R v Middeldorp

[2015] NZHC 1337

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CRI-2013-085-10823

CRI-2013-085-10822 [2015] NZHC 1337

THE QUEEN

v

JOHANNES HENDRIK MIDDELDORP NOELENE KAY BANTON

Hearing:	12 June 2015
Appearances:	G J Burston, P W Gardyne and M J Ferrier for the Crown J Bioletti for Mr Middeldorp A Courtney for Ms Banton
Sentence:	12 June 2015

SENTENCING NOTES OF MALLON J

[1]      Mr Middeldorp and Ms Banton you appear for sentencing having each been convicted of seven counts of reproducing a document with intent to cause loss1 following a judge-alone trial before me.2

Circumstances of the offending

[2]      The  charges  concern  a  scam  involving  selling  or  endeavouring  to  sell advertising in fictitious publications.  The general modus operandi of the scam is set out in my judgment setting out the reasons for my verdicts.  As part of that scam an advertisement was reproduced for the targeted business’s approval which gave the

appearance  of  legitimacy.    Each  of  the  charges  related  to  a  differently  named

1      Crimes Act 1961, s 258(1) (maximum penalty of 10 years imprisonment).

2      R v Middeldorp [2015] NZHC 951. The convictions were entered by me following the delivery of my verdicts in Court.

R v MIDDELDORP [2015] NZHC 1337 [12 June 2015]

fictitious publication in which it was represented that the advertisement would be placed.3   At the time of making those representations there was no intention to print and distribute the publications in any meaningful way and you did not do so.  Mr Middeldorp  arranged  to  print  only  enough  copies  as  were  needed  to  send  to businesses in order to obtain payment from them.

[3]      Your scam was run from your home in Port Waikato.  Others were involved in  similar  operations  elsewhere.    One  of  those  operations  was  run  by Anthony Hendon with the assistance of others, including primarily, James Burns.   They pleaded guilty before trial and have been sentenced.4   You, Mr Middeldorp, were in regular contact with Mr Hendon and strategies and other aspects of your operations were shared, albeit that you were cautious in what you told Mr Hendon because you were effectively competing for the same or similar targets.

[4]      The charges on which you were convicted are for an operation that was on a lesser scale.  They cover over 900 individual instances of this conduct aimed at over

690 mainly small businesses and some charities from around the country.  The price you charged for the fictitious advertising varied, but was generally in the range in round figures of $300 to $500 per advertisement.5   On occasion the price charge for an advertisement was more than $1,000.   Most businesses were targeted once or twice.   Some were targeted four or five times.   Those that agreed to pay for the advertisements on multiple times were referred to in this industry as “bunnies”. Your offending took place over the period from July 2011 to October 2012 and only came to an end when you were arrested.  The total amount sought from those targeted was

approximately $470,000.  Based on forensic accounting analysis, the money actually received into accounts controlled by you was approximately $114,000.

[5]      Your  operation  at  Port  Waikato  was  a  joint  one.    You  worked  together, moving from one fictitious publication to the next, making sales in those fictitious

publications to targets using a computer database set up at your home.   You had

3      There were nine counts in the indictment.  Both defendants were acquitted on the first in time of those counts (The Local Wall Calendar). In addition, Mr Middeldorp was acquitted of the count relating to the fictitious publication Handbrake, and Ms Banton was acquitted of the count relating to the fictitious publication The NZ Firefighter.

4      R v Hendon [2015] NZHC 973; R v Burns [2014] NZHC 2278.

5      The figures usually ended in 95, such as $295 or $395. They were not inclusive of GST.

different roles in the joint operation.  Ms Banton, you made more of the sales calls, and your defence at trial was that you only did the sales and were not aware of how the business was being run.  I was satisfied that you were aware of and to a lesser extent involved in other aspects of the operation, such as obtaining publications from which to source advertisements and discussions with Mr Middeldorp over what to call the next publication.   You knew that the publications were not going to be printed and distributed in any meaningful way.

[6]      Mr Middeldorp, you did some of the sales, but you also carried out the primary role on all other aspects of the operation.  Your defence at trial was that you intended to do the printing when the representations were made, but financial pressures overtook this and meant that  you  could not do as  you had  originally intended.   I accepted there was a reasonable possibility of that in respect of the earliest publication in the indictment, but I was sure this was not so in respect of each of the charges on which you were convicted.  I am satisfied that you were the instigator and driving force in the operation and Ms Banton went along with it.  As the instigator and driving force behind the operation your culpability is higher, even though Ms Banton made more of the sales calls and consequently sent more of the reproductions that formed the particulars that proved the charges.

[7]      Many of the businesses targeted were not duped into paying you any money. But a significant number did. Although the amounts sought were generally relatively small, they were sought largely from businesses whose advertising budget was likely to be small, and also from charities.  Where the advertising was agreed to, it was a cost for that business for no gain.  The victim impact statements that are before me provide a sample of the impact your offending had.  It is similar to that in relation to Mr Hendon’s  offending.    In  some  cases  there  were  detrimental  effects  for  the victims’ health and/or business.  More generally their trust was abused causing upset and embarrassment and a general loss of trust.   As I said when sentencing Mr Hendon,  the Crown  was  correct  to  describe it  as a blight  on  commerce.    It  is offending that requires significant resources to investigate and prosecute.  And it is offending that requires a sentence that denounces and deters.

Circumstances of the offenders

[8]      Turning to your personal circumstances, Mr Middeldorp you are 63 years old. You have been in a relationship with Ms Banton for about 20 years.  You have two recent  convictions  for  unrelated  but  relatively  minor  offending  and  some  very historic offending when you were a teenager and young man, again for minor offending.

[9]      You presently have some paid employment.   You have no assets or debts. You have offered to pay reparation at the rate of $50 per week, but are not in a position to offer anything more than that.   You regret the offending and have no intention of being involved in it again.  The pre-sentence report writer regards you as being at low risk of reoffending.

[10]     Ms Banton you are 61 years old.  You have no previous convictions.  You are on medication for depression and have been for some time as I understand it.  You are  not  employed  and  are  in  receipt  of  a  sickness  benefit.    You  have  offered reparation but you are not in a position to do so in any meaningful way and nothing concrete in that regard has been put forward.  You have expressed shame and embarrassment, and that is consistent with some of the comments that you made to confidants in the intercepted conversations about how much you detested what you were doing.  Notwithstanding the evidence at trial, somewhat surprisingly, it seems from your pre-sentence report that you maintain that you were not aware of how the business was operating.  I can only reconcile that by concluding that it reflects your shame and embarrassment for your conduct.  The pre-sentence report writer assesses you as being at a low risk of reoffending.

Assessing the sentence

[11]     I turn now to consider the aggravating features of the offending, which are that:

(a)       it was a planned and quite elaborate operation motivated by financial gain;

(b)the  impact  of  your  offending  was  wide-spread,  targeting  a  large number of businesses with intent to cause them loss, some of them a number of times, from around the country;

(c)       it was persistent offending carried out over 16 months;

(d)the amount netted by the operation was not insignificant, and where “bunnies” were targeted, usually because they were a soft touch for an altruistic cause, there was an element of exploitation.

[12]    The Crown submits that the offending sits at the middle of dishonestly reproducing documents offending.  With reference to a range of cases, including the recent sentencing of Mr Hendon, it submits that the appropriate starting point in this case for Mr Middeldorp would be four years imprisonment and three and a half years

imprisonment  for  Ms  Banton.6      The  starting  point  proposed  for  Mr Middeldorp

would put it at around the same level as Mr Hendon when Mr Hendon’s previous

Fair Trading Act convictions are excluded.7

[13]     Mr Bioletti in his written submissions did not put forward an appropriate starting point but rather submits that the Crown’s starting point is too high given the particulars proven in respect of you, Mr Middeldorp.  He notes that on the particulars proven against you the amounts sought totalled around $116,000 and the total sum netted from those proven particulars was around $33,000.  He submits that because of this, this should put you on parity with Ms Banton.  He submits that a community- based sentence is the appropriate starting point.  He says that if he had to place a starting point taking into account parity with Mr Hendon and Mr Burns, he would say two to two and half years imprisonment, but really urges on me that there is no

comparison on scale and therefore a community sentence is the appropriate one.  Ms

6      It has provided a range of cases in support of this submission: R v Hendon, above n 4, Klair v

Commerce Commission [2014] NZHC 1811; Hall v R [2014] NZCA 38; Otimi v R [2012] NZCA

216; Waghorn v Police HC Invercargill CRI-2008-425-1, 4 March 2008; Sahib v Police [2012] NZHC 3324; Davidson v R [2011] NZCA 356; R v Grygoruk HC Auckland CRI-2006-092-

12831, 23 May 2008; and Hogan v Ministry of Social Development HC Napier CRI-2005-441-

24, 22 July 2005.

7      R v Hendon, above n 4, where the starting point was four years and six months imprisonment inclusive of an uplift for the previous Fair Trading Act convictions.

Courtney submits that a starting point of two and a half years imprisonment is appropriate for Ms Banton.

[14]     This was persistent, pre-meditated offending, carried out to provide you with a lifestyle, albeit that it seems to have been a relatively modest lifestyle where at times it was a struggle to pay even very small daily bills.   It is offending which requires denunciation and deterrence.   It was very similar in its method to that in which Mr Hendon was involved, but is of lesser seriousness because it covers a shorter time span and consequently much lesser sums targeted and obtained overall. I consider Mr Middeldorp’s offending to be more serious than Mr Burns’, because although  he  was  involved  in  a  bigger  operation  his  role  in  that  operation  was

different to yours.8   I put your offending as being approaching, but a little below, the

middle of seriousness for offending covered by this type of charge.  In my view the appropriate starting point for you Mr Middeldorp is three years imprisonment.

[15]     There are no personal aggravating factors.   Nor are there any mitigating factors which could reduce the sentence.  You have recently been before the Court, although  on  a  different  and  relatively  minor  matter,  and  the  offending  is  of  a recidivist nature over a period of time.   So no discount for a first offender is appropriate.   You have expressed regret, but your remorse is not particularly demonstrable.   This means your end sentence will be three years imprisonment. Reparation is not sought and it is not appropriate to order it in the circumstances.

[16]     Turning to you Ms Banton, your starting point should be less as is accepted in the submissions for the Crown.  Although you went along with the operation and jointly benefited from it, and at times were seemingly delighted with the money that was coming in for the little hours of work involved, you were not the instigator or driving force making and implementing the decisions about how it would and did operate, nor in carrying them out other than through your principal role in making the sales.  I accept Ms Courtney’s submission that two years and six months is the

appropriate starting point for you.   I note that this is three months less than the

8      R v Burns, above n 4.  No comparison with the sentence for Ms Dow is appropriate given her much lesser and different role and her different circumstances:  Serious Fraud Office v Dow DC Wellington CRI-2013-085-9137, 11 October 2013.

sentencing indication you were given by another High Court Judge.9    However, I have the benefit of having heard all the evidence at trial which has assisted in placing your offending as against that of Mr Middeldorp, Mr Hendon and Mr Burns.

[17]     There are no personal aggravating factors that require an uplift from the two years and six months starting point.  That puts you in the range where, depending on my assessment of mitigating factors, a sentence other than imprisonment might be available.  A guilty plea would have brought you to that point quite comfortably, as the sentencing indication you were given showed.  However you do not have a guilty plea discount to call upon.   Also, somewhat problematically, you have not fully accepted responsibility for your role in the operation.  That said, I do accept that you are ashamed and embarrassed by your offending.  I accept that most of the time you, in your words, “detested” the work you were doing.   Although I do not have a medical certificate about your depression, I accept that you are and have been for some time, as you said to the police when you were arrested and I note that you are in receipt of a sickness benefit. Taking everything into account I have concluded that you are genuinely remorseful. At 61 years of age this is the first time you are before the Court.  Although the offending was persistent over a period of time, I consider it is appropriate to allow you a discount as a first offender.   Despite the persistent nature of the offending, that discount should be greater than is sometimes allowed

for, given your age.10   I also accept that prison is likely to be somewhat difficult for

you at your age and stage.

[18]     Taking all these factors in consideration, and after much reflection about this, I have decided that a sentence other than imprisonment should be imposed.   In reaching that view I have taken the most generous assessment I can on the mitigating factors here.  I have decided that in your circumstances the appropriate sentence is

12 months home detention, together with 200 hours community work.   I consider that is sufficient for denunciation and deterrence, and at least in this way you may be

able to put something back into the community.

9      R v Banton [2014] NZHC 1668.

10     R v Singh [2014] NZHC 209. See also Jackson v Serious Fraud Office [2012] NZHC 3297; R v

Jones HC Auckland CRI-2004-004-12785, 12 December 2006; and Lester v R [2012] NZCA 47.

The sentence

[19]     Mr Middeldorp you are therefore sentenced to three years imprisonment. This is to be imposed concurrently on each of the charges.   Ms Banton you are sentenced to 12 months home detention and 200 hours community work, again imposed concurrently on each of the charges.

[20]     By consent I order forfeiture of the property listed in the notice dated 5 June

2015.11     The hardware is to be forfeited and destroyed on the condition that the Serious Fraud Office provides an electronic copy of such material as is requested by Mr Middeldorp and Ms Banton other than any record used to facilitate the offending.

[21]     I do not have the conditions in front of me from the pre-sentence report in relation to the home detention sentence.   [Discussion:   Counsel did not have it in front of them either.  I indicated that the only condition from Mr Middeldorp’s pre- sentence appendix that is appropriate is to attend any counselling or programme recommended by the probation officer.  I said that it should commence on Monday to enable the equipment to be set up.   It is to be served at the address that was assessed, as I understand it, as suitable, being the current residence.  If there is any issue about that, counsel would need to come back to me.]

[22]     You may stand down.

Mallon J

11     Sentencing Act 2002, s 142B.