Director of Public Prosecutions v Little

[2016] VCC 1687

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

AT MELBOURNE
CRIMINAL JURISDICTION

CR 16-00492

DIRECTOR OF PUBLIC PROSECUTIONS

v

JAMES LITTLE

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JUDGE:	HER HONOUR JUDGE QUIN
WHERE HELD:	Melbourne
DATE OF HEARING:	21 October 2016
DATE OF SENTENCE:	11 November 2016
CASE MAY BE CITED AS:	DPP v Little
MEDIUM NEUTRAL CITATION:	[2016] VCC 1687

REASONS FOR SENTENCE
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APPEARANCES:	Counsel	Solicitors
For the Office of Public Prosecutions	Ms S. Holmes
For the Accused	Mr A. Lewis

HER HONOUR:

1James Little, you have pleaded guilty to 19 charges of obtaining financial advantage by deception.  The maximum penalty for this offence is 10 years.  Charges 2, 4, 5, 8, 11, 12, 13, 15, 16 and 17 are continuing criminal enterprise offences, with each transaction within that charge being for an amount above $50,000.

2The maximum penalty for those identified offences is 20 years.  Additionally, you have consented to me dealing with, and pleaded guilty to a relevant summary matter, dealing in property of the subject of the proceeds of crime; the maximum penalty for that offence is two years.

3The circumstances of your offending are set out in the summary of prosecution opening dated 17 October 2016, Exhibit A and can be summarised as follows.  You worked with your co-offender, Andrew Simcock at K & S Freighters, a large transport company.  You commenced work there in December 2003, working in various positions, including as an operations manager, carrying out logistical tasks in the business. 

4In October 2010 you were promoted as the imported steel sales and operations manager and worked in that position until August 2014.  In this role you were responsible for operational planning, customer relationships, occupational health and safety and operational compliance.

5Simcock commenced work with the company in May 2001.  He also held various positions which included him being responsible for all the administrative duties within the steel business unit, incorporating, oversight and management of the administration staff.  In 2007 you and Simcock were friends and both worked in the steel business unit of the company.  The steel business unit was an office within One Steel Mill, the main customer of K & S Freighters. 

6By way of background to this offending, your relationship was such that you set up a company with Simcock known as Wharf Transport Solutions and competed against K & S Freighters for work.  By virtue of your positions, you could underquote K & S Freighters and once your company was awarded the work you would then subcontract it to a legitimate road transport business.

7During 2007 Simcock told you that he was aware that K & S Freighters had been overpaid $100,000, and that the funds were sitting in an account unbeknown to management.  Simcock came up with the plan to create a company and to invoice K & S Freighters for transport that did not exist.  The plan was for Simcock to manage the accounts and for you to manage the operational or logistical site of the fraud. 

8You enlisted your sister who has a different surname to you to be a director of the new company, so that neither your or Simcock's connection would be discovered.  She was paid $500 a month for her involvement.  In September 2007 you and Simcock registered Dock to Dock Transport Proprietary Limited (Dock to Dock) and set up a bank account.  You arranged for Dock to Dock to be placed on the list of sub-contractors with K & S Freighters and provided relevant bank details. 

9Counts 1 to 6, 9 and 12. In respect of the charges relating to Dock to Dock, the following steps were taken by you and Simcock on a number of occasions: 

i.You created a fraudulent email and attachment with a request, purporting to be sent by an employee at OneSteel for the pickup of goods; 

ii.Simcock would reply and forward this email to his staff, requesting a staff member to access the K & S Freighters fleet management system and create two sub-contractor payment authorities, SPAs. This document or SPA commenced the process to have transport actioned.  By the creation of the two SPAs the loads were legitimised within the fleet management system and ultimately allowed for funds to be extracted.  The order information entered into these two SPAs by the staff member was unbeknown to them false, and was manually entered into the system without any legitimate order from OneSteel, and with Doctor Dock the allocated subcontractor;

iii.Simcock would then sign the SPAs, confirming to management that he had viewed the proof of delivery dockets, PODs, that should have been supplied by Dock to Dock.  These PODs did not exist

iv.You would then create a false invoice by Dock to Dock, which listed the fictitious loads of transport;

v.The invoice with authorised SPAs were then forwarded to head office of K & S Freighters for payment.

10By the adoption of this process set out above, K & S Freighters would pay to Dock to Dock the value of an invoice less any deductions.  Soon thereafter, you and Simcock would withdraw the funds from the Dock to Dock bank account.  Between 21 June 2009 and 4 December 2012 you and Simcock supplied a significant amount of invoices from Dock to Dock to K & S Freighters for fictitious loads of transport.

11On each occasion the process explained above was adopted.  By the provision of these invoices to K & S Freighters, payments were made to Dock to Dock thirty-eight times, for a total sum of $2,061,267.92.  The details of the transactions are outlined in the chart incorporated in Exhibit A.

12Count 7, the charge relating to David Vella.  During 2011, David Vella was one of the subcontractors of K & S Freighters.  On occasions Vella would be required to drive two trips of steel in a day, taking him beyond the 12 hour limit allowed for drivers.  These loads could not be properly invoiced as
K & S Freighters would have discovered the excessive hours.  You assured Vella that he would be paid.

13You advised Vella to invoice K & S Freighters for transport of loads that he did not complete.  The false invoices were supplied under your direction.  Between 1 July 2011 and 31 October 2011, Vella supplied K & S Freighters with four false invoices, each of which was paid, the total sum being $36,300. 

Charges regarding Portside D G Proprietary Limited, Counts 8, 10, 11, 13, 16 and 18

14In 2011 the steel business unit within K & S Freighters suffered a downturn in steel transport requests from OneSteel and other customers.  Additionally, management at K & S Freighters undertook a review of transport completed by subcontractors, in an attempt to allocate their work to K & S Freighters employees.

15On 22 July 2011 the chief financial officer of K & S Freighters sent an email to all subcontractors and staff, including you and Simcock, expressing concerns that subcontractors, including Dock to Dock, were not adhering to company policy.  ASIC had terminated Dock to Dock's company registration on
30 January 2011, due to lack of compliance.  In order to spread the month by month value of the deception with Dock to Dock, you registered another company, Portside D G Proprietary Limited (Portside).  At this time, you were in a personal relationship with Bic Jade Ngoc Bui, who had previously worked in the steel business unit at K & S Freighters.

16You offered Bui between $2,000 & $3,500 a month to be a director of Portside, and told her there was a conflict of interest between this transport work and your employment at K & S Freighters, so that your name could not be used.  On 12 August 2011, Portside was registered with ASIC, with you listed as the director.  You opened a bank account for Portside.  You added Portside as a subcontractor and provided relevant bank details for
K & S Freighters.

17Using a similar system, as that which was adopted in respect of Dock to Dock, you created false invoices and produced fraudulent PODs.  Some of this was done by you, but you soon delegated this task to Bui, advising her what to write on them.  You requested K & S Freighters staff to create multiple SPAs for fictitious transport work for Portside.

18On 8 September 2011, you created six false invoices for Portside with the corresponding information in the SPAs.  The total value of these invoices supplied by you was $84,700.  The invoices were authorised by
K & S Freighters on 21 September 2011 They paid Portside $83,006, the value being the invoice totals less the mandatory insurance deduction.  The following day you withdrew $45,000 from the Portside bank account in cash.

19Between 8 September 2011 and 7 July 2014, 159 further invoices were supplied from Portside to K & S Freighters for fictitious loads of transport.  On each occasion, under your direction, staff created the SPAs with false information supplied by you.  By supplying these 159 invoices to K & S Freighters, payment was made to Portside thirty-three times, for a total of $2,209,339.  The details of the transactions are outlined in the chart contained in Exhibit A. 

20From late 2012, Simcock became aware of Portside and continued to maintain the deception from the accounting end.  During February 2013, staff at
K & S Freighters identified issues with Portside with the ATO and in relation to insurance.  You created a fraudulent certificate of currency and on
17 April 2013, forwarded it to K & S Freighters.

21When this was discovered to be fraudulent, you informed K & S Freighters that the accountant of Portside had supplied the fraudulent documents.  You eventually supplied legitimate documents as required purchasing insurance. 

Charges regarding David Vella Vic Proprietary Limited, Counts 14, 15, 17 and 19

22You created an account for a third company to spread the fictitious loads.  Instead of creating another company, you approached David Vella.  You told him that you had some freight that needed to be moved interstate, though he informed you he did not drive interstate anymore.

23You told Vella that Portside would complete the work but that this company did not have the appropriate subcontractor agreement with K & S Freighters.  You offered Vella $500 per load of transport to be completed by Portside if he, that is Vella, acted as a loading agent and invoiced K & S Freighters for the loads.  Portside would invoice David Vella Vic Proprietary Limited for the transport less the $500 a load.

24Vella agreed to this arrangement, believing he was acting as a loading or booking agent, a common practice within the industry, despite it being against his subcontracting agreement with K & S Freighters.  You then requested
K & S Freighters staff to create the SPAs for the fictitious loads where Vella was the subcontractor.  You took the SPAs and attended Vella's residence to supply him with the information for the invoices, which you ultimately completed.

25You then forwarded the Vella invoices with the SPAs and fraudulent PODs to K & S Freighters for authorisation.  Between 6 June 2013 and 13 July 2014 David Vella Vic Proprietary Limited supplied ten invoices to K & S Freighters for fictitious loads of transport.  Vella was not aware the loads were fictitious. 
K & S Freighters paid that company $509,300 for these invoices.  The details of which are in the table contained in Exhibit A.

26As to concealment of the deception in 2011, Simcock moved to the position of credit collections officer for the OneSteel accounts and thus could not continue to oversee the SPA creation and authorisation.  However, Simcock concealed the fraud within the OneSteel accounts to prevent K & S Freighters' management identifying the significant financial burden Dock to Dock, Portside and David Vella Vic had become.

27This was done in a variety of ways, including that the costs were posted where management would not see tax invoices, or exact routes, due to the volume of transport loads in the account.  Additionally, errors made by OneSteel in overpayments and mistaken double payments were able to be utilised to conceal the payments to these companies.

28Between 2009 and 2014 Simcock overcharged and concealed overpayments by OneSteel to the value of approximately $2,500,000.  Bank statements show that large sums of cash from Dock to Dock account were regularly withdrawn at multiple locations between 21 June 2009 and 14 February 2014, when the account was closed.  The majority of money paid to Vella for the fictitious loads was paid by Vella to Portside, less his $500 commission per load.  You accessed the money paid to the Portside bank account.  You withdrew large amounts of cash and delegated Bui to transfer a significant amount of money from this account.  You supplied cash to Simcock on a regular basis and also arranged Bui to electronically transfer him funds from that account.

29Throughout the period of the offending, you and Simcock were employed by
K & S Freighters, receiving remuneration packages for that employment of between $60,000 to $100,000. 

30The fraud was ultimately detected by K & S Freighters in August 2014, who contacted Victoria Police.  On 21 October 2014, police executed a search warrant at your home at Hoppers Crossing and you were arrested.  Police located multiple documents relating to Dock to Dock and Portside, including fraudulent documents used in the schemes.

31Also located at your address was a Hunter boat and trailer and a Jeep Grand Cherokee purchased by you during the offending period.  These items are the subject of the related summary offence of possessing proceeds of crime. 

32When interviewed by police on arrest you admitted to being involved in the deception and admitted to receiving a considerable amount of money from the
Dock to Dock and Portside bank accounts.  You claimed it was Simcock who had first approached you with the idea to dishonestly extract funds from
K & S Freighters.  You admitted you were dishonest in your actions, but stated that the blame for the deception should be shared evenly between you and Simcock.

33You claimed to have a serious gambling problem and that you had gambled all of the money you had obtained from the scheme.  You subsequently made a detailed statement to police on 12 March 2015. 

34As to your personal circumstances, you are currently aged 45 and the youngest of eleven children.  Your parents separated when you were very young and it was your mother who raised you with your older siblings, living in the Dandenong area.

35Some of your sisters, as well as your wife and friends, were in court to support you.  I received some character references from family members and friends, and I take that material into account.  You married your wife when you were aged 30 in 2001 and you have two children with her, a ten year old girl and an eight year old boy.  You have separated from your wife but continue to live under the same roof.  You have another child aged two with Ms Bui, and you have recently resumed contact with that child.

36You had difficulties at school and left soon after completing primary school.  You have had regular employment since that time.  Your main source of employment in your adult years has been in the transport industry.  You worked at
K & S Freighters from 2003 until 2014 and gradually rose through the ranks to a managerial position.  As outlined in Exhibit A, it was upon discovery by Simcock of the overpayment of $100,000 in 2007, and his suggestion to set up the scheme with Dock to Dock, that this offending commenced.  Each of you had a different role to ensure the scheme worked with funds to be shared 50/50.

37I was informed prior to, and for the duration of this offending, that you have had significant problems with gambling.  The genesis of this commenced when you were very young and accompanied your mother to the TAB.  Your gambling problem has continued for many many years of your life.  Whatever spare money you have had you have spent on horses or poker machines.  You were a platinum member at Crown Casino and enjoyed all the incentives and special privileges that came with being a committed gambler.

38Just prior to this offending, your wife had taken over the handling of the family finances to try to monitor and control your gambling, with this issue causing significant problems in your marriage.  The funds you obtained through this scheme were able to be utilised by you for gambling purposes.

39I note that there is no suggestion for the period of this offending of you experiencing significant financial betterment, or of adopting a lavish lifestyle.  Any assets you had were the subject to finance and the funds and losses were ultimately traceable through numerous sports betting accounts.  It was conceded, however, that your gambling addiction was not a matter in mitigation, rather, it should be considered as part of the background and context or explanation for this offending.

40I was provided with a report from Patrick Newton, clinical and forensic psychologist, dated 18 October 2016.  You attended seven counselling consultations with him between 4 March and 18 November 2015 and then continued treatment with community based agencies.  I received a report from Next Door Psychology, Exhibit 3, relating to sessions undertaken between May and July 2016 to address your gambling addiction and other compulsive behaviours.  You also participated in a follow up assessment with Mr Newton on 13 October 2016.  I take the material in both reports into account.

41Mr Newton's report sets out a history of you seeking psychological assistance for depression in 1989, 2010 and 2014, with treatment focusing on your gambling and financial stresses.  Mr Newton is of the opinion that you have experienced chronic depressive symptoms since your youth, with limited success in treatment.

42Your symptoms are sufficiently severe that Mr Newton diagnosed you with persistent depressive disorder, at a mild level of severity.  He is also of the opinion that you meet the diagnostic criteria for a gambling disorder, with a strong need for you to participate in gambling related treatment.  Mr Newton is of the opinion that your conditions were not such, as to have obscured your intent to commit these offences, or compromised your ability to understand the wrongfulness or consequences of your actions.  Your counsel conceded the relevant principles in Verdins were not enlivened as a consequence of the opinion of Mr Newton.  It was, however, submitted that your conditions were such that custody will be more burdensome for you.  I accept that submission and take that factor into account.

43You have a prior conviction for theft occurring in 2002, involving you stealing car radios from your employer.  The value of this property was between $2,000 to $3,000.  On 21 June 2006 at Sunshine Magistrates' Court you were sentenced to three months imprisonment, wholly suspended.  Although this matter is somewhat dated, given that it involved dishonesty and breach of trust in the context of your employment, it is relevant to specific deterrence.

44I take into account your plea of guilty.  You have pleaded guilty at the earliest opportunity and there is a significant utilitarian benefit in the plea, saving the community the costs and inconvenience of a trial, which in matters of this nature, are often drawn out, complicated and expensive.  Your plea is also indicative of your acceptance of responsibility for your actions and shows a willingness to facilitate the course of justice.  It was always understood that you would plead to suitable charges without the need for the preparation of a fully detailed brief of evidence.

45Additionally, I accept your plea is indicative of remorse.  Such is consistent with your admissions or candid responses in the record of interview, and the provision of a detailed 18 page statement to police, with an undertaking to give evidence against your co-accused, if required.

46I take into account the assistance that you have provided to police in the undertaking just mentioned.  Information you were able to provide to police included the details and methods of the scheme, which were of considerable value to the prosecution.  These matters are often difficult and time consuming for investigative authorities to prepare and prosecute.  Your assistance strengthened the Crown case against Simcock.  As recognised in Cottee, at paragraph 25, it is very much in the public interest that those who commit offences be given every encouragement to inform on their co-offender and give evidence against them.  I understand at this stage, Simcock is pleading to some of the offending before me in December of this year, and that you are unlikely to be required to give any evidence.  You have given an undertaking to do so if necessary.  Your assistance is of significant mitigatory value and warrants a substantial discount of an otherwise appropriate sentence.

47Additionally, I take into account that given this factor, that you are at risk of being placed in protective custody, and thereby, your time spent will be more burdensome. 

48These matters were discovered in 2014.  There has been a delay in the matters being finalised.  Despite you indicating at the outset you would plead guilty, you have had these matters hanging over your head for more than two years.  I accept that during this period you have taken positive steps towards your rehabilitation.  I accept that you have sought treatment to deal with your various issues and that your gambling is now significantly reduced.  You continue to have the support of your family and friends.  Your level of cooperation with police and preparedness to assist them, in addition to the other matters mentioned, all go well for your rehabilitation.

49There are a number of aggravating features of your offending. 

1)    It involves sophisticated system of fraud, including the creation and registration of two companies, and the use of another company.  Once confident in the success of the scheme, you used other companies to divert attention from the original subcontracting company, Dock to Dock. 

2)    You involved others to ensure your identities were not revealed or activities detected. 

3)    You actively participated in the preparation of relevant documents and took steps when questions were asked regarding the subcontracting companies. 

4)    The activities were regular and occurred over a five year period. 

5)    The individual charges and total amounts involved were significant, amounting to $4,816,206.92. 

6)    Charges 2, 4, 5, 8, 11, 12, 13, 15, 16 and 17 are continuing criminal enterprise offences, with each transaction within those charges being above $50,000. 

7)    Your activities amounted to a significant breach of trust of your employer.  You have a relevant prior conviction.

50Your counsel properly conceded that the only appropriate disposition for your offending was a period of imprisonment.  These offences are serious.  The amounts involved were in the millions and your offending continued over a very lengthy period of time and on regular occasions.  The offences constitute a gross breach of trust, placed in you and Simcock by your employer.  You participated in the continued exploitation, or took advantage of a substantial business operation, where your conduct could be covered up and was unlikely to be detected.

51Issues of general deterrence are important.  Others who hold position of trust within businesses should be aware that if they are unable to resist the temptation to unlawfully gain from their position, and they are caught, they will face punishment.  I also take into account specific deterrence, though give it less weight given that I accept that you are genuinely remorseful and have reasonably good rehabilitation prospects.  It is necessary, in sentencing you, to strike a balance between the matters raised in mitigation and the objective seriousness of this offending, together with all the other relevant sentencing principles.

52If you could please stand up, Mr Little.

53In respect of Charge 1, you are convicted and sentenced to a period of imprisonment of two years.  In respect of Charge 2, you are convicted and sentenced to a period of imprisonment of 12 months.  In respect of Charge 3, you are convicted and sentenced to a period of imprisonment of two years.  In respect of Charge 4, you are convicted and sentenced to a period of imprisonment of four years.

54In respect of Charge 5, you are convicted and sentenced to a period of imprisonment of four years.  In respect of Charge 6, you are convicted and sentenced to a period of imprisonment of two years.  In respect of Charge 7, you are convicted and sentenced to a period of imprisonment of six months.

55In respect of Charge 8, you are convicted and sentenced to a period of imprisonment of four years.  In respect of Charge 9, you are convicted and sentenced to a period of imprisonment of two years.  In respect of Charge 10, you are convicted and sentenced to a period of imprisonment of two years.  In respect of Charge 11, you are convicted and sentenced to a period of imprisonment of 12 months.

56In respect of Charge 12, you are convicted and sentenced to a period of imprisonment of two years.  In respect of Charge 13, you are convicted and sentenced to a period of imprisonment of five years.  In respect of Charge 14, you are convicted and sentenced to a period of imprisonment of 12 months.  In respect of Charge 15, you are convicted and sentenced to a period of imprisonment of two years.

57In respect of Charge 16, you are convicted and sentenced to a period of imprisonment of three years.  In respect of Charge 17, you are convicted and sentenced to a period of imprisonment of two years.  In respect of Charge 18, you are convicted and sentenced to a period of imprisonment of 12 months.  In respect of Charge 19, you are convicted and sentenced to a period of imprisonment of 12 months. 

58In respect of the summary offence, you are convicted and sentenced to a period of imprisonment of one month.  Two years of the sentence of Charge 4 is cumulative on the sentence in respect of Charge 13.  That makes a total effective sentence of seven years and I set a non-parole period of four years.

59Pursuant to s.6J of the Sentencing Act, I direct that it be noted on the records of the court that you have sentenced as a continuing criminal enterprise offender on the relevant charges previously stated. Pursuant to s.6AAA of the Sentencing Act, if you had not pleaded guilty to these matters I would have sentenced you to a period of imprisonment of ten years, with a non-parole period of eight. Pursuant to s.464ZF(2) of the Crimes Act, I order that you undergo a forensic procedure for the taking of a scraping from the mouth until a sample of sufficient standard is obtained for the placement on the database.

60I must inform you that if at the time of the request, you do not consent to the taking of a mouth scraping, under the supervision of an authorised member of the police force, then the sample will be a blood sample and the police may use reasonable force to enable that forensic procedure to be conducted.  Do you have the 464 order and the forfeiture order there?

61ASSOCIATE:  I'll just print them off.

62HER HONOUR:  Very well, all right.  You can sit down Mr Little while this is being done.  Thank you.  Thank you, you can remove the prisoner.

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