Director of Public Prosecutions v Porcaro

[2015] VCC 658

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

AT MELBOURNE
CRIMINAL JURISDICTION

CR-12-00995
CR-13-01731

DIRECTOR OF PUBLIC PROSECUTIONS

v

GIUSEPPE PORCARO

---

JUDGE:	HIS HONOUR JUDGE LACAVA
WHERE HELD:	Melbourne
DATE OF HEARING:	8 May 2015
DATE OF SENTENCE:	15 May 2015
CASE MAY BE CITED AS:	DPP v Porcaro
MEDIUM NEUTRAL CITATION:	[2015] VCC 658

REASONS FOR SENTENCE
---

Subject:  49 charges of deception.
  Continuing criminal enterprise.

Sentence:  Eight and a half years imprisonment,
  with a non-parole period of five and a half years.  

---

APPEARANCES:	Counsel	Solicitors
For the Director of Public Prosecutions	Mr D. Porceddu
For the Accused	Mr P. Kilduff

HIS HONOUR:

1Giuseppe Porcaro, you have pleaded guilty to a number of charges contained in two indictments.  Indictment C1108169.3 is what I shall hereafter call the “deception indictment”.  It contains 49 charges, each of which you have pleaded guilty to.  This includes 35 charges of obtaining property by deception, nine charges of obtaining financial advantage by deception, and three charges of theft.  The maximum penalty for each of these offences is ten years' imprisonment.  You also pleaded guilty to two charges of attempting to obtain property by deception, for which the maximum penalty is five years' imprisonment.  Your offending in the deception indictment extended over nearly seven years, between February 2002 and December 2008.

2The second indictment contains one charge of making a false document, for which the maximum penalty is ten years' imprisonment.  This offending occurred during the course of one year between October 2007 and October 2008.

3Further, a number of the offences on the deception indictment are continuing criminal enterprise offences within Schedule 1A of the Sentencing Act 1991 (herein “the Act”).  That means for the purposes of sentencing on those  charges that are continuing criminal enterprise offences, the maximum penalty is doubled to 20 years' imprisonment.  I am required to have entered into the records of the court the fact I sentence you as a continuing criminal enterprise offender for continuing criminal enterprise offences and I will later order that that be done.

4With the exception of the three theft charges, Charges 17, 25 and 42, the remaining 46 charges on the deception indictment are founded on the same facts or form and are part of a series of offences committed by you that are of  similar character within s.9(1) of the Act.  In those circumstances, I will impose an aggregate sentence for all of your offending, encompassed by those 46 charges on the deception indictment.  My reasons for doing so are that there are so many charges of a deception kind here and I am required to sentence you, applying principles of totality in sentencing and also have regard to current sentencing practices. 

5Current sentencing practices limit the overall total effective sentence that I can impose, to well below the maximum penalty of twenty years that could be imposed on any one of the continuing criminal enterprise offences, of which there are several.  On those deception charges, I propose therefore to impose an aggregate sentence that properly reflects your overall level of criminality for the offending in the deception charges and has regard to a number of mitigating factors that I have taken into account and to which I shall later refer.

6The circumstances of your offending, in the deception indictment, are set out in a prosecution summary which was tendered on the plea and marked as Exhibit A.  It was read to the court in summary form by the prosecutor,
Mr Porceddu and accepted by your counsel, Mr Kilduff, as being accurate and as forming a proper factual basis upon which I can proceed to sentence you on the charges in the deception indictment.  It is not necessary that I here repeat what is there set out, except in a summary way, however these sentencing remarks should be read in conjunction with the prosecution summary.

7The offence of obtaining property by deception focuses upon the offender dishonestly telling lies in order to induce another person to hand over property, in the belief that what he or she is being told by the offender is the truth. 

8The offence of obtaining a financial advantage by deception is similar.  In this offence the offender, by dishonestly telling lies, induces another person to give to him or her a financial advantage that the offender would not otherwise be entitled to, such as the use of money or a credit in an account, or a loan.

9At the heart of both of these kind of offences is the dishonest telling of lies by the offender.  That means the offender knows that he or she is telling lies and for that reason knows that he or she has no legal entitlement whatsoever to  whatever property or financial advantage that might be obtained.  In all cases, the victims believe that what they are being told by the offender is true and in reliance on what they may have been told, they hand over property or a financial advantage to the offender.

10These offences are thus offences committed by con artists, people who have no hesitation in lying and taking people down for whatever they can get out of them.  Often the victim will be induced by lies that promise that the victim is investing in a legitimate business arrangement and that money invested by them is secure and will return an above market interest rate.  Such false representations make such investments sound both attractive and safe to the victim and the victim places complete trust in the offender so that the offence is usually committed in breach of trust.  That is what happened here.

11In each of the obtaining offences on the deception indictment, you lied to the relevant victim and induced money or a financial advantage from them.  You told them that money or a financial advantage given to you would be invested and secured in a way that you knew at all times to be utterly false.  By this means, over the period of nearly seven years of offending, you obtained money or financial advantage to a total of $4,731,816.29, of which $3,648,003.79 has not been recovered.  The lies that you told are detailed in the summary and in the charges. 

12This was a classic Ponzi scheme, where money obtained from some of your victims was used to repay or pay interest to others.  The unrecovered money was lost by the victims in Charges 1, 6, 15 to 18, 20 to 31 and 33 to 49.  The money lost appears to have been channelled to various speculative business ventures controlled by Angeleri, and principally to a business known as "Australian Motor Finance", an elaborate corporate structure set up by Denis Dalmo Angeleri, a now disgraced former legal practitioner and businessman and others to finance sub-prime borrowers with loans to purchase
second-hand cars.  Although entirely legitimate, that business was never adequately funded and probably never made a profit and was probably technically insolvent within a short time of the start of its operations.  There is no evidence you had detailed knowledge of the affairs or parlous state of Australian Motor Finance.

13As to the three theft charges Charges 17, 25 & 42, they each also involved large amounts of money, which you simply took from the lawful owners, without permission, knowing you had no legal entitlement to do so.  The elements of the offence of theft differ from the elements of the other charges.  However, I accept these offences should be treated as having occurred in the context of the Ponzi scheme you were operating and taken into account in arriving at an appropriate total effective sentence.  For this reason, the sentences I impose on the theft charges will be served concurrently with the aggregate sentence I will impose on the deception charges.

14You were employed as a law clerk in the legal department at Norwich Union Insurance.  At one time Angeleri was the head of that department but in the 1990s, he left and set up his own law firm and several company structures through which he pursued various business ventures.  One such company was Euroquest Corporate Proprietary Limited.  You became a director of this company in April 1991.  Angeleri was also a director.

15Whilst you operated as a legal executive for Angeleri & Co Solicitors, your principal role was to source people who would invest in Euroquest.  In this role you managed the investors, encouraging investments and you often paid out interest on the investments personally to investors in cash.  You sourced the investors principally from clients of Angeleri & Co, relatives, friends and social acquaintances.  You were not involved in the fraud that Angeleri and others who were directors of Australian Motor Finance or related companies were engaged in, except for the charge of making false documents on the other indictment. 

16Your offending in the charge on that indictment was the subject of a separate prosecution summary, which I admitted into evidence as Exhibit B on the plea.  That document was also read in open court by the prosecutor and accepted by your counsel as being accurate and as forming a proper factual basis upon which I can proceed to sentence you on the single charge of making false documents.  Again, it is not necessary that I here set out in full what is there contained, except in a very summary way.  Again these sentencing remarks need necessarily be read with what is therein contained.

17Mr Angeleri and one Michael O’Brien have each pleaded guilty to fraud charges concerning and elaborate fraud on both the National Australia Bank and the Adelaide Bank Limited between 2003 and 2008.  During that time, hundreds of false loans were submitted to the banks, who financed them in the belief they were legitimate.  The proceeds of the false loans which exceeded $24m, went to prop up Australian Motor Finance financially, or were used to repay or service false loans earlier obtained.  Australian Motor Finance was subject to external audit and the elaborate system set up by O’Brien and Angeleri managed to avoid detection by external auditors for many years.

18Your role in relation to the charge of making false documents over the year between 1 October 2007 and 30 October 2008, was to assist in the cover up, by preparing false documents to be placed on fictitious files created to reflect legitimate dealings with fictitious borrowers.  When these files were examined by auditors, they were duped.

19Your offending in the charges on the deception indictment was at a high level for this kind of offending.  It was sophisticated, planned and prolonged and involved substantial amounts of money.  It involved deceiving many people into handing over money or financial securities, which they had put away for later life and your offending involved breach of trust.  You knew that the victims that you were dealing with placed their trust and reliance in the truth of what you were telling them and you knew that the representations that you were making were a pack of lies.  That is why your offending is of a high level.

20Your offending in making the false documents was also very serious, although I am satisfied that in relation to the affairs of Australian Motor Finance, you were but a bit player, in whom others more deeply involved knew they could rely upon to assist.

21You have pleaded guilty to the charges and indicated an intention to do so at the earliest opportunity.  These factors are in your favour and you are entitled to a reduction in sentence because of these facts and this will be reflected in the sentences that I will shortly pass.  By your pleas of guilty at an early time, you have saved the time and costs of two trials, which may have been a lengthy process and which would have been expensive to run.  I accept these could have been large trials, which have been avoided in your case because of your guilty pleas. 

22In addition, I am satisfied that your pleas of guilty evidenced genuine remorse on your part for your offending.  Having heard a lot about you on the plea and the effects that this offending has had upon you and your family, I am satisfied that it is highly unlikely that you will re-offend in this way and I am satisfied that your prospects for full rehabilitation are good.

23You were first charged with the offending in the deception indictment on
20 September 2011.  There was a contested committal with Angeleri, at which you were committed to stand trial after pleading guilty to most of the charges.  Thereafter, on 7 December 2012, you were arraigned and pleaded guilty to the charges in this court.

24I accept there has been undue delay in disposing of the charges against you and that the delay can in no way be attributable to you.  I accept that you and your family have had the fact that you would have to face this court for the purposes of being sentenced, hanging over your head for over three years and that this has prevented you from getting on with your rehabilitation and putting these matters behind you.  During the period of the delay, you have been on bail and you have complied with all of its conditions and importantly, you have not re-offended. 

25The disposition of your charges has been to some extent caught up with and been overtaken by proceedings taken against Mr Angeleri, Mr O’Brien and
Mr Brindley for alleged offending in relation to the business Australian Motor Finance.  In passing sentence, I have reduced the overall sentence I would have imposed, but for the delay not caused by you.

26I also received into evidence victim impact statements from Mr Frank DeAngelis and Mrs Rosetta De Angelis, relevant to Charges 6 and 45, and from Mr Victor Bonnica, relevant to Charges 15, 18, 20, 26 and 43.  The effects upon your victims from your offending can there be seen.  In passing sentence, I have taken this evidence into account.

27I turn to your personal circumstances and background.  Mr Kilduff filed with the court a brief outline of argument, which I marked as Exhibit 1 on the plea.  That outline referred to a report from psychologist Jeffrey Cummins dated
29 April 2015, which I marked as Exhibit 2 on the plea.  Mr Kilduff relied upon what is contained in that report as to your background circumstances. 
I borrow from that report.

28You are now aged 53, married with three children, the eldest of whom is aged 21 and the youngest 14.  No one in your family has ever before been in trouble with the law.  Your parents were hard-working and it would appear, gave you a very good upbringing.  Your father was unfortunately killed in a car accident about eight years ago.  Your mother is aged 74 and you and she remain close and she is still supportive of you, as is your wife, whom you described to Mr Cummins as a “rock”.  She in fact also lost money in your business ventures.

29You were educated at Ferntree Gully Primary and then Upper Ferntree Gully Technical School for two years, following which you attended St Joseph’s College, completing Year 12, which you at first failed then passed when you repeated at night school.

30You worked for your uncle, a solicitor in Ferntree Gully, as a law clerk for about five years.  After that you worked for Norwich Union Life Insurance as an in-house law clerk for about 11 years, leaving in around 1996 when you left to work with Angeleri in his solicitor’s practice.  That is what introduced you into this offending.

31You have not worked again.  You have lost everything as a result of this offending and you went into bankruptcy in 2013 and remain undischarged.  You are in receipt of the Newstart Allowance through Centrelink.  You and your wife and family are now heavily reliant on the earnings of your wife.  You told Mr Cummins, inter alia, “Things have been so tight for us financially.   We had to get relief grants for the utilities including gas, water, and also for payment of the rates.”  You also told Mr Cummins you have gained considerable weight since this offending was revealed and you take prescribed blood thinning medication and medication for elevated cholesterol levels.  It was not submitted any of these health issues would make any term of imprisonment more onerous for you.  You are not prescribed any
anti-depressant or anti-anxiety medication and there are no issues concerning your overall mental health that affect the kind of sentence I impose.

32As a result of this offending, you told Mr Cummins you rarely socialise, as a number of your friends and relatives were victims of your offending.

33You told Mr Cummins and I accept that you did not live the high life on the proceeds of this offending.  The money obtained by you largely went into bad business ventures, conceived and promoted by Angeleri.  In my view, having regard to your background and limited education and work experience, by working with Angeleri, you were engaging in work that was way out of your league.  You had neither the qualifications or experience to either say “no” or to stop.  Once the deception was underway, you went along with it as it spiralled out of control.

34You expressed as great deal of regret for what you have done, to
Mr Cummins and, as he reported, you expressed appropriate empathy for the victims of your crimes.  I accept you are remorseful for your actions and I very much doubt you will ever again re-offend in this way.

35Mr Cummins’ opinion was that you were suffering symptoms of an adjustment disorder, with mixed anxiety and depressed mood at the time you offended.  He thought the adjustment disorder developed in response to work related financial stress.  Mr Cummins thought you presently suffer symptoms of anxiety and depression, as part of an adjustment disorder, with mixed anxiety and depressed mood, some of which is reactive to having been charged and the prospect you will be gaoled.  You expressed to Mr Cummins optimism about your future and you told him you intend to spend your time in custody constructively.  All of that is in your favour and is why I am satisfied it is unlikely you will re-offend in this way.

36The basic purposes for which a court may impose a sentence are punishment, deterrence, both specific and general, rehabilitation, denunciation and protection of the community.

37In sentencing you, I must have regard to a number of matters, such as the seriousness of the offences involved, your culpability for it, your personal circumstances and those of the victim, if any.  I am required to balance the interests of the community in denouncing criminal conduct with the interests of the community in seeking to ensure that as far as possible offenders are rehabilitated and reintegrated into society.

38While deception sentences can vary widely in seriousness, offending that is committed in breach of trust, involving large quantities of money, over an extended period of time and involves a high level of planning, sophistication, endeavour and persistence, normally attracts a significant sentence of imprisonment.  All of these features are present here. 

39This kind of offending calls for a stern sentence because of the need to apply general deterrence and to adequately reflect denunciation for your offending.  This kind of fraud is difficult to detect and investigate and such investigations are costly and time consuming.  They take up a lot of resources in the investigation and prosecution, as has been the case here.  For these reasons, a lengthy term of imprisonment must be imposed on you and your counsel did not submit otherwise.  He asked me to have regard to proper application of the principle of totality and not to impose a crushing sentence upon you.  The sentence I will impose addresses these submissions. 

40On the charges on the deception indictment, with the exception of the three charges of theft, Charges 17, 25 and 42, you are convicted and sentenced to an aggregate sentence of seven and a half years imprisonment.

41On Charge 17, theft you are convicted and sentenced to a term of imprisonment of three years

42On Charge 25, theft, you are convicted and sentenced to a term of imprisonment of two years.

43On Charge 42, theft, you are convicted and sentenced to a term of imprisonment of two years.

44On the charge of making false documents on the other separate indictment, you are convicted and sentenced to a term of imprisonment of two years.

45I direct that one year of the sentence imposed on the charge of making false documents, in the second indictment, cumulate upon the aggregate sentence imposed on the 46 charges in the deception indictment, with the exception of the theft charges, making a total effective sentence of eight and a half years imprisonment.

46I direct that you serve a minimum of five and a half  years imprisonment before being eligible for release on parole.

47I direct that seven days pre-sentence detention be reckoned as having been already served under the sentences passed this day and be deducted administratively.

48For the purposes of s.6AAA of the Act, I state that had it not been for your pleas of guilty to the charges, I would have imposed a total effective sentence of 12 years imprisonment, and I would have directed that you serve a minimum term of eight years imprisonment.

49I direct the fact I have sentenced you on the following charges as a continuing enterprise offender for continuing enterprise offences be entered into the records of the court.  Those charges are contained in the deception indictment and are Charges 1, 3, 5, 7 to 9, 11 to 15, 17, 18, 20, 21, 23 to 29, 32, 33, 35, 37, 39, 41 to 44 and 46.

50In its summary, the prosecution identified the two charges of attempt to obtain property by deception, Charges 10 and 38, as continuing criminal enterprise offences. In my view this is an error, since the offence that you have pleaded guilty to and been convicted of, namely attempt to obtain property by deception, is not an offence listed in Schedule 1A of the Act. For these reasons I have not sentenced you as a continuing enterprise offender on those charges.

51The prosecution seeks the making of an order under s.464ZF of the Crimes Act 1958, for the taking of a forensic sample from your body. The offences of which you have been convicted, although very serious, are not forensic sample offences in Schedule 8 of the relevant Act and I decline to make that order.

52The prosecution initially sought the making of a compensation order in favour of Adelaide Bank following conviction of the charge of making false documents.  For the reasons I expressed in argument, I very much doubt
I have the power to make such an order and the application was withdrawn.

53The prosecution also foreshadowed making application for a compensation order on behalf of each of the victims of the charges in the deception indictment.  I understood from Mr Kilduff that such applications would not be opposed, provided the orders sought are in proper form.  I will make such orders when and if they are sought.

54Any matters arising out of that, Mr Kilduff?

55MR KILDUFF:  No, Your Honour.

56HIS HONOUR:  Mr Porceddu?

57MR PORCEDDU:  No, Your Honour. 

58HIS HONOUR:  Very well.  Would you remove Mr Porcaro please. 

59I will just leave the court for a few minutes whilst the court is cleared.

- - -