DPP v Sidaoui [2019] VSC 225

2 You were born in Australia in 1961, and are one of four children of Lebanese immigrant parents. Your early family life was happy, and your early schooling was unremarkable. You moved to Lebanon with your family for your first few years of high school. Whilst in Lebanon, civil war broke out, and your family lived in difficult circumstances. Your family returned to Australia to avoid the ongoing conflict, and you finished your secondary schooling here. You obtained a degree in applied science, and then a law degree in 1990.

3 You were admitted to practise as a lawyer in 1991. After completing your articles of clerkship with another practitioner, you began your own firm in Coburg. You practised as a sole practitioner until 2013, doing work which included conveyancing, preparing leases and wills, and some family law matters. Most of your clients came from the Arabic speaking community.

4 You borrowed money from various financial institutions and private lenders, using as security certificates of title which your firm held for family members and unrelated clients. In order to obtain those loans, you forged signatures and provided false information on numerous documents, including loan applications, mortgages, sale agreements and transfers of land. All of this was done without the knowledge or authority of the relevant clients or relatives. This conduct constitutes the basis of the 18 charges of obtaining a financial advantage by deception ('the deception charges').

5 You also stole funds that had been deposited into your trust account. Some of those funds were the proceeds from the sale of client properties, others were deposits related to property purchases. This conduct constitutes the basis of the 15 theft charges.

6 The schedule to these sentencing remarks summarises the particular offending in respect of each of the 33 charges.

7 Some of the deception charges are course of conduct charges, which means that the relevant charge incorporates multiple incidents of the commission of the same offence, on more than one occasion over a specified period.

8 A large number of the charges involve continuing criminal enterprise offences, which I will refer to for convenience as CCE offences. They are CCE offences because the amount you stole or obtained in respect of the particular charge was $50,000 or more. The following are the CCE offences:

(a) Deception charges - 1 to 3, 5 to 9, 11 to 18 and 23; and

9 Because you are guilty of more than 3 CCE offences, you are to be sentenced as a CCE offender in respect of all of the CCE offences. As a CCE offender, you are liable to double the maximum penalty in the case of all CCE offences. The maximum penalties for both the deception and theft charges are:

10 The total quantum of your offending was $16.8 million, of which $15.4 million was fraudulently obtained finance, and $1.4 million was stolen funds. This is the largest total amount in a case involving a fraudulent solicitor in Victoria.

11 The amounts involved in your offending ranged from a low theft of $12,035 (charge 33), to a deception which, charged as a course of conduct, totalled more than $2.6 million (charge 7). The quantum of the offending is a significant, though not determinative, factor in sentencing. Quantum is relevant in so far as it provides some real indication of the measure of loss and damage, both financial and psychological, caused to the victims of the frauds. However, that consideration is not to be applied mechanically. Here, the charges involving the largest sums for individual transactions comprised fraudulent loans taken out from financial institutions. Most of those loans were in fact repaid, albeit through further offending.

12 Also relevant to your sentence is the amount of the benefit you personally gained. It is common ground that more than $10 million of the proceeds of your offending went into servicing or repaying fraudulently obtained loan facilities. However, the precise amount of your total personal benefit was the subject of some dispute at your plea hearing.

13 According to the prosecution's forensic accountant, your net personal benefit was $6.6 million. Your expert accountant assessed the net benefit as $4.1 million. The primary reason for the different calculations can be explained by different approaches to the treatment of transactional costs (including interest, fees and stamp duty associated with the loans), and funds whose use cannot be identified. I have no doubt that the true figure lies somewhere between those two sums.

14 At the end of the day, it is not necessary for me to resolve the differences in approach between the two forensic accountants. Whether your personal gain is calculated at $4.1 million or $6.6 million, your offending is extremely serious, because of the circumstances in which you obtained such a large personal benefit, through breaching the trust of your clients and family members. Even taking the lowest of those two figures, you received an average personal benefit of more than $400,000 for each year of your offending.

15 Given the interconnected nature of much of the deception conduct - with new loans being taken out to refinance old ones, and keep your offending concealed - it is not particularly helpful to assess the seriousness of individual charges by looking at your personal financial benefit from each particular transaction.

16 The conduct the subject of the deception charges was elaborate and carefully planned. The amount of fraudulent documentation required for each loan transaction was considerable. In at least half a dozen cases, you also incorporated companies and registered clients as directors or shareholders of them without their knowledge, in order to make loan applications in the companies' names.

17 Between 2003 and 2008, your sister and parents were the only individual victims of your offending (charges 1 and 2). Then, in early 2008, you started engaging in deception in relation to unrelated clients. Initially, you were able to borrow from banks and other institutional lenders. By around 2010, you found yourself resorting to borrowing from private lenders, many of whom charged exorbitant rates of interest - some around 10% per month. This led to you applying for even more fraudulent loans, in order to service existing loans.

18 By late 2012, you had exhausted your capacity to obtain fraudulent loans. You were becoming increasingly desperate, and started stealing monies which had been deposited into your trust account. Fourteen of the 15 theft charges relate to offending between November 2012 and November 2013. This was particularly brazen offending, which carried a high risk of discovery.

19 You only stopped your offending after one of your clients complained to the Legal Services Board ("LSB'), in November 2013, about your failure to return substantial settlement proceeds to him.

20 Your reasons for offending are not straightforward. When you were first interviewed by police in late 2013, you gave them several different explanations: you said you had various financial problems over a number of years, which had 'snowballed'; you said you 'took on a situation' for somebody else, but would not give them any more details; and you also told them you could not even remember how it started.

21 Before this offending, you had been a hardworking lawyer, who had never been in trouble with the law. You volunteered with many community organisations, and had leadership roles in the Islamic Society of Victoria and the Australian Arabic Council. You were also involved with the introduction of Arabic television into Australia. You performed a lot of pro bono legal work for your clients.

22 You do not drink alcohol, or abuse any substances. You have always lived modestly, mostly with your parents. You did not offend in order to pursue a lavish lifestyle; there were no expensive houses, cars or overseas holidays obtained at the expense of others. You have no assets beyond your personal effects, and are on a carer's pension.

23 You have never married, or had a long-term romantic partner. You have always been very close to your family, helping them out in practical ways, including financially.

24 When your father fell seriously ill in 2000, you became heavily involved in his day to day care over the next decade, until his death. That took up a lot of your time, and resulted in you spending less time on the affairs of your practice.

25 Your younger brother, Amine, who worked as a conveyancing clerk at your firm, engaged in some criminal conduct of his own in 1999. You assisted him to make full restitution of $152,000, and helped pay his legal bills; I accept that you may have used some of the funds you obtained by deception for that purpose. But there was no evidence to support your counsel's submission that the only motivation for your initial offending was to help your family.

26 Some of the proceeds of your offending went into the purchase and development of properties in Greensborough, through a family company called Sidaoui Enterprises Pty Ltd. Due to your lack of expertise as a developer, the project failed spectacularly, and considerable money was lost as a result.

27 Once you started offending, you soon found yourself on a treadmill. The poor performance of your practice meant you were unable to service the loans and meet your expenses, and soon you were engaging in further deception to keep things afloat.

28 Your offending was not a momentary lapse of judgment. Whatever the motivation for your initial dishonesty, you had ample opportunity to stop your offending over the next decade, but you did not do so. Instead, you engaged in a carefully calculated course of conduct over a long period, which involved repeated deliberate acts of dishonesty and substantial amounts of money.

29 Only three of the charges, which total just under $100,000, did not involve a breach of trust by you. The fact that most of your offending was carried out in breach of trust is an aggravating feature. Lawyers are in a special position of trust, as officers of the court. Breaches of trust by lawyers bring the whole profession into disrepute. Courts have frequently commented on the need for severe punishment for lawyers who offend in breach of their professional duties, to denounce their conduct and to deter others from offending.

30 Your previous good character is not unusual for a white collar offender. In such cases, it is the offender's good character that allows them to gain people's trust and offend in the first place. General deterrence is a particularly important sentencing consideration in the case of white collar crime.

31 I do not accept that your offending is less serious because your victims were unaware of it at the time, or may have been partially or wholly compensated for their financial loss by the LSB Fidelity Fund.

32 Three of your former clients have provided statements outlining the consequences of your offending for them and their families. They speak of the pain that you caused by breaching their trust, not only as their lawyer, but also as a fellow member of the Arabic speaking community. They trusted you with savings they had worked hard to accumulate. They speak of the stress and uncertainty caused by realising that their money was gone - including, in one case, the fear that an elderly couple would lose their home of more than 20 years. They now feel wary towards lawyers.

33 The victim impact statements illustrate why your breach of trust as a member of the legal profession is such a serious aggravating feature of your offending. The privileges you enjoyed as a lawyer were commensurate with your capacity to cause damage to those who trusted you to navigate the law on their behalf.

34 You are extremely fortunate that, in so far as they were also victims of your offending, your sister, Rhonda, and your brother, Ronnie, have managed to put aside their deep hurt at your betrayal of their trust, and have forgiven you for your actions. Their support will be very important to you upon your eventual release back into the community.

35 You have forfeited your ability to pursue your chosen profession, and will never be in a position to hold trust money again. Your age, genuine shame and remorse, co-operation with authorities, and lack of prior convictions, mean that there is little need for specific deterrence in this case.

36 Since your offending was exposed in late 2013, you have been seeing a psychologist, Patrick Newton, for counselling and treatment.

37 According to Mr Newton, you have been consumed by shame and remorse, and you experience an intensely punitive inner dialogue, with repeated suicidal ideation. He described you as an emotionally vulnerable man, who is ill-equipped to manage the stressors of a custodial environment.

38 Mr Newton also noted that, during your adolescence, you suffered heightened levels of anxiety and depressive mood disturbances upon experiencing stress, as a result of your exposure to the Lebanese civil war.

39 Mr Newton diagnosed you as having a major depressive disorder of moderate clinical severity. Your depression was triggered by the detection of your offending, and has been exacerbated by the ongoing stress associated with the consequent criminal and civil proceedings, as well as the delay in prosecuting these charges. You continue to be treated with both antidepressant medication and counselling.

40 There is no dispute that a custodial environment is likely to have a significant adverse effect on your mental health, and imprisonment will be more onerous for you than for somebody without depression. Both of those matters have a moderating effect on the sentence to be imposed.

41 However, given that there is no suggestion that your depression played any causal role in this offending, none of the first four Verdins principles apply.

42 You have in recent times suffered from a couple of serious medical conditions. Some cardiac problems which you experienced in 2014 were addressed by surgery. Since then, it seems that your cardiac issues are being adequately managed with medication. There is no evidence that your cardiac health could not be adequately managed in a custodial environment.

43 In late 2017, you were diagnosed with an aggressive form of multiple sclerosis called primary progressive multiple sclerosis ('PPMS'), after experiencing pain and burning sensations in your legs since 2016. Your condition has so far been unresponsive to any treatment. By February 2018, you were only able to walk 100-200m without rest. Your neurologist describes your prognosis as poor, and he expects that your ability to walk will continue to decline over the next 12 to 24 months. You will likely need a walking stick or frame and, eventually, a wheelchair.

44 Since April 2018, you have been one of 14 people participating in a two year clinical trial for a new PPMS medication. Participants in the trial are required to take oral medication three times daily, visit the clinic regularly, have regular blood tests, wear a Fitbit device to monitor daily exercise and walking distance, and have annual or biannual MRIs. It is not apparent from the evidence whether you are on the trial medication or the placebo, or whether participating in the trial has objectively improved your condition. However, your psychologist reports that you consider this to be the only intervention to date which has significantly improved your pain and mobility.

45 There is some uncertainty as to whether or not you will be able to remain on the trial once you are in custody. Corrections Victoria does not allow prisoners to wear electronic devices such as Fitbits. It was uncertain at the time of the plea hearing whether you would be able to remain on the trial if you could not use a Fitbit, and could only monitor your steps manually.

46 I am sentencing you on the basis that your PPMS will continue to cause chronic pain, disrupted sleep, and impaired mobility, throughout your time in custody. I accept that your PPMS will increase the burden of imprisonment for you, which has some mitigating effect on your sentence. However, I do not accept the submission that your ill health makes you a less suitable vehicle for general deterrence.

47 Your age is also a relevant consideration in sentencing you. Although your offending began when you were 42, you are now 57 years old. For an older offender, each year of their sentence represents a significant portion of their remaining life. However, age alone cannot justify reducing a sentence to inadequacy. It is not appropriate to impose an excessively lenient sentence merely in order to give an aged offender a prospect of a useful life after release from prison.

48 Your mother is 81 years old, and suffers from anxiety and incipient dementia, as well as various physical ailments. Her health has declined in recent years, and she has become more dependent on you. You are very close to your mother, and have lived with and cared for her for many years. She will need to attend a number of medical appointments over the coming months, to investigate a possible cancerous growth. Alternative arrangements will need to be made for her care, after you go into custody.

49 I accept that you are concerned and worried about her wellbeing. An offender's anguish at being unable to care for a family member can properly be taken into account as a mitigating factor - for example, if the court is satisfied that this will make the experience of imprisonment more burdensome.

50 However, your mother has three other adult children, all of whom are married and live in Melbourne. At least two of them work in responsible positions, and all have an ongoing relationship with your mother. There is no evidence that they would be unable to provide suitable care for her in your place. I am not persuaded that your concern about your mother's wellbeing will make prison more burdensome for you than for any other offender with similar family responsibilities.

51 Your offending was only discovered after one of your clients, Muhammad Sakkal, complained to the LSB in November 2013 that you had failed to return to him approximately $943,000, owed from the sale of two residential properties.

52 The LSB referred the matter to Victoria Police. On 2 December 2013, LSB and police investigators attended at your law firm, with a notice seeking the production of the firm's records. You indicated that you were willing to assist the LSB and police with their investigations. The following day, your current solicitors wrote and reaffirmed your offer to co-operate fully. A couple of weeks later, you made full admissions in relation to the Sakkal complaint, in a voluntary interview.

53 Initially, the investigators were only looking into the files of a small number of your former clients. You voluntarily disclosed to investigators the names of other clients who had been the victims of your offending. The investigators may well have discovered this offending eventually, without your assistance, but your early disclosure undoubtedly assisted them in their investigations.

54 You assisted in relation to the making of claims for compensation by your former clients against the LSB's Fidelity Fund. Your former clients have recovered $4.1 million from that fund. You have consented to the making of a compensation order in the sum of $4.1 million, in favour of the LSB, under s 86 of the Sentencing Act 1991.

55 Your ongoing co-operation also included providing self-incriminating affidavits or statements in various proceedings, before you had been charged with the current offences.

56 You also consented to being struck off the roll of practitioners, and to pay the LSB's legal costs of that proceeding.

57 You are entitled to a discount on the sentence to be imposed on you, by reason of your guilty plea. Your plea has considerable utilitarian value - the community has been spared the time and cost, and your victims have been spared the trauma, of what would have been a lengthy and complex trial. There is no dispute that you pleaded guilty at the earliest possible opportunity.

58 Although you only stopped offending after you were discovered, I accept that you are now genuinely remorseful. You have experienced frequent suicidal thoughts. You have withdrawn from your friends and community, owing to your sense of shame and alienation, and struggle to seek the support of your family because you feel you do not deserve their assistance.

59 You are also entitled to a discount by reason of your full co-operation with the LSB and Victoria Police over many years. These were complex offences, which would have taken considerably more time for the authorities to investigate and prosecute without your assistance. Because of the absence of files, some of the offending may have been difficult to discover, or prove beyond reasonable doubt, without your co-operation and admissions.

60 Delay is another relevant sentencing consideration in your case. Even though the first complaint was made in November 2013, you were not charged in relation to these matters until late March 2018.

61 Some of that delay was attributable to the fact that some of your records had been destroyed; that required additional investigation to obtain the necessary documentation from other parties. Some of the delay was due to the nature and sheer scale of your offending.

62 However, it is common ground that the majority of the delay was due to the lack of police resources to investigate your offending. In particular, the informant, a member of the Fraud and Extortion Squad, was fully occupied with other substantial white collar crime cases between 2013 and 2016.

63 In sentencing another solicitor in respect of similar charges in 2015, King J described a similar five year delay in the police investigation as 'entirely unacceptable', and a 'sad indictment on the priorities of a policing organisation'.[1] Her Honour expressed the hope that Victoria Police would put in place processes to ensure it never happened again. Unfortunately for the victims of your offending, as well as for you, it seems that the police have failed to do that.

64 The prosecution concedes that the delay between the discovery of your offending and your being charged is appropriately characterised as undue delay. That delay has constituted a form of punishment in itself, given the anxiety and uncertainty of having criminal charges and the threat of imprisonment hanging over your head for so many years. That is particularly so given your mental health problems, which have undoubtedly been exacerbated by the delay. You are entitled to a discount on your sentence on account of the length of the delay and its effect on you.

65 It is also a relevant consideration that you have not offended further during the period of delay.

66 In relation to the deception charges, only one of the charges (charge 4) did not involve a breach of trust, or sophisticated conduct. I regard the offending in relation to your unrelated clients as worse than that involving only family members. The other bases for distinguishing between the remaining deception charges are the amount involved, and whether the offending involved a course of conduct or a single instance of offending.

67 In relation to the theft charges, the offending was very similar in nature, and all except one charge (charge 10) occurred within the final year of your offending. The two main bases for distinguishing between the theft offences are the amount stolen, and whether or not they involved a breach of trust.

68 On the CCE deception charges, I sentence you to the following terms of imprisonment:

(a) Charge 7 - 6 years

(b) Charge 3 - 5 years

(c) Charges 5, 12 and 16 - 4 years

(d) Charges 1, 2, 8, 11, 13 and 15 - 3 years

(e) Charges 9, 17 and 23 - 2 years and 6 months

(f) Charges 6 and 18 - 2 years

(g) Charge 14 - 1 year

69 On the only non-CCE deception charge, charge 4, I sentence you to 6 months' imprisonment.

70 On the CCE theft charges, I sentence you to the following terms of imprisonment:

(a) Charge 19 - 5 years

(b) Charge 24 - 4 years

(c) Charge 10 - 3 years

71 On the non-CCE theft charges, I sentence you to the following terms of imprisonment:

(a) Charges 28 and 31 - 2 years

(b) Charge 20, 22, 25, 27 and 29 - 15 months

(c) Charges 21, 26, 30 and 32 - 12 months

(d) Charge 33 - 9 months

72 I order that the base sentence is 6 years' imprisonment on charge 7 (deception). All other sentences are to be served concurrently, save where I specifically direct cumulation.

(a) Charges 3, 5, 12, 16, 19 and 24 - 5 months each

(b) Charges 1, 2, 8, 10, 11, 13 and 15 - 2 months each

74 That makes a total effective sentence of 10 years and 1 month's imprisonment.

75 There is no general sentencing principle that in cases of white collar offending there should be a wider than normal gap between the head sentence and the non-parole period. However, having regard to your age and serious ill health (both mental and physical), together with your early plea, genuine remorse, and co-operation with authorities, as well as the unacceptable period of delay, I have decided to set a lower non-parole period than I would otherwise have done. I fix a period of 5 years and 6 months before you will be eligible for parole.

76 Pursuant to s 6J of the Sentencing Act 1991, I record that you have been sentenced as a CCE offender in respect of the CCE offences in charges 1 to 3, 5 to 19, 23 and 24.

77 I declare, pursuant to s 6AAA of the Sentencing Act 1991 that, but for your plea of guilty, I would have sentenced you to 13 years' imprisonment, with a non-parole period of 9 years.

79 I direct that those matters be noted in the records of the court.

Obtained five investment loan facilities from Arab Bank, First Mortgage Company and CBA for yourself and Sidaoui Enterprises by falsely representing that Rhonda Sidaoui (sister) had signed documents as either guarantor or borrower, and consented to her Viewbank property being used as security for loans

Obtained three investment loan facilities from First Mortgage Company, Permanent Mortgages and NAB for yourself and Sidaoui Enterprises by falsely representing that Mahmoud and Laila Sidaoui (parents) had signed guarantor and/or loan applications and consented to their McLeod property being used as security for loans

Obtained six investment loan facilities from Jervois Nominees, Westpac, NAB and PSAL for yourself and Sidaoui Enterprises by falsely representing yourself as the genuine owner of four properties belonging to Kayal, Said, Awaad and the Chahrouks

Obtained a credit card from Citigroup as Ronnie Sidaoui (brother)

Obtained four investment loan facilities from NAB for yourself and Sidaoui Enterprises by falsely representing yourself as the genuine owner of the property belonging to Kayal, and that Sidaoui Enterprises' development properties were on the market

Obtained investment loan facilities from NAB for yourself and Sidaoui Enterprises by falsely representing yourself as the genuine owner of the property belonging to Assaad

Obtained eight investment loan facilities from NAB for yourself and Sidaoui Enterprises by falsely representing yourself as the genuine owner of the properties belonging to Kayal and Assaad, and that Ronnie & Nahed Sidaoui (brother and sister-in-law) were genuine applicants or guarantors

Obtained two investment loan facilities from NAB for yourself and Sidaoui Enterprises by falsely representing that Sidaoui Enterprises was the genuine owner of the properties belonging to the Merhis and the Neshabes

Obtained one investment loan facility from NAB for yourself and Sidaoui Enterprises by falsely representing yourself as the genuine owner of the property belonging to Moustafa

Stole funds from trust account deposited for the purchase of Aldanaf's property

Obtained three investment loan facilities for yourself or Sidaoui Investments from non-bank lenders by falsely representing that Sidaoui Investments was guarantor, Said Sidaoui had signed guarantor documents, and Omar & Said Sidaoui (no relation) had consented to their Brunswick property being used as security

Obtained investment loan facilities for yourself or another from non-bank lenders by falsely representing that Ibrahim & Mohamad were genuine guarantors, had signed guarantee documents and mortgage contracts, and consented to their properties being used as security

Obtained five investment loan facilities for yourself or another from non-bank lenders by falsely representing that Ibrahim, Zoobi and Kayal were genuine guarantors, had signed mortgage contracts and/or guarantee documents, and consented to their properties being used as security

Obtained one investment loan facility from a non-bank lender for yourself by falsely representing that your sister and parents had signed guarantor documents and consented to their properties being used as security

Obtained three investment loan facilities from non-bank lenders for yourself or another by falsely representing that Zoobi and Sakkal were genuine guarantors or borrowers, had signed loan documents and consented to their properties being used as security

Obtained three investment loan facilities for yourself or another from non-bank lenders by falsely representing that the Mohamads were genuine guarantors, had signed loan documents, were genuine directors of the company owning the Coburg property, and consented to the property being used as security

Obtained one investment loan facility for yourself or another from a non-bank lender by falsely representing that the Maalikis and Ellahibis were genuine guarantors, had signed loan documents, were genuine directors of a company, and consented to their properties being used as security

Obtained one investment loan facility for yourself or another from a non-bank lender by falsely representing that Kayal and Zoobi had signed a joint venture agreement, Kayal was a director/secretary/sole shareholder of a company, Kayal was a genuine applicant, had signed loan agreement/mortgage documents and consented to the Viewbank property being used as security

Stole funds from trust account from the sale of Sakkal's property

Stole funds from trust account from the sale of Hasan's property

Stole funds intended for stamp duty payment for a transfer of property

Stole funds from trust account from the sale of Sakkal's property

Obtained one loan facility from non-bank lenders for yourself or another by falsely representing that the Mohamads had signed loan documents, were genuine guarantors, genuine directors of the borrower and consented to company property being used as security

Stole funds from the sale of Sakkal's property and from trust account

Stole funds from trust account deposited for the purchase by the Kotsakidises (not clients) of a property owned by Sidaoui Enterprises

Stole funds from trust account from the sale of Arabi's property

Stole funds from trust account deposited for the purchase of a property by your client, Saliba

Stole funds from trust account from the sale of Gizmo Holdings' property

Stole funds from trust account from the sale of the Hassans' property

Stole funds from trust account from the purchase by Papaevangelou (not a client) of a property owned by your brother, Ronnie Sidaoui.

Stole funds from trust account from the sale of the Boulads' property

Stole funds from trust account from the sale of Faraj's property

Stole funds from trust account from the sale of Sleiman's property

[1] R v Munt [2015] VSC 132, [14].