R v Chevin
[2017] NZHC 285
•28 February 2017
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CRI-2014-004-002293 [2017] NZHC 285
THE QUEEN
v
PETER LOUIS CHEVIN
Hearing: 28 February 2017 Appearances:
B M Finn for the Crown
A J Lloyd for the DefendantSentencing:
28 February 2017
SENTENCING NOTES OF WOOLFORD J
Solicitors: Crown Solicitor, Auckland
Counsel: A J Lloyd, Minter Ellison Rudd, Auckland
R v CHEVIN [2017] NZHC 285 [28 February 2017]
Introduction
[1] Mr Chevin you are for sentence on nine representative charges of theft by a person in a special relationship.1 The maximum penalty is seven years imprisonment.2 You pleaded guilty to a previous version of these charges following a sentence indication I gave you on 5 August 2016.3 I annex a copy of that indication to these notes and will sentence you in accordance with it today.
[2] Since the sentence indication, the charges which you are facing have been amended. You now face nine charges rather than 10, as the Crown is no longer pursuing Charge One, the “TTA charge”. In formal terms, you withdrew your pleas of guilty to the earlier charges and promptly entered pleas of guilty to the amended charges.
Background
The offending
[3] The background to your offending is set out in full in my sentence indication. However, for the sake of completeness, I will briefly summarise the more important facts.
[4] You were one of five defendants due to commence a 12 week trial on
8 August 2016. You were the only defendant to plead guilty. The trial of your co- defendants has now well exceeded its allotted time and is still ongoing. The principal defendant in the Crown case is your acquaintance Mr Bublitz. The allegations are that he acquired and used two finance companies, Mutual Finance Limited (Mutual) and Viaduct Capital Ltd (Viaduct), to support his various property interests. You and the other defendants are said to have assisted him. Mutual, which had the benefit of a Crown guarantee, was purchased and used, according to the
Crown, to support Viaduct through a series of illegal related party transactions.
1 Crimes Act 1961, s 220.
2 Crimes Act 1961, s 223.
3 R v Chevin [2016] NZHC 1819; Criminal Procedure Act 2011, s 61.
[5] Your admitted offending occurred over a period of four to five months. The basis of the charges against you is that you had control, along with others, of investors’ funds in Mutual. The funds were held on terms that required them to be dealt with in accordance with a Debenture Trust Deed. You have pleaded guilty to dealing with certain funds otherwise than in accordance with those requirements. As I mentioned earlier, the Crown no longer pursues the “TTA charge” so the total value of the transactions in the remaining charges is $2,280,000.
[6] The remaining charges relate to specific aspects of the related party transactions. They are:
(a) That you were involved in purchasing a loan to Homebush Trustees
Limited from Viaduct for $495,000;
(b)That you were involved in purchasing loans of $235,000 to each of Stuart James Bruce, Stephen Ebert and Andreas Roseneder from Viaduct;
(c) That you were involved in purchasing loans of $220,000 to each of DHL Investments Limited, Retail Kumeu Limited, Cinco Procurements Limited and Fenton DHL Limited from Viaduct; and
(d)That you were involved in paying $200,000 to Viaduct to purchase a loan from Hilltop Ridge Farms Limited.
[7] While you were a secondary party to the offending, it is alleged that you were involved in discussing and arranging these transactions with other defendants and on one transaction were involved in drafting credit submissions to support the purchases. In relation to the DHL Investments Ltd, Retail Kumeu Ltd and Cinco Procurements Ltd transactions you were also involved in recruiting associates to provide the appearance of holding shares in another company, Dockland, which had ostensibly been purchased by those borrowing parties from Viaduct, but which in fact there was never any real intention to transfer.
[8] The Crown case in relation to you Mr Chevin is that you were wilfully blind. You were aware there was a substantial risk the transactions would breach related party restrictions in the Trust Deed and Crown guarantee, but facilitated them regardless without inquiring further.
[9] You were not a director of Mutual, but were paid for your time through a trust called the Stonne Trust. Payments were made from the Hunter Capital group of entities, which was controlled by Mr Bublitz, and at times from Mutual.
[10] The total loss to the Crown from the scheme is assessed as being
$4.3-$5.6 million.
Personal Circumstances
[11] In terms of personal factors, Mr Chevin you are 52 years old. You have a number of previous convictions which relevantly include six charges of failing to do required acts as a bankrupt, one charge of managing a company as a prohibited person, one charge of failing to assist a liquidator, one charge of failing to supply records to a liquidator and one charge of failing to keep books and records. These charges, like the present offending, relate to improper financial and company management. They were all, however, at a far less serious level than the present offending.
[12] Your initial pre-sentence report prepared by the Department of Corrections wrongly recorded that you had no previous convictions. This was, however, updated when you yourself identified the error. On reconsideration the Department of Corrections did not change its recommendation. In any event, your conviction history was before the Court and was referred to during your sentence indication so I do not see this error as raising any issue at sentencing today.
[13] The pre-sentence report also records that you live with your wife of 26 years and the youngest of your four children. You continue to have the support and care of your family. You told the report writer that you took the opportunity to become involved in Mutual’s business against the advice of your wife. You reported that you
were struggling to secure sustainable employment at the time due to the global financial crisis.
[14] You say now that you are “exceedingly remorseful” and that your actions were “stupid” and “wrong”. Your remorse was assessed by the writer of the pre- sentence report as being genuine and sincere.
[15] Your risk of re-offending was assessed by the report as low. I note, however, that this was expressly in the context of the report writer believing you had no previous convictions. In light of your true conviction history, I would place your risk of re-offending slightly higher.
[16] There is one other important factor I need to discuss in relation to your personal circumstances – your assistance to the Financial Markets Authority (FMA) investigation. The Crown reports that following notice of the FMA investigation in
2012 you were asked by Mr Bublitz to destroy a number of documents. You did not do so and instead drew them to the attention of the FMA. As the Crown submitted prior to your sentence indication, the documents were of considerable assistance. You continued to co-operate with the investigation and offered future assistance during the trial if evidence provided by you would be of assistance.
[17] In relation to your subsequent co-operation and assistance, the Crown now submits that you have not provided further assistance of considerable merit since the sentence indication. The Crown, however, did not take you up on your offer to give evidence at the trial of your co-defendants. They say that your statement did not address many of the documents and events most relevant to the case against you and your co-defendants. It was also provided late relative to the trial. The Crown therefore considers that the value of your assistance to their case was ultimately limited to the provision of 19 boxes of documentary material in 2012, and your two interviews around that time.
Approach to sentencing
[18] In sentencing you now Mr Chevin, I will follow the standard three stage approach that I used during your sentence indication.4 This means I will first explain the starting point that I have selected. I will then make any necessary adjustments for personal aggravating and mitigating factors. Finally, I will apply a discount for your guilty plea.
Starting point
[19] In my sentence indication I recorded the view that a starting point of three years imprisonment was likely to be appropriate. As I said, the approach to offending under s 220 of the Crimes Act is as set out by the Court of Appeal in R v Varjan:5
[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.
[20] Although competing contentions were put to me as to the extent of your role in the scheme, I considered that you were substantially involved in operations and had been since the outset of planning around Mutual. Your knowledge is to be assessed on the basis of wilful blindness. You were not a director, but this factor carries relatively little importance given that you were prevented from holding that position by your status as a bankrupt. Your offending occurred over a period of four to five months. Its direct victim – that is the investors – have been compensated by the Crown guarantee. The result of this, however, is that the scheme in which you were involved has caused significant loss to the Crown estimated to be between $4.3 and $5.6 million.
[21] I also identified three comparable cases of particular relevance.
4 R v Taueki [2005] 3 NZLR 372 (CA) and Hessell v R [2010] NZSC 135, [2011] 1 NZLR 607.
5 R v Varjan CA97/03, 26 July 2003; approved recently in Tallentire v R [2012] NZCA 610, [2013] 1 NZLR 548 at [179].
[22] The first was Hamilton v R in which the offending attracted a starting point of five years imprisonment.6 The defendant in that case assisted the principal offenders in the Belgrave finance company collapse to set up a scheme deliberately designed to conceal relevant companies. He prepared documentation for 14 of the transactions and played a key role in facilitating them. His knowledge and culpability were held to be significant. His role as a solicitor was an additional aggravating factor. Your
role in the current scheme was not as central, you are not a solicitor and were not actually involved in preparing false documentation. Your culpability is clearly to be regarded as being at a lower level.
[23] In the second case, R v Cropp, the offender received a starting point of three years and four months imprisonment. 7 As the Chief Executive Officer of Dominion Finance he had been involved in permitting a deceitful loan application to go before the Credit Committee as part of four separate thefts under s 220. The Court accepted that he had not been motivated by personal benefit, but there had been elements of premeditation and a degree of dishonesty. As in that case you were paid, but did not receive any additional financial benefit. Unlike Mr Cropp you did not deliberately put deceitful documents before authorities. Based on your overall role, I therefore
placed your culpability at a slightly lower level than Mr Cropp’s.
[24] The third case, R v O’Leary, involved an offender Mr Gardner (a director of Rockforte Finance Ltd), who pleaded guilty to two charges under s 220 as well as counts of making a false statement by a promoter and obtaining by deception.8 The s 220 charges involved related party transactions and exposure limit breaches. It was accepted that Mr Gardner had a general knowledge that other related party loans were occurring, but was not involved in facilitating or implementing them. Mr Gardner received a starting point of two years and six months imprisonment. As I said, I consider this was clearly at the lower end of the available range.
[25] Ultimately I placed your offending between that of Mr Gardner and
Mr Cropp. For that reason, and given the features of your offending discussed
6 Hamilton v R [2015] NZCA 28.
7 R v Cropp [2013] NZHC 1193.
8 R v O’Leary [2013] NZHC 2784.
above, I was of the view that a starting point of three years imprisonment was appropriate.
[26] As noted above, the total value of the transactions that make up the charges against you has decreased to $2,280,000 since my sentence indication. As the Crown submits, I did not refer explicitly to the total value of the transactions when considering the aggravating features of your offending. Rather, in assessing your culpability I focused on your role and level of involvement in the scheme, your level of knowledge and the extent to which your offending was deliberate, and the serious impact and loss stemming from the overall offending. The Crown submits that there is, therefore, no reason for me to now depart from a starting point of three years imprisonment.
[27] However, in the circumstances of the case with the withdrawal of the TTA charge and the decrease in the total value of the transactions, I do consider that a modest reduction in the starting point is warranted. Hence I will adopt a starting point of two years and nine months imprisonment.
Adjusting for personal factors
[28] As I noted in the sentence indication, no discount for good behaviour is appropriate given your past criminal record, specifically in relation to financial crime. However, your status as a banned director and a three-time bankrupt with numerous convictions for breaching limitations placed on bankrupts has been treated as aggravating your offending generally rather than warranting a specific uplift.
[29] The major discount available to you, supported by the Crown, is for your co- operation and assistance with the investigation. You provided documentation to the FMA despite Mr Bublitz’s instructions to dispose of the documents. While there was a delay in your provision of the evidence, the prosecution found this early evidence useful. However, the prosecution submits that they did not find the subsequent statement you provided at the time of your sentence indication of much further assistance. Rather, they submit it amounts primarily to a plea in mitigation.
[30] Previously the Court has held that where there has been a delay in providing evidence, a 10 per cent discount is appropriate. However, the Court in that case acknowledged that the “discount might have been greater had the information been provided earlier and thus proved sufficiently helpful to the Police to justify the prosecution of the co-offenders”.9 As I noted in the sentence indication, the prosecution has found your initial evidence helpful. At the time I said a discount of at least 15-20 per cent for the information and documentation provided prior to the trial was warranted, with potential for an additional discount for valuable future
assistance. Given that since the commencement of the trial you have continued to co-operate, but have not contributed additional evidence of value, I consider that a discount of 20 per cent is appropriate.
[31] The writer of the pre-sentence report was of the view that you have taken responsibility for your actions and demonstrate genuine remorse. I therefore consider that you are entitled to a further five per cent discount to take into account remorse.
[32] There remains the question of the appropriate discount for your guilty plea. I considered that you would not be entitled to a full 25 per cent discount given your guilty plea came on the eve of trial. Given the length and complexity of the trial, it nonetheless saved a considerable amount of time. I also accepted that you faced difficulties in properly instructing counsel further in advance of the hearing, but had signalled an intention to co-operate considerably earlier. Thus as indicated, a 20 per cent discount is appropriate.
[33] Taking into account your co-operation, your remorse and your guilty plea, I
adopt a total discount of approximately 45 per cent. This places your final sentence at 18 months imprisonment.
9 K (CA79/2016) v R [2016] NZCA 297 at [18].
Home detention
[34] Given that I have reached an end sentence of imprisonment of less than
24 months, home detention is available as a sentencing option for you.10 Whether or not it is appropriate to impose home detention is thus at my discretion.11
[35] The pre-sentence report deemed your address suitable for electronic monitoring. The report writer recommended a sentence of home detention despite notification of your previous convictions. The Crown does not oppose a sentence of home detention. However, they submit that any sentence should be at the upper end of the available range to ensure denunciation of your serious offending.
[36] Rehabilitative considerations are generally considered to be important in determining whether to sentence an offender to home detention.12 In your case, you have started to re-establish your professional reputation since leaving the employment of Mr Bublitz. You have been discharged as a bankrupt and your management ban has expired without any further issues. You have established an income and started to pay off debts.
[37] Given your remorse, assistance with the authorities and the steps you have taken towards ensuring positive reintegration with the community, I am satisfied that the purposes and principles of sentencing can be achieved in your case by a sentence of home detention.13
[38] The maximum term available for home detention is 12 months.14 A sentence of home detention is generally equivalent to a term of imprisonment that is twice as long. This reflects the fact that those serving short-term sentences of imprisonment are automatically released after serving half their sentence, whereas a sentence of
home detention will be served in full.15 However, “halving” is not automatic, and
10 Sentencing Act 2002, s 15A(1)(b).
11 Doolan v R [2011] NZCA 542 at [38].
12 R v Hill [2008] NZCA 41, [2008] 2 NZLR 381 at [37].
13 Sentencing Act 2002, s 16(2)(b).
14 Sentencing Act 2002, s 80A(3).
15 Parole Act 2002, s 86(1).
the Court will fix the term in light of “an evaluative assessment of all the circumstances”.16
[39] I consider that a term of nine months home detention is appropriate. This is towards the upper end of the available range for home detention. It therefore holds you accountable for the harm you have done, denounces the conduct in which you were involved, and acknowledges the gravity of your offending.
Sentence
[40] Mr Chevin, would you please now stand. Accordingly, I impose a sentence of nine months home detention on each of the nine charges to which you have pleaded guilty.
[41] Stand down.
……………………………….
Woolford J
16 R v Bisschop [2008 NZCA 229 at [19].
NOTE: PUBLICATION OF THE JUDGMENT AND OF THE REQUEST FOR A SENTENCING INDICATION IN ANY NEWS MEDIA OR ON THE INTERNET OR OTHER PUBLICLY ACCESSIBLE DATABASE IS PROHIBITED BY SECTION 63 OF THE CRIMINAL PROCEDURE ACT
2011 UNTIL THE DEFENDANT HAS BEEN SENTENCED OR THE CHARGE DISMISSED.
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CRI-2014-004-002293 [2016] NZHC 1819
THE QUEEN
v
PETER LOUIS CHEVIN
Hearing: 5 August 2016 Appearances:
B M Finn for the Crown
A J Lloyd for the DefendantSentence
Indication:
5 August 2016
SENTENCE INDICATION OF WOOLFORD J
Solicitors: Crown Solicitor, Auckland
Counsel: A J Lloyd, Minter Ellison Rudd, Auckland
Introduction
[1] Peter Louis Chevin currently faces 20 charges laid by the Financial Markets Authority. The first charge alleges that Mr Chevin concurred in the making of a false statement in a letter to an officer of the Treasury dated 27 November 2009. His concurrence was with intent to deceive the Treasury. It is laid under s 242 of the Crimes Act 1961. The maximum penalty under s 242 is 10 years imprisonment.
[2] The other 19 charges are all laid under s 220 of the Crimes Act 1961 and allege that Mr Chevin had control, along with others, of investors’ funds in Mutual Finance Limited (Mutual) on terms which he knew required them to deal with the funds in accordance with a Debenture Trust Deed and intentionally dealt with the funds otherwise than in accordance with those requirements and thereby committed theft. The maximum penalty under s 220 is seven years imprisonment.
[3] Mr Chevin seeks a sentence indication on the basis of 10 charges under s 220 of the Crimes Act 1961. This excludes the original charge under s 242, and consolidates the remaining 19 charges into 10 representative charges.
[4] The first of these 10 charges, I am advised, alleges that Mr Chevin was involved in transactions with a related party, Viaduct Capital Limited (Viaduct), totalling $4,310,000 which breached Clause 5.2(b) of Mutual’s Trust Deed in that the aggregate value of related party transactions exceeded two per cent of Mutual’s total tangible assets over any 12 month period. This charge apparently encompasses all the transactions with which Mr Chevin is alleged to have been involved.
[5] The other charges cover offending relating to four different transactions. These are:
(a) Purchasing a loan to Homebush Trustees Limited from Viaduct to the value of $495,000.
(b) Purchasing loans of $235,000 to each of Stuart James Bruce, Stephen
Ebert and Andreas Roseneder from Viaduct.
(c) Purchasing loans of $220,000 to each of DHL Investments Limited, Retail Kumeu Limited, Cinco Procurements Limited and Fenton DHL Limited from Viaduct.
(d) Paying Viaduct $200,000 to purchase a loan to Hilltop Ridge Farms
Limited.
[6] The sum involved in these four transactions was $2,280,000 or approximately half of the total sum of $4,310,000 with which Mr Chevin is said to have been involved.
[7] Mr Chevin’s 12 week trial is due to commence on Monday, 8 August 2016. At a telephone conference at 9:00 a.m. yesterday, Thursday, 4 August 2016, counsel for Mr Chevin sought a sentence indication. I have, accordingly, heard from counsel at 2:15 p.m. today. My sentence indication follows. Because of time constraints, it is somewhat briefer than might otherwise be the case.
Factual background
[8] Mr Chevin is one of five defendants in this trial. He was a friend of Paul Neville Bublitz, who, the Crown allege, is the major defendant in the prosecution. The essence of the Crown case is that Mr Bublitz acquired and used two finance companies, Viaduct and Mutual, to support his various property interests and that the other defendants assisted him.
[9] The Crown allege that in the course of the acquisition of the two finance companies, the defendants deliberately misled investors and potential investors in Viaduct and Mutual by failing to disclose a series of related party transactions entered into for the benefit primarily for Mr Bublitz and his interests, rather than the finance companies. In effect, the Crown allege that the defendants were a party to the theft of a substantial part of the finance companies’ capital, to which the investing public and the New Zealand Government, under the Crown Guarantee, had contributed.
[10] Viaduct was acquired first. However, difficulties arose when Treasury withdrew the Crown Guarantee from Viaduct in April 2009. Mr Bublitz therefore allegedly set out to acquire a second finance company, Mutual, which continued to have the benefit of the Crown Guarantee. Mr Bublitz and Mr Chevin, together with others, were allegedly concerned to ensure that Mutual kept the Crown Guarantee and discussed how best to present the purchase of Mutual to Treasury.
[11] Following the acquisition of MFL and the appointment of a new board of directors, Mutual began purchasing loans from Viaduct. Sixteen loans were purchased from Viaduct between December 2009 and May 2010. The loans totalled just over $3.9 million. These were all alleged to have been in breach of both the Debenture Trust Deed entered into by Mutual and the Crown Guarantee.
[12] Mr Chevin’s charges under s 220 relate to four different transactions after Mutual had been purchased - the Homebush transaction, the Northgate transaction, the Dockland transaction and Hilltop transaction.
[13] On 26 January 2010, Mutual purchased a $240,000 portion of Viaduct’s loan
to Homebush Trustees Limited. On 10 February 2010, Mutual purchased a further
$255,000 portion of Viaduct’s loan to Homebush. Mr Chevin discussed arranging a purchase of both portions of the Homebush loan with Mr Bublitz and others. Viaduct and Mutual were related parties as they were under the common control of Mr Bublitz or entities associated with him.
[14] Between 14 March 2010 and 24 March 2010 Mutal purchased a $235,000 portion of each of the Viaduct loans to three Northgate borrowers, Messrs Bruce Ebert and Roseneder. Again, Mr Chevin discussed arranging the Northgate loan purchases with Mr Bublitz and others.
[15] In early 2010 Viaduct was in serious financial difficulties and urgently needed cashflow. In March 2010 Mr Bublitz, Mr Chevin and others organised for companies linked to their associates to purchase Dockland shares from Viaduct. The companies were:
(a) DHL Investments Limited; (b) Retail Kumeu Limited;
(c) Cinco Procurements Limited; and
(d) Fenton DHL Limited.
[16] Each of the borrowers entered into a sale and purchase agreement for
375,000 Dockland shares for $625,000. The purchases were to be funded by a
$405,000 loan from Viaduct and a further $240,000 loan facility provided by Mutual.
[17] Between 21 March 2010 and 1 April 2010 Mutual entered into agreements to advance $240,000 loans to the four borrowers. In each case Mutual paid $220,000 directly to Viaduct, ostensibly the vendor of the shares. The shares were not in fact transferred to the borrowers and were never intended to be transferred to the borrowers. Viaduct never obtained the consent of other Dockland shareholders for the proposed transfer of the shares as required by the Dockland Constitution. Mr Chevin and another were involved in recruiting associates to provide the appearance of holding the Dockland shares for Viaduct. Mr Chevin, Mr Bublitz and others discussed arranging the Dockland transactions.
[18] Finally, on 7 April 2010 Mutual purchased a $230,000 portion of Viaduct’s loan to Hilltop. On 7 April 2010 Mutual paid $200,000 to Viaduct. The remaining monies were paid to creditors of Hilltop between 12 April 2010 and 27 April 2010. Mr Chevin was involved in drafting the credit submission in support of the purchase and Mr Chevin discussed with Mr Bublitz and others arranging purchase of the Hilltop loan.
[19] The Crown case in relation to Mr Chevin is that he was wilfully blind in relation to each of the transactions set out above, and that he was aware of the substantial risk that the proposed transactions would breach related party restrictions, but resolved to facilitate their entry anyway, without making inquiry independent of Mr Bublitz to avoid confirming his suspicions.
[20] Mr Chevin was at no point a director of any of the relevant companies. The Crown says he was paid for his time through a trust called the Stonne Trust. Payments were made to his Trust from the Hunter Capital group of entities, controlled by Mr Bublitz, and at times from Mutual.
Submissions
[21] The Crown submits that Mr Chevin’s offending was aggravated by his premeditation, in that he understood that the purpose of purchasing Mutual and undertaking the transactions was to channel money from Mutual to Viaduct and Hunter Capital, even if, on the Crown case, he may not have known the implications of such transactions at all times.
[22] The Crown also points to the scale and duration of the offending, the loss, the fact that he was a banned director and the fact that he personally benefited from the offending. The Crown says that Mr Chevin operated as a de facto director of Mutual, albeit controlled by Mr Bublitz. The total loss to the Crown from the scheme is assessed at $4.3 - $5.6 million before interest, and his offending was over four to five months.
[23] The Crown notes that his involvement was, however, as a secondary party as reflected in his charges under s 66(1)(b) of the Crimes Act of assisting Mr Bublitz to carry out these transactions. The Crown describes him as one of Mr Bublitz’s most trusted advisers, playing a large role in canvassing and arranging many of the transactions that were signed off by Mr Bublitz.
[24] The Crown asks for a starting point of three and half to four years imprisonment.
[25] The Crown, however, ask for substantial discounts for Mr Chevin’s co- operation with the investigation. They say that, following notice of the FMA investigation in 2012, Mr Chevin was asked to destroy a number of documents, which he did not do, and instead drew them to the attention of the FMA. These documents have assisted in formulating the Crown case. The Crown says that Mr Chevin may be willing to give further assistance in the case, which could also
warrant a further discount. In light of his current co-operation, they seek a 15 –
20 per cent discount.
[26] In addition, the Crown acknowledges that Mr Chevin would be entitled to a maximum discount of 20 per cent for his guilty plea.
[27] Mr Lloyd, for Mr Chevin, says that Mr Chevin was not an active participant in Mr Bublitz’s scheme, and that he merely turned a blind eye to the offending taking place. Mr Lloyd describes this as “deliberate” and “elected naivety”. He says that Mr Chevin was not a main protagonist in the offending and that his culpability was low. He characterises the main role of Mr Chevin as being to advise and project manage actual property investments, and emphasises that he had no background in finance.
[28] Mr Lloyd says that Mr Chevin was assured of the legality of the transactions by Mr Bublitz, with confirmation received from a former Treasury employee during his time working for them. He accepts providing assistance to the scheme to implement the proposed transactions and that he did, at times, begin to provide ideas for the schemes outside his area of expertise.
[29] Mr Lloyd emphasises Mr Chevin’s efforts to preserve documents directly against Mr Bublitz’s instructions in 2012 and that after leaving Mr Bublitz’s employment, he approached authorities offering to be interviewed and provided
20 hours of interview to the FMA.
[30] He asks for a sentence of 350 hours community work or a low end sentence of imprisonment (about 12 months imprisonment) converted to community detention. He asks for discounts of up to 40 per cent from the starting point.
Analysis
[31] I have considered a range of cases involving financial crime of this general type.1 I note the comments made in R v Varjan, approved recently by the Court of Appeal in Tallentire v R in the context of offending under s 220:2
[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 the breaches of trust involved; and the impact on victims.
[32] The Crown refers to the cases of R v Cropp and Hamilton v R.3 I have also considered the case of R v O’Leary, the sentencing of Mr O’Leary and Mr Gardner after the collapse of Rockforte Finance in 2011.4 In my view, Mr Chevin’s culpability sits between that of Mr Gardner and Mr Cropp.
[33] Mr Hamilton assisted the principal offenders in the Belgrave Finance collapse to set up the scheme, which was deliberately designed to conceal control of the relevant companies. He prepared documentation for 14 loans from Belgrave via the trust. His level of knowledge and culpability for the scheme itself was significant, given his key role in creating it and facilitating it. His role as a solicitor was also a significant aggravating factor. The starting point of five years was described by the
Court of Appeal as “unassailable”.5
[34] Mr Chevin did not have as central or formal a role in the scheme in this case, and neither was he a solicitor with the attendant duties of being an officer of the court. He was not actually involved in preparing any false documentation, and has only been charged as a party in relation to the s 220 offending. This clearly places
his culpability as lower than Mr Hamilton.
1 R v Smith [2013] NZHC 1341; R v Williams [2013] NZHC 2139; R v Bowden [2012] NZHC
1249; R v Kirk DC Auckland CRI-2009-004-24026, 21 December 2010; Roest v R [2013] NZCA 547, [2014] 2 NZLR 296; Ludlow v R [2013] NZCA 196; R v Douglas [2012] NZHC
2271; Tallentire v R [2012] NZCA 610, [2013] 1 NZLR 548; Watson v R [2012] NZCA 17; R v
Cropp [2013] NZHC 1193.
2 R v Varjan CA97/03, 26 July 2003 approved by the Court of Appeal in Tallentire v R [2012] NZCA 610, [2013] 1 NZLR 548 at [179] as “a useful basis for analysis”.
3 R v Cropp [2013] NZHC 1193 and Hamilton v R [2015] NZCA 28.
4 R v O’Leary [2013] NZHC 2784.
5 At [23]
[35] Mr Cropp was the CEO of Dominion Finance, and had been involved in permitting a deceitful loan application to go before the Credit Committee as part of four separate incidents of theft under s 220. A starting point of three years four months imprisonment was adopted, in circumstances in which Lang J accepted that Mr Cropp was motivated by trying to keep Dominion afloat and not greed or personal benefit. There had been elements of premeditation and it involved a limited degree of dishonesty.
[36] Mr Chevin was paid for his involvement, although similarly to Mr Cropp, received no additional financial benefit. He did not deliberately put deceitful documents in front of authorities, although he has conceded he was wilfully blind to the progress of some transactions. In my view, the deliberate nature of Mr Cropp’s offending places his overall culpability as slightly higher that Mr Chevin. The fact that Mr Chevin was not a director, as noted by his counsel, is not particularly compelling given that Mr Chevin was unable to be a director given his status as a bankrupt. He was clearly highly involved in the operations and had been since the outset of the planning around Mutual.
[37] Comparing his role to the co-offenders sentenced in O’Leary, in that case Mr Gardner was a director of Rockforte Finance and pleaded guilty to just two charges under s 220 as well as two counts of making a false statement by a promoter and one charge of obtaining by deception, in relation to obtaining entry into the Crown Retail Guarantee Deposit Scheme. The Court noted that the s 220 counts related to related party and exposure limit breaches that occurred, regarding which it “was also accepted that you had a general knowledge that other related party loans were occurring, but did not know the detail, and were not involved in facilitating or
implementing them”.6 It was commented that he was “complicit in and knowingly
involved in the deceit involved in disguising the true situation”.7 A starting point of two years six months imprisonment was given, clearly, in my view, at the lower end
available for this type of offending.
6 At [13].
7 At [14].
[38] In my view, Mr Chevin’s involvement was more serious than Mr Gardner’s. On the Crown case, Mr Chevin knew, by way of wilful blindness, of the ulterior purpose behind the purchase of Mutual and the fact that it was to be used to channel money to other of Mr Bublitz’s companies. The evidence demonstrates his involvement in extensive discussions to that effect, which went on over four to five months. He acknowledges actions such as recruiting his wife to hold assets as part of the four impugned transactions, and he was involved in preparing one of the credit submissions. He knew the detail, and did not inquire, which Mr Gardner did not. Further, he could almost be seen to be acting as a de facto director in circumstances where he had been bankrupted.
[39] In my view, a starting point of imprisonment is clearly necessary to reflect the seriousness of the offending. Any lesser starting point would not reflect the serious impact and loss stemming from the overall offending, with which Mr Chevin was clearly intimately connected. This can be demonstrated with reflection on the sentence given to Mr Gardner, in similar circumstances.
[40] Taking into account the basis of the Crown case as formulated around Mr Chevin being wilfully blind only to the nature of the transactions, I indicate that a starting point of three years imprisonment is likely appropriate. This places Mr Chevin’s culpability as slightly above Mr Gardner’s, given his higher level of involvement in developing the scheme, but below the level of Mr Hamilton, a lawyer who specifically designed the scheme or Mr Cropp, who did deliberately facilitate dishonest transactions.
[41] In relation to Mr Chevin personally, in the absence of a pre-sentence report and other evidence as to his personal circumstances, a precise figure cannot be reached for any reduction in sentence for mitigating features.
[42] Certainly, given his past criminal record specifically in relation to financial crime, no discount for prior good behaviour is appropriate. The Crown has taken a generous approach in seeing Mr Chevin’s status as a banned director, as a three-time bankrupt with numerous convictions for breaching limitations placed on bankrupts, as aggravating his offending generally rather than warranting a specific uplift.
[43] The major discount available to Mr Chevin is for his co-operation with the investigation. It appears that he has provided very helpful documentation to the FMA and there is the possibility that he may offer further assistance to them. Without having finally determined the extent of Mr Chevin’s assistance, I cannot indicate a specific discount that is likely to be appropriate. I can, however, indicate a general range that is given for assistance.
[44] In circumstances where there has been a delay in providing evidence to the Police, a 10 per cent discount has been given although the Court in that case noted that the “discount might have been greater had the information been provided earlier and thus proved sufficiently helpful to the Police to justify the prosecution of the co- offenders”.8 Clearly the prosecution have found Mr Chevin’s evidence helpful. A discount of at least 15 – 20 per cent for the information and documentation he has provided so far appears warranted. Documentary evidence of financial crime offending is of central importance to such cases.
[45] It is also available to me to indicate a discount for promised future assistance.9 Mr Chevin has provided a statement which indicates his willingness to assist the Crown and his acceptance of responsibility for his role in facilitating dishonest offending against investors and the Crown.
[46] In Hotchin v Police, another finance company case, a discount of 30 per cent was granted taking into account reparation, remorse and assistance to authorities, although in that case Lang J did not consider the assistance given to be of vital or even critical importance.10 In Hotchin, the Crown already had contemporaneous documents available to form their case against other parties. By contrast, the documents already given by Mr Chevin have clearly been useful to the authorities; if
further information and evidence is equally of assistance, a more substantial discount would be warranted. Evidently here, there has been limited time for evidence to be put forward as to Mr Chevin’s remorse, and whether that can be an additional factor
taken into account.
8 K (CA79/2016) v R [2016] NZCA 297 at [18].
9 R v Hadfield CA337/06, 14 December 2006; confirmed in R v Hessell [2009] NZCA 450, [2010]
2 NZLR 298 at [23] and F (CA596/2011) v R [2011] NZCA 628.
10 R v Hotchin HC Auckland CRI-2009-092-20927, 4 March 2011.
[47] Other cases have indicated an overall 60 per cent discount, when combined with an early guilty plea, can be appropriate for co-operation.11 Such a level, in my view, would not be warranted here, given my discussion below about the lateness of Mr Chevin’s proposed guilty plea. However, an overall 60 per cent reduction without the benefit of an early guilty plea, indicates a maximum reduction of about
35 per cent for assistance, depending of course on its extent and value to the prosecution.12
[48] Mr Chevin’s request for an indication, and concomitantly any guilty plea he makes, comes on the eve of trial. He is not, therefore, entitled to a full 25 per cent discount. The Crown has recommended a 20 per cent discount, taking into account the fact that Mr Chevin had apparently signalled an early intention to co-operate, but has only recently been in a position to properly instruct counsel and accept the gravity of his offending. In the circumstances, a 20 per cent discount would be at the high end.
[49] I am willing to indicate that, given the Crown’s concession that Mr Chevin at an early stage did initially signal an interest in co-operating and only recently instructed counsel, a 50 per cent discount would be at the upper end of the range that could be granted to Mr Chevin to reflect both his assistance and guilty plea. That would shape Mr Chevin’s end sentence at in the vicinity of 18 months imprisonment, clearly within range to consider his prospects for community-based sentences.
[50] It is, of course, the value of the evidence which shapes the level of discount a Judge can award for assistance to authorities.13 This will be the determining factor in finally setting any discount to Mr Chevin’s sentence.
Conclusion
[51] Overall, I can indicate that a starting point of around three years imprisonment is likely to be adopted, looking at the totality of Mr Chevin’s
offending. If discounts at the higher end of the spectrum are adopted, this places
11 See R v Hessell [2009] NZCA 450, [2010] 2 NZLR 298 at [23].
12 See Rau v Police HC Hamilton CRI-2010-419-76, 24 November 2010 as also reflecting this approach.
13 See R v Grace [2008] NZCA 243 and R v Simpson [2008] NZCA 467.
Mr Chevin’s end sentence at a level where it would be a short term sentence of
imprisonment and thus possible to consider community-based sentences.
[52] If a pre-sentence report was favourable in demonstrating Mr Chevin’s remorse for his actions, home or community detention could be appropriately considered at that stage.
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Woolford J
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