R v Anthony James Dickson

Count 1

1. To address the level of criminality involved in count 1 it is necessary to describe the financial transactions that generated assessable income for NHA, NHA's dealings with the inventors of medical technologies, the events surrounding the lodgement of NHA's tax returns and the audit by the Australian Taxation Office ("ATO"), and aspects of the offender's case. It is also necessary to make certain additional findings concerning whether the agreements provided to the ATO to support the false depreciation claims were all shams or only some of them were and address various submissions made as to the loss involved in or occasioned by count 1. I will deal with these topics in turn.

The financing transactions

1. The offender is a highly experienced tax and finance professional. During the course of 2005 and 2006 he pursued negotiations with the ANZ to pursue a financing transaction that had the following essential features. One of the ANZ's clients sold an asset to a partnership consisting of the trustee of a unit trust, namely ANZ Investment Holdings Ltd, and the client. The ANZ provided debt financing to fund the purchase. The asset was leased back for use in the client's business. The trust generated assessable income from the lease payments although most of that income was used to pay debt, interest and fees. NHA acquired 100% of the units in the unit trust. Under the relevant taxation legislation all of the net income of the trust was to be treated as taxable income of NHA although it did not receive a distribution of those amounts as they were used to pay down the ANZ's debt. Instead NHA received a cash distribution from the trust of 9% of the taxable income of the trust.
2. The result of each such transaction was that ANZ's clients received an injection of cash from selling their asset. The client paid rent to use the asset, however those payments were tax deductible. The rental cost was lower than it otherwise would have been because NHA was effectively contributing part of its tax losses to make the transaction more commercially attractive. ANZ received interest on its loan to the trustee which was paid by the lease payments and fees for facilitating the transaction.
3. As noted, it was agreed that, in return for it acquiring the obligation to declare the entirety of the taxable profit of the trust in its tax return, NHA received cash payments representing 9% of each trust's taxable profit. In order for its participation in these transactions to make any commercial sense for NHA it had to have available to it very large amounts of tax losses to offset the taxable income it was required to declare. The offender repeatedly assured the ANZ that those deductions had been, or would be, generated by NHA assuming obligations to pay very large amounts to acquire certain medical technologies. ANZ was assured that NHA was in effect selling tax losses arising from large depreciation expenses on medical technology to acquire funding. As I will explain, the true position was that no such obligations were intended to be incurred and none were incurred. Instead the offender and his co-conspirator agreed to use the bulk of the cash distributions for their own purposes.
4. In total four such transactions were arranged involving three of the ANZ's clients, Bluescope Steel, Gunns and Incitec. The relevant trust deeds were executed on 30 August 2006, 17 December 2006, 1 August 2008 and 21 September 2009. The first cash distribution to NHA was made on 26 October 2006 when $14.3 million was sent to NHA. Overall a total of $68,405,000.00 was distributed to NHA by the four trusts between that date and 24 December 2009. As the ratio of cash distributed to deemed tax income was 9:100 it follows that it was envisaged that in excess of $750 million in assessable income would be notionally distributed to NHA and declared in its tax returns over time. As I will explain, just over $378 million was so "distributed" in the financial years 2007 to 2010, and declared in NHA's tax returns.

The medical technologies

1. Throughout the period of the two conspiracies NHA presented itself as a business involved in the acquisition and exploitation of medical technology. It employed staff and had office premises. The evidence revealed that the offender, his co-conspirator and other staff employed by NHA had a number of dealings with various inventors of medical technology. It was not the Crown case that the entirety of NHA's business was a façade or that the medical technologies were not genuine. Instead the Crown case concerned the means by which NHA was alleged to have acquired three particular medical technologies as they were the subject of the depreciation claims in NHA's tax returns for the financial years 2007 to 2010.
2. The first medical technology was a cancer vaccine known as "Genvax". It was developed by Dr Stephen Ralph. Throughout 2006 the offender and his co-conspirator met with Dr Ralph and discussed the terms upon which the technology might be acquired and exploited. At the trial a variety of executed and unexecuted agreements which purported to transfer the rights to this technology to various entities were tendered. With the exception of those that were signed by Dr Ralph, the Crown case was that it could not and did not have to demonstrate when they were executed as the offender was engaged in the process of manufacturing agreements from time to time to suit his and his co-conspirator's purposes. I will return to address this, but it suffices to state that the Crown succeeded in establishing that proposition beyond reasonable doubt.
3. On or about 9 January 2007, Dr Ralph and his company, Genvax Pty Ltd, executed an agreement assigning the intellectual property rights in Genvax to Athena Health Patents Incorporated ("Athena") for 50% of the gross revenues on commercialisation [1] . This is not the relevant assignment the subject of the false depreciation claims that were later made in NHA's tax returns. On or about 15 January 2007 a loan agreement was executed in which Athena agreed to lend to Genvax Pty Ltd up to $1.8million on a non-recourse basis for the development of Genvax [2] . A project deed concerning the development and exploitation of Genvax was executed on or about the same day [3] .
4. Athena was incorporated in the Cayman Islands. It was originally named Neumedix Biotechnology International Limited but it changed its name to Athena in January 2007. At the trial there was a dispute over the origins of this company and who controlled it. The offender said it was formed by his brother, John Dickson, in 2005 and that John Dickson owned the shares [4] . In contrast, John Dickson stated that he never negotiated for, worked for or was involved in the day-to-day management of Athena [5] .
5. There was a sustained attack on John Dickson's credit and his evidence generally. On this issue and the other matters noted in this judgment I have no doubt the jury accepted his evidence. I am otherwise satisfied that it should be accepted. It accords with the balance of the evidence at the trial. For example on 12 January 2007 the offender sent an email to the firm in Cayman Islands that acted as the registry for Athena directing that its name be changed and that two corporate entities be added as directors [6] . Later in 2007 the offender and his co-conspirator prepared and amended drafts of correspondence on Athena's letterhead [7] . I am satisfied beyond reasonable doubt that at all relevant times the offender controlled Athena.
6. The assignment from Dr Ralph and Genvax Pty Ltd to Athena was executed on behalf of Athena by a solicitor purporting to act under a power of attorney executed by one of Athena's corporate directors, Flying Dragon Group International Ltd ("Flying Dragon") [8] . John Dickson was a director of Flying Dragon but he denied that he executed the power of attorney. I am satisfied beyond reasonable doubt that he did not and that his signature was forged and placed on the document.
7. The second item of medical technology was a device placed on the upper part of the spine during surgery known as the "CG Surgical Clip" ("CGS"). It was developed in New Zealand. On or around 2 March 2007 a representative of CG Surgical Limited executed an assignment of the intellectual property in CGS to Athena in exchange for 50% of the proceeds of commercialisation [9] . On or about the same date he signed a loan agreement on behalf of CG Surgical with Athena under which the latter agreed to advance up to NZD$825,000.00 for the development of the technology [10] . Shortly after these documents were executed a commercial dispute broke out so that in the end result only a small portion of the funds were advanced and there was almost no further development of the CGS.
8. The third item of technology was a diagnostic test for colorectal cancer known as "Cologene". It was developed by Dr Jenkins from the United Kingdom. Dr Jenkins gave evidence via videolink. In his evidence Dr Jenkins was shown various assignment agreements bearing his name and the name of his company, Armedillo Health Ltd ("Armedillo") which he produced but which were unsigned. He said that he recalled he signed various documents on or about 2 November 2007 at his lawyer's offices [11] . I am satisfied that he signed them some time in November 2007. Four of these documents are of particular relevance.
9. One of the agreements produced by Dr Jenkins was an assignment of the rights in Cologene from Armedillo to Athena in exchange for 40% of the proceeds of commercialisation [12] . Another was a loan agreement between Athena and Armedillo under which an amount of up to 1.3 million pounds sterling was agreed to be lent for the development and exploitation of Cologene [13] .
10. The other two agreements were assignments by Athena. They were not the subject of much attention in the trial but, as I am required to make some additional findings, it is appropriate to note them at this point. Under one of these agreements Athena purported to assign the rights for Cologene to NHA for the territory of Europe (other than the United Kingdom), USA, Mexico, Brazil and South Africa for a consideration of 200 million pounds sterling [14] . Under the other agreement Athena purported to assign the rights to Cologene for the rest of the world to Neumedix Health New Zealand Ltd for 200 million pounds sterling [15] . The significance of these agreements is that they are fundamentally inconsistent with the assignment agreement for Cologene provided to the ATO which was said to justify the depreciation claims for the purported acquisition of Cologene by NHA.

The tax returns and the tax audit

1. NHA's tax return for the 2007 financial year was lodged on 26 February 2009 [16] . It was signed by the offender. The return disclosed $47,837,698.00 in income from the unit trusts. However this was offset by various expenses the largest of which was a claim for $76,071,054.00 in depreciation expenses. The overwhelming bulk of that claim consisted of depreciations expenses in respect of the cost of the alleged acquisition by NHA of the intellectual property in Genvax and CGS from Athena.
2. NHA's tax return for the 2008 financial year was lodged on 17 September 2009 [17] . It was also signed by the offender. The return disclosed $77,229,906.00 in income from the unit trusts but claimed $98,470,850.00 in depreciation expenses. The overwhelming bulk of the latter claim consisted of claims for depreciations expenses in respect of the cost of the alleged acquisition by NHA of the intellectual property in Genvax, CGS and Cologene from Athena.
3. The lodgement of these returns led to the automatic generation of tax assessments which accepted the claims that were made. As NHA recorded a tax loss it did not incur any tax debt. However the returns attracted the attention of officers of the ATO. The ATO commenced an audit.
4. In February 2010 the ATO wrote to NHA making a very broad request for the production of documents [18] . On 15 February 2010 the offender wrote to the ATO seeking an extension of the time for compliance [19] . Shortly afterwards there was a telephone conversation between the offender and an ATO officer, Mr Chris Harvey. The offender claimed he told Mr Harvey that he did not have executed versions of some transaction documents as they were overseas. He claimed Mr Harvey agreed to the offender's suggestion that the latest version of the transaction documents be printed off his computer and provided to the ATO. Mr Harvey denied this. The significance of this aspect of this conversation, if it occurred, is it provides an explanation for why the offender did not provide the ATO with executed copies of the assignment agreements and how it was that he was able to supply them in his case at the trial although there were material differences.
5. I have no doubt the jury accepted Mr Harvey's evidence. To the extent necessary I am satisfied beyond reasonable doubt that Mr Harvey's denial should be accepted. Amongst other matters it is supported by his file note of the conversation [20] . The offender's version of the conversation is not supported by a subsequent email sent by him on 15 March 2010. [21]
6. Between March and May 2010 the offender caused to be provided to the ATO fourteen folders of documents said to be responsive to the ATO's request and supportive of the amounts stated in NHA's 2007 and 2008 tax returns including the large depreciation claims. Included in this material were three unsigned agreements each of which purported to record an assignment of the intellectual property in one of the three medical technologies from Athena to NHA (the "Genvax Assigment Agreement", the "CGS Assignment Agreement" and the "Cologene Assignment Agreement"). Each of them had a handwritten annotation on the front indicating that it represented the executed copy. I will return to address the terms of these agreements later in this judgment but the combination of the provision of these agreements with their annotations, the contents of the tax returns and various unsigned minutes of NHA that were provided to the ATO recording the entry into of the agreements, amounted to an unambiguous assertion to the ATO that NHA had acquired the three technologies on the terms set out in those agreements.
7. The ATO's letter of 10 February 2010 requested NHA provide, amongst other documents, any valuations of the relevant medical technologies that supported the amounts claimed for depreciation in NHA's tax returns. Included in the material supplied to the ATO were three documents purporting to be valuations of the medical technologies by the Karkalla Biotechnology Group ("KBG") [22] . Those valuations stated that the value of Genvax was USD$627 million as at December 2005, the value of CGS was between USD$103 million and USD$119 million as at February 2006 and the value of Cologene was USD$2.541 billion as at November 2007. Each of the reports had a signature and underneath that the name "Peggy Wong, President Karkalla". Elsewhere in each document she was described as "Peggy Wong PHD President Karkalla".
8. The Crown contended, and the offender strenuously denied, that these valuation reports were concocted by, or at the direction of, the offender and that the Dr Peggy Wong referred to either did not exist, or if she did, she had no connection to the reports. There was a vast amount of documentary material to support the Crown's contention. This included computer records pointing to the documents and their logo being created well after the dates referred to in the reports; documents indicating that the offender controlled various companies named "Karkalla"; the hosting of a contact email address for Peggy Wong by NHA in Australia, although it was alleged that she was based overseas; and numerous other documents allegedly signed off by Peggy Wong that inconsistently attributed to her a multitude of titles and job descriptions. In support of his case the offender gave evidence of his dealings with Peggy Wong and called two witnesses including the offender's other brother, Paul Dickson, who said they had met her. The jury clearly accepted the Crown's contention. To the extent necessary I am also satisfied beyond reasonable doubt that the reports were concocted by, or at the direction of, the offender. The use by the offender of false identities was one aspect of his modus operandi in carrying out the two conspiracies that he was convicted of.
9. On or about 17 May 2010 the offender caused NHA's tax return for the 2009 financial year to be lodged electronically [23] . The return declared $123,841,532 in assessable income from the unit trusts and claimed $106,689,541 in depreciation expenses. On 1 September 2011 NHA's tax return for the 2010 financial year was lodged [24] . It was signed by the offender. The return declared $129,474,513 in assessable income from the unit trusts and claimed $109,021,139 in depreciation expenses. The overwhelming bulk of the depreciation claimed in each return was referable to the alleged cost of the acquisition of the three medical technologies under the assignment agreements that I have referred to. Further, when those depreciation claims were combined with carried forward losses from prior years which were in turn attributable to depreciation claims in those years, it meant that the tax assessments that were automatically generated did not create a tax debt in favour of the Commonwealth.
10. On 15 February 2012 the offender caused NHA to lodge amended returns for each of the financial years 2007 to 2010. The income declared in the returns was $18,550,000, $77,229,906, $30,868,000 and $129,474,513 respectively. The first and third of these figures were erroneous. The correct amounts were in the order of those disclosed in the 2007 and 2009 initial returns respectively. The amount of deprecation claimed in each amended return was $76,888,893, $118,570,332, $104,042,825 and $102,825,040 respectively. The total of these amounts is just in excess of $402 million. An exhibit tendered in the offender's case attributes approximately $386 million of the total amount claimed for depreciation as referable to the assignment agreements [25] . While there are reasons to doubt the calculations in that exhibit, the difference between that and the total of $402 million is immaterial for the purposes of sentencing. As I have stated, an amount in excess of $378 million was declared as income earned by NHA from the unit trusts.
11. In or around March or April 2012 search warrants and notices under s 263 of the Income Tax Assessment Act 1936 (Cth) ("ITAA 1936"), were executed on the offender's premises as well as a number of other places (see R v Dickson; R v Issakidis (No 12) [2014] NSWSC 1595 at [16]ff). He was arrested in April 2012. Since that time the ATO has issued amended taxation assessments for NHA, and proceedings under the Proceeds of Crime Act 2002 (Cth) have been commenced against the offender.

The offender's case at trial

1. In light of a number of submissions made on behalf of the offender at the sentencing hearing it is necessary to briefly address the offender's evidence at the trial.
2. In his evidence, the offender told the jury that throughout these events he was an employee of Rand Stone Private Equity Partnership ("Randstone"). He said that Randstone was a consultant to an entity known as the "HFAC Harmony Biotechnology Private Equity Partnership" ("HFAC"), with HFAC standing for "Health for all Children". The offender said that HFAC was a Cayman Islands based private equity partnership that was originally formed between two wealthy entrepreneurs a number of years ago, and that it invests in medical technology (and similar initiatives) designed to improve the health of all children worldwide.
3. The offender said that his arrangement with HFAC was that he would act as its "steward" for various medical technologies and that Athena acquired intellectual property rights for the three technologies as the undisclosed agent for HFAC. The offender said that the recipient of funds from NHA, Dampier Finance Asia Pacific Ltd ("Dampier Finance"), was HFAC's nominated receiving agent for the payment of the amounts owing by NHA under the three assignment agreements with Athena referred to previously and that the movement of funds from NHA overseas which I will describe were simply NHA meeting its obligations under those agreements. Further, the offender said that the subsequent routing of those funds through Hong Kong and back to Australia occurred as a result of HFAC directing him to transfer those funds, and "invest" them in Australia by allegedly lending various amounts to his co-conspirator and otherwise paying him his remuneration under his arrangements with Randstone.
4. There were a number of documents tendered in the offender's case which were said to evidence these arrangements. These included executed versions of the Genvax assignment agreement and the Cologene assignment agreement provided to the ATO which referred to HFAC as a party. None of the assignment agreements provided to the ATO refer to HFAC.
5. The Crown submitted to the jury that this evidence was false and the documents said to support it were fabricated after the offender's arrest. I will not repeat all the points made by the Crown but they included the fact that none of the documents provided to the ATO or seized during the execution of the search warrants provided any support for this evidence, save for one deed that bore the date March 2006 but which appears to have been prepared well after. Critically none of the assignment agreements between the inventors and Athena that were retained by the inventors or the assignment agreements between Athena and NHA provided to the ATO referred to HFAC. In any event the jury were instructed, inter alia, that, if there was a reasonable possibility that the version presented by the accused was true, then the Crown case failed. It follows from the jury's verdict that it rejected even the reasonable possibility that the accused's version was true and otherwise accepted that the supposedly corroborative documents were fabrications.

Further findings concerning the assignment agreements

1. I have already referred to the agreements purporting to record an assignment of the intellectual property in the three technologies between Athena and NHA that were provided to the ATO which were the basis for the depreciation claims in NHA's tax returns and the versions of those assignments that the offender tendered in his own case.
2. It was accepted that the Crown case on both counts 1 and 6 was circumstantial and the jury were instructed accordingly. In relation to count 1 this included a direction in accordance with Shepherd v The Queen (1990) 170 CLR 573. In particular the jury were instructed that they could not be satisfied beyond reasonable doubt of the existence of the agreement the subject of count 1 unless they were first satisfied beyond reasonable doubt that NHA "did not incur any obligation to pay for the intellectual property assignment under at least one of the agreements … which was the basis [for] the depreciation claimed in NHA's tax returns" [26] . To that end the jury were also given directions of law in relation to the principles concerning sham agreements.
3. From their verdict it can be accepted that the jury accepted that at least one of the three agreements was a sham. However the Crown urged the Court to find that all three were shams. Counsel for the offender resisted this and submitted that the Court should find that only the CGS Assignment agreement was a sham.
4. The relevant principles to be applied can be stated briefly. A sham is a document such as a contract which has the form or appearance of a legally effective document but is really one which the relevant parties intend should not have its apparent, or indeed any legal, consequences (Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; 218 CLR 471 at [46]). It is "intended to be mistaken for something else, …, a spurious imitation, a counterfeit, a disguise or a false front", something that is not "genuine or true" (Sharrment Pty Ltd & Ors v Official Trustee in Bankruptcy (1988) 18 FCR 449 at 454). To determine whether such a document is a sham there must be a consideration of the subjective intentions of the relevant parties (Raftland Pty Ltd v Commissioner of Taxation [2008] HCA 21; 238 CLR 516 at [146]).
5. Just because one person or the same group of persons may be behind two corporate entities that enter into a contract does not mean that the contract is not genuine; that is, it is a document the parties do not intend to have its apparent legal effect. Moreover, just because a document described as a contract is unsigned or is only signed by one party does not by itself indicate that it is a sham. An unsigned contract can record the terms of an agreement that has been reached between parties. Further just because a contract is complex or forms part of a complex arrangement does not mean that it is not genuine. Simply because a contract appears to be circular or uncommercial or lacks economic sense does not necessarily mean it is not a genuine or true contract (Raftland at [149]). Even if an agreement was entered into for the sole purpose of obtaining favourable tax treatment it does not necessarily follow that it was not genuinely intended by the parties to have legal effect. Also, the fact that parties to a contract later depart from its terms does not necessarily mean that they never intended the contract to be legally binding (Raftland at [149]) although it can assist in forming such a conclusion. Parties can genuinely intend to enter into a contract but sometimes events transpire to mean that they cannot fulfil them.
6. I have already made a finding that Athena was under the effective control of the offender. It follows that in determining whether the assignment agreements were shams the relevant subjective intentions to consider are those of the offender and his co-conspirator, as they were on both sides of the transaction. For the reasons that follow I am satisfied beyond reasonable doubt that they did not intend to have NHA legally bound by the obligations in any of the three agreements and, in particular, did not intend to make NHA obliged to make the patents rights consideration payments referred to in those agreements.
7. Before addressing each of the agreements individually it is necessary to describe part of the Crown case that cuts across all three of them. An especially powerful part of the Crown case was various handwritten and typed documents that passed between the offender and his co-conspirator sometime in late 2006 [27] and then in July and September 2007 respectively [28] . The main subject of those communications was the distribution of certain interest earned by NHA on amounts received from the trusts.
8. The Crown contended that a close reading of those documents revealed that the underlying assumption of the correspondence was that the offender and his co-conspirator had agreed to divide up the bulk of the funds received from the trusts between themselves with a portion to be paid to a third person and to NHA to pay its various expenses but not the amounts allegedly required under the assignment agreements with Athena. The significance of this material is that, as I will explain, in 2007 and 2008 a number of instalments were allegedly due under those assignment agreements. The only source of funds that NHA had to pay for them was the cash distributions from the trusts yet these communications suggest that neither the offender nor his co-conspirator contemplated using them for that purpose. These communications strongly support an inference that that was so because they knew that those instalments were not payable.
9. Otherwise, the Crown contended that the fundamental assumption of these documents was that NHA would not only have no tax liabilities, it would also not have any liability to pay the amounts said to be owing under the assignment agreements which gave rise to the depreciation claims that avoided those liabilities. This material was powerful evidence in support of the Crown case on count 1 because while NHA might legitimately achieve one of those aims it could not legitimately achieve both.
10. The first of the assignment agreements to be considered concerns the alleged acquisition of Genvax by NHA from Athena. There were two relevant versions in evidence being the Genvax Assigment agreement dated 15 January 2007 provided to the ATO [29] and the version that included HFAC as a party that was tendered in the offender's case. For the reasons already stated this latter document can be ignored. The former purported to record the worldwide sale of the rights to Genvax from Athena to NHA for approximately $190 million payable over five years as well as for payment of the "fair market value" for the period thereafter. The first three payments required were $27.15million on 13 April 2007, $2.46 million on 30 June 2008 and $12.77 million on 1 July 2008. The agreement was structured so that NHA could elect to avoid the assignment at the end of each instalment period and in doing so only assume the obligation to pay the instalments referable to that period.
11. I note six matters about the Genvax Assignment agreement. First there is the point I have just referred to, namely the communications between the offender and his co-conspirator in 2006 and 2007 concerning the division of the funds distributed from the trusts point to there being no intention to pay the amounts allegedly owing under the Genvax Assignment agreement. Otherwise the amounts payable under this agreement (and the other agreements) were very large yet NHA had not even the remotest prospect of obtaining access to that level of funding in the short term while the Genvax technology was still at an early stage of development.
12. Second, clause 14.5.2 of the Genvax Assignment agreement contained a clause disclaiming any common ownership of Athena and NHA and asserting that the agreement was negotiated on an arm's length basis. This clause was clearly false, and false to the knowledge of the offender, in that he was both sides of the transaction.
13. Third, between 6 and 8 February 2007 the offender's personal assistant sent a number of facsimiles to Barclays Bank enclosing a number of agreements including a signed agreement in which Athena purported to sell to NHA the worldwide rights for Genvax for $18 million and another agreement in which Athena purported to lend $18 million to Dampier Finance. The documents were sent to Barclays because it was querying the true source of the funds that Dampier Finance had received from NHA and was reluctant to act on instructions it had received to send the funds to Hong Kong. The offender effectively represented that the funds were the proceeds of a loan from Athena to Dampier Finance and that Athena was entitled to the funds because it had sold Genvax to NHA for $18 million. Those assertions were fundamentally inconsistent with the terms of the Genvax Assignment agreement provided to the ATO.
14. Fourth, in late 2007 the offender retained Walsh & Walsh accountants to prepare accounts for NHA. A memorandum and an assignment agreement for Genvax that emanated from the offender's email address was sent to the accountants for the purpose of their preparing the accounts. [30] This material advised Walsh & Walsh that the entity that assigned the intellectual property to NHA was not Athena but another company, Karkalla International Holdings ("KIH"), and that it did so on different terms to those set out in the Genvax assignment agreement even though the latter bore a date eleven months prior.
15. The offender denied that he sent the emails. He claimed they were sent by another person in his office. His denials were unbelievable and no doubt had a devastating effect on his creditability in the eyes of the jury. The emails were clearly drafted by him. He later prepared and signed accounts for NHA that reflected the effect of those agreements.
16. Fifth, the Genvax Assignment agreement was created much later than the date stated on the agreement, namely 15 January 2007, but it was backdated. If the agreement had been created on or about the date it bore it would have been sent to Walsh & Walsh. Instead, just prior to lodging NHA's tax return for the financial year 2007, the offender caused NHA's accounts to be completely rewritten to remove the effect of the agreements previously sent to Walsh & Walsh, and substituted the effect of the Genvax Assignment agreement and the CGS Assignment agreement. This appears to represent the most likely time at which those agreements, or some draft thereof, was first created.
17. Sixth, the other findings noted above point to the absence of any intention on the part of the offender to make NHA legally obliged to pay Athena the amounts stated in the Genvax assignment agreement. In particular his submission of concocted valuations to the ATO reflects a dishonest and fraudulent intent on his part.
18. The CGS Assignment agreement provided to the ATO was also unsigned [31] . It bore the date 5 March 2007. It purported to record an assignment of the worldwide rights to the intellectual property in CGS for a total consideration of $60 million payable over four years, together with an agreement to pay the "fair market value" thereafter. A payment of $2.25 million was due on 15 April 2007, and a payment of $4.235 million was due on 1 July 2008. This agreement also purported to enable NHA to avoid the assignment at the end of the instalment periods. The first, second and fifth to sixth points made in relation to the Genvax Assignment agreement also apply to this agreement. In relation to the fourth point, the memorandum sent to Walsh & Walsh in November 2007 advised them that the intellectual property in CGS had been assigned on completely different terms to those set out in the CGS Assignment agreement [32] . The combination of the material sent to Walsh & Walsh suggested that it had been assigned by KIH to NHA and not by Athena,
19. Otherwise I note two further points in relation to the CGS Assignment agreement. First, as noted, shortly after March 2007 when the representatives of CG Surgical signed the assignment to NHA a dispute broke out, and the development of the technology ceased. Despite this, NHA apparently continued to incur obligations to pay the instalment amounts under the CGS Assignment agreement.
20. Second, a signed agreement similar to the CGS Assignment agreement was sent to Walsh & Walsh at the time NHA's accounts were re-written in early 2009 [33] . This version did not include clause 14.5.2 discussed above. Its inclusion in the version sent to the ATO is consistent with the offender seeking to deceive the ATO into accepting that the CGS Assignment agreement was negotiated at arm's length.
21. The Cologene Assignment agreement presented to the ATO was unsigned but bore the date 30 November 2007 [34] . It purported to record an assignment of the worldwide rights to the intellectual property in Cologene for a total consideration of USD$160 million payable over a period of three years together with an agreement to pay the "fair market value" thereafter. The first three payments required were $5.75 million on 1 July 2008, $15 million on 15 December 2008 and $5 million on 15 February 2009. The first, second and fifth to sixth points made in relation to the Genvax Assignment agreement apply to this agreement.
22. With the fourth point (at [56]), the agreements sent to Walsh and Walsh in early 2008 included a Deed of Option dated 6 March 2007 which purported to enable NHA to acquire the intellectual property for Cologene from KIH at its election. This was inconsistent with the Cologene Assignment agreement under which NHA purported to acquire the intellectual property in Cologene from Athena in November 2007.
23. Further, included in the documents tendered on behalf of the offender was a signed version of the Cologene Assignment agreement which referred to HFAC as a party. As noted it follows from the jury's verdict that this version is a concoction. Further, it should be noted that the Cologene Assignment agreement presented to the ATO was completely inconsistent with the two assignment agreements concerning the sale of rights to Cologene previously noted (at [26]).

Count 1: Loss or risk of loss and loss resulting from the offence

1. Detailed submissions were made by the Crown and on behalf of the offender concerning the extent of the loss or risk of loss involved in count 1. At the outset it must be noted that there are two distinct inquiries that must be undertaken.
2. The first concerns the extent of the loss or risk of loss intended by the offender to be caused in giving effect to the agreement the subject of count 1. The second concerns the extent of the loss, if any, that was in fact caused by the offender's conduct the subject of count 1.
3. With the first matter the offender was convicted of a conspiracy to dishonestly cause a loss or a risk of loss. In convicting the offender of that offence it necessarily follows that the jury was satisfied beyond reasonable doubt that the offender and his co-conspirator intended to dishonestly cause a loss or a risk of loss to the Commonwealth pursuant to the agreement they formed, and that each knew or believed that the loss would occur or that there was a substantial risk of the loss occurring (Code; s 135.4(9)(b), s135.4(5)(b)).
4. It follows that one aspect of any assessment of the criminality involved with count 1 is to determine the extent of the loss or risk of loss that the offender and his co-conspirator intended to cause in giving effect to their agreement and the extent of the loss that each knew or believed would occur or was a substantial risk of occurring. Such an inquiry involves a consideration of the scope of their agreement and an adoption of the hypothesis that their agreement was successfully implemented.
5. With the second matter, subsection 16(2)(e) of the Crimes Act 1914 (Cth) (the "Crimes Act") specifies that one of the factors to be considered in determining the appropriate sentence is any "loss or damage resulting from the offence". A consideration of this fact involves an inquiry into the loss or damage that was in fact occasioned by the commission of count 1. As is evident from what I have stated, the completion of the agreement the subject of count 1 was ultimately frustrated by its detection by the ATO and the Australian Federal Police ("AFP"). Their actions ameliorated the occasioning of loss to the Commonwealth in that tax returns for the financial years after 2010 claiming false deductions were not lodged, amended tax assessments have been raised and some of the proceeds of the money laundering have been seized. An assessment of the loss that has in fact resulted from the commission of count 1 must take into account those facts. However those matters are irrelevant to the first inquiry because self evidently the offender and his co-conspirator's agreement was designed to achieve an acceptance of NHA's false depreciation claims and not a detection of their fraudulent scheme.
6. Against that background I will deal with each inquiry in turn.
7. The jury were instructed that, for the purposes of count 1, the concept of "loss" meant "a loss in property, whether temporary or permanent and includes not getting what one might get" (Code; s 130.1). They were also instructed that there is a loss to the Commonwealth "if it does not get property that it would otherwise get namely a tax debt owed by NHA". This instruction reflected the effect of the relevant tax legislation and what the evidence revealed as to the manner in which NHA's tax returns led to tax assessments. As stated, the lodgement of NHA's initial return for the financial years 2007 and 2008 automatically generated tax assessments based on the figures in the returns. For the subsequent returns, the returns themselves constituted the assessment. In each case if an assessment recorded an amount of tax was owing then a tax debt arose in favour of the Commonwealth ((see s 5-5 of the Income Tax Assessment Act 1997; s 255-5 of Schedule 1 to the Taxation Administration Act 1953). A tax debt is a form of property being a chose in action. If no such debt arose because of a false depreciation claim then the Commonwealth did not obtain property it might otherwise "get".
8. The agreement entered between the offender and his co-conspirator was to claim false depreciation deductions. It follows from the jury's verdict and the above findings that false claims were contemplated in respect of the three technologies. Thus the offender and his co-conspirator intended NHA to claim false depreciation expenses in respect of those technologies, intended they would be accepted and that, as a consequence, no tax debt would arise in favour of the Commonwealth because the false depreciation expenses would be more than sufficient to offset any tax debt that might otherwise arise from NHA's deemed receipt of income from the trusts.
9. Pursuant to the agreement the subject of count 1, between $386 million and $402 million in false deductions was claimed (see [36]). It was accepted that the total amount payable for the instalments for the first three to five years under the three agreements was approximately $450 million. As noted the alleged agreements made provision for further payments representing what is said to be "fair market value". However that is too vague a basis for concluding beyond reasonable doubt that the offender and his co-conspirator intended to claim deductions based on these agreements beyond the instalments for the first three to five years. Thus while between $386 million and $402 million was claimed I am also satisfied beyond reasonable doubt that the remainder of the instalments under the assignment agreements was intended to be claimed other than the amounts said to be payable for fair market value.
10. Given that the object of the conspiracy was to eliminate NHA's tax liabilities from its receipt of income from the trusts, it may be that the true scope of the intended loss or risk of loss was the elimination of any liability on the entirety of the anticipated distributions from the trusts; ie $750 million. However, in the absence of the Crown pointing to material that suggested that deductions based on either the alleged obligation to pay fair market value or other sham agreements were contemplated, I am not satisfied beyond reasonable doubt that the scope of the agreement between the offender and his co-conspirator extended that far.
11. Given that the anticipated total income from the four trusts was $750 million I am satisfied that, over time, it was intended that NHA would be able to apply the entirety of the approximate $450 million in false deductions to offset declared income. As the corporate tax rate was and is 30% it follows that I am satisfied beyond reasonable doubt that the extent of the loss or risk of loss that was intended to be caused to the Commonwealth was 30% of approximately $450 million or approximately $135 million. Clearly the fraud sought to be perpetrated was a very large one.
12. What was the actual loss to the Commonwealth that resulted from the offence?
13. As stated the object of the agreement the subject of count 1 was to raise false depreciation expenses claims. The implementation of the conspiracy lead to the lodgement of returns and amended returns for the financial years 2007 to 2010 which claimed between $386 million and $402 million in false deductions. As stated, the lodgement of the returns lead to the generation of assessments which did not yield any tax debt owing in favour of the Commonwealth.
14. As also noted, a series of amended assessments for NHA for the financial years 2007 to 2010 have been issued. A number of adjustments have been made, however only two are relevant. The first is to add back the understatements of income noted above in [36]. The second is to disallow the amounts claimed for depreciation under the three assignment agreements. In a schedule provided to the Court on 6 February 2015 Mr Harvey explained that these adjustments resulted in the raising of a tax debt in favour of the Commonwealth of $104,152,053 for the financial years 2007 to 2010 (as well as a reduction in carried forward losses available for future years of $58,789,443.30). NHA has lodged objections to the amended assessments. In evidence at the sentencing hearing Mr Harvey stated that a draft decision has been prepared denying the objections and upholding the amended assessments. In that event NHA may seek review in either the Administrative Appeals Tribunal or the Federal Court.
15. Leaving aside the possibility that NHA's applications for review might yield a reduction in the size of the amended assessments, a matter I will return to, it follows that the relevant loss or damage occasioned to the Commonwealth from count 1 is a temporary delay in obtaining a tax debt of $104,152,053. The object of the conspiracy was to claim false tax deductions. False deductions were claimed and as a result no tax debt was raised in favour of the Commonwealth. The false deductions have now been reversed and the Commonwealth now has a tax debt in its favour that it was entitled to at an earlier time. Whether that delay was or will ultimately prove to be productive of an actual loss in revenue was not explored in the evidence.
16. For the sake of completeness it is appropriate to deal with a number of the submissions that were made on this topic. At one point the Crown attempted to quantify the loss occasioned to the Commonwealth by taking into account adjustments beyond the amounts claimed for depreciation expenses under the three assignment agreements and the understatements of income. Ultimately this was corrected in the manner I have outlined.
17. Counsel for the offender contended that in determining the actual loss resulting from the commission of count 1 the Court should bring to account the amounts that are recovered or likely to be recovered by reason of amended assessments issued to the clients of the ANZ that participated in the financing transactions. As the Crown did not elicit those details then it was said to follow that it has failed to discharge its onus of proving that any loss resulted from the offence. I reject that contention.
18. Mr Harvey explained that a series of amended assessments had been issued to ANZ's clients in which reliance had been placed on the anti-avoidance provisions found in Part IVA of the ITAA1936. In respect of one of those clients, Gunns, Mr Harvey stated that an assessment of approximately $12.2 million has been raised, that Gunns has been liquidated and that it is not anticipated that any dividend will be paid. Although details of the other assessments raised were not made available to the Court, Mr Harvey did explain that the invocation of Part IVA was unrelated to the falsity of the deductions claimed by NHA. Instead they concerned the alleged artificiality of the financing transactions even assuming that NHA contributed genuine losses. In these circumstances the receipt of any revenue from the application of Part IVA does not in my view result from the offence and does not offset the assessment of the loss resulting from the offence.
19. Counsel for the offender put a refinement to the above submission. He submitted that, in having applied Part IVA, the Commissioner was obliged to make compensatory adjustments to NHA's assessments to apply the same counter-factual to its circumstances as was applied to ANZ's clients (see s 177F(3) of the ITAA 1936 and Federal Commissioner of Taxation v Jackson (1990) 27 FCR 1 at 16 to 18 per Hill J). Counsel submitted that would ensure that a consistent application of the counter-factual scenario was applied to the circumstances of all the taxpayers involved in the same transaction. For example, if Part IVA was applied by raising a counter-factual that treated part of the lease payments as being capital expenditure then, if that was applied to the relevant trust, it would reduce its profitability and ultimately reduce NHA's assessable income from the trust. It was submitted that any proper assessment of the actual loss to the Commonwealth resulting from the offences should be offset by the effect of the application of these compensatory adjustments, or at least reflect an assessment of the likelihood that they will be made either by the Commissioner or on appeal to the Federal Court (or the Administrative Appeals Tribunal). As no information concerning these matters was elicited by the Crown it was submitted that it had not discharged its onus of proof in relation to loss.
20. To this point in time NHA's argument that there should be compensatory amendments to its returns has not been accepted by the Commissioner. Mr Harvey's evidence that the draft decision represents the decision that will be made is sufficient to conclude that it is very unlikely that the Commissioner will make any such adjustments. Otherwise the nature of the counter-factuals applied to the ANZ's clients is not known. It is not clear that, even if they were applied to NHA, they might lead to a reduction in its assessable income. In the end result all this submission amounts to is that there is no more than a possibility that NHA may ultimately succeed in obtaining an amended assessment that reduces its taxable income on account of the so called compensatory adjustments. Without further material it represents no more than a theoretical contingency. It does not affect the assessment I have made that the loss resulting from the commission of count 1 was a temporary loss to the Commonwealth of a tax debt of in excess of $100m.
21. It was also submitted on behalf of the offender that there was a "reduced quantum of potential loss" resulting from count 1 because NHA had available to it in and after financial years 2009 and 2010 further deductions from assignment agreements for the acquisition of other medical technologies that were not the subject of attack by the Crown. I reject this contention. These other agreements were not the subject of attack by the Crown because they were not the subject of any claim for deductions in any tax return. I am not obliged to give them any level of weight in the sentencing process when neither their commerciality or genuineness has been explored or needed to be explored in the trial. NHA did not make any claims for deductions based on these agreements and they were not brought to account in its financial statements.
22. Otherwise I note that a number of other submissions were made by the offender and on behalf of the offender on this topic. They suffered from the principal defect that they were either predicated on an acceptance of the offender's case or sought to reargue it even though it was emphatically rejected by the jury.

Count 6

1. The Crown case on count 6 as accepted by the jury is best explained by reference to two charts which were Crown exhibits S and T. These exhibits identified the receipt between 26 October 2006 and 28 November 2008 of five tranches of funds by NHA from the unit trusts totalling $63,715,000. The exhibits depict the transfer of these funds by NHA to accounts in the United Kingdom and then to accounts in Hong Kong. From that point the bulk of the funds were distributed back to Australia or New Zealand. Some of those funds were used to pay amounts owing to the inventors by Athena, and paying expenses of NHA. However, the bulk of it was utilised for the personal enrichment of the offender, his co-conspirator and another person who had some involvement in the scheme. Six further matters should be noted.
2. First, although the amount distributed from the trusts to NHA was in excess of $68 million the Crown only sought to prove that the conspiracy the subject of count 6 resulted in a dealing in proceeds of crime of $63 million. The discrepancy arises because the sixth tranche of $4,675,000 which was distributed to NHA on or about 24 December 2009 was not addressed by Exhibits S and T or the voluminous other exhibits that demonstrated what was depicted in those charts.
3. Second, the instructions to the jury identified the Crown case as alleging that the amounts standing in the various bank accounts constituted the proceeds of crime being the proceeds of the conspiracy that is count 1. [35] The basis for that contention has already been explained (see [10]). As part of those instructions the jury were told that if they acquitted the offender on count 1 then they had to acquit him on count 6. The jury were also instructed that, if they did not unanimously find the agreement the subject of count 1 was formed prior to 12 January 2007, then they had to acquit the offender of count 6. The significance of that date was that it was the date of the first movement of funds overseas by NHA being the first of the relevant dealings the subject of the conspiracy charged by count 6. If the agreement the subject of count 1 had not been formed prior to that time then the proceeds of the accounts that were distributed overseas on 12 January 2007 could not have been the proceeds of crime and there could not have been any conspiracy to deal with those monies as proceeds of crime.
4. This aspect of the instructions was favourable to the offender because it was possible for the jury to conclude that he and his co-conspirator entered into the agreement the subject of count 1 some time after 12 January 2007 and from that point conspired to deal with (a lesser amount as) the proceeds of crime. However it was not put to the jury that way principally in order to avoid an already complicated case being further complicated. The end result is that the jury's verdict means that they necessarily accepted that the agreement the subject of count 1 was formed prior to 12 January 2007, that all the funds moved overseas from NHA's account thereafter were the proceeds of crime and that those movements gave effect to the agreement the subject of count 6. Thus it necessarily follows from the jury's verdict that the amount that was dealt with in giving effect to that agreement the subject of count 6 was $63,715,000.
5. Third, during the course of the Crown case the offender admitted that he caused all of the transfers of funds depicted in exhibits S and T to occur. This admission needs to be explained. The accounts in the United Kingdom belonged to Dampier Finance. Dampier Finance was incorporated in Samoa in July 2006 at the instigation of the offender. At the time of its incorporation the offender received assurances that the details of its ownership and control were not available to foreign regulators. The offender was the sole director of Dampier Finance for a number of years. It had an unusual ownership structure in that the owner of the company was the person that had possession from time to time of certain bearer debentures. The offender claimed that his brother, John, held these debentures. John denied that and stated that the control of the company was exercised by the offender. On that topic I am satisfied beyond reasonable doubt that John Dickson's evidence should be accepted.
6. The bank accounts in Hong Kong were held by two companies incorporated in Hong Kong in respect of which all the relevant legal indicia of control and ownership rested with John Dickson. However his evidence was that he would act on the direction of the offender. As I have said at least so far as the movement of the relevant funds was concerned that was not in dispute. Further it was not in dispute that instructions were given by the offender using a code and also by his using the pseudonym "Ronnie Wang". In his evidence the offender stated that these were all security measures designed to avoid persons such as criminal gangs becoming aware of the transfers. This was a specious assertion. I am satisfied beyond reasonable doubt that it was undertaken in an attempt to avoid scrutiny by tax regulators.
7. Fourth, a significant matter in the course of the events was the falling out between John Dickson and the offender that occurred in early 2010 which was after the first two tax returns for NHA had been filed and around the same time as the ATO's audit was commencing. Subsequently John Dickson provided a number of documents to the Australian Consulate in Hong Kong. It was the receipt of those documents that enabled the ATO to follow the money trail after funds left Australia. Either through that source or through the execution of search warrants or both, the email communications between the offender and John Dickson became available. In the scheme of what was otherwise a sophisticated tax fraud some of those emails are amateurish in that they suggest blatant dishonesty. I am satisfied beyond reasonable doubt that the offender never envisaged they would become available to Australian regulators.
8. Fifth, one aspect of the sentencing process is to identify the extent to which the offender profited from the offences. The Crown provided a breakdown of the amounts distributed back to the offender or entities associated with him via the scheme already described. It yielded a figure of $19,616,996.37. I accept that figure. It included amounts invested in land purchases and for the purchase of a shopping centre. As noted the jury rejected the offender's claim that these amounts represented amounts invested on behalf of the entity he referred to as HFAC or the receipt by him of his remuneration from Randstone.
9. Sixth, a significant amount of funds was distributed to his co-conspirator. Most of those distributions were documented as loans but in substance they were distributions. The offender participated in the preparation of false documentation which disguised the nature of those distributions.

Sentencing factors

1. The legislative regime that applies to the sentencing of the offender is found in Part IB of the Crimes Act. Within that part, subsection 16A(1) mandates that the sentence imposed must be "of a severity appropriate in all the circumstances of the offence". Section 16A has been held to accommodate a number of common law principles of sentencing including general deterrence, proportionality and totality (see Bui v The Queen [2012] HCA 1 at [18]). Subsection 16A(2) specifies a non-exhaustive list of matters that must be taken into account in determining the appropriate offence. I will deal with those factors said to be relevant to the offender's circumstances.

Count 1: Nature and circumstances of the offence

1. Subsection 16A(2)(a) requires that consideration be given to the "nature and circumstances of the offence". I have already described the facts involved in count 1. There are a number of features of the offence and the offender's conduct that warrant the conclusion that this case falls into the worst category of offences under s 135.4(5).
2. First there is the loss or risk of loss that was intended to be caused to the Commonwealth. I have already found that the extent of the loss or risk of loss that was intended to be caused to the Commonwealth was approximately $135 million. During the course of sentencing submissions the Court was referred to a number of sentences imposed in respect of taxation fraud. None of the decisions to which the Court was referred involved an attempt to defraud the revenue authorities of an amount of that order.
3. Second, there is the level of sophistication and planning involved. This was a well thought out conspiracy. The offender applied his considerable expertise and business acumen in dealing with a large financial institution, inventors of medical technology and professional advisers, as well as documenting the arrangements necessary to implement a very large fraud on the revenue. The formation and implementation of the conspiracy took place over many years. As noted, the jury were satisfied that it was formed prior to 12 January 2007. The offender caused the lodgement of NHA's amended returns in February 2012 and the conspiracy was still ongoing when the offender was arrested in April 2012. The offender did not simply implement a fraudulent scheme designed to avoid tax on legitimately earned income. Instead he formulated and implemented a plan to obtain an income stream which would only be of value to him if NHA fraudulently claimed deductions.
4. Third, the implementation of the conspiracy involved the use of numerous indicias of deceit, including false identities and concocted documents. For a sustained period the offender deliberately set out to lay a false documentary trail in a number of places to avoid detection and to assist NHA in withstanding scrutiny of its depreciation claims.
5. Fourth, the offender's role in the conspiracy was extensive (see Savvas v The Queen [1995] HCA 29; 183 CLR 1). The Crown charged the offender with what was described as a closed conspiracy, that is a conspiracy between the offender and his co-conspirator only. The jury were instructed that before they could convict the offender they had to be satisfied of the participation of his co-conspirator in the conspiracy with him. However, even allowing for the fact there were only two conspirators, the offender was the predominant player in the events the subject of count 1. As between him and his co-conspirator it was the offender who possessed a detailed knowledge of the tax system. It was the offender who possessed the professional skills necessary to implement, and did implement, those aspects of the conspiracy that were the vehicle for fraud, namely the incorporation and control of overseas entities, the use of false identities, the drafting of sham commercial agreements, the procuring of bogus valuations and the preparation of tax returns. The co-conspirator was not subordinate to the offender in any hierarchical sense. Nevertheless it was the offender who was the moving force behind the conspiracy that was the subject of count 1.
6. The Crown also pointed to the fact that the offender's motivation for the commission of count 1 was greed. I accept that was his motivation, however in determining the relative seriousness of the offence constituted by count 1 and the offender's conduct, this does not add much. Generally most, if not all frauds upon the revenue, are motivated by a desire for financial gain albeit direct or indirect (see R v Zerafa [2013] NSWCCA 222 at [86]) ("Zerafa")) and this was no different. I note that written submissions placed before this Court on behalf of the offender dispute that he was motivated by greed, but instead by a desire to pursue the medical technologies. This is completely inconsistent with the jury's verdicts. The jury necessarily accepted the Crown case that the offender and his co-conspirator agreed to perpetrate a tax fraud for their own benefit by agreeing to pretend that NHA was investing in three medical technologies at a level far above the true amounts and diverting funds designed for that purpose to themselves.

Count 6: Nature and circumstances of the offence

1. In R v Ly [2014] NSWCCA 78 at [86] the Court of Criminal Appeal listed a number of matters relevant to sentencing for money laundering offences under the Code, some of which bear upon the nature and seriousness of the offence. They are generally applicable to conspiracies to launder money.
2. A significant factor identified in Ly is the amount that was the subject of the conspiracy (Ly at [86]; R v Huang; R v Siu [2007] NSWCCA 259 at [34]). In this case it was $63,715,000. On any view that is an extremely large sum. As was the case with count 1, none of the cases brought to the Court's attention involved a dealing with an amount of that size.
3. A further factor is the number of transactions and the period over which they occurred (Ly at [86] and [87]). Exhibits S and T depict over 110 transactions orchestrated by the offender. He directed the movement of funds overseas and then back to this country. He did so via the use of accounts in overseas jurisdictions owned by companies that he secretly controlled, the use of false identities and codes and, in some cases, disguising the nature of the distributions as loans or investments. As noted, of the amount that was dealt with, he received $19.6 million. Otherwise the second and fourth matters noted above in relation to count 1 apply equally to his conduct in relation to count 6.
4. Against this the money laundering offences are "not only concerned with the source of the money or property dealt with, but also [their] ultimate use". They extend to "money obtained illegally or to be used for illegal purposes or dealt with in a manner that is illegal" (Ly at [86]). In this case there is no suggestion that the offender and his co-conspirator contemplated using the funds for any illegal purposes.
5. The circumstances of count 6 and the offender's conduct warrant a conclusion that this case represents a very serious example of an offence under s 11.5(1) in so far as it incorporates s 400.3(1).

Course of conduct

1. Subsection 16A(2)(c) requires the Court to consider whether the offence forms part of a course of conduct consisting of a series of criminal acts of the same or a similar character. The Crown submitted that this factor was relevant in this case. I do not agree. In implementing the conspiracies the subject of counts 1 and 6 a number of separate acts of dishonesty were undertaken which may answer the description of "criminal acts", although they were not identified with any precision. However the formation and adherence to the conspiracies the subject of counts 1 and 6 did not form "part" of a course of conduct consisting of a series of criminal acts. Instead those acts were the implementation of those conspiracies. There is a danger of sentencing the offender for offences for which he was not convicted if he is punished for any separate acts of dishonesty that he committed in implementing the conspiracy the subject of counts 1 and 6.

Loss or damage

1. As noted, subsection 16A(2)(c) requires the Court to consider "any injury, loss or damage resulting from the offence". I have already addressed this in relation to count 1, and the Crown did not contend that this factor was engaged in respect of count 6.

Co-operation with law enforcement agencies

1. Subsection 16A(2)(h) requires the Court to consider the "degree to which the person has co-operated with law enforcement agencies" in investigating the offences. On behalf of the offender it was submitted that he co-operated with the ATO by providing material, and he offered to meet with Mr Harvey during the audit yet Mr Harvey declined. This submission overlooks the fact that the jury's verdict reflects an acceptance that the offender submitted false and misleading material to the ATO to support the false depreciation claims in NHA's tax returns. I do not accept that the offender assisted the authorities with their investigations.

Personal deterrence, antecedents and prospects of rehabilitation

1. Subsection 16A(2)(j) requires the Court to consider the "deterrent effect that any sentence or order under consideration may have" on the offender. Subsection 16A(2)(m) requires the Court to consider the "character, antecedents, age, means and physical or mental condition" of the offender, and subsection 16A(2)(n) requires the Court to consider the offender's prospect of rehabilitation. These factors can be conveniently considered together.
2. The offender is now fifty years of age. He has no previous convictions. He has achieved academic qualifications at a high level and amassed considerable professional experience especially in the areas of tax and finance. He graduated from the University of New South Wales with degrees in accountancy and law. After graduating he completed Price Waterhouse's professional year programme. He was admitted as a member of the Institute of Accountants and later became a fellow. During the 1990s he worked in succession for St George Bank, Westpac and the National Australia Bank. In 2000 he commenced as a principal at the firm of accountants, Ernst & Young. He ceased in 2004. Around that time he became a Director of Admiralty Resources NL which was listed on the Australian Stock Exchange.
3. There is no doubt that prior to the commission of count 1 and count 6 the offender was of good character. The jury were instructed accordingly. It is a factor to be considered as part of the "instinctive synthesis" of the sentencing process (Wong v R [2001] HCA 64; 207 CLR 584 at [74] to [76]) ("Wong"). However, with so called "white collar" criminal activity such as corporate malfeasance, sustained tax fraud and money laundering, prior good character is treated as being of less significance than might otherwise be the case (R v Williams (2005) 152 A Crim R 548 at [60]; R v Huang; R v Siu at [36]). The offender's qualifications, experiences and good standing provided him with the opportunity to commit the offences for which he was convicted.
4. An assessment of an offender's prospects of rehabilitation and the necessity for personal deterrence is often difficult in the case of an offender who has resolutely denied any wrongdoing. The Crown submitted that the "degree of subterfuge" involved in these offences gives reason to pause before forming a positive conclusion about his prospects of rehabilitation.
5. During the course of sentencing submissions the offender's Counsel provided to the Court a forty-five page document written by the offender entitled "Mr Dickson's submissions on sentence". Large parts of those submissions sought to reargue the case put by the offender to the jury which they rejected. In that part of the submissions that addressed personal deterrence the offender repeated his bitter complaints about the actions of the ATO and the prosecuting authorities in laying charges. In that part of the submissions that addressed his prospects of rehabilitation, the offender stated "Mr Dickson has learned that he should avoid doing business in Australia". These contentions do not assist the offender in obtaining a favourable assessment of his prospects of rehabilitation and the absence of a need for personal deterrence.
6. Nevertheless I will proceed on the basis that the prospects of the offender committing an offence of a remotely similar nature in the future are very low. It is inevitable that a substantial custodial sentence will be imposed. The offender realises that his professional career and reputation are destroyed, although he wrongly blames the actions of others rather than himself. The likelihood that upon his release the offender will be in a significant position of trust seems low. However, even if he is, he is highly intelligent and I expect the scars of this prosecution and imprisonment will operate upon his decision-making processes.

Hardship to the offender's family

1. Subsection 16A(2)(p) requires the Court to consider the probable effect that any sentence or order will have on the offender's family or dependents. During the trial the Court heard that the offender has two older children from his first marriage. The offender's second wife is from Slovakia although they lived together in Australia. They were married in Bratislava in 2004. Their daughter was born in May 2010. In his evidence at the trial the offender stated that, after he was charged, his wife returned to Slovakia with their daughter.
2. During sentencing submissions Counsel for the offender stated that, shortly after the verdict, the offender was served with divorce papers issued by a Slovakian Court. It was also stated that the offender was now engaged to an overseas resident whose application for a spouse visa is in jeopardy because of his convictions. It was also stated that the applicant's elderly mother was suffering financial hardship because she had sold her house to fund the offender's legal fees and she will otherwise not have the assistance of the offender. The Crown accepted those matters and I will act on them.
3. Based on this brief description, I accept that the offender's incarceration will cause hardship to his children and his fiancé. Although the children of his first marriage are now adults, the absence of their father and the knowledge that he is imprisoned can be expected to be painful indeed. More importantly it seems very likely that his youngest daughter will never see her father during her formative years and may never see him thereafter. I also accept that the offender's elderly mother will not have his assistance, although I note that she has two other adult sons and an adult daughter.
4. If subsection 16A(2)(p) was to be applied according to its terms, these adverse effects would be considered as part of the instinctive synthesis. However, as the Crown pointed out, I am bound by authority to construe the section as though it was preceded by the words "in an exceptional case" (R v Hinton [2002] NSWCCA 405; 134 A Crim R 286 at [31] per Howie J; Zerafa at [119ff]). The adverse effects that have been identified do not meet that threshold.

Comparable cases

1. Subject to so much of Part IB of the Crimes Act, which picks up aspects of different state and territorial laws, one of its objects is to achieve consistency in sentencing for federal offences. Such consistency is to be achieved by the application of the statutory regime and in the application of legal principles. However it is not demonstrated by and nor does it require numerical consistency (Hili v The Queen; Jones v The Queen (2010) 242 CLR 520 at [47] to [49]) ("Hili"). In pursuit of consistency I am obliged to have regard to sentences that have been imposed in other cases but such comparisons have their limit (Hili at [53]). Such sentences can "stand as a yardstick against which to examine a proposed sentence" (Hili at [54] citing Director of Public Prosecutions (Cth) v De La Rosa [2010] NSWCCA 194 at [304]). Critically it is important to identify the "unifying principles which those disparate sentences may reveal" (Wong at [47]; Hili at [55]).
2. The Court was provided with a number of sentencing judgments of higher courts in respect of revenue fraud and money laundering offences. In accordance with the principles stated in Hili I have reviewed each of those decisions. That review bears out the statement in Wong as to the underlying significance of the unifying principles many of which have already been addressed.
3. Thus, in relation to revenue fraud, the relevant factors that emerge are the extent of the intended loss, the actual loss, the level of sophistication of the fraudulent scheme, its duration and the role of the offender. The decisions also reveal the significance of the maximum sentence in that a comparable statutory predecessor to s 135.4(5), namely former s 29D of the Crimes Act had a maximum penalty of 20 years imprisonment (Liles v R (Cth) [2014] NSWCCA 289; R v Dunn (No 9) [2014] WASC 61 ("Dunn"); R v Cox [2013] QCA 10; R v Agius [2012] NSWSC 978; O'Meara v R [2009] NSWCCA 90; Ridley v R [2008] NSWCCA 324; Robertson v R [2007] NSWCCA 270; El-Chaar v R [2007] NSWCCA 16; R v Ronen [2006] NSWCCA 123). In relation to money laundering the factors include the amount that was dealt with, the number of transactions, the intended use of the funds, the methods applied and the role of the offender (Chen v R [2010] NSWCCA 224; Chen v R [2009] NSWCCA 66, "Chen"; Ansari; Ly).
4. I will mention the circumstances of two of the cases to which I was referred in which the offending has some similarities to this case. In R v Dunn [No 9] [2014] WASC 61 ("Dunn No 9") an offender was sentenced after trial to a term of imprisonment of seven years with a non-parole period of four years for an offence under s 135.4(3) of the Code. The maximum penalty was ten years imprisonment. The offender was the principal in devising and implementing a scheme to offset tax payable by claiming false tax deductions. Similarly to this case E.M. Heenan J found that the purpose and object of the conspiracy was to inflict a loss of $7.2 million but that was not achieved by reason of the detection of the conspiracy (Dunn No 9 at [47]). This offender compares unfavourably to the offender in Dunn No 9. The intention of his conspiracy was to inflict a far higher amount of loss and his scheme was far more sophisticated.
5. In Chen the appellant was convicted of a conspiracy under s 11.5(1) and 400.3(2) of the Code for which the maximum penalty was 12 years imprisonment. The offender pleaded guilty to conspiring to deal with $20 million of funds obtained from a $150 million fraud on a superannuation fund. The conspiracy was frustrated and no funds were lost through its implementation (Chen at [7]). After allowing a 25% discount for his plea of guilty he was sentenced to a term of imprisonment for six years with a non-parole period of three years. The Court of Criminal Appeal rejected the contention that the sentence was manifestly excessive. It found that the offence was "well above … the middle range of seriousness" for such an offence. Again the offender's position compares unfavourably to the offender in Chen. The maximum penalty in this case is higher, he did not plead guilty, the amount agreed to be laundered was much larger, it involved far more transactions and was a more sophisticated scheme.
6. Although I have referred to these cases in some detail I have not attributed to them any particular weight beyond that which Hili directs.

Totality and Cumulation

1. One issue that arises in relation to this matter is whether the sentences for each offence should be concurrent and, if so, to what extent. A number of decisions have expressed concern over the sentencing of offenders for both a predicate and money laundering offence especially where the criminality involved in the money laundering offence is encompassed by the predicate offence (Thorn v R [2009] NSWCCA 294; 198 A Crim R 135 at [27] to [31] ("Thorn"); Nahlous v R [2010] NSWCCA 58; 77 NSWLR 463 at [15] to [16]; Schembri v R [2010] NSWCCA 149 at [11] to [16]; and Redfern v R [2012] NSWCCA 178; 228 A Crim R 56 at [17]).
2. In R v Dickson; R v Issakidis (No 1) [2014] NSWSC 1068 I rejected an application for a stay of count 6 that was made on the analogous basis that it was an abuse of process because there was no criminality separately charged by that count. While I accepted that there was some overlap between the two offences, I found that the elements of count 6 were separate and distinct from count 1 and that "significant further criminality" was alleged in relation to count 6 (at [26] to [29]). Having had the benefit of hearing the evidence at the trial I adhere to those findings.
3. The overlap between the two counts was to be found in the fact that, with count 6, the funds the subject of the agreement to deal were derived from count 1. However the separate elements and the further criminality were the numerous dealings with those funds depicted in Exhibits S and T, and the disguise involved in the round robin transfer of funds received by NHA out of Australia and their repatriation. The tax fraud perpetrated on the Commonwealth could have been attempted without any of those dealings having occurred.
4. The submissions of the offender referred to the observation of Howie J in Thorn at [27] to the effect that the relevant criminality was in the obtaining of funds by a fraudster and "not in their use". However in Thorn the relevant dealing was the receipt of the proceeds of fraud by a company that had made false GST returns and their subsequent withdrawal by the offender from an automatic telling machine and transfer to his personal account (Thorn at [6]). There is no relevant analogy between the dealings in Thorn and the circumstances of count 6.
5. The analysis to this point suggests that a significant degree of cumulation in the two sentences is warranted. However this stage of the sentencing process not only involves "questions of cumulation or concurrency" but "as well … totality" (Pearce v R [1998] HCA 57; 194 CLR 610 at [45]). Thus care needs to be taken in imposing a penalty for each offence and structuring the overall sentence to ensure that the combined effect of all the sentences reflects the total criminality of the offender's conduct (see Cahyadi v R [2007] NSWCCA 1; 168 A Crim R 41 at [27] per Howie J). In this case I consider that is best achieved by making the sentences for the two offences mostly concurrent lest they otherwise have a crushing effect on the offender.

Sentences

1. In Milne v R [2012] NSWCCA 24 ("Milne") at [297] the Court of Criminal Appeal emphasised the need for sentences in cases of serious revenue fraud to reflect "denunciation, general and personal deterrence". Those tempted to engage in large scale tax fraud constitute a class of offenders who are inherently likely to be swayed from offending by the prospect of prosecution and incarceration for a substantial period of time.
2. Otherwise the authorities binding on this Court require the imposition of substantial custodial sentences for large scale tax fraud of the kind attempted to be perpetrated in this case (Hili at [63]; Director of Public Prosecutions v Hamman (unreported, 1 December 1998); R v O'Connor [2002] NSWCCA 156; Milne id). Thus, in Milne at [297] the Court of Criminal Appeal stated: "There is a high community expectation that serious tax fraud will be properly punished and offenders, no matter their business acumen and high status in the commercial world, will be dealt with sternly and appropriately."
3. These observations apply with all their force to the offender. Having regard to its size, scale, timespan and tactics his offending falls into the worst category of cases under s 135.4(5).
4. I have already referred to the principles governing the imposition of sentences for money laundering. The maximum penalty of 25 years for an offence under s 11.5(1) and s 400.3(1) represents an emphatic statement by the legislature of the seriousness with which such offences must be treated. As stated, count 6 represents a very serious example of this offence.
5. One can have sympathy for the position of the offender. He finds himself broke, professionally ruined and incarcerated. He was a person who had much to lose and he has now lost it. The consequences for him and his family are severe. However his situation is not a product of circumstances but of a conscious decision on his part to pursue a dishonest and fraudulent tax scheme on a large scale. He engaged in the conduct the subject of the offences while holding an unshakeable belief in his intellectual superiority to all those around him and the ATO. It was his undoing.
6. As the offender was taken into custody on 22 December 2014 it follows that his first custodial sentence should commence from that date.
7. Having regard to the scale of criminality involved in each offence I am satisfied that no sentence other than a full time custodial sentence for each offence is appropriate in this case (Crimes Act, s 17A(1) and (2)).
8. Anthony James Dickson, for committing count 1 on the indictment, being an offence contrary to s 135.4(5) of the Code, you are sentenced to imprisonment for seven years and six months commencing 22 December 2014 and expiring on 22 June 2022.
9. Anthony James Dickson, for committing count 6 on the indictment, being an offence contrary to s 11.5(1) of the Code, you are sentenced to imprisonment for nine years commencing 22 December 2016 and expiring on 21 December 2025.
10. Pursuant to s 19AB(1) of the Crimes Act I fix a single non-parole period of seven years expiring 21 December 2021.
11. Mr Dickson I am required by s 16F of the Crimes Act to explain to you the sentences I have imposed. I have ordered that you be imprisoned for an aggregate period of 11 years commencing 22 December 2014 and expiring 21 December 2025. I have fixed a non-parole period of 7 years imprisonment, which will expire on 21 December 2021. That means that you will be imprisoned for not less than 7 years. If you are granted parole at the end of that time, or before the expiration of the aggregate sentence, you will serve the balance of the sentence in the community. If you are granted parole, the order will be subject to conditions determined by the relevant parole authority, and may be amended or revoked. If you fail, without reasonable excuse, to comply with the conditions of your parole, your parole may be revoked and you may be taken back into custody.

I certify that the preceding 143 paragraphs are a true copy of the reasons for judgment herein of his Honour Justice Beech-Jones. Date: 20 March 2015 Associate

Endnotes

1. Ex A p 889
2. Ex A p 947
3. Ex A p 922
4. T3297
5. T1024 to 1025
6. Ex A at p 858
7. Ex JJ; Ex A at 1684; Ex A at 1757 and Ex A at 1758
8. Ex A at 917
9. Ex A at 1201
10. Ex A at p 1230
11. T1735
12. Ex A at p 1701
13. Ex A at p 1765
14. Ex A at p 1729
15. Ex A at p 1787
16. Ex A at p 2999
17. Ex A at p 3768
18. Ex A at p 4013
19. 1D49
20. Exhibit UU
21. Ex 1D49
22. Ex A at p 225, Ex A at p 293, Ex A at p 746
23. Ex A at p 4249
24. Ex A at p 4656
25. Ex 1D47
26. T246; 16/12/2014
27. Ex A at p 624
28. Ex A at pp 1620 to 1623AJD; 2501A, B and 2502
29. Ex A at p 967
30. Ex A at p1814 and p 2041
31. Ex A at p1289
32. Ex A at 1814
33. Ex A at p 1260
34. Ex A at p 1918
35. T254 16/12/2014

Amendments 16 April 2015 - Amended pursuant to orders made by Beech-Jones J on 16 April 2015. 29 May 2015 - Corrections to dates in [141], [142] and [143]. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 07 June 2016