Director of Public Prosecutions v Petzierides
[2019] VCC 1888
•15 November 2019
| IN THE COUNTY COURT OF VICTORIA | Revised Not Restricted Suitable for Publication |
AT MELBOURNE
CRIMINAL JURISDICTION
CR-16-01482
| DIRECTOR OF PUBLIC PROSECUTIONS |
| v |
| SIMON PETZIERIDES |
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| JUDGE: | HIS HONOUR JUDGE CAHILL |
| WHERE HELD: | Melbourne |
| DATE OF HEARING: | 24 January 2019, 25 February 2019, 4 July 2019, 30 September 2019, 2 October 2019, 12 November 2019 |
| DATE OF SENTENCE: | 15 November 2019 |
| CASE MAY BE CITED AS: | DPP v PETZIERIDES |
| MEDIUM NEUTRAL CITATION: | [2019] VCC 1888 |
REASONS FOR SENTENCE
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Subject: Dishonestly obtain a financial advantage by deception
Catchwords: Guilty plea – fraudulent GST claims totalling $537,616.88 paid – attempted fraudulent GST claims totalling $75,900 – some fraudulent claims lodged after ATO audit – 1st offender – some remorse – excellent prospects of rehabilitation – delay in prosecution
Legislation Cited: Criminal Code (Cth); Crimes Act 1914 (Cth); Sentencing Act 1991
(Vic)
Cases Cited: Hili [2010] NSW CCA 108
Sentence: 3 years’ imprisonment with a conditional recognisance release
order after serving 18 months
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APPEARANCES: | Counsel | Solicitors |
| For the Office of Public Prosecutions | Mr J. Robins | |
| The Accused was not represented |
HIS HONOUR:
1Simon Petzierides, you have pleaded guilty to two charges of dishonestly obtaining a financial advantage by deception from the Commonwealth, contrary to sub-s.134.2(1) of the Criminal Code (Cth) (‘the Code’) and one count of attempting to dishonestly obtain a financial advantage by deception from the Commonwealth, contrary to sub-ss.11.1(1) and 134.2(1) of the Code.
2The maximum penalty for each offence is 10 years’ imprisonment.
3The circumstances of your offending are set out in the Summary of Prosecution Opening.[1] They are agreed facts.
[1] Exhibit A
4Your offending occurred between 9 September 2010 and 26 July 2012. During that time, you worked as a builder and property developer. In the course of your business, you operated two companies, Brooklyn Projects 392 Pty Ltd and Finnsam Pty Ltd.
5Your tax agent, who was also your accountant, prepared business activity statements for the companies. You provided false information, including false invoices, to obtain Goods and Services Tax (“GST”) refunds, to which you and the company were not entitled.
6In relation to Charge 1, between 9 September 2010 and 29 May 2012, you dishonestly obtained GST credits, totalling $419,406.88, by providing false information in seven Business Activity Statements, lodged with the Australian Taxation Office (‘ATO’), in the name of Brooklyn Projects 392 Pty Ltd.
7In relation to Charge 2, between 3 April 2012 and 23 May 2012, you dishonestly obtained GST credits, totalling $118,210, by providing false information in two business activity statements, lodged with the ATO, in the name of Finnsam Pty Ltd.
8In relation to Charge 3, between 25 July and 26 July 2012, you attempted to obtain GST credits, totalling $75,900, by providing false information in a business activity statement, lodged with the ATO, in the name of Brooklyn Projects 392 Pty Ltd. Your attempt was unsuccessful, only because the ATO suspected you had provided false information and denied you the GST credits, you had dishonestly claimed.
9In all, you fraudulently obtained GST refunds totalling $537,616.88 (Charges 1 and 2) and you attempted to fraudulently obtain a further GST refund of $75,900 (Charge 3).
10The method of your offending was simple, but effective. You provided your tax agent with details of payments to building contractors and suppliers for expenses which the companies had not incurred.
11In November 2011, when the ATO conducted a random audit, your accountant asked you for documents to substantiate the GST expenses you had claimed.
12You provided him with a false ledger and four false tax invoices for building work and supplies, together with a false bank statement purporting to substantiate payment of the invoices.
13For the March 2012 business activity statement (‘BAS’) for Brooklyn Projects 392 Pty Ltd lodged on 23 April 2012, you provided your accountant with a false building invoice for $440,000 which was included in the BAS.
14For the May 2012 BAS for the same company, you provided your accountant with two false building invoices for $440,000, which were included in the BAS.
15For the Finnsam Pty Ltd March 2012 BAS, you provided your accountant with a false building invoice for $838,200, which was included in the BAS and for the Finnsam Pty Ltd May 2012 BAS, you provided your accountant with a false building invoice for $462,010, which was included in the BAS.
16After the ATO queried the Brooklyn Projects 392 Pty Ltd, July 2012 BAS, which is the subject of Charge 3, they asked to interview you. On 29 August 2012, your accountant attended on your behalf. You were overseas at the time.
17On 29 April 2016, you were charged with a number of dishonesty offences. You were admitted to bail on stringent conditions which compelled you to remain in Victoria and report to police three times a week.
18Your case was listed for trial on 27 August 2018. At that time, the prosecution alleged your deceptions totalled more than $1,000,000. After two days of negotiations, a plea was negotiated and, on 29 August 2018, you pleaded guilty to the charges contained in the indictment now before the court.
19Your plea hearing commenced on 24 January 2019 before me. Mr Kantor appeared on your behalf. He made comprehensive submissions and at his request, I adjourned your plea hearing part-heard to enable him to obtain further information in relation to your ex-wife's medical condition, which was relevant to whether your imprisonment would occasion exceptional family hardship, and also in relation to a debt you were seeking to recover, which would assist you to make reparation for your offending.
20In the course of submissions, I indicated to Mr Kantor that the seriousness of your offending demanded a custodial sentence. Following that hearing, you changed your legal representatives and, on 25 February 2019, instructing a Sydney firm, you foreshadowed an application to change your guilty plea. I remanded you in custody on that day.
21By 8 April, the Sydney firm, Mitry Lawyers, no longer acted for you and your matter was further adjourned until 4 July 2019, when Mr Stavris, appearing as a friend of the court, indicated you would adhere to your guilty plea, but intended to dispute the amount you had dishonestly received.
22Then, I received the report of Daniel Rands, forensic accountant, who made criticisms of the standard of services your accountant had provided you and also his fees.[2]
[2] Exhibit 2 – Report of Daniel Rands, Chartered Accountant, dated 18 December 2019.
23I also received a report of Mathew Staios, a neuropsychologist.[3]
[3] Exhibit 3 – Report of Matthew Staios, Neuropsychologist, dated 28 September 2019.
24On 30 September 2019, Mr Stavris informed me he could no longer give you any assistance.
25On 2 October 2019, Mr Stavris appeared again and he told me that you would maintain your guilty plea and accept the facts that were alleged in the prosecution opening as the basis of that plea.
26On 12 November 2019, when your plea hearing continued, Mr Stavris relied on a number of documents, a number of which Mr Kantor had produced on your behalf, to support his submissions, namely:
(a) a discharge summary from Warringal Hospital, which related to your former wife's medical condition;[4]
[4] Exhibit 1 - Discharge Summary from Warringa Private Hospital.
(b) a chronology of proceedings;[5]
[5] Exhibit 5 - Updated Defence Chronology.
(c) the report dated 14 January 2019 of Patrick Newton, psychologist;[6]
(d) a letter dated 18 January 2019 from your ex-wife;[7]
(e) your ex-wife's heart care medical records which were dated 9 January 2019;[8]
(f) an Austin health letter dated 27 December 2018, concerning hospital treatment your ex-wife was receiving;[9]
(g) your father's letter dated 22 January 2019;[10]
(h) a friend's letter, the friend being Tammy Robinson dated 17 January 2019;[11]
(i) your current wife's letter dated 21 January 2019;[12]
(j) a letter from a business colleague George Damaskos, dated 16 January 2019;[13]
(k) a letter of your parish priest, Father Kentrotis, dated 15 January 2019;[14] and
(l) Correction Program Certificates which relate to the time you have spent in remand custody.[15]
[6] Exhibit 6 - Psychological Report of Patrick Newton, dated 14 January 2019.
[7] Exhibit 7 - Letter from Caterina Petzierides dated 18 January 2019.
[8] Exhibit 8 - HeartCare Victoria Medical Records relating to Caterina Petzierides dated 9 January 2019.
[9] Exhibit 9 - Austin Health Letter relating to Caterina Petzierides dated 27 December 2018.
[10] Exhibit 10 - Letter of Kyriskos Petzierides dated 22 January 2019 (Mr Petzierides’ father).
[11] Exhibit 11 - Letter of Tammy Robinson dated 17 January 2019.
[12] Exhibit 12 - Letter of Irena Belyaeva dated 21 January 2019 (Mr Petzierides’ current wife).
[13] Exhibit 13 - Letter of George Damaskos dated 16 January 2019.
[14] Exhibit 14 - Letter of Reverend Father Elisa Kentrotis dated 15 January 2019.
[15] Exhibit 15 - Corrections Certificates.
27Your personal circumstances are set out in Mr Newton's report. You were born in November 1970 and are now aged 48 years. You are the third of four children. Your father was a builder and your mother, the principal homemaker. You were closer to your mother than your father, who was a strict man.
28You attended local primary schools and then Ivanhoe Grammar. After Year 11, you left school and completed an apprenticeship in the building trade. You have always worked in the building industry.
29You have been married twice. You married your first wife, Caterina, in 2005 and separated in 2012. You have two children, Noah aged 14 and Anouk aged 12. The children remained with their mother, but when she suffered a heart episode on Christmas Eve 2018, you, with your current wife, Irena, looked after them. Hospital records confirm your former wife had a stroke[16] and was referred for neurological investigations.[17] In a letter to the court, she wrote, as she is unable to work, you have always provided for your children and her financially. She said financial pressures caused your separation from her in 2012. She described you as an extremely hard worker and said you have a genuine love for your family. You have told her about your offending and she believes you are remorseful.
[16] Exhibit 8 - HeartCare Victoria Medical Records relating to Caterina Petzierides dated 9 January 2019.
[17] Exhibit 9 - Austin Health Letter relating to Caterina Petzierides dated 27 December 2018.
30You are estranged from your father. You lost your parents life savings approximately $2,000,000, which they had loaned to you in building ventures. Nevertheless, your father provided a reference for you and he described you as a decent, hardworking and trustworthy son.[18] He was present when police arrested you at your parents' home. Since your arrest, he has watched you work and study to try to make amends for their loss and for your offending. He too said you are remorseful for what you have done.
[18] Exhibit 10 - Letter of Kyriskos Petzierides dated 22 January 2019 (Mr Petzierides’ father).
31George Damaskos is a building trainer and assessor. In 2016, you sought his assistance to undertake studies to obtain a building diploma and builder’s licenses in Victoria and Queensland. He wrote you have shown integrity and determination to turn your life around. You told him about your offending. You said at the time, you were struggling to deal with business pressures and the stress of your family separation. He described you as genuinely sorry for your offending.[19]
[19] Exhibit 13 - Letter of George Damaskos dated 16 January 2019.
32Your current wife is Russian and she is a lawyer. You met in Paris in 2014 and married in Melbourne on 15 October 2016. You are her sponsor for her Australian visa application. You are the only one she knows in Australia and recently she returned to Russia where she can more easily obtain work and accommodation. She has told you she will return to you after you have served your prison sentence. In her letter, she wrote, you are a caring father to your children and confirmed they came into your care when their mother fell ill.[20] She described you as a loving man who works hard. Your offending is very much out of character with the person she knows. She also described you as remorseful.
[20] Exhibit 12 - Letter of Irena Belyaeva dated 21 January 2019 (Mr Petzierides’ current wife).
33Tammy Robinson runs a not for profit community gymnastic club.[21] She engaged you to complete the fit out for a new gym. She described you as decent, hardworking and trustworthy. You also told her about your tax fraud and she too believes you are remorseful.
[21] Exhibit 11 - Letter of Tammy Robinson dated 17 January 2019.
34You have been a member of the Hellenic Orthodox Church at Templestowe for more than 30 years. The parish priest, Father Kentrotis wrote, he has known you only as an industrious, respectful and honest person.[22] He is aware of your offending and believes the stress of your separation was a contributing factor. He found you to be upset and embarrassed and remorseful. He has observed you to move forward to sort out of your life and believes you are not likely to ever reoffend.
[22] Exhibit 14 - Letter of Reverend Father Elisa Kentrotis dated 15 January 2019.
Newton
35In relation to your offending, you told Patrick Newton:
I owed money to my dad. I was struggling financially; my cashflow was down. It seemed like a good idea at the time. The money was coming into the company account and then going straight out again paying bills. The builders were hassling me for cash and there was a lot of pressure. I guess I thought it would all sort itself out in the end and I was reassured by my accountant and bookkeeper. But in the end it was my account and my company so I accept that I am the one who was responsible.
36You have consented to a reparation order to the ATO and intend, following your release from prison, to repay the debt.
37In Mr Newton's opinion, while you are prone to be overwhelmed by stress, your symptoms at the time you offended were not severe enough to have met criteria for any mental disorder.
38He estimated you have high average intelligence. When he assessed you, you were not suffering any significant psychological disorder. In his view, your psychological stability suggests relatively good prospects for rehabilitation and for a return to continued productive life in the community. Dr Newton identified eight factors favourable to your rehabilitation:
(a) Firstly, that your prosecution has been aversive to you. In other words, that you have learned a lesson from it.
(b) Secondly, that you enjoy support of your wife, family and close friends.
(c) Thirdly, you have expressed regret for your conduct and a desire to make restitution.
(d) Fourthly, you have stable accommodation and personal circumstances.
(e) Fifthly, you are intelligent.
(f) Sixthly, you have no prior convictions.
(g) Seventh, you have a good work record; and
(h) Eighth, you have no behavioural problems such as substance abuse or gambling.
Remand
39You have no criminal record. Your time in remand is your first time in custody.
40Initially you were held at the Melbourne Remand Centre which, post-riot, was extremely restricted. Subsequently, you were transferred to Marngoneet which is also a restrictive prison environment, where you have undertaken all vocational programs made available to you and used your building skills in the prison workshop.[23] You have also been given a trusted position on reception at prison records.
[23] Exhibit 15 - Corrections Certificates.
41On 24 September 2019, Mathew Staios, the clinical neuropsychologist, interviewed you for a psychological assessment.[24] You had been in remand custody for seven months by that time. You told him your mental state had declined since your incarceration. You reported poor sleep, a feeling of hopelessness, anxiety, fear for your safety and difficulty adjusting to the custodial setting. In his opinion, you had clinical anxiety and depression.
[24] Exhibit 3 - Report of Matthew Staios, Neuropsychologist, dated 28 September 2019.
42You told Mr Staios you were sorry for your actions and are willing to make restitution. You said you did not act dishonestly, but relied on your accountant's advice. You also denied obtaining a financial advantage in the order of $600,000.
43In September 2019, you also engaged the forensic accountant, Daniel Rands, to question:
(a) the amount of GST credits which you obtained and attempted to obtain; and
(b) to question your accountant's professional conduct.[25]
[25] Exhibit 2 - Report of Daniel Rands, Chartered Accountant, dated 18 December 2019.
44Rands had insufficient information to assess whether the business activity statements were properly prepared, but he was critical of your accountant's record keeping and the fees charged to you.
45Subsequently on 2 October 2019, through Mr Stavris, you unambiguously admitted your dishonesty and the losses you had caused to the revenue.
46In written and oral submissions,[26] Mr Stavris relied on the following factors in mitigation of penalty:
(a) Your plea of guilty, for its significant utilitarian value, and as evidence of acceptance of your responsibility for your actions and remorse.
(b) The lengthy delay in the prosecution and finalisation of these charges, during which there has been no further offending by you.
(c) You have complied with your tax obligations, apart from, as I understand it, some outstanding company returns and you have complied with restrictive bail conditions.
(d) He also relied on your excellent prospects for rehabilitation and pointed to the protective factors which Mr Newton had identified.
[26] Exhibit 4 - Defence Submissions dated 10 November 2019.
47Ms Hollingworth for the Crown, submitted:
(a) Your offending was serious, taking into account you dishonestly obtained GST credits totalling $537,616.88 and attempted to obtain a further credit of $75,900 over a period of twenty-two months, between September 2010 and July 2012.
(b) Your offending was aggravated by your conduct, at an ATO audit, in November 2011, when you provided false financial documents to support your fraudulent claims to that time and, subsequently, when you lodged six more false BAS statements, from December 2011 until July 2012, and provided your accountant with false invoices to support them.
48She accepted your guilty plea as high utilitarian value and shows a level of remorse albeit qualified by your decisions to change your plea in February 2019, and later to dispute quantum in July 2019, until 2 October when you maintained your guilty plea and admitted the quantum of the dishonesty alleged against you.
49She also accepted delay as a mitigating factor, although she submitted that that also is qualified to the extent that you had contributed to the delay in part yourself.
50She submitted I should impose a term of imprisonment which necessitates the imposition of a non-parole period.
51She referred me to several other cases concerning business activity statement tax fraud, where the sentences range from two years to four years and six months.
52Mr Stavris referred me to a sentence in this court of Andrew Matthews (Judge Quinn, 13 May 2019) where the offender, a bank loans officer had dishonestly obtained introducer fees in excess of $600,000. Her Honour imposed a sentence of three years imprisonment, partly suspended and requiring eight months to be served.
53There are differences in the circumstances of the offending and the personal circumstances of the offender, between each of the cases I was referred to and yours. Nevertheless, I have used them as a yardstick to guide me.
Analysis
54Your offending was objectively serious, involving fraud against the revenue exceeding half a million dollars, by filing ten false business activity statements over a period of twenty-two months. That you provided false documents at the ATO audit and continued to make fraudulent GST claims is an aggravating feature.
55General deterrence and just punishment are the primary sentencing considerations.
56As Justice Rothman said in Hili [2010] NSW CCA 108 at [13]:
… self-assessment… reposes on the taxpayer a heavy duty of honesty. The practical restrictions on the capacity of government to apprehend offenders for every offence necessarily requires that the legislature and the courts ensure that deceitful conduct, in a commercial enterprise, once discovered, is appropriately punished. Deterrence looms large.
57However, in this case, I accept that there was no evidence of significant enrichment on your part and I accept, at least the substantial part of the proceeds of your crimes were used to pay the company's creditors.
58I must also take into account your favourable personal circumstances and other mitigating factors.
59In that behalf, I accept:
(a) Your guilty plea has high utilitarian value;
(b) That you are remorseful, although in engaging Mr Rands, you had attempted to shift blame for your offending to your accountant;
60I also accept that the lengthy delay, although partly attributable to you, is a substantial mitigating factor, because you have used the time to significantly advance your affirmation, while facing uncertainty as to your fate;
61I accept that your time in custody as a first offender has adversely effected your mental health; and
62I accept that you have excellent prospects for rehabilitation and are unlikely to reoffend.
63I am required by s.16A(1) of the Crimes Act 1914 (Cth) to impose a sentence “of severity appropriate in all the circumstances of the offence” and in doing so, to apply the various criteria set out in sub-s.16A(2) of the Act.
64I consider a sentence of three years’ imprisonment is appropriate, with you to be released on a conditional recognisance release order after serving 18 months of that term.
65Please stand, Mr Petzierides.
66By this sentence, I must denounce your conduct. I must punish you and deter you and others from committing crimes of the same or similar kind. I must also look to the protection of the community and also to your rehabilitation.
67Taking into account the circumstances of your offending and its effects, your personal circumstances and antecedence, and endeavouring to produce a sentence which reflects and promotes the purposes of sentencing in a manner appropriate to you, I sentence you as follows.
(a) On Charge 1, dishonestly obtain a financial advantage by deception, which relates to the seven BAS statements lodged on behalf of Brooklyn Projects 392 Pty Ltd, you are convicted and sentenced to two years’, six months’ imprisonment to commence today.
(b) On Charge 2, dishonestly obtain a financial advantage by deception which relates to the two business activity statements lodged on behalf of Finnsam Pty Ltd, you are convicted and sentenced to nine months’ imprisonment, to commence on 15 December 2021.
(c) On Charge 3, attempt to dishonestly obtain a financial advantage by deception, which relates to the business activity statement lodged on behalf of Brooklyn Projects 392 Pty Ltd, but queried by the ATO, you are convicted and sentenced to six months’ imprisonment, to commence on 15 May 2022.
68By the structuring of those commencement dates Mr Petzierides, I intend that your sentence of imprisonment should be three years and that it would expire on
14 November 2022.69I order that you be released under paragraph 21B of the Crimes Act 1914 (Cth), after serving 18 months of the term of imprisonment upon you giving security by recognisance of $1,000 to be of good behaviour for 18 months.
70I declare that that 263 days is to be reckoned as time already served of the 18 months, which you would be required to serve. So my intention is that you should be eligible for release in approximately nine months time.
71I declare but for your plea of guilty, I would have imposed a sentence of four years’ imprisonment and fixed a minimum term of two years and six months.
72I order you make reparation to the Commonwealth, namely the Commissioner of Taxation, in the sum of $537,616.88.
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