R v Long
[2021] NZHC 3522
•17 December 2021
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CRI-2018-004-10728
[2021] NZHC 3522
THE QUEEN v
JIAN LONG WEN TING ZHANG
Hearing: 17 December 2021 Appearances:
S O’Connor for the Crown
R Butler and M Beattie for Jian Long
M Corlett QC and J Ding for Wen Ting ZhangJudgment:
17 December 2021
SENTENCING NOTES OF GORDON J
Solicitors: Crown Solicitor, Auckland
Anderson Creagh Lai Ltd, Auckland K3 Legal, Auckland
Counsel: R Butler, Auckland
M Corlett QC, Auckland
R v LONG AND ZHANG [2021] NZHC 3522 [17 December 2021]
Introduction
[1] Wenting Zhang and Jian Long, you are both before me for sentence, having pleaded guilty to a large number of dishonesty charges arising out of a fraudulent scheme the two of you and your co-offender, Peng Pian,1 perpetrated against Zhaoyi Li and his wife, Hongmei Wang. In short, as a result of your actions, Mr Li was deceived into paying approximately $6 million that he would not otherwise have been required to pay in relation to a property investment between 2015 and 2017.
The offending
[2] In entering your guilty pleas, you accepted the contents of the summary of facts. A brief background is that Mr Li and Ms Wang wished to emigrate from China to New Zealand under an investor category of immigrants. Mr Long you were the immigration consultant in New Zealand for Mr Li and Ms Wang and you, Ms Zhang, acted as an investment broker. You induced Mr Li and Ms Wang to contribute funds for the purchase of some land to be developed.
[3] You and Mr Pian provided false information about the purchase price, the deposit for the project and the payment said to be required by Mr Pian’s “boss”. You also falsified the details of an “under the table” payment to another prospective purchaser, when in fact there was no such payment. You deceived Mr Li into thinking other people were contributing to the purchase price. The reality was that Mr Li was the only contributor. You obtained a loan to fund the rest of the purchase, using documents purporting to be signed by Ms Wang, when in fact she had not signed the documents.
[4] You set up a company, WOW Development Ltd (WOW), to facilitate the development venture and told Mr Li he was not eligible to be a director of the company. That was untrue. You deceived Mr Li into making payments for the purchase of shares. You both took steps to conceal the true position, providing Mr Li with false bank statements and a false LINZ title document.
1 Mr Pian was sentenced by Moore J on 16 October 2020: R v Pian [2020] NZHC 2724.
[5] In late 2016, Mr Li became aware that he had been deceived. You both allowed Mr Li to have a greater role in the company and to access its bank accounts. However, you continued to deceive him in other ways. He was deceived into making payments on false invoices regarding work said to have been done on the development (but which had not been done). The invoices were provided to an accountant engaged by the company in order to conceal the fraud.
[6] The funds paid into a lawyer’s trust account on behalf of the company, to which Mr Li had an entitlement, were paid either to you or your associates but not to Mr Li.
[7] The Crown, in its submissions, divides the offending into three stages, which I accept is an available approach on the basis of the summary of facts. In making its calculations, where payments were made to relatives or associates of one or other of you (i.e. for your benefit), the Crown treats them as having been received by you for the purposes of the Crown’s calculations which follow.
[8] The first stage of the offending is the property and the share purchases. The Crown accepts that given Mr Pian was sentenced on the basis of the sums he personally received at this stage, the same approach may be taken in respect of the two of you. For the property and share purchases:
(a)you, Ms Zhang, received $400,000; and
(b)you, Mr Long, received $300,000.
[9] The second stage of the offending involved payments from Amicus Law. The Crown calculates that:
(a)you Ms Zhang received $2,207,428.71; and
(b)you, Mr Long, received $1,737,857.50.
[10] The third stage of the offending involved payments made upon false invoices (CJ Construction invoices) as I have already referred to. The Crown has calculated that a total of $1,918,890.65 was paid as part of this deception for the benefit of each
of the two of you. The Crown submits there being no basis upon which to distinguish between the two of you, it is appropriate that you are treated as having received
$959,445.33 each.
[11]The total obtained is therefore (on the Crown’s calculations):
(a)By you, Ms Zhang, $3,566,874.04; and
(b) By you, Mr Long, $2,997,302.83.
[12] The defence position for both of you in relation to the third stage of the offending is that while you were responsible for causing Mr Li this amount of loss, you did not personally receive this amount. Mr Butler, for you Mr Long, therefore, submits that rather than saying the total obtained by you is (approximately) $3 million, it should be stated as Mr Li’s loss figure that can be attributed to you is (approximately) $3 million. Similarly, Mr Corlett, for you Ms Zhang, says it is not correct to say you “obtained” $3,566,874.04.
[13] I will address this issue later in these sentencing remarks and will also come to the amounts paid by each of you as reparation when I address whether there should be an adjustment to the initial starting point.
[14] As a consequence of the offending, as I have said, you each faced a large number of dishonesty charges.
[15]You, Ms Zhang, have pleaded guilty to:
(a)Theft by a person in special relationship (x 10)2;
(b)Obtaining by deception (x 6)3;
(c)Using a forged document (x 2)4;
2 Crimes Act 1961, s 220(1). Maximum penalty (s 223(a)): seven years’ imprisonment.
3 Section 240(1)(a). Maximum penalty (s 241(a)): seven years’ imprisonment.
4 Crimes Act, s 257(1)(a). Maximum penalty: 10 years’ imprisonment.
(d)False accounting5; and
(e)Dishonestly using a document (x 7).6
You, Mr Long, have pleaded guilty to:
(a)Theft by a person in a special relationship (x 6)7;
(b)Obtaining by deception (x 6)8;
(c)Using a forged document (x 3)9;
(d)False accounting10; and
(e)Dishonestly using a document (x 7).11
[17]Both of you pleaded guilty to your respective charges on 14 May 2021.
Victim impact statement
[18] I have read Mr Li’s Victim Impact Statement (VIS) dated 2 June 2021. He states the fraudulent offending had a significant economic impact on him. He says in 2017 he borrowed NZD 10 million from China to repay the loan for the mortgage on the land. He says after the sale of the land, his accounting books showed he had suffered a loss of NZD 6 million.
[19] Mr Li says at the end of 2016 when he found out he had been deceived, he asked you both what had happened. He says you told him about taking the money and expressed a desire to remedy the situation. You, Mr Long, transferred all the shares in the business to him (you held 50 per cent of the shares but of that, 25 per cent were
5 Section 260(a). Maximum penalty: 10 years’ imprisonment.
6 Section 228(b). Maximum penalty: seven years’ imprisonment.
7 Section 220(1). Maximum penalty (s 223(a)): seven years’ imprisonment.
8 Section 240(1)(a). Maximum penalty (s 241(a)): seven years’ imprisonment.
9 Section 257. Maximum penalty: 10 years’ imprisonment.
10 Section 260(a). Maximum penalty: 10 years’ imprisonment.
11 Section 228(b). Maximum penalty: seven years’ imprisonment.
held beneficially for Ms Zhang) and you both paid $300,000 to him. But he says, unexpectedly you continued to deceive him with false invoices.
[20] He says as a result of your offending that he has “a great distrust of the people around, and I am always on the alert.” He says when he came to New Zealand he “could not open [his] heart to make new friends”. Importantly, Mr Li says that he cannot tell his family about the offending because of the huge loss and shame it has caused him. He now has insomnia.
Approach to sentencing
[21] Ms Zhang, you have pleaded guilty to 26 charges. Some of the charges have a maximum penalty of seven years’ imprisonment and some carry a maximum penalty of 10 years’ imprisonment. Mr Long, you have pleaded guilty to 23 charges of the same nature. The fundamental principle in sentencing for multiple offences is the total sentence must represent the overall criminality of the offending and the offender.12
[22] Under the Sentencing Act 2002, the relevant principles and purposes for dishonesty offending are denunciation and deterrence.13 In Arnott v R, the Court of Appeal acknowledged the well-established principle that “planned and repeated dishonesty for financial gain typically constitutes serious offending, warranting a clear element of denunciation.”14
[23] The Court of Appeal also remarked in R v Rose that even if the risk of reoffending by the particular offender is not great, the safety of the community requires a sentence which will serve as a deterrent to others.15 In sentencing you both, it is also necessary to hold you accountable for your actions and the harm that you have done to the victim and to promote a sense of responsibility in you for that harm.16
12 R v Xie [2007] 2 NZLR 240 (CA) at [18].
13 Sentencing Act 2002, s 7(1)(e) and (f).
14 Arnott v R [2015] NZCA 236 at [8].
15 R v Rose [1990] 2 NZLR 552 (CA) at 556.
16 Sentencing Act, s 7(1)(a).
[24] I also consider the principles of sentencing.17 In particular, I note the need to take into account the gravity of your offending in this case, including the degree of your culpability,18 and the information provided to the Court as to the effect of the offending on the victims.19 Counterbalancing these principles is that the Court must impose the least restrictive outcome that is appropriate in the circumstances.20
[25] The sentencing methodology involves two steps.21 I must first determine a starting point that takes into account the aggravating and mitigating features of your offending. I will then consider factors personal to each of you, including your guilty pleas, that may adjust the starting point. There are also the Provision of Advice to the Court reports (PAC Reports) for you both, the VIS from Mr Li, which will all inform the sentencing exercise.
[26] There is no guideline judgment for the charges to which you have both pleaded guilty. Instead, this Court is to assess your culpability in regard to dishonesty offending in reference to:22
(a)The nature of your offending;
(b)Its magnitude and sophistication;
(c)The type, circumstances and numbers of victims;
(d)The amount of losses involved; and
(e)Any breaches of trust.
[27] The Court of Appeal in R v Varjan also stated that comparable cases assist the court in assessing the culpability of the defendant.23 The Court of Appeal said matters
17 Sentencing Act, s 8.
18 Section 8(a).
19 Section 8(f).
20 Section 8(g).
21 Moses v R [2020] NZCA 296, [2020] 3 NZLR 583 at [46].
22 R v Varjan CA97/03, 26 June 2003 at [22], approved in Arnott v R, above n 14, at [8].
23 At [23].
that can mitigate culpability include reparation, co-operation with investigators, plea, remorse and personal circumstances.24
[28] In Cole v Police, this Court commented that the amount of money lost or dealt with is not determinative of the seriousness of the offence.25 However, the Court stated there is obviously some connection when assessing the need for deterrence, especially when a breach of trust is involved or where the offenders take advantage of friends or others who place their trust in them.26
[29] In a recent case in this Court, R v Borlase, the Court surveyed a number of cases of fraud more generally, such as theft by a person in a special relationship and obtaining by deception.27 In R v Borlase, Fitzgerald J stated:28
In cases where benefits of between approximately $1m to $3m had been obtained, starting points in the vicinity of seven to nine years’ imprisonment have been adopted. Where the benefits obtained were around $500,000 to $750,000, starting points of around five to seven years’ imprisonment have been adopted.
Submissions
Crown
[30] In summary, Mr O’Connor, for the Crown, submits the appropriate starting point for each of you is in the range of seven years’ imprisonment. The Crown accepts a discount of between five and 15 per cent may be available for reparation you both have made. Mr O’Connor submits I should give a discount for good character of no more than 10 per cent and that a discount of up to 10 per cent is appropriate for your guilty pleas.
[31]Mr O’Connor submits the key aggravating factors of the offending are:
24 R v Varjan, above n 22, at [23].
25 Cole v Police [2001] 2 NZLR 139 (HC) at [12].
26 At [12].
27 R v Borlase [2017] NZHC 236 at [73].
28 At [73].
(a)The magnitude and sophistication of the fraud: Mr O’Connor says the total sum involved in the fraud was some $8 million. (However, I note the agreed statement of facts says that Mr Li paid $6 million unnecessarily and in his submissions this morning, Mr O’Connor accepted that). In the written submissions the Crown acknowledges that some of the $8 million went towards the land purchase and some has been addressed in the sentencing of Mr Pian and some repayments have been made. But even allowing for those matters, Mr O’Connor submits that you both personally received significant sums or significant sums were received for your benefit. He submits initially the offending scheme was moderately but not highly sophisticated. At its core was a series of outright lies. But you also used a company structure and legal advisers to facilitate the fraud.
Mr O’Connor submits that the offending developed in sophistication after Mr Li confronted you in December 2016 and you began to use false invoices to ensure Mr Li continued to contribute funds;
(b)Motivation: Mr O’Connor submits that the two of you could only have been motivated by greed;
(c)Period over which the offending occurred: the initial misrepresentations occurred in December 2015 and continued until the latter part of 2017 and involved a series of deceptions; and
(d)Abuse of position of trust: Mr O’Connor submits that Mr Li and his wife were in a vulnerable position as overseas-based investors and prospective immigrants who placed their trust in you, and you abused that trust.
[32] Mr O’Connor submits that if the Court accepts the Crown’s submissions, the Court is unlikely to have jurisdiction to impose anything less than sentences of imprisonment. The Crown says that is the appropriate outcome in this case, given the seriousness of the offending.
Ms Zhang
[33] Mr Corlett QC, on your behalf Ms Zhang, submits the Court should adopt an adjusted starting point of four to four and a half years’ imprisonment. He reaches that adjusted starting point by deducting 20 per cent off an (unstated) initial starting point (which I calculate as five to five and a half years imprisonment).
[34]Mr Corlett also submits the Court should give discounts of:
(a)20 per cent for your guilty plea;
(b)10 per cent for what is submitted to be genuine remorse expressed in the PAC Report and earlier correspondence from you offering
$2 million in reparation and also reparation actually paid;
(c)five per cent for previous good character; and
(d)10 per cent for personal circumstances, including your new-born baby.
[35] Mr Corlett also adopts some of the submissions made by Mr Butler in relation to personal circumstances.
[36] As regards reparation, Mr Corlett submits you offered to pay $2 million in a letter dated 4 June 2021, but you did not hear back from the Crown. He submits the total you have repaid makes whole the loss that Mr Li suffered. Mr Corlett submits that a notable feature of this case is that you, Ms Zhang, have long acknowledged your wrongdoing and have endeavoured to repay the victim in full. I will address the issue of reparation later in these sentencing remarks.
[37] Mr Corlett submits a sentence of imprisonment would serve no useful purpose but would further separate you from your family, which will adversely impact you rather than aid in your rehabilitation. He submits a sentence of home detention would be more appropriate. If the Court reaches a sentence that is just beyond the threshold for home detention, then a sentence of home detention can be combined with a
sentence of up to 400 hours of community work under s 19(8) and s 55(2) of the Sentencing Act.
Mr Long
[38] Mr Butler, on your behalf Mr Long, submits an initial starting point of five to five and a half years’ imprisonment is appropriate to reflect the fact that your offending continued beyond the point of Mr Pian’s involvement. Mr Butler submits a 20 per cent discount (as was given to Mr Pian) is appropriate to reflect your pre-charge repayments and overall reparation to Mr Li, which results in an adjusted starting point of four to four and a half years.
[39] Mr Butler accepts that your actions were motivated by a desire for financial gain. But he submits that underpinning the offending was your obligation to provide security for your parents and in-laws, your wife and your child, as a child born under the One Child Policy (that is a reference to you rather than your child). He says there were cultural expectations of your family and the pressure for you to be seen as providing a certain lifestyle for your wife and your family. He says you turned to your associates and placed unconditional, naïve trust in them.
[40] In regard to the sentencing principles and purposes, Mr Butler says the Court is required to take into account any particular circumstances of the offender that mean a sentence would be disproportionately severe. Mr Butler submits in that regard, you inevitably face deportation to China once your sentence is complete.
[41] Mr Butler accepts that the extent of loss, premeditation, breach of trust and duration of the offending are relevant factors. But he says that the extent of the loss is not $8 million as referred to by the Crown. He refers to Moore J’s comment in R v Pian, that:29
…The victims have not suffered materially according to Ms Smith [Crown counsel] … It follows that the seriousness of the offending is to some extent mitigated by the victims’ loss, if there was a loss at all, being relatively modest.
29 R v Pian, above n 1, at [31].
[42] Further, Mr Butler submits that if the offending includes partial or complete recovery, that offending is rightly seen as less serious than those cases where there is no recovery because in the latter situation the victim’s loss is permanent rather than transitory.
[43] Mr Butler accepts you, Mr Long, were in a position of trust in relation to Mr Li and Ms Wang. However, Mr Butler submits your status as an immigration adviser was not central to your offending. He submits that Mr Li is an international investor and was not as vulnerable as other victims in similar cases, such as Ryan v R and R v Scott.
He refers to the fact that Moore J accepted this argument in R v Pian.30
[44] Mr Butler submits your offending was limited to misrepresentation through silence during the meeting in December 2015 and to not correcting Mr Pian’s/Ms Zhang’s representations to Mr Li. He says you did not promote the initial project, nor make any representations to Mr Li. He also says you did not attend the initial meeting two days earlier between Mr Li, Mrs Zhang and Mr Pian.
[45] Mr Butler makes submissions on discounts that should be made for matters personal to you. I will address those submissions later in these sentencing remarks.
[46] Finally, Mr Butler also makes submissions on reparation which I will again address when I come to consider an adjustment to the initial starting point.
[47] In summary, Mr Butler submits home detention is a principled outcome in regard to the parity principle and the outcome in R v Pian.
Starting point
[48] In determining the appropriate starting point for each of you, I must consider the features of your offending to assess its seriousness. I must also consider the importance of observing parity or consistency of approach between co-offenders.31
30 R v Pian, above n 1, at [23], referring to McGregor v R [2015] NZCA 565.
31 Sentencing Act, s 8(e).
[49] I start with the cases referred to me by the Crown to engage in an assessment of the initial starting point.32
[50]In Ryan v R, the fraudulent offending involved $8.3 million, with losses of
$4.4 million to the victims. However, the sophistication of the fraud was high in that case compared to your offending because it involved a more complex operation. Mr Ryan appeared to run a legitimate investment business, which attracted 900 investors, some of whom had conducted due diligence before investing.33 The offending also impacted on vulnerable people who felt stigmatised because of their innocent association with a Ponzi scheme.34 The initial starting point in the High Court was nine years’ imprisonment. However, on appeal, the Court of Appeal imposed an adjusted starting point of seven years and six months’ imprisonment (to reflect totality of the offending).35
[51] In R v Scott, the amount involved in the fraudulent scheme was $5,425,875, with losses of $2.1 million.36 The offending in R v Scott differed from your offending in that the fraudulent scheme operated for a much longer period of 13 years and involved 13 victims. The offending was not particularly sophisticated, as it consisted of Mr Scott providing multiple false written documents and contracts to investors over the years. An initial starting point of seven years’ imprisonment was adopted for the offending.
[52] For sentencing purposes today, I adopt the figure of $6 million, which is the amount the agreed summary of facts says Mr Li was deceived into paying, which he would not otherwise have been required to pay. This is a substantial amount. I accept Mr O’Connor’s submission that your offending was moderately sophisticated. In sentencing Mr Pian, Moore J adopted an initial starting point of four and a half years’ imprisonment. In my view, the operation increased in sophistication after Mr Pian ended his involvement, because you started to use fraudulent documents and engaged lawyers in the operation in a similar way to R v Scott. Your actions were in flagrant
32 R v Pian, above n 1; Watson v R [2012] NZCA 17 ; Robertson v R [2020] NZCA 218; Arnott v R,
above n 14; and Ryan v R [2018] NZCA 586.
33 Ryan v R, above n 32at [8](d).
34 At [8(b)].
35 At [26].
36 R v Scott [2017] NZHC 2510 at [2] and [7].
disregard of Mr Li, who was your friend and a recent immigrant to New Zealand. He trusted you on multiple levels.
[53] I accept Mr Butler’s submission that Mr Li has a lower level of vulnerability however than some of the other victims in R v Scott and Ryan v R, due to the fact that he is an international investor. But you still breached Mr Li and Ms Wang’s trust on multiple occasions, even after Mr Li became suspicious of the operation. I agree with the submission that greed was the primary motivation for both of you.
[54] In light of the cases that have been referred to the Court and the submissions from counsel, I find that the aggravating factors for both of you are the extent of the loss, premeditation, your motivation and breach of trust. While these features are common in dishonesty offending, the amount of money involved in this scheme was significant. It is apparent there was premeditation involved throughout the offending as you lied to Mr Li on a number of occasions and made conscious decisions to continue to lie to Mr Li once he realised he was being deceived. This was not opportunistic dishonesty offending. It continued from the end of 2015 to 2017. Finally, the motivation for the offending, as already discussed, was clear. You acted in your own self-interest. You were friends with Mr Li but also held yourself out as an immigration consultant and finance broker to him. He trusted you and you breached that trust.
[55] In respect of Mr Butler’s submission that you, Mr Long, played a lesser role in the offending in the initial period, I acknowledge the different roles played by each defendant have a fundamental impact on their culpability and responsibility for any loss.37 In this case, however, there is only a fine distinction between the role you, Mr Long, and you, Ms Zhang, played in the offending in the initial period. The difference is not material. There is a greater distinction between the role Mr Pian played in the offending compared to two of you. Misrepresentation does not turn on overt action. Omissions such as not telling Mr Li the true position still contribute to misrepresentation. I find that the role each of you had in the offending was relatively
37 Zhang v R [2019] NZCA 507, [2019] 3 NZLR 648 at [118].
equal. But in any event, and perhaps more fundamentally, the submissions made by Mr Butler were based on witness statements and not on the agreed summary of facts.
[56] There is one final issue relevant to setting the initial starting point. In sentencing Mr Pian, Moore J said:38
[31] I note that there has been a complete recovery of the funds [Mr Pian] received. I also note this investment enterprise has ultimately proved successful. The victims have not suffered materially according to Ms Smith [Crown counsel]. … It follows that the seriousness of the offending is to some extent mitigated by the victims’ loss, if there was a loss at all, being relatively modest.39
[57] I do not consider the fact that Mr Pian left the scheme in August 2016 affects the approach I must take in sentencing you and for reasons of consistency it is necessary for me to adopt the same approach. The fact that your offending continued after the share transfer and after the property sale does not alter the fact that a capital gain was realised (although separately the continuing offending after Mr Li discovered your earlier deceptions is, as I have noted already, an aggravating feature of your offending).
[58] Considering all of the above factors, I set the initial starting point at six years’ imprisonment for both of you.
Adjusted starting point
[59] Ms Zhang, your position is that you accept you received $2,507,000 either directly or to accounts associated with you. As against what you received (i.e.
$2,507,000) your position is that you have transferred to Mr Li funds and equity in property with a total value of some $3,185,000 made up of: $400,000 (funds),
$825,000 (equity in WOW), $560,000 (funds) and $1.4 million (transfer of a property at an agreed value with Mr Li). Offers of repayment to Mr Li were also made before you were charged.
38 R v Pian, above n 1, at [31].
39 Citing Elmiger v R [2019] NZHC 1238 at [33], referring to R v Patterson [2008] NZCA75 at [41].
[60] Mr Corlett submits that the total sum paid is more than sufficient to repay the amount that you received either directly or to accounts associated with you. He adds that the sum paid is also sufficient to make a significant contribution to the losses suffered by Mr Li as a result of the CJ Construction invoice offending, notwithstanding that you did not receive any funds as a result of that offending. But he says you accept liability for those amounts even though you did not receive them personally. They were paid to others for your benefit.
[61]By contrast, on the Crown case the sum outstanding for you Ms Zhang is
$644,016.54.
[62] Mr Long, you say that you personally received $2 million to which you were not entitled. As I have already noted, you accept the Crown’s loss figure for Mr Li that can be attributed to you is $3 million. Your position is that you should have the amount of $2,785,000 credited to you made up as follows: pre-charge cash repayments of $1,120,000; transfer of WOW shares in the sum of $825,000; post-charge cash payment of $200,000 and a deed poll binding promise to pay Mr Li $640,000. Mr Butler makes a similar submission to that made by Mr Corlett. That is that you have repaid all of the money you personally received ($2 million) and you have made a substantial contribution towards other losses you jointly caused with Ms Zhang via the CJ Construction invoices, leaving a shortfall of $215,000. But Mr Butler also notes in a letter dated 8 September 2021 on behalf of Mr Li by a firm of solicitors, it concludes by saying, “Our client is prepared to grant your client a full pardon if the balance of $700,000 are [sic] paid by your client to ours”. And Mr Butler notes that the binding deed poll was signed after the date of that letter.
[63]By contrast, the Crown says the total outstanding from you is $1,044,445.33.
[64] There are two reasons for the difference between the numbers as between the Crown and the defence. The first is (and the difference is more apparent than real) whether the value of the CJ Construction invoices should be taken into account as sums received by each of you. You both accept that although you did not personally receive those sums, they were paid for your benefit and you accept liability for those amounts.
[65] The second difference between the two of you and the Crown is whether in calculating reparation made to Mr Li the value of the share transfers in WOW made by Mr Long to Mr Li should be taken into account. As I have already mentioned, Mr Long you held 50 per cent of the shares in WOW (with 25 per cent of that being held on behalf of Ms Zhang). The gross value of the 50 per cent shareholding was
$1.65 million. Attributing half of that amount to each of you, you both include
$865,000 as part of the total reparation sum. On that basis, Mr Corlett submits for you, Ms Zhang, is that you have in fact paid more than the amount wrongly received by you. And for you, Mr Long, Mr Butler makes a similar submission.
[66] Your counsel therefore submit that the initial starting point should be adjusted by deducting 20 per cent.
[67] The Crown does not accept reparation should take into account the value of the transfers of shares in WOW. On that basis, the Crown submits the initial starting point should be adjusted by only five to 15 per cent to acknowledge your reparations.
[68] I accept that the payment of reparation is to be taken into account as part of the adjusted starting point.40 I also acknowledge some of the reparation by each of you was made before you were charged with any offences. The issue comes down to whether the transfer of shares in WOW should be taken into account. I acknowledge there is some merit in what the Crown says as follows. The fact that Mr Li became the sole owner of WOW and was able to profit from its business (in other words from the sale of the property) does not require an adjustment in the reparation to which he is entitled. He had been the sole contributor to the company’s funds and the transfer by the two of you simply recognised that. In making its calculations the Crown acknowledges it would be inappropriate for Mr Li to be recompensed for sums that he paid that ultimately went towards the land purchase and the Crown’s calculations put those amounts to one side. In doing so, that takes into account that Mr Li ultimately benefited from the sale of the property. But, the Crown says, to give the two of you credit for transferring your shares would mean that you benefit twice.
40 Elmiger v R, above n 39, at [34], referring to R v Patterson, above n 39, at [41].
[69] However, I propose to follow the approach urged on the Court by Mr Corlett and Mr Butler on your behalf. That is because I have already accepted, given the need for consistency in approach as between you and Mr Pian, the Court is required to take into account the fact that the development sold at a profit. The transfer of 50 per cent of the shares to Mr Li enabled him to receive 100 per cent of the profit on the sale of the land.
[70] For all the above reasons, and having regard to the amount of reparation paid, I make a deduction of 20 per cent from the six year initial starting point to reach an adjusted starting point of four years and nine months’ imprisonment (rounded down in your favour) before considering factors personal to you.
[71]I now turn to consider those factors.
Personal circumstances
PAC Reports
Ms Zhang
[72] The PAC Report for you, Ms Zhang, dated 4 June 2021, outlines your explanation for your offending. You say Mr Long invited you to join a project, which he promised was of “huge potential and a lot of profit”. You say you were told you could “learn from the project as not many people can get that chance”. You said you complied with what you were asked to do and that you did not know what you were thinking.
[73] You told the report writer that in 2017, you suspected there was something wrong with the project. You say, despite the gut feeling that something was wrong, you did not contact Mr Li because of the Chinese way of doing business. You say you tried to extricate yourself from the project and transfer all your shares to Mr Li. However, a person called Eric told you that Mr Li did not want to talk to you. You wanted to show your sincere apologies by giving him two million dollars, but you did not hear back from his lawyer.
[74] On reflection, you say “it does not matter whether I knew or not, that’s what I did, it was my dumb decision, during 2015-2017 I should have contacted Mr Li directly, not through anyone else. I need to take responsibility I have to have a “consequence”. You told the report writer that you will try to apologise in whatever way you can.
[75] The report writer assessed you as posing a low risk of reoffending as you do not have prior convictions. Your risk of harming others is assessed as medium due to the financial and emotional harm caused by the current offending. The report states it appears your desire for financial gain overrode other considerations.
[76] The report also notes your desire to participate in a Restorative Justice conference. The report writer recommends home detention and reparation as a sentencing outcome.
[77] In respect of your cultural circumstances and relationships, you identify as Chinese, you are an only child and came to New Zealand in 2002 to study. You are a mother of two sons, aged 11 and nine. You have recently had a baby, who is now seven weeks’ old. You are a Buddhist. You have permanent residence status in New Zealand. You say your offending has had an impact on your husband’s livelihood and the Chinese community is talking about it.
[78] Your husband describes you as someone who “always keeps her word and she is a kind person”. He said he initially blamed you for the predicament. However, he said you “helped the family a lot” and are a very good wife and very good mother. You say you have no family support in New Zealand. Your family is in China. So is your husband’s family.
Mr Long
[79] The PAC Report for you, Mr Long, dated 4 June 2021, states that your explanation for your offending was “I needed to make money. A friend introduced me to Mr Li and Ms Wang to help them with their immigration. My friend said they were very wealthy clients and by helping them with buying the property to develop we could make money.”
[80] You say you felt lonely and vulnerable when you met Ms Zhang. You were nervous because you had not been involved in that type of business before. When you questioned Ms Zhang about the transactions, you felt comforted as Ms Zhang told you she had consulted lawyers about the business.
[81] On reflection, you say Ms Zhang lied to you. However, the report writer says you take full responsibility for your offending behaviour and do not blame your co- defendants. You were emotional at times throughout the interview. You told the report writer that you attended mediation with the victims, you have paid some reparation and apologised to the victims. You say your apology was accepted. You also said at the time you intended to pay back all the money owing.
[82] The report writer notes you have not been subject to a community sentence previously, however, you complied with the pre-sentence interview process for the PAC report. The report writer says that due to your age, remorse and insight that you displayed into your offending behaviour, you present a low risk of reoffending. However, the report writer also assesses you as presenting a high risk of harm because of the nature of the offending, the amount of money involved and the impact on the victim’s financial position.
[83] In light of the above factors, including the seriousness of the offending, the high maximum penalty for the convictions you face, your remorse and intention to pay reparation in full, the report writer recommends a sentence of home detention.
[84] As regards your personal circumstances, the report writer states you were born in China and are an only child. You immigrated to New Zealand in 2007. You were married. You have a five year old daughter with your former wife. Your relationship ended after the offending. You say your income is limited now because of the active charges you face and because of COVID-19. You completed a Bachelor of Arts degree in China, with a major in International Trade. In New Zealand, you gained a Graduate Diploma in Business (Level Seven). You have worked for several Immigration companies and in 2014, you established your own immigration consultancy company. After a year, you closed the company to open an immigration company with a previous colleague of yours.
[85] You told the report writer you have pro-social support, including some good friends who are aware of your situation and are providing you with support. The PAC report notes you are at a moderate risk of experiencing severe mental health problems. You reported no risk of self-harm at this point but agreed you would benefit from counselling.
Cultural report
[86] Mr Long, a report under s 27 of the Sentencing Act was written by Mr Patrick Au. He says that the information in the report is limited to his discussions with you. He says you were born in Zhanjiang City in the Guangdong province of China.
[87] Mr Au says in modern China, often people will use guanxi (a special connection or relationship) to be given special privileges to obtain benefit from people in power. Guanxi refers to having personal trust and a strong relationship with someone. It can include moral obligations and exchanging favours. You found your family background could not give you the guanxi you needed to set up a successful business, which was your goal. Mr Au says in China, there is a link between social status, roles and relationships, which all play a part in a person’s social life.
[88] You obtained a University degree in Guangzhou and wanted to study overseas in New Zealand. You say your parents gave up their savings and supported your first year of study in New Zealand, where you completed your graduate diploma in business at AUT.
[89] You told Mr Au that you have a filial piety obligation to ensure that your parents and grandparents have a happy retirement life. This is more than a moral obligation, it is also an economic obligation. You say you had a strained relationship with your parents-in-law and your wife (at the time) did not get on with your parents. You separated after the Police started their investigation.
[90] You told Mr Au you are worried about having to take responsibility over the care of your parents, especially now that your paternal grandparents have passed away.
[91]In regard to your offending, you accept it was motivated by greed.
[92] Now that the details of your offending have been published, Mr Au says your reputation has been destroyed. You are worried about deportation. Mr Au is worried about you facing a term of imprisonment, as he says it is considered an extreme shame and loss of face, not only for you but also for your family. Causing shame to one’s parents is considered unfilial in China. He says these factors, along with your loss of contact with your daughter, loss of future career and potentially loss of all your equities, are all risk factors for suicide.
Aggravating features of the offender
[93] The Crown properly accepts there are no aggravating features personal to either of you. I agree.
Mitigating features of the offender
Good character
[94] The Crown acknowledges that neither of you has any previous convictions, and submits a discount of no more than 10 per cent may be appropriate for this factor. Mr Butler submits 10 per cent is appropriate for your lack of criminal history, Mr Long. Mr Corlett suggests five per cent for you Ms Zhang. Each of you has filed a number of positive character references which I have read. They all indicate that your offending was out of character.
[95] I will give a discount of 10 per cent off the adjusted starting point, for both of you, for good character.
Guilty plea
[96] Both defence counsel submit a 20 per cent discount is warranted for your guilty pleas and taking into account, under s 9(2)(fb) of the Sentencing Act, the late disclosure provided by the Crown. Mr O’Connor submits a discount of up to 10 per cent is appropriate for entering guilty pleas.
[97] You both pleaded guilty to your respective charges on 14 May 2021. That date was 10 days before trial. The Crown acknowledges that you both indicated you would
enter guilty pleas in memoranda filed in Court on 30 April 2021 (Mr Long) and 4 May 2021 (Ms Zhang).
[98] What both defence counsel say on your behalf is that the timing of your guilty pleas was directly impacted by late disclosure by the Crown. On 26 November 2018, the Police executed search warrants at your homes and at your office, Mr Long. During the execution of those warrants various devices were seized by the Police and retained by them. Those devices were cloned but no material arising out of the cloning process was provided until mid-March 2021. Disclosure was completed on 27 April 2021. Almost immediately after disclosure was completed, you both advised the Court that you would be entering guilty pleas. Both defence counsel submit that had disclosure obligations been complied with two years earlier, guilty pleas would have been entered at that time. In response, the Crown says that the guilty pleas must be properly characterised as late guilty pleas. While acknowledging the late disclosure, Mr O’Connor submits that the Crown evidence was already very strong and included a statement from your co-offender, Mr Pian.
[99] I recognise that your guilty pleas saved the Court and counsel resources and time due to the fact the trial for this matter would have extended over five weeks and involved over 30 witnesses. I also recognise that timing is not the only consideration when determining an appropriate discount for a guilty plea.41 While your guilty pleas were entered effectively on the eve of your trials, I accept that as soon as you had full disclosure, which was very late, then your guilty pleas were forthcoming. However, I also accept that the Crown case even before the late disclosure was a strong one. Also, of course, the late disclosure was of your own material. It cannot have come as a surprise to you. I consider a 15 per cent discount for each of you is warranted.
Remorse
[100] Mr Butler submits you, Mr Long, have undertaken significant steps to show remorse and make reparation to Mr Li. He submits a five per cent discount would be appropriate. Mr Butler refers to your arranging and paying for a private mediation that took place on 19 May 2021. He says during that mediation you made an apology
41 Hessell v R [2010] NZSC 135, [2011] 1 NZLR 607.
to Mr Li and Ms Wang, which appeared to be accepted at the time. Mr Butler also refers to the reparation paid by you. You are aware you have to start again financially but you realise it is the right thing to do.
[101] I accept that you, Mr Long, have shown genuine remorse towards Mr Li and Ms Wang in your steps to arrange and pay for private mediation. I am cautious not to double-count the reparations, for which I have already given you a discount. The payments are, however, an indication of your remorse. I give you a five per cent discount for your demonstrated remorse.
[102] Mr Corlett submits the Court should give a discount of 10 per cent for your remorse, Ms Zhang. He refers to your email of 12 September 2017 and your letter dated 4 June 2021, offering $2 million and your actual reparation. He also refers to your willingness to engage in a restorative justice conference with Mr Li and Ms Wang. He also submits the PAC report reveals your remorse, with your saying “I need to take responsibility, I have to have a consequence”.
[103] I accept that you, Ms Zhang, are genuinely remorseful for your offending. I give a five per cent discount for your remorse.
Facilitating the disposition of the proceedings (s 9(2)(fa))
[104] Mr Butler submits you, Mr Long, are entitled to a five per cent discount for facilitating the disposition of the proceedings under s 9(2)(fa) of the Sentencing Act by agreeing that exhibits could be produced by consent at trial, witnesses having their evidence read at trial and other steps you agreed to in order to shorten the trial. Mr Corlett adopts that submission and says this factor applies to you Ms Zhang too.
[105] The submission is misconceived. Not only is it incorrect because there was no trial, but it double-counts the positive consequences that flow from entering a guilty plea42, which I have already considered. I do not give a discount for this factor.
42 See R v Rakich [2014] NZHC 3287 at [111]–[113] and R v Chandler [2016] NZDC 16797 at [21].
Compliance on bail/return from overseas
[106] Mr Butler submits you surrendered your passport Mr Long to Police in November 2018. You made arrangements through Police to travel to China. You then returned to New Zealand as arranged. Mr Butler submits that your compliance on bail and return from overseas warrant a five per cent discount. He cites Rogers v R43 and Butler v R44 as authorities for this submission. Mr Corlett submits you, Ms Zhang, should also receive a discount for compliance while on bail.
[107]In Butler v R,45 the Court of Appeal said:
[20] In Rogers v R, William Young P for this Court discussed the principles at play when considering voluntary return. The discussion there is coloured by the fact that Mr Rogers had initially absconded and so any credit needed to be balanced against creating incentives to abscond. It is plain, however, that there has long been a practice of giving recognition to this factor and we consider that remains appropriate. In fairness to the Judge we note it was not suggested at sentencing but that does not preclude an appropriate appellate adjustment. In Mr Butler’s circumstances we consider 10 per cent would be appropriate.
(citation omitted)
[108] In this case, I give a five per cent discount to you Mr Long for returning from overseas. There is no suggestion that your bail conditions have been unduly onerous and I do not give a discount for compliance with bail terms.
[109] Ms Zhang, there is similarly no suggestion that your bail terms have been unduly onerous. You have been separated from your two older children for a lengthy period but that was your choice to send them back to China. I do not give you a discount for complying with your bail terms.
Imprisonment would be disproportionately severe (s 8(h)) and cultural factors (s 27)
[110] In respect of cultural factors and the impact imprisonment would have on you, Mr Long, Mr Butler submits that a discount of 5 per cent should be given. Mr Butler
43 Rogers v R [2010] NZCA 48.
44 Butler v R [2019] NZCA 65.
45 Butler v R, above n 44.
refers to the One Child Policy, guanxi and the pressures on you to provide security and a good retirement for your parents, and a certain lifestyle to your broader family.
[111] Further, he refers to the fact that you have shared custody of your young daughter and you care for your elderly parents. He says (and I have referred to this already) there is a culture of shame surrounding your conviction and sentence, which will impact your family severely. In particular, your parents will experience hardship if you go to prison. Mr Butler refers to Singh v R, where the Court of Appeal allowed a one-year reduction in sentence for the appellant’s inevitable deportation.46 Mr Butler notes that you will no longer be able to act as a New Zealand Director for a period of five years.
[112] Mr Corlett refers to your personal circumstances, Ms Zhang. You have two sons and a new-born baby daughter. You have had primary responsibility for bringing up your children because your husband has travel commitments through his business. You tried to shield your two sons from the shame of your arrest and guilty pleas. They are currently living in China with your parents. You have been separated from your children for three years for that reason and due to the COVID-19 pandemic. Your husband has been in a motorcycle accident recently. He has had to go to the doctor for rehabilitation on a weekly basis. Your parents are not in good health. Your father has been diagnosed with cancer and your mother has heart disease.
[113] For each of you I do not consider that these factors are sufficient to warrant a discount for s 8(h) alone. However, they do warrant a discrete s 27 discount. These background factors help explain what underpinned the dishonesty offending (but they do not excuse it). I accept that imprisonment will be difficult for you, Mr Long, due to having shared custody of your daughter and looking after your elderly parents. For these reasons, I consider a five per cent discount as sought, is warranted.
[114] For you, Ms Zhang, I give you a 10 per cent discount for personal background factors. I recognise that your circumstances in New Zealand are stressful and it is difficult to be away from your family, especially your sons. Other family members are not in good health. Specifically, as your husband is currently recovering from an
46 Singh v R [2018] NZCA 388 at [35].
accident, raising a new-born baby will be challenging. I accept for you that these factors also weigh in on s 8(h), as they will make imprisonment disproportionately severe for you.
[115] Overall, the deductions I make for each of you for personal factors (although made up slightly differently) total 40 per cent.
Sentence
[116] Ms Zhang, after making deductions from the adjusted starting point to take into account the relevant mitigating factors, your end sentence is reached by deducting 40 percent from the adjusted starting point of four years and nine months’ imprisonment. That is an end sentence of two years and 10 months’ imprisonment (rounded down in your favour). Given that the sentence exceeds the threshold for home detention by some margin, this is not a case where I would impose a sentence of home detention combined with a sentence of community work, as suggested by Mr Corlett.
[117] Mr Long, after adjusting the starting point to take into account the relevant mitigating factors, your end sentence is similarly two years and 10 months’ imprisonment.
Result
[118] Would you both please stand. Ms Zhang, I sentence you to two years and 10 months’ imprisonment. Mr Long I also sentence you to two years and 10 months’ imprisonment.
[119]Stand down please.
Gordon J
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