R v Thomas

[2022] NSWDC 658

District Court

New South Wales

Medium Neutral Citation:

R v Thomas [2022] NSWDC 658

Hearing dates:

9/9/22, 20/9/22, 14/11/22

Date of orders:

14/11/22

Decision date:

14 November 2022

Jurisdiction:

Criminal

Before:

Bourke SC DCJ

Decision:

I have taken into account a 25 percent discount for the plea of Guilty.

I sentence the offender to a term of imprisonment of 1 years 3 months. The matter on the s16BA certificate is taken into account.

However, I intend to give consideration to whether that sentence ought to be served by full time imprisonment or by an ICO.

I therefore order a Sentencing Assessment Report.

SOPH for sentence to 14/11/22 at 9.30am in the Downing Centre.

The offender is to appear in person on the next occasion.

I order a SAR. The offender is to report to the Lithgow office of Community Corrections within 3 days to enable the report to be prepared.

Catchwords:

Crime – Sentence – Commonwealth – Director of corporation use position dishonestly with the intention of gaining advantage for himself – Officer of corporation use position dishonestly with the intention of gaining advantage for himself

Legislation Cited:

Corporations Act 2001

Commonwealth Crimes Act 1914

Cases Cited:

Totaan v R [2022] NSWCCA 75

Category:

Sentence

Parties:

Commonwealth DPP – Crown
Mark Peter Thomas - Offender

Representation:

Mr G Hurley for Commonwealth Crown
Mr M Thangaraj for Offender

File Number(s):

21/95105

Publication restriction:

I make the following non-publication orders:
- anything which reveals or might tend to reveal the identities of the offender’s children.
- the highlighted sections in the documents annexed to the Notice of Motion dated 6 September 2022.

sentence

1. The offender, Mr Mark Thomas, is to be sentenced in relation to an offence under s 184(2)A of the Corporations Act 2001, that between 31 January and 20 February 2014, being a director of a corporation, namely Blueprint Investment Management Limited, a foreign company, he used his position dishonestly with the intention of gaining an advantage for himself.

2. The maximum penalty for that offence is five years imprisonment and/or a pecuniary penalty of up to $340,000.

3. In addition, he asks that I take into account another offence under that same provision, which has been placed on a schedule pursuant to s 16BA of the Commonwealth Crimes Act 1914, being an offence that between the same dates, being an officer of a corporation, namely Van Eyk Research Proprietary Limited, he used his position dishonestly with the intention of gaining an advantage for himself. The maximum penalty is the same as already announced.

4. The maximum penalty for the offences are of course important guideposts in the sentencing exercise to which I have regard. The offender pleaded guilty in the Local Court and is entitled to the benefit of that early plea. While there is no statutory provision regulating the percentage of discount to be allowed for a plea of guilty in a Commonwealth matter, I am satisfied that it is appropriate to allow discount of 25% for the utilitarian value of the plea of guilty.

5. The facts have been set out in an agreed document of 163 paragraphs however in essence the facts are as follows.

FACTS

6. The offender was the Chief Executive Officer and Chief Investment Officer and Chairman of Van Eyk Research Proprietary Limited, hereinafter referred to as VER, and had a base salary of just over $466,000. He also held 2,634,930 shares in VER, being 11% of the total shares.

7. The offender was effectively the principal person responsible for running VER and the principal decision maker on matters relating to investment strategy, resourcing, financial commitments and the daily operations of VER.

8. VER was the parent company of a New Zealand subsidiary company called Blueprint Investment Management Limited, hereinafter referred to as BIML. The offender was the sole director of BIML. Among other things, that company provided investment management services to trustees in charge of investment funds. VER was also the investment manager of 14 managed investment schemes under the Blueprint name in Australia, which in January 2014 had about $1.3 billion in funds under management.

9. VER had a standing committee called the Blueprint Investment Committee, hereinafter referred to as BPIC, which was responsible for investment decisions relating to both Australian and New Zealand-based funds. As at November 2013 there were four members of the BPIC, one of whom was the offender.

10. The role of the BPIC was to consider, among other things, possible amendments to fund asset allocations. BIML was the investment manager for two New Zealand funds known as the PAM 1 fund and the PAM 5 fund. These two funds were referred to collectively as the BIML/PAM funds.

11. The trustee for these funds was the New Zealand Public Trust which had the job of acting in the interests of investors by being an independent supervisor of securities and custodian of assets. The investment management services that BIML provided in relation to the BIML/PAM funds were governed by an agreement between BIML and New Zealand Public Trust. Specifically, BIML performed its obligations as investment manager for the funds under the terms of a master trust deed under which New Zealand Public Trust was trustee.

12. Another company in this complicated picture was Australasian Wealth Investments (AWI), which via its subsidiary, Van Eyk Group Holdings (VEGH), held 49.6% of the shares in VER. Another shareholder in VER was Pine Gould Corporation (PGC), which held 5,555,555 shares, plus a further package of 666,667 VER shares following its conversion of a convertible note with a face value of $5,600,000.

13. PGC wanted to sell its VER shares and one of the interested buyers was AWI. However, if AWI had acquired those shares from PGC, AWI would then have held more than 50% of the issued shares in VER, meaning that AWI would gain control of VER.

14. The intention of AWI to take control of VER was disclosed in a meeting on 3 October 2013 between the offender and a Mr Benjamin Heap who subsequently, in late-November 2013, was appointed a director of both AWI and its subsidiary, VEGH.

15. The matters discussed in the 3 October meeting were set out in an email on 4 October from Mr Heap to the offender. In that email Mr Heap referred to his interest in an asset swap deal in which AWI would take control of the VER research business while the remaining VER business would be “rebranded”. Mr Heap suggested in the email that such a restructure would “allow us both to win” but that if a deal along these lines could not be made then it was likely that AWI would pursue a different strategy in its desire to acquire the additional shares and take effective control of VER.

16. The offender did not want this takeover to happen, and told others that he was concerned that AWI’s actions would “bust up the business” given that AWI apparently did not see value in VER’s asset consulting business and was interested only in the research side of the business.

17. As a result of his concerns about the possible takeover by AWI, in early October 2013 the offender approached Macquarie Investment Management Limited to see if Macquarie would be interested in buying the additional shares. On 5 October 2013 the offender sent a text message to an officer of Macquarie which said:

“Things have got a little hostile with my new shareholder structure and unfortunately it may have a significant impact on Blueprint’s future. I have plans on how this may be avoided but may need Macquarie’s help”.

18. This was followed by a meeting with Macquarie on 8 October in which the offender said, among other things:

“I’m having problems with AWI and I’m concerned as to what it might mean for me and for Van Eyk if AWI or someone aligned with it buys the shares and gets control...would Macquarie be interested in buying them?”

19. The approach to Macquarie was however unsuccessful, and so the offender approached a friend of his named Darren Pettiona who was a former director of VER. In about mid-November 2013, the offender had a conversation with Mr Pettiona to the following effect:

“Can you help me out because there’s going to be some VER shares come on the market. I have arranged for a managed fund to buy some but I need someone to buy the rest so that AWI doesn’t get them because they’re looking to bust up the business. It’s going to cost about $5 million”.

20. To this, Mr Pettiona replied, “I’m not prepared to risk that at this point in time. I don’t really want to put the cash into it at the moment”. The offender said:

“I think we could find a financier. I’ve got someone that might be interested to do it for us called Millennium Funds Management. They have a wholesale cash fund. We will then roll VER into a listed entity, or be funded by private equity and then we can sell the VER shares. So it’s okay, it’s good”.

21. To which Mr Pettiona said, “If I can help I will help but I’m not chomping at the bit to do this thing. It would have to be on good terms and conditions”.

22. The offender’s reference in this conversation to “Millennium Funds Management” was a reference to Millennium Capital Managers Limited, hereafter referred to either as Millennium Capital Managers Limited or MCM, and its wholly owned subsidiary Millennium Assets Services, hereafter referred to either by that name or MAS.

23. MCM was a fund asset manager and MAS was a professional trustee and an asset manager. Together they were referred to as “Millennium”. Thomas Wallace and David Grey were directors of Millennium at all relevant times.

24. On 25 November 2013 VEGH, the subsidiary of AWI, requested a general meeting of VER shareholders to consider resolutions to appoint Benjamin Heap and Andrew Barnes to the VER Board. At that time Mr Barnes was a managing director of AWI and a director of its subsidiary, VEGH, and Mr Heap was appointed a director of those companies on 29 November 2013.

25. In December 2013 a notice of general meeting to be held on 23 January 2014 was sent to VER shareholders. The notice proposed two resolutions for the appointment of Mr Barnes and Mr Heap as directors of VER but also noted that “it is the chairman’s intention to vote all undirected proxies against all resolutions”. The reference to “the chairman” was of course a reference to the offender.

26. As part of the plans to thwart any takeover of VER by AWI a meeting took place on 17 December 2013 between the “Van Eyk team” and a Mr Ding, a partner at Allens Linklaters Solicitors. After this meeting, Mr Ding sent an email to Mr Pettiona setting out the key elements of a proposed loan to a company to be set up by Mr Pettiona.

27. The key elements included, among other things, that a new company called TAA Melbourne Proprietary Limited would be registered in Victoria with Pettiona being the sole director and holder of one fully paid $1 share. The constitution of the company would be very restrictive, preventing it from issuing more shares or borrowing money other than under a proposed loan agreement with Millennium and the assets of the company would be limited to the shares in VER. The proposed loan agreement was that Millennium would lend $4,999,999.50 to TAA Melbourne at an interest rate of 7.5% per annum so that TAA Melbourne could buy the 5,555,555 shares in VER from PGC.

28. On 18 December 2013 Allens Linklaters incorporated TAA Melbourne, a shell company of which Darren Pettiona was the sole director and shareholder. On 19 December 2013 the offender was informed by one of his VER managers that Mr Pettiona would not sign the proposed loan agreement unless he received a letter of comfort indemnifying him for any tax liability, legal or litigation costs and any other costs. Mr Pettiona also indicated that he would require a consultancy fee of $10,000 plus GST per month to be involved in the proposed transaction. A letter of comfort to this effect was provided by VER to Pettiona on 20 December 2013.

29. The TAA loan agreement, which ultimately was signed, contained various clauses. These included that the borrower must use the advance of $4,999,999.50 to acquire the VER shares in accordance with a share purchase deed and that interest at a rate of 7.5% would be payable. The loan agreement also specified that “to the extent that the borrower has funds available” the borrower shall repay all amounts outstanding under the agreement upon the earliest to occur of three things:

1. The date which is nine months following the first drawdown date;

2. The third business day following the sale of the acquired shares; and

3. The date on which any default occurs.

30. Importantly, the obligation of the borrower to repay any moneys was limited by cl 6 of the agreement to any moneys that it had available to it including any funds arising from the sale of the acquired shares. The effect of this was that if TAA Melbourne did not have any valuable assets it would not be required to repay the loan. As already noted above, the assets of TAA Melbourne were limited to the VER shares which TAA proposed to purchase. However, the interest rate of 7.5% under the TAA loan agreement compared favourably to other interest rates available at the relevant time, which ranged between about 2.5 and 5.9%.

31. On 20 December 2013, PGC exercised its right to convert the convertible note to 6,222,222 fully paid ordinary shares in VER. On that same day TAA Melbourne offered to purchase 5,555,555 of the convertible note shares from PGC at 90 cents per share at a total price of $4,999,999.50. Also on that day, Fleming SG Capital Special Opportunities Proprietary Limited, a third party unrelated to VER, offered to purchase the balance of the convertible note shares. In other words, the 666,667 shares from PGC at 90 cents per share at a total price of $600,000.30.

32. On 9 January 2014, the VER board resolved to allot the convertible note shares to PGC. VER’s directors, being the offender and a Michael Tinkler, signed the resolution. On 23 January 2014, a meeting was convened to consider the resolutions to appoint Messrs Barnes and Heap to the VER board however the offender adjourned the meeting, without any business being conducted, to 5 February 2014.

33. Around this time, there was concern that if Mr Pettiona did not conclude the loan transaction on behalf of TAA Melbourne by the time of the extraordinary general meeting on 5 February 2014, then AWI would to buy the convertible note shares and in all likelihood gain effective control of VER.

34. Around late January 2014, a meeting was attended by the offender and Thomas Wallace of Millennium, as well as others. In that meeting the offender expressed concern about how long it was taking to finalise the arrangements. The offender referred to “the New Zealand Blueprint funds that we control” which could be used to do the transaction and told Mr Wallace that he would deal with the New Zealand side of things. He also said that “the EGM is coming up and I need to get this done” to which Mr Wallace replied “as long as everything is properly disclosed and we have legal signoff we have no problem”.

35. Also in January 2014, the offender told VER Senior Product Manager Jackie Lemon, who had responsibility for the day-to-day management of the Blueprint and BIML/PAM funds, that he would use cash allocations from the BIML/PAM funds to fund the loan to TAA Melbourne. However, Ms Lemon told the offender “I do not think this is a good idea because investors funds are being deployed to fund a loan to buy VER shares”.

36. On 31 January 2014 the Blueprint investment committee held a meeting which was attended by the offender and others. The minutes of this meeting record that the committee resolved that moneys from the BIML/PAM funds be allocated to Millennium’s Wholesale Enhanced Income Fund (WEIF), which was said to offer a portfolio of active investments in cash and related instruments that aimed to provide income returns, capital security and liquidity.

37. The minutes however did not state that these new allocations of funds to the WEIF would be used to fund a loan to purchase VER shares, with those shares being held as security for the loan, nor did the minutes state that the offender would have a limited power of attorney over the voting rights attached to the VER shares or that the borrower’s obligation to repay the loan was limited in recourse to any moneys that it had available. The offender and another officer signed the BPIC minutes on 3 February 2014.

38. Also on that day a draft statement of investment purpose and objectives, also known as a draft SIPO, together with the minutes of the BPIC meeting and an amended WEIF information memorandum were sent by email to Kathleen Brennan, was the Manager, client services, at New Zealand Public Trust.

39. On 4 February 2014, Ms Brennan prepared a decision sheet which detailed her assessment of the proposed investment based on the documents sent to her. Ms Brennan concluded that the draft SIPO supported the intended investment objectives and that the amendments which were required in order to allow the investment of the BIML/PAM funds were aligned to the requirements of the trust deed.

40. Accordingly, she recommended that the New Zealand Public Trust agree to the draft SIPO. However, the New Zealand Public Trust was not told that the WEIF allocations would be used to fund a loan to purchase VER shares with those shares to be held as security for the loan, nor were they told that the offender would have a limited power of attorney over the voting rights attached to the shares, or that the borrower’s obligation to repay the loan was limited in recourse to any moneys that it had available.

41. Ms Brennan submitted the decision sheet, together with the BPIC meeting minutes to which I referred earlier, as well as the WEIF information memorandum and the amended SIPO to a senior manager at the Public Trust, who approved the proposed amendments. Ms Brennan then advised officers at VER of this approval.

42. The draft SIPO was not prepared by the offender, however he signed the final version on behalf of BIML on 5 February 2014, after which it was emailed to New Zealand Public Trust. Shortly after this, and on the same day, VER held an extraordinary general meeting to consider the resolutions to appoint Messrs Heap and Barnes as directors of VER, however, those resolutions were defeated by a majority vote. PGC, which at that time held the VER shares to which I referred earlier, voted against the resolutions.

43. After this, the offender sent a text to Millennium director Tom Wallace which said, “Tom, 60.82% against new directors. We won. I will call you later. Thanks for your support!”.’

44. On 6 February 2014, in other words the next day, the offender sent another text to Mr Wallace in which he thanked him for his assistance and suggested that they would meet up for dinner and a drink in the near future.

45. It was also on or about 6 February 2014 that Mr Pettiona, on behalf of TAA Melbourne, and Messrs Wallace and Grey on behalf of Millennium, executed the loan agreement for the purpose of allowing TAA to buy the VER shares from PGC.

46. Between 7 and 10 February 2014, requests were sent by an officer of VER to the New Zealand Public Trust asking that the moneys forming part of the BIML/PAM funds be allocated to the WEIF, that is the Wholesale Enhanced Income Fund.

47. On 12 February 2014, the offender signed a circular resolution of directors of VER to ratify the transfer of VER shares from PGC to TAA Melbourne. However, in early February 2014 Mr Michael Jenkins, who was the general manager of the holding company for BIML, received questions from advisors about the rationale for the allocations of BIML/PAM funds into the WEIF. After Mr Jenkins made some investigations, he did not feel comfortable about where the money was going, as it appeared that the investment might involve a “related party transaction”.

48. In this regard, cl 20.6 of the Master Trust Deed provided in essence that an investment in a related party should only occur after the investment manager, BIML, had provided the trustee with “reasonable detail” of the proposed transaction and a certificate stating that in the investment manager’s opinion the transaction is on reasonable commercial terms. No such detail, or any such certificate, was provided to the New Zealand Public Trust.

30. Arising from his concerns, Mr Jenkins raised questions with others and eventually had a conversation with the offender in which he asked, “Mark, what is this investment into Millennium about?”. The offender in response told him:

“Assets from BIML funds will be transferred to a Millennium Capital Management fund called the Wholesale Enhanced Income Fund. Van Eyk has a long association with Millennium and has used Millennium before. They are one of the best cash managers in Australia. The Wholesale Enhanced Income Fund is perfect for what Van Eyk wants to do. This is an investment committee decision intended to get a better money manager for the BIML funds”.

50. In this conversation, the offender did not tell Mr Jenkins that the WEIF allocations would be used to purchase the VER shares or that the offender would have a limited power of attorney over the voting rights attached to those shares. The offender also did not tell Mr Jenkins that the WEIF allocations were used to finance a loan under which the obligation to repay was limited to any moneys that it had available to it.

51. Around 20 February 2014, Ms Brennan, the Manager Client Services at New Zealand Public Trust, received by post an anonymously marked parcel of documents which included the TAA Melbourne loan agreement. Ms Brennan scanned the documents and sent them to David Campbell, who was a custodian of the New Zealand Public Trust. The documents were then, via a series of emails, forwarded to senior personnel in VER and ultimately to the offender. One of the persons who received the documents by email was Mr Jenkins, who after reviewing them was not satisfied that the investment of the BIML/PAM funds in the WEIF was appropriate. He raised these concerns with the offender and the following conversation occurred:

52. Mr Jenkins said, amongst other things, “That’s not on. The loan agreement was a back-to-back loan for Pettiona to acquire the shares. You don’t have to be a rocket scientist to see what’s going on here”, to which the offender replied, “It was something that needed to get done. It was just an interim measure. The loan will be paid back in a couple of weeks”.

53. It is apparent from the agreed facts that after the TAA loan agreement was received by New Zealand Public Trust, questions were being asked amongst the staff and officers of VER, Millennium and related entities about how this could have happened.

54. On 20 February 2014, David Grey, one of the directors of Millennium, sent an email to the offender stating that he was furious that the documents had been sent to New Zealand and that he had launched an inquiry into the matter. Also, the offender telephoned Mr Wallace of Millennium, asking:

“What the fuck happened here. All the documents have gone to New Zealand. It’s a breach. They are now telling me they can’t invest in a loan. New Zealand can’t hold the debt instrument”.

55. Ms Brennan, of the New Zealand Public Trust, has confirmed that she did not receive any transaction detail or any certificate from BIML or from VER pursuant to cl 20.6 of the master trust deed which, as earlier noted, imposed such requirements in relation to a related parties transaction. Ms Brennan also has confirmed that the material she was given in order to consider the investment in the WEIF said nothing about the WEIF lending $5 million to TAA Melbourne for the purpose of buying shares in VER.

56. She further said that at face value, she did not consider such a loan to be an appropriate investment and that if this information had been disclosed it would definitely have been a factor in her considerations. She said that this information would have led her to make further enquiries about the particular loan to TAA Melbourne and what it meant and the implications for the relevant funds before making a decision.

57. Those are the essential facts of the offending upon which I proceed to sentence.

58. In summary, the principal offence involved the offender dishonestly using his position as a director of BIML to facilitate an investment of the BIML/PAM funds into the Wholesale Enhanced Income Fund (WEIF), so that those funds could be loaned to TAA Melbourne, which would then purchase the VER shares from PGC.

59. The schedule offence, which was part of the overall transaction, involved the offender dishonestly using his position as an officer of VER to recommend and facilitate the allocation of the BIML/PAM funds to the WEIF in circumstances where reasonable detail of the investment and its purpose was withheld from New Zealand Public Trust.

60. In determining the sentence to be imposed for this Commonwealth offence, I must take into account so many of the factors in s 16A(2) of the Crimes Act 1914 as are relevant and known to the Court. Paragraph (a) refers to the nature and circumstances of the offence.

61. The offence carries a period of imprisonment of up to five years which marks it as being of some seriousness however it is important that I make some assessment of where, on a theoretical scale of seriousness, the particular offence committed by this offender lies objectively.

62. In this regard, the principal offence was complex and relatively sophisticated. The conduct was deliberate and involved planning which occurred over a period of some weeks. The offending therefore cannot be treated as an impulsive act or a momentary aberration. The offending was also committed in the face of, and despite, warnings of its inappropriate nature, given the conversation in January 2014 in which senior product manager Jackie Lemon referred to investor funds and told the offender that the proposed transaction was not a good idea.

63. There is also the fact that the loan transaction was not commercially sound, especially given that the liability of TAA Melbourne to repay the loan was “limited in recourse to any moneys that it has available to it (including that arising from the sale of the acquired shares)”.

64. While the interest rate under the loan was a superficially attractive 7.5% there was no practical way for TAA Melbourne to pay that interest other than by selling the shares, given that it could not borrow money and could not own other assets. Of course, the reason that the loan arrangement was not commercially sound was because the transaction was a sham and was entered into not for the primary purpose of acquiring the 7.5% interest return, but for the ulterior purpose of maintaining control of VER and thwarting the proposed takeover by AWI.

65. In addition, the offending involved a breach of a position of trust and responsibility given the control that the offender was able to exercise in relation to the companies involved in carrying out the transactions. However, in my view, this aspect of trust and responsibility is one that is inherent or at least partly inherent in any offence under s 184(2) para A of the Corporations Act, and which is an important reason why the offence has been created. I therefore have taken care not to double-count this aspect.

66. The offending also involved the withholding, which I conclude was intentional, of material aspects of the arrangements from the New Zealand Public Trust. This included, among other things to which I have already referred, the real purpose behind the arrangements and the so-called “limited recourse provision”.

67. It was argued on behalf of the offender that the offending was not carried out with “greedy intention” in the sense of seeking to obtain a direct personal financial advantage to the detriment of the company, or of any investors. I accept, to some extent, that this is so. In this regard the offending can be seen as different to many “corporate frauds” that come before the courts however, I do not accept that the offender was acting solely in order to “save” VER and its employees.

68. While this might have been some part of the offender’s motivation, he also had a very significant interest in maintaining the status quo, which involved his continuing control of the affairs of VER, including its strategy, resourcing, financial commitments and daily operations. There was also his considerable salary, which could have been at some risk in the event of a takeover.

69. The offender argued that there was no deliberate decision by him to conceal relevant information from the New Zealand Public Trust. In support of this argument, it was submitted that there was no evidence that the offender directed his employees to withhold any such information. Counsel for the offender pointed to parts of the agreed facts, which indicate that general counsel Mr Di Francesco was an experienced lawyer in financial services who said he did not turn his mind to whether the investment was a “related party transaction” until concerns were raised by Mr Jenkins on 20 February 2014. It was argued further that the offender was entitled to rely on Mr Di Francesco to ensure proper compliance with the master trust deed.

70. I accept that there is no evidence that the offender ever issued any direction to Mr Di Francesco or anyone else to actively withhold relevant information from the New Zealand Public Trust. On the other hand, I do not fully accept the submission by the offender that “given Mr Di Francesco’s role, experience and remuneration, the offender was entitled to rely upon him to ensure compliance with the trust deed”. This submission, on behalf of the offender, implies that the offender simply “left it to others” and was ignorant that important information had not been disclosed.

71. Given the offender’s senior and controlling position in the company, and his close interest in effectively getting the deal done, it is improbable in my view that he genuinely believed that full details and the true nature of the transaction would be or had been disclosed.

72. Also, the offender was highly experienced in the financial services industry and would have known that questions would probably have been asked by the trustee if all details had been made known. Furthermore, there is the fact that, when confronted by Mr Jenkins following the anonymous disclosure of documents to the trustee, the offender said, “It was something that needed to get done. It was just an interim measure. The loan will be paid back in a couple of weeks”, which strongly suggests that the offender well knew that everything was not “above board”.

73. On top of this is the telephone conversation around the same time in which the offender said to Mr Wallace, “What the fuck happened here. All the documents have gone to New Zealand...”. Having regard to these matters, and absent any evidence on oath from the offender, while I cannot be satisfied that the offender specifically directed others to withhold relevant information, I believe he was well aware that the New Zealand Public Trust would not be given “the full picture”.

74. Turning then to para (b) of s 16A(2). In sentencing the offender I will take into account the additional offence on the s 16BA schedule. This involved the offender misusing his position of authority in a different company and therefore amounted to separate criminality. However the actions making up this offence formed an important part of the steps taken in committing the principal offence and was to a large extent part of the same criminal conduct.

75. In these circumstances, the extent to which the penalty for the primary offence should be increased, because of the need for personal deterrence and the community’s entitlement to exact retribution, should be minimal.

76. Paragraph € of s 16A(2) refers to any injury, loss or damage caused by the offence. In this regard, while no actual loss was caused to investors, the transactions orchestrated by the offender nonetheless exposed managed funds to risk.

77. Paragraph (f) requires that I have consideration to any contrition. While the offender did not give evidence on sentence, there is some material suggesting that he is remorseful and has shown some contrition. This is in the form of his comments to the psychologist and to various of his character referees. There is also the offender’s letter in which he expresses remorse, although the letter also contains a degree of self-justification, which reduces the weight I attach to his claims of being contrite. Overall, I accept however that there is a moderate degree of remorse.

78. Paragraph (g) refers to the question of a plea of guilty and the timing and degree to which that has resulted in a benefit to the community. In this regard, as I have already noted, the offender pleaded guilty at the earliest opportunity. This is significant as it saved the community the inconvenience and expense of running what would have been a fairly long and complicated trial. I intend to allow a discount of 25% on account of the utilitarian value of the plea. It seems to me also that the plea is a matter which to some extent supports my finding of a moderate degree of remorse.   

79. Paragraph (j) refers to the need for personal deterrence. Personal deterrence is obviously an important matter in cases of this kind, although given the positive conclusions to which I will refer in a moment about the offenders rehabilitation, it seems to me that the importance of personal deterrence is somewhat diminished in this case.

80. Paragraph (ja) refers to the importance of deterring others. In this regard it has been said many times by the Courts that general deterrence is a fundamentally important matter in cases of so‑called “white collar crime”. As the Crown said in written submissions, general deterrence assumes importance, particularly because of the difficulty in detecting, investigating and prosecuting offences of the type and complexity involved in the present case.

81. Paragraph (k) refers to the need for adequate punishment, which is of course fundamental in any sentencing exercise.

82. Paragraph (m) requires me to have regard to the offender’s character, antecedents, age and other subjective matters and in this regard I make the following observations:

83. The offender is 55 years of age. His criminal history involves a cannabis offence in 1985, some drink driving offences in 1986 and 1992 as well as two assault offences and a contravene Apprehended Domestic Violence Order offence in 2008. While this history disentitles him to some extent to leniency that otherwise might be allowed, I note that he has no prior offences for dishonesty.

84. He is supported by a large number of testimonials which all speak about the offender in very positive terms. The fact that he has this support, and the support of his wife, is a very positive factor for his future and his risk of reoffending.

85. Perhaps more important, however, is the fact that the offender and his wife have three young children to look after and it is the offender who now is the primary carer for those children. The offender is very closely involved with his children and attends to most of the daily requirements such as school drop offs and most of the domestic tasks around the house. The offender’s wife currently works 80 hours per fortnight, which is mostly from home but is required to travel to Sydney two days per week.

86. The couple’s eldest son has autism and possible intellectual delay, which affects him in a number of ways. He has sensory issues and is prone to becoming overstimulated by sound. He has severe receptive and expressive language delay, and receives weekly treatment for his problems. However his condition has improved markedly since the family moved away from Sydney, partly due to the smaller student and class numbers at the school where he now attends.

87. The couple’s youngest daughter has systemic rheumatoid arthritis, which was diagnosed at 18 months. She is now three years old and this condition causes her significant pain and nausea.

88. In addition, the offender’s father, who is 87 years of age, has dementia, and will move in with the offender and his family in coming months for at least some period of time due to his own partner having to undergo surgery.

89. A psychological report before the Court indicates that the offender came from a relatively privileged background on the lower North Shore of Sydney with no background of abuse or deprivation. The offender is in good physical and mental health and has no signs of antisocial personality disorder or any other psychological conditions that might increase his risk of reoffending.   

90. The psychologist assesses him as being a low risk of offending in the future and does not suggest that he requires any specific intervention or treatment.

91. At the time of the offending the offender had over 20 years of experience in the financial services industry. This fact, as well as the fact that there is nothing in the offender’s background which can be said to have contributed to his offending, leads me to the view that his moral culpability for his criminal actions is fairly high.

92. The offender has lost his career in the financial services industry and will also, by reason of his conviction for the offence before the Court, be disqualified from managing a corporation for five years. These additional penalties are matters to which I have had regard in determining the appropriate sentence.

93. Paragraph (n) of s 16A(2) refers to the prospects of rehabilitation. In this regard, the offender’s generally pro-social background, his limited criminal history and his social supports and family commitments lead me to the view that he is a low risk of reoffending. His prospects of rehabilitation are in my view fairly good.

94. Paragraph (p) of s 16A(2) refers to the probable effect of the sentence on the offender’s family or dependents. Since the decision in Totaan v R [2022] NSWCCA 75, it is clear that in Commonwealth matters it is not necessary for exceptional circumstances to exist before hardship or other effects on a person’s family or dependents is taken into account on sentence.

95. Having regard to the matters I have set out earlier relating to the offender’s integral role in the running of his family, and the considerable demands relating to his children, I am satisfied that the likely effects on his family of a period of imprisonment is a highly relevant factor in this case. It is therefore a matter to which I have given considerable weight.   

96. Another relevant factor which I have taken into account is the considerable delay between the offending, the detection of the offending, and the time before the offender was brought before a Court. I accept that during that period the offender has been left in a state of uncertainty which would no doubt have been stressful. During that time, he has committed no other offence and has taken substantial steps in his rehabilitation by engaging positively with his family and his local community.

97. I have had regard to a range of other sentences imposed for broadly similar types of offending which were drawn to my attention by the Crown and the offender, however I have also had regard to the different factual and subjective circumstances that each of those cases involved.

98. Mr Thomas, if you could just stand up and I will inform you of the sentence.

99. I convict the offender of the principal offence. I am satisfied that the only appropriate penalty is one involving a sentence of imprisonment. Having taken into account the 25% discount and after having regard to the offence on the s 16BA schedule, I impose a term of imprisonment of one year, three months.

100. I intend to give consideration to whether that sentence ought be served by fulltime imprisonment or by the imposition of an Intensive Correction Order. For that purpose I intend to direct the preparation of a Sentencing Assessment Report.

101. You can have a seat, Mr Thomas. That report will usually take a number of weeks. I will be sitting in Katoomba for a large part of the remainder of the year however I will be in Sydney for a two week period around November. Is 14 November suitable?

102. GAUJA: Yes, that’s suitable.

103. HUXLEY: Yes, that’s suitable, your Honour.

55. HIS HONOUR: I will mark that at 9.30. So that will be here at the Downing Centre.    I direct that a Sentencing Assessment Report be prepared and provided to the Court before that date.

56. GAUJA: Your Honour, I understand the nearest Correctional Centre is at Lithgow.

57. HIS HONOUR: All right. I think usually the Community Corrections people would approach the offender but what I will do is direct that if the offender has not heard from anybody at Community Corrections within the next three days he should telephone the Community Corrections office at Lithgow.

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Decision last updated: 16 January 2023