R v Ferguson

[2022] NSWDC 356

District Court

New South Wales

Medium Neutral Citation:

R v Ferguson [2022] NSWDC 356

Hearing dates:

7 June 2022

Date of orders:

14 June 2022

Decision date:

14 June 2022

Jurisdiction:

Criminal

Before:

Grant DCJ

Decision:

Orders at [129]

Catchwords:

SENTENCING – dishonestly obtain financial advantage by deception – Chief Financial Officer – substantial sums misappropriated – breach of trust – offender the victim of a dating scam – catfishing – motive for offences – honest intention to repay funds – strong subjective circumstances – assistance to authorities – excellent prospects of rehabilitation – offender is remorseful and contrite – intensive correction order imposed

Legislation Cited:

Crimes Act 1900

Crimes (Sentencing Procedure) Act 1999

Cases Cited:

Abellanoza v R [2021] NSWCCA 4

Blanch v R [2010] NSWCCA 304

Cahyadi v R (2007) 168 A Crim R 41

Goodbun v R [2020] NSWCCA 77

Kable v DPP [1995] 36 NSWLR 374

Kovacevic v Mills [2000] 76 SASR 404

Mandranis v R [2021] NSWCCA 97

Mourtada v R [2021] NSWCCA 211

Postiglione v The Queen (1997) 189 CLR 295

R v Curtis (No 3) [2016] NSWCCA 866

R v Fangaloka [2019] NSWCCA 173

R v Gentz [1999] NSWCCA 285

R v Moon [2000] NSWCCA 534

R v Pantano (1990) 49 A Crim R 328

R v Pont (2000) 121 ACR 302

R v Woodman [2001] NSWCCA 310

Sarah-Jane Vaughan v R [2011] NSWCCA 4

Singh v R [2020] NSWCCA 353

Veen v The Queen (No 2) (1988) 164 CLR 465

Yardley v Betts (1979) 22 SASR 108

Category:

Sentence

Parties:

Regina (Crown)
Kaye Leanne Ferguson (Offender)

Representation:

Counsel:
Ms C Mendes (Offender)

Solicitors:
Mr S Matchett (Crown)
Mr M Rosalky (Offender)

File Number(s):

2021/00030267

Publication restriction:

Nil

JUDGMENT

Introduction

1. Kaye Leanne Ferguson is 59 years of age. She soon will be 60. She has born five children in a loveless marriage. She was subjected to verbal, emotional and physical abuse throughout her marriage. Her husband was an alcoholic. In January 2020, she separated from her husband. She was sad, lonely, depressed and vulnerable. She sought happiness from a dating site. She was scammed and lost a considerable amount of money.

2. She went back to the dating site in search of happiness. She found a man that she thought would provide what her life had lacked – happiness. She was vulnerable with low self-esteem. She was ripe to be scammed and so she was. The scammer made her feel fault and guilt for locking him out of his bank account. To make amends she exhausted her finances in the belief that he had the means and ability to pay her back upon his return to Australia.

3. She was the Chief Financial Officer of a club. She was the sole signatory of the club accounts. It was a successful and profitable club. She, in breach of the trust reposed in her, used over a million dollars of the club's money to assist the scammer. At the time she transferred the funds, she also believed he, the scammer, would pay the funds back. When she knew the funds would not be repaid, she informed the Chief Executive Officer of what she had done and provided a comprehensive list of the transactions. She was dismissed. She has repaid over $300,000 to the club. She now lives with her daughter and her five children.

4. This is not a case where the fraud has come about due to gambling, alcoholism or the maintenance of a lavish lifestyle. Due to her loneliness, depression and vulnerability she was duped and became a victim. The club became a victim of her actions. The Crown submits that she must go to gaol. Ms Mendes, counsel for Ms Ferguson, concedes that the only appropriate penalty is a sentence of imprisonment, but that sentence should be served in the community.

5. Ms Ferguson is to be sentenced for three charges of dishonestly obtain financial advantage by deception contrary to s 192E(1)(b) of the Crimes Act 1900. The maximum penalty for this offence is ten years' imprisonment. The maximum penalty is an important guidepost in the assessment of sentence. A judge should steer by, but not aim for it.

Victim impact statements

6. Two victim impact statements were provisionally tendered. One from Mr Matthew Holgate, the President of the club, dated 25 May 2022 and the other from Mr Peter Duncan, Chief Executive Officer of the club, dated 11 October 2021. It is said by the President that the fraud has and continues to have a significant and detriment effect upon the club's financial position. I accept that a net loss of $700,000 is a significant amount. Tendered on behalf of the offender was the 2021 annual report of the club. The President in his report said:

"I am very proud to report that (the club) is in a very strong financial position with every facet of our business consistently trending in the right direction. Our trade continues to flourish at record levels. Our cost controls are excellent. We have zero debt and cash reserves of $3.4 million which allows us to maintain our capital improvement programs into the future."

7. But for the fraud, no doubt the President's message would have read, "…we have zero debt and cash reserves of $4.1 million which allows us to maintain our capital improvement programs in the future." Later in the report, the President says:

"Through the efforts of our staff, management and board of directors, coupled with the ongoing support of our members, guests and business partners we have had an excellent year. Our financial performance has been the highest on record with each individual business unit showing consistent and ongoing growth."

8. The victim impact statement speaks of the betrayal of trust. This is an aspect of sentencing that I do not lose sight of. They also speak of reputational damage. There is nothing in the annual report that indicates memberships have been returned or membership goals have not been obtained. Mr Duncan talks of "the public's perception that the club is not viable or trustworthy".

9. If one reads the 2021 annual report, then one could not view the club as unviable or untrustworthy. The club's position is to the contrary. Mr Duncan talks about his job security. There is nothing in the annual report which points to insecurity of his tenure. He is the Chief Executive Officer of a vibrant, thriving club that has emerged stronger from the abyss of COVID‑19 than many other clubs.

10. It is clear from the President's report that major reviews of policies, procedure and banking arrangements have taken place. A new auditor was appointed in December 2019. An audit risk and compliance committee was implemented in April 2021, and in May 2021, a new financial manager with accounting qualifications was appointed. The President goes on to report:

"In the face of adversity our staff, management and directors all rose to the challenge.This has meant our operational performance was unaffected whilst at the same time we continue to progress our capital improvement program throughout the year."

11. I do accept that Mr Duncan feels devastated by the acts of the offender as I am sure do her fellow workers, management teams and members. He should not blame himself. After a long and productive relationship with the offender, no‑one could foresee the breach of trust and the resulting loss.

Plea of guilty

12. A plea of guilty was accepted by the Local Court Magistrate in committal proceedings for the offences. Ms Ferguson is entitled to a discount for an early plea of 25% in accordance with s 25D(2)(a) of the Crimes (Sentencing Procedure) Act 1999.

The facts

13. There is an extensive agreed facts document tendered as part of exhibit 1. For brevity in this judgment, I have endeavoured to summarise those facts. For the full facts one should refer to the exhibit.

14. The offender was the Chief Financial Officer of a club. She was responsible for all financial payments and transactions for the club. There are five bank accounts for the club held with the National Australia Bank which the offender had access and control over.

15. In August 2020, the offender joined a dating website called Singles50. She formed a relationship with a male profile called William David Rodavan. Due to COVID‑19 restrictions, they could not meet in person. Rodavan, whose profile disclosed that he was from Melbourne, Victoria, claimed that he had been offered a work contract in the Gulf of Guinea.

16. Shortly after his alleged arrival in the Gulf of Guinea, he told the offender he had been involved in a work‑related accident resulting in the death of workers employed by him. He explained that he needed funds to provide to the families of the alleged victims of the accident and to cover various fines and charges. The offender transferred $225,000 of her own funds to Rodavan.

17. Rodavan's story continued in December 2020 and the offender exhausted all her personal funds to assist. She then used her position with the club to access the club's cash management account to authorise 27 unauthorised transactions from the club's account to various accounts nominated Rodavan. The total amount transferred out of the cash management account in December 2020 was $650,000. The offender deposited $10,000 from her own personal savings into the club's account on 8 December 2020 (the sequence 1).

18. I pause to note that the Court Attendance Notice incorrectly described the total of $660,000. Because of this, the facts incorrectly disclose the total of the fraudulent transactions as $1,114,000, where the total should be $1,104,000 ($650,000 plus $414,000 plus $40,000) and the total loss to the club is $1,104,000, where the figure should be $1,094,000 ($1,104,000 minus $10,000).

19. The transactions continued in January 2021. A total of $414,000 was transferred out of the cash management account by the offender into various accounts nominated by Rodavan in January of 2021 (sequence 2).

20. On 21 December 2020, the offender approved a $20,000 withdrawal from the club’s account and transferred this to her personal account. Similarly, on 15 January 2021, a $20,000 transaction from the club’s account to the offender’s personal account was authorised by the offender. Both amounts were used to pay for renovation work to the offender’s property in Yarrawonga, Victoria (sequence 10).

21. On 23 January 2021, the offender received an email from Peter Rae, chartered accountant for the club, stating that the club has a new auditor, and an audit would be performed in June 2021. On 29 January 2021, the offender had a conversation with Peter Duncan, Chief Executive Officer of the club. Duncan queried the amount of money in the club’s account.

22. On Sunday 31 January 2021, Mr Duncan received a telephone call from the offender’s brother who informed Duncan that the offender was, “not in a good way.” Mr Duncan attended the offender’s home and met her brother. The offender had locked herself inside her bedroom.

23. Her brother called out that Mr Duncan had arrived. The offender became hysterical. After approximately 10 minutes, the offender came out of her room and fell on the ground crying, and had a conversation with Mr Duncan, where she disclosed that she stole over $1 million. She showed all of the unauthorised transactions to Mr Duncan on her laptop.

24. Mr Duncan contacted Neil Membrey, the Business Manager of the National Australia Bank branch in Wangaratta and asked the offender to email all of the transactions to Membrey. The offender informed Mr Duncan that she had left an envelope on his desk with a printout of the fraudulent transactions.

25. Mr Duncan later left and met with the president of the club, Matthew Holgate, and informed him of the situation. Mr Rae was also contacted and advised.

26. On 1 February 2021, all statements and the documents in the envelope were provided to Mr Rae. New South Wales Police were contacted and provided with the same documentation. The unauthorised transactions reported by the offender were the full extent of the unauthorised transactions engaged in.

27. On 2 February 2021, the offender attended Mulwala Police Station with her laptop, mobile phone, and a typed statement, setting out her relationship with Rodavan, and the details of his story. She was arrested and participated in an electronically recorded interview. She showed police messages from Rodavan, which set out the instructions of each of the unauthorised transactions in sequences 1 and 2.

28. She disclosed that Rodavan had a bank account with Nordea Bank which had a positive balance of $3.5 million. It appeared to be a personal web page with a background indicating that it was Nordea Bank. The offender told the police that under no circumstances would she have engaged in the transfers if she thought the money would not be transferred back into the club account.

29. In relation to the transactions in sequence 10, the offender explained that she had contracted builders to carry out renovations on her property in Yarrawonga, and that she “desperately had to pay my local builders.”

Objective seriousness

30. White‑collar crime is viewed very seriously by the Courts for reasons summarised by McCallum J in R v Curtis (No 3) [2016] NSWCCA 866 at [51]:

“White‑collar crime is a field in which perhaps more than any other offending is often a choice freely made by well educated people from privileged backgrounds, prompted by greed rather than the more pernicious influences of poverty, mental illness or addiction that grip other communities.”

31. The operative words in that judgment are greed. This, in my view, is not a greed case. She was sad, lonely, depressed, and vulnerable.

32. There are several factors that have bearing on the assessment of objective seriousness of an offence of this nature, including the amount of money involved, the length of time over which the offences were committed, the motive, the degree of planning and sophistication, and if there is any accompanying breach of trust.

33. In this case, the amount of money involved was substantial, a total of 1.13 million was lost by the club as a result of the fraud. The Crown has drawn my attention to comparative cases of fraud by an employee, including Abellanoza v R [2021] NSWCCA 4, Singh v R [2020] NSWCCA 353, and Sarah-Jane Vaughan v R [2011] NSWCCA 4. The Crown concedes that these are of limited utility in the present case, given that they each involve between $2.7 million and $3.7 million, substantially more than the present case.

34. The offender has repaid all that she can to the club, having sold her house in Yarrawonga, which I take into account on sentence: Sarah‑Jane Vaughan v R [2011] NSWCCA 4 at [10]. Despite this, a substantial sum, over $700,000, remains outstanding. The subjective material reveals that aside from her car and a few personal items, the offender has nothing left. The offender is nearly 60 years old, and it is unlikely that the offender will be able to repay the club in full. The loss is effectively irretrievable.

35. The length of time over which the offences are committed are relevant to the assessment of object gravity: R v Pont (2000) 121 ACR 302. Offences of this nature usually take place over a number of years, as was in the case of Abellanoza and Singh, which occurred over a period of approximately four years, demonstrating consistent and persistent fraud: Singh at [9].This offending took place between December 2020 and January 2021, a period of not more than eight weeks. While it was not a single impulsive incidence of offending, it could not be said that the offending took place over a period of time, operating to aggravate the offence as contemplated in Singh.

36. The motive for the crime is also relevant to my assessment: R v Woodman [2001] NSWCCA 310 at [29]. Both Ms Mendes, counsel for the offender, and Mr Matchett for the Crown, submitted in relation to the motive and subsequent bearing on the object of seriousness of the offences. The subjective material reveals that the offender was at a very vulnerable stage of her life. She joined a dating website seeking an intimate relationship. These offences were committed to meet the demands of funds of a man who the offender thought cared for her and was confident would repay the funds.

37. The Crown submits that her motive for committing this crime, that is, her desire for a relationship with Mr Rodavan, is not so distinct from the desire for a lavish lifestyle that drives others to commit similar offences. In his words, “a BMW or a boyfriend”, the motive is the same.

38. I have difficulty accepting the submission. The desire for a relationship and a connection is a part of the human experience, distinct from gambling, alcohol or drug addictions. Ms Mendes submits, and I accept, that such motivations are almost never accompanied with an honest intention to repay the stolen funds.

39. Catfishers and dating scammers are sophisticated. They manipulate their victims. Data from the ACCC reveals that in 2021, Australians lost over $56 million to dating and romance scammers, suggesting that dating scammers are, overall, very successful in their evil manipulation of their victims. Ms Ferguson is to be sentenced for offences of fraud. She has stolen significant amounts of money from her employer, but she too, is a victim.

40. The degree of planning involved and sophistication in the present offence is not comparable to that described in other offences of this nature. The offender did not determine who was paid or how much they were paid. The transactions were directed by Rodavan. Additionally, there was nothing to suggest that the offender took steps to conceal her conduct.

41. The objective seriousness of this offence is elevated because of the accompanying breach of trust. The offender was the Chief Financial Officer of the club. This offending is a grosser breach of trust, taking her seniority within the club into consideration: R v Pantano (1990) 49 A Crim R 328 at 338. In circumstances where there is a breach of trust involving large sums of money, considerations of general deterrence is of increased importance in the sentencing exercise: Pantano at 330.

42. However, Newman J in R v Gentz [1999] NSWCCA 285 at [18] said that “the law does recognise that there are extraordinary cases where the factual material takes the case outside the normal mainstream of approach.” I consider this is one of those extraordinary cases.

43. For sequence 1 and 2, taking all of those factors into account, I consider that they fall below the mid‑range of objective seriousness. For sequence 10, I am of the view that this falls well below the mid‑range. I accept Ms Mendes’ submission that the offender was mid‑renovations of her Yarrawonga property, at the time she met Rodavan. She had depleted her own funds, the tradesmen needed to be paid. She believed Rodavan would repay her and the club. She misappropriated $40,000. It was the only occasion she directly benefitted from her criminal conduct.

Subjective circumstances

44. The following documents have been tendered which assist me in determining the relevant subjective circumstances of the offender:

1. Report of Dr Katie Seidler, clinical and forensic psychologist, dated 8 September 2021;

2. Letter of Lisa Power, psychologist, Gateway Health, dated 23 May 2022;

3. Letter of Lisa Power, psychologist, Gateway Health, dated 17 August 2021;

4. Letter of Laurie Fitzpatrick, Wellness Support Coordinator, Gateway Health, dated 6 May 2022;

5. Affidavit of Hayley Ferguson sworn 31 May 2022;

6. Supreme Court of Victoria – Minute of Consent Order dated 2 September 2021

7. Letter of Robyn Clarke dated 29 May 2022

8. Letter of Richard Fifield, Store CEO, BWS dated 10 February 2022.

45. To Dr Seidler, the offender described her childhood and parents in positive terms. They were loving and supportive. She grew up in a financially stable household, absent any social disadvantage.

46. The offender gave evidence that she commenced school at four years of age at a convent school. This was a year early to enable her to assist her sister who suffered from Down Syndrome. After a year, she moved to a local primary school. The offender reported to Dr Seidler that she was not particularly studious but achieved overall in the average range academically. She denied any notable concerns with respect to her school attendance or behaviour. She completed secondary education.

45. Her childhood and life at school was difficult as a result of a skin condition. She was subjected to teasing and bullying as a result of her eczema, which detracted from her experience at school. It also made her self-conscious and impacted her self‑esteem. However, she was still able to develop lasting childhood friendships.

46. Since leaving school, the offender has completed a number of qualifications in the area of business management, hospitality and interior design. She completed an introductory course in disability services. However, she was advised that because much of the work in this area is funded through the National Disability Insurance Scheme (NDIS), her criminal history would prevent her from gaining employment. She completed the course, as it was only an introductory course but did not continue any further studies in this area as a result of the advice that she received.

47. The offender has an excellent work history. She worked in various roles as a teenager, later working as a receptionist at a golf club, progressing to a financial manager role, where she remained for 24 years. She also worked as an accounts manager with an accounting company, then at another golf club, before gaining employment with the club where she worked for 11 years. Her role here was challenging and she felt she was not professionally trained to undertake. She was often required to deal with complex problems, not just to do with finances of the club, but also support staff of experiencing personal and professional problems.

48. At the time of Dr Seidler’s report, the offender was in receipt of Centrelink payments, but was eager to re‑enter the workforce. She acknowledged that she would need to change careers as a result of this offending, expressing an interest in interior design. The offender, in her evidence, disclosed that she has since gained employment at a wine depot. This is a physically, laborious, casual role. She has told her employer about these proceedings. She gave evidence that her current employer had no issues with her work ethic and that he hoped to see her continue.

49. In addition to her employment, the offender has been undertaking volunteer work at Albury Wodonga Foodshare, Ms Fitzpatrick in her letter, states that Ms Ferguson enjoyed being able to contribute to the community. Hayley Ferguson discloses in her affidavit that the offender has found this volunteer work rewarding.

50. Ms Ferguson met the man that would be her husband when she was 19 years of age, and they were married when she was 21. Her now ex‑husband would drink excessively most evenings and was psychologically, verbally, and sometimes physically abusive towards her. Her daughter’s affidavit further details the domestic abuse Ms Ferguson suffered, including an incident when he punched the back glass door and smashed the glass. The offender felt that she could not call the police.

51. Ms Ferguson gave evidence about her difficult marriage, which deteriorated in the 10 years prior. She described a serious domestic violence incident where her husband threw a knife at her after his mood deteriorated while he was cooking dinner. He would throw other items at her and was physically violent on occasions. To Dr Seidler, she described her home life with her ex‑husband as terrible. They often separated, although she always held on to hope that things would improve, that her husband would stop drinking and she could have the happy home life that she grew up with.

52. The offender disclosed that the ‘last straw’ for the marriage to Dr Seidler, which she confirmed in evidence. She disclosed an occasion where the pair were driving home from Albury and her ex‑husband became angry. He sped the car in excess of 180 kilometres per hour. She feared that he would kill them both. She begged him to stop, which he did not do until she told him she was going to call the police. She did not report the incident to the police, explaining that she was embarrassed, but they did separate.

53. After separation, the offender lived with her brother in Yarrawonga. She felt overwhelmed and could not continue living there. She had an investment property, which she decided she would move into, but the tenant required some time to move out. She moved back with her ex‑husband with an arrangement that they would live in separate rooms of the house.

54. The offender has five adult children, including one step‑child. Dr Seidler’s reports discloses that the offender has ten grandchildren, however, in evidence the offender told the Court that since the preparation of the report, two more grandchildren have been born. She enjoys close relationships with all of her children and grandchildren and has used the time since this offence to spend more time with them.

55. It was in the context of the breakdown of her 36-year relationship with her now ex‑husband that this offending came about. She was experiencing loneliness and was acutely aware of her single status, impeding her ability to socialise with her friends. She hoped to meet someone to be part of her life. She was at a particularly vulnerable stage in her life when she joined the online dating site.

56. She was a victim of a dating scam before she met Mr Rodavan, disclosing to Dr Seidler that a man she met online impressed her and she was manipulated into transferring $130,000 of her money to him. This occurred in June 2020. He did not repay the money, and he threatened to reveal sexualised pictures of her to her children. She went to the police. In addition, she contacted the Commonwealth Bank. With their assistance, she was able to recover some of the money that had been scammed. In her evidence, she had difficulty in recalling details of this incident; she had blocked it out.

57. Around August 2020, she met another man on the same site – Mr Rodavan. She fell in love with him. When he asked her for financial assistance, she agreed. He continued to manipulate her over time with stories of increasing need for money. She felt responsible to continue to provide him with funds, even after she had exhausted all of her own. It is against this background that the offending conduct began, and this otherwise honest person began to steal significant sums from her workplace.

58. Since this offending, Ms Ferguson has experienced suicidal ideation and acute stress from being terminated from her employment, the fraud charges, and the shame from being a victim of this dating scam. In her evidence she explained that over the weekend, after realising that she had once again been the victim of the dating scam and before she has disclosed the offending to her employer, she contacted Lifeline. These stresses compounded feelings of low self‑worth and confidence resulting from her experience of family violence. This offending brought about a decline in her mental health for which she has sought psychological counselling.

59. In her affidavit, the offender’s daughter discloses that their mother always encouraged them to save and be cautious with their money. This behaviour is “completely contrary” to everything she has ever done and the lessons she has taught her children. She describes her mother now, as a “broken person” who has lost everything.

60. I now turn to her evidence concerning Mr Rodavan. She was lonely. After separation from her husband, she felt constantly ill. She had difficulty eating and sleeping. She was depressed but did not seek professional help.

61. Her girlfriend suggested a dating website. She went on the website and met someone online. They never physically met. In June and July 2020, she was persuaded to part with a significant amount of money. She was scammed. The bank was able to recover some but not all of the money. She reported the matter to police but there was nothing they could do. She blocked out what happened.

62. She was lonely and vulnerable. She wanted to find someone to have a happy life. She went back on the dating website. There she met Mr Rodavan. She thought with him she had found happiness and a life to share. Unknown to her, Mr Rodavan was a con artist, a modern‑day cad.

63. He told her he lived in Melbourne, and he had a daughter overseas studying. He worked in an engineering and often travelled overseas for work. He was looking for someone to be part of his life.

64. They engaged in texts, Viber, phone calls and video calls. They discussed meeting. He said he would come to Mulwala. It was not to be. Due to COVID‑19, the borders were closed. He said he had a job in the Gulf of Guinea.

65. In his absence from Australia, he asked her to pay some of his large invoices from his bank account. He gave her the password to his account and a hyperlink. The bank was Nordea Bank. She went to the website, and it looked like a proper bank.

66. She was asked to pay an invoice of $1,020,800.00. She took a screenshot of the transfer. After the transfer, there was a credit balance of $3,584,468 (see exhibit D).

67. On a later occasion, he asked her to pay from his account shipping and diesel costs. She made three attempts to log in, but she was unable to do so. On the fourth attempt she was successful, but the bank would not process the invoice. She spoke to Rodavan who told her because there had been too many attempts to access the account, it had been blocked. It was necessary for him to go into the bank in person (see exhibit 3).

68. While she was on the telephone to Rodavan, she heard an explosion in the background. He told her he had to go because there had been an explosion at the workplace.

69. He rang her a couple of days later and said he was in hospital and had been injured as a result of the explosion. He sent photographs of himself, the treating doctor, and burn injuries to his legs (see exhibit F).

70. She felt responsible for the blocking of his account. She paid the invoices out of her funds. He said he would repay her, and she believed him.

71. He told her that several people were killed in the explosion and the families of the deceased wanted money. Originally, it was $20,000 but then it became $40,000 and he told her that his passport had been taken by the police, and that it was a dangerous country and foreigners were kidnapped.

72. She drew down on her own loan accounts, paying him money to assist him in the circumstances that he was in. She had no more resources. She began misappropriating club monies to get him back to Australia and assist his business.

73. She felt that his life was in danger, and she needed to get him back to Australia. He said he would return the money, and she believed him. If she did not believe him, she would not have given him her or the club’s money.

74. She wanted him back in Australia. Her motivation was for him to repay the money and for him to get back safely.

75. On Friday 29 January 2021, he telephoned her and said he was in Sydney undergoing quarantine. He asked her for more money for his hotel. She offered her credit card. He said the motel did not take credit cards. This is when she became suspicious. She realised he was not telling her the truth and the money was not going to be returned. She felt sick.

76. She made a printout of the club transactions with an intention to tell Mr Duncan, the CEO, on the Monday. She hoped that funds may be forthcoming over the weekend, but underneath, she felt her world was about to fall apart. On Sunday, she was in a dark place and rang Lifeline. She spoke to relatives and then she spoke to Mr Duncan and confessed her wrongdoing.

77. She took money from the club to pay trades, to complete the renovation to her house. She believed Rodavan would reimburse her. The house was subsequently sold, and all proceeds went to the club to reduce the debt. She is currently living with her daughter and her five children, two who have autism. She described it as a busy household.

78. In cross‑examination, she told the Crown prosecutor that her priority was to ensure repayment to the club, and that is why she wanted him back in Australia. She made the initial payment because she had locked him out of the account, and she felt guilty because she had locked him out of the account.

79. She believed that he would return to Australia, repay her money, and they would commence a relationship.

80. In January, her prime motivation was to get him back to repay the money to the club. She still believed there was a possibility of a relationship. She said that he took advantage of her feelings at the start and through the process her main motivation was to get the money back to the club.

81. She had slight doubts before he landed in Sydney, but they crystallised on the Friday. On the Friday she realised she had been the victim of online dating scamming.

82. She was asked about a meeting with the club auditor, Peter Rae, on 23 January. She said she was not troubled by an email about the meeting. The meeting was to introduce a new accountant from Mr Rae's office to her. She said the club's accounts were always audited in July. She hoped Rodavan would pay the money back before the audit. She said she was always going to tell Peter Duncan what happened.

83. She agreed that she spoke to Mr Duncan on 29 January where he asked her how much was in the main account. She went on to tell him that a large number of invoices had been paid that were due such as the ‘pokie tax’. She did not tell him about the misappropriation but did so two days later. She agreed that Mr Duncan trusted her and that the accounts only required a single authorisation. It was her belief that the money would be returned.

84. In relation to the two payments from the club for her renovations, she said that Mr Rodavan said he would repay the money and she had to repay the builders. She said she hoped to have a relationship and hoped for future happiness. She denied that Mr Rodavan was a recent invention and an attempt by her for a more favourable sentence. On balance, I am satisfied of the following;

1. The offender was subject to physical and verbal abuse throughout her marriage;

2. She is someone who has low self‑esteem;

3. After separation from her violent and abusive husband she was sad, lonely, depressed and vulnerable. She described her life as terrible. She was ripe for scamming;

4. She went on a dating website to find someone to have a happy life;

5. She was scammed and lost money. I accept that she has blocked that occurrence out. It would have been a highly embarrassing moment in her life;

6. She was still sad, lonely, depressed and vulnerable. She tried her luck again on the website to find someone to have a happy life with;

7. Mr Rodavan was a scammer using what looked to be a genuine bank account with over $3.5 million in it. Part of the scam was to get her to use his account so she could see that he had the ability to pay substantial invoices;

8. The explosion and photographs of him in a hospital and leg injuries were part of the ruse for the scam to take place

9. I accept that she felt guilty in having locked him out of his account. It was that guilt, loneliness, vulnerability and the search for happiness that enabled the scam to commence and continue. She was a victim. She exhausted her access to funds and then turned to her employer's funds;

10. This case is very different to the frauds that occur due to gambling, alcoholism, drug use or lifestyle enhancement. She had lost sensibility and objectivity right up until he said that the hotel would not accept a credit card. She believed the moneys would be returned.

Assistance to authorities

87. Ms Mendes submits that the assistance provided to the authorities warrants a further discount of 10%. The extent of the discount is to be assessed using the factors set out in s 23 of the Crimes (Sentencing Procedure) Act 1999. I accept that this offender's assistance by preparing documentation and disclosing the full extent of the fraudulent transactions to Mr Duncan and then to the police before it was detected by the club was useful, truthful, complete, reliable and timely. I accept the submission that the assistance provided by the offender allows for a quantifiable discount. I am of the view that, considering all of the circumstances, the appropriate discount for assistance is 5%.

Prospects of rehabilitation

88. The offender has no prior criminal history. She is entitled to rely on her lack of criminal history and prior good character in mitigation of the offence; s 21A(3)(e) to (f) Crimes (Sentencing Procedure) Act 1999. I accept this offending is the result of poor judgment rather than a disposition for criminal or antisocial behaviour.

89. She is supported by a network of prosocial peers and enjoys the strong support of her family. In her letter, Ms Fitzpatrick opines that the offender is a person of honesty and integrity and that she has been reliable in keeping appointments and working hard on her rehabilitation. She has a good work history which bodes well for her prospects of rehabilitation.

90. It is submitted that Ms Ferguson is fully rehabilitated. The Crown accepts that the offender has excellent prospects. This experience has been a humiliating one which has resulted in the loss of well-paid employment, significant financial loss, loss of important relationships with former colleagues and family, ongoing struggles with depression and anxiety and the loss of standing within a small, close‑knit community. There is a negligible risk that she will reoffend. In my view, she has excellent prospects of rehabilitation and will not be before a court again.

Contrition/remorse

91. The offender was upfront with her employer when she realised she had been scammed again. The facts disclose that the offender was hysterical when Mr Duncan approached her about the funds. She was crying and made immediate admissions to the unauthorised transactions. She disclosed completely the extent of the unauthorised transactions to Mr Duncan and then later to the police.

92. In her interview with Dr Seidler, the offender was tearful throughout. She sobbed as she discussed the offence. I accept that this is a manifestation of her remorse. She is embarrassed and ashamed that she was manipulated in this way.

93. In her evidence, she was asked by Ms Mendes if there was anything that she would like to say to Mr Duncan, who was seated in the public gallery. She said, "There's not a minute of my life that I don't regret it. I'm so sorry, Peter." She sobbed as she said this and explained that she loves the club, that they were friends and she wishes to God that she could turn back time, but she cannot. I consider that the offender is genuinely remorse and contrite.

The parties submissions

The Crown

94. The Crown submits that no penalty other than full‑time custody is appropriate. They submit that where an employee breaches the trust of their employer in defrauding large or substantial sums with systematic dishonesty, with planning and some sophistication, general deterrence requires that there be substantial sentences of imprisonment imposed. The Crown properly concedes that the offender has demonstrated a degree of remorse and presents with excellent prospects of rehabilitation.

The offender

95. Ms Mendes, in her written submissions, submits that the factual circumstances in this matter are highly unusual, if not entirely extraordinary. She submits that the offender cuts an extremely pathetic figure who is a victim of a sophisticated international catfishing scam. She transferred the sum of $225,000 of her own funds to the scammer before dishonestly appropriating the club's money.

96. She has led, up to now, an exemplary life. She submits that the Court has a very difficult task of balancing the seriousness of the offending, giving due weight to the very large sum of money involved and the offender's breach of trust, against the wholly unique factual background and the offender's powerful subjective case.

97. She submits that a term of imprisonment may be appropriate to reflect the gravity of sequences 1 and 2 and an aggregate sentence of three years' imprisonment or less would be within proper bounds of the Court's sentencing discretion and appropriate given the gaol of achieving individualised justice. She has reminded me of what Mahoney ACJ said in Kable v DPP [1995] 36 NSWLR 374 that, "If justice is not individual, it is nothing." She submits sequence 10 should be dealt with by a community correction order.

Consideration

98. The Crown has referred me to a number of comparable cases. In Abellanoza v R the amount of money involved was larger than this case. It involved $3.7 million. It was sophisticated and occurred a lengthy period (four years). The motivation behind the offending was disgruntlement with employment, a gambling addiction, a desire to send funds overseas and spending on personal items and holidays. It can, in my view, be readily distinguished from this case.

99. Singh v R [2020] NSWCCA 353 is of limited assistance. The sentencing judge found that the appellant's motivation was purely greed and that the fraudulent gained proceeds were consumed in a lavish lifestyle. The offending occurred over a four‑year period and was found to involve systematic dishonesty attended by planning and a level of sophistication. I accept Ms Mendes' submission that the decision is helpful to the extent that it highlights what the case under consideration is not.

100. In Sarah‑Jane Vaughan v R [2011] NSWCCA 4, the appellant engaged in offending over seven years involving 417 separate transactions and a sum over $2.7 million for personal benefit to lead an “extremely lavish lifestyle”.

101. Bellew J in Goodbun v R [2020] NSWCCA 77 at [257] said:

"Thirdly, in circumstances where the Court has been referred to sentences imposed in a number of other cases, it is necessary to bear firmly in mind the limitations which are placed on material of that kind. Sentences imposed in other cases are not binding precedents. They are statements of what has happened in the past. A history of sentencing can establish a range of sentences that have in fact been imposed. However, such history does not establish that the range is the correct range, or that the upper or lower limits of the range are the correct upper and lower limits. Further, the range of sentences that have been imposed in past cases does not fix the boundaries within which future judges must, or even ought, to sentence. Such cases can, and should, provide guidance to sentencing judges, and to appellate courts, and stand as a yardstick against which to examine a particular sentence. However when considering past sentences, it is only by examination of the whole of the circumstances that have given rise to the sentence that unifying principles may be discerned. Fundamentally, the consistency that is sought in sentencing is consistency in the application of the relevant legal principles, and not numerical or mathematical equivalence.” (Footnotes omitted).

102. There is nothing in the cases referred to by the Crown other than the concept of general deterrence as consistency in the application of the relevant legal principles and not numerical or mathematical equivalence.

103. The victimisation of Ms Ferguson (the duping of a vulnerable, middle-aged woman with low self‑esteem who had endured a long-term abusive marriage) by a sophisticated ongoing romance scammer played a pivotal role in her offending behaviour. Mr Rodavan trusted Ms Ferguson with his bank account and then convinced her that she had blocked his account. Her sense of guilt in blocking him out of his bank account, combined with the knowledge that he had a large sum of funds, precipitated her transfers in conjunction with unbelievable, terrible and disastrous stories she had been told.

104. This case involved a significant breach of trust. The club trusted her to the extent that she had, and she alone could have, unfettered access to the club's accounts without the checks and balances of a secondary signature or the agreements of a second person.

105. The question of specific deterrence I think is not of any great weight or any weight at all in this case. The offender is 59 and has lived an entirely commendable life up until now. She has lost her job. She was sacked from her position at BWS. She has found it difficult to obtain fresh employment, but she has. She has suffered reputational damage in her small community. I do not imagine that any sentence has to be passed on her with the object of deterring her from doing the like again. The question of general deterrence, of course, is always a matter of consideration in a case of this nature. General deterrence depends very largely on the nature of the crime:

"…in the more serious cases of sustained and deliberate fraud deterrence is very important. Imprisonment is likely to be required but all mitigating circumstances and the rehabilitation of the offender must still be considered. Substantial mitigating circumstances and, in some cases, considerations of mercy and leniency may lead to the conclusion that a sentence of imprisonment is inappropriate or that such sentence is appropriate but that the imprisonment need not be served.": Kovacevic v Mills [2000] 76 SASR 404; [2000] SASC 106 at [43].

106. The fraud occurred over a six-week period or thereabouts. Although there were numerous withdrawals, the offending may not be described as sustained as was in Kovacevic.

107. The offender is a mature woman. She is 59. She has reached that age without any breach of the law at all. She has lived a decent, honourable life. She has raised a family and has always been in employment. She is presently employed.

108. A woman of her age when first convicted can call in aid her character and is entitled to ask the Court to rely very strongly, indeed, on the fact that she is of exemplary character and has been at all times up until the moment of conviction: Unal Okutgen (1982) 8 A Crim R 262, Starke J at 266, Phillip John Smith (1982) 7 A Crim R 437, Starke J at 442.

109. She is genuinely contrite and remorseful. She pleaded guilty at the first opportunity and cooperated with the authorities. These matters establish that she is well on the way to successful rehabilitation which is, of course, in the community's interests. As King CJ observed in Yardley v Betts (1979) 22 SASR 108 at pp 112 to 113:

"“The protection of the community is also contributed to by the successful rehabilitation of offenders. This aspect of sentencing should never be lost sight of and it assumes particular importance in the case of first offenders and others who have not developed settled criminal habits. If a sentence has the effect of turning an offender towards a criminal way of life, the protection of the community is, to that extent, impaired. If the sentence induces or assists an offender to avoid offending in the future, the protection the community is, to that extent, enhanced.

To say that the criminal law exists for the protection of the community is not to say that severity is to be regarded as the sentencing norm. Times and conditions change and the approach of judges to their task must be influenced by contemporary conditions and attitudes. But public concern about crimes, however understandable and soundly based, must never be allowed to bring about departure by the courts from those fundamental concepts of justice and mercy which should animate the criminal tribunals of civilised nations.

…the protection of the public must remain our first concern but if consistently with that we can in our compassion assist another human being to avoid making ruin of his life, we ought surely to do so."

110. The amount involved, although substantial, is less than the amounts seen in the most serious types of cases. The period of offending represents a relatively short period in a law-abiding and useful life.

111. The offender has repaid over $300,000 from the sale of her house. In arranging part reparation to be made, the offender was doing no more than repaying what she had illegally received by her own conduct. Offenders cannot buy their way out of severe punishment by repaying what they should never have received. However, the Court does regard part reparation as a positive matter so far as this offender is concerned:

"…sentencing is not a purely logical exercise, and the troublesome nature of the sentencing discretion arises in large measure from unavoidable difficulty in giving weight to each of the purposes of punishment. The purposes of criminal punishment are various: protection of society, deterrence of the offender and of others who might be tempted to offend, retribution and reform. The purposes overlap and none of them can be considered in isolation from the others when determining what is an appropriate sentence in a particular case. They are guideposts to the appropriate sentence but sometimes they point in different directions.": Veen v The Queen (No 2) (1988) 164 CLR 465 at 476.

112. In my view, specific deterrence and protection of the community do not play a role in sentencing this offender. Her fall from grace and the loss of employment and limitations to future employment do not require the imposition of specific deterrence personal to the offender. She has excellent prospects of rehabilitation and will not be before a court again. In those circumstances protection of the community does not play a role in sentencing.

113. General deterrence plays a role due to the amount involved and her breach of trust. The concept of general deterrence, that is, the need to send a message to others that they should not engage in such conduct, must be placed in context with the offending. She was scammed. It was not offending as a result of gambling, alcoholism, drugs or extravagant lifestyle. There is a degree of uniqueness about her offending which requires an individual approach to sentencing. She is a victim. She suffered a large financial loss and she fell prey to the malicious tactics of an international love scammer.

114. Retribution (a notion that reflects the community's expectation offenders will suffer punishment) and denunciation play a role in sentencing this offender. I also take into account her subjective case, her plea, her cooperation, part restitution and her prospects of rehabilitation. Although general deterrence is important, it can never be allowed to dictate a sentence which is not proportionate to the offence committed or appropriate to punish the particular offender before the Court: R v Moon [2000] NSWCCA 534, Howie J at [81].

115. Each count for sentence involved a course of conduct but they were discrete acts of criminality. Each of the sentences should be partially cumulative. The aggregation of all the sentences must be adjusted in an appropriate measure of the total criminality involved: Postiglione v The Queen (1997) 189 CLR 295 at 307 to 308 per McHugh J, Cahyadi v R [2007] NSWCCA 1; (2007) 168 A Crim R 41.

116. It is recognised that courts do not add one sentence upon the other. It is also recognised that the severity of combined sentences should not, unless absolutely necessary, operate to destroy any prospects of rehabilitation and reform. Ms Mendes concedes that a modest degree of partial accumulation may be appropriate given that each sequence represents separate but related offending.

117. Instinctive synthesis is a method of sentencing by which the judge identifies all the factors that are relevant to the sentence, discusses their significance and then makes a value judgment as to what is the appropriate sentence given all the factors of the case. Individualised justice is an important aspect of sentencing. The indicative sentences will be reduced by the combined discount of 30%.

118. Sequence 1: the indicative sentence is 2 years and 5 months' imprisonment. But for the 30% discount, the sentence would have been 3 years and 6 months, with rounding down.

119. Sequence 2: the indicative sentence is 2 years and 1 month. But for the 30% discount, the sentence would have been 3 years, with rounding down.

120. Sequence 10: the indicative sentence is 3 months. But for the 30% discount, the sentence would have been 5 months with rounding down.

121. I impose an aggregate sentence of 3 years.

122. To consider Ms Mendes' submission that the sentence be served in the community, a three-step process is involved. First, the Court must be satisfied that having considered all possible alternatives no penalty other than imprisonment is appropriate. I am so satisfied.

123. Second, if a sentence of imprisonment is appropriate, the Court determines the length of sentence without regard to how it is to be served. In this case, an appropriate aggregate sentence of three years' imprisonment. The third and critical step is to determine whether the sentence should be served by way of an intensive correction order.

124. In taking the third step and, although s 66 mandates that community safety is the paramount consideration, a sentencing judge must weigh and assess that consideration against the entirety of the facts, matters and circumstances which are relevant to the sentencing task applying the instinctive synthesis approach: Blanch v R [2010] NSWCCA 304 at 51.

125. In R v Fangaloka [2019] NSWCCA 173, the Court found that the paramount consideration whether to make an intensive correction order is whether such an order or full‑time detention would be more likely to address the offender's risk of reoffending. Unless a favourable opinion is reached as to that question, an intensive correction order should not be imposed.

126. In Mourtada v R [2021] NSWCCA 211, Basten JA at [25] said of his judgment in Fangaloka:

"Thirdly, and least importantly for present purposes, there have been different views as to how s 66 requires “community safety” to operate. In R v Fangaloka I noted that on one reading of s 66, “unless a favourable opinion is reached” in assessing whether such an order would be more likely to address the risk of reoffending, “an ICO should not be imposed”: at [63]. Subsequently, that has been taken to be the statutory construction preferred in Fangaloka. No doubt the judgment could have been more clearly expressed, but the view accepted at [65]-[66] did not include the proposition that a positive favourable opinion was required before an ICO should be imposed. Rather, a more nuanced approach was adopted to the weighing of the various considerations required to be taken into account under s 66. At [66] the reasoning noted that the purpose of s 66 was “to ensure that the court does not assume that full-time detention is more likely to address a risk of reoffending than a community-based program of supervised activity.” The sentencing court was not required to favour an ICO over full-time custody, but it was required to have specific regard to community protection and to bear in mind that short sentences were not necessarily effective as a means of deterring further offending.”

127. In Mandranis v R [2021] NSWCCA 97, Simpson AJA, with whom the other members of the Court agreed, held that s 66(1) subordinates (but does not exclude) other considerations to community safety. That is the inescapable consequence of declaring community safety to be the paramount consideration.

128. I have weighed and assessed community safety against the entirety of the facts, matters and circumstances which are relevant to the sentencing task, applying the instinctive synthesis approach.

129. I am satisfied that the imposition of an intensive correction order is an appropriate sentence in this case. I am satisfied on the information and evidence before me that an intensive correction order can be imposed without the need for a report: see s 17D of the Crimes (Sentencing Procedure) Act 1999. The conditions of the intensive correction order are:

1. That the offender not commit any offence;

2. That Ms Ferguson be under the supervision of the Albury community corrections office;

3. That she report to the Albury Community Corrections Office by telephone within seven days.

130. I am satisfied that there are exceptional circumstances, and no additional conditions are imposed on the intensive correction order: s 73A(1A) Crimes (Sentencing Procedure) Act 1999.

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Decision last updated: 18 August 2022