Criminal Law - Sentence - Solicitor in sole practice in Geelong - Trust account deficiency of over $600,000 - Eighteen counts of theft over a period of more than 9 years - pleas of guilty - many mitigating factors - head sentence of 5 years - non-parole period of 2 years and 6 months
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1 Kenneth Hampson, you have pleaded guilty to nineteen offences. They consist of one count of having a deficiency in your trust account as a solicitor contrary to s.188 of the Legal Practice Act 1996, and eighteen counts of theft. The maximum penalty for having a trust account deficiency is 15 years' imprisonment. The maximum penalty for theft is 10 years' imprisonment. As at 28 February 2002, the trust account deficiency was $623,862.03. That figure was the total of deficiencies in the individual accounts of eighteen clients. Those eighteen clients were the clients from whom money was stolen. The amounts of the thefts ranged from as high as $185,302 on count 14 to as low as $587 on count 8.
2 The thefts took place between 1992 and 2002. The first theft was in May 1992. The last theft was shortly before a receiver was appointed to take over your law practice on 28 February 2002. During that time, and for many years earlier, you had conducted that practice as a sole practitioner in Geelong. It was a general practice that included conveyancing and assisting in the administration of estates of deceased persons. It was in those two areas that the thefts took place. At all times, you had a trust account and an ordinary account with the Commonwealth Bank as required by statute. Between April 1997 and February 2002, you also, and inappropriately, deposited and withdrew funds from an account at the Bendigo Bank. That account was in your name in trust for a client named Holland. The use by you of that account made it easier for you to continue to steal and to cover up for your thefts for longer than if you had abided by the statutory requirements.
3 At some times, it is clear that you applied amounts stolen to your own benefit. At other times, it is clear that the amounts were applied to the benefit of other clients. That included restoring money stolen previously. In short, you routinely "robbed Peter to pay Paul". At many times, it is not clear whether you alone or other clients alone benefited. The complexities of separating self-advancement from the restoration of earlier thefts has had several consequences. One consequence has been that the level of your thefts has not been easy to establish. On any view, the total was well in excess of $1 million, but the fact of repayments makes that a somewhat meaningless figure. Another consequence has been that the total level of your self-advancement has not been easy to establish. Yet another consequence has been that the complexity has contributed to the delay in your being sentenced.
4 I have referred to the ultimate deficiency figure of $623,862.03. That figure appears to be in a broad sense a reasonable indication of the extent of the losses to clients caused by your actions. Of course, they have not all been ultimately out of pocket to the full extent of their losses. That is so because of the role played in meeting certain kinds of claims of clients of defaulting solicitors by the Legal Practitioners' Fidelity Fund. I have not been informed of the amounts actually paid out of the Fund to compensate your former clients either in total or individually. I had a clear basis for concluding that the full amount of claimed losses was not paid to clients named Cauchi and Holland. As to the Cauchis, a claim for compensation was made on the hearing of the plea. As to the Hollands, I was informed that you had personally contributed over $20,000 of your own moneys towards their losses. I was also informed that the title to your home in Geelong was not in your name, but that that was a matter of family history and not part of any plan to defeat creditors.
5 To illustrate the nature of your thefts, it is appropriate that I give some examples. The choices that I have made are made for a variety of reasons. Count 1 as to the estate of Black is chosen because it was the first. Count 2 as to a client named Dung is chosen because it illustrates how later thefts were used to cover repayments of moneys earlier stolen. Counts 4 and 5 as to clients named Cauchi are chosen because their loss was not fully covered by the Fidelity Fund. Count 6 as to clients named Holland is chosen because those thefts involved the opening of the Bendigo Bank account, that was later used inappropriately as a form of covering up. Count 7 as to the estate of Barraclough is chosen as an example of using estate moneys, and because it prompted a victim impact statement. Count 18 as to a client named Morgan is chosen because it is representative of many of the later thefts on conveyancing transactions which were not completed by you, even though you had been provided by your client with the funds to effect completion.
6 As to the estate of Black, Count 1, you were appointed executor and obtained a grant of probate in December 1991. It was an estate that could not be wound up quickly. On 12 May 1992, you stole the amount of $15,000 out of the estate funds. You applied that money to your own benefit. That theft came at a time when you were under considerable personal financial pressure related to the collapse of the Pyramid Building Society. It was also at a time when you were entitled to receive considerable money from the estate for a variety of reasons. You could have chosen to go about it the long way. Instead, you chose to take the short way, the dishonest way. That choice started the rot. In June 1996, you arranged to borrow $30,000 using the East Geelong property of the estate of Black as security. The amount borrowed was applied to the benefit of other clients.
7 As to the client named Dung, Count 2, you acted for her when she sold a property in February 1995. She instructed you to invest part of the proceeds on first mortgage. You chose not to do so. You chose instead to use her money for other purposes, including to make up for deficiencies as to other clients. You still accounted to her as if you were continuing to do as she had instructed you. When she needed money, and called on you for it, you were able to provide it. That was because you applied to her benefit at those later times, money which you took from other clients. On the material before me, it was apparent that moneys repaid to Ms Dung had been taken by you from a client named Hansen, a client named Cauchi, the estate of Barraclough and the estate of Olney. From Ms Dung, you stole $142,452.91. Because of the repayments, the ultimate deficiency was significantly less, namely $15,801.17. As I have noted, however, repaying her necessitated your engaging in further thefts.
8 As to the clients named Doris and Joseph Cauchi, Counts 4 and 5, they were an estranged husband and wife, who sold one property and bought two others in November 1996. They separately requested you to invest part of the proceeds on first mortgage, and you did not do so. You allocated in each case $1,000 more for stamp duty than was actually paid. You continued to account separately to each of them between 1996 and 2001. You did so on the basis that there had been invested as to Doris Cauchi $18,000 and as to Joseph Cauchi $20,000. On the hearing of the plea, an application was made under s. 86 of the Sentencing Act for orders for restitution. The making of those orders was not opposed, and I have made them in the form sought.
9 As to the clients named Holland, Count 6, the theft was of $173,963.44 between March 1997 and June 1999. The Hollands were a husband and wife who each had a parent die, bequeathing money to grandchildren contingent on their attaining the age of 40. Those birthdays were many years into the future as at that time. In March 1997, you opened an account in the Bendigo Bank in your name in trust for Maxine Holland. You initially deposited into that account, the amount of $50,000. You later applied that money either to your own benefit or the benefit of other clients. It was through that Bendigo Bank account that you later again moved a great deal of money that had no link to Maxine Holland. The moneys included moneys received by you for or from Christopher Holland. The Fidelity Fund accepted claims made by the Hollands only in part. On the hearing of the plea, I was informed that, and given some evidence that, you had taken steps to meet personally some of the loss not met by the Fidelity Fund.
10 As to the estate of Barraclough, Count 7, you acted for the executrix. The theft was of $20,047.75 in September 1998. The residual beneficiary was a daughter of the deceased born in May 1983, who was not due to turn eighteen until May 2001. In September 1998, you received a cheque for superannuation moneys. The instructions of the executrix were to hold the balance after payment of relevant expenses in an interest bearing trust account until May 2001. You failed to carry out those instructions. You nonetheless continued to account to the executrix as if you had done so. In September 2004, the daughter of the testator prepared a victim impact statement. It refers to her perception of you as a man whom her father trusted, in whom he felt safe and secure, as well as being a friend of the family, and in whom she too felt safe. She spoke of the hurt and anger she felt about having to lodge a Fidelity Fund claim.
11 As to the client named Morgan, Count 18, you acted for him in the sale of one property and the purchase of another. The theft was of $7,060 in December 2001. You asked your client to pay costs and disbursements as detailed by you so as to permit the property purchased to be registered in his name. In December 2001, he forwarded the cheque for $7,620.27. You did not have the property registered in his name. Instead, you deposited the cheque to the credit of your own Citibank credit card account.
12 Of the other eleven counts of theft, three more were from the estates of deceased persons. One, Count 16, was quite minor. It involved the non-payment of the fee of a barrister that might well have been an oversight. Counts 3 and 9 involved estates where disputes or the age of beneficiaries led to moneys being held over a quite long period of time. As with other matters where it suited you to defer having to make payment, you continued to account for capital and interest as if the relevant moneys were appropriately invested. The remaining eight matters all relate to conveyancing transactions. A number of them, including counts 8, 13, 15, and 17 are not unlike Count 18 where moneys were received by you in order for you to complete a transaction as by paying stamp duty, registering a mortgage or transfer or the like, but the money was not so applied. With Count 10, a mortgage was paid out by the mortgagee, but you elected not to tell the mortgagor, and retained the money paid. Counts 11 and 14 had a similar non-completion element but also involved the holding of deposits or the proceeds of sale, where instructions given by the clients were not observed by you. In each of counts 9, 10, 11, 12, 14, 15, and 17 you used the Holland Bendigo Bank account as the means of receiving and applying money as it suited you.
13 I turn to matters of history that include your background. You were born in October 1945 into a supportive family with three siblings. Your parents worked, your father on the docks, your mother as a teacher. You were educated at St Bernard's Essendon, and from there you went to university to study law. After you graduated from law school, you did your articles in a city firm, where you met your then wife to be. Your family had links to Geelong. You went to work in Geelong with a law firm in 1969. You married in 1970. In due course, you and your wife had two daughters. When your parents retired, they and a maiden aunt followed you to Geelong. Over the many years leading up to their deaths you and your family home were there for them. In 1971, you were taken into partnership. In 1979, you left the partnership. You practised as a sole practitioner until February 2002.
14 I interrupt the history only to note that many aspects of this history have come not just from Mr Mullaly who appeared for you on the plea. Much of what he said was supported in the testimonial letters that were tendered before me on the hearing of the plea. There were more than forty letters. To what was said in those testimonials must be added the oral testimony given on the plea by Messrs Epstein and Boston, two lawyers from Geelong, and by a Ms Merrington. As doubtless was intended, I was impressed not only by the numbers but by the content of what was written and said. More than forty people from various walks of life have been prepared to commend you for the good that you have done them and other members of the community in general and the community of Geelong in particular. Many, if not most, have known you not just for years but for decades. Your contributions to the community have been considerable not only in the past but up to the time that you were taken into custody last month.
15 Not necessarily the most important, but certainly of longstanding and of great value has been what you have done to assist other people through sport in general and swimming in particular. In football, it was with the Geelong Amateurs. In surf lifesaving, it was with the Fairhaven Life Saving Club. In basketball, it was in helping to found the Geelong Basketball Club. The strongest commendations related to what you have contributed to swimming and in particular through the Geelong Aquatic Centre Sharks Swimming Club. I speak of swimming, but what is clear from the letters is that many people, many swimmers, have benefited from your support and encouragement and help. Other letters bring home the extent of the support that you have given over the years to people who benefited from your skills as a lawyer. It seems that you were often prepared to help others facing hard times without seeking to be paid. Your generosity with your time included action taken at the time of the collapse of the Pyramid Building Society.
16 I have noted the significant number of senior lawyers who were prepared to write and attest to your many good qualities, and to indicate that their support of you continued notwithstanding your serious lack of judgment. Many letters placed emphasis on the way you have acted as a loving and caring husband and father. By your actions up to early 2002, which were then revealed, you brought great shame and humiliation not only on yourself but on your wife and two daughters. That shame has continued and must inevitably continue. It must be of some consolation to your wife and daughters that there are so many of your and their friends in Geelong who are prepared to remain very supportive of you and them.
17 That the closeness of the Geelong community has its advantages and its disadvantages is apparent from the letters. Many of the letters refer to events that they seem to know a lot about. Those matters include your attempted suicide, your continuing abstinence from alcohol, for which you are clearly to be commended, and your inability to drive a car. Many of the letters refer to your remorse for the adverse consequences of your mishandling of your clients' money. Some confirm your various attempts to get work over the past four years. More than one refer to your preparedness to engage in manual labour. Likewise, a number of letters refer to the added stress and other adverse consequences to you and to your family arising from the fact that more than four years passed between your ceasing to practise law and your being sentenced. I will comment later on the matter of delay but will now return to matters of less recent history.
18 For most of your first twenty years in Geelong, your focus was on your family and developing your law practice. As noted, many of the testimonial letters refer to your being a good husband and father and a good lawyer. Your interest in the surf led to your buying land at Fairhaven on which you built a beach house. That was destroyed in the Ash Wednesday fires of 1983 and you rebuilt. Later in that decade you turned to what Mr Mullaly euphemistically referred to as the expansion of assets. Where assets are expanded by borrowing money, there are inevitably risks. While the risks are not as obvious or as frivolous as the risks associated with gambling, they are well known. You chose to engage in certain ventures that carried the risks associated with extensive borrowing. You chose to join in those ventures with persons to whom you felt a moral obligation. You borrowed to acquire an interest in a caravan park, a commercial property in Geelong and a commercial property in Torquay. With the benefit of hindsight, it is clear that the timing of your taking the risks of heavy borrowing was very bad indeed. Along with many others, you suffered adverse consequences from the collapse of the Pyramid Building Society. There had to be forced sales of all of the assets the subject of your expansion. You had also to sell the Fairhaven beach house.
19 Those were the calamitous circumstances which befell you when you made the first of the choices which has led to your now being in the dock. In 1992, you chose to steal from the first of the eighteen clients from whom you ultimately stole. As I have noted, you had some justification for the taking of some money from the Black estate. But not for as much as you took or for the way that you took it. Once you committed that first breach of trust, there was a certain inevitability about your being caught for what followed. But you aggravated the situation by covering up for many years. Indeed, you preserved the veneer of respectability for nearly nine years.
20 In the last two of those nine years, the magnitude of the hole that you had dug for yourself began to have its effects on your behaviour. You became depressed. You withdrew socially. You drank more alcohol. Your depression deepened in the time leading up to the end of February 2002 when the receiver was appointed to take over your practice. It was at that time that you decided to take your own life. Your plan was to jump from a bridge. Your driving, en route to the bridge, in an intoxicated state, attracted police attention, and so your plan was foiled. You were admitted to a psychiatric clinic. You remained there for more than two weeks. You have at times since then been taking anti-depressant medication. The medical reports placed before me on the plea do reveal a position that, as to depression, warrants some moderation of general deterrence. As to health matters, of more concern in the last twelve months has been the need for intensive treatment for prostate cancer. The medical reports advert to the possible adverse consequences of imprisonment as to that condition, for which I must allow.
21 I must and do give you credit for co-operating with the investigators from the Law Institute and with the police, when they set about unscrambling what you had done. From all perspectives, it is a pity that there has been a delay of over four years. I do regard that delay as a mitigating factor. At the plea, I sought to investigate the causes for it. I do not need to go into much detail. In 2002, you co-operated with the Law Institute investigators. In 2002, those investigators appear to have relatively promptly checked with those from whom money had been stolen and then arranged for Fidelity Fund claims to be made and assessed. Police investigations started no later than March 2003. The first hearing in the Magistrates' Court appears to have been in December 2005, two years and nine months later. You were interviewed by the police in June 2004, and your co-operation during that interview is clear from the transcript. Statements were collated from clients between July and September 2004, and from Ms Ryan of the Law Institute in January 2005.
22 Against the background of that chronology, Mr Hillman, prosecuting, made certain points which do have some validity. The focus of police investigations is necessarily different from that of Law Institute investigations. The standards are different. More detailed documentation will often have to be obtained. Investigating even one count of theft may involve a lot of work over a long period of time. Tracing money will rarely be an easy task. In doing the investigative work in relation to your thefts, the exercise was the more difficult for several reasons. The period involved was over nine years. You did not work to one obvious pattern. Sometimes, you used authorised bank accounts. Often you used the Bendigo Bank account like a slush fund. Sometimes you took money just for your own diverse needs. Sometimes you took it from one client to satisfy the needs of another. Sometimes, you provided misleading information, including accounting details, to clients to cover up what you were doing. In my assessment, a significant part of the delay was brought about by the need to spend time trying to unscramble your own work that was sometimes messy, whether intentionally or not, and was also sometimes intentionally misleading. I am, nonetheless, of the opinion that the delay was unnecessarily long.
23 There are many other mitigating factors for which I must allow. To a degree I will repeat myself when listing many of them. You have pleaded guilty. You made your intention to do so clear from a very early time. You have co-operated with authorities at all times. You have no prior convictions. You have suffered, and you will continue to suffer from mental and physical health problems. You did not fritter away the amounts stolen on gambling or living a high life. You have demonstrated your remorse and your determination to rehabilitate yourself. You have continued to contribute to the community. You and your family have suffered, and will continue to suffer, enormous shame and humiliation.
24 But let there be no doubt as to the need for the sentence that must be imposed on you to signal the denunciation of what you did. It must also reflect appropriately the need to provide general deterrence. Other lawyers must be deterred from betraying the trust of their clients. You not only demeaned yourself. You demeaned the legal profession. Years ago in this court, you took an oath when you joined the profession. You have seriously betrayed that oath.
25 In formulating the sentence, I must follow a number of principles as to cumulation, totality and otherwise. I must allow for relative seriousness, adjusting for matters as to each count such as the amounts involved, the personal advantage gained, the extent of the breach of trust, and the period of continuing deception.
26 On count 19, I impose a term of 3 years' imprisonment. Other periods are cumulative on that period of 3 years. On count 6, I impose a term of 1 year and 6 months, cumulative as to 3 months. On counts 1, 2 , 3, 7, 9 and 14, I impose a term of 1 year, each cumulative as to 2 months. On counts 4, 5, 10, and 11, I impose a term of 1 year, cumulative as to 1 month. On counts 12, 13, 15, 17 and 18, I impose a term of 3 months, cumulative as to 1 month. On counts 8 and 16, I impose a term of 1 month, all concurrent, not cumulative.
27 The head sentence is 5 years. I set a non-parole period of 2 years and 6 months. That period is relatively low. It reflects the considerable number of mitigating factors operating in your favour, as earlier detailed. I declare 54 days by way of pre-sentence detention and direct that that be entered in the Court records.