R v Karam
[2020] VCC 496
•30 April 2020
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE CRIMINAL DIVISION | Revised Not Restricted Suitable for Publication |
Case No. CR-16-01646
| THE QUEEN |
| v |
| SAM KARAM |
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JUDGE: | HIS HONOUR JUDGE TRAPNELL | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 17-18 September 2018 | |
DATE OF SENTENCE: | 30 April 2020 | |
CASE MAY BE CITED AS: | R v Karam | |
MEDIUM NEUTRAL CITATION: | [2020] VCC 496 | |
REASONS FOR SENTENCE
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Subject: CRIMINAL LAW – Sentence
Catchwords: Dishonestly causing a loss to the Commonwealth – Dishonestly causing a loss or risk of loss to the Commonwealth – Paying ‘off the books’ wages without remitting tax to the ATO – Risk of loss to the ATO of approximately $1 million – Early plea of guilty – Very lengthy delay – Verdin’s principles 6 engaged – Relevant prior criminal history – Drug abuse – Highly problematic prospects of rehabilitation – Total effective sentence of three years’ imprisonment with a recognisance release order allowing immediate release
Legislation Cited: S 135.1(3) Criminal Code (Cth) – s 135.1(5) Criminal Code (Cth) – Crimes Act 1914 (Cth) s 4B(2) – s 244 Criminal Procedure Act2009 (Vic) – s 79(1) Judiciary Act 1903 (Cth) – s 16A(1) Crimes Act1914 (Cth) – s 16A(2) Crimes Act1914 (Cth)
Cases Cited:R v Verdins (2007) 16 VR 269 – Veen v The Queen (No 2) (1988) 164 CLR 465 – R v Rumpf [1988] VR 466 – Alexandros v Birchell (2000) 31 MVR 307 – DPP v Rongonui (2007) 17 VR 571 – Bellizia v The Queen [2016] VSCA 21 – Atholwood v The Queen (1999) 109 A Crim R 465 – Cameron v The Queen (2002) 209 CLR 339 – Barbaro v The Queen (2012) 226 A Crim R 354 – Rodriguez v DPP (2013) 40 VR 436
Sentence: Total effective sentence of three years’ imprisonment with a recognisance release order allowing immediate release
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APPEARANCES: | Counsel | Solicitors |
| For the CDPP | Mr B Young QC with Mr M Regan | Solicitor for the Commonwealth Director of Public Prosecutions |
| For the Accused | Mr D McGlone | Leanne Warren and Associates |
HIS HONOUR:
1 Sam Karam, you have pleaded guilty to a Commonwealth indictment containing one charge of dishonestly causing a loss to the Commonwealth between 1 April 2012 and 31 August 2014 (Charge 1)[1] and one charge of dishonestly causing a loss or risk of loss to the Commonwealth between 10 August 2013 and 30 September 2014, knowing or believing that the loss would occur or that there was a substantial risk of the loss occurring (Charge 2).[2] The maximum penalty for each of these offences is five years’ imprisonment[3] and/or a fine of $33,000.[4]
[1] Contrary to subs 135.1(3) Criminal Code (Cth).
[2] Contrary to subs 135.1(5) Criminal Code (Cth).
[3] Pursuant to ss 135.1(3) and 135.1(5) Criminal Code (Cth).
[4] See Crimes Act 1914 (Cth) s 4B(2). At the relevant time a ‘penalty unit’ was equal to $110.
2 Charge 1 relates to you causing an admitted quantified loss to the Australian Tax Office (‘ATO’) of $12,948, being the non-payment of Pay as You Go (‘PAYG’) tax instalments payable on cash payments totalling $38,580 you received as wages from ACG National Pty Ltd (‘ACG’) and MLA Security Services Pty Ltd as trustee for the Ammouchi Family Trust (‘MLA’), with the intention of dishonestly causing a loss to the Commonwealth.
3 Charge 2 relates to a loss or risk of loss you caused to the ATO of PAYG tax instalments neither withheld, declared nor remitted to the ATO in respect of numerous employees of MLA, Mask Services Pty Ltd (‘Mask’) and a business known as ‘Shoretec’ (‘Shoretec’).
The Facts
4 The factual substratum to these offences is set out in three documents filed by the prosecution as follows:
(1) An undated document headed ‘Plea Opening – General Summary’.[5]
(2) An undated document headed ‘The Queen -v- Sam Karam, Plea Opening – Executive Summary’.[6]
(3) A document described as ‘The Queen -v- Sam Karam, Prosecution Opening for Plea’ dated 28 August 2018.[7]
[5] Exhibit P1.
[6] Exhibit P2.
[7] Exhibit P3.
5 I was told by your counsel I can treat the contents of these documents, so far as they relate to you, as a statement of agreed facts for the purposes of sentencing you for these offences.
6 At the relevant time, ACG was one of Australia’s largest national private security companies. A major part of its operations involved supplying security personnel at clients’ sites and various public events. Victoria provided the largest income stream from the deployment of the largest guard workforce in the company’s operations.
7 ACG aggressively projected an image eschewing any reliance upon sub-contractors, however, many guards were in fact employees of several sub-contractors to ACG. ACG substantially asserted overarching control in the recruitment, deployment and supervision of guard personnel, whether they were employed directly by ACG or through its several sub-contractors.
8 ACG’s clients at the relevant time included: The Port of Melbourne Authority, Patricks Stevedores, Etihad Stadium, Coca Cola Amatil, the Melbourne and Olympic Park Trust, and all three major Melbourne racecourses. ACG also provided security guards to major seasonal sporting events such as the Spring Racing Carnival and the Australian Open tennis.
9 ACG relied upon several sub-contractors to provide guards for Victorian events. These sub-contractors included Mask, which you owned and operated, MLA, which was owned and operated by Mohamed Ammouchi and Shoretec, the business name used by Jamal Kaakour.
10 As an employer, ACG was obliged to withhold an amount of PAYG tax from wages and salaries paid to its employees and to regularly remit that amount to the ATO. During the charged period, that responsibility shifted from ACG to retained sub-contractors in respect of their employees’ wages. There were many guards who thought they were employees of ACG, but in fact their employer was either Mask, MLA, Shoretec, or another company owned and operated by one of your co-offender, Mr Frank Moussa.
11 I accept, as the prosecution alleges, you engaged in ongoing dishonest conduct arising from your association with ACG. You and others involved in this scheme persistently acted dishonestly by paying ‘off the books’ wages to all security guards employed by MLA, Mask and Shoretec without remitting PAYG to the ATO.
12 The resultant loss and risk of loss to the Commonwealth was substantial. Moreover, Ammouchi, and later you, regularly made untaxed cash supplement payments to seven ACG salaried managers.
13 You and Ammouchi were the targets of telephone interception warrants. The evidence, including business records, messages and intercepted telephone conversations, revealed a long association and familiarity between you and your co-offender Harry Korras. The two of you worked together in the security industry a decade earlier.
14 By March 2012, you had been appointed by Korras as a salaried ACG events manager, a position you remained in for about 12 months. During this time, you worked closely with your co-offender Ammouchi, administering MLA rostering and events deployments. You received untaxed cash payment supplements from MLA in addition to you ACG salary. The evidence establishes that from as early as April 2012, you began supplementing your ACG taxed salary by working MLA shifts for untaxed cash payments. This gives rise to Charge 1 on the indictment.
15 In March 2013, Korras declared that you would ‘operate MLA’ and ‘control all the guards’. You resigned your position as ACG events manager in early April 2013 and soon after you started working effectively in partnership with Ammouchi.
16 In April 2013, you became the sole director, secretary and shareholder of Mask Services Pty Ltd, a new company incorporated by the Peterson Group which was an acronym for Mohamed Ammouchi and Sam Karam. The Peterson Group were ACG’s accountants. You continued to receive occasional untaxed cash payments for your own shifts paid under the MLA payroll, rather than under your own Mask payroll.
Charge 1
17 Charge 1 combines the dishonesty involved in your receipt of cash payments from MLA whilst employed as a salaried manager of ACG, together with the payments you later received from MLA whilst operating Mask.
18 Between 1 April 2012 and 31 August 2014, you received $38,580 in untaxed cash payments from MLA. You also received $26,204.42 whilst employed at ACG for a year. These payments were separate from your official taxed ACG salary as events manager. The PAYG tax evaded was $7,654.88. You also received untaxed cash payments from MLA for shifts worked by you between September 2013 and August 2014.
19 You failed to lodge personal income tax returns for FYs 2013 and 2014. Other evidence establishes that you made very substantial other untaxed earnings in the amount of $249,993 in FY 2014 and $45,718 in part of FY 2015. You evaded at least $4,508 PAYG tax in 2014 and at least $766 PAYG tax in 2015. In total, over the charged period of some 29 months, you evaded paying $12,928 in PAYG tax.
Charge 2
20 From April 2013, some MLA guards were administratively transferred over to Mask. For about the next 15 months, you and Ammouchi worked co-operatively using MLA and Mask to provide guards to ACG until your relationship irretrievably fractured in early August 2014.
21 In July 2013, you entered into an agreement with Kaakour, the operator of Shoretec, on behalf of yourself and Ammouchi, to receive the ACG payment for Shoretec invoices for all Shoretec’s guards. This arrangement was brokered by Korras and the ACG Victorian events general manager, Hayssam Chmayse. In accordance with the arrangement, Kaakour agreed to pay you and Ammouchi commission of $1 per guard hour and allowed you both to retain the amount of GST paid by ACG to Shoretec. Thereafter, you and Ammouchi withdrew the balance of the remitted amount (minus the commission and GST) and delivered this sum in cash to the ACG head office for collection by Kaakour. The retained commission and GST were shared 50/50 as profit between you and Ammouchi. This profit comprised the $1 commission component plus all GST paid by ACG.
Separate Mask invoices were created by the Peterson Group from September 2013 until September 2014. Whilst MLA remained the named contractor to ACG, between September 2013 and May 2014 ACG payments under that contract were made to both MLA and Mask. The MLA bank account was closed on 23 May 2014. From late May 2014 until mid-September 2014 all ACG payments under the MLA sub-contract were made into the Mask bank account. You were responsible for all cash withdrawals from late May 2014.
23 In August 2014, your partnership arrangement with Ammouchi irretrievably broke down. You then proposed to continue to conduct the business of MLA and Mask alone. After Ammouchi withdrew from his involvement with you and MLA, you continued to receive the ACG remittance for the payroll fortnights ending 31 August 2014 and 14 September 2014. This last payment was received despite ACG having notified you on 1 September 2014 that your services were no longer required.
24 No PAYG tax was ever remitted to the ATO by MLA or Mask for any of the five quarters ending 30 September 2013 through to 30 September 2014.
25 In the 18-month period from 10 April 2013 to 30 September 2014, the subject of Charge 2, ACG was invoiced $3,113,150 in respect of the MLA sub-contract payroll, including payments for Mask invoices. This included $283,013 invoiced GST. Additionally, from July 2013 to 31 August 2014, ACG paid a further $1,853,747 (including $168,522 GST) with respect to Kaakour's Shoretec payroll. This was initially deposited into the MLA account and later into the Mask account. The combined total amounts paid is $4,966,888, including $451,526 GST. ACG also made relevant payments totalling $5,052,168 into the MLA and Mask bank accounts.
26 No ATO audit was ever undertaken which would have allowed for the calculation of each guard’s individual tax liabilities. Accordingly, apart from calculations applicable to the ACG managers' untaxed cash supplements, the total PAYG tax amount lost to the Commonwealth cannot be quantified. Nonetheless, against a background of over $4.96 million paid by ACG into the MLA and Mask accounts, the loss was substantial. It is agreed, I should sentence you on the basis the amount lost to the Commonwealth government through non-payment of PAYG tax was approximately $1 million.
27 Your aggregated profit ‘split’ during the period charged in Charge 2 was $331,937. This does not include the $12,375 cash you received for 495 shift hours with MLA in FYs 2014 and 2015, which is covered by Charge 1.
28 Search warrants were executed at several locations in October 2014. You were arrested in February 2015 and participated in records of interview in which you made some admissions. In effect, you told police that during the offending period your primary concern was for the welfare of the security guards employed by ACG, MLA and Mask, and you left the accounting and bookwork of the Mask business to others at ACG.
Personal Circumstances
29 You were born in Lebanon and you are presently aged 48 years. You have two brothers and a sister who were born in Lebanon and another brother, who is 11 years younger than you, who was born in Australia.
30 You and your family immigrated to Australia in 1974, when you were three years old, to escape the deteriorating political situation in Lebanon. Your family, who are Maronite Christians, were sponsored by an uncle who was already residing in Australia.
31 When you were younger, you were subjected to excessive physical and verbal discipline by your father. You regard yourself as being a member of a relatively close family unit.
32 Your father was a schoolteacher. He passed away in September 2014 while he was residing in Lebanon. Your father may have been suffering from dementia before his death. You and he had a falling out and you feel guilty for not reconciling with him before his death.
33 Your mother was also a schoolteacher and is currently in her mid-70s and living in Melbourne’s east. You are in regular contact with her and she previously visited you during the time you most recently spent in custody.
34 You grew up in the Melbourne inner suburbs and completed your primary school education at Brunswick East Primary School, before moving to Brunswick High School, where you completed year 12 as ‘a slightly above average student’. Apparently, you were very good at mathematics.
35 Whilst at school, you met some of your co-offenders, together with other individuals concerned with this case. You either attended the same school as them or got to know them as a teenager in and around the local area.
36 About twelve months after finishing your schooling, you travelled to Lebanon for a short holiday. Upon arrival in that country, you were told you were required to undertake military service. You spent the next 22 months undergoing military training and performing military service in Lebanon.
37 You have had three major relationships in your life. You began a nine-year relationship with Julie Casella when you were about 18 years old. From this relationship you have a daughter, Kaylee, who is about 21 years old.
38 In your late 20s, you resigned from Advent Security where you were employed as the operations manager. This placed strain on your relationship with Ms Casella and she eventually left you. After the separation Kaylee lived with her mother, but you and Kaylee remain close.
39 In 2011, you commenced a relationship with Andrea Taranto. This lasted for about five years and together you have a seven-year-old son, Xavier. You were very much a hands-on father from Xavier’s birth; however, you have not seen him for over four years since your separation form his mother. Apparently, there were intervention orders put in place, which you breached, and Ms Taranto has ceased all contact with you.
40 In more recent times, you have been living in Port Melbourne with your current partner Faberge Webster. You have no children from this relationship and the pair of you were recently engaged.
41 You have maintained employment in the security industry since commencing as a security guard at Princes Park in Carlton North whilst you were still in high school. Regulation of the industry was limited at the time and, with the assistance of some of your uncle’s friends, you were able to secure work on the doors of licenced premises with a night watchman’s licence. You came to know other co-offenders, including Frank Moussa, when working as a security guard at Princes Park.
42 In your later teenage years, you worked at Bombay Rock in Sydney Road, Brunswick. At 18 years of age, you commenced employment at Advent Security where you became close friends with your co-offender Korras, who also began working there. You also met another co-offender, Julian Milla, whilst you were both employed at Advent Security.
43 Your counsel submitted this was a time of considerable stability for you. However, things began to unravel at work. Korras was dismissed from Advent Security and you subsequently resigned. You commenced working at another security guard company and then set up your own business, Skram Consulting. You and Korras drifted apart.
44 At some point in 2011, you received a call from Korras who knew of opportunities for employment as a security guard. The two of you renewed your friendship and you started work as a security guard, working ACG shifts for MLA. This was your introduction to ACG, and this provides context to your involvement in the offending conduct.
45 So far as your present circumstances are concerned, you are considerably impoverished since your involvement with ACG. Your relationship with Ms Taranto ended as it became apparent your involvement with ACG was finishing. You have not seen your son Xavier for over four years.
46 The combination of grief arising from the end of your relationship with Ms Taranto, the death of your father, and the loss of your employment caused you to spiral downwards into drug abuse. This in turn rendered your circumstances even more chaotic and you engaged in criminal activity, ending in a term of nine months’ imprisonment in 2016. During your time in custody, you were unable to continue making repayments on your home loan and you lost your house. After serving six months of that sentence, you successfully appealed and received time served plus a community correction order.
47 You have been unable to continue employment in the security industry because of your criminal record. You no longer hold a security licence and you have not been employed since you were arrested for the current offences.
48 You were initially receiving a jobseeker allowance; however, you have been on a disability support pension since developing carpel tunnel syndrome. You are now on a waiting list for carpal tunnel surgery to your right wrist.
49 Accordingly, I accept you have no capacity to pay a pecuniary penalty or make restitution over and above the payments you have already made in respect of Mask’s superannuation guarantee charge liability and an ATO repayment plan you agreed to. However, as your counsel properly conceded, these payments do not relate to the offending conduct encompassed by the charges before me.
50 I have had regard to a psychological report prepared by Mr Jeffrey Cummins, a consulting clinical and forensic psychologist engaged by your legal representatives, dated 24 August 2018.[8] You deny any problematic alcohol use even though you often drank excessive quantities of alcohol whilst you were working in the nightclub scene. You reported to Mr Cummins that you are now ‘an infrequent drinker of alcohol’.
[8] Exhibit SK2.
51 You have a history of illicit substance use, which began with cannabis use whilst at high school and you ‘dabbled’ in cocaine just prior to your father’s death. After your father died, you began using amphetamines and methylamphetamine, which you still sometimes use. You told Mr Cummins that you ‘[weren’t] coping with dad’s death. [You’re] still not coping’.
52 Mr Cummins clinically assessed you as being of low average intelligence or possibly as being of ‘slightly below average intelligence’. This is despite the fact he was aware you had successfully completed Year 12 studies. Moreover, you had established and operated your own security industry business, Skram Security, albeit this was not ultimately successful, and while working as an events manager for ACG, you managed a large security force assigned to Etihad Stadium during football matches.
53 Mr Cummins opined you ‘may have’ a Borderline Personality Disorder concerning your father’s death and you are suffering from a ‘Persistent Complex Bereavement Disorder’. While this diagnosis is not causally connected to your offending conduct, it is relevant to your current personal circumstances.
54 At interview you presented as ‘being mildly-moderately anxious and moderately depressed’, which is no doubt reactive to your present circumstances. Mr Cummins opined that your ‘mental health would be very likely to deteriorate if [you were] incarcerated in relation to the present charges’. Despite this opinion, your counsel did not submit that any Verdins principles[9] were engaged in your case. Nonetheless, in the absence of any challenge to Mr Cummins’ opinion, I accept that Verdin’s principle 6 is applicable to you and I sentence you on that basis.
[9] See R v Verdins (2007) 16 VR 269, 276 [32] (Maxwell P, Buchanan and Vincent JJA).
55 You have a relevant prior criminal history dating back to September 1991 and extending to October 2001, which includes three appearances for offences involving dishonesty. These resulted in the imposition of adjourned bonds and an aggregate fine. During this period, you also received prior convictions and findings of guilt for offences against the person, drug offences, offences relating to possessing prohibited weapons and offences against the administration of justice. For these offences you received an aggregate suspended sentence of imprisonment, a community based order and aggregate fines.
56 Given your prior criminal history, specific deterrence and protection of the community must be given some real weight in sentencing you for the present offences.[10]
[10]See Veen v The Queen (No 2) (1988) 164 CLR 465, 477–8.
57 The Criminal Record filed by the Commonwealth Director dated 26 July 2018[11] was admitted by you upon your arraignment on 30 July 2018. Whilst no objection has been taken by you to its form or content, it includes convictions for offences committed after the end of the offending periods alleged in the charges on the Indictment, which are not ‘prior convictions’. These comprise offences dealt with in the Magistrates’ Court on 16 April 2015, 27 August 2015 and 20 October 2016 and appeals against sentence heard in this Court on 18 September 2015 and 1 May 2017. I have disregarded these matters in considering your prior criminal history.
[11] This was filed pursuant to s 244 of the Criminal Procedure Act2009 (Vic) as applied to these proceedings by s 79(1) of the Judiciary Act 1903 (Cth).
58 Nonetheless, since the matters contained in the document filed as a Criminal Record dated 26 July 2018 are admitted by you, they are subsequent convictions and findings of guilt which, while they cannot be taken into account in the same manner as prior convictions can be, they bear upon my assessment of your character and shed light on your risk of recidivism. This is relevant to the weight I give to specific deterrence and protection of the community in sentencing you for the present offences. Subsequent offending is also relevant to my assessment of your prospects of rehabilitation.[12]
[12] See R v Rumpf [1988] VR 466, 475 (McGarvie J, Young CJ and Murray J agreeing); Alexandros v Birchell (2000) 31 MVR 307, 310–1 [15], [18] (Smith J); DPP v Rongonui (2007) 17 VR 571, 580 [37] (Maxwell P); Bellizia v The Queen [2016] VSCA 21 [75], [77]–[78] (Santamaria JA).
59 As your counsel submitted, it is noteworthy that you had a nearly 14-year offence free period between October 2001 and April 2015. Your decent into crime at that stage in your life is at least partly explained by the combination of destabilising circumstances referred to above.[13]
[13]Above at [46].
60 Following the plea hearing and prior to imposing sentence on you, I sought updated plea submissions on your behalf and a response from the Commonwealth Director. The latter electronically filed another Criminal History, dated 23 March 2020. This document contains allegations of further matters, which are not prior convictions or prior findings of guilt, that have been dealt with since the plea hearing. In my view the document does not comply the provisions of the Criminal Procedure Act 2009 (Vic) and its contents have not been admitted by you. In the circumstances, I consider it would be unfair to have these further matters put to you given the significant delay that has occurred in finalising this case, and the fact you are now legally unrepresented. I will disregard the offences committed by you since the plea herring in sentencing you for the present offences.
Sentencing Considerations
61 The fundamental principle in sentencing you is that I must impose a sentence ‘that is of a severity appropriate in all the circumstances of the offence’.[14] I must have regard to a number of sentencing considerations as set out in s 16A(2) of the Crimes Act 1914 (Cth) (‘the Act’). This list is not exhaustive.
[14] Crimes Act1914 (Cth) s 16A(1).
62 Included in the matters to which I must have regard in sentencing you, are the following:
(a) the nature and circumstances of the offence;[15]
(b) any loss resulting from the offence;[16]
(c) the deterrent effect that any sentence or order under consideration may have on other persons;[17] and
(d) the need to ensure that the person is adequately punished for the offence.[18]
[15] Ibid s 16A(2)(a).
[16] Ibid s 16A(2)(e).
[17] Ibid s 16A(2)(ja).
[18] Ibid s 16A(2)(k).
63 General deterrence and denunciation are prime considerations in sentencing you in respect of these offences. The courts have a significant responsibility to protect the integrity of the revenue system by imposing punishment for deliberate and sustained fraud in order to deter others who may be tempted to indulge in similar conduct.
64 The taxation system is open to abuse because it is based on trust. Accordingly, when abuse is discovered sentences must be salutary. Tax fraud also has many harmful, but often hidden, social consequences. It is difficult to detect and if undetected the rewards can be great.
65 The Commonwealth Director submitted, and I accept, that in your case detection was made more difficult by the payment of cash wages and the employment of sub-contractors, which had the effect of shifting the tax burden to entities that did not take responsibility for the payment of their taxation obligations.
66 In this case, the investigation and prosecution of the fraudulent scheme of which you were a part was complex, difficult, time consuming and resource intensive. I was informed that the investigation involved the execution of numerous search warrants, the seizure of thousands of documents, the interception of many communications over a lengthy period and the detailed forensic analysis of accounting records.
67 Your crime is not victimless because the burden of fraud perpetrated on the Commonwealth government falls on the whole Australian community. Serious tax fraud will inevitably have flow-on effects to the incidence of taxation imposed on, and paid by, honest taxpayers.
68 It is for these reasons, and others, that the sentences I impose on you for this offending must give real effect to the principles of general deterrence, denunciation and just punishment. Those, like you, who systematically defraud the revenue of large sums of money over an extended period must in general expect to receive a sentence of imprisonment.
69 You held a managerial position and you were the sole director, secretary and shareholder of Mask. Whilst you were not the instigator of the scheme giving rise to the charges before me, nonetheless, you must have had some awareness of what was occurring, and you played your part in the scheme as directed by others.
70 Your offences were continuing ones, committed over a 30-month period, during which you were partly responsible for the failure of MLA, Mask and Shoretec to remit PAYG tax to the ATO. The accepted total loss in respect of Charge 1 is $12,948. The loss and/or risk of loss to the Commonwealth resulting from Charge 2 is unquantifiable but agreed to be approximately $1 million.
71 Clearly, as your counsel conceded, this is serious offending and significant sentences of imprisonment are called for in order to give effect to the principles of denunciation, general deterrence and just punishment. Whether any part of those sentences must be immediately served by you depends upon my assessment of, and the weight I give, to circumstances personal to you, to which I now turn.
Mitigating Circumstances
72 You pleaded guilty at a late stage in the proceedings on 30 July 2018, on what was to be the first day of a very lengthy multi-headed trial. Nonetheless, given the prosecution’s change in position regarding a proposed conspiracy charge, and your lack of legal representation until a relatively late stage in the proceedings, I accept your pleas were entered at the earliest forensically reasonably opportunity, and you are entitled to have this taken into account in your favour.[19] The prosecution accepts yours are to be treated as early pleas.
[19] See Atholwood v The Queen (1999) 109 A Crim R 465, 468 (Ipp J); Cameron v The Queen (2002) 209 CLR 339, 345–6 [20]–[22] (Gaudron, Gummow and Callinan JJ).
73 Your plea has significant utilitarian benefit considering the likely length and complexity of any trial and the large number of witnesses that would have needed to be called. Indeed, Senior Counsel for the Commonwealth Director fairly described the utilitarian benefit of your pleas of guilty as being ‘massive’.
74 Your pleas also indicate an acceptance by you of responsibility for your offending conduct and a willingness to facilitate the course of justice. However, on the material before me, I am unable to make a finding in your favour that you demonstrate true contrition and remorse over and above that which is evident from the pleas themselves.[20]
[20] See Barbaro v The Queen (2012) 226 A Crim R 354, 364–365 [32]–[38] (Maxwell P, Harper JA and T Forrest AJA).
75 Another very significant mitigating circumstance is the effect of delay in your case. There will always be some delay in prosecuting highly complex white-collar crime cases, but here there has been considerable systemic delay occasioned by the progress of the proceedings through the courts, my personal circumstances and the effects of the COVID-19 pandemic. The law recognises that ‘delay is more likely to be a major mitigatory factor where the prosecution or the justice system is responsible for the delay’.[21]
[21] Judicial College of Victoria, Victorian Sentencing Manual, online, page 142 [7.5.3.2].
76 As the Victorian Court of Appeal observed in Rodriguez v DPP (Cth):[22]
Delay is normally relevant in two ways. First, it is relevant to rehabilitation that has occurred during the delay and the effect that has in turn on specific deterrence. Secondly, delay is relevant in the sense that the anxiety and uncertainty of having the prospect of a sentence hanging over one’s head during the period of delay is akin to punishment in itself.[23]
[22] (2013) 40 VR 436.
[23] Ibid 445–6 [36] (Warren CJ and Redlich JA) (citations omitted).
77 So far as your rehabilitation during the period of delay is concerned, considering your subsequent offending I am unable to accept you have rehabilitated yourself. Overall, I can only assess your prosects of rehabilitation as being highly problematic and dependent on you becoming drug free and remaining so.
78 So far as delay akin to punishment is concerned, you have had these matters hanging over you since you were arrested in February 2015, a period of well over five years. Since the plea hearing, some nineteen months ago, you have had the very real prospect of a sentence of imprisonment with a component of immediate incarceration hanging over your head like the ‘Sword of Damocles’. Undoubtedly, this would have caused you stress and anxiety.
79 In my opinion, the delay in this case calls for significant leniency to be extended towards you.
80 So far as the seriousness of your offending conduct is concerned, your counsel submitted that you ‘lacked even the most rudimentary business acumen’ and you ‘could not be said to be, in any meaningful way, running a business’. He observed that the incorporation of Mask and the manner in which its operations were effectively controlled by ACG, ‘followed an earlier contrived template that had been employed to create’ several companies associated with your co-offenders.[24] Your counsel submitted you ‘provided a compliant vehicle to front another bogus ACG subcontractor’.
[24] See Plea Submissions dated 14 September 2018 (Exhibit SK1) [16]–[17].
81 One of your co-offenders in his record of interview described your role as he saw it in these terms: ‘Sam was just the – front man who would … deal with the guards’. He told police you would ‘run errands, do favours, deliver a payroll and derive a financial advantage for [yourself] while feeling important’.
82 The prosecution submitted that your role was much greater than this. At least so far as MLA and Mask were concerned, you were ‘very much involved in running the business[es]’ and you were ‘actively conducting a business’. So far as your involvement in Mask is concerned, the prosecution submitted you were not ‘a passive company director put in place for a purpose of ACG’. By this I understand the submission to be that you were not simply a ‘stooge director’ nominally in charge of a company you had no active control over.
83 The prosecution further submitted that your ‘role increased over time, and it became a role of significance’. They point to the fact you were chosen for the role you played in this overall tax avoidance scheme by Korras, who on any view was a very successful and canny businessman. You were moved from ACG, where you were given a significant salary increase, to MLA, where you were ‘engaged in the negotiations for the take-up of the Shoretec payroll’. You were ‘agitating for more details as to the Shoretec payroll’ and, while working with Ammouchi at MLA, you were regularly requesting from Ms Penny Kyriopoulos of the Peterson Group not only information regarding the current week’s payroll, but also information pertaining to past weeks’ payrolls.
84 Moreover, upon becoming aware that the ATO was intending to conduct an employer obligation audit of MLA, Ammouchi closed that company’s bank account and all subsequent payments of security guards’ salaries were made by ACG into your company’s bank account. This continued for about 4½ months until shortly before the end of the period charged in Charge 2. During this period, you became what Senior Counsel for the Commonwealth Director described as ‘the effective administrator of all the payments’, being the only person authorised to operate that bank account. You were the person withdrawing cash for payment to the security guards sub-contracted to ACG.
85 I accept your role in the overall offending conduct is greater than your counsel has submitted. Just how much greater is difficult to judge in light of the complexity of the tax avoidance scheme, the interrelationship of the various companies involved, and my inability to accurately assess, on the material before me, the role of others; such as: Korras, Nick Kyriopoulos, Peter Kyriopoulos and those involved in the management of ACG and the Peterson Group.
86 Of course, in order to make a finding against your interest, I would have to be satisfied beyond reasonable doubt that you were in effective control of MLA and Mask, and not just naively responding to the directions of others.
87 On balance, I am unable to make the findings the prosecution seeks regarding your role in the overall offending conduct. Whilst this may be a somewhat benevolent view, I will sentence you on the basis that, like some others entangled in this overall scheme to avoid the payment of PAYG tax, you were a vulnerable, unsophisticated and relatively unintelligent man, who was preyed upon by others involved in the management of ACG and the Peterson Group. In my opinion, this reduces your moral culpability, particularly in relation to the offending conduct giving rise to Charge 2.
88 So far as Charge 1 is concerned, you personally derived a financial benefit equivalent to the evaded PAYG tax of cash payments you received from MLA and Mask totalling $12,948.
89 In relation to Charge 2, you derived substantial benefits from your profit splitting with Ammouchi. The precise amount is unquantifiable, but your counsel conceded that, apart from everyday living expenses, you paid school fees for your daughter at a private school in Year 12, paid for a family holiday to Hamilton Island in Queensland, and you purchased a BMW motor vehicle from your ill-gotten gains. The BMW was ultimately sold when you could not continue making the loan repayments.
90 Having dissipated any financial gains you received from your crimes, you are now impecunious, and I accept that you have derived little long-term financial benefit from your crimes. Nor is there any evidence of you living an extravagant lifestyle during the period of offending.
Application of Sentencing Principles
91 I have had regard to current sentencing practices in relation to the charge of dishonestly causing a loss or risk of loss to the Commonwealth and similar offences. The Commonwealth Director provided me with relevant comparative material and cases. I have had regard to this material in formulating the sentences I impose in your case.
92 It is difficult to gauge more than a very general yardstick from so called ‘comparable cases’, given the wide range of offending conduct which can constitute this offence and the myriad of personal circumstances pertaining to individual offenders. Nonetheless, to the extent that I have been able to gain any assistance from comparable cases and other like material, I have sought to do so in your case.
93 The basic purposes for which a court may impose a sentence are just punishment, deterrence, both specific and general, rehabilitation, denunciation and protection of the community. In sentencing you, I must have regard to a range of factors as set out in the relevant provisions of the Act. In general terms, these include the seriousness of the offence, your culpability for it and your personal circumstances.
94 I am required to balance the interests of the community in denouncing criminal conduct with the interests of the community in seeking to ensure, so far as is possible, you are rehabilitated and reintegrated into society.
95 General deterrence, denunciation and just punishment are very important sentencing considerations for these offences. I am of the view that in your case specific deterrence and protection of the community need be given real weight. I assess your prospects of rehabilitation as being highly problematic and dependent upon you becoming and remaining drug free.
96 I have had regard to the sentences I imposed on your co-offenders Harry Korras,[25] Frank Moussa[26] and Mohamed Khalil Ammouchi.[27] Given the findings I have made in your case, in my view your personal circumstances call for considerable leniency to be extended.
[25] [2019] VCC 1681.
[26] [2019] VCC 1891.
[27] [2020] VCC 341.
97 The Commonwealth Director submitted that a sentence of imprisonment, with a portion to be served before recognizance release, remains the only appropriate sentence in the serious circumstances of these offences and [your] admitted role.
98 Your counsel accepted terms of imprisonment were the only appropriate sentences to impose in your case, given the objective seriousness of these offences. However, he submitted that when all relevant matters are considered any term of imprisonment should be, in effect, wholly suspended.
99 Section 17A(1) of the Act restates the established common law position that imprisonment to be immediately served is a sentence of last resort and a court must consider all other available sentences and all the circumstances of the case.
100 Mr Karam, I have formed the opinion that penalties involving sentences of imprisonment, coupled with a reconnaissance release order with the effect that you will serve no time in immediate custody, are the appropriate dispositions in your case.
101 I have extended significant leniency towards you on account of your early pleas of guilty and the immense delay that has occurred in finalising your case.
Stand up Mr Karam
On the charge of dishonestly causing a loss to the Commonwealth (Charge 1), you are convicted and sentenced to imprisonment for 6 months commencing on 30 October 2022.
On the charge of dishonestly causing a loss or risk of loss to the Commonwealth (Charge 2), you are convicted and sentenced to imprisonment for two years and ten months commencing from today.
I must make a recognisance release order in your case. I order your release under s 20(1)(b) of the Crimes Act 1914 (Cth) forthwith upon you giving security by recognisance of $5000.00 to comply with the following condition:
You are to be of good behaviour for a period of three years.
There is no PSD to declare.
Mr Karam, the purpose of these orders is to punish you for the crimes you have committed. The effect of my orders is you have a sentence of imprisonment of three years hanging over your head from today for three years. During this three-year-period commencing today, you must not commit another offence punishable by imprisonment because that will breach your recognisance and you may be ordered to serve the three years in prison.
The recognisance release order may be discharged or varied under s 20AA of the Crimes Act 1914 (Cth).
Do you understand all this?
Pursuant to s 6AAA of the Sentencing Act 1991 (Vic), I state the sentence I would have imposed on you but for your pleas of guilty would have been a total effective sentence of 5 years and 6 months’ imprisonment, with a non-parole period of 3 years’ and 8 months’ imprisonment.
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