R v Karpavicius
[2013] NZHC 3095
•22 November 2013
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CRI-2011-004-16838 [2013] NZHC 3095
THE QUEEN
v
ROKAS KARPAVICIUS
Hearing: 22 November 2013 Appearances:
R McCoubrey and M R Walker for Crown
G Newell for PrisonerJudgment:
22 November 2013
SENTENCING REMARKS OF LANG J
R v ROKAS KARPAVICIUS [2013] NZHC 3095 [22 November 2013]
[1] Mr Karpavicius, you appear for sentence today having been found guilty by a jury on three charges of money laundering and one charge of importing the Class A controlled drug lysergide. The maximum sentence on the money laundering charges is seven years imprisonment, whilst the maximum sentence on the importing charge is life imprisonment.
The facts
[2] The police operation that led to your arrest began in or about February 2008, when the New Zealand Police became aware from their Australian counterparts of the fact that granite and stone shipments had been made to New Zealand and Australia that were likely to have contained the Class B controlled drug amphetamine. The police began surveillance on you, and this included intercepting your phone conversations.
[3] During the course of the police operation, they intercepted a package that arrived at the customs area in the postal service of New Zealand. The Customs Service opened the package and discovered that it contained a Harry Potter book written in Spanish. On closer examination, the book was found to contain a number of tabs of a chemical substance. Ten of these were found to contain the Class A controlled drug LSD.
[4] The police operation revealed that you were part of a sophisticated money laundering operation. This involved the laundering of proceeds of sale of drugs in New Zealand into foreign currencies and for transmission into foreign bank accounts. In this endeavour you were working closely with a person by the name of Ronald Brown. He pleaded guilty in October 2010 to a wide range of charges, including importing amphetamines and money laundering. He was eventually sentenced to 11 years imprisonment after the Judge took a starting point of 14 years
imprisonment.1
[5] Your role in the operation was to launder the proceeds of the sale of drugs in
New Zealand. The method that was adopted was that Mr Brown and his assistant,
1 R v Brown HC Auckland CRI-2008-004-020453, 3 February 2011.
Ms Simanu, would collect together the cash in New Zealand currency. This was kept in safety deposit boxes at Auckland banks. You then employed several methods of changing the New Zealand currency either into foreign currency or depositing it into foreign accounts. First, you would arrange for people in New Zealand, including Mr Brown and Ms Simanu, to make deposits directly into foreign bank accounts nominated by you. Secondly, you sent five separate couriers to New Zealand. They were in New Zealand between 30 August 2007 and 29 October 2007, 23 November
2007 and 17 December 2007, 21 May 2008 and 5 June 2008 and 5 August 2008 and
12 August 2008.
[6] The role of the couriers was to uplift funds that were being held by Mr Brown. They would then either deposit the funds directly into foreign bank accounts nominated by you, or they would have the funds changed into foreign currencies. At the end of their stay in New Zealand, they would depart in some instances carrying large sums of cash in both New Zealand and overseas currency. In all, approximately 2.2 million New Zealand dollars was either spirited out of the country in this way, or changed into foreign currency and then taken out of the country. This was obviously money laundering on a very large scale.
[7] At the termination of the police operation on 12 August 2008, the police located the final courier in his hotel room. They found €100,000 secreted inside a computer bag in his possession. Some of the couriers had used false passports whilst in New Zealand in order to disguise their true identities.
Sentencing Act 2002
[8] In any case involving offending of this scale, several sentencing principles are to the forefront. The first, and most obvious, of these is the need to deter both you and others of like mind from engaging in such behaviour. If foreign nationals know that New Zealand is an easy place to launder money through, then obviously this country will be prey to people involved in that type of undertaking. Secondly, it is important to hold you accountable for the magnitude of your offending, and to ensure that you accept full responsibility for that.
Starting points
[9] I take, as do both counsel, the lead charges to be those of money laundering. In assessing your culpability, I need to have regard to several factors. The first of these is your role in the money laundering operation. I have no doubt at all, having listened to the intercepted conversations during your trial, that you were the guiding force and mastermind behind this operation. Although Mr Brown represented the New Zealand end of the operation, he effectively followed your orders. You were the person who arranged for the couriers to come to New Zealand, and I have no doubt you were aware of, if not responsible for, the fact that they used false identities whilst they were here.
[10] I have no doubt, either, that you had a beneficial interest in at least some of the monies that were transported out of New Zealand. I do not accept that your role was merely that of a commission agent. It is telling, in my view, that at no stage during any of the intercepted conversations did Mr Brown seek to enquire as to how he may gain access to, or obtain benefit from, the funds that you arranged to be taken out of New Zealand. I therefore take you as the person who received the principal benefit of all the funds that were taken out of this country.
[11] I also need to bear in mind that this offending was obviously closely associated with very serious drug offending. Although it cannot be ascertained what quantity or type of drugs produced the sums that you laundered, nevertheless to produce such sums considerable quantities of valuable drugs must have been sold in this country.
[12] Thirdly, I take into account that this was a relatively sophisticated money laundering scheme involving, as it did, no fewer than five human couriers as well as the setting up of other European bank accounts into which funds were deposited from New Zealand.
[13] All of these factors place your offending, in my view, towards the very top end in terms of setting the starting point to be applied in relation to your sentence.
[14] Counsel have referred me to a number of authorities dealing with the crime of money laundering. The rationale behind the penalties imposed for this crime was succinctly described by the Court of Appeal in R v Wallace.2
We accept the view expressed by the English Court of Criminal Appeal in R v Greenwood that those who launder money for drug dealers are nearly as culpable as those who actually participate in the dealing. They help the dealers avoid detection and in this way provide assistance in their activity. Depending upon the circumstances, they may not technically be parties to the principal crimes, and hence the need for a separate offence on the statute book, but they come very close to it. Sentences for money laundering should therefore bear a relationship to sentences for the particular principal offending and should be approached on a similar basis. The more serious the principal offending, the more serious the laundering. Where the criminal activity which is being concealed or otherwise assisted is of a less pernicious kind, the appropriate sentence for money laundering will be at a lesser level than it will be for laundering known by the offender to be related to very serious criminality, such as the present. In sentencing for drug dealing a primary factor is the deterrence of others who may be minded to do likewise. The personal circumstances of the particular offender are given comparatively little weight. So it must be for money laundering associated with drug dealing.
The Court may also draw a distinction between money laundering which involves personal benefit and circumstances, such as in Greenwood, where the misguided intention of the launderer is to help the drug offender without seeking any personal gain.
[15] In the present context, your activities enabled funds realised from the sale of pernicious drugs to be taken out of New Zealand. That provided a benefit to those involved in the sale of drugs, because they would obviously have had considerable difficulty spending that amount of cash within this country.
[16] When sentencing Mr Brown, Woolford J took a starting point of five years imprisonment to reflect his involvement in the money laundering activities.3 I take your involvement to be greater than his, by virtue of the fact that you were the mastermind behind it.
[17] The starting points in other cases are also of some relevance. In R v Zhang, the Court of Appeal approved a starting point of five and a half years imprisonment
for a person who assisted in the laundering of drug sale proceeds by her partner.4
2 R v Wallace CA415/98, 16 December 1998 at 5-6.
3 R v Brown, above n 1.
4 R v Zhang [2010] NZCA 481.
Over an 18 month period, she laundered the sum of approximately $700,000 through her bank account and an associated credit card.
[18] In R v Sorby,5 a starting point of three and a quarter years imprisonment was selected in relation to a person who had laundered $400,000 in cash over a period of one month.
[19] The starting points adopted in relation to other offenders who were involved in your operation are also relevant. When Ms Simanu was sentenced, the Judge adopted a starting point of two and a half years imprisonment. She was no more than a functionary who carried out instructions given to her by you and Mr Brown.6
[20] Mr Grigaliunas, who was the final courier apprehended with the sum of
€100,000 in his possession, received a sentence of 18 months imprisonment from a starting point of two and a half years imprisonment.7
[21] Mr Karaka, who attempted to launder $100,000 by putting cash through his own bank account, received a sentence derived from a starting point of two years imprisonment.8
[22] As I have said, given the fact that you were the mastermind of the money laundering operation, the starting point to be adopted in your case must exceed that selected in relation to Mr Brown. I consider that the sophistication of the operation and the quantities involved mean that a starting point of six years three months imprisonment is warranted. I record that the Crown submitted that a starting point of between five and a half and six and a half years imprisonment was appropriate. Your counsel submitted that a starting point of between four and a half and five years imprisonment was appropriate.
[23] I need to apply to that an uplift to reflect the importation of LSD on 25 April
2008. Your counsel submits that that should be recognised within the starting point
5 R v Zorby, HC Auckland T022561, 30 May 2003.
6 R v Simanu HC Auckland CRI-2008-004-020453, 16 December 2010.
7 R v Grigaliunas DC Auckland CRI-2009-004-1879, 29 January 2009.
8 R v Karaka DC Auckland CRI-2008-004-1879, 29 January 2009.
adopted in relation to the money laundering charges, but it is entirely separate offending and warrants discrete recognition. Standing on its own, I consider it would attract a starting point of between a year and 18 months imprisonment. Having regard to totality principles, I propose to apply an uplift of six months to reflect this factor. This means that I am left with an end starting point of six years nine months imprisonment before taking into account aggravating and mitigating factors personal to you.
Aggravating factors
[24] There are no aggravating factors, such as previous convictions, that would operate to increase the starting point I have selected. It therefore follows that the only remaining exercise is to decide whether or not I should reduce the starting point to reflect mitigating factors personal to you.
Mitigating factors
[25] One factor that concerned me before sentencing today was the fact that you spent approximately ten months in custody in Latvia whilst awaiting extradition to New Zealand. Had that not been taken into account, I would have applied a discount to reflect that factor. Today, however, counsel for the Crown advises me that time spent in custody awaiting extradition is recognised through provisions in the parole and extradition legislation. For that reason, I do not apply a discount to reflect that factor.
[26] Your counsel submits that I should apply a significant discount to reflect the fact that you will serve your sentence in a foreign country and away from your wife and two young children. I agree that serving a sentence in New Zealand will be of some hardship to you, because you will be separated from your wife and family for a considerable period.
[27] Having said that, however, I do not consider that a large discount is warranted. Many of the factors that apply to foreign nationals imprisoned in New Zealand do not apply in your case. You have a good command of the English language and this will prevent you from being isolated from other prisoners, as is
often the case when sentenced prisoners do not speak English. Secondly, I have no doubt, from everything that I have seen and heard about you, that you have a confidence and sense of self-reliance that will serve you well whilst you serve your sentence of imprisonment. I am prepared to allow a discount of six months to recognise the fact that you will be serving your sentence in a prison in a foreign country and away from your family.
Minimum term of imprisonment
[28] This produces an end sentence of six years three months imprisonment. The only remaining issue is whether I should impose a minimum term of imprisonment.
[29] The Court has the power to impose a minimum term of imprisonment in any case where that is necessary to reflect the need to deter offenders, to hold them responsible for their offending and to protect the community.9
[30] In the present case, all of the principles that apply in relation to an order for a minimum term of imprisonment are engaged. If the normal parole provisions were to apply to you, you would be eligible for parole after serving just two years one month of your sentence. In my view, that would be manifestly inadequate to deter both you and others of like mind from considering being engaged in the future in money laundering on this scale in New Zealand. It would also be insufficient to hold you accountable for your offending and to denounce it on behalf of the community.
[31] For that reason, and notwithstanding the fact that you will be deported when you have served your sentence, I propose to impose a minimum term of imprisonment of three years.
Sentence
[32] On each of the money laundering charges you are sentenced to six years three months imprisonment. Those sentences are to be served concurrently, but you are to
be subject to a minimum term of imprisonment of three years. On the charge of
9 Sentencing Act 2002, s 86.
importing LSD you are sentenced to six months imprisonment. That sentence is to
be served concurrently with the other three sentences.
Lang J
Solicitors:
Crown Solicitor, Auckland
Kevin McDonald, North Shore City
Counsel:G Newell, Auckland
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