Fasciale v The Queen [2010] VSCA 337

1 I have read in draft the reasons for judgment of Weinberg JA, and I respectfully agree with them.

2 On 10 November 2008, following a trial lasting some three and a half weeks, the appellant, Spartaco Fasciale, was found guilty in the County Court at Melbourne of ten counts of obtaining property by deception contrary to s 81 of the Crimes Act 1958 (counts 1 to 7, 10, 13 and 14), four counts of obtaining financial advantage by deception contrary to s 82 of that Act (counts 8, 9, 11 and 12), and 14 counts of dishonestly using his position as a director of a corporation with intent to gain an advantage contrary to s 184(2)(a) of the Corporations Act 2001 (Cth) (counts 15 to 21, and 26 to 32). He was acquitted of four other counts, one by direction, and three by the jury (counts 22 to 25).

3 The maximum penalty for the two State offences is ordinarily ten years' imprisonment. However, as a result of the convictions on counts 1 and 2, and by virtue of the operation of ss 6H and 6I of the Sentencing Act 1991, the maximum penalty for counts 1 to 14 (inclusive) was in fact 20 years' imprisonment. The appellant was erroneously sentenced on the basis that the heavier maximum only applied to counts 3 to 14. Coincidently, the decision of this Court in R v Roussety,[1] to the effect that all counts were amenable to the 20 year maximum, was delivered on the same day that the appellant was sentenced. Accordingly, the appellant received the benefit of an erroneous interpretation of the key provisions. Of course, he cannot be heard to complain about that error.

4 Finally, it should be noted that the maximum penalty for each of the Commonwealth counts is five years' imprisonment.

5 In relation to the State counts, on each of counts 10, 12 and 14, the appellant was sentenced to 24 months' imprisonment, on each of counts 1, 3, 4, 5 and 13 to 18 months' imprisonment, and on each of counts 2, 6, 7, 8, 9 and 11 to 12 months' imprisonment. The sentencing judge directed that five months of the sentences on each of counts 12 and 14, four months of the sentences on each of counts 1, 3, 4, 5 and 13, and three months of the sentences on each of counts 2, 6, 7, 8, 9 and 11 be served cumulatively upon each other, and upon count 10. The total effective sentence on the State counts was therefore six years' imprisonment. His Honour fixed a non-parole period of four years in relation to those counts.

6 When he came to sentence the appellant for the Commonwealth offences, the sentencing judge said:

1. Insofar as the Commonwealth offences [are concerned], you will be convicted on Counts 15, 16, 17, 18, 19, 20, 21, 26, 27, 28, 29, 30, 31 and 32, and sentenced to a term of six months' imprisonment on each count. These terms are to be served concurrently, and I direct pursuant to s 19(3) of the Crimes Act 1914 (Cth), that this period of six months is to commence immediately after the end of the non-parole period which I have set.

7 The total effective sentence, combining the State and Commonwealth offences, was therefore six years' imprisonment with what was, in effect, a minimum term of four years and six months to be served before the applicant's possible release.

8 Before turning to the grounds of appeal, it is necessary to say something briefly about the circumstances surrounding these offences. For the purposes of this judgment, it is sufficient to provide only a brief summary of the salient features of the appellant's conduct.

9 The appellant practised as an accountant for approximately 35 years. From 1985 until the time of the offending, he was self-employed, largely engaged in bookkeeping and in the preparation of taxation returns.

10 In 2003, the appellant joined up with an acquaintance, Raphael Khouri, in Queensland. There, he encountered George Hippocratus, an acquaintance of Khouri's. Hippocratus trained them both in how to trade on the stock exchange. During his time in Queensland, the appellant also met, and became acquainted with, one Joseph Garozzo.

11 In March 2004, the appellant returned to Victoria. At about that time, Garozzo lent the appellant $200,000 to trade on the stock exchange once he had established his business back in Melbourne. The appellant registered Fasciale Futures Trading Pty Ltd ('FFT') in Victoria on 23 March 2004. He opened a trading account in the name FFT on 25 March 2004.

12 Also at about that time, the appellant was introduced by Garozzo to one Robin Chapman. The appellant suggested to Chapman that he should invest money with him. He told Chapman that he would pay three per cent per month on any funds so invested. He also told Chapman how the money would be invested, that is, by using 20 percent to buy and sell shares and futures, and by keeping the balance in reserve. On the basis of these representations, Chapman gave the appellant a cheque for $100,000.

13 Some time later, the appellant sent Chapman a document purporting to be a loan agreement. Chapman executed that document and returned it to the appellant. On the face of the agreement, it was a straight unsecured loan requiring the appellant to pay Chapman three per cent per month interest. It said nothing about investing part of the funds and keeping the balance in reserve. Obviously enough, it did not say that the appellant would use any part of the funds to pay interest to other investors, or for his personal expenditure. It gave Chapman the right to call for repayment of the principal sum 12 months later, provided that he gave the appellant notice of this requirement during the tenth month of the agreement.

14 From 2004 onwards, the appellant kept up his monthly interest payments to Chapman. However, by January 2006 he had run into financial difficulty, and thereafter he made no further payments. The cheque in the sum of $100,000 drawn upon Prenzler Investments Pty Ltd (Chapman's company) formed the basis of count 1.

15 Counts 2 to 7, 10, 13 and 14 are all strikingly similar. Each count alleged that the appellant dishonestly obtained a cheque from various investors with the intention of permanently depriving those investors of their cheques.

16 Counts 8, 9, 11 and 12 also involve similar conduct to that alleged in count 1. However, in relation to those counts, money was transferred electronically, rather than by way of cheque.

17 The essential dishonesty was that the investors were generally told, it appears, that only a smallish percentage of their funds would be invested in shares and futures trading, the balance being kept in reserve. However, the amounts which they invested, or at least a substantial part thereof, were actually used to pay promised interest to the investor body, and (to a relatively small extent) to meet the appellant's personal expenditure.

18 Turning then to the Commonwealth offences, counts 15, 17, 20, 26, 28, 30 and 32 all arose out of the use by the appellant of certain investors' money to pay back other investors' interest. Counts 16, 18, 19, 21, 27, 29 and 31 all concerned withdrawals from the FFT trading account to other accounts controlled by the appellant, for his personal use.

19 The appellant now relies upon three grounds in support of his appeal against sentence. They are as follows:

1. The learned sentencing Judge erred in his approach to the fixing of a non-parole period.
2. The learned sentencing Judge erred in assessing the quantum of the offending.
3. The sentence is manifestly excessive.

20 The written submissions put forward on behalf of the appellant argued essentially that the sentencing judge erred by cumulating the Commonwealth sentences upon the State non-parole period, instead of considering their possible cumulation upon the State head sentence and, having determined that matter, then fixed a single, appropriate, non-parole period in respect of all offences.

21 It was further submitted that the sentencing judge ought to have first arrived at a head sentence on each of the State and Commonwealth offences, which would have involved all directions as to cumulation and concurrency, including the commencement dates for the Commonwealth offences. It was only then, once the total effective head sentence had been determined, that his Honour should have gone on to consider what would be a suitable non-parole period as a 'separate and distinct exercise of discretion'.

22 It was noted that 'the purpose of fixing a non-parole period is to provide for mitigation of punishment in favour of the prisoner's rehabilitation through conditional freedom'.[2] It was submitted that the method adopted by the sentencing judge defeated that purpose.

23 In addition, it was submitted that the ratio between the effective non-parole period of four years and six months, and the head sentence of six years, being some 75 per cent, was unusually high and, in the absence of any explanation, indicative of error.

24 In oral argument, counsel for the appellant departed somewhat from her written submissions, and advanced a different contention. She submitted that the sentencing judge appeared to have misinterpreted the relevant sentencing legislation in that he believed that he was compelled to have the Commonwealth sentences commence only after the expiration of the State non-parole period, and not before.

25 In support of that submission, counsel pointed to his Honour's statement in the sentencing remarks that, 'in my view, there must be some cumulation of the Commonwealth and State offences albeit small.'[3] Presumably, the argument was that his Honour's use of the word 'must', in that context, should be viewed imperatively, and that, so interpreted, that constituted an erroneous interpretation of the relevant statutory regime. I shall deal with that argument in more detail shortly.

26 The Crown submitted in response that it is well-established that a court cannot impose a single non-parole period in respect of both Commonwealth and State terms of imprisonment.[4] Thus, his Honour was correct in his approach to sentencing the appellant in that he first decided upon a non-parole period for the State offences, and then cumulated a further actual custodial term upon that non-parole period for the Commonwealth offences.

27 In my view, the Crown's submission should be accepted. It is well established that, when sentencing for both State and Commonwealth offences, separate sentences must be imposed. Moreover, it is not possible to fix a single non-parole period in relation to both State and Commonwealth sentences.[5] If a non-parole period is considered to be appropriate, a separate such period should be fixed for the State sentences and for the Commonwealth sentences, and the commencement dates stipulated.[6]

28 The question of how to combine sentences for State and Commonwealth offences has, for some years, created difficulties for sentencing judges. Recently, this Court provided some guidance on that issue. In Scerri v The Queen,[7] the appellant pleaded guilty to two drug offences, one State and one Commonwealth. He was sentenced to eight years' imprisonment, with a minimum term of six years on the State count, and to five years with a minimum term of two years on the Commonwealth count. The sentencing judge directed that the sentence imposed on the Commonwealth count should commence at the expiration of the non-parole period of the State sentence, resulting in a total effective sentence of 11 years' imprisonment, with a minimum term of eight years.

29 For reasons that are not relevant to the resolution of the present appeal, the Court in Scerri[8] held that the sentencing discretion had miscarried. That meant that the appellant would have to be re-sentenced. He was then sentenced on the State count to be imprisoned for a term of five years, with a minimum term of three years, and on the Commonwealth count to be imprisoned for five years with a minimum term of three years. The Court directed that the sentence on the Commonwealth count was to commence, not at the expiration of the State non-parole period, as the sentencing judge had done, but rather upon the expiration of the first 12 months of that non-parole period. That made a total effective sentence of six years' imprisonment. The appellant was ordered to serve four years before being eligible for parole.

30 It is important to note that the Court in Scerri[9] did not disapprove of the sentencing judge's decision to direct that the Commonwealth sentence commence at the expiration of the State non-parole period. It did, as part of the re-sentencing exercise, consider that the Commonwealth sentence should commence earlier than that, and picked a figure of 12 months as being an appropriate starting date. For present purposes, what is significant about Scerri[10] is the Court's approval of the practice of having a Commonwealth sentence begin on a fixed date, in the future, which is linked to the non-parole component of a State sentence.

31 In the present case, the sentencing judge directed that each of the Commonwealth sentences should commence at the expiration of the four year State non-parole period, effectively resulting in a period of at least four years and six months having to be served.[11]

32 It was submitted on behalf of the appellant that the sentencing judge erred in two separate ways in imposing the sentences that he did. It was first submitted that a Commonwealth sentence cannot be attached solely to a State non-parole period, but must also be linked to a State head sentence (as was in fact done in Scerri).[12] It was next submitted that his Honour had laboured under a misapprehension as to how to combine State and Commonwealth sentences in that he had failed to appreciate that a Commonwealth sentence could be ordered to commence prior to the expiration of a State non-parole period, rather than at the end of that period.

33 I am not persuaded by either submission. I see no reason why a short Commonwealth sentence (which being less than three years cannot have a non-parole period)[13] should not be attached to a State sentence in the way that his Honour did. A sentencing judge is entitled to conclude that the head sentence imposed upon a State count is sufficient to encompass the entire criminality associated with both the State and Commonwealth offences, but to treat the Commonwealth matters as requiring an additional period to be served before being eligible to be released on parole. It may be unusual to approach the matter in that way. Normally one would expect the additional time to be served by reason of the Commonwealth offences to be added to both the State head sentence, and the State non-parole period.[14] It does not follow, however, that the failure to add to the State head sentence, as well as the State non-parole period constitutes vitiating error.[15]

34 If a Commonwealth sentence can commence part way through a State non-parole period, as Scerri[16] plainly holds, there is no reason in principle why such a sentence cannot commence at the expiration of a State non-parole period.

35 The appellant relied upon s 19(3) of the Crimes Act 1914 (Cth) in support of his contention that the sentencing judge had erred in ordering that the Commonwealth sentences commence at the expiration of the State non-parole period. That section provides as follows:

(3) Where:

(a) a person is convicted of a federal offence or offences, and a State or Territory offence or offences, at the same sitting; and

(b) the person is sentenced to imprisonment for more than one of the offences;

the court must, by order, direct when each federal sentence commences but so that:

(c) no federal sentence commences later than the end of the sentences the commencement of which has already been fixed or the last to end of those sentences; and

(d) if a non-parole period applies in respect of any State or Territory sentences - the first federal sentence to commence after the end of that non-parole period commences immediately after the end of the period.

36 It is clear, from the language of the section, that it was enacted to ensure that, where an offender was convicted of both State and Commonwealth offences, and the commencement date of the Commonwealth offences was to be fixed at some point in the future, the sentencing judge must ensure that the first Commonwealth sentence to be served will commence not later than the end of the State non-parole period. The aim is to prevent a situation arising whereby an offender is released from prison on State parole, and then finds him or herself having to be returned to prison at some later date to commence serving the Commonwealth sentence. In other words, the section is intended to avoid the creation of a 'gap' in incarceration, which would be undesirable.

37 Of course, the reference to the Commonwealth sentence commencing 'immediately after' the State non-parole period is not a prescription that this is what must occur. It is only a bar to any later commencement date being fixed. Once again, Scerri[17] provides a clear illustration of the way in which the section is intended to operate.

38 The submission that the sentencing judge in the present case misunderstood the import of s 19(3), and wrongly assumed that the Commonwealth sentences could not, as a matter of law, commence until the expiration of the State non-parole period cannot be sustained. Such an approach would not only fly directly in the face of the language used in the section, but it is not supported by anything that his Honour said during the course of his sentencing remarks. When read in context, his Honour's use of the word 'must' (when he said that there 'must be some cumulation of the Commonwealth and State offences, albeit small') should be understood not as a statement of the binding legal effect of the sub-section, but rather, as an expression of his Honour's view as to the appropriate measure of punishment warranted in this case.

39 The sentencing judge made it clear that he intended to impose a 'small' amount of cumulation for each of the Commonwealth counts, on the basis that each of the Commonwealth offences involved separate criminality. His Honour could have articulated the total cumulation warranted by providing a commencement date for each Commonwealth offence, and allowing for approximately two weeks of cumulation on each in order to produce an additional six months on the actual custodial term. Such an approach would have been largely unworkable, and quite pointless.

40 The sentencing judge made it clear that it was his intention that the appellant should serve an additional six months by reason of his having committed the various Commonwealth offences. His Honour explained that he had gone about achieving that end in as simple a way as was practicable. He said:

1. I observe by way of explanation that although I have referred to the decision of the DPP v Grabovac,[18] I pause to further observe that the counts I have just identified, being the Commonwealth counts, were all separate offending. It seemed to me in view of the nature of the sentencing requirements of the Commonwealth Crimes Act 1914 that it be my overall intention to impose a cumulation of a total of 6 months for all, that it would be preferable to make those counts concurrent and impose the term of 6 months rather than divide up each count to a period of say half a month and then get to a period of round about 6 months.
2. I say that by way of explanation because it may appear to someone else, or another court, that I have been inconsistent in my interpretation of Grabovac's case, but I have done that because it seems to me that to do otherwise would make the gaol calendar and the records not as clear as I sought to have them made.

41 The sentencing judge's reference to Grabovac[19] should be understood in context. In that case, this Court observed that, in general, a court should avoid imposing artificially inadequate sentences in order to accommodate the rules relating to cumulation. Where practicable, appropriate individual sentences should be passed on each count, and those sentences should be made wholly or partially concurrent. It should be noted, however, that the Court in Grabovac[20] made it clear that a rule of this kind could only be a precept or guideline to be applied as and when practicable. It should also be noted that Grabovac[21] concerned sentencing for multiple State offences, and did not involve the interplay between State and Commonwealth offences.

42 The short answer to the appellant's submission is that there is simply nothing in the transcript of the plea, or his Honour's sentencing remarks, to indicate that he was under any misapprehension whatsoever as to the possibility that the Commonwealth offences could be made to commence before the expiration of the State non-parole period. His Honour was fully alive to that possibility, but it would not have achieved what he considered to be an appropriate outcome. He was entitled to approach the matter in that way.

43 The next submission advanced on behalf of the appellant was that the minimum term that the appellant would have to serve before being eligible to be released, being four years and six months, was excessive having regard to the total effective sentence of six years. It was submitted that a ratio of 75 per cent was unduly high, particularly where the appellant was of previous good character and had good prospects of rehabilitation. Moreover, it was submitted that the sentencing judge had provided no explanation as to why such a high ratio was thought to be appropriate.

44 The Crown responded by submitting that previous good character and prospects of rehabilitation carry less weight in relation to 'white-collar' crime than in relation to other offences.[22] For that reason, his Honour had been entitled to impose a higher non-parole period than might otherwise be thought to be appropriate for someone with the appellant's background.

45 In this State, there is no fixed or standard ratio which must be achieved when fixing a non-parole period.[23] That applies to both State and Commonwealth matters. In R v Bolton,[24] Callaway JA nonetheless observed that, in the majority of cases, 'the proportion is between two-thirds and three-quarters, but both shorter and longer periods are found'.[25]

46 In Hili v The Queen,[26] the High Court was critical of a statement by the New South Wales Court of Criminal Appeal to the effect that:

the 'norm' for a period of mandatory imprisonment under the Commonwealth legislation is between and 60 and 66% [of the head sentence].[27]

There is nothing in the reasons for judgment in Hili[28] which suggests that the effective non-parole period fixed in this case was in any way inappropriate.

47 Although the sentencing judge in this case considered a ratio of two-thirds, as between the head sentence and the non-parole period, to be appropriate when dealing with the State offences, it cannot be said, in my view, that the additional six months required to be served by reason of the Commonwealth offences, and its consequent adjustment of the ratio to three-quarters, required any specific explanation. Of course, his Honour did state that the reason why he had adopted that course was because he considered a small amount of cumulation between the State and Commonwealth offences to be appropriate. That explanation was, in the circumstances of this case, adequate. It should not be forgotten that his Honour could, legitimately, have cumulated the Commonwealth sentence upon the State head sentence, as well as upon the State non-parole period. That would have resulted in a ratio broadly consistent with that fixed in relation to the State sentences alone. However, had his Honour done so, that would not have been to the appellant's advantage.

49 Pursuant to ground 2, counsel for the appellant submitted that the sentencing judge erred in his calculation of the total loss incurred by the appellant's offending. His Honour estimated the loss to be 'in the order of $1,727,000'. This amount included the principal sum ($1,270,000), and the interest that the investors expected to receive ($457,200). It was submitted that this assessment disregarded the submission put forward on the plea that the appellant had paid interest of approximately $790,000 to the investors, and that the actual loss totally incurred was therefore in the order of $350,000.

50 It was further submitted that the sentencing judge fell into error by including the theoretical lost interest of $457,200 in the quantum. It was said that this potential interest was never actually obtained by the investors, and that they were therefore never actually deprived of it.

51 The Crown responded by submitting that the sentencing judge was entitled to have regard to the loss of potential interest. After all, it was the promise of such interest that was a major factor in the investors' decision to invest.

52 It was submitted that, on any view, the loss to the investors was 'significant'. It was further submitted that the interest actually paid to the investors was necessary in order that the appellant could continue the fraud without raising suspicion. In effect, the appellant's conduct constituted what in common parlance is described as a 'Ponzi scheme'. That is, a scheme whereby a fraudulent investment operation pays returns to separate investors from their own money, or money paid by subsequent investors, rather than from any actual profit earned.

53 In my opinion, it matters little whether, upon a proper calculation, the scale of the fraud was of the order of $1,200,000, or $1,700,000. On no view could it be regarded as a fraud of only some $350,000. This was a brazen and calculated course of conduct, and warranted severe punishment. I would reject this ground.

54 Counsel for the appellant submitted that there were a number of mitigating factors which should have called for a lighter sentence. These included the sentencing judge's acknowledgement that specific deterrence did not play a significant role in this case, the appellant's age (59 at the time of sentencing), his history of ill health, the delay in the matter being finalised, the appellant's cooperation with the authorities, and his previous good character and lack of prior convictions. Counsel also pointed to the fact that the appellant had derived only a 'small' personal benefit from his offending, said to be just over $70,000.

55 It was submitted on behalf of the Crown that a sentence of six years' imprisonment with, in effect, four years and six months to serve, was well open to the sentencing judge. In support of that submission, it was noted that the offending had occurred over a lengthy period (some 22 months), and that investors had sustained very significant losses. Moreover, some of the money of which they had been defrauded had been used by the appellant for personal expenses and lifestyle. The appellant had pleaded not guilty, and conducted a fully contested trial. Accordingly, he was not entitled to any discount for remorse, nor for the utilitarian value of a plea of guilty. Finally, there was a need for any sentence in this case to operate as a general deterrent.

56 In my opinion, it cannot be contended that a sentence of six years' imprisonment, with an effective term of four years and six months to be served, fell outside the range of sentences reasonably available to a sentencing judge for offences of this nature. I would reject this ground.

57 It follows that, in my opinion, this appeal should be dismissed.

[1] [2008] VSCA 259; (2008) 24 VR 253.

[2] DPP v Josefski [2005] VSCA 265; (2005) 13 VR 85, 94.

[3] R v Fasciale (Unreported, County Court of Victoria, Judge Wood, 17 December 2008), [37].

[4] Crimes Act 1914 (Cth), s 19AJ.

[5] Ibid. See also R v Fulop [2009] VSCA 296; (2009) 236 FLR 376, 378; and Colbourn v The Queen [2009] TASSC 108.

[6] It should be noted in that regard that, although there is no power in Victoria to backdate a Commonwealth sentence to start from a date earlier than its imposition (see R v Nagy [1992] VicRp 45; [1992] 1 VR 637), this does not apply when the Court of Appeal re-sentences an appellant after a successful appeal. See R v Jennings [1998] VSCA 69; [1999] 1 VR 352, 368-9; and R v Rich (No 2) (2002) 4 VR 155, 164-5.

[7] [2010] VSCA 287 ('Scerri').

[11] Of course, if the appellant were to be refused parole, he would serve a total of six years' imprisonment. That would effectively make the Commonwealth sentences redundant, since they would be served wholly concurrently with the State sentences.

[12] [2010] VSCA 287.

[13] Crimes Act 1914 (Cth), s 19AB(1). Further, see the definition of 'aggregate' in s 16(1). Note also that, because the aggregate sentence for the federal offences did not exceed six months, it was unnecessary to fix a recognisance release date: s 19AC(3).

[14] As was the outcome in Scerri [2010] VSCA 287, where a federal non-parole period had to be fixed.

[15] Where a sentencing judge adopts the course that his Honour did of simply adding a short Commonwealth sentence to a lengthy State sentence, the judge must be astute to ensure that the relationship between the total effective sentence, and the effective non-parole period, does not become disproportionate. In the present case, the ratio ultimately arrived at of 75 percent was proportionately high, and certainly significantly higher than the two-thirds ratio considered appropriate for the State offences taken alone. However, for the reasons set out at [43] to [47] of this judgment, the 75 percent ratio was explicable and, in my view, did not give rise to any appealable error.

[16] [2010] VSCA 287.

[18] [1998] 1 VR 664 ('Grabovac').

[22] DPP v Bulfin [1998] 4 VR 114, 131-2; R v Rivkin [2004] NSWCCA 7; (2004) 184 FLR 365, 443; and DPP v Page [2006] VSCA 224, [37].

[23] R v Ngui [2000] VSCA 78; (2000) 1 VR 579, 583; R v Harkness [2001] VSCA 87, [24]; and R v Tran [2007] QCA 221; (2007) 172 A Crim R 436, 442.

[24] [1998] 1 VR 692.

[26] [2010] HCA 45 ('Hili').

[28] [2010] HCA 45.