R v Daniels
[2020] NZHC 275
•25 February 2020
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CRI 2019-004-003382
CRI 2019-004-003544
[2020] NZHC 275
THE QUEEN v
TYSON TEREI DANIELS & ANDREW NEILL SIMPSON
Hearing: 25 February 2020 Appearances:
D J Johnstone for the Crown
M J Dyhrberg QC & H G de Groot for Mr Daniels G J S R Foley & S R Zydervelt for Mr Simpson
Judgment:
25 February 2020
SENTENCING NOTES OF VAN BOHEMEN J
Solicitors/Counsel:
Crown Solicitor, Meredith Connell, Auckland M J Dyhrberg QC, Auckland
Matai Chambers Ltd, Auckland Guyon Foley Barrister, Auckland
R v DANIELS & SIMPSON [2020] NZHC 275 [25 February 2020]
[1] Mr Daniels and Mr Simpson, you may remain seated. I will tell you when you need to stand. I am going to begin by discussing some background common to you both and make some remarks about the offending that is common to you both. I will then deal with you Mr Daniels and then with Mr Simpson. When I have dealt with you, Mr Daniels, you may stand down when I tell you to.
[2] Tyson Terei Daniels and Andrew Neill Simpson, you appear for sentence today for serious money laundering offending relating to the importation and supply of class A and B drugs.
[3] Mr Daniels, you pleaded guilty on 27 November 2019 to 9 charges of money laundering,1 each having a maximum penalty of seven years’ imprisonment, and one charge of participating in an organised criminal group,2 having a maximum penalty of 10 years’ imprisonment.
[4] Mr Simpson, you pleaded guilty on 27 November 2019 to 13 charges of money laundering, each having a maximum penalty of seven years’ imprisonment.3
Circumstances of the offending
[5] In early 2018, the Police instituted Operation Nova, an investigation into the importation and supply of controlled drugs and associated money laundering. The investigation centred around members and associates of the New Zealand chapter of the Comanchero motorcycle gang, an organised criminal group. You were both eventually arrested along with seven other co-accused who will go to trial in September.
[6] The Police investigation uncovered a sophisticated operation that used encrypted communication devices to avoid police surveillance. Members of the group arranged drug deals and drug importations to generate significant amounts of money for the Comancheros. This money was deposited into structured trust accounts, usually in amounts of less than $10,000 at a time at various bank branches in an effort
1 Crimes Act 1961, s 243(2).
2 Crimes Act 1961, s 98A.
3 Crimes Act 1961, s 243(2)
to disguise their origin and to avoid raising suspicion. To further avoid detection, the money was also channelled through associated companies such as Heavy Heavy Ltd, which provided an apparently legitimate source of income for Mr Daniels and others in the group and was also used to launder funds derived from criminal activity.
[7] Both you, Mr Daniels and you, Mr Simpson, played a crucial role in this operation which laundered a significant amount of money from major criminal drug importation and dealing over an extended period of time.
[8] Mr Daniels, as Vice President of the Comancheros you oversaw the gang’s operations and directed its criminal activity. You had overarching responsibility for the operation even if you left its implementation to others. You received significant personal benefits from the operation, including the purchase and use of luxury vehicles.
[9] Mr Simpson, as the solicitor employed by members of and people affiliated with the Comancheros, you were the facilitator of the money laundering operation. You used your specialist knowledge as a lawyer to advise on structuring the laundering scheme across the multiple trust accounts you set up. You also channelled money through your solicitor’s trust account and made deposits into the accounts yourself. You knew what you were doing was dodgy. Intercepted phone calls reveal that you told one of the others involved in the scheme that if he deposited “nine” at each “drop” it would not get “flagged” by which you clearly meant avoiding the banks’ reporting thresholds.
[10] Mr Simpson, approximately $1.2 million was deposited or transferred into accounts you established for the scheme. You retained a little over $18,000 as remuneration for your work as a lawyer. You transferred the balance into trust accounts you had set up for Pasilika Naufahu, the President of the New Zealand chapter of the Commancheros, Mr Daniels and one other. Included in the money deposited into your trust account was AUD32,000 from a Sydney-based drug-dealer and associate of Mr Naufahu, who in May 2018, was the subject of a New South Wales police investigation and search, which led to the discovery of significant quantities of Class A and B drugs, cash in excess of $2.5 million, and firearms.
[11] Mr Simpson, using cash that had been laundered through your trust account you authorised payments on behalf of the trusts and made payments directly to luxury motor vehicle dealers for vehicles purchased by Mr Daniels and others. Vehicles obtained through your assistance for Mr Daniels, Mr Naufahu and others in the group included two Rolls Royces, a Bentley, a Lamborghini, two top-end Mercedes Benz, and five Range Rovers. You also assisted in the purchase of a $1.38-million-dollar property using several different trust accounts and creating another purpose-built trust account for the transaction to avoid detection. You also facilitated the purchase of large capital items for Heavy Heavy such as concrete pumps worth nearly $90,000 in one case and $350,000 in another.
[12] The money laundering was undoubtedly on a large scale. The Crown says that the nine different transactions giving rise to the charges to which you have pleaded guilty, Mr Daniels, had a total value of almost $2.6 million and that the 13 transactions giving rise to the charges to which you have pleaded guilty, Mr Simpson, come to a total value of almost $3.3 million.
[13] Your counsel say these figures do not reflect the real value of your culpable invovement. For Mr Daniels, Ms Dhyrberg says that the cars were only ever bought and sold at trade-in values so that the real value of the transactions was of the order of
$1.3 million or half of what the Crown says. For Mr Simpson, Mr Foley says that although you dealt with just over $2 million, some $600,000 came into your trust account in circumstances where you were not reckless so that you should be sentenced on the basis that you dealt culpably with just over $1.4 million.
[14] While the Summary of Facts for Mr Daniels uses the purchase prices of the vehicles involved in the nine transactions, which totals just over $2.6 million, the amounts of laundered funds particularised in the charges to which Mr Daniels has pleaded guilty come to a combined total of just over $1.3 million, as the Crown and Ms Dhyrberg agree.
[15] In your case, Mr Simpson, the amounts particularised in the charges to which you have pleaded guilty come to a total of just over $2.2 million. As Mr Johnstone has said, under s 24(1) of the Sentencing Act, I must accept as proved all facts that are
essential to a plea of guilty. I accept, however, that that relates to the guilty plea and Mr Simpson does not contest his guilt, only the quantum that may bear on the sentence that I may impose. Having regard to s 24(2) of the Act, I have indicated that I do not regard the difference between $1.4 million and $2.2 million as materially different in the context of offending by a man in Mr Simpson’s position and the difference in amounts has not affected the starting point I set for your sentence or the overall length of the sentence.
[16] However one looks at it, the figures are significant and these luxury vehicles provided significant personal, direct benefit to members of the group as a result of high-level criminal offending. Both of you facilitated this benefit and Mr Daniels benefitted directly by the use and ownership of three luxury vehicles.
[17] Mr Daniels and Mr Simpson, the sentence the Court imposes on you should denounce your conduct and hold you accountable for the harm caused to the community by your offending. It should also promote in you a sense of responsibility for and an acknowledgement of that harm. It should also deter you from engaging on such offending again and should be a deterrent to others who may be tempted to engage in similar conduct. It should also assist in your rehabilitation, so you do not continue to offend.
[18] In setting your sentence I must assess the gravity of the offending, taking into account its seriousness as indicated by the maximum penalties prescribed, and your particular culpability. I must take into account the desirability of consistency with similar offending and similar offenders, and impose the least restrictive outcome that is appropriate in the circumstances. I must also take into your account your personal and family, whanau and cultural background.
Mr Daniels
[19] Mr Daniels, I deal with you first. The operation that you oversaw as Vice President of the Comancheros was sophisticated. As the Crown says, it involved the use of a construction company that engaged in legitimate work but which was used to disguise the origin of the funds, multiple trust accounts and the use of a solicitors trust account, and the use of the banking system to transfer funds at amounts designed
to avoid triggering the banks’ reporting thresholds, as well as transfers through associated companies. It also employed sophisticated technology to avoid detection. Items of that equipment were found at your home.
[20] Ms Dhyrberg has properly accepted that you hold a significant position in the gang, which is an organised criminal group, and that it can properly be inferred that you knew of the provenance of the money laundered through the scheme because of your position. She also accepts that you received benefits commensurate with your status.
[21] As Ms Dhyrberg notes, you were not directly involved in the mechanics of implementing the operation. I do not consider that that mitigates your culpability given your oversight of the operation from your position as Vice President. I accept that that position should not in itself be given disproportionate weight as an aggravating feature. However, it should definitely be given weight. Your place in the Comancheros hierarchy means you were one of the directors of this serious offending which exemplifies how organised criminal groups can obtain significant financial benefit from offending without putting directly themselves at risk.
[22] Your Pre-Sentence Report suggests that your offending, as with your membership of the Comancheros, stem from a desire to make financial profit efficiently and effectively in contrast to the struggles that your parents endured. Ms Dyhberg takes issue with that interpretation of your remarks to the report writer and says that nothing untoward should be taken from your motivation to better your circumstances. Be that as it may, what is glaringly absent from the report is any expression of remorse or acknowledgement of any need to change your ways. Your position of studied neutrality on the Comancheros in the context of your current circumstances can only be taken as signifying an intention to maintain your gang affiliation.
Starting point
[23] In accordance with the settled sentencing process, I must first determine what would be an appropriate starting point for your offending. As all counsel
acknowledge, there is no tariff decision for money laundering but all agree account must be taken of sentences handed down in previous similar cases.
[24] The Crown submits the offending in your case is more serious than any of the earlier cases and should be considered the worst of its kind. The Crown points to the sophistication of the offending operation, the length of time and the money involved as warranting a higher starting point than was set in those cases. Having regard to previous sentences imposed for money laundering in Zhang v R4 and R v Le,5 where starting points of five and a half years and four years were adopted and R v Chase,6 where the Court of Appeal considered a starting point of five and a half years would have been appropriate before adjusting for recklessness and other factors, Mr Johnstone / Ms Smith for the Crown say a global starting point of six to seven years’ imprisonment would be appropriate for both you and Mr Simpson, and that the starting point for you, Mr Daniels, should be at the higher end of that range.
[25] Ms Dyhrberg submits that, having regard to the real values involved, inferred knowledge and the benefits received, your offending is similar to that in R v Wallace,7 where the Court of Appeal upheld a sentence where the sentencing judge started with an estimate of three and a half to four years before adjusting for mitigating factors, and also to that in Zhang and Chase. Ms Dhyrberg notes that the defendants in those cases were directly responsible for executing the offending transactions, but accepts that you had an overarching role. Ms Dyhrberg also accepts that your offending constituted more than the recklessness attributed to the defendants in Le and Chase and that your position in an organised criminal group must also bear on setting a starting point. For these reasons, Ms Dhyrberg says a starting point of five years is appropriate.
[26] I agree with the Crown and Ms Dhyrberg that Le and Chase do not offer useful comparisons with your offending, despite some similarity in respect of the sums involved and the nature of the laundering operations. Those defendants were sentenced on the basis of recklessness, which certainly does not apply in your case,
4 Zhang v R [2010] NZCA 481.
5 R v Le [2018] NZHC 2199.
6 R v Chase [2018] NZHC 1022.
7 Wallace v R CA415/98, 16 December 1998.
Mr Daniels, and they did not occupy senior positions in criminal gangs responsible for the operations.
[27] I agree with Mr Johnstone / Ms Smith that the offending in this case is more serious than that in Zhang. Ms Zhang laundered $700,000 over 18 months, and derived significant benefits such as a $50,000 car, a house and other luxurious lifestyle benefits as a result. While the time period and personal benefit are comparable, I consider your offending to be significantly more serious than that of Ms Zhang. Ms Zhang was enticed into her offending by her partner. By contrast, you had knowing oversight of a major money-laundering operation and the amount of money laundered was almost twice as great as that in Zhang, even on the basis of the figures in the charging documents.
[28] I also agree that the offending is also more serious than that in Wallace. In that case, the Court of Appeal inferred that Mrs Wallace had knowledge that the money she laundered was derived from drug dealing. Here, your offending goes a step further. You clearly knew that the money was derived from a significant drug importation and supply operation by the group of which you are a member and Vice President. Your role as Vice President also meant you were in a position to stop the operation – a point the Court in Wallace considered significant in assessing Mrs Wallace’s culpability.
[29] While I understand the Crown’s position that I should set a starting point at or close to seven years’ imprisonment, I consider that to be too high, particularly when regard is had to the $1.3 million figure in the charges to which you have pleaded guilty. Looking at the matter broadly, having regard to previous decisions, the sum involved, your knowledge of the source of the funds, your oversight of the operation and your involvement in and leadership of organised criminal group, I consider a starting point of six years to be appropriate.
Personal mitigating factors
[30] Ms Dhyrberg accepts there are no personal mitigating factors that I ought to consider, other than a discount for your early guilty plea. I have, however, taken note of the letters in support written by your wife, your mother, your sisters and your friend,
Maraia Junior Aumatangi. You are fortunate to have the support of such loving family and friends.
[31] Ms Dhyrberg says that you should be given the benefit of a 25 per cent discount, having regard to changes of counsel and the need to address bail and disclosure issues before a guilty plea was entered. The Crown accepts that a substantial discount for a guilty plea is appropriate but says that you should not be given the benefit of a 25 per cent discount, which should be reserved for those who plead at the earliest opportunity, and that a discount of 20 per cent would be appropriate.
[32] I acknowledge your plea was made early in the course of proceedings and take note of the circumstances to which Ms Dhyrberg draws attention. However, I also note that you continued to offend while on bail which I consider is also material. In these circumstances, I consider a discount of 16 months to be appropriate. That produces an effective sentence of four years and eight months’ imprisonment.
[33]Mr Daniels please stand.
[34] Tyson Terei Daniels, on the nine charges of money laundering and one charge of participation in an organised criminal group to which you have pleaded guilty, I sentence you to a term of imprisonment of four years and eight months.
[35] You may stand down, Mr Daniels. Ms Dhyrberg, you are excused as I understand you have another commitment.
Mr Simpson
[36] I now deal with you, Mr Simpson. As I have already said, you were the facilitator of the laundering scheme. You did so as a lawyer with responsibilities to the Court and to the profession.
[37] I note from the Pre-Sentence Report that you feel huge regret, that you have found the experience humiliating and that you say that your offending stemmed from naivety, although you acknowledge that things ramped up. The Report writer notes
you have strong family and community connections. The writer acknowledges that the magnitude of your offending is such that a custodial sentence would be warranted but, taking account of the solid support that you have from family and friends, recommends a sentence of home detention to be followed by 12 months of post detention conditions. You and your father, who is also a practising lawyer, have worked out an arrangement under which you might continue to provide advice on matters within your professional competence, even taking into account the fact you have surrendered your practising certificate and the likelihood that you will be disbarred from practising as a lawyer for a period. You have a supportive wife and five young children under the age of 13. The Court has received many letters in support attesting to your usually good character. You have also written explaining your regret and remorse and the toll on you and your family.
[38] I put these factors to one side, however, as I first consider the appropriate starting point for your offending. I will come back to your personal circumstances.
Starting point
[39] In considering the seriousness of your offending, I have regard to the following circumstances. First, you were a key facilitator of the money laundering scheme. You made it work. You set up the trusts through which the funds flowed. Secondly, you made it work because of your position as a lawyer and member of a professional body. You used your professional skill and knowledge and your solicitor’s trust fund both to make happen and to lend respectability to an operation laundering large amounts of money obtained from serious drug offending. Thirdly, you did not just set up the legal and administrative arrangements to enable the operation. You took part in it personally and advised others on how to avoid triggering the banks’ reporting thresholds. You also set up specific laundering arrangements for the purchase of real estate and capital equipment.
[40] You say that you were duped and that you did not appreciate the nature of the transactions in which you had become involved. However, you acknowledge that you had suspicions that some of the transactions may have involved tax avoidance. You say you turned a blind eye to the source of the funds. Your counsel, Mr Foley, says
that it was only very late in the offending, in November 2018, that you undertook your own investigations and appreciated that your clients had been deported from Australia for gang related offending. Even then, however, you continued your involvement.
[41] The Crown submits that you were wilfully blind to the fact that the cash passing through the accounts you had set up was from drug offending and that you were aware you acted for people with gang backgrounds who had served prison sentences. The Crown says that your offending is also more serious than the defendants in Chase, Le or Zhang because of the amounts laundered, the sophistication of the operation, the nature and extent of your involvement, and the extended duration of the offending in comparison to those cases. For these reasons the Crown submits I should adopt the same global starting point of between 6 and 7 years for you as the Crown proposed for Mr Daniels.
[42] Mr Foley says you should not be regarded even as acting recklessly until you had made your own investigations in November 2018. Mr Foley says your offending would be at a similar level to the defendants in Le, Chase, Wallace and R v McCamish8 had you been reckless throughout the entire period of your offending and had you received a significant personal benefit. However, in Mr Foley’s submission, you were reckless only in the final phase of the offending after you had made your inquiries in November 2018 and that you did not receive a significant personal benefit. He says the fee of $18,384.33 that you received for your involvement likely represents a fair and moderate fee for your time.
[43] For these reasons, Mr Foley submits that I should adopt a starting point of between two and a half to three and a half years.
[44] There can be little doubt that you were at least naïve and incredibly foolish to get involved in this scheme. I accept that you did not know directly, as Mr Daniels knew, that you were involved in laundering funds from serious drug offending. I also accept that the fee charged for your time would not have been unreasonable had your advice been for setting up trusts to enable lawful transactions, and that in comparison
8 R v McCamish HC AK CRI 2008-404-398 [18 March 2009].
to the benefits enjoyed by Mr Daniels, the benefits of your participation in the operation were modest.
[45] But I cannot accept that your culpability stops at naivety and foolishness, even for the period until you made your belated inquiries. By your own admission, you knew that things were not right. You say you suspected tax avoidance. You say you had doubts as to the veracity of the assurances you were given that the funds came from business activities, gambling, or the sale of luxury cars. But you chose to continue.
[46] In your own words, you turned a blind eye to the source of the funds. I am satisfied that in so doing you were reckless not just to the possibility that the funds came from activities such as tax avoidance or gambling but also to the possibility that they came from much more serious offending, including drug offending. The amounts and numbers of transactions themselves ought to have put you on notice. And yet you chose to continue, regardless of that possibility, as indeed you did once you had made your inquiries in November 2018. I am satisfied that you were at least reckless for the whole of the period of the offending and probably more than that after you had made your inquires.
[47] In addition, you were acting in your professional capacity and when you chose to continue your involvement, even when your suspicions were raised, you not only placed your personal gain above your duties as a lawyer but you risked bringing your profession into disrepute. That is a significant distinguishing factor.
[48] That said, I am also satisfied that there is a significant difference between your situation of largely reckless involvement in a scheme devised by others where you achieved only modest personal gain and that of Mr Daniels who knew exactly what was going on, had oversight of the whole operation and gained a substantial personal benefit. For that reason, I do not accept the Crown’s submission that I should adopt a global starting point for both offenders. I consider there is a significant distinction to be drawn in terms of respective culpability. For these reasons, I consider that a starting point of four years and six months’ imprisonment is appropriate in your case, Mr Simpson.
Personal mitigating factors
[49] Mr Foley notes you have no previous convictions, that you were forthcoming with the Police in your interview, that you deeply regret your offending, that you voluntarily engaged the services of a clinical psychologist to identify and address the causes of your offending, that you are the father of five young children who are dependent on you and your wife and that your wife is now shouldering the burden of much of this responsibility, both financially and in caring for the children.
[50] For all these reasons, Mr Foley submits there should be a discrete discount of 18 per cent on top of a discount of 25 per cent for a guilty plea at the earliest reasonable opportunity.
[51] The Crown acknowledges the pre-sentence report writer’s assessment of your previous good character, your pro-social lifestyle, your position in the community and your family support. However, it submits the Court should be hesitant to give significant discounts for these factors and says you enjoyed and abused a privileged position in the community. As with Mr Daniels, the Crown says the discount for an early guilty plea should be no more than 20 per cent because the plea was not entered at the earliest possible opportunity.
[52] Notwithstanding those submissions, I am satisfied that your remorse is genuine as is your commitment to rehabilitation. I consider that these factors, combined with your lack of a previous record, the strong community support you continue to enjoy, as evidenced by the many letters I have received attesting to your continuing good character, and the support of your family warrant a substantial discount which I set at 15 per cent. That reduces your sentence to three years and 9 months’ imprisonment. To that, I add a further reduction of 12 months for an early guilty plea. That produces an end sentence of two years and nine months’ imprisonment.
[53] I recognise that this your wife and your children need you in their lives and that to impose a custodial sentence on you is also to impose a sentence on your spouse and your children. I deeply regret a father being separated from his young family – both in your case as well as that of Mr Daniels. Sadly, that is the consequence of your decisions, Mr Simpson.
[54]Mr Simpson please stand.
[55] Andrew Neill Simpson, on the thirteen charges of money laundering to which you have pleaded guilty, I sentence you to a term of imprisonment of two years and nine months.
[56]You may stand down.
G J van Bohemen J
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