R v Lustig
[2004] VSC 483
•19 November 2004
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
CRIMINAL DIVISION
No. 1419 of 2004
| THE QUEEN |
| V |
| PETER SIMON LUSTIG |
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JUDGE: | WHELAN J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 3, 4, 5, and 12 November 2004 | |
DATE OF SENTENCE: | 19 November 2004 | |
CASE MAY BE CITED AS: | R v Lustig | |
MEDIUM NEUTRAL CITATION: | [2004] VSC 483 | |
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Criminal Law – Sentencing – Money laundering – Having a deficiency in a trust account – plea of guilty – no conscious or wilful dishonesty - unusual circumstances – sentence of three months’ imprisonment on each count, wholly suspended for one year.
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APPEARANCES: | Counsel | Solicitors |
| For the Crown | G. Thomas SC | The Solicitor to the Office of Public Prosecutions |
| For the Accused | L. Lasry QC with J. Singh | Webb Korfiatis |
HIS HONOUR:
Peter Simon Lustig, you have been pleaded guilty to a charge that, between 9 July 2001 and 13 June 2002, you engaged directly or indirectly in a transaction that involved money that was the proceeds of crime, and you ought reasonably to have known that that money was derived directly or indirectly from some form of unlawful activity.
You have also pleaded guilty to a charge that you had, on 25 September 2001, a deficiency in your trust account.
You were admitted as a barrister and solicitor of this Court in April 1977. You have practised as a solicitor, both as an employee and as a partner, and since May 1992 you have conducted practice as a sole practitioner, principally in commercial litigation.
In late June and early July 2001 you commenced acting in a matter involving one David Arundell. You met Mr Arundell and his de-facto wife, Linda Kopans, in late June. You opened a file in the name of Linda Kopans. Mr Arundell had misappropriated substantial sums from a group of companies known as the Albedor Group, as well as from others. You were engaged to attempt to reach a settlement of the civil claims the Albedor Group had against Mr Arundell.
On 6 July 2001 you received an e-mail from Mr Arundell. The e-mail had an attachment. The attachment referred, amongst other things, to a sum of $69,000 in a bank account of Mr Arundell’s brother. The attachment gives a confusing explanation for the source of this money. It is clear, however, that any person reading the attachment would have had grounds for concern that this $69,000 had been unlawfully obtained.
As matters transpired, that money had indeed been unlawfully obtained, although not in the manner or from the source confusingly described in the e-mail attachment.
In August 2001 you drafted and subsequently sent correspondence to the solicitors for the Albedor Group which offered to forward a bank cheque for $69,000 to them on certain conditions. A bank cheque for $69,000 payable to Albedor Holdings Pty Ltd had been forwarded to you. Your letter referred to this sum as being returned to “its rightful owner”. The conditions were unacceptable to the Albedor Group and you remained in possession of the cheque. You held it on your file until 25 September 2001 when it was paid into a specially opened term deposit account at the Commonwealth Bank in the name “Peter Lustig in trust for Linda Kopans”.
The cheque and the term deposit were not entered in any Register of Investments maintained by your practice, were inaccurately recorded in your Transit Register, and were not included in your Annual Statement of Trust Moneys and Audit Report. Evidence was given before me that these deficiencies were due to failings by your non-professional staff.
In due course David Arundell was charged and in May 2002 he was sentenced to a term of imprisonment.
In June 2002, on instructions from David Arundell and/or Linda Kopans, you disbursed the funds in the term deposit account as follows: $3,000 to yourself on account of fees; $7,000 to Mr Arundell’s solicitor in the criminal matters, and $60,868.88 to the solicitors for Mr Arundell’s former wife.
As a result of police intervention, orders were made restraining any dealings with these funds. I have been told that the sum received by you has been paid over to the Director of the Asset Confiscation Section in accordance with orders made in October 2002.
Even if one accepts that you did not carefully read the e-mail of 6 July 2001, as you maintained in your record of interview, and even if one accepts that the errors and omissions in your trust records were the result of errors by your staff; the terms of your own correspondence in August 2001; the known source of the bank cheque, being from Mr Arundell’s brother's account; the fact that the bank cheque was itself payable to Arundell Holdings Pty Ltd; and your apparent hesitation and uncertainty about what to do with the cheque after its “return” was rejected, and which led to you hold it on your file for a time; reveal this to be a case where you most certainly ought reasonably to have known the money was derived from some form of unlawful activity. You then acted on instructions to disburse the money, and whilst none of it was lost, if it had not been for the intervention of the police some of that money may have been difficult to recover.
You were originally charged with a number of offences. After a hearing on a voir dire you indicated your intention to plead guilty to an amended charge of money laundering and a charge of having a deficiency in your trust account. The presentment was amended. You were arraigned and pleaded guilty to two of the charges. The Crown led no evidence on the balance of the charges and I directed an acquittal on those charges.
On the hearing as to sentence Mr Thomas SC for Crown outlined the circumstances of the offences. He called Mr Dunn, an trust account inspector employed by Victorian Lawyers RPA Limited, who explained the circumstances of the trust deficiency offence.
Mr Thomas told me the money laundering count, which was an offence under s 122 of the Confiscation Act 1997, carried a maximum penalty of 20 years’ imprisonment, and that the trust deficiency count, which was an offence under s 188 of the Legal Practice Act, carried a maximum penalty of 10 years’ imprisonment. The maximum penalty for the offence under the Legal Practice Act is, in fact, 15 years. I raised this matter with the parties earlier this morning and that is now agreed.
Section 122 of the Confiscation Act has since been repealed. At the relevant time it provided for a single offence where a person engaged in a transaction involving the proceeds of crime, where the person knew, or ought reasonably to have known, the money or other property was derived from some form of illegal activity. This particular matter is now dealt with in sections 194 and 195 of the Crimes Act where a cascading series of offences are provided for, from an offence of dealing with the proceeds of crime knowingly and with intent to conceal, which has a maximum penalty of 20 years’ imprisonment, to an offence of dealing with property where there are reasonable grounds to suspect that it is the proceeds of crime, which is a summary offence with a maximum penalty of two years’ imprisonment.
Mr Thomas on behalf of the Crown emphasized that the offence here was one where you reasonably ought to have known the money was derived from some form of illegal activity. The Crown did not allege you in fact knew it was so derived. This reflects the account of events which you gave in your record of interview. Mr Thomas told me that his instructions were that these charges required a sentence of a term of imprisonment, but whether it was to be immediately served or not was a matter for me. I took this to mean that the Crown considered a suspended sentence to be within an appropriate sentence range.
Mr Lasry QC, who appeared with Mr Singh on your behalf, addressed me at length. They called evidence from your non-professional staff, including your wife, and from five character witnesses. In excess of 70 character references from barristers, solicitors, clients and other associates were tendered. They make impressive reading.
The character evidence called from Mr Broderick, your former employee; Mr Flett, a client; Mr Zwier, a prominent Melbourne solicitor; and Mr Marc Bevan-John, a well-known member of counsel, as well as from another client, Mr Di Simone, was equally impressive.
You have no prior convictions. The material before me reveals you to be a person perceived as being honest, competent, hard working, and a person who has earned the respect of your clients and your colleagues.
The charges against you are serious. They are charges often associated with gross dishonesty and with considerable criminality, but that is not the position here.
In addition to matters to which I have already referred, your case has these characteristics:
1.Save for the sum of $3,000 in fees eventually paid out and since forwarded to the Asset Confiscation Section, there was no element of direct personal gain for you in any of the relevant transactions.
2.Notwithstanding the failure to properly record the cheque and the term deposit as previously referred to, your file at all times revealed the receipt of the funds and their disposition.
This is not a case of defalcation. This is not a case of conscious and wilful dishonesty.
There are other factors which have been put in your favour. These include:
1. Your character and reputation, to which I have already referred.
2.The fact that you have pleaded guilty. A trial would have been complex and protracted. There are legal issues which you might have agitated at some length if you had not pleaded guilty.
3. Your age and your family. You have two young children.
4.You have already suffered a very substantial detriment to your professional career and it is likely that you will suffer further in this respect.
I have reached the conclusion that a term of imprisonment which is to be immediately served, or a term which is not suspended in other words, is not warranted in this case. I have reached that conclusion for the following reasons:
1.Whilst the offences carry very substantial maximum penalties, that is because they encompass conduct in an entirely different category to that which has occurred here. If the relevant events occurred today it seems to me to be quite possible that you would have been charged with a summary offence under s 195 of the Crimes Act, carrying a maximum penalty of two years’ imprisonment.
2.It is no doubt the case that money laundering would attract a gaol term which would not be suspended in all but unusual cases. This is an unusual case. The nature and gravity of your conduct and your culpability are, it seems to me, less than the conduct commonly giving rise to these offences.
3.There have been no victim-impact statements in this matter. That is because the Crown cannot identify any victim. So far as I can see, no loss has been visited upon any person as a result of your conduct. It must also be said, however, in this regard that but for the police intervention it may be that some or all of the funds would have been difficult to recover.
4.You have pleaded guilty. You gave the police a lengthy record of interview. The account you gave was, save for the issue of your own state of mind, substantially in accordance with the Crown case.
5.You are a person without prior convictions, and a person who has practised for many years, impressing those with whom you have dealt with both your competence and your integrity.
Crimes committed by professional people in dealing with the proceeds of crime are very serious. I do not think there is a specific deterrence issue of concern with you, but general deterrence in this context is very important. Mr Lasry suggested I should consider a bond or a fine or a Community Based Order. I do not think I can do that for offences of this kind.
In all the circumstances, I think I must impose a term of imprisonment, but that term will be wholly suspended.
I sentence you on each count to a term of three months’ imprisonment, to be served concurrently, those terms to be wholly suspended for a period of one year.
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