DPP v O'Brien, Michael [2014] VCC 859

1. Each charge of obtaining property by deception carries a maximum penalty of 10 years' imprisonment. The charge of theft, Charge 14, also carries a maximum penalty of 10 years' imprisonment. The facts of the case were opened in detail by Mr Porceddu and are contained in Summary of Prosecution Opening, Exhibit A in these proceedings. A number of Victim Impact Statements were also tendered, Exhibits B through G. I have received into evidence a list setting out the amount contained in the indictment and the amount representing the false loan amounts, Exhibit H.

1. In 2000 you were invited by one of your co-accused, Denis Angeleri to enter into a new venture advancing finance to purchasers of second hand motor vehicles and between 2003 and 2008, you with Angeleri and others carried on a business of providing finance to such purchasers. Australian Motor Finance Corporate Pty Ltd (AMFC) was the financier of the loans. AMFC was effectively a shell corporation, having no assets or operations, and Australian Motor Finance Ltd (AMFL) provided the infrastructure and personnel for AMFC's loan business.

1. By 2004 the undertaking had essentially run out of money. You were only writing about 5% of the loans that you had anticipated. With Angeleri and Brindley you concocted a scheme to obtain funding by creating fictitious loan applications made by fictitious borrowers. Your role in this scheme was to personally recommend and approve the granting of fictitious loans, thereby circumventing the prescribed approval process. As the scheme gained momentum the three of you refined your process, opening of a number of accounts into which funds were paid.
2. At the relevant times, Angeleri was the Managing Director of AMFL and a director of AMFC, Ian Brindley (another co-accused) was Deputy Managing Director and Chief Financial Officer of AMFL and a director of AMFC. You were acting as Director and Company Secretary of AMFL. A further co-accused, Giuseppe Porcaro, acting on the direction of Angeleri, had a limited role related to the manufacture of fraudulent loan documents that were used to deceive the auditor during routine audits.

1. Whilst the provision of false loan information for the procurement of funding had been going on for some time, the earliest false loan being in June 2003, the charges commence with the acquisition of the loan portfolio by ABL Nominees Pty Ltd (ABL), a wholly-owned subsidiary of Bendigo and Adelaide Bank Limited. That occurred on 17 May 2007 and the subsequent ongoing maintenance of the fraud continued until 19 December 2008. Immediately prior to 17 May 2007, AMFC received its funding from the National Australia Bank. On the day the loan portfolio was sold, the portfolio then contained 266 false loans to the value of

$7,682,163.00. Charges 1 and 2 could as easily been represented by one charge except that credit was disbursed to two entities - NAB and Absolute Capital.

1. Then on some 300 occasions between 20 June 2007 and 19 December 2008 you submitted numerous claims for finance which contained fraudulent loans and obtained a total of $39,862,965.00 of which $17,911,057.00 is referable to the fraudulent loans. This offending was initially the subject of separate charges of obtaining a financial advantage by deception were then rolled up in 2 month lots creating the 11 charges, Charges 3 to 13 inclusive.

1. Charge 15 deals with some 24 loans started as legitimate loans but when the borrower defaulted and the vehicles were repossessed and sold, the proceeds went to AMF. AMF failed to notify ABL of the delinquent loans, which resulted in an amount totalling $433,701.00 owing to ABL.

1. In mid-2008, ABL began investigating anomalies in AMF's data and on 20 December 2008, ABL ceased funding to AMFC. On 23 January 2009, receivers were appointed to AMFC. Between the close of business on 22 January and the arrival of the auditors on 23 January 2009, Angeleri, Brindley, Porcaro and yourself removed files and computers containing incriminating evidence in relation to the fraudulent loans from AMFC. The files and computers were later discovered by police at a premises owned by Stephen Dale, Angeleri's brother-in- law.

1. On 22 January 2009 you transferred, without authority, $50.00 from the AMFC Collections Account into an unknown account. It is alleged that by the Crown that this was a 'test run', to see if you could get away with your deception. Once the initial transfer was deemed successful, you immediately transferred

$2,750,000.00 from the AMFC Collection Account to the AMFL Cash Management Account. This forms the basis of Charge 14, theft. Between 22 and 23 January, numerous transactions were conducted via internet banking from the Cash Management Account to other bank accounts under the control of either yourself, Angeleri or Brindley. I shall deal with how you benefitted from this transaction later.

1. Ms Kothrakis, who appeared on your behalf, told me something of your personal history. You are now aged 67 years, an only child raised in Newcastle. Your father was a pawn broker and cattle farmer and had served in the war. Your mother was a housewife and you and she were close. You have never been close to your father, who you described as bigoted, religious and selfish. He now suffers from dementia and resides in a nursing home. Your mother died in 1996 after a stroke.

1. You attended two Catholic primary schools, where you performed well

academically and made friends easily. You completed the first three years of secondary school at a Catholic high school in Newcastle, where you were sexually assaulted by one of the priests. It is at this point that you started to struggle academically. You went to boarding school for Years 9 through 12, and found the experience difficult given the discipline that was meted out by the priests. You did marginally better academically but left half-way through your final year without completing Year 12.

1. From that time you have maintained an impressive employment history. After leaving school you completed your leaving certificate at night school while working full-time at the Commonwealth Bank, where you remained employed for three years. By age 20 you had been promoted to assistant manager. In 1995 completed a Certificate in Accounting. At 20 you were conscripted into the Army and served a mandatory two years. You enjoyed the camaraderie so much, you remained in the Army Reserves. During this time you got a job as an assistant accountant in Newcastle whilst studying accounting at night. In 1970, you returned to the Army and in 1971 you were commissioned as an Officer of the Royal Australasian Electrical and Mechanical Engineers. You left the Army in 1973 and returned to the family business of pawn broking and saddlery before again returning to the Army in 1978. You spent three years as an officer commanding a field force unit, despite not having any technical qualifications. For your service, you received the National Service Medal in 1981.

1. In 1980 you met your first wife, Lyn. At the time, you were working in the family business which was struggling financially. To assist, you set up a manufacturing business in Tonga. You and Lyn married in 1983. Sadly, the family business burnt down in 1984. You restarted the business and in 1989 you revived the manufacturing business, this time in India. Your first daughter was born in 1989, the same year that Newcastle suffered an earthquake. In 1990, you decided to start over and commenced selling insurance with AMP. It is here that you met Denis Angeleri. The family business that had been operational since 1901

eventually closed down and you were subsequently sued, declaring bankruptcy in around 1991. Your financial woes continued and you were forced to sell your family home. While preparing the house for sale in 1992 you fell from a ladder and broke your back in two places. You discovered your wife was pregnant with your second child around this time. Your son was born in 1992 and at that time you started Australian Trade Credit. A couple of years later you also began working for the Department of Employment, Education and Training where you developed and ran a New Enterprise Incentive Scheme (NEIS). Your second daughter was born in 1995. In 1997 you were working at Newcastle Business College as a teacher and you had completed a number of additional qualifications in the area of business management and marketing. In 2000, Angeleri invited you to join him in Australian Motor Finance.

1. Whilst it appeared initially that the business model was sound, by 2003, the business had run out of money. You were self-insuring, the lending practices were reckless, you were being pursued by the banks and you should have simply closed the business down. Angeleri proposed to use illegitimate loans to keep the company afloat and you went along with it. Ms Kothrakis said that you were initially shocked by the proposal but offered no resistance to it. She said you had two failed business ventures behind you. She said that you thought that you just needed some time, some breathing space, and the business would recover. As I said, you went along with Angeleri's proposal and, in a matter of months, you were responsible for putting fraudulent loans together and signing off on them before sending them to Angeleri or another partner for approval. You were, at this time, experiencing marital difficulties and had separated from your wife. The breakdown of your marriage and the eventual divorce in 2009 was a protracted and acrimonious affair and, as a result, you lost contact with your three children.

1. You have been exposed to a number of negative experiences over the years: at age 18 months you were run over by a furniture truck; when you were 8, you witnessed a woman decapitated in a motor vehicle accident; at high school you

were sexually assaulted by a Catholic priest; at age 30 one of your close friends was murdered; when you were aged 40, you witnessed a girl killed during a police pursuit. In the mid-1980s, you experienced stress when you were sued and subsequently filed for bankruptcy. In 1992, you fell from a ladder and fractured your back in two places, making you unable to work for two years.

1. Ms Kothrakis tendered on your behalf a psychological report by Dr Joel Godfredson dated 8 January 2014, Exhibit 1, an outline of submissions, Exhibit 2, an outline of personal history, Exhibit 3, and a confessional police statement made by you, Exhibit 4. Dr Godfredson was of the opinion that you suffer from a moderate degree of depression as a response to your current circumstances but that your symptoms appear to be well-managed as a result of engaging in psychological therapy. He was unable to comment on how a period of incarceration would affect your depression other than saying that your symptoms could worsen. Importantly, he assessed your risk of re-offending as low and something that does not warrant specific intervention.

1. On your behalf, Ms Kothrakis provided a very helpful outline of submissions, Exhibit 1, and submitted in summary that I take into account the following matters by way of mitigation:

(a) You are now 67 years of age, have no prior convictions and that I can conclude that you are otherwise of good character;

(b) Despite facing a number of challenges in your life you have maintained an impressive work history;

(c) You were not the mastermind behind the offending but can be characterised as an informed participant in it;

(d) There has been delay of some 5 years since detection and 2.5 years since you were interviewed by police which may be a function of the breadth of the police investigation into the

offending but should nevertheless be taken into account;

(e) You pleaded guilty at the earliest opportunity and should be given the full benefit of your plea. This is a large case and the there is substantial savings brought about by your plea;

(f) The offending was not motivated by greed or the wish for a lavish lifestyle but rather a desire to keep the business going and that I should view this in the context of your previous history of business failure; and

(g) Importantly, you cooperated with the authorities and have given an undertaking to give evidence at the trial of your co-accused, which also evidences remorse.

1. Against these mitigating factors Ms Kothrakis, quite properly in my view, pointed out a number of aggravating features. Firstly, the monetary value, in the sense of the actual loss brought about by your offending, being $24,729,759.00, is very substantial; secondly, the offending involved a breach of trust; thirdly, it occurred over a period of years; fourthly, there was a high degree of planning, method and sophistication to the offending; and fifthly, the offending had a significant impact upon the victims.

1. Six Victim Impact Statements were tendered, Exhibits B to G, in which your victims speak of having a bad credit rating as well as an inherent lack of trust as a result of your offending. Victim Impact Statements provided by your ex-wife and daughter are scathing and detail the physical, psychological and financial impact of your offending. A further Victim Impact Statement was provided from a representative of the Bendigo and Adelaide Bank, who set out the loss suffered by that institution. In sentencing you, I take these Statements into account so far as they are relevant.

1. The basic purposes for which a court may impose a sentence are punishment, deterrence (both specific and general), rehabilitation, denunciation, and protection of the community. In sentencing, I must have regard to a range of matters such as the seriousness of the offence, your culpability for it, your personal circumstances and those of the victim if any. I am required to balance the interests of the community in denouncing criminal conduct with the interests of the community in seeking to ensure that as far as possible offenders are rehabilitated and reintegrated into society.

1. While deception offences vary widely in seriousness, offending that is committed in breach of trust, involving large quantities, over an extended period of time normally attracts a significant sentence of imprisonment. These offences are notoriously difficult to detect and expensive to investigate and prosecute. Viewed objectively, you employed substantial dishonesty at a number of levels to achieve your ends. It was not a question of creating one or two documents, it was a well- planned and highly sophisticated operation requiring a substantial endeavour and persistence on your part. Planning and sophistication usually point to gravity of conduct and cases involving planning and sophistication are often distinguished from cases in which it can be said that the offender acted spontaneously and where, accordingly, it is argued that a lesser degree of criminality or culpability is evidenced.

1. Reviewing the case law on offending of this type offers only limited guidance given the variety of offending conduct and the requirement that each case be decided on its own facts and circumstances. The monetary value of your offending is greater than anything previously recorded in Victoria. The previous greatest amount was in the order of $16M defrauded from small investors and

$6M from banks by _Graeme Ronald Hoy_1 for which he received a sentence of 13

years and nine months with a non-parole period of 9 years. That sentence was approved by the Court of Appeal. Like you, Mr Hoy had no prior convictions.

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However, what it is clear from the past cases is that whilst there is a broad sentencing range, general deterrence is always said to be a primary sentencing consideration and that previous good character and the presence of hardship caused by imprisonment for both the prisoner and his family, the loss of reputation and other mitigating factors do not detract from the need for condign punishment.

1. I take into account your plea of guilty which was offered at the earliest opportunity. Your sentence is less severe than I would have imposed had you pleaded not guilty. Your plea saves time, expense, the need for witnesses to give evidence and is reflective of remorse. This is especially so in your case as the investigation into your offending was extensive, resulted in a voluminous brief of evidence, and would have necessitated a lengthy and expensive trial. I take into account the fact that you have no prior convictions and an enviable work history and I accept that you are ordinarily a person of good character. It is highly likely that you will not reoffend and accordingly that your prospects for rehabilitation are very good.

1. A substantial mitigating factor in your case is that you have cooperated with the authorities by making a full and frank disclosure of your offending and that of your co-accused and by giving a sworn undertaking to give evidence against your co- accused. This also is indicative of remorse**,** acceptance of responsibility and a willingness to facilitate the course of justice. It also supports my finding that your prospects of rehabilitation are good. It is a matter of high policy that persons detected committing criminal offences inform against other offenders. It is well recognised that such cooperation is unlikely to be forthcoming without substantial inducements. You provided a 27-page confessional statement to police, Exhibit 4, implicating yourself and your co-accused and detailing the methods used to commit your deceptions. Your disclosures are full and frank and the statement will no doubt be of benefit in the prosecution of your co-accused. You have, accordingly, provided a high level of assistance to the authorities and, as such,

you are entitled to receive the maximum benefit for your cooperation.

1. At the conclusion of the plea hearing I received written submissions from counsel as to where the monies went and, in particular, whether it could be shown that the monies were solely used to prop up the business rather than contributing to your personal enrichment or a lavish lifestyle. It appears that during the relevant period only $1,368,089.09 was paid to your company, Moneypac Securities, for your consulting and service fees. Ms Kothrakis submitted that this money also met legitimate business expenses. This assertion was not contested by the prosecution.

1. I am accordingly satisfied that you entered into this enterprise, and persisted with it, in an effort to keep the business afloat and, having previous experience with failed businesses, did not want the same thing to happen again. It does appear that the vast bulk of monies appropriated in the scheme were "re-invested" in the business. That is not to say that you did not benefit. By ensuring that the business was kept alive you retained your employment which, in turn, kept your family relatively comfortable, as evidenced in the Victim Impact Statements of your former wife and daughter, Exhibits E and F.

1. I am also satisfied that beyond providing you with a relatively comfortable lifestyle, there was no evidence of the proceeds being used to support a lavish lifestyle, or otherwise being squandered. In the end, though, this is of little comfort to the victims. The financiers have lost a very large amount of money and incurred other expenses, see Exhibit G, and other victims have suffered an impairment of their credit standing with financial institutions, Exhibits B, C and D.

1. It cannot be said that there is mitigation to be found in the fact that the substantive victims in your case are well-heeled financial institutions rather than small time investors. Whilst it may be the case that in some instances aggravation is to be found where fraudulent schemes target small time investors who feel the loss most poignantly, theft from large institutions nevertheless

causes direct and indirect harm to many and the need to deter those who seek to commit such fraud remains a primary consideration.

1. With respect to the theft of $2.75M, Charge 14, $260,000-odd found its way into accounts controlled by you. You claimed that the transfers had been effected by Angeleri. All but some $15,000 was reversed by the bank at your request. Moneypac retained $5,000.00 and $10,000.00 was sent to your credit card account. The theft was brazen and it was also desperate. The game was up and you and your co-offenders attempted to salvage something for yourselves. It showed a level of callous disregard for the right of your creditors.

1. Delay is also a relevant factor. There has been considerable delay due to a number of factors which has caused you some stress. This is clear from the report of Dr Godfredson, Exhibit D, to which I have already referred. While it is largely attributable to the thoroughness of the police investigation, it is delay nevertheless and I take it into account in your favour.

1. Pursuant to the provisions of Part 2B of the Sentencing Act 1991, you are to be sentenced as a Continuing Criminal Enterprise (CCE) Offender. CCE offences include the offences of obtaining a financial advantage by deception and theft where the value is greater than $50,000.00. In your case that means all but Charges 4, 8 and Charge 15, which has no monetary value attached to it. On sentencing for a CCE offence I am required to have regard to the fact that the maximum penalty applicable to the offence is two times that provided by the legislation. It follows that for all but the charges I have just mentioned the maximum penalty is 20 years. The qualifying offences are Charges 1, 2 and 3. In keeping with the decision in R v Roussety [2008] VSCA 259; (2008) 24 VR 253, I intend to sentence you on all charges as a Continuing Criminal Enterprise offender. I will make the required declaration to this effect in due course.

1. Pursuant to s 9(1) of the Sentencing Act, I may impose an aggregate sentence for two or more offences that "form, or are part of, a series of offences of the

same or a similar character". Section 9(4A) expressly permits the imposition of an aggregate sentence for rolled-up charges. I am satisfied that the conduct in Charges 1 to 13 and 15 constitutes the implementation of a continuous scheme designed to prop up the failing enterprise by providing false information to the bank to secure funding and, as such, are clearly part of a series of offences of the same or similar character. Perhaps with the exception of charges 1, 2 and clearly 14, the other charges could have been rolled into one overarching charge. The fact that these individual charges are "rolled up" and that there is no substantive reason for them being split into 13 separate charges other than the fact that they are grouped in 2 month lots evidences the appropriateness of the conclusion I have reached. I am also encouraged by the observations of the Court of Appeal in the case of Hoy to which I have already referred to the effect that a sentencing judge may, "within limits, adopt a broad-brush approach to the fixing of sentence

... where there was an ongoing fraudulent course of conduct, a single fraudulent or common enterprise or where the criminal behaviour on counts was of a similar and repetitive nature".2 Had the matter been more extensively investigated, it would have been possible to create a number of offences pre-dating 16 May 2007. As it is that offending is adequately reflected by charges 1 and 2 which whilst are distinct charges, nevertheless are sufficiently linked for the purposes of an aggregate sentence.

1. For these reasons I intend to impose an aggregate sentence on all of the charges of obtaining a financial advantage by deception - Charges 1 to 13, inclusive, and Charge 15 - while imposing a separate sentence in relation to Charge 14, the charge of theft.

1. Mr O'Brien, would you please stand. On Charges 1 to 13, inclusive, and Charge 15 you are convicted and sentenced to be imprisoned for an aggregate sentence of 7 years. This is the base sentence. On the remaining charge of theft, Charge 14, you are convicted and sentenced to 6 years' imprisonment. I direct that 2

years of the sentence imposed on Charge 14 be served cumulatively upon the base sentence, making a total effective sentence of 9 years' imprisonment. I direct that you serve a period of 5 years and 4 months before being eligible for parole.

1. I declare that 22 days of pre-sentence detention be reckoned as having been served under the sentence and I direct that a declaration to that effect be recorded in the records of the court.

1. I cause to be entered in the records of the court, further, that you have been sentenced as a Continuing Criminal Enterprise offender in respect of all charges.

1. I also formally declare that I have reduced your sentence as a result of the undertaking that you have given to give evidence if called upon in accordance with the statement dated 15 October 2013 and marked as Exhibit 4, and I direct that a declaration to that effect be recorded in the records of the court.

1. Section 6AAA of the Sentencing Act requires me to state the total effective sentence and the non-parole period that I would have imposed had you pleaded not guilty and been convicted. Had you been convicted after a trial, in addition to not receiving the benefit of a plea of guilty you of course would not have received the significant benefit for cooperation with the authorities and, accordingly, I would have sentenced you to 15 years' imprisonment with a non-parole period of 11 years.

1. I make the compensation order in the amount of $22,683,355.00 noting that the sum has been agreed and that the order is by consent.

1. HIS HONOUR: Thank you, please remove the prisoner.