Director of Public Prosecutions v Spinella
[2021] VCC 724
•8 June 2021
| IN THE COUNTY COURT OF VICTORIA | Revised Not Restricted Suitable for Publication |
AT MELBOURNE
CRIMINAL JURISDICTION
CR 20-01190
| DIRECTOR OF PUBLIC PROSECUTIONS |
| v |
| JAICOME SPINELLA |
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JUDGE: | HIS HONOUR JUDGE CAHILL |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 12 May 2021 |
DATE OF SENTENCE: | 8 June 2021 |
CASE MAY BE CITED AS: | DPP v Spinella |
MEDIUM NEUTRAL CITATION: | [2021] VCC 724 |
REASONS FOR SENTENCE
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Subject: Obtain financial advantage by deception – guilty plea
Catchwords: Director and general manager of concreting company – misappropriation of $3.1M into his gambling account over 7 months – gambling addiction – voluntary cessation and disclosure of offending – Doran discount – for your delay in prosecution – very good prospects of rehabilitation.
Legislation Cited: Crimes Act 1958 (Vic).
Cases Cited:R v McKee & Anor (2003) 138 A Crim R 88; Nhat Hoang v R [2013] VSCA 287; R v Doran [2005] VSCA 271; DPP v Bulfin [1998] 4 VR 114; DPP(Cth) v Page [2006] VSCA 224; R v Grossi (2008) 23 VR 500; Bulfin [1998] 4 VR 114; R v Jamieson [1988] VR 879; R v Maclean (2000) 2VR 118; Diane Deborah Apted v R [2021] VSCA 151; Keane v R [2011] VSCA 156; R v Pham (2015) 256 CLR 550; Poursanidis v R [2016] VSCA 164.
Sentence:
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APPEARANCES: | Counsel | Solicitors |
| For the Director of Public Prosecutions | Ms F. Thompson | Commonwealth Director of Public Prosecutions |
For the Accused | Ms N. Kaddeche | Emma Turnbull Lawyers |
HIS HONOUR:
1Jaicome Spinella, you have pleaded guilty to one charge of obtaining financial advantage by deception. The circumstances of your offending are set out in the prosecution opening which was Exhibit A.
2You were one of three equal shareholders in Bowen Concrete Pty Ltd which was incorporated on 29 November 2015. You were also 1 of the 2 company directors.
3The business carried out medium-scale commercial concreting, sub-contracting to builders for projects in Melbourne.
4You were the general manager and solely responsible for financial management. There were no formal financial procedures and/or controls.
5The other director, your friend, Joey Reitano, was responsible for day-to-day operations on work sites. The third shareholder, your younger brother, was responsible for procurement, design and project management.
6The business started with one employee. It grew significantly and, in July 2017, it had 55 employees and quarterly sales of $4.7m.
7On 16 November 2016, the business set up an ANZ credit card facility to pay creditors.
8You had been operating a betting account with Ladbrokes Betting Agency since 18 October 2014. On 23 November 2016, you made two payments totalling $220 from the company credit card to your Ladbrokes account.
9The amounts you dishonestly obtained quickly escalated.
10In December 2016, you made 85 payments totally $163,779 to your account. In January 2017, you made 21 payments totalling $166,225 to your account. In February 2017, you made 23 payments totalling $143,068 to your betting account. In March 2017, you made 103 payments totalling $296,285 to your betting account. In April 2017, you made 65 payments totalling $549,176 to your betting account. In May 2017, you made 54 payments totalling $397,950 to your betting account. In June 2017, you made 150 payments totalling $1,086,450 to your betting account; and between 1 and 14 July 2017, you made 68 payments totalling $328,785 into your betting account.
11In all, between 3 December 2016 and 14 July 2017, without your co-directors' knowledge or authority, you used the company visa card to make 571 payments into your Ladbrokes betting account totalling $3,131,718.82.
12For about two months, you had concealed your deception by recording the payments in the company's accounts as payments to trade creditors. Thereafter, you made no entries in the company's accounts at all.
13On 15 July 2017, you informed your sister, Katherine Riui, and her husband Vincent you had gambled and lost substantial company funds. On 18 July 2017, you confirmed it to them in an email. You also closed your gambling account and you effected a permanent self-exclusion from betting.
14On 21 July 2017, receivers were appointed to the company by its secured creditor, a finance company.
15On 25 July 2017, the members of the company resolved to appoint a liquidator and, with the assistance of your lawyer and a business advisor, you voluntarily provided the liquidator with a confessional statement which set out the moneys you had misappropriated.
16On 2 April 2019, ASIC officers interviewed you. You told them you had been gambling since your teens. You said your first use of the company credit card was inadvertent. You admitted “lending” yourself $3.13m. You said your gambling escalated when you gambled more to try to recoup what you had lost. On 24 February 2020, you were charged. On 30 September 2020, at a committal mention you entered a guilty plea. The company liquidator, Shane Dean, in a letter to the court wrote that you responded to all requests for information and you “have been candid in your answers to the liquidators even when some of the answers appeared to be to your detriment”.[1]
[1] Exhibit 4.
17Your cooperation was ongoing. The company's receivers and liquidator issued proceedings against Ladbrokes to recover the money you lost and damages consequent upon the company's collapse on the grounds that Ladbrokes had failed in its duty to prevent you from misappropriating company funds.[2]
[2] Exhibit 19.
18The plaintiffs had alleged Ladbrokes identified red flag behaviours which included two 11-hour online gambling sprees: firstly on 3 December 2016 when you bet on horse races in New Zealand, every State in Australia except Tasmania, South Africa, England and Ireland and then on 2 March 2017, when you paid $182,510 into your account, betting on Australian and international racing.[3]
[3] Exhibit 19, [35(d)].
19It was alleged, rather than intervening to minimise harm to you from your gambling behaviour, Ladbrokes encouraged you to gamble further by giving you VIP service to make it easier for you to place bets, incentives including special bonus bets from $200 to $4000 and offers of corporate hospitality at the MCG and Caulfield Racecourse on occasions when you had sustained heavy gambling losses and when you had paused your gambling for a day or two.
20In its defence, Ladbrokes had contended the “encouragements made to [you] to gamble were directed at ensuring that you did not take [your] custom to a competitor”.[4]
[4] Defence, [27(b)].
21The proceedings resolved in a confidential settlement following a mediation on 2 June 2021.
22You have no criminal record. You were born on 19 March 1987. You were 29 years old when you started to offend. You are now aged 34 years old.
23Your personal circumstances are set out in the psychological report dated 19 April 2021 of Alison Mynard.[5]
[5] Exhibit 3.
24You are the youngest of three siblings. Your parents worked hard to give you the best opportunities. You described them as “super proud parents”.[6] You told Ms Mynard they often argued, and the household was at times chaotic.[7] You said you had a good relationship with your mother, less so with your father.[8]
[6] Exhibit 3, p. 2.
[7] Exhibit 3, p. 2.
[8] Exhibit 3, p. 2.
25Your father was a heavy drinker. He was also a gambler, betting on horseracing, and he introduced you to betting at a young age by allowing you to pick a horse which he would place a bet on. By the time you were 12 or 13, you were placing horse bets yourself with the TAB, spending $10 to $20 at a time. By the age of 16, you were playing online poker, spending $50 at a time.
26You went to local schools and completed Year 12. You felt pressured to attend university to meet your parents' high expectations of you. You completed a four-year Bachelor of Applied Science with Honours at RMIT. While you were at university, you were playing representative football and had to decline an offer to play interstate because of your studies. At university, you largely abstained from gambling.
27You have consumed alcohol regularly from the age of 17. By your mid-20s, you were drinking heavily. After you left university, your gambling became problematic. You obtained a credit card and bet on horse races, spending upwards of $5000. You gambled because you enjoyed the social aspect and the excitement of winning and, at times, it helped counteract negative emotions.
28You have had consistent employment in the construction industry since 2006. You describe yourself as a hard worker and said you wanted financial stability to support your family. You purchased your first home at the age of 23.
29In your mid-20s, you commenced a relationship with Anna, the mother of your daughter, Chloe, who is now five years old. When Anna learned of your offending, she left you and took Chloe with her to Queensland to be closer to family.
30In August 2017, you moved there to be nearer to them and to get away from persons affected by the company collapse who had made death threats against you.
31You have since re-partnered.
32You told Ms Mynard when you offended you would get excited about winning but fell on a “slippery slope” when you tried to recoup your losses.[9] Eventually, you realised you could not come back from those losses and you told your sister what you had done.
[9] Exhibit 3, p. 6.
33Your sister gave impressive evidence before me.
34She said on a Saturday evening in mid-July you telephoned her wanting to speak with her urgently. When she met with you, you told her you had gambled the business into financial collapse. You said you had been drinking heavily and taking pills to cope with anxiety. Your brother and your other business partner, who was your friend, were told. So were your parents.
35She said the next day, your sister's husband went through the details of your gambling spending with you. Soon after, the liquidator became involved.
36Your sister also told me the family assisted you financially in your move to Queensland and took control of your bank accounts so that you cannot get money to access money to gamble. In a written reference, she wrote “your recovery has not been a completely upward journey, however it has come close”.[10] She wrote she is “incredibly proud of how well [you have] managed in the effort [you have] put into [your] recovery”.[11]
[10] Exhibit 10.
[11] Exhibit 10.
37In August 2017, you consulted a psychiatrist, Dr Ben McDarmont, in Brisbane, for assistance.[12] He diagnosed you with alcohol use disorder, gambling disorder and adjustment disorder with anxious mood relating to the collapse of the company. He recommended a trial with medication. You were reluctant to take it and tried to cope by exercising more. You saw Dr McDarmont again in April and May 2020. You took the medication he prescribed and reported it helped you.
[12] Exhibit 2.
38Ms Mynard recommends you undertake medium to long term therapy to address your gambling and alcohol disorders.[13] In her view, you have insight into your mental health issues and are motivated to improve yourself.[14]
[13] Exhibit 3, p. 11.
[14] Exhibit 3, p. 10.
39I received a number of impressive references from family members and friends.[15]
[15] Exhibit 5 to 17.
40Your uncle and aunt wrote you have a “magnetic personality, cheerful character and a willingness to help others”.[16] Your younger brother, Christopher, wrote you have an “incredible work ethic and are very drive and passionate about the construction industry”.[17]
[16] Exhibit 5.
[17] Exhibit 17.
41You played football with Chris Kent.[18] He has known you for 10 years. He described you as hardworking and decent. He helped you, at times, with accommodation and a car, after you were charged. And you rescued him from drowning when he was involved in a serious accident in 2018 in a Brisbane swimming pool.
[18] Exhibit 7.
42Your cousin, James Marinelli, wrote that the two of you were close growing up.[19] Since your offending, he has seen you show responsibility by living within your means and providing for your daughter. You also helped him with a home renovation.
[19] Exhibit 8.
43Jason Wilcox, who is the state manager for Buildcorp, employed you as a project manager for three years between 2013 and 2016.[20] He described you as a key employee who contributed to his company's growth. When you left to start your own concreting business, your friendship with him continued.
[20] Exhibit 9.
44Your parents, Dominic and Maria, described you as a “sporty, popular and intelligent child with lots of friends”.[21] They wrote, you grew into a “hard-working, loyal friend and protective brother”.[22] You “moved interstate… because you felt ashamed and you… wanted to be close to [your] daughter”, they said.[23]
[21] Exhibit 11.
[22] Exhibit 11.
[23] Exhibit 11.
45Another cousin, Patrick, described you as a “genuine person with a good heart, always placing family and friends first”.[24] A former girlfriend Sarah who has known you for more than eight years, and remains your friend, has seen you attempt to rebuild your life with great support from your sister, Katherine.[25]
[24] Exhibit 12.
[25] Exhibit 13.
46Scott Waterman is another former football teammate.[26] In 2015, you helped him with a large renovation to his business premises without payment except for a “nice dinner”.[27] When he moved to Brisbane for work, you helped him with accommodation. He described you as a good man who has suffered “in many ways” and “lost” a great deal in consequence of your offending.[28] His father, Steele Waterman, who was a detective inspector with Victoria Police, described you as a “gifted” cricketer and footballer who was always “socially conscious” and “well-behaved”.[29]
[26] Exhibit 14.
[27] Exhibit 14.
[28] Exhibit 14.
[29] Exhibit 15.
47Your girlfriend, Courtney, has been with you for eight months. She wrote you have been “transparent with [her] about [your] struggle with addiction, the charges against [you and your]…court case.[30] She has spent a lot of time with your daughter and you. She described you as “generous, kind-hearted, loyal, caring and dependable” to your daughter and her.[31]
[30] Exhibit 16.
[31] Exhibit 16.
48Another friend, Matthew Ashenden, has known you for about four years.[32] You met him when you joined a Brisbane football club. He described you as “a calm and measured person” who has worked “tirelessly” with young players at the club.[33]
[32] Exhibit 17.
[33] Exhibit 17.
49None of these people knew the extent of your gambling addiction. You have confided in all of them about your offending. They attest to your immense shame and remorse for your wrongdoing and your insight into the harm you caused your friend, Joey, your family and others who suffered as a consequence of the collapse of Bauen Concrete Pty Ltd.
50Ms Kaddeche who appeared on your behalf, accepted that, because of the gravity of your offending, an immediate term of imprisonment is required.
51While acknowledging your crime was a serious breach of trust of your co-director, she submitted, firstly, it was unplanned; the credit card facility was obtained to pay trade creators and your early misuse of it was in small amounts. Secondly, it was unsophisticated; apart from entering early bets in the company accounts as payments to creditors, you took no steps to conceal your dishonesty. Thirdly, it lasted for a relatively short period compared with many other instances of white-collar crime. And fourthly, you were not lavishly enriched. You made nothing out of it and your gambling escalated as you tried to make up your losses.
52In mitigation of penalty, she relied on the following factors: one, your voluntary ending of your offending and disclosure to your family and the company; two, your early guilty plea; three, your cooperation with the liquidator from the outset; four, your ongoing cooperation with the liquidator and receivers in recovery proceedings; five, you diagnosed gambling addiction and alcoholism; six, the delay in prosecution through no fault of your own; seven, your previous good character; and eight, your good work ethic and family support.
53Relying on R v McKee & Anor [2003] 138 A Crim R 88 and Nhat Hoang v The Queen [2013] VSCA 287, she submitted your gambling addiction and alcoholism reduce your moral culpability and are relevant to your rehabilitation, deterrence and community protection. She also submitted, relying on R v Doran [2005] VSCA 271, as you provided the prosecution with the evidence necessary to obtain a conviction against you, you should receive a “demonstrable discount” in your sentence.
54Ms Kaddeche submitted your moral culpability is further reduced by Ladbrokes' “active facilitation” of your gambling and by the application of Verdins principles.[34] She also submitted that the receivers' recovery proceedings against Ladbrokes have “implications on the potential loss” to Bauen Concrete.
[34] Exhibit 18.
55Ms Thompson, who appeared for the prosecution, submitted that because I am sentencing you on a rolled up charge, I must consider all the circumstances of the offence including its commission over an extended period and the totality of the harm caused.[35] She submitted yours is a serious example of the offence because it involved 571 dishonest transactions totalling more than $3m over a period of seven months, consequent on a major breach of trust of your friend and your brother.
[35] Exhibit B and C.
56Relying on statements of principle in DPP v Bulfin [1998] 4 VR 114, per Charles JA, at [131] and DPP (Cth) v Page [2006] VSCA 224, at [37], she submitted, for white collar crime, general deterrence is the primary sentencing consideration and the personal mitigating factors are less significant. She submitted because your crime led to the failure of the company, there was an “adverse impact” on not only your co-director and shareholders but also employees and trade creditors.
57Before the proceedings were resolved, Ms Thompson had told me the liquidator was confident of recovery of damages from Ladbrokes. Subsequently, she informed me, at a mediation, the liquidators settled on confidential terms and Ladbrokes does not consent to the release of the settlement details. She submitted Ladbrokes’ alleged failure to provide you with assistance when they identified problems with your gambling does not mitigate your conduct. She accepted that to the extent that Ladbrokes encouraged you to gamble your moral culpability is moderated “but to a very limited degree”.
58She submitted “your primary motivation to continue [gambling] appears to have been to try to recoup your losses”.
59She accepted as mitigating factors that you voluntarily admitted your misconduct to the liquidator and made your guilty plea early. She acknowledged you have no prior convictions and your references depict a man of good character.
60She did not challenge Ms Mynard's diagnosis of your gambling and alcohol use disorders. However, she submitted there is no causal connection between them and your offending.
61She noted you told Ms Mynard you did not usually drink and gamble at the same time; drinking would follow your gambling to “deal with the stress of it all”. She submitted, for the reasons Redlich JA identified in R v Grossi [2008] 23 VR 500 at [56], “your gambling addiction has little if any impact on moral culpability or general deterrence.” She submitted your prospects of rehabilitation are conditional upon you addressing your ongoing addictions. She referred me to a number of cases of crimes of misappropriating business funds to feed a gambling addiction where the offender had pleaded guilty.
62The courts have made many statements about the seriousness of white-collar crime and the importance of general deterrence and denunciation. Mitigating factors such as no prior convictions, good character references and good prospects of rehabilitation are to be given less weight. For serious examples like yours, a sentence of imprisonment and non-parole period is required. Your counsel was not heard to argue otherwise.
63While you face a single charge and the maximum penalty is limited to 10 years' imprisonment, as it is a rolled up charge which bundles together a collection of identifiable charges, I must take into account the extended period of your offending and the totality of the harm it caused.
64Yours was a serious abuse of trust involving misappropriation of a substantial sum of money, $3.1m over a seven-month period, which caused the collapse of a successful company and losses to employees and creditors. In your position of financial responsibility, you deceived not only the company but also your friend.
65I accept your offending was relatively impulsive rather than carefully planned, the credit card was set up initially to pay trade creditors, and relatively unsophisticated in that after your early betting, you made no attempt to conceal your dishonesty. You lost the money gambling not on personal enrichment.
66On the material before me, I am not satisfied that the Verdins principles are engaged. Your gambling addiction notwithstanding, you made your own choices to gamble and it escalated as you tried to recoup your losses. However, having regard to the guidance in Grossi's case, per Redlich JA at [51] – [56], I accept that your addiction, which had its origins in your father's early encouragement to bet when you were young, moderates your moral culpability to some limited degree.
67Similarly, I accept Ladbrokes' incentives, when you incurred substantial losses and when you paused in your betting, contributed to the escalation of your betting and the misappropriation of company funds.
68The collapse of the company will have caused substantial financial harm to employees and creditors. While you have not been able to make any restitution personally, it cannot be said all moneys were irretrievably lost. Considering the liquidator's confidence of a successful suit against Ladbrokes, the subsequent settlement at mediation and, perhaps, Ladbrokes' refusal to disclose the settlement terms, it is a reasonable possibility that at least some of the funds you misappropriated were recovered from Ladbrokes.
69I accept in mitigation of penalty, firstly, your guilty plea has high utilitarian value; secondly, you are sincerely remorseful and have insight into the wrongfulness and consequences of your crime; thirdly, because the delay in prosecution, some four years, which is not attributable to you, you have been left in a state of anxiety awaiting your outcome and, in the meantime, you have made positive progress towards your rehabilitation; fourthly, you are otherwise of good character; fifthly, with your solid work ethic and strong family support, you have very good prospects of rehabilitation provided you can overcome your gambling addiction; and sixthly, separation from family who are a considerable support and your daughter will make prison more burdensome for you.
70Additionally, I accept you voluntarily ended your gambling binge and disclosed it to your family and the company, you cooperated with the liquidator immediately and provided the evidence for your conviction, you entered your guilty plea at the earliest opportunity, and you continued to cooperate with the liquidator and receivers in recovery proceedings against Ladbrokes. In my view, these factors in combination warrant an additional demonstrable reduction, sometimes known as a Doran discount, of both your head sentence and non-parole period.[36]
[36] R v Doran [2005] VSCA 271.
71The prosecution helpfully referred me to six appellate decisions. While all cases involved misappropriation of business funds for gambling, the circumstances of the offending were diverse. The amount stolen ranged from $237,000 to $5m. The duration of offending ranged from three years to nine years. The amount you dishonestly obtained was in the mid to upper range of these cases; the duration of your offending was considerably shorter than the lowest case. The sentencing range was two years and six months to seven years' imprisonment.
72I have considered all of the cases referred to by counsel and, additionally, the very recent Victorian Court of Appeal decision of Diane Deborah Apted v The Queen [2021] VSCA 151 to identify and apply the relevant sentencing principles and, making appropriate adjustment for differences in offending and personal circumstances of the offenders between those cases and yours, I have used them, and the maximum penalty, as a yardstick to measure your sentence Period
73Mr Spinella, by the sentence I impose, I must denounce your conduct, punish you and deter you and others from committing crimes of the same or similar kind. I must also look to your rehabilitation.
74Taking into account the circumstances of your offending, your personal circumstances and antecedents and endeavouring to produce a sentence which reflects and promotes the purposes of sentencing in a manner appropriate to you, on the charge of obtaining a financial advantage by deception you are convicted and sentenced to four years' imprisonment.
75To mitigate punishment and foster your rehabilitation, I direct you serve a minimum term of two years before being eligible for parole release.
76I declare you have served 36 days of your sentence by way of pre-sentence detention.
77While there is some artificiality in the process, I declare that but for your plea of guilty, I would have sentenced you to five years and six months' imprisonment and fixed a minimum non-parole period of three years and six months.
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