R v Cranston

[2023] NSWSC 1004

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

R v Adam Cranston [2023] NSWSC 1004

Hearing dates:

16 August 2023; 22 August 2023

Date of orders:

22 August 2023

Decision date:

22 August 2023

Jurisdiction:

Common Law - Criminal

Before:

Payne JA

Decision:

(1)    Mr Cranston is sentenced to a term of imprisonment of 9 years to commence on 6 March 2023 and expire on 5 March 2032 for the tax fraud conspiracy;

(2)   Mr Cranston is sentenced to a term of imprisonment of 12 years to commence on 6 March 2026 and expire on 5 March 2038 for the money laundering conspiracy;

(3) Under s 19AB of the Crimes Act 1914 (Cth) a single non-parole period of 10 years commencing on 6 March 2023 is fixed;

(4)    The offender is first eligible for parole on 5 March 2033.

Catchwords:

CRIMINAL LAW – sentence – federal offenders – conspiracy to cause loss to the Commonwealth – money laundering conspiracy – significant loss to the Commonwealth – persistent course of conduct

Legislation Cited:

Proceeds of Crime Act 2002 (Cth)

Crimes Act 1914 (Cth)

Criminal Code

Cases Cited:

AE v R [2023] NSWCCA 74

Alpha v The Queen [2013] NSWCCA 292

Arenilla-Cepeda v The Queen [2012] NSWCCA 267

Cheung v R (2001) 209 CLR 1; [2001] HCA 67

Dickson v R [2016] NSWCCA 105

Director of Public Prosecutions (Cth) v Pratten (No 2) (2017) 94 NSWLR 194; [2017] NSWCCA 42

DPP (Cth) v De La Rosa (2010) 79 NSWLR 1; [2010] NSWCCA 194

DPP (Cth) v Estrada (2015) 45 VR 286; [2015] VSCA 22

DPP (Cth) v Goldberg [2001] VSCA 107

Elomar v The Queen (2014) 316 ALR 206; [2014] NSWCCA 303

Filippou v The Queen (2015) 256 CLR 47; [2015] HCA 29

Giang v R [2017] NSWCCA 25

Giourtalis v R [2013] NSWCCA 216

Hiliv The Queen (2010) 242 CLR 520; [2010] HCA 45

Issakidis v The Queen [2019] NSWCCA 302

Kao v R [2020] NSWCCA 38

Leach v The Queen (2007) 230 CLR 1; [2007] HCA 3

Markarian v The Queen (2005) 228 CLR 357; [2005] HCA 25

Moiler v R [2021] NSWCCA 73

Pearce v R (1988) 194 CLR 610

R v Agius [2012] NSWSC 978; (2012) 87 ATR 528

R v Anquetil [2020] NSWSC 995

R v Anthony James Dickson (No 18) [2015] NSWSC 268

R v Brown (1986) 43 SASR 33

R v Cranston (No 9) [2021] NSWSC 1413

R v Dev Menon [2023] NSWSC 768

R v Doff [2005] NSWCCA 119

R v El Rashid (NSWCCA, unreported, 7 April 1995)

R v Gregory (2011) 34 VR 1; [2011] VSCA 145

R v Hammond [2020] NSWSC 888

R v Hausman; Hausman v R; R v Rostankovski; Rostankovski v R [2022] NSWCCA 24

R v Hawkins (1989) 45 A Crim R 430

R v Huang; R v Siu [2007] NSWCCA 259; (2007) 174 A Crim R 370

R v Huston; R v Fox; R v Henke; ex parteCth DPP [2011] QCA 350; (2011) 219 A Crim R 209

R v Isaacs (1997) 41 NSWLR 374

R v Issakidis [2018] NSWSC 378

R v Jiao [2015] NSWCCA 95; (2015) 251 A Crim R 236

R v Kaldor [2004] NSWCCA 425; 150 A Crim R 271

R v Kitson [2019] NSWSC 1109

R v Lauren Cranston [2023] NSWSC 454

R v Lee [2007] NSWCCA 234

R v Lin [2014] NSWCCA 254

R v Ly [2014] NSWCCA 78; (2014) 241 A Crim R 192

R v Nguyen [2010] NSWCCA 331

R v Patrick Willmott [2023] NSWSC 474

R v Riddell [2009] NSWCCA 96; (2009) 194 A Crim R 524

R v Rivkin (2004) 59 NSWLR 284; [2004] NSWCCA 7

R v Roach [2005] VSCA 162

R v Todd [1982] 2 NSWLR 517

Sabra v R [2015] NSWCCA 38

Savvas v The Queen (1995) 183 CLR 1

Shi v R [2014] NSWCCA 276; (2014) 246 A Crim R 273

Strbak v The Queen (2020) 267 CLR 494; [2020] HCA 10

Taiapa v The Queen (2009) 240 CLR 95; [2009] HCA 53

The Queen v Olbrich (1999) 199 CLR 270; [1999] HCA 54

Tiknius v R [2011] NSWCCA 215; 221 A Crim R 365

Totaan v R (2022) 108 NSWLR 17; [2022] NSWCCA 75

Tyler v R; R v Chalmers [2007] NSWCCA 247; (2007) 173 A Crim R 458

Weininger v The Queen (2003) 212 CLR 629; [2003] HCA 14

Category:

Sentence

Parties:

Rex (Crown)
Adam Michael Cranston (Offender)

Representation:

Counsel:
R Sharp KC with J Paingakulam and C Tran (Crown)
J Stratton SC with H Blake (Offender)

Solicitors:
Commonwealth Director of Public Prosecutions (Crown)
One Group Legal (Offender)

File Number(s):

2017/148697

Publication restriction:

(1) Pursuant to s 7 of the Court Suppression and Non-publication Orders Act 2010 (NSW) the parts of these reasons for judgment which are marked as redacted on the file copy of the judgment initialled by Payne JA are not to be published (other than to the parties and their legal representatives) until further order of the Court.
(2) Order (1) is made on the ground specified in s 8(1)(c) of the Act.
(3) Pursuant to s 11(2) of the Act, order (1) applies throughout the Commonwealth of Australia.

Judgment – EX TEMPORE

[Amended in accordance with the principles in Bar-Mordecai v Rotman [2000] NSWCA 123 at [194]]

1. PAYNE JA: On 26 April 2022, Mr Adam Cranston, together with Ms Lauren Cranston, Mr Dev Menon, Mr Jason Onley and Mr Patrick Willmott, was arraigned before a jury on the following counts:

Between about 1 March 2014 and about 18 May 2017, at Sydney in the State of New South Wales and elsewhere, conspiring with each other, Simon Paul Anquetil, Devyn Michelle Hammond, Joshua Meredith Kitson, Peter Larcombe, Daniel Rostankovski and divers others with the intention of dishonestly causing a loss to a third person, namely the Commonwealth.

Contrary to section 135.4(3) of the Criminal Code (Cth).

Between about 1 March 2014 and about 18 May 2017, at Sydney in the State of New South Wales and elsewhere, conspiring with each other, Simon Paul Anquetil, Devyn Michelle Hammond, Joshua Meredith Kitson, Peter Larcombe and divers others to deal with money of a value of $1,000,000 or more believing it to be the proceeds of crime.

Contrary to sections 11.5(1) and 400.3(1) of the Criminal Code (Cth).

2. On 7 March 2023, the jury returned verdicts of guilty on both counts in relation to Mr Cranston. That day, Mr Cranston’s bail was revoked and he was remanded in custody.

3. In what follows I make findings of fact for the purposes of sentence. The principles I have applied in making those findings of fact are as follows:

1. A sentencing judge has a duty to make, as far as possible, findings of fact relevant to the issues that will inform the sentence: The Queen v Olbrich (1999) 199 CLR 270; [1999] HCA 54 at [1]; Weininger v The Queen (2003) 212 CLR 629; [2003] HCA 14 at [16]-[17]; R v Isaacs (1997) 41 NSWLR 374 at 378;

2. Sometimes, however, it may be impossible for the sentencer to resolve a given factual question in a way that tends to either increase or decrease the sentence. In that case, the sentencer must leave that matter to one side and proceed on the basis of what can be found: Filippou v The Queen (2015) 256 CLR 47; [2015] HCA 29 at [70];

3. If a party at sentencing seeks to rely on a particular fact, that party has the onus of proving the fact in question: Olbrich at [25]. There is, however, no general joinder of issue in sentencing and, unlike at the trial, no generalised onus of proof: Olbrich at [25];

4. If the prosecution seeks to rely on a fact, they must prove it beyond reasonable doubt. If the offender seeks to rely on a fact, the standard of proof is on the balance of probabilities: Olbrich at [27]-[28]; Leach v The Queen (2007) 230 CLR 1; [2007] HCA 3 at [41]; Filippou at [64], [66]; Strbak v The Queen (2020) 267 CLR 494; [2020] HCA 10 at [32];

5. After a jury returns a verdict of guilty, the sentencer is constrained to making findings of fact that are consistent with the jury’s verdict: Cheung v R (2001) 209 CLR 1; [2001] HCA 67 at [14], approving Isaacs at 376-377;

6. A sentencer cannot know, in many cases, exactly what facts the jury found or what evidence they accepted. The sentencer is constrained by a verdict only when that verdict, by necessary implication, reveals that the jury accepted particular evidence or resolved facts in a particular way: Cheung at [17];

7. Within this constraint, the sentencer can make findings as they see fit: Savvas v The Queen (1995) 183 CLR 1 at 8. There is no requirement to accept all of the Crown’s case as put to the jury: Cheung at [7]. Nor is the judge required to take a view of the facts most favourable to the offender: Isaacs at 377D.

4. The following evidence was led in the sentence proceedings.

5. The Crown relied on:

1. an affidavit affirmed on 14 April 2023 by Edward Brendan McGinness, Acting Principal Federal Prosecutor at the Commonwealth Director of Public Prosecutions. This affidavit addressed the procedural history of the prosecution and the trial; and

2. all of the evidence given in the trial.

6. Mr Cranston relied on:

1. A report dated 3 August 2023 by forensic psychiatrist Dr Antony Henderson;

2. A report dated 25 July 2023 by psychologist Professor Stephen Woods;

3. A certificate showing Mr Cranston’s attendance at an addiction course in gaol;

4. An affidavit affirmed on 8 August 2023 by Elizabeth Cranston, the offender’s wife;

5. Character references in the form of:

1. A letter from Vladimir and Irene Rouhliadeff, the offender’s parents-in-law;

2. A statement dated 27 April 2023 from Steven Williams, a friend of the offender’s father;

3. A statement dated 18 April 2023 from Gloria Cassimatis, the wife of the offender’s father and a senior Australian Taxation Office (ATO) officer;

6. A bundle of documents which was provided to Professor Woods and Dr Henderson, which primarily consists of earlier medical reports and other medical records.

7. A letter from the Australian Federal Police (AFP) dated 15 August 2023 setting out limited assistance provided by Mr Cranston in recovering proceeds of crime from the conspiracies.

7. On 17 August 2023, the day after the hearing, Mr Cranston provided to the Court a further letter from the AFP dated 17 August which he sought to rely on. That letter also detailed limited assistance given by Mr Cranston in proceedings against him under the Proceeds of Crime Act 2002 (Cth).

8. I have taken all of this material into account. To the extent it is relevant, I will address the evidence in what follows.

Relevant facts

9. The facts found in this judgment are not drawn from sentences imposed upon Mr Cranston’s co-conspirators and relate only to Mr Cranston. One matter bears particular emphasis in making these findings. The Crown case against Mr Cranston was, in large measure, a circumstantial case. Given the content of the recordings, in particular, the Crown had a compelling circumstantial case. I do not propose to examine all of the pieces of circumstantial evidence in minute detail but, rather, will focus on the important submissions made by the parties having an effect on my ultimate conclusions.

10. In September 2016, the AFP commenced an investigation into an alleged conspiracy between several persons to dishonestly cause a loss to the Commonwealth (the tax fraud conspiracy). The tax fraud conspiracy involved the establishment and operation of a payroll services company, named Plutus Payroll Australia Pty Ltd (Plutus), and a number of apparently unrelated sub-contracting companies, which were in truth controlled by a number of the conspirators (the second tier companies). The purpose of establishing this structure was to deprive the Commissioner of Taxation of Pay As You Go Withholding (PAYGW) amounts and Goods and Services Tax (GST).

11. Between 2014 and 2017, Plutus collected from its legitimate clients $141,291,923.08 in PAYGW and GST that it was obliged to remit to the ATO. At least $105,625,304.36 was misappropriated as a result of the conspiracies (74.7% of all PAYGW and GST amounts collected by Plutus). Only $30,883,342.47 was ever remitted to the ATO and a further $4,783,276.25 was later garnisheed by the ATO.

12. The conspirators agreed to launder the money which should have been paid to the ATO (the money laundering conspiracy). In furthering the money laundering conspiracy, in ways I will explain in greater detail, various entities were used to receive, conceal and divert the misappropriated taxes derived from the tax fraud conspiracy, essentially for the benefit of a number of the conspirators.

13. Mr Cranston was one of the architects of the scheme, along with Jason Onley, Peter Larcombe and Simon Anquetil. Joshua Kitson was involved from the beginning of the tax fraud conspiracy and was a significant participant in that conspiracy. Mr Menon become over time a pivotal participant in both conspiracies.

14. For reasons I will explain, I am satisfied that Mr Cranston was a knowing participant in both conspiracies from their outset.

The tax fraud conspiracy

15. Between February and March 2014, at least five of the conspirators, Mr Cranston, Mr Onley, Mr Anquetil, Mr Kitson and Mr Larcombe (now deceased) had meetings at so called “gentlemen’s clubs” in the Sydney CBD during which they discussed a scheme which involved operating a payroll business as a means to misappropriate PAYGW amounts and GST that was payable to the ATO. Early discussions of the scheme proposed an “agency” model, whereby a payroll services company could act as an agent for labour hire companies. This model was not ultimately adopted. Instead, the subcontractor arrangements with the second tier companies were adopted. This is significant because Mr Anquetil and Mr Kitson, [redacted], were never in a position to operate or control the second tier companies, which were the engine of the conspiracies. As I will explain, it was always Mr Cranston, Mr Onley and Mr Larcombe (before he fled Australia) who controlled the second tier companies. The scheme was never “Mr Anquetil’s scheme”. Mr Anquetil could not extract funds from the second tier companies without the express permission of Mr Cranston, Mr Onley or Mr Larcombe (until he fled Australia).

16. A payroll company, Plutus, was incorporated on 23 April 2014 with Mr Anquetil as the sole director. Legitimate clients of Plutus included initially, contractors, and later, larger companies and even government agencies. The principal incentive for contractors and companies to sign as clients of Plutus was the fact that Plutus did not charge any fee for its services. Plutus was designed to be “squeaky clean” and apparently compliant with its taxation obligations.

17. The tax fraud conspiracy operated and was implemented as follows:

1. Legitimate clients made regular transfers of gross payroll amounts to Plutus pursuant to contractual arrangements. Gross payroll comprised wages and salaries, PAYGW amounts and superannuation. GST was paid by the legitimate clients on the total gross payroll amounts. Plutus was obliged under contracts with legitimate clients to pay the wages and salaries of the relevant employees and contractors, withhold and remit to the ATO the required PAYGW and GST amounts, as well as remit the employees’ superannuation contributions to their superannuation funds.

2. Between July 2014 and March 2016, Plutus transferred the gross payroll monies, in full, to the second tier companies, controlled by Mr Cranston, Mr Onley and Mr Larcombe (until he fled Australia). The controllers of the second tier companies arranged for vulnerable and unsophisticated people who did not understand the operations of the second tier companies to be appointed as the sole shareholders and directors of the second tier companies. The controllers of the second tier companies then arranged for apparently unrelated third parties to "manage" the second tier directors. In the period from mid-2015 to mid-2016, that role was filled by Mr Simon McIntyre.

3. In the period from mid-2016 to February 2017, Mr Daniel Rostankovski, under the direction of Mr Cranston, Mr Onley and Mr Menon became responsible for recruiting and managing the directors of the second tier companies and ensuring they had no unsupervised involvement in the operations of those companies. In their liaison with Plutus staff, accountants and other third parties, Ms Cranston and Ms Hammond signed off as the named directors of the second tier companies or as “bookkeepers” assisting the directors in email communications.

4. In the period from April 2014 to February 2015, Ms Cranston and Mr Willmott were principally involved in the operation of the second tier companies’ accounts from a “back office”, at the instruction of Mr Cranston, Mr Onley and Mr Larcombe.

5. In the period from February 2015 to May 2016, Ms Hammond and Mr Willmott were principally involved in the operation of the second tier companies’ accounts from this “back office”, at the instruction of Mr Onley, Mr Larcombe and Mr Cranston. From March 2015, Mr Menon was involved in the “back office” operation of the conspiracies as an accountant and lawyer.

6. On 26 August 2015, Mr Larcombe left Australia, never to return. Mr Larcombe had little involvement in the conspiracies after August 2015. Mr Larcombe died in Los Angeles on 19 August 2016.

7. From May 2016 to May 2017 Ms Cranston and Ms Hammond were engaged in conducting the day-to-day management and operation of the second tier companies. Throughout this period, they acted on the instructions of Mr Onley, Mr Cranston and Mr Menon.

18. Although the legitimate client companies’ agreements with Plutus contained a clause enabling Plutus to assign or sub-contract its obligations, Plutus did not inform its legitimate clients about the sub-contracting arrangement it had put in place with the second tier companies. This is because the sub-contracting arrangement was a mechanism designed to misappropriate amounts which should have been paid to the ATO. While the second tier companies would pay the contractors and employees of the legitimate companies amounts representing their net wages and superannuation, the second tier companies would, from the very beginning, remit only part of the taxes required to be paid to the ATO. Instead, for the entire period of the conspiracies a large proportion of these taxes would be retained by the second tier companies and not paid to the ATO but distributed according to the instructions of the controllers of the second tier companies.

19. The second tier companies paid the amounts which should have been paid to the ATO principally to other entities controlled by Mr Onley, Mr Larcombe, Mr Cranston and Mr Anquetil, often as payments of fabricated “invoices”, as well as to individuals including the conspirators. The second tier companies in some cases made payments back to Plutus. Over time the liabilities of the second tier companies to the ATO grew at an alarming rate. Annexed to these reasons and marked Annexure 1 is Exhibit II from the trial which shows the dramatically increasing obligations of the second tier companies to the ATO and the extent to which the second tier companies fell further and further behind in their tax payment obligations.

20. In March 2016, Plutus began to retain a portion of the funds it received from legitimate clients before the gross payroll amount plus GST was remitted to the second tier companies. I describe this as the Plutus cut. I accept [redacted]’s evidence that the manual process implementing the Plutus cut commenced in March 2016. The Plutus cut was also used to divert PAYGW and GST which should have been paid to the ATO to purchase lavish personal items for the conspirators.

21. After 1 July 2016, regular payments by Plutus of amounts which should have been paid to the ATO were made to a newly incorporated company controlled by Messrs Cranston and Onley, Synep Ltd (Synep). Payments were made from Synep for lavish personal expenditure on behalf of the principal conspirators, including Mr Cranston. From the commencement of its operation, Synep was a vehicle for the continuation of the conspiracies.

22. Mr Menon was an accountant and a lawyer. He was a partner at Clamenz Lawyers (Clamenz) which was initially located in the same building as Plutus. From June 2015, Mr Menon was knowingly involved in ensuring that the sub-contracting arrangement and front office facade was maintained and the back office dealings of the second tier companies were not exposed.

23. While Plutus lodged Business Activity Statements (BASs), throughout the period of the tax fraud conspiracy, the second tier companies either lodged their BASs late (up to 13 months late) or did not lodge a BAS at all.

24. There were eight second tier companies involved in these conspiracies:

1. ACN 169 184 909 Pty Ltd (t/as Keystone Pay) (Keystone)

2. Uneek Consulting Services Pty Ltd (later renamed Keystone Payroll Australia Pty Ltd, then later PPA Contractors Australia Pty Ltd) (Uneek)

3. Sonar Consultants Pty Ltd (later renamed PPA Services Australia Pty Ltd) (Sonar)

4. PP Aus Holdings Pty Ltd

5. PP Australia NSW Pty Ltd

6. PP Services (WA) Pty Ltd

7. PPA (SA) Pty Ltd

8. PPA NT Pty Ltd

25. Companies (4) to (8) are referred to as the “PP Companies”. Annexed to these reasons as Annexure 2 are exhibits PP, QQ and RR from the trial which illustrate diagrammatically how money was moved as part of the conspiracies in the three taxation years during which the conspiracies operated.

26. On 8 June 2016, Keystone was placed into liquidation. The ATO investigation into the conspiracies only commenced in earnest in the second half of 2016. On 8 and 22 December 2016, two bank accounts held in the name of Uneek were garnisheed by the ATO. Sonar never had a separate bank account and used Uneek’s accounts. On 24 January 2017, the ATO garnisheed the five PP second tier companies’ accounts. After 24 January 2017, Plutus managed its obligations to its legitimate clients by paying salary, wages and superannuation directly from Plutus.

27. Between January and May 2017, a number of discussions between the conspirators were recorded by surveillance devices installed at Clamenz at the MLC Centre in Martin Place, Sydney. During these discussions, the conspirators, including Mr Cranston, spoke in explicit terms about the fraud, including its history, key features, how it was implemented and the conspirators’ respective involvement and financial gains.

28. On 1 February 2017, at Clamenz, Mr Rostankovski issued the principal conspirators, including Mr Cranston, with a blackmail demand for $5 million. Mr Rostankovski threatened media exposure of the conspiracies and violence if the blackmail sum was not paid. After the blackmail demand of $5 million had been almost completely paid via instalments, a further blackmail demand was made for an additional $20 million. Over 12 weeks, a total of $24.24 million in PAYGW and GST which should have been paid to the ATO was retained by the conspirators and was transferred from Plutus to the trust account of a law firm, Lands Legal, to satisfy the blackmail demands. Mr Rostankovski and a Mr Daniel Hausman pleaded guilty and have been imprisoned for conduct arising from these events. Mr Sevag Chalabian, a solicitor at Lands Legal, was found guilty by a jury of money laundering in relation to these events and is serving a sentence of imprisonment.

29. On 26 April 2017, the ATO served a garnishee order on bank accounts operated by Plutus. The conspiracies concluded after the AFP arrested a number of people, including Mr Cranston, on 17 and 18 May 2017.

The money laundering conspiracy

30. The conspirators agreed that taxes dishonestly withheld from the Commonwealth would not be paid to the ATO but would instead be dealt with for the ultimate benefit of the conspirators. The quantum of misappropriated taxes increased each financial year. The means by which monies were misappropriated adapted and evolved. In furtherance of the money laundering conspiracy, monies were received, concealed and disposed of through bank accounts owned by companies associated with the conspirators.

31. Acts in furtherance of the money laundering conspiracy included:

1. The PAYGW and GST amounts withheld by the second tier companies by the “back office” were transferred to a number of entities’ accounts, controlled by and associated with, in particular, Mr Cranston, Mr Onley and Mr Anquetil and used to purchase real property, luxury cars, a boat, an aeroplane and other luxury items in which conspirators were joint or principal beneficiaries. At times, funds transfers were also accompanied by false invoices and false descriptions such as loans. Ms Cranston, Ms Hammond and Mr Willmott made these transfers at the instruction of others, in particular Mr Cranston, Mr Onley, Mr Larcombe and Mr Menon.

2. Some of the PAYGW and GST which should have been paid to the ATO was also transferred by the second tier companies to other entities owned by Mr Anquetil, and some of those amounts were transferred back to Plutus to make Plutus appear to be a legitimate and profitable company. To the extent that senior counsel for Mr Cranston, Mr Stratton SC, submits that Mr Cranston ever believed that Plutus was a profitable company, I reject that submission. Mr Cranston was involved with the inner workings of the conspiracies and knew at all times that Plutus was not legitimate or profitable. Mr Cranston knew from the beginning that Plutus did not charge any fee for its services. He also knew from the beginning that Plutus’ subcontractors, the second tier companies, which he controlled, had failed to pay millions of dollars in PAYGW and GST to the ATO which they should have paid. Mr Cranston knew that if the authorities realised that Plutus and the second tier companies were not dealing at arm’s length and that he controlled the second tier companies he was at risk of criminal prosecution.

3. From at least October to December 2014 large sums of PAYGW and GST amounts which should have been paid to the ATO were transferred by the second tier companies to a company controlled by Mr Anquetil named Media and Marketing Group (MMG) and transferred by MMG back to Plutus to make Plutus appear to be legitimate and profitable.

4. From 1 July 2016, the Plutus cut was transferred through Synep, which became the parent company of Plutus, and other entities, for the benefit of Mr Cranston, Mr Onley and Mr Anquetil. This was a way in which to make Synep appear to be legitimate and profitable.

32. The main financial beneficiaries of the money laundering conspiracy were Mr Cranston, Mr Onley and Mr Anquetil. Written submissions were made on behalf of Mr Cranston that the tracing exercise of the forensic accountant who gave evidence at the trial, Ms Celona, and in particular her use of the “first in, first out” method of tracing, was unreliable. I reject that submission. Ms Celona’s evidence was convincing and uncontradicted. The “first in, first out” method of tracing is a widely used method and provides, as Ms Celona persuasively explained, a conservative approach. I am satisfied that the tracing exercise identified in Ms Celona’s evidence was reliable. I accept her evidence.

33. I find that for his role in the conspiracies, Mr Cranston received a financial gain of not less than $6,861,782.17 (Trial Exhibit LL, Diagrams 1-5 and 7 are Annexure 3 to these reasons). Some of the monies received by Mr Cranston traced from Plutus funds were used toward the purchase of a truck, luxury cars, a plane, a caravan, and three properties (Trial Exhibit LL, Diagrams 11-26 are Annexure 4 to these reasons).

Commencement of Mr Cranston’s knowing involvement in the conspiracies

34. As I have said, Mr Cranston was involved in the initial planning and set up of Plutus and the second tier companies. Having regard to all of the evidence, I find that Mr Cranston became knowingly involved in the conspiracies from the outset, being from February 2014. I reject the submission that Mr Cranston did not have knowledge of the tax fraud conspiracy in the period up to June 2016. This submission relies on the premise that the evidence of [redacted] should not be accepted unless corroborated by independent witnesses. For the reasons explained below, I accept the evidence [redacted]. That evidence was compelling and consistent with the verdict of the jury.

[redacted]

35. [redacted]

36. [redacted]

37. [redacted]

38. [redacted]

39. [redacted]

40. [redacted]

41. [redacted]

42. [redacted]

43. [redacted]

Non-exculpatory duress

44. Mr Cranston relied upon what was submitted to be non-exculpatory duress, submitting that I should make the same finding in relation to him as I did in relation to Mr Menon in R v Dev Menon [2023] NSWSC 768 at [50] and in relation to Mr Anquetil in R v Anquetil [2020] NSWSC 995 at [100]. The Crown accepted that I should make that same finding here. As I will explain, I take non-exculpatory duress into account in that same limited way. The following principles, relied upon by the Crown, were not disputed by Mr Stratton SC. Drawing upon Tiknius v R [2011] NSWCCA 215; 221 A Crim R 365 at [45]-[46], [49]-[54]; Kao v R [2020] NSWCCA 38 at [39], [45]; and Giang v R [2017] NSWCCA 25 at [33] it was submitted that I should proceed on the basis that:

1. The Court is entitled to approach non-exculpatory duress claims with a significant degree of circumspection. It is easy to make claims as to the conduct of persons applying pressure on an offender.

2. The Court is required to make careful assessment of the evidence in support of asserted non-exculpatory duress. The onus of proof is on the offender. Even where that onus is discharged, the Court still has to decide what weight non-exculpatory duress has on sentence.

3. The Court is also required to consider the form and duration of the offender’s conduct, the nature of threats made and the opportunity to report this to the authorities.

4. The Court is required to articulate the objective gravity and moral culpability of the offending in light of the duress.

45. I am bound by, and in any event respectfully agree with Johnson J in Tiknius that it is necessary to keep in mind, even at the sentencing stage, some of the policy considerations underlying the law of duress. In Taiapa v The Queen (2009) 240 CLR 95; [2009] HCA 53 at 106 [31], French CJ, Heydon, Crennan, Kiefel and Bell JJ accepted as a starting point when considering the reasonableness of a person's actions (concerning the defence of duress), the proposition stated by King CJ in R v Brown (1986) 43 SASR 33 at 40:

The ordinary way in which a citizen renders ineffective criminal intimidation is to report the intimidators and to seek the protection of the police. That must be assumed, under ordinary circumstances, to be an effective means of neutralizing intimidation. If it were not so, society would be at the mercy of criminals who could force pawns to do their criminal work by means of intimidation.

46. General deterrence has a very substantial role on sentence in cases where non-exculpatory duress is relied upon by the offender: R v Riddell [2009] NSWCCA 96; (2009) 194 A Crim R 524 at 536-539 [54]-[63]; R v Roach [2005] VSCA 162 at [15].

47. Whilst no doubt the threats of violence made by Mr Rostankovski were frightening to Mr Cranston, as I explained in R v Cranston (No 9) [2021] NSWSC 1413, he and the other conspirators quickly turned the blackmail demand to their own perceived advantage. Mr Menon, with Mr Cranston’s knowledge, drafted a deed which he intended would pass the liability for the unpaid tax to the straw directors. Mr Cranston’s contemporaneous assessment of the outcome of the blackmail negotiations was that “it’s actually a blessing in disguise”.

48. The resolution of the blackmail demand also involved affidavits being sworn by the straw directors which Mr Cranston and the co-conspirators knew to be false. Mr Menon said at the time to Mr Cranston and others:

1. “Once we got the affidavits I’ll feel comfortable that they’re stitched up to the max, right. Any criminal … case or anything, it’s like these are the affidavits signed by their lawyer”;

2. “Once we’ve had the last ….(indistinct)….and from there its going to be almost impossible for them to weasel out of this…”;

3. “Oh, its already done. He sent me them. Like he’s – sorry, he sent me photos of the affidavits signed and he’s confirmed in writing with me saying ‘I am in possession of all things, I make an undertaking that I will hand up’ – We’re gonna get it mate.”

49. Once the deed and the affidavits were in place Mr Cranston and his co-conspirators believed that they had passed the tax debts onto the straw directors. From that point, Mr Menon states on the recordings that he would go straight to the police if he was again threatened. I find that it was only the need to prevent their criminal conduct from being exposed which prevented Mr Menon and Mr Cranston from approaching the authorities about the blackmail. As Mr Menon explained on 7 February 2017 to Mr Anquetil and Mr Cranston:

MENON: But that’s only if he’s got the deeds and the affidavit, and if we wind up everything they’ll have nothing to blackmail us with. Like there won’t be anything to blackmail us with. It’ll be like you can’t blackmail us, we’ll just go to the cops.

50. I find that the payment of almost $25 million to Mr Rostankovski and Mr Chalabian was not made under duress. I find that the payment was made principally to avoid detection of the crimes Mr Cranston and his co-conspirators had committed. A part of Mr Cranston’s participation in this blackmail payment, however, was fear of threats made to him by people he believed were linked to criminal organisations. This bears on Mr Cranston’s moral culpability, in much the same limited way as it bore on Mr Anquetil’s and Mr Menon’s.

Mr Cranston’s role in the tax fraud conspiracy

51. Mr Cranston’s role and participation in the tax fraud conspiracy involved:

1. Planning how the tax fraud conspiracy would operate with Mr Anquetil, Mr Larcombe, Mr Onley and Mr Kitson;

2. Planning and discussing key developments in the scheme including the incorporation of new second tier companies, the liquidation of existing companies and the implementation of the Plutus cut;

3. Directing and overseeing the operation of the second tier companies and supervising Mr Willmott, Ms Cranston and Ms Hammond;

4. Utilising his personal associates, such as Aaron Paul and Christopher Guillan, to recruit straw directors for relevant entities;

5. Arranging for the incorporation of Synep and its purchase of Plutus in order to lend legitimacy to the conspiracies and extract funds from the scheme; and

6. Planning and discussing how the scheme could be concealed including through the destruction of records and the removal of certain Plutus staff members.

Initial planning

52. Mr Cranston was part of the initial group of conspirators who established the tax fraud conspiracy. Between February and April 2014, Mr Cranston met with Mr Anquetil, Mr Kitson, Mr Onley and Mr Larcombe to discuss and agree to a tax scheme utilising a payroll business.

53. [redacted]

54. In March or April 2014, Mr Anquetil and Mr Kitson met with Mr Cranston, Mr Onley and Mr Larcombe at “The Men’s Gallery” on Pitt Street, Sydney. During this meeting, they discussed how quickly the planned payroll business could be set up and how quickly Mr Kitson could bring contractors to the business. There was some evidence about mobile phones being distributed by Mr Cranston, but I do not think that evidence went anywhere, either against Mr Cranston’s interests or for them.

55. During initial discussions, to which Mr Cranston was a party, it was discussed that the “front office” company, Plutus, would act as a legitimate company and would seek to grow its customer base through the attraction of a zero-fee service.

56. On 15 April 2014, Mr Anquetil sent a Skype message to Mr Kitson about the agency model (which was not the model ultimately used by the conspirators) saying “i had quite the brainwave on this idea over the weekend and i had to get in front of Jay today to check them thru with him and the other guys running the payroll”. [redacted] I accept, that the “other guys” included Mr Cranston. Mr Cranston submitted that the messages between Mr Anquetil and Mr Cranston on this day indicated that from the outset, it was Mr Anquetil’s idea to make money out of the scheme “and then sell it to others” including Mr Cranston. I reject this submission. From the beginning it was the second tier companies, controlled by Mr Cranston, Mr Onley and (until he fled the country) Mr Larcombe, which were at the centre of the tax fraud and money laundering conspiracies. Mr Cranston knew, from the beginning, that Plutus did not charge any fees for its services. Mr Cranston knew, from the beginning, that Plutus’ subcontractors, the second tier companies, had deliberately failed to pay millions of dollars in PAYGW and GST to the ATO that should have been paid. Unlike the rest of the world, Mr Cranston and the co-conspirators knew that Plutus and the second tier companies were not acting at arms-length. Legitimate and profitable companies do not have secret arrangements with subcontractors not to pay millions of dollars in tax. Plutus was never a legitimate and profitable company and Mr Cranston knew that throughout.

57. During this initial phase, other meetings involving Mr Cranston were held where aspects of, and possible improvements to, the scheme were discussed. [redacted]

Meetings while Mr McIntyre was managing straw directors (mid-2015 to mid-2016)

58. Mr Cranston was present for various discussions between mid-2015 and mid-2016 at the Aventis office involving Mr Menon, Mr Larcombe, Mr Onley, Mr Willmott and Mr McIntyre, who was then managing the second-tier directors. During these meetings, they discussed company names and structures, changing the directors of companies, creating new companies and ensuring that the straw directors did not talk to the ATO.

59. I accept Mr McIntyre’s evidence on this subject. Mr Cranston was present for one meeting shortly before Mr McIntyre ceased managing the second tier directors, where participants discussed raising the amounts of money to be paid to the straw directors to increase their efficiency.

60. Mr Cranston would occasionally attend the second tier company “back office” and talk about company structures, names and directors.

61. As I have already said, I reject Mr Cranston’s submission that in the period until June 2016, he had no knowledge of the tax fraud conspiracy. There is abundant evidence from [redacted] that from the beginning, Mr Cranston was a participant in the conspiracies. The evidence proved that Mr Cranston was a controller of the second tier companies, which had not paid millions of dollars in PAYGW and GST which should have been paid to the tax office. At all times Mr Cranston was aware that PAYGW and GST, in the millions of dollars, which should have been paid by the second tier companies to the ATO was not paid. The clients of Plutus, to whom promises had been made to make those tax payments, were not aware of the second tier companies or that tax which should have been paid on their behalf was being misappropriated by the controllers of the second tier companies.

62. I reject the submission that Mr Cranston was in much the same position as the Plutus employees Tim Fox and Tim Munk. One critical difference between them was that Mr Cranston was a controller of the second tier companies and knew that PAYGW and GST, in the millions of dollars, which should have been paid by the second tier companies to the ATO was not being paid. A second critical difference is that Tim Fox and Tim Munk believed that the second tier companies were acting at arm’s-length from Plutus. Mr Cranston knew that they were not.

Dealing with straw directors

63. I find that Mr Cranston was aware that from mid-2016 Mr Rostankovski was managing the straw directors of the second tier companies. This is clear from his attendance at meetings and various recorded conversations.

64. On 10 and 25 October 2016, Mr Menon talked to Mr Cranston about Mr Rostankovski getting a car. On 11, 17 and 19 October 2016, Mr Cranston talked to Mr Menon or Mr Onley about Mr Rostankovski’s pay. On 30 November 2016, Mr Menon told Mr Cranston about a conversation he had had with Mr Rostankovski about the straw directors. On 13 January 2017, Mr Cranston complained to Mr Menon about Mr Rostankovski not being proactive in dealing with the straw directors given how much they paid him. Mr Menon said in relation to Mr Rostankovski “You’ve gotta be on top of these directors each week, you’ve gotta go see them, do you know what I mean?” to which Mr Cranston replied “That’s his job, man”. On 27 January 2017, Mr Onley, Mr Menon and Mr Cranston discussed having Mr Rostankovski open bank accounts that had been frozen.

63. Mr Cranston occasionally dealt with Mr Rostankovski directly. On 19 October 2016, Mr Cranston discussed Mr Rostankovski’s pay with him. On 24 January 2017, Mr Rostankovski attended the Clamenz office and spoke with Mr Cranston, Mr Menon and Mr Onley.

64. I find that Mr Cranston knew at all times that all of the straw directors of the second tier companies were not capable of performing the role of company director. That conclusion is underlined by what Mr Cranston said about various of these straw directors:

1. In relation to Alexander Nappa, Mr Cranston asked if he was “smart enough to sit in a meeting”.

2. In relation to Danielle McDonnell, Mr Cranston called her “the mad girl that’s gone off her head”.

3. In relation to Anthony Palumberi, Mr Cranston called him “illiterate” and said “The guy’s got an IQ of like fifty four … He’s probably a section ten, mate. Have you checked he’s not a section ten?”

67. Mr Cranston was involved in discussions with Mr Paul and others about finding new straw directors to replace those managed by Mr Rostankovski. Mr Cranston and Mr Menon coached Mr Paul about what to say to potential new straw directors, how much money to offer them and what they had to do.

Meetings from mid-2016 onwards

68. From mid-2016 onwards, Mr Cranston attended meetings with other conspirators during which they discussed the tax liabilities of the second tier companies, liquidating second tier companies without paying those liabilities, starting new second tier companies in their place, avoiding detection and managing the straw directors. During these meetings, Ms Hammond and Ms Cranston would provide information about the tax liabilities of each company and how much was being paid to the ATO compared to the 60% target.

The Plutus cut

69. I find that Mr Cranston was aware of the automation of the Plutus cut from November 2016. On 17 November 2016, Mr Cranston told Mr Menon that less than gross wages was being sent from Plutus. Mr Menon said that this was because Plutus was withholding super and because they were keeping “the twenty, the twenty per cent clip”.

70. On 30 November 2016, Mr Cranston asked Mr Menon if “Simon’s numbers are back up again?”.

71. On 30 January 2017, Mr Anquetil referred to “the margin that we took; the margin that we; calling the margin we took one point seven mill, okay”, to which Mr Cranston replied “Yep”. During this discussion, Mr Menon talked about reducing the “month percentage margin”.

72. On 7 February 2017, in a discussion between Mr Cranston, Mr Menon and Mr Kitson, Mr Menon referred to “what we did with glitches and shit”.

73. On 20 February 2017, Mr Menon told Mr Onley and Mr Cranston, in the context of paying the blackmailers, that “we’re already taking the margin out of it. Right they didn’t fucking notice … Do you get what I’m saying? … we’re already taken the margin out of it so don’t worry they don’t know the real numbers”.

74. On 1 March 2017, the following discussion took place between Mr Cranston and Mr Menon:

CRANSTON:   … the discount gets reduced as of, like, this week?

MENON:   I would – my advice would be stop taking the money as of tomorrow.

CRANSTON:   Yep.

MENON:   And jack that up fucken eight percent, six percent or something where they can’t really tell. It’s too small what you won’t be able to even know.

CRANSTON:   Yep. They won’t be able to pick that up. No way.

MENON:   That’s what I’m saying. That’s what you have to do.

CRANSTON:   Yep.

…

CRANSTON:   We can send them cooked figures and then you just undercook it by whatever the discount is.

…

MENON:   … I agree, we’ll play with the numbers.

Synep

75. In early 2016, Mr Anquetil, Mr Cranston, Mr Onley and Mr Menon met at Clamenz, where Mr Cranston and Mr Onley said they would incorporate a public company and purchase Mr Anquetil’s shares in Plutus for $5 million. During this meeting, Mr Menon suggested that the purchase would be effected by payment from Plutus to Mr Anquetil, which would be accounted as a loan between Synep and Plutus. This is what occurred.

76. Mr Stratton SC submitted that when Synep purchased Plutus, Mr Cranston was unaware that Plutus was not making a profit through lawful means. He submitted that I should reject the evidence of [redacted] that Mr Cranston was aware of this state of affairs. I reject this submission and I accept the evidence of [redacted]. I find that the conspirators, including Mr Cranston, knew throughout that Plutus and Synep were never profitable, unless PAYGW and GST which should have been paid to the tax office was treated as Plutus’ property or “income” able to be spent.

77. On 14 March 2016, Mr Cranston and Mr Onley incorporated Synep, which ultimately purchased Plutus from Mr Anquetil. Mr Menon recruited Mr Ian Stephens to be a director of Synep, although Mr Stephens played no role in the operations or decision-making of the company. Mr Menon handled the incorporation of Synep and arranged meetings with Mr Cranston and Mr Onley about Synep.

78. [redacted]’s evidence was that it was March 2016 when Mr Onley told him that Mr Larcombe and Mr Willmott had taken millions of dollars from the scheme for themselves. It is correct that [redacted] has confused the date of this conversation. Mr Onley learnt of Mr Larcombe’s embezzlement only in May 2016, rather than March 2016 as [redacted] stated. I do not think this error is significant.

79. This is because the evidence is clear that Synep, from the beginning, was intended by its controllers, Mr Onley and Mr Cranston, to facilitate the movement of funds between Plutus, the second tier companies and the conspirators. From its inception, Synep did exactly that. [redacted]’s evidence, in substance, was of a plan to do exactly what Mr Cranston and Mr Onley actually did.

Concealing the conspiracy and destroying records

80. Mr Cranston agreed with others about limiting certain kinds of communication to avoid detection. He was recorded at various times requesting that others contact him on “the WhatsApp thing” or the “other thing”. On 27 January 2017, Mr Onley told Mr Menon and Mr Cranston that none of them should have their phones on them. Mr Onley later said he would put his phone on aeroplane mode and Mr Cranston said “Don’t talk over the phone”. Mr Onley continued that “the one thing that will get us fucked”, to which Mr Cranston responded “Is phones”. During this discussion, they talked about wire taps and not texting. Mr Onley said that they were mitigating their risk by having no links, no texts and no emails. On 27 January 2017, Mr Cranston asked Mr Anquetil if he had Whatsapp, but Mr Onley cautioned against using their phones.

81. Mr Cranston played an active role in a series of emergency meetings at Clamenz in late January 2017 following the ATO garnisheeing some of the second tier companies’ bank accounts.

82. In a meeting on 24 January 2017, Mr Menon, Mr Cranston, Mr Onley, Ms Cranston and Ms Hammond discussed ways in which they could keep the ATO from investigating or uncovering the conspiracies. They all agreed that Mr Palumberi would not sound convincing if he were interviewed by the ATO and that it would be best if he were paid by the conspirators to leave Australia. They discussed which second tier companies should be wound up and which should be retained. Mr Menon suggested that PPA NT would lodge and then be liquidated. Mr Menon confirmed that corporate keys had been requested and would be sent to the relevant accountants for the five new directors that Mr Paul had obtained.

83. On 27 January 2017, Mr Menon and Mr Cranston put together a spreadsheet of “income” (which was in fact money collected as PAYGW and GST which should have been paid to the tax office) and expenses to budget what needed to be done to continue the scheme. Mr Cranston said of PAYGW and GST “That’s total income right”, to which Mr Menon responded “Yep. So let’s put back the income”.

84. On 30 January 2017, Mr Anquetil, Mr Cranston and Mr Menon again talked about the figures they had worked out, in the context of Mr Menon raising a concern about continuing to run the Plutus scheme.

85. In a number of conversations, Mr Cranston talked about destroying documents and records. For example, on 7 February 2017, Mr Cranston said “we’ll take the boat out. … We’ll take all the shit on the boat (whistle) passed the Heads”. On 14 February 2017, Mr Menon said to Mr Cranston, Ms Hammond and Ms Cranston that they needed to go through and wipe emails and messages. When Ms Cranston said “Wipe the whole phones. Get new phones”, Mr Cranston replied “100% … Means you can’t reload them back, like”. On 23 February 2017, Mr Menon, Mr Onley and Mr Cranston discussed burning records and retrieving computers from Mr Rostankovski. On 27 February, they, along with Mr Kitson and Mr Anquetil, discussed getting accounting data off the Xero software system. On 13 April 2017, Mr Menon, Mr Kitson and Mr Cranston talked about hacking and destroying documents. On 28 April 2017, Mr Menon asked Mr Kitson, Mr Onley, Mr Cranston and Mr Anquetil “When do we get hacked? Do we say on the weekend or no?”.

86. On 14 February 2017, Mr Cranston was involved in discussions about collecting the paperwork and laptop of Jorge Ward, a “back office” staff member. That same day, Mr Menon said to Mr Cranston, Ms Cranston and Ms Hammond that it would be impossible to detect and decipher the financial aspects of the scheme:

MENON: There’s no forensic accountant in the world, without even, without even, I can’t even fucking piece this together. Like it’s impossible... Like mate, they will never figure it out… Like that’s the only thing that I’m actually, like a blessing in disguise was that it was such a cluster fuck, that no one will figure this out because even I, even me sitting down with you three, all of us together trying to piece it together now is fucking hard, and we know.

87. Mr Cranston discussed potential defences with his co-conspirators, including in relation to any future criminal charges. For example, on 27 January 2017, he said that his defence was that he did not receive any money. On that same day, he talked about paying 88% of the tax so that they were paying current and historical tax debts and could claim that they were paying off those debts if the ATO were ever to intervene. On 7 February 2017, in the context of Mr Cranston again discussing this potential defence, he said “there’s not one person in this that they could just point the finger at and go … he's taken it all”. On 13 February 2017, when Mr Menon asked what they would say if the ATO suggested they were promoting a scheme that facilitated organised crime, Mr Cranston responded that “the org crime I think, is a positive one ‘cause we can then turn around and say, we’re stood over”.

88. On 20 February 2017, Mr Cranston said to Mr Menon “but the money trail doesn’t lead to me though. Because I got no. Would they be able to pin me for defrauding the Commonwealth?”. That same day, Mr Cranston and Mr Menon discussed Plutus potentially taking responsibility for the debt, paying workers and coming forward. Mr Cranston asked if that would avoid “the whole criminal thing right”. Mr Cranston submitted that the reference by him in the recordings to “the whole criminal thing” does not refer to avoiding it, as the Crown suggested. I reject this submission. Later that day, Mr Cranston said he would say “I did debt collection”, and he ran through a story with Mr Menon whereby Mr Cranston would say that he thought he was buying a proper company. Mr Menon responded “Yeah Adam, you are so good at this … You’ve got a defence for everything. That was never the question”.

89. On 23 February 2017, in a discussion with Mr Menon and Mr Kitson, Mr Cranston mentioned getting “hauled in front of a … Fucken jury or something”. They discussed having a defence of saying that Plutus discovered what was going on and did its best to fix it.

90. Mr Cranston was involved in discussions about blaming the non-payment of tens of millions of dollars in tax on Mr Larcombe. For example, on 7 February 2017, Mr Menon explained to Mr Cranston and Mr Kitson how the deed incorporated the Peter Larcombe story. Mr Menon said to Mr Cranston that he should blame his side payments on Mr Larcombe. Mr Cranston then suggested that if the directors were found out “then they think it’s just Pete Larcombe anyway”. On 14 February 2017 in a conversation with Mr Cranston, Ms Hammond, Ms Cranston and Mr Paul, Mr Menon said:

So we've covered all this now and that but basically what we are saying is Peter [Larcombe] ran the whole thing. Okay. You guys had no idea what was happening, if this ever comes to it. I just want you guys to start thinking about the stories, if, obviously, Adam, this goes for you too Loz, Adam, Jay Onley, (indistinct), protects everyone right, me, every single person.

91. On 23 February 2017, Mr Menon, Mr Cranston and Mr Onley discussed Mr Larcombe and the deed with the blackmailers. Mr Cranston asked “Has he written that Peter Larcombe ran this and all that type of stuff?”. It will be recalled that Mr Larcombe had died the previous year.

92. Mr Cranston was involved in seeking to have Mr Willmott assist in concealing the fraud. On 20 February 2017, he and Mr Menon coached Mr Willmott on what to say his “story” was. On 3 March 2017, Mr Cranston was involved in a conversation with Mr Willmott and Mr Menon where Mr Menon talked about everyone getting together in a meeting room to go through their affidavits.

93. On 13 February 2017, Mr Cranston and Mr Menon discussed with Mr Paul documents that they would need to forge signatures on in order to change the directors of companies.

Mr Cranston’s awareness that tax was not being paid

94. As I have found, Mr Cranston was aware since the inception of the tax fraud conspiracy that less than 100% of the second tier companies’ tax liabilities were being paid. This finding is underlined by a number of recordings. As I have explained, I reject the submission that he had no knowledge of the tax fraud conspiracy before June 2016.

95. On 17 October 2016, Mr Menon spoke with Mr Cranston about him taking money that was set aside from money that ought to have been paid to the ATO. On 25 October 2016, Mr Menon told Mr Cranston, in the context of a discussion about how much Mr Rostankovski wanted, that “it’s a lot of money that’s owing”. On 27 October 2016, Ms Cranston asked Mr Cranston if Mr Menon told him “the percentages” to which Mr Cranston responded yes. Mr Cranston said “Oh, need to do better but, yeah, we’re – it’s not as bad as what we thought it would be”.

96. On 10 November, Mr Cranston called Ms Cranston to ask about money he wanted paid by the second tier companies to his side companies G&T Holdings Pty Ltd and Prescott Page Recoveries Pty Ltd. The following exchange occurred:

L. CRANSTON:    I'd rather, is that absolutely urgent? I'd rather pay the tax.

A. CRANSTON:   Yes it is actually urgent yeah 100 percent it's really urgent … but we'll discuss possibly getting the tax money paid alright put some more in there to pay tax or something ok.

L. CRANSTON:   We don't Adz we don't have any more mate trust me, we chase our own tail, like it's fucked

A. CRANSTON:   Okay no no Dev and I are going through the numbers today with you relax

L. CRANSTON:   Yeah but ... numbers mate you you, we're running blind, the thing that you don't understand is we actually we are running blind

A. CRANSTON:   No were not running as blind as you think we're okay

L. CRANSTON:   But we're still trying to chase up for the 8 weeks that we were behind, so it's always gonna, we're always gonna be behind the eight ball always

97. On 22 November 2016, Mr Cranston asked Ms Cranston “are you keeping up to your point 6 percent on your … on the other stuff?” to which she responded “No, we can’t do point 6, no”. Later that day, Ms Cranston told Mr Cranston the percentages of tax which should have been paid to the ATO which were actually being paid by each company, being 57%, 52%, 50%, 0.084%, 60%, 60% and 62%.

98. On 2 December 2016, Mr Menon endorsed a plan raised by Mr Cranston to continue the scheme with the existing companies rather than setting up new ones. Mr Menon said he agreed because “we’re not that far behind in taxes” and it would be better for the ATO to wind the companies up because they could say “we were happy to go, keep on going and pay our taxes”.

99. Mr Cranston participated in a recorded conversation on 24 January 2017 where Mr Menon said that Sonar “Hasn’t paid its taxes”. During this conversation, Ms Hammond and Ms Cranston explained that, in relation to PPA NT Pty Ltd, they were paying between 60% and 70% of taxes every day, and in relation to PP Services (WA) Pty Ltd, that it had a “small” tax debt each quarter of $1 million. Mr Menon said in relation to PP Australia NSW Pty Ltd, “this is going to go on the liquidation as well. N one. Like no question”. In relation to keeping some of the other companies, Mr Menon said “We’re going to keep three of them and burn two” and “Let’s have a fighting track record with them”.

Mr Cranston’s role in the money laundering conspiracy

100. I find that Mr Cranston’s role in the money laundering conspiracy was to be one of its main financial beneficiaries. He received and directed the making of payments, including through his participation in meetings and his discussions with Mr Menon and Ms Cranston in particular.

101. Mr Cranston established a number of side companies, and utilised certain existing companies within his control, to receive funds and distance himself from the receipt of those funds. Those companies were:

1. G&T Holdings Pty Ltd, incorporated on 10 September 2014;

2. Four MacDonald Pty Ltd, incorporated on 2 March 2016;

3. GoldCarz Pty Ltd, incorporated on 3 March 2017;

4. Jemz Consulting Pty Ltd, incorporated on 26 July 2016 (Jemz);

5. Prescott Page Recoveries Pty Ltd, incorporated on 4 March 2013; and

6. Aventis Partners Pty Ltd, incorporated on 21 October 2011.

102. In respect of Jemz, Mr Cranston used Mr Paul as a conduit between himself and Mr Paul O’Leary, who Mr Cranston understood was a convicted criminal, to set up the company. Mr Cranston issued instructions to Mr Paul to transfer money for the purpose of purchasing his property in Vacy, to pay for other costs associated with that property, and to arrange for false invoices to be made in the name of a second tier director.

103. Mr Cranston regularly gave instructions, particularly to Ms Cranston, to make payments for his benefit. For example, on 27 October 2016, Ms Cranston made a payment to Mr Guillan on Mr Cranston’s instructions. On 16 November 2016, she informed him that she had paid an invoice for Maddem Constructions. On 22 November 2016, he told her “Alright, well in the interim just make sure my invoices are paid. I don’t think I should suffer”. On 24 November 2016, he messaged her to have her pay $1000 from Prescott Page to a cleaning company.

104. Mr Cranston gave directions about, or was aware of, falsifying records to cover payments made for his benefit. For example, on 16 November 2016, he asked Ms Cranston if Ms Amber Grice, the director of Maddem Constructions, had “re-jigged” an invoice from that company. On 29 November 2016, he asked Mr Scott Vickery, a sole trader working on the Vacy property, to send him an invoice for work done on the property which did not show the address or Mr Cranston’s name and had “whatever you can think of” as a description for the services performed.

105. On 27 January 2017, Mr Menon asked Mr Cranston “Did you take any money when you paid the Burraneer invoices and shit hey?”. Mr Cranston replied “Yeah, but I can get Betty [Mr Daniel McCabe] to cover that though … he’s like one of us … and Amber [Grice] runs Almighty, so she knows … I trust them”. On 9 February 2017, Mr Cranston asked Ms Hammond about invoices for his property at Burraneer Bay, concerned that Ms Grice might have put his address on them. Ms Hammond assured him that his address was not on the invoices but said that Ms Grice had put the proper company name on them, so they agreed that the invoices would need to be changed. On 14 February 2017, Mr Paul and Mr Cranston discussed Mr O’Leary changing invoices and blaming the then-deceased Mr Larcombe for it. On 14 February 2017, Mr Cranston also met with Mr Menon, Ms Cranston and Ms Hammond to discuss payments that had been made for Mr Cranston’s benefit. He asked Ms Cranston about how she was going with the reconciliation of payments that had been made.

102. Following the blackmail, Mr Cranston was involved in discussions with the other conspirators about whether and how much to pay the blackmailers. On 7 and 8 February 2017, Mr Cranston talked with other conspirators about sending money to the blackmailers. On 20 February 2017, Mr Cranston, Mr Onley and Mr Menon discussed whether the blackmailers would pay the ATO. On 23 February 2017, Mr Cranston, Mr Kitson and Mr Menon talked about continuing to make payments under the blackmail deed. Mr Cranston submitted that his recorded statement that “I don’t think Sev will allow it mate … I think they’re gonna pay” indicated that he incorrectly believed that monies paid to the blackmailers would be paid to the ATO.

103. I find that Mr Cranston was also aware of Mr Onley receiving payments for his own benefit. On 25 October 2016, Mr Menon updated Mr Cranston about how much money Mr Onley was getting in comparison to him. On 15 November 2016, Ms Cranston told Mr Cranston that Mr Onley was taking $50,000 from Uneek. That same day, Mr Cranston and Mr Menon spoke about Mr Onley taking money beyond what had been agreed between them. On 30 November 2016, Mr Menon complained to Mr Cranston about Mr Onley’s spending.

104. Mr Cranston took issue with many of the diagrams prepared by Ms Celona tracing funds between Plutus and accounts associated with him. As I have already explained, the evidence of Ms Celona was convincing and uncontradicted, and utilised accepted, conservative accounting methodologies. I also reject any submission that funds which were traced into accounts formally controlled by people such as Mr Paul, Mr O’Leary or Mr Guillan were not funds used at the direction of Mr Cranston and for his benefit.

Consideration

109. The total loss caused by the conspiracies over the period between March 2014 and May 2017 was $105,625,304.36.

110. The offender is to be sentenced for offences against Commonwealth law and the Court is required to apply the terms of Part IB of the Crimes Act 1914 (Cth). The guiding principle under s 16A(1) of the Crimes Act is the imposition of a sentence which is of a severity appropriate in all the circumstances of the offence. The Court must consider the matters identified in s 16A(2) of the Crimes Act, to the extent that they are relevant.

111. Given the length and detail of the submissions made by the Crown and Mr Cranston, I will deal with the respective submissions when addressing each of the matters required to be taken into account by Part IB of the Crimes Act.

112. The offences of which Mr Cranston has been found guilty by the jury, carry the following maximum penalties: for the offence against s 135.4(3) of the Criminal Code, imprisonment for 10 years and/or a fine of $108,000; for the offence against ss 11.5(1) and 400.3(1) of the Criminal Code, imprisonment for 25 years, and/or a fine of $270,000.

113. The maximum penalty serves as a yardstick: Markarian v The Queen (2005) 228 CLR 357; [2005] HCA 25 at [30]-[31]. It is important to have regard to the maximum penalty to determine the degree to which the offender’s conduct offends against the legislative object of ensuring compliance with taxation laws. In addressing this question, care should be taken to ensure that what the offender actually did is considered, rather than any shorthand labels: Olbrich. I take the maximum penalty in each case into account as an important guidepost.

114. I take into account the approach to sentencing for a conspiracy charge which was summarised by Simpson J (with whom Spigelman CJ and Harrison J agreed) in Tyler v R; R v Chalmers [2007] NSWCCA 247; (2007) 173 A Crim R 458 at [78]-[85]. It was held in Tyler at [83]-[84] that sentencing for specific acts alone would:

[83] … be a negation of the complex inter-connection between the various participants, and the organisational nature of a conspiracy. It would represent too literal an application of the decisions that identify the ‘role’ of any participant as a relevant factor in the sentencing exercise. It would be to ignore the essential feature of the offence of conspiracy – the agreement to participate in an organised criminal activity.

[84] That is not to say that the physical acts of the offender whose sentence is under consideration are irrelevant. They are relevant, as one part of a complex tapestry…

115. Those remarks have been approved on numerous subsequent occasions: R v Nguyen [2010] NSWCCA 331 at [46]-[50]; Arenilla-Cepeda v The Queen [2012] NSWCCA 267 at [75]; Alpha v The Queen [2013] NSWCCA 292 at [69]-[70]; Elomar v The Queen (2014) 316 ALR 206; [2014] NSWCCA 303 at [684]; DPP (Cth) v Estrada (2015) 45 VR 286; [2015] VSCA 22 at [45].

116. These conspiracies demonstrate the “dangerousness” of individuals working in concert for a common unlawful end. I also proceed on the basis that it is axiomatic that general deterrence is a critical consideration in relation to white collar offences like these which are difficult to detect, investigate and successfully prosecute.

117. Before descending into the detail it is important to note that I am obliged to impose a sentence which is of a severity appropriate in all the circumstances of the offence. A “sentence” includes the head sentence and non-parole period. In Director of Public Prosecutions (Cth) v Pratten (No 2) (2017) 94 NSWLR 194; [2017] NSWCCA 42 at [61], Basten JA explained (Campbell and N Adams JJ agreeing) that “the fixing of a non-parole period is as much a part of a sentence as is the nomination of the full term”. The Court must consider the matters identified in s 16A(2) of the Crimes Act, to the extent that they are relevant, but always with the purpose of the sentence at the forefront: imposition of a sentence which is of a severity appropriate in all the circumstances of the offence.

118. I turn now to the list of factors I must take into account under s 16A(2) of the Crimes Act. I will not address those factors that the parties agreed did not apply here.

Section 16A(2)(a) – Nature and circumstances of the offence

119. I find that the two conspiracies fall towards the highest range of objective seriousness of offences of this kind, and that Mr Cranston’s role is at the top of those conspiracies.

120. The conspiracies themselves involved a high degree of sophistication, planning, deception and dishonesty. Across its duration, the scheme caused at least $105,625,304.36 of loss to the Commonwealth.

121. Both of the conspiracies involved a significant level of sophistication, premeditation, planning and deception and a high degree of dishonesty and breach of trust. This was demonstrated by the following:

1. The establishment of many corporate entities to implement the conspiracies and conceal the conspirators’ involvement;

2. The success of the conspiracies depended upon the appearance of Plutus as a legitimate company and an effective “back office” of second tier companies that processed the payments and disbursed the tax fraud proceeds on behalf of the conspirators;

3. Agreements were drafted between Plutus and the second tier companies to create an appearance of legitimacy;

4. The creation and payment of false invoices;

5. Legitimate clients who engaged Plutus were unaware that Plutus subcontracted its services to the second tier companies;

6. Unsophisticated and vulnerable people were appointed as directors of the second tier companies to create the appearance that the sub-contracting arrangement with the second tier companies was at “arm’s length” when in reality such people had no role in managing the companies they were directors of and were intended to be held responsible for any outstanding tax liability.

122. Mr Cranston was a key member of the initial group of conspirators who established the tax fraud conspiracy. He was intimately aware of the criminal purpose of the scheme and the means by which it would be achieved. Mr Cranston attended meetings in early 2014 with his co-conspirators where they had discussions as to how to improve the scheme. He was involved in the deception and set-up of sophisticated corporate structures, managed and oversaw the “back-office” operation of the second-tier companies, and was involved in discussions about the “front-office” operation of Plutus.

123. I accept the Crown’s identification of the following examples of Mr Cranston’s role, which I have found extended over more than three years:

1. Mr Cranston planned how the tax fraud conspiracy would operate with his co-conspirators, Mr Anquetil, Mr Onley, Mr Larcombe and Mr Kitson;

2. Mr Cranston planned and discussed key developments in the scheme including the incorporation of new second tier companies, the liquidation of existing entities and the automation of the Plutus cut;

3. Mr Cranston directed and oversaw the operation of the second tier company back office staffed by Mr Willmott, Ms Cranston and Ms Hammond;

4. Mr Cranston directed and arranged payment for Mr Rostankovski to manage the vulnerable second tier directors, knowing that the conspirators’ actions risked the directors being held liable for millions of dollars in tax debts. He used Mr Rostankovski and the straw directors so that he himself could keep at arm’s length and conceal his true control over the companies;

5. Mr Cranston’s dealings with proceeds of crime were sophisticated, organised and diverse. They involved the incorporation of new corporate entities and use of existing corporate entities to transfer the tax fraud proceeds for his own benefit and the benefit of other conspirators. He directed the issuing of false invoices and purported loans to disguise the transfer of funds to his various entities;

6. Mr Cranston recruited Mr Paul to carry out tasks and to act on his behalf in furtherance of both conspiracies, directing him to recruit straw directors, pay straw directors, forge signatures and destroy records;

7. Mr Cranston used Mr Paul as a conduit between himself and Mr O’Leary to set up Jemz and issue instructions relating to various payments;

8. Mr Cranston used Mr Guillan to set up G&T Holdings, acquire and maintain assets such as luxury vehicles using money derived from the tax fraud conspiracy, and arrange for transfers between companies to be falsely characterised as loans;

9. Mr Cranston used Mr Paul and Mr Guillan to distance himself from direct transactions involving tax fraud proceeds, and arranged for payments for them derived from tax fraud proceeds;

10. Mr Cranston engaged with his “back office” conspirators to arrange payments to his associated accounts when he wanted to use the tax fraud proceeds for his own benefit;

11. Mr Cranston arranged for the incorporation of Synep and its purchase of Plutus to lend legitimacy to the scheme;

12. Mr Cranston, together with others, authorised the payment of blackmail funds and instructed Mr Menon on the preparation of the blackmail deeds; and

13. Mr Cranston planned and discussed how the scheme could be concealed, including the destruction of records and the removal of certain Plutus staff members.

124. Mr Cranston was actively involved in both conspiracies for a period in excess of three years. This was a consistent and persistent demonstration of fraud over a significant period which is to be taken into account when considering the criminality of the offence: R v Hawkins (1989) 45 A Crim R 430 at 435.

125. The objective seriousness of an offence may be aggravated where it was committed for financial reward: R v Kaldor [2004] NSWCCA 425; 150 A Crim R 271 at 297 [104]; R v Lee [2007] NSWCCA 234 at [32]. I find that Mr Cranston was principally motivated by financial reward in participating in the conspiracies. He received a direct financial gain of not less than $6,861,782.17 into accounts associated with him, and used that money to acquire luxury houses, motor vehicles and goods. The offences were committed not out of need but out of greed: DPP (Cth) v De La Rosa (2010) 79 NSWLR 1; [2010] NSWCCA 194 at [261].

126. Mr Cranston was an instigator or architect of these conspiracies and one of the primary financial beneficiaries. He was plainly a willing and active participant. While he attempted to keep an arm’s length from any exposure, Mr Cranston, together with Mr Onley, were the “controlling minds” of the second tier companies, which were critical to the success of both conspiracies. He was involved from the outset, for a substantial period in excess of three years.

127. Given the significant amount of tax loss caused and money laundered, which is at the upper range of known offences dealt with by this Court, Mr Cranston’s period of involvement, and what he actually did in furtherance of these conspiracies, I find that his offending falls at the upper range of objective seriousness for offences of this kind.

128. In terms of objective seriousness, whilst Mr Anquetil pleaded guilty to receiving a larger financial benefit than Mr Cranston, Mr Cranston’s control of the second tier companies and his associated abuse of the corporate form was a factor pointing in the other direction; that is, making his role more objectively serious than Mr Anquetil’s. I find that the objective seriousness of Mr Cranston’s criminal conduct is materially the same as the other principal beneficiaries, Mr Anquetil and Mr Onley. The Crown submitted, and I agree, that the objective seriousness of Mr Cranston’s conduct is slightly above Mr Menon, who in turn is slightly above Mr Kitson, and substantially above each of Mr Willmott, Ms Cranston and Ms Hammond.

Section 16A(2)(c) – If the offence forms part of a course of conduct consisting of a series of criminal acts of the same or a similar character—that course of conduct

129. I have found that Mr Cranston’s conduct occurred across more than three years and was a persistent course of conduct which was neither spontaneous nor opportunistic. This case has some similarities with R v Agius [2012] NSWSC 978; (2012) 87 ATR 528 at 541 [62], where Simpson J found that the offenders in a conspiracy to defraud the Commonwealth, which included filing false income tax returns over several years, had engaged in a course of criminal conduct for the purposes of s 16A(2)(c).

130. The same conclusion should be reached here.

Section 16A(2)(e) – Any injury, loss or damage resulting from the offence

131. Tax fraud is a collective financial injury to the community. It is corrosive of our society. To paraphrase the Victorian Court of Appeal in DPP (Cth) v Goldberg [2001] VSCA 107, tax evasion is not a victimless crime. It is a form of corruption. In the face of brazen tax evasion, honest citizens may begin to doubt their own values and become tempted to do what they see others do with apparent impunity. At the very least, honest taxpayers are left with a legitimate sense of grievance, which is itself divisive.

132. Taxes are the price we pay for a civilised society. The $105,625,304.36 stolen by the conspirators should have been available to pay for schools, hospitals and, perhaps pointedly in this case, legal aid. This is money that the Commonwealth will need to recoup by cutting spending or by extracting a greater amount in taxation from other citizens either now or in the future in repaying borrowings.

Section 16A(2)(f) – The degree to which the person has shown contrition for the offence

133. Mr Cranston described himself to the psychiatrist Dr Henderson as “remorseful” and “ashamed and embarrassed with the pain I’ve caused”, which was “wrong, impulsive, stupid, greedy.” When asked by Professor Woods about his motivation for getting involved in the scheme, Mr Cranston referred to his drug and alcohol dependence, Mr Larcombe’s “activities”, blackmail threats and the prospect of financial gain. Mr Cranston also reported to Dr Henderson that, “By 2016, it was all too late. I was already in it, so I would try and enjoy it”.

134. There was no real attempt to demonstrate contrition for the offence and Mr Cranston is not entitled to have contrition taken into account in his favour.

Section 16A(2)(h) – The degree to which the person has cooperated with law enforcement agencies in the investigation of the offence or of other offences

135. The willingness of an offender to facilitate the course of justice by making sensible admissions and conducting the defence of his or her case efficiently is able to be taken into account as cooperation: R v Doff [2005] NSWCCA 119.

136. Mr Stratton SC and Ms Blake’s conduct of the trial on behalf of Mr Cranston was both co-operative and helpful and I record my gratitude to them and their client for that. The length of the trial was not attributable at all to the conduct of Mr Cranston’s defence. I take into account in Mr Cranston’s favour this important degree of co-operation in the conduct of the trial.

137. I also take into account, at least to a limited extent, in Mr Cranston’s favour the “uncertain suspense” for Mr Cranston created by the period of years between charge in 2017 and sentence in 2023: R v Todd [1982] 2 NSWLR 517; Sabra v R [2015] NSWCCA 38. The time taken was principally the product of the numerous delays brought about by the COVID-19 pandemic, the length of the trial itself and issues with Mr Cranston’s legal aid funding. Also relevant is the delay in Mr Cranston being sentenced, and thus classified in the prison system, by reason of legal aid issues. The understandable anxiety felt by Mr Cranston about delays to which he did not contribute is taken into account in his favour here. In doing so, I also note the remarks of Bathurst CJ in Giourtalis v R [2013] NSWCCA 216 regarding the care that needs be taken in the extent to which delay is taken into account, particularly in a complex fraud case.

138. Mr Cranston relied on a letter from the AFP dated 15 August 2023, which I marked Exhibit B on the sentence proceedings. That letter states that on 13 June 2017, Mr Cranston informed the AFP that there was an amount of money buried at the Vacy property. Through this information, the AFP subsequently seized $169,750 from the property, which was buried and concealed in a plastic bag within a cooler. In the letter, the AFP graded Mr Cranston’s assistance in this regard as being of low value, as it only assisted in the confiscation of funds. I nonetheless take it into account in Mr Cranston’s favour.

139. Mr Cranston also relied on a further letter from the AFP dated 17 August (the day following the sentencing hearing). This letter states that on 16 August 2023, the day of the sentencing hearing, consent orders were executed on behalf of Mr Cranston pursuant to s 316 of the Proceeds of Crime Act which contained various orders under that Act, including orders to forfeit property which was already the subject of various restraining orders. Mr Cranston gave an undertaking that he will not make any claim in relation to the restrained property and agreed that he will not ever apply to reinstate any of the now-deregistered companies associated with him or assert any claim or entitlement in relation to the former property of those companies. Whilst the orders were signed at a late stage, namely five months following Mr Cranston’s conviction, and I am prohibited from taking into account the substance of the orders by s 320 of the Proceeds of Crime Act, I take Mr Cranston’s cooperation as detailed in these letters into account in Mr Cranston’s favour.

Sections 16A(2)(j) and 16A(2)(ja) – The deterrent effect that any sentence or order under consideration may have on the person or on other persons

140. General deterrence is a fundamental consideration in the present sentencing exercise. That applies to both offences proved against Mr Cranston. Fraud on the Commonwealth revenue is easy to commit, difficult to detect and comes at a great cost to the community: Hili v The Queen (2010) 242 CLR 520; [2010] HCA 45 at [63].

141. In Dr Henderson’s report relied upon by Mr Cranston for the purposes of sentencing, Mr Cranston is recorded as saying this:

…“I worked in insolvency, liquifying companies with a large tax debt. I worked for Rodgers Reidy insolvency accounting. I saw directors walk away from companies without any possibility of paying their tax debt, keep their assets without a penalty and driving Ferrari’s. I was always told that it’s immoral but not illegal”. Mr Cranston added, “Plutus was to be a legitimate start-up company in 2014. I knew if it failed, if it couldn’t meet its obligations second-tier companies could be liquified so Plutus could continue to grow”.

142. Can I be clear. Installing vulnerable drug addicted people as directors of companies, running up massive tax debts in those companies by taking money from them which should be paid to the tax office and then planning to liquidate those companies with large tax debts is a very serious crime. If there are any members of the commercial or insolvency communities who engage in such activities and regard the subject matter of these conspiracies as “immoral but not illegal”, those individuals should expect, when they are apprehended, to face a lengthy sentence of imprisonment. The notion that the present conduct could ever be regarded as “immoral but not illegal” is false. For that reason, general deterrence must be at the forefront of the sentence to be imposed here.

143. In R v Huston; R v Fox; R v Henke; ex parte Cth DPP [2011] QCA 350; (2011) 219 A Crim R 209, the Queensland Court of Appeal held at [58] that sentences must do more than pay lip service to the need for general deterrence, that the conspiracy to evade tax was a form of corruption that has an “insidious corroding effect on society” and that effective deterrents are required to vindicate taxpayers and prevent this type of offending.

144. It is relevant that tax fraud is often committed by white collar criminals. This group is more likely to be first time offenders, fearful of incarceration and capable of rational cost-benefit analysis. There is a real prospect that a substantial sentence will deter offenders with similar characteristics from committing similar crimes: R v Gregory (2011) 34 VR 1; [2011] VSCA 145 at [53]-[54].

145. Money laundering, similarly, involves serious criminal activity: R v Jiao [2015] NSWCCA 95; (2015) 251 A Crim R 236 at [31]. Money laundering is vital to the success of conspiracies such as the present, because it moves the proceeds of crime to third parties, making the detection of the underlying crime more difficult: Shi v R [2014] NSWCCA 276; (2014) 246 A Crim R 273 at [109]. It also prevents the recovery of funds even if the original fraud is detected: Shi at [109]; R v Lin [2014] NSWCCA 254 at [63]. As I have said, that has proved to be the case here. The need for general deterrence is therefore considerable.

146. In his report dated 16 December 2020, Dr Henderson diagnoses Mr Cranston with Attention Deficit Hyperactivity Disorder (ADHD), Major Depressive Disorder, a mixed anxiety disorder and a substance abuse disorder. Dr Henderson stated that Mr Cranston is likely to experience custody in significantly more burdensome terms due to his mental health impairments. Professor Wood made similar diagnoses and reached essentially the same conclusion.

147. Mr Stratton SC submitted that the psychiatric condition of Mr Cranston is such that moral culpability was reduced and general deterrence should play a lesser role, referring to De La Rosa at [177]. Further, he submitted that specific deterrence has a reduced role in this case because of Mr Cranston’s psychiatric condition and because he has already suffered great reputational damage such that it is very unlikely he will be able to commit any similar offences again. I accept that in relation to moral culpability, it has long been accepted that “[w]here the state of a person’s mental health contributes to the commission of the offence in a material way, the offender’s moral culpability may be reduced” with potential consequential effects upon the weight to be afforded to the various sentencing factors, including denunciation and general deterrence. This form of connection between the offence and its commission might be described as “a” causal connection, but it need not be the direct or precipitating cause: Moiler v R [2021] NSWCCA 73 at [59] per Button J with whom Basten JA and Davies J agreed; DS v R; DM v R (2022) 109 NSWLR 82; [2022] NSWCCA 156 at [95] (per Beech-Jones CJ at CL, N Adams and Cavanagh JJ).

148. Having carefully considered De La Rosa and the principles it establishes, and cases in the Court of Criminal Appeal which have explained those principles such as Moiler and DS, , I am not satisfied that Mr Cranston’s mental health conditions contributed to the commission of the offending in any relevant way. Simply put, I do not think that any rational link was established in the evidence between Mr Cranston’s ADHD, Major Depressive Disorder, mixed anxiety disorder or substance abuse disorder and these vast, three-year-long conspiracies to defraud the Commonwealth and launder the proceeds of that fraud. I am not satisfied that Mr Cranston’s moral culpability is reduced by reason of his mental conditions. Nor am I persuaded that Mr Cranston is an inappropriate vehicle for general deterrence resulting in a reduction in the sentence which would otherwise have been imposed. Finally, I am not satisfied that Mr Cranston’s mental conditions reduce or eliminate the significance of specific deterrence.

149. As I will explain, I am, however, satisfied that Mr Cranston’s medical conditions mean that custody may weigh more heavily on him than other prisoners and I propose to take into account those conditions in that way.

150. As to specific deterrence, despite stating to Dr Henderson that he was remorseful for his behaviour, Mr Cranston appears still to believe that he and his co-conspirators have done nothing criminal. Whilst not nearly as important as general deterrence, a sentence having a sufficient deterrent effect on the offender is warranted.

Section 16A(2)(k) – The need to ensure that the person is adequately punished for the offence

151. Section 17A of the Crimes Act provides that a court shall not pass a sentence of imprisonment on any person for a federal offence unless the court, after having considered all other available sentences, is satisfied no other sentence is appropriate in all the circumstances of the case. Sentences for offences in the nature of tax evasion and money laundering should have both a deterrent and punitive effect. This is particularly so in cases such as the present where the fraud is calculated, systematic and persisted in for some time.

152. As the Victorian Court of Appeal said in Gregory:

[57] A sentence imposed for fraud upon the taxation revenue is intended to reaffirm basic community values that all citizens according to their means should fairly share the burden of the incidence of taxation so as to enable government to provide for the community, that the revenue must accordingly be protected and that the offender should be censured through manifest denunciation.

153. I have concluded that a sentence of full-time imprisonment is the only appropriate sentence to impose in this case. Given the gravity of the offending, a significant sentence of full-time imprisonment must be imposed. Mr Stratton SC accepted that the imposition of a full-time custodial sentence was here inevitable.

Section 16A(2)(m) – The character, antecedents, age, means and physical or mental condition of the person

154. Mr Cranston is 36 years of age and has no criminal record. Where the need for general deterrence is strong, less weight will be given to good character. Good character is of less significance as a mitigating factor in the face of systematic defrauding of revenue: R v Ly [2014] NSWCCA 78; (2014) 241 A Crim R 192.

155. As Gleeson CJ explained in R v El Rashid (NSWCCA, unreported, 7 April 1995) white collar crime is rarely committed by people with a criminal history. R v Rivkin (2004) 59 NSWLR 284; [2004] NSWCCA 7at [410] is authority for the proposition that where, as here, good character places the offender in a position where they can commit the offence, it is of less significance. In the related case of R v Hausman; Hausman v R; R v Rostankovski; Rostankovski v R [2022] NSWCCA 24 at [74], Hamill J (Fullerton and Adamson JJ agreeing) held that good character may be of less significance where the offender’s character, lack of convictions, knowledge, qualifications or standing in their field facilitated or assisted in the commission of the offence. The same observation may be made here. I find that Mr Cranston used his prior good character, understood in this sense, to assist in committing the offences. Mr Cranston used his knowledge of potential vulnerabilities in Australia’s system of taxation collection to design and operate the conspiracies. For example, Mr Cranston, in the context of seeking to avoid criminal prosecution, explained to his co-conspirators that by reason of structural differences in approach within the ATO, the conspirators should concentrate on paying a higher percentage of PAYGW rather than pay GST which was owing because:

… the ATO don't give a fuck about GST, like they will eventually, don't get me wrong, that's a tax debt that we'll incur a a [debt], GST is actually a separate department, they run their own little shit together, they don't, they're and they're numpties right, GST are the dumbest fucks, so they they've over there they don't care, so they're separate ….

156. Mr Cranston’s use of his good character to commit the offences diminishes the leniency which his good character might otherwise attract.

157. The following character references were given on the offender’s behalf:

1. Vladimir and Irene Rouhliadeff, the offender’s parents-in-law, described the offender as “always hardworking and driven by the idea of providing for his family”. They stated that his wife and children have struggled financially and socially since the offender entered custody.

2. Steven Williams, a friend of the offender’s father and former ATO officer, said that the offender is “a thoughtful and considerate individual who was extremely enthusiastic about anything that he had an interest in”. He stated that the offender seemed driven by his business endeavours, and that he has been strongly supportive of his parents and siblings over time.

3. Gloria Cassimatis, the wife of the offender’s father and a senior director at the ATO, described the offender as “altruistic … and having a loving nature”. She described him as very successful, passionate and confident in his business endeavours. She said that the offender has a very strong relationship with his wife, his children and other family members.

158. In her affidavit, Ms Elizabeth Cranston, the offender’s wife, described Mr Cranston as a caring and supportive father and husband, who has been driven to provide for his family, including during the trial. She said that since Mr Cranston was found guilty, he has told her that he is sorry for the harm he has caused and had wished that he made better choices.

159. I take these references into account in Mr Cranston’s favour.

160. As I have said, I take into account the report of Dr Henderson dated 16 December 2020, as described above. Mr Cranston’s ADHD and ADHD-related comorbid conditions will make his time in custody more difficult. I also take into account the report of Professor Wood dated 25 July 2023, which expresses similar opinions. Professor Wood diagnosed Mr Cranston with ADHD, Major Depressive Disorder, Other Specific Personality Disorder, Other Specified Trauma and Stressor-Related Disorder. He opines that the disorders suffered by Mr Cranston will cause him to experience a greater level of hardship as a correctional inmate than might otherwise be the case.

161. I accept that by reason of the matters addressed in Dr Henderson and Professor Woods’ reports, Mr Cranston may experience a greater level of hardship as a correctional inmate than might otherwise be the case.

162. I also take into account the balance of medical evidence relied on by the offender, being earlier medical reports, records and progress notes, but they take the matter no further than the reports I have already addressed.

Section 16A(2)(n) – The prospects of rehabilitation of the person

163. Mr Stratton SC submitted that I should conclude that Mr Cranston has good prospects of rehabilitation because he has maintained employment throughout his life and in custody, has no criminal record, and has strong relationships with his wife, children and parents. Whilst it is true that Mr Cranston has maintained employment throughout his life and in custody, has no criminal record, and has strong relationships with his wife, children and parents, I am not so sanguine about his prospects of rehabilitation.

164. Mr Cranston, even now, does not appear to understand or accept the gross violation of societal norms involved in dishonestly taking over $100 million of taxes which should have been available to spend by government on behalf of the community which must now be recouped by cuts to government services or from increased taxes paid by other taxpayers – either now or in the future. I find that, on the balance of all of the evidence, Mr Cranston’s prospects of rehabilitation are only fair.

Section 16A(2)(p) – The probable effect that any sentence or order under consideration would have on any of the person’s family or dependants

165. The probable effect that any sentence or order under consideration would have on any of the person’s family or dependants must be taken into account.

166. When sentencing for offences such as tax fraud where general deterrence is of particular importance, the personal circumstances of an offender, including the effect of the sentence on their family or dependents, may attract somewhat less weight than they otherwise would: Totaan v R (2022) 108 NSWLR 17; [2022] NSWCCA 75 at [109].

167. Taking account of the effect of a sentence on an offender’s family cannot displace the requirement that the sentence imposed is of a severity appropriate in all the circumstances. In AE v R [2023] NSWCCA 74, Wilson J (Button and N Adams JJ agreeing) held:

[54] The additional evidence of the impact of the sentence upon family members is not such as to attract an even greater mitigatory benefit than that allowed at first instance. The situations respectively of the applicant’s youngest child and his sister cannot result in a sentence that breaches the statutory requirement that the sentence imposed is of a severity appropriate in all the circumstances. Those circumstances include the very serious nature of the offence, committed by an intelligent individual who was in a financially and socially privileged position in society and who, in blaming others for his crime, appears to have limited insight into his offending, and its potential consequences, which go well beyond the impact upon him and his family. The drug the applicant imported into Australia could, if distributed, have done the sort of harm to the community that he fled his native Colombia to escape.

168. I have taken into account the aspects of Professor Wood’s report which detail the medical conditions of Mr Cranston’s children, and the difficulties they have been experiencing as a result of their separation from their father.

169. I have also taken into account the affidavit of Ms Elizabeth Cranston, the wife of the offender. She details the significant financial, social and psychological issues that she and her children have faced since her husband was arrested. She states that she is heavily reliant on her elderly parents for financial and caring assistance, and that her children are constantly stressed about being unable to see their father at home.

170. While I take hardship to Mr Cranston’s family and dependants into account, the sentence, including the non-parole period, imposed must be of a severity appropriate in all the circumstances. To paraphrase Wilson J in AE, those circumstances include the very serious nature of the offences, committed by a person who was in a financially and socially privileged position in society and who appears to have limited insight into his offending, and its potential consequences, which go vastly beyond the impact upon him and his family.

Comparable cases and parity

171. In Hili the High Court reiterated that consistency in federal sentencing is achieved with regard to what has been done in other cases through the work of the intermediate courts of appeal. Some of the cases which at a very high level are relevant here are:

1. Dickson v R [2016] NSWCCA 105. In that case the offender was found guilty following a trial of two serious offences. Count 1 related to a complex tax fraud with net losses to the Commonwealth in excess of $100 million. The other count related to money laundering of over $63 million. The offender’s personal gain was found to be $19,616,996.37. The offending occurred over a period of about six years. Mr Dickson was originally sentenced by Beech-Jones J to 11 years imprisonment with a non-parole period of 7 years (see R v Anthony James Dickson (No 18) [2015] NSWSC 268) but was later re-sentenced following a Crown sentence appeal by the Court of Criminal Appeal to a total effective term of 14 years imprisonment with a non-parole period of 9 years and 3 months (see Dickson v R [2016] NSWCCA 105).

2. R v Issakidis [2018] NSWSC 378. This case involved Mr Dickson’s co-conspirator. Mr Issakidis’ personal gain was approximately $15,738,020. Like Mr Dickson he faced two serious charges. A single non-parole period of 7 years and 6 months was imposed. Mr Issakidis’ conviction-only appeal was dismissed by the Court of Criminal Appeal: Issakidis v The Queen [2019] NSWCCA 302.

3. R v Huang; R v Siu [2007] NSWCCA 259; (2007) 174 A Crim R 370. In that case the offender pleaded guilty to one offence in contravention of s 400.3(1) of the Criminal Code. The loss to the Commonwealth was $3,088,311 and Mr Huang’s total financial benefit was $30,000. Mr Huang was imprisoned for 5.5 years with a non-parole period of 3 years and 4 months. The Court allowed a total reduction of 50% in the sentence due to Mr Huang’s plea of guilty, contrition and past and future assistance.

172. The most significant sentences I have taken into account are those imposed on Mr Cranston’s co-conspirators. Mr Stratton SC submitted that the persons closest in terms of objective gravity to the case of Mr Cranston are Mr Anquetil, Mr Kitson and Mr Menon. I agree.

173. In R v Hammond [2020] NSWSC 888, I sentenced Ms Hammond for her role in the tax fraud scheme and the money laundering scheme. Ms Hammond pleaded guilty. Ms Hammond had and knew she had a central role in the scheme, even though she operated on instructions from the principal conspirators. The indicative sentences imposed on Ms Hammond were 6 years for the money laundering offence and 4 years for the tax fraud offence. Ms Hammond received considerable discounts. The aggregate sentence imposed, but for those discounts, was 8 years and a non-parole period of 5 years.

174. In R v Lauren Cranston [2023] NSWSC 454, I concluded that Ms Cranston’s role in the conspiracies, whilst different in some respects to Ms Hammond’s was, in all material respects, virtually the same. I imposed an effective head sentence on Ms Cranston of 8 years with a single non-parole period of 5 years.

175. In R v Patrick Willmott [2023] NSWSC 474, I imposed on Mr Willmott a term of imprisonment of 5 years for the tax fraud conspiracy, and a term of imprisonment of 7 years for the money laundering conspiracy. These sentences were partly cumulative to create an effective 9 year head sentence, with a single 6 year non-parole period. I found that Mr Willmott had a prominent role in managing the conspiracies’ “back office” operations. I found the objective seriousness of his offending was above that of Ms Lauren Cranston and Ms Hammond, but well below the schemes’ principal architects.

176. In R v Dev Menon [2023] NSWSC 768, I imposed on Mr Menon a term of imprisonment of 8 years and 6 months for the tax fraud conspiracy, and a term of imprisonment of 12 years for the money laundering conspiracy. These sentences were partly cumulative to create an effective 14 year head sentence, with a 9 year non-parole period. I found that Mr Menon’s culpability was only slightly below that of the principal architects, Mr Cranston, Mr Onley and Mr Anquetil. This was based in large measure on Mr Menon’s abuse of his position as a solicitor in committing the offences.

172. In R v Kitson [2019] NSWSC 1109, Mr Kitson was sentenced for a period of 9 years and a non-parole period of 6 years, before discounts. Mr Kitson was charged with only one offence, a tax fraud contravention of s 135.4(3) of the Criminal Code. Mr Kitson’s personal gain was approximately $1.3 million and he was near the top of the hierarchy in the tax fraud conspiracy. The head sentence imposed, 9 years, is near the top of the range for offending of this kind.

173. The sentence most relevant for parity purposes is the one I imposed on Mr Anquetil: R v Anquetil [2020] NSWSC 995. Mr Anquetil pleaded guilty to the tax fraud conspiracy and to dealing with $28,192,805.20 as part of the money laundering conspiracy. He also asked that his dealing in the proceeds of crime via the payment of the blackmail monies, in an amount of $24,244,760.64, be taken into account pursuant to s 16BA of the Crimes Act. For the tax fraud offence, the starting point was 9 years and 4 months imprisonment. For the money laundering offence, the starting point was 12 years imprisonment. Mr Anquetil, like Mr Cranston, was one of the principal architects of the conspiracies. However, unlike Mr Cranston, Mr Anquetil was not involved in the running of the second tier companies. In laundering the money involved, Mr Anquetil incorporated various entities and falsified documents. In relation to the money laundering conspiracy, Mr Anquetil pleaded guilty to dealing with $28,192,805.20. His personal gain was at least $12,218,148.55.

174. I make the following findings about Mr Cranston’s role in the conspiracies:

1. Mr Cranston’s role in the conspiracies was materially the same as the other principal beneficiaries, Mr Anquetil and Mr Onley. On the one hand, Mr Anquetil received a larger financial gain than Mr Cranston. On the other hand, unlike Mr Anquetil, Mr Cranston was heavily involved in the running of the second tier companies, which were the epicentre of the conspiracies.

2. In relation to the tax fraud conspiracy, Mr Cranston’s role was slightly above Mr Kitson.

3. In relation to both conspiracies, Mr Cranston’s role was also slightly above Mr Menon. I reject Mr Stratton’s submission that Mr Cranston should receive a lower sentence than Mr Menon. It is correct that a significant factor in sentencing Mr Menon was his abuse of his position as a solicitor, a factor not relevant to Mr Cranston. Nevertheless, Mr Cranston’s central role in the conspiracies, including his control of the second tier companies, from the beginning makes his offending more objectively serious.

4. Mr Cranston’s role was substantially above the roles of Mr Willmott, Ms Cranston and Ms Hammond.

180. Having regard to all of the matters I have set out above, I have determined that the appropriate sentences to be imposed on Mr Cranston are 9 years imprisonment for the tax fraud conspiracy and 12 years imprisonment for the money laundering conspiracy.

181. I have given consideration to the principle of totality and the principles explained by the High Court in Pearce v R (1988) 194 CLR 610; see also Dickson v R [2016] NSWCCA 105 and Dickson (No 18) [2015] NSWSC 268.

182. I have determined that in Mr Cranston’s case there should be a degree of accumulation between the sentences imposed here for the two counts sufficient to reflect the separate serious criminality involved. Three years is the appropriate period of accumulation, the same period as that applied to Mr Anquetil, before discounts. This gives rise to an effective head sentence of 15 years.

183. Under s 19AB of the Crimes Act, I impose a single non-parole period for both offences of 10 years. This sentence is of a severity appropriate for the offences and provides a minimum period that Mr Cranston must spend in custody appropriate to all the relevant elements of punishment, including rehabilitation, the objective seriousness of his offences and his subjective circumstances.

Conclusion and sentence

184. Having regard to all of the matters identified in these reasons, I make the following orders:

1. Mr Cranston is sentenced to a term of imprisonment of 9 years to commence on 6 March 2023 and expire on 5 March 2032 for the tax fraud conspiracy;

2. Mr Cranston is sentenced to a term of imprisonment of 12 years to commence on 6 March 2026 and expire on 5 March 2038 for the money laundering conspiracy;

3. Under s 19AB of the Crimes Act 1914 (Cth) a single non-parole period of 10 years commencing on 6 March 2023 is fixed;

4. The offender is first eligible for parole on 5 March 2033.

185. I am required by s 16F of the Crimes Act to explain the sentences I have imposed. I have imposed an effective head sentence of 15 years imprisonment commencing on 6 March 2023 and expiring on 5 March 2038. As required by the Crimes Act, I have fixed a single non-parole period for both offences. The single non-parole period is a term of 10 years, also commencing 6 March 2023. That means that Mr Cranston will be imprisoned for not less than 10 years. If he is granted parole at the end of that time, or before the expiration of the head sentence for the money laundering conspiracy, he will serve the balance of the sentence in the community. If he is granted parole, the order will be subject to conditions determined by the relevant federal parole authority and may be amended or revoked. If he fails, without reasonable excuse, to comply with the conditions of his parole, his parole may be revoked and he may be taken back into custody to serve the remainder of his head sentence.

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Annexure 1 - Exhibit II

Annexure 2 - Exhibits PP to RR

Annexure 3 - Exhibit LL Diagrams 1 to 5 and 7

Annexure 4 - Exhibit LL Diagrams 11 to 26

Amendments

23 August 2023 - Paragraph [33] and annexures amended

Decision last updated: 23 August 2023