DPP (Cth) v Hunter; DPP

[13]

Thirty investors, many or most of whom knew the respondents (and trusted them) through the Bendigo church, subscribed their funds to the first scheme which continued from about December 1997 until approximately April 1998. Some 50 investors subscribed their funds to the second scheme which continued during the latter half of 1998. In total, as I have said, some $A4 million was subscribed, of which some $3.5 million was ultimately lost to the investors. Investors were encouraged to invest in the schemes by representations that large profits would be returned on capital within short periods of time. That encouragement included an elaborate complex of documentation calculated to assure investors that their money would be safe, would not be used otherwise than for the purpose of lodgement into the relevant debenture trading program and that no part of the funds invested would be deducted by the respondents or their companies for any purpose so that, if the debenture trading program did not proceed, the funds invested would be returned to the investor in specie and "every cent invested " would be "promptly refunded". To that end, each investor was given a "Letter of Guarantee of Funds" (signed by the investor and Hunter on behalf of Acts Net Ltd) confirming that the directors of the company were giving an "unequivocal guarantee" to the investor that the investor's funds were to be "held in trust", "only applied for the express use of the debenture trading program", and not subject "to any deductions whatsoever". Contrary to this documentation, the material before the sentencing judge showed that the investors' funds were, without consultation with the investors, transferred from time to time into accounts of other companies controlled by the respondents and used thereafter for the benefit of the respondents. Those activities were the subject of counts 1 to 4 inclusive on the indictment, that is the counts which alleged that the respondents at various dates in 1997 and 1998 and contrary to s.232(b) of the Corporations Law knowingly made improper use of their positions as officers of the company by dishonestly transferring those sums from the Acts Net Ltd US "dollar account" to the account of Acts Ministry Inc. or the account of Ascension College Inc. With the intent to gain directly or indirectly an advantage for themselves or others.

[14]

Quite apart from the deceitful documentation, there were other pressures placed upon investors to participate in these schemes or to placate them so as to maintain their participation. Thus, Peter Carson, who had invested substantial amounts in September 1997, made inquiries about his investment of Milner in December. Milner responded by fax advising that "the program had been extended by 30 days to 6 April when a 100% return would be paid". Upon the strength of those representations Carson invested more money. Theresa Buckley said that in August 1997 she was approached by Hunter and Milner and asked whether she was interested in investing in a "government guaranteed no risk investment scheme". It was, they said, "limited to Christians". They further told her that the "Federal Government uses the scheme to move funds". Kathryn Andrew, an ordained priest and school teacher, said that she was told by Hunter that the "investment program worked" and that he had to sit down and "count piles of money". She, too, was told that invitations to invest were only being made to Christians. He told her that he was "a millionaire". The funds which she invested were part of her husband's superannuation. Rodney Witcombe was introduced to the second scheme in Perth by Milner. Milner explained to him that he (Milner) would place the funds invested in a selected trading program with a reputable bank, maintaining control of the funds under his signature and that this would guarantee security of the capital. When, in July 1998, Witcombe met Hunter and Milner to ask further questions, he was told that "the mechanism consisted of hundreds of interbank transactions" in which the bank "rented the potential of the investors' money whilst retaining it on safe deposit and, through the power of leveraging, substantial profits were made". This induced Witcombe to invest more money. These were samples of the misrepresentations made to investors to gain or maintain their interest. It is because those profits, which were being promised to the investors, are "prescribed interests" within the meaning of the Corporations Law that an approved deed is required to protect the investors. It would seem that the respondents proceeded in blind or studied ignorance of these legal requirements.

[19]

This appeal has been well argued on both sides. However, at the end of the day, I am quite satisfied that his Honour's discretion has miscarried, largely for the reasons which have been advanced by Mr Barry. In my view, his Honour has undervalued the seriousness of the conduct in which the respondents engaged and particularly has failed to recognise, both in his reasons and in the sentencing disposition, the fact that the respondents determined to embark upon a second scheme at a time when they must have known that the first scheme was, or was about to become, a failure because of the offshore third party's inability to deliver. The fact is that they continued to make false representations to many investors for the purposes of inducing those investors to part with their money by soothing them with blandishments both in words and written guarantees that their moneys were safe. The offences described in counts 5 and 6 were indeed the product of separate schemes and were offences which described entirely different conduct from the offences described in counts 1 to 4. A sound exercise of the sentencing discretion, in my view, rendered it a virtual imperative to order some degree of cumulation of the sentences imposed on those counts, both upon each other and upon the sentences impose on counts 1 to 4. For my own part, I am by no means satisfied that either respondent showed any willingness to contribute his own moneys to these schemes. That matter was in dispute between the Director and counsel for Milner before the sentencing judge. His Honour made no finding about it and notwithstanding that Mr Milner had claimed in his record of interview to have contributed about $40,000, the evidence to which we were referred would not support that fact. But whether that is so or not, it is, in my view, inconceivable that men of the experience and calibre of the respondents could have failed to recognise that, as a the 1998 year wore on, their continued extraction of moneys from people whom they knew were dependent upon them, warranted the confident prediction of profits contained in their written and oral representations.

DPP (Cth) v Hunter; DPP - [2003] VSCA 171 - VSCA 2003 case summary — Zoe

At a glance

Court

Decision date

Before

Source

Judgment (43 paragraphs)

Parties