Najam Shah, you have pleaded guilty to one charge of conspiracy to defraud, contrary to common law. You conspired between 31 March 2008 and
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15 December 2011 with B and C to defraud a number of financial institutions. I will be using letters to denote those persons from now on.
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This common law offence carries a maximum penalty of 15 years' imprisonment. This penalty reflects the gravity of the offence and is a consideration to which regard must be had in determining what is an appropriate sentence. The conspiracy in general term was to provide false information in support of applications for housing and finance.
The prosecution, by the Commonwealth Director of Public Prosecution, prepared a detailed summary of the circumstances of the offending which was tendered and exhibited and will be retained on the court file for future reference. This document was ultimately agreed upon as to the facts upon your plea and endeavoured to summarise a very large body of evidence which consisted of thousands of documents relating to many hundreds of applications to various financial institutions over the relevant period.
I do not propose to set out at length what is contained in the prosecution opening upon which I proceed to sentence you.
Suffice as to state briefly that between 2006 and 2011 you operated a business known as Myra Financial Services. It was your business established by you, together with another person, D. It was named after your daughter. The sole director and shareholder was your wife who found herself in that role because, at the time, you were a declared bankrupt. She had nothing to do with the day to day running of the company. The business of Myra was the preparation of fraudulent applications for clients who were seeking finance for housing applications which were submitted to various financial institutions.
Some of these applications were prepared in order to obtain finance for the house and land packages Myra promoted which were marketed by another company, Future Property Concepts or FPC in which you were also a partner, which company formally was owed by your wife and two others including D.
The fraudulent applications were completed by others who had been employed by Myra at your direction. Those employees would prepare false supporting documents, submit the applications and false documents, handle requisitions from financial institutions in relation to the applications and generally collaborate with those institutions to ensure the loans were approved by "polishing" them, the term which was used, polishing the documentary material in order to achieve this end.
Myra would then extract the loan facilitation fee and other commissions and benefits derived from the commission or schemes then in place relating to home ownership and its finance.
You specifically interviewed clients, obtained relevant initial information such as their real income levels and employment status. B and C were hired by you and were employees of Myra.
B began working for Myra earlier than C and for a period they worked together, and D, one of the original directors and shareholders of FPC, Future Property Concept, who was also its major financial contributor, worked in Myra's Footscray office throughout the relevant period.
Many of Myra's clients were from various backgrounds, particularly Indian and African, and many would have, under normal conditions, difficulty applying for a home loan because of their lack of savings, earnings or even employment.
However, your enterprise was not for altruistic purposes, rather for greed. You, B and C were assisted by other staff by the performance of different tasks in producing sophisticated false documents which included bank statements, pay slips, identification documents such as driver's licences and citizen's certificates.
Examples of false information were income levels, employers, bank balances and citizenship status. You set up a system of answering phone queries by financial institutions whereby staff members were instructed with a script to confirm employment details of the applicants.
False documents were designed and produced based on templates found on the computer systems used by Myra.
Apart from the loan facilitation fees and the commission paid to FPC for the sale of house and land packages, you also shared in the fees Myra received from the Commonwealth Bank until that institution identified the use of false documents.
You had set up and cultivated relationships with brokers and bank managers who would facilitate the loans based on the applications supplied by your company, knowing they were false. You instructed your staff which such managers and brokers to deal with and they did so. You instructed B in what was required in relation to the documents using the templates available in order to create false documents.
After a while, he worked reasonably autonomously but always at your direction. You had met him at a mosque in the western suburbs and offered him work at Myra. You instructed him initially to not to give information to FPC, which was run by D and you were also assisted by your receptionist, who taught B how to deal with the applications generally. You instructed B to prepare the relevant documents for each application, to research companies to use as employers.
The details on the payslips included figures for superannuation and the bank statements created would contain false deposits, false balances and payslips.
You would interview clients and record instructions in your handwriting, which you would give to both B and C to process. Each client would be the subject of a file, which would include all relevant documents in conformity to your instruction sheet.
You would then check the file. Both B and C effectively reported to you. In June 2008, another person, F, who was a graphic designer, was employed by you and he was also creating false documents.
All information contained on computer files was stored on an external hard drive which you would take with you at the end of the day and also, you used cloud storage. The hard drive contained spreadsheets used at weekly meetings to keep track of the progress of applications and it would be updated by B and C at your direction for such meetings.
Your central task appears to have been the establishment and maintenance of relationships with bankers and brokers. One particular CBA mobile lender, G, was introduced to Myra staff as a business development manager and attended Myra premises almost on a daily basis, using your mobile phone and computer, and would raise with you and the staff, inconsistencies and errors in the false documents for correction. It appears that person knew the documents were false.
C began work in March 2009. You and B trained him in the process of false applications. Later, C was more directly involved in the operation of the business by directly meeting clients, applicants, with bank personnel.
During the relevant period, Myra moved offices and established offices away from Footscray, the original location, but ultimately returning there by late 2010. Myra also operated from your home in the eastern suburbs. B left Myra in August 2010.
Employment verification was facilitated as I have described above with written instructions written by you and placed near a phone and often answered by you. You also registered phone numbers for businesses used as false employers.
One appliance repair business was listed in the White Pages at the Myra FPC address in Footscray because the operator of that business was known to you. Another business was falsely used; was a restaurant owned by you. FPC was also used as a false employer and you told C to use it on payslips.
C also worked from your house. Financial institutions included certain branches of St George, Bank of Queensland, Westpac and Bankwest, amongst others. Here the brokers and bank managers would facilitate the applications, knowing they were false.
Over 400 different employer names were identified as being used in at least 350 payslips, with replicated entries in false bank statements purporting to represent either completely fabricated employment or bona fide employment but with increased salary amounts.
Some of these companies were significant companies and known, like Oracle, Bostik, St Vincent's Hospital, a number of banks, Jayco Caravans, Visy Recycling, Crown Plaza and other smaller enterprises, manufacturing, accounting, retail, cleaning, electrical contractors, plumbers, nursing homes and insurance companies.
False verification and certification stamps were produced and used to indicate proper certification of documents. False bank stamps were also created. An example is given in the summary of p.8 of an application for a loan to the National Bank which included not only false Australian citizenship certificate, a false payslip and false bank statements containing a false credit figure and account, but also a statutory declaration purportedly made by the applicant, who had not signed it, was unemployed and had no money saved in a bank account.
You had met her in October 2011, introduced to her by D at the Footscray office and was interviewed by you for purposes of "doing the finance".
The false payslips and certificate of citizenship copies were found at your residence. A computer version and a PDF version of the payslip and citizen's certificate were located in your cloud computing account within a directory and file path in your name.
On 15 December 2011, Australian Federal Police together with officers of ASIC, Australian Securities and Investments Commission, executed search warrants on a number of premises associated with Myra, including your home.
The material comprised over 49,000 pages and over 890,000 electronic items. This material has led to an extensive analysis and long investigation. Enquiries with all banks, mortgage brokers, loan applicants and service providers to Myra had to be undertaken.
Further, material from these was obtained and reviewed. The computer in your home office was seized and analysed. This involved 750 electronic files in the format of Photoshop image files, including driver's licences, citizenship documents, over 1200 Excel files containing payslip or bank statement templates and over 640 Word files containing similar documents.
The instruction pages and other documents were found. ASIC obtained over 3400 electronic files of various documents from cloud storage related to Myra.
For part of the time between 2008 and December 2011, Myra operated in part under formal referral and licence agreements with at least one bank and informally, through facilitators and brokers.
$170m was the amount involved in this enterprise. Between April 2008 and March 2009 alone under the formal referral agreement with the Commonwealth Bank, Myra submitted 121 loan applications, amounting to loans of approximately $36m being provided by the bank.
Between April 2009 and December 2011, Myra arranged 533 applications, processed through a range of financial institutions, facilitators, brokers and lending managers and mobile bankers. 413 out of 533 were approved and funded with loan values of $134m. 120 were declined. Many of the declined applications were resubmitted with a number being approved in full or in part. All of the 612 loan applications contained false information.
A breakdown by the 12 financial institutions concerned is contained in the summary at pp.11 and 12, the most significant being over $54m with the Commonwealth Bank, over $68m with the Westpac, $36m with the Bank of Queensland, over $12m with the National Australia Bank and over $12m with Bankwest.
Myra and FPC generated income by commission for each home and land package. In the case of Waterson, a home and land package provider, the commission was between $10,000 and $20,000, split evenly between Myra and FPC. Loan facilitation fees were charged by Myra and fees for the referral partner agreement with the CBA were also received.
Under the formal agreement between April 08 and April 09, Myra submitted 121 applications, generating over $186,000 in referral fee payments in relation to loans worth over $36m. Between April 09 and December 2011, through informal arrangements, 351 approved applications in relation to approved loans of over $111m proved Myra with a 50 per cent of estimated commission of the $1.75m to $3.5m. Loan facilitation fees received were over $1.1m. Myra therefore received over $2.16m in the period 08 to 11.
I have already mentioned the maximum penalty prescribed for the offence. The court must also have regard to current sentencing practices. The prosecution submitted a list of cases it submitted were somewhat comparable. There are no many cases of this type of conspiracy or scale, for that matter, though some exist.
Other cases referred to are concerned with other conspiracies, such as to cheat and defraud, to launder money, to import drugs as well as obtain financial advantage by deception by the use of falsified documents, or receive in secret, commissions, electronic commerce-based fraud offences and in the case of DPP v Gregory [2011] VSCA 145, which was not referred to, a conspiracy to dishonestly cause a risk of loss to the Commonwealth.
I have also considered DPP v Bulfin [1998]4 VR 114, which concerned a deception to obtain finance using false information and contained some very important statements regarding the sentencing of white collar criminals.
These decisions, rather than provide a yardstick, as that term is described in paragraph 10.22 by the High Court in The Queen v Kilic[2016] HCA 48, more properly inform a broad understanding of the range of sentences which ensure consistency in sentencing and a uniform application of principle.
Mortgage fraud, as it may be generally termed, that damages the integrity of the financial system and the significant process of commercial loan applications. As in this case, such damage is not only potential but actual. The fraud did not only potentially undermine the loan approval process, it enabled in fact its utter corruption. This was its intent and such intent was achieved on numerous occasions over a period which extended over years in a brazen, audacious and sophisticated process of criminal conduct.
It is not to the point that losses have been recorded, nor that the amounts lent were secured by mortgages. This does not diminish the gravity of the offence. Over a period of three years, dishonestly and systematically, pursuant to the agreement that you made, you provided false information to numerous institutions deceivingly in order to extract fees for your benefit, motivated by greed.
Such carefully calculated course of conduct over a long period, repeated acts of dishonesty and the very substantial amounts of money involved must attract strong denunciation by the court. In this process I have taken into account your actual conduct, committed pursuant to the conspiracy and that of your co-conspirators, all overt acts, their duration and intricate, dishonest matrix.
In this sense, the act of all co-conspirators essentially lead back to you as primary figure, the principal actor. You played a managerial role which is different to the role played by B and C, who essentially were in subservient positions. Though they had some freedom of movement within the detailed work of polishing the false documents, they in essence were responsible to you and acted for you and on your behalf, and the material demonstrates that those who were at the financial institution end of this circle of corruption, understood the very fact by the contact, the visits, the personal relationships and accepted the hierarchy of responsibility which placed you at the apex of this well-organised deceit.
This was a sophisticated and sustained scheme of a very large scale, as reflected in the amounts actually approved and the sheer volume of false documents produced. This level of criminality makes it paramount that general deterrence be considered of particular significance in your sentence.
I consider you a principal in this conspiracy. The idea may have been shared at its germination with D but the recruitment, training and instructions as well as decisions over this considerable period, particularly the vital cultivation of corrupt relationships on a daily basis, can all be sheeted home to you.
Some aspects, which often feature in sentencing white collar crime, are a lack of criminal history with its concomitant good character, specific deterrence does not feature in sentencing considerations and prospects of rehabilitations are excellent or high.
In your case, there is a relevant criminal history, which although of a different scale and gravity, nevertheless I consider of some significance, which I must take into account, in which on the one hand means that I should not give undue significance to good character and on the other, that specific deterrence does feature as a sentencing consideration in your case.
These matters are countervailing factors to your plea and your conduct thereafter. The former matters do not have the same weight as the latter and I consider that I should take them into account in the overall synthesis of relevant matters.
In any event, they should not distract from the importance of general deterrence. The observations in Bulfin by Charles JA, reiterated in Gregory, about motivation for offending in offences which involve a carefully calculated course of conduct over a long period of deliberate repeated acts of dishonesty and involving substantial amounts which are difficult to detect by usually lengthy and very expensive investigations, are very apt to your case.
In such a case, the element of general deterrence will usually carry particular significance in sentencing for, as the total effective sentence in the non-parole period, together with the requirement for strong denunciation to the court, indicate.
In Gregory, the court further made clear the reason for this significance in paragraph 53.
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"General deterrence is likely to have a more profound effect in the case of white collar criminals. They are likely to be rational, profit-seeking individuals who can weigh the benefits of committing a crime against the cost of being caught and punished. They are also more likely to be first-time offenders who fear the prospects of incarceration."
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These observations apply in your case. There are two aspects of your criminality which aggravate your offending. Although it was said before me that the general default rate on housing loans of 1 per cent had been exceeded, this had not been on a formal analysis, though I note the Court of Appeal in the appeal of B and C noted at paragraph 21 that there were numerous instances of loans in arrears, closed or subject to legal action, for debt recovery far exceeding the write-off rate.
The precise percentage is not to the point. Your actions with your co-conspirators facilitated loans whose financial viability was less secure than the normal course of business. It was accepted on your behalf, on your plea, that the conduct taking place in the context of a conspiracy added to your moral culpability and it was conceded that it was "mums and dads" who were effected by your deception, often, because of their background, vulnerable and susceptible state to the corrupt facilitation you provided them; a fact you must have understood.
Another aggravating feature is the fact that in 2009, about a year after a referral partner agreement was signed between the Commonwealth Bank and Myra, fraud investigators from the bank made contact with Myra and asked you a number of questions and from that point on, the bank refused to process further applications.
However, this did not deter you or deflect you from your intent. You continued until 2011. It demonstrates the contumacious nature of your offending which equates with high moral culpability.
I take your plea into account. This significant factor will lead to a discount upon your sentence. As can be understood by previous descriptions of the criminality involved as a consequence of the conspiracy to which you pleaded, this matter would have involved a very complex and very lengthy trial, probably lasting months of court time. Your plea has a great utilitarian value in that such a trial has been avoided. I accept that the plea is some evidence of remorse of itself.
However, the presence of remorse is difficult to assess and evaluate and may at times be difficult to distinguish from mere regret. One indicator of relevance is its timing. Your plea was certainly not entered at the first opportunity and is more properly described as having been made at the last opportunity, that is, at the beginning of the actual trial, taken even after arraignment, in which you had pleaded not guilty.
You were charged in January 2015. Two committal mentions were adjourned at your request in April and June of that year. In August, the committal was adjourned because by that date, B and C had offered to be interviewed and provided statements, with the committal being adjourned to February 2016.
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B and C were sentenced in December 2015. Your committal hearing proceeded over two days in February 2016 and the trial was listed in due course for February 2017 with a number of mentions in between.
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In February 2017, the trial commenced with a not guilty plea but that plea became a plea of guilty on the thirteenth of that month. The first day for a plea hearing in April 2017 was adjourned at your request as well as the July dates. This chronology is indicative of the lateness of the plea. Nevertheless, the utilitarian value is a weighty matter which I take into account.
Another consideration is what accompanied the plea by way of your own conduct of the plea, which process I take into account. This conduct undertaken by you is valuable and will be commensurately and adequately recognised and acknowledged.
The prosecution submitted there was no evidence of genuine remorse at all, particularly in view of the fact that there was never an offer to plead up until very late. I am prepared to accept that, as I have stated, the plea is evidence of some remorse, which I take into account, but it is not of the calibre to which one can assign significant amelioration of sentence with confidence.
There is another aspect which I do take into account and that is delay. Whilst the delay between the search warrants of December 2011 and the charge of January 15 is just over three years, experience in these matters shows such delays are invariably connected to the nature of the offences. The resources required to investigate complex transactions and the task of collating a massive number of documents, taking statements from many witnesses, is time-consuming and difficult. Nevertheless, the delay is a mitigating factor to take into account.
Before turning to your personal circumstances, I should note the details of your prior, which was alleged. At the Broadmeadows Magistrates' Court in June 2006, you were convicted of causing to be delivered false papers and secondly, making a false or misleading statement. You were convicted and sentenced to four months' imprisonment, to be served by way of intensive corrections order and to pay costs.
This was said to have been in the context of documents in support of an application for permanent residency, using a false address for the applicant who had entered, I was told, into a sham marriage. This is clearly a relevant and serious offence reflected in the penalty imposed. This was only a relatively short 18-month period before the commencement of the conspiracy in 2008.
It is this prior which, in my view, apart from the aggravating features of your criminality, enlivened the principle of specific deterrent which is to be considered when assessing your prospects of rehabilitation. These were said by your counsel to be "at least good". I agree that that is a fair concession and a guarded description of those prospects. They are good.
You are 58 years of age. You were born in Lahore in Pakistan. You were educated to tertiary level with degrees in science and arts. From age 24 to 28, you worked as a medical representative and in 1987 you came to Australia on a work visa to attend an exhibition. You settled in Melbourne and after brief work at McDonald's, you found employment with the Main Group until 1994.
Thereafter, you worked in your father's retail business, which was closed after he died of an acute asthma attack, aged 69. Your father had operated an import business of Indian goods in Dandenong. Your mother had died aged 49 in 1989 and was a housewife. You had no siblings. Your parents had lived in America for some years before you sponsored them to come to Australia in 1988. You were married in your late 20's for about two years but divorced with no children.
Between 1990 and 1993, you married your second wife and have an adult daughter from that relationship, with whom you have had no contact for over 20 years. In 1994, you married your current wife. You had three children: a son who is studying law in Queensland, another son who is a university student and a younger daughter, only aged 11. Your wife has, of late, remained supportive of you and this enhances, in my view, both the assessment as to your prospects of rehabilitation and the evaluation that reclusion will be somewhat ameliorated by her continued support.
In 1997, you relocated to Sydney and operated an Indian restaurant there and worked in advertising. As a result of WorkCover issues, you were declared bankrupt. In 2004, you worked at a Melbourne call centre for Easy Banking for 12 months. You then worked in sales at Divine Homes with D for one and a half years.
Mr Jeffrey Cummins, a consultant and criminal forensic psychologist, provided a report for the court of his assessment dated 21 April 2017. Some matters in his report are noteworthy. When asked about the offending, you stated that you were charged because you supervised and organised brokers who organised loans with various banks. You told him that two others, B and C, both got community corrections orders and "the amount is quoted at $4.6 million because that's what the company Myra earned over that time period".
This led Mr Cummins to state wrongly that the estimated value of the fraud was $4.6 million, though he himself had the summary of prosecution opening with him. I should make clear that in terms of the benefit derived, the prosecution went no further than a fair approximation of that, without being able to quantify enrichment. I do not take your statement to Mr Cummins as substituting that position. What was acknowledged on your behalf was that apart from the $90,000 salary shared with your wife, you were given cash now and again in undetermined amounts, a pool at your home was paid for, a car was leased for you and you bought an investment property on Phillip Island which you sold soon after at a small profit.
You told Mr Cummins that D, the CEO of Future Property Concept, absconded overseas in 2012 and then when FPC ceased trading in 2012, you then worked for Dennis Family Homes on a salary but was asked to leave when you were charged and have been unemployed since. You have asthma and take appropriate medication for that condition and for high blood pressure but apart from sleep medication, have not had anti-anxiety or anti-depressant medication.
You would drink alcohol regularly to relieve stress, particularly over the last three or so years, taking wine and scotch most evenings. Mr Cummins found you to be an anxious and depressed man with reactive adjustment disorder, in response to your predicament. You do not have a mental health condition but I accept that your reactive adjustment may deteriorate when incarcerated and I take that into account.
In this context, you've seen Mr Peter Elliott, a psychologist, in the past between November and December 2015 on some five occasions, although he hasn't seen you since that time. At that time, you attended to deal with your depression, high level of stress and sleeping difficulties. His report dated
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10 March 2017 noted that he couldn't speak to your current state except to say you are likely to need psychological assistance and regular treatment.
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A large part of the plea on your behalf was taken up with submissions about parity of sentence with your co-offenders and the submission was made that a lengthy community corrections order should be the sentence of the court in your case. That is, a community correction order standing alone or in combination with one year community correction as a last resort. It was argued that the degree of deception and features and factors in the offending applied equally to the two co-accused who were dealt with by way of a community corrections order. It was said that although the role was different, the criminality and the conspiracy was similar, as was the amount involved in each case. I must reject this argument.
In my view, there are significant objective differences between you, B and C which justify differentiation between you and them on reasonable grounds. The criminality which was dealt with by the court in their plea can be gleaned in the reported judgment of the Court of Appeal in DPP v Cooke (a Pseudonym) and DPP v Barber(a Pseudonym) 216 VCA 137R. The decision of the court, which concerns the DPP's appeal of their sentence by Her Honour Judge Lawson of December 2015, focussed on those matters. The differences are that you were a principal of Myra. They were employees hired by you. The co-offenders developed a certain freedom of action and independence in the process undertaken to falsify documents with false information but they took their training instructions from and reported and were responsible to you.
The conspiracy was founded originally upon your agreement with D to act dishonestly in the business which they joined. Your contacts and relationships with the lending institutions and individuals then was crucial to the ongoing success of the enterprise, though they shared such contacts from time to time, it was your task to cultivate such contacts. Your involvement was longer in time and garnered greater benefits and involved, in truth, a much great amount of total money lent.
They are much younger than you and have no prior convictions. Their pleas of guilty and cooperation were made at a much earlier time. One left Myra before any ASIC involvement. Their prospects of rehabilitation were said to be excellent. C did not abscond as you had advised him to do, while another returned from overseas to face the charges.
I consider your objective criminality and moral culpability to be very high. Irrespective of whoever else may have been at the genesis of the conspiracy, like D, you were the principal architect of this ongoing scheme. Those who play a managerial role in this kind of offending are in a different position to those who are characterised as the "mules" or "shoppers" in past cases who are considered to have acted for others.
Given the submission which the prosecution said was inappropriate about the community corrections order, I have considered at length whether your crime is so serious that nothing short of a sentence wholly comprised of an immediate term of imprisonment will suffice to satisfy the requirements of just punishment and whether a community corrections order, either alone or in conjunction with a sentence of imprisonment, would satisfy those requirements.
It is true that community corrections orders have a multiple purpose character. They are punitive and rehabilitative over and above the narrow punitive purpose of imprisonment. So the question for the court must be to identify any features of the offence and offender which requires the conclusion that reclusion, with all its disadvantages, is the only option. I have concluded that the deterrent and retributive purposes of punishment must take precedence in your case. Your just desserts require incarceration because of all the features I have outlined and because any argument about parity is ill-founded.
This sentence will then be significantly reduced by the ameliorating effects of the plea and all its aspects which call for tangible recognition.
Please stand, Mr Shah. On the charge of conspiracy, you are convicted and sentenced to five years' imprisonment with a non-parole period of three years and three months. But for your plea, I would have sentenced you to seven years with a non-parole period of 4 and a half years.
Madam Prosecutor, are there any other orders that are required?
PROSECUTOR: There's not, Your Honour. Just in terms of the days pre-sentence detention.
HIS HONOUR: Yes, I was going to ask you next.
PROSECUTOR: So, our calculations
HIS HONOUR: How many are they?
PROSECUTOR: Including today, it was 61 and then there was one additional day that was served, so 62 in total including today.
HIS HONOUR: I take it that that's agreed to.
DEFENCE: It is, Your Honour.
HIS HONOUR: I declare that you have served 61 days excluding today by way of pre-sentence detention and I will have that number noted in the records of the court. Yes, you can remove Mr Shah.