R v Coukoulis
[2002] VSC 6
•11 February 2002
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
CRIMINAL DIVISION
No. 1402 of 2002
| THE QUEEN |
| v |
| THEODOROS CHRISTOPHER COUKOULIS |
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JUDGE: | Gillard J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 4 and 5 February 2002 | |
DATE OF SENTENCE: | 11 February 2002 | |
CASE MAY BE CITED AS: | R v Coukoulis | |
MEDIUM NEUTRAL CITATION: | [2002] VSC 6 | |
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APPEARANCES: | Counsel | Solicitors |
| For the Crown | Mr C. Ryan | Solicitor for Public Prosecutions |
| For the Accused | Mr D. Allen | Haines & Polites |
| For the Legal Practice Board | Mr J. Barravecchio | Victorian Lawyers RPA Ltd |
HIS HONOUR:
Theodoros Christopher Coukoulis, you have pleaded guilty to a substantial number of offences which occurred during the period 8 July 1993 to 13 March 1996 whilst you practised as a solicitor, at Frankston, in this State.
The first count, Count 1, alleged that between 8 July 1993 and 13 March 1996, you had a deficiency of money in or payable into your solicitor's trust account in the sum of $6,859,828.79 and have not given a sufficient explanation for such deficiency, contrary to s.42(1) of the Legal Profession Practice Act 1958. That Act was subsequently repealed by the Legal Practice Act 1996 but at all relevant times, was the applicable legislation. The maximum sentence for the commission of such an offence under s.42(1) of that Act, was seven years.
Counts 2 - 48 (inclusive) allege that at Frankston, on various dates between 8 July 1993 and 3 March 1996, you stole sums of money from various people and companies. The total amount alleged to have been stolen was M$8.167.
The amounts stated in Count 1 and Counts 2 - 48 (inclusive) do not represent the actual amount which has been lost, and which the Legal Practice Board was obliged to pay to various people and companies with whom you did business and who suffered loss.
Count 1 states a figure which represents the moneys that were received by you during the said period and which should have been in or paid into your trust account.
The amounts in Counts 2 - 48 (inclusive) do represent the sums of money actually stolen by you, but include some amounts which were in fact repaid by you in the course of your criminal activities.
The actual loss suffered by those who lent money to your firm was $3,963,781.53. That was the sum that remained outstanding when you ceased practice, and which ultimately was paid by the Legal Practice Board in response to claims made by those who lent money to your firm and who suffered loss. In fact, the Legal Practice Board paid out a greater sum by reason of interest in the sum of $427,154.73 and some costs.
On any view, the amount that you stole and failed to repay to the persons doing business with your firm, was a very substantial sum.
The money was stolen over a period of two years and eight months, namely, from 8 July 1993 to 3 March 1996, and during this period, you committed many dishonest acts involving some 32 persons and eight companies. No doubt there were persons connected with those companies who were traumatised and distressed, as were individuals, by your dishonest conduct.
You were born on 25 December 1961, the elder son of parents who immigrated to this country from Greece. You are now aged 40 years. You have a brother who is aged 30 years. You presently reside in a modest house in Dromana with your mother and aunt.
Your parents conducted a fruiterer's business in Frankston and Mount Eliza and were clearly very hard working people. Your father was a highly respected member of the Greek community in Frankston. Like many immigrants to this country who wish to give every opportunity to their children to succeed, he had high expectations of you and sent you to Peninsula Grammar School, where you completed your schooling in the year 1979. You were a school prefect and in your final year at school, you achieved good marks. You commenced a course in economics at Monash University in 1980 and having successfully completed your first year, were accepted into the Law School. You graduated in Law and Economics in 1984. You commenced your articles with a firm, Braham McLaughlin and Co, in 1985, and on 3 April 1986, you were admitted to practise as a barrister and solicitor, by this Court. You obtained, on that day, an Employee Practising Certificate from the Law Institute.
You continued to work with that firm and in June 1987, you transferred to its Frankston office. The partners offered you the practice at Frankston, which you purchased in June 1987 for $60,000. You rented the premises from where the practice was conducted. At that stage, you were only 25 years of age. The practice was substantially conveyancing, although you did litigation work, especially in the lower courts. Throughout your period as a sole practitioner, you employed three women, one as a secretary, and two as conveyancing clerks, and later, you took on an Articled Clerk.
It is necessary to go back in time. It is said that these events are the genesis of your later dishonest conduct. In late 1982, your parents were experiencing financial problems and a writ of possession was served on them in respect of the family home. Your father suffered a heart attack soon thereafter, and despite operations and treatment, his health deteriorated. As a result, you had to take on the mantle of responsibility for the family and the family business. At that time, your parents were conducting the two fruiterer's shops at Frankston and Mount Eliza. It was necessary to deal with the creditors to avoid losing the home, and to find sufficient moneys for your father's medical expenses. By reason of your father's condition, he was unable to make a substantial contribution to the conduct of the businesses, and it was necessary for you, at an early hour in the morning, to drive to the Footscray wholesale market and obtain the produce for both shops and then return to the shops. After doing this, you then went to Monash. At that time, your brother was still at school.
I accept the evidence that during those years at Monash, you were extremely industrious, hard working and attentive to your parents' needs, and, in addition, managed to successfully achieve two degrees. During this period, you took on a soft drinks round, you did some labouring and you were selling insurance in order to increase income for the family. In addition, your brother was at Peninsula Grammar and it was necessary to find the fees for his tuition.
Because of your father's condition, the shop in Mount Eliza was sold in 1983 and the business was run from the Frankston shop. I accept that by 1985, the family was substantially indebted to a bank and the home was security for the loans. It appears that in 1985, the indebtedness was refinanced through a finance company and the home was provided as security.
In September 1985, during your articles year, your father died.
I accept that your father had high expectations for your success, and that you were under some pressure from the family to be successful. However, I have no doubt that both your parents were very proud of you when you obtained your dual degrees at Monash. Around about the time of your father's death, the Frankston fruiterer's business was sold.
In 1986, whilst you were working as a first year solicitor, you purchased, on behalf of the family, a child care business for $40,000 to provide work for your mother and aunt and to provide some cash flow.
In 1989, the child care business was sold for $60,000 and the money was used to purchase office premises at 395 Nepean Highway, Frankston, for $340,000. Unfortunately, you were unable to obtain bank finance, no doubt due to the indebtedness of the family and not having any security, and it was necessary to negotiate vendor's terms, which resulted in the sum of $150,000 being paid with balance over five years at an interest rate of 20%. It appears that you were able to persuade Westpac to provide bridging finance of $80,000, which the bank subsequently sought repayment of, which you managed to defer.
At the end of 1990, your brother left school and got a job at Sizzler's.
By late 1991, your financial position – and by that I mean also that of the family – was somewhat precarious and you were having difficulty in meeting the payments for the office premises. In late 1991, you brought the contract to an end by abandoning the premises and renting a smaller premises upstairs, being Suite 8. You state that you thought you paid about $220,000 to the vendor, but the instalments proved to be beyond your ability to finance.
By late 1991, the indebtedness of you and the family was in the order of $400,000, which you refinanced through another bank, although you were denied any overdraft facilities. At that time, you were in default and were paying an interest rate of somewhere in the vicinity of 22%.
Around the same time, you increased your indebtedness by purchasing an empty shop in Somerville with the intention of installing your brother in a convenience store. The purchase price was $300,000 and you were assisted in that purchase by John Pennell, who was a client of your firm and who had, over many years, lent the firm substantial sums of money. He was described as a silent partner. Evidently, he lent you some $200,000 and you agreed to pay him $3,000 per week for that assistance. The taking on of another financial burden in mid‑1993 was an unwise decision. However, you were concerned for your brother and you hoped to provide him with employment. You hoped that the business would have a cash flow and would enable you to service your various debts. It was necessary to fit out the store and stock it. You were able, on the security of the shop, to obtain a loan of $180,000 from the National Australia Bank and in addition, you were allowed overdraft facilities for the shop and your practice. This enabled you to repay loans to Westpac, who were placing pressure upon you to repay your debts. You expected the convenience store to have a turn over of some $20,000 per week, but, unfortunately, it turned out to be a failing business and in 1995, the freehold was sold, Mr Pennell was paid out and the balance of the funds was used to repay the National Australia Bank. It appears that you got no more for the shop than you paid.
In July 1993, when you commenced your criminal activities, you had debts totalling approximately $880,000, you were required to pay the silent partner in the convenience store, Mr Pennell, $3,000 per week, and you had to find a substantial sum of money to pay the interest outstanding in respect to the debts owed to the banks. It is said that because of your financial pressures, you commenced to steal from your clients and over a three year period up to 3 March 1996, you dissipated the sum of $3,963,781.53.
It was asserted on your behalf by Mr Duncan Allen of Counsel, that you were not a gambler and did not live the high life. It was said that substantial losses were caused by your precarious financial position, which was a substantial drain on your finances. Your criminal activities involved obtaining loans for a short period, from clients and others, at substantial interest rates. Gradually, you reached a point where you stole money from one client to pay out another client, who was pressing for repayment of principal and interest. In other words, the "rob Peter to pay Paul" phenomenon, which is often seen when a business person gets into a financial quagmire. Finding the money to pay the expenses of your practice, your debts to the lending institutions, and supporting the convenience store business, caused you to steal, from clients and others, money with offers of substantial interest. Eventually, you reached the point where you had to pay substantial interest to obtain loans to pay out earlier loans. This merry go round continued, getting you deeper and deeper into the financial quagmire, necessitating drastic and unwise action in the form of short term borrowings of substantial sums of money at exorbitant interest rates. By the end, you became extremely desperate, the interest rates sky rocketed and you were finally unable to pay out the borrowings.
I expressed the view in the course of submissions, that I found it hard to accept that M$3.9 could disappear in a period of slightly less than three years because of the demands of your draining financial position and the payment of excess interest, in order to obtain loans to pay out other loans. However, your Counsel submitted that the financial outgoings were so high that the conclusion that you dissipated the funds in this way and that they were lost, was clearly open to accept. The assertions were made from the Bar table that all was lost. There is some support in the deposition material for such a conclusion. The Crown did not seek to either argue or call evidence to contradict the conclusion that the losses were suffered in this way. Whilst I have some misgivings, I proceed on the assumption that the money was so lost.
By the end of 1995/early 1996, you were under considerable pressure from clients who had not been repaid their loans, including the interest, and on 13 March 1996, two Law Institute Inspectors, Messrs Brian Delaney and Darrell Petersen, visited your practice at 395 Nepean Highway, Frankston, at 11.00 a.m. You frankly admitted that you had financial problems due to the purchase of the premises at 395 Nepean Highway and your father's debts; that the practice was not generating sufficient income to service the financial obligations; that you found that your clients and others were very willing to lend money for very large interest rates; and that you commenced, thereafter, to obtain moneys from clients and others on promises of substantial interest rates. Unfortunately, in the end, you were unable to repay the loans.
You signed a statement in which appears the following –
"The solicitor has no idea how many clients he has currently borrowed from. It may be in excess of 50.
Again the solicitor does not know the current extent of his borrowings, he estimates it could be between M$2 and M$3."
You also informed the inspectors that you would be prepared to assist them to investigate the matters. Later that day, you consented to the appointment of a receiver by this Court, and you thereafter ceased to practise. You have not practised since. You have had some labouring-type jobs over the past six years but you have worked little, and apparently lived the life of a recluse. You have kept to yourself, grown a beard to avoid recognition and in reality, wasted the last six years of life, not progressing but remaining stagnant. A period between the ages of 34 to 40 when one should be operating at one's peak. You presently reside in a modest home in Dromana with your mother and your aunt.
The Victorian Lawyers RPA Ltd has not made an application to strike you from the Roll of this Court, but I was informed, at the conclusion of the plea, that you would consent to such a course. It is inevitable that your name will be removed from the Prothonotary's Roll of this Court and the probabilities are extremely high that you will never be permitted to practise in the legal profession again.
You consented to an order being made in favour of the Legal Practice Board in the sum of $4,390,936.26 for compensation under s.86 of the Sentencing Act 1991. That sum includes interest on the amount paid out in satisfaction of the claims. In addition, you agreed to pay the costs of the Legal Practice Board fixed in the sum of $1,500. There was no suggestion that you had any assets to enable you to meet that order for compensation. I approach this matter on the basis that the loss will never be rectified and that your solicitor colleagues will have to share the burden of contributing to the loss.
It is now necessary to summarise your conduct over the period between July 1993 and March 1996, which resulted in the counts in the presentment to which you have pleaded guilty.
You commenced your criminal activities in July 1983. In the next two years and nine months, you committed many acts of theft, far more than the 47 counts in the presentment. By way of example, Count 2, which is concerned with the theft of $964,700 belonging to John Pennell, is made up of 27 different transactions during the period from 8 July 1993 to 9 February 1996. Other counts are also rolled-up separate transactions and your criminality must be viewed in the light of the fact that the 47 counts, in fact, represent in total, approximately 180 acts of theft.
Your conduct throughout shows a high level of dishonesty and criminality. The thefts were not the result of "on the spot", "spur of the moment" decisions, but were the result of premeditation. In some cases, your conduct involved the unauthorised misuse of documents belonging to others, and, on some occasions, the use of forged documents.
A consideration of the circumstances of Count 2 demonstrates the nature of your dishonest activity. The victim was John Pennell, an elderly man who had known you for many years prior to 1993. His sons attended the same school as you, and one of his sons did his articles with you and was subsequently employed by you as a solicitor. The victim impact statement signed by Mr Pennell graphically reveals the enormous stress caused to him, his wife and his family, as a result of your dishonest conduct. Indeed, it is asserted by Mr Pennell that his subsequent heart attack and deterioration in health was due to your appalling conduct, which caused him and his family so much distress. Mrs Pennell also believes her recent health problems have been caused by the stress and anguish resulting from your conduct.
The Pennell family had known you for many years. Over the years, Mr Pennell entered into some 211 transactions with you, involving sums of money totalling some M$6. As I have said, he was more than just a lender to your firm. He was a client who trusted you implicitly. He was a man who ultimately became a friend and confidante. Despite this, you deceived him and stole $964,700 over the period from 8 July 1993 to 9 February 1996, in respect to 27 separate transactions. As I have stated, although this is a single count of theft, in reality, it represents 27 separate thefts.
The Pennells had been substantial investors of funds through the practice of Braham McLaughlan and Co through the mid‑1980s, but had not utilised the investment process for some years. In late 1991, you informed him that you had a number of clients who wished to borrow funds and indicated that that may be of interest to him. The Pennells were reluctant initially, because of prior problems associated with the firm of Braham McLaughlan and Co, but since they had known you for many years, they trusted you with their money. They commenced investing in late 1991.
The procedure adopted was for you to introduce the business to the Pennells, identifying the property owner and amount and interest to be paid. Mr Pennell adopted the practice of driving past the property to satisfy himself that it was of sufficient value. Mortgage documents were prepared by your office and signed by Mr Pennell. Mr Pennell did not advance any money without a mortgage being signed. It subsequently came to light that the mortgages prepared did not list a borrower, even though Mr Pennell's memory was that when he signed them, a borrower was noted. In some cases, a title to property was shown to him. Mr Pennell relied on you to handle the transaction and protect his interests. Mr Pennell advanced the money by cheques. He invariably crossed the cheques and wrote "account payee only". Despite this precaution, it appeared, from time to time, that you deposited the money into a variety of accounts, not being the stated payee. The evidence is clear that you did not deposit the moneys into the trust account, which you were obliged to do. The 27 transactions involved in Count 2 involved varying sums of money, in which some security documents were signed by Mr Pennell but were not proper security documents. Moneys were paid into either your office account or to a company called Keelo Pty Ltd, a company controlled by you.
The Pennells trusted you implicitly. They were satisfied with the service you were providing, and they always received their interest payments and capital payments in 1992 and 1993. Further, you had been successful in litigation brought on their behalf.
The Pennells were concerned in early 1996 when a number of cheques bounced, and attended at your office on 13 March 1996 whilst the inspectors were there. Mr Pennell said to you that "everything should be alright because he was protected by mortgages". You frankly admitted that most of the mortgages were not completed and that the funds would not be recovered. You had induced the Pennells on occasions to obtain money on overdraft from Westpac on the promise that you could borrow the money at higher interest rates, and that this would represent a good investment. You also wrote to Mr Pennell on occasions stating that the mortgages were current. This was untrue.
The circumstances surrounding Count 3 also demonstrate your level of dishonesty and deceit. An elderly woman, Mrs Eunice Smith, sold her property in September 1993 and engaged you to act as her solicitor. You received about $170,000, which you informed Mrs Smith would be invested on her behalf in "an interest bearing trust fund". Although she had not instructed you to do this, she agreed. Thereafter, she made contact with you from time to time to ascertain the amount of interest that was being paid and reinvested. In November 1995, she requested that the funds be released to her, but you told her that they would not be available until February 1996. When she approached you in mid‑February 1996, you told her that you had to go into the city to sign certain documentation. You did not pay her any of the principal or interest. In fact, you stole the money by paying it into an account styled "Theo Coukoulis on trust for Michael Blanche". As I understand it, Mr Blanche, who was a solicitor and had been involved in the practice previously, was unaware that you were operating an account on his behalf. In fact, it was for your benefit. In addition, you deposited funds into your company, Keelo Pty Ltd.
Louise Pennell is the daughter of Mr Pennell and has known you for most of her life, through the association with her family, and, in particular, the fact that you went to school with her two brothers, Mark and Jason. Your dealings with her demonstrate how you won over her confidence by obtaining loans from her, and promptly repaying them with substantial interest. But in fact, unbeknown to her, you were using the money for your own purposes, often to repay other loans which you had stolen. In June 1994, you approached her and requested her to invest money in trust at a substantial interest rate of 15%, payable monthly. Thereafter, she often lent you sums of money, and during 1994 and for most of 1995, you repaid the moneys. On occasions, cheques bounced but you did supply a further cheque. All told, there were some 13 transactions, and in July 1995, she paid to you the sum of $44,500 on the basis that the cheque was to be placed into your trust account and applied towards a first mortgage loan. She received monthly interest payments until the end of January 1996. The last cheque bounced. You provided another cheque and this also was dishonoured. She lost, in total, some $44,500. Again, you used the money for your own purposes, not depositing it into your trust account, but into your office account and your company account, and paying a sum in respect of the Somerville store.
It is unnecessary to go through and summarise the other transactions, the subject of the remaining 44 counts, as they all demonstrate the same course of conduct. Obtaining the confidence of potential lenders, offering them substantial interest rates, inducing some of them to even obtain overdrafts from banks to provide money on the promise of a substantially greater sum of interest, and the receipt of moneys which were never paid into your trust account. The moneys were paid into one or other of a number of accounts controlled by you and used by you. All told, the amounts stolen by you were in the order of M$8.167, and the actual amount that was lost was M$3.9.
Often, you would provide comfort to lenders by fraudulently providing a photostat copy of a Certificate of Title taken from conveyancing files in your office. The registered proprietors were unaware of this conduct and did not authorise you to provide the Title. Of course, those clients were not seeking the money lent. You were, and stealing the money. In respect to a small number of lenders, you deceived them by forging documents and providing copies of mortgage documents which were forged. It is clear that you did have substantial debts, that you did have substantial interest bills to meet and that ultimately, you reached the point where, in desperation, you offered lenders very substantial interest rates in order to obtain money to pay out the other lenders, who had lent you money which you had stolen.
Between October 1994 and March 1996, Stuart Robertson, a director of L.S. Russell Manufacturing Pty Ltd, invested money with you on some 58 occasions. On each occasion, the loan was made in the belief that it would be invested by way of genuine loan to one of your clients. On many occasions, you handed over either a duplicate Certificate of Title or a photostat, as indicating some security. Mr Robertson firmly believed that the loan was genuine, secured by the copy Title provided. The fact was that they were not genuine loans. The owners of the properties in the copy Certificates of Title were unaware that you had been using the Title and that you had no authority to do so. This series of transactions demonstrates again the level of your dishonesty. Of the 58 transactions, some 15 remain unpaid. Those transactions are the subject of one count, namely, Count 5, and realistically, constitute 58 separate occasions of theft. Again, all moneys paid over were paid into accounts over which you had some authority, and on one occasion, a large sum was paid over to your female friend, Miss Barclay.
On at least three occasions, you forged documents and fraudulently used them.
Lorraine Bauer is a solicitor and the sister of Stewart Robertson, the director of L.S. Russell Manufacturing. She and her husband, in April 1995, purchased a property in Bentleigh, and her mother agreed to lend them the sum of $175,000 to assist with the purchase. Settlement was to take place on 3 July 1995. The mother paid the amount to you, plus stamp duty and fees, and the mortgage documents were signed by Mrs Bauer and her husband. Nearly one year later, in March 1996, Mrs Bauer received a surprising phone call from a solicitor who stated that he had mortgage documents in his possession, that had been given by one of his clients, and one of the documents included a copy of a mortgage in relation to the purchase of the property in Bentleigh. The copy mortgage was in the names of Mr and Mrs Bauer as mortgagors and a company called Oaklands Real Estate Pty Ltd as mortgagee. The Bauers had not seen the mortgage before and did not sign it. Further, you had not lodged the transfer and the Certificate of Title still showed, as proprietors, the vendors. The copy mortgage appears to bear the common seal of the company and appears to have been signed by a director and secretary of the company. The document also purports to be the signatures of Mr and Mrs Bauer, but they are not their signatures. In fact, Mr Carl Chong, a director of Oaklands Real Estate Pty Ltd, signed the document as mortgagee, on the understanding that he was advancing $120,000 to Mr and Mrs Bauer, which he gave you. No doubt, you used the mortgage document to obtain money from Mr Chong.
In January 1996, you prepared a document, being a loan agreement, and you forged the signature of Adrien Valmorbida. The document purported to lend to Mr Valmorbida the sum of $60,000 but, in fact, at no stage did Mr Valmorbida seek to borrow that sum or obtain that sum.
Your conduct over the said period of two years and nine months, demonstrates that you are a wicked, dishonest, deceitful man, who deceived and stole from friends, acquaintances and others. You breached your trust. Your level of criminality is indeed high.
The two victim statements from Mr and Mrs Pennell and Mr Stewart Robertson amply demonstrate the stress and upset that you caused to persons who knew you well, admired you, who were happy to do business with you, and who placed their trust in you. You badly let them down and they refer to stress-related illnesses resulting from your activities and also the financial problems that were caused by your theft.
The determination of a sentence in a given case is the exercise of a judicial discretion. It is recognised that it is one of the most difficult tasks a judge is called upon to perform. The Law requires me to determine the facts, apply the relevant principles of law and to determine, in the exercise of my discretion, what is a proportionate and appropriate sentence in the circumstances of this case. The principles of law are the common law and enacted in statutes; in particular, in this State, the Sentencing Act 1991.
Taking into account the principles of sentencing, the relevant statutory provisions and the maximum sentence prescribed for the offence by the statute, the task "of a sentencing judge, is to pass such sentence, as in all the circumstances relating to the offence and to the offender, is that which he regards as the appropriate sentence." – see R v Young (1990) VR 951 at 954.
As the Full Court said in that case, it has always been accepted in this State that "the purposes of punishment are manifold" and hence "the task of the sentencing judge has never been regarded as capable of being confined, without injustice, within rigid formulae."
The High Court summarised the principles to apply in Veen v R (No. 2) (1988) 164 CLR 465 at 476, where Mason CJ, Brennan, Dawson and Toohey JJ said –
"However, sentencing is not a purely logical exercise, and the troublesome nature of the sentencing discretion arises in large measure from unavoidable difficulty in giving weight to each of the purposes of punishment. The purposes of criminal punishment are various: protection of society, deterrence of the offender and of others who might be tempted to offend, retribution and reform. The purposes overlap and none of them can be considered in isolation from the others when determining what is an appropriate sentence in a particular case. They are guideposts to the appropriate sentence but sometimes they point in different directions."
In the end result, the punishment must fit the crime. The sentence must be commensurate with the seriousness of the crime, and this is known as the principle of proportionality. As the High Court said in Hoare v R (1989) 167 CLR 348 at 354 –
" … A basic principle of sentencing law is that a sentence of imprisonment imposed by a court should never exceed that which can be justified as appropriate or proportionate to the gravity of the crime considered in the light of objective circumstances."
This requires the Court to start with a consideration and appraisal of the objective gravity of the offence. The sentence must fit the seriousness of the crime. It must also serve as a sufficient deterrent, not only to the prisoner but to any others who are of like mind, and the protection of the public. One of the fundamental purposes of punishment is to protect society. In addition, of course, the Court considers the matters personal to the prisoner, his character, his conduct and his probable future.
Section 5 of the Sentencing Act 1991 in sub-s.(1) sets out the purposes for which sentences may be imposed. I have considered those matters and have taken them into account. The sub-section requires the Court to determine a sentence which is just in all the circumstances, which is aimed at deterring the offender or other persons, which assists rehabilitation, protects the community from the offender, and manifests the denunciation by the Court of the type of conduct which the prisoner was guilty of. Remorse is a matter that is to be taken into account, and the sentence must not be more severe than that which is necessary to achieve the purpose or purposes for which the sentence is imposed.
After weighing up all relevant circumstances, including both aggravating and mitigatory factors, the Court is to pronounce a sentence which is the result of the "instinctive synthesis" of those matters. That is the appropriate sentence. That does not mean that the process of reasoning is one of guesswork, but indicates the complex process involved in sentencing by which, after paying attention to all relevant matters, including aggravating and mitigating matters, the Court arrives at the appropriate sentence. It is not appropriate in this State to adopt what was known as the two-stage approach to the determination of sentence, namely, to determine the undiscounted term of imprisonment and then, having reached that result, take into account all mitigating factors to arrive at a proper and appropriate sentence. See R v Nagy (1992) 1 VR 637.
Count 1 is concerned with the breach of s.42(1) of the Legal Profession Practice Act 1958. Section 40 of that Act obliged you to pay into your trust account all moneys received by you. The evidence of Ms Marie Ryan is to the effect that all moneys accepted by you for investment, by way of loan to a third party secured by mortgage, are deemed to be trust moneys within the meaning of that section. You were obliged to place those moneys in the trust account. You failed to do that during the period from 8 July 1993 to 13 March 1996. By your plea of guilty, you admit that you had a deficiency of $6,859,828.79 in your trust account and you had no explanation for such deficiency.
Section 42(1) of that Act makes such failure an indictable offence and fixes a maximum term of imprisonment of seven years. This one count fails to reveal the true position. The number of transactions which you handled and which did not involve your trust account numbered hundreds. In my view, this offence was serious. By not putting the money into your trust account, you were able to cover up your criminal activities and keep your offending conduct away from the eyes of your auditors. As Mr Pennell said in his statement, he knew your auditor, he knew him to be a careful and honest person and he had faith in the auditing process protecting his interests. You no doubt set out to cover your tracks in this way, which reflects upon your moral culpability, your dishonesty and wickedness.
The other offences, namely, Counts 2 – 48, must also be viewed as extremely serious.
The maximum penalty for each count of theft is 10 years' imprisonment.
The factors which bear upon the seriousness of the offence, your culpability and your high level of dishonesty can be briefly stated –
· The total amount of the thefts set out in Counts 2 – 48 (inclusive) is M$8.167.
· The actual amount that has been lost and is irrecoverable is M$3.9. This, on any view, is a substantial sum of money. It represents the greatest amount stolen by a solicitor in this State since Mrs Bryant's defalcations totalling M$8 in 1976.
· Your criminal conduct covered a period of slightly in excess of two years and eight months, during which time you were involved in some 178 fraudulent transactions.
· Your actions were premeditated and were not the result of a spur of the moment decision.
· You dishonestly forged some documents, admittedly not many, and on many occasions, dishonestly used Certificates of Title to fraudulently induce people to part with their money, on the understanding that their moneys were secure.
· You used copy Titles of persons who had entrusted you with legal work, without their authority, as a support for your dishonest activities.
· You committed these crimes within seven years of your admission to practise, after you publicly proclaimed to the Full Court that you would well and honestly conduct yourself in the practice of your profession, which clearly embraces upholding the law in this State. This I find as very grave, that a person so young and so soon after admission indulged in such dishonest conduct over a long period. It does raise a question as to your future.
· You betrayed the trust of lenders, some of whom were clients, many of whom had been friends and close acquaintances, and you also betrayed the trust of your clients, who were induced to leave Certificates of Title with you.
· You have also betrayed the trust of the legal profession, which no doubt contributes to undermining the confidence the community has in the legal profession.
Your level of dishonesty, especially in a person aged in his early thirties, is a matter of considerable concern, especially in a man who has demonstrated in the past not only industry, but a high degree of intelligence. The sentence which I must impose must not only reflect the gravity of the offences, but also deter, not only you, from pursuing a career of dishonesty upon your release from gaol, but other members of the profession, who may be minded to commit similar offences.
All told, the circumstances of the offences lead to the conclusion that the punishment to fit your criminal activity is an immediate term of imprisonment for a lengthy period.
In determining what is the appropriate sentence, it is necessary to take into account any mitigating factors.
At the outset, it must be said that you are truly sorry for what you have done, and I am quite satisfied, through not only the submissions of Counsel but also evidence I have heard and the report of Mr Ian Joblin, the forensic psychologist, that you are remorseful and are truly sorry for your conduct, and the grief and distress that you have caused the victims.
You have no prior convictions. You pleaded guilty, and this resulted in the saving of much court time and expense to the community. A trial would, no doubt, have taken a number of months.
These are all factors that I weigh carefully and take into account.
In addition, your Counsel emphasised that you did not deny the charges and indeed, at the very earliest opportunity, admitted that you had taken substantial sums of money from your clients and others. That is indeed correct. On the day the inspectors from the Law Institute arrived at your office, namely, 13 March 1996, you frankly admitted that you had taken the money and promised to cooperate. At the committal held on 30 May 2001, it proceeded by way of a hand-up brief and you were committed to the County Court. I understand that you indicated to the prosecution on that day that you would be pleading guilty, and did so at the case conference held on 9 October 2001.
Your attitude at a police interview held in October 1998 tends to be against the conclusion that you were cooperative and prepared to assist in any way. Whilst you answered some questions during the course of the interview, you, on occasions, refused to answer some searching questions and told the investigating police very little. Evidently, you had received some advice to adopt that stance, but I do not read much into your failure to cooperate on that occasion because the case against you was overwhelming, the line of questioning was somewhat disjointed and one got the impression that the police treated it as a pure formality. I am prepared to accept that your admission of guilt and remorse was consistent throughout.
Other important factors to weigh up in the circumstances are, that you have now lost your reputation as a member of an honourable profession, you have lost your right to be a member of such a profession, and the probabilities are indeed high that you will never be permitted to practise in the legal profession. You are a person who has been convicted of 48 serious offences. These matters in themselves represent a fairly heavy punishment.
Another matter relied upon by your Counsel as a mitigating factor is the delay in bringing this proceeding to court. You were found out on 13 March 1996, you ceased to practise on that day, and the matter did not come on in this Court until Monday 4 February 2002. This represents a delay of nearly six years. After the Institute had commenced their investigations, the matter was referred to the Major Fraud Squad, but the investigation did not commence until the beginning of 1997 due to the pressure of work. The investigation was continuing in October 1998 when you were interviewed. The investigation continued until early in the year 2000 and a decision was made to lay charges in May 2000. The charges were, in fact, laid in December 2000 and the committal took place on 30 May 2001. Throughout this period, you knew that you would be charged, it was inevitable, and that you would be going to gaol. This has kept you in a state of suspension and, no doubt, has had a profound effect on your life.
There is no doubt that the delay has been inordinate, and it is unfortunate that the matter has taken so long to come to court. The evidence reveals, which I accept, that during the last six years, you have withdrawn from society, your friends and acquaintances; you have performed a few labouring‑type jobs; you have become a recluse; and you live with your mother and aunt at Dromana in a modest house. You are deeply ashamed of what you have done and you have grown a beard in an endeavour to pass through the community without being recognised. Because of the inevitability of a prison sentence, you have not sought to reestablish yourself in any form of worthwhile employment or pursue a course of training or study to fit you for some other vocation. I am quite satisfied that the last six years in themselves have represented a form of sentence, admittedly self-imposed, but, nevertheless, an unfortunate reality. I do take into account the period of delay and in accordance with the authorities, I have placed substantial weight on the delay factor, which results in not an insubstantial reduction in the sentence.
In R v Todd (1982) 2 NSWLR 517 at 519, Street CJ said, in relation to delay –
"Moreover, where there has been a lengthy postponement, whether due to an interstate sentence or otherwise, fairness to the prisoner requires weight to be given to the progress of his rehabilitation during the term of his earlier sentence, to the circumstance that he has been left in a state of uncertain suspense as to what will happen to him when in due course he comes up for sentence on a subsequent occasion, and to the fact that sentencing for a stale crime, long after the committing of the offences, calls for a considerable measure of understanding and flexibility of approach – passage of time between offence and sentence, when lengthy, will often lead to considerations of fairness to the prisoner in his present situation playing a dominant role in the determination of what should be done in the matter of sentence; at times this can require what might otherwise be a quite undue degree of leniency being extended to the prisoner."
I also refer to R v Kane (1974) VR 759 at 767, and R v Miceli (1998) 4 VR 588 at 591‑2.
I accept that you have not sought, in the last six years, to rehabilitate yourself but, in fact, you have been left in a state of some suspense, not uncertain as to its likely outcome, namely, imprisonment, but the length of imprisonment. In my view, I should treat delay in this case, in fairness to you, as constituting a form of punishment, in that in the last six years of your life, between the ages of 34 and 40, you have done and achieved little. To a man who was so industrious and no doubt proud of his position in the community, especially within the Greek community of Frankston, this, no doubt, represented a not insubstantial punishment.
I accept the evidence that you were a respected member of the Greek community in Frankston, and at one stage, occupied a senior position in their association. I accept that you were industrious, in not only your work but in your endeavours with that association, and that you were well liked and respected. I also accept that you are genuinely and deeply ashamed of what you have done, and have shown remorse.
I am also satisfied that you were a lively, industrious, bubbly person prior to all this happening, and that since then, you have become depressed and withdrawn.
I have read with care the report of Mr Ian Joblin. He saw you on four occasions over the last three months. He noted the family pressures upon you to succeed and your desire, when you took over your practice, to be successful and admired. This manifested itself in a degree of hypomania, a mental disorder characterised by a euphoric outlook with excessive activity of mind and body, abnormal self‑confidence and uninhibited behaviour. Whilst I note his opinion, which provides possible explanation, it does not excuse your behaviour.
I take into account all the mitigating factors in weighing up what is the appropriate sentence to fit the crime, but it must be emphasised that your criminal conduct was extremely serious, and it must be brought home to you and to others of like mind that this conduct, by a member of an honourable profession, is not permitted.
The prosecutor tendered in evidence a summary of sentences imposed on solicitors since February 1976 in respect to theft, deficiency and defalcation. The table sets out the amount involved in the charges, and as I have already stated, the amount of M$3.9 which has been irretrievably lost as a result of your conduct and which must now be provided by the other members of the profession, is the greatest sum to have been the subject of any charges against a solicitor since Mrs Bryant in 1976. She was sentenced to seven years with a minimum of four years, and I accept the submission of Mr Allen that in those days, with remissions, the minimum period of imprisonment served by Mrs Bryant was no doubt less. The Full Court in R v Glickman in 1979 did not interfere with a sentence of 12 years, with a minimum of nine years, and a fine of $110,000 in respect of a loss of $600,000. That case, whilst having some similar features to the present, is different, in that the accused left the jurisdiction, had to be returned and pleaded not guilty, necessitating a lengthy trial. But the case does give an indication of the appropriate term of imprisonment for the gravest of solicitor defalcation cases. I also note that in December 1990, Justice Vincent, in the matter of R v Coloretti, sentenced the solicitor to a period of seven years' imprisonment with a minimum of four years, in respect of losses totalling M$1.4.
I agree with the submission of your Counsel that one must approach such summaries with considerable care. It is trite to observe that each case depends upon its own particular circumstances and that each case will, no doubt, have its particular points of aggravation and its particular points of mitigation. However, the table does demonstrate the fact that where the amount involved is substantial, the sentences are invariably higher. That is not surprising. The amount involved in this case, on any view, is substantial. None of it has been recovered, and it appears none will ever be recovered. Although you have consented to orders to repay something in excess of M$4.4, the reality is that none of that money will ever be paid. Whilst the table is helpful, in the sense that it gives some idea of the range of penalties and, further, it does demonstrate that the amount involved is an important factor in determining the period of sentence, I place very little weight on that table in arriving at the appropriate sentence.
On any view, these offences were very serious, committed over a long period of time, in flagrant breach of trust, in circumstances showing a high degree of dishonesty over a long period of time, and justifying a long period of imprisonment, not only to punish you for the offence, but to deter you and others from committing serious offences in the future. I do take into account and weigh up the matters that have been put forward by way of mitigation.
You are convicted on each count and sentenced as follows:-
On Count 1, you are sentenced to a period of four years' imprisonment. On Counts 2, 5, 6 and 13, you are sentenced to five years' imprisonment to be served concurrently with each other. On Count 3, you are sentenced to three years' imprisonment to be served concurrently with the sentences in respect to Counts 2, 5, 6 and 13. On Counts 4, 7, 8, 9, 10, 11, 12, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 38, 39, 40, 41, 42, 43, 44, 45, 46 and 48, you are sentenced to two years' imprisonment to be served concurrently with each other and with all other Counts. On Counts 37 and 47, you are sentenced to one year's imprisonment to be served concurrently with each other and all other counts, save Count 1.
I order that the sentences imposed in Counts 1 and 2 be served cumulatively upon each other. Of course, all other counts of theft are concurrent with Count 2. This results in a total effective sentence of nine years' imprisonment.
This approach accords with the principles stated by Ormiston JA in DPP v Grabovac (1998) 1 VR 664 at 680. His Honour's observations were agreed to by the other members of the Court. The end result, in my opinion, gives effect to the principles of totality and proportionality.
It is now necessary to consider a minimum period of imprisonment.
Under s.11(1)(b) of the Sentencing Act 1991, the Court is bound to fix a period during which the offender is not eligible to be released on parole, unless there are particular circumstances which makes the fixing of such a period inappropriate. In my view, the general rule should apply and I will fix a minimum period.
It must be borne in mind that the minimum term is part of the sentence and the Court is concerned with the question as to what is the appropriate period that should be imposed.
In R v Chan (1994) 76 A Crim R 252 at 255, the Court of Criminal Appeal had this to say with respect to the fixing of non-parole periods in this State –
"In the first place the fixing of a non-parole period does not serve to determine the date upon which the offender will be released upon parole. It operates to fix a time when the Parole Board may itself decide if and when he is to be released on parole. Then, in fixing a non‑parole period, the judge is selecting a period that must be served having regard to all the circumstances of the offence. A purpose, but not the only one, in fixing a non-parole period is to assist the prisoner's rehabilitation through conditional freedom. However, the non‑parole period also has a punitive aspect.
As a general rule there should not be too great a disparity between sentence and non-parole period."
I accept that matters of mitigation and rehabilitation are factors that are relevant to the question of fixing the non-parole period. The Court of Appeal has stated that as a general rule, there should not be too great a disparity between the sentence and the non‑parole period. I accept that that is the general rule, but each case must be considered in the light of its own circumstances.
There are two features about this case which justify a departure from the general rule. The first is the lengthy delay between the cessation of your practice and today, and, in particular, the fact that you have not taken any steps to retrain for other work. Secondly, rehabilitation. That is important. You should be given every opportunity to start afresh, and rehabilitation will be enhanced by conditional release. Sooner rather than later. You have destroyed your past, you must now give thought to your future.
In my opinion, taking into account all the relevant matters, the appropriate minimum period during which the prisoner is not eligible to be released on parole is six years.
Pursuant to s.18(4) of the Sentencing Act 1991, I declare that the period of imprisonment is to be reckoned as from Tuesday 5 February 2002 when the prisoner was taken into custody. I declare that period to be six days, inclusive of today’s date, and I direct that the records of the Court note the declarations.
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