Mamfredos v The Queen

[2010] NZCA 524

IN THE COURT OF APPEAL OF NEW ZEALAND

CA64/2010
[2010] NZCA 524

BETWEENGEORGE SOCRATES MAMFREDOS

Appellant

ANDTHE QUEEN

Respondent

Hearing:3 November 2010

Court:Randerson, Potter and Cooper JJ

Counsel:P E Dacre for Appellant

P J Morgan QC for Respondent

Judgment:18 November 2010 at 9 a.m.

JUDGMENT OF THE COURT

The appeal against conviction and sentence is dismissed.

REASONS OF THE COURT

(Given by Randerson J)

Introduction

[1]        The appellant Mr Mamfredos was convicted after trial in the District Court before Judge McAuslan and a jury on seven counts:[1]

(a)        One count of false pretences.

(b)        Two counts of using a document with intent to defraud.

(c)         One count of obtaining by deception.

(d)        Two counts of using forged documents.

(e)        One count of attempting to pervert the course of justice.

[1]      R v Mamfredos DC Manukau CRI 2007-092-16338, 14 September 2009.

[2]        He was later sentenced to five years imprisonment and now appeals against both conviction and sentence.

Background

[3]        A Mr Herbert was seeking to raise capital to invest in property developments in the South Island.  The Crown case was that Mr Mamfredos falsely represented to Mr Herbert that he could arrange a loan for him of US$100 million through financiers in the Middle East.  For that purpose it was alleged Mr Mamfredos extracted funds from Mr Herbert under false pretences. 

[4]        Mr Mamfredos told Mr Herbert that certain sums were required in advance to cover the costs of due diligence as well as fees payable to the lender and to Mr Mamfredos.  In January 2003, Mr Herbert paid an initial sum of $32,000 to Mr Mamfredos.  Mr Herbert understood this was for due diligence costs.

[5]        Later, Mr Mamfredos told Mr Herbert a sum of up to US$1 million would be needed to cover costs.  Since neither Mr Herbert nor his company Cathedral Securities Ltd had sufficient funds, a loan agreement was entered into on 5 February 2003 under which a family trust associated with Mr Mamfredos agreed to advance to Cathedral Securities Ltd the sum of US$1 million to cover the costs.

[6]        It was a term of the agreement that the family trust would immediately advance US$1 million to the foreign lenders.  The company agreed to repay US$250,000 of that sum with the remaining US$750,000 to be repaid when the loan application was granted.

[7]        Pursuant to the agreement, Mr Herbert and Cathedral Securities Ltd paid further sums to Mr Mamfredos between March 2003 and May 2004.  In all, Mr Herbert paid NZ$660,826 to Mr Mamfredos or his trust.  No money was ever paid to the foreign lenders as agreed.  Instead Mr Mamfredos spent the money for his own purposes.  None of this money was ever repaid and led to the fraud and false pretences charges.

[8]        In 2005, Cathedral Securities Ltd began proceedings in the High Court to recover the sums paid to Mr Mamfredos or his trust.  One of the complaints Mr Herbert made in the High Court proceedings was that the sum of NZ$32,000 initially paid to Mr Mamfredos for the due diligence inquiry had been fraudulently obtained because no such inquiry was conducted.  Mr Mamfredos created fictitious documents in order to show that a due diligence inquiry had been conducted.  These documents were annexed as exhibits to an affidavit filed in the High Court by Mr Mamfredos and deceived the High Court Judge at the hearing. 

[9]        After inquiries were commenced by the Serious Fraud Office, Mr Mamfredos installed software on his computer which meant the Serious Fraud Office was unable to access a large number of files. 

[10]      These events led to the charges of forgery and wilfully attempting to pervert the course of justice.

The grounds of appeal against conviction

[11]      Mr Dacre presented to us a submission which Mr Mamfredos had prepared in support of his appeal against conviction.  This was to the effect that Mr Mamfredos could not be guilty of fraud since no loan application was ever prepared by Mr Herbert.  Without such an application, it was impossible for Mr Herbert to obtain the loan he was seeking.

[12]      Mr Mamfredos argued that the necessary loan application would have required due diligence on the part of Mr Herbert, Cathedral Securities Ltd and all entities involved with the loan; a guarantee in the form of a bank deposit amounting to one per cent of the loan; a letter authorising the prospective lender to take a lien over the deposit to secure payment of the lender’s fee; a valuation of the assets offered as security for the loan showing a value of US$125 million; a proposal setting out a loan repayment plan; and a feasibility study of the proposed business.

[13]      Mr Mamfredos also maintained that on 26 November 2002 Mr Herbert engaged him as a broker to obtain the US$100 million loan and promised to pay a broker’s fee of US$1 million.  Fifty per cent of that fee was to be paid in advance as a commitment fee and the balance as a success fee upon the grant of the loan.  Mr Mamfredos further maintained that Mr Herbert had made false representations to him as to the extent of his assets, his ability to pay the necessary fees, and the assets which could be provided to secure the loan.

[14]      Mr Mamfredos further submitted that none of the steps he identified were taken by Mr Herbert and that the loan application did not exist.  He also contended that Mr Herbert had misled the Serious Fraud Office and the Court by claiming to have submitted a loan application to him.  Mr Herbert’s subsequent bankruptcy was evidence that he could never have obtained the loan he had asked Mr Mamfredos to seek.

The Crown’s response

[15]      Mr Morgan QC submitted on behalf of the Crown that the ability of Mr Herbert to obtain the loan was immaterial to the prosecution case.  The Crown case was straightforward.  Mr Mamfredos had obtained substantial funds from Mr Herbert under false pretences.  These had not been spent as agreed.

[16]      Mr Morgan submitted that the evidence before the jury was sufficient to support the convictions if accepted.  Mr Herbert’s evidence as to the relevant events was supported by an associate (a Mr Kerr) and by a solicitor (a Mr Fletcher).  Large numbers of supporting documents were also produced.  It was not in dispute that Mr Herbert had paid the sums alleged to Mr Mamfredos and that they had never been repaid.  Nor was it in dispute that none of these funds had been applied for the purposes represented.  Mr Dacre accepted there was no basis to challenge the jury’s verdict on the ground it was not supported by the evidence.

[17]      Mr Morgan also submitted there were substantial evidential difficulties in the argument Mr Mamfredos now seeks to present.  First, no brokerage agreement was produced at trial and it could not qualify as fresh evidence for the purposes of appeal.  Secondly, and more importantly, Mr Mamfredos did not give evidence at trial.  The points he now seeks to raise were no more than unsupported assertions.

[18]      Moreover, the assertion that no loan application was ever prepared was not supported by the evidence at trial.  Mr Herbert’s evidence was that a business appraisal was prepared which ran to some 400 pages in length.  It cost some $70,000 to produce including input from accountants and lawyers.  It was given to Mr Mamfredos who made some suggestions for improvement after which a further version was delivered to him. 

[19]      There was documentary evidence in the form of an email from Mr Mamfredos stating it was “a very good document, one I will be happy to promote …”.   There was further evidence given by Mr Herbert as to both oral and written representations from Mr Mamfredos speaking in encouraging terms about the prospects of obtaining the loan with confident assurances that the loan approval would soon be available.  In addition, a partial version of the loan appraisal was produced by the defence during Mr Herbert’s cross-examination.

Conclusions

[20]      We are satisfied there is no basis on which the convictions could be successfully challenged.  The Crown’s allegations were straightforward in nature and, as was conceded, there was sufficient evidence before the jury which, if accepted, could support the convictions.

[21]      We accept the Crown’s submission that it was irrelevant to the prosecution case whether the loan would, in the end, have been granted.  The point of the Crown case was that Mr Mamfredos falsely represented that he could obtain the loan Mr Herbert was seeking and that he falsely represented that funds were required in advance in order to meet fees and expenses.  Mr Herbert paid substantial funds to Mr Mamfredos in reliance on those representations.  The funds were not applied for the purposes represented and have never been repaid.  It was entirely open for the jury to accept that evidence and to find the charges were proved.

[22]      The argument now raised by Mr Mamfredos is not only irrelevant but is no more than assertion, unsupported by evidence.  Indeed, the evidence given by Mr Herbert, which the jury clearly accepted, contradicted Mr Mamfredos’ assertions that Mr Herbert  failed to produce a loan application.

[23]      We note that the argument Mr Mamfredos advanced on appeal has no bearing on the two convictions for forgery and the conviction for attempting to pervert the course of justice.  No argument was presented to challenge those convictions.

[24]      In all the circumstances, the appeal against conviction is dismissed.

Sentence appeal

[25]      There were no submissions advanced in support of the sentence appeal but it was not formally abandoned.  The Judge adopted a starting point of three and a half years imprisonment on the fraud counts.  She accepted the Crown’s submission that the case involved sophisticated and systematic dishonesty over a period of some two years.  There had been a substantial breach of trust in the sense of a calculated and prolonged deception of Mr Herbert and his advisers.  The amounts involved were substantial and had not been repaid.

[26]      The Judge considered that the forgery matters warranted a cumulative sentence of 18 months imprisonment with a further 12 months on the charge of wilfully attempting to pervert the course of justice.  Applying the totality principle, she arrived at a final sentence of five years imprisonment.

[27]      We are satisfied that the sentence was well within range.  The sentence appeal is dismissed accordingly.

Solicitors:

Crown Law Office, Wellington for Respondent