Director of Public Prosecutions v Nirens
[2017] VCC 1960
•18 December 2017
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE CRIMINAL DIVISION | Revised (Not) Restricted Suitable for Publication |
Case No. CR-15-01486
| DIRECTOR OF PUBLIC PROSECUTIONS |
| v |
| JEFFREY NIRENS |
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JUDGE: | HIS HONOUR JUDGE RYAN | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 18 December 2017 | |
DATE OF SENTENCE: | 18 December 2017 | |
CASE MAY BE CITED AS: | DPP v Nirens | |
MEDIUM NEUTRAL CITATION: | [2017] VCC 1960 | |
REASONS FOR SENTENCE
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Subject: CRIMINAL LAW
Catchwords: Sentence – Plea of Guilty – Obtaining financial advantage by deception – Obtaining property by deception
Legislation Cited: Sentencing Act 1991
Cases Cited: R v Verdins (2007) 16 VR 269
Sentence: 8 years’ imprisonment with a non-parole period of 6 years’ imprisonment; 103 days pre-sentence detention; Section 6AAA declaration: 10 years’ imprisonment with a non-parole period of 8 years’ imprisonment; Compensation Order
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APPEARANCES: | Counsel | Solicitors |
| For the DPP | Mrs T. Russell | Tracey Rusell Office of Public Prosecutions |
| For the Accused | Mr A Patton | Mr W. Tighe Haines and Polites |
HIS HONOUR:
1 Jeffrey Nirens, on 4 September 2017, you pleaded guilty to an indictment containing 16 charges of obtaining a financial advantage by deception and one charge of obtaining property by deception. The total amount of money obtained by you is slightly in excess of $3.8 million.
2 Upon pleading guilty, you were bailed to 5 September 2017 and then re-bailed to 6 September 2017 so that you might get your affairs in order. On 6 September 2017 you were remanded in custody until 16 November 2017 for plea.
3 You initially appeared before me on 28 August 2017. And on 30 August 2017 a jury was empanelled to determine whether you were fit to stand trial. This issue was raised by your counsel and so you bore the burden of demonstrating on balance that you were unfit to stand trial. Called on your behalf was your treating psychiatrist, Dr Schiff. The Crown called psychiatrist, Dr Morton. On 1 September 2017 a jury found you fit to stand your trial.
4 Your offending spans the period 20 December 2001 until 17 May 2011. Many of the charges on the plea indictment are rolled-up charges and Charges 1, 4, 5, 10, 11, 12 and 16 are continuing criminal enterprise offences and accordingly the maximum penalty for those offences is 20 years’ imprisonment. In respect to the balance of the charges on the indictment, the maximum penalty is 10 years’ imprisonment.
5 Upon arraignment you admitted your prior convictions which deserve to be particularised. On 12 March 2004 at the County Court at Melbourne, you pleaded guilty to 7 counts of obtaining property by deception; 3 counts of obtaining a financial advantage by deception; 2 counts of making a false document; and 2 counts of using a false document. You were sentenced to a total effective sentence of 26 months’ imprisonment, 20 months of which was suspended for a period of 2 years and 6 months. Accordingly, Charges 1, 2 and 3 in part were committed whilst you were undergoing a suspended sentence and this is an aggravating feature of that offending.
6 Tendered as Exhibit A on the plea was a summary of prosecution opening a document of some eighteen (18) pages that was read aloud in court and which summarises the facts that found each of the counts on the indictment. As well, it contains a chronology of these proceedings and I will annex a copy of the summary of prosecution opening to my reasons. However, in very brief terms, you were born in October 1951 and qualified as an accountant in 1986. I was told that you were struck off as a member of CPA Australia in December 1997 after becoming a bankrupt in October 1996. His Honour Judge Barnett was told on your plea in 2004 that you had voluntarily forfeited your membership of your professional body in 1987 following disciplinary action. Whatever be the true position despite your bankruptcy you offered taxation advice via a business known as Moorish Business Services Pty Ltd (“MBS”). This company was ostensibly controlled by your wife but you were the guiding mind behind its operations, providing taxation, financial and investment advice to clients.
7 In 2001 you set up Investment and Management Pty Ltd (“IAM”).
8 The funds that you obtained from your victims passed through either one or both of these accounts over time.
9 In 2003 you were declared bankrupt and your personal assistant, Michelle Matthews, was appointed a director of IAM but, once again, you were the controlling mind behind its operation.
10 In summary, the false representation that you made to each of your victims was that their moneys would be invested when nothing could have been further from the truth. In effect, you ran a Ponzi scheme whereby any repayments of interest came from that victim’s capital investment or the capital investment of other victims.
11 Tendered as Exhibits B, C and D were a number of bundles of Victim Impact Statements. Exhibit B consisted of the Victim Impact Statements not read in open Court, being Mr Hernstadt, Ms Miyamoto and Mr Rodger. Exhibit C is the Victim Impact Statements of Mr and Mrs Silby and Mr and Mrs Bamberry that were read in open court. Exhibit D consists of those Victim Impact Statements that were to be read in Court by the deponents, being Rodney Nash and Michael Brown, but who, when called, were not present in Court.
12 The effect of your acts of dishonesty have been profound on each of the authors of the Victim Impact Statements. In the main, you defrauded your victims of their life savings. Their retirement plans are in disarray. Some are continuing to work well after they had planned to retire because of your conduct. Some, too, now live in reduced circumstances, being unable to maintain their previous comfortable lifestyle because of their losses. Long looked-forward-to overseas travel is now a fantasy rather than a reality for some of your victims. Inheritances have been squandered. Some of your victims’ physical health has deteriorated, whilst each is psychologically damaged by you, fearing what the future holds for them now that their savings are gone.
13 During the fitness hearing, Dr Schiff swore that he had treated you for many years. He diagnosed you with depression with suicidal ideation from time to time and that you had been treated as an inpatient at the Delmont Private Hospital from time to time. He swore that as part of your treatment you had undertaken group therapy for a period of six years. Dr Schiff described the various medications that had been tried with you, most of which had little if any beneficial effect on you. Dr Schiff also deposed as to the physical ailments from which you suffer that included severe headaches that after examination by specialists were unable to be explained. At the time of the fitness hearing, you were an inpatient at the Delmont Hospital reporting that you had attempted suicide by way of overdose the previous weekend. Dr Schiff opined that you suffered from anxiety based in part in your fear of a custodial sentence in respect of the instant offending. Dr Schiff described you as a vulnerable personality, dependent, over-anxious and narcissistic.
14 Ultimately Dr Schiff opined that you were unfit to stand your trial because you could not exercise the right to challenge jurors; you could not follow the course of the trial in an effective and timely fashion; you were unable to understand the process and the substantial effect of the evidence that would be given in support of the prosecution case; and you would be unable to instruct your legal team effectively. Dr Schiff withdrew one of the bases for your unfitness, being your ability to exercise the right to challenge jurors, because he simply did not understand that process.
15 Dr Morton swore that she would not give evidence concerning patients that she treated as she would be inherently biased towards them. She found that you could give a detailed description of the charges and that you were able to express a very sophisticated understanding of your plea options. She opined that you had the ability to challenge a juror; that you understood the concept of standards of proof; and that you understood the nature of a trial. Further, you had expressed to Dr Morton your concern about your ability to gain access to evidence that was relevant in the trial process. Dr Morton opined there was no suggestion that you were unable to communicate your wishes to your legal advisers.
16 Ultimately, Dr Morton swore that she did not believe that your symptoms met the criteria for an anxiety disorder; rather, she thought you were a man with a narcissistic personality disorder who had previously been incarcerated and who was aware of the nature of being in prison. You were distressed by the prospect that you may be imprisoned again. Despite this, no work had been done with your treating psychiatrist to prepare you for the trial process. Dr Morton noted that at one stage you had sought to engage with her and to influence her and she believed at the time you were seeking to form a rapport with her that was inappropriate.
17 Dr Morton found you fit in all respects but opined that you might find the trial process distressing and that steps could be taken to alleviate this, perhaps by the use of medication.
18 It is plain to me that Dr Schiff is biased in your favour, understandably, and that you have taken advantage of him in your therapeutic relationship with him.
19 It is also apparent from a perusal of the history of this proceeding that you have manipulated the procedures of this Court to delay the finalisation of this matter.
20 You are 67 years of age. You grew up in Melbourne with your parents and three brothers. You were educated at Mount Scopus College and graduated with a Bachelor in Commerce in Accounting from Melbourne University in 1973, before completing a Masters in Taxation Law in 1994.
21 You have been married twice, your first wife, Deborah, is the mother of your three children, Rebecca, Yvonne and Nathan. You have five grandchildren. Your relationship with your children has been strained since 2001. However, during the period that you were permitted to remain on bail after entering pleas of guilty, you reconnected with your children and grandchildren.
22 In respect to your second wife, Rhonda, you are presently engaged in Family Law proceedings in respect of the distribution of the assets from that marriage.
23 You are presently in a relationship with Ms Monica Skladowski and have been so since 2013; you are engaged to be married.
24 Until you were remanded in custody, it was a condition of your bail that you reside with your brother, Andrew, and his wife in East Bentleigh. You maintain contact with your elder brother, Michael, who resides in Queensland.
25 You are incarcerated at the Melbourne Remand Centre and you continue to suffer from a number of ailments and medical conditions. As a consequence of these conditions, you have been deemed unfit to work. You continue to complain of debilitating headaches. Whilst in custody, you experienced recurrent nose bleeds and underwent cauterisation of your nasal passages to treat this condition. I was told that you were awaiting the result of blood tests and that an MRI scan is scheduled for later this year. Tendered as part of Exhibit 2 on the plea was the report of Dr Leon Turnbull, psychiatrist, dated 11 October 2017. He opined:
“I see little scope to associate any mental health issues around the time of the offending but this man is clearly distressed and finds it difficult to cope. I would anticipate that at the time of sentencing he will continue to be in a similar or worse state. Part of that is due to a propensity towards anxiety and depression but another inseparable part is his attitude and beliefs about what occurred in that he considers himself a victim.”
26 Earlier in his report Dr Turnbull opined:
“It is Mr Niren’s insistence that he is struggling in custody, is not receiving adequate psychiatric care and that the appropriate care should be with Dr Schiff. I would anticipate this man will continue to have struggles in prison and at the precise time of assessment he is at or near loggerheads with the health service over their care with him having written to the Health Commissioner.”
27 Mr Patton of counsel, who appeared on your behalf, submitted that the diagnosis of depression and the reported symptoms experienced by you in custody enliven principles 5 and 6 of R v Verdins. I accept in all the circumstances that time in custody will weigh more heavily on you than on a person without your ailments. However, I am not satisfied that there is a serious risk of imprisonment having a significant adverse effect on your mental health.
28 It was acknowledged on your plea that your offending involved a significant breach of trust. It is to be noted that the total amount received by you was in excess of $3.8 million and that your offending covers the period from 20 December 2001 to 17 May 2011.
29 In respect to your plea of guilty, you are entitled to the utilitarian benefit that flows from it; however, I can discern little or no remorse in you for your offending.
30 I give little weight to the report of Dr Schiff dated 22 August 2017 which forms part of Exhibit 2 on the plea, save that he accurately describes how you present to him and the medications that have been prescribed to you.
31 Mr Nirens, you are an inveterate swindler and I have little doubt that given an opportunity to offend again you would.
32 Principles 1 to 4 of R v Verdins were not relied upon by your counsel and properly so, I am of the view that you are an appropriate vehicle for the application of general and specific deterrence.
33 Please stand up.
34 Doing the best I can, taking into account the objective circumstances of your offending together with your personal circumstances and applying sentencing principles, I sentence you as follows:
On Charge 1 – 4 years’ imprisonment;
On Charge 2 – 1 year’s imprisonment;
On Charge 3 – 3 years’ imprisonment;
On Charge 4 – 4 years’ imprisonment;
On Charge 5 – 4 years’ imprisonment;
On Charge 6 – 6 months’ imprisonment;
On Charge 7 – 1 year’s imprisonment;
On Charge 8 – 1 year’s imprisonment;
On Charge 9 – 1 year’s imprisonment;
On Charge 10 – 3 years’ imprisonment;
On Charge 11 – 1 year’s imprisonment;
On Charge 12 – 3 years’ imprisonment;
On Charge 13 – 6 months’ imprisonment;
On Charge 14 – 1 year’s imprisonment;
On Charge 15 – 6 months’ imprisonment;
On Charge 16 – 1 year’s imprisonment; and
On Charge 17 – 6 months’ imprisonment.
35 I order that 9 months of the sentence imposed on Charges 4 together with 6 months of the sentences imposed on charges 3, 5, 10 and 12, together with 3 months of the sentences imposed on Charges 2 and 8, together with 2 months of the sentences imposed on Charges 7, 11, 14 and 16, and 1 month of the sentence imposed on Charge 15 be served cumulatively upon each other and upon the sentence imposed on Charge 1. This results in a total effective sentence of 8 years’ imprisonment and I fix the period of 6 years’ imprisonment as the period that you must serve before you will become eligible for parole.
36 I direct that it be caused to be entered in the records of the Court that in respect to Charges 1, 4, 5, 10, 11, 12 and 16 that you are sentenced for continuing criminal enterprise offences.
37 I declare that you have spent 103 days of pre‑sentence detention, not including today.
38 Pursuant to s.6AAA of the Sentencing Act 1991, I declare that but for your plea of guilty, I would sentenced you to 10 years’ imprisonment with a non-parole period of 8 years’ imprisonment.
39 You may be seated. Now, there were a number of applications pursuant to s.86 of the Sentencing Act 1991. I have signed each of them in triplicate and I hand them down. Does anything arise out of the sentence?
40 MRS RUSSEL: No, Your Honour.
41 MR TIGHE: No, Your Honour.
42 HIS HONOUR: You may remove the prisoner.
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Annexure A – Summary of Prosecution Opening for Plea
IN THE COUNTY COURT Indictment No.F110737768
OF VICTORIA
AT MELBOURNE
County Court Ref No. CR-15-01486
DIRECTOR OF PUBLIC PROSECUTIONS
V
JEFFREY GEORGE NIRENS
SUMMARY OF PROSECUTION OPENING
Date of document: 12 October 2017
Filed on behalf of: Director of Public Prosecutions
Prepared by:
John Cain Solicitor’s Code: 7539
Solicitor for Public Prosecutions Telephone: (03) 96037824
565 Lonsdale Street
Melbourne VIC 3000 Ref: 1501763/T Russell
CHARGES:
1-7,9-17 Obtain financial advantage by deception: s.82 (1) Crimes Act 1958
Obtain property by deception: s.81(1) Crimes Act 1958
BACKGROUND
1.The Accused Jeffrey George Nirens (DOB 16 October 1951) was a qualified accountant between 1986 and 1992, but was struck off as a member of CPA Australia in December 1997 after becoming a bankrupt in October 1996.
2.Despite his bankruptcy, the Accused offered taxation advise via a business known as Moorish Business Services Pty Ltd (“MBS”). MBS was ostensibly controlled by the Accused’s wife but the Accused was the actual operator of the business, providing taxation, financial and investment advice to clients.
3.In 2001, the Accused set up Investment and Management Pty Ltd (“IAM”).
4.The Accused was again declared bankrupt in 2003 and asked Michelle Matthews, his personal assistant, to be a director of IAM, but the Accused was to be in daily control of the entity.
Charges 1 and 2:
5.The Accused was introduced to Fraser Stevens (p.250) in August 2001. The Accused claimed to represent various University of Melbourne professors in their taxation affairs, to be the author of articles regarding taxation, and to be currently engaged in a PHD on taxation matters.
6.Mr Stevens and his wife met with the Accused on 1 October 2001 to discuss investment of money by the Accused at a higher rate of interest than provided by banks and in a secure investment.
7.The Accused advised that he would pay 10% interest on their investment of $625,000 and that it would be securely invested in first home mortgages with the Bendigo Bank for 12 months. In order to organise this investment, the Accused arranged for a company to be incorporated and a trust set up: Fralor Pty as trustee for the Fralor Trust was incorporated on 9 October 2001.
8.Mr Stevens transferred $200,000 to the Accused on 20 December 2001 at the Accused’s request and a further $425,000 to the Accused on 18 January 2002, the funds being deposited in the IAM account.
9.The Accused initially provided a monthly interest payment but then began to pay more sporadically, so Mr Stevens requested that the money be paid weekly. This too became erratic.
10.On 6 April 2002, Mr Stevens requested that the money invested by the Accused be returned.
11.On 1 July 2002, the Accused falsely claimed that Mr Stevens was not required to pay PAYG tax to the Australian Taxation Office and that GST had been cancelled. This information was false.
12.On 26 July 2002, in response to demands by Mr Stevens, the Accused paid to him the sum of $25,000.
13.On 30 June 2003, the Accused paid the sum of $120,000 to Mr Stevens and further $150,000 on 2 July 2003.
14.On 25 January 2005, Mr Stevens paid to the Accused the sum of $15,000 with the intention that it be invested on the same terms as the balance of the principal already held by the Accused.
15.The Accused subsequently returned $15,000 by way of interest payment on 14 April 2005 and a further $15,000 on 15 April 2005.
16.On 29 August 2006, the Stevens paid a further $150,000 to the Accused to be invested on the same terms as the balance of the principal and a further $30,000 on 30 March 2007.
17.The purported interest payments from the Accused became more erratic, and the Stevens finally requested that all invested monies be returned to them by the Accused on 1 September 2009. After seeing a financial advisor, they discovered that the Accused was not a registered financial advisor and should not have been giving financial advice.
18.Subsequent police investigation has revealed that deposits made by the Stevens into the IAM accounts controlled by the Accused were used to make payments to other victims in the form of a “Ponzi” scheme and were not invested in first mortgages.
Charges 3 and 4:
19.In 2006 Hideko Miyamoto, an invalid pensioner, was in a relationship with Robert White. White was an associate of the Accused and involved in various money lending activities of the Accused. White introduced the Accused to Ms Miyamoto.
20.In 2007 at the instigation of White and the Accused, the Ms Miyamoto began to invest monies with the Accused. White and the Accused persuaded Ms Miyamoto to sell a property she owned in Sydney and that the monies would be invested by the Accused for a 12 month period with interest paid weekly or rolled over.
21.Ms Miyamoto invested $711,722 from the sale of the Sydney house with the Accused, payments being transferred to the Accused as follows:
- 8 November 2006 $51,965
- 23 January 2008 $299,912
- 8 February 2008 $99,970
- 25 February 2008 $99,970
- 19 March 2008 $99,970
- 23 April 2008 $59,935
22.Ms Miyamoto also invested further amounts in 9 payments totalling $386,968 for the Accused to invest on the same terms.
23.Subsequent forensic analysis by police have established that the total sum invested by Ms Miyamoto was $1,098,690 in 15 deposits between 1 April 2005 and 5 August 2011.
24.Shortly after each deposit was made into an IAM account controlled by the Accused, a payment was then transferred out of an IAM account to an account held by White.
25.Although some payments were made to Ms Miyamoto by the Accused, the Accused stopped making payments to Ms Miyamoto in September 2008. The Accused later admitted to Ms Miyamoto that he had been paying commissions on her invested monies to White.
26.In mid 2009, Ms Miyamoto demanded all of her money be returned. The Accused did not do so, but paid $1700-2000 every week between November 2009 and November 2010. The balance of monies was never paid back to Ms Miyamoto.
Charges 5 and 6:
27.In November 2007, Blanch and Anthony Bamberry (p.276) were introduced to White when their house in Helensville, Queensland was up for sale. White then introduced them to the Accused, saying that they could get returns on their money from the Accused like White did via the Accused’s business MBS. White told the Bamberrys that the Accused was a member of the chartered accountant’s society, a member of Rotary, and was of high standing in the Jewish community, with a number of high profile Jewish clients.
28.The Accused and White convinced the Bamberrys that they would invest the Bamberry’s money by loaning it out in small parcels at high interest of 41.34% for short terms, in particular to Nirens’ Jewish clients. The Bamberrys agreed to invest on these terms. Nirens confirmed by email that the term of the investment by the Bamberrys would be 12 months on 2 months call, with the return being $1590 per week.
29.The Bamberrys invested $850,000 by transferring the following amounts to IAM accounts controlled by the accused as follows:
12 December 2007 $200,000
22 January 2008 $50,000
5 March 2008 $50,000
25 March 2008 $50,000
9 April 2008 $100,000
23 April 2008 $350,000
7 May 2008 $50,000
30.The Bamberry’s also made a further payment of $25,000 on 24 April 2008.
31.The Accused made the first purported interest payment to the Bamberry’s on 10 December 2007 of $1,590.
32.On 17 September 2008, the Accused emailed the Bamberrys saying that the “clients” could not pay the interest due on the investments. He also revealed that instead of investing the money in small parcels as had been agreed, the money had been invested in two larger projects, one in Barham Victoria and another a nursing home complex in Sydney, and that the “clients” were awaiting refinancing.
33.On 27 February 2009, all payments by the Accused to the Bamberrys ceased and the Bamberrys were informed by the Accused that he had also been paying a commission to White on the Bamberry’s money, and also on that of Ms Miyamoto.
34.On 5 October 2009, the weekly payments from the Accused to the Bamberrys’ accounts recommenced but then ceased again on 25 November 2010. Further erratic payments totalling $5394.30 were received between November 2010 and February 2011.
35.The total amount repaid to the Bamberrys from their investment payments totalling $950,000 were $308,000.
36.On 26 April 2011, the Bamberrys had a meeting with the Accused at their home. He stated that his affairs were in the hands of solicitor Graeme Efron, that all his assets were to be sold and paid into a trust. He also wrote 5 post-dated cheques to the Bamberrys of $1500 each. When the first two were dishonoured the Bamberrys did not present the others.
37.In July 2011, the Accused purported to assign two blocks of land at Barham to the Bamberrys, but when they asked for proof of his entitlements to the land the assignment was not forthcoming.
38.Subsequent forensic analysis by police have established that between 20 December 2007 to 22 May 2008, the Accused made payments to White from IAM accounts totalling $57,623.02, which formed an ongoing fee to White related to the Bamberry deposits with the Accused.
Charge 7:
39.Following a recommendation from Mrs Bamberry, on July 2008 Janet Evans (p.289) was introduced to the Accused. Ms Evans had placed her life savings of $25,000 with the Queensland Teachers Credit union on 23 July 2008 but was told shortly afterwards by Ms Bamberry about IAM and how she could be earning 40% interest with the Accused.
40.Based on emails between herself, Ms Bamberry and White, Ms Evans agreed to invest her money on the same terms as the Bamberrys. To this end, she withdrew the $25,000 from the QTCU account on 31 July 2008 and deposited it with the Accused by transfer. The deposit was confirmed by the Accused on 10 September 2008 by email stating that the weekly income on the monies deposited would be $198.75.
41.Correspondence then occurred between Ms Evans and the Accused between 8 October 2008 and 7 March 2009, as no interest payments were made. On 19 April 2010 Ms Evans requested the return of her investment but received no reply.
42.No payments were made by the Accused on the investment of Ms Evans and he has not communicated with her since 7 March 2009, nor has the principal been repaid.
Charge 8 and 9:
43.Mr Arie Herrnstadt (p.295) was an accounting client of the Accused between 1996 and 2002.
44.In 2009, Mr Herrnstadt again went to see the accused at MBS for advice regarding preparation of income tax returns for the 2003-2009 period. The Accused advised that there would be back tax and penalties of approximately $50,000.
45.The Accused said he could make an arrangement whereby there would be no penalties payable to the ATO by lodging the sum of $50,000 for a two week period and that it would attract an interest payment of 10%.
46.On the basis of this advice, Mr Herrnstadt made payments to the Accused by way of cheques made payable to MBS:
- 29 June 2009 $12,000
-2 July 2009 $5000
- 6 July 2009 $5500
47.A separate transfer of $35,000 was made by Mr Herrnstadt to the Accused’s MBS account on 9 July 2009.
48.The Accused met with Mr Herrnstadt on that day and was told by the Accused that the funds would be required until completion of the 2009 and 2010 returns.
49.In June 2010, Mr Herrnstadt had a further meeting with the Accused, who said that he required a further $12,000 to finalise the dispute. This money was paid by Mr Herrnstadt to the Accused’s MBS account by cheque of 24 June 2010.
50.In December 2010, Mr Herrnstadt requested the finalisation of the matter and the return of his monies. He was told by the Accused that the accounts would be reconciled once the matter was finalised with the ATO. The Accused also offered to invest a further $70,000 of Mr Herrnstadt’s saving’s but this offer was declined.
51.On 21 January 2011, Mr Herrnstadt received advice from MBS that he owed the ATO the sum of $4553.43.
52.In May 2011, Mr Herrnstadt contacted the Accused again and was told the failure to finalise the matter was due to the Accused’s heath and marital problems.
53.On 26 May 2011 Mr Herrnstadt met with the Accused, who renewed the offer of the $70,000 investment and said that the $70,000 currently held by the Accused could be rolled into this investment. This was again declined but a short time later the Accused contacted Mr Herrnstadt and said that he had already invested the $70,000 on his behalf. After a heated discussion, the Accused to meet with Mr Herrnstadt at the MBS office on 27 May 2011.
54.On that day there were further discussions between Mr Herrnstadt and the Accused as to the whereabouts of the monies and Mr Herrnstadt subsequently wrote to the Accused stating that he would be attending at the MBS office on 17 June 2011 to collect a bank cheque for the full amount, in default of which he would commence legal action.
55.On 17 June 2011, Mr Herrnstadt attended the MBS and was told by the receptionist that the cheque was not available for collection, the ATO documents had not been submitted and that the Accused had admitted himself to a psychiatric facility that day. In subsequent discussions with MBS staff, Mr Herrnstadt became aware that the Accused did not run the business and was not a registered tax agent.
56.No money has been repaid by the Accused to Mr Herrnstadt. The cheques for payment for the ATO were not used for this purpose but were instead paid into the Accused’s accounts.
Charge 10:
57.The Accused had acted as the accountant and financial advisor for Rodney Nash (p.309) and his wife in 2009.
58.In 2009, at the recommendation of the Accused Castle Hill Pty Ltd was purchased as a shelf company and its name was changed to Nober Pty Ltd, this would then manage the trust and self-managed superannuation funds of Mr and Mrs Nash.
59.Following discussions with Mr and Mrs Nash in September 2009, the Accused offered to invest their money at the rate of 9% per annum. This was then confirmed in a loan contract signed by the parties dated 23 September 2009. The money was to be invested in bridging loans to solicitors.
60.Mr Nash made the following transfers into the MBS account of the Accused:
- 23 September 2009 $200,000
- 2 December 2009 $68,000
- 16 December 2009 $142,182
61.In late 2010 the Accused entered into new investment contracts with Mr Nash with an interest rate of 12.5% p.a.
62.On 5 and 6 July 2011, Mr Nash attended at the MBS offices and was told by Ms Matthews that the money was lost and that MBS had been sold.
63.On 7 July 2011, Mr Nash contacted the Accused by telephone demanding repayment of his money. On 19 August 2011, Mr Nash was told by the Accused that his funds were held as part of a pooled investment financing a resort development on the Murray River. In subsequent meetings and telephone calls it became apparent that there was no money invested in the alleged development and on 28 September 2011 the Accused admitted to Mr Nash that he did not know where the money was, and that he had been operating a “sort of” Ponzi scheme.
64.Subsequent police investigation has revealed that within 4 days of the initial deposit of $200,000 on 23 September 2009, there was a transfer of the funds to the other complainants Stevens, Miyamoto and Bamberry and a similar transfer occurred after the deposits in December 2009.
Charge 11:
65.The Accused was the accountant and financial advisor to Ross Catlow (p.320) between 1998 and 2010.
66.In February 2010 the Accused met with Mr Catlow at Mr Catlow’s home. The Accused encouraged Mr Catlow to invest money in a company trust held by the Accused, which lent money to solicitors for bridging finance, with returns of 10% per month and the interest paid weekly.
67.Based on the Accused’s assurances, Mr Catlow signed an investment agreement produced by the Accused and transferred the sum of $50,000 to MBS by cheque on 2 March 2010. This was banked by the Accused on 4 March 2010.
68.After receiving interest payments of $4,120.00 per week from the Accused for some months, in September 2010 Mr Catlow requested the return of the sum of $10,000. When this was not returned by November 2010, Mr Catlow requested the repayment of the full amount of $50,000.
69.The Accused paid to Mr Catlow the sum of $10,000 on 17 December 2010 and a further $1,000 on 22 March 2011, claiming that the money was coming from his personal account due to problems with a legal firm. The Accused has failed to return the balance of the monies.
70.Subsequent police investigation has revealed that the monies allegedly invested for Mr Catlow were used to make payments to victims Stevens, Miyamoto and Bamberry.
Charge 12,13:
71.The Accused was the accountant for Colin and Deirdre Sibly (p.325) from 2000-2008. In that capacity, he prepared their tax returns and also gave financial advice to the Siblys.
72.In September 2008 Mr Sibly inherited $150,000. The Accused recommended a personally managed financial structure whereby the Siblys would receive returns of 12.5% pa. Following the Accused’s advice and assurance that the money would be invested in short term bridging finance facilities, Mr Sibly transferred $150,000 to the IAM account controlled by the Accused on 18 December 2008.
73.Following payments of purported interest by the Accused to the Siblys in December 2008 and January 2009, the Accused encouraged the Siblys to make further investments from their superannuation funds with MBS. The following payments were transferred to the Accused by the Siblys:
-10 September 2010 $7,000
- 18 November 2010 $6,500
- 12 January 2011 $8,500
- 17 May 2011 $2,000
74.The Accused also encouraged the Siblys to invest further funds into his investment products as a way of providing continuing income for their retirement and paying out existing an existing line-of credit. After discussing reverse mortgages, the Accused persuaded the Siblys to lodge a further $150,000 with him on 6 April 2011, which was to be invested on the short-term money market and provide a $15,000 return on the investment.
75.On 24 June 2011 Mr Sibly requested the return of all the funds from MBS but were advised that there were no funds available to repay them. He subsequently discovered that the Accused did not have the professional indemnity insurance he had previously claimed to have and was not a qualified accountant or financial advisor.
76.The last contact with the Accused was an SMS on 8 July 2011 saying that he would arrange restitution, but no monies have been repaid.
Charge 14:
77.In 2007 Mike Brown (p.340) engaged the Accused and MBS as his accountant and received financial advice from the Accused regarding investments. The Accused claimed to be a chartered accountant, owner of MBS, and holding various accounting qualifications.
78.In October 2010, the Accused offered Mr Brown the opportunity to invest money in a “no risk” investment which was only available for long term trusted clients of the Accused. The terms were that Mr Brown would transfer $50,000 to the Accused for two months and this would receive a 10% net return of $5000.
79.The purpose of the investment was financing a deposit on a property one of the Accused’s investors was buying.
80.In accordance with the agreement, on 3 November 2010 Mr Brown transferred $35,000 from his self-managed superannuation account to an MBS account controlled by the Accused, and a further amount of $15,000 on the same day from his company account to the MBS account.
81.No return of the money was made after the two months nor payment of interest. In February and March 2011 the Accused forwarded $60,000 cheques to Mr Brown but both were dishonoured.
82.No funds have been received from the Accused.
Charge 15:
83.Cameron Orr (p.347) was introduced to the Accused in 2000 and used the Accused as an accountant from 2001 to 2011. He was led to believe by the Accused that the Accused was a practicing accountant and held a Masters in Taxation.
84.In February 2011 the Accused persuaded Mr Orr to make an investment which was being offered by the Accused only to selected clients by MBS. The funds were to be invested with MBS, lent to a solicitor’s firm for deposits for property purchases with a 30-90 day settlement and that the money would be secured on the properties. A 10% return would be paid within 45 days.
85.In accordance with this agreement, Mr Orr transferred the sums of $10,000 to the Accused’s MBS account on 10 February 2011, a further $4000 on 11 March 2011 and $3000 on 20 March 2011.
86.No repayments were made to Mr Orr by the Accused nor any payment of interest. Police have established the monies received from Mr Orr were used to make interest payments to victims Stevens, Sibly and Catlow.
Charge 16, 17:
87.Michael Rodger was introduced to the Accused in 2008 and engaged the Accused to set up a superannuation trust. He also paid the Accused for ongoing taxation financial advice.
88.In April 2011, Mr Rodger and his wife discussed with the Accused about investing their superannuation finds in property. The Accused advised Mr Rodger to invest $50,000 for 90 days with a 10% return. The Accused said that the investment was to provide bridging finance to high net worth clients and was secured by first mortgages.
89.On 12 April 2011, Mr Rodger transferred the sum of $50,000 to the Accused’s IAM account.
90.The Accused subsequently contacted Mr Rodger on two other occasions in April and May 2011 regarding similar investments. Based on these approaches by the Accused, Mr Rodger made two further transfers to accounts controlled by the Accused:
- 20 April 2011 $15,000;
- 17 May 2011 $4000.
91.After being made aware by Mr Orr that there were problems with the investments, Mr Rodger contacted MBS and was told that the business was not owned by the Accused and the Accused had no assets.
92.Police have established that the monies paid by Mr Rodger to the Accused were used to make interest payments to victims Stevens and Sibly.
Police Investigation:
93.Following complaints by the various victims and information provided by ASIC, police established Operation Moors (p.414). Contact was made with the Accused by mobile phone on 6 October 2014 (p.423). Police attempted to interview the Accused via arrangements with his solicitor but were advised on 26 November 2014 that the Accused was too unwell to be interviewed in person but would do so in writing. Police declined to interview the Accused in writing only.
94.Police have established that during the course of the offending by the Accused he has made transfers from the IAM and MBS accounts to the bank accounts of White totalling $2,873,136.
95.When interviewed by police (p.402), White made a statement and claimed inter alia that he had also been misled by the Accused.
Penalties
The maximum penalties for these crimes are:
Obtain financial advantage/property by deception: 10 years (Level 5)
Continuing Criminal Enterprise charges (1,4,5,10-12 & 16): 20 years
Victim Impact Statements
To be provided
Other Orders
s.464ZF
Compensation
Pre Sentence Detention
The Accused has been remanded since 6 September 2017.
Chronology
5 March 2015 Summons
1 April 2015: Filing hearing
24 June 2015 Committal mention
26 August 2015 Further committal mention, PG SHUB
Co-accused, Robert White, failed to appear at the committal mention and a warrant has been issued for his arrest.
12 November 2015: County Court mention. Accused application to adjourn plea – new solicitors engaged. Accused in hospital
11 December 2015: County Court mention (2) – Accused will not plead guilty. Trial date scheduled
8 February 2016: County Court mention (3) – solicitors obtaining instructions from Accused
27 July 2016: County Court mention (4) – adjourned administratively as Accused still in hospital
16 August 2016: County Court mention (5) – solicitor ceased to act but appeared as amicus curiae. Accused in poor health, fitness/MI issues have been explored with forensic psychiatrist and fitness/MI will not be an issue for trial
30 August 2016: County Court mention (6) – accused appears unrepresented. Tells Court he doesn’t know what to do
6 September 2016: County Court mention (7) – accused appears unrepresented. He will re-engage solicitors
12 September 2016: County Court mention (8) – solicitors ceased to act but appear as amicus curiae – having difficulty with instructions/advice. JD & Assoc will assist in transfer of legal aid to another firm
19 September 2016: County Court mention (9) – new solicitors instructed (Haines & Polites) – legal aid funding still to be transferred and not in place for a trial
5 October 2016: County Court mention (10) – waiting for legal aid to confirm transfer of funding (Haines & Polites). Counsel to be briefed for trial.
19 October 2016: County Court mention (11) – adjourned for final directions hearing
28 October 2016: Final Directions Hearing – indication that Accused is unable to give instructions
3 November 2016: Final Directions Hearing (2) – Accused will apply to adjourn trial (scheduled for 7/11/16) – is obtaining medical report
7 November 2016: Trial hearing adjourned upon application by Accused. Application not opposed. Forensicare Report order pursuant to s. 10
30 March 2017: County Court mention – Forensicare report received, no fitness issues, trial proceeding. Defence to file response by 14/5/17
16 May 2017: County Court mention - Counsel now briefed for the accused, seek 3 weeks to file defence response, due 2/6/17
6 June 2017: County Court mention – Accused in hospital. Certificate from Dr Schiff, Defence told that the certificate is insufficient and that a report be provided 5 days before FDH. Forensicare appointment booked for 12th July 2017
29 June 2017: Final Directions hearing – Accused attended. Forensicare appointment on 12/7/17. Current report by treating psych inadequate for purpose.
27 July 2017: Final Directions Hearing – Accused in hospital. Likely fitness investigation on first day of trial listing.
10 August 2017: County Court mention – no defence response yet. Accused on day release from Delmont Private Hospital, likely to be released following day.
18 August 2017: Final directions hearing – Accused attended. Defence response (x2) filed. HH directed defence file and serve a psychiatric report addressing s. 6 criteria, Crimes (Mental Impairment & Fitness to be Tried) Act by COB 24 August 2017
21 August 2017: Advised by email at 18:06 that the Accused had withdrawn instructions for Jonathan Miller to appear on his behalf.
28 August 2017: Trial scheduled. Adj to 30 August 2017 for fitness investigation
30 August 2017: Fitness investigation
1 September 2017: jury verdict, accused fit for trial
4 September 2017: arraigned on plea indictment, pleaded guilty. Bailed.
5 September 2017: answered bail, re-bailed
6 September 2017: answered bail, remanded for sentence on 16 November 2017