R v Colosimo
[2012] NZCA 60
•6 March 2012
| IN THE COURT OF APPEAL OF NEW ZEALAND |
| CA687/2011 [2012] NZCA 60 |
| BETWEEN MICHAEL SANTO COLOSIMO |
| AND THE QUEEN |
| Hearing: 16 February 2012 |
| Court: Stevens, Ronald Young and Andrews JJ |
| Counsel: W T Nabney and R E Nabney for Appellant |
| Judgment: 6 March 2012 at 4.00 pm |
JUDGMENT OF THE COURT
The appeals against conviction and sentence are dismissed.
____________________________________________________________________
REASONS OF THE COURT
(Given by Andrews J)
Introduction
After a two-week trial in the District Court at Tauranga before Judge Rollo and a jury, Mr Colosimo was found guilty on one count of forgery and one count of dishonestly using a document. He was sentenced on 10 October 2011 to imprisonment for two years and six months.[1]
[1]R v Colosimo DC Tauranga CRI-2009-070-6860, 10 October 2011 [sentencing judgment].
Mr Colosimo has appealed against his conviction and sentence. The appeal against sentence was on the grounds that evidence was improperly admitted, that the Judge should have declared a mistrial, and that the Judge’s summing up was unfairly prejudicial to Mr Colosimo. The appeal against sentence was on the grounds that it was manifestly excessive.
Background
Mr Colosimo owned a restaurant, known as The Kestrel, in Tauranga through a company Cervino Holdings Limited [Cervino]. Mr Colosimo was a director and shareholder of Cervino. In 2006, Mr Colosimo wished to sell the restaurant and the complainants were interested in buying it. In the course of discussions with the complainants, Mr Colosimo presented a financial statement which showed a net profit of $199,597 for the ten-month period to November 2005. The complainants completed the purchase of the restaurant but subsequently found that it was constantly trading at a loss.
The charges against Mr Colosimo focused on the financial statement he presented to the complainants. This document was referred to as “the November financials”. The Crown alleged (and the jury, by its verdicts, accepted) that the November financials were forged.
There were two aspects to the forgery. First, the front page was created from the letterhead and professional waiver statement of the firm of accountants engaged during 2005 by Mr Colosimo. Secondly, the second page was taken from a draft trading statement prepared by new accountants engaged by Mr Colosimo in January 2006. The draft trading statement was qualified and subject to confirmation of a number of pieces of information. $100,000 was added to the revenue and net profit set out in the draft, thus increasing the purported net profit for the ten month period from approximately $99,000 to approximately $199,000.
Mr Colosimo’s defence at trial, as indicated in his counsel’s brief opening statement to the jury, was, first, that the November financials were not a forgery but rather were a genuine document prepared by his former accountant, Mr McFadden. Secondly, that if they were forged, then that was done by another person and without his knowledge. The defence case was that Mr Harvey, who was employed by Mr Colosimo to help run his businesses, and became a shareholder in two restaurants, was the forger. The jury’s verdicts show that they accepted that the November financials were forged by Mr Colosimo, and were presented by him to the complainants in order to obtain a pecuniary advantage (the sale of the restaurant).
Was evidence wrongfully admitted?
Mr Colosimo contended that the following evidence was wrongfully admitted:
(a)Evidence that he was adjudicated bankrupt on 8 September 2008, and evidence as to his indebtedness.
(b)Evidence given by Mr Manning, the accountant who prepared the draft trading statement for the ten months to November 2005 and the draft trading statement itself. It was also submitted that if this evidence were properly admitted, then the Judge should have declared a mistrial.
Evidence of Mr Colosimo’s bankruptcy
Before the trial began, the Judge heard an application by the Crown for leave to admit the evidence of Ms Selvaratram, an insolvency officer employed by the Official Assignee, as to Mr Colosimo’s bankruptcy adjudication and the extent of the proofs of debt in the bankruptcy. The Judge granted the application, subject to certain deletions, immediately after the hearing, and issued his reasons later.[2]
[2]R v Colosimo DC Tauranga CRI-2009-070-6860, 4 November 2011.
The Judge concluded that, subject to certain specific exclusions, the evidence was relevant to issues in the trial. He said:[3]
The contents of the brief of Ms Selvaratram helped illustrate the pattern of Mr Colosimo’s financial circumstances over the years before he set up the [Kestrel] Restaurant (mid-2004 to February 2005), during his operation of it (February 2005 to April 2007), and subsequently resulting in his bankruptcy (on 8 September 2008). It does not directly identify his sometime financial successes, but it does independently confirm and reflect the parlous state of his personal finances over the relevant period of years. In that sense, it is probative evidence.
[3]At [29].
The Judge rejected a submission that the evidence would be unfairly prejudicial to Mr Colosimo. He said:[4]
There is no reason to apprehend that the jury will attach inappropriate weight to the circumstance of Mr Colosimo’s bankruptcy or that it would be influenced against him because of his adverse financial position reflected in his bankruptcy. In any event these matters can be the subject of judicial direction to the jury.
[4]At [33].
Mr Nabney submitted on behalf of Mr Colosimo that the evidence was not relevant, and that if it were at all relevant, then its prejudicial effect outweighed any probative value. This submission was based on the bankruptcy having occurred some two years after the events giving rise to the charges against Mr Colosimo. Mr Nabney submitted that there was nothing in the evidence led by the Crown to show that Mr Colosimo was in dire financial straits at the time of those events. He submitted that there was evidence as to the financial position of the company, Cervino, and that evidence of Mr Colosimo’s subsequent bankruptcy added nothing of any relevance. Rather, it predisposed the jury to see Mr Colosimo as dishonest, by virtue of being bankrupted with substantial debts owing.
We accept Mr Lillico’s submission for the Crown that evidence of Mr Colosimo’s financial position was relevant. The central issue for the jury in this trial was whether Mr Colosimo was the person who forged the November financials. The Judge noted that Ms Selvaratram’s evidence disclosed indebtedness dating back to 2002.[5] Although Mr Nabney pointed to certain evidence in the cross-examination of Ms Selvaratram on this point, it was for the jury to decide which parts of her evidence they accepted and which parts they rejected.
[5]At [17].
The jury was entitled, when considering whether it was satisfied beyond reasonable doubt that Mr Colosimo had forged the November financials, to ask who may have had a motive to do so. If the jury accepted Ms Selvaratram’s evidence as to Mr Colosimo’s indebtedness that, together with evidence given by a forensic accountant, Mr Weir, that Cervino was “deeply unprofitable” and “clearly insolvent” at the relevant time, would have been of assistance in answering the question as to motive. While we accept that evidence of Mr Colosimo’s personal situation did not add a great deal, it could not be said to have no probative value at all.
As it was relevant to an issue in the proceeding, Ms Selvaratram’s evidence was admissible unless it was required to be excluded because its probative value was outweighed by the risk that it would have an unfairly prejudicial effect on the proceeding, or needlessly prolong the proceeding.[6]
[6]Evidence Act 2006, ss 7 and 8.
We are not persuaded that the probative value of Ms Selvaratram’s evidence was outweighed by either risk. It was not contended that the evidence needlessly prolonged the proceeding. Any risk that it would have an unfairly prejudicial effect on the proceeding was appropriately addressed by the Judge’s careful direction to the jury as to prejudice and sympathy in his summing up.[7]
[7]Summing up at [11]–[12].
Accordingly, we reject this ground of the appeal against conviction.
Admission of evidence relating to the November financials and the Judge’s refusal to declare a mistrial
It is convenient to deal with these two matters together, as the Judge’s refusal to declare a mistrial followed from his ruling that evidence of the draft trading statement prepared by the new accountants was admissible.
As noted earlier at [6] Mr Colosimo’s first ground of defence at trial was that the November financials were not forged. The evidence with which this ground is concerned arose during the evidence of Mr Manning. He was employed by the firm of accountants instructed by Mr Colosimo in late 2005 to take over the accounting work for Cervino and Mr Colosimo’s other business entities, from the former accountant, Mr McFadden. Mr Manning began his evidence during the afternoon of the second day of the trial. In the course of giving evidence he disclosed that he had an electronic file, the contents of which had not previously been disclosed by the police or the Crown. Undoubtedly, this was relevant evidence.
Included in the electronic file was a draft trading statement for the period from 1 February to 30 November 2005. The draft trading statement showed a net surplus before tax and depreciation of $99,598. It was qualified as to its accuracy pending receipt of further information, as set out in an accompanying letter addressed to Mr Colosimo and Mr Harvey dated 23 January 2006. It was apparent that the draft trading statement had been used to create the forged November financials, by adding $100,000 to sales revenue and net surplus, and deleting any reference to the qualification.
The Judge described the following events in a memorandum to this Court.[8]
[8]R v Colosimo DC Tauranga CRI-2009-070-6860, 10 February 2012 (memorandum to the Court of Appeal).
Following an in-chambers discussion, in the presence of Mr Colosimo, the trial was adjourned overnight. The next morning, Mr Nabney sought an order that the draft trading statement, and other documents produced by Mr Manning, were inadmissible. After hearing argument, the Judge ruled that the documents disclosed by Mr Manning, including the draft trading statement, were admissible, as they were relevant and probative of an issue in the trial; namely, whether the November financials were a forgery. He also held that, by the time the draft trading statement came to light, the jury had already heard compelling evidence from Mr McFadden to the effect that the November financials were forged. As a result, the Judge said, Mr Colosimo’s initial defence was no longer sustainable.[9]
[9]See R v Colosimo DC Tauranga CRI-2009-070-6860, 28 November 2011 at [73]–[76].
The Judge then adjourned the trial to the following day to enable the Crown and defence to consider the contents of the newly-disclosed documents, and to make any further inquiries.
When the trial resumed, Mr Nabney asked the Judge to declare a mistrial on the grounds that Mr Colosimo was prejudiced in his defence by the late disclosure of the documents. Mr Nabney wished to have the opportunity to call Mr Manning’s employer to give evidence, and to examine documents and an office computer provided to him the previous day, as a result of the material produced by Mr Manning. The application was opposed by counsel for the Crown.
The Judge gave an oral ruling dismissing the application. He said:[10]
But in short form I can say that it’s a discretionary consideration. I’m mindful of the need for Mr Colosimo to have a fair trial and that the interpretation and implementation of discretions relating to allowing previously undisclosed documents and the like into a trial must be [balanced] against fair trial considerations. In this instance there has been the disclosures in the course of evidence by Mr Manning …of other documents which previously hadn’t been disclosed. That’s unfortunate, but in the nature of a trial such as this, where much of the information behind the actual evidence relates to accounting records, knowing the precise detail and where to draw the line as to what is relevant to disclosure and what isn’t, can be a blurred line.
...
So I’m not satisfied that the issues which you raise are of such fair justice significance, that it justifies the aborting of this trial at this time. ...
[10]Transcript of chambers hearing annexed to memorandum to the Court of Appeal at 26–27.
The Judge gave reasons for his ruling in his judgment of 28 November 2011. He said:[11]
[77] Did this mandate a mis-trial, because a newly discovered document confirmed Mr McFadden’s evidence that [the draft trading statement] demonstrably was not his document and therefore could only be a forgery? Or indeed because the ancillary documents, being correspondence, file-notes and draft financial statements from late 2005 to March 2006, were not previously known to the defence?
[78] I decided not. There would be some minor prejudice to the defence in not having seen the computer file documents, other than [the draft trading statement], before the trial commenced. But the unexpected must always be expected in any trial, especially a trial involving such a vast array of documentary exhibits to be produced by the Crown and the defence when it is unrealistic to expect that those documents can ever be entire, rather only the anticipated salient few.
[79] [The draft trading statement] is undoubtedly prejudicial to the defence, but not unfairly or illegitimately so, in my view. The document speaks for itself. It marries up with Mr McFadden’s avowment that [the November financials are] untrue. But even without that document, that would have remained the case in this trial.
[11]R v Colosimo DC Tauranga CRI-2009-070-6860, 28 November 2011.
Further, the Judge noted that the day-long adjournment after the documents produced by Mr Manning were ruled admissible was adequate time for counsel to deal fairly and appropriately with any new issues that may have arisen.[12]
[12]At [82]–[83].
Before discussing the submissions on this issue, we note, first, that the Judge recorded, as a postscript of the judgment of 28 November 2011, that soon after he gave his oral ruling it came to his notice that the defence were already in possession of the draft trading statement, before it was produced by Mr Manning.[13] We also note that it was agreed by computer experts for the Crown and the defence that the second page of the forged November financials was created from the draft trading statement on Mr Colosimo’s office computer on 3 February 2006.[14]
[13]See [84]–[87].
[14]See [80].
Mr Nabney submitted in this Court that the Judge should have ordered a mistrial. He submitted that Mr Colosimo was prejudiced, as he and his counsel did not have sufficient time to reconstruct the way in which the defence was to be conducted. He also submitted that Mr Manning’s evidence had undermined Mr Colosimo’s defence, as outlined in Mr Nabney’s brief opening statement. Mr Nabney submitted that the defence had to shift its focus, and concentrate on who had created the November financials.
Mr Nabney further submitted that the fact that Mr Colosimo had Mr Manning’s draft trading statement in his possession did not answer the prejudice that came about as a result of it becoming part of the Crown case without warning or being foreshadowed in any way.
Mr Lillico submitted that Mr Colosimo was not prejudiced in his defence by Mr Manning’s evidence and the documents produced, and certainly not to the extent that there needed to be a mistrial. Mr Lillico also submitted that Mr Colosimo had effectively abandoned the first plank of the defence (that the November financials were genuine) before Mr Manning gave evidence, as it was never put to Mr McFadden that the November financials were genuine. Nor was it put to Mr McFadden that he may have had a motive to give false evidence against Mr Colosimo. Rather, the cross-examination concentrated on laying a foundation for the defence case that another person (Mr Harvey) was the forger, and that financial reports had in the past been prepared by Mr Colosimo’s staff from figures provided by Mr McFadden and without Mr Colosimo’s knowledge.
We do not accept Mr Nabney’s submission that the defence was prejudiced by Mr Manning’s evidence and the documents he produced.
First, it is significant that the defence already had the draft trading statement; it was by no means a complete surprise to Mr Colosimo and his counsel. Further, we do not accept that Mr Manning’s evidence and the admission of the draft trading statement undermined Mr Colosimo’s defence. The second plank of the defence case signalled in the defence opening statement was that Mr Colosimo knew nothing about any forgery. He could still (and did) run his case on the basis that he knew nothing about the forgery. He could still (and did) contend that someone else had been the forger. In the circumstances, Mr Colosimo could not claim to be seriously prejudiced by evidence supporting the Crown case that they were forged.
A further difficulty with the submissions for Mr Colosimo on this point is demonstrated by his submission that the defence did not have sufficient time to properly reconstruct the way in which the defence was to be conducted. The first point is that a mistrial was sought, not an adjournment. Secondly, Mr Colosimo presented no evidence as to what, if any, further matters he would have explored and what, if anything, would have changed in the way in which the defence was run, had the defence been “given sufficient time”. Thirdly, the outcome of the first chambers discussion was an overnight adjournment. Following that adjournment and the failed application to declare a mistrial, there was no further application for an adjournment.
We are satisfied that the Judge did not err in concluding that the issues raised on behalf of Mr Colosimo were not of such significance to Mr Colosimo’s receiving a fair trial as to justify a mistrial being declared. The Judge did not err in declining to declare a mistrial.
This ground of the appellant’s appeal against conviction also fails.
Was the Judge’s summing up unfairly prejudicial to Mr Colosimo?
Mr Nabney submitted that the Judge’s summing up was unfairly prejudicial to Mr Colosimo, as a result of the manner in which the Judge summarised the evidence. This resulted, he said, in an unbalanced summary (in favour of the prosecution) being put to the jury, leading to a miscarriage of justice. He submitted that the summing up was unbalanced because when the Judge summarised the evidence, he largely ignored the defence case and the way in which prosecution witnesses had responded when cross-examined.
The following is a summary of the submissions made by Mr Nabney regarding the summing up:
(a)The Judge told the jury they should avoid going through the transcript of the evidence and exhibits.
(b)The Judge discussed the November financials, but did not remind the jury of the significance of the fact that the complainants had obtained their own valuation of the restaurant business.
(c)The Judge did not remind the jury that Mr Manning had sent the draft trading statement to Mr Colosimo’s associate, Mr Harvey, and thus undermined the defence case that Mr Colosimo did not receive it.
(d)The Judge unfairly said that Mr Manning’s employer had “[pulled] the pin” on the firm acting for Mr Colosimo, and did not refer to Mr Colosimo’s evidence as to why he changed accountants.
(e)The Judge did not remind the jury, when discussing Mr Weir’s evidence that Cervino was “clearly insolvent”, that the restaurant business was still trading and continued to do so. Nor did he stress that the complainants bought the business, not the company.
(f)The Judge referred to evidence given by an electrician as to accounts not being paid, and ignored the defence position that the reason for the accounts not being paid was disputes as to their validity.
(g)Mr Nabney’s main challenge was as to the Judge’s treatment of Mr Harvey’s evidence. He submitted that the Judge dealt with this evidence unfairly, and did not discuss with the jury the defence contention that Mr Harvey’s evidence was contradictory.
(h)The Judge dealt only briefly with Mr Colosimo’s evidence.
We preface our discussion of this point of appeal by noting that, in addition to addressing the jury as to the evidence,[15] the Judge’s question trail given to the jury included a summary of the evidence relating to each issue for determination. Mr Nabney accepted that the question trail had been provided to, and approved by, counsel beforehand, and that it was a fair summary of the respective Crown and defence cases. Mr Nabney also accepted that he did not raise any issue with the Judge concerning the summing up after the jury retired.
[15]Summing up at [99]–[145].
As this Court said in R v Shipton,[16] there are limits to a Judge’s duty to put the defence case to the jury. The Judge’s duty is to summarise the nature of the defence and to “squarely put [it] through his office by summarising the nature of the defence and the evidence”.[17] In R v Keremete, this Court said:[18]
The judge need not, and should not, strive for an artificial balance between the rival cases if the evidence clearly favours one side or the other ... A judge is entitled to express his or her own views on issues of fact, so long as it is made clear that the jury remains the sole arbiter of fact ... Any comment on the facts should be made in suitable terms without use of emotive terms or phrases which could lead to a perception of injustice. But provided the issues are fairly presented, the comment may be in strong terms ... Inevitably these are ultimately matters of degree and judgment.
[16]R v Shipton [2007] 2 NZLR 218 (CA).
[17]At [37].
[18]R v Keremete CA247/03, 23 October 2003 at [19] (references omitted).
More recently, in Rangihuna v R,[19] this Court considered a submission that the Judge’s summing up was unfair or inaccurate and undermined the defence case. This Court said:[20]
In terms of balance and fairness therefore, the question must be whether the summing up read as a whole properly puts the respective cases to the jury, including both the arguments and evidence. There can be no objection to a Judge making reasonable comments on the content of counsel’s submission or the evidence of either party, where explanation, clarification or amplification may be required.
[19]Rangihuna v R [2010] NZCA 540.
[20]At [28].
With those principles in mind, we briefly address the criticisms made on behalf of Mr Colosimo.
Regarding the submission that the Judge told the jury they “should avoid going through the transcript of the evidence and exhibits” ([38](a), above) we note that the Judge said in his summing up:[21]
What I had hoped to avoid for you, ladies and gentlemen, is that you feel the temptation that you need to sit down at page 1 and work your way through because I want to now deal with my assessment, and you make your own assessment of the evidence, and where it fits in assisting you in determining the issues that are touched on in the question trail.
[21]Summing up at [99].
The jury was clearly advised that they were to be the judges of fact and that if they disagreed with anything the Judge said, they should prefer their own view.[22] Further, the Judge properly directed the jury to focus on the evidence given at trial,[23] and that they must consider all the evidence, both for the Crown and the defence.[24] In the closing part of the summing up the Judge reminded the jury that they would have copies of the transcript of evidence,[25] and that if they were checking a witness’s evidence they must look at evidence-in-chief, cross-examination, and re-examination.[26] We are satisfied that there was no danger of members of the jury being left with the impression that they should avoid going through the transcript, or that they should accept the Judge’s assessment of the evidence. We find no fault with the Judge’s directions on this aspect.
[22]At [3].
[23]At [10].
[24]At [18].
[25]At [150].
[26]At [152].
Regarding [38](b), the fact that the complainants had obtained their own valuation was not relevant to the issues the jury had to decide in this case. As the Judge directed,[27] the case was not about what the complainants did, it was about what Mr Colosimo was alleged to have done, and whether the Crown had satisfied the jury beyond reasonable doubt in terms of the issues set out in the question trail.
[27]At [101].
A similar conclusion applies in respect of the criticism set out in [38](e).
The criticisms at [38](c), (d), (e) and (h) deal largely with the Judge’s treatment of Mr Colosimo’s evidence and the defence case. Having reviewed the summing up, we are satisfied that the Judge appropriately dealt with Mr Colosimo’s evidence.
As noted at [38](g), Mr Nabney’s main challenge concerned the Judge’s treatment of Mr Harvey’s evidence. The Judge dealt with Mr Harvey’s evidence at length.[28] In the course of this discussion, the Judge noted other evidence that was critical of Mr Harvey. What the jury made of Mr Harvey’s evidence, and Mr Colosimo’s contention that he had created the forgery, was a factual matter solely for the jury. We are satisfied that the relevant issues were squarely put before the jury.
[28]At [115]–[131].
With respect to all of these criticisms, it is to be recalled that the jury also had the assistances of the question trail, which cannot be faulted and which itself contained a fair summary of the opposing cases. Standing back, then, and looking at the summing up as a whole, we are satisfied that the Judge properly explained the trial issues to the jury and properly put the respective Crown and defence cases. We do not consider that the summing up was unbalanced.
We reject this ground of the appeal against conviction.
Appeal against sentence
The Judge approached sentencing on the basis the complainants’ loss was in the region of $433,000. This approach adopted the Crown submission that the loss comprised the purchase price for the restaurant business plus stock. The Judge rejected a submission made on behalf of Mr Colosimo that sentencing should be based on a loss to the complainants of $100,000. That figure was based on the extent to which Mr Colosimo had altered the November financials (from just over $99,000 to $199,000). The Judge found that but for Mr Colosimo’s forgery and dishonest promotion of the forged November financials, the complainants would never have bought the business.[29]
[29]Sentencing judgment at [23] and [43]–[45].
In fixing a starting point the Judge took into account the following factors, in particular:
(a)Mr Colosimo’s culpability, as to which the Judge said:[30]
You would have known, from the ever increasing losses of the Kestrel business, the inevitable outcome for [the complainants] of your sale of that business to them. Your actions were quite other than honest and loyal, as the testimonial writers describe you. They were fraudulent, dishonest and greedy. That is the assessment of your culpability which marks the starting point for sentencing in this case ...
The Judge assessed Mr Colosimo’s culpability as “very high”.[31]
(b)The starting points adopted in cases cited to him by counsel.[32]
(c)The extent of the financial loss to the complainants, which the Judge described as follows:
[30] … they lost everything they had – the business; their house, which had been built, as I say, only two years earlier, the culmination of a lifetime of work and industry; they lost their reputations and to a significant degree, their self esteem.
[31] They lost additional money which they put into the Kestrel restaurant business, $150,000 I am told, in an endeavour to keep it afloat and their son also contributed money to assist them, the sum of $200,000, also lost.
(d)Premeditation: the Judge noted that the forged financial statement was created by Mr Colosimo on 3 February 2006, some months before it was presented to the complainants.[33]
(e)The particular financial and emotional distress caused to the complainants, which the Judge considered to be significant, and distinguished the case from those cases where the State is the victim.[34]
(f)The maximum penalty for each of offence (ten years imprisonment for forgery, and seven years imprisonment for using a document).[35]
[30]At [39].
[31]At [42].
[32]R v van Wakeren [2008] NZCA 492; R v Chatha HC Palmerston North CRI 2004‑054-4551, 16 November 2007; Francis v R [2011] NZCA 353; R v Grant CA481/2003, 16 March 2004; R v Clark CA364/99, 23 November 1999; R v Stirling HC Hamilton CRI-2005-419-122, 5 May 2006; Ransom v R [2010] NZCA 390, (2010) 25 CRNZ 163.
[33]Sentencing judgment at [67].
[34]At [68]–[71].
[35]At [72].
The Judge fixed the starting point for Mr Colosimo’s sentence at three years imprisonment.[36] He then allowed a discount of six months (approximately 17 per cent) for personal mitigating factors: the absence of relevant previous convictions and the adverse impact of a prison sentence on Mr Colosimo’s relationship with his five year old son. This resulted in an end sentence of two years six months, which was imposed on the forgery charge. A concurrent sentence of two years imprisonment was imposed on the charge of dishonestly using a document to obtain a pecuniary advantage.
[36]At [72].
The Judge observed that the effect of the sentence was to exclude the possibility of home detention. He went on to say that, even if home detention had been available, a sentence other than imprisonment:[37]
… would not serve the legal and social requirements of a strong deterrent message and a message of denunciation of forgery of accounting documents in such circumstances and then their deliberate, dishonest and deceitful use.
[37]At [80].
Mr Nabney first submitted that the Judge unfairly characterised Mr Colosimo’s offending as being more serious because it was fraud against individuals, as opposed to fraud against the State, as is the case in benefit fraud. He submitted that as a result, the Judge adopted a starting point that was too high.
We reject the submission that the Judge’s focus on the complainants as individual led him to adopt a starting point that was too high. The Judge assessed Mr Colosimo’s culpability as “very high”. The basis of this assessment was that Mr Colosimo’s offending had caused a significant loss to the complainants, and had had a significant financial and emotional effect on them. As the Judge noted, the complainants’ purchase of the restaurant led in the end to their bankruptcy and the loss of their house.[38] The Judge did no more than state the obvious when contrasting the complainants as victims of Mr Colosimo’s fraud with the State as the victim of benefit fraud.
[38]See Sentencing Act 2002, s 9(1)(d).
Mr Colosimo deliberately altered accounting documents to produce the November financials which were presented to the complainants when they were considering buying the restaurant business. The jury’s verdicts show that they accepted that Mr Colosimo intended that the complainants be induced to buy a business that was not profitable. Mr Colosimo cannot have been unaware of the potentially grave consequences of his offending.
Mr Nabney next submitted that the Judge was wrong to value the complainant’s loss at $433,000 (being the purchase price), rather than at $100,000 (being the extent of the fraudulent alteration). He submitted that the Judge’s approach ignored evidence that the complainants had obtained their own valuations, and that they had operated the business for some time. He submitted that the Judge was wrong to sheet all of the loss suffered by the complainants to Mr Colosimo.
We reject this submission, also. First, it is clear that the Judge did not “sheet home all of the loss suffered” to Mr Colosimo. The Judge recognised that not all of the complainants’ losses were directly attributable to Mr Colosimo.[39] Secondly, the Judge was entitled to find that the complainants were induced to buy the restaurant business, as Mr Colosimo had intended. That finding is totally consistent with the complainants’ evidence that they were induced to buy the business on the basis of the November financials, and would not have bought it if the November financials had shown the true position. The finding is also consistent with the jury’s verdicts.
[39]Sentencing judgment at [32].
Having been induced to purchase the restaurant, the complainants paid $433,000. In the end, as the Judge found, they lost that, together with their house, their financial reputations, and their self-esteem.
The Judge was required to take account of the effect of Mr Colosimo’s offending on the complainants,[40] and to consider, as an aggravating factor, the extent of any loss, damage, or harm resulting from the offending.[41] The Judge did not err in considering, as one aspect of the effect of Mr Colosimo’s offending on the complainants, and of the loss, damage, and harm that resulted, the fact that as a consequence of the offending the complainants lost their investment of $433,000. That loss flowed directly from Mr Colosimo’s forgery and presentation of the forged November financials.
[40]Sentencing Act 2002, s 8(f).
[41]Section 9(1)(d).
Mr Nabney sought to support his submission that the starting point was too high by reference to this Court’s judgment in Ransom v R.[42] We have not found that judgment to be of assistance in the present case. First, it was primarily concerned with the question whether, as a matter of principle, home detention is available as a sentence for benefit fraud. Secondly, all of the cases cited involved benefit fraud – that is, obtaining a benefit or ACC payment by fraudulent means.
[42]Ransom v R [2010] NZCA 390, (2010) 25 CRNZ 163.
The circumstances of the present case bear more similarity to those in Francis v R,[43] R v Grant,[44] and R v Clark.[45] Francis involved dishonesty against an employer, a greater number of charges (15) but a smaller loss (approximately $63,700). A starting point of two years six months imprisonment was upheld in this Court. In Grant, this Court considered the sentence imposed for two counts of forgery and three counts of fraudulent use of a document. The offending involved creating fictional invoices which resulted in payments of approximately $507,000. Following various recoveries, the amount ultimately lost by the victim was approximately $232,000. This Court upheld the sentencing Judge’s starting point of four years imprisonment.
[43]Francis v R [2011] NZCA 353.
[44]R v Grant CA481/03, 16 March 2004.
[45]R v Clark CA364/99, 23 November 1999.
In Clark, this Court considered an appeal against a sentence of four years imprisonment imposed on a total of 22 charges of obtaining money by various fraudulent means. The total amount involved was $386,000, and there were some 17 complainants. This Court accepted that a starting point of between four and five years imprisonment was appropriate.[46]
[46]The appeal was allowed in respect of discounts for the appellant’s guilty pleas and co-operation with the authorities.
We are satisfied that in all the circumstances of this case, including the matters we have listed at [51] above, the starting point of three years imprisonment was not manifestly excessive. Mr Nabney did not challenge the discount of six months allowed by the Judge for personal mitigating factors. We are satisfied that the end sentence of two years six months imprisonment was not manifestly excessive. In the light of that conclusion, we are not required to consider Mr Nabney’s further submission regarding home detention. The appeal against sentence is dismissed.
We observe, however, that had we been required to consider home detention, we could not have reached the conclusion that home detention was appropriate, given the serious consequences of Mr Colosimo’s offending, the fact that no reparation has been, or can be, paid, and Mr Colosimo’s attempt to blame another person for his offending.
Result
The appeals against conviction and sentence are dismissed.
Solicitors:
Crown Law Office, Wellington for Respondent
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