R v Scholze
[2024] QCA 252
•13 December 2024
SUPREME COURT OF QUEENSLAND
CITATION:
R v Scholze [2024] QCA 252
PARTIES:
R
v
SCHOLZE, Luke Robert
(appellant)FILE NO/S:
CA No 33 of 2024
DC No 368 of 2023DIVISION:
Court of Appeal
PROCEEDING:
Appeal against Conviction
ORIGINATING COURT:
District Court at Townsville – Date of Conviction: 5 February 2024 (Coker DCJ)
DELIVERED ON:
13 December 2024
DELIVERED AT:
Brisbane
HEARING DATE:
15 October 2024
JUDGES:
Mullins P and Boddice JA and Davis J
ORDER:
The appeal is dismissed.
CATCHWORDS:
CRIMINAL LAW – APPEAL AND NEW TRIAL – PARTICULAR GROUNDS OF APPEAL – VERDICT UNREASONABLE OR INSUPPORTABLE HAVING REGARD TO EVIDENCE – where a jury found the appellant guilty of one count of dealing with money that was the proceeds of crime, in excess of $100,000 – where admissions were made as to the relevant cash transactions – where a significant quantity of cannabis was found at the appellant’s residence, bundled in weights which accorded with the imperial measures used in the distribution of cannabis – where the Crown led evidence of text message conversations in which the appellant said that his cannabis was underweight; that it was “full of seed”; and that he could not sell it – whether the verdict was unreasonable or insupportable having regard to the evidence
CRIMINAL LAW – APPEAL AND NEW TRIAL – PARTICULAR GROUNDS OF APPEAL – MISCARRIAGE OF JUSTICE – GENERALLY – where, at trial, the appellant brought an application that there was no case to answer – where the Crown submitted there was a case to answer – where the Crown submitted that there was evidence capable of establishing, beyond reasonable doubt, that the appellant was supplying commercial quantities of cannabis over the relevant period, and the $270,000 in cash was proceeds from those sales – whether a miscarriage of justice occurred because the trial judge rejected the appellant’s no case to answer application
Dansie v The Queen (2022) 274 CLR 651; [2022] HCA 25, cited
COUNSEL:
M J Jackson for the appellant
C O’Connor for the respondentSOLICITORS:
Legal Aid Queensland for the appellant
Director of Public Prosecutions (Commonwealth) for the respondent
MULLINS P: I agree with Boddice JA.
BODDICE JA: On 5 February 2024, a jury found the appellant guilty of one count of dealing with money that was the proceeds of crime, in excess of $100,000.
On 6 February 2024, the appellant was sentenced to imprisonment for 4 years, with a non-parole period of 18 months.
The appellant appeals his conviction, relying on two grounds. First, that the verdict is unreasonable and cannot be supported having regard to the evidence. Second, that a miscarriage of justice occurred because the trial judge rejected an application that the appellant had no case to answer.
Indictment
The indictment alleged that between 13 April 2020 and 6 October 2020, the appellant dealt with money or other property that was, and that he believed to be, proceeds of crime and at the time the value of the money, or other property, was $100,000 or more. The Crown particularised the count in the following terms:
“Luke Robert Scholze dealt with money in that he ‘received, possessed, concealed or disposed of money’ or ‘engaged in a banking transaction relating to money’ by dealing with the money listed in Annexure A – Relevant Transactions “Amount” column. The money was in the form of cash or bank credits. The transactions provided a person or entity identified in Annexure A – Relevant Transactions” Recipient” column with the cash or bank credits, on the basis he would receive cryptocurrency into his cryptocurrency wallet. Luke Robert Scholze dealt with the money with the intention to engage in that conduct.
The money was the proceeds of crime in that it is wholly or partly derived or realised, directly or indirectly by Luke Robert Scholze commercially supplying cannabis to unknown customers.
And Luke Robert Scholze believed the money was proceeds of crime.
At the time of the dealing the value of the money is $100,000 or more. Several contraventions have been combined into a single charge pursuant to s400.12 of the Criminal Code Act 1995 (Commonwealth).”
The accompanying Annexure A listed multiple bank transactions between 13 April 2020 and 17 September 2020, for specified amounts ranging between $525 and $33,700. Most were cash movements, although some were electronic transfers. The total value was in excess of $270,000.
At trial, admissions were made as to the relevant cash transactions. At issue, was whether the prosecution could establish, beyond reasonable doubt, that the cash was proceeds of crime from the appellant commercially supplying cannabis over a 12-month period.
Evidence
Admissions
The following facts were formally admitted by the appellant:
“1.During the search of the dwelling on 18 October 2020 at [address], Oonoonba, police located the following items:
a.A Cryovac bag in the master bedroom dresser drawer containing 455g of Cannabis.
b.7 ATM receipts located on kitchen table and from spare bedroom
c.Iphone XS located in a black sports bag in a bedroom
d.Iphone X in vehicle registration ‘BLKLST’.
e.A parcel addressed to ‘Mark S – [address], Oonoonba’ in the dresser drawer in children’s bedroom. It was found to contain 898g of Cannabis.
f.A cryovac bag in the kitchen cupboard which contained 222g of Cannabis.
g.A Westpac ATM receipt in the Lounge.
h.10 used clip seal bags in the kitchen in a Waeco fridge in a top cupboard.
2.The defendant performed the transaction of money contained in ‘Annexure A – Relevant Transactions’. Any reference contained in the column ‘Location of Deposit’ was provided by the defendant, at the relevant time of the deposit, on the deposit slip.
3.The defendant received Bitcoin into his BTC wallet as per ‘Annexure B – Money Transferred vs Bitcoin Purchased’. The column ‘Approximate Value of Transaction’ is an approximation based on historical value of Bitcoin.
4.The connection the defendant had to Modern Wall Street Pty Ltd was as a customer. He was not otherwise aware of or involved in any other way with the following statements. Financial analysis of multiple bank accounts used by Modern Wall Street Pty Ltd showed:
a.between 14 October 2019 and 17 November 2020 that the company received a total of $15,277,677.03 in deposits.
b.$4,018,949.47 of these deposits were sent from the accounts of AKG Investing Pty Ltd.
c.$2,809,922.36 of these deposits were sent from the account of Easy Collect Pty Ltd.
d.$49,480 of these deposits were sent from accounts of Easy Lend Pty Ltd.
e.Once received into these accounts, $326,002.22 was withdrawn as cash at branches primarily in South Australia and NSW. $16,000 was withdrawn as cash at ATM’s.
f.$11,714,134.54 was sent from Modern Wall Street Pty Ltd accounts, to the Modern Wall Street account with Independent Reserve.
g.Another $209,006 was sent to the digital currency exchange ‘Bittfloww’.
h.$109,959 was sent to the Commonwealth Bank of Australia accounts of Mr Sloggett. $10,000 was sent to [name omitted], Mr Sloggett’s girlfriend.
i.$14,000 was seen to the account of Gabrielle Lance
j.$60,000 was sent to the accounts of Alex Karagoizis
k.$34,540 was sent to the accounts of Kenneth EU.
5.The defendant has utilised the phone number [ABCD].
6.Annexure C is a copy of records held by the Australian Taxation Office. Namely:
a.A copy of the defendant’s ‘Income Tax Return’ for the period 1 July 2019 to 30 June 2020.
b.The defendant’s ‘Notice of Assessment’ for the year ended 30 June 2020.
c.The defendant’s ‘Business Activity Statement’ for the period 1 July 2020 to 30 September 2020
d.The defendant’s ‘Business Activity Statement’ for the period 1 October 2020 to 31 December 2020.”
Annexures A and B listed multiple transactions. Annexure C contained returns showing the appellant’s business made a loss of over $80,000 in the 2020 tax year and had sales of $34,463 in the quarter 1 July 2020 to 30 September 2020 and $2,772 in the quarter 1 October 2020 to 31 December 2020.
Police investigation
The investigating officer gave evidence that it was an AUSTRAC[1] requirement that any transaction, deposit, or withdrawal of physical cash of over $10,000, at a designated service provider such as a bank, required the bank to obtain identification information from the person making the transaction and to report that transaction. Those reports were obtainable by law enforcement intelligence and tax agencies. Cryptocurrency, a form of digital currency, was not regulated by one particular agency or bank. However, transfers undertaken in relation to it were recorded in computers so that there could be verification of that transfer.
[1]Australian Transaction Reports and Analysis Centre.
In Australia, to buy cryptocurrency, a member of the public has to go through a digital currency agency. Since April 2018, these agencies have had to be registered with AUSTRAC. They must obtain customer identity information, obtaining verification of identification from documents such as a driver’s licence or a passport. These agencies charged a percentage fee of the transaction amount.
One entity through which cryptocurrency was traded was Bitcoin. It contained a public key and a private key. A public key is like an account; it contains an address and has a value assigned to it. Anyone can look at your Bitcoin address and see how many Bitcoin you have in that account. The private key is like your PIN or your password. It is only known to you. Using that private key, a person can transfer value from their public key to another wallet. Bitcoin is attractive to some people, as while you can see the public key, you do not know which person owns that Bitcoin address. For that reason, it is difficult to trace a transaction back to an individual.
There are websites on the dark web that sell various illicit commodities. They are different to Google-type websites. You require another browser to access the dark web. Darknet marketplaces provide online places for people to buy illicit items such as drugs. Almost always, cryptocurrency is used for payment because of its anonymity.
A search warrant was executed on the appellant’s address on 18 October 2020. Police located a cryovac bag in the dresser drawer in the master bedroom, containing 455 grams of cannabis, a number of receipts, a parcel in a children’s bedroom set of drawers, containing 898 grams of cannabis marked “Mark S” with the address “[address], Oonoonba”; 222 grams of cannabis in a kitchen cupboard, in a cryovac bag; a Westpac ATM receipt in the lounge, and 10 used clip seal bags in a fridge in the kitchen. Those bags smelt strongly of cannabis. A mobile phone was located inside a bedroom and a second mobile phone was located inside a black Toyota Landcruiser parked on the front yard. That second phone was found to contain items of interest. Screen shots were taken of its contents.
The investigating officer said cannabis is generally sold wholesale, in half-pound amounts. The amount of cannabis located in the kitchen was very close to half a pound, converted to the metric system, whereas the amount located in the bedroom drawer, was close to one pound and the amount located in the children’s bedroom, close to two pounds. Police did not locate any utensils for smoking cannabis.
On 30 October 2020, police executed a search warrant at the appellant’s address at Rosslea. The appellant’s mobile phone was seized by police and screenshot photos taken of its contents.
The forensic examination of the second mobile phone located in the search of the residence on 18 October 2020, revealed that it had installed an encrypted communication application known as Wickr. That application had the ability to anonymise handles, so as to alter the phone number or email address, and to use PIN codes, to make it harder for access. The Wickr application, upon opening, revealed active conversations with three separate entities. One chat, between the applicant’s handle, AYDKOB and an email address for the handle ‘primustiling’, had an indication of an auto deleting application expiring after six days, suggesting messages were deleted after that period of time. The chat appeared to have taken place between the appellant and primustiling on 13 and 14 October 2020. The second chat was between AYDKOB and a handle bosscoin888. The third conversation was between AYDKOB, primustiling and bosscoin888.
Screenshots were produced of other conversations, including a Facebook Messenger transaction between the appellant and a profile Kris Richards, a screenshot of LocalBitcoin, an online peer-to-peer website where people can buy and sell cryptocurrency, without using the digital currency exchanges, a screenshot of a Bitcoin purchase form and messages with persons associated with entities Modern Wall Street and Easy Lend.
A recording of the execution of the search warrant was played to the jury. In it, the appellant was recorded as identifying that there were drugs in the top drawer of a room; denying there was any ice, pipes or syringes, saying, “No, don’t do that”; and saying he did not have a mobile phone, but he did have a work phone. The appellant said it was normal for customers of his mechanical business to pay him in cash. They could save 15 per cent off a big bill. If it was cash, he did not usually put it into his business account. Probably 80 per cent of his customers liked to pay cash. The appellant was also recorded as saying that he “used” to do Bitcoin. A cash transaction for Westpac from 6 October for $33,700 was for Bitcoin. The cash had been saved up over a couple of years. He could not remember the name he used to obtain it. He did not have any Bitcoin wallets. He had obtained money from an insurance payout and put some of the money through Bitcoin.
The appellant was also recorded as saying the cannabis had been obtained through a trade with a customer. When asked about the clip seal bags, he denied selling cannabis. He said the cannabis was swapped for a couple of motors. The man did not give him his name. The appellant was also recorded as accepting that he had initially told police he had nothing in the house and that he did not have any mobile phones, but that police had found drugs and two mobile phones. He denied that police would find messages on his phone relating to selling drugs. When asked how long it would take him to smoke all of the cannabis found in the house, he replied, “Oh fuck. Hopefully a year”. Later, the appellant was recorded as telling police that to be honest he was planning to sell cannabis, but had not done so yet. It was in his mind. Times were tough.
In cross-examination, the investigating officer agreed that the prosecution against the appellant materialised due to an investigation undertaken in respect of another person trafficking in dangerous drugs. That person had previously been charged in relation to car insurance fraud and possession of a variety of drugs.
The investigating officer accepted that he had obtained the assistance of an employee of the Australian Taxation Office, who provided taxation documentation in relation to the appellant, for the tax year ending 2020, as well as business activity statements for the quarters ending September and December 2020. Documentation had also been provided in relation to the other person, who was also alleged to have been providing a money laundering service that converted to cryptocurrency.
The investigating officer also sought assistance from a financial analyst, in reviewing banking and other documentation which identified large scale cash deposits by the appellant. The assistance request was to show that the cash deposited by the appellant did not come from his legitimate work personal accounts. In response, the financial analyst had sent an email dated 4 February 2022:
“I have been trying to work on [the appellant’s] statement today, however I must admit I am struggling.
[The appellant] appears to operate some sort of business. (something to do with cars)
He has net income of approx. $981,000 which is made up roughly of …
Point being I can’t say any of this is unexplained due to the business he operates. The cash/ individuals/ and organisations may in fact be legitimate clients.
All I can do is say what his net earnings are and how he has spent it.
I can show what payments he has made to the other syndicate members and where trace information says it was him making deposits I can confirm whether the funds came out of his accounts or the origin of the cash deposits are unexplained (because they never came from any of his accounts)
If you have any instructions or ideas on what you are trying to prove from the information I have it would help.”
The investigating officer had replied on 6 February 2022:
“Hi Hope,
Sorry about the delay.
Yes [the appellant] had a mechanics workshop (Blacklist Performance, and /or NQ Performance).
That’s fine, I am happy for you to describe it just as income and break it down as you have outlined.
In terms of showing his payment to other syndicate members, with the exception of electronic transfers from his accounts to the POI’s accounts, there is no need for you to do this. I have identified and discussed the cash deposits he has done into these accounts in my statement.
Hopefully, that should simplify it for you.
Any questions, give me a call/ email.
Cheers.”
The investigating officer accepted various admissions had been made in respect of transactions and as to the connection the appellant had to Modern Wall Street Pty Ltd as a customer. The investigating officer accepted that transactions conducted on 19 May and 27 July, involved cash sums transferred directly from an account associated with the appellant. The appellant’s name would have been on the transfers because it had come from his bank account.
Financial analysis
A financial analysis in relation to the appellant revealed four bank accounts, two in his name alone and two with another party. Each account was analysed for a period from 1 January 2019 to 28 October 2020. Some particular companies were paid money, including Easy Collect Pty Ltd and Modern Wall Street. There was unexplained income of approximately $280,000.
Appellant
The appellant gave evidence that he had been operating a mechanical business since 2018. Shortly after purchasing that business, he incorporated another name to deal with the performance side of cars. He would ask customers whether they wanted to pay cash or by card. If they paid by cash, they could save between 10 and 15 per cent. Probably 80 to 90 per cent of customers, usually big dollar jobs, would pay in cash. Most of his customers were ordinary citizens who would not be able to get a tax deduction. Regardless of whether customers paid in cash or card, he would enter details into his computer. If it was paid in cash, he would refer to it as an invoice and would not put “paid” down. He would write “cash”. If paid by EFTPOS, he would write “paid” on the invoice. He did not declare any of the cash payments on tax.
The appellant said as part of his business, he would purchase vehicles, do work on them and sell them for cash. The appellant also collected automotive parts. He would store them in various shipping containers. He would on-sell them to others for cash. He did not keep any records in relation to the sale of any of those items. He did not believe he had to declare their sale on tax.
The appellant said he had received a $100,000 insurance payout, due to flooding. There had been an earlier insurance payment of approximately $25,000, after he had lost tools in a break-in. He also received money off his father. He borrowed around $60,000. Some of those loans had been paid back to his father.
The appellant said a female customer had him undertake multiple jobs on her four cars, between October 2019 and January 2020. He could not recall whether he produced any invoices or receipts. She paid in cash over that period; around $25,000 or more. A male customer purchased a race motor off him around January 2020, for around $13,000 cash. There was a further transaction in March 2020, for around $12,000 cash. The appellant did not recall giving him a receipt. The appellant also on-sold a vehicle given to him by his father, for $12,500 cash.
The appellant said when police arrived at his residence on 18 October 2020, he told police there were no smoking devices in the house. The appellant said he would smoke cannabis out in the back yard. He kept a smoking device inside the barbecue. At no stage that day did he see detectives near the barbecue. The person he told police he had obtained cannabis through, had come into his workshop at the start of October. He traded him a motor, a gearbox and another engine for a notional value of between $8,000 and $10,000. The cannabis found by police had been provided by that man in payment. The man provided a deposit of two half-pound bags. The appellant received, about a week and a half later, a one pound bag and within a few days, another parcel containing more. He had opened the first parcel, but had not opened the second parcel when found by police.
The appellant said he sold a half-pound bag to a mate that lived remotely. None of the cash paid for the supply of that cannabis was used to purchase Bitcoin. He used cash monies obtained from his business. There was a lot of money that went in that way. The appellant said he told police about a receipt for $33,700 which had been used to buy Bitcoin. The appellant thought Bitcoin had ripped him off, because he could not see it in the Bitcoin wallet. He had not had any contact with Bitcoin since his phone was taken on 18 October 2020. He had not cashed in any Bitcoin, either before or after 18 October 2020.
In cross-examination, the appellant denied that he was commercially supplying cannabis for 12 months prior to 18 October 2020. He had supplied it once. The cash that he transferred to Bitcoin, was from his mechanical businesses so as to avoid being detected by the tax man. That was why he used aliases when depositing the money. The appellant accepted he was in possession of 1.575 kilograms of cannabis on 18 October 2020. There were also 10 used clip seal bags in a fridge. He was not aware that cannabis was sold in imperial amounts. The cannabis located in a cryovac bag in a kitchen cupboard was a half-pound bag. A pound bag was located in a bedroom dresser. The parcel address to Mark S found in the children’s bedroom, weighed just under two pounds. The appellant said he did not intend to sell the cannabis. He thought about it.
The appellant accepted that he had the Wickr app on his phone. He was unaware that the app autodeleted after six days. He could not remember observing messages disappear from his phone. He was not aware that the app was encrypted, or that it was difficult for authorities to detect messages on it. AYDKOB was his handle on his phone. The appellant agreed he was communicating with primustiling. The appellant did not know the person’s name. He was discussing cannabis he had obtained from a particular supplier. He did not know whether the person he was speaking to, was a cannabis dealer.
The appellant said his message to that person was that his cannabis was underweight. The appellant knew it was underweight because when he sold half a pound at the start of October the man told him it was underweight. He denied that his message “always underweight” meant that he obtained cannabis from this particular person on multiple occasions. The appellant accepted that his message was complaining about the quality of the cannabis. He thought there was seed rather than bud. He agreed that his message, “I sell mine in bulk so I don’t open it!”, indicated that he sold in bulk, but the appellant said he only did it one time. “always under weight” was a mis-type by him. He was “talking shit” to that person.[2] His statement “it’s fucked, man the [sic] count the bag as weight” was made because the person he had sold the half-pound to, told him they must count the bag as weight. He denied he was talking about multiple times he had been obtaining cannabis. The words, “over the year it adds up!” was “shooting the shit with him and saying it could be a possibility over the year”.[3] The appellant said, “That’s how I would word it – and should have worded it.”
[2]AB 287/17.
[3]AB 288/45.
The appellant accepted that he had another exchange on Wickr with bosscoin888. He was the person who had supplied him with cannabis. He had met him once. He did not know his name. He was communicating with bosscoin888 on Wickr, because that was how the person wanted to communicate, after he came into the workshop. It was the start of October 2020. He could not remember why bosscoin888 put him onto primustiling. His text message “Hey man that shit that came last week I can’t sell, Bro. Full of seed!”[4] was complaining about the quality of cannabis sent the week before 13 October 2020. The appellant had been told enough to know that it was not good quality. The message “If that stuff is the same coming, I’ll send it back, as I can’t sell it”[5] was a reference to more cannabis coming as of 13 October 2020. He agreed he was prepared to be blunt, but denied this was because he regularly dealt with this person. It was because he had given that person a good deal on some motors and felt like he was getting ripped off.
[4]AB 289/25.
[5]AB 289/45.
The appellant accepted that his mobile phone had a browser, “Tor Browser”. He could not explain why it was on his phone. The appellant accepted he was on the dark web, but did not know if it was through that application. He denied accessing the dark web to purchase cannabis. He was looking for recipes on how to cook it into food. He obtained access by typing “dark web” into the search bar.
The appellant said that he closed down the performance cars business in January 2021. He lost business within a few days of the raid. His other business operated with two employees. They were not employed full-time. He accepted that for the financial year ended 30 June 2020, he reported a net loss of $80,776. His reported income did not include cash payments. He could not say what was the correct figure for his business. He did have the cash invoices and could calculate it from those invoices, but had not done so. He did not give the accountant the cash invoices. He would take all of the cash invoices out. Fifteen per cent discount would depend if it was a repeat customer. The appellant said that if he did not declare the income, he did not have the pay the GST.
The appellant accepted that the commission he had to pay Modern Wall Street to buy Bitcoin, was pretty high. He did not accept that giving a 15 per cent discount and then spending high commission to buy Bitcoin was costing him a lot of money. Eighty per cent of clients wanted to deal in cash. It looked good for him to offer a discount. Those same customers did not return en masse after 30 October 2020. His business just “fell off a cliff”.[6]
[6]AB 303/27.
The appellant said that the insurance payment for $25,000, was not used for Bitcoin. The insurance payout for $100,000 was used to buy Bitcoin. The appellant accepted that he did not need to hide the insurance payout from the tax man. The appellant also used cash from selling cars and motor vehicle parts to buy Bitcoin, even though he understood that he did not need to declare that cash to the tax man.
The appellant accepted that between 1 January 2019 and 28 October 2020, his father deposited $62,370 into the appellant’s bank account. He did not use any of that money to buy Bitcoin. He asked his father for a loan. He did not use the cash that he had on hand because he was saving it to buy Bitcoin.
The appellant said the male customer was a regular customer who became an acquaintance, not a friend. He paid the appellant cash for a built motor in January 2020. The appellant accepted that the male customer paid $10,000, by electronic transfer, in June 2019, for a “1JZ Soarer build”. That was a totally different build. The female customer paid him $25,000 cash between October 2019 and January 2020. That was used to buy Bitcoin.
The appellant said that documents on his computer were genuine. Invoices could not be edited once done. He could put “paid cash” at the end and print the invoice and give it to the customer, but could not edit it on the program. The appellant would give a price to a customer, write in his diary and do up an invoice in front of the customer. The receipt he would give would be the amount of cash received by him.
The appellant accepted he had an account with LocalBitcoins. He bought Bitcoin through that account, from April to October 2020. He agreed that he had a Wickr conversation with the person Bitflow on 12 October 2020, making inquiries to source Bitcoin through Bitflow.
The appellant accepted that when police attended his home on 18 October 2020, he said he did not have a mobile phone in the house. He agreed that his mobile phone was in his car. He denied that what he told police was a lie. He did not have a mobile phone in the house. He accepted that he had been regularly transferring deposits to Modern Wall Street to be transferred back in Bitcoin, from April through to October 2020, but denied he was being dishonest when he told police that he “used” to do Bitcoin.[7] He agreed that he was making inquiries to buy more Bitcoin on 13 October 2020. He was not being dishonest when he told police he could not tell them who he had been buying Bitcoin through. The appellant knew the company name, but not the name of the people. He could have shown the officers the contacts of those people, as they were on his phone, but he did not have his phone on him at the time.
[7]AB 326/9.
The appellant agreed police asked him whether he had any records on his phone and that he replied, “Nah, I stopped doing it.” He denied that was untrue. He had stopped doing it when he was asked by police. He agreed he told police that he purchased Bitcoin on 6 October for $33,700 from money he had been saving for a couple of years. He denied that was untrue. He also denied it was untrue for him to say that he did not buy the cannabis located in the house, which had Mark S on it. He obtained that cannabis from the man who came into the workshop, who did a trade for the cannabis. He denied that he lied to police when he said they would not find any messages on his phone about selling drugs. He agreed that he said to police, “Well, it was in my mind. I hadn’t made up, but the thought was there. Yeah, you know, like times are tough”, but denied that his business was suffering tough times at that time.
The appellant said he provided Modern Wall Street with identification in April 2020. He took a selfie and a photo of his licence and sent it to one of the Bitcoin groups. He did not accept that he knew that going through this company would mean it was not traceable back to him. He denied that was why he was providing false names on the deposit and breaking up the transactions. The appellant said not one part of his transfers for Bitcoin was the proceeds of selling drugs, “Not one dollar, no.”[8]
[8]AB 331/47.
The appellant accepted that on 4 May 2020, he made two transfers of money, using false details. He did not transfer it in two lots to be below the $10,000 AUSTRAC requirement. He would do different transactions as the ATM would split the money. The appellant accepted that on 29 June 2020, there were deposits to Mark Speck. That was a false name. He denied it was to avoid detection. He did not want people knowing his exact business.
Customers
The male customer gave evidence that he had known the appellant for some years. He did work on his car. In late January 2020, he purchased a 1JZ motor for $13,500 cash from the appellant. In mid-March 2020, he purchased a Nissan Navara from the appellant for $10,000 cash. In the past, the male customer had paid by EFTPOS.
The female customer had the appellant do work on four vehicles between October 2019 and February 2020. She paid him, in cash, a total of $25,000.
Loans
The appellant’s father said he had given money to the appellant, if he needed it. Sometimes it was described as a loan. The appellant had not repaid many of them. He transferred $10,000 to the appellant’s business on 3 January 2020, $1,000 on 6 to 8 January 2020 and $5,100 on 9 January 2020. He had also had the appellant do work on vehicles he had had the appellant purchase for him. There were other payments for auto parts in January and February 2020, as well as loans in March, April and May 2020.
Summing up
The trial judge directed the jury that as the case relied on circumstantial evidence, it was necessary that the jury be satisfied that guilt was the only rational inference that could be drawn from the evidence as a whole. If there was any reasonable possibility consistent with innocence, it was their duty to find the defendant not guilty.
In directing the jury as to circumstantial evidence, the trial judge specifically referred to the Crown’s reliance on: the significant quantity of cannabis found at the appellant’s residence, bundled in various weights, all of which appeared to accord with the imperial measures used in the distribution of cannabis; the text message exchanges between the appellant and the users known as primustiling and bosscoin888; and on the communications between the appellant and the various Bitcoin distributors.
The trial judge directed the jury as to the use of what were said to be lies told by the appellant on 18 October 2020. Those lies were that the appellant said he did not have a telephone when the telephone was in the car and easily accessible; that a purchase of Bitcoin for $33,700 was from monies he had saved, when there had been a multitude of earlier purchases of many thousands of dollars, meaning it was not money that had been saved over time; that when questioned about whether there might be messages on his telephone that related to the selling of drugs, the appellant replied, “no” when there were the communications between him and the users primustiling and bosscoin888; that when the appellant was asked about various receipts, the appellant said “I used to do Bitcoin”, suggesting that was in the past, when that question related to a transaction that occurred on 16 May 2020 and the admission showed there had been transactions subsequent to that date; and that when asked who were the operators of the Bitcoin distributorships, the appellant said he did not know when the information was available to him on his phone. The trial judge directed the jury that if they concluded that each or any of those were deliberate lies, they were relevant only to the appellant’s credit.
The jury was further directed that before they could rely on the contents of the texts and communications between the appellant and primustiling and bosscoin888, to show the real character of the appellant’s actions, they had to first be satisfied that the appellant sent the texts and second, be satisfied that what they contained was true, rather than what the appellant said was “just talking shit”. Finally, the jury had to be satisfied, beyond reasonable doubt, that the texts were in relation to dealing commercially with cannabis.
Consideration
Ground 1
The determination of a ground that the verdict was unreasonable and against the weight of the evidence, requires an appellate court to undertake its own independent assessment of the record as a whole, to determine whether it was open to the jury to be satisfied of the appellant’s guilt of the offence, beyond reasonable doubt.
Due regard is to be had to the jury’s role and the advantage afforded to it in having seen and heard the witnesses. However, if the consideration of the record as a whole, reveals discrepancies, inadequacies, or other aspects of the evidence which, even allowing for those advantages, supports a conclusion that the jury ought to have had a reasonable doubt, the verdict is to be set aside as unreasonable.[9]
[9]Dansie v The Queen [2022] HCA 25 at [38].
In undertaking an independent assessment of the record in the present case, particular regard must be had to the fact that satisfaction of the appellant’s guilt of the offence, was dependent upon an acceptance of circumstantial evidence as to the appellant’s involvement in the commercial sale of cannabis and the monies, the subject of the proceeds of crime count, being proceeds from that commercial sale exceeding $100,000. The jury could only be satisfied of the appellant’s guilt, beyond reasonable doubt, if a consideration of the evidence excluded a reasonable hypothesis consistent with innocence.
The appellant submits that the jury could not be so satisfied, as there was evidence before the jury that he was the recipient of cash on a regular basis from customers of his mechanical and car parts businesses. The appellant relies on his statements to police in the initial interview, his evidence and the evidence of two customers, as to the payment of cash to him for mechanical services and/or car parts. It is submitted that the jury could not exclude the reasonable hypothesis that the monies, the subject of the count, was undeclared cash from his business.
Whilst there was evidence which raised for the jury that hypothesis, a consideration of the evidence as a whole supports a conclusion that it was open to the jury to be satisfied, beyond reasonable doubt, that notwithstanding that evidence, the monies the subject of the count, were proceeds of crime from the commercial sale of wholesale quantities of cannabis and were in a sum in excess of $100,000.
This conclusion flows from the following considerations.
First, it was open to the jury to reject the appellant’s evidence as untruthful. The appellant made statements to police about no mobile phone being in the home, about his cessation of purchasing Bitcoin and about there being no drug-related messages on his phone which, it was open to the jury to find, were untruthful. That conclusion significantly impacted on his credibility generally.
Second, the text messages between the appellant, primustiling and bosscoin888, were consistent with the appellant having been engaged in the commercial sale of wholesale quantities of cannabis, on a regular basis, over the previous 12 months. His explanations for those conversations lacked credibility. It was open to the jury to reject those explanations as untruthful. That conclusion also adversely impacted on the jury’s assessment as to the credibility of the appellant’s evidence as to the source of the cash, the subject of the count.
Once the jury rejected the appellant as a witness of truth, it was open to the jury to not only reject his evidence, but also his statements to police, that the Bitcoin was purchased using cash saved from customers of his mechanical businesses. The fact that he was receiving loans from his father and had incurred substantial losses in the business, was contrary to his having access to such cash. Further, the evidence from the two customers as to the payment of cash to the appellant, did not prevent the jury from rejecting the appellant’s evidence as to the origin of the cash, the subject of the count, as untruthful.
Third, once it was open to the jury to reject the appellant’s evidence as untruthful, a consideration of the evidence as a whole, supported a conclusion that it was open to the jury to be satisfied of the appellant’s guilt of the offence, beyond reasonable doubt. In addition to the contents of the messages between the appellant, primustiling and bosscoin888, there was the finding by police of a large quantity of cannabis, in different locations, packaged in amounts consistent with saleable quantities. Some of the cannabis was located in packaging with a false name. Also found were numerous clip seal bags smelling strongly of cannabis, consistent with their having been used in that commercial operation. Police found no smoking implements and were told by the appellant that there were no such things at his premises. All of that evidence supported a conclusion, beyond reasonable doubt, that the appellant was engaged in the commercial sale of wholesale quantities of cannabis over the 12 month period prior to 18 October 2020.
In addition, there was evidence of the purchase of Bitcoin using processes which included false names and identification details and making several transactions on the same day, on multiple occasions, over the six month period, consistent with the deliberate avoidance of AUSTRAC requirements so as to avoid detection.
When regard is had to those various pieces of evidence, once the jury rejected the appellant’s evidence as untruthful, the only rational conclusion was that the monies used to purchase the Bitcoin, the subject of admissions, was proceeds from the commercial sale of cannabis.
Finally, it was open to the jury to be satisfied that those proceeds exceeded $100,000. The fact that the appellant had received cash in his business from two customers, did not detract from circumstantial evidence supportive of a conclusion that over the period, the subject of the count, the appellant had received in excess of $100,000, as proceeds of crime from the commercial sale of wholesale quantities of cannabis. The appellant’s need for loans from his father was consistent with any cash received from his business being of a magnitude that would not raise a reasonable doubt as to the proceeds of crime from the commercial sale of wholesale quantities of cannabis being less than $100,000. This is particularly so as the monies received from the appellant’s father would be excluded as the appellant said none of that money had been used to purchase Bitcoin.
The verdict of the jury was not unreasonable.
Ground 2
At the conclusion of the Crown case, the appellant submitted that there was no case to answer. Whilst there was evidence of 1.575 kilograms of cannabis at the appellant’s home on 18 October 2020 and there were text messages consistent with sales of cannabis, those messages were outside the relevant money laundering period and did not identify amounts, or the sale price. Having regard to what would be the value of 1.575 kilograms of cannabis, that cannabis and those messages provided no explanation for hundreds of thousands of dollars in cash.
Further, as the case was a circumstantial case, the Crown had to exclude a reasonable hypothesis, open on the evidence, consistent with innocence. The appellant had told police that 80 per cent of the customers in these mechanical businesses, paid in cash. Nothing in the Crown case excluded the inference that the $270,000 was cash monies obtained from customers. Whilst the non-declaring of those monies as income would be a crime as it would involve tax evasion, the Crown did not particularise the crime as tax evasion. Some potential lies identified by police, were insufficient to exclude that reasonable hypothesis.
The Crown submitted that there was a case to answer. There was evidence capable of establishing, beyond reasonable doubt, that the appellant was supplying commercial quantities of cannabis over the relevant period, and the $270,000 in cash was proceeds from those sales. There was the large quantity of cannabis located at his house, packaged in a way consistent with the commercial sale of cannabis. There were empty clip seal bags noted to have smelt of cannabis. There were no smoking utensils in the house. There were Wickr messages consistent with frequent sale of drugs at a wholesale level over the previous year. There was significant unexplained wealth obtained over a short period of time, the appellant having deposited $270,000 to obtain Bitcoin over less than six months. Whilst the appellant told police that 80 per cent of customers paid cash, he said they did so to save 15 per cent on big bills, which would act as a significant disincentive for the appellant to receive cash. There was also the nature of the buying of the Bitcoin itself. The appellant used a false name, including the false name located on a package of cannabis located at his house. The cash transactions were undertaken in a manner avoiding the AUSTRAC threshold, attending different banks and different branches, as well as using multiple Bitcoin addresses and false numbers. Finally, there were lies told by the appellant.
The trial judge ruled that there was a case to answer. There was circumstantial evidence which, if accepted, established the appellant’s guilt of the offence, beyond reasonable doubt.
The appellant did not press this ground, in oral submissions. The appellant conceded, in his written submissions, that there was no error in the test adopted by the trial judge and that consistent with the application of that test, there was a case to answer at trial.
This ground also fails.
Orders
I would order:
1.The appeal be dismissed.
DAVIS J: I agree with Boddice JA.
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