DPP v Chen

[2017] VCC 735

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

AT MELBOURNE
CRIMINAL JURISDICTION

CR 16-01512

DIRECTOR OF PUBLIC PROSECUTIONS

v

XI CHEN

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JUDGE:	HER HONOUR JUDGE GAYNOR
WHERE HELD:	Melbourne
DATE OF HEARING:	1 June 2017
DATE OF SENTENCE:	1 June 2017
CASE MAY BE CITED AS:	DPP v Chen
MEDIUM NEUTRAL CITATION:	[2017] VCC 735

REASONS FOR SENTENCE
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APPEARANCES:	Counsel	Solicitors
For the Director of Public Prosecutions	Mr Y. Hardjadabrata
For the Accused	Ms O. Thompson

189372  Pages 1 - 11

 

 

HER HONOUR: 

1Xi Chen, you have pleaded guilty before me to four charges of theft, four charges of false accounting and one charge of knowingly deal with the proceeds of crime.

2The extremely detailed prosecution opening is attached as an exhibit to these sentencing remarks.  In short compass over a period of about four years between 2012 to 2015 inclusive, you stole computer hardware and software from your employer, LDS International Pty Ltd totally in value $557,018.58. 

3Your modus operandi was that you would use a computer from a remote location to obtain unauthorised online access to the LDS computer accounting system to conceal the thefts by making unauthorised alterations to those records.  The alterations that you made on the inventory stock account comprise the reduction of individual items of stock and the creation of false credit notes for products purported returned by customers.  Your actions in doing so underlie Charges, 2, 4, 6 and 8 on the indictment, those being the charges of false accounting.

4Your theft of the computer products underlie Charges 1, 3, 5 and 7 on the indictment.  You then onsold those products an eBay account in the name of your de facto wife through a company, Ever Successful Pty Ltd which was owned by your partner's parents and was used by you for your own computer products business. 

5You also introduced Ever Successful to LDS as a customer and on the discovery of these thefts in early 2015, that company owed LDS about $92,000.  You deposited the money that you obtained from the sale of these stolen computer products into bank accounts controlled by you.  An analysis of those bank accounts for the period of the thefts revealed that you made cash deposits of $142,337 from an undetermined source into three of the accounts.  The money was used to assist in the purchase and reduction of a mortgage on an investment property in Slater Avenue, Blackburn and to assist in the purchase of your residential property at Nara Road, Mitcham. 

6In September 2015 police searched your house in Nara Road where they discovered many quantities of cash in envelopes and plastic bags totally $451,904.  The prosecution alleges that the cash was the proceeds of your sale of stolen LDS computer products and this underlies Charge 9 on the indictment, knowingly dealing in the proceeds of crime.

7During this period you were a business development manager with LDS and responsible for sales of products and as a purchaser of VGA cards and motherboards. 

8You began employment with LDS on 3 October 2011.  LDS was an information technology company privately owned by the managing director, David Shen and the sales Director John Liu and sold computer parts hardware and software from offices in Brisbane, Sydney and Melbourne.  You worked at the Melbourne LDS office in Preston.

9As a sales manager you had restricted access to the LDS computer network, whilst more unrestricted access to alter stock levels and issue credit notes was reserved for the owners, Mr Shen and Mr Liu.  Access of this kind was via a user name comprising the first letter of the Christian name and the surname therefore example David Shen's user name was DShen.  Mr Shen had a generic password which he had never personalised.

10In 2014 LDS experienced a cash flow problem which continued until late February 2015 when the warehouse manager, Kim Shen approached David Shen to tell him there were inconsistencies between the inventory of stock on hand and the quantity of stock that had been received at the warehouse.  Ultimately it was confirmed that stock was missing and on checking the accounts it was noticed that the user names of David Shen and Chris Chen, the general manager had been used without their knowledge.

11It was then discovered that many of the entries altering the accounts using David Shen's user name occurred when he was overseas.  It was also discovered that Chris Chen's account and unlimited access had been used at times when Mr Chen was absent from the store.  Later it was discovered that alterations to the account were being completed by someone logging into network remotely and using an Internet protocol address which was later found to be connected to you.  Ultimately and by various means more fully outlined in the prosecution opening, the various transactions that you undertook to enable the thefts were linked to you. 

12LDS customers were also approached and amongst other things it was discovered that a number of the credit notes that had been issued were in fact false.  Various bank accounts used by you were tracked and through them were discovered listing of computer products and their sale on eBay.

13You were arrested on September 3, 2015 when your house was searched and the cash moneys I have mentioned discovered.  You took part in an intensive police interview in which you gave no comment answers to some questions and answered others.  Amongst other things you told police you were given permission to access the LDS accounting system remotely when you joined the company, that you had sold stock for LDS for cash and paid the money to David Shen and that sometimes the company did not have their commission for sales in cash so you got it in products from David Shen if they were available which you would then sell through your business. In total you conducted 734 transactions. 

14You pleaded guilty to the charges at the last committal mention and the matter proceeded by way of straight hand‑up brief. 

15You have no prior convictions. 

16The maximum penalty for theft is 10 years' imprisonment.  The maximum penalty for false accounting is 10 years' imprisonment.  The maximum penalty for dealing in a proceeds of crime is 15 years' imprisonment.

17Ultimately as a result of your activities, the owners of LDS were forced to close all their offices in Brisbane, Sydney and Melbourne due to the loss of income from the missing stock.  Because of the loss of stock and subsequent heavy reduction in the company's income, the owners had to liquidate the company and terminate the employment of staff, some of whom had been with the company for 15 years. 

18I now turn to your personal circumstances:  You are 36 years of age and an Australian citizen who was born in Shanghai in China.  Your mother worked as a laboratory assistant and your father was a engineer.  You told the psychologist, Carla Ferrari whose report dated 2 May 2017 was tendered on the plea, that you had a good relationship with your parents but that they were typically strict Chinese parents who favoured academics and displayed little emotion or affection. 

19You completed your formal secondary education and obtained a Bachelor of Arts majoring in English education, applied at mathematics course work and a masters in English education.

20In China you began working in sales within the IT industry where you were quite successful.  You became a sales manager with a large firm in China.  You emigrated to Australia in 2007 after your first wife, a former university lecturer moved here to study.  She came first, the idea being that you were to follow in two or three years but found it difficult in Australia and demanded that you emigrate, which you did.

21You apparently found the transition here difficult, being forced to leave China earlier than you had expected.  Also, although you obtained work here, the renumeration was significantly lower than that you had earned in China.  The workload and stress levels were higher and you are only eligible for junior level entry roles here as you had no experience in the Australian industry. 

22You worked in various sales roles here and were employed by MSI, another computer company in the manufacturing side of the industry, you selling to distributers and then on selling to wholesalers.  You were the sole representative for the Victorian region, servicing a large number of clients, including LDS.  You had a base wage of about $50,000 with commission.  You were then head hunted by LDS with a base wage of about $60,000 and a commission comprising half the value of the sales you made, which was a far more lucrative offer than the renumeration you enjoyed with MSI.

23Your first marriage broke down after seven years, the two of you separating shortly after you relocated to Australia.  You are in a de facto relationship with your second partner by whom you have two daughters, aged four and two.  You are now separated from that partner, you telling Ms Ferrari that you believed this was primarily due to the very long hours of work you undertook.  You and your partner were separated by living under the same roof until you were remanded in custody following the plea hearing in this matter.

24You also told Ms Ferrari that you had been promised a lucrative incentive by LDS but it was not the subject of any written contract and the promised commission was mostly not paid.  You believe you are still owed significant amounts of commission by LDS, almost equivalent to the amount of money that you embezzled.

25The psychologist report presented some problems for you in that you appeared to deny many of the actions surrounding the offending to which you have pleaded guilty.  Of importance, however, is the testing that showed you to be suffering from a major depressive condition, which according to Ms Ferrari, had its roots in your childhood where you felt unequal academically to other children in your class, extremely pressured to succeed academically and in accordance with a traditional upbringing were not shown much affection or love.

26Ms Ferrari stated that your very high scores on the depression anxiety index scale were "understandable given the current circumstances relating to his impending court appearance, however it is also evident that he has a history of untreated mental health issues which are likely to be significantly exacerbated".

27One longstanding issue was for you, was your obesity which you apparently you have suffered from since early adolescence, although the stress of your current legal situation has meant that you shed 30 kilos in a fairly short period of time.  You did not meet the criteria for alcohol dependence, although you admitted to Ms Ferrari that since being charged you had resorted to alcohol as a means of coping with your emotional state.

28In addition to finding that you are currently suffering from a major depressive disorder, Ms Ferrari found you had a generalised anxiety disorder, essentially under "Psycho‑social and environmental problems" she listed your strict upbringing with little demonstration of love and affection, combined with a pressure to achieve academically.  You developed a sense of perceived failure, felt unable to fit in with or relate to same age peers and were bullied because you were overweight. 

29Secondly, your father died unexpectedly in your second year at university.  No explanation for his death was ever given to you and you took two years out of university in order to grieve for him. 

30Ms Ferrari found you have difficulty forming and maintaining friendships or relationships, have trouble connecting to others, have two failed relationships and a limited social network.  As I have said she found you had untreated mental health conditions from childhood and adolescence, including recurrent depression and anxiety.  Mental health difficulties are still stigmatised in China and to hence you received no treatment for them. 

31Finally you suffered a difficult transition when emigrating from China to Australia as you were not prepared for the move, were forced to relocate two years before you had expected and suffered a significant loss officially, occupationally, personally and socially.

32It was Ms Ferrari's view that a custodial sentence could potentially result in a significant deterioration of your vulnerable mental state and emotional functionally.  She stated, "Mr Chen is extremely remorseful for being implicated in these incidents and was adamant that he has no intention of engaging in any illegal or unethical activities in the future".  She said you had protective factors which were indicative of a reasonable prognosis for rehabilitation, they being that you are acutely aware of the negative impact your offending has had on your emotional and psychological wellbeing and on your marriage, family, career and relationships with business associates and with your own children.  You also came to understand that you need professional help to resolve your untreated emotional issues.

33Since your arrest for this offending and release on bail, you spent far for time with your children, particularly your youngest child and became very close to her.  I received a supportive reference from your mother, who wrote of your extremely hard work, both at school and university and then in employment, saying that after your arrest she came to Australia to stay with you.  She said, "This matter has had a big impact on his spirit and he has become so skinny".  She said you were extremely regretful for what you had done, knew it was wrong and said she would provide assistance whenever you need it in the future and hopefully that is so.

34Your partner, Tian Tian Tsu wrote that you were, "Of good moral character, honest, loyal and extremely considerate".  She said you were a good father to your daughters and were very helpful to her during a period of postnatal depression and you are an extremely hard worker.  Your friend and former business partner, Nin Ju described you as a talented and kind person who worked extremely hard and he said he was surprised to learn of your offending and he, too, offered further assistance to you in the future.

35Another former business partner, Nu Ming Shen wrote of you in similar terms and of his surprise at learning you had been engaged in such offending.

36I received two victim impact statements from the former owners at LDS, Jian Liu and David Shen.  Mr Liu was forced into bankruptcy as a result of your offending which has of course drastically affected the quality of his life.  He suffers sleeplessness, lack of motivation, a strained relationship with his wife and he has been placed in a situation where he is now extremely fearful for his financial future.  He concluded, "I do not think I can work amongst a team again and trust others.  I have also lost the confidence to venture into future businesses".

37Mr Shen also described emotional issues and problems sleeping, the need to consult a therapist and of course the loss of the business and the moneys it had invested, leading to a decision to sell the family home in order to repay loans and debts.  He stated the money loss has impacted support for his children's education as well as their personal happiness.  Without a job he has no income and has applied therefore to Centrelink. 

38It is very difficult to determine the motivation for this offending.  It is quite clear that prior to this offending you had been a hardworking and productive man.  It may be that you thought you were recovering commission which had not been paid to you, but overall no real meaningful explanation for the offending has been forthcoming. 

39This is extremely serious offending, involving as it did a complete breach of trust, dishonesty and the setting up of the sophisticated system in order to defraud your employers and ultimately you have done a very grave harm to them.  As is quite clear, your offending has resulted in the complete destruction of this business and of course has had a massive impact upon the owners of it and no doubt the staff were dismissed from it.  In other words it had a very serious and deleterious ripple effect on a large number of people.

40It was submitted to me by your counsel that I should deal with you by a combination sentence of gaol and community correction order.  This would mean a maximum sentence of 12 months followed by community corrections order of up to five years.  However, in my view, the seriousness of this offending which was protracted and incredibly damaging as I have said to those effected by it is such that only a sentence of imprisonment is appropriate in this case. 

41Issues of just punishment and general deterrence are dominant in the sentencing exercise before me, as is the issue of general deterrence which always arises in cases where breach of trust is involved. 

42In sentencing you, I do take into account your early plea of guilty which has saved the community the time and expense of a trial.  I accept that you are remorseful for this offending.  I also accept that the psychological conditions you suffer will make a term of imprisonment for difficult for you to endure than the normal prisoner. 

43No reparation has been made to the company or your former employers.  A restraining order has been placed on the cash located at your home as well as the two properties.  Your wife is seeking exemption in relation to the two houses and to $11,000 of the cash recovered and up until the day of the plea this was the position taken by you except that you also sought exemption of the $450,000 as well.  During the hearing you indicated you were prepared to abandon that exemption application in relation to the cash found.

44I therefore sentence you as follows.  Could you stand up please, sir.  On Charge 1, you are sentenced to nine months imprisonment.  On Charge 2, you are sentenced to nine months' imprisonment.  On Charge 3, you are sentenced to 11 months' imprisonment.  On Charge 4, you are sentenced to 9 months' imprisonment.  On Charge 5, you are sentenced to 2 years' imprisonment.  On Charge 6, you are sentenced to 9 months' imprisonment.  On Charge 7, you are sentenced to 18 months' imprisonment.  On Charge 8, you are sentenced to 9 months' imprisonment.  On Charge 9, you are sentenced to 12 months' imprisonment. 

45The base sentence will be the sentence imposed on Charge 5, that is two years' imprisonment.  I order that four months of the sentence imposed on Charge 7, one month of the sentences imposed on Charges, 1, 2, 3, 4, 6 and 8 and two months of the sentence imposed on Charge 9 be served cumulatively to the sentence imposed on Charge 5 and all our sentences.

46This gives a total effective sentence of three years and I order that you serve a minimum term of 20 months before becoming eligible for parole. 

47Pursuant to s.6AAA, I declare that had you not pleaded guilty I would have sentenced you to a term of four and a half years' imprisonment and order that you serve a minimum term of three years. 

48Thank you.  Have a seat, please.

49Is there anything else that I need to attend to?  You can have a seat, sir.

50MR HARDJADABRATA:  Just a few things, Your Honour, the disposal order and a forfeiture order in relation to items that were seized from the prisoner's property, he's now consented to.

51HER HONOUR:  Yes.

52MR HARDJADABRATA:  And I ask that ‑ I hand up.

53HER HONOUR:  Thank heavens, I thought you had given it to me and I'd lost it.

54MR HARDJADABRATA:  I beg your pardon?

55HER HONOUR:  I thought I'd lost it.

56MR HARDJADABRATA:  Oh, well we have got copies here, Your Honour.

57HER HONOUR:  Always a wise idea, thank you (handed to Her Honour).

58MR HARDJADABRATA:  Also, we did make an application for a forensic sample order as well.

59HER HONOUR:  I don't know that that's really appropriate ‑ what do you say Ms Thompson? 

60MS THOMPSON:  Your Honour, if I might just briefly clarify, I did does that matter and forgotten what I discussed on the last occasion, I beg your pardon.

61HER HONOUR:  Yes, all right thank you.  Yes. 

62Your Honour, my client has no objections but it would be my submission that perhaps it is not necessarily the most appropriate case, given the circumstances of offending.

63HER HONOUR:  Yes.  I'm inclined to agree, Ms Thompson, I really don't think this is a matter where a forensic sample is ‑ ‑ ‑ 

64MR HARDJADABRATA:  If Your Honour pleases.

65HER HONOUR:  I have signed those, however.  Yes thank you. 

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