R v Korras
[2019] VCC 1681
•8 October 2019
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE CRIMINAL DIVISION | Revised Not Restricted Suitable for Publication |
Case No. CR-17-00606
| THE QUEEN |
| v |
| HARRY KORRAS |
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JUDGE: | HIS HONOUR JUDGE TRAPNELL | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 17 September 2018 | |
DATE OF SENTENCE: | 8 October 2019 | |
CASE MAY BE CITED AS: | R v Korras | |
MEDIUM NEUTRAL CITATION: | [2019] VCC 1681 | |
REASONS FOR SENTENCE
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Subject: CRIMINAL LAW – Sentence
Catchwords: Dishonestly causing a loss or risk of loss to the Commonwealth – Moderately serious example of offending – Plea of guilty – Large national private security company – Paying ‘off the books’ wages without remitting tax to the ATO – Substantial loss of $85,638.68 – Offending lasted three years – Joint owner of the company – Not the instigator of the offence – Turned a blind eye to the offending – High moral culpability – No particularly relevant prior criminal history – Person of relevantly prior good character – Made full restitution to the ATO – Very good prospects of rehabilitation – Two years and six months’ imprisonment coupled with a reconnaissance release order – Fined $10,000
Legislation Cited: Criminal Code (Cth) s 135.1(5) – Crimes Act 1914 (Cth) s 4B(2) - Crimes Act1914 (Cth) s 16A(1)
Cases Cited:Atholwood v The Queen (1999) 109 A Crim 465 – Cameron v The Queen (2002) 209 CLR 339
Sentence: Two years and six months’ imprisonment coupled with a reconnaissance release order. Fined $10,000.
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APPEARANCES: | Counsel | Solicitors |
| For the CDPP | Mr B Young QC with Mr M Regan Ms D Middleton | Solicitor for the Commonwealth Director of Public Prosecutions |
| For the Accused | Mr J B Saunders with Mr J B Saunders | Theo Magazis and Associates |
HIS HONOUR:
1 Harry Korras, you have pleaded guilty to a Commonwealth indictment containing one charge of dishonestly causing a loss or risk of loss to the Commonwealth[1] between 1 October 2011 and 20 October 2014 knowing or believing that the loss would occur or that there was a substantial risk of the loss occurring. The maximum penalty for this offence is five years’ imprisonment[2] and/or a fine of $33,000.[3]
[1] Contrary to s 135.1(5) Criminal Code (Cth).
[2] Pursuant to s 135.1(5) Criminal Code (Cth).
[3] See Crimes Act 1914 (Cth) s 4B(2). At the relevant time a ‘penalty unit’ was equal to $110.
2 The charge relates to a loss to the Australian Tax Office (‘ATO’) of Pay As You Go (‘PAYG’) tax neither withheld, declared nor remitted to the ATO. Supplemental untaxed cash payments totalling $237,606 were regularly paid to ten salaried employees of your company, ACG National Pty Ltd (‘ACG’). PAYG tax totalling $85,638 was thereby evaded over a period of some 3 years.
THE FACTS
3 The factual substratum to this offence is set out in three documents filed by the prosecution as follows:
(1) An undated document headed ‘Plea Opening – General Summary’ (exhibit P1).
(2) An undated document headed ‘The Queen -v- Harry Korras Plea Opening Executive Summary’ (exhibit P2).
(3) A document described as a ‘Prosecution Opening for Plea’ dated 3 September 2018 (exhibit P3).
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 this offence.
4 ACG is one of Australia’s largest national private security companies. A major part of its operations involves supplying security personnel at clients’ sites and various public events. Victoria provides the largest income stream from the deployment of the largest guard workforce in the company’s operations.
5 ACG aggressively projected an image eschewing any reliance upon sub-contractors, however, a large number of guards were actually 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.
6 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. That responsibility shifted from ACG to retained sub-contractors in respect of their employees’ wages. There were a number of guards who thought they were employees of ACG, but their actual employer was either MLA Security Services Pty Ltd (‘MLA’), which was effectively owned and controlled by Mr Mohamed Ammouchi through a family trust, or FMAM Corp Pty Ltd (‘FMAM’), which was effectively owned and controlled by Mr Frank Moussa, also through a family trust.
7 You, Ammouchi and Moussa persistently acted dishonestly by paying ‘off the books’ wages to security guard employees without remitting PAYG tax to the ATO. The resulting loss and risk of loss was substantial, but is not accurately quantifiable absent any audit of the guard contingent. However, for the purposes of sentencing you the agreed loss is $85,638.
8 You have a long history of involvement in the security industry. Initially, you were an employee of other companies, but from 2000 you became a secretary, director, and shareholder in several private security companies and in other companies with major shareholdings in those private security companies.
9 You resigned from three private ACG related security companies in July 2011, however you remained the beneficial owner of 50 per cent of the company’s shares. During the charged period Peter Kyriopoulos, an accountant, was the sole director and company secretary of ACG. He was the beneficial owner of the other 50 per cent of the company’s shares
10 During the charged period you identified yourself as the ‘chairman’ and ‘founder’ of ACG. However, when necessary, you sometimes described yourself as an ‘employee’. Irrespective of description, you were the figurehead and leadership ‘face’ of ACG. You undertook regular PR contact with established major clients, you sought out new business opportunities, you negotiated contracts and remained actively involved with everything and everybody associated with ACG at all levels both within the company and extending to the sub-contractors, including their guards.
11 ACG’s clients included: the Port of Melbourne Authority, Patricks Stevedores, Etihad Stadium, Coca Cola Amatil, the Melbourne and Olympic Park Trust, and all of the 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.
12 You maintained a continuing presence at the ACG head office in Parkville, and you regularly attended events and sites. You were widely recognized and acknowledged by staff as the company’s owner or, simply, ‘the boss’. You were very actively involved in client liaison and strategically building the business.
13 Given your continuing status as an owner of ACG, you were pivotal in the negotiations culminating in the very profitable sale of the company to Spotless Facility Services Pty Ltd, which occurred towards the end of the charged period.
14 During the charged period, ACG relied significantly on smaller subcontracted companies to supply manpower. The present charge arises from the use of two particular sub-contractors, MLA and FMAM. At all relevant times you knew both companies were paying employees untaxed cash ‘off the books’. Consequentially, each was designated a ‘preferred partner’.
15 ACG utilised both Ammouchi and Moussa as a means of reducing ACG’s labour costs. You either personally authorised or otherwise sanctioned the payment of untaxed cash supplements to ten ACG salaried employees via MLA or FMAM. These payments were in respect of overtime and weekend hours worked as supervisors or guards at various sites or events.
16 Neither MLA nor FMAM withheld or remitted to the ATO any PAYG tax referable to these hours worked. These supplemental hours were charged to the subcontractors, MLA and FMAM, by ACG without increasing the fixed (and taxed) salaries each guard received. ACG thereby saved the cost of the PAYG tax component, and some other associated payroll costs. The ten salary recipients are listed in ‘Annexure A – Untaxed Cash Payments to Ten ACG Salaried Personnel’ to exhibit P2.
17 The arrangement with both MLA and FMAM was that ACG paid invoices (including GST) submitted by the sub-contractors. The invoices included the value of the shifts of the several ACG salaried employees. The sub-contractors each withdrew substantial cash amounts either to pay their own employees or for distribution to the ACG salaried staff. The withdrawn ACG cash was either promptly delivered to ACG head office or collected from the sub-contractors for downstream distribution to the ACG salaried employees. A total of 26 payments were made to the ten sub-contractors over the charged period.
18 Search warrants were executed at a number of locations on 23 October 2014 and you were arrested towards the end of February 2015. You made a no comment record of interview, as was your right, but you can receive no sentencing discount for assisting the authorities in their lengthy and complex investigation of your crime.
Personal circumstances
19 I now turn to your personal circumstances. In this I was assisted by your counsels’ oral and written submissions.[4]
[4] Exhibit HK1 – Outline of Submissions on Plea dated 16 September 2018.
20 You are currently aged 44[5] and at the commencement of the offending period, you were 36 years of age. You were born in Brunswick and you are the middle child in a sibship of three. Your father, Kostas Korras, was a brewery worker with Carlton and United Breweries. He died some seven years ago at the age of sixty-eight. Your mother, Despina Korras, engaged in home duties and still resides in the family home in Brunswick. She has had significant health issues since you were aged seventeen.
[5]Date of birth 1 November 1974
21 You have a brother who works in the security industry and is married with two children, and another brother who is a public servant and married with one child. Both of your brothers live in Melbourne and your extended family is very close. Your brother, Jim, was present in Court during the plea hearing.
22 Your primary schooling was in Brunswick and you then attended Brunswick High School. You describe yourself as a ‘bad student’ who frequently got into trouble. Your formal education ended when you completed Year 9 in 1989 at the age of 15.
23 At the age of 14, you came to the aid of your younger brother who was involved in a fight. As a result of this intervention you were charged with intentionally cause injury and subsequently placed on a good behaviour bond in the Preston Children’s Court. Clearly this matter is entirely irrelevant for present purposes.
24 At the age of 14, while still at school, you commenced work at McDonald’s and remained there until the age of sixteen. Since then, apart from a period in 1990 when you were working as a fruit picker in the Mildura area, you have worked in the security industry.
25 You initially worked as a doorman at various night clubs. You were a casual employee but effectively working full time. At this stage no security licence was required and you did not hold a licence. You acquired your first security licence when you were 18 years of age.
26 At this age you met your wife, Tracy, whom you married at the age of 18 years. You have two children together, Tayla aged 25 and Evander aged 20. Your wife, was a cook in a nursing home. She subsequently studied to become a nursing sister and later obtained her qualification as a midwife. She currently works as a midwife.
27 When your wife fell pregnant with Tayla you sought stable employment and obtained a job with Advent Security (‘Advent’). This company was run by a former police officer, Peter Benny. The company had security contracts with the AFL and a large number of hotels and clubs. It employed approximately 500 security guards, mostly on a casual basis.
28 You worked weekends at football matches during the day and at hotels and clubs during the night. You obtained a further position working as a security guard in Housing Commission flats on week nights.
29 At this stage in your life, Tracy was not working as she was caring for your young daughter. Your family were living in rental accommodation and in order to provide for your family, you took on additional work and obtained a cleaning contract, commencing work at 5.00 am. You maintained this hectic work schedule for the next two years.
30 Approximately two years after you commenced employment with Advent, Mr Benny approached you and asked you to join the management team as an operations manager. The role involved you planning and organising security personnel for various venues where Advent was operating. The position was full time and you worked a 40 hour week. Additionally, you continued to work as a security guard yourself at football matches during the day on Saturdays and Sundays and in hotels and clubs in the evenings. During this period you worked between a 70 and 80 hours per week.
31 As Advent continued to grow, your role expanded. In 1999 the company obtained the contract for security at the Sydney Olympics and you were heavily involved in performing that contract. Mr Benny promised that your salary would be significantly increased to compensate you for the work you performed in connection with the Sydney Olympic Games contract. However, these promises were not honoured. In 2001, your relationship with Mr Benny broke down in acrimonious circumstances and you left Advent.
32 In that year, you formed your own security organisation Australian Corporate Guards (‘A C Guards’) with another former Advent employee, Paul Clements. The business concentrated on corporate and events security work and did not seek security contracts for hotels and clubs.
33 You demonstrated considerable ability at expanding and promoting A C Guards and you obtained a large number of security contracts with corporations as well as security contracts for large public events. Your company had contracts with Coca Cola Amatil and Colonial Stadium, as it was then called, as well as the 2007 FIFA World Swimming Championships and the Melbourne Commonwealth Games.
34 Whilst your entrepreneurial skills were excellent, your financial management skills were not. As A C Guards grew in size, financial issues arose and you sought the assistance of Mr Peter Kyriopoulos, an accountant.
35 Kyriopoulos initially worked for A C Guards as a consultant and then in a number of financial management roles. In 2008, you and Kyriopoulos formed the company ACG National Pty Ltd (‘ACG’) with Kyriopoulos becoming the director and chief executive officer. Thereafter the company was operated on the basis that your role was to secure contracts, service existing clients and be the public face of the company. Kyriopoulos ran the financial affairs of the company.
36 The company continued to expand and by 2014 it had in excess of 100 security contracts and was employing some 80 sub-contractors. In that year ACG was sold to Spotless Security.
37 Since the sale of ACG, you have worked as a motivational speaker and consultant. You have also occasionally worked as an event manager for touring celebrities.
38 Your counsel submitted that you were not the instigator of the scheme to evade the payment of PAYG tax to the ATO, but you knew what was happening and you turned a blind eye to it. While this lessens you moral culpability to some extent, you were a joint owner of the company and you were in a position to stop the offending conduct, which lasted more than three years. Accordingly, in my opinion, you moral culpability reminds high.
39 So far as your prior criminal history is concerned, apart from the Children’s Court matter in 1989, you have some prior convictions for driving offences in 1995. You received a community-based order for 12 months to perform 200 hours of unpaid community work. You breached that order and in 1996 a new order was imposed with additional hours of unpaid community work. It appears you successfully completed that order.
40 You also have some prior offences in 2002 in relation to engaging in employment as a private agent whilst unlicensed. You were without conviction fined $3,000. This was subsequently varied to be without conviction fined $250 and you were ordered to pay $2,500 in costs.
41 Whilst you do have some prior criminal history, it is not particularly relevant in sentencing you for the present offence and I give it very little weight.
Sentencing considerations
42 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’.[6] I must have regard to a number of sentencing considerations as set out in s 16A(2) of the Crime Act 1914 (Cth) (‘the Act’). This list is not exhaustive.
[6] Crimes Act1914 (Cth) s 16A(1).
43 Included in the matters to which I must have regard in sentencing you, are the following:
(a) the nature and circumstances of the offence;[7]
(b) any loss resulting from the offence;[8]
(c) the deterrent effect that any sentence or order under consideration may have on other persons;[9] and
(d) the need to ensure that the person is adequately punished for the offence.[10]
[7] Ibid s 16A(2)(a).
[8] Ibid s 16A(2)(e).
[9] Ibid s 16A(2)(ja).
[10] Ibid s 16A(2)(k).
44 General deterrence and denunciation are prime considerations in sentencing you in respect of this offence. The courts have a significant responsibility to protect the integrity of the revenue system by imposing punishment for deliberate and sustained fraud so as to deter others who may be tempted to indulge in similar conduct. Because the tax system is based on trust, it is open to abuse. 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.
45 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 may not have taken responsibility for the payment of their taxation obligations.
46 In this case, the investigation and prosecution of this 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 a large number of communications over a lengthy period and the detailed forensic analysis of accounting records.
47 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.
48 It is for these reasons and others that the sentence I impose on you for this offending must give real effect to the principles of general deterrence and denunciation. Those, like you, who systematically defraud the revenue of a relatively large sum of money over an extended period of time must in general expect a sentence of imprisonment.
49 You held a managerial position within ACG and you were effectively a 50 per cent equity owner of that company. Whilst you were not the instigator of the scheme giving rise to the charge before me, nonetheless you were aware of what was occurring and turned a blind eye to it. Your offence was a continuing one over approximately a three year period during which you were complicit in the failure of ACG to remit PAYG tax in the amount of $85,638.68. The total loss to the ATO of $85,638.68 was payable and evaded on a total amount of at least $237,606 paid in cash and received by the 10 security guards involved in the scheme.
50 I find yours to be a moderately serious example of this offence and your moral culpability is high.
Mitigating circumstances
51 You have pleaded guilty and you are entitled to have this taken into account in your favour. Moreover, I accept that your plea was entered at the first reasonable forensic opportunity.[11] Your plea has significant utilitarian benefit in light of the likely length and complexity of any trial. It also indicates an acceptance by you of responsibility for your offending conduct and a willingness to facilitate the course of justice. In your case, I am also prepared to sentence you on the basis that you are truly remorseful for your offending.
[11] See Atholwood v The Queen (1999) 109 A Crim 465, 468 (Ipp J); Cameron v The Queen (2002) 209 CLR 339, 345–6 [20]–[22] (Gaudron, Gummow and Callinan JJ).
52 I accept that you are a person of relevantly prior good character, who has worked hard to provide for your wife and children, and who has contributed to the community in a number of ways.
53 I have had regard to four character references tendered on your behalf.[12] These people speak highly of your character, work ethic and charitable works. I also accept the evidence contained within these references that you demonstrate true contrition, remorse and shame for your conduct. This is also evident by the fact that you have made full restitution to the ATO.
[12] Letter from Robert Hadded, founding partner of The Practice Pty Ltd, dated 13 September 2018; Liliana Sanelli, CEO of Perfect Events, dated 13 September 2018; Luke Montgomery, Group CEO of The Bellrock Group, dated 12 September 2018; and John Christopoulos, director of Hall Chadwick Melbourne, dated 16 September 2018. (Ex HK2)
54 On 13 September 2018, four days before the plea hearing, you paid restitution to the ATO in the sum of $85,638.68, which is the entire amount of the loss to the Commonwealth government. This is a significant matter in mitigation, which I take into account in your favour
55 I accept that you have learnt a salutary lesson from the investigation, charging and legal process in this matter. Accordingly, I am of the opinion that I need give no weight to specific deterrence or protection of the community in sentencing you. Moreover, I assess you prospects of rehabilitation as being very good.
56 There has been some delay in finalising these proceedings which is through no fault of yours. You have had this matter hanging over your head for some time and I accept this has caused you a degree of stress and anxiety. I take the effect of this delay into account in your favour.
57 I also take into account the fact that you care for your handicapped mother and that this is quite a burden on you, involving I am told, up to three visits to her per day. Your counsel informed me that when you were aged 17, your mother was diagnosed with and operated on for brain tumours. As a consequence of the surgery, she has paralysis in one arm and one leg. Over the years the tumours have reoccurred and there have been further surgical interventions on a number of occasions.
58 Despite her handicap, your mother continues to live in the family home in which you grew up, as is her wish. You and your brothers tend to her needs on a daily basis, sharing the work between you. Your role as your mother’s carer is to attend on her each night and assist her with going to bed. The prosecution accept the existence of these circumstances and your devotion to your mother’s care. This was confirmed during the investigation of the present charge through intercepted communications and surveillance of you.
59 Your counsel accepted that your mother’s circumstances were not such as to constitute exceptional circumstances of a type sufficient to enliven s 16A(2)(p) of the Crimes Act1914 (‘the Act’). However, I do accept that any sentence of imprisonment by reason of your mother’s ill health would weigh heavily on you in a custodial environment. This is relevant to the sentence I impose on you as, in these circumstances, a sentence of immediate imprisonment would cause you custodial hardship, as would separation from your family.
60 I accept that you have the support of your family and friends and that this offending is out of character for you.
61 You are in good physical and mental health and you are not addicted to alcohol or any illicit drugs.
Application of sentencing principles
62 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. Your legal representatives provided me with an extensive list headed ‘Table of Comparable Cases’ dated 17 September 2018[13] together with a number of cases. The Commonwealth Director also provided me with relevant comparative material and cases.[14] I have had regard to all of this material in formulating the sentence I impose in your case.
[13] Ex HK3
[14] Ex P4, Table 3 ‘Sentencing Schedule - $80,000 - $93,999’.
63 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 case and other like material, I have sought to do so in your case.
64 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.
65 I am required to balance the interests of the community in denouncing criminal conduct with the interests of the community in seeking to ensure that so far as is possible, you are rehabilitated and reintegrated into society.
66 As I observed earlier, general deterrence and denunciation are very important sentencing considerations for this offence. Whilst just punishment, general deterrence and denunciation must be given significant weight in my instinctive synthesis, I am of the view that in your case, specific deterrence and protection of the community need be given no weight. Moreover, I assess your prospects of rehabilitation as being very good.
67 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.
68 Mr Korras I have formed the opinion that a sentence involving a sentence of imprisonment coupled with a reconnaissance release order with the effect that you will serve no time in immediate custody is the appropriate disposition in your case. Both the prosecutor and your counsel accepted such a disposition is open to me. Additionally, I will impose a substantial fine on you.
Stand up Mr Korras
On the charge of dishonestly causing a loss or risk of loss to the Commonwealth (Charge 1) you are convicted and sentenced to be imprisoned for two years and six 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 two years and six months.
In addition you are fined $10,000. I direct that fine be referred to the Director of Fines Victoria for collection.
There is no PSD to declare.
Mr Korras, the purpose of these orders is to punish you for the crime you have committed. The effect of my orders is that you have a sentence of imprisonment of two years and six months hanging over your head from today for two years and six months. During the two years and six months 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 two years and six months in prison. In addition you must pay a fine of $10,000, but you will have time to pay that fine. Fines Victoria will be in touch with you to arrange the terms for payment of the fine.
The recognisance release order may be discharged or varied under s 20AA of the Act.
Do you understand all this?
Pursuant to s 6AAA of the Sentencing Act 1991 (Vic) I state that the sentence I would have imposed on you but for your plea of guilty would have been a sentence of 3½ years’ imprisonment with a non-parole period of 2 years’ imprisonment together with a fine in the sum of $12,500.
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