Zaia v The Queen
[2020] VSCA 9
•7 February 2020
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCR 2018 0189
| ROBERT ZAIA | Applicant |
| v | |
| THE QUEEN | Respondent |
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| JUDGES: | KYROU, KAYE and McLEISH JJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 29 January 2020 |
| DATE OF JUDGMENT: | 7 February 2020 |
| MEDIUM NEUTRAL CITATION: | [2020] VSCA 9 |
| JUDGMENT APPEALED FROM: | DPP v Zaia (Unreported, County Court of Victoria, Judge Lacava, 16 August 2018) |
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CRIMINAL LAW – Appeal – Sentence – Two charges of conspiracy to defraud – Offending involved fraudulent applications for financial facilities worth $59,072,843 – Total effective sentence of 10 years’ imprisonment with non-parole period of 7 years, 6 months – Whether sentence infringed parity principle – Whether sentence manifestly excessive – Leave to appeal refused.
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| APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr J Connolly | Victoria Legal Aid |
| For the Respondent | Mr C B Boyce QC | Ms A Hogan, Acting Solicitor for Public Prosecutions |
KYROU JA
KAYE JA
McLEISH JA:
Introduction and summary
The applicant and his co-offenders, William Jordanou and Scott Arthur, conspired to fraudulently obtain loans from various financial institutions. In the period from 6 July 2007 until 17 November 2011 (‘charge 1 period’), the applicant fraudulently obtained amounts totalling $48,560,900 from Commonwealth Bank of Australia (‘CBA’). In the period from 17 September 2009 until 12 September 2013 (‘charge 2 period’), he made fraudulent applications to other financial institutions for financial facilities totalling $10,511,943.
The offenders used the accounting practice Zaia Arthur & Associates Pty Ltd (‘ZAA’) — of which they were all partners at the relevant time — as the vehicle to carry out the offending. The conspiracy involved the applicant and Jordanou applying for financial facilities on behalf of clients of ZAA and submitting false documents and information through ZAA in support of the applications. The false documents were prepared by Arthur at the direction of the applicant and Jordanou.
On 14 May 2018, the applicant pleaded guilty to the charges set out in the following table and on 16 August 2018, he was sentenced as set out in that table.[1]
[1]DPP v Zaia (Unreported, County Court of Victoria, Judge Lacava, 16 August 2018) (‘Sentencing remarks’).
Charge Offence Maximum Sentence Cumulation 1 Conspiracy to defraud [common law] 15 years [Crimes Act 1958 s 321C] 8 years Base 2 Conspiracy to defraud 15 years 4 years 2 years Total effective sentence: 10 years’ imprisonment Non parole period: 7 years, 6 months Pre-Sentence detention declaration: 129 days 6AAA Statement: 14 years’ imprisonment, non-parole period of 10 years, 6 months
On 15 March 2017, Arthur pleaded guilty to the same charges and on 9 March 2018 he was sentenced by this Court — following his successful appeal — as set out in the following table.[2]
[2]Arthur v The Queen [2018] VSCA 58 (‘Arthur’).
Charge Offence Maximum Sentence Cumulation 1 Conspiracy to defraud 15 years 5 years,
6 monthsBase 2 Conspiracy to defraud 15 years 2 years 6 months Total effective sentence: 6 years’ imprisonment Non parole period: 4 years 6AAA Statement: 10 years’ imprisonment, non-parole period of 7 years
On 28 February 2018, Jordanou pleaded guilty to the same charges and on 16 August 2018, he was sentenced — by the judge who sentenced the applicant — as set out in the following table.[3]
[3]DPP v Jordanou [2018] VCC 1282 (‘Jordanou’).
Charge Offence Maximum Sentence Cumulation 1 Conspiracy to defraud 15 years 10 years Base 2 Conspiracy to defraud 15 years 5 years 2 years Total effective sentence: 12 years’ imprisonment Non parole period: 9 years 6AAA Statement: 15 years’ imprisonment, non-parole period of 12 years
The applicant has sought leave to appeal against sentence on the grounds that the sentence infringes the parity principle and that the total effective sentence and non-parole period are manifestly excessive.
For the reasons that follow, the application for leave to appeal against sentence will be refused.
Circumstances of the offending
The applicant and Arthur were qualified accountants. They first met in about 1997 when the applicant was a partner at an accounting firm in Dandenong and Arthur was a bookkeeper at that firm. In 2002, they formed ZAA. The applicant’s former wife, Rita Zaia, and Arthur were appointed as directors of the company. In 2003, Jordanou joined ZAA as a quasi-financial advisor and finance broker. Jordanou did not have any professional qualifications.
The applicant and Jordanou expanded the business into property development by sourcing and managing finance on behalf of clients and also became involved in developments themselves. They offered to facilitate finance for clients and managed funds during the development. For example, they facilitated draw downs, paid invoices and provided accounting services.
During the charge 1 period, the applicant, Jordanou and Arthur conspired to defraud CBA in the provision of loan facilities by submitting false information and documentation in support of 17 loan applications on behalf of clients of ZAA. All the applications were granted by CBA.
Of the 17 loan facilities, 15 related to property developments and two related to equipment finance. The total value of the loan applications was $48,560,900, with individual facilities ranging from $411,400 to $6,741,000. The actual loss to CBA was approximately $19,694,835.
As part of each loan application for a client, the applicant and Jordanou provided false information, including in relation to the client’s income and assets, in order to persuade CBA that the client was in a much better financial position than the client actually was and that the client would be able to service the loan.
On instructions from the applicant and Jordanou, Arthur prepared false documents including tax returns, tax assessment notices and payslips which were used to support the loan applications. The clients were not aware of the false documents being used on their behalf.
The applicant and Jordanou dealt directly with the clients on whose behalf the loan applications were submitted and managed the loan accounts once they were established. The applicant and Jordanou forwarded false builders’ invoices to CBA to support draw downs on construction loans. Once the funds were available the applicant and Jordanou controlled the use of the money. They sent letters to CBA, purportedly from the clients, requesting that parts of the loan funds be transferred to various people and entities. These transfers were not authorised by the clients and were made without their knowledge. Some of the funds obtained were traced to an account of the Zaia Family Trust.
The charges laid against each offender were particularised differently. In relation to Jordanou’s first charge of conspiracy to defraud, the period of offending was from 28 September 2004 until 5 April 2011 during which a total of 23 loan applications were made, 22 of which were successful. The total value of the loan applications was $58,516,900. The actual loss to CBA was approximately $21,800,000.
As to Arthur’s first charge of conspiracy to defraud, the period of offending was from July 2007 until 14 December 2012 during which a total of 14 loan applications were made, all of which were successful. The total value of the loan applications was $44,709,500. The actual loss to CBA was approximately $15,000,000. Arthur did not personally benefit from his offending.[4]
[4]Arthur [2018] VSCA 58, [11], [34].
During the charge 2 period, the applicant, Jordanou and Arthur conspired to defraud various financial institutions in the provision of loan facilities and motor vehicle finance by submitting false information and documentation in support of the applications for finance. The financial institutions defrauded were Mercedes Benz Financial Services Australia Pty Ltd, Bank of Queensland, Macquarie Leasing Pty Ltd, Homeloans Ltd, Alphera Financial Services, Rhino Money and St Georges Finance Ltd.
During this period, the applicant applied for 15 loans on behalf of clients of ZAA, of which 13 were approved and two were refused. The total value of the loan applications was $10,511,943, with individual facilities ranging from $24,615 to $5,000,000. The loan application for $5,000,000, which accounted for almost half of the total value of the loan applications, was one of the two applications that were refused. The actual loss to the financial institutions is unknown.
The offending in relation to charge 2 occurred in a similar manner to that the subject of charge 1, in that the applicant and Jordanou dealt directly with the clients or business partners, managed the loan accounts and instructed Arthur to prepare the false documents, which he duly did.
On 28 March 2012, police executed a search warrant at the premises of ZAA. At this stage police had begun investigating the conduct the subject of charge 1. After the search warrant was executed, the applicant completed and lodged a further 10 false loan applications with various financial institutions.
In relation to Jordanou’s second charge of conspiracy to defraud, the period of offending was from 30 March 2010 until 15 June 2014 during which a total of 12 loan applications were made, nine of which were successful. The total value of the loan applications was $18,703,403. The actual loss to the financial institutions is unknown.
As to Arthur’s second charge of conspiracy to defraud, the period of offending was from 17 September 2009 until 12 September 2013 during which a total of 12 loan applications were made, all of which were successful. The total value of the loan applications was $2,008,734. The actual loss to the financial institutions is unknown.
The prosecution was unable to calculate the amount of financial gain that the applicant received from the offending.
For convenience, the duration and value of the applicant’s offending in comparison to that of his co-accused may be summarised as follows:
Applicant Jordanou Arthur Charge 1 Period of offending July 2007–Nov 2011
(approx 4.5 years)Sep 2004–April 2011 (approx 6.5 years) July 2007–Dec 2012 (approx 5.5 years) Number of applications 17 loan applications
(all successful)23 loan applications
(22 successful)14 loan applications
(all successful)Value $48,560,900
Actual loss: $19,694,835$58,516,900
Actual loss:
$21,800,000$44,709,500
Actual loss:
$15,000,000Charge 2 Period of offending Sep 2009–Sep 2013
(approx 4 years)March 2010–Jun 2014
(approx 4 years)Sep 2009–Sep 2013
(approx 4 years)Number of applications 15 loan applications (13 successful) 12 loan applications
(9 successful)12 loan applications
(all successful)Value $10,511,943
Actual loss unknown$18,703,403
Actual loss unknown$2,008,734
Actual loss unknownProcedural history and guilty plea
In May 2014, the applicant, Jordanou and Arthur were charged and granted bail. The applicant gave a ‘no comment’ record of interview.
After the applicant was charged, a number of committal mentions were adjourned. The applicant was committed for trial at an uncontested committal on 7 December 2015. Various mentions in the County Court were then adjourned. During part of this period, the applicant was not legally represented and some of the adjournments were due to legal representation funding issues. Funding was secured and the applicant was legally represented from November 2016.
On 22 May 2015, Arthur’s legal representatives informed the Magistrates’ Court that Arthur would plead guilty to an appropriately worded indictment. On 15 March 2017, Arthur pleaded guilty to two charges of conspiracy to defraud. Arthur assisted police by providing a signed statement dated 20 April 2015 implicating the applicant and Jordanou, and undertook to give evidence against them at trial.
Initially, the applicant and Jordanou were to be tried together. On 14 March 2017, the prosecution filed an indictment containing 45 charges of obtaining financial advantage by deception from CBA and one charge of obtaining property by deception from CBA. That indictment was to be the first trial indictment and there was an understanding that another four indictments would be filed should further trials be necessary. The filed indictment and the four proposed indictments encompassed a total of around 150 charges.
The trial of the applicant and Jordanou was set down for 11 April 2017, but between then and 19 June 2017 the trial was adjourned on approximately 13 occasions for various reasons, mostly related to Jordanou. During this period, the applicant provided an unsigned ‘can say’ statement to police. In the statement, the applicant denied all responsibility for the offending and blamed Jordanou.
The prosecution made the statement available to Jordanou’s legal representatives. The judge ruled that this compromised the applicant’s right to silence in a way that would render the joint trial unfair and that the applicant and Jordanou would be tried separately.
A number of directions hearings took place between June 2017 and 24 November 2017 to prepare for the trial to proceed.
Jordanou’s trial was listed for 26 February 2018 but did not proceed due to a settlement being negotiated. On 28 February 2018, Jordanou pleaded guilty to a new indictment containing two conspiracy to defraud charges. The applicant continued to plead not guilty.
On 23 March 2018, the County Court heard evidence from two witnesses, Arthur and Matthew Walker, a former employee of ZAA, on a Basha hearing. Arthur gave evidence in accordance with his undertaking.
On 14 May 2018 — the day that the applicant’s first trial was listed to commence — the prosecution filed a new indictment containing two conspiracy to defraud charges and the applicant pleaded guilty to those charges. His plea was heard jointly with that of Jordanou.
The applicant’s personal circumstances
The applicant was aged between 42 and 49 at the time of the offending and was 53 when he was sentenced. He grew up in the south eastern suburbs of Melbourne. He has a younger sister and had a normal childhood.
The applicant completed Year 12 and went on to complete a Bachelor of Business, majoring in accounting, at Victoria University. He studied part time while working in an accounting firm. He later commenced full time employment with that firm and in 1989, he became a partner.
As set out at [8] above, in 2002, the applicant and Arthur formed ZAA.
In 2003, the applicant was bankrupted after guaranteeing a debt relating to a bottled water business.
The applicant married his former wife, Rita, in 1989. They have two sons aged 23 and 17. The applicant had remained close with his sons and was involved in their lives.
The applicant’s former wife suffered from significant mental health issues and in 2010 they divorced. In around 2008, he commenced a relationship with Nicola Christie-Bologna. She has two sons from a previous relationship, aged 14 and 21. They treated the applicant as if he were their father.
The applicant has no relevant prior convictions.
ZAA was dissolved after the present charges were laid. While he was on bail, the applicant obtained employment in labouring positions, sold timber goods and established a business building sheds and other outdoor structures.
The applicant was assessed by a forensic psychologist, Dr Aaron Cunningham. In his report dated 18 June 2018, Dr Cunningham stated that the applicant presented with an adjustment disorder with depressed mood. He was of the opinion that the applicant ‘experiences depressive symptoms in the context of significant stressors’ and that his ‘depression will improve after the resolution of his court matters and sentence’. In Dr Cunningham’s opinion, the applicant suffered from significant stress in the context of his relationship with his former wife but he was not suffering from a significant mental illness during the period of his offending.
The applicant also suffers from restless legs syndrome, which is managed with medication and exercise.
Jordanou’s personal circumstances
Jordanou was aged between 46 and 56 at the time of his offending and was 60 when he was sentenced. He grew up in Mulgrave. He completed Year 12 but did not engage in tertiary studies. After completing Year 12, he worked as a carpet salesman and later worked in the financial services industry, including as a loan/branch manager for AVCO Finance. As set out at [8] above, in 2003 he joined ZAA as a quasi-financial advisor and financial broker. He later became a partner.
Jordanou is married and has a son aged 30 and a daughter aged 28. He had the support of his family, however his offending strained his relationship with his son.
Jordanou’s father passed away three years before Jordanou was sentenced. He and his wife had primary care of his 84 year old mother who suffers from liver cancer and at the time of the plea was in palliative care.
After Jordanou was arrested and charged, the Jordanou family home was sold as mortgage repayments were no longer being made due to a lack of income.
In sentencing Jordanou, the judge stated that he had no relevant prior convictions.[5]
[5]In 2003 Jordanou was fined $1,100 for failure to submit a report as to a company’s affairs and to submit books and records in relation to a corporation.
In his younger years, Jordanou played for and was captain of the South Melbourne soccer team. He was the recipient of awards at club and state level, including for best and fairest player. He later coached junior soccer at state level.
When Jordanou was 14, he was involved in an accident and was required to have his spleen removed. As a result, he was susceptible to infection and is required to take penicillin three times a day. Jordanou suffered from depression, headaches and knee pain.
Arthur’s personal circumstances
Arthur was aged between 37 and 43 at the time of his offending and was 47 when he was re-sentenced by this Court. When he was younger, his family moved regularly between Victoria and Western Australia which resulted in him changing schools on a regular basis. Arthur’s parents separated when he was a teenager and from the age of 17 he raised his younger brother.
After leaving secondary school, Arthur completed a business course and worked as a trainee accountant. At the conclusion of the training period, he commenced what was to be a long career in bookkeeping, accounting and taxation. He holds an Advanced Diploma in Accountancy from Swinburne University.
Arthur was in a relationship for 17 years and has a son of that relationship, aged 15. He lost contact with his son.
In a report dated 2 July 2015, forensic psychologist Ian Joblin stated:
[Arthur] has no medical history which will contribute to psychological issues. … it is strongly my opinion that there is a degree of inadequacy in [Arthur’s] self-perception. … it is my opinion [that] … Arthur is a highly submissive person which resulted in his being overborne.
Arthur has no prior convictions.
Sentencing remarks
The judge stated that the fraud against CBA ‘was a prolonged fraud of breathtaking proportions’.[6] He described it as ‘one of the largest frauds to come before a court in this State’.[7] He went on to say:
The level of the falsifications in some of the documentation supplied to the CBA was high and the action of giving it to the bank audacious. [The applicant’s] offending was planned, and sophisticated, and it seems, took advantage of the fact that the level of due diligence practised by the CBA was negligible, if not non-existent. [8]
[6]Sentencing remarks [18].
[7]Sentencing remarks [10].
[8]Sentencing remarks [18].
The judge stated that lodging the loan applications with the supporting false documents through ZAA ‘was deliberately done in order to give the applications legitimacy’ and ‘[t]hat raises a level of trust which was breached’.[9]
[9]Sentencing remarks [14].
As to the offending the subject of charge 2, the judge stated that it was also ‘very serious’ and that his comments in relation to charge 1 also applied in respect of charge 2.
The judge noted that counsel for the applicant had conceded that the offending the subject of both charges ‘involved a breach of trust that goes to the integrity of the banking system’.[10] He stated that that kind of offending ‘strikes at the heart of … commercial business borrowing from financial institutions’ and that it ‘almost always involves a breach of trust … by offenders who are qualified professionals who have never previously … breached the law’.[11]
[10]Sentencing remarks [55].
[11]Sentencing remarks [70].
The judge considered the respective roles of the applicant, Jordanou and Arthur in the offending in the context of submissions made by the applicant’s counsel on the plea with regard to the parity principle. The applicant’s counsel had submitted that Jordanou was the principal offender and that the applicant should be sentenced in parity with Arthur. The judge said the following:
[The applicant’s] role was to deal with the clients who would be the borrowers, and to give the full support of [his] firm to the scheme and to instruct Arthur what to falsify. [The applicant] also managed the money, much of which was traced as having been accounted for in an account of the Zaia Family Trust. Jordanou’s role was to get the clients who would be the borrowers. He was the spruiker. Arthur did the hands on work of falsifying the documents. The ideas for the various fraudulent transactions came from [the applicant], and Jordanou, and were put to the CBA and the other financial institutions through the accounting firm.
…
Whilst I accept in passing sentence I must have regard to the roles that each of the offenders played in these crimes, and I must have regard to parity principles, I do not accept [the applicant’s] role was at the level of Arthur who in my view was a subordinate to [the applicant] and Jordanou. [Counsel for the applicant] submitted [the applicant was] not an instigator of these crimes, but acted as an intermediary between Jordanou and Arthur. I do not accept that submission.
[The applicant was] a principal in this offending. [He was] the senior professional in the accounting firm and [he] introduced Jordanou into the firm. [The applicant] had the professional infrastructure and contacts at the CBA that Jordanou, and [the applicant], needed to enable the CBA conspiracy to occur. [The applicant] gave Arthur instructions as to what documents to falsify and what falsities to put into them.
Save for some obvious distinguishing factors as to the length of the conspiracies alleged against [the applicant] and the amounts of money involved, it is difficult to distinguish [his] level of moral culpability for this offending from that of Jordanou. [They] were both in it together, [they] both needed each other. Jordanou had no qualifications and he needed a respectable professional firm to be the front, and provide the infrastructure for dealing with the CBA and the other financial bodies.
By getting the accounting firm involved, [the applicant] provided the means for the frauds to succeed. [He was] equally involved with Jordanou in telling Arthur what documents to falsify and what false information was to be put into them. This was a true criminal conspiracy, a meeting of minds between [the applicant] and Jordanou. I reject the submission that [the applicant fell] to be sentenced in parity with Arthur.[12]
[12]Sentencing remarks [23], [25]–[28].
Later in his reasons, the judge made further observations about the respective roles of the applicant and Arthur in the offending. He stated that the applicant’s offending could be distinguished from that of Arthur as the charges to which Arthur pleaded guilty differ both in terms of time and the amount involved. He found that Arthur was ‘a subordinate’ to the applicant and Jordanou[13] and that Arthur’s moral culpability was at a ‘much lower level’ than theirs. That finding was made for the following reasons: Arthur had pleaded guilty and indicated that he would do so at an early time; he had the full benefit of delay; and he gave an undertaking to give evidence against the applicant and Jordanou.[14]
[13]Sentencing remarks [25], [72].
[14]Sentencing remarks [73].
As appears from the sentencing remarks set out at [61] above, the judge found the applicant and Jordanou were the principal offenders, that there was a meeting of minds between them in relation to the conspiracy and that it was difficult to distinguish their moral culpability. He found that the applicant’s ‘level of moral culpability and responsibility for [the offending was] high’.[15] He made the same finding in relation to Jordanou.[16] Nevertheless, the judge accepted that the applicant should receive a lesser overall sentence than Jordanou because: the applicant had experienced some delay; Jordanou’s offending extended over a longer period of time; and Jordanou’s offending involved approximately $18,000,000 more than that of the applicant.[17]
[15]Sentencing remarks [19].
[16]Jordanou [2018] VCC 1282, [16].
[17]Sentencing remarks [29]–[30].
The judge observed that following the execution of a search warrant at the premises of ZAA by police in March 2012, the applicant had lodged a further 10 false loan applications which are the subject of charge 2. He was of the view that from at least that point the applicant was on notice that he was the subject of an investigation. He found that this conduct was an aggravating factor to be taken into account in relation to charge 2.[18]
[18]Sentencing remarks [31].
The judge gave the applicant credit for his guilty plea. He said that it had saved the time and cost of what might have been five lengthy and complex trials. He considered that, by his plea, the applicant accepted responsibility for his offending and facilitated the course of justice. He also treated the guilty plea as evidence of the applicant’s remorse for his offending.[19]
[19]Sentencing remarks [47].
The judge considered that the applicant had pleaded guilty late in the trial process and that, as such, he could not expect to receive a reduction in sentence that he would have received if he had pleaded guilty at an earlier stage.[20]
[20]Sentencing remarks [50], [53].
The judge also took into account the following matters in relation to the plea: unlike Arthur, at no time did the applicant say that he would plead guilty to an appropriately worded indictment; the applicant pleaded guilty two and a half months after Jordanou did; and until he pleaded guilty, the applicant gave no indication to the court that he would do so.[21]
[21]Sentencing remarks [51].
The judge accepted that there was some delay in the finalisation of the charges for which the applicant was not responsible and took into account that delay.[22] He said that it was to the applicant’s credit that he had endeavoured to get on with his life in a worthwhile way since he was charged.
[22]Sentencing remarks [57].
The judge had regard to the applicant’s background and personal circumstances, including his health issues. He noted that the applicant had no prior convictions and, the present offending aside, he had led an ‘unblemished life’.[23] He also took into account the numerous character references received into evidence. He stated that the character references spoke well of the applicant as a person of honesty and integrity and that his remorse for his offending came through in the character references.[24]
[23]Sentencing remarks [58], [64].
[24]Sentencing remarks [58].
The judge was satisfied that the applicant was doing his best to rehabilitate himself and was convinced that he was unlikely to reoffend. He concluded that the applicant’s prospects for rehabilitation were good.[25]
[25]Sentencing remarks [59], [64].
The judge noted that it was conceded by counsel for the applicant on the plea that just punishment and general deterrence were the principal sentencing considerations in this case.[26] He considered that there was a need to adequately reflect denunciation for the offending.[27] He also had regard to the principle of totality.[28]
[26]Sentencing remarks [55].
[27]Sentencing remarks [70].
[28]Sentencing remarks [74].
The judge ultimately held that offending which involved white collar crime of the scale in the present case called for a stern sentence and that a lengthy term of imprisonment must be imposed.
Grounds of appeal
The applicant’s grounds of appeal were in the following terms:
Ground 1: The sentence infringes the parity principle.
Particulars:
(a)In all the circumstances the sentence is insufficiently disparate from the sentence imposed on the co-accused William Jordanou, giving rise to a justifiable sense of grievance.
(b)In all the circumstances the sentence is excessively disparate from the sentence imposed on the co-accused Scott Arthur, giving rise to a justifiable sense of grievance.
Ground 2: The total sentence and non-parole period are manifestly excessive.
Ground 1: Parity
Parties’ submissions on ground 1
The applicant submitted that his total effective sentence and non-parole period failed to account for the objective differences between his offending and that of Jordanou. He relied on the following matters: Jordanou’s criminal activity had extended over a longer period; Jordanou’s offending involved a greater number of transactions; and the total value of Jordanou’s offending was in excess of $76,000,000, whereas the applicant’s was approximately $59,000,000.
In oral submissions, the applicant contended that the judge’s conclusion that his role in the offending the subject of charge 1 could not be distinguished from that of Jordanou was wrong. This was said to be because Jordanou’s offending commenced in September 2004 and he had obtained approval from CBA for five loan applications totalling $9,356,000 in value prior to the applicant becoming involved in the offending in July 2007.
According to the applicant, the judge should have found that Jordanou had instigated the fraudulent scheme and had established the modus operandi for it prior to the applicant becoming a party to it. The applicant conceded that once he became a party to the fraudulent scheme, his role was relevantly indistinguishable from that of Jordanou. The applicant argued that, as Jordanou was the instigator of the offending, the disparity between his sentence and that of Jordanou for charge 1 should have exceeded two years.
The applicant argued that his plea of guilty had been entered at the same stage of his trial as Jordanou’s plea. He contended that he had ‘offered a more limited degree of contest in the conduct of the trial proceedings’ than Jordanou and therefore his plea was entitled to greater weight.
According to the applicant, Jordanou was the instigator of the criminal enterprise, the driving force behind its activities and was principally responsible for the cultivation and exploitation of the relationships of trust with clients and employees of the financial institutions.
The applicant argued that Jordanou had prior convictions that were of some relevance, that the delay had impacted him more adversely and punitively than Jordanou and that the applicant had superior prospects of rehabilitation.
The applicant submitted that the disparity of four years between his total effective sentence and that imposed on Arthur is unjustifiable. He argued that the non-parole period of 7 years and 6 months, which is nearly double that to be served by Arthur, is too wide a discrepancy.
The Crown submitted that the sentence imposed on the applicant appropriately reflects the similarities between his offending and Jordanou’s offending. It argued that there was no material difference between the role and culpability of the applicant and Jordanou as they were both directly, actively and indispensably involved in the conspiracy. According to the Crown, the applicant and Jordanou were both afforded appropriate mitigation in sentence for matters relevant to each of them, including delay in relation to the applicant.
The Crown also submitted that the sentence imposed on the applicant appropriately reflected the differences between his offending and Arthur’s offending. It argued that Arthur’s offending was distinguishable on the basis that: he was subordinate to the applicant and Jordanou and acted on their instructions; his role was confined to the preparation of documents; and he did not benefit financially from the offending. According to the Crown, the judge appropriately afforded weight to the different mitigating factors relevant to each of the applicant and Arthur.
Decision on ground 1
The principles governing the issue of parity are well established. They were summarised recently by this Court in Wood v The Queen as follows:
As a general proposition, when sentencing co-offenders, a judge should strive to avoid unjustifiable disparity. Self-evidently, any significant disparity should be capable of a rational explanation. For a disparity to be unjustifiable, it must be such as not to be explicable by differences between co-offenders, or the nature of their offending.
This Court may intervene on the ground of undue disparity, in circumstances where the challenged sentence, standing alone, may ordinarily be regarded as within range. The test is whether the disproportion between the sentences is manifestly excessive, and gives rise to a legitimate or justifiable sense of grievance. The disparity must be marked, or clearly unjustifiable.[29]
[29][2019] VSCA 39, [77]–[78] (citations omitted).
In order for the parity ground to succeed, ‘it must be shown that the conclusion as to sentence differentials was not reasonably open’.[30]
[30]Hilder v The Queen [2011] VSCA 192, [38]. See also Collins v The Queen [2015] VSCA 106, [23].
In our opinion, ground 1 is not made out.
The judge correctly identified the similarities and differences between the respective roles and levels of culpability of the applicant, Jordanou and Arthur and their personal circumstances. Those similarities and differences were appropriately reflected in the sentence he imposed on the applicant.
We agree with the judge’s conclusion that the applicant and Jordanou were equal principals in the offending. They were the directing minds of the overt acts that constituted the conspiracies to defraud and actively directed the commission of those acts. They instructed Arthur to prepare fraudulent documents and managed the funds that were received from the financial institutions that were the victims of their fraud.
Both the applicant and Jordanou dealt directly with clients and financial institutions. The applicant provided the professional infrastructure that gave the financial institutions confidence in the legitimacy of the false documentation and thus facilitated the offending. In any event, the activities of the applicant and Jordanou were coordinated and equally important in the success of the fraudulent scheme. The judge correctly found that it was difficult to distinguish their moral culpability.
The main differences between the offending of the applicant and that of Jordanou which warranted the applicant being sentenced more leniently than Jordanou were: the longer period of Jordanou’s offending, which commenced in September 2004, more than two years before the commencement of the applicant’s offending in July 2007; the larger number of loan applications in which Jordanou was involved; the larger amounts that Jordanou fraudulently obtained from the financial institutions; and the delay that was occasioned without any fault on the part of the applicant. On the other hand, unlike the applicant, Jordanou was required to serve some time in protective custody due to death threats associated with his offending.[31]
[31]Jordanou [2018] VCC 1282, [52].
In our opinion, the disparity of 2 years’ imprisonment in the sentences imposed on Jordanou and the applicant in respect of charge 1 constituted an appropriate allowance for the above differences. Although the commencement of Jordanou’s offending preceded that of the applicant, the applicant sensibly conceded that once he joined the fraudulent scheme his role was relevantly indistinguishable from that of Jordanou. In those circumstances, characterisation of Jordanou as the ‘instigator’ of the fraudulent scheme, even if accepted, does not materially advance the applicant’s case on the issue of parity.
We reject the applicant’s submissions that his guilty plea was entitled to greater weight than that of Jordanou and that Jordanou’s prior convictions were of any relevance.[32]
[32]See n 5 above.
It follows from the above discussion that we are not satisfied that the differential in the sentences of the applicant and Jordanou infringed the parity principle.
Likewise, the differential in the sentences of the applicant and Arthur did not infringe the parity principle.
We agree with the judge’s conclusion that Arthur’s role in the offending was subordinate to that of the applicant and Jordanou and his moral culpability was lower. Arthur did not instigate the offending and did not have an active role in dealing with either clients or financial institutions. His main role was to follow the directions of the applicant and Jordanou regarding the creation of the fraudulent documents to be used in the offending. Also, the total amounts that were fraudulently obtained from financial institutions as a result of Arthur’s offending were significantly less than those resulting from the offending of the applicant and Jordanou.
Unlike the applicant and Jordanou — who pleaded guilty when their trials were due to commence — Arthur indicated a willingness to plead guilty to an appropriately pleaded indictment at an early stage. Further, delay was a more significant sentencing consideration for Arthur compared to the applicant and Jordanou.
Most significantly, Arthur had the benefit of a substantial moderation in his sentence as a result of his cooperation with the authorities and his undertaking to give evidence against the applicant and Jordanou, which he honoured. The authorities recognise that, in appropriate cases, cooperation with the authorities may warrant very substantial moderation in sentence.[33] The Court of Appeal stated that it had significantly moderated Arthur’s sentence as a result of the assistance he provided to the authorities.[34]
[33]See Haamid v The Queen [2018] VSCA 330, [24].
[34]Arthur [2018] VSCA 58, [28].
In our opinion, the differences between the applicant and Arthur in terms of their roles in the offending, moral culpability and mitigating circumstances — particularly Arthur’s early plea of guilty and assistance to the authorities — more than justified the differential in their sentences.
Ground 2: Manifest excess
Parties’ submissions on ground 2
The applicant submitted that the judge failed to give sufficient weight to a number of factors on which he relied, resulting in the sentence being wholly outside the range available in a reasonable exercise of the sentencing discretion. He argued that the judge gave excessive weight to the applicant’s role and culpability, which obscured the factors that differentiated his role from that of Jordanou.
The factors on which the applicant relied may be summarised as follows:
(a)In the light of the complex nature of the trial proceeding, his guilty plea had substantial utilitarian value and had been entered at the first reasonable opportunity.
(b)He was of previous good character, had character references, had obtained alternative employment and developed a shed building business, which demonstrated his strong prospects of rehabilitation.
(c)He had been under significant emotional and financial stress at the time that he entered into the criminal enterprise. He also suffered from restless legs syndrome and he was assessed by Dr Cunningham as suffering from an adjustment disorder with depressed mood.
(d)He had suffered stress and uncertainty due to the delay of approximately four years between the time the charges were laid and his sentence. The delay had arisen in the context of a complex trial proceeding, in which he was unrepresented for a long time. A significant cause of the delay was the wrongful disclosure of his ‘can say’ statement to Jordanou’s legal representatives, resulting in separate trials being ordered. Also, he had been a less active litigant than Jordanou in the trial proceeding in terms of making applications, issuing subpoenas and participation in Basha inquiries.
(e)The principle of totality required that a crushing sentence be avoided.
The applicant relied on four recent decisions in support of his argument that the sentence imposed by the judge was manifestly excessive. He submitted that his sentence was greater than those imposed in relation to a charge of conspiracy to defraud in Wells v The Queen[35] and Ooi v The Queen,[36] which involved a gross breach of trust by government officials. The applicant argued that in Director of Public Prosecutions v Shah[37] the principal of a conspiracy was sentenced to 5 years’ imprisonment for offending that involved hundreds of fraudulent loans with a total value of approximately $170,000,000. The applicant also relied on Iliopoulos v The Queen,[38] which concerned fraudulent applications for high value loan facilities over a number of years. He submitted that the fact that his total effective sentence is nearly as high as the total effective sentence of 11 years’ imprisonment that was imposed in Iliopoulos reinforces his contention that his sentence is manifestly excessive.
[35][2018] VSCA 79 (‘Wells’).
[36][2018] VSCA 78 (‘Ooi’).
[37][2017] VCC 1448 (‘Shah’).
[38][2017] VSCA 384 (‘Iliopoulos’).
The Crown submitted that when appropriate regard is had to the objective seriousness of the applicant’s offending and the sentencing principles of general deterrence, specific deterrence and just punishment, the sentence imposed on the applicant cannot be said to be wholly outside the range of sentences that were open to the judge.
The Crown contended that the offending was plainly very grave due to a number of features including the extremely large sums of money involved, its protracted duration, the planning and sophistication of the criminal enterprise and the significant breach of trust as against the financial institutions as well as the clients of ZAA.
The Crown argued that the judge afforded the applicant mitigation in sentence for all relevant matters, including his guilty plea and its significant utilitarian benefit, remorse, delay, good prospects of rehabilitation, prior good character and his physical and mental health issues.
The Crown submitted that when regard is had to the maximum penalty of 15 years’ imprisonment and current sentencing practices, including the cases to which the applicant referred, the total effective sentence cannot be considered to be manifestly excessive.
According to the Crown, the non-parole period, which was 75 per cent of the total effective sentence, was within the common proportional range and was reasonably open to the judge given that the offending fell at the higher end and called for significant weight to be given to general deterrence.
Decision on ground 2
In our opinion, no aspect of the sentence imposed on the applicant is manifestly excessive.
The scale of the fraud perpetrated by the applicant was breathtaking. It was planned, sophisticated, methodical and prolonged. It extended over a period of six years and involved fraudulent loan applications for amounts totalling $59,072,843 making it one of the largest frauds committed against financial institutions in this State. It also involved an egregious breach of trust in that a professional accountancy practice, ZAA, was used to facilitate the commission of the fraud. On any view, the offending was very grave.
The courts have consistently stated that this type of offending warrants stern punishment because it is difficult to detect and strikes at the heart of the financial system. General deterrence is of paramount importance in order to convey a clear message that those who seek to financially benefit from fraudulent activities will be incarcerated for lengthy periods when they come before the courts. Denunciation and protection of the community from fraudulent activity are also important sentencing considerations.
For the reasons set out under ground 1, the applicant’s moral culpability was very high.
The applicant was able to call in aid a number of mitigating circumstances — particularly his plea of guilty, remorse, good prospects of rehabilitation and delay — which warranted moderation in his sentence.
When the gravity of the applicant’s offending, his high moral culpability and the mitigating circumstances on which he relied are considered in the context of the maximum penalty of 15 years’ imprisonment for the offence of conspiracy to defraud, the sentence of 8 years’ imprisonment for charge 1 cannot be regarded as wholly outside the sentencing options reasonably available to the judge.
That conclusion applies with even more force in relation to the sentence of 4 years’ imprisonment for charge 2. Cumulation of 50 per cent of the sentence for charge 2 was appropriate having regard to the fact that it constituted separate offending and involved different financial institutions. Further, a significant aggravating feature in relation to charge 2 was that the offending continued after police had executed a search warrant on the premises of ZAA.
The non-parole period, being 75 per cent of the total effective sentence, is unremarkable.
We do not consider that the cases on which the applicant relied support his contention that the total effective sentence imposed on him and the non-parole period are manifestly excessive.
It is well established that so-called comparable cases are not precedents and do not establish upper or lower limits for the exercise of the sentencing discretion in a particular case. Their function is to provide a broad indication of current sentencing practices, which is but one of the many sentencing considerations that inform the proper exercise of that discretion.
Shah does not assist the applicant as the sentencing judge’s sentencing remarks suggest that there were particular mitigating factors that explain the sentence of 5 years’ imprisonment that was imposed in that case for a single charge of conspiracy to defraud.[39]
[39]Shah [2017] VCC 1448, [67], [89].
Likewise, Wells and Ooi, which involved a charge of conspiracy to defraud against each of two senior Victorian public servants who corruptly manipulated the awarding of contracts for public works exceeding $15,000,000, do not assist the applicant. That is because, in both cases, this Court found that the sentence of 7 years and 6 months’ imprisonment that was imposed on each offender was not manifestly excessive in part because the offenders were entitled to significant moderation in their sentences due to the assistance they provided to the authorities.[40]
[40]Wells [2018] VSCA 79, [58], [61]; Ooi [2018] VSCA 78, [68], [71].
Iliopoulos also does not support the applicant’s contention that the sentence imposed on him is manifestly excessive. In that case, Iliopoulos was sentenced as a continuing criminal enterprise offender to a total effective sentence of 11 years’ imprisonment on 11 charges of obtaining financial advantage by deception and one charge of attempting to obtain financial advantage by deception. The base sentence was 7 years’ imprisonment. The 11 charges involved a scheme that secured funding for Iliopoulos’s businesses on the basis of fraudulent financial documents that were prepared by a female co-offender. The sentencing judge found that the female co-offender, rather than Iliopoulos, was the instigator, mastermind and architect of the fraudulent scheme.[41] The sentence imposed on Iliopoulos was also informed by parity considerations.[42]
[41]Iliopoulos [2017] VSCA 384, [35].
[42]See DPP v Iliopoulos [2016] VSC 447, [85].
In our opinion, to the extent that the above cases inform current sentencing practices, the sentence imposed on the applicant is not inconsistent with such practices.
Conclusion
For the above reasons, the application for leave to appeal will be refused.
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