R v Chahil
[2020] NZHC 317
•28 February 2020
THIS IS A REDACTED VERSION, GIVEN PERMANENT NAME SUPPRESSION ORDERS PURSUANT TO S 202 OF THE CRIMINAL PROCEDURE ACT 2011. SEE
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CRI-2017-004-2998
[2020] NZHC 317
THE QUEEN v
RUPINDER SINGH CHAHIL and VIJAY KUMAR GUPTA
Hearing: 28 February 2020 Appearances:
B H Dickey and N B Goodger for the Crown
AJD Bamford, E J Riddell and S G Lukey for Mr Chahil J R Billington QC and HMZ Lanham for Mr Gupta
Sentencing:
28 February 2020
SENTENCE OF GAULT J
Solicitors / Counsel:
Mr B H Dickey, Meredith Connell, Office of the Crown Solicitor, Auckland Mr N B Goodger, Inland Revenue, Takapuna
Mr AJD Bamford, Bamford Law Ltd, Nelson Ms E J Riddell, Barrister, Nelson
Mr S G Lukey, Barrister, Christchurch
Mr J R Billington QC and Ms HMZ Lanham, Barristers, Auckland
R v CHAHIL and GUPTA [2020] NZHC 317 [28 February 2020]
[1]Mr Chahil and Mr Gupta, you appear for sentence following guilty pleas.
[2] Mr Chahil, you have pleaded guilty to 43 charges relating to tax evasion and money laundering. They are:
(a)17 charges of knowingly not providing information to the Commissioner of Inland Revenue (the Commissioner) when required to do so;1
(b)17 charges of providing false information to the Commissioner to evade GST;2 and
(c)nine charges of money laundering.3
[3]Mr Gupta, you have pleaded guilty to nine charges of money laundering.4
[4] Following the guilty pleas at trial on 7 October 2019 I now enter the convictions as follows, according to the charge notice:
(a)Mr Chahil: charges 1 to 17 as amended, 18 to 36, 39 and 41 to 46.
(b)Mr Gupta: charges 35, 36, 39 and 41 to 46.
[5]The Crown withdraws the remaining charges 37, 38 and 40.
Facts
[6]I turn to the facts of your offending.
[7] The charges against Mr Chahil arise out of his involvement with the large-scale tax evasion scheme undertaken by various companies connected with the Masala
1 Tax Administration Act 1994, ss 148 and 143A(1)(b). Maximum penalty is a $25,000 fine.
2 Sections 148 and 143B(1)(c) and (f). Maximum penalty is five years’ imprisonment and/or a
$50,000 fine.
3 Crimes Act 1961, ss 66 and 243. Maximum penalty is seven years’ imprisonment.
4 Sections 66 and 243. Maximum penalty is seven years’ imprisonment.
restaurants. Mr Chahil and Mr Gupta were both involved with the corresponding money laundering, which in essence was designed to conceal the tax evasion.
[8] Mr Chahil has been involved in property development and hospitality businesses since 2000. Mr Gupta was an accountant but did not hold a public practising certificate. They knew each other through community and business associations and activities.
[9] Mr Chahil controlled 17 companies (the Masala related companies) with the assistance of an employee, Ms Jain. The Masala related companies operated 13 restaurants between 1 April 2008 and 31 March 2014 (the audit period). In broad terms, Mr Chahil and Ms Jain caused the Masala related companies to conceal a large volume of primarily cash sales conducted at the Masala restaurants.
[10] As part of this, Mr Chahil caused the Masala related companies to knowingly not provide income tax returns to the Commissioner when required to do so, between 2009 and 2014. The Masala related companies did not file any income tax returns during the audit period, with the following exceptions:
(a)2009 and 2010 income tax returns, filed by NZ Hospitality Ltd;
(b)2010 income tax return, filed by Cogent Hospitality Ltd; and
(c)2012 income tax return, filed by Hospitality Company Ltd.
[11] At least 55 reminder letters were sent to the Masala related companies between 15 July 2009 and 10 August 2016, which requested that the outstanding income tax returns be filed. An income tax shortfall resulted; the exact quantum of that shortfall is unknown.
[12] Mr Chahil and Ms Jain also provided false information to the Commissioner. On a daily basis during the audit period, the managers of the Masala restaurants would generate cash sales from the restaurant till system and write these figures into cash books. On approximately a weekly basis, the managers would collect all cash takings from the Masala restaurants. This was done at the request of Ms Jain and Mr Chahil.
From time to time, Mr Chahil and Ms Jain collected the cash directly from the tills of the various Masala restaurants.
[13] The managers, Mr Chahil and/or Ms Jain would meet to review the cash books from the various restaurants and collect the cash from the managers. Mr Chahil and/or Ms Jain, or an internal accountant, would count the cash. Mr Chahil and Ms Jain would instruct certain managers to write second sets of sales reports containing all but the cash sale figures and instruct the managers as to how much cash to deposit in the company accounts.
[14] The actual total daily receipts were higher than the total sales which were reported to the Commissioner by the Masala related companies. Mr Chahil and Ms Jain’s actions caused the Masala related companies to file 115 GST returns which contained false or misleading sales figures for the Masala restaurants with the intention of evading the assessment or payment of GST. The overall GST tax shortfall was
$702,667.37.
[15] Between 1 January 2012 and 23 April 2013, the proceeds of the completed tax evasion was subject to various money laundering transactions, involving both Mr Chahil and Mr Gupta. Mr Chahil delivered the cash to Mr Gupta, to be made into Masala related company bank accounts through foreign exchange transactions. On a number of occasions, Mr Chahil directed Ms Jain to check that the deposits in the Masala related companies’ bank accounts, via forex trading, reconciled with the amounts of cash which had been delivered to Mr Gupta. In relation to a number of these deposits, the Commissioner made information requests to seek an explanation as to the origin of the funds. Mr Chahil directed the preparation and provision of false responses to these information requests. At least $524,184.94 was subject to money laundering transactions carried out by Mr Chahil and Mr Gupta.
Approach to sentencing
[16] I will follow the normal sentencing process.5 First, I will set a starting point which reflects the nature and circumstances of your offending. I will then consider
5 R v Taueki [2005] 3 NZLR 372 (CA); and Hessell v R [2010] NZSC 135, [2011] 1 NZLR 607.
your personal circumstances, to assess whether an adjustment to the starting point is required – up or down. Finally, I will consider whether a discount should be given for your guilty pleas.
[17] Throughout this process, I must have regard to the purposes of sentencing as set out in s 7 of the Sentencing Act 2002. Tax evasion is a species of fraud. While the risk of re-offending by many “white collar” criminals may be low, the safety of the community nevertheless requires a sentence which acts as a deterrent to others.6 In many cases of fraud, deterrence is particularly important “where potential offenders can understand and reflect upon the consequences of offending”.7 Other relevant purposes include the need to hold you accountable for the harm caused and to promote a sense of responsibility for that harm. Your conduct must be denounced, and others must be deterred from committing the same or similar offences. I must also have regard to the principles of sentencing as set out in s 8.
[18] I will address the sentence to be imposed on each of you in turn, beginning with Mr Chahil.
Mr Chahil
Starting point
[19] Mr Dickey, for the Crown, submits that sentences for the tax evasion and money laundering charges should be imposed cumulatively, with a reduction for totality. He acknowledges that the tax evasion and money laundering charges relate to each other but submits the sets of offending are discrete in that the tax evasion was necessarily completed before the proceeds of that offending were laundered. Your counsel, Mr Bamford, submits that a starting point should be adopted for the tax evasion with a small uplift for the money laundering.
[20] As the Crown acknowledges, your tax evasion offending is inexorably linked to your role in the money laundering. The offending may be somewhat different in kind, but the money laundering was a furtherance of the tax evasion offending, in that
6 R v Rose [1990] 2 NZLR 552 (CA) at 556.
7 Ross v R [2019] NZCA 455 at [61].
it was designed to conceal the proceeds of the tax evasion. The general guidance provided in the Sentencing Act 2002 as to when concurrent and cumulative sentences should be imposed does not have the effect of “trumping” the central principle of sentencing, namely that the total sentence must represent the overall criminality of the offending and the offender.8 Ultimately, how the end sentence is arrived at is not “terribly important”.9 For these reasons, I prefer to adopt concurrent sentences.
[21] In the circumstances, like Mr Bamford, I adopt the tax evasion charges of providing false information to the Commissioner as the lead charges, given the secondary nature of the money laundering despite their higher maximum penalty. I first consider the starting point which appropriately reflects your tax evasion offending.
[22] There is no guideline sentence judgment for tax evasion. However, this type of offending ordinarily attracts a sentence of imprisonment; that will invariably be the starting point.10 This reflects the position that offending of this kind can properly be characterised as “straight theft from the community”.11 Culpability is to be assessed by reference to the circumstances and factors such as:12
… the nature of the offending; its magnitude and sophistication; the type, circumstances and number of 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] The Crown submits a starting point of three years and nine months’ imprisonment is appropriate. Mr Bamford submits a starting point two years and nine months’ imprisonment for the evasion charges should be adopted.
[24] Counsel are in agreement that the period over which the offending took place and the voluntary nature of the New Zealand tax system are two aggravating features of your offending.
8 R v Xie [2007] 2 NZLR 240 (CA) at [18].
9 At [38].
10 R v Easton [2013] NZCA 677, (2013) 26 NZTC 21-057 at [36]-[37].
11 James v R [2010] NZCA 206, (2010) 24 NZTC 24,271 at [8].
12 R v Varjan CA97/03, 26 June 2003 at [22].
[25] Your offending occurred over an extended period of six years, between April 2008 and April 2014. The offending was sustained and repetitive. It involved the regular, two-monthly provision of false information to Inland Revenue. As the Crown submits, the magnitude of the offending is also aggravating. Seventeen companies largely failed to file income tax returns from 2009 to 2014 and around 115 false or misleading GST returns were provided to Inland Revenue.
[26] While the evasion may not have been particularly sophisticated, it was carried out on a very large scale. The GST evasion amounted to over $700,000. Lost income tax is not quantified.
[27] I recognise a settlement was reached after proceedings were issued under the Criminal Proceeds (Recovery) Act 2009. Mr Bamford says that you were instrumental in coordinating the settlement despite not being named as a party – although there is no evidence of your role in the settlement. The settlement sum of $8 million was said to represent almost all of the unlawful benefit said to have been derived from the tax evasion offending.13 Mr Bamford submits that as the Crown does not seek a reparation order, it follows that the tax evaded has been paid. Mr Bamford also submits there has already been a “very significant penalty” incurred as a result of the criminal proceeds settlement because defence experts say the settlement amount significantly overpaid the real loss.
[28] The Crown submits the circumstances of the forfeiture are removed from you. It submits that the respondents to the criminal proceeds proceeding did not include any of the individual Masala related companies as the assets were those of separate holding companies. As no assets of the Masala related companies were forfeited, and no assets of yours personally were forfeited, the Crown submits there is no nexus with the index criminal offending. It also does not accept that you were instrumental in the settlement. In any event, the Crown says it is wrong in principle to give any discount for the forfeiture of criminal proceeds.
[29] I accept that fraud offending where no recovery is achieved is “more serious” than fraud offending with complete recovery, if only because in the latter case the
13 Commissioner of Police v Investments Ltd [2017] NZHC 284 at [13].
victims’ loss is transitory and not permanent.14 In this context I cannot take into account what Mr Bamford submits defence experts would have said at trial about recoupment of tax lost, which the Crown does accept – and Mr Bamford accepted this morning is of marginal relevance at sentencing. But it is fair to infer that most of the loss has been recouped from the Court’s approval of the settlement,15 even though you were not a party to the settlement and your personal assets were not forfeited. But there is a distinction between voluntary and involuntary recovery of money. It is appropriate to acknowledge “involuntary” recovery of money in the starting point analysis and “voluntary” reparation as a personal mitigating factor – taking care not to double-count.16
[30] However, in this case I consider the effect of the criminal proceeds settlement is modest. I accept, given the connection to the Masala related companies, through the separate holding companies, it is possible that your family had some beneficial interests in the properties forfeited. But even so, your culpability is not significantly reduced given you would not have voluntarily returned the money if you had not been caught.
[31] Mr Bamford also referred to the bar on prosecution in s 149 of the Tax Administration Act 1994, but as this was not engaged I do not consider it is a mitigating effect of the settlement.
[32] The Crown also refers to the tremendous public cost of uncovering the offending and says it forms part of the overall loss caused by the offending. The Crown says the investigatory effort amounted to more than 11,600 hours of Inland Revenue time alone and tax authorities in Australia and India had to be contacted. The Court of Appeal has said it is proper to take into account expenditure essential for the Revenue to investigate returns to ascertain the correct tax position.17 When viewed in conjunction with your efforts to frustrate the investigation, the costs of investigating the tax returns somewhat amplifies the loss suffered – that is, the cost to the public.
14 R v Patterson [2008] NZCA 75 at [41].
15 Commissioner of Police v Investments Ltd [2017] NZHC 284 at [13].
16 R v Patterson [2008] NZCA 75 at [41].
17 R v Hunter (2002) 20 NZTC 17,784 at [15]-[18].
But in the absence of quantification in money terms,18 I do not treat this as increasing the tax evasion loss in this case.
[33] The Crown submits the vulnerability of the victims and the impact of the offending on victims are aggravating features of your offending. As mentioned, Mr Bamford accepts that the abuse of the voluntary nature of the New Zealand tax system is an aggravating factor, given the system is predicated on voluntary compliance by taxpayers with their tax obligations. Tax evasion defrauds the public purse.19 The Masala restaurants also would have been able to undercut their competitors by avoiding some of their tax obligations. However, tax evasion will always involve an abuse of the New Zealand tax system. The vulnerability of the victim in that sense is inherent in the charge. For that reason, I place only modest weight on this factor.
[34] The Crown further submits your offending involved an abuse of your position of authority. I agree this is an aggravating factor. You were a director of at least some of the companies and appear to have exerted at least indirect control over others. The managers of the various restaurants involved with the offending acted at your direction. You would instruct the managers to construct misleading sets of sales reports. In this sense, as the Crown says, you were a “ringleader”.
[35] Offenders who were involved in the same enterprise must be treated consistently.20 Your co-offender, Ms Jain, was sentenced by Moore J on 8 May 2018. She pleaded guilty to 17 charges of aiding the provision of false information to the Commissioner with the intention of evading tax, and four charges of knowingly not providing information to the Commissioner when required, with the intent of evading tax. Both offences carry a maximum penalty of five years’ imprisonment and/or a
$50,000 fine. Moore J adopted a starting point of three years and three months’ imprisonment. This was upheld on appeal. He considered Ms Jain’s culpability was lower than yours and Mr Gupta’s, in part because she did not have your ability to
18 Compare the following cases, where the costs associated with the investigation were specified: R v Kerr [2016] NZHC 512 at [5]-[6]; Luoni v Police [2016] NZHC 695 at [6]; and R v Rose [2016] NZHC 1109 at [35].
19 Wang v R [2016] NZCA 56, (2016) 27 NZTC 22-043 at [20].
20 Mau’u v R [2011] NZCA 385 at [26]; see also Sentencing Act 2002, s 8(e).
exercise control over the tax evasion. Mr Bamford disputes this. I accept that she had a significant role and was not solely acting at your direction, and that you were the sole director of fewer companies, but I agree with Moore J that you had a greater ability to exercise control. On the other hand, as Mr Bamford submitted, she was also sentenced on the basis of four charges of failing to provide information with the intent of evading tax, whereas your similar charges – 17 in number – were amended to lesser charges. Also, she was sentenced on the basis that over $800,000 of GST was evaded. In addition, there is your modest discount I have mentioned for the recoupment. Overall, taking into account these offsets, I consider your starting point should be the same as hers.
[36] There are multiple aggravating features of your offending. As has been reiterated by the Courts, an element of deterrence is needed. In light of comparable case law,21 and with reference to the starting point adopted in relation to Ms Jain, I adopt a starting point of three years and three months’ imprisonment for your tax evasion offending.
[37]I turn now to consider your money laundering offending.
[38] The Crown submits the money laundering offending warrants a starting point of two years and six months’ imprisonment, before a global reduction is made to both starting points. It submits the ultimate starting point for both sets of offending viewed together should be in the realm of four years and three months’ imprisonment.
[39] Mr Bamford submits a “small” uplift of three months for the money laundering charges is appropriate.
21 In Mehmood v R [2015] NZCA 338, (2017) NZTC 22-020, the Court of Appeal held a starting point of four years’ imprisonment was “well justified” by the scale of the offending; the offender defrauded the New Zealand public of $1 million in a calculated and systematic way over five and a half years, by 144 offences. In R v Adams (2006) 22 NZTC 19,872 (CA) (the offender was found guilty of 11 charges of fraudulently using a document (a GST tax return) for the purposes of obtaining a pecuniary advantage; he obtained a benefit of $693,209 and the offending was premeditated and involved a complex series of frauds; a starting point of four years was upheld on appeal. In R v Kampeng [2019] NZHC 2500, Mr Thongskul was sentenced on six representative charges covering 124 false GST, income tax and personal income tax returns, spanning seven years. The sum of the tax evaded was $950,000. A starting point of three years and nine months’ imprisonment was adopted.
[40] There is also no guideline sentencing judgment for money laundering. The Court of Appeal has emphasised that sentences for money laundering should bear a relationship to the sentence imposed for the particular principal offending and should be approached on a similar basis; the more serious the principal offending, the more serious the laundering.22 The extent of the money laundering operation, and the offender’s involvement in it, are clearly important considerations.23
[41] Many of the aggravating factors identified in relation to the tax evasion offending apply equally to the money laundering offending, albeit with different weight attaching to some factors. The period over which you participated in the money laundering was approximately 14 months, from 15 February 2012 to 23 April 2013. It is estimated that at least $524,000 of funds was subject to money laundering transactions. While the money laundering took place over a shorter period, it was a sophisticated operation. It involved numerous bank accounts and international jurisdictions.
[42] The Crown, responsibly, accepts your role was to deliver the proceeds rather than participate in the machination of the money laundering transactions. I balance this factor against the fact that you appeared to be a driving force behind the laundering operations – everything largely appears to have occurred at your direction. As the Crown submits, the money laundering was essentially to “cover up” the tax evasion, from which you stood to gain.
[43] In light of comparable case law, if sentencing you on the money laundering charges alone, I would have adopted a starting point of at least two years and six months’ imprisonment.24 The Crown acknowledges that imposing cumulative
22 R v Wallace CA 415/98, 16 December 1998 at 8-9; see also Zhang v R [2010] NZCA 481 at [10].
23 R v Wallace at 9.
24 In Zhang v R [2010] NZCA 481, a starting point of five and a half years’ imprisonment was upheld on appeal; over an 18-month period, the offender laundered almost $700,000 worth of drug profits (the source of which were from her partner). In R v Wallace CA415/98, 16 December 1998, the offender helped launder over $1.3 million dollars’ worth of drug profits. A starting point of three and a half to four years imprisonment was not disturbed on appeal. In R v Khan [2018] NZHC 3065, the offender pleaded guilty to 17 charges of money laundering involving a sum of approximately $330,000. The offender was reckless as to whether the cash was sourced unlawfully, acted on the instruction of another and did not benefit significantly from the offending. A starting point of two years and six months’ imprisonment was adopted.
sentences, resulting in an aggregate starting point of around six years’ imprisonment, without a discount for totality would be disproportionate.
[44] Having adopted the tax evasion offending as the lead charge and adopted a starting point of three years’ and three months, I uplift that by nine months for the money laundering. That reaches a combined starting point of four years’ imprisonment.
[45] But there is a further factor relevant to totality. You spent six months on home detention from 28 October 2016 for providing false or misleading information to Immigration New Zealand. The offending occurred within the time period of the current offending. Given the connection in time, Mr Bamford submits a discount of three months is warranted. The Crown says that any discount in this respect should be nominal.
[46] Again, I recognise the need for parity with the sentence imposed on Ms Jain. Ms Jain was previously sentenced to 11 months’ home detention for providing false and misleading information to Immigration New Zealand and the exploitation of employees. Moore J reduced her starting point by six months, recognising the overlap such that it may be said at least part of the offending was part of an integrated scheme but also that the actual conduct involved in the two sets of offending was substantially different and any adjustment for totality should be modest.
[47] In my view, the two sets of offending are quite different. However, recognising the need for parity, I consider a discount of three months is appropriate. This brings your end starting point to three years and nine months’ imprisonment.
Aggravating and mitigating features personal to Mr Chahil
[48]I turn to aggravating and mitigating features personal to you.
[49] The Crown does not point to any aggravating features personal to you. As you have a limited conviction history, I agree.
[50] Mr Bamford submits a discount of 25 per cent discount is warranted, in light of the criminal proceeds settlement. However, even if your relatives were beneficial owners of assets forfeited, the settlement is better viewed as an “involuntary” payment in the absence of evidence, rather than one of voluntary reparation at sentencing,25 and the Court of Appeal has indicated the more logical approach is to acknowledge that in the starting point analysis, as I have done.26 In any event, it should not be double counted.
[51] Mr Bamford submits your remorse is a mitigating feature, and submits the comments made in the pre-sentence report must be viewed in light of the criminal proceeds settlement and the defence expert analysis. The report writer identified your offending supportive attitude and offending associates as offending related factors. In discussions with the report writer, you attempted to ‘downplay’ your offending. You said the businesses had grown exponentially and you no longer had oversight or control over all areas of the business. The report writer considered that you appeared to apportion responsibility to others. You also appeared surprised charges were ongoing and referred to the significant financial payment you had made as part of a settlement; this appeared to be viewed by you as a punitive measure and one that resolved the issue with little thought given to your actual offending. The report writer considered the little remorse you do display is directed at your own predicament.
[52] On the other hand, you have written a letter to the Court in which you accept responsibility for your offending and recognise there was no excuse. I acknowledge that. I have also read the letters from your family, and I acknowledge them. Letters provided by your associates and friends suggest you are genuinely remorseful for your offending and take ownership of it. A forensic psychologist’s report states you accepted responsibility for the tax evasion offending, but that you reported that you never intended not to settle the income tax returns and GST returns and were so overwhelmed at the time that it became easier to put matters off. The psychologist believed you evidenced a range of “ongoing cognitive distortions” in relation to your offending, such as minimising, blaming, rationalising and admitting only partial responsibility, but also considered the remorse you did express was genuine.
25 Compare R v Kampeng [2019] NZHC 2500.
26 R v Patterson [2008] NZCA 75 at [41].
The report is mixed at best. On balance, I do not consider you display sufficient genuine remorse to warrant a discrete discount.
[53] Your letter refers to your position as a primary carer for your elderly father and the stress you have placed the family under. Your mother also has limited mobility. As well, you reside with your 15 year old son who is completely dependent on you following your separation. It is clear from the various character references supplied that you are a respected member of your family and community; your children continue to support you, and you have positively contributed to the community over the years. I recognise you have had a serious fall from grace. Despite this, I consider the period over which the offending occurred and your previous convictions preclude a discrete discount for prior good character.
[54] Mr Bamford submits a further mitigating feature is the fact that the business operations simply “got out of control”. I cannot accept this. It is inherent in your guilty pleas on the more serious tax evasion charges that you knowingly supplied the Inland Revenue with false or misleading tax returns and laundered the proceeds of that tax evasion. The nature of the offending, particularly the re-writing of the cash books, and the period over which it occurred does not support this submission.
[55] As a result, there are no adjustments, up or down, for your personal circumstances.
Guilty plea
[56] You were charged on 15 March 2017. You pleaded guilty as part of an agreed resolution, on what was to be the second day of trial in October 2019.
[57] Mr Bamford submits a guilty plea of 25 per cent is justified. He submits you were not in a position to enter guilty pleas until experts had reviewed the prosecution evidence. He outlines the calculations the defence experts arrived at in some detail and says the income tax return charges were significantly amended on the basis of those calculations.
[58] The Crown submits a discount in the vicinity of 10 to 15 per cent is justified; the resolution of the charges did spare many witnesses from giving evidence, but this, the Crown says, is balanced against the strength of the evidence against you and the lateness of the pleas.
[59] You did not plead guilty at the earliest available opportunity; there was sufficient time to review the evidence and arrive at a resolution prior to late 2019. Based on the timing, a 10 per cent discount would be sufficient. However, I accept your pleas were entered only after the Crown quite significantly amended 17 of the income tax charges, effectively ‘downgrading’ them, and three charges were also withdrawn. As the Crown acknowledges, the guilty pleas further spared around 20 witnesses from giving evidence. Accordingly, I consider a discount of 15 per cent is warranted.
[60] Applying the discount of 15 per cent, or seven months, to three years and nine months’ imprisonment brings the end sentence to one of three years and two months’ imprisonment. It is therefore not open for me to consider a less restrictive sentence than imprisonment.
[61] Mr Dickey also seeks a fine in the order of $100,000 on the 17 lesser tax charges. I am satisfied this can be addressed as discrete as I have not factored these charges into the starting point for the more serious charges.
[62] In the circumstances, given my sentence of imprisonment on the other charges, the recovery made, and the ability to pay which was acknowledged, I consider a fine at the lower end is appropriate in the order of $3,000 per charge. I consider a fine of
$50,000 is appropriate. I do not take up Mr Bamford’s suggestion of fines on the more serious charges, given my approach to them.
Conclusion
[63]Mr Chahil, please stand.
[64] On the 17 charges of providing false information to the Commissioner, I sentence you to three years and two months’ imprisonment. Each of those sentences is to be served concurrently.
[65] On the 17 charges of knowingly not providing information to the Commissioner, I impose a total fine of $50,000.
[66] On the nine charges of money laundering, I sentence you to two years and one month’s imprisonment. Again, these are to be served concurrently.
[67] To re-iterate, Mr Chahil, your end sentence is one of three years and two months’ imprisonment together with the fine.
[68]Please stand down.
Mr Gupta
[69] Mr Gupta, I turn now to consider your appropriate sentence in relation to the nine charges of money laundering.
Starting point
[70] The Crown does not differentiate between your role in the money laundering scheme and that of Mr Chahil. It submits a starting point of two years and six months’ imprisonment is equally appropriate. Your counsel, Mr Billington QC, submits a starting point of two years’ imprisonment should be adopted, assessing your culpability as moderate.
[71] I identify at least three aggravating features of your offending. First, it occurred over a period of 14 months and involved multiple transactions. Secondly, the money laundering transactions involved funds totalling over $524,000. Thirdly, it was sophisticated. You controlled the deposit of large cash sums into bank accounts you or your entities controlled as well as the transfers to overseas bank accounts and/or the purchase of large amounts of foreign currency which was concealed and then remitted back to New Zealand.
[72] In relation to the last factor, I acknowledge Mr Billington’s submission that the sophistication of the offending should not be overstated. He says you were well known in the Indian community for providing a remittance service and assisting with foreign exchange; in some ways, you were doing no more than providing your usual services but were reckless as to the origin of the funds you were handling. That may be so, but inherent in the charge is at least recklessness that the funds were derived from a serious offence. Your utilisation of your relevant skills is aggravating.
[73] Despite that, I accept Mr Billington’s submission that care needs to be taken to ensure your offending is not conflated with the scale of the larger tax evasion scheme. The money laundering transactions occurred over a 14 month period, as opposed to the full six years, and many of the transactions occurred within the first six months of the charging period. The money laundering transactions involved funds totalling less than the funds resulting from the tax evasion offending.
[74] Mr Billington further submits that you should be sentenced on the basis of recklessness only. I accept it is sufficient for an offender to be reckless as to whether or not the property was the proceeds of a serious offence; actual knowledge is not essential. The Crown submits it would not have required much for you to speculate on the source of the cash from Mr Chahil. But there is little in the summary of facts which indicates that you knew the cash was the proceeds of tax evasion. The one reference to knowing might be read to incorporate recklessness. Mr Dickey accepts that single reference does not mean that you knew, as opposed to you were reckless. For actual knowledge to be relied on as an aggravating factor, it would need to be proved beyond reasonable doubt.27 So I accept Mr Billington’s submission. But you were still reckless. Having recognised the risk, you still assisted Mr Chahil in the foreign exchange transactions.
[75] The Court of Appeal has acknowledged that a distinction may be drawn between money laundering which involves personal benefit and circumstances where the misguided intention of the launderer is to help, without seeking any personal gain.28 You did not provide your services for free – you obtained a commission
27 Sentencing Act 2002, s 24(2)(c).
28 R v Wallace CA415/98, 16 December 1998 at 9.
accepted to be $5,000, after expenses had been deducted. The Crown does not accept that that was the extent of your benefit. But on the evidence, your personal gain was limited. Despite being involved in the machinations of the laundering, you acted at the direction of Mr Chahil and stood to gain less than he did.
[76] Sentences for money laundering should bear a relationship to sentences for the principal offending and be approached on a similar basis – the more serious the principal offending, the more serious the laundering.29 The starting point I adopted for Mr Chahil of three years and three months’ imprisonment reflects the seriousness of the lead tax offending.
[77] Taking these factors into account and the comparable case law,30 I adopt a starting point for you of two years’ imprisonment.
Aggravating and mitigating features personal to Mr Gupta
[78] Turning to aggravating and mitigating features personal to you, there are no aggravating features personal to you.
[79] Mr Billington submits that a discount is available for your prior good character. You are 65 years old and have no prior convictions. You are a well-respected member of the community. The Crown submits any discount must be modest, given the offending was prolonged and repeated. Further, you used your abilities to manipulate financial regulatory systems.
[80] Evidence of an offender’s previous good character is a mandatory consideration.31 The rationale behind this is two-fold. A defendant without prior convictions, and otherwise generally of good character, deserves some leniency for an
29 R v Wallace CA415/98, 16 December 1998 at 8-9.
30 In R v Khan [2018] NZHC 3065, the offender was convicted of 17 charges of money laundering proceeds from drug-offending. He was charged with acting recklessly rather than deliberately and received only a trivial financial gain. Peters J adopted a starting point of two years and six months’ imprisonment to reflect the sheer number of charges and the offender’s direct involvement in “getting the money out of New Zealand”. In R v Simanu HC Auckland CRI-2008-004-020453, 16 December 2010, the offender was found guilty of five charges of money laundering a sum of approximately $85,000 over the course of roughly a year. Woolford J adopted a starting point of 20 months imprisonment; the offender’s involvement was limited and she was reckless as the origins of the funds. She also received only modest payments for her involvement.
31 Sentencing Act 2002, s 9(2)(g).
offence that represents an isolated lapse from grace.32 Previous good character can also indicate a greater capacity for rehabilitation.33
[81] Your offending took place over 14 months, although the bulk of the offending did occur within the first six months. While your offending was reckless and repetitive, I do not consider the period over which the offending occurred precludes a good character discount entirely.
[82] The Court has been provided with various letters of reference from your friends, family and associates, which I acknowledge. It is clear you are well-respected and the letters indicate the high esteem with which you are held. They portray your offending as totally out of character, and almost all attest to the contributions made to the community. For example, you have been the treasurer of two charitable trusts which use initiatives to give back to the community.
[83] You have clearly been a contributing member of the community and your fall from grace is a punishment in itself.34 I consider a discount for prior good character is warranted but recognise it must be limited given the period over which the offending occurred. A discount of five per cent is appropriate.
[84] Mr Billington submits you are entitled to a further discount for remorse. I agree. The pre-sentence report writer considered you are remorseful and accept responsibility for your offending. You have provided the Court with a letter expressing your remorse. It is insightful and well written. I accept that you appreciate the effect your offending has had on your family, community and the wider public. You have also offered to pay reparation of $5,000 in light of the commission received – as mentioned, Mr Dickey does not accept that is the extent of the benefit. I propose a further discount of five per cent is warranted for remorse.
[85] Mr Billington submits your health concerns are a further mitigating factor. You are 65 years old and have various health problems. Of particular concern is your treatment for congestive heart failure with irregular rhythm, for which you take long-
32 Taylor v R [2017] NZCA 574 at [24].
33 At [24].
34 R v Findlay [2007] NZCA 553 at [91].
term medication. Both your cardiologist and GP advised it would be preferable for you to minimise stress. An offender’s age and ill health are to be taken into account to the extent they are applicable and if not recognising them would render an otherwise appropriate sentence disproportionately severe.35 But I do not consider a discrete discount for your ill health is necessary or appropriate – even without a discrete discount for ill health, I need to consider whether the appropriate sentence is imprisonment or home detention.
[86] Applying a combined discount of 10 per cent to the starting point of two years’ imprisonment reduces your sentence to one year and ten months’ imprisonment.
Guilty plea
[87] You are entitled to a further discount for your guilty pleas. Mr Dickey and Mr Billington agree it should be in the vicinity of 10 to 15 per cent. As discussed in relation to Mr Chahil, the guilty pleas were not entered at the first available opportunity. Your pleas followed those of Mr Chahil later the same day. Your charges were not amended. For that reason, I consider your discount should be less than that for Mr Chahil. For you, a discount of 10 per cent is warranted. That brings your end sentence to one year and eight months’ imprisonment.
Home detention
[88] As your end sentence is two years’ imprisonment or less, it enables me to consider home detention.
[89] The Crown acknowledges a sentence of home detention may be appropriate for you in all the circumstances. Mr Billington agrees, submitting that in the circumstances of this case, particularly given your age and health, a sentence of home detention is the appropriate outcome.
35 M (CA91/2012) v R [2013] NZCA 325 at [52].
[90] In determining whether a short-term period of imprisonment should be commuted to a sentence of home detention, a sentencing judge “must make a considered and principled choice between the forms of sentence”.36
[91] The pre-sentence report writer identified your poor attitudes and anti-social associates as offending related risk factors. However, the report writer considered the risk of re-offending is low, and the risk of harm to others is also assessed as low. The report writer ultimately recommended a sentence of home detention, given your remorse, willingness to pay reparation and ill health. There are no issues with the proposed address.
[92] I consider you are a good candidate for home detention. I also do not overlook your significant health issues in this regard, which weigh in favour of home detention. Ultimately, I consider a sentence of home detention would be the least restrictive outcome,37 but will still serve the principles of denunciation and deterrence.38
[93] To determine the length of any sentence of home detention, an evaluative assessment is required.39 This involves considering all factors relevant to the offender and the term fixed must be consistent with the purposes and principles of the Sentencing Act 2002, including imposing the least restrictive sentence appropriate.40
[94] In the circumstances, I consider a term of ten months’ home detention to be appropriate.
Conclusion
[95]Mr Gupta, please stand.
[96] On each of the nine charges of money laundering, I sentence you to ten months’ home detention with standard conditions and the special conditions set out in the pre-sentence PAC report. These sentences are to be served concurrently.
36 Fairbrother v R [2013] NZCA 340 at [30].
37 Sentencing Act 2002, s 8(g).
38 See Fairbrother v R [2013] NZCA 340 at [30].
39 R v Bisschop [2008] NZCA 229 at [18].
40 At [18].
[97]I also order you to pay $5,000 in reparation.
[98]Please stand down.
Gault J
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