DPP v Lang

IN THE COUNTY COURT OF VICTORIA

AT MELBOURNE

CRIMINAL DIVISION

Revised
Not Restricted
Suitable for Publication

Case No. CR-18-02554

DIRECTOR OF PUBLIC PROSECUTIONS

GUNTER ANTON LANG

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JUDGE:	O'CONNELL
WHERE HELD:	Melbourne
DATE OF HEARING:	28 April 2020
DATE OF SENTENCE:	5 June 2020
CASE MAY BE CITED AS:	DPP v Lang
MEDIUM NEUTRAL CITATION:	[2020] VCC 759

REASONS FOR SENTENCE

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Subject:CRIMINAL LAW
Catchwords: Obtain financial advantage by deception; continuing criminal enterprise offender; Quantum in excess of $6,000,000; False representations made in the course of share trading and investment business; 33 victims; Offender 74 – 75 years of age at time of offending, 80 at time of sentence; Plea of guilty; Remorse; Relevance of COVID-19 crisis; Special circumstances justifying lesser head sentence and disproportionately low non-parole period.
Legislation Cited: Crimes Act 1958 (Vic); Sentencing Act 1991 (Vic).
Cases Cited:R v Iles [2009] VSCA 197; Poursanidis v The Queen [2016] VSCA 164; Porcaro v The Queen [2015] VSCA 244; R v Munt [2015] VSC 132; Hoy v The Queen [2012] VSCA 49; Yusuf v The Queen [2010] VSCA 266; The Queen v Fernandez [2006] VSCA 38; Director of Public Prosecutions v Bulfin [1998] 4 VR 114; RC v R; R v RC [2020] NSWCCA 76; Re Broes [2020] VSC 128; R v Roussety [2008] VSCA 259; RK v Mirik [2009] 21 VR 623.

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APPEARANCES:	Counsel	Solicitors
For the DPP	J. Saunders	Office of Public Prosecutions
For the Accused	S. Kenny	Slades & Parsons

HIS HONOUR:

Introduction

Gunter Lang, you have pleaded guilty to 33 charges of obtaining a financial advantage by deception contrary to s 82 of the Crimes Act 1958 (Vic).
During the period 6 January 2014 to 22 September 2015, investors, on the strength of false representations you made to them, deposited a total of $6,493,476.70 with your share trading and investment business. You lost approximately $6,000,000 of those funds.
At your plea hearing, Mr Saunders, who appeared on behalf of the Victorian Director of Public Prosecutions, tendered a prosecution opening dated 14 April 2020. That document sets out the circumstances associated with the commission of these offences and will form the factual basis for your sentence. Mr Kenny, who appeared on your behalf, accepted that the circumstances outlined in the opening were accurate.
Relying upon that opening, your offending can be summarised as follows:

Background

G. A. Lang & Associates was incorporated on 6 May 2009. You were registered as the sole director and shareholder and ran the company as a share trading and investment business.
You represented yourself to potential investors as an accredited share trader. You had a LinkedIn profile that stated you were the CEO of ‘The Financial Trader’, and you had a business card that stated that you were a ‘Financial Trader and Consultant’. Investigators established that neither you nor your company were ever licensed or authorised to provide financial advice to the public.
You would regularly attend share training courses and seminars where you got to know fellow attendees. At these seminars, you would promote yourself as an investor who only used ‘stop-loss orders’[1] and led people to believe that your share trading investment business was making substantial profits.
[1] A stop-loss order is an instruction to the broker to close out a position at a predetermined level thereby
restricting the investor’s losses.
On 21 February 2010, and again on 15 November 2010, you applied for an online share trading account with IG Markets Ltd (‘IG Markets’). Those applications were refused because of your age, the fact that you were a pensioner and the fact that you had a bad credit rating. Seemingly in response to these refusals, you requested your son Anthony Lang to open a share trading account with IG Markets. He did this in December 2010. Anthony was aware that your applications had previously been refused. IG Markets’ terms of trade prohibited Anthony from allowing you to use his account to conduct trades. Nonetheless, you used his account to conduct share trades using money that was invested with G. A. Lang & Associates.
You told potential investors that:
·     you only invested in shares, CFDs[2] and share options;
·     you always used a ‘stop-loss order’;
·     that each month when the investor’s dividends were established, you would round the percentage down to a whole number and keep the difference as payment for your services;
·     the investments you made had a return in excess of 20% per annum; and
·     you had never suffered a monthly loss.
[2] A CFD is a contract for the difference. It is an agreement to exchange the difference in the price of an asset
from the time the contract is opened until the time it is closed. A CFD enables an investor to speculate on the
price movements of an asset in either direction.
When investors placed money with G.A. Lang & Associates a contract was signed. The contract provided inter alia:
It is agreed as follows: the monies to be used by the borrower for investing, using shares, CFD’s and share options, always using a guaranteed stop-loss order or similar device to ensure that the worst possible outcome of any trade is a breakeven situation. On or before the last business day of every month the borrower shall pay the net proceeds of the trades (net of brokerage, interest and other charges) into a bank account specified by the lender or reinvest them for the following month at the lender’s discretion. The loan can be redeemed in part or in full by giving 30 days’ notice.

Each of the 33 charges pleads that you dishonestly obtained a financial advantage which took the form of a credit to G. A. Lang & Associates by representing to investors:
a) that the money invested ‘would only be used for investing using shares, CFD’s and share options and always using a guaranteed stop-loss order or similar device to ensure the worst possible outcome of any trade was a breakeven situation’; and
b) that the investment results provided by you were genuine.
Most of the funds obtained from investors were deposited into a Commonwealth Bank of Australia (‘CBA’) account in the name of ‘G. A. Lang & Associates Proprietary Limited in trust for G. A. and G. Lang Family Trust’. However, some funds were deposited in to your personal CBA account.
The majority of the invested funds were then transferred into a Circle Credit Cooperative Limited (‘Circle Credit’) account in your son Anthony Lang’s name. Anthony then transferred this money into his IG Markets account where it was used to conduct trades.
In the earlier stages of this scheme, you would instruct Anthony to conduct the money transfers and share trades on your behalf. Later, however, Anthony gave you his password to the IG Markets account and you then conducted the trades yourself.

The investors

The investors and the details of their investments referable to each charge are set out in the table taken from the summary of prosecution opening below:

Charge number	Complainant	Date	Amount (total in bold)
1	Christopher SMITH	6 January 2014 13 February 2014	$500 $500 $1000
2	Donald PAYNE	15 January 2014 16 January 2014 15 January 2015 15 January 2015 16 January 2015	$35,000 $35,000 $10 $49,000 $10,000 $129,010
3	Rosemary ROBERTS	16 January 2014 14 April 2014	$100,000 $50,000 $150,000
4	Rosemary ROBERTS	17 January 2014	$20,000 $20,000
5	Michelle BLUM	20 January 2014 22 June 2015 22 July 2015	$2000 $2796.70 $1000 $5796.70
6	Vivian PHUAH	18 February 2014 15 October 2014 16 December 2014 18 February 2015 14 July 2015 16 September 2015	$2000 $5000 $13,000 $3000 $20,000 $2000 $45,000
7	Nigel MALE	19 March 2014 24 June 2014 01 July 2014 17 August 2014 19 October 2014 22 November 2014 22 March 2015 19 April 2015 21 June 2015 01 July 2015 23 August 2015	$590 $3500 $41,000 $16,000 $1290 $21,800 $3500 $9000 $25,250 $49,500 $8400 $179,830
8	Peter KOZMINSKA	08 April 2014 09 April 2014 10 April 2014 11 April 2014 12 April 2014 15 August 2014 17 May 2015 19 June 2015	$20,000 $20,000 $10,000 $20,000 $20,000 $4000 $15,000 $8000 $117,000
9	Peter KOZMINSKA	09 April 2015	$100,000 $100,000
10	Charles SIMON	09 April 2014	$10,000 $10,000
11	Jason KOZMINSKA	10 April 2014 12 April 2014	$2000 $5000 $7000
12	Nahum BAIHELFER	10 April 2014	$35,000 $35,000
13	Frank JACKSON	04 May 2014 05 May 2014 06 May 2014	$20,000 $20,000 $10,000 $50,000
14	Ron JACKSON	09 May 2014	$200,000 $200,000
15	Leon SERRY	13 June 2014	$10,000 $10,000
16	Emma ROBERTS	18 June 2014 27 January 2015 24 February 2015 20 April 2015 17 June 2015 17 July 2015	$1000 $280 $10,000 $225 $700 $225 $12,430
17	Donald PAYNE	23 June 2014 21 July 2014 21 July 2014 19 August 2014 15 January 2015 16 January 2015	$650,000 $750,000 $250,000 $1,650,000 $50,000 $50,000 $3,400,000
18	Belinda JACKSON	15 July 2014 19 January 2015	$1,050,000 $100,000 $1,150,000
19	Kerryn MCGRATH	12 August 2014	$100,000 $100,000
20	Teresa OLSZANAKA	10 October 2014	$3500 $3500
21	Matthew MALE	22 October 2014 17 February 2015 20 August 2015 22 September 2015	$3700 $16,000 $10,000 $20,000 $49,700
22	Simon JACKSON	12 November 2014	$390,000 $390,000
23	Denuka OPATHA	19 November 2014 20 November 2014 21 November 2014	$10 $15,000 $10,000 $25,010
24	Lorraine POLKINGHORN	20 November 2014	$20,000 $20,000
25	Liangping GONG	18 January 2015 18 January 2015 19 January 2015 17 July 2015	$10,000 $10,000 $1000 $15,500 $36,500
26	Andrew VLOK	11 February 2015 19 February 2015 17 March 2015	$3500 $3700 $2000 $9200
27	Darryl FLOYD	16 February 2015	$100,000 $100,000
28	Ron JACKSON	05 March 2015	$10,000 $10,000
29	Susan BROOKS	11 June 2015	$1500 $1500
30	Charles SIMON	25 June 2015	$100,000 $100,000
31	Fortunado BERNARDO	11 August 2015	$20,000 $20,000
32	Graeme LEBRANSKY	21 September 2015	$3000 $3000
33	Noel LEVIN	21 September 2015	$3000 $3000
TOTAL			$6,493,476.70

A summary of the evidence from a small selection of the complainants serves to demonstrate how the representations were made.

Fortunato Bernardo: $20,000 on 11 August 2015 (Charge 31)

On 9 June 2015, you made a presentation to a group of potential investors of whom Mr Bernardo was one. During the presentation, you claimed that you had started by investing with your own funds and that you were achieving an average return of 22% per annum. You described the proposed investments as risk-free, stating that they were ‘covered by stop-loss and an insurance policy that would cover the gap’. You stated that the worst-case scenario was breakeven.
On 10 August 2015, you met with Mr Bernardo, who signed a contract, and provided a cheque for $20,000.
Shortly after investing, he was advised by his sister-in-law that she was having difficulty getting her investment with you repaid. Mr Bernardo contacted you and you advised him that your trading account had been hacked and subsequently frozen by ASIC and the Federal Police.
On 16 September 2015, you attended at Mr Bernardo’s home. You again advised him that the funds had been frozen by ASIC and the Federal Police due to the hacking of your share trading account. You told him that the money was safe and accessible. Those representations were patently false.

Kerryn McGrath: $100,000 on 12 August 2014 (Charge 19)

Ms McGrath met with you on 8 August 2014 when you made a presentation regarding your investment scheme.
During that presentation, several topics were discussed including the fact that ‘the risks involved were to be mitigated by guaranteed stop-loss to preserve the principal invested’. You stated that you would take a 1% commission.
As a result of the representations you made at that meeting, Ms McGrath invested $100,000. During the term of her investment, she received regular email updates about her investment which always stated she was making a profit. You also forwarded emails detailing how the overall investments of your company were performing.
At no time did you advise Ms McGrath that you had stopped investing with a guaranteed stop-loss order, or that her investment had made a loss.
On 30 October 2015, Ms McGrath was notified that a liquidator had been appointed to G.A. Lang & Associates.

Simon Jackson: $390,000 on 12 November 2014 (Charge 22) and $1,150,000 between 15 July 2014 - 19 January 2015 with his sister Belinda Jackson (Charge 18)

Simon Jackson is the brother of Belinda Jackson. He was involved in the investment of $1,050,000 from his late mother’s estate.
Mr Jackson explained that when he and his sister were considering investing money, you told them that the money was being traded on the US stock exchange in options and using stop-loss triggers so that losses would be minimised. They were also shown documents detailing the purported strong performance of your investments over four years.
Simon Jackson received monthly communications from you regarding the investments he and his sister had made. As a result, he made the further investment of his funds.

Mathew Male: $3700 on 22 October 2014, $16,000 on 17 February 2015, $10,000 on 20 August 2015 and $20,000 on 22 September 2015 (Charge 21)

Mr Male made four investments with your company. He told investigators that during the period he was investing with you he received regular updates about his investment which stated that it had made a profit. He also received emails detailing the overall performance of G.A. Lang & Associates.
Mr Male stated that at no stage did you advise him that you had stopped investing in shares with a guaranteed stop-loss order, or that his investment had made a loss.

The scheme unravels

In 2014, you began trading in high-risk American and German shares. You did this without the permission of investors and that trading resulted in the accelerated loss of investors’ funds. In the period September 2014 to September 2015, your company experienced losses in the order of $7.2 million. You did not inform investors of these losses, instead, you continued to tell them that their investments were returning a profit.
During this period, you also raised further funds for investment. You did this by representing to current and potential new investors that:
·     your business had approximately $7.2 million in assets;
·     all funds were invested in ‘stop-loss order investments’; and
·     all investments were making a substantial profit.
Existing investors were given false information as to the performance of their investments and the returns that those investments had earned. On some occasions, you falsely informed investors that their returns were being credited to, or reinvested in, their account.
The additional funds that you raised during this period were not used to fund new investment activity, instead they were directed to paying existing investors a ‘return’ on their investments.
IG Markets noticed that the balance of Anthony Lang’s account had been decreasing rapidly. They emailed and phoned Anthony on a number of occasions requesting that he provide them with an update of his assets. He replied and agreed to such requests, but never provided IG Markets with the requested information.
When the majority of the invested funds had been lost, and you were unable to return any funds to investors, you told them that your trading account had been hacked and that money had been stolen. You reassured them that all investments were safe and that the hacking had been reported to the Australian Federal police and to ASIC and that the trading account had been frozen whilst an investigation was conducted. You told investors they would have access to their money within days.
On 16 September 2015, you informed several of the investors that you had insurance with Allianz Insurance and that this would cover any loss of investors’ funds. You said that you had submitted a claim for the theft from your trading account and expected insurance payment by 14 October 2015. You promised to repay investors all the money owed to them on that date.
On 13 October 2015, Anthony Lang attended IG Markets in Melbourne and informed them that you had been using his trading account. IG Markets immediately deemed this suspicious and suspended the account.

G. A. Lang & Associates is placed in liquidation

On 30 October 2015, G. A. Lang & Associates was placed into liquidation. The liquidator established that:
·     you had acted as an unlicensed options and derivatives trader;
·     during 2014 and 2015, you invested in high-risk American and German stocks and recorded losses of almost $7 million;
·     you misappropriated $738,081 from investors’ funds and used that money for personal expenses such as ATM withdrawals, credit card payments, household goods, rent and miscellaneous expenses;
·     as the funds under your control diminished you continued to send investors emails stating that their investments were profitable;
·     while running G.A. Lang & Associates, you never submitted financial statements or tax returns so all the performance results of your business were false; and
·     during 2014 and 2015, you used the money from new investors to pay returns to existing investors.
On 18 November 2015, a letter was received by the liquidator from you in which you admitted operating the IG Markets account in Anthony’s name, that the only involvement Anthony had in running G.A Lang & Associates was the transferring of money between accounts, and that you had made some wrong decisions and incurred losses while running the business. You declared yourself bankrupt on 11 February 2016.

Investigation

During 2016, police executed search warrants on Circle Credit and IG Markets seizing information and documents that showed the flow of funds from Circle Credit to IG Markets. IG Markets records indicated that from the time that Anthony Lang’s account was opened, both ordinary trades and trades with stop-loss orders were made. Those ordinary trades were conducted without the permission of the investors.
It was established that during the charge period, you were in receipt of the age pension and a German pension, and that you did not submit taxation returns in either your own name or that of G.A. Lang & Associates.
On 15 February 2017, police executed a search warrant at your home and seized your computer and various documents regarding the IG Markets account in Anthony’s name. Relevant documents were also seized from Anthony’s residence. Among those documents was a handwritten letter to investors which you had signed and in which you stated that you stopped using stop-loss orders, that your business incurred losses and that you are sorry for the losses to investors.
The review of Circle Credit statements established that you had transferred $16,200 from investors funds to Anthony Lang and those funds were used to purchase a 2010 Holden Cruze.
When you were interviewed by police about these matters on 15 February 2017 you elected to make no comment.

Victim impact

Nine victim impact statements were tendered and read to the court.
Plainly, your offending has had a devastating effect on the victims who trusted you to invest their funds wisely and safely. Many have lost their financial security and the stress and ongoing anxiety they must endure continues to exact an enormous personal toll.
I will refer to a just a small sample to try to convey something of the harm your offending has caused.
Belinda Jackson lost all of her mother’s inheritance and savings. She cannot now purchase a home. Her life, she says, will never be the same and not a day goes by where she does not think about the loss and how badly it has affected her life.

Rosemary Roberts describes how she has lost a lot of sleep over the last four or five years worrying how she is going to cope financially. She will need to sell her house in the near future.
Daryl Floyd explained that he and his wife were ‘absolutely devastated, angry and frustrated’ when they learned that you had lost their investment. He expects that they will never recover from the loss.
Emma Roberts and her partner, another victim, Nigel Male, both suffered materially and psychologically from the stress and anxiety caused by their loss. Their financial security and physical and emotional health have suffered greatly.
Another investor who lost in the order of 3.5 million dollars describes the effect on he and his family as ‘catastrophic’. His reaction to the news of these losses was one of complete shock and he is now left with a ‘profound feeling of loss’ as he attempts to negotiate the financial stress in which you have now placed him.
Finally, Simon Jackson described the impact as emotionally devastating. He states:
It has been sometime since the crime occurred. I remember the events like yesterday. I lost my dreams on that day. I still struggle with it every day.
Your crimes, of course, affected many others beyond those who chose to make the victim impact statements tendered on the plea. I hope what I have referred to provides at least some insight into the devastation wrought by your offending.

Personal history

Mr Kenny sought to summarise your personal history in the following way. Throughout your working life, over more than 40 years, you had little to do with financial services and nothing to do with share trading. You retired in 2007 and thereafter started investing in shares as a hobby and in an attempt to increase your retirement income. You became reasonably successful and through social connections, word-of-mouth and through attending seminars, you started trading using money that was invested with you by other people. When the business ran into difficulties, you invested in high-risk shares in an attempt to trade your way out of trouble. By October 2015, you had lost everything and made a genuine attempt to take your own life. Your business was then placed in liquidation.
You formally pleaded guilty to these charges on 7 April 2020 and it is submitted that you are extremely remorseful.
You were born in Munich, Germany on 15 December 1939 and are now 80 years of age. You were 74 or 75 when you committed these offences. You have no prior convictions.
You grew up in wartime Germany and your father, who was a master baker by trade, was conscripted into the army in 1940. He fought in France in the early stages of the war and after losing an arm returned to Munich and opened a bakery.
You have some memories of the latter part of the war and recall being sent to the countryside to live with an aunt outside Munich because of the bombing and destruction. After the war you attended school and, as you got older, worked in the family bakery. You would make local deliveries early in the morning before starting school.
You attended high school until the age of 16 and thereafter completed a two-year tertiary course in chemistry. Once you had qualified, you took up employment at a factory in Bruchhausen. In 1960, you decided to take advantage of an assisted migration program and arrived in Melbourne in 1961. You immediately found work at a chemical factory in Yarraville. The following year, you took a job working in a fluorescent light factory where you met your wife Georgina, who at that time was a young woman who had recently migrated from Greece. You have been together since 1962 and she remains supportive of you. There are two children of the marriage, Anthony and a daughter Lisa who gave evidence on your plea to which I will refer shortly. You have one grandchild.
In 1964, you started work with ICI in their central research laboratory in Ascot Vale. You worked in that laboratory until 1992. During the 1960’s, you and your family rented houses in Brunswick and Niddrie before purchasing a house in Gladstone Park in 1971. You still live in that house with your wife. In 1992, in the wake of the recession, you took a redundancy package and went on to work with Optus in marketing until the mid-1990’s, and then took on a similar role with Telstra until your retirement in 2007.
As I indicated earlier, you did not gain any experience of share trading during your working life. When you retired, you went to a number of seminars and did some research into share trading in the hope of increasing your retirement income. In about 2009, you appear to have started to take your hobby more seriously. You sold the family home for $240,000 and rented it back whilst using the proceeds to invest in shares.
You incorporated G. A. Lang & Associates and applied for your own online trading account which was refused for the reasons I set out when summarising your offending. Once you established the online share trading account in your son Anthony’s name, you started investing other people’s money who you met through friends, at seminars or via word-of-mouth.
As the business expanded it ran into difficulties towards the end of 2013. In response, you started to engage in much riskier transactions and, contrary to the assurances you had given, you stopped using stop-loss orders. As the situation deteriorated further, funds you obtained during the last nine months or so of the scheme were not invested in shares at all, but rather you used those funds to pay earlier investors so as to avoid the collapse of the scheme. In doing so, you made numerous representations about the health of the scheme which were blatantly false.
Mr Kenny emphasised that throughout the offending, you and your wife continued to live in your modest house in Gladstone Park, and although you were dealing in very large amounts of money, you were not living any sort of lavish lifestyle at all. There is no evidence or indeed suggestion that you acquired any assets or, in any other way, took on the trappings of wealth during this period.
As the scheme collapsed in October 2015, you checked yourself into a motel close to your home and attempted to take your own life. You were found by staff at the motel in a dire state. You were admitted as an involuntary psychiatric patient to the Broadmeadows Aged Persons Mental Health Unit where you remained for eight weeks. After discharge, you remained an outpatient with the NorthWestern Mental Health Aged Persons Mental Health Program (‘APMHP’) until January 2017.

Psychological/psychiatric evidence

In October 2015, you were assessed by Ms Sue Packer, Clinical Neuropsychologist attached to NorthWestern Mental Health’s APMHP to determine whether an underlying neurodegenerative illness could have contributed to your behaviour. In a report of 5 November 2015, Ms Packer noted that you were ‘feeling frustrated and perplexed by his inability to explain why he had failed to take remedial action in the face of large investment losses and mused that ‘something must’ve happened in my brain’’.
Ms Packer stated:
The current assessment suggested a generally intact cognitive profile with some possible subtle reductions in the areas of unstructured new verbal learning, delayed recall of visual information with sensitivity to interference and self-monitoring and sustained attention processing speed/vigilance. While these decrements are subtle, they have the potential to account for difficulties making complex decisions at high speed. Such difficulties are often associated with cardiovascular risk factors (such as hypo and hypertension) and also with depression. While there is no evidence of neurodegenerative disorder, Mr Lang’s current performance may suggest some mild vascular cognitive impairment.
Mr Lang’s continued ruminations, depression and suicide attempt suggest that he has insight into the impact of his stock-market error and the resultant losses to his investors. However he appears to be confused regarding the specific details of his actions and unable to understand why he did not take remedial action. It is suggested that his subtle executive function difficulties could have contributed to his decisions at the time.
You were further assessed by Dr Nicola Lautenschlager, a professor of Psychiatry of Old Age at the University of Melbourne. You have been placed on a medication regime involving antidepressants and lithium, and have commenced volunteer work in assisting with German language classes. Dr Lautenschlager noted, in a report of 1 September 2016, that your mood had further improved by that stage and she informed you that there was no evidence at that time that you might be experiencing cognitive impairment or an organic brain disorder. You were advised that you were statistically at greater risk of developing cognitive changes because of your depressive episodes and you were given advice about diet and physical activity that may assist in prevention.
In May 2017, you were referred to the Healthy Minds Psychological Services for psychological counselling. In a report of 15 May 2018, Rosemary Vella, psychologist, noted that you engaged well in therapy and opined that you had achieved substantial psychological gains and that you appear to be more aware of your psychological difficulties. Although you had made ‘many gains in therapy’ in dealing with anxiety, low mood disorder and low self-confidence, it was recommended that you needed to continue to access psychological support.
In addition to her psychological report, Ms Vella also provided a character reference on your behalf. She described you as a loyal and trustworthy man who cared about others and was very generous in your contributions to the community by volunteering many hours of work in a multicultural radio station and teaching the German language.
Your general practitioner, Dr Papagelis, has treated you since 2001. He prescribes and monitors your medications including the anti-depressants. In a report of 17 April 2020, Dr Papagelis described you as a pleasant dependable family man who is highly respected in his community.
Finally, you were assessed by Dr David Ball via video-link on 21 April 2020. Dr Ball qualifies his assessment by reference to the fact that video-link assessments have substantial limitations, particularly in that it is not possible to administer psychological testing.
In his report of 23 April 2020[3], Dr Ball reviews your personal history consistent with what I have described above. He says that you expressed regret and remorse for the offending and wished to make ‘an unreserved apology to all 33 investors. I expressed my deep sorrow about the losses which were caused by my mistakes’.
[3] Incorrectly marked as 23 March 2020.
With respect to diagnosis Dr Ball states:
Based on Mr Lang’s personal and medical history and clinical interview I am of the opinion that he fails to satisfy any DSM-V diagnostic criteria for mental illness, personality disorder, substance use disorder, mood disorder or other pervasive syndrome. He fails to satisfy any previous or current diagnostic criteria for gambling disorder, manic episode, bipolar disorder or narcissistic personality disorder or significant features. However, his medical records show a previous depressive episode and adjustment disorder now in full remission.
In Dr Ball’s opinion, your age and compromised health would mean that a custodial sentence would be more onerous for you than other inmates.

Evidence of Lisa Lang

Your daughter, Lisa Lang, gave oral evidence on your plea. She enjoys a close relationship with you and her mother, and is grateful for the guidance and values you instilled in her. She is now 44 years of age and an accomplished author. As an adult, she chose to live close to your house and would make sure that she would see you a number of times each week.
She had been completely shocked by your offending and its scale. She confirmed that you lived in the rented house in Gladstone Park during the offending period and that you only owned a 1993 Nissan Pulsar motor vehicle. The only asset she recalls being purchased over the relevant time was a new lounge suite.
In 2015, she noticed a big change in your manner. You became withdrawn and anxious, and appeared to be behaving erratically. She became increasingly concerned and arranged to have you assessed by a psychiatrist. The night before that appointment you attempted suicide.
Now that you have recovered, you told her that you wish to accept responsibility for your actions and that you understand that is important to the people who suffered because of this offending that you do so. She described you as feeling very remorseful.
Ms Lang encouraged you to take up tutoring in the German language and believes that has provided new purpose and enabled you to better cope with the uncertainties associated with dealing with this case. Special financial arrangements have been made to ensure that you do not have access to the joint pension received by you and your wife.
Your wife has also provided a reference in which she describes her devotion to you over the 58 years you have been together. She is now 82 years of age and has never held a drivers licence. You would always take her to her medical appointments and shopping and the like. She describes living a quiet life with you. She says that she can see how your actions still weigh heavily on you.
Your neighbour of 49 years also provided a personal reference which describes you as a quiet respectful person and a good friend.
I will take all of those reports and references into account.

Defence submissions

In summary, Mr Kenny relied on the following factors in mitigation:
1.        Your plea of guilty;
2.        Your remorse;
3.        Your previous good character;
4.        Your excellent prospects rehabilitation;
5.        The significant delay in resolving this matter;
6.        The impact of the COVID-19 pandemic; and
7.        Your age.
Mr Kenny acknowledged that this offending caused large losses to many investors with a significant breach of trust. In that sense, emphasis on general deterrence is clearly required. On the other hand, you had expressed remorse for the impact of your conduct in the investors letter you had sent to the liquidator of 18 November 2015. You have consistently expressed your remorse to others, for example to your daughter Lisa and your assessing psychologist Dr David Ball.
That remorse was supported by your plea of guilty. That plea was set out in an offer made on 5 February 2020 and confirmed when you were arraigned on 7 April 2020. There were certainly issues in this case that could have been pursued at trial but you chose not to. It was submitted that the plea showed a willingness on your part to facilitate the administration of justice and take responsibility for your offending.
A very significant additional feature of your plea of guilty was its utilitarian value. Had this matter proceeded to trial, I was informed that the Crown would have split the Indictment, necessitating two trials, each of approximately four or more weeks duration. The time, money and resources your plea has saved, it was submitted, was very considerable. The combination of all of those matters should translate into a very substantial reduction in the sentence that otherwise would be imposed.
You are equally a person of previous good character with no previous or subsequent convictions. It was argued that your prospects for rehabilitation must be assessed as being excellent. You reached the age of 74 before you offended and at 80, it could not be realistically suggested you would be at risk of recidivism.
Four and half years have elapsed since you offended, and 25 months since you were charged. You have shown in the interim that you can contribute constructively to the community, for example in your teaching of the German language, and you have done so with the uncertainty and anxiety of this matter hanging over your head.
It was also put that your age is such that any period of imprisonment will represent a substantial part of the period of life you have left and carries with it the risk that you might die in jail.
Finally, the COVID-19 crisis will render any time that you are required to spend in prison more considerably more difficult. It was submitted, and as I understand it accepted by Mr Saunders, that if imprisoned you would be required to go into quarantine/isolation for 14 days, you will not have visits, your time outside of your cell will be reduced and there will be no access to educational or rehabilitative programs. Perhaps more importantly, your age makes you particularly vulnerable to the disease. You have been self-isolating at home in compliance with government advice, and placing you in prison will expose you to greater risk. The anxiety that prospect generates is a very relevant matter to take into account.
As to the offending itself, Mr Kenny noted that your case had some unusual features. You were never a white-collar worker and therefore you were not a typical white-collar offender. You were never someone who was wealthy at any time, whether before, during or after the offending. Your offending was not particularly sophisticated; no staff were employed, no premises were acquired, no advertising was used to attract investors. You did not start out to deceive your investors, it was only when things went wrong that you engaged in the offending the subject of these charges. This was very much a backyard operation essentially reliant on word of mouth. All of your own funds went into the scheme to help keep it afloat which were also lost. Accordingly, your moral culpability compared to other offenders of this type with similar losses was relatively low.
In his written submissions, Mr Kenny submitted ‘that the appropriate penalty includes a lengthy period of supervision in the community’.

Prosecution submissions

It was submitted that having regard to the quantum, duration of the offending and circumstances in which the representations were made, that immediate imprisonment was the only appropriate sentencing option.
Although, it was said you had ‘by and large’ complied with the representation you would use stop-loss orders up until 2014, that was not always the case. Certainly during the offending period, you had abandoned that safety measure causing your investors to lose their investments.
Taking into account monies repaid during the offending period, the overall loss to investors was in the order of $6,000,000.
You had also benefited personally. There was no evidence of a lavish lifestyle, but by reference to the forensic accountant’s analysis, it was safe to work on the basis that you had personally benefited from the scheme by approximately $400,000 spread over a four year period. That figure qualifies the assertion in the prosecution opening that you personally received $738,000 in investors’ funds.
This sort of offending, it was argued, might be committed in a myriad of ways. You were not, for example, the CEO of a large company living the high life at the expense of investors. However, your offending became particularly heinous towards the last nine months or so when you made repeated false representations as to the health of investments, whilst effectively managing a Ponzi scheme. In that sense, your moral culpability should be seen as being high.
Mr Saunders submitted that your advanced age was relevant in three ways:
1. There is a real risk that you will not see life beyond prison;
2. There is little risk that you could reoffend; and
3.Imprisonment will invariably be more onerous than would be the case for a younger person.
These contentions were derived from the decision of the Court of Appeal in R v Iles[4] per Lasry AJA at [19], [20] and [22].
[4] [2009] VSCA 197, (‘Iles’).
Acknowledging those matters, it was nonetheless submitted that advanced age was not a ‘get out of jail free card’. I take this to mean that advanced age will not justify an inappropriate sentence; it may moderate, but not absolve.

Similarly, the COVID-19 considerations were relevant and should be taken into account, but in a modest way.
Mr Saunders referred to the following cases as providing some comparative assistance; Poursanidis v The Queen[5], Porcaro v The Queen[6], R v Munt[7], Hoy v The Queen[8], Yusuf v The Queen[9] and The Queen v Fernandez[10].
[5] [2016] VSCA 164.
[6] [2015] VSCA 244, (‘Porcaro’).
[7] [2015] VSC 132, (‘Munt’).
[8] [2012] VSCA 49, (‘Hoy’).
[9] [2010] VSCA 266, (‘Yusuf’).
[10] [2006] VSCA 38.

Consideration

In considering these submissions, perhaps the first point that should be emphasised is that your plea of guilty will substantially reduce the sentence that would otherwise be imposed. I accept that it was not an early plea, however it was open to you to contest at least some of these allegations in various ways. Rather, you facilitated the course of justice by accepting full responsibility for this offending. In doing so, you avoided the need for two lengthy trials resulting in very substantial savings for the community. The sentencing discount that will be accorded to you should be seen by others in a similar position as an incentive to adopt a like attitude.
Your plea of guilty is also consistent with what I find to be genuine remorse on your part. Why you allowed these losses to escalate so substantially in the way that you did is not altogether clear to me, but I am satisfied that you understand the devastation you have caused and that you are sorry for that. There are a number of features of the materials that lead me to that conclusion, not least of which was the genuine attempt on your own life and the oral evidence of your daughter Lisa, with which I was particularly impressed.
As Mr Kenny pointed out, four and a half years have elapsed since your offending stopped and you were charged over two years ago. Even though considerable delays in matters of this kind are common because of the volume of the material and its complexity, delay is nevertheless still an important mitigating feature. You have used your time constructively but I’ve no doubt that the anxiety associated with knowing that you would one day have to face up to the consequences of this offending has taken its toll.
I accept that you are a person of otherwise good character. I also accept further that your prospects of rehabilitation are very good, if not excellent. I do bear in mind, however, as Charles JA pointed out in DPP v Bulfin[11], that good character is a common feature in white-collar offenders and sentencing judges need to be cautious in not allowing that feature to distract attention from the importance of general deterrence.
[11] [1998] 4 VR 114.
Whilst you may not be a typical white-collar offender, and your offending lacks some of the sophistication one often sees in cases where investors have suffered large losses, that fact provides no comfort to the investors that placed their trust in you and as a result have been devastated. I accept that when you commenced investing on behalf of others you did not intend to deceive them. Nor did you live the high life. I note that, the comparative authorities to which I was referred by Mr Saunders, tend to deal with similar quanta but involve more serious examples of this type of offending. The sort of predatory criminality that characterised the offenders in Porcaro, Munt, Yusuf and Hoy is not present to the same extent in your case. In that sense, Mr Kenny’s point that your moral culpability is, relatively speaking, somewhat less, is well made.
Even so, in my view, you were much more than a backyard investor who had gotten out of his depth. The scale of deception and loss you engaged in once things started to go wrong was particularly egregious - all the more so in the last nine months when, as the prosecutor suggested, you were effectively running a Ponzi scheme. In reality, you were doing no more than indulging in high-stakes gambling with money belonging to those who had the misfortune to believe your assurances. Viewed from that perspective, your moral culpability should still be assessed as being of some moment, even if it is not as high as was present in the comparative cases to which I was referred.
It follows that I accept the submission made by the prosecutor, that there is no alternative open to me other than to impose a term of actual imprisonment. Moreover, the sheer seriousness of this offending precludes the possibility that that sentence could be served in combination with a Community Correction Order.
There are two sentencing factors, however, which seem to me to specifically bear on the length and structure of the sentence that should be imposed in your case. The first is your advanced age and the second relates to the sentencing considerations arising from the COVID-19 pandemic that are particularly relevant to you.
You seem to be fortunate in the sense that having reached the age of 80, you are not afflicted by any serious medical or psychological/psychiatric health issues. Nevertheless, advanced age, as the prosecutor acknowledged, is relevant.
In Iles, Redlich JA who was in agreement with Lasry AJA and Neave JA, considered that whilst (old) age did not permit the imposition of an inappropriate sentence, it was to be taken into account in determining what justice required. His Honour stated at paragraphs [33] – [35]:
Old age is generally spoken of as a mitigating factor permitting the imposition of a sentence which is shorter than otherwise might be the case. The significance of old age as a mitigating factor is that general deterrence may be required to surrender some ground to the need to exercise mercy to take account of the possibility that the offender may not live to be released. General deterrence in the context of sentencing an elderly offender must be considered in the light of the impact upon public perception of a gaol sentence upon a man of such advanced years upon whom a sentence will bear more heavily.
It may in particular circumstances be necessary to impose a sentence which may have the effect of requiring an offender to spend the whole of the remainder of his life in custody. The older the offender, the greater the likelihood that even a relatively short sentence will fall into this category…
Thus, the fact that each year of the sentence which the appellant must serve will represent a substantial portion of the period of life which is left to him is a weighty consideration which mitigated the sentence to be imposed.
His Honour’s comments in my view are apposite to this case. Advanced age is a weighty consideration and the sentencing purpose of general deterrence should cede some ground to the exercise of mercy. Nor does someone in your position strike me as a particularly good vehicle for general deterrence.
In tandem with advanced age are the problems thrown up by the COVID-19 crisis. Placing you in prison will naturally provoke anxiety for you because you are in the particularly vulnerable age group and you will be taken from a relatively safe environment - your home - and placed in in a crowded custodial setting where the risk of infection is likely to be far higher. Conditions will be more harsh than usual, and you will experience those conditions as being more burdensome than a younger person. That is also a weighty consideration.
In the matter of RC v R; R v RC[12], Wilson J considered the exercise of the NSW Court of Criminal Appeal’s residual discretion not to interfere with the sentence imposed at first instance on an elderly offender (76 years of age) in ill health. The Court did not proceed to re-sentence the respondent, despite the clear inadequacy of the sentence imposed. Her Honour stated at paragraph [254]:
I am mindful of the present medical emergency. Although the respondent’s evidence was silent on this point, it may be readily accepted that the experience of serving a custodial sentence will be more onerous for him than is the general experience. It is reasonable to conclude that the respondent, a man of advanced age who suffers from a long-term bronchial condition, will experience a level of stress, anxiety, and even fear at the potentially fatal consequences to him were he to be infected with the COVID 19 virus in prison, that would not be the case for a younger, fitter, prisoner.
[12][2020] NSWCCA 76.
In my view, your advanced age and the sentencing considerations associated with the COVID-19 pandemic do materially bear upon the length of the sentence to be imposed and particularly on the fixing of a non-parole period, more so than was submitted by the prosecutor. It seems to me that the minimum term that justice requires you to serve should be unusually low so as to accommodate those sentencing considerations.
I do not overlook the fact that a non-parole period has an important punitive aspect and that generally a disproportionately low non-parole period would tend to undermine the general deterrence objective of the head sentence.[13] However, there are occasions where special factors can justify an unusually low non-parole period.[14] In my view, this is such an occasion. As Lasry J said in the context of an application for bail in the COVID-19 crisis, ‘this is not an ordinary application in an ordinary time’[15]. Your advanced age, and with it your particular vulnerability to COVID-19, means that you will have to endure imprisonment much more acutely. The sentence imposed will reflect that fact.
[13] See DPP v Avci (2008) 21 VR 310 at [53] – [54]; R v VZ (1998) 7 VR 693; DPP v Huby [2019] VSCA 106 at [70], [71] and [99].
[14] See the discussion in Huby at [74] and [75] referring to R v Tsiaris [1996] 1 VR 398 and R v Bullen [2005] VSCA 206.
[15]Re Broes [2020] VSC 128 at [42].
I should add that I have determined that it is appropriate to impose aggregate sentences for the different classes of offences which I will identify in a moment. That is so because these offences form part of a series of offences of the same character committed in the same way.
Schedule 1A of the Sentencing Act 1991 (‘the Act’) defines the offence with which you have been charged - obtaining a financial advantage by deception contrary to s 82 of the Crimes Act 1958, where the value of the financial advantage obtained is $50,000 or more - as a continuing criminal enterprise offence. Section 6H of the Act relevantly defines a continuing criminal enterprise offender as an offender who is found guilty of three or more continuing criminal enterprise offences. Section 6I of the Act renders a continuing criminal enterprise offender liable to a maximum term of imprisonment for a continuing criminal enterprise offence that is double the length of the maximum term prescribed.
The operation of those provisions in your case translates to the following:
Charges 3 and 9 are the first two continuing criminal enterprise offences on the Indictment and might be described as the qualifying offences. Having regard to what was said by the majority in R v Roussety[16], you therefore fall to be sentenced as a continuing criminal enterprise offender in respect of charges 3, 9, 14, 17, 18, 19, 22, 27 and 30, and the applicable maximum penalty is 20 years. On all other charges, the relevant maximum penalty is 10 years imprisonment.
[16]R v Roussety [2008] VSCA 259 per Nettle JA at paragraphs [33] – [36].
I am obliged to take into account the higher maximum penalties applicable to those offences as one of the many matters relevant to the formulation of your sentence. Whilst the penalties for those offences should not be automatically increased simply by reason of the increased maximum penalty[17], in this case, the greater quanta and greater criminality involved will result in the continuing criminal enterprise offences attracting longer sentences.
[17] See Shiel v The Queen [2017] VSCA 359 at [41].
Finally, application has been made for compensation orders pursuant to s 86 of the Act. As to the discretion to be exercised in considering that application, I have had regard to the decision of Bell J in RK v Mirik[18] at [135] – [143]. Although I am satisfied that you have no effective financial ability to meet the compensation orders sought, I am satisfied that it is nevertheless appropriate to make the orders. I do so because it seems to me that in some small way, those orders form part of the overall sentence which denounces your offending and it may also provide some insurance that in the very unlikely event that your financial circumstances change the victims of your offending would have recourse.
[18] (2009) 21 VR 623.

Conclusion

Taking all relevant matters into account you will be sentenced as follows.
For the purposes of imposing sentence the charges on the Indictment will be divided into four categories:
The first category relates to charges which involve more than one instance of offending (rolled-up charges) where you fall to be sentenced as a continuing criminal enterprise offender. On charges 3, 17 and 18 (which involve a quantum of $4,700,000) you will be convicted and sentenced to an aggregate sentence of 4 years imprisonment.
The second category relates to charges which involve a single instance of offending where you fall to be sentenced as a continuing criminal enterprise offender. On charges 9, 14, 19, 22, 27 and 30 (involving a quantum of $990,000) you will be convicted and sentenced to an aggregate sentence of 2 years and 9 months’ imprisonment.
The third category relates to charges which involve more than one instance of offending (rolled-up charges) where the applicable maximum penalty is 10 years imprisonment. On charges 1, 2, 3, 5, 6, 7, 8, 11, 13, 16, 21, 23, 25 and 26 (involving a quantum of $667,476.70) you will be convicted and sentenced to an aggregate sentence of 2 years and 6 months’ imprisonment.
The fourth category relates to charges which involve a single instance of offending where the applicable maximum penalty is 10 years imprisonment. On charges 4, 9, 10, 12, 15, 20, 24, 28, 29, 31, 32 and 33 (which involve a quantum of $136,000) you will be convicted and sentenced to an aggregate sentence of 1 year imprisonment.
I will direct that 6 months of the aggregate sentence imposed on the second category of offending, 6 months of the aggregate sentence imposed on the third category of offending, and 3 months of the aggregate sentence imposed on the fourth category of offending, is to be served cumulatively upon the aggregate sentence imposed in relation to the first category of offending, making a total effective sentence of 5 years and 3 months imprisonment. I will fix a non-parole period of 21 months.
I will declare pursuant to s 6AAA of the Act that but for your plea of guilty you would have been sentenced to a total effective term of imprisonment of 7 years with a non-parole period of 3 years and 6 months.

[2020] VCC 759

5 June 2020