoned and for a period from November 2019 to January 2020 voluntarily. You had a gambling problem for nearly 20 years. In 2018, you competed a gambling rehabilitation program while you were in prison and you have not gambled since.
45You told Ms Cocharillo your substance abuse and gambling went hand in hand, and, when you offended, you had business debts made worse by your addictions and were scrambling to get money for drugs and gambling. You said you were at rock bottom.
46To psychological testing, you meet the criteria for stimulant use and gambling disorders.
47Ms Cocharillo assessed you as having average intelligence. In her opinion, your risk of reoffending is high. However, a number of the risk factors, including your substance abuse, unemployment and financial pressures are amendable to intervention. In other words, if you can control your drug addiction and stabilise your financial situation, you are less likely to reoffend.
Defence Submissions
48Mr Patton, who appeared on your behalf, in comprehensive written and oral submissions, acknowledged your offending was sophisticated and involved a substantial fraud on the revenue which continued for nearly two years. He also acknowledged you were a senior, critical member of the conspiracy. He sought to contrast your role to Mr Steele’s. Mr Steele brought the expertise and the conspiracy was successful when Mr Steele was participating and a failure when he was not, in Mr Patton's submission.
49He submitted a substantial proportion of the proceeds of your fraud were lost.
50He contended, as did Mr Steele, that $450,000 was stolen when offenders burgled a storage unit in December 2011, and $1,587,070 was forfeited to the Commonwealth as proceeds of crime in 2014.
51He acknowledged, while your prior criminal history is very limited, considering your frequent subsequent offending, your prospects for rehabilitation must be guarded.
52He submitted you have nevertheless responded positively to your time in custody, you have trusted work as a billet and as a peer listener, and you have the ongoing support of your mother, your siblings and your girlfriend.
53In mitigation of penalty, he relied on,
(a) firstly, your guilty plea, although not made early, for its significant utilitarian value for the avoidance of an otherwise lengthy and complex trial.
(b) Secondly, your very limited criminal history.
(c) Thirdly, the delay of eight years.
(d) Fourthly, totality to take into account in the sentences you have served for the proceeds of crime charge and the subsequent prison terms, and
(e) Fifthly, the additional burden of COVID-19 related prison restrictions and isolation for prisoners.
54He submitted, while your culpability was comparable to Mr Steele’s, the disparity between your roles warrants a disparity in sentence between you.
55Mr Patton referred me the Commonwealth Director of Public Prosecutions v Rowson[6] and Liles v R (Cth),[7] both cases involve tax frauds on the revenue. Each offender pleaded guilty.
[6]Director of Public Prosecutions (Cth) v Rowson [2007] VSCA 176.
[7]Liles v The Queen [2014] NSWCCA 289.
56Rowson’s case was a Director's appeal. He pleaded guilty to one count of obtaining financial advantage by deception and one count of attempting to obtain financial advantage by deception as a result of a dishonest GST scheme, where he dishonestly obtained $2,453,102.22 in GST refunds and claimed GST refunds totalling $1,333,173, which were not paid. He had no relevant prior convictions and admitted his involvement to police when he was apprehended. The Director’s appeal was allowed and the court resentenced Rowson to four years’ imprisonment for the substantive count and three years’ imprisonment for the attempt.
57The total effective sentence was five years’ imprisonment, with a non-parole period of three years.
58Liles successfully appealed a head sentence of eight years' and three months' imprisonment for her involvement in three tax avoidance conspiracies which defrauded the Commonwealth of $3,781,649. An accountant, she filed false tax returns, provided advice to co-conspirators and created documents which facilitated the fraud. The New South Wales Court of Criminal Appeal re-sentenced her to five years' and nine months' imprisonment, with a recognisance release after serving three years and six months.
Prosecution Submissions
59Ms Thomas and Ms Haban-Beer, who appeared for the prosecution, in support of written submissions, relied on a large volume of written materials, including written submission on sentence,[8] two folders of prosecution plea materials,[9] exhibit item 5483,[10] and a folder of spreadsheets.[11]
[8]Exhibit E
[9]Exhibit B.
[10]Exhibit 3
[11]Exhibit D.
60The prosecution submitted the conspiracy was premediated and well planned, It involved;
(a) obtaining confidential tax payer information,
(b) using that information to create sham business identities which were registered with the ATO,
(c) lodging fraudulent business activity statements which claimed GST refunds for those entities, and
(d) creating false identity documents to open bogus bank accounts for the receipt of the dishonestly obtaining refunds.
61In oral submissions, Ms Thomas contended I should not find the $1.5 million in cash that law enforcement agencies seized from safe deposit boxes controlled by Mr Charles and you on 14 September 2012, were the proceeds of this conspiracy.
62She submitted there was no direct evidence before me that they were. Ms Thomas submitted the cash in the safe deposit boxes could reasonably have been proceeds of drug trafficking or other crimes and not the tax conspiracy.
63The prosecution submitted your plea has utilitarian value, and parity, following the sentence of your co-conspirators, is relevant to your sentence.
64The prosecution also submitted delay is not of significant duration as to mitigate sentence.
65In a table of comparative cases, the prosecution referred to nine appellate decisions, including Rowson and Liles
66While all cases involve tax fraud, the circumstances of the offending and the offender were diverse.
67The sentences ranged between one year and eight months' and nine years' and 11 months' imprisonment. Six offenders were sentenced after trial, five were convicted of several charges, and five were convicted of conspiracy to defraud the Commonwealth, which carried a higher maximum period of 20 years' imprisonment.
Sentencing Principles
68The sentencing principles in cases of fraud against the revenue are well established.
69General deterrence and denunciation are prime sentencing considerations for serious fraud against the revenue because;
(a) firstly, the tax system relies on taxpayer trust and is open to abuse.
(b) Secondly, tax evasion is not a victimless crime, it is theft from the government.
(c) Thirdly, fraud is difficult to detect, and if undetected, the rewards may be great and,
(d) fourthly, investigation and prosecution is often complex and time consuming.
70Courts have a responsibility to protect the integrity of the revenue by imposing sentences which are likely to deter others from similar offending.[12]
[12]See Hili v The Queen (2010) 242 CLR 520, DPP (Cth) v Rowson [2007] VSCA 176 and DPP v Gregory (2011) 211 A Crim R 147.
71Your offending was objectively serious. It was planned, deliberate and deceitful. You were involved in a five million dollar tax fraud conspiracy. It continued over a two-year period and a large amount of revenue, two and a half million dollar was defrauded.
Role and Participation
72You set up false business entities to implement the fraud, you created and stored spreadsheets which contained the details of the sham businesses, you used false identity documents to create bank accounts, you lodged fraudulent GST claims and you laundered the dishonestly obtained GST refunds through false bank accounts.
73Mr Steele and you were the senior partners in the conspiracy. While Mr Steele brought lawful and unlawful accounting and tax expertise to the conspiracy, he participated in the lodging of $2,500,000 of fraudulent GST claims, whereas you were involved in lodging $5,000,000 of fraudulent claims.
74When sentencing Mr Steele, I said I could not decide whether not he was the senior partner or architect, as the prosecution alleged. The information then before me was inconclusive. Considering you left school after Year 10 and worked thereafter as a concreter, whereas he was tertiary educated and worked as a qualified accountant and a tax agent, I am prepared to find he was the brains or the architect of the enterprise.
75The loss to the Commonwealth was $2,500,000. Mr Patton submitted police recovered about $1,500,000 of those funds in 2014.
76In August 2014, Mr Steele and you each pleaded guilty to a charge of dealing with money, approximately $1,500,000, reasonably suspected of being proceeds of crime. Judge Chettle sentenced both of you to six months' imprisonment. Mr Steele was to be release on recognisance after six months, you were to be released after three months.
77Between 28 December 2011 and 27 August 2012, the two of you, with Cassandra Brett’s brother, Steven Brett[13], opened six safety deposit boxes where the cash was stored. Your offending then occurred between 23 August 2012 and
14 September 2012. None of you had any legitimate sources of income to explain your possession of the cash.[13]A pseudonym.
78Mr Steele’s unlikely explanation to the police was that he was holding the cash on behalf of a friend who had a gambling problem. At the time, you were his friend and had a gambling problem. The two of you were also laundering large sums of cash which were the proceeds of this conspiracy.
79You gave no explanation for your possession of the money. Your counsel told Judge Chettle there was a risk of further charges against you if the source of funds could be identified.
80As I said when sentenced Mr Steele, in my view, the coincidence of;
(a) You, with Mr Steele, laundering the dishonestly obtain tax refunds, totalling approximately $2,500,000 into cash,
(b) The location of nearly $2,000,000 cash in the safety deposit boxes during the operation of the conspiracy, and
(c) the absence of material to demonstrate between Mr Steele, Ms Brett and you had profited in the order of $2,000,000 from drug trafficking or some other crime, which has remained undetected, or any other source,
makes it more likely the cash or a substantial part of it was proceeds of this conspiracy.
81Accordingly, I decline to make the reparation order for $2,000,000 sought by the Commonwealth.
Consideration
82While your plea of guilty was not made until the first day of trial, in a case such as this, it has high utilitarian value. I also consider it is evidence of your acceptance of responsibility for your actions and some remorse.
83Your very limited prior criminal history has no relevance to this offending. However, your frequent subsequent dishonesty offending is relevant to specific deterrence and to my assessment of your prospects of rehabilitation.
84I accept you will suffer additional prison hardship as a result of the increased prison isolation and anxiety connected with the COVID-19 public health crisis.
85Considering there has been a delay of eight years in the prosecution of this charge, there has been a lengthy period of uncertainty for you, but it cannot be said that you have used the intervening time to advance your rehabilitation. Accordingly, I consider delay is relevant to your sentence to only a modest degree.
86As you have served other terms of imprisonment, including one likely connected to this offending, since you offended in this case, I must have regard to the principle of totality to avoid imposing a disproportionate sentence on you.
87I must also consider the party principle to ensure consistency of punishment of you and co-offenders.
88On 15 May 2020, I sentenced Daniel Steele to five years' imprisonment and fixed a minimum non-parole release period of three years. While he brought he financial expertise, lawful and unlawful, to the conspiracy, during his participation, fraudulent claims totalling $2.5 million were lodged; during yours the figure was $5 million. Balancing those factors, I am not satisfied there should be disparity between your respective sentences.
89On 8 December 2014, Kiara Leach pleaded guilty to one charge of aiding and abetting the obtaining of a financial advantage by deception and one charge of aiding and abetting an attempt to obtain a financial advantage by deception in a course of conduct between 4 January 2012 and 31 August 2012.
90Ms Leach provided tax file numbers to Mr Steele and you in respect of which the ATO paid refunds totalling $144,523 but did not pay $1,650,884. He was aged 22 years and had no criminal record. He gave an undertaking to give evidence against co-conspirators.
91Judge Punshon sentenced him to 20 months' imprisonment with immediate release. But for his undertaking to cooperate, the sentence would have been 32 months' imprisonment with recognisance release after serving 15 months. His Honour described both is past and future cooperation as very significant.
92Cassandra Brett was indicted on the same conspiracy as Mr Steele and you. On 3 April 2019, she pleaded guilty. During her participation in the conspiracy, the ATO paid fraudulent GST claims totally $207,385, a further $1,782,696 of GST refunds were unsuccessfully claimed.
93Judge Mullaly sentenced her to two years' and six months' imprisonment with immediate release.
94While less grave than yours, Ms Leach’s offending, in particular, and Ms Brett’s were both serious. Ms Leach’s offending involved a significant breach of his employer's trust. Ms Brett was actively assisting you for a significant part of the conspiracy. Each was relatively young and had no criminal record. Both were afforded leniency and avoided custodial sentences.
95Making appropriate adjustment for the significant differences between the circumstances of their offending and their personal circumstances and yours, I have also taken their sentences into account in determining the sentence I shall impose on you.
96While I must be cautious in my approach, because of your criminal history, I have some hope for your rehabilitation. You have made a positive response to your time in remand custody. Illicit drugs have been your ruin; in gaol, you are in enforced remission. I accept, if you can beat your drug addiction, with your work skills, you can re-establish yourself financially, and, once drug-free and financially stable, you are capable of reformation.
97I see a benefit to the community and you to continue your rehabilitation in the community under parole supervision after you have served time in prison.
98I have considered the cases referred to me to assist to identify and apply the relevant sentencing principles, and making adjustment for the differences in circumstances between those cases and yours, I have used them and the maximum penalty as a yardstick to measure the sentence I will impose upon you.
99You are a federal offender who must be sentenced in accordance with the provisions of part 1B of the Crimes Act 1914 (Cth).
100When sentencing a federal offender, the court must impose a sentence that is of appropriate severity in all of the circumstances of the offence. The court must also consider the facts set out in s.16A(2) of the Crimes Act if those matters are relevant and known to the Court. Although that list is not exhaustive, other common law principles of sentencing, including totality and parity, will apply in order to determine the appropriate sentence.
101In summary, your offending was objectively serious.
102You participated in a substantial $5 million tax fraud conspiracy resulting in a loss of $2,500,000 revenue over a period of two year. For an offence of this type, the primary sentencing considerations are general deterrence and the need for just punishment.
103Given your persistent recidivism since this offending, specific deterrence also has some significance.
104For those reasons, I must impose a sentence of imprisonment upon you. However, I have moderated the term of imprisonment and the minimum non-parole period to take into account;
· your guilty plea,
· your remorse,
· your limited prior criminal history,
· the additional hardship of the COVID-19 pandemic,
· delay,
· parity,
· totality, and
· your prospects of rehabilitation.
105By the sentence I impose, I must denounce your conduct, punish you and deter you and others from committing crimes of the same or similar kind. I must also look to your rehabilitation.
106Considering the circumstances of your offending, your personal circumstances and antecedents and endeavour to produce a sentence which reflects and promotes the purposes of sentencing in a manner appropriate to you, on the charge of conspiracy to dishonestly obtain a gain from the Commonwealth, you are sentenced to 5 years imprisonment which is to commence today. I fix a minimum non-parole release period of 3 years.
107I declare you have already served 143 days of your sentence by way of pre-sentence detention.
108I declare but for your plea of guilty, I would have imposed a sentence of six years' and nine months' imprisonment and fixed a minimum non-parole release period of four years and six months.
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