R v Bakhaazi [2006] VSC 496

Supreme Court of Victoria|2006-12-13|Before: CURTAIN, J

CRIMINAL LAW - Failing to account for trust money - Obtaining property by deception - Procuring the execution of a valuable security.

1 Elias Michael Bakhaazi, you have pleaded guilty to six counts of failing to account for trust monies, five counts of obtaining property by deception and one count of procuring the execution of a valuable security. No prior convictions are alleged against you.

2 You were admitted to practice as a barrister and solicitor in the State of Victoria on 5 March 1984, and at all times relevant to the commission of these offences, you were a practising solicitor.

3 Counts 1 and 2 on the presentment occurred in April 1992 when you were the holder of a full practising certificate and you were operating as a sole practitioner in High Street, Preston. Mr Nadim Makari had been your client since 1988 and in 1992 you advised him to place his savings in an investment scheme operated by your firm, which would pay money to other clients of the firm at higher interest rates with the capital repayable on demand. Mr Makari gave you $20,000 in return for which you issued a receipt. After 12 months, Mr Makari made the first request for the profits from the previous year's investment and he was advised to wait until the following year. Despite his repeated requests for the return of the money, it was never repaid, nor was there ever any proof proffered to indicate the funds had in fact been invested. Indeed, this was confirmed by an examination of your trust account records for the period March 1992 to March 1993 which failed to disclose that such funds had ever been held in trust. This conduct forms the subject of counts 1 and 2 on the presentment.

4 In 2001 you were then the holder of an employee practising certificate and employed as a solicitor with Aloe & Co. Pty Ltd. As an employee solicitor, you were not authorised to receive trust money on your own account.

5 Mr George Maatouk engaged you to act for him in respect of the purchase of a property in Reservoir. In that capacity you asked him for a cheque for $17,611 said to cover stamp duty and registration fees. Indeed, you went with Mr Maatouk to the bank and had him make the cheque payable to you by representing to him that you were a partner in the firm and that you would deposit the cheque in the firm's trust account. You received the cheque and instead of banking it into the firm's trust account, you paid it into your own personal cheque account and over the next three and a half weeks withdrew all the funds. A subsequent examination of the firm's account shows that the funds were never deposited in the trust account or the office account and it was not until 12 months later that Mr Maatouk, on contacting the firm, discovered that the stamp duty had not been paid and the property had not been registered in his name, and indeed that remains the case today. This conduct forms the subject of counts 3 and 4 on the presentment.

6 In May 2001 you were consulted by a Mr Moustafa Abdullah about the removal of a caveat on a property owned by him in Murchison. Later that year he consulted you about raising a loan of $60,000 to fund home renovations which figure was later increased at his request to $150,000 to enable the purchase of a take-away business.

7 You advised him to invest any additional funds with you to secure a higher interest rate than that provided by the Australian Securities Limited, the lending institution used by the firm Nicholas O'Donohue which held his house at Clifton Hill as security for his mortgage. On 22 August 2001, mortgage documents were prepared and signed by Mr Abdullah which effectively gave you authority to give direction to the Australian Securities Limited for disbursement of the mortgage funds. Towards the end of August, Mr Abdullah received a letter from Nicholas O'Donohue confirming that the loan facility had started and advised that after deductions of various fees and charges, the amount of $146,922.83 had been advanced. Mr Abdullah was not aware that settlement of the loan had taken place and he contacted you and you advised him that the moneys had been invested. Mr Abdullah had wanted the money and did not want it invested. You told him you could not provide him with all of it, but that you would pay him in cash instalments after interest payments had been collected from people with whom you had invested the moneys. In September 2001 Mr Abdullah received a total of $43,000 cash in separate payments, but despite further repeated requests, you did not provide him with any further moneys. Investigations later disclosed that the check from ASL was paid into your de facto wife's account and she subsequently disbursed two cheques, one for $80,000 and the other for $66,922.83, both made payable to you. You deposited these funds into your personal account at the National Bank and by 28 September 2001, those deposits were fully withdrawn by you and none of the money was ever deposited into your employer's trust account. This conduct forms the subject of counts 5, 6 and 7 on the presentment.

8 In October 2001 you were contacted by Mr Ghassan Hamod, who was in the process of selling and buying two hotels and the company in which he was involved was also in litigation proceedings concerning one of them. You told him you would require $8,000 cash to finalise the hotel transactions and $10,000 to settle the litigation. Mr Hamod borrowed $18,000 which he gave to you and you told him it would go into Aloe & Company's trust account.

9 The day before the court hearing concerning the liquidation, you contacted Mr Hamod and advised him that all would be finalised the next day. In fact, you did not appear at the hearing and inquiries made by Mr Hamod revealed that you had left the employ of Aloe & Co some two weeks earlier and that you were then employed at the firm Issac Brott & Co, and that that firm had no knowledge of the litigation; nor did it have any paperwork in respect of the sale and purchase of the hotels, and the $18,000 cash received by you had not been recorded in the solicitor's trust account. In fact, that money has never been recovered and this conduct forms the subject of counts 8 and 9 on the presentment.

10 In November 2001, whilst employed as a solicitor with Issac Brott & Co, you were approached by Mr and Mrs El Haouli, who wanted to purchase a fish and chip shop in Eltham and needed to borrow $40,000 to complete the purchase. You told them that they had to provide $40,000 cash so as to establish their bona fides with the bank, and to that end they gave you $10,000 in cash. Mr and Mrs El Haouli worked for a trial period in the shop and you advised them, falsely, that you had obtained a bank loan approval for $40,000. They then borrowed $24,000 from friends and gave this to you as part of the settlement moneys. Settlement was scheduled to take place in late January and you advised them that settlement had taken place and they took possession on 4 February 2002. In fact, settlement had never taken place and when that became known to the El Haoulis, they were, not surprisingly, extremely distressed and had to arrange for finance through a friend of the vendors. A total of $34,000 which was handed to you has never been recovered. An examination of Issac Brott and company records reveals no records of any contact with the National Australia Bank for a loan, nor was there any file note regarding the receipt of moneys. An examination of the trust account of the firm does not disclose any transaction which showed the funds had ever been deposited into the company's trust account and it is this conduct which forms the subject of counts 10, 11 and 12 on the presentment.

11 Aloe & Co made a complaint to the Law Institute in November 2001 and in 2002 the matters were referred to the police. You were interviewed by the police on 10 September 2004 and made a no comment interview, which is, of course, your right. You were subsequently arrested on 2 August 2005. Bail was refused and you remained in custody until 9 August 2005 when bail was granted.

12 You are 48 years old and you were born in Lebanon. You came to this country with your parents in 1970 when you were 11. You have five siblings and, as I understand it, an older brother migrated to Australia preceding your arrival. Your father worked here in a factory and it was a matter of great pride that you were the first in your family to complete high school. Indeed, such was your academic achievement that you gained entry to and subsequently completed your law degree at Melbourne University Law School. You were admitted to practice in 1984 and after articles with the firm of Gray & Gray, you commenced practising as a sole practitioner. It appears that you were supported by the Lebanese community and they, in turn, were supported by you. You were held in high regard, acting not only for individuals within the Lebanese community, but also for various Lebanese institutions, and at times acting pro bono. Indeed, your pro bono work also extended to helping clients of the local Salvation Army agency.

13 Various testimonials tendered in evidence as Exhibit 3 speak of your work within the Lebanese community and of the esteem with which you were regarded in that community and in your church.

14 Your former secretary, Miss Mineo, gave evidence on your behalf. She was your secretary in those early years, and she spoke of your honesty and trustworthiness, that you were a enthusiastic solicitor who worked long hours and you were well regarded by your large clientele.

15 Your counsel has submitted that you have no recollection of the events giving rise to counts 1 and 2 on the presentment; that at the time you were not short of funds, nor were the creditors chasing you, and in those circumstances, you are at a loss to understand how and why those offences occurred. Mr Allen SC submitted that the remaining counts on the presentment, however, occurred at a time when you were under considerable stress and your life was unravelling.

16 In 1994, you engaged in a business venture which subsequently failed and you lost $700,000, and ultimately you were declared bankrupt. You were described by your counsel as a broken man at that point. You drifted from firm to firm as an employee solicitor and you developed a gambling problem and you were stealing money to repay other moneys. In 1998 your practising certificate was cancelled and you appealed that decision and a negotiated settlement resulted in your not being able to apply for a certificate for 12 months. You subsequently did obtain an employee practising certificate and it is said that you obtained employment in firms which were not always able to pay you; and it was in these circumstances that you continued to gamble at the TAB and the casino and purchase Tattslotto tickets in considerable volume. In 1999 you were charged by ASIC in respect of outstanding fees and a dishonoured cheque, and you were acquitted of those charges.

17 In early 2002, you presented yourself at the Monash Medical Centre emergency department where you were diagnosed with suicidal ideation and auditory visual hallucinations. You were committed as an involuntary patient at the Alfred Hospital psychiatry unit and discharged after five days. The discharge summary report tendered in evidence as Exhibit 2, reports that you were diagnosed as suffering an acute stress reactor with a brief reactive psychosis. It appears that at about this time, your relationship with Helen Wokuleski, your de facto wife of long standing, with whom you have a son, came to an end.

18 Since being spoken to by the police in respect of these matters it is said that you have lived an isolated life, somewhat as a hermit, moving around rural Victoria and keeping sporadic contact only with your son. You have, however, since your arrest, been reunited with your family, who support you in your predicament. You have been living with a niece, Miss Naddaf, whilst on bail, and her testimonial speaks of the help you have been to her. She describes you as disoriented and severely depressed when you first came to live with her and that you have gradually improved since August of last year.

19 A report from your general practitioner, Dr Gerges, tendered in evidence as part of Exhibit 3, states that when you consulted him in September of last year, he found you to be very depressed and with a poor memory. He referred you to a psychologist for counselling regarding your gambling, and to a psychiatrist, Dr Congiu for treatment. Two reports from Dr Congiu were tendered in evidence as Exhibit 1. He also diagnosed you as severely depressed, with marked memory difficulties. He prescribed antidepressant medications and it now appears, in his words, that "the depressive illness has significantly improved". You will, however, in his opinion, require psychiatric treatment in the foreseeable future and need to continue with your antidepressant medication. Dr Congiu has also noted an improvement in your memory function.

20 You have been attending counselling sessions with "Gambler's Help" and it appears from the testimonial tendered in evidence that you are progressing well and your counsel submits that you are now no longer gambling and that your efforts since your arrest to address these difficulties in your life auger well for your rehabilitation.

21 The maximum penalty for the offence of obtaining property by deception is ten years imprisonment; as is the maximum penalty for the offence of procuring the execution of a valuable security by deception. The maximum penalty for failing to account for trust moneys is two years imprisonment.

22 It follows that each of these offences is serious; all of them involve a serious breach of trust because in each instance, you were acting as the victim's solicitor and indeed, at times, their adviser. Each of your victims trusted you not only with their affairs, but their money, and they relied upon you and you, in turn, stole from them. In total, $236,533.83 was misappropriated by you, of which, $117,000 has been repaid, but only to your victim, Mr Abdullah.

23 As to the offences pursuant to the provision of the Legal Professions Act 1958 and the Legal Practice Act 1996, these offences are not only a breach of the trust placed in you by your clients, but also a breach of your fundamental obligation as a solicitor to properly account for moneys so entrusted to you. Further, you have exploited the confidence your clients had in you, no doubt because they regarded you as a trustworthy person who would act in their best interests, and certainly not to their financial detriment. They did not expect that their solicitor would steal from them.

24 Victim impact statements tendered in evidence, made by Mr Maatouk, Mr Makari, Mr Hamod and Mr Abdullah each speak eloquently of the impact of your criminality upon each of them. Mr Maatouk describes the stress he has suffered and ongoing worry as the property, the subject of that transaction, has still yet to be transferred into his name. Mr Hamod speaks of the loss of three businesses, the stress of these matters and its impact upon his marriage and health. Mr Makari stated that the $20,000 was his hard savings earned from "the very hard work that he had to put up with over the years." He describes you as a heartless man and blames himself for being fooled by you. Mr Abdullah is still repaying the interest of $3,000 per quarter on the loan of $150,000. He has had to sell two properties and borrow from family and friends to make ends meet and states that, financially, his retirement is ruined.

25 Your offending conduct encompasses five transactions involving six victims. The bulk of your offences were committed between April 2001 and January 2002, a period of ten months. It follows that although your offending conduct, putting aside counts 1 and 2, was over a relatively short period of time, it was nonetheless deliberate and sustained and must have required a degree of planning on your part. I accept that the funds misappropriated did not go towards funding a life of affluence or excess, although clearly some moneys went towards the rental of your family home and lease repayments on a car, and to fund your gambling, and it appears that some of the funds went towards making payments to other clients of Aloe & Co, but otherwise the money is unaccounted for and, as Mr Allen submitted, it has just gone. In that regard, I note that you consent to compensation orders being made against you and that at least in respect of Mr Abdullah, he did receive the $40,000 from you and has successfully made a claim against the Legal Practitioners Fidelity Fund for $74,000; otherwise, all of the victims have all suffered financial loss.

26 Your counsel has conceded that a sentence of imprisonment is inevitable and indeed it must be so. Mr Allen has submitted that either a longer than normal period on parole or a partially suspended sentence is here appropriate. In support of this submission, he relies upon you pleas of guilty; your previous good character; the fact that no prior convictions are alleged against you; your genuine remorse and shame; that the latter offences occurred at a time of great stress which resulted in your admission to a psychiatric unit, and that your life at that time was, as he described it, in a descending whirlpool. He submitted also that you continue to require ongoing psychiatric treatment and antidepressant medication and that you have taken steps to address your gambling, that these are all factors which mitigate the sentence otherwise to be imposed and can give the court confidence that your prospects for rehabilitation are favourable.

27 Mr Elston SC, counsel for the Crown, conceded that a longer period on parole may here be appropriate in the circumstances of the this case.

28 In sentencing you, I take into account your pleas of guilty and give you a discount for them. I take into account also that you indicated that you would plead guilty to an appropriately drawn presentment at the delivery of the hand-up brief on 4 November 2005. I take into account also that by reason of such pleas, you have saved the community the cost of a trial and the witnesses the ordeal of one. I take into account that at the age of 48, you will be serving a sentence of imprisonment for the first time and that you have no prior convictions, and that were it not for these offences, you are otherwise to be regarded as a person of good character. I take into account that you were well regarded and held in high esteem by the Lebanese community and that you have made a worthwhile contribution to that community and I take into account that you have now suffered the loss of that respect and esteem. I take into account your remorse and shame, that you co-operated with the police to the extent of attending voluntarily to be interviewed, and later, when it became apparent to you that the police wanted to make contact with you, you made contact with them and again voluntarily attended at the offices of the Major Fraud Squad to enable your arrest to take place. I take into account also that you co-operated with the prosecution of this matter and did not oppose the uplifting of this case from the County Court to this Court. I take into account also that you have consented to the making of compensation orders. I take into account your depression and your mental health which requires ongoing psychiatric treatment, although your counsel concedes that this is not a case where the principles of the Queen v Tsiaras are applicable. I take into account also, that with the progress you have made in seeking professional help to address your difficulties, and with the renewed and continued support of your family, your prospects for rehabilitation can be said to be favourable. In short, I take into account all matters which go in your favour.

29 I must also have due regard to the nature and gravity of the offences here committed, the need to pass a sentence which will act in denunciation of your conduct and serve to punish you. Any sentence imposed must also give due weight to specific deterrence so that even if you are placed in a position of trust again, you will not re-offend in a similar fashion, and further, due weight must be given to general deterrence, so that persons in the position of trust, including solicitors, will know that if they breach the trust placed in them by their profession generally and their clients in particular, they can expect condign punishment.

30 Accordingly, you are convicted and sentenced as follows: Count 1, 12 months' imprisonment; count 2, 6 months' imprisonment; count 3, 12 months' imprisonment; count 4, 6 months' imprisonment; count 5, 12 months' imprisonment; count 6, 18 months' imprisonment; count 7, 6 months' imprisonment; count 8, 12 months' imprisonment; count 9, 6 months' imprisonment; count 10, 12 months' imprisonment; count 11, 6 months' imprisonment; count 12, 6 months' imprisonment.

31 Although each offence is a discrete offence involving six victims in five transactions, four of which occurred during a ten month period, in order to address such considerations, including the principles of proportionality and totality, I propose to make the following orders: I order that four months of the sentence on count 1; one month of the sentence on count 2; three months of the sentence on count 3; one month of the sentence on count 4; two months of the sentence on count 5; one month of the sentence on count 7; three months of the sentence on count 8; one month of the sentence on count 9; three months the sentence on count 10; one month of the sentence on count 11; and one month of the sentence on count 12, each be served cumulatively with the sentence imposed on count 6, that is 39 months' imprisonment.

32 In order to give full weight to your prospects for rehabilitation, I order that you serve a non-parole period of 18 months and I declare that you have already served by way of presentence detention a period of 17 days.

33 Do you understand the sentence I have imposed upon you Mr Bakhaazi?

HER HONOUR: It's a sentence of three years and three months with a non-parole period of 18 months and I have declared that you have already served 17 days of that sentence. Take a seat, thank you. Any other matters?

MR ELSTON: Just briefly, Your Honour, the orders for compensation are made, as I understand it.

HER HONOUR: I have made those orders for compensation pursuant to s.86 of the Sentencing Act in respect of Mr Makari, Mr Hamod and Mr Maatouk.

Legal Professions Act 1958

Legal Practice Act 1996

Legal Professions Act 1958

Legal Practice Act 1996

Legal Professions Act 1958

Legal Practice Act 1996

Legal Professions Act 1958

Legal Practice Act 1996

Legal Professions Act 1958

Legal Practice Act 1996

Legal Professions Act 1958

Legal Practice Act 1996

Legal Professions Act 1958

Legal Practice Act 1996

Legal Professions Act 1958

Legal Practice Act 1996

At a glance

Court

Decision date

Before

Source

Judgment (38 paragraphs)

Parties

Legislation Cited (16)