R (Commonwealth) v Aurav

District Court of NSW|2013-08-16

A serious money laundering offence 1On 1 February 2013 Gaurav ARORA, the offender, formally pleaded guilty to an offence of dealing with over $1,000,000, intending that the money be an instrument of crime: s 400.3(1) Criminal Code Act 1995. A similar plea had been indicated in the Local Court in July 2010. The particular crime acknowledged by the guilty plea was conducting cash transactions designed to avoid the reporting requirements of the Financial Transaction Reports Act 1988. That law requires a bank, a party to a cash transaction, to report details of all transactions involving $10,000 or more. So seriously does Parliament, on behalf of the community, regard such crimes that a maximum penalty of 25 years imprisonment (or a substantial fine) has been fixed. 2Offences against s 400.3(1) Criminal Code apply to a wide range of activity. What is common to them all is desire by the offender to disguise the source, and/or destination, of the funds the subject of the transactions. Such crime, generally referred to as 'money laundering,' is treated seriously because the secret movement of large sums of money allows the profits of illicit enterprises to be disposed of or used for further crime. Money laundering itself is serious criminal activity that is at the very heart of organised, professional crime syndicates. In addition even if not directly linked to organised crime, taxation can be avoided. And, more generally the adverse and corrupting effects of large sums of secret money can undermine the economy of the nation. The law recognises that it will frequently be impossible for the relevant authorities to "identify the origins of the funds or what is ultimately to be the use made of them": Ansari v R [2007] NSWCCA 204. As the source or destination of the money often cannot be discerned the transactions themselves are also criminalised. 3Factors relevant to assessing the objective seriousness of the offence can include: (1)The amount of money. (2)The period of time over which the offence occurred. (3)The level of organisation and subterfuge involved. (4)The offender's position in the hierarchy of any organisation. (5)The role the offender played. (6)The likely benefit. (7)Any loss to the community or other victims. (8)The source of the funds if known, and, (9)The ultimate use to be made of them, if known. 4A court must deal with each matter on the basis of the objective facts as proved by the evidence. The respective onus' placed on the Crown and the offender must be recognised and applied, however, sentencing does not always allow for any clear delineation: R v Olbrich (1999) 199 CLR 270. "Some disputed issues of fact cannot be resolved in a way that goes to either increase or to decrease the sentence that is to be imposed": Weininger v The Queen (2003) 212 CLR 629 at [19].

Background 5In January 1998 Mr Arora came to Australia from India on a student visa. A subsequent application for a protection visa was refused. Mr Arora remained in Australia until he was eventually arrested on 20 October 2004 trying to leave Australia on a false passport. He remained in immigration custody until 21 June 2005 when he was allowed into the community with a temporary bridging visa. It had a 'no work' condition. 6In 2002, Mr Arora met Jodie, who he married in 2004. She already had a son. Three daughters were born to the relationship; the youngest was born after the offender went into custody in February 2010. 7Between March 2006 and September 2008, the offender purchased or caused to be purchased 198 bank drafts or international money orders, all for less than $10,000. Using those drafts or orders at well over a 100 different bank branches, $1,557,790 was remitted to bank accounts in India. The bulk of the transfers were to accounts in his name. He conducted the vast majority of the transactions personally. He did however recruit two friends, Chris Hairis and Peter Wall and his father, to help him transfer $272,270. They received 3 year or 3½ year suspended sentences for their crimes. Their respective sentencing remarks were before me as exhibit A tab 9. The lesser scale of their offending compared with that of the offender mean no parity issues arise. 8A comprehensive summary of what the offender did and what was discovered during the police investigation is set out in the facts document; exhibit A, tab 2. Although not 'agreed', little in that document was ultimately disputed. A considerable amount of cash was also found in safety deposit boxes associated with the offender, as were records relating to bets placed on thoroughbred horse races. The offender was subject to further investigations and an Australian Tax Office Audit in relation to those records, the cash found, and the money remitted to India. He was not liable to pay tax on any of the money. And, eventually, the Federal Police returned $710,110 in cash to him. 9The facts document also notes evidence of an association between the offender and illicit drugs. The offender was arrested in February 2010 for drug matters but those were discontinued. On sentence Mr Hairis gave evidence that the offender had supplied drugs to him on a number of occasions. While the offender's association with drugs is important to resolution of a number of issues, he is not being sentenced for any drug offence. Initially, the Crown took on the burden of establishing beyond reasonable doubt that the source of some of the funds transferred to India was associated with drug supply. Mr Hairis's evidence did not enable that submission to be pursued with any vigour. There was no evidence before me to suggest that the offender was a drug supplier on a regular or commercial basis. 10The Crown's substantive position was and remains that the offender facilitated the transfer of a very large sum of cash from Australia to India. The transactions were designed to hide the source of the money. He organised the transactions. He organised others to help him. He was the principle. It was submitted further that his explanation for the source of the money does withstand careful scrutiny: Indian students on 'no work' visas do not legitimately obtain and remit $1.5 million to India over a 3 year period. 11Mr Boulton SC, for the offender, took on the task of establishing on a balance of probabilities that the source of the money remitted and the cash found was winnings from successful bets on thoroughbred horse races. He initially cautioned against scepticism and over 2 days led evidence designed to show: (1)The source of the money was successful racing bets; (2)The rationale for committing the transaction offences, involving avoiding reporting obligations, was to disguise the fact of the offender's income from immigration authorities; (3)That the offender's mental illness contributed to a state of mind where his desire for secrecy led him to commit transaction offences, which, as it ultimately turned out, were unnecessary.

Resolution of the issues regarding the source of the funds 12The Defence contend that on balance they have established the source of the funds were gambling winnings. 13The Crown submit that apart from the possibility a small proportion of the funds transferred came from drug supply profits the real source of the funds is still unknown. Their contention is the win-loss ledger books (exhibit 2) are sham records to cover the true source of the funds. Support for the contention is drawn from the offender's own account of his gambling given to Dr Jacomon, where he speaks of how with the aid of "voices" he would win and lose considerable amounts of money: exhibit 1 tab 2 page 5. 14The Crown has produced no evidence to support their contention other than to ask that I approach my task with reasonable cynicism and scepticism. A scepticism I admit I expressed at the outset of the matter. There are, I am sure, ways by which money can be laundered using on course bookmakers. I could speculate but I will resist the temptation to do so in the absence of evidence upon which a sound inference could be based. 15The Crown properly note that even if I accept over $3,000,000 in winnings as genuine these winnings may not account for or correlate with the money sent to India. Nor, they submit, should I blindly accept the assertion the money is the offenders. This they submit is particularly so given the absence of any information as to the source of, or price paid for, the information, which led to the extraordinary success of the offender's betting. That submission is soundly based. The Crown do not have to assume the obligation of proving or disproving matters. The objective facts of what was done and how it was done can still be damning, even in the absence of evidence of why it was done. 16The evidence as to source of the funds relied on by the offender comes from the betting analysis prepared by the Crown (exhibit A, tab 5) and other material in Defence exhibit 1; Exhibit 2, the Collins ledger books; and the records of NSW Racing, exhibit 4 Volumes 1 to 4. The offender also called as witnesses, Mr Lewin, a licensed bookmaker and Mr Way, an experienced punter employed by the offender to provide advise about how best to use the odds offered by oncourse bookmakers. 17It is important to note that the offender gave no evidence. Hearsay evidence is routinely admitted in sentencing proceedings and often what is attributed to an offender is not in dispute or is corroborated by other material. In such circumstances evidence from an offender is not necessary and would add little. Where matters are in dispute however or where the hearsay material is put before the court in an attempt to minimise the objective seriousness of an offence, very considerable caution is required. Where significant matters of fact must be determined, hearsay attribution, or postulations based on hearsay assertions can carry very little weight. 18What is recorded in the Collins ledger Books get some support from the Racing Records, Mr Way and Mr Lewin. I accept that the offender was a regular punter at trackside meetings. He was known to be a winner. Mr Lewin told me that consistent winners are not unusual. Initially he spoke of "lucky streaks" but when pressed he indicated the offender was a person whose bets he "respected". That is; he was known to be likely to win: So likely to win that a bet by Mr Arora signalled to him, where the "smart" money might be going in a race. Mr Lewin was reluctant to go into detail about what led to "smart" betting but as a bookmaker he had to be aware of it and lay off such bets or ensure his potential outgoings were covered by the bets of "mug punters" who, obviously, did not have access to the information the "smart" punters did. 19Looking closely at exhibit 2 on page 1 and taking 10 December 2005 as a notional starting point, it shows someone bet $3,000 @ $2.90 on 'Wanderer' for a win. The bet paid $8,700, a return of $5,700. The initial $3,000 investment was thus immediately returned. From then on bets used "bookies money." The books and other information then reveal an extraordinary return on that initial investment as from then until 31 December 2009 net winnings totalled $3,035,033. On very few days was a loss recorded. At least 60% of bets were successful with most, especially in the initial stages, being bets for a win only not each way bets. 20The books are in two sets of handwriting. On the second day of the sentencing proceedings Mr Way gave evidence and said he wrote the first set and the offender the second being those entries after 2008. Mr Way's existence had not previously been alluded to in any of the evidence given or tendered. He said he was employed by the offender to help him negotiate the intricacies of dealing with on course bookmakers. He said it was on his suggestion the win-loss accounts were recorded and that he did so meticulously at the end of each racing day from notes made in daily race books. 21The early account books are in his handwriting. His evidence, which I accept, goes some way to explaining matters, which up until then had been only partially revealed. The books now possess a degree of genuineness that they did not previously hold. The discrepancy in the rate of wins to losses between the books compiled by Mr Way and later by the offender may be coincidental but it seems more likely to result from the offenders deteriorating mental condition and or because while he was employed, Mr Way helped discipline the offender's betting. 22The evidence of Mr Lewin and Mr Way is supported by the Collin's account book records and the independent information obtained from Racing NSW; exhibit 4. I can also draw comfort from the return of the money by the AFP and the results of the tax audit. On balance that evidence satisfies me that the offender did win enough at the track to satisfy my, I trust, not unreasonable cynicism about the source of the money remitted to India. 23 That said, the offender had no obvious skills as a punter or student of racing or horse form. He needed Mr Way to help him understand on course bookmaking strategies. He has no obvious mathematical, algorithm or statistical skills. I accept Mr Way's evidence that the offender was "getting information about what horse might be hard to beat." That information made him a "winner backer' or "smart punter". It was information unavailable to experienced punters and students of horse form such as Mr Way, or long-term bookmakers like Mr Lewin. Mr Lewin said he gleaned information about likely winners from observing the betting patterns of "smart punters" like the offenders. It was clearly this inside information not luck that gave the offender an advantage over others at the track including average or "mug" punters. Use of such inside information is probably now illegal. It may even have been illegal at the time if the source of the information was corrupt or obtained by fraud. I however have no information at all about the source of Mr Arora's "luck." The statements attributed to him by Dr Jacomon, "The voices which were by now clear and strong encouraged him to take up gambling to add to his income and promised that they would guide him to a win...He succeeded with the aid of his voices to win considerable amounts of money;" are a nonsense.

Assessment of objective criminality 24I can readily imagine why the offender would want to keep the source of his inside-information secret. Mr Arora reported to Dr Neilssen and Dr Jacomon that he was kidnapped and tortured in 2006. No reason for that event is put forward. The enormous sums able to be generated from so little apparent investment provide a reason to hide the money from prying eyes, official and unofficial. The taxation commissioner would have been suspicious and I accept the offender's contention that immigration officials would have raised an eyebrow or two had they known such sums were being remitted to India by a person with a "no work' bridging visa. 25I also note that apart from the fact the money went to accounts held by the offender in India, there is no evidence before me of what then became of that money. Nor is the evidence sufficient to establish on balance what, if any, proportion of it was the offender's. 26Mr Boulten asks I accept that his client was doing illegally what could have been done legally and that this reduces the gravamen of the crime. In the absence of evidence as to the source of the information or evidence from the offender I could not go so far. That said, I do accept, in part, his submission set out in detail in MFI 2 at [92] -[99], that this offence does not have a number of features common to those s 400 matters where very high penalties were imposed. In particular, here there is no obvious loss to the community by avoidance of tax. Further, where the money can be shown to be sourced from organised crime more severe penalties are imposed. In addition, Mr Arora appears to have voluntarily ceased his offending behaviour well before arrest and the level of actual deception involved was not great as he used his own name and own or family accounts in India. 27There is no established range of penalties for such offences: Milne v R [2010] NSWCCA 24 at [29]. There is some utility in looking at what was done in other cases but care needs to be taken: Hili v The Queen (2010) 242 CLR 520 at [54] & [55]; The Queen v Wong (2001) 207 CLR 584; DPP v De la Rosa [2010] NSWCCA 194 at [303]- [305], per Simpson. Some unifying principles can be discerned from other matters dealt with in both NSW and Victoria: See for example: Trandy v R [2009] VSCA 321; Chen v R [2010] NSWCCA 224; R v Huang (2007) 174 A Crim R 370; Li v R [2010] NSWCCA 125; Nguyen v R [2010] NSWCCA 226 and R v Milne (no 6) [2010] NSWSC 1467. Consistent application of principle is encouraged but each offender and each sentencing exercise is individual. What occurred in other cases is a one of a number of guides to my exercise of an individual discretion. 28Mr Boulten drew my attention to the offender's mental state and in particular the opinion of Dr Jacomon that it operated at the time of offending so as to impair his capacity to make rational decisions free of impulsivity. I do not accept this opinion. Dr Nielssen does not support it. It is not supported by the fact that the offender was able to engage Mr Way and engage in complex behaviour both to "earn" the money and to send it overseas. Neither Mr Way nor Mr Lewin gave any hint that the offender was incapacitated in his decision-making ability. To the contrary he appeared to them to be a smart punter. 29While I accept the offender did and does have a psychiatric illness - schizophrenia, there is no evidence I could accept that shows the offender's mental health contributed to the commission of the offence in a material way such that his moral culpability could be reduced. 30Another guide to the exercise of my discretion is the maximum penalty of 25 years imprisonment. Careful attention must be had to the maximum penalty, "first because the Legislature has legislated for them; secondly, because they invite comparison between the worst possible case and the case before the Court at the time; thirdly, balanced with all other relevant factors, a yardstick": Markarian v The Queen (2005) 228 CLR 357. Because of the amount of money, the period of time and the unknowns noted above this crime remains a serious example of its type. Only a full time custodial sentence could adequately punish what was done. 31Such a sentence is required because almost inevitably offences of the type, size, duration and level of organisation, committed here compel a degree of severity to reflect general deterrence to a significant degree. That is, by the severity of the penalty to attempt to deter others from engaging in such behaviour. General deterrence presumes offenders will make some sort of risk assessment. Offences involving money-laundering transactions are particularly well suited to such an analysis. The hypothetical equation should be posed in such a way that the inevitable answer is, "no, it's just not worth it".

Subjective case for the offender 32A determination of the appropriate penalty and the minimum period of justice requires the offender spend in custody, requires an examination not just of what was done and, where discernable, why, but also the subjective case made for the offender. Some of those principles can be found in s 16A Crimes Act 1914.

Willingness to facilitate the course of justice 33The offender offered to plead to the present count when the matter was in the Local Court. That offer was not taken up until other proceedings were discontinued. His plea does demonstrate a willingness to facilitate the course of justice. It must be tempered, by his parallel realisation there was a strong case against him: Lee v R [2012] NSWCCA 123. The two concepts are not necessarily inconsistent. That willingness was further evidence by the letter, exhibit B. Although the information provided was assessed as having "low value" it indicates, by its content, the generally pro-social values of the offender. It speaks well for his future prospects. Those matters in combination require a reduction in the otherwise appropriate sentence of 25%.

Mental Illness 34The offender does suffer from a mental illness -schizophrenia. Dr Neilssen accepts it is present but also noted the absence of any significant impairment in his intellectual function arising from it: exhibit 1 tab 1 at page 6. I accept the opinion of Dr Nielssen, which is objectively supported by Justice Health records: exhibit 1 tabs 1, 3 & 4. 35At times while in custody the offender has been scheduled pursuant to the Mental Health (Forensic Provisions) Act 1990 with florid psychotic symptoms. Particularly at those times he would have served his time in gaol in a harsher environment than other prisoners who were not so afflicted. His illness also attracts a measure of sympathy although this is still a case where both general and specific deterrence considerations must continue to operate: R v Engert (1994) 84 A Crim R 69, DPP v De la Rosa at [177].

Other subjective considerations 36The offender has only one matter on his criminal record. It reflects his desperate attempt to stay in Australia where he now has a family. He is a person of otherwise good character however this is rarely a significant factor in crimes such as this where good character often enables and facilitates the commission of the offence and the avoidance of detection. 37He has the support of his wife and family who have stood by him. His wife has medical problems. So too does her son: exhibit A tabs 6 and 8. His youngest child has only known him to be in gaol. His family suffers hardship, as they are deprived of their husband and father. Hardship is occasioned to the offender as well. Despite the medical evidence in exhibit A tabs 6 and 7, the hardship suffered does not put this case in any exceptional category: R v Edwards (1996) 90 A Crim R 510. The recent return of the money initially seized by the AFP may, as the Crown now suggest, help alleviate some of the practical difficulties posed by the offender's imprisonment. 38The offender has been in custody now for over 3 ½ years. While he has voiced no contrition he has taken practical steps towards his rehabilitation. His prison record is exemplary. He is described as hardworking, willing, compliant and polite. The Corrective Service material served (exhibit 1 tab 5) shows no hint of the earlier drug abuse problems referred to in the reports. It confirms the other material before me that indicates the offender is fundamentally pro-social with family support and a capacity for hard work. He has that capacity despite suffering from a mental illness, which on occasions can be disabling but is now managed by medication.

Conclusion 39There is much in the offender's background that attracts sympathy but the offence committed was a serious one. It cannot be explained by his drug use or mental illness. He knew what he was doing was illegal. He continued to attempt to deceive the authorities in a systematic manner for a lengthy period. The amounts involved in the transactions added up to a significant sum. What he did must be denounced. He must be imprisoned in an attempt to deter him from future offending but more particularly in the attempt to deter others. 40A non-parole period must be set. It is the minimum period he must spend in custody before becoming eligible for release. The considerations taken into account in setting that period are the same as those applicable to the setting of the head sentence. However "obviously, the weight to be attached to these factors and the way in which they are relevant will differ due to the different purposes behind each function": Bugmy v The Queen [1990] HCA 18; (1990) 169 CLR 525 at [19]. 41What then is a sentence of a severity appropriate to all the circumstances of the offence and the additional matters relevant and known to me? Mr Boulten submits enough time has been served. Mr Crown properly suggests it all depends on my findings of fact particularly as to the source of the funds the subject of the unlawful transactions. 42Had it not been for his guilty plea and his other cooperation a sentence of 9 years would have been imposed. 43The formal orders are the Court are: (1)Mr Arora you are convicted. (2)You are sentenced to a term of Imprisonment of 6 years 9 months. (3)Your sentence is to commence on the 17 February 2010. (4)I fix a non-parole period of 3 years 9 months to expire on 16 November 2013 on which date you will, subject to s 19 AL Crimes Act 1914, be released to parole. 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: 27 August 2013

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