R v KING Anthony

[2008] NSWDC 191

CITATION:	R v KING Anthony [2008] NSWDC 191 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	18 September 2008
JUDGMENT DATE:	18 September 2008
JURISDICTION:	Criminal
JUDGMENT OF:	Murrell SC DCJ
DECISION:	Convicted and sentenced to two years and five months imprisonment.
CATCHWORDS:	Fraud - Dishonestly obtain by deception - King bus group - Delay resulting related matter sentence
LEGISLATION CITED:	Crimes Act 1900, s178A, s 178B.
PARTIES:	Regina Anthony KING
FILE NUMBER(S):	2005/11/0986; 2005/00013705
COUNSEL:	Ms Seeto Mr Lowe

JUDGMENT

1 The Crown filed an ex officio indictment charging that, between June 2000 and 20 December 2000 at Port Macquarie and elsewhere in the State of New South Wales, the offender dishonestly obtained from the National Australia Bank Limited (NAB) for MB Sales Australia Pty Ltd, a valuable thing, namely a warrant for $65,785,846.50, by deception, ie by falsely representing to the NAB that 183 new Mercedes Benz buses existed.

2 On 8 September 2008, the offender entered a plea of guilty. In July 2008, the offender had foreshadowed that he would plead guilty to a more serious offence, an offence against s 176A of the Crimes Act 1900, and in August 2008 had confirmed that intention. As a result of plea negotiations between the offender’s twin brother and co-offender, Peter King, and the DPP, the offender was indicted for a lesser offence, the offence against s 178BA. The maximum available penalty is five years imprisonment, as opposed to ten years imprisonment under s 176A. No standard non-parole period applies.

3 The chronology of events set out in the Crown bundle, Exhibit B. Shortly, the misconduct occurred in late 2000. In April 2003, a receiver was appointed to the offender’s companies and the deception was discovered. In June 2003 the offender was arrested and charged with a related matter. He was tried in September 2006 and found guilty of the related matter. His twin-brother was tried before the same jury and the jury could not determine a verdict in relation to Peter King. In February 2007, I sentenced the offender to a five years imprisonment with a three year non-parole period to date from 8 February 2007. At that stage, there was no indication that the Crown would proceed in relation to the charge the subject of these sentencing proceedings. It was not until June 2007 that the DPP filed the relevant indictment. In August 2007, there were appeal proceedings in relation to the original trial, which resulted in a further delay in the prosecution of the subject proceedings.

4 The first occasion that the offender was arraigned in relation to the subject proceedings was on 8 September, when he entered the plea of guilty. In those circumstances, which are somewhat unusual in relation to a consideration of the utilitarian value of a plea, the Crown submits, the offender accepts and I agree that the appropriate discount to reflect the utilitarian value of the plea is 20 %.

5 The background to the offence is set out in my reasons for sentence in the earlier proceedings. The offender and his twin brother, Peter King, were adopted by the King family when they were three months old. There were biological children of the family. In addition to the adopted twin brothers, the family also adopted a girl. The King family had run the King bus company in Kempsey since 1924. The company had been founded by the offender’s grandfather. Later, it was operated by the offender’s father and uncle.

6 When he was about seventeen years old, the offender began to work in the business. He graduated to a management position. After the offender’s father died in 1982, the offender ran the company on behalf of the family. In 1996, the offender and co-offender borrowed some millions of dollars in order to buy out other family members. The King group of companies expanded rapidly. The King group bought out all competitor bus companies along the New South Wales north coast. At its peak, the group operated many buses. It had a valuable contract from the Department of Transport in relation to the transport of school children.

7 The group moved its headquarters from Kempsey to Port Macquarie. The offender was the person principally responsible for financial aspects of the King group of companies. In mid-2000, the offender and co-offender began negotiations with the NAB, first in relation to the re-financing of existing leasing arrangements between the King Group and third-party financiers and, second, for the purpose of financing the purchase of additional or new buses to enable the group to expand its business. It is the latter purpose that is the subject matter of these proceedings. The re-financing of existing lease arrangements was the subject matter of the earlier proceedings.

8 In relation to the purchase of new buses, the offender asked the NAB to finance the purchase of up to 300 new Mercedes Benz buses. The buses were to be purchased from Daimler Chrysler. The offender informed the NAB that the King Group company, MB Sales Australia Pty Ltd (MBS), had purchased a fleet of 183 new buses from Daimler Chrysler at a cost of $325,000 per bus. The buses had not yet been registered. He came to an arrangement with the NAB that the new buses would be sold to the NAB and that the NAB would then lease the buses back to King Brothers Holdings (KBH).

9 In November 2000, NAB offered a facility of $100 million to meet the dual purposes of re-financing part of the existing bus fleet and purchasing up to 300 new buses. As a result of an agreement in principle, two sets of documents were created. One set related to the re-financing of the existing bus fleet. The second related to the purchase of new buses. The arrangement was that the NAB would have a fixed and floating charge over the King Group’s assets and undertakings.

10 The NAB asked for invoices from the supplier of the new buses and confirmation that the company MBS had acquired the new buses from Daimler Chrysler. To this end, the offender provided the NAB with the following documentation:

11 Two MBS invoices concerning a total of 183 new buses. The invoices were dated 14 December 2000. They appeared to establish the sale of 183 new buses by Daimler Chrysler to MBS. The invoices purported to particularise buses by reference to model, year of manufacture, chassis and engine number. The total value of the 183 new buses, including GST, was $65,785,846.50. Unfortunately, the invoices were false. On 14 December 2000, the offender had instructed an employee of the King Group, Mr Hillier to prepare the invoices in question. The offender provided Mr Hillier with the handwritten information that was to form the basis of the false invoices.

12 The second set of documents that the offender generated for the purpose of extracting funds from NAB was a set of Daimler Chrysler invoices dated 1 November 2000. These invoices purported to emanate from Daimler Chrysler. They referred to the same vehicles as those referred to in the two tax invoices.

13 The offender arranged for the generation of a letter purporting to come from Daimler Chrysler. It was dated 11 December 2000. It listed 200 buses for which MBS had allegedly paid. The letter indicated that the buses had been supplied to MBS and that DaimlerChrysler had been paid for the buses. In fact, the letter was prepared by an employee of Daimler Chrysler, Mr Horn, who had been recruited by the offender to prepare the false document.

14 On the basis of these documents, the NAB was satisfied that the new buses existed and that it was in a position to acquire title of the buses. The NAB used the false invoices with which it was provided to prepare documentation, including a lease agreement and equipment schedules. Pursuant to that documentation, the NAB was to lease the buses, which it would own, back to the King group.

15 Once the documents had been prepared, settlement of the transaction proceeded on 18 December 2000. At that time, the NAB authorised the drawing of a sum of $65,785,846.50. On the next day, a similar transaction proceeded in relation to the “existing” buses. Pursuant to that transaction, a total sum of $44,001,144, including GST, was advanced by NAB to purchase 144 “existing” buses. That $44 million was the subject of the trial. That transaction is the matter for which the offender was sentenced in February 2007. The total amount of money advanced was $109,786,990.50.

16 In April/May 2001, officers of the NAB decided to make more specific enquiries in relation to the NAB’s acquisition of buses. At that time, there was a “road trip” that involved representatives of the NAB accompanying King Brothers representatives for the purpose of inspecting the buses that had been “purchased” by the NAB. As many buses were in use, no one anticipated that all buses would be sighted. However, a number of buses were inspected in the course of that road trip. The offender played a critical role at that time. He had an equipment schedule purporting to itemise the buses the subject of the December 2000 financial transactions. The offender went up to various buses and pretended to read out chassis numbers. He called out those numbers so that the buses could, in effect, be ticked off the list that was in the possession of the NAB, thereby providing reassurance to the NAB that a good number of the buses for which it had advanced the money, in fact, were present and correct. The offender deliberately called out the false numbers for the purpose of reassuring the NAB that the buses existed.

17 The agreed facts accept that the offender and co-offender knew or believed that the 183 buses the subject of these proceedings, did not exist. As at 18 December 2000 when the monies were advanced, they knew or believed that the NAB was paying $65 million for new buses which did not exist. It was therefore dishonest of the offender and co-offender to represent that the buses did exist.

18 In April 2003, the King Brothers Group failed to meet its obligations under the two leasing facility arrangements with the NAB and the NAB appointed receivers and managers. From that point, the deception was revealed.

19 The flow of monies in relation to the matters the subject of those proceedings today and the earlier proceedings is set out in the flowchart at tab 2(i) of Exhibit B. Among other things, that flowchart indicates that the offender and co-offender each received a sum of $500,000 that was paid into an account held by the offender or co-offender and his wife. Otherwise, the monies were dispersed back into the group or back to the NAB by way of paying rent in advance or in some other way and did not move beyond either the company group or the NAB.

20 The offender’s counsel, Mr Lowe, submitted that the $500,000 that was paid to the offender and his wife was invested in real estate, which the NAB subsequently foreclosed upon and sold. The Crown does not accept that proposition as no evidence was adduced to establish a clear link of that type. It does not really matter whether the money went directly, indirectly or not at all into real estate. The situation is that the vast bulk of funds that were advanced were, in effect, reinvested in company affairs and anything that did go to the offender or co-offender and was invested in their personal names was accessible to the NAB when it terminated the arrangement and acted upon the guarantees and indemnities that had been provided by the offender and co-offender to secure the advances of December 2000.

21 Some findings that I made in the sentencing proceedings of 8 February 2007 are applicable to these proceedings. First, the existing buses, the objective seriousness places the offence towards the upper end of the range. The offender played a pivotal role in relation to the transaction. The transaction involved a substantial degree of planning. There was a continuing deceit, clearly evidenced by the role that the offender adopted during the April/May 2001 inspection of buses. The NAB’s loss in relation to the new buses, as at October 2006, was a loss of $36.1 million. The size of that loss compares to the $34 million that, as at April 2003, was the loss associated with the transaction involving existing buses. The reason that the $65 million advance became a $36 million loss is that the NAB was able to recover substantial funds from the bus company pursuant to guarantees that had been provided by the offenders, and by other means. The NAB applied the funds that it recovered in the manner that it deemed most appropriate, resulting in a significant reduction so far as the ongoing loss associated with this matter is concerned and a lesser reduction in relation to the transaction concerning the existing buses. In July 2003, the offender became bankrupt as a result of these transactions.

22 As I observed on 8 February 2007, from the offender’s perspective, it was a case of hoping, if not expecting, that the King Brothers Group would trade its way out of difficulties. The offender and his brother were quite prepared to guarantee all relevant debts. Further, the business was a potentially viable business. It controlled bussing on the north coast of New South Wales. It owned a substantial number of buses, albeit not the number suggested to the NAB, and it held at least one very valuable contract, The contract relating to the transport of school children. The offender committed both offences hoping, and probably expecting, that there would be no actual financial loss to anyone, least of all himself.

23 It is relevant that the company group was not publicly listed. The offender and co-offender were the only directors and were the owners of the relevant companies. The sole victim outside the companies was the NAB.

24 Because of the very close relationship in terms of conduct, timing and substance of the two offences, it is relevant to make some observations about the totality of the criminal conduct. The criminal conduct involved a total fraud of a sum of about $109 million. The offender was the pivotal figure. He assumed financial responsibility for the affairs of the King Group of companies. It was he who enlisted the help of others, in particular Mr Hillier of the King Group, and Mr Horn of Daimler Chrysler.

25 Both this transaction and the transaction involving the existing buses achieved fruition on one day, but that day was the culmination of a great deal of organisation and planning by the offender. After 18 December, there was ongoing deception perpetrated by the offender against the NAB. The most glaring example of that was when the offender read out the false chassis numbers during the road trip in April/May 2001.

26 Looking at the objective criminality of this matter, and of the two matters in totality, a very large amount of money was involved. This offence, and indeed the offence of 19 December, while coming to fruition on one day, involved planning and organisation over an extended period of time. There was a high level of planning and sophistication attached to the scheme. As far as motive is concerned, the motive was to benefit a company group of which the offender and co-offender were, in effect, the owners. The offender did not anticipate that any loss would flow to anyone. He anticipated that everyone would be a winner, so to speak.

27 I will turn for a moment to the offender’s subjective circumstances. He is now forty-six years old. He was about thirty-eight or thirty-nine years old at the time of the offence. In 1988, he married. He has continues to enjoy a very good relationship with his wife. The couple has three daughters, now aged six, thirteen and fifteen years. The offender has been an excellent parent to his children. He has always been very involved with the girls, starting from immediately after the birth of his oldest daughter. At that time, his wife suffered from depression and he provided her and his new baby with a great deal of support.

28 Following his arrest in 2003 and up to his incarceration in 2007, he provided a great deal of help and support to his daughters. At the time, he was, in effect, a full-time parent. He is described as very loving. It therefore comes as no surprise that he is sorely missed by his children. Each has been deeply disturbed by his absence and the circumstances surrounding his absence. One of the older children has suffered serious depression and is receiving ongoing treatment. Both older children have manifested serious behavioural disturbances. The principal of their school has provided a letter attesting to their anti-social behaviour, despite the fact that each has the potential to perform very well. According to the school principal, it is very important to maximise the contact between the girls and their father, as that may serve to reduce their behavioural disturbance. There is also evidence that the youngest child is very distressed at her father’s absence. All this has placed a great deal of pressure on the offender’s wife. In circumstances of impecuniosity, she has been forced to be both father and mother to her children, while continuing to support the offender through the stress of imprisonment.

29 The family was very much looking forward to the prospect of the offender obtaining weekend leave, for which he had qualified and been recommended. The leave was due to start in August 2008, and it was hoped that the leave would enable the re-establishment of relationships between the offender and his daughters, and assist to ameliorate their disruptive behaviour. The imposition of a further sentence will prevent that. The material from the Correctional Services Department is very supportive of the offender progressing to day and weekend leave. There is evidence that an officer of that Department believes that the offender is unlikely to re-offend, and that his access to day and weekend leave is appropriate and deserved. There is a document indicating that, in relation to all aspects of prison behaviour, the offender literally has achieved a ‘ten out of ten.’

30 In these circumstances, the offender submits that I should impose a fully concurrent sentence. First, he relies on the delay in the matter coming to sentence, principally attributable to the conduct of the police and prosecution authorities. Second, he relies upon prejudice to himself and hardship to his family. Third, he refers to the issue of parity. Although Peter King has not yet been sentenced, he has pleaded guilty to an offence that carries a maximum available penalty of five years imprisonment. As he has entered a plea of guilty there will be a discount for the utilitarian value of the plea and he will certainly not receive a sentence of five years imprisonment. On the other hand, the offender already has a sentence of five years imprisonment and faces a further sentence. It is submitted that the only way in which these matters can adequately be addressed is by the imposition of a fully concurrent sentence.

31 I do not accept that submission. In relation to the question of delay, the Crown accepts that there has been significant delay. I agree that the delay has resulted in unfairness to the offender. The evidence upon which the Crown now proceeds was available from the outset. In other words, had the appropriate enquiries been made at the time, the evidence would have been available. I accept that the Director of Public Prosecutions was not in possession of the information, but the information was there to be found. The offence occurred almost eight years ago. The offender underwent a trial in relation to the existing buses. I agree with the submission that, at the conclusion of that trial, he was entitled to feel a sense of finality so far as further prosecution was concerned. It was not until after he had been sentenced in relation to the existing buses that he first learned that the Crown proposed to proceed in relation to the new buses. That must have been a devastating revelation. The Crown concedes that, had it been in possession of the relevant evidence in relation to the new buses, there would have been only one set of proceedings, and quite likely there would have been only one charge that would have caught up both the new buses and the existing buses. It would have caught up the advancement of money on both 18 and 19 December 2000.

32 The delay in the prosecution of this matter has had an important and upsetting personal impact on the offender in that, on the eve of being granted day and weekend leave, and looking forward to re-establishing close contact with his family and addressing the serious problems that his daughters face, his hopes have been dashed as he must face sentence proceedings in this matter.

33 The delay enables the Court to have regard to the rehabilitation of the offender. There is no suggestion of any other criminal conduct since the commission of these offences. The offender is assessed by the Department of Correctional Services officers as a model prisoner who has done everything that he possibly could do to demonstrate rehabilitation in that environment. Further, and quite importantly, the entry of a plea of guilty indicates that the offender has, at last, faced up to his criminality. That augurs well in relation to rehabilitation. It is difficult to consider someone an excellent prospect for rehabilitation if they have not admitted fault. When the offender came before me for sentence on the existing bus matter, he still maintained that he was not at fault and it was all a technicality or something of that nature. The situation has changed dramatically. He has conceded fault by the entry of the plea of guilty.

34 In sentencing the offender, I am well aware that I need to have regard to the relevant aggravating and mitigating features under s 21A of the Crimes (Sentencing Procedure) Act. The relevant aggravating features are the extent of loss sustained by the NAB and indeed the value of the sum defrauded in the first place, and the degree of planning and the ongoing deceit associated with the offence.

35 As far as mitigating features are concerned, the principle ones are the entry of the plea of guilty and the strong prospects of rehabilitation. As far as good character is concerned, it is true that, apart from the commission of these offences and the earlier apparent defrauding of the first financiers of the existing buses, the offender has an unblemished record. However, in relation to fraud matters, prior good character is generally considered to be of lesser significance. It is the very fact that a person is of good character that may mean that they are in a position where they are able to commit significant fraud.

36 General deterrence is a very important consideration when it comes to white collar crime. As I indicated in February 2007, in my view, unlike many other types of offences, when it comes to white collar crime, people who are involved in the corporate world do pay attention when significant sentences of imprisonment are imposed. In that way, the imposition of a significant sentence of imprisonment can serve the function of general deterrence.

37 In this matter, the sentencing exercise is very difficult because of the delay and the fragmentation in charging the offender. Looking at matters together a total sentence of six years with a four year non-parole period may have been appropriate.

38 For this matter, the starting point for sentencing is a sentence of three years imprisonment, but I have deducted 20% for the utilitarian value of the plea of guilty to arrive at a sentence of two years and five months imprisonment.

39 Mr King, you are convicted and sentenced to two years and five months imprisonment from 8 February 2010 to 7 July 2012. I impose a non-parole period of nine months to expire on 7 November 2010. Looked at in total, that is a three year nine month non-parole period. You will be eligible for release to parole on 7 November 2010. There are special circumstances, being that I am sentencing in the context of the earlier sentence, that it is your first time in prison, and the excellent prospects of rehabilitation.

oOo

30/10/2008	-	judgment date was not showing in public listing - Paragraph(s) headnote
09/12/2008	-	Sentences dates were not reflective of actual sentence - Paragraph(s) 37-39