R v Schofield
[2016] ACTSC 98
•3 May 2016
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | R v Schofield |
Citation: | [2016] ACTSC 98 |
Hearing Date: | 7 April 2016 |
DecisionDate: | 3 May 2016 |
Before: | Burns J |
Decision: | See [50]-[58]. |
Catchwords: | CRIMINAL LAW – JURISDICTION, PRACTICE AND PROCEDURE – Judgment and Punishment – Sentence – Particular Offences – offences of dishonesty – theft – misappropriation of monies – degree of sophistication and planning – used to fund luxurious lifestyle – no prior criminal history – plea of guilty – reasonable prospects of rehabilitation – terms of imprisonment imposed. |
Legislation Cited: | Crimes Act 1914 (Cth), s16A Criminal Code Act 1995 (Cth), s 131.1 Magistrates Court Act 1930 (ACT), s 90A |
Parties: | The Queen (Crown) Nicholas Schofield (Offender) |
Representation: | Counsel Ms K Musgrove (Crown) Mr J Moffett (Offender) |
| Solicitors Commonwealth Director of Public Prosecutions (Crown) Sharman Lynch Solicitors (Offender) | |
File Number: | SCC 245 of 2015 |
BURNS J:
Nicholas Schofield, you appear before me today for sentence with respect to eight offences of theft contrary to s 131.1 of the Criminal Code Act 1995 (Cth). Each offence carries a maximum of 10 years imprisonment.
At the first mention on 16 October 2015, you appeared before the ACT Magistrates Court, where you were charged in relation to each of the eight offences. On that date you entered pleas of guilty to all charges, except for the second charge, to which you did not enter a plea. Upon entering pleas of guilty to the seven charges you were immediately remanded in custody pending sentence.
The matter was adjourned to 13 November last year. On that date you entered a plea of guilty in relation to the second offence. The matter was then committed to this Court for sentence. You appeared before me on 7 April this year for sentence. On that date I granted leave to the Crown to amend the certificate under s 90A of the Magistrates Court Act 1930 (ACT) to insert the word "permanently" in each charge so that each charge referred to your intention to permanently deprive Indigenous Business Australia of property. You were then re-arraigned and pleaded guilty to all eight counts.
Facts
A Statement of Facts was tendered at your sentence hearing, which specifies the facts in detail that relate to each offence of theft. I will not refer to the facts in any great detail, however, I will give some background to the offences. You were an employee of Indigenous Business Australia (IBA), a corporate Commonwealth entity. One of IBA's primary functions is to assist the indigenous community by lending for home and business purposes. The funding is provided by the Commonwealth Government and IBA's banking is undertaken with Westpac.
A new finance system was implemented by IBA on 1 January 2013, which I will refer to as TechOne. You had over six years experience in the use and management of TechOne systems and you were recruited by IBA for this expertise to manage the implementation.
On 9 April 2014, your position title was changed to “Manager-Finance Systems.” The TechOne system used by IBA was highly customised to its needs. It enabled the interface between the separate and older Quote Application Tracking System (QATS)/Loans Administration System (LAS), which was used by the Loan Team at IBA with the Treasury Team. This System also provided the interface between the Treasury Team and Westpac, where funds for the various loans were drawn from. When IBA authorised a loan, the transaction was entered into the QATS/LAS Loan System. The loan was then approved there and sent through an interface via a file in the TechOne system to the Treasury Team. The Treasury Team was separate from the Loan Team.
Each afternoon the Treasury Team undertook a payment run for the day, and once verified, the Treasury Team uploaded the payment run into Westpac Online. Westpac Online would then disburse the funds to be paid or loaned by IBA to the appropriate accounts of the loan or payment recipients. The Treasury Team did not review loan transactions within the System that had vendor reference “V85555” as the Treasury Team relied upon the Loan Team to review and authorise loans with such reference numbers.
Your role at IBA included authorising rights and access to the finance system using TechOne and to be the administrative point of contact between the Finance Team and the Loan Team to resolve any transactional and technical issues. This position gave you full access to and the ability to correct transactions being processed via the finance systems.
An annual statutory audit in August 2014 revealed significant discrepancies and IBA commenced an investigation. On 29 October 2014, an examination of IBA's Westpac accounts identified four suspicious transactions involving payments which appeared to be made to Redink Homes. Redink Homes is a homebuilder that had legitimate transactions with IBA. The transactions did not appear to have any corresponding links with the Loan System. These transactions had been manually created and approved by you using the finance system.
You officially resigned from IBA on 14 January 2015, however, you agreed to continue working until 13 February 2015 which was when a new person was due to take over your position. You had previously offered to resign, but IBA indicated that you needed to stay to assist them in resolving the suspicious transactions.
On 27 January 2015, you had a meeting with the Chief Financial Officer, Mr Kumar, at IBA. You were asked to provide evidence that those transactions had been requested by the Loan Team. You were unable to provide such evidence, and after some further discussion you said, "If you are implying that I am in association with the builder, then I am walking out the door."
Later that same day, further inquiries by IBA revealed that funds from all four suspicious transactions had been sent to a Commonwealth Bank account. These inquiries later identified you as the sole account holder of that account. The next day, 28 January 2015, Mr Kumar was in a meeting with the Chief Executive Officer, Mr Fry, and the Chief Operating Officer, Mr Bator, in relation to the four transactions. During this meeting you called Mr Kumar and said, "I am not coming into work today. I took the money. I have $300,000 left with me that I will repay." You were then put on loudspeaker at this meeting, where you admitted to paying the money into the account, which you said was about $800,000 and that you changed it in the System. When Mr Kumar said that it was more like $900,000, you said, "Yes, whatever the amount is, I took it." You then said that you would repay IBA.
Your employment was officially terminated, effective immediately on that day, and the matter was reported to the Australian Federal Police. You then agreed to attend Woden police station that day.
In total, eight fraudulent transactions totalling $1,415,200 were identified. In each case those payments were made to your Commonwealth Bank account. Seven of the transactions referenced Redink Homes and one, which was for an amount of $371,500, referenced the Australian Government Solicitor, who provides legal services to IBA and also had legitimate transactions with IBA.
A detailed forensic accounting report was prepared by KPMG Forensic as part of the investigation into these transactions. You committed the offences by creating the appearance of automatic loan payments in TechOne using a sundry/dummy vendor reference of “V85555”, which is typically used in automatic transactions which are uploaded from an interface file from the separate Loans System.
As I previously mentioned, these transactions were not reviewed or checked before payment was made. The payments were then made from IBA's Westpac account to your account as if the payment was going to a vendor as provision of funds for a home loan. By using this reference number, you ensured the payments were able to be processed, that referenced legitimate vendors, whilst being distributed to your account.
Following the payments being made, you initiated, and in some cases also posted other transactions and journals to conceal the accounting entries you used to misappropriate funds. Some of the ledger accounts used were those which had not historically been reconciled on a consistent basis, or at all. In some cases, you also changed the authorisation setting on your user ID from the default setting to a temporary setting. You used your position within TechOne to gain access to other user IDs to enable you to post the relevant suspicious transactions. While the majority of the suspicious transactions were created and posted by the TechOne user ID associated with you, there were several other user IDs which were involved in some of the suspicious transactions to varying degrees.
Police investigations revealed that you are the sole account holder of a number of different bank and credit card accounts which you used to transfer money from your Commonwealth Bank account.
Offences
I will now turn to each of the offences, and I will refer to each of them by the number which was given to the charge in the Magistrates Court.
The first offence is charge 8006 of 2015. That is a transaction on 9 May 2013 amounting to $24,050, which was deposited to your Commonwealth Bank account. Following the money being deposited into that account, between 10 and 14 May 2013, you then transferred that money in five separate transactions into another bank account with a different bank in your sole name.
The second offence is charge 8007 of 2015. The second offence is for a transaction between 12 and 15 May 2013 amounting to $371,500, which was deposited into your Commonwealth Bank account. This is the transaction that referenced the Australian Government Solicitor. When police interviewed you during the search warrant, you repeatedly denied any involvement with obtaining that amount of money, and repeatedly denied taking that money. Between 15 and 17 May 2013, however, the evidence establishes that you transferred funds from your Commonwealth Bank account to several of your other accounts. You then used part of that money to pay off the mortgage of an investment property you had in Adelaide, and other various amounts were sent to your wife in the Philippines.
The third offence is charge 8008 of 2015. This involves a transaction on 8 July 2013 amounting to $48,100, which was deposited into your Commonwealth Bank account. The fourth offence is charge 8009 of 2015, which relates to a transaction on 9 July 2013 amounting to $24,050 that was deposited into your Commonwealth Bank account.
The fifth offence is charge 8010 of 2015, which relates to a transaction between 10 and 15 October 2013 for an amount of $175,000, which was deposited into your Commonwealth Bank account. Between 15 October and 7 November 2013, following that amount of money being deposited into your account, you made a number of transfers of that money. One of those was the purchase of an Aston Martin motor vehicle for $150,000, which you made over three instalments of $50,000 each.
The sixth offence is charge 8011 of 2015. This relates to a transaction on 12 November 2013 of $215,000, which was deposited into your Commonwealth Bank account. The seventh offence is charge 8012 of 2015, which relates to a transaction on 2 January 2014 of $248,500 that was deposited into your Commonwealth Bank account. Between 22 January and 12 August 2014, you then made a number of transactions from this account. This included a transfer of $69,755 to your wife in the Philippines and $10,000 for a doll’s house for yourself.
The eighth offence is charge 8013 of 2015, which relates to a transaction between 31 July and 19 August 2014 for the amount of $309,000 that was deposited into your Commonwealth Bank account.
It is clear from the Statement of Facts that all these transactions involved a significant degree of planning and sophistication. The Statement of Facts also provided more detail about the way in which you spent the money that you misappropriated. Inspection of some of your credit card records showed that on top of essential expenditures, such as utility bills and groceries, you spent a significant amount of money on luxuries, such as travel, wedding expenses, designer fashion and jewellery.
The immigration records obtained showed that you travelled overseas seven times between 8 May 2013 and 29 January 2015. I also note that your annual salary as at January 2015 was $113,563 and your PAYG payment summary from IBA for the year ending 30 June 2014 showed that you earned $106,118.
On 12 March 2015, the Australian Federal Police executed a search warrant at your residence and on your vehicles. You also participated in a record of interview, during which you made a number of admissions and denials. I will not recite them all here in detail. I do note that you thought that it was "a bit sad" that it actually worked, referring to the manner in which you committed these offences. You also stated that the $70,000 or $80,000 transferred to the Philippines was just for your wife's living expenses. You also said that you had stopped this, and you said that it was "just stupid".
At the conclusion of the search warrant police seized two vehicles, being a silver 2006 Aston Martin Vantage sedan and a red 2004 Mini Cooper S Centenary Y series sedan.
A general form of consent order in separate civil proceedings between IBA and yourself was tendered by you at your sentence hearing. You submitted that this was to demonstrate that there has been cooperation between you and the Australian Government Solicitor, who was representing IBA. This consent order had been signed by you and is dated 30 March this year, although it appears that it is yet to be executed. This general form of consent order stipulates that judgment be entered for the plaintiff against you in the amount of $1,415,200 plus pre-judgment interest.
Email correspondence between a Federal Prosecutor at the Commonwealth Director of Public Prosecutions, a senior lawyer at the Australian Government Solicitor and your lawyer was also tendered. In particular, at the sentence hearing the Crown drew my attention to an email by a Senior Lawyer at the Australian Government Solicitor, which is dated 7 April 2016. This email refers to your cooperation during the civil proceedings between yourself and IBA. In this email your cooperation is described as "standard" in the civil proceedings. While you did provide a list of your assets shortly after the commencement of the civil proceedings under a court order which compelled you to do so, there were accounts that were not disclosed. Additionally, you were described as responding to discovery orders inadequately during the proceedings and, after several additional requests for proper discovery, responded sufficiently for the plaintiff's client's purposes.
Subjective Features
A Pre‑Sentence Report was tendered at your sentence hearing. You are currently 46 years of age and were born in the United Kingdom. You are one of three children. You reported that your family relocated to New Zealand when you were four years old and thereafter to Australia when you were 11.
You described your childhood as “very good” and reported that you had a close relationship with your parents and other siblings, who are in New Zealand and Tasmania respectively. You told the author of the Report that your father had been diagnosed with cancer between 2012 and 2013 and is currently in remission. You also reported that your mother was diagnosed with cancer in June 2015 and reported that it caused you considerable emotional distress.
You told the author of the Report that you are married and have a two‑year‑old son. Both your wife and son reside in the Philippines. You plan to reside with your sister in Tasmania upon your release, which has been confirmed by your sister.
You completed Year 12 and enrolled to do a Bachelor of Mathematical and Computer Sciences at the University of Adelaide, although you did not complete that degree. You reported a significant employment history in the field of finance.
You reported a suicide attempt in February 2015. You told the author of the Report that you do not currently have any suicidal ideation and that you are not on any mental health treatment. You did not dispute the Statement of Facts and claimed to understand the seriousness of your offences, although it was the opinion of the author of the Report that you had limited insight into your offending behaviour.
At the time of your interview you acknowledged to the author of the Report the impact of you actions on your victims and noted that your actions were premeditated and commenced after noticing an opening in the system. You told the author of the Report that you knew you would be caught and did not expect to get away with these offences. It was the view of the author of the Report that you appeared to accept responsibility for your actions.
You have no prior criminal history and you are assessed as at low risk of general reoffending. The author of the Report considered your family support as a protective factor. You were considered as suitable for a low level intervention by ACT Corrective Services.
Consideration
In sentencing you, I must comply with the provisions of Part 1B of the Crimes Act 1914 (Cth) and, in particular, I must impose sentences of appropriate severity in all of the circumstances, taking into account the relevant factors contained in s 16A of that Act.
I have set out the nature and circumstances of these offences. The offences are objectively serious and involved you abusing your knowledge of IBA's accounting system to steal very large sums of money over a 15 month period. Your actions involved repeated breaches of the trust reposed in you by your employer.
It would undoubtedly have been possible for your employer to have put in place a series of checks and balances to ensure that these offences did not occur, but that would have been at the expense of added cost to your employer. Organisations such as IBA depend upon, and are entitled to depend upon, the honesty of senior and trusted employees in conducting their business.
You offended on eight separate occasions during a 15 month period, so that it cannot be said that your offending was isolated or impulsive. You largely used the proceeds of your offending to fund a lavish lifestyle. You received a substantial wage for your services such that you did not want for any of the necessities of life. Your motive in committing these offences was simply greed.
Your crimes have caused loss and damage to IBA and its clients. Whilst some not insignificant reparation will be achieved by the sale of your assets, you accept that this will be insufficient to make full reparation. It is not clear exactly to what extent IBA will suffer loss as a consequence of your actions, but it is clear that the loss will be substantial.
You made substantial admissions to your employer and to police after your crimes were detected, but you attempted to minimise your responsibility by denying that you had taken the sum of $371,500 on 14 May 2013 and by blaming the accounting system that allowed you to commit your crimes. It must, nevertheless, be accepted that you demonstrated a degree of contrition and that you largely cooperated with the authorities in investigating your crimes.
You entered early pleas of guilty to these charges, demonstrating a degree of remorse, acceptance of responsibility and a willingness to facilitate the course of justice. It must be accepted, however, that the evidence against you is overwhelming. Balancing these factors, I will reduce the otherwise appropriate sentences by approximately 15 per cent to reflect your pleas of guilty.
On the basis of your lack of any prior criminal history, your age and the matters referred to in the Pre‑Sentence Report, I think it unlikely that you will reoffend. The convictions which will be imposed on these charges will make it unlikely that you will ever again be placed in a position where you will have the opportunity to reoffend in a similar manner.
The most important sentencing considerations for these offences are general deterrence and the need for punishment. I take into account your prior good character, but the weight to be given to that circumstance is reduced by the nature of your offending. You were only trusted as you were and placed in a position to commit these crimes because of your apparent good character. Having considered all relevant circumstances, I consider your prospects for rehabilitation to be reasonable to good.
The Crown helpfully provided me with a collection of prior cases demonstrating sentences that had been imposed in the past for similar offending. Your Counsel accepted that these cases were comparable. I do not propose referring to these cases in detail, but I have received considerable assistance by referring to them.
As your Counsel rightly conceded, there is no alternative other than a term of immediate imprisonment for these offences. It is also appropriate to recognise that these were separate offences of offending by making the sentences partially consecutive.
Sentence
With respect to the first offence (CC15/8006), I record a conviction and you are sentenced to two years and six months imprisonment, commencing on 16 October 2015 and expiring on 15 April 2018. I have reduced that from three years imprisonment in order to reflect your plea of guilty.
With respect to the second offence (CC15/8007), I record a conviction and you are sentenced to three years and four months imprisonment, commencing on 16 December 2015 and expiring on 15 April 2019. I have reduced that from four years in order to reflect your plea of guilty.
With respect to the third offence (CC15/8008), I record a conviction and you are sentenced to two years and six months imprisonment, commencing on 16 January 2017 and expiring on 15 July 2019. I have reduced this from three years for your plea of guilty.
With respect to the fourth offence (CC15/8009), I record a conviction and you are sentenced to two years and six months imprisonment, commencing on 16 April 2017 and expiring on 15 October 2019. I have reduced this from three years to reflect your plea of guilty.
With respect to the fifth offence (CC15/8010), I record a conviction and you are sentenced to two years and nine months imprisonment, commencing on 16 June 2017 and expiring on 15 March 2020. I have reduced this from three years and four months to reflect your plea of guilty.
On the sixth offence (CC15/8011), I record a conviction and you are sentenced to two years and nine months imprisonment, commencing on 16 August 2017 and expiring on 15 May 2020. I have reduced this from three years and four months' imprisonment to reflect your plea of guilty.
On the seventh offence (CC15/8012), I record a conviction and you are sentenced to two years and nine months imprisonment, commencing on 16 October 2017 and expiring on 15 July 2020. I have reduced this from three years and four months to reflect your plea of guilty.
On the eighth offence (CC15/8013), I record a conviction and you are sentenced to two years and 11 months imprisonment, commencing on 16 November 2017 and expiring on 15 October 2020. I have reduced that from three years and six months to reflect your plea of guilty.
The total aggregate sentence which I have imposed is therefore one of five years imprisonment, commencing on 16 October 2015 and expiring on 15 October 2020. I set a non-parole period of three years, commencing on 16 October 2015 and expiring on 15 October 2018.
| I certify that the preceding fifty-eight [58] numbered paragraphs are a true copy of the Reasons for Sentence of his Honour Justice Burns. Associate: D Scuteri Date: 19/05/2016 |
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