Director of Public Prosecutions v Johnston
[2018] VCC 2210
•20 December 2018
| IN THE COUNTY COURT OF VICTORIA | Revised Not Restricted Suitable for Publication |
AT MELBOURNE
CRIMINAL JURISDICTIONCR 15-02239
CR-16-00067
| COMMONWEALTH AND STATE DIRECTOR OF PUBLIC PROSECUTIONS |
| v |
| MAUREEN JOHNSTON |
| JUDGE: | HER HONOUR JUDGE WILMOTH |
| WHERE HELD: | Melbourne |
| DATES OF PLEA HEARING: | 20 December 2017, 7 February, 16 July, 25 July, 15 October, 14 November 2018 |
| DATE OF SENTENCE: | 20 December 2018, 15 February 2019 - compensation orders made. |
| CASE MAY BE CITED AS: | DPP v Johnston |
| MEDIUM NEUTRAL CITATION: | [2018] VCC 2210 |
Subject: Criminal law - sentence
Catchwords: pleas of guilty to six charges of deception, on State and Commonwealth indictments - total $1,132,500 – offending over 5 years continuing when on notice of investigation – offender established trust with victims – effect on victims - illness commencing during offending period – gambling addiction and depression - extensive surgeries and treatment ongoing – delay caused by illness – unusual management difficulties likely in prison due to illnesses and medical conditions.
Cases Cited:Verdins v R [2007]VSCA 102; Grossi v R [2008] VSCA 51 at [56]
Sentence: 5 years and 6 months, non-parole period 2 years.
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APPEARANCES: | Counsel | Solicitors |
| For the Director of Public Prosecutions | Mr J. Dickie | Commonwealth and State DPP |
| For the Accused | Mr R. de Kretser | Dribbin and Brown |
Pages 1 - 29
HER HONOUR:
1Maureen Johnston, you have pleaded guilty to a total of six charges of deception contained on two indictments, one prepared by the State Director of Public Prosecutions and the other by the Commonwealth, but they are all charges under State legislation. The maximum penalty for each offence is ten years' imprisonment.
2In June 2014 you were charged with the offences on the State indictment (C1510142.1 CR-16-00067) concerning the complainants Daffy and Peters, and with the offences on the Commonwealth indictment (CR-15-02239) in October 2014. You were charged with further offences on the State indictment in November 2014 concerning the complainants Domanski
3The total amount defrauded was $1,132,500.
4I will be sentencing you to prison for a term which will take account of your medical difficulties. This morning I have been informed that Mr Money from Corrections will personally manage your transfer to prison in a timely manner to ensure that you are assessed properly and to avoid any delay in providing your medication.
Circumstances of the offending
5I turn now to the circumstances of the offending. It is necessary to set out these circumstances in some detail to show the representations you made upon which the victims relied, which goes to the gravity of the offending. You were the sole director of Small Business Management Pty Ltd (referred to as SBM) which was incorporated on 9 October 2009. You and your husband Douglas Johnston were the sole shareholders. You operated a bank account in the name of SBM and you were the only person authorised to operate it.
6The offending which is the subject of the charges on the Commonwealth indictment began in late August or early September 2009 and continued until July 2013. Meanwhile, from January 2013 you were committing offences against several people which eventually resulted in charges on the state indictment.
The charges on the Commonwealth indictment
Marion Westlake
7Dealing first with the charges on the Commonwealth indictment, Marion Westlake became friendly with you and your husband after you met in 2009. You invited her to your home and in discussing her future you and Mr Johnston said you had a possible investment for her that would help her to retire early. You asked her how much superannuation she had and she told you about $100,000.
8You suggested that she withdraw the money and establish her own self-managed super fund, which she agreed to do. Mr Johnston said he could set it up and manage the money on her behalf to receive better returns than currently. There was reference to his old accounting practice, now run by his daughter. There was no discussion as to how the money would be invested other than through SBM, which Ms Westlake understood was a company owned and operated by you and Mr Johnston. You both referred to interest returns on her investment of 10 per cent per quarter to be paid quarterly. Ms Westlake considered you were wealthy people and she trusted you. She set up an account in the name of KM Westlake Super Fund and transferred her superannuation funds into it in anticipation of investing them in SBM.
9At your request, in January 2010 she transferred a total of $45,000 into the SBM account. She was unaware as to how the funds were to be invested. None of the funds were used for investment purposes. A few months later, you and Mr Johnston told Ms Westlake that her funds were going to be used to import goods via another company, which was false. Ms Westlake did not seek further information as she trusted you.
10Between May 2010 and October 2011 she transferred a total of $32,000 to your SBM account at your request. In late 2011 Ms Westlake told you that she was about to receive $140,000 from the sale of her mother's unit. At Christmas drinks at your home you asked her to invest the funds with SBM. She agreed to invest $75,000 in return for 10 per cent interest payable quarterly with the moneys to be returned in 12 months. You said this was urgent and Ms Westlake arranged a bank cheque to be drawn for that amount which she deposited into your account. By this time she had given you a total of $152,000, none of which had been used for investment purposes.
11In March 2012 Ms Westlake spoke with you about what she thought were her investments and you promised to repay all outstanding moneys. You gave her two post-dated cheques, one for $82,000 and one for $74,000. You told her not to deposit them until told to do so. By January 2013 Ms Westlake had not heard from you and she deposited the cheques. Both were dishonoured.
12In early 2013 you told Ms Westlake that all of her funds had been invested for the construction of six units in Williamstown but the builder had gone broke. You said you and your husband had taken over ownership of the partially built units. At the end of April you told her that the units could not be sold because the council would not provide a certificate of occupancy. You asked Ms Westlake for $10,000 to help finish one of the units which could then be sold and the proceeds would be used to repay everything owing to her, plus interest, in three weeks' time.
13As a result of this representation, Ms Westlake paid $10,000 into the SBM account. All these representations were false. The money was not used for the units and had not been intended for that purpose. The money was never repaid and Ms Westlake engaged solicitors to try to recoup her money. Letters of demand were sent on 26 June 2013, and on 16 August 2013 judgment was entered against SBM for $156,000 plus interest and costs.
14During the time when you were receiving money from Ms Westlake as purported investments, you told her on occasions that you were ill, making it difficult for you to pursue moneys owed to you. You gave her some small payments, purportedly interest, which were usually deposited just before you made a further request of her for more money to invest. The amounts provided by Ms Westlake to you, totalling $162,000, otherwise remain outstanding.
Judith and Phillip Stephens
15I now turn to the other victims, Judith and Phillip Stephens. Mr Stephens was a retired fisherman who met you and your husband while attending Collingwood Football Club games. You were a member of that club. In May or June 2011 at a football game you raised with him the idea of investing money. You told him that you and your husband had invested in a block of units being built in Port Melbourne and you were looking for more funds for the project. You said there would be a good return on the investment with interest paid every six months.
16The four of you discussed it further and the Stephenses indicated they could invest about $650,000. You told them that you and your husband could match that, giving the builder about $1.3m to complete the project. You gave the Stephenses details of the investment providing a return of 15 per cent per annum, with further shares in profits on the sale of the units which would be completed in 12 months. You said half of the 15 per cent annual return would be paid by cheque and half in cash.
17Mr Johnston said that SMB had a mortgage over the property. As a result of these false representations Mr and Mrs Stephens agreed to invest $650,000 and they transferred the money into your SBM account. You gave them a document titled "Investment Agreement" which referred to the 7.5 per cent return to be paid by cheque, but did not refer to the 7.5 per cent cash return. Neither the address or the units nor the name of the builder was included. The money was not used for any investment. About $100,000 of the funds were used by you to repay an existing loan.
18In October 2011 you told Mr Stephens that the builder needed an extra $200,000 to complete the units and you said you and your husband were putting in $100,000. You asked Mr Stephens to provide an extra $100,000 on the same terms as the earlier investment and he agreed. That transfer occurred but there was no investment. However, believing there was an investment the Stephens agreed to roll it over after six months, doing so again after 12 months for a further 12 months.
19In May 2012 you further pursued Mr Stephens, telling him about a property investment that you and your husband had organised with other investors concerning an American property purchased through an investment company, US Invest. You said investors had pulled out and enquired if the Stephens were interested in replacing them. You said they could receive rental income of about $1400 a month from the property.
20Two weeks later you explained to the Stephens on a visit to their home that each investor was allocated units in a trust set up for the investment. You said that you and your husband held one unit which cost $50,000 and wanted Mr and Mrs Stephens to take up two units at a cost of $100,000, replacing those investors who had withdrawn. The Stephens agreed to invest but only had $70,000 available. Mr Johnston said this was acceptable because the Stephens were owed about $30,000 in interest on the moneys they had invested in the Port Melbourne property, which could be added to the $70,000 thereby enabling the Stephens to invest in the two units.
21On the basis of these false representations the Stephens transferred $70,000 in two portions to the SBM account. None of the funds were used as investments. You followed up with further false representations in the form of a letter you gave the Stephens falsely purporting to confirm their investment with US Invest. You also provided them with a brochure from US Invest and trust deed for the USA properties' unit trust. Soon afterwards you sent them a letter from SBM confirming ongoing interest payments to them regarding their initial investment of $650,000.
22Mr Johnston later told Mr Stephens that rental was only payable every three months, later providing him with two cheques representing rental payments which were not to be banked until he was told to do so. Mr Stephens was later provided with two replacement cheques totalling $13,041 which he deposited. These purported to be rental payments relating to the US property.
23In about August 2012, after initially agreeing in June 2012 to roll over the $650,000 investment Mr Stephens asked Mr Johnston to recover his funds. Mr Johnston gave him a cheque for about $740,000 representing the investment plus interest, but he was told not to bank the cheque until told to do so. Well into 2013 a further cheque was given to him with similar instructions. On 5 August 2013 Mr Stephens banked the cheque but it was dishonoured.
24Mr and Mrs Stephens have received no other interest or rental payments, nor have they recovered any of the $820,000 they thought they were investing with you.
Kwang Mi Bum
25I now turn to the other victim on that indictment. Kwang Mi Bum, known as Mimi Bum, met you and your husband in late 2011 through a shared interest in Collingwood Football Club. During 2012 you told her about a secret property deal, saying this involved a number of partners, including a lawyer, a successful builder, and Mr Johnston, whom you described as a qualified and highly regarded accountant. You said the deal was secret because you were minimising tax obligations by paying tradesmen in cash. The investments relied upon cash from investors which yielded a higher return than money placed in a financial institution.
26In June 2013 you telephoned Ms Bum to discuss investing in a property involving an old apartment complex. You told her the cost was $50,000 and in return for investing she would receive interest payments of 10 per cent per month for a three-month investment. When she asked how you could pay interest every month and still return the investment after three months, you said you and your husband had been doing this successfully for nine years.
27Ms Bum agreed to invest but she only had $45,000. You offered to lend her the $5000 to make up the difference. She signed an investment agreement for $50,000 confirming it was for three months with 10 per cent interest payable each month. She gave you $5000 cash and later transferred to the SMB account $40,000 in two transactions. The money was not used for a particular investment nor was it intended to be. Ms Bum made repeated attempts to have her funds returned but they remain outstanding.
ASIC investigation
28On 14 February 2013 ASIC received a complaint about you and on 16 July 2013 an investigation was commenced. On 11 November ASIC officers wrote to you, inviting you to participate in an interview but they received no response. ASIC conducted a long investigation and you were charged on 8 October 2014 after a delay caused by difficulties in finding you.
29The offending which is the subject of the Commonwealth indictment had commenced during the same period as the offending which is the subject of the state indictment. I turn now to those charges.
Gwenneth Daffy
30Between February 2012 and February 2014 you employed Gwenneth Daffy as your house cleaner. She was aged about 67 in 2012. In January 2013 you asked her if she would like to invest in a property that you and your husband were building in Port Melbourne in partnership with a builder whom you said she would meet one day. You told her that any money invested would be returned within months with a double profit. These representations were false as you were not involved in any such property development scheme.
31As a result of your ongoing false representations, including that more investment was required for different stages of the property development, Ms Daffy initially handed $9000 to you in several cash instalments. She obtained the money from her savings and then from cash advances on her credit cards. None of it was used for the stated investment purposes. From time to time you told her that she was due for a return on her investment and she continued to give you money. During the second half of 2013 Ms Daffy gave you further amounts of money, so that by mid-November she had given you $35,000. Some of this was handed to you as cash and some was deposited into your bank accounts.
32On occasions, you accompanied Ms Daffy to the bank for her to obtain a cash advance on her credit card and hand the cash to you. Of the $35,000 she had given you, about 23,000 was outstanding on her credit cards, due to the cash advances. You promised her that she would receive her money so she could pay off those cash advances and her mortgage.
33On 25 November 2013 you gave her two cheques, purporting to be from SBM, each made out for $3,000. You told her you would not pay the full amount owing, as you had another investment for her. You told her you had $17,000 for her from her previous investments and instead of paying it to her, you invested in the new project. Ms Daffy agreed, as she trusted you completely. She deposited the two cheques, to reduce the debt on her credit cards.
34On 28 November, you gave her $4,000 cash and of this, Ms Daffy used $2,800 to pay off the credit card debt and retained $1,200. On 29 November, you rang Ms Daffy and said you wanted a further $5,000 from her, to invest in the new Port Melbourne project. You told her your husband was doing the accounting for the project, that it was a really good deal and that she would get a really good return in February 2014.
35She paid you $5,000 from a cash advance on her credit card and you later rang her and asked for a further $5,000. You went with her to the bank, where she withdrew $2,600 as a cash advance on her credit card and then to another bank, where she withdrew $800 as a cash advance on her second credit card. She gave this money to you, together with the cash of $1,600, a total of $5,000. You told her the project was going well and she would get all her money back, plus profits, in February 2014. You repeatedly referred to a 50 per cent profit, or a doubling of her money, without specifying an exact figure.
Sarah Peters
36Between May and November 2013, Ms Daffy told her daughter Sarah Peters about your investment scheme and encouraged her to invest. Ms Peters had met you at Christmas 2012. Ms Daffy had also arranged for Ms Peters' tax returns to be prepared by Mr Johnston. In November 2013, after earlier having had no money to invest, Ms Peters obtained $42,000 from a voluntary redundancy package.
37On 10 December 2013, Ms Daffy told her daughter that you had a deal going and if she wanted to get into it, she had to invest that day. She told her daughter that she could make a 50 per cent profit in a week or two. Ms Peters agreed to invest and she withdrew $20,000 from her bank. She then met you and her mother at a McDonalds restaurant. In Ms Daffy's car in the carpark, you told Ms Peters that you knew a builder who had a block of land, but needed finance to construct the buildings. You told her that as soon as the builder had finance, the money would be returned, plus 50 per cent within a week or two. You told her that you did this all the time with the builder. You put your handbag on the passenger seat and told Ms Peters to put the money into it. She found you convincing and she put $20,000 into your bag.
38On 12 December, Ms Peters visited your house to sign her tax forms. You told her about another deal with the same builder, a deal so good that Mr Johnston was in on it. You said the builder was earning too much and this was a way of avoiding paying tax. You told Ms Peters that she could invest as much as she could afford and again, that she would get her money back, plus profit, in a week. Ms Peters withdrew $8,000 from her savings account and gave it to you.
39You then flew to Queensland and went overseas on 28 December. You rang Ms Peters and left a message that you would do all her deposits during the next fortnight. Meanwhile, Ms Peters asked Ms Daffy to chase up her money with you. Ms Daffy contacted you and you told her that it was a matter between you and Ms Peters and this started to worry Ms Daffy.
40In February 2014, Ms Daffy asked you when she could expect to be paid. You said you had the money, but you were unwell and could not get to the bank. Ms Daffy offered to drive you, but you declined, saying you had cancer. Another time, you said you had been bitten by a dog.
41On 13 March at Ms Daffy's home, you gave her a handwritten document stating that you were handing over two post-dated cheques for $42,000 and $48,000, payable to her. The document bore your signature and required Ms Daffy to sign an acceptance. When she said she would speak to Ms Peters first, you stormed off with the document and the cheques. Ms Daffy contacted the Victorian Police. The officer she spoke to advised her to accept the cheques and later she met you and accepted the cheques and signed the document. You acted aggressively towards her and she agreed to wait until 31 March before banking the cheques.
42On that day, you called Ms Daffy to come to your house, which she did and you threatened to get solicitors involved for what Ms Peters had done. Ms Daffy considered you were rambling and irrational and you said you were unwell. Ms Daffy said she wanted her money back. She banked the cheques, but they were dishonoured and she obtained the cheques then and gave them to the police
Anita and Andrew Domanski.
43In October 2014, while a patient at Beleura Private Hospital in Mornington, you met another patient, Anita Domanski. She told you that she and her husband Andrew had only $24,000 left of their $42,000 savings, blaming this on her illness. You expressed interest in how they were reinvesting their funds and you mentioned ADF Homes.
44You told her about a building venture you were involved in, that helped some of your husband's builder clients avoid GST. You said a cash investment would generate more funds in a short period of time. You asked if her husband might be interested and Ms Domanski agreed to ask him.
45After your discharge from hospital, you continued to be friendly towards Ms Domanski, visiting her in hospital and talking on the phone. She told you her husband was happy with the idea of the business venture and they could invest $12,500.
46After Ms Domanski was discharged from hospital, you visited her and met her husband. You said you had a property development business and that you needed to supply tradesmen with cash to start projects. You explained that once the first stage was completed, the bank would draw down the loan to pay the builder and the investors would get their money back. You said that the cash enabled the builder to get supplies cheaply. The Domanskis agreed to invest. You promised them a return of $17,5000 on their investment of $12,500, on17 December 2014 and that the investment would be with your plumber.
47On 27 October, Mr Domanski gave you the money for this purported investment. Over the next two days, they agreed to invest a further $15,000, for which you promised a quick return. In order to obtain some of this money, you had Ms Domanski accompany you to your chemotherapy appointment at Frankston Private Hospital and after the appointment, you drove her to a bank, where she withdraw the balance of the funds and gave it to you. You then took Ms Domanski shopping for shoes, buying her three pairs and paying for her lunch.
48A few days later, you organised and paid for two return flights to Brisbane for the Domanskis and one night's accommodation. Mr Domanski had confided in you that a friend in Brisbane was fighting a brain tumour and his condition was deteriorating rapidly.
49A few days after that, you were at the Domanskis' house and met Mr Domanski's sister. You discussed financial matters with her and later, you told Mr Domanski that you were concerned about her inadequate superannuation. You suggested that he borrow $5,000 from her, to invest with you. You said this would return $7,500 by 21 November 2014.
50Instead of borrowing the money, the Domanskis decided to fund the investment themselves and they withdrew $5,000 from various of their accounts, the last of their savings. You went to their house to collect the money, telling them it would be invested in a building goods auction. All of these representations to the Domanskis were false and the $32,000 they gave you was not used for the stated purposes. Mr Domanski contacted the police after reading a newspaper article about you and your husband. Ms Daffy also reported the matter to the police and the investigation began in March 2014. You attended Frankston Police Station on 30 June and you were arrested and interviewed. Apart from admitting to being a Director of SBM, you made a no comment interview and you were charged and released on bail.
Gravity of the offending
51The summary of the offending makes clear the intentionally dishonest and blatantly opportunistic steps you took to obtain large amounts of money from people whose trust you gained from your interactions and relationships with them. You befriended people, socialised with them and impressed them with largesse and confident talk of money and the details of potential investments. You exploited your cleaning lady and her daughter. You befriended a vulnerable patient in the same hospital where you were being treated. You took money from people, knowing their resources were being exhausted, making promises to them, knowing they were false, but upon which they relied.
52Four of your victims provided statements describing the impact upon them. Ms Westlake described the pressure and disappointment of no longer looking forward to being a self-funded retiree, but needing Government assistance, owing to her losses and with a mortgage she has been unable to pay off. She said her self-confidence has been eroded and she had to turn to counselling to rectify this.
53Phillip Stephens describes similar effects of his and his wife's retirement plans being ruined, not only by the loss of their funds, but also by his having become disabled following a massive stroke, which he considers was caused by the emotional reaction to the forthcoming court case. Judith Stephens added that reference to this case makes her feel physically ill and that it had a devastating effect on their marriage for some time. She said they cannot now afford to do everything that would assist with her husband's rehabilitation, with regard to the effects of the stroke he suffered.
54The statement provided by Mimi Bum refers to the struggle she has in trusting people and that issue is also reflected in each of the other victim impact statements. She describes having lost the trust of her two young children, which she says is the worst thing in her life. Her relationship with her partner broke up; apparently he was your second-cousin. She had to sell her house and move into a new environment and she says this was the hardest time for her and her family. She considers the fraud has affected her thyroid condition and she never feels a hundred per cent, struggling with exhaustion and lack of motivation. Her description of you as: "ghoulish, atrocious and heartless" is completely understandable.
55You committed these offences over five years, at some stages knowing you were being investigated and that judgment had been ordered against you. The use of the funds by you has not been clarified. It seems that some money was used to pay other creditors in Ponzi-style offending, some was used for personal items and expenses and some was gambled. No motivation other than greed can be inferred.
56General deterrence is an important sentencing factor, because of the difficulty in detecting and investigating such crimes and because of the potentially severe impact on often vulnerable people. Your unusual circumstances call for a slight moderation in the need for general deterrence, as I shall explain.
The plea material
57You are now aged 63, a woman in very poor health, who is facing a prison sentence. The plea hearings in this case have been spread over many months, commencing with your arraignment almost exactly one year ago. The delay during that time and the complexity of the hearings was due to your ongoing health problems and the need for extensive medical material to be produced and for relevant witnesses to give evidence.
58That delay is a matter I take into account in weighing the mitigating factors in this case, as you have had the prospect of imprisonment hanging over your head for a long time. It also leads me to consider the chronology of the progress of the case, as outlined by both your counsel Mr de Kretser and the prosecutor Mr Dickie. Because of the unusual delay between arraignment and sentence, it is important to put that chronology on the record.
59A filing hearing was held on 5 November 2014, at which you failed to appear, as you were in hospital. As a result, you were remanded in custody from 27 November 2014 until your release on bail on 1 December 2014. The case went through a complex progression of hearings, during which time various reports were obtained and your fitness for trial was examined. A trial was listed for 23 January 2017, but this was vacated, due to your ill health.
60On 20 December 2017, you were arraigned and pleaded guilty, as I have described. Since then, further adjournments have been made necessary by the need for multiple reports concerning your health. On7 February 2018, the plea hearing commenced with the prosecution summary read and the plea in mitigation commenced in preliminary form. At one stage during that hearing, you collapsed, demonstrating a condition which has been documented in your medical records, but after a break, you were able to continue. That has also happened at subsequent hearings.
61A mention was held on 16 July 2018, regarding the availability of medical reports and the case was further adjourned until 25 July, when a large number of medical reports were tendered. The manageability of your medical conditions in prison was addressed by Mr de Kretser and it was foreshadowed that a report would be provided by forensic pathologist Dr Byron Collins.
62On 15 October, your general practitioner, Dr Hajbabaie, gave evidence of the history of his treatment of you and of your present state of health. Dr Collins also gave evidence, as did Mr Brendan Money, regarding the facilities at Dame Phyllis Frost Centre. Questions arose as to how prison authorities would be able to deal with your specific complex treatment needs. I shall return to those matters at a later stage in these sentencing remarks.
General background chronology
63Both parties provided helpful chronologies, which are Exhibit G and Exhibit 1. I have drawn from those chronologies in the outline which follows. You were born and grew up in Melbourne and completed secondary school. You married at the age of 20 and had three children. Your husband left you when the children were all under three years old and after a second brief marriage, you met Douglas Johnston, your present husband. You had various jobs and for some nine years, you worked as a prison officer at Pentridge Prison, but resigned in 1988, as the work had become traumatising for you.
64In 2006, you were diagnosed with cancer of the left breast and a lumpectomy was performed, followed by radiotherapy and chemotherapy. Your recovery was complicated by golden staph infection of the wound. In October 2009, your business, Small Business Management Pty Ltd, was incorporated. On 4 December that year, your general practitioner wrote to your former employer to the effect that you were being treated for breast cancer through radiation and chemotherapy and were too ill to return to work for at least two years. The doctor thought you might never be able to return to work.
65In March 2010, the GP noted pain in your right leg, hip and knee and several months later, a prolapsed disk at L45. By November, you were suffering from a rash, an infection of the left breast and a few months after that, a small cyst was discovered on your right lung. In addition, you had to undergo a colonoscopy and you had chest pain as well.
66In July 2012, you had a brain MRI and in November 2012, you had surgery following discovery of a brain aneurism. In July 2013, cancer in the right breast was confirmed and bilateral mastectomy was performed. Around this time, you suffered from depression, because of the failure of surgery and with more surgery to follow. From mid-September 2014, you spent several weeks in hospital and in mid-November 2014, you were admitted to the Albert Road clinic. Whilst a patient there, you finished chemotherapy and two days later, on 27 November, while still an inpatient, you were arrested.
67You applied for bail in the Magistrates' Court and the application was heard over several days, concluding on 1 December, when bail was granted and you were released. In July 2015, you were assessed by Dr Antony Cidoni in relation to the question of your fitness to be tried and he produced a second report on that matter in November 2015, when you were diagnosed with a severe major depressive disorder and remained unfit for trial. Dr Cidoni considered that your condition was unlikely to improve substantially over the following 12 months.
68In April 2016, you commenced consulting with a cardiologist, Dr Susan Corcoran. In May, you were assessed by forensic psychiatrist Dr Danny Sullivan, who provided a report and fitness continued to be an issue over the ensuing few months. Dr Corcoran referred you to a neurologist, Dr Michael Tan, who determined in October 2016 that you were fit for trial from a neurological point of view.
69Around the same time, Dr Cidoni determined that you were now fit for trial, but still suffering from a major depressive disorder and proffered the opinion that you would be extremely vulnerable in custody, with your depression highly likely to deteriorate significantly.
70At a directions hearing on 9 November 2016, it was confirmed that you were fit for trial. In that month, you consulted with a thoracic surgeon: Dr Manolitsas at Cabrini Hospital and he produced a report. On 23 November, you were hospitalised due to hypoglycaemia, or diabetic coma, which had been diagnosed around that time.
71While the case was adjourned for discussions to take place, on 8 December 2016, you were taken to hospital by ambulance and discharged on 22 December, following treatment for breast abscess and ulcers. This condition had worsened when the diabetes was diagnosed. The trial listed for 23 January 2017 was vacated, as I said before, due to your ill health and you were readmitted to Frankston Hospital on 16 February, where you underwent an operation to treat the infections in the breast wounds. You remained there for a week and at home you received treatment known as “hospital in the home” treatment, with nurses attending every two days to change the dressings. You returned to hospital for the same condition in March 2017 and it remained unresolved for many months, with home treatment continuing during that time.
72On 21 November 2017, a written plea offer was made on your behalf, which was not accepted, but which led to further discussions resulting in resolution. You were arraigned on two new indictments, as I have already described and the plea hearing was fixed for 5 February 2018.
Mitigating factors
73With that background material in mind, I turn to the factors in mitigation on which you rely. Your plea of guilty was not entered early, but the delay was closely linked to problems with your health, of an unusual kind and combination, as I have described. You were deemed unfit to plead for many months from July 2015 until October 2016. After that date, you experienced several periods of hospitalisation and continued to be treated at home, with your health compromised by both physical and mental illnesses.
74The plea has substantial utility in having avoided the expense and inconvenience of a long trial and in sparing a potentially large number of witnesses from having to give evidence. I accept it as an indication of remorse in the sense of accepting responsibility for your crimes, but there is little expression of remorse in any other way, save for the accepting of responsibility which you have indicated to your counsel. You say that your husband had nothing to do with it, that the representations made were yours alone. You told the psychiatrist Dr Vaddadi that what you did was wrong and that you feel very guilty, but having told him the somewhat whitewashed version of the facts, those feelings of guilt are perhaps of reduced value. If there were more genuine expressions of remorse, they might suggest better prospects for rehabilitation. Nonetheless, you are entitled to a discount on your sentence for your plea of guilty.
75Your prospects for rehabilitation are somewhat reduced by the fact that you have a prior court appearance in 2000 for similar offending, although involving deceptions of a less serious type, resulting in a good behaviour bond. You also appeared in the County Court in June 2005 on charges of trading as a bankrupt and were sentenced to 18 months' imprisonment, to be released forthwith on a three year good behaviour bond.
76Victims of that offending were left being owed $86,000, according to the sentencing remarks of His Honour Judge Shelton of this court. You were on notice then that your actions had caused great financial difficulty for other people and that you had been punished for it, but that seems to have played no part in deterring you from much more serious dishonesty of a high order. Accordingly, specific deterrence is relevant, as is the need for general deterrence and both call for a substantial, although moderated sentence in this case.
77You live with your husband Douglas Johnston, who is your official carer. Your life has been rendered miserable by your poor health, with little prospect of improvement. Since your arrest, you have led an isolated and lonely life, with no opportunities for social interaction. You are estranged from your children and grandchildren owing to tensions arising from this case, although apparently the seeds of that were sown a long time ago.
78You had a gambling problem and most of the money you obtained was frittered away on poker machines. You told Dr Vaddadi that your gambling problem started in 2011 and you soon incurred large debts, having borrowed money from friends. You told him that when you could not repay them, you were charged with fraud. That explanation is, of course, completely at odds with the facts, as it ignores the predatory and exploitative behaviour you used to persuade these people that you had sound investments for them. It was not a case of you borrowing money from them.
79Dr Vaddadi diagnosed your depressive disorder and gambling disorder and although he thought the depressive disorder predated your offending, he could not say whether the gambling disorder did. He thought your judgment would have been impaired by depression, at the time when you were cheating your friends and this is the basis of Mr de Kretser's submission that the principles in the decision of Verdins apply. Judge Shelton, in his sentencing remarks, referred to your gambling problem as having arisen as early as the time of your employment as a prison officer, leading to you having to sell your house and then to bankruptcy.
802010 was the beginning of the offending period and you continued gambling, perhaps as a long-standing and chronic manifestation of depression. This was some five years after the diagnosis of breast cancer, with other serious medical conditions following. You did not work after 1996, apparently because of the mounting serious medical conditions and the need for constant treatment.
81Despite the mounting burden of illness, your way of life at the time of the offending suggests that you were an outgoing, confident woman, able to persuade people of your business acumen to the extent that they gave you large amounts of money to invest for them. I am not satisfied that there is a nexus between the depression you suffered and the offending sufficient to attract the Verdins principles and reduce your moral culpability accordingly.
82However, similar considerations do apply in relation to your experience of imprisonment. Because of your unusual problems and in terms of your physical health, you will find imprisonment more burdensome than would others who do not suffer similarly and I shall return to that matter later.
83It should be noted that Dr Vaddadi is of the opinion that the post-traumatic stress disorder from which you suffer, as a consequence of your experience as a prison officer, but which is now in remission, might intensify in prison and he considers that your depression is such that you need weekly psychiatric treatment. Between May and August this year you engaged with a psychologist, Ms Tanya Wilson, to address depression and anxiety. She reports that in the past, you had turned to gambling to deal with depression, but you have learned some useful strategies through counselling.
84Your gambling addiction raises the question of the weight it warrants in this sentencing task. The law in this regard is accepted as being set out in R v Grossi at paragraph 56, where Redlich JA describes the mechanics of a pathological gambling disorder assessed in accordance with the principles in Verdins. His Honour said:
"That assessment will generally lead to the conclusion that the presence of a gambling addiction should not, on that ground alone, result in any appreciable moderation of the sentence."
85After analysing the reasons why this is so, His Honour concluded:
"Finally and perhaps most importantly, the nexus of the addiction to the crime will often be unsubstantiated. The disorder will not generally be directly connected to the commission of the crime. The addiction providing only a motive, an explanation for its commission. Hence, by contrast to a mental condition that impairs an offender's judgment at the time of the offence, such addiction will generally be viewed as only indirectly responsible for the offending conduct."[1]
[1] R v Grossi [2008] VSCA 51 at [56]
86While the nexus between your offending on the one hand and the combination of depression and a gambling addiction on the other hand is not established in this case, that does not exclude a degree of moderation being applied to the need for general deterrence. I do take into account your poor health and complex needs as indicating that you are not a particularly appropriate vehicle for general deterrence.
87The management of your medical conditions in prison emerged from the evidence as the primary mitigating factor to be taken into account in determining the appropriate length of a prison sentence in the circumstances, to be balanced against the gravity of the offending. Clearly a burden will be imposed on you by aspects of your mental and physical health and I have taken this into account in determining the length of your sentence when considering the burden imposed by your medical conditions generally.
Management of medical conditions in prison
88I turn now to the issue of that management. Evidence was heard from your general practitioner Dr Hajbabaie, from Dr Byron Collins, a consultant forensic pathologist and from Mr Brendan Money, who is the Assistant Commissioner in the sentence management division of Corrections Victoria. Dr Collins succinctly described the major health risks you face as being the recurrent falls, diabetes and the ulcerated wounds on your breasts. He considered that a fall could result in an intracranial bleed, which might not be apparent immediately and if untreated, could be fatal. He said if your diabetes is uncontrolled, it may develop into a coma, as it did once before and that is life threatening. He said if the infected wounds are not managed appropriately, septicaemia may develop, which can be fatal.
89Dr Collins said the risk lies less in the treatment available than in the diagnosis or identification of a problem, such as a head injury from a fall, and a problem is less likely to be detected in a timely manner in prison than at home. Added to that risk is the fact that a doctor is not available at the prison on weekends and only during business hours on weekdays.
90In a report dated 2 July 2018, which is Exhibit 4, Dr Hajbabaie stated that you were then under the care of nine specialists, as well as himself and other doctors. The list included a psychiatrist, an endocrinologist, a respiratory physician, an oncologist, a neurologist, a dermatologist, a psychologist, a diabetic educator and the Peninsula Health plastics team. Dr Hajbabaie listed the medications you take each day, about 29 tablets. He said that your diabetes is poorly controlled because of the other conditions from which you suffer, despite being appropriately medicated for it.
91He gave evidence in October that he saw you every two weeks. He described the breast ulcers from which you suffer as caused by a rare skin condition in which the immune system attacks the skin. At that time, you were receiving hospital treatment, but at home. For some weeks, a machine was attached to your body to drain the ulcers, with a nurse attending daily to change the dressings under the supervision of a consultant. The machine was no longer necessary by the final plea hearing date, but the nurse still had to visit. This treatment regime was necessary to prevent sepsis, which could compromise the diabetes and result in a coma. In turn, the infection has made your diabetes very hard to control and the cyclical effect is that a rise in sugar levels can worsen the infection.
92These two issues appear to be of greatest concern in your treatment in prison, as I said before and the third is the recurrent unpredictable falls which occur. These falls, which have been observed in court several times, have been investigated by specialists and the cause remains unclear. They can happen anytime, anywhere and even on multiple occasions in one day. They have caused in the past moderate head injury and injuries to your face and to your upper and lower limbs. It was established during the plea hearing that it is possible for you to have a personal alarm in your cell, so you could call for help, rather than rely on a duress button, which might not be accessible to you.
93The need for timely treatment in your particular case was outlined by Dr Hajbabaie in his evidence. He said it was most important that you be given the proper dose of medication and that it be timely and he emphasised the importance of a treating doctor being familiar with your medical file, because of its complexity. For example, you take analgesics for back pain due to chronic lumbar spine and cervical spine dysfunction and you are under the care of a respiratory physician for chronic obstructive pulmonary disease. This is under control, but you are vulnerable to severe respiratory infection and pneumonia if infection is not treated quickly.
94Any delay in your routine medication could cause an acute adverse effect. It follows that there can be no delay, once remanded in custody, for you to continue receiving your medication and for that purpose alone, your medical file from Frankston Hospital should ideally be with you in prison.
95The other purpose in having the file available would be for continuity of treatment, which is very important in your case and which, although preferable, would not be available for a prisoner previously treated at a hospital other than St Vincent's.
96An extension of the issue which emerged in the evidence was whether you could be seen urgently by a specialist if the need arose and whether you would be able to see your own specialists. Dr Hajbabaie said that, to date, the specialists had been able to control the wound infections, which persisted for almost two years and the chronic headache disorder is now being treated successfully with a gammaCore device, which could be brought into prison by you and used in the medical centre when required.
97Other conditions from which you suffer, particularly the falls and the diabetes, are not under control and the progress being made would be undermined by your being imprisoned and prevented from continuing to see the same specialists.
98Mr Dickie, for the prosecution, established through cross-examination that a collaborative approach to your treatment was utilised at Frankston Hospital and that this could also be used by medical staff at St Vincent's. Mr Money said a prisoner may consult with their own specialist at their expense in exceptional circumstances and in your case, that would have to be assessed. He stated that at the point of classification upon entry to prison, you would be assessed as to whether you would be a protected prisoner, given your past employment as a prison officer. He was able to confirm that you would be able to take the PICC line machine into prison with you, if it was needed, and that trained nurses, but not specialist nurses, are available to dress the wounds, with that management expected to be adequate and appropriate. Fortunately, the PICC lines were able to be removed several weeks ago, so the machine is no longer an issue.
99Mr Money confirmed that at the point of classification, a prisoner's medical file was not usually provided to the medical staff ahead of this, but it can be done. He said he could facilitate the reception of your medication list by the prison doctor if you supplied it before the date of your sentence and that that step would help to ensure that you are provided with your medication for the rest of that day and on the following days without any delay or omissions.
100That is the most important aspect of your reception into prison as part of your classification, and I express the hope that the prison authorities are well aware of this and are well prepared for it. The risks to your health are too great for any neglect or omission in regard to the continuous availability of your regular medication needs. I was assured by Mr Money that the prison system at Dame Phyllis Frost Centre is well capable of attending to these needs.
101Mr Money also confirmed that it may be possible for you to monitor your blood sugar levels yourself in your cell and that the well qualified staff at the medical centre would assess you quickly if you were unwell. He also confirmed that the gammaCore device could be kept in the medical centre for your use.
102Finally, although Mr Money could not give all the guarantees sought, he gave assurances that Justice Health endeavours to provide a level of medical care that is consistent with that provided in the community.
Legal submissions in relation to sentence
103The burden that your ill health places upon you means, as I said earlier, that your experience of prison will be more difficult than for others who do not suffer in the same way and that is conceded by the prosecution.
104Because of your unusual combination of conditions and the serious effects they have upon you with concomitant risks, even life-threatening ones, they will place a substantial burden on you. Your treatment needs are complex and that has raised serious concerns as to the adequacy of available treatment in prison. Those concerns have been extensively ventilated and Justice Health is now well aware of them, with Mr Money having taken steps to ensure this to the extent that it is possible to do so.
105It is by no means clear that your health will worsen by being in prison and the possibility of an improvement during your sentence was not discounted by your general practitioner, who was asked to consider that question. Separation from your husband, who has been your carer, is another matter, as he has been with you constantly, including at night, and in prison you will be alone at night. You have relied on him more closely as you have become estranged from family and other social contacts and I take that into account.
106Of concern is your need, as I have said, to monitor your blood sugar levels more than four times a day, which is the standard in prison, but with nursing staff available 24 hours a day, the provision of a personal alarm could ameliorate the risk of diabetic coma, allowing you to alert staff if you feel unwell. The risk of a sudden fall, leaving you injured and unattended, could also be dealt with by this means and I simply note there that when Ms Coombs attended court on 14 November to provide information from Justice Health, she confirmed that such a personal alarm can be provided to you.
107Illness of itself may only justify a reduced sentence to a degree; it does not allow the offender to escape punishment and that has been accepted in this case.
Conclusions
108There has never been any doubt in this case that a prison sentence to be served immediately is warranted for this very serious offending. In each case, you gained the trust of the victims and breached that trust, as I have already described. You continued offending when you knew you were being investigated, as if driven by your own selfish needs at any cost. On the other hand, your poor health and complex medical needs calls for a somewhat reduced sentence.
109I sentence you as follows.
On Indictment No.CR1600067, for each charge, two years' imprisonment.
On Indictment CR1502239, for Charge 1, two years and six months.
For Charge 2, three years.
For Charge 3, two years.
The sentence for Charge 2 on that indictment will be the base sentence for the purposes of cumulation. Six months of each of the other sentences on each indictment will be served in cumulation upon the base sentence. That results in a total effective sentence of five years and six months.
I order that you serve two years before being eligible for parole.
If you had not pleaded guilty to these charges, I would have sentenced you to seven years' imprisonment, with a non-parole period of three years. I think there is pre-sentence detention of about four days, is that right?
110MR de KRETSER: Yes Your Honour. Yes Your Honour.
111HER HONOUR: Four days. I declare that time to be already served and I should note it on the court record. Are there any other matters?
112MR de KRETSER: As Your Honour pleases.
113MR DICKIE: Your Honour, I recall there may have been draft compensation orders forwarded to Your Honour?
114HER HONOUR: I haven't got them to hand right now. I'll have a look in chambers for those and I'll make those orders.
115MR DICKIE: Yes Your Honour, if they can be redirected?
116MR de KRETSER: They weren't opposed, Your Honour.
117HER HONOUR: Not opposed.
118MR de KRETSER: There was one issue with a quantum that I'm sure we can - with the Westlake one, but I think we can work that out. There may be - there may be a small issue with the quantum, but we can work it out between ourselves.
119HER HONOUR: Notwithstanding whatever I make the order for, you mean?
120MR de KRETSER: No, no, the - I think we can sort it out, I'm confident, I just don't know whether - there was an issue whether it was 160-something, or $160,000 with the Westlake, what the quantum is ‑ ‑ ‑
121HER HONOUR: I see.
122MR de KRETSER: ‑ ‑ ‑ but I just need to - we'll be able to sort it out, I'm very confident.
123HER HONOUR: Now if there's any problem with those compensation orders, that can be handled by email, I think?
124MR de KRETSER: Yes.
125HER HONOUR: All right and that's all, is it? No other ancillary orders?
126MR DICKIE: No other matters, Your Honour.
127HER HONOUR: All right.
128MR de KRETSER: Sorry, the only other thing, I did send those custody management ‑ ‑ ‑
129HER HONOUR: I received those, thank you, yes.
130MR de KRETSER: Yes.
131HER HONOUR: Yes.
132MR de KRETSER: So that's the - the only other issue that we'd ask that ‑ ‑ ‑
133HER HONOUR: Have you got those with you, those emails?
134MR de KRETSER: Yes.
135HER HONOUR: How do you want to handle this, Mr de Kretser? Do you want to give those to the officers here, or what?
136MR de KRETSER: I can give a copy of what I've written to the officers that are here and the attached medical reports, but I understand Your Honour will make those orders, or something similar, yes.
137HER HONOUR: They will be placed onto the gaol record in the column that deals with management issues, they'll all be there.
138MR de KRETSER: Yes.
139HER HONOUR: That might be adequate, I suppose.
140MR de KRETSER: Yes.
141HER HONOUR: All right, we'll do it that way.
142MR de KRETSER: Yes.
143HER HONOUR: Thank you.
144MR de KRETSER: Thank you Your Honour.
145HER HONOUR: Now, perhaps I'll leave the Bench while ‑ ‑ ‑
146MR DICKIE: And there is specific transport that's been organised, Your Honour and the authorities alerted to the fact that there will be direct transport to Dame Phyllis Frost, Your Honour.
147HER HONOUR: Very well, and as I think I said at the beginning that Mr Money has said that he will be personally managing the transfer.
148MR DICKIE: Yes Your Honour.
149HER HONOUR: All right. Well, I'll also take this opportunity to thank you, Mr Dickie and your instructors and you, Mr de Kretser and your instructors for a lot of work over a long period of time in this matter.
150MR de KRETSER: Thank you.
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15 FEBRUARY 2019
The Court ordered that Maureen Johnston pay compensation to:
Gwenneth Daffy in the sum of $35000
Sarah Peters in the sum of $28000
Anita and Andrew Domanski in the sum of $32500
Marion Westlake in the sum of $162000
Phillip and Judith Stephens in the sum of $820000
Kwang-Mi Bum in the sum of $45000
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