Director of Public Prosecutions v Yudelman

IN THE COUNTY COURT OF VICTORIA

Revised
(Not) Restricted
Suitable for Publication

AT MELBOURNE

CRIMINAL DIVISION

Case No. CR-12-01586

DIRECTOR OF PUBLIC PROSECUTIONS

ALAN YUDELMAN

---

JUDGE:	LACAVA
WHERE HELD:	Melbourne
DATE OF HEARING:	10 APRIL 2013
DATE OF SENTENCE:	3 MAY 2013
CASE MAY BE CITED AS:	DPP v Yudelman
MEDIUM NEUTRAL CITATION:	[2013] VCC 796

REASONS FOR SENTENCE
---

Subject: Plea of Guilty to 16 charges of dishonesty
Sentence: 6 years imprisonment with 3 and 1/2

---

APPEARANCES:	Counsel	Solicitors
For the DPP	Mr P. Pickering	Solicitor for Public Prosecutions
For the Accused	Mr D. Grace QC	David Grace QC

HIS HONOUR:

Alan Yudelman, you have pleaded guilty to 14 charges of Obtaining Financial Advantage by Deception (charges 1 and 2 and 5 to 16) and one charge of Obtaining Property by Deception (charge 3) and one charge of Attempting to Obtain Financial Advantage by Deception (charge 4).
In sentencing for your crimes I am required by s 5(2)(a) of the Sentencing Act 1991 (“the Act”) to have regard to the maximum penalty prescribed for each offence. The maximum penalty for the offences of Obtaining Financial Advantage by Deception and Obtaining Property by Deception is 10 years imprisonment. The maximum penalty for the offence of Attempting to Obtain Financial Advantage by Deception is 5 years imprisonment.
Charges 1, 6 and 7 and charges 10 to 16 are Continuing Criminal Enterprise Offences within s 6H of the Act. That means that in sentencing on those charges the maximum penalty prescribed is doubled and I am required to enter in the records of the Court the fact I sentenced you on those charges on the basis that they are Continuing Criminal Enterprise Offences. Accordingly I direct that the fact I sentence you on charges 1, 6 and 7 and charges 10 to 16 as Continuing Criminal Enterprise Offences be entered into the records of the Court.
S 5(2)(e) of the Act also provides that I must have regard to the fact that you have pleaded guilty to these crimes and the time at which you indicated that you would do so. You were charged with offences on 18 October 2011. A hand up brief was served on 2 April 2012. There were then discussions between your legal advisers and the prosecution which resulted in you indicating you would pleaded guilty on 27 August 2012.
In sentencing you I treat you as having indicated an intention to plead guilty at the earliest opportunity. Because of your pleas of guilty you have saved the time and the costs of a trial. In this case the trial would have been lengthy and would have involved the calling of many witnesses and would have taken up much court time. Your pleas of guilty have saved all of that as well as the obvious costs. Because you have pleaded guilty to the charges and indicated an intention to do so at the first available opportunity you are entitled in my view to a reduced sentence and this is reflected in the overall sentence I will shortly pass.
In addition in sentencing you I have also taken your pleas of guilty as demonstrating your genuine remorse for your conduct.
The circumstances of your offending are described in a summary which I entered into evidence as Exhibit A on the plea. That document is some 29 pages in length and it was summarised in open court by the prosecutor Mr Pickering. The summary was accepted by your counsel Mr Grace Q.C. as being accurate and as forming a proper basis upon which I can proceed to sentence you. It is not necessary that I detail here all of the circumstances of your offending except in summary form. These sentencing remarks must be read however in conjunction with what is contained in that exhibit.
Your offending extended over nearly seven and a half years from 5 March 2004 (charge 1) to 31 August 2011 (charge 16). Each one of your offences involved a bogus commercial or business transaction. In summary you falsified tax invoices and gave them to a finance broker to support applications for finance to commercial lending institutions. The invoices purported to be for the supply of equipment to be used in commercial ventures. The invoices were totally false and the equipment non existent. You took advantage of a fundamental flaw in many of these commercial transactions, namely, the financial institution rarely if ever checked to verify the invoice or the fact that the item of equipment described within it even existed.
With the exception of charges 3 and 4, by this means on each occasion that you offended you succeeded in obtaining a financial advantage that you would not have otherwise obtained. The financial advantage was the lending of money. Once the financial institution agreed to lend the money you entered into the agreements standing behind each loan. You met the repayments for a while and the loans that form the basis of charge 1 to 3 and charges 5 and 6 were repaid in full. There were some repayments of the loans involved in charges 7 to 16. That reduces the impact of offending in those charges because the damage is reduced. But the offence is the obtaining of the financial advantage by means of a deliberate deception or fraud. That is at the heart of these offences.
Charge 3 is a charge of obtaining property, namely a cheque for $38,753.00 by deception. Charge 4 is a charge of attempting to obtain a financial advantage by deception.
It appears you serviced each loan you obtained by your deception for as long as you could. By the time you were apprehended you appear to have been obtaining more loans the proceeds of which were being used to service the loans from your earlier offending. In fact your offending in charge 16 occurred even after you were first interviewed by police but not charged on 2 August 2011. I interpret that as an indication of the level of desperation that you must have reached by August 2011 in endeavouring to service the many loans that you had obtained by your many deceptions.
Charge 2 is a rolled up charge. It includes within it four occasions where you falsified invoices between the dates set out in the charge where you obtained a financial advantage totalling $156,145.00 by deception.
Charge 3 is another rolled up charge. It includes within it two occasions where you falsified invoices between the dates set out in the charge where you obtained property totalling $76,791.00 by deception.
Charge 4 is another rolled up charge. It includes within it four occasions where you falsified invoices between the dates set out in the charge where you attempted to obtain a financial advantage totalling $49,643.06 by deception.
Charge 8 is another rolled up charge. It includes within it thirteen occasions where you falsified invoices between the dates set out in the charge where you obtained a financial advantage totalling $588,493.00 by deception. This is by far the most serious of the charges here because of the number of offences rolled up and the amount involved and the sentence I will impose on this charge will form the base for the overall sentence I will shortly pass.
Charge 9 is another rolled up charge. It includes within it eight occasions where you falsified invoices between the dates set out in the charge where you obtained a financial advantage totalling $370,995.00 by deception. Again this is a very serious charge because of the number of offences rolled up and the total amount of the financial advantage obtained.
The other charges are not rolled up charges. In R v Jones [2004] VSCA 68 at paragraph 13 Charles JA with whom Phillips JA and Bongiorno AJA agreed, explained the differences between a representative charge and a rolled up charge. When sentencing on a representative charge the judge is not entitled to impose a sentence in respect of other crimes represented by the charge. The sentencing judge can do so in respect of a rolled up charge. The advantage to the person being sentenced on a rolled up charge is that no matter how many offences are rolled into the charge the sentencing judge cannot impose more than the maximum sentence prescribed for the offence. The passage in R v Jones was cited with approval by the Court of Appeal in DPP v. Felton [2007] VSCA 65.
Your offending extended over a long period and with regularity. It involved a degree of planning and cunning and sophistication. It involved a deception of the financial institution involved and duping the finance broker involved. It involved various corporate entities or business names controlled by you. It also required a degree of assistance from others which you managed to secure. In the offences where Laserrib Pty Ltd invoices were involved for example you appear to have been able to complete your crime with the assistance of Mr Klotnick. In the offences where Len Moss Agencies was named on the tax invoice as another example you agreed to Mr Moss deducting between $2,000 and $3,000 for what is described as a “commission”. In return he appears to have supplied the false invoice and facilitated ultimate payment to you of the proceeds of the individual loans involved.
This was not offending by someone who did not know what he was doing or who was not thinking clearly. Rather, it was offending by someone experienced in the ways of commerce that targeted an obvious flaw in the business practices of the various commercial lending institutions involved, namely the failure to properly verify the authenticity of each transaction submitted to it for approval.
The total financial advantage obtained by you by your deceptions (not including charge 4 attempt) was $1,926,091.40. In addition you obtained the property of the cheques in charge 3 by deception, another $76,791.00. A total obtained by deception of $2,002,882.40.
Although you serviced the loans for some time and as I indicated above some of the loans were repaid in full and others in part, the fact remains that much of the money you obtained by your deceptions has been lost. The figures lost include accumulated interest. That cannot just be ignored however because the financial institutions are in the business of lending money repayable with interest and they have lost the opportunity to lend this money to legitimate borrowers.
I admitted into evidence various victim impact statements. Exhibit B is a statement from Dale Elmer from the Bank of Queensland Equipment Finance which shows that as at 3 October 2012 that organization was owed $459,071.97. The figure includes accumulated interest.
Exhibit C is a statement from Joann Sounness from Capital Finance Australia. As at 5 December 2011 that organization was owed $58,173.28. The figure includes accumulated interest.
Exhibit D is a statement from Gregory McCulloch from Macquarie Leasing Pty Ltd. That organization was owed $857,016.70. The figure includes accumulated interest.
Exhibit E is a statement from Tracey O’Keefe from Suncorp Metway Ltd. As at 24 January 2012 that organization was owed $86,401.04. The figure includes accumulated interest.
It would appear there is no chance of any of the financial institutions who lost money at your hands recovering any losses. The National Australia Bank which also lost money did not file a victim impact statement.
In sentencing you for these crimes I have taken into account the victim impact statements as I must. In many ways the financial institutions involved here have only themselves to blame. A novice making even the crudest of due diligence inquiries into each of your loan applications would have identified each as a deception. However, the financial institutions involved appear to have been prepared to accept the face value of a false invoice submitted to it by you through an intermediary finance broker who’s reward was doubtless a handsome fee. The ultimate victims of course are the shareholders of these financial institutions. Those running these organizations appear to have done very little to protect their interests.
I turn to your background circumstances. You are 61 years of age and you have no prior convictions. You were born and raised in South Africa and you were educated there. You are said to have been bullied at High School but that did not prevent you from receiving a University education graduating with a Commerce degree from the University of Witwatersrand and with accounting qualifications. Eventually you entered into a successful clothing business with your brother in law which was described as a hawking type business.
You married in South Africa and you and your wife were blessed with three children between 1981 and 1985. Because of the unrest in South Africa you sold your business interests and migrated to the United States of America to California in 1986. When you went to that country you had US$1M. At that time you would have been considered well off financially. Certainly better off than most people.
When you travelled to the US you were alone and separated from your family for a period of time but they followed you shortly thereafter. You used your money to purchase another clothing business which was described as moderately successful. Your home and factory were located close to an earth fault line and an earthquake which damaged both convinced you to leave and migrate again to Australia which you did in about 1989. You sold the clothing business and arrived in Australia in August 1989 with approximately $250,000 suggesting you lost money on your US clothing venture.
You and your family settled in Doncaster. You immediately set about establishing new business interests in Australia which you did by renting out Coca Cola vending machines. The business was successful and you branched out into other products. The purchase of the machines was financed through the NAB.
In 2001 you moved to Caulfield and you still live in the accommodation which you then acquired which is modest. Your priority was to give your children a good Jewish education which you did educating them at Mt Scopus College.
You entered into various business ventures including a dry cleaning business and a travel business but without success. By early 2004 you were described by Mr Grace as being hopelessly insolvent. Soon after your offending commenced.
The money obtained through your offending was not spent on high living. I accept you and your family have generally maintained a modest existence.
You went bankrupt but around 2005 you approached a business associate Mr Levin to purchase a Noel Jones estate agency franchise in South Yarra. Your offending in charges 5 and 6 resulted in those monies being channelled into that business which had it would appear significant cash flow problems. You controlled 38% of this business and withheld pay cheques to yourself amounting to $155,692.42. I admitted these into evidence as Exhibit 2 on the plea.
There was a falling out between you and Mr Levin that resulted in you being removed from the Noel Jones business after Mr Levin commenced a legal proceeding against you. As a result you are also said to have lost any interest you previously had in another business model developed by you known as Webmercials. That is a business that involves digital placement of advertisements on the internet. That is said to be a continuing business which has been very successful but you have lost any interest you had in it.
You seem to be a person with good business ideas but your track record as a successful businessman in this country is not a good one. Whilst you were involved in Noel Jones and in Webmercials you were offending and you were continuing as much as possible to met the repayment obligations of the loans. In a business sense your offending seems to have brought you down as if a large stone were tied around your neck.
By 2008 you found yourself aged 57 and unemployed with few if any prospects. You were living off whatever savings you had and modest earnings of your wife. Mr Levin sued you in 2009 and you did not enter an appearance. Judgment was entered against you and bankruptcy followed. You were financially ruined and further offending followed. It had to because you were committed to numerous loans by this time which required repayments of both capital and interest. If you did not meet these your criminality would have been immediately revealed. You had no other means of effecting repayment and so you continued to offend robbing Peter to pay Paul.
I was told and accept you became like a hermit and lead a reclusive life but you looked for work. You did not receive social security payments and you were assisted by your loyal and hard working wife who I accept did not have any knowledge of your previous offending or of the fact your offending was then on going.
I admitted into evidence as exhibits 4 to 6 respectively references from each of your children. In each of them they speak well of you as a fine father and family man and as a friend in need to others less fortunate. I accept that this offending is out of character with the person they know and love and I accept that you will be sadly missed by them whilst in prison. They also speak of your remorse as expressed by you to them and your regret at the shame your offending had brought on the family. In sentencing you I have taken into account fully the references from your children.
I accepted into evidence as Exhibit 7 references from Teresa Welch, Rene Israel and Jennifer Jacobsohn. They are all friends and each speaks highly of you as a kind and thoughtful person. Ms Welch speaks highly of your business acumen and your management skills. Each is astounded by your offending which I accept is contrary to your otherwise previous reputation in the community in which you reside. In sentencing you I have fully taken into account these references. I accept that this offending which lasted over a seven and a half year period you have lead a worthwhile and otherwise blameless life and have contributed generally to your community in a worthwhile way.
I received character evidence viva voce from a number of witnesses each of whom spoke highly of you and of the fact this offending was entirely out of character. They also spoke of your sense of shame at your conduct and your remorse for your offending. These witnesses have known you as a family man, a business man, a friend and as a member of the community. Your character evidence was impressive and it served to further confirm what comes from the written reference that I have referred to above. Mr Chate also said you were a good businessman. In sentencing you I have taken into account the evidence of Dr Sher, Renee Israel, Russell Gecelter, Darryl Chate, Mark Zetzer, David Braver and Dr Heine given on your behalf.
As I have said above I accept you are remorseful and with the support which you obviously have from your family and friends I very much doubt you will re-offend. I regard your chances of achieving full rehabilitation as excellent.
Mr Grace conceded at the outset of his plea that the only appropriate disposition here was a sentence that imposed immediate imprisonment. His plea asked for moderation of the sentence and for imposition of a short minimum term because of the state of your health, especially your mental health. He submitted the minimum term I impose should be in the range of 18 months to 2 years imprisonment. I did not ask the prosecution to make submissions as to the range of sentence.
I accepted into evidence a medical report from psychiatrist Dr Marion Lustig as Exhibit 9. You consulted with Dr Lustig on one occasion only on 11 July 2009. Your purpose at that time was not to seek treatment but to obtain a letter from the doctor as to the affect upon your mental health should Mr Levin proceed at that time to bankrupt you. You told Dr Lustig much of your life history to that time and especially of the consequences for you and your family of your failed business ventures whilst in Australia especially the involvement with Mr Levin in the Noel Jones franchise. The purpose of telling the doctor all of this history was to convey the level of stress which you were doubtless then suffering from. You wanted evidence to support a plea to avoid being bankrupted.

You told Dr Lustig that your mental state had started to deteriorate in about November 2008. You also told the doctor your mental state had deteriorated dramatically in the fortnight preceding your appointment with the doctor. That was when a threat of bankruptcy had apparently been made by Mr Levin.
You did not tell doctor Lustig of the fact you had commenced to offend in 2004 or that your offending at that time was on-going. One of your deceptions rolled into charge 8 also occurred in July 2009 and must have occurred very close to the time when you consulted Dr Lustig. Numerous others followed in the months thereafter.
Dr Lustig opined inter alia:

“However, on the basis of my contact with him, I did feel he was suffering from major depression, with prominent symptoms being lowered mood, significant sleep difficulty, worsening of mood in the mornings, hopelessness, poor concentration and suicidal ideation. All these symptoms had been present in the fortnight before his consultation with me, and most of them had been present for at least seven months. He also had significant anxiety symptoms, especially panic attacks, also of several months duration.
His mental state was almost certainly a reaction to the escalating deterioration in his financial circumstances, culminating in the threat of bankruptcy, together with his feeling that his former business partner had betrayed him and was being vindictive.”
“In my opinion Mr Yudelman currently presents as being severely anxious and severely depressed. In my opinion the anxiety symptoms including panic attacks are secondary to him having a diagnosis of Major Depressive Disorder.”

It is significant I think that in the detailed history you gave to Dr Lustig there is no history of you having ever being treated for depression.
I also admitted into evidence a letter from your general practitioner Dr Herbst of the Inkerman Medical Group. That letter does not say for how long you have been a patient of that clinic. It lists what are described as “current medical issues and associated treatments”. These range from shortness of breath to a root canal problem with tooth 26. Each of the medical issues listed would appear to be manageable and controlled by conservative treatment and certainly would not make your time in prison any harder. Significantly, there is no evidence of you either seeking or of you having been treated by your general practitioner for depression.
Mr Jeffrey Cummins a clinical and forensic psychologist provided an extensive report (exhibit 1) and gave sworn evidence. The report is too lengthy to refer to in full here and again these sentencing remarks need be read by reference to that report. The report sets out in detail all of your life and family history all of which I have had regard to. Relevantly, Mr Cummins opined, inter alia as follows:

Mr Cummins reported that you were suffering from a Major Depressive Disorder with secondary symptoms of anxiety (including panic attacks) over the time of offending. He opined: “In my opinion he was suffering from these conditions because of his parlous financial circumstances and he then offended whilst feeling anxious and depressed and his offending was specifically aimed to address his parlous financial circumstances”.
I accept that you now suffer from a Major Depressive Illness. I do not accept that this has been the case throughout your offending. You told Dr Lustig you started to feel depressed in November 2008 but there is no evidence of you having been treated for depression of any kind and the opinion that you have suffered from a Major Depressive Illness throughout your offending in my view is contrary to the objective evidence as to how you have previously conducted yourself as a father and family man, within your community and as a person who enjoyed a good reputation as a businessman and a manager of business. That you could conceive and develop the idea of webmercials for example shows that you were well able to continue to think and operate as a businessman. Mr Cummin’s report details your history. It goes through in roughly chronological form the many and varied business ventures that you have engaged in through the time of offending. In my judgment all of that is inconsistent with someone suffering a Major Depressive Illness of the kind opined by Mr Cummins throughout that time.
I am prepared to accept that towards the latter part of your offending you may have suffered from a Major Depressive Illness which on the evidence has come about by a combination of factors including poor business decisions and lack of success in business but most probably because of the offending itself. By the time you saw Dr Lustig in July 2009 you found yourself in a vortex from which you realised you could not escape. Because your attempts at business continued to be unsuccessful you were forced to keep on offending in order to repay the many loans you were accumulating. On my reading of the evidence it was probably the realisation on your part that your whole edifice was about to come crushing down revealing your criminality and the likely catastrophic consequences for you and your family that caused you to suffer Major Depression.
I accept that because you now suffer from a Major Depressive illness your time in prison will be more burdensome for you because of that fact. Accordingly I have reduced both the overall sentence and the minimum term I would have imposed because of that fact. Mr Grace submitted that all six principles in the decision of Verdins apply in your case. I do not accept that to be the case. I understood him to be submitting your moral culpability should be reduced because you were suffering from a Major Depressive Illness throughout your offending which he submitted explained the motivation for your offending as being “a perceived need to act dishonestly so that you could support your family”. I reject that submission. You well knew that you were acting dishonestly at all times. Nothing can justify or diminish that fact.
This 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 offending strikes at the heart of this area of commerce which concerns commercial business borrowing from financial institutions. That is why stern sentences are called for as a deterrent. This kind of fraud is difficult to investigate and such investigations are costly and time consuming. They take up a lot of resources in investigation and prosecution. At the centre of the crime rests the fact that the security for the lending namely, the object purported to be supplied by the invoice, is non existent in the result the lender has no security to fall back on and the money loaned is invariably lost. In your case you offended on many occasions over more than seven years and the amounts of money involved were large. Nevertheless, because I accept you now suffer from a Major Depressive Illness I have moderated the sentences I will now pass.
On Charge 1 you are convicted and sentenced to a term of imprisonment of 1 year.
On Charge 2 you are convicted and sentenced to a term of imprisonment of eighteen (18) months.
On Charge 3 you are convicted and sentenced to a term of imprisonment of 1 year.
On Charge 4 you are convicted and sentenced to a term of imprisonment of six (6) months.
On Charge 5 you are convicted and sentenced to a term of imprisonment of eighteen (18) months.
On Charge 6 you are convicted and sentenced to a term of imprisonment of eighteen (18) months.
On Charge 7 you are convicted and sentenced to a term of imprisonment of 1 year.
On Charge 8 you are convicted and sentenced to a term of imprisonment of three years.
On Charge 9 you are convicted and sentenced to a term of imprisonment of two (2) years.
On Charge 10 you are convicted and sentenced to a term of imprisonment of 1 year.
On Charge 11 you are convicted and sentenced to a term of imprisonment of 1 year.
On Charge 12 you are convicted and sentenced to a term of imprisonment of 1 year.
On Charge 13 you are convicted and sentenced to a term of imprisonment of 1 year.
On Charge 14 you are convicted and sentenced to a term of imprisonment of 1 year.
On Charge 15 you are convicted and sentenced to a term of imprisonment of 1 year.
On Charge 16 you are convicted and sentenced to a term of imprisonment of 1 year.
Pursuant to s 16 of the Act I direct that 1 year of the sentence imposed on charge 9 and six (6) months of the sentences imposed on each of charges 2, 3, 6 and 14 cumulate upon the sentence imposed on charge 8 making a total effective sentence of 6 years imprisonment.
Pursuant to s 11 of the Act I fix a non parole period of three and a half years imprisonment.
I declare there have been 22 days pre-sentence detention not including this day and that 22 days be reckoned as having been already served under the sentences imposed this day and be entered into the records of the court and deducted administratively.

1 For the purposes of section 6AAA of the Act I state I have imposed sentences being terms of imprisonment and I have reduced the overall sentence I would have imposed but for your pleas of guilty. Had it not been for your pleas of guilty to the charges I would have imposed a total effective term of imprisonment of 10 years and I would have fixed a non parole period of seven and a half years.

[2013] VCC 796

3 MAY 2013