Director of Public Prosecutions v Newton

[2021] VCC 603

IN THE COUNTY COURT OF VICTORIA

AT MELBOURNE

CRIMINAL DIVISION

Revised
Not Restricted
Suitable for Publication

CR-20-01811

DIRECTOR OF PUBLIC PROSECUTIONS

v

JONATHAN NEWTON

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JUDGE:	HIS HONOUR JUDGE HANNEBERY
WHERE HELD:	Melbourne
DATE OF HEARING:	11 May 2021
DATE OF SENTENCE:	13 May 2021
CASE MAY BE CITED AS:	DPP v Newton
MEDIUM NEUTRAL CITATION:	[2021] VCC 603

REASONS FOR SENTENCE
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Subject:CRIMINAL LAW

Catchwords:              Negligently dealing with the proceeds of crime – general deterrence

Legislation Cited:      Sentencing Act 1991 (Vic)

Sentence:                  Community Corrections Order of 12 months duration with 50 hours of unpaid community work

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APPEARANCES:	Counsel	Solicitors
For the Director of Public Prosecutions	Ms H. Baxter	Solicitor for the Director of Public Prosecutions
For the Accused	Mr C. Dane QC	Vines Lawyers

HIS HONOUR:

Introduction

1Jonathan Newton, you have pleaded guilty to two charges of negligently dealing with the proceeds of crime contrary to s 194 of the Crimes Act 1958.  The maximum penalty for that offence is five years’ imprisonment.

Summary of offending

2The circumstances of the offending were set out in the Summary of Prosecution Opening that was tendered as Prosecution Exhibit 1 on the plea.  In short, each charge relates to a separate transaction where money subsequently proven to be the proceeds of crime was placed into a bank account you operated.

3The first of these transactions, the subject of Charge 1, occurred as follows: on an unknown date, an unknown person or persons fraudulently gained access to a legitimate business’ email account.  On 16 November 2018, a landscaping business in New South Wales received what they believed to be a legitimate invoice from the business whose email had been hacked.  That landscaping business paid the amount of $141,361.13 to an ANZ account operated by a friend of yours.

4You had registered an account for this friend with a purported investment firm called Summit Oil Profits.  She had provided you with her bank details for the registration.  She had also been provided with a log-on and username but had never accessed her account.

5On 16 November 2018 you contacted your friend and told her that her investment had paid out and that she would receive a payment.  You told her to retain $2,000 of the $141,361.13 placed in her account and to transfer the remainder to the account you operated.  You told her to label the transfer 'return of incorrect transfer of funds'.

6On 19 November 2018, your friend received a phone call from a person named Michael, purporting to be the CEO of Summit Oil Profits.  He asked her if she had received the funds and if you had told her what to do with them.  She became suspicious at this point and told you that she did not wish to receive any more funds from Summit Oil Profits.  Your friend has not been charged with any offence.  The amount of $139,361 was transferred into your account.

7When the fraud was discovered, the matter was reported to the New South Wales police.  This led to the reimbursement of the fraudulently obtained money by the Bendigo Bank.

8The second of these transactions similarly involved the proceeds of an email scam.  On 5 December 2018, once again a different legitimate business was duped into paying a fraudulently generated invoice.  The $254,642 paid ended up in an account operated by you.

9Of that $254,642, investigations revealed several withdrawals were made between 5 December 2018 and 17 December 2018.  These withdrawals were:

(a)    $113,386 transferred to Turkey under the description 'services';

(b)   $61,142 transferred to Lithuania under the description 'Voip credit';

(c)   $57,777 transferred to London under the description 'consulting services';

(d)   $15,000 in cash deposits to John Azman; and

(e)   $6,500 to Newtel Productions, your own personal account.

10You were interviewed by the police on 26 July 2019.  During that interview you provided an explanation for the money being deposited and transferred in and out of your account.  You told police that you had invested $20,000 with Summit Oil Profits in 2015 or 2016.  This investment, you were told, had reached a value of $90 million.  You went on to describe circumstances in which you were provided with stories that your investment could not be withdrawn because of an IRS investigation, and that you had instructions provided to you by various people about permitting your accounts to be used in a variety of ways.  You told police that you did not know that you were laundering money, nor did you know or suspect that anything suspicious was occurring.

11It is perhaps unsurprising that the police believe that Summit Oil Profits is a high yielding scam.

12The version of events you provided to police about the instructions you received about the use of your accounts appears on its face to be highly unlikely.  On first view it is almost inconceivable that anyone would believe the inherently improbable stories that you had been told.  For reasons I will explain, however, you are to be sentenced on the basis that you were being truthful with the police, and that you did in fact believe that you were involved in legitimate and lawful transactions.

Statutory scheme in relation to dealing with the proceeds of crime

13To understand the basis upon which you are to be sentenced today, some analysis of the statutory scheme in relation to dealing with proceeds of crime is required. Section 194 of the Crimes Act 1958 makes it an offence to deal with the proceeds of crime.  The section creates three offences of cascading seriousness.  Where someone knowingly deals with the proceeds of crime they are liable to a maximum penalty of imprisonment for 15 years.  Where someone recklessly deals with the proceeds of crime they are liable to a maximum penalty of 10 years' imprisonment.  Where someone negligently deals with the proceeds of crime they are liable to a maximum penalty of five years' imprisonment.

14You are charged with negligently dealing with the proceeds of crime.  In sentencing you for that offence, I must take care not to impute a mental state that suggests you either knew or were reckless about the status of this property as being the proceeds of crime.  I must be conscious to ensure that you are not sentenced based on an offence you are not charged with.

15To be reckless for the purpose of s 194, a person must be aware that there is a substantial risk that the property is proceeds of crime and decide to deal with the property anyway despite this risk.

16By contrast, in relation to the offence of negligently dealing with the proceeds of crime, there is no subjective mental state that must be proven with regard to your knowledge or awareness of any risk that the property was in fact proceeds of crime.  Whilst it must be proven that you intentionally dealt with the property, what must be proven about your negligence as to its status is purely objective.

17To be guilty of the offence, the prosecution must prove that the accused person consciously and voluntarily dealt with property although he or she failed to realise it was proceeds of crime, and that this occurred in circumstances which included such a great falling short of the standard of care which a reasonable person would have exercised, and such a high risk that the property was proceeds of crime, that the accused person’s conduct merits criminal punishment.

18In the current case that means you are to be sentenced on the basis that you failed to realise in relation to either of the transactions that the property you were dealing with was in fact the proceeds of an email fraud, or indeed any other crime.  I must also sentence you on the basis that you had no awareness even of there being a substantial risk that this was the case.  To do otherwise would be to sentence you for an offence you are not charged with.

19I also note that you are not to be sentenced as the participant in what seems to be a sophisticated international email scam.  Nor does it seem to be the case that an offence of negligently dealing with the proceeds of crime is aggravated by reference to the seriousness of the offence from which the proceeds are derived.

Moral culpability and gravity of offending

20Given that I must sentence you on the basis that, as you claim in your interview, you had no awareness of a substantial risk that this was the proceeds of crime, your moral culpability for this offence is very low.

21What must then be assessed in relation to the gravity of the offence is the level of negligence exhibited, and the amount of property dealt with.

22The amount of property dealt with in relation to both charges is almost $400,000, a substantial amount.

23The level of negligence demonstrated by your conduct must be assessed against the standard of care which a reasonable person would have exercised.  In this case, a reasonable person would have at least asked questions, and required some sort of verification, as to the legitimacy of the transactions that were occurring.  You did not do so despite handling what were substantial amounts of money and being required to undertake what seemed inherently unusual tasks regarding the transfer of that money.

24To that extent, general deterrence has some role to play in sentencing in alerting people to the perils of the extreme naïveté that you have demonstrated.

Effect on the ‘victims’

25Because of the unusual nature of the offence, those that would properly be described as victims of the offence that resulted in the funds being derived, are not victims of the offences to which you have pleaded guilty.  As such the prosecution did not seek to tender any victim impact statement.

Personal circumstances

26In relation to your personal circumstances you are now 37 years of age.  You were 34 at the time of the offence.

27You grew up in Wantirna and attended Emmaus College in Burwood to Year 11.

28You are single and live with your parents at their home in Wantirna South.  Your father is a retired telecommunication manager and your mother is a retired school teacher.  You have a younger brother who is an officer with the Victorian Police.

29You have no prior convictions.

30You are self-employed in the film and TV industry as well as stand-up comedy.  You have your own business called 'I shoot images' doing work for real estate agents and restaurants.

31I have received and read character references from Cable Williams, Milton White, Michael Moore, and Nikki Lee.[1]  All attest to your good character.

[1]Exhibits D3, D4, D5, and D6.

32I have also received a psychological report from David Ball.[2]  He notes in that report that you have recently been diagnosed as being on the autism spectrum.  I note, however, that beyond it providing some background as to your general circumstances, no submission was made suggesting that this diagnosis means that any of the Verdins[3] principles were enlivened.  Whilst it is possible that the diagnosis explains what otherwise seems to be inexplicable gullibility on your behalf, to make any conclusions on that point would be speculative.

[2]Exhibit D2.

[3]        R v Verdins (2007) 16 VR 269 (‘Verdins’).

33You have a great interest in steam locomotives.  You are a member of the Victorian Goldfields Railway Society.  I am told that you have previously travelled overseas to pursue this interest.

Matters in mitigation

34You have pleaded guilty at what is an early stage in proceedings.  You are entitled to a discount on sentence for the utilitarian value of that plea.  In the context of the impact that pandemic restrictions have had on court listings, the saving of time and resources that your plea has enabled is particularly significant.

35No specific submission was made on your behalf in relation to remorse.  This is, however, understandable given the unusual culpability profile of the offences before the court.

36It has been submitted on your behalf, and I accept, that your prospects of re-offending are very low.  I agree that you have very good prospects of rehabilitation based on your lack of prior criminal history nor anything subsequent, your otherwise good character, your early plea of guilty, and the lack of moral culpability attaching to these offences.

37I also place some, very limited, weight on the fact that this matter relates to offending committed more than two years ago. Whilst the delay itself is not exceptional, seven months of the investigation had passed before you were interviewed, and then it has taken almost two years for the proceedings to conclude.  None of this delay is attributable to any actions of yours, and I accept that the stress of these matters hanging over your head has amounted to something of a punishment.

Submissions on sentence

38Ms Baxter, on behalf of the prosecution, relayed her instructions conveyed prior to the plea that a combination sentence of imprisonment and Community Corrections Order was appropriate in the circumstances.  During the plea, and very reasonably, in my view, Ms Baxter did not strongly contend that imprisonment was required, although she did rightly submit that general deterrence played a role in sentencing.

39Mr Dane QC on your behalf submitted that either a fine or a Community Corrections Order was appropriate in all the circumstances. He contended that either of those outcomes ought to be imposed without a conviction being recorded.

40In exercising my discretion whether or not to record a conviction, pursuant to s 8 of the Sentencing Act 1991 I must have regard to all the circumstances of the case including the nature of the offence, the character and past history of the offender, and the impact of the recording of a conviction on the offender’s economic or social well-being or on his or her employment prospects.

41I have already discussed both the nature of the offence and your good character.  It has been submitted on your behalf that the recording of a conviction may cause some restriction, or at least inconvenience to your capacity to travel.  I have already noted that you work in the entertainment industry and have a desire to travel both for that and to pursue your interest in trains.  Whilst the effect of a conviction is somewhat uncertain, I accept that there is potentially some impact on your economic and social well-being of a conviction being recorded.  In all the circumstances I am prepared to impose a Community Corrections Order in this case without a conviction being recorded.

Sentence

42What I am proposing to do at this stage, on Charges 1 and 2 is place you on a Community Corrections Order.  Perhaps you might stand up now, Mr Newton.  So I am going to place you on a Community Corrections Order for a period of 12 months from today's date, without a conviction being recorded.

43Before I ask you to consent to such an order being made, I have to tell you a little bit about the order, so you know what it means.

44The following Core conditions apply to all Community Corrections Orders:

(a)   You must not commit, whether in or outside Victoria, during the period of the order, an offence punishable by imprisonment.

(b)   You must report to and receive visits from the Secretary of the Department of Justice, or his or her nominee, during the period of the Order.

(c)   You must report to the Community Correction Centre at Ringwood Community Correctional Services within two clear days from today.

(d)   You must notify the Secretary, or his or her nominee, of any change of address or employment within two clear working days after that change.

(e)   You must not leave Victoria except with the permission of the Secretary to the Department of Justice, or his or her nominee.

(f)    You must comply with any direction given by the Secretary that is necessary for the Secretary to give to ensure you comply with the Order.

45There is one other condition attached to this Order which would apply to you:

(a)   You have to perform 50 hours of unpaid community work over a period of 12 months as directed by the Regional Manager.  

46Now, I can only impose a Community Correction Order if you agree to such an Order being imposed.  So I am going to tell you a little bit more about that. 

47I advise you that if you contravene or breach that order by committing further offences you can be charged and a sentence of imprisonment is one of the options that can be imposed for that breach. 

48You can also be re-sentenced for the offences that are before me and one of the options available includes a term of imprisonment.

49So you have to be careful for the next 12 months.  No committing any further offences that might incur a term of imprisonment, otherwise you are back before the court and you will be re-sentenced on these two charges that are before me.

50I also advise you that if you fail to comply with any direction of the Secretary of the Department of Justice, that is a Community Corrections officer, worker if you like, as part of that order, a substantial fine can be imposed. 

51All right, so you understand all that, Mr Newton, you are aware of all of that?

52OFFENDER:  Absolutely, Your Honour.

53HIS HONOUR:  And do you consent to being placed on a Community Corrections Order?

54OFFENDER:  I do.

55HIS HONOUR:  All right.  So Mr Newton, on Charges 1 and 2, I place you on a Community Corrections Order of 12 months duration.  I make that order without conviction.  Apart from the mandatory requirements of such an order, I order that you undertake 50 hours of unpaid community work.  Now, my Associate will now approach you with the Community Corrections Order paperwork for your signature.  Are there any other orders required?

56MS BAXTER:  Only, if Your Honour would like to declare a 6AAA statement, but it's not required, given that Your Honour has only imposed a CCO.

57HIS HONOUR:  Yes, then I won't do that, thank you.  All right, anything further?  Thank you both for your assistance.

58MR DANE:  Thank you Your Honour.

59HIS HONOUR:  I'll adjourn until 1 o'clock.

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