Director of Public Prosecutions v Pfeiffer

[2018] VCC 251

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

AT MELBOURNE
CRIMINAL JURISDICTION

CR-17-01200
CR-17-01205

DIRECTOR OF PUBLIC PROSECUTIONS

v

PAUL PFEIFFER
MELBOURNE DELUXE REAL ESTATE PTY LTD

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JUDGE:	HIS HONOUR JUDGE HIGHAM
WHERE HELD:	Melbourne
DATE OF HEARING:	2 March 2018
DATE OF SENTENCE:	9 March 2018
CASE MAY BE CITED AS:	DPP v Pfeiffer
MEDIUM NEUTRAL CITATION:	[2018] VCC 251

REASONS FOR SENTENCE
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Subject:
Catchwords:
Legislation Cited:
Cases Cited:
Sentence:

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APPEARANCES:	Counsel	Solicitors
For the Director of Public Prosecutions	Mr P. Stefanovic	Office of Public Prosecutions
For the Accused	Mr M. Tovey QC	Melasecca, Kelly and Zayler Solicitors

HIS HONOUR: 

1Paul Pfeiffer, you and Melbourne Deluxe Real Estate Pty Ltd, the company of which you were the sole director and principal officer at law, have both pleaded guilty to eight charges of fraudulent conversion, and one charge of fraudulently rendering an account.  The maximum penalty is a term of imprisonment of ten years or 500 penalty units, and if a corporation, a penalty of 1,000 penalty units.

2You, Mr Pfeiffer, have no prior nor any subsequent criminal matters.

3Filed on the plea as Exhibit 1 was a summary of prosecution opening, and I annex a copy of that summary to these sentencing reasons.

4In brief, the offending occurred in the course of the operation of your real estate business, Melbourne Deluxe Real Estate Pty, which company was set up in early 2016.  The offending occurred between 14 April 2016 and 13 May 2016.  These are Charges 1 to 8.  The fraudulent account was rendered on 2 June 2016 thus the offending encompassed a little over a six week period.

5At all relevant times, you were a licensed estate agent, and were the nominated officer in effective control of your company, Melbourne Deluxe.  You were the sole director, and the only person with access to its trust accounts.  Melbourne Deluxe was a legal entity engaged under contract.  You, Mr Pfeiffer, were not only the principal officer, but authorised and executed each transaction which constituted the respective charge.

6An estate agent who receives or holds money in relation to a transaction on behalf of another, pending the completion of the transaction, must immediately pay the money into a trust account. The money must not be used for any other purpose other than paying the persons entitled to it. A deposit for the purchase of a house is held in trust on behalf of the purchaser for the benefit of the vendor pending completion of the sale, known as settlement. If permission is given by the purchaser under s.27 of the Sale of Land Act, the estate agent may release a deposit to the vendor at an earlier date, before the settlement. It is common practice for commission, marketing and/or other disbursements to be paid to the estate agent by the vendors from the deposit. This is agreed in a contract between the estate agent and vendor. However, commission payments and the like are only payable upon settlement, or in the event of a s.27 permission, the date specified in that permission, often the date on which the permission is signed.

7The conversions alleged in Charges 1 to 8 consist in the withdrawing of funds by you from the company trust account, which were then applied for the company's own use in circumstances where the funds were held on trust for the purchases of two properties, 69 Radnor Street and 42 Elliot Avenue, pending the completion of these sales.

8Melbourne Deluxe, which as I have stated was the legal entity engaged under contract, did not have permission from the purchasers to use the money in this way.  Paragraph 21 of Exhibit 1 sets out a chronology identifying each relevant deposit and withdrawal from the company trust account, and the corresponding charge.  I do not repeat that chronology here.

9Funds were being withdrawn from the trust account and used for both your business and personal expenditure.  Consequential shortfalls were made up from new deposits paid into the trust account.  In essence, as was agreed on the plea, you robbed Peter to pay Paul.

10Radnor Street and Elliot Street represented only the second and third sales that the company had handled.  As your counsel accepted on the plea, by 13 May 2016, when you transferred $103,000 from the trust account held in respect of the sale of 42 Elliot Avenue to the vendors of 69 Radnor Street, there was no prospect at all of that sum being recouped.

11Charge 9 refers to the account rendered, stating that $103,000 was still held in trust for the benefit of the vendors of 42 Elliot Avenue. 

12The offence of fraudulent conversion does not require for there to be an actual loss.  The offence is complete once the funds in question have been misappropriated.  In this case, the actual loss arising from your dishonesty was $69,152.18, which was paid to Mr Cockburn from the Victorian Property Fund, the body for whose benefit a compensation order is sought.

13Between June and early July 2016 you told a stream of untruths and misrepresentations to the vendor of 49 Elliot Avenue, Mr Simon Cockburn, in an attempt to hold off the inevitable day of discovery.  Eventually, those who acted for Mr Cockburn lodged a formal complaint to Consumer Affairs Victoria, the relevant statutory body.  Consumer Affairs Victoria then conducted an audit of the company's trust account.  The order revealed the trust account's deficiencies, and the conversions which form the subject matter of Charges 1 to 8.

14You were issued with a show cause notice, to which you replied on 27 January 2017, citing:

"A stressful and life changing series of events that have incapacitated my ability to perform the duties of an Estate Agent with due care".

15You went on to identify these events as a breakdown of your marriage due to the pressures of starting a new business, and the loss of your driver's license for six months, followed immediately by another six months.  You stated you had not kept accounting records of the trust account and had no explanation or understanding why money was transferred out of that account.

16At that time, you blamed poor record-keeping and claimed the money was used to pay creditors of the company, and not for personal gain.  Later, you instructed solicitors to act on your behalf, who communicated with Consumer Affairs Victoria.  They represented that it was your lack of judgment and inadequate book-keeping that had led to your taking commissions prematurely.  These, in my view, were mere obfuscations, an attempt to shift responsibility for your own dishonesty.

17On 27 February 2017, charges were laid by Consumer Affairs Victoria.  You pleaded guilty to all of the charges at a committal mention in May 2017, and the prosecution accepted that your plea was entered at the earliest opportunity.  This is a significant matter, for which I give you full credit.

18I now turn to your personal circumstances.

19You were born on 20 May 1971, and thus you were 44 turning 45 at the time of this offending, and now you are 46.  You were adopted at birth by your family, and you grew up in Port Lincoln, South Australia, where your father worked in tyre sales and your mother raised the family.

20At an early age, you lost the sight in one eye because of a failed surgical attempt to remove a congenital cataract.  Apart from this, there were no significant childhood illnesses.  Family discipline was, I am told, strict, but was by no means mistreatment.

21You had a sister, who was also adopted, who was a year older than you, with whom during your younger years you had a relatively arms' length relationship, but whom you have supported financially and emotionally over the more recent years.

22At school you were an average student, and left school in year 12 after your father was retrenched.  You worked as a fisherman initially, so you could bring some money into the family and support your parents and your sister.  You bought your first home in Port Lincoln, and by your mid-20s had moved into the real estate business, having attained a sales representative license.  You have remained in that industry throughout your working life, up until your arrest for these offences.

23For a while you lived in Alice Springs in the Northern Territory, working in your chosen field, and then in the year 2000 you came to Melbourne and worked and lived in the Balwyn area.  You worked for various well-known real estate franchises over a period of 15 years.

24Having heard on the plea, and having read the references provided by work colleagues and your professional peers and friends, it is clear, Mr Pfeiffer, that you were very good at the job of selling houses.  I was informed by your learned counsel that your net earnings in the two financial years prior to your arrest, had been in excess of $200,000.  This was earnings from your work as a commission agent.  I am prepared to accept, and do accept, that this talent for selling houses did not translate into a talent for managing your business.

25You had two significant relationships in earlier life, and in 2002 you met your wife Michelle, with whom you have two children.  In November 2015 your wife Michelle sought a trial separation.  It seems that you were ill-equipped emotionally to deal with this challenge to your sense of security and wellbeing.  You moved out of the matrimonial home in Ashburton, whilst your wife and your two boys remained living there.  You were provided with accommodation by a friend, who has provided a reference on your behalf to the court, and at this time you worked in that friend's business managing short stay accommodation.

26In early 2016 you successfully earned commission of some $43,000 in a property deal, and you determined that the time was right for you to start out on your own.  Coincidentally, in February of 2016, you had persuaded your wife to reconcile, and you and your family moved to Mount Martha for a fresh start.

27Melbourne Deluxe was up and running by early February 2016.  You had a lifestyle to support, whereby the outgoings were $130,000 per annum, including running two high-end cars and with two children at private schools.  Your credit cards were also at their credit limits.  You had taken business premises in Collins Street and had rent to meet there.

28Quite simply, you needed the business to be an immediate and profitable success.  You were dependent upon a ready and immediate cash-flow.  This, it appears, was the immediate factual background to your offending.

29I am told that lurking in the background was a prospective commission that would have provided you with sufficient funds to keep your head above water for a good period of time, but that deal fell through, and unfortunately for you, your new business did not produce the early profits for which you had hoped.

30You did not want your wife to begin to feel anxious over your inability to meet the bills.  You determined that you needed to maintain the level of expenditure attached to your standard of living, and did not discuss with your wife the need to tighten belts.

31I accept that, to begin with, you converted monies to your own use to which you believed you were entitled (the entitlement to which would come very soon thereafter). In addition, I accept that you were at this time emotionally focused upon the ill health of your mother, which may to some extent have clouded your judgment.  Nonetheless, as your learned counsel accepted, by the time of Charge No.8 there was no deal in the pipeline.  There was no financial saviour waiting in the wings.  There was no prospect of the monies being repaid.

32Rather than confide in your wife, rather than tailor your expenses to match your income, rather than change your expectations, you determined upon a course of dishonesty.

33There was tendered on the plea as part of defence bundle Exhibit 2PP, a report from Mr Patrick Newton, forensic psychologist, dated 7 June 2017.  In your session with Mr Newton in May of 2017, you placed blame for your offending upon your wife.  You stated that the main reason the company had experienced difficulties had been your wife's use of company accounts for personal circumstances.  It was such conduct on her part, rather than your own actions or lack thereof as a director, which you stressed as being central to your offending conduct.

34You no longer maintain that position.  You now accept that the responsibility for your offending rests solely with yourself, and with no one else.  In this regard, your learned counsel accepted that this ameliorated your remorse.  That is the most generous characterisation of what you said to Mr Newton.

35However, there was also a report from Ms Barbara O'Loughlin, clinical psychologist, dated 27 September 2017.  Ms O'Loughlin stated that you are:

"Motivated to take responsibility for your actions regarding the misappropriation of trust funds. You have demonstrated a willingness to explore the antecedents to this action in such a way so as to enact change".

36Now Mr Pfeiffer, I do accept that over most recent times you have owned responsibility for your actions; that you now genuinely want to make amends to your family and to the wider community for your offending, and if at all possible, to rebuild your life.  You have the support, it is clear, of friends and peers.  You want to be a figure in the life of your boys, and you want to rehabilitate yourself.  These are all significant factors impacting upon the exercise of my sentencing discretion.

37Mr Pfeiffer, there are some occupations within Victoria, and indeed the wider Australian community, in which members of the public place an unquestioning faith.  The profession of real estate agent is one such profession.  Members of the public come to you and your peers to make a purchase of enormous consequence for them and their families, and one which usually involves the biggest expenditure that they will ever make in their lives.  It is essential for the wellbeing of our community that the public have confidence in, and are able to place their trust in, the estate agent of their choice.  It is essential also for our economy.

38Thus any offending which breaches that trust is an offence not only against the individual who may suffer loss, but against the entire Victorian community.  The victims of your offending are not only the vendors whose deposits you dishonestly applied to your own purposes, but also your entire former profession, whose integrity is damaged by any rogue practitioner such as yourself.

39In addition, there is the Victorian taxpayer, which includes those who have had to fund the reimbursement of your victim from the statutory body.  Thus any dishonesty in your professional capacity is, in my view, to be regarded as serious offending.

40The offences with which you are charged are serious offences indeed, as is clear from the maximum penalty imposed by parliament, being one of ten years' imprisonment.

41On the plea, your learned counsel submitted that in all the circumstances of this case, a Community Correction Order was a sufficient sentence.  The learned prosecutor, Mr Stefanovic, submitted that a Community Correction Order was open to me as a sentencing disposition.

42Mr Pfeiffer, in sentencing you, I must have regard to a range of different factors.  I must give effect to principles of both general deterrence and specific deterrence.  I must deter others from behaving as you did, and I must deter you from repeating such behaviour.  However, I have some confidence that you will not again appear in front of the courts.  I must express the community's denunciation of your conduct, and I should promote, if possible, your rehabilitation.  I must have regard to current sentencing practices, as determined and described by the Court of Appeal for this kind of offence, and I must have regard to the maximum penalty.  In short, I must try to balance your personal circumstances with the circumstances of your offending.

43There was common ground on the plea that sentencing purposes of general deterrence and specific deterrence and denunciation come to the fore in offending of this nature.  The community quite simply, as I have stated, cannot operate without trust in your former profession, and thus there is a need for courts to send a strong and decisive message to the public that those who may be tempted to offend in this manner, will be punished, and also the need to deter you - reduced, I accept - from any repetition of your offending.

44I was provided with well-known authorities which establish sentencing principles in instances of what has been called "white collar" crime.  Previous good character must be given less weight in the sentencing process than may otherwise be the case, and ordinarily the immediate loss of liberty will be called for.

45However, Mr Pfeiffer, in this case I have regard to the following:

(1) The relatively short period of time over which your dishonest conduct took place;

(2) The quantum of actual loss;

(3) The absence of loss to elderly and vulnerable victims, who are unable to recoup or reset their lives;

(4) The relative simplicity involved in the commission of the offences, and the ease with which the dishonest transactions were revealed;

(5) Your early plea of guilty, and the utilitarian benefit which that attracts;

(6) Your prospects of rehabilitation, which I view with considerable optimism;

(7) Your acceptance now of personal responsibility for your offending;

(8) Your eventual, if ameliorated, remorse;

(9) The fair concession made by the prosecution that a community corrections order was open to me as a sentencing disposition.

46Would you stand up, Mr Pfeiffer?

47Mr Pfeiffer, on Charges 1 to 9, you are convicted, and I pass an aggregate sentence of a Community Correction Order for a period of two years.

48You will be subject to supervision during the period of two years, and you will perform 200 hours of unpaid community work.

49Pursuant to s.6AAA, had you not pleaded guilty, you would have been sentenced to a term of imprisonment of 12 months.

50Melbourne Deluxe Real Estate Pty Ltd, on Charges 1 to 9, is convicted and is fined a sum of $25,000, which sum is to be managed and collected by Fines Victoria.

51I have to ask you, Mr Pfeiffer, whether you agree to be placed upon a Community Correction Order.

52ACCUSED:  I agree, Your Honour.

53HIS HONOUR: Under s.86 of the Sentencing Act, I make the compensation orders sought.

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ANNEXURE A

Indictment No.: C1711279

IN THE COUNTY COURT OF VICTORIA AT MELBOURNE

CRIMINAL JURISDICTION

Court Reference: CR-17-01200 & CR-17-01205 IN THE MATTER OF:

THE DIRECTOR OF PUBLIC PROSECUTIONS

– v –

PAUL WAYNE PFEIFFER

and

MELBOURNE DELUXE REAL ESTATE PTY LTD

SUMMARY OF PROSECUTION OPENING FOR PLEA

Date of document:  13^th September 2017

Filed on behalf of:  The Prosecution
Prepared by:  Solicitor’s Code: 7539

John Cain  Telephone: [phone]

Solicitor for Public Prosecutions  Fax: [phone]

565 Lonsdale Street  Ref: Jacqueline Harris

Melbourne Vic 3000

Director’s Standing

1.The office of the Director of CAV (“the Director”) is created by section 107 of the Australian Consumer Law and Fair Trading Act 2012 (Vic). One of the Director’s functions is to prosecute breaches of a Consumer Act.¹

2.The Estate Agents Act 1980 (Vic) (“the Act”) is a Consumer Act.²

Status as Licensed Estate Agents

3.Both Melbourne Deluxe Real Estate Pty Ltd (“MELBOURNE DELUXE”) and Paul Pfeiffer (“Mr PFEIFFER”) were at all relevant times licensed estate agents (refer: NL-4 – Certificates of the Registrar).³

1 See s.109(f) of the Australian Consumer Law and Fair Trading Act 2012 (Vic)

2 See Schedule 1 to the Australian Consumer Law and Fair Trading Act 2012 (Vic)

3 Naomi Lay (Senior Compliance & Enforcement Officer/Lead Investigator) – p.660.

4.Mr PFEIFFER is the sole director of MELBOURNE DELUXE (refer: NL-4 – Certificates of the Registrar⁴ and NL-1 ASIC extract⁵), and the only person with access to its trust account (BSB 013-247, Acc 1967-65792) (refer: RMQ-21⁶).

Relationship Between Accused / Deeming Provision

5.MELBOURNE DELUXE is charged as the principal offender, being the legal person engaged under contract to act as estate agent, and the legal person who held the relevant money on trust. Mr PFEIFFER is also charged as a principal offender, pursuant to s195(1) ACLFTA, which provides:

“If a body corporate contravenes or commits an offence against any provision of this Act, each officer of the body corporate is deemed to have contravened the same provision if the officer knowingly authorised or permitted the contravention.”

6.The Director alleges that Mr PFEIFFER knowingly authorised or permitted each contravention.

Duties of an Estate Agent

7.An estate agent who receives or holds money in relation to a transaction, on behalf of another, pending the completion of a transaction, must immediately pay the money into a trust account; and must not use the money for any purpose other than paying the persons entitled to it: s59 of the Estate Agents Act.

8.A deposit for the purchase of a house is held in trust, on behalf of the purchaser, for the benefit of the vendor, pending completion of the sale (settlement). If permission is given by the purchaser under s27 Sale of Land Act, the estate agent may release the deposit to the vendor at an earlier date. It is common for commission, marketing and/or disbursements to be paid to the estate agent, by the vendor, from the deposit – this will be agreed in a contract between the estate agent and vendor (often in the Exclusive Sale/Auction Authority).

9.However, this payment to the estate agent is only payable upon settlement, or, if a s27 permission is given, the date specified in the permission (often the date it is signed).

10.At all relevant times, Mr PFEIFFER was a licensed estate agent and was nominated as the Officer in Effective Control of Melbourne Deluxe Real Estate Pty Ltd (MELBOURNE DELUXE).

11.MELBOURNE DELUXE operated several bank accounts including a trust account⁷ and two (2) business accounts.⁸ All accounts were held at ANZ.

4  Naomi Lay – p.660.

5  Naomi Lay – p.643.

6 Rachel Quinn (Compliance & Enforcement Officer) – pp.556 to 580.

Investigation by Consumer Affairs Victoria (CAV)

12.On or about 11 October 2016⁹ a search was conducted of the CAV complaints database which contained details of a complaint against MELBOURNE DELUXE alleging that deposit money had not been paid to a vendor upon settlement.

13.Inspectors attended the business premises of MELBOURNE DELUXE at Level 13, 350 Collins Street, Melbourne on 12 October¹⁰, 16 November¹¹ and 28 November 2016¹² to conduct trust account inspections and seize files. During those inspections, several trust account deficiencies, incidents of wrongful conversion of trust account monies and further breaches of the Act and related regulations were identified.

14.It was discovered that various sums had been transferred out of the trust account and into other accounts controlled by Mr PFEIFFER and the funds used to pay both business and personal expenses.¹³

15.Further, a deposit of $103,000 was paid into the trust account by a purchaser to be held on trust for the vendor of 42 Elliott but was paid out to the vendor of another property, leaving $0 in the trust account.¹⁴

16.When 42 Elliott settled, there were no funds with which to pay the vendor¹⁵ and the vendor remained out of pocket until he ultimately made a claim against the Victorian Property Fund, which was paid.

17.The CAV Director of Regulatory Services – Andrew Levens, wrote to Mr PFEIFFER on 10 January 2017 asking that he show cause as to why his personal estate agents licence and the licence of Melbourne Deluxe should not be suspended.¹⁶

18.He was asked to include evidence of actions taken to rectify and an explanation of the cause(s) of the trust account deficiencies and contraventions of the regulations as well as an explanation regarding the cause(s) of the wrongful conversion of trust monies.

7 Trust Account – See ANZ letter at p.556. See Trust account statements at pp.558 to 566.

8 First account is the Business Premium Saver account – See ANZ letter at p.557 (1^st entry in the Table on that page). See these account statements at pp.567 to 581. Second account is the Business Advantage account – See ANZ letter at p.556 (2^nd entry in the Table). See these account statements at pp.582 to 630.

9  Rachel Quinn – statement at p.2[8].
10 Rachel Quinn – statement at p.3[13].
11 Rachel Quinn – statement at p.9[32].

12 Rachel Quinn – statement at p.12[39].

13 See Trust Account statement at pp.558 to 559.

14 See Trust Account statement at p.559. $103,000 into the account on 26/04/2016.  $384,835 transferred out of the Trust account on 13/05/2016 leaving $0 in the Trust account.

15 Simon Kurban – statement at pp.734 to 739.

16 See Exhibit NL-2 at pp.647 to 650.

19.Mr PFEIFFER responded to the show cause notice on 27 January 2017¹⁷ citing

“a stressful and life changing series of events that have incapacitated my ability to perform the duties of an Estate Agent with due care”. He went on to identify these events as the breakdown of his marriage due to the pressures of starting a new business (in November 2015) and the loss of his driver licence for 6 months followed immediately by another 6 months. He stated that he had not kept accounting records for the trust account and has no explanation or understanding of why money was transferred out of the account. He blamed poor record keeping for errors and claimed that money was used to pay creditors of the company and not for personal gain.

20.It appears that Mr PFEIFFER subsequently engaged the services of Solicitors, who wrote to CAV, on his instructions, on 21 February 2017¹⁸ stating that Mr PFEIFFER’s lack of judgment and inadequate bookkeeping had led to his taking commissions prematurely. Further, they claim that a transfer of $76,322.20 out of the trust account was mistakenly thought to have been marketing expenses paid in by a client. However, that client had in fact properly paid funds into one of the business accounts and those funds were promptly moved to other accounts on the very same day as this amount was taken from the trust account. The funds were used for business and personal expenses including school fees, credit cards and ballet tickets.

21.The following chronology identifies each relevant deposit and withdrawal from MELBOURNE DELUXE’s trust account and its corresponding charge (Refer: RMQ-21):

6/04/2016Part deposit for 69 Radnor paid into MELBOURNE DELUXE trust account: $300,000. ²⁰

7/04/2016 Part deposit  for  69  Radnor  paid  into  MELBOURNE  DELUXE trust account: $125,000.²²

14/04/2016 Charge 1 - Fraudulent  Conversion  [s91(1)(a)(ii)]  (money removed from trust before settlement/early release) $1000 moved from trust account, to Business Advantage Account.²³

15/04/2016 Charge 2 - Fraudulent  Conversion  [s91(1)(a)(ii)]  (money removed from trust before settlement/early release) $4000 moved from trust account, to Business Advantage Account.²⁴

17 See Exhibit NL-5 at pp.662 to 666.

18 See Exhibit NL-11 at pp.692 to 695.

19 See Trust account at p.558.

20 See Trust account at p.558.

21 See Contract of Sale – Particulars at pp.171 to 172.

22 See Trust account at p.558.

23 See Trust account at p.558 where the $1000 is transferred out to a non-Trust account. See where the $1000 is credited to the non-Trust account at p.588.

24 See Trust account at p.558 where the $4000 is transferred out to a non-Trust account. See where the

$4000 is credited to the non-Trust account at p.588.

19/04/2016 Charge 3 - Fraudulent  Conversion  [s91(1)(a)(ii)]  (money removed from trust before settlement/early release) $10,000 moved from trust account, to Business Advantage Account.²⁵

22/04/2016 Charge 4 - Fraudulent  Conversion  [s91(1)(a)(ii)]  (money removed from trust before settlement/early release) $6000 moved from trust account, to Business Advantage Account.²⁶

26/04/2016 Deposit for 42 Elliott paid into MELBOURNE DELUXE trust account: $103,000.²⁷

26/04/2016 Charge 5 - Fraudulent  Conversion  [s91(1)(a)(ii)]  (money removed from trust before settlement/early release) $21,165 moved from trust account, to Business Advantage Account.²⁸

3/05/2016Early release permission signed by purchaser of 69 Radnor.

5/05/2016Charge 6 - Fraudulent Conversion [s91(1)(a)(ii)] (money payable to the vendor of 69 Radnor was moved to the business account of MELBOURNE DELUXE) $76,322.20 moved from trust account, to Business Premium Saver Account.²⁹

13/05/2016 Charge 7 -  Fraudulent  Conversion  [s91(1)(a)(ii)]  (money payable to the vendor of 69 Radnor was moved to the business account of MELBOURNE DELUXE) $24,677.80 moved from trust account, to Business Premium Saver Account.³⁰

13/05/2016 Charge 8 - Fraudulent Conversion [s91(1)(a)(ii)] (money held in trust pending the sale of 42 Elliott, being $103,000, was unlawfully removed from the trust account and given to the vendor of 69 Radnor, as part of a larger cheque) $384,835 withdrawn from the trust account as a cheque payable to the vendor of 69 Radnor. This brought the balance of the trust account to $0.³¹

2/06/2016     Charge 9 – Fraudulently renders an account [s.91(1)(c)(i)] PFEIFFER signed a letter from MELBOURNE DELUXE to Kelpax P/L (vendor of 42 Elliott) saying “Deposit held in trust = $103,000”. In fact, the trust account had a balance of $0.³²

25 See Trust account at p.559 where the $10,000 is transferred out to a non-Trust account. See where the

$10,000 is credited to the non-Trust account at p.589.

26 See Trust account at p.559 where the $6000 is transferred out to a non-Trust account. See where the

$6000 is credited to the non-Trust account at p.594.

27 See Trust account at p.559.

28 See Trust account at p.559 where the $21,165 is transferred out to a non-Trust account. See where the

$21,165 is credited to the non-Trust account at p.594.

29 See Trust account at p.559 where the $76,322.20 is transferred out to a non-Trust account. See where the

$76,322.20 is credited to the non-Trust account at p.571.
30 See Trust account at p.559 where the $24,677.80 is transferred out to a non-Trust account. See where the

$24,677.80 is credited to the non-Trust account at p.573.

31 See Trust account at p.559.

32 See Trust account balance as $0 as at 13/05/2016 and remaining at $0 as at next page on 15/06/2016.

06/06/2016 Settlement date for 42 Elliott (no early release permission).

22.The Director alleges that on each occasion that money was withdrawn, the money was fraudulently converted to MELBOURNE DELUXE’s own use, in circumstances where the money was held on trust for purchasers of two properties, by MELBOURNE DELUXE, pending the completion of those sales.

23.MELBOURNE DELUXE did not have permission from the purchasers to use the money in this way.

The licensing context in which the offending occurred

24.Few occupations are subject to a licensing regime in Victoria. The purpose of such a regime is to provide additional protections to consumers, and one of the methods by which that is achieved is the imposition significant barriers to entry that traders (in this case, estate agents) must satisfy before they can carry on a licensed business. Eligibility requirements are set out in ss14 and 15 of the Estate Agents Act 1980.

25.Consumers engage estate agents to assist them with the most significant purchases they are likely to make, and repose significant trust in them.

26.Using one's position as an estate agent to unlawfully access consumers' money is detrimental not only to the immediate victims, and the public (who must pay compensation out of the Victorian Property Fund), but damages the reputation of other estate agents, causing harm to the whole industry.

27.Charge 8 is further aggravated by the offenders' emotional manipulation designed to discourage the victim from seeking redress. The behaviour includes sending the following messages to Mr Kurban:

(a)"I just need your help not to compromise my name as I am selling half the business. Otherwise I might as well give up"³³ on 5/7/2016;

(b)"If a complaint is lodged. Then I'm rooted." and "Lawyers will cost you money and all you will achieve is my demise³⁴ on 5/7/2016;

(c)“Simon, Monday please. I can put up my car as security if you wish…Mate, I’m dying here.. I have a deal about to be done where the commission is $80k and they will release deposit immediately and I have sold half my business to a finance guy that decided to stay up at the snow today…” “This is the lowest point in my professional career…” on 8/7/2016.³⁵

33 See Simon Kurban statement at p.736[1] and Exhibit SK-8 at p.796.

34 See Simon Kurban statement at p.736[1] and p.737[37] and Exhibit SK-8 at p.796.
35 See Simon Kurban statement at p.737[43] and Exhibit SK10 at p.806.

28.The dishonesty inherent in the offences is aggravated for charges 8 and 9 by the offenders' subsequent correspondence with Kelpax Pty Ltd/Mr Kurban. On numerous occasions Melbourne Deluxe & Paul Pfeiferr make dishonest statements to explain the delay in transferring the trust money, including:

(a)"Thanks buddy, I've sent email to my accountant to process" on 15/06/16³⁶;

(b)"Sorry about all this mate, I’ll put in an extra $500 to cover interest lost. Please know that this has been a Australia Post issue, not MDP" on 22/06/16³⁷;

(c)"The prick that has the money sent to him by accident has not refunded." on 29/06/16³⁸; and

(d)"I have sacked my office Bookkeeper and in damage control." on 29/06/2016.³⁹

Maximum Penalties

1.Charges 1 to 9: If a corporation, not more than 1000 penalty units. Any other person, not more than 500 penalty units or imprisonment of not more than 10 years.

Victim Impact Statement

2.Mr Kurban has indicated that he does not wish to make a Victim Impact Statement.

Compensation Order

3.The Prosecution seeks a compensation order pursuant to section 86 of the Sentencing Act 1991 in the sum of $69,152.18 which was paid to Mr Kurban from the Victorian Property Fund. Section 84 of the Estate Agents Act 1980 provides for the subrogation of the Secretary to rights of a claimant upon payment out of the fund of any moneys in respect of a claim. Consequently, the draft order is in favour of the Secretary of the Department of Justice and Regulation, c/o the Director of Consumer Affairs Victoria.

Days in custody

4.Nil

………………..

Paul Stefanovic
Barrister
Owen Dixon Chambers Melbourne

36 Simon Kurban statement at p.735[12] & Exhibit SK-3 at p.785.

37 Simon Kurban statement at p.735[13] & Exhibit SK-4 at p.785.
38 Simon Kurban statement at p.786[19] & Exhibit SK-5 at p.786.
39 Simon Kurban statement at p.736[19] & Exhibit SK-6 at p.786