R v Chakera
[2012] VSC 323
•2 August 2012
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
CRIMINAL DIVISION
S CR 2012 0051
| The Queen |
| v |
| Mohsin Mohamed Hussein Chakera |
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JUDGE: | KYROU J | |
WHERE HELD: | Melbourne | |
DATES OF HEARING: | 30 July 2012 | |
DATE OF SENTENCE: | 2 August 2012 | |
CASE MAY BE CITED AS: | R v Chakera | |
MEDIUM NEUTRAL CITATION: | [2012] VSC 323 | |
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CRIMINAL LAW – Sentence – Solicitor – Three charges of obtaining from clients financial advantage by deception – No personal benefit – Guilty plea – Inordinate delay – Depression – Elderly and frail offender – Special circumstances – Total effective sentence of 26 months – Suspension of 23 months of the sentence – R v Verdins (2007) 16 VR 269; R v Merrett (2007) 14 VR 392.
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| APPEARANCES: | Counsel | Solicitors |
| For the Crown | Mr D Brown | Office of Public Prosecutions |
| For the Accused | Mr D Sheales | MLC Lawyers |
HIS HONOUR:
Mohsin Mohamed Hussein Chakera, you have pleaded guilty to three charges of obtaining a financial advantage by deception. Your offending took place between 29 March 1999 and 1 February 2001 in the course of your practice as a solicitor. The three victims were clients. The financial advantage totalled $360,000 but you did not personally benefit. Rather, the financial advantage was obtained by another client, Chaminda Danthanarayana (‘CD’), a property developer and his companies, Precision Marketing Investments Pty Ltd (‘Precision’) and Baylee Pty Ltd (‘Baylee’).
During the period of the offending, you were between 58 and 60 years old and conducted a sole practice in Morwell. Your clients included members of the Victorian Indian community.
Your practising certificate was cancelled in 2003 and you were disqualified from applying for a new certificate for 6 years. In 2005, you became a bankrupt.
As I said at the plea hearing, although an immediate custodial sentence is required, there are compelling mitigating circumstances that warrant leniency. For the reasons that I will explain, I will be sentencing you to a total effective sentence of 26 months’ imprisonment and will be suspending all but 3 months of that sentence for a period of 26 months.
Circumstances of offending
I will summarise the circumstances of your offending from the Crown plea opening, which your counsel did not contest.
Charge 1
The victim of Charge 1 was Nereus Malhotra, who was widowed soon after arriving in Australia from India in 1996. Her husband’s estate was worth about $200,000 and she was appointed administrator. She engaged you to act for her because of a contested claim against the estate. In March 1999, you drafted a bridging loan agreement without Ms Malhotra’s prior instructions and told her to sign it in order to obtain interest. The agreement provided for a loan of $60,000 by Ms Malhotra to Precision for 12 months which was to be secured by a mortgage over four properties listed in the schedule. The agreement provided that the mortgage would be held in escrow and that a caveat would be lodged over the titles to the properties.
Ms Malhotra told you that she preferred to receive the money in cash but you said that the money had to remain under your control. Before signing the documents, Ms Malhotra asked you whether the investment was secure. You assured her that the listed properties were safe and that once construction was completed within 12 months, she would get all her money back.
Subsequently, you showed Ms Malhotra the stamped words ‘“Counterpart Mortgage” Stamped with $204.00, Trn 463889 13 Apr 1999, amount secured $60,000.00 Stamp Duty Victoria, DMNO’ on the top right hand corner of the agreement and told her that the stamp was a government seal, that it was a mortgage and that no one would be able to sell the properties without repaying her loan. These comments reassured Ms Malhotra that her funds were safe. You did not at any time register a mortgage or a caveat over the titles to the listed properties.
At the plea hearing, the prosecutor informed me that Ms Malhotra lost all of her investment. She recovered most of it from the Legal Practitioners Fidelity Fund (‘Fidelity Fund’). You did not make any restitution.
Charge 2
The victim of Charge 2, Parvenah Mashour, was also a widow. In 1995, you successfully obtained compensation for her following her husband’s death in an industrial accident. In July 1999, you approached her seeking a loan of $50,000 to Precision to develop units at 98-100 Chute Street, Mordialloc. You assured her that it was a good investment and that her loan would be secured by a mortgage. On 2 August 1999, Ms Mashour signed a bridging loan agreement for a loan of $50,000 to Precision for 12 months, with CD being the guarantor. The agreement provided for the execution of a mortgage over four properties listed in the schedule. You did not lodge either a mortgage or a caveat over the titles to the listed properties. Precision did not repay the principal or interest on the due date of 2 August 2000.
After 2 August 2000, Ms Mashour contacted you and CD on numerous occasions to request payment. She made it clear that she did not want to reinvest her money and wanted to be repaid as soon as possible. She was told that there were problems with completing the project but that she would be paid when it was completed. The date for completion was continually postponed.
On 15 September 2001, Ms Mashour received $10,000 in respect of the principal. She also received some payments of interest. At the plea hearing, the prosecutor informed me that Ms Mashour lost $40,000 of her investment. She recovered most of this from the Fidelity Fund. You did not make any restitution.
Charge 3
The victims of Charge 3 were Anil and Zarna Somaia, a married couple who conducted an import and distribution business. You were their personal friend as well as their solicitor. In October 2000, you contacted Mrs Somaia to request a short term loan of $300,000 for CD, whom you described as a very good client of good repute. You said that CD’s development company, Baylee, needed a short term loan to complete some projects and that the loan would be fully secured. After Mr and Mrs Somaia rejected the proposal, you telephoned Mrs Somaia frequently about the proposed loan and assured her that the money would be safe.
Eventually, Mr and Mrs Somaia agreed to lend Baylee $250,000. The loan was made in five instalments between 5 December 2000 and 1 February 2001. Precision guaranteed the loan. You told Mr and Mrs Somaia that you would prepare a contract of sale for unit 2/1108 Dandenong Road, Carnegie (‘Carnegie property’) so that it could be held in their names as security and could be transferred to them if the loan was not repaid when due. You also told Mr and Mrs Somaia that you would lodge a caveat over the title to the Carnegie property to protect their interest.
However, Baylee had already entered into a contract to sell the Carnegie property to a third party and you acted for Baylee in that transaction. Although you arranged for a caveat to be lodged over the title to the Carnegie property, on 17 April 2001, without the consent of Mr and Mrs Somaia, you withdrew the caveat to enable settlement of the sale to the third party.
Baylee failed to repay the loan on the due date of 31 March 2001. In late April 2001, Mr and Mrs Somaia received payment of $50,000 in respect of the principal together with some outstanding interest.
By May 2001, Mr and Mrs Somaia were concerned about the loan. You proposed that the parties enter into a performance agreement, whereby Mr and Mrs Somaia agreed to defer taking action against Baylee and Precision, and, in return, Precision agreed to give Mr and Mrs Somaia a charge over three properties. Mr and Mrs Somaia accepted the proposal when you agreed to give a personal guarantee of the outstanding amount. The agreement and the guarantee were signed on 6 June 2001.
Mr and Mrs Somaia requested that you provide documentary evidence of their security. By letter dated 2 August 2001, you forwarded to them what purported to be a copy of a caveat in relation to the charge over the three properties. It was stamped ‘This is a photocopy’. The original caveat had stamped on it ‘This is a photocopy of an unregistered dealing lodged with the Titles Office’. You had removed the words ‘of an unregistered dealing lodged with the Titles Office’ prior to forwarding the copy to Mr and Mrs Somaia in order to mislead them as to their level of security.
On 6 August 2001, the Titles Office issued a ‘Stopped Case’ notice on the caveat because one of the titles had been cancelled as a result of the registration of a plan of subdivision. The caveat was not registered because you failed to amend it, but you never informed Mr and Mrs Somaia of this.
Also in August 2001, Mr and Mrs Somaia requested you to arrange the transfer of one of the charged properties to them. You prepared a contract of sale of unit 5, 98-100 Chute Street, Mordialloc. Between August 2001 and June 2002, Mr and Mrs Somaia frequently contacted you about settlement. You engaged in delaying tactics by telling them that there were technical hitches preventing settlement from taking place. At the end of June 2002, Mr and Mrs Somaia discovered that the property had been sold to a third party on 29 November 2001. You acted for Precision in that transaction.
At the plea hearing, the prosecutor informed me that Mr and Mrs Somaia lost $200,000 of their investment. They recovered most of this from the Fidelity Fund. You did not make any restitution.
Personal circumstances
You were born on 18 July 1940 in India but grew up in Tanzania where your father conducted a medical practice. You are the oldest of five siblings. In 1965, while you were studying for your Bar exams in the United Kingdom, your father died and you returned to Tanzania to look after your mother and your siblings. You assumed the role of family patriarch and ensured that your siblings completed their education. You then returned to the United Kingdom where you eventually signed the Bar roll. In 1972, you migrated to Australia and commenced legal practice that year.
After practising as an employee and in partnership, you established your own firm in Morwell in 1981. Your practice areas included property law, mortgage finance and personal injuries. You were very close to your first wife, whom you married in 1965. She worked in your practice as office manager and controlling accountant and she was instrumental in ensuring that the practice operated efficiently and complied with regulatory requirements.
Prior to your offending, you had an unblemished record as a solicitor. The character references from clients and colleagues attest to the high regard with which you were held.
Tragically, your first wife became seriously ill in January 1998 and died in June 1998. Her illness and death had a profound impact on you. You became depressed and, despite appearances, you could no longer cope with the pressures of legal practice. Your health and your practice deteriorated. As your siblings and your daughters lived outside Victoria, you did not have close family around you to provide support. It was while you were in this vulnerable state that you were befriended by CD and his wife. They offered you their hospitality and support and you came to emotionally depend on them. In your record of interview, you described how you formed a father-son relationship with CD and how you were ‘mesmerised’ by him and believed that he would become financially successful. Your depressive illness deprived you of your prudence and judgment and you failed to see that CD was a conman.
It was your misguided faith in CD that led to your offending. You lied to your clients for the purpose of financially assisting CD at your clients’ expense. In your record of interview, you sought to explain your conduct by repeatedly emphasising that during all your dealings with your clients, you honestly believed that CD would come good and that your clients would be repaid. The reality was that there was no prospect of a full recovery of the loans that you persuaded your clients to make to CD and then to defer enforcement action.
Eventually your clients did not believe your lies and complained to the Law Institute of Victoria (‘LIV’). Your professional career quickly unravelled. In August 2003, your practising certificate was cancelled and you were disqualified from applying for a new practising certificate for six years. In 2005, you became a bankrupt.
In 2003, you suffered a heart attack and had a quadruple by-pass operation. In 2004, you were involved in a serious car accident which required extensive hospitalisation and rehabilitation.
On 21 November 2005, you were interviewed by the police but were not immediately charged.
In 2005, one of your former commercial clients employed you as the local manager of its business in Zambia. Although you moved to Zambia, you regularly visited Australia.
By February 2012, your bankruptcy and the practising certificate disqualification period had expired and you applied to the LIV for a practising certificate. The LIV informed the police of your presence in Australia and you were arrested and charged. You indicated your intention to plead guilty at the earliest available opportunity and formally did so at the first committal mention.
Elements of the offence and maximum penalty
Section 82(1) of the Crimes Act 1958 provides that a person who ‘by any deception dishonestly obtains for himself or another any financial advantage’ is guilty of an indictable offence and is liable to a maximum penalty of 10 years’ imprisonment.
This is a very serious offence. The gravity of the offence is even more pronounced where it is committed by a legal practitioner and officer of this Court, because its elements include dishonesty and deception. By your guilty plea, you have admitted that you engaged in deceptive and dishonest conduct. Your conduct did not merely involve an error of judgment or a lapse in professional standards; it involved persistent fraudulent conduct over an extended period. Such conduct by an officer of this Court strikes at the heart of the administration of justice and requires denunciation.
Your offending involved a gross breach of trust towards your clients who depended on you to discharge your duty to protect their interests. Instead of discharging this duty, you sacrificed your clients’ interests and misled them. Your clients became your victims.
I have taken into account the maximum penalty of 10 years’ imprisonment. As all the charges involved at least $50,000, they are continuing criminal enterprise offences and you are to be sentenced as a continuing criminal enterprise offender.[1] Section 6I of the Sentencing Act 1991 has the effect of doubling the maximum penalty to 20 years’ imprisonment.
[1]See cl 1(e) of sch 1A and s 6H(1) of the Sentencing Act 1991.
Impact on victims
Your victims did not file victim impact statements. However, it can be inferred from the Crown plea opening that your victims experienced stress and anxiety during the period of your offending. I have also taken into account the fact that two of your victims were commercially inexperienced widows.
In your favour, I have taken into account the fact that Mr and Mrs Somaia wrote to the Court stating that they have forgiven you and requesting leniency.
Guilty plea and remorse
During your record of interview, you were contrite and acknowledged your wrongdoing. Although you were reluctant to accept that you had engaged in dishonest or deceptive conduct and did not make full admissions, the admissions that you made would have assisted in securing a conviction. Your undoubted remorse and the fact that you indicated your intention to plead guilty at the earliest available opportunity and formally pleaded guilty at the committal mention, entitle you to a significant sentencing discount.
Delay
Although you were interviewed by the police in November 2005, you were not charged until February 2012. This inordinate delay has not been satisfactorily explained. At the plea hearing, the prosecutor informed me that you were not charged earlier because you had left Australia. However, you regularly visited Australia between 2005 and 2012. Given your cooperation with the LIV and later the police prior to your departure from Australia and your cooperation with the authorities since you were charged, I am satisfied that you would have presented yourself at a police station had you been requested to do so. I am also satisfied that if the police wanted to arrest you, they could have established alerts at Australian airports.
In any event, whether inordinate delay warrants a sentencing discount does not depend on whether the delay was satisfactorily explained.[2] Rather, it is the effect of the delay on you which is relevant.[3] The delay has had a dual impact. First, you have had to live for many years under the shadow of possible serious criminal charges. You have found the process upsetting and it has prolonged your underlying mental illness which I will discuss shortly. Secondly, during the intervening period, you have been a law-abiding citizen, you have been gainfully employed and you have demonstrated that you have rehabilitated yourself. In the interests of fairness, I have significantly moderated your sentence due to the unacceptably long period between the completion of the disciplinary proceedings in 2003 and the time you were charged earlier this year.
[2]R v Merrett (2007) 14 VR 392, 400 [34].
[3]R v Merrett (2007) 14 VR 392, 400 [35].
Mental and physical health, deterrence and the kind of sentence to be imposed
Your counsel tendered a number of medical reports whose contents were not contested by the prosecution.
Mr Patrick Newton, a forensic psychologist, stated in his report dated 24 July 2012 that you suffer from anxiety and depression and that this condition can be traced back to the intense grief reaction to your first wife’s death. He expressed the opinion that the level of your depression between 1998 and at least 2003:
would have been sufficiently severe to have impacted upon [your] broader cognitive functioning including [your] attention span, [your] capacity to weigh alternatives appropriately, [your] ability to reason logically about various courses of action, [your] anticipation of the likely outcomes of actions, and [your] decision making. [You] would not have been able to exercise [your] usual degree of acumen and judgment…
The prosecutor has accepted that your mental condition at the time of your offending reduced the moral culpability of the offending and thus engaged the first principle in Verdins.[4]
[4]R v Verdins (2007) 16 VR 269, 276 [32].
In his report, Mr Newton stated that your depressive symptoms are ongoing and require treatment and that you would find it difficult to adjust to imprisonment. He stated that those difficulties would be magnified by your age, your social background and your physical fragility and that you are likely to be a relatively vulnerable prisoner. He stated that incarceration is likely to cause you to suffer more regular and more intense bouts of mood disturbance than a prisoner who did not suffer your pre-existing problems and that the effect of imprisonment on you is likely to be particularly onerous. Once again the prosecutor did not contest these opinions.
It is not in dispute that you suffer type 2 diabetes and high blood pressure and that you take medication for these conditions. You have also lost part of the sight in your left eye.
I accept that your mental condition and, to a lesser extent, your physical condition, pose a serious risk that imprisonment will have a significant adverse effect on your health and that the sixth principle in Verdins[5] is engaged.
[5]R v Verdins (2007) 16 VR 269, 276 [32].
The fourth principle in Verdins[6] deals with moderation of specific deterrence due to mental illness. Although this principle is engaged, it has limited relevance because specific deterrence is not an issue. I have no doubt that there is no risk of reoffending, particularly since your counsel stated in open Court that you do not propose to resume practising law.
[6]R v Verdins (2007) 16 VR 269, 276 [32].
The third principle in Verdins[7] deals with general deterrence. This is always an important consideration when legal practitioners commit offences involving dishonesty in the course of their practice. As public confidence in the integrity of members of the legal profession is vital to the administration of justice, the Court must constantly reinforce the message that legal practitioners who engage in a course of fraudulent conduct and who repeatedly breach their clients’ trust should normally expect to be imprisoned.[8] In your case, however, I accept that general deterrence needs to be moderated due to your mental illness at the time of your offending and due to your ongoing symptoms.
[7]R v Verdins (2007) 16 VR 269, 276 [32].
[8]DPP v Serong [2001] VSC 213 (29 June 2001) [48]; R v Tansey [2012] VSC 221 (31 May 2012) [58], [60].
The second and fifth principles in Verdins[9] deal with the appropriateness of alternative kinds of sentence in the light of an offender’s ongoing mental illness. These two principles have informed my decision to suspend most of the sentence of imprisonment that I will impose.
[9]R v Verdins (2007) 16 VR 269, 276 [32].
Previous good character, rehabilitation and other considerations
Prior to your offending, you were a person of good character who had not committed any offences. Accordingly, you are to be sentenced as a first time offender. I have also taken into account that you have not reoffended.
I accept that your offending was an aberration in an otherwise exemplary personal and professional life. Since your offending, you have retained the loyalty and support of your family and some of your former clients. You have worked in a position of responsibility for one of your former clients and that client is willing to continue to employ you. As I have already said, you have demonstrated that you have rehabilitated yourself. The community does not require protection from you.
In sentencing you, I have taken into account your age, your frail health and the fact that you did not personally gain from your offending. I have also taken into account current sentencing practices and the matters set out in s 27(1A) of the Sentencing Act in relation to suspended sentences.
Sentence
At the plea hearing, the prosecutor submitted that an appropriate sentencing range in your circumstances was a total effective sentence of 2 to 3 years’ imprisonment with a non-parole period of 1 to 2 years. The prosecutor acknowledged that suspension of all or part of the sentence was an appropriate sentencing option.
Your counsel acknowledged that a sentence of imprisonment was appropriate. He submitted that the strong mitigating circumstances warranted a term of imprisonment of less than 3 years and that the sentence be wholly suspended.
For the reasons I have already discussed, a term of imprisonment is required. In the light of the compelling mitigating circumstances to which I have already referred, the term of imprisonment will be significantly moderated to ensure that it is just and appropriate. Given your status as a legal practitioner and an officer of this Court, the serious and persistent nature of your offending, the gross breach of trust that was involved and the fact that you are to be sentenced as a continuing criminal enterprise offender, I am not persuaded that a wholly suspended sentence is appropriate. However, in the light of the mitigating circumstances, I am satisfied that it is desirable to make an order suspending most of your sentence.
You are convicted and sentenced as follows:
(a) On Charge 1, I sentence you to 8 months’ imprisonment.
(b) On Charge 2, I sentence you to 7 months’ imprisonment.
(c) On Charge 3, I sentence you to 20 months’ imprisonment.
I direct that 3 months of the sentence on Charge 1 be served cumulatively upon the sentence imposed on Charge 3 and that 3 months of the sentence on Charge 2 be served cumulatively upon the sentence imposed on Charges 3 and 1. The total effective sentence is 26 months.
I propose to order that all but 3 months of the total effective sentence be suspended for a period of 26 months. The purpose of the proposed order is to enable your release from prison after 3 months. After your release, you will not be on parole and your freedom will not be constrained in any way. However, if you commit another offence within 23 months of your release and that offence is punishable by imprisonment, then there will be two consequences. First, you will be guilty of an additional offence punishable by imprisonment for up to 3 months. Secondly, it is very likely that an order will be made requiring you to serve the suspended period of imprisonment of 23 months. It is therefore very important that you do not commit any offences during the 23 months of your sentence which will be suspended.
I now order that all but 3 months of the total effective sentence of 26 months be suspended for a period of 26 months.
I declare that you have served 4 days of pre-sentence detention, not including today, and that this period be reckoned as already served under this sentence.[10]
[10]Sentencing Act s 18(1).
I declare that but for your plea of guilty I would have fixed a total effective sentence of 40 months’ imprisonment with a non-parole period of 24 months, and I direct that that fact be entered in the records of the Court.[11]
[11]Sentencing Act s 6AAA(1) and (4).
I declare that in respect of Charges 1, 2 and 3, you have been sentenced as a continuing criminal enterprise offender for a continuing criminal enterprise offence, and I direct that that fact be entered in the records of the Court.[12]
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[12]Sentencing Act s 6J(1).
CERTIFICATE
I certify that this and the 13 preceding pages are a true copy of the reasons for sentence of Kyrou J of the Supreme Court of Victoria delivered on 2 August 2012.
DATED this 2nd day of August 2012.
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