Director of Public Prosecutions v Iliopoulos and Bariamis
[2016] VSC 447
•9 August 2016
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
CRIMINAL DIVISION
S CR 2014 0172
S CR 2014 0162
| DIRECTOR OF PUBLIC PROSECUTIONS |
| v |
| STEVE ILIOPOULOS AND VASILIS BARIAMIS |
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JUDGE: | KAYE JA |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 10 June, 29 July 2016 |
DATE OF SENTENCE: | 9 August 2016 |
CASE MAY BE CITED AS: | DPP v Iliopoulos & Bariamis |
MEDIUM NEUTRAL CITATION: | [2016] VSC 447 |
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CRIMINAL LAW – Sentence – Jury verdict – Obtaining financial advantage by deception – Two accuseds – Multiple counts – Large amounts of finance obtained from banks – False accounts presented to bank – Accuseds liable on basis on joint criminal enterprise with principal offender – No prior convictions – Accuseds otherwise of good character.
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APPEARANCES: | Counsel | Solicitors |
| For the Crown | Mr D Brown and Mr P Kounnas | Acting Solicitor for Public Prosecutions |
| For the Accused Steve Iliopoulos | Mr M Dempsey | Lethbridges |
| For the Accused Vasilis Bariamis | Mr G Georgiou SC and Mr L Howson | Dribbin & Brown |
HIS HONOUR:
Steve Iliopoulos. You have been found guilty, by the jury empanelled on your trial, of eleven charges of obtaining a financial advantage by deception, and one charge of attempting to obtain a financial advantage by deception. The jury acquitted you of two other charges of obtaining a financial advantage by deception.
Vasilis Bariamis (‘Bill Bariamis’). You have been convicted by the same jury of two charges of obtaining a financial advantage by deception, and one charge of attempting to obtain a financial advantage by deception. The jury acquitted you of one other charge of obtaining a financial advantage by deception.
The offences, for which you both have been convicted, arose out of representations made to financial institutions to provide lending facilities, and hire purchase finance, to the Viking Group of Companies, with which you were both associated at the relevant time. At the trial, the charges were treated as belonging to two groups, namely, charges relating to obtaining financial lending facilities (‘the finance charges’), and charges relating to the obtaining of hire purchase finance in respect of equipment purchased by the Viking Group of Companies (‘the equipment charges’).
The finance charges, on which one or both of you were respectively convicted, alleged that you had committed the offences charged in a joint criminal enterprise with each other and with Loukia Bariamis, who is the wife of you, Bill Bariamis. Steve Iliopoulos, you were alleged to have committed the equipment charges yourself, although, in the course of the trial, it became common ground that Loukia Bariamis was heavily involved in the commission of those offences with you.
On any view of the facts, Loukia Bariamis was a central figure in the commission of each of the offences in respect of which you have both been convicted. In 2013, she pleaded guilty, in this Court, to three charges of obtaining a financial advantage by deception from the Commonwealth Bank of Australia (‘the CBA’), those charges being the equivalent of charges 6, 8 and 14 in the indictment in this case. On her plea, Loukia Bariamis gave an undertaking to cooperate with the prosecution in this matter, and to give evidence in accordance with statements made by her to the police, if and when called upon to do so. Loukia Bariamis had also pleaded guilty, earlier, in the County Court of Victoria, to charges arising from a tax fraud in circumstances that I shall shortly relate.
Loukia Bariamis was a certified public accountant, a registered auditor, and a tax agent. From the early 1990s, she was a member of the accounting firm Greenfield Fox. During that time, you, Steve Iliopoulos, became a client of Loukia Bariamis. In 2004 and 2005, Loukia Bariamis perpetrated an extensive fraud on the Australian Taxation Office. For that purpose, she entered the tax portals of a number of clients of Greenfield Fox, altered the Business Activity Statements that had been entered on those portals, and by that means obtained the payment to her by the Australian Tax Office of substantial taxation refunds totalling the amount of $1.8 million. One of the clients, whose tax portals she manipulated in that way, was you, Steve Iliopoulos. Her criminal activities were entirely unknown to all of her clients. It is evident that Loukia took elaborate and quite artful steps to conceal her fraudulent activities from her husband (you Bill Bariamis), her family, her business partner, and her clients. Ultimately, her fraud was detected by the Australian Tax Office in June 2005. After a very lengthy investigation, Loukia was charged with tax offences, and, as I stated, she was sentenced for them by a County Court judge in 2013.
At all times you, Steve Iliopoulos, had remained trusting of, and particularly loyal to, Loukia Bariamis. After her offending was discovered, she led you to believe that her wrongdoing was no more than a transgression. As an act of loyalty to her, you declined to assist the Australian Tax Office in its investigation of her.
In the meantime, you, Steve Iliopoulos, had commenced to work with a company called Viking Fleet Service in 1999. You are, by training, a mechanic. Viking Fleet Service was then a relatively small business, involved in the repair of trucks and prime movers. In due course, you entered into an agreement with the owner of that business to purchase it. The process, by which you completed the acquisition, proceeded over a period of years. Ultimately, you completed the purchase in 2007. In the meantime, Loukia Bariamis had assisted you to refinance, with the Commonwealth Bank of Australia, the lending facilities that had been provided to that business by the Australian and New Zealand Banking Corporation.
In due course, the business of Viking Fleet Service expanded. During that time, Loukia Bariamis commenced to work for you in an accounting capacity. In 2007, you entered into negotiations to purchase Perth Freightlines Pty Ltd. That business was involved in long haul and interstate freight services. The business of Perth Freightlines was substantially larger than the business of Viking Fleet Service. The negotiations to purchase that business were quite protracted. Ultimately, the purchase was settled on 8 August 2008.
In order to finance the purchase of Perth Freightlines, Viking Fleet Service borrowed $5,000,000 from the CBA. Loukia Bariamis assisted you to obtain that finance. The application for finance was based on accounting and tax documents prepared by Loukia Bariamis for a number of entities associated with Viking Fleet Service. In order to conceal the fact that she had compiled those documents, Loukia prepared them as if they had been compiled and prepared by Alex Vovos of Meridian Financial Services. She did not have the authority or permission of Alex Vovos to prepare or proffer those documents in that way. Although, in her evidence, Loukia Bariamis claimed that you were a party to the production of the false accounting documents to the CBA, the jury acquitted you, Steve Iliopoulos, of the charge arising out of that application for finance, that was charge 2 on the indictment.
At about that time, you assumed the title of chief executive officer of the Viking Group of Companies. You had little financial expertise, and limited business experience or know how. Rather, your expertise lay in the management of a fleet of trucks, and in heavy vehicle maintenance and servicing. Accordingly, Loukia Bariamis assumed the role of chief financial officer of the business. In that capacity, she assumed responsibility for the production of financial and accounting documents relating to the business. The evidence demonstrated that Loukia regarded the accounting and financial side of the business as very much her own exclusive domain. She took particular care to ensure that other persons, associated with the Viking Group, only had limited access to, and familiarity with, the details of the financial documents that she was producing.
Shortly before the purchase of Perth Freightlines, you, Bill Bariamis, joined the Viking Group in August 2008 as its executive general manager. Your background was in transactional banking, which involved the provision of electronic and like financial services to customers of the National Australia Bank. Specifically, you did not have any relevant background in accounting or in commercial banking. Rather, your role in the Viking Group of Companies was very much on the operational and strategic side of the business.
In due course, the business of the Viking Group grew and diversified very rapidly. Its business was divided among a number of different corporate entities. The principal entities included Perth Freightlines, which had a depot at Derrimut, and which was involved in interstate transport; Viking Fleet Service, which was a heavy vehicle maintenance and service company; Viking Transport Express, which provided transport services; and Viking Transport and Logistics, which was the warehousing and containerised freight division of the Viking Group. The Group also purchased a logging business, that was incorporated within Viking Transport and Logistics, and a Tasmanian fishing business.
As a result of its rapid expansion, the business of the Viking Group experienced chronic cash flow shortfalls. For that purpose, the CBA granted to it a series of temporary excesses over the limit it had formally agreed in the Group’s lending facilities. In July 2009, you, Steve Iliopoulos, and Loukia Bariamis, applied to the CBA for the provision of further financial lending facilities to the Group. The bank acceded to that application, and increased the formalised lending facilities by a sum of $2.55 million. The application, for those increased facilities, was based on the same documents as the previous application for the financial lending facilities for the purchase of Perth Freightlines. That application was the subject of charge 4, which alleged that you and Loukia Bariamis were parties to a joint criminal enterprise to obtain the additional financial lending facilities from the CBA by deception. The jury acquitted you of that charge.
One of the facilities, provided by the CBA to the Viking Group, was referred to as a receivable finance facility. Under that facility, the bank provided finance to three members of the Viking Group, namely Perth Freightlines, Viking Transport and Logistics, and Viking Fleet Service, for 80 percent of those companies’ current debtors, up to a prescribed limit. It was a condition of the facility that the bank would not provide finance in respect of debts owed to those companies by related entities in the Viking Group. In order to access finance under that facility, the Viking company was required to provide a statement to the bank, setting out the invoices in respect of which it sought funding. At the end of each month, the bank reconciled that document with the debtors’ ledgers of the three companies concerned. Those ledgers were referred to as the aged debtor trial balances of the companies.
In order to deal with the increasing cash flow problems of the Viking Companies, Loukia Bariamis conceived, and implemented, a system by which debts, owed to the three Viking companies by related entities in the Group, were, in the documentation provided to the bank, replaced by fictitious debts owed by other unrelated third persons. In addition, when funding was available under the facility limit, Loukia Bariamis significantly exaggerated the amounts that were owed to the Viking companies by their debtors. On some occasions, false or fictitious debtors were inserted into the aged debtor trial balances and other documentation provided to the bank.
In October 2009, the CBA approved a further application by the Viking Group for additional financial facilities, totalling $12.15 million. The application, for those facilities, was based on falsified aged debtor trial balances for Perth Freightlines, Viking Fleet Service and Viking Transport and Logistics. Those documents fraudulently inflated the amounts owed by debtors to each of those three companies by $5.5 million. In addition, the application for the financial facilities was based on falsified accounting documents for entities in the Viking Group, that purported to have been prepared by Alex Vovos of Meridian Financial Services. Again, those documents had been prepared by Loukia Bariamis herself, without the authority or permission of Alex Vovos or Meridian Financial Services. Charge 6 alleged that you, Steve Iliopoulos, and you, Bill Bariamis, with Loukia Bariamis, obtained a financial advantage by deception for the Viking companies arising out of that increase in the credit limits of Viking. Steve Iliopoulos, you were convicted of that charge. Bill Bariamis, you were acquitted of that charge.
Notwithstanding the substantial increase in credit facilities provided by the CBA in late 2009, the Viking companies continued to suffer cash flow shortfalls. As a result, the bank allowed a number of temporary excesses over the agreed limits from April 2010. The ongoing cash flow problems of the Viking Group were the subject of three meetings between officers of the CBA, and both of you and Loukia Bariamis, in June and July of 2010. As a result of the continuing liquidity problems of the Viking Group, the bank, in October 2010, approved a further application on behalf of the Group for additional financial facilities in the sum of $13.9 million. That amount included a $9 million increase in the receivable finance facilities provided to the three companies to whom I have referred. That application, and the meetings which preceded it, were the basis of charge 8, of which you were both convicted.
That charge was based on the provision to the bank of falsified aged debtor trial balances for Perth Freightlines, Viking Fleet Service and Viking Transport and Logistics. Those balances were falsely inflated by a sum of $7.2 million. In addition, charge 8 alleged that the increase in financial facilities was based on a false representation made to the bank that Viking Fleet Service was the exclusive supplier of heavy vehicle maintenance services to Aldi stores in Victoria. That representation was contained in a document entitled ‘Viking Group — Divisional Strategic Overview 2010-2011’, which you, Bill Bariamis, had sent to an officer of the bank in July 2010. You, Bill Bariamis, spoke to that document in the course of one of the meetings with bank officers on 22 July 2010. However, the evidence as to what you said at that meeting was unclear, and did not support the representation alleged in the charge. One witness (Gerrit Knauth) stated that you had said that Viking Fleet Services was establishing a connection with Aldi in Dandenong and was starting to service Aldi trucks at a Dandenong facility for the Group, which, in fact, was true. Based on that evidence, and consistent with the jury verdict, I would not be satisfied that either of you were convicted on the basis of the representation about Aldi alleged in charge 8.
After the provision of the credit facilities, that constituted the basis of charge 8, the Viking Group still continued to experience liquidity problems. Further temporary excesses were granted to the Group by the bank. At a meeting on 17 November 2010, the bank approved a further $4 million increase in the credit facilities. That approval was based on the same documentation and information provided to the bank, that formed the subject of charge 8. You, Steve Iliopoulos, and you, Bill Bariamis, were both convicted, on charge 14, of obtaining a financial advantage by deception from the bank as a result of that increase in the credit facilities.
Charge 7, on which you were both convicted, alleged that you both, with Loukia Bariamis, attempted to obtain a financial advantage by deception from Westpac Banking Corporation between 6 July 2010 and 30 March 2011. That charge arose out of an attempt by each of you, and Loukia Bariamis, to re-finance with Westpac the lending facilities provided by CBA to the Viking Group. One of the reasons, for the attempt to re-finance the facilities, was that Westpac provided a more flexible, and accessible, receivables finance facility than CBA, which was important to the alleviation of the chronic cash flow difficulties experienced by the Viking Group.
The application to Westpac commenced with a preliminary meeting between you both and Loukia, and officers of the Westpac Bank, on 6 July 2010. Following that meeting, and a further meeting in August 2010, a number of financial and accounting documents were provided to Westpac, principally by you, Bill Bariamis. Those documents included financial accounts of a number of entities in the Viking Group prepared by Loukia Bariamis, which falsely purported to have been prepared by Alex Vovos of Meridian Financial Services. In addition, you provided to Westpac a copy of the Divisional Strategic Overview document of the Viking Group. That document contained statements that Viking Fleet Services was the exclusive supplier of heavy vehicle maintenance services to Aldi stores in Victoria, and that it had substantial business generated by a contract with Boral Resources (Vic) Pty Ltd and by a contract with Linfox. Each of those statements were false. Those false statements, and the falsified accounting documents purporting to have been prepared by Alex Vovos, constituted the deceptions alleged in charge 7.
After the provision of the financial documents to it, an officer of Westpac noted that there was an inconsistency between the closing balances for one year, and the opening balances for the succeeding year, in the accounts that had been prepared by Loukia Bariamis. That inconsistency could not be resolved by Loukia Bariamis, without disclosing the fact that the documents were fraudulent. Accordingly, and notwithstanding that Westpac appeared to be interested in proceeding with the application for finance, Loukia Bariamis persisted in stalling the provision of further financial documentation to Westpac. In early 2011, steps were taken to revive the application, but they did not proceed further, before a receiver was appointed to the Viking Group in early April 2011.
The other group of charges on which you, Steve Iliopoulos, were convicted, were the equipment charges, which were contained in counts 1, 3, 5 and 9 to 13 on the indictment. No equipment charges were brought against you Bill Bariamis, and there was no evidence that you were, in any way, implicated in the commission of the offences alleged in those charges.
In the case of each equipment charge, the prosecution case was that you, Steve Iliopoulos, procured the provision of hire purchase finance to a member of the Viking Group in respect of equipment purchased or owned by it, by providing to the finance company fake invoices that purported to demonstrate that the Viking Company had acquired the particular piece of equipment at a price that was well in excess of the actual amount paid for it. In each case, the false invoices were created in the name of Knights Motors. That company was a business owned by your brother, Konstantinos Iliopoulos. The main function of that business was to carry out mechanical work, specialising in vehicle air conditioning repairs. Your brother did not give to you, or to Viking, his permission or authority to use the name of Knights Motors to produce those invoices, and he was not in any way implicated in the creation or production of them. In the case of each charge, the basic allegation was that the deception practised by you consisted of a false representation to the finance company that the equipment had been purchased by the Viking company from Knights Motors at the price stated in the invoice.
Each charge alleged that it was you, Steve Iliopoulos, who made the misrepresentation to the finance company that constituted the deception alleged in the charge. There was no evidence that you, yourself, created or produced the false invoices. Rather, the prosecution case was that that you directed an employee or officer of Viking to create and produce the false invoices to the finance companies. In her evidence at the trial, Loukia Bariamis admitted that she, of her own volition, produced and created the false invoice, that was used for the purpose of obtaining the finance that was the subject of charge 3. It was common ground, in final address, that, notwithstanding her denials, Loukia also was responsible for the production of the false Knights Motors invoices that were the subject of the other equipment charges. Based on the evidence, I am satisfied that those false invoices were created and produced by Loukia Bariamis herself, or by a Viking employee at her specific direction.
In addition, it was a condition of each hire purchase agreement that the equipment, that was financed under that arrangement, was not subject to any other finance arrangement. On each occasion, either you, or your son Peter, made a statutory declaration in support of the proposed hire purchase facility, which contained a clause to the effect that the equipment was not the subject of any other such finance arrangement. Contrary to that representation, some of the items of equipment, that were the subject of charges 5, 9, 10 and 12, were each the subject of existing finance arrangements with other financial institutions.
Charge 1 concerned the hire purchase by Viking Asset Management from Westpac Banking Corporation Limited of two Maxi cube trailers for the sum of $135,300. The arrangement was entered into with Westpac on 21 December 2007. It was based on a false Knights Motors invoice dated 14 November 2007 specifying that amount as the price paid for the two pieces of equipment. In fact, the equipment had been purchased by Viking Asset Management from Pickles Auctions on 14 November 2007 for $51,223.
Charge 3 concerned a hire purchase finance agreement entered into by Viking Asset Management with Adelaide Bank on 8 August 2008 in respect of four items of equipment in the sum of $282,131.90. Again, the finance arrangement was based on fake Knights Motors invoices evidencing the price purportedly paid by Viking Asset Management for that equipment. In fact, the vehicles had been purchased by Viking Asset Management directly from Perth Freightlines as part of the arrangement by which Viking acquired the business of that company. Before the purchase of the business, you had obtained a valuation stating that the proper market value of the equipment was $187,000.
Charge 5 concerned a hire purchase agreement entered into by Viking Asset Management with the CBA dated 22 July 2009 in respect of seven pieces of equipment. The amount financed was $795,000. The application for the finance was based on false Knights Motors invoices. In fact, two of the vehicles had been purchased by Viking as part of the acquisition by it of the business of M 1 Logistics in 2008. In addition, another of the vehicles had been purchased from an organisation called Paccar Trucks, and it was already the subject of a finance arrangement with Westpac.
In October 2010, as part of the facility agreement that was the subject of charge 8, the CBA agreed to re-finance equipment that Viking had already purchased out of its own funds. That agreement was directed to alleviating the chronic liquidity problems then experienced by Viking, part of which had resulted from the fact that Viking had used working capital to purchase its assets. Under the arrangement, Viking was entitled to sell equipment to the CBA, and to then lease it back from the bank.
Charges 9 and 10 each related to hire purchase agreements entered into by Viking Asset Management with the CBA on 29 October 2010 pursuant to that arrangement. Charge 9 concerned the sale and lease back of two Volvo loaders in the sum of $353,265. Charge 10 concerned a sale and lease back arrangement in respect of a 2008 Volvo loader in the sum of $218,350. On each occasion, the transactions were supported by false Knights Motors invoices which significantly inflated the purchase prices of the vehicles concerned.
Charges 11, 12 and 13 concerned hire purchase arrangements entered into by Viking Asset Management with the CBA on 5 November, 9 November and 18 November 2010 respectively, based on Knights Motors invoices sent by Loukia Bariamis to the CBA on 28 October 2010. Charge 11 concerned two loaders that were financed by the bank in the sum of $652,850. Charge 12 concerned four items of equipment financed in the sum of $740,850. Charge 13 related to the finance of two items of equipment in the sum of $279,200. Again, each of the transactions were supported by fake Knights Motors invoices, which grossly inflated the purchase price of the equipment concerned. For example, in charge 11, the invoice represented that a Clark Handler loader had been purchased by Viking from Knights Motors for $203,500. In fact, that item had been purchased by Viking from another company, in May 2010, for $20,000.
That, then, is a brief summary of the offences in respect of which you have been convicted. It is necessary for me to make some factual findings, particularly about the roles of each of you, and Loukia Bariamis, in that offending. For that purpose, I have been much assisted by the thorough written and oral submissions made by counsel on behalf of each side.
At the outset, I should state that I am satisfied that you, Steve Iliopoulos, did not engage Loukia Bariamis as the chief accountant for the Viking Group for the purpose of carrying out any fraudulent activity. Rather, as I have already indicated, the evidence is clear that, as the Viking Group started to grow, you were in need of the financial and accounting expertise that you were lacking, and that she was able to provide to you. I am satisfied that you engaged Loukia Bariamis in the Viking Group, as its chief financial officer, in good faith and for honest and legitimate purposes.
I am also satisfied, and indeed it has not been in dispute, that Loukia Bariamis was very much the instigator, mastermind and architect of each of the finance frauds that were the subject of charges 6, 7, 8 and 14. It was Loukia Bariamis who initiated and developed the concept of each of those frauds. In particular, it was Loukia Bariamis who conceived the idea of devising financial accounts that purported to have been produced by Alex Vovos of Meridian Financial Services, for the purpose of the applications for the financial facilities that were the subject of the finance offences. In addition, it was Loukia Bariamis who produced those false accounts for that purpose. On her own evidence, Loukia stated that she produced the accounts in the name of Alex Vovos, in order to conceal from the bank her own involvement in the production of them. The fact that the jury acquitted you, Steve Iliopoulos, on charges 2 and 4 means that, for the purposes of sentencing you, I should act on the basis that Loukia Bariamis, on her own, perpetrated the frauds that were the subject of those charges, and that you subsequently attached yourself to her fraudulent scheme in respect of the application to the CBA for further financial facilities that were granted in November 2009, and that were the subject of charge 6.
Similarly, it is clear on the evidence, and indeed it was not in dispute, that it was Loukia Bariamis who instigated and implemented the concept of producing false aged debtor trial balances for the purpose of fraudulently manipulating the receivable finance facility provided to the Viking companies by the CBA. In her evidence, Loukia Bariamis claimed that she had developed that idea in conjunction with Carly Hartley. Ms Hartley denied any involvement in the development of the scheme. On the evidence, I am satisfied that it was Loukia alone who initiated and formulated the concept of production of the false aged debtor trial balances. I doubt that Carly Hartley had the financial expertise, or the inclination, to have instigated, or developed, the methods by which Loukia Bariamis falsely manipulated the debtor balances that were provided to the CBA. On the evidence, and based on the jury’s verdict on charge 6, I am satisfied that you, Steve Iliopoulos, relevantly agreed to, and became a party to, the production of those false debtor balances to the bank, after Loukia Bariamis had initiated and developed the idea of doing so.
It is further clear that you, Steve Iliopoulos, did not have sufficient expertise to have played any significant role in implementing the details of the finance frauds, on which you have been convicted. As I stated, those frauds were the brainchild of, and implemented by, Loukia Bariamis. You have been convicted of charges 6, 7, 8 and 14 on the basis that you were a party to, and participated in, a joint criminal enterprise that was instigated and devised by Loukia Bariamis. Fundamentally, the prosecution case was that you agreed to the development and production of the false financial documents, and that you participated in the deceptions by approving of the conduct of Loukia Bariamis, and by attending meetings with the banks for the purpose of the discussion of the application for further financial facilities that were the subject of each of the charges on which you have been convicted.
I am satisfied that you, Bill Bariamis, joined the Viking Group as its executive general manager in good faith. Your role was to provide strategic and operational management focus to the Group, which was, by then, growing significantly. There was no suggestion in the evidence that you knew of the fraudulent activities of Loukia Bariamis at the Viking Group when you joined it. Nor is there any suggestion that you joined the Viking Group in order to become a party to those fraudulent activities. The effect of the verdicts of the jury is that you did not become involved in the frauds, that were practised on the banks, until mid-2010, at the commencement of the steps that were taken to re-finance the facilities with the Westpac Bank, and which were the subject of charge 7. Thus, you were not a party to, or involved in, the finance frauds that were instigated by Loukia Bariamis for the first two years during which you were working with the Viking Group. Your offending occurred over a relatively short period of time, between mid-2010 and March 2011.
Accordingly, you are to be sentenced on the basis that, approximately two years after your wife, Loukia, had instigated and commenced to perpetrate finance frauds on the CBA, you knowingly agreed to become party to an enterprise involving the frauds that were the subject of charges 7, 8 and 14, and that you participated in those frauds. In respect of charge 7, you were alleged to have participated in the frauds by providing to the Westpac Bank a number of false financial and related documents that had been prepared and produced by Loukia Bariamis, and by acting as the Viking Group’s main spokesperson at meetings with the representatives of the Westpac Bank. In respect of charges 8 and 14, you participated in the joint criminal enterprise to commit the frauds that were charged by attending at, and participating in, meetings with representatives of the CBA in which the applications for further financial facilities were discussed and negotiated.
In the course of sentencing submissions, there was some discussion as to the basis upon which you, Bill Bariamis, were convicted on charge 8. As I have already indicated, I do not consider that the jury was satisfied that you made the false representation concerning Aldi, as alleged in charge 8. I am satisfied on the evidence, and by the verdicts of the jury, that you were convicted on charges 8 and 14 on the basis that you knew of, and agreed to, the production of the false aged debtor trial balances to the CBA, that are set out in the particulars to each of those charges.
In respect of the equipment charges, on which you, Steve Iliopoulos, were convicted, as I stated, there is no direct evidence as to the person who compiled and produced the false documents that were the subject of those charges, apart from charge 3. However, as I have noted, it was common ground, and in my view correctly so, that they were compiled and produced by Loukia Bariamis herself, or by an employee in her accounting division under her direction. As discussed in the course of sentencing submissions, I am unable to form any conclusion as to whether the device, of using false Knights Motors invoices, for the purposes of the deceptions that were the subject of those charges, was conceived by you or by Loukia Bariamis. I certainly could not find, beyond reasonable doubt, that it was you who initiated that concept. Equally, I could not find, on the balance of probabilities, in mitigation, that the idea was initiated by Loukia Bariamis. Nevertheless, the evidence satisfies me that both you and Loukia were, effectively, equally involved in the commission of each of the offences. I am also satisfied that you could not have committed those offences, if not for the involvement of Loukia Bariamis in them. That observation is particularly relevant to charge 3, which involved the production of a fairly complex set of documents. On the evidence, I am satisfied that the same observation applies equally to each of the equipment charges.
Based on those factual findings, I am able to form some conclusions as to the level of culpability of each of you for the offences, in respect of which you have been convicted.
In the course of submissions, it was common ground that the roles and culpability of you, Steve Iliopoulos, and of Loukia Bariamis, in the commission of both the finance offences and the equipment offences were more or less equal. In general, I agree with that approach. You, Steve Iliopoulos, as the effective owner of the Viking Group, were the principal beneficiary of the frauds. The offences were each committed in order to sustain the financial viability of the Viking Group of companies owned by you. In addition, the ongoing financial success of those companies enabled you to engage in a rather extravagant lifestyle in the manner described in the evidence of Ms Fiedler. As the effective owner, and chief executive officer, of the companies, the offences would not have been committed without your approval and participation.
On the other hand, as I have already found, the deceptions, that were the subject of the finance offences, were each very much the brainchild of Loukia Bariamis. As I have already noted, it was Loukia Bariamis who conceived each of the frauds, worked out how they could be implemented, and was responsible for the production of false accounting documentation to enable those frauds to be effected on the banks. Clearly, the deceptions could not have taken place without Loukia Bariamis’ involvement. Further, I am well satisfied that they would not in any event have taken place, as it was she who initiated and advocated the concept of using fraudulent means to obtain further financial facilities from the CBA, and to attempt to obtain replacement facilities from the Westpac Bank.
You, Bill Bariamis, were convicted on charges 7, 8 and 14, on the basis that you agreed to join the enterprise, that was already on foot, between Loukia Bariamis and Steve Iliopoulos, to obtain further financial lending facilities from the CBA, that were the subject of charges 8 and 14. The practise of obtaining financial facilities, by deception, had already been implemented, first by Loukia Bariamis on her own, and (in respect of charge 6) by Loukia Bariamis with Steve Iliopoulos, over a period of two years before you became involved in that enterprise. You did not play any role in compiling or developing the false financial information that was provided to the CBA that is the subject of charges 8 and 14. Your guilt lay in the fact that you knowingly agreed to the provision of the false accounting documents to the bank, and that you participated in meetings in which, based on those documents, further lending facilities were negotiated with the bank in October and November 2010. In that respect, I am satisfied that your level of culpability, in respect of those offences, was significantly less than that of Loukia Bariamis or Steve Iliopoulos.
It was common ground that your culpability, in respect of the offending that was the subject of charge 7, was effectively equal to the level of culpability of Steve Iliopoulos and Loukia Bariamis. I agree with that proposition. While Loukia Bariamis compiled and produced the false documentation, that was the subject of that charge, it was you who provided that documentation to the Westpac Bank, knowing that it was false. Further, you actively participated in the application to the Westpac Bank to re-finance the facilities held by the Viking Group with the CBA. In doing so, you attended meetings, and acted as spokesperson for and on behalf of the Viking Group. In those circumstances, it is appropriate to regard your culpability as generally equal to that of Loukia Bariamis and Steve Iliopoulos in respect of the offending that is the subject of charge 7.
The offending, in respect of which both of you have been convicted, is particularly serious. Because of the amounts involved in each of those offences, Part 2B of the Sentencing Act 1991 has the effect that both of you are to be sentenced as a continuing criminal enterprise offender in respect of each those charges. As a consequence, the maximum sentence, for charges 1, 3, 5, 6 and 8 to 14, is 20 years’ imprisonment, and the maximum sentence, for charge 7, is 10 years’ imprisonment.
The total amount advanced by the CBA to the Viking Group in relation to the finance charges, on which you, Steve Iliopoulos, were convicted (charges 6, 8 and 14) was $30,050,000. In addition, the amount advanced by the CBA, and other financial institutions, to the Viking Group, in relation to the transactions that were the subject of the equipment charges, amounted to $3,456,000. Thus, in total, you have been convicted for offending consisting of the fraudulent obtaining of financial facilities and finance from banking institutions in an amount of $33.5 million. Bill Bariamis, the total amount of the advances agreed by the CBA, in respect of the loan facilities that are the subject of charges 8 and 14,was $17.9 million. In addition, the finance facilities that you both, with Loukia Bariamis, sought to re-finance with the Westpac Bank, and that were the subject of charge 7, amounted to $53 million.
Thus, the amounts involved in the offending, on which both of you have been convicted, were substantial. In the case of you, Steve Iliopoulos, you were convicted of twelve offences committed over a period of more than three years. In the case of you, Bill Bariamis, the three offences of which you were convicted were committed over a shorter period of eight months, between July 2010 and March 2011.
As I stated, you, Steve Iliopoulos, were, in effect, the principal beneficiary of the offending. The deceptions, that were the subject of each of the offences, were directed to securing the financial viability of the Viking Group of Companies, which you owned and which you controlled. As noted, the offending also enabled you to engage in a luxurious lifestyle.
You, Bill Bariamis, had much less to gain from the offending. Certainly, as the offending was important to the continued financial health of the Viking Group of companies, it enabled you to continue your employment with them, and to earn a good income from it. The prosecution relied on the evidence of Susan Fiedler to prove that you also derived an additional benefit, as your employment with the Viking Group enabled other payments to be made to your accounts which were used for personal purposes. However, the evidence in that respect was not particularly convincing. It was clear, on the evidence, that your wife Loukia managed and controlled the family accounts. I am not satisfied, beyond reasonable doubt, that, apart from one overseas trip for you and your family, you knowingly derived any significant personal benefit from the monies that were paid into your accounts, and from the use of the Viking AMEX card that was in your name.
In the present case, the offending engaged in by both of you did not involve the aggravating features, common in many fraud cases, of defrauding innocent members of the public. The offending was, nevertheless, of a serious nature. The courts recognise that the provision of credit by financial institutions, in the belief that repayment will be made, is at the heart of our financial and economic system. In providing financial facilities to commercial enterprises, our banks and financial institutions ordinarily need to rely, substantially, on the authenticity of financial information provided to them by the intended borrower. Fraudulent devices, such as those practised by you in this case, inevitably adversely affect the manner in which our financial institutions conduct their business, and the losses that are sustained as a result are often passed onto the ordinary consumer by means of increased costs of lending and higher financing charges.
On the other hand, there were a number of relevant mitigating factors attaching to the offending.
First, as I stated, I am satisfied that Loukia Bariamis was very much the moving force in respect of the finance offences. She had the advantage of a tertiary education and she was specifically trained in accounting and financial matters. By contrast, you, Steve Iliopoulos, had a limited formal education, and you had little or no financial and accounting expertise and knowledge. You, Bill Bariamis, did not have any significant experience in corporate lending, and you were not a trained accountant. I am satisfied that, without her involvement, neither of you would have been minded to indulge in any of the offences alleged in the finance charges of which you have been convicted.
Secondly, I am satisfied that both of you held the view, throughout the period of your offending, that the Viking Group was profitable and viable. You both understood that the deceptions, that were practised on the banks, were designed to address the ongoing cash flow problems, which, Loukia Bariamis led you to believe, were of a short term nature and would ultimately resolve. In that way, I am satisfied that each of you believed that the financial facilities, that were provided by the bank, would be duly repaid by the Viking Group.
In that context, I should observe that you both had a reasonable basis upon which to believe that the Viking Group, at the time, was operating in a manner that was profitable and successful. Managers of some of the divisions of Viking, who gave evidence in the trial, stated that to their perception the business of the Group was thriving, and growing. Apart from its cash flow issues, the business bore all the hallmarks of being successful and viable.
Thirdly, I am satisfied that, in respect of each of the offences, the loans and financial facilities were sought and obtained for legitimate, although at times misconceived, business purposes. While the evidence of Ms Fiedler demonstrates that large sums of money, obtained from the banks, were spent on extravagant lifestyles, of yourselves or your families, nevertheless those amounts constituted only a small percentage of the total amount fraudulently obtained from the financial institutions. The evidence demonstrates that the Viking companies grew far too quickly, and, in doing so, they spent monies on fuelling that growth that was well beyond their means. The three persons who were in charge of the business — both of you and Loukia Bariamis — lacked sufficient expertise and cohesion to properly manage the growth of the business. I am satisfied that the large majority of the funds, provided by the banks and financial institutions, that are the subject of the charges on which you have been convicted, were obtained and used for the purposes of funding the very rapid growth of the Viking Group, and not for your immediate financial enrichment.
Fourthly, while the amount of finance obtained from the CBA, and sought from the Westpac, was, as I stated, substantial, it is important to keep in perspective the extent to which the false information, provided in support of those loans, overstated the financial position of the Viking Group. For example, the amount of further finance obtained as a result of the false representations alleged in charges 8 and 14 was $17.9 million. The aged debtor trial balances, relied on by the CBA to provide that additional finance, exaggerated the debtors of the three companies concerned by an amount of $7.22 million. On the evidence, I am satisfied that if those false debts had not been included in the balances, the bank would, nevertheless, have acceded to a further financial facility of $12 million.
In addition, there are a number of mitigating factors arising from the personal circumstances of both of you.
You, Steve Iliopoulos, are 54 years of age. You were born in Greece in 1962, and you came to Australia with your family when you were three years of age. Your parents were industrious and made a life for their family in their new country. You attended high school to the age of 15, to Form 4 level.
After leaving school, you worked, first, in meatworks for one year. You then completed a five year apprenticeship with J & T Autos, after which you worked as a mechanic in your parents’ garage. Subsequently, you purchased a truck. You used it for the purposes of interstate haulage to Sydney and Adelaide. In time you paid off the truck, and developed a transport business called KSG. However, the surge in the fuel price after the first Gulf War affected the viability of your business. Ultimately, the business failed, and you were bankrupted in 1998. Following your bankruptcy, you worked for the owner of Viking Fleet Service. As I have noted, during that time, you purchased that company, which was the foundation stone of the Viking Group.
You married in 1986, and you have four children, two sons and two daughters, aged between 29 years and 23 years. For some years the marriage was successful, but it ran into difficulties, and you separated from your wife in about 2005. Initially, the separation was amicable, but it later became acrimonious, particularly in the context of your wife claiming 70 per cent of the total worth of the Viking Group in the marriage settlement.
The circumstances of your separation from your wife adversely affected your children. As a result, your two sons did not speak to their mother for some time. Fortunately, your family has reconciled and re-established a harmonious relationship.
After administrators were appointed to the Viking Group in April 2011, Viking Transport continued to run for a short period of time. You were arrested and charged on 15 March 2013. You remained in custody until 5 September 2013, when you were released on bail. After your release, you were employed by a friend, Serge Esposito, in his business Bronco Fleet Service, as a full time consultant. Mr Esposito has provided a reference stating that your ability to liaise with customers, to provide technical support, and to manage a heavy vehicle workshop, has been a major asset in developing the business. You continued to work with that business while you remained on bail.
You do not have any relevant previous convictions. On your plea, your counsel tendered a number of character references, which depict you as a hardworking, conscientious person. You are highly regarded by your friends as a person of integrity, who is selfless and caring, and a loyal and devoted family man. The testimonial from your priest, Father George Frangos, notes that after you were released on bail in 2013, you assisted a number of young individuals in the parish who had been affected by substance abuse issues.
Unfortunately, your youngest daughter has a serious drug abuse problem. I accept that, as a consequence, a term of imprisonment will weigh more heavily on you, as you are, and will be, conscious that you will not be available to her to assist her and to support your family in attempting to care for her.
I am satisfied that, based on the material put before me, you have good prospects of rehabilitation. You have an excellent work record, and you are possessed of skills which should enable you to readily re-enter the workforce on your release. Your lack of any relevant previous convictions, and the references tendered on your behalf, reinforce my view that it is unlikely that you will re-offend.
You, Bill Bariamis, were born in South Australia in 1962 and you are 54 years of age. Your parents had migrated to Australia from Greece six years earlier. Your father was a viticulturist in South Australia. After his retirement, he and your mother came to live in Melbourne, where your sister and you were residing. Your mother passed away in 2004. Before then, your father had already suffered two strokes. You acted as the principal carer of your father until he died in 2007.
You were educated in South Australia. In 1984, at the age of 22, you married Loukia Bariamis. There are two children of the marriage, a daughter aged 23 years, and a son aged 20 years.
After you completed your secondary education, you attended Flinders University, where you gained a Bachelor of Arts degree, majoring in political science and economic history. In 1983, you obtained an Honours Degree in political science. You then moved to Melbourne because Loukia, who then was your fiancé, was living here.
You initially obtained work with Myer Stores selling furniture. You were rapidly promoted at the store. After 18 months, you left Myer, to commence employment with a computer company as a sales assistant and support manager. You remained with that firm for a period of three years until 1988. You then commenced employment with a company that operated as a clearing house for credit card transactions. You were responsible for the computer systems, and looked after the electronic funds transfer systems. You did well in that employment, and remained there until 1994, when you obtained employment with the National Australia Bank as a manager in the electronic funds transfers department. In that capacity, you were responsible for the bank’s large corporate clients, and, in particular, you were responsible for consulting with those clients in relation to their needs for electronic funds transfer equipment. After four years, you took employment with one of the companies that utilised the NAB’s products, Transaction Resources. You remained in that employment for some seven years until 2008, when you commenced employment with Viking Transport.
It is evident, from that brief history, that you have always been in regular gainful employment. In particular, you have shown yourself to be an enterprising person, changing your employment on a number of occasions in order to better your position and to further your career.
In addition, you have been a devoted and caring father to your two children. Each of them have provided references describing the substantial support that you have been to them over the years. The care and support, that you have provided to your children, has been of significant importance, in light of a number of issues that have arisen concerning your wife Loukia. For some time she has had psychological problems, that were described in the reasons for sentence by the judge who sentenced her on the finance charges. During her employment with Viking, Loukia was often absent from the home, working late hours, residing part time at an apartment at Docklands, and travelling interstate. Your sister in law describes how you have been effectively the sole parent to your two children, from the time they were very young.
Your daughter, Anthea, is completing a Master’s Degree in publishing. She also runs a cleaning company. As a result of her mother’s issues, Anthea has experienced extreme ongoing anxiety, and during the last 18 months she has been receiving regular counselling for that condition. Your son, Ross, was diagnosed with Asperger’s syndrome at the age of two years. He has been a patient of Dr Richard Eisenmajer, a clinical psychologist, since 2002. In a report, Dr Eisenmajer states that Ross has recently returned to him for treatment, because his mood difficulties have been exacerbated as a result of the recent trial. Ross is suffering severe levels of stress, and he has greater difficulties regulating his mood. As a result, he has decided to suspend his university enrolment for the time being.
As conceded by your counsel, the hardship suffered by your two children, as a result of your incarceration, cannot be appropriately described as so exceptional as to qualify as a mitigating circumstance. However, I accept that their difficulties will weigh heavily on you during your term of imprisonment, and it will be particularly burdensome for you to be conscious that you are not available to provide much needed support and assistance to them at an important time of their lives. That consideration is relevant as a mitigating circumstance in your favour.
Notwithstanding the travails to which she has put you and your family, you have remained steadfastly loyal to your wife Loukia. While you were on bail, you visited her, with your two children, twice each week while she was in custody. It is clear from the testimonials tendered on your behalf that, despite the difficulties that she has occasioned to you, you have provided commendable support to your wife during her many depressive episodes. Your loyalty and devotion to your wife, in those circumstances, might fairly be described as quite remarkable.
You do not have any previous convictions. On your plea, a number of character references were tendered on your behalf from family and friends. Those testimonials describe you as a very loyal, supportive and devoted family member, with a strong set of personal values. Your friends and family consider you to be a person of integrity. You have also been generous with your time and expertise in helping other people. The references from members of your family pay particular tribute to the support that you have given to all members of your family, and, in particular, to your children.
You have a number of health issues, that will make your time in custody more difficult. You suffer from Type 2 diabetes, high blood pressure, and an enlarged prostate, and for each of those conditions you are required to receive medication. Since 2011, you have suffered from depression, for which you have been prescribed Effexor.
I accept that you have very good prospects of rehabilitation. Your lack of previous convictions, your good work record, and the testimonials of your family, satisfy me that the need for specific deterrence, in your case, is diminished. The conduct, in which the jury found that you engaged in this case, is totally out of character for you. In his testimonial, Fergus Bailey, who has been a friend of you for 20 years, states that he would be quite comfortable engaging you in a senior employment role in his business that is involved in the servicing and repair of caravans. In those circumstances, I consider that your prospects of rehabilitation are good.
You were both charged with the offences, for which you have been found guilty, in March 2013. Thus, there was a period of three years before those charges were tried. I accept that during that period of time the fact that the charges were hanging over each of you has been a matter of some strain to you. As Mr Brown, the prosecutor, accepted, you are both entitled to a moderate discount on your sentence as a consequence of that period of delay.
Those, then, are the matters personal to both of you which are relevant for the purpose of determining your sentences. As I stated, the offences, for which both of you have been convicted, are serious. As a result of the false representations in which each of you participated, substantial amounts were advanced by the CBA to the Viking companies, most of which has not been recovered. In such a case, the law requires that the considerations of general deterrence and denunciation be given particular weight. It is important that the sentences to be imposed on both of you adequately express the condemnation by the community of your dishonest conduct, and that the sentences are of sufficient severity in order to deter other likeminded individuals from engaging in the type of conduct for which you have been convicted. However, for reasons I have already stated, I do not consider that the consideration of specific deterrence needs to be given particular weight. As I stated, the offending in the case of each of you is out of character, and you are both unlikely to offend again.
On the other hand, there are a number of mitigating factors, both in respect of the offending, and in respect of your personal circumstances, that I have discussed, and that I take into account. In that context, in cases such as this, the law tends to give the fact, that the offender is of good character, less weight than in cases involving other types of offences, because offences of dishonesty, for which both of you have been convicted, are often committed by persons who are otherwise of good character and who have no previous convictions. Nevertheless, your lack of previous convictions, and your good character, are relevant mitigating circumstances to which I shall give weight.
As I stated, Loukia Bariamis pleaded guilty to the equivalent of charges 6, 8 and 14 on the indictment. The amount involved in the equivalent to charge 8, against Loukia Bariamis, was in fact $3.5 million more than the amount charged against both of you on the indictment. Loukia Bariamis was sentenced on the three charges to a total effective term of 6 years’ imprisonment, with a minimum non-parole period of 4 years.
There are, of course, significant differences between the case of each of you on the one hand, and that of Loukia Bariamis, on the other hand. In particular, as indicated by the s 6AAA declaration on her sentence, the sentencing judge gave substantial weight to Loukia’s plea of guilty, her cooperation with the police, and her undertaking to give evidence and cooperate with the prosecution in this case. In addition, Loukia Bariamis suffers and suffered from a major depressive illness. The sentencing judge gave significant weight to that circumstance, both in terms of moderating the need for general deterrence, and in assessing Loukia’s culpability. None of those mitigating factors are present in the case of either of you. Notwithstanding those differences, Loukia’s sentence is relevant, as the principles of parity of sentencing require that there be some proportionality between the sentences to be imposed upon you, and the sentences imposed on Loukia Bariamis, in respect of the particular charges to which she pleaded guilty.
In the course of the plea, the prosecution referred to a number of recent cases, namely, Hoy v R;[1] Yusuf v R;[2] Pederson v R;[3] Koch v R;[4] Day v R;[5] R v Roussetty[6] and R v Causer,[7] all involving sentences for offences of obtaining a financial advantage by deception and similar offences. However, as correctly conceded by Mr Brown, they are not, in any relevant sense, comparable to this case. The cases do contain useful statements of the applicable principles, and, in a broad sense, give some indication as to the approach of the courts to sentencing in cases of fraud. Otherwise, they are of little utility in the present case.
[1][2012] VSCA 49.
[2][2010] VSCA 266.
[3][2013] VSCA 321.
[4][2011] VSCA 435.
[5][2011] VSCA 243.
[6](2008) 24 VR 253.
[7][2010] VSC 341.
Because of the number of charges of which both of you have been convicted, and in particular in the case of you, Steve Iliopoulos, it is necessary to allow a significant amount of concurrency as to the sentences that I impose in respect of each of those charges, in order that the total effective sentence is not disproportionate to your offending, and that that sentence is just and appropriate in all the circumstances.
Taking into account the matters to which I have referred, I sentence you as follows.
I sentence you, Steve Iliopoulos as follows:
(1)On charge 1 — I sentence you to 4 months’ imprisonment.
(2)On charge 3 — I sentence you to 6 months’ imprisonment.
(3)On charge 5 — I sentence you to 18 months’ imprisonment.
(4)On charge 6 — I sentence you to 6 years’ imprisonment.
(5)On charge 7 — I sentence you to 5 years’ imprisonment.
(6)On charge 8 — I sentence you to 7 years’ imprisonment.
(7)On charge 9 — I sentence you to 9 months’ imprisonment.
(8)On charge 10 — I sentence you to 6 months’ imprisonment.
(9)On charge 11 — I sentence you to 15 months’ imprisonment.
(10)On charge 12 — I sentence you to 18 months’ imprisonment.
(11)On charge 13 — I sentence you to 6 months’ imprisonment.
(12)On charge 14 — I sentence you to 3 years’ imprisonment.
I propose to treat the sentence on charge 8 of 7 years’ imprisonment as the base sentence. All other sentences are to be served concurrently save where I specify direct cumulation.
I make the following orders for cumulation:
·Charge 6 — 18 months cumulative on charge 8.
·Charge 7 — 15 months cumulative on charges 8 and 6.
·Charge 14 — three months cumulative on charges 8, 6 and 7.
·On each of charges 1, 3, 9, 10 and 13 — one month cumulative on charges 8, 6, 7 and 14 and each other.
·On each of charges 11 and 12 — two months cumulative on each of charges 8, 6, 7, 14, 1, 3, 9, 10 and 13 and each other.
·On charge 5 — 3 months cumulative on charges 8, 6, 7, 14, 1, 3, 9, 10, 11, 12 and 13.
Thus, your total effective sentence shall be 11 years’ imprisonment. I direct that you serve a minimum of 7 years’ imprisonment before you become eligible for parole.
Pursuant to s 18(4) of the Sentencing Act, I declare that the period of 276 days inclusive of today’s date be reckoned as already served under the sentence which I impose. I shall cause a notation to be made in the records of the Court that that declaration was made.
I sentence you, Bill Bariamis as follows:
(1)On charge 7 — I sentence you to 5 years’ imprisonment.
(2)On charge 8 — I sentence you to 5 years’ imprisonment.
(3)On charge 14 — I sentence you to two years’ imprisonment.
I propose to treat the sentence on charge 8 of 5 years’ imprisonment as the base sentence. I make the following orders for cumulation:
·Charge 7 — 15 months cumulative on charge 8.
·Charge 14 — two months cumulative on charges 8 and 7.
Thus, your total effective sentence shall be 6 years and 5 months’ imprisonment. I direct that you serve a minimum of 4 years’ imprisonment before you become eligible for parole.
Pursuant to s 18(4) of the Sentencing Act, I declare that the period of 100 days inclusive of today’s date be reckoned as already served under the sentence which I impose. I shall cause a notation to be made in the records of the Court that that declaration was made.
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