R (SFO) v Robinson
[2015] NZHC 1673
•17 July 2015
NAME, ADDRESS AND OCCUPATION OF "MR C"ARE TO BE SUPPRESSED FROM PUBLICATION IN RELATION TO THIS PROCEEDING AND PURSUANT TO S 202 OF THE CRIMINAL PROCEDURE ACT 2002.
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CRI-2013-004-10110 [2015] NZHC 1673
THE QUEEN (SFO)
v
ANDREW HROTHGAR ROBINSON
Appearances: R S Reed and M K Thomas for the SFO
J N Bioletti for the Prisoner
Sentence:
17 July 2015
SENTENCING NOTES OF MUIR J
Counsel/Solicitors:
R S Reed, Barrister, Auckland
M K Thomas, Serious Fraud Office, AucklandJ N Bioletti, Barrister, Auckland
R (SFO) v ROBINSON [2015] NZHC 1673 [17 July 2015]
Introduction
[1] Mr Robinson, you appear for sentencing today on the following charges:
(a) five charges of theft by person in a special relationship, which is an offence against s 220 of the Crimes Act 1961 and punishable by up to seven years’ imprisonment;
(b)one charge of dishonestly using a document, an offence against s 228(b) of the Crimes Act and again punishable by seven years’ imprisonment.
[2] You pleaded guilty on 13 May 2015 with a three week trial scheduled to begin on 18 May 2015.
Facts
[3] I refer briefly to the background facts. The statement of facts indicates that you were a financial adviser who provided financial services through a company called Strategic Planning Group Ltd (SPG). You were one of three directors.
[4] The Financial Markets Authority (FMA) approved you as a Registered Financial Adviser on 19 March 2003. You became an Approved Financial Adviser (AFA) on 20 November 2012, as approved by Grosvenor Financial Services Ltd (Grosvenor).
[5] You and your co-directors each operated your own separate businesses under the SPG umbrella. Your business provided financial services. SPG held operating, trust, and foreign currency accounts with ANZ National Bank. The trust account was originally set up to manage client funds for insurance and tax purposes. You were a signatory on all of those accounts.
[6] As a financial adviser you were obligated to deposit all client money into SPG’s trust account and to disburse or distribute the funds only in accordance with the particular client’s instructions.
[7] Your status as an approved Grosvenor financial adviser enabled your clients to have access to Grosvenor’s administration platform when investing with SPG. That platform provided your clients with additional investment security, administration, custodial and reporting services for each investment they made. Access to that platform was a very attractive feature of the services you offered.
[8] The charges of theft in a special relationship arise out of your misappropriation of client funds between 16 March 2010 and 11 December 2012 when irregularities were identified by Grosvenor and your accounts were closed. Your explanation for the offending was that due to the vagaries of the financial markets, some of your clients lost money and you were too afraid to confront them about it. Whether that simply reflected a weakness of character, a concern that revelation of the truth would have resulted in collapse of your business, or a combination of both is now speculative and immaterial. To cover those losses you used other clients’ money. Quickly the whole charade became akin to a Ponzi scheme. You also used some of the funds to pay for business and personal expenses (approximating 20% of the total losses).
[9] You misused funds, contrary to client instruction, on the following occasions:
(a) on 17 November 2009 a client deposited USD$89,963.00 into SPG’s foreign currency account. The client directed you to hold these funds pending further instructions. However, between 16 March and 1 June
2010 you used $USD73,198 of that money to repay investments to other SPG clients and to pay the business expenses of a company known as BCI which was involved in an alleged back to back trade of
$9 billion worth of diamonds. The Serious Fraud Office says the BCI arrangements have all the hallmarks of an advance fee fraud. Your client knew nothing about them.
(b)on 10 August 2010 a family trust deposited $50,000 into the SPG trust account. The trust instructed you to invest these funds in a particular company. Instead you used the funds to pay for further business expenses associated with BCI.
(c) on 21 March 2011 another client deposited USD$71,638 into SPG’s foreign currency account. The direction was to hold the funds in that account pending further instructions. On 25 July 2011 you acted contrary to your client’s instructions and used $68,313 of your client’s money to repay the investment of another SPG investor;
(d)between 7 and 11 December 2012 you sold shares owned by husband and wife clients to the value of $258,956 without their knowledge or authority. Those particular clients ultimately suffered losses approximating $500,000.
(e) Between 22 July 2010 and 5 December 2012 you used in excess of
$2.5 m of SPG investor funds that were invested in the Grosvenor platform to repay investments of other investors or to pay for business and personal expenses. You were able to access those funds after convincing the SPG investors to change their Grosvenor nominated bank account for receipt of investment monies from their own account to SPG’s trust account. You were then able to withdraw investor funds for the purpose of meeting the calls of other investors or your business or personal needs. The scheme has all the hallmarks of a well planned and premeditated fraud where the trust of, in many cases, elderly clients was exploited to provide you with capacity to misappropriate their money.
[10] In total, between March 2010 and December 2012, you misappropriated
$2,690,689.68; $2,206,021.93 of which was used by you to repay other SPG and associated SPG No.1 investors; $295,162 and some cents was used for business expenses and $189,504 and some cents was spent on your personal expenses, predominantly to pay your mortgages. You take issue with $8,800 of such business expenses but both counsel are agreed that the extent of the dispute is not significant in terms of the sentencing.
[11] The charge of using a document dishonestly arises out of the following circumstances. Between 1 April 2010 and 22 August 2012 you prepared and
provided a number of reports and emails to SPG investors. You falsified the figures in those reports. The reports and emails concerned were:
(a) Two investment portfolio update reports for the periods 1 April to 30
September 2010 and 1 April to 30 September 2011 for the same clients;
(b) Four client holding reports dated various dates in August and March
2012 to four different clients; and
(c) Three emails dated 26 September 2011, 18 July 2012, 22 August 2012 to three different clients.
[12] You falsified the client holdings reports by first downloading them from Grosvenor, and then altering certain figures. Your intention was to hide the theft of these clients’ funds.
[13] Allowing for certain recoveries, the investors lost approximately $2.3 million. Individually, clients invested sums ranging between $43,000 and $500,000. There are 13 victims in this case, including both individuals and trusts.
[14] That figure includes an allowance for the sum of $64,000 currently in SPG’s trust account. I am told that SFO inquiries have concluded this money belongs to Mr and Mrs S and Mr C. The Crown applies for an order that this money be paid as reparation proportionately to the deposits made by those investors to Grosvenor accounts.
Purposes and principles of sentencing (ss 7 and 8 of the Sentencing Act 2002)
[15] I discuss first the purposes and principles of sentencing under the relevant provisions of the Sentencing Act. The purposes of sentencing that I consider most relevant to this case are the need to hold you accountable for the harm done to the victims and the community; to promote in you a sense of responsibility for that harm; to provide for the interests of your victims; and to denounce your actions and to deter others from committing the same offending.
[16] The relevant principles of sentencing which I take into account are the gravity of the offending, including the degree of your culpability; that the maximum penalty must be imposed if the offending is within the most serious cases of its kind, and that there is a general desirability of consistency with appropriate sentencing levels for similar offending. I must also take into account any information provided to me about the effect of the offending on the victims.
Victim impact statements
[17] Nine victim impact statements were provided to the Court. Together they make for most distressing reading. Many elderly and vulnerable people whose trust you cultivated and secured have literally seen their lives decimated. The genesis of your offending may not, as your counsel has suggested, been to fund some extravagant lifestyle (although funds were used to support personal expenses that you could not clearly otherwise afford) but the consequences have been no less destructive of people’s lives for that fact. Some have found themselves in a position where they must continue working despite serious ill health. Others have become depressed and withdrawn. All feel an acute betrayal of trust.
Submissions for the Crown
[18] The Crown submits that the document charge is part and parcel of your theft offending, but that nevertheless, the maximum penalty of seven years’ imprisonment for any one of the charges is insufficient to reflect the totality of your offending, and that a cumulative approach to sentencing is required. It submits that I should take a starting point between seven and eight years’ imprisonment. In respect of applicable mitigating factors, the Crown submits that you are entitled to:
(a) a modest discount for previous good character, but cautions that you used your good character to persuade investors to invest with you and to trust you;
(b)some credit for your co-operation with the Serious Fraud Office during the investigation, but submits that your level of co-operation
was not to the extent identified in R v Hafield,1 where the defendant’s immediate co-operation with the police lead to the identification and arrest of four major drug dealers and importers.
(c) a guilty plea discount of up to 10 per cent. The Crown submits that a guilty plea was entered only days before trial, and against a strong Crown case. The Crown was already put to the expense of preparing the trial and the victims were already preparing themselves mentally to give evidence in Court.
[19] The Crown submits that a minimum period of imprisonment of 50 per cent should be imposed to recognise the gravity of the offending.
[20] The Crown also seeks the reparation order that I have referred to previously.
Submissions for the defendant
[21] Your counsel’s primary submission is that your offending was not driven by greed or a desire to live what he terms a “champagne” lifestyle, but by a desire to keep your business afloat. Your counsel submits a total starting point between six and seven years’ imprisonment is appropriate, and advocates for a concurrent approach to sentencing. He submits that you were formerly a person of good character and that you displayed a level of responsibility when you voluntarily returned from Australia knowing of the consequences. He submits that you are willing to pay reparations, but accepts that there is a now very limited opportunity for you to do so with your having been adjudicated bankrupt. Your counsel also says that you are remorseful, as evident by your return from Australia, your co-operation and your guilty plea and he has provided to me this morning a letter of remorse written by you personally. In respect of the minimum period of imprisonment, your counsel submits that it is unnecessary, as the lengthy sentence that will inevitably be imposed sufficiently reflects the gravity of the offending.
Sentencing approach
[22] I refer now to the appropriate sentencing approach.
[23] Section 84 of the Sentencing Act sets out
84Guidance on use of cumulative and concurrent sentences of imprisonment
(1) Cumulative sentences of imprisonment are generally appropriate if the offences for which an offender is being sentenced are different in kind, whether or not they are a connected series of offences.
(2) Concurrent sentences of imprisonment are generally appropriate if the offences for which an offender is being sentenced are of a similar kind and are a connected series of offences.
(3) In determining for the purpose of this section whether 2 or more offences committed by 1 offender are a connected series of offences, the court may consider—
(a) the time at which they occurred; or
(b) the overall nature of the offending; or
(c) any other relationship between the offences that the court considers relevant.
[24] Where the sentencing is for multiple offending, the focus is on the totality of the offending rather than on a mechanical approach to sentencing. The Court of Appeal in R v Xie2 said:
[16] The fundamental tenet of the totality principle is that the final sentence must reflect “the totality of the offending”. How the total sentence is made up has never been important. We cite what this court said in R v Williams CA91/00 31 May 2000:
“[11] We reject the argument that there is a particular way in which total sentences must be put together in respect of multiple offending. The issue is what is an appropriate total sentence for the various charges which have been admitted or proved. How that is constructed in the particular circumstances is a matter of individual discretion and assessment. Sometimes there is advantage in imposing cumulative sentences on some or all of the charges, whereas others are more appropriately dealt with by one major sentence which subsumes all matters, with concurrent sentences imposed.”
[17] That passage from Williams was cited with approval in R v Barker CA57/01 30 July 2001. In that case, this court, at [10] reiterated the key principles when sentencing for multiple offending:
(a) With multiple offences the sentence must reflect the totality of the offending;
(b) In respect of multiple offences, this court will not insist that the total sentence be arrived at in any particular way; and
(c) The total sentence must represent the overall criminality of the offending and the offender.
[18] Those principles survive the enactment of the Sentencing Act and indeed are endorsed by it. Having endorsed it, Parliament then goes on in ss 84 and 85 to describe when concurrent sentences and cumulative sentences “are generally appropriate”. The guidelines do not have the effect of trumping the central principle of sentencing for multiple offending, namely that the total sentence must represent the overall criminality of the offending and the offender.
[19] In this case concurrent sentencing would have been appropriate, provided that concurrent sentencing could lead to an appropriate total sentence. But it could not, at least in Mr Xie's case. In circumstances where the total sentence appropriate for the totality of the offending exceeds the maximum penalty for any one offence, cumulative sentencing must be used. This is a circumstance where concurrent sentencing is not appropriate because it prevents the implementation of the fundamental tenets of sentencing for multiple offending: R v Mackwood CA197/95 28 March 1995 at 2.
[25] That case was applied by Wylie J in R v Douglas.3 There the defendant was convicted of three charges of theft in a special relationship. On each charge the maximum penalty was, as in this case, seven years’ imprisonment. In total, a sentence of 21 years was available. However, Wylie J adopted an eight and a half year starting point to reflect the totality of the offending, stating that a cumulative approach to sentencing was appropriate.4
[26] It follows, from what I have said, that if concurrent sentences are inadequate to reflect the totality of the offending, cumulative sentences must be applied and a
starting point that reflects totality should be adopted.
3 R v Douglas [2012] NZHCC 2271.
4 At [105], [106] and [110].
Aggravating factors relevant to the offence (s 9 of the Sentencing Act 2002)
[27] Before setting the starting point in this case, I first assess the aggravating factors of your offending from my perspective. The relevant factors, as I see them, are these:
(a) Premeditation. The level of premeditation involved in your offending was very high. You stole from clients to cover up trading losses. You used your status as a financial adviser approved by the FMA and by Grosvenor to encourage clients to invest with SPG. You manipulated your clients into giving you direct access to their investments through the SPG trust account instead of their nominated and secure Grosvenor accounts. To cover your tracks you falsified investment and client holdings reports. Your offending ended up having all of the hallmarks, as I say, of a Ponzi scheme.
(b)The number of victims. There are 13 separate victims. Eleven of them have suffered serious financial losses from which they are unlikely ever to recover.
(c) The extent of loss or harm resulting from the offending. Of the approximately $2.69 m that you have misappropriated, over $2.3 m was lost. The nine victim impact statements that were provided to the Court show the extent of the financial, emotional and psychological harm caused by your offending. Many of your victims were elderly people who entrusted you to invest the funds they had put aside to ensure a comfortable retirement. Your offending has left them financially vulnerable at a time in their lives when they can least afford that. I take into account the humiliation suffered by your victims once they discovered what you had done, and how that would have only added to their distress. Additionally, the loss and harm caused by your offending extends to the indirect victims. Some of your victims were family trusts, for whom the loss of such large sums of money is likely to have an inter-generational impact. The same is
true for those victims who intended to use their money for their grandchildren’s education or to leave to family members ultimately by way of bequest. Because of you, their children and families have missed out on significant sums of money that would have assisted them in establishing their own lives.
(d)The abuse of your position of trust. You grossly betrayed the trust that your investors had in you. You used your position as an AFA to convince your clients that you were concerned only with their best interests. From that position you manipulated your victims to give you access to their money. You then misappropriated it, not only to cover up trading losses, but also to meet business and personal expenses. You violated your clients’ instructions in breach of their trust. After stealing the victims’ money, you continued to manipulate them into thinking their investments were safe by falsifying figures in their client reports. Your victims were highly vulnerable to your deceit because of the level of trust they placed in you in your profession. They had every right to consider your qualifications and status as an AFA meant that you could be relied upon. The embarrassment many of them record in their Victim Impact Statements may be understandable but is totally unwarranted. It is you who is responsible not them.
(e) The vulnerability of your victims. In respect of all of your clients you were in a position of trust. Many, however, were particularly vulnerable because of their age. It is clear that as part of the promotion of your business you identified the elderly and retirees as having significant potential. Your guest lectures, recorded in one of the victim impact statement reports, at the University of the Third Age, where one of your investors was first introduced to you, exemplifies that. You targeted a vulnerable group.
(f) The duration of the offending. Your offending spans two and a half years. It lasted that long because you continuously reassured your victims, using false statements, that their investments were safe.
Setting the starting point
[28] There is no guideline judgment for cases involving theft in a special relationship. It is established however that a lengthy period of imprisonment is appropriate in cases of major defalcations, misappropriations, schemes to dishonestly obtain money or property or where recidivism indicates the need to protect the
community.5
[29] The starting point must reflect the culpability of the offender in the particular case. The Court of Appeal provided the following guidelines to assess culpability in fraud offending in R v Varjan:
[22] Culpability is to be assessed by reference to the circumstances and such factors as the nature of the offending, its magnitude and sophistication; the type, circumstances and number of the victims; the motivation for the offending; the amounts involved; the losses; the period over which the offending occurred; the seriousness of breaches of trust involved; and the impact on victims.
[23] It is in the assessment of culpability that comparison with other cases is to be undertaken. Matters of mitigation such as reparation, co-operation with investigators, plea, remorse and personal circumstances necessarily must be assessed in each particular case.
[30] Having regard to the aggravating factors I have identified above, I consider your level of culpability to be high. Overall, this offending was serious. It involved substantial sums. It was sophisticated. You persuaded your clients through plausible explanations to substitute your trust account for their own accounts and in so doing facilitated your fraud. In acting the way you did, you violated the standards of your profession. The losses have quite literally robbed many of your victims of their golden years.
[31] I accept that the offending was, at least at the early stages of it, mainly motivated by your desire to keep our business running and your inability to confront
5 R v Varjan CA97/03, 26 June 2003 at [25].
your clients about their losses. I accept that the principal driver was, at least at that stage, not greed, but I note that you did use some of your victim’s funds for your own purposes ultimately, to sustain a lifestyle not otherwise available to you.
[32] I have considered all of the cases that have been referred to me by counsel.6
The starting points vary from six years to eight and a half years. All of the cases cited to me involved thefts of a million or more dollars from multiple unsuspecting investors, and spanned several years.
[33] In the present case the total sentence available to me on a cumulative basis on all six charges is nominally 42 years’ imprisonment. As in R v Xie I consider this a case where I must be mindful of the totality of the offending, applying, if required, a cumulative approach to achieve that. The total sentence must reflect the overall criminality of the offending and the offender. For the reasons I have previously set out, I regard that as high and I therefore adopt a total starting point of seven and a half years imprisonment.
Aggravating factors relevant to the defendant
[34] I have not been appraised of any aggravating factors relevant to you personally. You do not have any relevant criminal history.
Mitigating factors
[35] I now turn to what mitigating factors personal to you warrant a discount off the starting point. I start with a brief reference to the presentence report.
[36] The report writer assessed you as posing a low risk of harm to the community and having a low risk of reoffending. The report writer was of the view that you committed the offending because of your inability to deal with confrontation. The
writer also recorded that you sought, however, to minimise your actions by, although
6 R v Rose [1990] 2 NZLR 552 (CA), (1990) 5 CRNZ 638; R v Varjan CA97/03, 26 June 2003;
Cherry v R [2013] NZCA 636; R v Petersen DC Wellington CRN-2010-091-004572, 18 March
2011; R v Harrison and Jones [2007] NZCA 297; R v Bourton [2014] NZCA 151; R v Lewis
[2014] NZCA 151; Arnott v R [2015] NZCA 236.
first admitting that what you had done was wrong, then stating that you did not take the money to support a luxury lifestyle.
Personal circumstances
[37] Mr Robinson, I note that you are 42 years old. You have four children, aged seven to 16. You have been in the financial sector your entire adult life. Prior to this offending you had a clean record. Your counsel submits that you are entitled to a discount for previous good character. The Crown does not oppose this, but submits that it should be a limited one given the fact that your previous good character was in fact part of the instrumentality of the fraud. I accept that proposition. I allow a three percent discount on account of previous good character.
Co-operation with the investigation
[38] The Crown acknowledges that your co-operation during the investigation was helpful, but it says I should also take into account the fact that your return from Australia, although voluntary, was not immediate. I agree with your counsel that your co-operation was not at the same level as in Hadfield, but I consider that, nevertheless, it should be recognised, and discretely recognised. I therefore apply a discount of five percent for your co-operation with authorities.
Remorse
[39] Your counsel submits that if you were not remorseful, you would not have returned from Australia or assisted the Crown with the investigation. I accept that you have some feelings of remorse, and you have provided me, this morning, with what is quite a detailed and lengthy letter in which you state among other things that you apologise unreservedly to your victims, their families and the Court and that you have faced up to your actions and seek forgiveness from your victims. As the Supreme Court has observed sentencing Judges are very much aware that remorse
may well be no more than self-pity of an accused for his or her predicament.7 When
an allowance is made for remorse it is typically small. In this case I do make a small
allowance for remorse, in the amount of two per cent which cumulatively brings the discounts that I have applied, to this point in my judgment, to 10 per cent.
Guilty plea
[40] You did not plead guilty at the earliest opportunity. Indeed, you did so only five working days before the trial was scheduled to begin. By that stage the Crown had already completed most of its preparations for trial and the witnesses themselves would have had to have prepared themselves mentally (and possibly re-arranged their schedules) to accommodate the trial. It would have added to their stress that the guilty plea came so late in the piece. Moreover the case against you was strong. I accept the Crown submission that a discount of no greater than 10 per cent is appropriate and Mr Bioletti does not submit otherwise. I make an allowance of 10 per cent to reflect your guilty plea.
Sentence: final
[41] The end result is a sentence of six years’ imprisonment. On a strict arithmetical calculation it is slightly more but I have averaged it down to six years’ imprisonment.
Minimum period of imprisonment (s 86 of the Sentencing Act 2002)
[42] I now address the question of whether a minimum period of imprisonment, under s 86 of the Sentencing Act is appropriate. The Crown submits that I should impose a minimum period of imprisonment of 50 per cent.
[43] If an offender receives a determinate sentence of imprisonment of more than two years, the court may order that the offender serve a minimum period of imprisonment (MPI).8
[44] The Court may impose an MPI if it is satisfied that the one-third default minimum is insufficient to either, hold the defendant accountable for the harm done,
denounce the conduct, deter the defendant or others, or to protect the community.9
An MPI must not exceed two-thirds of the full term of the sentence.10
[45] The purpose of an MPI has been stated in terms that:11
[Section] 86 provides the mechanism to constrain that outcome where the offending is so serious that release after one-third of the sentence would plainly constitute an insufficient response in the eyes of the community, even though there may be no on-going safety risk. It enables the courts to give a degree of reality to the sentence and the outcome.
[46] The central consideration is the defendant’s level of culpability, which is increased by vulnerable or multiple victims, and serious consequences.12 The sentencing considerations in ss 7, 8 and 9 are also relevant in fixing an MPI.13
[47] As I have already observed, the offending was serious and your level of culpability high. One-third of the sentence I have imposed would amount to two years’ imprisonment. I do not consider that in the eyes of the community that would be a sufficient sentence, given the gravity of the breaches of trust, the amounts involved, the number of victims (the majority of whom suffered significant financial loss from which they will never recover), and the stress and humiliation that this has caused them. A requirement to serve at least two years and nine months of the sentence in my view appropriately recognises the principles of deterrence and of promoting a sense of accountability for the harm caused.
[48] I therefore impose an MPI of two years and nine months (which equates to approximately 45 percent of the six year sentence).
Result
[49] Mr Robinson, would you stand now please.
[50] You are sentenced to six years’ imprisonment on each of the five charges of theft in a special relationship and the single charge of dishonestly using a document,
9 Sentencing Act, s 86(2).
10 Section 86(4)(a).
11 R v Brown [2002] 3 NZLR 670 (CA) at [28].
12 At [32].
13 At [27].
such sentences to be served concurrently. A minimum period of imprisonment of two years and nine months is imposed.
[51] You are ordered to pay the sum of $64,854.13, currently standing in SPG’s trust account, to Mr and Mrs S and Mr C in the proportions determined by the Serious Fraud Office as equating to the deposits received from the respective Grosvenor accounts. If your signature is required for that purpose you are directed to provide it.
[52] Mr Robinson, you may stand down.
Muir J
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