R v Pian

[2020] NZHC 2724

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CRI-2018-004-010728

[2020] NZHC 2724

THE QUEEN

v

PENG PIAN

Hearing:

16 October 2020

Appearances:

Emma Smith for the Crown

David Jones QC for the Defendant

Judgment:

16 October 2020

SENTENCING REMARKS OF MOORE J

R v PIAN [2020] NZHC 2724 [16 October 2020]

Introduction

[1]    Peng Pian, at the age of 38 you appear for sentence after pleading guilty to three charges of obtaining by deception.1 The plea followed my sentence indication.2 Your co-defendants have maintained their not guilty pleas and are due to be tried in May next year.

The offending

[2]    I am conscious that you will have already heard me summarise your offending at the sentencing indication. Nevertheless, today’s sentencing must stand on its own. Sentencing is an important judicial function which must be undertaken in public. This requires me to repeat much of what I said at the indication.

[3]    The victims in this case had applied to immigrate to New Zealand under the Government’s investor immigration category. As part of the approval process to obtain permanent residence there are investment requirements. The victims decided to consider various real estate investment projects. It was proposed to the male victim that he would join you and your co-defendants in an investment syndicate for the purpose of purchasing land for investment.

[4]    The male victim was required to invest sums of money to enable the purchase of a proposed project property, while you and your co-defendants conveyed the false impression you too were contributing towards the investment. In fact, you all misrepresented the amounts payable by him and contributed nothing to the purchase.

[5]    The variety and extent of misrepresentations across the entire fraudulent enterprise, which covered approximately 18 months, were vast, but those relevant to the period covered by your alleged offending include:

(a)the male victim was told his share of a $4,400,000 deposit on a property was $2,200,000 reflecting his 50 per cent shareholding. In fact, the

1      On  4  September  2020;  Crimes  Act  1961,  s  240(1)(a).     Maximum penalty: seven years’ imprisonment.

2      On 28 August 2020; R v Pian [2020] NZHC 2216.

required deposit was just $2,170,000. He had previously made a payment of $580,000  which  was  redirected  to  this  purpose.  On  17 December 2015 he made a $1,620,000 payment to cover the balance of the deposit. You and your co-defendants contributed nothing to the deposit;

(b)the male victim was told an “under-the-table” payment of $2,000,000 was  required  to  pay  your   boss   to   secure   the   purchase.   On  17 December 2015, he made a payment of $1,100,000 to the bank account of a Mr Wang, purporting to be your boss. The male victim did not have sufficient funds in New Zealand to meet the remaining

$900,000 payment and so you and your co-defendants offered to pay it on his behalf, with the understanding he would reimburse you when it was possible to do so. In reality, Mr Wang was not your boss, and neither was there any under-the-table payment. You had looked at the land with a view to recommending it to your actual boss but decided against it and instead told your co-defendants about it. You received

$170,000 from the funds paid by the male victim;

(c)on 24 December 2015, the male victim paid $2,100,000 into his lawyer’s trust account which he then instructed was to be distributed to the defendants to repay them for the $900,000 he was falsely led to believe the defendants had paid on his behalf. You received $160,000 of this amount; and

(d)in August 2016 you decided you no longer wished to be a shareholder in the company because you were unhappy with the interest rate on the loan to the corporate lender. The male victim paid a total of $1,300,000 as his contribution to buying your shares. You were paid $300,000 from the funds provided by him.

[6]    After you sold the shares you ceased being involved in the scheme. You had received a total of $630,000 from the male as a result of the deception. You have since repaid that money, together with $30,000 in interest.

[7]    Those are the facts. I turn next to discuss some matters which relate to you personally.

Criminal history

[8]    The first is your criminal history. It is relevant that you have no previous convictions.

Pre-sentence report

[9]    Next  is  the  pre-sentence,   or   PAC,   report.   This   was   completed   on  25 September 2020. The writer records that you were  raised in  China,  came to  New Zealand in 2003 and obtained permanent residence in 2009 at which time you formed your own construction business. You returned to China, but later came back to New Zealand. You are married to your second wife, with whom you have one young child. You have two children from a previous marriage. You are employed by a company, for which you were the general manager although this is no longer your title due to your involvement in these proceedings. You report you do not drink alcohol nor do you gamble. You have no mental or physical health issues.

[10]   The writer discussed all sentencing options with you. You stated that you fully understood and would abide as directed. You were assessed as being high in your ability to comply with community-based sentences. Your risk of reoffending in a similar manner is assessed as low, although the report writer noted that such offending is difficult to detect. Your risk of harm to others was also assessed as being low.

[11]   You advised the report writer that you were not aware of the offending at the beginning. You said that you thought it made “good business sense” to purchase shares in the newly found business development. You said that when you realised the full extent of the offending, you had already left the company. You said that it was not until the victim came to sell the land to another developer that the full extent of the fraudulent activities became clear to both you and the victim.

[12]   You expressed remorse for your part in the offending. You told the report writer that you were “greedy” and that you now know that you made a “big mistake”.

You report to now being on good terms with the male victim and now consider him to be a friend. You told the writer that you have repaid the sum of $660,000 and that you believe that you do not owe any further money.

[13]   The proposed address for an electronically monitored sentence is assessed as being suitable. You live there with your wife and young child. Your wife was spoken to and she said she understood the contents of the occupant agreement form and signed it, stating that she would support you.

[14]   The report writer recommends a sentence of home detention and noted there are also 400 hours of community work available.

[15]   Your counsel, Mr Jones QC, has also provided me with a letter from a regular business associate of yours, Zongyi Hu. He states that he considers you to be a good person and to be honest and trustworthy and would like to work with or for you in the future.

Victim impact statement

[16]   A victim impact statement has  been  provided  by  the  male  victim,  dated 14 October 2020. He states he became suspicious that something was not right with the business arrangement and had his accountant examine the accounts. He found that he had lost around $6,000,000 because of the fraud. As to the emotional harm caused by the offending, he says that he and his wife had to come to New Zealand earlier than intended to deal with the matter. They found lawyers to investigate the defendants to try and recover the loss. They had to sell the land to repay the fraudulent loans taken out against the property. During this time the male victim says he was under great psychological pressure and was extremely worried that if he could not repay the loan, he would be forced to sell the land and the loss would be immeasurable.

[17]   He goes on to say that for a long time it was very difficult for him to trust the people around him. After he and his wife came to New Zealand, he says he could not open up his heart to make new friends.

[18]   He says that although he knows he is the victim, he could not tell his family about the fraud or the case, because of the huge loss and the shame it caused him. He said he and his wife pretended that everything was going well in New Zealand.

[19]   He states that you did pay him back and apologised to him. He says that you revealed your guilt and expressed remorse for what you had done to him. As a consequence, the male victim has forgiven you.

Approach to sentencing

[20]   Mr Pian, I have already indicated an appropriate starting point and discounts, but in the interests of open justice I must repeat those today. Under s 116 of the Criminal Procedure Act 2011, I am bound by my sentence indication except where fresh information becomes available which materially affects the basis on which the indication was given.

[21]   I must consider the relevant purposes and principles set out under the Sentencing Act 2002 (“the Sentencing Act”). The relevant principles engaged here are the general desirability of consistency with sentencing levels, the need to consider the effect on the victim of the offending and the importance of deterring similar offending. This is counterbalanced by the requirement to impose the least restrictive outcome and to take into account any restorative justice processes.

Discussion

Starting point

[22]   First, the starting point. Your offending was of moderate sophistication, given the use of the corporate structure and use of legal advisers. However, as fairly accepted by Ms Smith for the Crown, you removed yourself from the scheme before it reached a higher level of sophistication. Despite this, the magnitude of the offending is significant, with approximately $6,000,000 in total being paid by the male victim through fraud. However, I accept you were not party to the scheme for the entire duration over which these funds were lost and were responsible for only part of the total sum defrauded.

[23]   You held a position of trust relative to the male victim and abused that trust through your part in the deceptive scheme. I take into account Mr Jones’ submission that male victim is an international investor which reduces his vulnerability when compared to victims in comparable cases, but it cannot be overlooked that he was highly dependent on you and the others involved with you and was necessarily reliant upon the advice, including yours, to guide him in his investment decisions in a country which was new to him and in an investment environment and culture which would have been alien. However, I accept his level of vulnerability is not as great as those in the cases cited by Mr Jones and the Crown.3

[24]   I also note that the PAC report supports Ms Smith’s submission that greed was the primary driver of your offending.

[25]   In consideration of the case law referred to by counsel,4 and in balancing the aggravating features of the offending, I would set an initial starting point of four-and- a-half years before any reduction for repayment.

[26]   There is no doubt a discount on account of reparation is appropriate. Ms Smith submitted the repayment of the funds should be considered in determining the starting point, whereas Mr Jones submitted a discount for reparation should be considered as part of the mitigating features and deducted after the starting point has been set.

[27]   On this point, I note that in Elmiger v R this Court considered such a discount is relevant in determining the starting point.5 In Elmiger the first instance Judge in the District Court ordered the repayment, and a discount of approximately 10 per cent was deducted from the starting point on appeal to reflect the fact the victim had suffered less harm because of the repayment. For the same reasons, I consider this to be the appropriate approach here and should be considered in setting the starting point. As a matter of conventional and orthodox sentencing practice, that must be correct. The repayment of funds obtained by fraud is not a personal mitigating factor. It is a feature

3      McGregor v R [2015] NZCA 565.

4      See McGregor v R [2015] NZCA 565; R v Clark CA364/99, 31 November 1999; R v Goodburn

[2017] NZHC 1567; Mamfredos v R [2010] NZCA 524; R v Love [2016] NZHC 2394.

5      Elmiger v R [2019] NZHC 1238 at [34].

relevant to assessing the seriousness of the offending in setting the appropriate starting point.

[28]   Next is the question of what the discount for repayment in these circumstances should be.

[29]   In Patterson v R the Court of Appeal discussed the difference between “voluntary” and “involuntary” repayments. A voluntary repayment may be viewed as a true sign of relief; it is present where a defendant has “done [their] best to atone financially for the fraud”6 and is deserving of a discount in terms of s 9(2)(f) of the Sentencing Act. In contrast, where there is an involuntary or directed repayment, culpability is not significantly reduced and “[the defendant] is still a fraudster and would not have voluntarily returned the money … but for being caught”.7

[30]   In my view the mitigating value of the relevant conduct in the present case sits somewhere between these two bookends. You were not ordered to repay the funds by the Court, but made the decision to do so after you were confronted by the male victim. In that way it cannot be said that payment was wholly voluntary in the sense it was an unprovoked response driven out of sincere, reflective contrition and remorse. But for the confrontation with the male victim, it is far from certain that you would have made the payment.

[31]   I note that there has been a complete recovery of the funds you received. I also note this investment enterprise has ultimately proved successful. The victims have not suffered materially according to Ms Smith. Furthermore, your co-defendants have made some payments to the male victim although the provenance of those funds is not entirely clear. 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.8

[32]   You atoned for your offending through that repayment. Furthermore, despite the comments above, I accept you made the repayments before the involvement of the Police or the Courts. I consider a 20 per cent discount to the starting point of four-

6      R v Patterson [2008] NZCA75 at [42].

7 At [41].

8      Elmiger v R [2019] NZHC 1238 at [33], referring to R v Patterson [2008] NZCA75 at [41].

and-a-half years’ imprisonment appropriate. This results in an adjusted starting point of three years and five weeks. I turn next to your personal factors.

Personal factors

[33]   Neither Ms Smith nor Mr Jones has pointed to any aggravating factors personal to you and I accept there are none. However, there are a number of personal mitigating factors present.

[34]   You have not appeared in Court before and are of previously good character. I agree with both Crown and Mr Jones that a discount of 10 per cent is warranted for this factor.

[35]   I also consider that despite my earlier comments regarding remorse, a discrete and modest discount on that account is appropriate. While I am conscious of the mandate not to double count the discount already given for the repayment, I note you made a payment of $30,000 to account for lost interest in addition to the full repayment. I consider this additional measure to be indicative of some sincere level of indiscrete remorse. This is supported by the comments of the PAC report writer, who said you expressed remorse for the offending and recorded your frank admission that your offending was driven by greed. A discount of five per cent is warranted for this factor.

[36]   The next question is what discount should be given to your assistance to the authorities? At the sentence indication, I allowed a modest discount of five per cent, based solely on your offer of assistance. Because there was a paucity of information in front of me at that time I said I might review the discount if there was anything more concrete around the extent of your assistance to the Crown. Since then things have moved on. You have provided a formal statement to the Crown and I am told you will be called as a Crown witness at your co-defendants’ trial. The Crown says that your anticipated evidence will considerably assist it in proving its case against your co- defendants. And so, Ms Smith submits that up to 10 per cent might be awarded as a discount for that factor. What, in the Crown’s submission, limits the discount, which in some cases can be very generous indeed, is that the other defendants were already

facing charges when you made the offer, and there is no suggestion of personal risk arising as a consequence of your co-operation.

[37]   Mr Jones submits that a further discount of 10 to 15 per cent, in addition the five per cent discount given for offering to assist is available.

[38]   I have reviewed your statement and the authorities put forward at the sentencing indication.9 Your offending was a good deal less serious than the offences you have promised to help the Crown prove. The high quality of the assistance you have given, and will give as a witness, has been acknowledged by the Crown. On the other hand, you face no apparent jeopardy for this assistance as is often the case for offenders in your position. On that basis, I am satisfied that a total discount of 15 per cent is warranted for your assistance to the Crown.

[39]   You pleaded guilty shortly after the indication was given. Considering you were charged in May 2019 it cannot be said to be particularly early. I agree with the Crown that a 15 per cent discount is appropriate.

[40]   After reducing a four-and-a-half year starting point by 20 per cent to take into account the repayment, the starting point for the offending would be three years and five weeks’ imprisonment.

[41]   Deducting discounts for previous good character (10 per cent), remorse (five per cent), the guilty plea (15 per cent) and assistance to the authorities (15 per cent), your end sentence would be one of just under 17 months’ imprisonment.

Home detention

[42]   That is a short term of imprisonment,10 it allows me to consider whether a sentence of home detention would be appropriate.11 Mr Jones rightly points to the principle that home detention is still a significant sentence which holds prisoners

9      R v Nyugen [2009] NZCA 239 at [16], citing R v A & B [1999] 1 Cr App R (S) 52 at 56; R v Hadfield CA337/06, 14 December 2006; R v Boyle [2019] NZHC 1584; Mori v Police [2013] NZHC 225.

10     Parole Act 2002, s 4(1).

11     Sentencing Act 2002, s 15A.

accountable.12 The Crown fairly accepts that an end sentence of home detention is the appropriate outcome in all the circumstances.

[43]   I note that the pre-sentence report concluded that home detention was the recommended sentence. You live with your wife, who is supportive, and young child. You are assessed as having a high ability to comply with such a sentence. I am also conscious that you have accepted responsibility for your offending and in my view, you have a real prospect of rehabilitation. Further, I am required by s 8(g) of the Sentencing Act to impose the least restrictive outcome in the circumstances. On that basis, I agree a sentence of home detention is appropriate.

Result

[44]   Mr Pian, please stand. I sentence you to eight months’ home detention, on standard conditions. I also impose the special conditions recommended at page five of the PAC report.

[45]Stand down.

Moore J

Solicitors:

Crown Solicitor, Auckland Mr Jones QC, Auckland

12     R v Iosefa [2008] NZCA 453 at [41]; R v Osman [2010] NZCA 199 at [25].