Director of Public Prosecutions v Gonzalez

[2019] VCC 1713

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

AT MELBOURNE
CRIMINAL JURISDICTION

CR 17-02453

DIRECTOR OF PUBLIC PROSECUTIONS

v

JOSIE GONZALEZ
ALVARO GONZALEZ

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JUDGE:	HIS HONOUR JUDGE LACAVA
WHERE HELD:	Melbourne
DATE OF HEARING:	12 June 2019 (Trial) 28 August (Plea)
DATE OF SENTENCE:	18 October 2019
CASE MAY BE CITED AS:	DPP v GONZALEZ
MEDIUM NEUTRAL CITATION:	[2019] VCC 1713

REASONS FOR SENTENCE
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Subject:  Obtaining financial advantage by deception.  Continuing criminal enterprise.
Sentence:  Josh Gonzalez - Nine and a half years' imprisonment with a non-parole period of seven years.  Alvardo Gonzalez - Seven and a half years' imprisonment with a non-parole period of five years.

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APPEARANCES:	Counsel	Solicitors
For the Director of Public Prosecutions	Mr A. Grant
For Accused J. Gonzalez	Mr A.L. Hands
For Accused A. Gonzalez	Mr P. Kilduff

HIS HONOUR:

1Josie Gonzales and Alvaro Gonzales, each of you falls to be sentenced after a trial before a jury, which resulted in each of you being found guilty of fourteen (14) charges of obtaining a financial advantage by deception.  The maximum penalty for this offence is imprisonment for 10 years. 

2Each of the charges was prosecuted on the basis that you obtained a financial advantage in each instance between dates, on a course of conduct basis. 

3The prosecution case, accepted by the jury, was that over the period of offending, between 15 March 2011, and 5 June 2013, (a period of about 26 months), you prepared a total of 428 false invoices that purported to be for the costs of legal fees, and presented those invoices to Dual Australia Pty Ltd ('Dual') for payment, and each false invoice was paid by the electronic transfer of money into the account of JAAG Lawyers Pty Ltd ('JAAG').

4Each of the false invoices was prepared by you Josie Gonzales, and purported to be from JAAG, a company set up by the both of you.  The name was an acronym for 'Josie And Alvaro Gonzales'.  The shareholder of JAAG was another company controlled by the both of you that acted as trustee for a family trust, also controlled by the both of you.

5Each invoice falsely charged Dual for legal services rendered, and some of them purported to be for 'counsel fees', and even named, (again falsely), a barrister, giving the impression that the invoice was for barrister’s fees or counsel fees incurred to a named barrister. 

6You, Josie Gonzales, prepared each of the false invoices on a pro forma, prepared for the purposes of the fraud by you Alvaro Gonzales. 

7At the time of offending, you, Josie Gonzales, were the National Claims Manager for Dual, and you were familiar with its claims systems, and record management using a program named Figtree.  You also had full knowledge of those insured clients of Dual that had past or current legitimate insurance claims on professional indemnity insurance policies written by Dual for Lloyds underwriting syndicates based in London. 

8Each false invoice prepared by you was also addressed to you, Josie Gonzales, as the National Claims Manager of Dual, and it named a legitimate insured of Dual.  For example, the first false invoice on 15 March 2011, after setting out formal references et cetera, was addressed as 'Re Aboriginal and Torres Strait Islander Healing Foundation', which was an insured of Dual.  It then went on 'To our professional services $8,975.00.  It then added as a separate amount for GST of $897.50.  The total of the first invoice was $9,872.50'.  To appear legitimate, each false invoice included GST, which was remitted by JAAG to the Australian Taxation Office (ATO) and that could then be claimed back by Dual from the ATO as an input tax credit.

9Each false invoice contained account details for the payment of the invoice to be made electronically.  You, Josie Gonzales, received each of the false invoices from yourself at JAAG, and in your capacity as National Claims Manager at Dual, you forwarded each invoice to the accounts department at Dual, along with an email advising that the invoices could be paid.  Using the evidence related to Charge 1 and the first schedule of invoices as an example, on 17 March 2011, you sent an email in the following terms to Sonia Christian, an accounts clerk at Dual, attaching a batch of invoices.  In your email you said:

'I have checked these invoices and am happy for these to be paid.  To assist you, I have attached an Excel spreadsheet, which sets out what you will have to enter into Figtree and where.  It is pretty self-explanatory.  Please note the “payee” direction I have put into the spreadsheet for JAAG Lawyers.  The invoices from JAAG Lawyers will relate to counsel’s fees, so I will need you to enter the “payee” as “counsel” and not the law firm’s name.  This will be important for my reporting purposes.  You will need to set this up in the Address/Creditor/ Maintenance part in Figtree.  I know how to do this in Figtree, so if you are unsure how to do so, please let me know'.

10The first batch of invoices forwarded by you to the accounts department by email on 17 March 2011 occurred shortly after Dual had taken its’ claims management in-house.  Dual went live with its’ in-house claims management on or about 1 March 2011, and you Josie Gonzales were in charge as the National Claims Manager.  Your email attached four false invoices from JAAG and a number of other genuine invoices received from other law firms such as DLA Phillips Fox and Allens Arthur Robinson.  In your attached spreadsheet, it was only the false invoices received from JAAG Lawyers that were singled out for recording the payee as 'counsel'.  In every other case, the payee was recorded as the named firm to which the payment had actually been made.  And this was the case throughout the offending, save on a few occasions where the accounts department, unknowingly fell into error and did not follow your instructions.  It was the prosecution case, accepted by the jury, that your instruction to Sonia Christian to record the payee in Figtree as 'counsel', instead of JAAG Lawyers, was to cover up the fact that payment had been made to JAAG Lawyers which was not known as a traditional provider of legal services to Dual and was not part of an informal panel of legal firms used by Dual.  JAAG never briefed counsel, and no fees were ever paid to counsel.  The reference to 'counsel', was a ruse used by you Josie Gonzales to avoid detection.  When pressed in cross examination by the prosecutor, you told the jury 'counsel' is just a word.  At another point, you inferred Alvaro could be regarded as counsel.  These were just signs of your defiance in the face of having been caught out.  It appeared, you, Josie Gonzales, had decided that you would give untruthful evidence before the jury at all costs.  I found your evidence most unconvincing, and obviously untrue in many respects.

11It was by this means that over the period of offending, you both obtained for JAAG, a total of $17,444,174 by deception.  The deception was that each invoice was false, in that it purported to be for legal services rendered, whereas in fact, JAAG had not provided any legal services and there was no solicitor-client relationship between JAAG and Dual, or indeed any other person or company.

12Thus far, I have referred only to the false invoices and documents that commenced your offending, which show how you set up your successful fraud.  Your offending progressed in the same way over a period of more than two years.  However, it is noticeable that once established, the level of your offending increased, in that the amounts claimed in each false invoice increased, no doubt once you were comfortable, that your fraud was successful, in delivering money to JAAG.

13This is obvious from the particulars set out in the schedules to the indictment itself.  The indictment charged 14 charges on a course of conduct basis, and provided a schedule to each charge that set out the date and number of each invoice, as well as the amount of each invoice and the name of each insured that had in fact made a claim through Dual. 

14The jury was provided with iPads that contained a copy of the indictment and the schedules to it.  By using hyper-text links formatted into the typed schedule to the indictment, the jury was able to easily move from the schedule in each charge, to a copy of each false invoice relating to that charge, a copy of the bank documents recording the transfer of money from Dual to JAAG, and to the emails and spreadsheets prepared by you Josie Gonzales, giving instructions to the accounts department that you were happy for the invoices to be paid and how to record the payment of invoices to JAAG in Figtree as a payment to 'counsel'.  There was no dispute in this trial about the provenance of the documents relied upon by the prosecution to prove its case.

15Charge 1 charged offending on a course of conduct basis, between 15 March 2011 and 20 June 2011.  It includes sixty-four invoices, which resulted in a total financial advantage received of $911,031.00.  An average false invoice amount of more than $14,000.00.

16Charge 2 charged offending on a course of conduct basis, between 1 July 2011 and 30 September 2011.  It includes fifty-six invoices, which resulted in a total financial advantage received of $1,233,144.00.  An average false invoice amount of more than $22,000.00

17Charge 3 charged offending on a course of conduct basis, between 7 October 2011 and 15 December 2011.  It includes thirty-eight invoices, which resulted in a total financial advantage received of $1,282,897.00.  An average false invoice amount of more than $33,000.00

18Charge 4 charged offending on a course of conduct basis, between 15 October 2011 and 15 December 2011.  It includes six invoices, which resulted in a total financial advantage received of $321,992.  An average false invoice amount of more than $53,000.00.

19Charge 5 charged offending on a course of conduct basis, between 12 January 2012 and 29 March 2012.  It includes thirty-four invoices, which resulted in a total financial advantage received of $1,225,950.  An average false invoice amount of more than $36,000.00.

20Charge 6 charged offending on a course of conduct basis, between 5 January 2012 and 29 March 2012.  It includes nineteen invoices, which resulted in a total financial advantage received of $1,117,710.00.  An average false invoice amount of more than $58,000.00.

21Charge 7 charged offending on a course of conduct basis between, 4 April 2012 and 28 June 2012.  It includes twenty invoices, which resulted in a total financial advantage received of $807,620.00.  An average false invoice amount of more than $40,000.00.

22Charge 8 charged offending on a course of conduct basis, between 4 April 2012 and 28 June 2012.  It includes twenty-four invoices, which resulted in a total financial advantage received of $1,525,260.00.  An average false invoice amount of more than $63,000.00.

23Charge 9 charged offending on a course of conduct basis, between 5 July 2012 and 27 September 2012.  It includes sixteen invoices, which resulted in a total financial advantage received of $642,950.  An average false invoice amount of more than $40,000.00.

24Charge 10 charged offending on a course of conduct basis, between 5 July 2012 and 27 September 2012.  It includes thirty-three invoices, which resulted in a total financial advantage received of $2,112,220.  An average false invoice amount of $64,000.00.

25Charge 11 charged offending on a course of conduct basis, between
11 October 2012 and 21 December 2012.  It includes seventeen invoices, which resulted in a total financial advantage received of $776,600.  An average false invoice amount of more than $45,000.00.

26Charge 12 charged offending on a course of conduct basis, between 4 October 2012 and 21 December 2012.  It includes twenty-eight invoices, which resulted in a total financial advantage received of $1,773,200.00.  An average false invoice amount of more than $63,000.00.

27Charge 13 charged offending on a course of conduct basis, between 3 January 2013 and 30 April 2013.  It includes twenty invoices, which resulted in a total financial advantage received of $877,580.00.  An average false invoice amount of more nearly $44,000.00.

28Finally, Charge 14 charged offending on a course of conduct basis, between
3 January 2013 and 30 April 2013.  It includes forty-four invoices, which resulted in a total financial advantage received of $2,836,020.00.  An average false invoice amount of more than $64,000.00.

29Charges 4, 6, 8, 10, 12 and 14, in the circumstances are each continuing criminal enterprise offences within the meaning of the Sentencing Act 1991 (the Act).  That is because each invoice dealt with in each of those charges, on a course of conduct basis, exceeded the amount of $50,000.  In these continuing criminal enterprise charges, the maximum penalty for the offence in each of those charges is double the prescribed penalty being 20 years imprisonment.

30This offending was prolonged and there were 428 occasions of false invoicing.  As can be seen from what I have set out above, the average amount of the false invoices more or less increased, as your offending progressed.  It thus became more and more audacious.  The prosecution case, accepted by the jury, was that you committed this offending together on a joint criminal enterprise basis.  The jury could not have convicted you Alvaro Gonzales of these crimes, unless it accepted that you acted with your wife in a joint criminal enterprise. 

31You, Josie Gonzales, were at all material times a legal practitioner and admitted to practice in this State.  After you completed your articles at a prestigious Melbourne law firm, you were employed as a claims officer at a company ProClaim, which acted as a claims department for insurers that did not have an internal claims department.  Dual was one such client and for a period of time, whilst at ProClaim, you acted handling the claims of Dual.  That work made you familiar with the business of Dual and through that work, you met and became friendly with Mr Coates, the founder of Dual.  In 2010, you had at least two meetings with Mr Coates, he having identified that Dual should take its’ claims in-house, instead of having them processed by ProClaim.  He liked you, and he respected your work and your work ethic.  He trusted you, and decided to poach you from ProClaim.

32You, Josie, met with Mr Coates in Melbourne, at which time you presented a proposal for Dual to take in-house, not only the processing of claims, but also legal services.  Instead of retaining firms in a semi-formal panel of firms to give legal advice, you proposed yourself going in-house at Dual to process the claims and for Dual to use a legal firm set up by you and Alvaro to do the legal work.  The proposal was in writing and was in evidence, Exhibit A.  It represented that such an arrangement would in fact save Dual a lot of money.  Mr Coates rejected the proposal, but wanted to take the claims processing in-house, and he wanted you to do it.  He wanted to employ you.  Mr Coates advised you that he was not interested in you and Alvaro doing Dual’s legal work, because he perceived there was a conflict of interest.

33Both you Josie Gonzales and Mr Coates met again in 2010, at which stage you had refined your original proposal for the claims to be taken in-house by Dual and for Dual to retain a legal firm set up by you and your husband to do the legal work, Exhibit B.  The proposal was again rejected by Mr Coates, but he still wanted you Josie to be the claims manager at Dual, to handle the claims of insured clients in-house instead of by ProClaim as had previously been the case.

34By November of 2010, you, Josie Gonzales, were employed as the National Claims Manager of Dual.  There is a contract of employment in writing setting out the terms and conditions of your employment, Exhibit C.  It makes no mention of JAAG and is also silent on any proposal that you had for Dual, to retain a law firm set up by you and Alvaro to do its’ legal work in-house. 
Mr Coates in his evidence was emphatic that he never at any time agreed with you, for a legal firm set up by the two of you, to do legal work for Dual.  He gave evidence that until your fraud was discovered in June 2013, he had never heard of JAAG Lawyers.  You, Josie, in evidence, told the jury that at your second meeting with Mr Coates, he agreed in full with your written proposal and for a law firm set up by you and your husband to carry out Dual’s legal work.  Your evidence was he said 'Yes go for it'.  That in my judgment was a blatant lie and would have been seen as such by the jury.  The jury clearly accepted the evidence of Mr Coates.

35The prosecution case was that within days of you Josie Gonzales commencing work as the National Claims Manager at Dual, on the 1 of November 2010, JAAG Lawyers Pty Ltd was incorporated on the 5 November 2010, Exhibit D.  The incorporation was arranged by you, Alvaro Gonzales, instructing accountants to incorporate the company.  Both of you were appointed as directors of JAAG.  Another company, A&J Gonzales Pty Ltd, which was trustee of your family trust, was the only shareholder in JAAG Lawyers Pty Ltd. 

36To give the appearance of actually being a practising law firm a so called  'virtual office', with a Collins St address was arranged by you Alvaro Gonzales on the 7 January 2011, about two months before the first false invoice was sent, Exhibit V.  In fact, JAAG was a law firm in name only.  It had no real office from which it practiced, and it had no clients, not even Dual.

37The prosecution case accepted by the jury, was that JAAG Lawyers was formed by the two of you, as part of your joint criminal enterprise, for the sole purpose of defrauding Dual, and that within days after the transition of the claims files from ProClaim to Dual in March 2011, the both of you began to defraud Dual by commencing to send, what became the 428 false JAAG Lawyers invoices to Dual, which were signed off for payment by you, Josie, and the proceeds of the fraud started to flow to JAAG.  As I said earlier, it paid over $5.5M in GST and income tax.  I conclude that was done also to avoid detection.

38The prosecution case accepted by the jury, was that you Josie, being the criminal offender working inside Dual, took steps to conceal the fact that payments were made to JAAG during the course of the fraud, and when questions were being asked from London about the high amount of money being spent on counsel’s fees.  When questions were asked, you suggested recording the payments as 'insureds' own costs', and later in the offending, even started naming several barristers as having performed work when that was not in fact the case.  See Exhibits H to M and Q and R.  Mr John Larkins was one such barrister.  He gave evidence he had never heard of JAAG, even though you Josie had named him on an invoice.  See Invoice 14961 dated 14 March 2013, part of Exhibit N for Charge 14.

39You Josie took whatever steps were necessary to perpetuate this cover up, because the both of you knew that JAAG had never been asked to do any legal work for Dual and Mr Coates had rejected your proposals that it should do so.

40You Josie Gonzales went on maternity leave to have your second child in early May 2013.  The prosecution case accepted by the jury, was that whilst on maternity leave, and when contacted by Josie Karakotina with queries about invoices and payments, you Josie replied in a way that deliberately did not mention JAAG Lawyers and in a way which was simply obfuscation.  See again Exhibits H to M and Q and R.

41Each of the 428 invoices was paid by Dual and the money went from Dual to JAAG’s bank account at the Bendigo Bank in Carlton.  See Exhibits S, T and U.  That account was opened by you Alvaro Gonzales, and you were the one who dealt with the banking and tax affairs of JAAG and related companies.  The prosecution case accepted by the jury, was that you Alvaro, always knew that no legal work had been done by JAAG for Dual, as referred to in the false invoices and that barristers referred to in some of the invoices had not done any work either.  The both of you knew that JAAG had no clients, not even Dual, and that all of the money in JAAG’s bank account had come from Dual, in payment of the false invoices because the bank statements electronically recorded this information.

42The prosecution case that this was a joint criminal enterprise between the two of you, was in my view unassailable.  But your role Josie Gonzales was as the principal offender.  The fraud could not have taken place without you.  You were the person on the inside as the trusted employee.  Whilst you both clearly agreed to carry out these criminal acts together, in a joint criminal enterprise, you Josie were the mastermind and the principal perpetrator of the fraud.  You prepared and submitted the false invoices, and whilst you did not officially approve their payment, you made clear that as the National Claims Manager, you were happy for them to be paid and without your clearance they would not have been paid.  You, Alvaro, gave full support to your wife and full support to the fraud.  You set up JAAG Lawyers.  You set up the virtual office.  You set up the bank accounts and you instructed the accountants about taxation and like matters.  You prepared the pro forma invoice used.  You helped spend the money, paying more than $4M cash for a home in Kew, shared by the both of you, Exhibit DD.  You were also admitted to practice as a legal practitioner and you were fully engaged in this fraud. 

43The fraud was discovered in early June 2013, when Ms Karakotina who had become suspicious of the extraordinary amounts of money being paid to JAAG as counsel fees, became suspicious and obtained a company search on her own initiative of JAAG.  At that point, it was revealed to her and to Dual, that JAAG Lawyers was in fact the both of you.  A quick audit was done and the fraud revealed.  All that Dual knew that JAAG had never been asked to provide legal services.

44The money you obtained from your fraud, whilst it came to JAAG from Dual, it was in fact money held in trust by Dual for its’ Lloyds syndicates in London.  What you did had the potential to destroy the business of Dual because of the total amount of money obtained by JAAG.  There was no victim impact statement filed or relied upon.

45To its good fortune, on 12 June 2013, Dual retained lawyers in Melbourne who ex parte, obtained freezing orders over all of your assets and those of JAAG and companies connected with you, Exhibit JG-3.  That order made by Justice Almond, preserved what was left of the stolen money that was deposited in accounts, and your assets which were later sold to repay the money stolen.  Justice Almond also made a search order that authorised representatives of Dual to search your home in Kew and a unit owned in your name Josie Gonzales, in North Carlton.  As a result of searches of those properties, copies of the false invoices and other incriminating documents were seized.  The freezing order permitted the release of funds to enable the both of you to get legal advice.  The search order permitted you to inspect documents seized by appointment, contrary to your evidence Josie Gonzales, that you could not inspect your own documents to defend yourselves.

46You both had legal advice from Mr Sdraulig of SDR Law, as to your rights in the face of the freezing order and the search order.  In fact, over the next three months, the freezing order was varied a number of times, to enable more funds otherwise frozen, to be released to enable you to obtain legal advice. 
Mr Sdraulig gave evidence that more than $300,000 was expended on you receiving legal advice from his firm and that he had briefed Dr Clifford Pannam QC, with Mr Sam Hay, to advise you as well, as Mr O.P. Holdenson QC relating to your position at criminal law.  I conclude, that as legal practitioners having access to the level of legal advice that you did, each of you fully understood the meaning and effect of the deed when you signed it.  It is a nonsense to suggest that you were both victims of the freezing order without recourse, which was the effect of the evidence of both of you on the voir dire, and of your evidence Josie Gonzales before the jury.

47Having received legal advice, there was no civil trial between yourselves and Dual which had made a claim for return of all of its’ money defrauded by you in the Supreme Court by generally endorsed writ.  There was no statement of claim filed and there was thus no defence required to be filed on your behalf.  Instead, what happened was that each of you, and companies relevantly associated with you, including JAAG, entered into a deed of settlement dated 19 September 2013, (“the Deed”).  The effect of which was that both of you agreed to repay the money that you had obtained by fraud from Dual.  All $17,444,174, Exhibit C.

48The deed went into evidence after I ruled it was admissible, as an admission against interest by each of you.  The deed in the recitals set out what the both of you alleged in the trial, namely that you, Josie Gonzales, had been authorised by Mr Coates, to use JAAG to undertake claims management and legal services on behalf of Dual, and that between May 2011 and May 2013, JAAG had carried out such claims management work and provided legal services to Dual.  But the deed provided JAAG had not rendered invoices for this work, and did not intend to do so.  The deed also recited what was in fact the position, namely that Dual denied that any claims management or legal services were provided by JAAG to Dual, (Recitals D and E).

49The deed went on to set out, amongst other things, what were the essential factual details of your offending.  It set out in definition 1.1(f), that you both agreed that you would admit the invoices were in fact false, as JAAG never provided legal services to Dual.  In definition 1.1(h), you both agreed that you would admit that JAAG misappropriated $17,444,174.

50The reason why the deed provided for 'Admissions' that you would each make to the Australian Taxation Office, was because of the total money obtained by JAAG from your fraud on Dual, nearly $5.5m had been paid as both GST and income tax to the Australian Tax Office.  In order for Dual to be repaid in full, and because both of you had no source of funds to repay this money, under the terms of the deed, you both agreed to cooperate with Dual in having this money repaid to Dual by the Australian Tax Office.  And that is what occurred.  The Australian Tax Office money was repaid, because it was not income to JAAG.  It was in fact the proceeds of your crimes.  See Exhibit JG-5.

51The deed provided that upon repayment of all of the money obtained from JAAG from Dual, all of the parties to the deed released each other from any further civil proceedings.  But the release by its’ terms, did not preclude Dual from reporting your fraud to the police. See clause 7(c).  Your crimes were not reported to the police by Dual, but by the Legal Services Board, which had investigated your conduct by 30 September 2013 and it lodged a complaint with the police in November 2013.

52You, Josie Gonzales, gave evidence and you were cross examined.  You gave evidence that you agreed with Mr Coates that you would provide claims services to Dual, and a law firm set up by you and your husband would give legal services to Dual.  The jury clearly rejected your evidence.

53You gave evidence that you only signed the deed because you could not afford to fight Dual because all of your money was tied up and you took a commercial decision not to fight Dual. 

54You denied any fraud and you said the invoices were genuine and prepared by you, on the basis of timesheets kept by Alvaro, who carried out legal work on the files concerned at your request.  You produced a file of material said to contain examples of the kind of work carried out by Alvaro.  See Exhibits JG-8 to JG-39.  By this means it was your defence, clearly rejected by the jury, that JAAG had a claim of right to the money it had been lawfully paid by Dual.  A glance at the documentation produced by you, Josie Gonzales, demonstrates your evidence was sheer nonsense.  In my view, most of your evidence was a concoction of lies.  On the plea, I said it was punctuated only by your prevarication.  I repeat that comment.

55You, Alvaro Gonzales, did not give evidence, as is your right, but adopted the evidence given by your wife insofar as it also sought to afford you a defence.  On the voir dire you gave similar evidence to that of Josie given in the trial.

56In my view, the defence of each of you to these charges was hopeless, and was seen as such by the jury.  No jury would ever accept that two junior members of the legal profession, could set up a law firm with no office and no clients and render fees of more than $17m for a little over two years work.  This was especially so when viewed through the fact, that the proposed purpose of this arrangement was to save Dual money, when in fact by the actions of both of you, what occurred was the exact opposite.

57Your offending is at a very high level for a fraud of this kind.  Your counsel, Josie Gonzales, submitted that because the money had been repaid, I should regard the offending as being mid-range.  I reject that submission.  This offending involved 428 false invoices raising $17,444,174.  It was prolonged over about twenty-six months.  It was relatively unsophisticated, yet simple, but planned.  It was able to succeed as it did, and for as long as it did, because it involved a breach of trust by you, Josie Gonzales, as a member of the legal profession and a trusted employee.  No one questioned your instructions and carried them out in full.  When questions were asked, you covered up the fraud.  This enabled the fraud to be covered up until you were absent from your employment on maternity leave in May 2013.

58This was not a fraud committed in the context of a solicitor client relationship.  But the fact, you, Josie Gonzales, were a legal practitioner should have meant you were more trustworthy.  I ask rhetorically, who would expect a legal practitioner to engage in a fraud like this?  I regard your conduct in committing this fraud on this scale, whilst a legal practitioner as being disgraceful.  The same description applies to you, Alvaro Gonzales.  You were a also legal practitioner who gave full support to this fraud and assisted in arranging and perpetuating it.  You helped spend and invest the proceeds.

59Neither of you has expressed any remorse.  You, Josie Gonzales, tried to lie your way to acquittal.  I am not here to punish you for that, as you are to be sentenced but for the charges only that you have been convicted of.  But I do take your lying and prevaricating in giving evidence into account in assessing your prospects for rehabilitation.

60Exhibit P produced in the trial, sets out in part what you did with the money.  As I said, nearly $5.5m had been paid to the Australian Taxation Office.  At the time of the freezing order, just over $6m was invested in term deposits, $468,495 was identified as 'living expenses', which is a lot of money over a period of just over two years.  In addition, $322,898.52 was calculated as unidentified withdrawals, $4,749,302.79 was used to acquire 50 Fellows Street in Kew, which was purchased in your name, Alvaro Gonzales.  I  conclude that you both lived very well from the proceeds of the fraud, at the expense of Dual, until you were caught out.

61Having said all of that, the fact remains that the money stolen by the both of you has been repaid in full, and that is a significant factor that I must take into account, in arriving at an appropriate sentence.  Here, the money was repaid in the face of a freezing order having been obtained with civil proceedings on foot.  I do not see the fact of repayment as evidence of remorse.  It was repaid, as it ought to have been, once your fraud was exposed and fortunately, you still had the money and assets which could be sold to make up the amount.  This included an investment property in North Carlton that you, Josie, had owned before the fraud commenced.  But the money was not repaid with regret, nor with an apology for your actions.  Instead, it was repaid, you both maintaining, an entitlement to it as expressed in the recitals to the deed.  But as I say, it was repaid and that is important.  It is one of the important factors I have taken into account in reducing the total effective sentence I will impose.  Had the money not been repaid in full, as it has been, I would have imposed a higher total effective sentence.

62Another important factor weighing heavily on me in arriving at my overall sentence, and fixing a non-parole period for each of you, is the fact you will both be imprisoned and you have two young daughters, aged 11 and six, now being cared for by the cousin of you, Alvaro Gonzales, and the girls attend a State primary school in the Western suburbs.  The fact both children will be without a parent at home, whilst you are both in prison, will doubtless be very difficult for them and for the relatives caring for them, who also have their own children to care for.  In that regard, I received into evidence as Exhibit J-3 on the plea, a letter from the cousin caring for the girls which addresses some of the impacts from your collective incarceration upon both girls and the family now caring for them.  I have taken this evidence fully into account. 

63I regard this fact as an exceptional circumstance, which does not operate as a factor mitigating your offending, but it does, I think, call for the sentencing discretion to exercise some measure of mercy.  See, Markovic v R and Pantelic v R [2010] VSCA 105, at paragraphs 77 to 79, and the cases referred to therein at footnotes 39 and 40.  Again, this exceptional circumstance is another important factor I have taken into account, in reducing the total effective sentence I will impose.  Absent this exceptional circumstance, and absent the fact the money has been repaid, I would have imposed a higher total effective sentence on each of you.

64Whilst neither of you can be punished for having pleaded not guilty to each of the charges and run a trial, as is your right, at the same time, you cannot expect to receive a reduction in sentence that would normally follow, had you pleaded guilty to the charges.  You were both not charged until November 2016.  There followed a number of committal mentions, before a one day contested committal on 7 September 2017.  You were committed to stand trial in the Supreme Court, before the charges were transferred to this court on 11 December 2017.  On that day, a trial date was fixed of 4 April 2019.  The trial did not proceed at that time for various reasons, including funding of your respective representation.  I heard some two days of pre-trial argument in March of this year and a further four days in June.  I ruled on the admissibility of the deed on 11 June and a jury was empanelled on that day.  The jury returned verdicts of guilty to all charges on 3 July 2019, and I heard your respective pleas on 28 August 2019.  The trial lasted twelve sitting days.  The depositions consisted of 3,296 pages and there were some twenty witnesses involved in the trial.

65The reason why I set all this out, in some detail, is that whilst there has been some delay which I must, and do, take into account.  But that is not unexpected in cases of this kind, where the investigation is long and time consuming and where the exhibits are large, both in number and volume.  Some of the delay here, during 2019, may be attributed to funding issues and difficulties finding counsel to represent you on Legal Aid funding.  That is regrettable.  What is important is how you have both used your time whilst you have each had these matters hanging over your heads.  I appreciate that neither of you has re-offended since May 2013.

66You, Josie Gonzales, are aged 45.  At the time of offending, you were aged between 38 and 40.  You are one of two children born to Italian immigrants.  Your father who is elderly is still alive and your mother passed away in 2016.  I was told and accept that as a result of this offending, you are now estranged from your brother.  At school, you were educated in the Catholic system and you completed Year 12 with an Anderson score of 330.  You commenced a Bachelor of Legal Studies at La Trobe University, where you met your husband.  In 1998, you completed an Advanced Diploma in Business/Legal Studies at RMIT University.

67In 1999, you commenced work as a para-legal at Phillips Fox, where you completed articles and you stayed on there until 2006, when you commenced working at ProClaim.  You and Alvaro married in 2006 and you lived in the North Carlton Unit, previously purchased by you.

68I was told and accept that the both of you are practising members of the God With Us Christian Church in Braybrook.

69You, Josie Gonzales, have admitted a relevant criminal history.  In November 1995, you were dealt with in the Sunshine Magistrates’ Court on charges of obtaining financial advantage by deception and obtaining property by deception.  You were then aged 22 years.  You received a disposition of non-conviction adjournment on those charges.  I was told and accept this prior matter was fully disclosed to the Board of Examiners, prior to your admission in the Supreme Court.

70There is a remarkable similarity between that prior offending and this offending, for which I sentence, you Josie Gonzales for.  The prior offending occurred whilst you were employed as a salesperson by Myer, at Highpoint West.  On 51 occasions in the course of your employment, you falsified vouchers relating to customers returning goods and obtained a total financial advantage of $24,332.00.  That is relatively serious offending and you were fortunate to get the disposition that you did.  The only mitigating factors that I can see, is that you pleaded guilty and the offending was committed when you were young.  Because of the facts surrounding your prior offending, I am somewhat surprised that the Board of Examiners made a certificate that permitted your admission to the legal profession. 

71Your prior offending here is relevant.  It is of a similar kind and shows that you did not learn your lesson.  There is a need for some specific deterrence to be reflected in your sentence.

72I received into evidence a report from Jeffrey Cummins dated 21 August 2019, relating to you Josie Gonzales.  He thought you suffer from some agitated depression as a result of the jury verdict and the position you now find yourself in.  He also thought your mental state may deteriorate after sentencing.  It was not suggested that you suffer from any mental health condition that needs to be taken into account in sentencing you, or that there are any facts giving rise to any of the Verdins principles.

73Your counsel, Mr Hands, submitted there were a number of factors imparting what he termed 'Extra-Curial Punishment'.  That you had to give up your ill-gotten gains and your North Carlton property, that you were followed by the press and that you will probably never again work as a legal practitioner.  I accept all of these things may be difficult for you, but they are all natural consequences of the offending you engaged in.  I accept that not being there for your daughters, and your concern for them whilst in custody, will likely make your time in custody more burdensome.  In arriving at an appropriate sentence for you, Josie Gonzales, I have taken all of this into account.

74Your counsel, Mr Hands, submitted I should provide for a lengthy period on parole and fix an early non-parole period.  Because of your prior offending, your lack of remorse and what I consider to be blatant lying and prevarication during the course of your evidence, I consider your prospects for rehabilitation to be only fair.  I doubt you will ever again find yourself in a position to again offend in this way, but given your display in this court, were you to be given an opportunity to do so, it would not surprise me should you re-offend.  I have therefore fixed a non-parole period which I believe to be appropriate in the circumstances.

75You, Alvaro Gonzales, are now aged 51 years.  At the time of offending, you were aged between 45 and 47 years.  Your counsel, Mr Kilduff, conceded that your offending is serious and the primary sentencing considerations in sentencing you include general deterrence, denunciation and just punishment.  He also conceded that in sentencing on a course of conduct offending, the sentence must be guided by the principles expressed in Crawford (A pseudonym) v The Queen [2018] VSCA 113 at [64] to [67].  He conceded the fact you are both legal practitioners is an aggravating factor in your offending, which it clearly is.  Mr Kilduff submitted that unlike your wife, you were not in a position of trust, as an employee.  I accept that to be the case, but you were part of the planning for the offending and you went along with it handling and spending the proceeds.

76Mr Kilduff relied upon a psychological report of Stephen Gault, (Exhibit A2). 
Mr Gault opined that 'mental impairment has no relevance for Mr Gonzales’ sentencing'.  Mr Kilduff relied upon the report because it sets out much of your background history.  You, Alvaro Gonzales, were born in Uruguay and you are the youngest of three brothers.  Your family migrated to Australia when you were aged six.  After settling in Melbourne, you attended schools in the Catholic system in the western suburbs.  You commenced an Arts Degree at La Trobe University studying sociology and music.  You left after one year and spent the next twelve months working as a percussionist in an orchestra.  The following year, you enrolled at Victoria University studying psychology, sociology and information technology.  After completing this degree, you specialised in information technology.  In 2004, you enrolled in law, studying by correspondence from the University of New England.  You graduated in 2007 and completed articles at Moray & Agnew in 2008 and you were admitted as a legal practitioner in 2009. 

77You have a good work record whilst studying in various jobs.  After your admission, you were a stay at home father minding your daughter.  Since this offending, you have been engaged selling on E-bay and assisting your wife in a business that sells beauty products online. From the report of Mr Gault, I conclude you have adjusted to prison life reasonably well.

78You have no prior convictions and this offending aside, you have led an unblemished life.  But you have expressed no remorse for your offending, and you insisted to Mr Gault that you had done nothing wrong.  This is in the face of what I consider to have been an overwhelming prosecution case.  But I think you were induced into this offending by your wife.  As legal practitioners, both of you ought to have known better.  Alvaro Gonzales, I assess your prospects for rehabilitation as being good.

79Section 9 of the Act permits the court to impose an aggregate sentence, if an offender is convicted of two or more offences founded on the same facts, or form, or are part of a series of offences of the same or similar character.  Your offending in each of the charges is founded on the same facts, or form, and was part of a series of offences of the same or similar character.  On the plea, I raised with your counsel the prospect of me imposing an aggregate sentence on each of you.  Neither of your counsel opposed that course.  However, because Charges 4, 6, 8, 10, 12 and 14 are each continuing criminal enterprise offences, and because I am required to sentence each of you on each of those charges as a continuing criminal enterprise offender, so that the basis of my sentence and the reasons for it is fully transparent, I have decided not to sentence you both on an aggregate sentence basis, and I will impose a sentence that relates to each individual charge.

80In sentencing you both for crimes of this kind, the sentence must have regard to deterrence, both general and (where relevant), specific.  The sentence must denounce your offending and have proper regard to your prospects of rehabilitation.  Here, there are fourteen charges and each one is serious.  You each engaged in a lot of serious offending, over a period of more than two years and by deception you obtained more than $17m.  But even though there are a number of offences, in arriving at just punishment, I must also have regard to the sentencing principle of totality.  The sentences that I will now impose on each of you have regard to these sentencing principles.

81Josie Gonzales, on Charge 1, you are convicted and sentenced to a term of imprisonment of two years.

82On Charge 2, you are convicted and sentenced to a term of imprisonment of three and a half years.

83On Charge 3, you are convicted and sentenced to a term of imprisonment of three and a half years.

84On Charge 4, you are convicted and sentenced to a term of imprisonment of three years.

85On Charge 5, you are convicted and sentenced to a term of imprisonment of three and a half years.

86On Charge 6, you are convicted and sentenced to a term of imprisonment of five years.

87On Charge 7, you are convicted and sentenced to a term of imprisonment of two years.

88On Charge 8, you are convicted and sentenced to a term of imprisonment of five years.

89On Charge 9, you are convicted and sentenced to a term of imprisonment of two years.

90On Charge 10, you are convicted and sentenced to a term of imprisonment of five years.

91On Charge 11, you are convicted and sentenced to a term of imprisonment of two years.

92On Charge 12, you are convicted and sentenced to a term of imprisonment of five years.

93On Charge 13, you are convicted and sentenced to a term of imprisonment of two years.

94On Charge 14, you are convicted and sentenced to a term of imprisonment of five years.

95I direct that one year of the sentence imposed on Charges 6, 8, 10 and 12, and six months of the sentence imposed on Charge 4, cumulate upon the sentence imposed on Charge 14, making a total effective sentence of nine and a half years imprisonment.

96I direct you serve a minimum term of seven years imprisonment, before being eligible for release on parole.

97Alvaro Gonzales, on Charge 1, you are convicted and sentenced to a term of imprisonment of two years.

98On Charge 2, you are convicted and sentenced to a term of imprisonment of three and a half years.

99On Charge 3, you are convicted and sentenced to a term of imprisonment of three and a half years.

100On Charge 4, you are convicted and sentenced to a term of imprisonment of three years.

101On Charge 5, you are convicted and sentenced to a term of imprisonment of three and a half years.

102On Charge 6, you are convicted and sentenced to a term of imprisonment of five years.

103On Charge 7, you are convicted and sentenced to a term of imprisonment of two years.

104On Charge 8, you are convicted and sentenced to a term of imprisonment of five years.

105On Charge 9, you are convicted and sentenced to a term of imprisonment of two years.

106On Charge 10, you are convicted and sentenced to a term of imprisonment of five years.

107On Charge 11, you are convicted and sentenced to a term of imprisonment of two years.

108On Charge 12, you are convicted and sentenced to a term of imprisonment of five years.

109On Charge 13, you are convicted and sentenced to a term of imprisonment of two years.

110On Charge 14, you are convicted and sentenced to a term of imprisonment of five years.

111I direct that six months of the sentence imposed on each of Charges 4, 6, 8, 10 and 12, cumulate upon the sentence imposed on Charge 14, making a total effective sentence of seven and a half years imprisonment.

112I direct you serve a minimum term of five years imprisonment, before being eligible for release on parole.

113I declare that you have each served 106 days pre-sentence detention of the sentences passed this day and I direct that 106 days be reckoned as having been already served, be entered into the records of the court and be deducted administratively.

114I declare I have sentenced each of you as continuing criminal enterprise offenders in regards to Charges 4, 6, 8, 10, 12 and 14, and I direct that my having done so, be entered into the records of the court.

115In respect of each of you, the prosecution seeks the making of a forensic sample order within s.464ZF of the Crimes Act 1958.  That application was not opposed by either of your counsel, and for the reasons stated in each order, I have signed them which means that whilst in custody, each of you may be approached by a police officer and asked to provide a forensic sample from your body in the form of a swab from your mouth.  If you refuse, the officer may use reasonable force to obtain the sample.  Are there any questions arising out of that Mr Kilduff?

116MR KILDUFF:  No, Your Honour.

117HIS HONOUR:  Mr Hands?

118MR HANDS:  No, Your Honour.

119HIS HONOUR:  Mr Grant?

120MR GRANT:  No thank you, Your Honour.

121HIS HONOUR:  Very well.  Yes thank you, remove Mr and Mrs Gonzalez please. 

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