R v Causer [2010] VSC 341

Supreme Court of Victoria|2010-08-19|Before: J FORREST J

CRIMINAL LAW - Sentencing - Fraud - Sections 6H and 6I Sentencing Act 1991 - Section 74 Crimes Act 1958 - Multiple counts of theft - Continuing criminal enterprise counts - Sentencing considerations - Plea of guilty - Approximately $19 million misappropriated and $16 million recovered - Mitigating factors - No exceptional circumstances.

2 You have admitted that you misappropriated $19,365,768 from your employer Clive Peeters Ltd, of which $16,326,662 has been recovered.

3 Your offending commenced in July 2007 and ceased in July 2009, when your activities were detected by a routine audit. Each count in the indictment relates to a particular month in which you misappropriated your employer's funds.

4 The maximum penalty for each of these offences is 10 years' imprisonment, however as each of the counts falls within the provisions of Part 2B of the Sentencing Act, you are to be regarded as a continuing criminal enterprise offender. You are therefore liable for a term of imprisonment of double the sentencing maximum of each of the counts - 20 years on each count.[1]

5 You were born on 7 January 1971 and are now 39 years of age. You had a happy childhood and completed HSC at Vermont High School. You met your first husband when you were 17 years of age and from that union have a daughter, Samantha, who is now 12½ years old.

6 You separated from your first husband when you were approximately 30 years of age. Subsequently, you met your present husband, Michael, whom you married in 2004.

7 You and Michael have two children, Deakin, who is 5 years of age and Kirralee, who is 4 years old. Deakin has been diagnosed with autism, with many behavioural and intellectual handicaps; Kirralee has also been diagnosed as autistic. She suffers from significant behavioural and intellectual disabilities. Both attend Mt Evelyn Special Development School.

8 Since an early age, each of the children have required intensive care, supervision and medical intervention. Your husband Michael ceased his own occupation and has been the primary carer for the two children whilst you have worked, on weekends you have looked after the children. Sadly, but not uncommonly, the strains of looking after the children with their challenging behaviour, has placed considerable stress on your relationship with Michael.

9 After completing HSC, you undertook an Associate Diploma in Accounting at Box Hill TAFE on a part-time basis. You then completed a Bachelor of Commerce (Accounting) at Deakin University and graduated at 26 years of age. You were employed in an accounting/bookkeeping capacity whilst engaged in these studies.

10 You worked for seven to eight years for a medical company during which time you obtained CPA accreditation (in 2000) and subsequently worked for approximately four years for the Nichiyu Fork Lift Company. That employment terminated in 2005 when the Victorian division of the company was sold.

11 Shortly after the birth of Kirralee on 1 March 2006, you obtained employment with Clive Peeters as Senior Financial Accountant at its head office in Bayswater North.

12 In April 2007 your duties with Clive Peeters were expanded, giving you responsibility for the payroll system, which included authorisation of salary payments to employees, payment of superannuation contributions and the remittance of group tax and payroll tax to the Australian Taxation Office and State Revenue Offices.

13 Between 11 July 2007 and 20 July 2009 you recorded in the company's electronic accounts 90 withdrawals involving 125 individual payments to eight bank accounts; $19.365 million in total was stolen by you under the guise of payroll related payments.[2]

14 It is not necessary to set out in any great detail the manner by which you executed this scheme. It suffices to say that you altered the payee details for a particular transaction, substituting the number of an account controlled by you in place of the genuine account number. This process of deception also required you to conceal your withdrawals within the company's records. You manipulated the on-line banking records, the general ledger and management reporting to conceal your misappropriation of the funds. Once the money was placed in the accounts controlled by you, within a short time they were utilised by you, mainly in connection with the purchase of real estate.

15 In late July 2009 you controlled some 44 properties which had been purchased with Clive Peeters' funds. These were acquired by you, primarily as a result of negotiations over the internet. None were purchased at auction. Many of these properties were then rented out through agents engaged by you.

16 In addition to the properties, you also purchased a motor vehicle for $110,000 for yourself, a motor vehicle and a motorbike for your husband (valued at $80,000 and $20,000 respectively), jewellery (valued at $17,000) and, ironically, some Clive Peeters shares.

17 As the result of an annual audit carried out in July 2009 a variation of $2 million was identified in the company's accounts, being a discrepancy between the figures in the general ledger and a subsidiary ledger for the trade creditors for which you were responsible.

18 Initially when interviewed by senior management of Clive Peeters, you lied as to the manner in which the discrepancy had occurred. However, on 4 August 2009 you admitted using the company's funds to purchase real estate and explained the manner by which you carried out this fraud.

19 You have, since your detection, assisted the police and the company in recovering much of the monies misappropriated by you. Approximately $16.326 million net has been recovered, leaving a shortfall of just over $3 million.

20 You have cooperated with the company and entered into agreements to facilitate reimbursement of the funds. In your record of interview you gave a full and frank account of your dealings and have assisted the forensic accountant engaged by the investigating police officers in ascertaining the manner in which you carried out the misappropriations and the accounts from which the money was removed.

21 You were charged on 16 December 2009 and indicated at the earliest opportunity that you would plead guilty.

22 You have since sold the family home and now live in rented accommodation. You have obtained employment working at a hotel and performing some bookkeeping tasks. Michael continues to look after the children during the week and you attend to their care on weekends.

23 A Victim Impact Statement has been filed by Mr Gregory Smith,[3] the Managing Director of Clive Peeters and a major shareholder in the company. Mr Smith is firmly of the view that your conduct is the primary cause of the collapse of Clive Peeters, which was placed in administration on 19 May 2010, with receivers and managers being appointed subsequently.

24 It is clear that the cash flow of the company was significantly compromised by your actions at a time when it was under financial stress, and Mr Smith's concerns are understandable. However, there were a number of other factors, independent of your actions, which also contributed to the company's collapse. I accept the prosecution's position that your actions were one of a number of factors which contributed to the demise of the company, but that they could not be regarded as a "primary, dominant or triggering cause" of the collapse.

25 Mr Jeffrey Cummins, Forensic Psychologist, gave evidence, and a report prepared by him was tendered on your behalf.[4] A folder of materials relating to the developmental problems faced by your two children was tendered and was accompanied by a report from Mr Michael De'Ath, the Regional Director of the Department of Education and Early Childhood Development.[5]

26 Dr Catherine Lynch, the treating paediatrician of both your children, has reported on their current condition and ongoing needs.[6] Deakin suffers from Autism Spectrum Disorder and has significant learning and behavioural difficulties. He requires intensive supports in aspects of day to day living and needs constant supervision. Kirralee also has Autism Spectrum Disorder, with similar delays in her development to those of Deakin. She also needs considerable support, assistance and supervision. Dr Lynch regards you as a caring, committed mother who manages the significant additional needs of your children well, notwithstanding the challenges posed by their respective conditions. I accept that with your incarceration Michael will be left with the responsibility of caring for your children. I also accept, without hesitation, Dr Lynch's closing remark that the stresses on families caring for children with disabilities are "enormous, chronic and ongoing."

27 Mr Cummins, who saw you initially at the referral of your solicitors, has concluded that you were obsessed with trading in property as a consequence of delusional thinking, regarding yourself as a property wizard. He has diagnosed you as suffering from a delusional disorder. He relates that disorder to anxiety and depression associated with your life circumstances - namely the deterioration in your marriage, the responsibility and stresses of looking after two autistic children and the pressures of your job. I accept his opinion, subject to some observations I will make in a moment.

28 In determining an appropriate sentence, the following matters are relevant:

(a) The magnitude of the theft. This is one of the largest, if not the largest, thefts perpetrated by a person in a position of trust in the history of this State. Notwithstanding the fact that a significant amount has been repaid, the scale of your embezzlement is significant.

(b) You were entrusted by the company to deal with its funds. Your obligation was to carry out your employment tasks honestly. For a period of two years, month in month out, you grossly abused the trust of your employer.

(c) The scope of your criminal activity was substantial. Not only was it perpetrated month by month over a period of two years, but it was calculated and required a degree of sophistication. It was not just a case of one entry in the company's books; rather, you took steps before and after the misappropriation to hide your fraudulent activities from company officers and auditors. Moreover, once the funds were obtained by you, they were promptly utilised to purchase properties which in turn were placed by you in the hands of managing agents. You then derived income from their rental. From beginning to end this was a plan of some sophistication over a lengthy period.

(d) The effect of the loss of the funds on Clive Peeters' financial position - the absence of that amount of cash, whilst a the triggering cause, must have played a part in its ultimate collapse.

(e) The maximum sentence of 20 years imprisonment on each count.

29 These factors alone would, in my view, result in a very lengthy period of imprisonment.

30 However, there are many mitigating factors in your favour:

(a) Your plea of guilty, given at the earliest possible time, is indicative of real remorse on your part. Further, it has facilitated the task of the investigating police and the Office of Public Prosecutions in terms of the preparation of the hand up brief and the plea;

(b) Your cooperation with the company, the police and the prosecuting authorities is, in my view, a significant factor. Often frauds such as that perpetrated by yourself are difficult to unravel and require intensive forensic and investigative efforts on the part of the police and accountants. With your assistance, the time and expense involved in the prosecution establishing its case has been reduced. You have also cooperated with the company by entering into deeds of agreement in relation to repayment and have assisted in the transfer of the titles of the properties held or controlled by you that were bought with the funds you stole;

(c) You have provided restitution to the company of over $16 million, leaving a shortfall of some $3 million. Your reimbursement to the company includes a small contribution of personal funds. This has resulted in your matrimonial home being sold and you living in sparse rental accommodation, a situation that is likely to continue upon your release;

(d) You have no prior convictions and are of good character. You have a demonstrable ethos of hard work and achievement which culminated in you obtaining a senior position with Clive Peeters. Also, I take into account that your reputation and career as an accountant is ruined and any future employment will almost certainly be in a very different sphere;

(e) I accept the evidence of Mr Cummins that your actions were the product of a delusional disorder. I am satisfied that a combination of the pressures of your employment, problems with your marriage and the stresses associated with raising your two children all contributed to this disorder and in turn your fraudulent activities. I also accept and take into account[7] that, as suggested by Mr Cummins, there was an element of depression generated by your circumstances which played a part in this delusion that you were a property guru. I accept, only to a limited extent, Mr Cummins' opinion that you lacked insight into the magnitude of your wrongdoing. It is abundantly clear that you were functioning at a high level at work and that there were no overt signs of depression or the need for treatment for that condition. Your fraudulent dealings and the use of the money as I have set out required a good deal of planning.

(f) Your manner of dealing with the funds also places your case outside those that often come before the court. As your counsel pointed out, given the manner in which the funds were utilised once your activities were discovered (whenever that might have been), the properties were available to be realised to repay the company for the monies you had embezzled. It is not a case of the monies being gambled away at the casino or the race track. Only a small amount of the monies misappropriated by you were spent on personal luxuries, in contrast to the manner of dissipation of funds in other major frauds.

(g) Your imprisonment will place great stresses on you, over and above those usually suffered whilst incarcerated. This is because of your concern for the welfare of your two children and your fear that Michael will not be able to provide an appropriate level of care for the children in your absence.

(h) There is no role in the sentencing task for individual deterrence. I have little doubt, given your background, that you will not re-offend, and indeed I hope that upon your release you are able to return to your family and the workforce and become a useful member of society as you had been prior to July 2007.

31 Each of the matters I have just identified mean that the sentence I impose should be significantly less than that which your actions might have attracted looking solely at the amount stolen and the surrounding circumstances of the theft.

32 On 16 August, I heard further submissions on the plea on your behalf. Your counsel, relying upon what had been said in a recent decision with similarities to your case,[8] contended that your situation was attended by exceptional circumstances which merited a significant discount on the period of imprisonment which would normally be imposed. Counsel's primary submission was that your two children, Deakin and Kirralee, will be significantly adversely affected in the event of a prolonged period of imprisonment being imposed on you. Counsel relied primarily upon the evidence of Mr Cummins to the effect that your husband will be unable to cope with looking after the children, and that there is a significant prospect that they will need to be taken into State care.[9]

33 Exceptional circumstances amount to a plea for mercy based upon an extraordinary family hardship,[10] consequential upon imprisonment of the accused. The plea must be seen as irresistible so much so that it would be inhumane to refuse to take such circumstances into account.[11]

34 The opinion of Mr Cummins needs to be balanced against the following matters:

(a) There is no evidence that to date your husband Michael, who is the primary carer for the children, has experienced any major difficulties in managing the children. Nor is there any suggestion that he will abandon the children in the event of your imprisonment.[12]

(b) There is no evidence from the treating paediatrician, Dr Lynch, or from the school that your imprisonment will place the children in jeopardy of being placed under State care. It is inevitable, as Dr Lynch notes, that there will be significant needs and responsibilities falling on Michael - however she does not suggest that this will lead to the intervention of the State.

(c) Mr Cummins' opinion, in his recent report, was not as definitive as that in his evidence before me.[13] Given the report was written in late July, I find it difficult to understand why there has been an apparent strengthening in his views as to Michael's inability to cope with the children in your absence.

35 The material adduced on behalf of the accused must be cogent and highly persuasive in demonstrating that imprisonment will produce a level of hardship of an exceptional nature.[14] In my view, the evidence does not establish satisfactorily the existence of such hardship which would place your case in the rare category of exceptional circumstances.

36 The prosecutor and your counsel have each made suggestions as to an appropriate sentence. I have been provided with details of sentences passed in other cases, as well as statistics provided by the Sentencing Advisory Council. All of this has been helpful and relevant, but the end result must be that you are sentenced on the basis of the facts peculiar to your own case and not those elicited from other cases determined by other courts. In this case there are two illustrations of the necessity for this approach; namely the extraordinarily large amount of money embezzled by you and, on the other side of the ledger, the raft of mitigating circumstances relevant to your offending.

37 Notwithstanding the mitigating factors I have mentioned, it is nevertheless necessary to send a message to all those in a position of trust and handling large (or for that matter small) sums of money that dishonest dealings with those funds must result in significant punishment.

38 I have determined that you should serve a total period of imprisonment of eight years. I propose to fix a non-parole period of five years. I have imposed a period of four years' imprisonment on each count and cumulate count 1 with count 12, the base sentence. The attached schedule sets out the periods of imprisonment on each count.

39 I declare pursuant to s 6AAA of the Sentencing Act that if it were not for your plea of guilty I would have fixed a total effective sentence of ten years and six months imprisonment with a non-parole period of seven years and six months imprisonment.

40 I direct that it be recorded that you are sentenced as a continuing criminal enterprise offender with respect to each of the counts.

41 I declare that you have spent 17 days in custody, including the date of this sentence. I direct that this be noted in the Court's records.

THEFT CONTRARY TO S.74 OF THE CRIMES ACT 1958

CCE OFFENCES: Maximum sentence 20 years' imprisonment

[1] Sections 6H and 6I Sentencing Act

[2] See the chart prepared by McGrathNicol Forensic Exhibit P2.

[4] Report of 30 July 2010 - SC2 on plea.

[6] Report of 20 July 2010 - SC2 on plea.

[7] R v Verdins [2005] VSC 479.

[8] R v Cowen [2010] VSC 301, Whelan J.

[10] Markovic v R [2010] VSCA 105 [7].

[11] Ibid [6] - [13], R v Wirth (1976) 14 SASR 291, 295-296; R v Edwards (1996) 90 A Crim R 510, 515, R v Nagul [2007] VSC 8 [43] and the cases cited in footnote [2] in Cowen and footnote [2] in Markovic.

[13] Report of 30 July 2010 page 11 - SC2 on plea.

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