Director of Public Prosecutions v Simcock

[2017] VCC 1048

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

AT MELBOURNE
CRIMINAL JURISDICTION

CR-16-01343

DIRECTOR OF PUBLIC PROSECUTIONS

v

ANDREW SIMCOCK

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JUDGE:	HER HONOUR JUDGE QUIN
WHERE HELD:	Melbourne
DATE OF HEARING:
DATE OF SENTENCE:	1 August 2017
CASE MAY BE CITED AS:	DPP v Simcock
MEDIUM NEUTRAL CITATION:	[2017] VCC 1048

REASONS FOR SENTENCE
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Subject:Obtain financial advantage by deception, continuing criminal enterprise, deal with property the subject of proceeds of crime.

Catchwords:
Legislation Cited:
Cases Cited:
Sentence:

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APPEARANCES:	Counsel	Solicitors
For the Director of Public Prosecutions	Mr P. Pickering
For the Accused	Mr N. Papas QC

HER HONOUR:

1Andrew Simcock, you have pleaded guilty to 11 charges of obtaining financial advantage by deception.  The maximum penalty for this offence is ten years.  Charges 2, 4, 8, 9, and 10 are continuing criminal enterprise offences with each transaction within that charge being for an amount above $50,000.  The maximum penalty for those identified offences is 20 years.  Additionally you have consented to me dealing with, and pleaded guilty to a relevant summary matter, dealing with property the subject of proceeds of crime. The maximum penalty for that offence is two years.

2The circumstances of your offending are set out in the summary of prosecution opening dated 30 November 2016, Exhibit A, and can be summarised as follows:

3You worked with your co-offender James Little at K & S Freighters, a large transport company.  In 2007 you and Little were friends and both worked in the steel business unit of the company.  The steel business unit was an office within the One Steel mill, the main customer of K & S Freighters.

4You commenced work with the company in May 2009.  You held various positions which included you being responsible for all the administrative duties within the steel business unit, incorporating oversight and management of administration staff.  In January 2011, you were promoted to the position of credit collections officer and had responsibility for managing and dealing with issues relating to the One Steel accounts.

5Mr Little commenced work there in December 2003.  He worked in various positions including as an operations manager, carrying out logistical tasks in the business, including allocation of sub-contractors.  In October 2010, he was promoted as the Imported Steel Sales and Operations Manager and worked in that position until August 2014.

6By way of background to this offending, your relationship with Little was such that you both set up a company known as Wharf Transport Solutions and competed against K & S Freighters for work.  By virtue of your positions, you could underquote K & S Freighters and once your company was awarded the work, you would then sub-contract it to a legitimate road transport business.

7During 2007, you told Little that you were aware that K & S Freighters had been overpaid $100,000 and that the funds were sitting in an account, unbeknown to management.  You came up with a plan to create a company and to invoice
K & S Freighters for transport that did not exist.  The plan was for you to manage the accounts and for Little to manage the operational side of the fraud.  Little then enlisted his sister, who had a different surname, to be a director of the company so that neither your or Little's connection would be discovered.  She was paid $500 a month for her involvement.

8In September 2007 you and Little registered Dock to Dock Transport Pty Ltd, hereinafter referred to as Dock to Dock, and set up a bank account.  Little arranged for Dock to Dock to be placed on the list of sub-contractors with
K & S Freighters and provided the relevant bank details.

9Charges re Dock to Dock. 

10In respect of the charges relating to Dock to Dock, the following steps were taken by you and Little on a number of occasions: 

11(1) Little created a fraudulent email and attachment with a request purporting to be sent by an employee at One Steel;

12(2) You would reply and forward this email to staff requesting a staff member to access the K & S Freighters fleet management system and create two subcontractor payment authorities, SPAs.  This document or SPA commenced the process to have the transport actioned. By the creation of the two SPAs, the loans were legitimised within the fleet management system and ultimately allowed for funds to be extracted;

13(3) The order information entered into these two SPAs by the staff member was, unbeknown to them, false and manually entered into the system without any legitimate order from One Steel and with Dock to Dock the allocated
sub-contractor;

14(4) You would then sign the SPAs confirming to management that you had viewed the proof of delivery dockets, PODs, that should have been supplied by Dock to Dock.  Those PODs did not exist;

15(5)Little would then create a false invoice by Dock to Dock which listed the fictitious load of transport.  The authorised SPAs were then forwarded to head office for payment.

16By the adoption of this process set out above, K & S Freighters would pay Dock to Dock the value of an invoice, less any deductions.  Soon thereafter you and Little would withdraw the funds from the Dock to Dock bank account. 

17Between June 2009 and 4 December 2012, you and Little supplied a significant amount of invoices from Dock to Dock to K & S Freighters for fictitious loads of transport.  On each occasion, the process explained above was adopted.  By the provision of these invoices to K & S Freighters, payments were made to Dock to Dock 38 times for a total sum of $2,061,267.92.  The details of these transactions are outlined in the chart incorporated in Exhibit A (see paragraph 30).

18Charges re Portside DG Pty Ltd.

19In 2011, the steel business unit within K & S Freighters suffered a downturn in steel transport requests from One Steel and other customers.  Additionally management of K & S Freighters undertook a review of the transport completed by sub-contractors in an attempt to allocate their work to K & S Freighters employees.

20On 22 July 2011, the chief financial officer at K & S Freighters sent an email to all sub-contractors and staff, including you and Little, expressing concern that sub-contractors, including Dock to Dock, were not adhering to company policy.  ASIC had terminated Dock to Dock's company registration on 30 January 2011 due to lack of compliance.

21In order to spread the month by month value of the deception with Dock to Dock, Little registered another company, Portside DG.  At this time Little was in a personal relationship with Ms Bui who had previously worked in the steel business unit at K & S Freighters.  Little offered Bui between $2,000 and $3,500 a month to be a director of Portside, and told her there was a conflict of interest between his transport work and employment at K & S Freighters, so that his name could not be used.

22On 12 August 2011, Portside was registered with ASIC with Bui listed as the director.  Little opened a bank account for Portside.  Little added Portside as a sub-contractor and provided relevant bank details to K & S Freighters.  Using a similar system as that which you had both in respect of Dock to Dock, he created false invoices and produced fraudulent PODs.  Some of this was done by him, but he soon delegated that task to Bui, advising her what to write on them.

23Little requested K & S Freighters staff to create multiple SPAs for fictitious transport work for Portside.  You became aware of Little's activities regarding Portside and from January 2013 you assisted in maintaining the fraud from the accounting end of the business.  Your offending involved 87 invoices of 18 payments, see paragraph 43 of Exhibit A, for a total of $1,426,711.

24In respect of the concealment of the deception, you concealed the fraud within the One Steel accounts to prevent K & S Freighters management identifying the significant financial burden of Dock to Dock, then Portside to them.  This was done in a variety of ways.  (a) The costs were posted where management would not see tax invoices or exact routes due to the volume of transport loads in the account.  (b) Errors made by One Steel in overpayments and mistaken double payments were able to be utilised to conceal payments to these companies.

25Between 2009 and 2014, you overcharged and concealed overpayments by One Steel to the value of approximately $2,540,198.  This amount is included as part of the charged acts.

26Throughout the period of the offending, you and Little were employed by K & S Freighters, receiving remuneration packages for that employment of between $60,000 to $100,000.

27Bank statements show that large sums of cash from the Dock to Dock account were regularly withdrawn at multiple locations between 21 June 2009 and
14 February 2014, when the account was closed.  Little accessed money paid to the Portside Bank account.  He withdrew large amounts of cash and delegated Ms Bui to transfer significant amounts of money from this account.  Little supplied cash to you on a regular basis and also arranged Bui to electronically transfer funds from the account to you.

28The fraud was ultimately detected by K & S Freighters in August 2014 who contacted Victoria Police.  On 21 October 2014, police executed a search warrant at your home at Tarneit and another property at Portarlington and you were arrested.  Police located documents, $8,900 cash, a jet ski and trailer.  The latter items are the subject of the related summary offence of possessing proceeds of crime.

29You were interviewed by police on 21 October and made partial admissions.  You claimed that Little created the companies and that he paid you for “turning a blind eye” or ignoring his fraudulent activities.  You maintained that you had not requested any money to be deposited by Little into your account.  Your solicitor provided information to police suggesting receipt by you of approximately $365,000, substantially less than the total amount the subject of these charges.  Your account to police was inconsistent with material in the depositions including emails which illustrated knowledge by you of the scheme, and requests for payment to Little. 

30As to your personal circumstances, I was provided with a report from Bernard Healey, clinical and forensic psychologist dated 19 January 2017 and a subsequent report -  I take that material into account.  You have attended over 20 counselling sessions with him between 18 May 2015 and now.  You have engaged well in the counselling process. 

31As to your personal history, you grew up in Melbourne and you are the eldest of four children.  I was informed that you are estranged from your immediate family and have been so since you were about 19 - you are currently aged 51.  You recently renewed contact with one of your sisters. 

32You were married for a period of about ten years from 2005.  You then separated and there were no children from that union.  You have repartnered and were married only weeks ago.  You and your current wife had a baby in March of this year.

33You completed schooling to halfway through Year 11 and later completed an accounting certificate, then a Bachelor of Commerce.

34Up until you were dismissed from this job because of your offending, you have worked in that field for various companies.  However, you have not been able to obtain similar employment since these matters were discovered. You had been at K & S Freighters for 13 years.  The results of testing conducted by
Mr Healey reveal you are an intelligent man with above average intellectual capacity.

35You have however had a long history of issues with gambling, both at the Casino and on the horses.  This activity increased when you had more funds available as a consequence of the commission of these offences over the period of years.  You have not been in paid employment since the commission of these offences and you informed Mr Healey that you have not had the funds to gamble.  You are described by him as fulfilling the relevant criteria for pathological gambling.

36You have had various health issues in your life, the details of which are set out by Mr Healey.  Some of these issues though historic, continue to impact on you as do the more current conditions from which you suffer.  Personality testing administered by Mr Healey in June 2015 was indicative of serious depression, anxiety and significant social introversion or withdrawal.  This assessment was confirmed, or revealed a consistent pattern, when you were assessed again by him some nine months later.

37There was no suggestion, however, that the material before me enlivened the principles in Verdins, though it was submitted that your depression and anxiety and other medical conditions were such that custody will be more burdensome for you.  This was not disputed by the prosecution and I accept that submission and take that factor into account.

38You have no prior convictions.  I take into account your plea of guilty.  Although you did not plead at the earliest opportunity, I understand the real issue or dispute related to quantum of the fraud, and that there had been from an early stage, an intention to plead guilty to appropriate charges.  There is a significant utilitarian benefit in the plea, saving the community the cost and inconvenience of a trial which in matters of this nature are often drawn out, complicated and expensive.

39Your plea is also indicative of your acceptance of responsibility for your actions and shows a willingness to facilitate the course of justice.  Additionally I accept your plea is indicative of remorse.  This is consistent with the material provided to me from you and your partner and also Mr Healey, who noted that you remain mortified and self reproachful over your dishonesty.

40I accept that you have a high level of remorse.  You have provided some reimbursement to K & S Freighters.  As a consequence of your dismissal,
K & S withheld approximately $23,000 of your long service and annual leave entitlements.  Additionally you have sold a property and approximately $260,000 has been provided to K & S in restitution.

41I accept that during this period between being charged and today, you have taken positive steps towards your rehabilitation and engaged in counselling over an extended period.  You have established yourself with your new wife and baby and provide valuable assistance in this family environment.

42Your family situation, efforts at restitution and engagement in counselling augur well for your rehabilitation.  I accept that your prospects are good.  In addition to these matters in mitigation, your counsel relied on hardship to a third party, your current wife, if you are imprisoned.  This was based on material provided to me from both you and your partner and Exhibit 4, letters from Dr Carolyn Breardon from Werribee Nursing Mental Health dated 18 May and 10 July.

43This material details your wife's psychiatric history and concerns expressed as o her vulnerability if you are not available to assist her and the difficulties that your wife may encounter caring for the child on her own.  Additionally I was informed that your wife has other health issues, Exhibit 9.

44Reliance was placed on the principles in Markovic (2010) 39 VR 589 and the establishment of exceptional circumstances to warrant the exercise of mercy in the sentencing discretion. Clearly you provide significant support and assistance to your wife and there are fears that she, with her psychiatric history, will find it very difficult to cope with the child with little other outside support.

45As established in the authorities, ordinarily hardship to a third party including family members is not sufficient to establish exceptional circumstances.  The prosecution submitted that all the evidence before me did not amount to exceptional circumstances, particularly given the time since her relapse approximately five years, and the lack of any certainty that your partner will experience hardship.  I accept that submission.

46I take this aspect or hardship to your wife into account in consideration of the additional burden that you will bear in custody,  but I do not accept that the circumstances of themselves are exceptional. 

47There were some aggravating features of your offending.

(1) It involved a sophisticated system of fraud, including (a) your knowledge of the creation and registration of two companies.  Once confident in the success of the scheme, you used other companies to divert attention from the original sub-contracting company.  (b) When you became aware of the Portside offending, you continued your involvement.  (c) The active participation of you in the preparation and authorisation of relevant documents and steps taken when questions were asked regarding the sub-contracting companies.

(2) The activities were regular and occurred over a five year period.

(3) The individual charges and the total amounts involved were significant, with a total of $3,487,978.92.

48Charges 2, 4, 5, 8, 9, 10 are continuing criminal enterprise offences with each transaction in those charges being above $50,000. See Schedule 1A of the Sentencing Act 1991.

49Your activities amounted to a significant breach of trust of your employer.

50As to parity, there are some features that distinguish you from your co-accused, Mr Little.  (1) You were involved in fraudulent activity relating to funds of a lesser sum than him.  (2) You have pleaded to less offences.  (3) You have no prior convictions.  He had one for a theft related offence from a previous employer.  (4) You have provided funds in restitution to K & S Freighters.  (5) He however made full admissions to police and made a statement against you.

51I am satisfied that these are matters which warrant your sentence to be less than that imposed by me in respect of your co-accused, Mr Little. 

52Given the gravity and duration of this offending, I have no alternative but to impose a term of imprisonment.  However, given your level of remorse and good rehabilitation prospects, I propose to impose a lesser non-parole period than I would have ordinarily considered appropriate. 

53These offences are serious.  The amounts involved were in the millions and your offending continued over a lengthy period of time.  The offences constitute a gross breach of trust placed in you and Little by your employer.  You participated in continued exploitation or took advantage of a substantial business operation where your conduct could be easily covered up and was unlikely to be detected.  Issues of general deterrence are important.  Others who hold positions of trust within businesses should be aware that if they are unable to resist the temptation to unlawfully gain from their position and they are caught, they will face stern punishment. 

54I also take into account specific deterrence, though give it less weight given that I accept you are genuinely remorseful, have no prior convictions and good rehabilitation prospects.  It is necessary to strike a balance between the matters raised in mitigation and the objective seriousness of this offending together with all relevant sentencing principles. 

55If you could please stand up, Mr Simcock.

56In respect of Charge 1, you are convicted and sentenced to a period of imprisonment of 18 months.

57In respect of Charge 2, you are convicted and sentenced to a period of imprisonment of nine months.

58In respect of Charge 3, you are convicted and sentenced to a period of imprisonment of 18 months. 

59In respect of Charge 4, you are convicted and sentenced to a period of imprisonment of three years. 

60In respect of Charge 5, you are convicted and sentenced to a period of imprisonment of three years.

61In respect of Charge 6, you are convicted and sentenced to a period of imprisonment of 18 months.

62In respect of Charge 7, you are convicted and sentenced to a period of imprisonment of 18 months.

63In respect of Charge 8, you are convicted and sentenced to a period of imprisonment of 18 months.

64In respect of Charge 9, you are convicted and sentenced to a period of imprisonment of four years.

65In respect of Charge 10, you are convicted and sentenced to a period of imprisonment of two years.

66In respect of Charge 11, you are convicted and sentenced to a period of imprisonment of nine months.

67In respect of the summary offence, you are convicted and sentenced to a period of imprisonment of one month.

68Twelve months of the sentence imposed on Charge 5 will be cumulative on the base sentence, which is Charge 9, a period of four years, which then gives a total effective sentence of five years, and I impose a non-parole period of two and a half years.

69Pursuant to s.6J of the Sentencing Act, I direct it be noted in the records of the court that you have been sentenced as a continuing criminal enterprise offender on the relevant charges previously stated.

70Pursuant to s.6AAA of the Sentencing Act, if you had not pleaded guilty to these matters, I would have imposed a sentence of imprisonment of seven years with a minimum of five years. 

71Now I am not certain whether I have left the orders that were provided to me in my chambers.  I might have done that, I am sorry.  So there was a ‑ ‑ ‑

72MR PICKERING:  We have further copies of the restitution, Your Honour.

73HER HONOUR:  Have you?

74MR PICKERING:  And also of the 464.

75HER HONOUR: Yes. Mr Simcock, pursuant to s.464 of the Crimes Act, I order you undergo a forensic procedure for the taking of a scraping from the mouth until a sample of sufficient standard is obtained for the placement on a database.  I must inform you that if at the time of the request you do not consent to the taking of a mouth scraping under supervision of an authorised member of the police force, then the sample will be a blood sample and police can use reasonable force to enable the forensic procedure to be concluded. 

76I also make the restitution order in the terms that have been provided to me in the sum of $8900 to K & S Freighters.  I will just sign those orders now.

77Are there any other matters that I need to address?

78MR PAPAS:  No, Your Honour.

79MR PICKERING:  Your Honour, I don't know whether Your Honour has had a chance to go through the restitution order, but it includes the cash and also the assets.

80HER HONOUR:  All right.  I am sorry, when I indicated that, I should have included the reference to the jet ski and the trailer.

81MR PICKERING:  Your Honour.

82HER HONOUR:  Thank you.

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