Director of Public Prosecutions v Poulakis
[2015] VCC 1690
•20 November 2015
| IN THE COUNTY COURT OF VICTORIA | Revised (Not) Restricted Suitable for Publication |
AT MELBOURNE
CRIMINAL JURISDICTION
CR 15-01273
| DIRECTOR OF PUBLIC PROSECUTIONS |
| v |
| JOHN POULAKIS |
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JUDGE: | HER HONOUR JUDGE DOUGLAS |
WHERE HELD: | Melbourne |
DATE OF HEARING: | |
DATE OF SENTENCE: | 20 November 2015 |
CASE MAY BE CITED AS: | DPP v POULAKIS |
MEDIUM NEUTRAL CITATION: | [2015] VCC 1690 |
REASONS FOR SENTENCE
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APPEARANCES: | Counsel | Solicitors |
| For the Director of Public Prosecutions | Mr A. Buckland | |
For the Accused | Mr R. Richter with Mr N. Rosebaum |
HER HONOUR:
1John Poulakis, you have pleaded guilty to two charges of dishonestly causing a risk of loss to a Commonwealth entity, the Australian Customs Service, knowing or believing that there was a substantial risk of loss occurring, contrary to s.135.1(5) of the Commonwealth Criminal Code.
2
You committed these offences, Charge 1, between 21 March 2002 and
26 March 2003. Charge 2, between 10 July 2003 and 23 February 2006.
3The charges are each rolled up charges. Charge 1, in relation to Customs entries made by Zignel Proprietary Limited. Charge 2 relates to Zignel International Proprietary Limited.
4The period in Charge 1 is around 12 months and consists of 26 Customs entries totalling $491,572.87. Charge 2 is around two and a half years and is in relation to 74 Customs entries totalling $978,543.24. The total is $1.47m. The maximum penalty provided in the Commonwealth Criminal Code in relation to each offence is five years imprisonment.
5The offending in total was over a period of around three and a half years in relation to 100 Customs entries and consequently can be described as a systematic scheme to understate the value of imported goods, so as to reduce the amount of Customs duty payable, $1.47m.
6Mr Buckland appeared on behalf of the prosecution and tendered a document, "Summary of Prosecution Opening" dated 12 November 2015. By way of a brief background, you and your brother Theo Poulakis have operated retail clothing shops and other businesses, Harrolds, which is a retailer as well as an importer of mainly high end men's clothing in the Melbourne central business district.
7Imported clothing mainly from France and Italy were sold in that shop, Harrolds. Zignel Proprietary Limited was incorporated on 30 June 1997 and from 2001, you and your brother were office holders of that company. Zignel International Proprietary Limited was incorporated on 22 May 2003. I am going to refer to parts of the opening that are apposite.
8Paragraphs 26 to 31.
"The scheme to which the offending relates, involved the replacement for Customs duty purposes of invoices from overseas suppliers in relation to imports by Zignel with Dorynale invoices. In relation to Dorynale, that was registered as a company in 2001 as "Dorynale Limited" in Cyprus".
"The Dorynale invoices were created by you. They were for the same goods as for the invoices from oversea suppliers that they replaced. However, they were represented that Dorynale was the supplier of the goods and that lesser amounts had been paid by Zignel for the goods that were in fact the case.
In each of the 100 entries that are the subject of the charges on the indictment, this resulted in the calculation and payment of a lesser amount of Customs duty payable in respect of each of the importations covered than would have been payable, had the Dorynale invoices not been submitted by you.
As to the process of importation, oversea suppliers invoiced Harrolds or Zignel and forwarded their goods to a freight forwarder. The freight forwarder would consolidate goods from a number of suppliers and then forward them as one shipment to Australia. In most cases, the overseas supplier sent Harrolds a copy of the invoice and requested payment in full or part before shipment.
The supplier was paid the full amount on the supplier's invoice from one of the Dorynale accounts or directly from Zignel's account in Australia. For Customs duty purposes, you prepared a Dorynale invoice addressed to Zignel for a much lesser value than the supplier invoice amounts. The Dorynale invoice was provided to "VISA", the Customs broker used in Australia by Zignel, which then made the Customs entry relying on the information on the invoice.
The Customs duty was then calculated based on the value in that invoice. Although it was normal practice for the freight forwarder to attach the supplier invoices to the travel documents accompanying the shipment, Harrolds had an arrangement to remove the invoices, the first of the 101 importations".
9I will indicate that Number 10 is not suggested to be a part of the offending. It is 100, but it was in total at the time was 101.
"The first of 101 importations was accompanied by supplier invoices, but you contacted VISA Customs brokers and substituted a Dorynale invoice for two supplier invoices. For the other 100 importations, the invoices were no longer attached to the consignments.
On or about 15 February 2006, Customs sent by mail a notice of proposal to exercise monitoring powers to Zignel Proprietary Limited and Zignel International Proprietary Limited. From around about this time, you cease substituting the invoices of overseas suppliers with Dorynale invoices".
10
I note Charge 2 on the indictment has the last day of the between dates as
23 February 2006.
"Harrolds began its own prudential audit engaging Sothertons Charted Accountants and business advisors for that purpose. In July 2006, Sothertons advised Customs that there had been a sizeable understatement by Zignel. There was a meeting held between Sothertons and Customs on a number of occasions and Sothertons provided a detailed information in relation to the transactions concerning Dorynale Limited and Zignel to Customs.
On 17 August 2006, Sothertons provided to Customs documentation relating to each individual importation by Zignel Proprietary Limited and Zignel International Proprietary Limited where Dorynale was the supplier.
On 31 October 2006, Customs and the Australian Federal Police executed search warrants at the head office of Harrolds and your residential premises and those of your brother. The proportion of the Dorynale based Customs entry values to the actual Customs' value, based on the Italian supplier invoices varied greatly and more than half were less than 30 per cent. Sixteen of the Dorynale invoices were less than 20 per cent of the value of the Italian supplier invoices.
On 23 March 2010, you were interviewed by the investigators. On 17 July 2009, you commenced paying back the amount that is the subject of this indictment by instalments. On 9 August 2010, that amount was paid in full".
11I will refer shortly to the statement from Mr Lissauer in relation to that figure.
"On 16 June 2014, a charge and summons was issued in relation to 100 charges pursuant to the more serious offence of obtain a financial advantage by deception, s.134.2(1) of the Commonwealth Code. The maximum penalty is ten years.
There were a number of committal mentions throughout the period from that time, and this matter resolved on 27 July 2015 before a committal proceeding was held and the resolution was that you pleaded guilty to the offences pursuant to s.135 as set out in the indictment.
You have no prior convictions or subsequent matters. The offences are serious. As I have stated, the offending took place over three and a half years and was 100 transactions or Customs' entries and could be said to be a course of conduct involving planning and involving the deliberate creation of false invoices.
This type of offending is often difficult to detect and in this case, it ended in the circumstances where the catalyst was the proposed monitoring audit by Customs".
12In the circumstances, the sentencing factors of general deterrence, that is deterring other people from committing this sort of offence, denunciation, and just punishment are important sentencing factors. As well as, in most cases, special deterrence, that is deterring you. This is because revenue systems must rely on members of the community, providing reliable information. The cost of such offending is born by the community in the sense of the payment for the investigation, the prosecution, as well as the loss of revenue.
13Now in this case, the Commonwealth's Crimes Act helpfully sets out for Judges a number of matters that I must take into account and pursuant to s.16A(1), the overriding or important factor is:
"In determining the sentence to be passed, in respect of any person for a Federal offence, a court must impose a sentence that is of a severity appropriate in all the circumstances of the offence".
14Mr Richter and Mr Rosenbaum appeared on your behalf and a document bearing the heading "Amended outline of defence submissions" dated 18 November 2015 was tendered. Mr Buckland tendered a document headed "Crown sentencing submissions" dated 18 November 2015, as well as relevant decisions and a chart of sentences. Mr Buckland did this at my instigation with the agreement of Mr Richter, as the defence material replied to some of the matters in the Crown's sentencing submissions. On your behalf, Mr Richter tendered a chart in relation to sentences as to cases involving Federal offences of avoiding duty in relation to tobacco.
15On your behalf, a statement from Robert Lissauer, who is a Director of Sothertons dated 17 November 2015 was tendered as were references from a number of people including friends, business associates and those who have known you in various capacities over the years. Also tendered on your behalf was a forensic psychological report from Patrick Newton dated 14 November 2015. I have taken the contents of all those documents into account.
16The informant Peter Blackmore who is an investigator with the Australian Customs and Border Protection Service gave evidence. He was called on your behalf by Mr Richter. During his evidence, he agreed that you cooperated with the investigators and there was no attempt at any stage to obfuscate or conceal any documents or information.
17Now I will refer to the document from Sothertons from Mr Lissauer, in particular the last paragraph.
"I cannot fault the cooperation or instructions of Mr Poulakis during the prudential Customs audit. At all times he was open, forthcoming and accurate in regard to the information and documentation he was able to provide, and displayed a genuine desire to fully comply with all requests made by and requirements of Customs in regard to the Customs notification.
On numerous occasions, Mr Poulakis expressed to me his regret for having proceeded with his methodology to determine the Customs' value of the imported merchandise based on the true industrial cost, in the absence of actual knowledge of specific component costs".
18As I stated, you repaid the money back five years ago and in this statement, Mr Lissauer referred to the fact that the investigators did not provide early on, the precise figure or explained how they came to that precise figure and he said this on p.5. I might say, there was no criticism, but it was just the position you found yourself and I accept that on your behalf.
"With criminal prosecution of Mr Poulakis still looming, he obtained legal advice of the success of any legal challenge, to such assessments will be very difficult if not impossible if his legal rights were to be protected of the such protection. On that basis, Mr Poulakis instructed me of his own volition and as a sign of good faith, to make arrangements with Customs to pay the understated Customs' duty as I had calculated.
I made those arrangements with Zignel and Zignel International, paid in full by instalments to Customs. The understated Customs duty I had identified and advised that Customs during the course of the prudential Customs audit. Those instalments were paid to Customs between 17 July 2009 and 9 August 2010 inclusive, which accepts that there is not any Customs duty now outstanding".
19I take into account your plea of guilty at the time the matter resolved from a s.134 prosecution, where the maximum penalty is ten years, to the current charges pursuant to s.135, where the maximum penalty is five years and the state of mind alleged is not intentional.
20You have saved the court the expense and inconvenience of a trial by such plea and the trial would have been of some length, as it involves complication and I take that into account as well as s.16AG of the Commonwealth Crimes Act. Also on your behalf, I take into account your cooperation with investigators pursuant to s.16AH and F. Cooperation in the sense of providing the auditors with all necessary documents and information being forthcoming. I accept that also on the basis of indicating remorse and contrition.
21S16 AH and F, Commonwealth Crimes Act, are equivocal, as co-operation could be if someone is assisting in terms of an informer's discount, which is not the case here. It is not standing in the way of a prosecution or an investigation by hiding documents or not being forthcoming. So I put it in that way and as reflecting your remorse and contrition.
22Also, evidence of your remorse and contrition is set out in the references and I consider, as I said during the plea hearing, the payment in full five years ago confirms that situation. It is also in my view significant that you have shown insight and accepted responsibility. Not just by your plea of guilty, but in relation to what you have told others.
23In Mr Newton's report, at Paragraph 24, I think this is telling.
"Mr Poulakis expressed intense remorse and considerable embarrassment for his conduct. He acknowledged openly that his conduct had been culpable and illegal and said he feels embarrassed and ashamed. Mr Poulakis said he is mortified to think he had behaved in such a way and that he feels that he has tarnished the reputation and esteem that he had built over a longstanding career in retail.
"He said that he accepts responsibility for his actions and that he has taken steps to make full restitution of the Customs' charges that were unpaid".
24I consider this shows insight. When I first read this matter, there seemed to be a reliance on legal advice or advice you received, but now you show insight which I consider to be significant. You are an intelligent, experienced businessman and that seems to me to properly reflect what took place.
25In relation to sentencing for this sort of offence, I will refer to the case that was referred to in relation to delay because there is also reference to revenue cases in that that is helpful. As I indicated at the end of yesterday, towards the end of the plea hearing, I do not intend to order that you serve the prison sentence immediately, it will be in - to use daily language, a suspended sentence.
26In the case of Schwabegger, [1998] 4 VR 636, a decision of the Court of Appeal of Callaway JA and Kenny JA and Acting Appeal Justice Vincent. This decision was referred to during submissions and the accused in that case pleaded guilty to a number of counts of defrauding the Commonwealth, by falsely representing his income to the Australian Taxation Office during a period some time earlier.
27Now at p.654, line 10 down to 25, Appeal Justice Kenny said this.
28MR RICHTER: Vincent I think it was, Your Honour.
29HER HONOUR: No, I am getting to that, this is Kenny Mr Richter.
30MR RICHTER: All right.
31HER HONOUR: I will refer to Justice Vincent shortly.
"It was plainly open to Her Honour to impose a sentence of imprisonment in respect of each offence. The offences amounted to a significant fraud on the revenue, which had been perpetrated over a number of years and which had resulted in the substantial loss to the revenue. In relation to such frauds, the interests of punishment and general deterrence are not ordinarily met without a period of actual incarceration, that is why frauds on the revenue of the kind committed by the applicant ordinarily attracts sentences which require a period of imprisonment actually to be served".
32Generally speaking, the applicant has to point to substantial mitigating circumstances and a number of decisions were referred to by Her Honour. Then she continued:
"But although a period of actual imprisonment may ordinarily appropriate for offences of this kind, I would respectfully adopt what was said by President Winneke in Carter at 606 and ritual incantations such as serious frauds on the revenue will result in custodial sentences are of little practical value.
33Continuing, Her Honour said this:
"In the case of revenue offences, as in the case of other serious offences, the sentence to be imposed will depend on the particular circumstances of the case. Accordingly it would be wrong to hold that as a matter of principle, person such as the applicant, must necessarily serve a period of imprisonment".
34Now upon a consideration of the material and the s.16(1)(j) which is the "deterrent effect, that any sentence may have on you" and (n), "the prospect of rehabilitation of you", I should say of your rehabilitation, "in the circumstances I sentence you on the basis it is unlikely you will reoffend, and therefore the weight given to rehabilitation will be considerably greater than the weight given to special deterrence and protection of the community.
35I have taken into account as I stated, your remorse, the repayment of the amount that is the subject of the indictment. I have also taken into account your personal circumstances. You are now 57, having been born on 12 July 1958. You were aged between 43 and 47 years at the time. You are married with three children. Throughout your life, I sentence you on the basis that you have conducted yourself generally as an honest and responsible person, who has not only been successful in business, but contributed to the community.
36The references are glowing and show a level of community responsibility. I also take into account the cooperation and candour shown to the investigators. A significant matter that was relied on your behalf quite properly is delay. I accept this is a complicated and involved investigation and included investigation that must have taken place outside Australia and the investigator quite properly did that.
37As to the effect on you however, which I consider significant, it is over nine years old and I consider it is important the overlap between delay and the repayment of the money. That is five years since you have made the repayment. Over five years after you were interviewed and I accept it has been hanging over your head for a considerable time and in Schwabegger's case, the passage that has been often quoted that was relied on by Mr Richter is the judgment of then His Honour Acting Appeal Justice Vincent.
38At Line 32 he said:
"Delay which is not attributable to the offender, of course constitutes a powerful mitigatory factor".
39Further down, His Honour said this:
"Further, there is in my opinion a serious incongruity between the assertion that an offence is serious and that the courts must through the sentences they impose, endeavour to limiter its incidents, that is the offending on the one hand and such a leisurely progression of the criminal justice proceedings, which follow its commission that literally years pass, before the matter comes on before the court on the other.
For a number of reasons, the investigation and prosecution of criminal conduct should be conducted as quickly as is reasonably practicable, if the objectives of the system are to be attained. Additionally, a legitimate sense of unfairness can develop when the criminal justice process proceeds in what can be perceived as too leisurely a fashion".
40I am taking this into account as a significant matter on the basis as it is not attributable to you and it has been hanging over your head for that length of time. It is not just your vulnerability, anyone in your position would feel the same difficulty.
41In the report from Mr Newton tendered on your behalf refers to that:
"My assessment indicates Mr Poulakis is currently in the group of significant emotional distress. He has found the extended period of this prosecution extremely stressful and has developed a depressive condition as a result.
This condition is persisting despite compassionate medical care and includes belts of concerning suicidal ideation".
42He referred to the need for you to have continuing assistance from medical practitioners.
43As I stated, the offending is serious and it is not unusual for those who commit this type of offence, to have no criminal history. Section 17A sub-s.1, I must take into account.
"A court shall not pass a sentence of imprisonment on any person for a Federal offence. Unless the court, after having considered all other available sentences, is satisfied that no other sentence is appropriate in all the circumstances of the case".
44Sub-s.2 provides the court must give reasons.
45I consider that no sentence other than a term of imprisonment will reflect the seriousness of the offending and I refer to the matters I mentioned earlier, in relation to s.16A, the period of the offending, the number of transactions, and the total sum involved.
46However, in the circumstances which I have referred to, in particular the substantial delay, I consider that you have shown contrition, in particular the repayment of the money back, that the need to serve a term of imprisonment immediately is not necessary to reflect the seriousness of the offence. The matters in s.16A(J), that is the deterrent effect, general deterrence got other like-minded people or yourself or the need to ensure you are adequately punished. I consider a term of imprisonment to be will adequately punish you.
47I also have referred to the current sentencing practices relied on by the learned prosecutor as to Tax and the Tobacco Authorities. They are not necessarily at odds with each other. I have taken into account also the common law, as well as the provisions of the Commonwealth legislation.
48As to the charges, this was referred to during submissions. I do not intend to cumulate the sentences as Charges 1 and 2 are during virtually the same period, there is only a few months difference and the fact that there are two charges drafted seems to me to reflect the fact that the company, which is referred to in Charge 1, Zignel Proprietary Limited became Zignel International. It is a continuous course of conduct and I sentence you on the basis it is a continuous course of conduct. Therefore in the circumstances, it is inappropriate to cumulate. If you could stand up please Mr Poulakis.
49As to Charge 1, I sentence you to be imprisoned for two and a half years, to commence today, pursuant to s.16E. As to Charge 2, I sentence you to five years imprisonment to commence today, pursuant to s.16E. I order that you be released forthwith pursuant to s.20(1)(b) of the Commonwealth Crimes Act, upon entering into a recognisance in the sum of $40,000.00. That you be of good behaviour for five years.
50Now Mr Poulakis, you do not have to pay that money now. It is only if you are not of good behaviour and I am sure you will be.
51OFFENDER: Yes, Your Honour.
52HER HONOUR: Now that has to be now prepared.
53MR RICHTER: That's been done, Your Honour.
54HER HONOUR: Thank you. Now Mr Poulakis, I take it your counsel and solicitor have explained to you what all this means in terms of the order I have made and perhaps they will go over it with ‑ ‑ ‑
55OFFENDER: Um, no, we'll do that later no doubt.
56HER HONOUR: I'm sure. Well while this is happening, a recognisance release order is that you promise the court, on your recognisance, you will not commit another crime during the five years and if you do, you come back before me and you have to - unless there is a very good reason, pay the $40,000, but I am sure Mr Rosebaum and Mr Richter will explain that. Now Mr Poulakis has to ‑ ‑ ‑
57MR ROSEBAUM: Wrong colour, Your Honour, Rosebaum.
58HER HONOUR: Sorry?
59MR ROSEBAUM: Wrong colour, not green, Rose. Rosebaum.
60HER HONOUR: Sorry, I've been calling you that all the time. I'm terribly sorry.
61MR ROSEBAUM: It's all right, Your Honour.
62HER HONOUR: I'm colour blind aren't I? And I know your - I'm sorry about that, why I said that ‑ ‑ ‑
63MR ROSEBAUM: It's the same as my calling on the prosecutor yesterday to give evidence. I think we're all getting on.
64HER HONOUR: Now that has to be signed by Mr Poulakis doesn't it?
65MR ROSEBAUM: Yes, Your Honour.
66MR BUCKLAND: Yes, Your Honour.
67HER HONOUR: Yes. I wonder if madam prison officer, if Mr Poulakis could sit behind Mr Rosebaum?
68MR BUCKLAND: As I understand, Your Honour, it's also got to be signed by yourself first.
69HER HONOUR: Yes.
70MR BUCKLAND: Beforehand.
71HER HONOUR: Yes, it's different to the State ‑ ‑ ‑
72MR BUCKLAND: Yes.
73HER HONOUR: The Commonwealth always do it differently.
74MR BUCKLAND: To keep us on our toes, Your Honour.
75HER HONOUR: Yes.
76MR BUCKLAND: Thank you.
77HER HONOUR: The undertaking by sureties can be crossed out.
78MR BUCKLAND: Yes, thank you, Your Honour.
79HER HONOUR: All right. Perhaps have a quick read of it. Just sit back there and you can see. Thank you Mr Poulakis, you can sit down now sir. Is there anything else Mr Prosecutor?
80MR BUCKLAND: Well it seems to be - if you read the paper, a bit of a (indistinct) point whether you do a 6AAA direction or not. It doesn't seem to be required (indistinct).
81HER HONOUR: I don't think so.
82MR BUCKLAND: Yes.
83HER HONOUR: When it's not a prison term to be served immediately.
84MR BUCKLAND: That's probably correct as well and it's Commonwealth, Your Honour. Yes, Your Honour, there's no ‑ ‑ ‑
85HER HONOUR: Commonwealth.
86MR BUCKLAND: And it being Commonwealth, certainly there's no uniform view that has to be done anyway.
87HER HONOUR: And I might say, this case is a little different to most.
88MR BUCKLAND: Yes.
89HER HONOUR: Because of the matters I took into account.
90MR BUCKLAND: Yes indeed, Your Honour.
91HER HONOUR: You know, for the reasons I gave.
92MR BUCKLAND: Yes.
93HER HONOUR: Now just on a technical basis, is there an error?
94MR BUCKLAND: In terms of the sentence itself?
95HER HONOUR: No, the Commonwealth sentencing provisions. I always ask if there's something technical.
96MR BUCKLAND: No, Your Honour. The thing which had me scurrying is because there's the first - is a longer than three year recognisance - sentence before recognisance release order, but as far as I can see, that's in order, I've checked that.
97HER HONOUR: You can't give a non-parole period for under three years.
98MR BUCKLAND: No, Your Honour.
99HER HONOUR: But you can give a recognisance release for more.
100MR BUCKLAND: Yes, indeed. That seems to be the case, so there doesn't seem to be an issue with that at all.
101HER HONOUR: Very well.
102MR BUCKLAND: But that is something I was double checking, Your Honour.
103HER HONOUR: Thank you.
104MR BUCKLAND: Thank you.
105HER HONOUR: Thank you gentlemen. If the defence could wait because my tippy will get copies for everybody of the orders. Thank you for your assistance, gentlemen.
106MR ROSEBAUM: Thank you, Your Honour.
107HER HONOUR: Could you adjourn sine die.
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