R v Hausman - [2021] NSWDC 846 - NSWDC 2021 case summary — Zoe

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R v Hausman

[2021] NSWDC 846

District Court of NSW|2021-03-16|Before: Mr P

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Source facts

Court

District Court of NSW

Decision date

2021-03-16

Before

Mr P

Source

Original judgment source is linked above.

Judgment (35 paragraphs)

[1]

INTRODUCTION

The offender is to be sentenced in relation to activities connected with an investigation by the Australian Federal Police into a conspiracy to commit tax frauds by a group of individuals, and dealing with the proceeds of the frauds. This conspiracy is well-known, or it is, at least, to sentencing courts: it is the Plutus tax fraud conspiracy. I will refer to those conspirators compendiously as the Plutus conspirators. Already, a certain number of the Plutus conspirators have been sentenced.
These sentencing proceedings may generally be viewed as satellite or collateral proceedings to sentencing proceedings for those involved in the Plutus tax fraud conspiracy. They involve the activities of two persons, the offender and co-offender Mr Daniel Rostankovski, in blackmailing some of the Plutus conspirators for substantial monies and then laundering the proceeds. The offender was not himself a Plutus conspirator.
The offender is to be sentenced for the following offences, being that: 1. on 1 February 2017 and on 15 February 2017, he made unwarranted demands, with menaces, with an intent to make a gain, by actual or threatened accusations that Adam Cranston, Jason Onley and/or Dev Menon had committed serious indictable offences, namely fraud and/or money laundering, contrary to s 249K(2) of the Crimes Act 1900 (NSW) (the 'blackmail offence'); 2. between 1 February 2017 and 15 February 2017, he committed an offence, with Sevag Chalabian and Michael Rostankovski, in that they dealt with money that was or believed to be the proceeds of crime and, at the time of dealing, the value of money was or exceeded $1million, contrary to s 400.3(1), with s 11.2A(1) of the Criminal Code (Cth) (the 'money laundering offence').
The maximum penalties for the blackmail offence was imprisonment for 14 years and/or a fine of up to 1,000 penalty units; and the money laundering offence was imprisonment for 25 years and/or 1,500 penalty units. There was no standard non-parole period for the blackmail offence.

[3]

The offender's early conduct

The offender shared prior business connections, and an office space with Adam Cranston and Jason Onley in Double Bay. He and the other two worked for different branches of a business, called 'Aventis' with a mutual business partner and now deceased, Peter Larcombe. The offender became aware that Cranston, Onley and Larcombe and others were engaged in a fraudulent scheme to defraud the tax office and deal in the proceeds of crime.
In 2015, the offender was introduced to Rostankovski. They both formed business and personal relationships. From the middle to latter part of 2015, the offender became aware that Rostankovski was also working for Adam Cranston, Onley and Larcombe, by recruiting and managing other, unsophisticated persons, to become directors of companies. Those companies were controlled by Cranston, Onley and others.
From at least the middle of 2016, the offender became aware of the Plutus tax fraud scheme; though he had no involvement in the scheme. He knew, in particular, that in furtherance of that scheme, Plutus subcontracted its payroll obligations to other entities (known as "second tier companies"). The second tier companies were structured and operated in such a way that they were under the de facto control for of at least some of the conspirators. The offender says he was aware that Rostankovski, acting under the direction of the conspirators Cranston, Menon and Onley, was responsible for recruiting and managing the directors of these second tier companies.
In about October 2016, Rostankovski told the offender that he felt taken advantage of by Adam Cranston and some of the other Plutus conspirators: he was aware of the significant amount of money that was being transferred through the accounts of the companies used by Cranston and Onley and was dissatisfied with the amount that he was being paid. The offender told Rostankovski that Adam Cranston had once intimidated him with a rifle and emailed to him anti-Semitic material. He told Rostankovski how upset and offended he was at this (he had suffered a loss of family members in the Holocaust). The offender also disclosed that he felt aggrieved by an accusation that Adam Cranston had made against him.
Between October and November 2016, the offender and Rostankovski began discussing and thereafter planning to blackmail the Plutus conspirators by threatening media exposure, reputational damage and threatening Adam Cranston, in particular, whose father (Michael Cranston) was a Deputy Tax Commissioner, with scrutiny by the authorities, unless the blackmailed sum of money was paid to them.
Throughout November and December 2016, the offender and Rostankovski discussed the latter's progress with monitoring the bank accounts and funds received each month by the Plutus conspirators. By November 2016, following the 'research' that Rostankovski had performed, they appeared to be satisfied that the sum of $20 million had been received by the Plutus conspirators and was not likely to materially change. They discussed threatening Adam Cranston and contemplated executing the blackmail demand, with the involvement of the journalist Stephen Barrett, earlier than planned. Rostankovski complained about the incompetence of the Plutus conspirators and indicated that he wished to stop working for Adam Cranston by February (2017). In November or December 2016, they agreed to meet to organise the timing of the blackmail. The offender emphasised that the timing for the making of the demand was crucial. He mentioned to Rostankovski that two laptops had been taken (by the offender's personal assistant) from the Double Bay office that the offender shared with Adam Cranston, Larcombe, Onley and others. These would be used as leverage when blackmailing the Plutus conspirators.
In November 2016, the offender had suggested to Rostankovski that he could contact Mr Stephen Barrett to threaten Adam Cranston with media exposure. Barrett was a self-employed journalist whom the offender had known for many years. The offender was aware that he had worked on '60 Minutes' and was a Channel 7 producer. The offender recruited Barrett to participate in the blackmail demand and later had a series of telephone conversations and meetings with Barrett in late January 2017, including a meeting in Newtown with Rostankovski on 28 and 30 January 2017.
From December 2016, the offender discussed a strategy with a co-accused (Mr Sevag Chalabian), principal of the legal firm, Lands Legal, of concealing the funds received from the Plutus conspirators, as a result of the planned blackmail, and later provided instructions to Chalabian as to his role. The offender had previously engaged Chalabian as his solicitor on a number of property ventures and agreements over the preceding years. The offender and Chalabian had discussions as to where the blackmailed proceeds could be sent and Chalabian provided some advice about that. Rostankovski was not a party to those discussions.
On 24 January 2017 the offender and Rostankovski disclosed their plan to Barrett, their understanding of the nature of the Plutus tax fraud scheme and the garnishee orders issued by the ATO on the second tier companies.
On the morning of 30 January 2017, Chalabian sent the offender a WhatsApp message, containing his firm's trust account details. The offender passed these details on to Rostankovski. On the evening of 30 January 2017 and on the morning of 31 January 2017, the offender and Rostankovksi discussed preparatory arrangements and their plan to blackmail the conspirators at Clamenz Lawyers' office in Martin Place in Sydney ('Clamenz'), where Menon was a principal partner, in the next couple of days. They discussed the information which Barrett should be supplied with. Rostankovski confirmed that he had access to the accounts of the second tier companies and the entities from which Adam Cranston was receiving monies; including 'Prescott Page' and 'Synep'. They planned the timing to make the first blackmail demand so as to ensure that the main Plutus conspirators were present, including Adam Cranston, Onley and Menon.

[4]

The first blackmail demand - 1 February 2017

At 3:21 am on 1 February 2017, the offender sent a text message to his personal assistant, requesting that she collect two laptops from the Double Bay office and brings those laptops when she picked him up at 7:45am. The offender believed that the laptops contained incriminating material, implicating the Plutus conspirators, not only in fraud, but also in money-laundering and could be used to leverage monies from them. The personal assistant did what she was instructed to do.
At about 9:33am, Rostankovski and Barrett met with Menon and Adam Cranston at Clamenz. The meeting was later joined by Onley and Anquetil. Barrett introduced himself as a journalist of 39 years' experience, who had worked with the ABC and two commercial television networks. Barrett disclosed that he was aware of an allegation of tax fraud involving Plutus and that he had been approached by two 'shadow' directors, Anthony Palumberi and Alex Nappa, who told him that they possessed paperwork disclosing the fraud and had received letters requiring large sums of money to be paid to the ATO. He said that he had spoken to the boss of 'A Current Affair', with whom he had a working relationship. He said that he could put all of the named directors of the second tier companies in a room and have a joint meeting, discussing why they were receiving bills from the ATO. Barrett further told them that he wished to interview Menon, Adam Cranston, Onley and also Adam Cranston's father, Michael Cranston. He implied that if they declined to be interviewed he might disclose things to the then Commonwealth Treasurer, and the now Prime Minister.
Rostankovski threatened that he possessed surveillance and information on entities Prescott Page, and Kisnet and 'absolutely everything'. He told some of the Plutus Conspirators that they would be arrested that afternoon.
At about 9:50am, Barrett then left the meeting. Soon after, Barrett rang the offender and they spoke for 23 seconds.
But back in the meeting, Rostankovski threatened that he had members of the Commancheros, the outlaw motorcycle gang, waiting downstairs and were ready to "come up and belt the fuck out of you guys". This threat of physical harm was not something of which the offender had been aware and it is accepted was outside the scope of the agreement he had with Rostankovski. Rostankovski also called the second tier director, Alex Nappa and had Nappa confirm, on speaker phone, his knowledge of the scheme and the names of Adam Cranston, Onley and Menon.
Rostankovski said to Adam Cranston and Menon that he was aware that $26 million had been hidden by the Plutus conspirators and demanded $5 million as a 'gag order'. He suggested that the forensic accountants had matched up figures and processes from the old scheme, that the conspirators were dumb to run the 'fucking scam, again with new directors'. He referred to laptops in his possession containing amongst other things, correspondence relevant to Keystone Pay (one of the second tier companies) and 'fake' emails from Simon Anquetil from Plutus.
The Plutus conspirators, Anquetil and Onley joined the meeting about 15 minutes later. Rostankovski repeated his demand that the $5 million was to be to be transferred to the trust account of Chalabian, acting for the second tier companies' directors. Acting on behalf of the conspirators, Menon confirmed that they would meet the demand and pay that sum of money; although it could not all be transferred in one hit and would have to be done in part payments, disguised as Plutus company overheads and other legitimate businesses, so as to avoid ATO scrutiny. Menon suggested that the best way was the transfer of an initial $1 million and to prepare a deed of settlement with the directors of the second tier companies. Menon said that he would speak to Chalabian to structure the deed as a dispute settlement and transfer the monies in part payments.
Although the offender was not present whilst the first blackmail demand was made, he orchestrated the blackmail and ensured its success. Barrett had rung the offender at about 11:07am to discuss the progress of the blackmail and the offender kept Chalabian informed of the developments, including Menon's desire to draft a deed in a way that disguised the true nature of the arrangement.
At 12:07pm, after having left the Clamenz meeting room, Rostankovski rang the offender. This was essentially a report. The offender told Rostankovski that he had instructed Chalabian to play "hardball" in his dealings with Menon, not to "settle for anything less than two and half (million) today" and confirming that the monies to be transferred, initially, to Menon's Clamenz trust account, before transfer to Chalabian to make it appear as though it was a "commercial thing .. (not) being paid as fuckin' …. ATO money."
At about 3:40pm, Rostankovski and Menon attended Chalabian's law firm, in the Sydney CBD. Later in the afternoon, at about 5:17pm, the sum of $250,000 was credited to Chalabian's account from Plutus' payroll account.

[5]

Preparing the first blackmail deed

Between 1 and 3 February 2017, the offender had numerous communications with Rostankovski, Chalabian, and Menon, sometimes singularly and sometimes jointly, regarding drafting of the sham deed between Plutus and the directors of the second tier companies, the object of which, was to disguise the transfer of the $5 million in response to the first blackmail demand. The offender provided instructions during the course of negotiations conducted by Chalabian and Rostankovski in their dealings with the conspirators.
The offender and Rostankovski discussed, amongst other things, a message that might be sent in reply to one received from Adam Cranston who, in a screenshot, alluded to extortion attracting a substantial penalty. The offender told Rostankovski that this indicated that Cranston was panicking. They also discussed when and how they could inject Barrett into discussion with Menon. The offender encouraged discussion as to the tactical side of negotiations; encouraging Rostankovski to remain silent whilst Chalabian managed the negotiations with Menon.
At 12:09am on 3 February 2017, the offender forwarded to Chalabian two screenshots of a screen provided by Rostankovski, which itemised the names of the second tier companies and the corresponding named directors; with accompanying instructions as to how to explain the fact that a second tier director, Danielle McDonnell, was missing and to instead claim his personal assistant was co-director of that 2nd tier company.
At 9:27am, Chalabian and the offender spoke on the phone and discussed the drafting of clauses of the first blackmail deed. They had an appreciation of what Menon wanted to do. The offender's main interest in the drafting of this document, and engineering the second tier companies' creditors in a manner to facilitate the situation whereby he, Rostankovski and Chalabian could get access to and use the $5 million as soon as it was received.
At 10:22am, the offender sent an iMessage to Chalabian, providing further instructions. He referred to "my guy" - a reference to Rostankovski - having received 17 missed calls last night and "Dev (Menon) is freaking - as are the others. They're over a barrel but it's in their nature to fight till end."
By the end of 3 February 2017, the first blackmail deed was executed between Plutus and the named directors of the second tier companies. It was Rostankovski who arranged for the directors to sign the documents on 3 and 4 February 2017.
Clause 2(a) of the deed provided a payment schedule, commencing with payment of $1 million on execution (acknowledging receipt, already, of $250,000) and on-going payments of $500,000 for 8 weeks. Sub-clauses 2(b), (c) and (d) purported to require the second tier companies to pay wages and superannuation to workers. Clause 4 passed on the obligation to lodge Business Activity Statements.
The offender confirmed receiving the first blackmail deed from Chalabian on 7 February 2017. In an SMS exchange with Rostankovski that day, the offender referred to the 'engineering' of the deed and instructions he had given to Chalabian and the need to start the distribution of funds the next week.

[6]

The second blackmail demand

On 10 February 2017, in a WhatsApp message to Chalabian, the offender raised the idea of putting pressure on the Plutus conspirators to obtain an additional $20 million. He asked Chalabian to meet to discuss the idea and Chalabian said he could meet on 20 February.
At 12:07pm on 15 February 2017, the offender had on his phone a photograph of a Blackberry screen containing a message which he drafted, which was partly as follows: "Now we have 9 weeks to bring down ARMAGEDDON and spank those cunts for the next 20 brother. Good stuff xx.. All you need to say is 'you irrevocably agree to pay B, C, D and E. Start fukin paying in same time frame and everything goes away'".
At 6:33pm, the offender sent to Rostankovski a draft message for the latter to on-send to Menon: "if their accounts get frozen no problem, the $ continues to minimum $20m under (b) (c) (d) etc and these directors will receive the $20m personally to remit off as they are, under the Act Dev, as you are well aware, personally liable for both super and PAYG which your clients Adam Cranston and Jay Onley would never pay. We are fully aware of GST ends up being worn by the company hence not a liable issue personally. So stop the bullshit and keep up the payments I strongly suggest."
After making some edits to the draft message, Rostankovski sent this message to Menon on 15 February 2017. This was the second blackmail demand.
The offender informed Barrett of the second blackmail demand and had him on standby lest more pressure needed to be exerted on the Plutus conspirators. He sent a message to Chalabian about 9:27pm on 16 February 2017, that he and Rostankovski would pay him $20,000 for each million received in the latter's trust account following the second blackmail demand: so if $15-20 million was received, Chalabian would get $300,000-400,000. He sent Chalabian a message noting the resistance of the Plutus conspirators but opining that they had enough leverage, and he encouraged Chalabian to keep the pressure on Menon and pursue the receipt of the monies.
At about 6:01 pm on 17 February 2017, the offender and Rostankovski had a lengthy telephone conversation during which they discussed the second blackmail demand. Amongst other things said in that discussion, the offender confirmed that the changes made by Rostankovski to the message sent to Menon were good. Rostankovski expressed the opinion that their priority was to continue to exert pressure to ensure the regular payment of the blackmail monies. The offender referred to having briefed Barrett and having him ready to exert further pressure if needed. They agreed that Rostankovski would call Menon. They also discussed property developments and opportunities for the potential investment of five or $6 million of the blackmail monies into a property which one of the offender's friends and associates, Michael Teplitsky, owned, worth $40 million. Rostankovski spoke of doubling the $20 million that they would receive from the blackmail demands.
On 20 February 2017, Chalabian met with the offender and Rostankovski in the Four in Hand Hotel. When Chalabian indicated that he would bring with him the false invoices from Plutus to the second tier companies that Menon had provided, to that point, to legitimise the payments of the blackmail monies, the offender confirmed that the invoices were "toilet paper" insofar as the directors of the 'subby' companies were concerned.
Later on the afternoon of 20 February 2017, Chalabian discussed additional matters with each of Rostankovski and the offender, via WhatsApp. Rostankovski sought to be distanced from the arrangements. The offender apparently respected this: he told Chalabian that Rostankovski did not want a file in his name and that it would be preferable if it was created in the name of one of the second tier company directors who took orders from Rostankovski. The offender also conveyed his confidence in receiving the additional $20 million, and confirmed Chalabian's expected gain. Later, Rostankovski and the offender arranged with Chalabian for a second tier company director to sign an authority document and create a paper trail legitimising the transfer of the monies.

[8]

CIRCUMSTANCES CONCERNING THE MONEY LAUNDERING OFFENCE

Between 1 February 2017 and 18 May 2017 the sum of approximately $24,244,760.64 was paid into the Lands Legal Trust account as a result of the two blackmail demands. About $4.8 million was received between 1 and 15 February 2017, after the first blackmail demand. About $19.4 million was received between 16 February and 18 May 2017, after the second blackmail demand.
Rostankovski and the offender provided instructions to Chalabian to disburse the blackmail monies, and Chalabian did so for their benefit and the benefit of others. They all had numerous communications about the methods of laundering, including the drawing and presentation of cheques; payments made locally; preparation of loan documents to disguise the origin of disbursements; overseas transactions and cash withdrawals. The destination of the funds, aside from reward payments to second-tier company directors for each disbursement, was to associated entities that Rostankovski and the offender controlled or had connections to, including overseas entities. Disbursements were made from the Lands Legal Trust Account, on the offender's and Rostankovski's instructions, from 28 February 2017.
Between 9 and 13 March 2017, the offender and Rostankovski instructed Chalabian to prepare a deed of agreement, dated 15 March 2017, recording the arrangement by which the blackmail funds and profits from investment opportunities would be distributed between them. In its essentials, the agreement noted that Rostankovski had access to $25 million and the offender would be paid 50% of profits from investment opportunities the offender introduced to Rostankovski.
The offender's Agreed Facts commonly set out in extensive detail examples of instructions and associated documentation to a range of disbursements from the Lands Legal Trust account between 28 February and 23 March 2017 (Agreed Facts 70-76).
The facts showed that the offender was doing the lion's share of the work to implement the transfers, sometimes into companies managed by associates of the offender, such as Jelvy Pty Ltd (Agreed Fact 72), Triswat Developments Pty Ltd (Agreed Fact 72).
Between 23 March and 18 May 2017, further disbursements were made from the Lands Legal Trust account at the direction or instruction of Rostankovski and the offender to Chalabian (Agreed Facts 77 - 81), including money transfers to entities in Hong Kong and Lebanon (Agreed Facts 80-81).

[10]

Relevant considerations

The offending was constituted by two separate blackmail demands in a rolled up offence. It was common ground that this was permissible on a guilty plea (R v De Leeuw [2015] NSWCCA 183 at [116]). This conferred at least a potential benefit upon the offender through the imposition of a single penalty for what might otherwise have been treated as separate instances of offending.
Section 249K(2) of the Crimes Act 1900 (NSW) is an aggravated form of the offence of blackmail. The relevant element of 'menace' is that the victim has committed a serious indictable offence. It was common ground that the 'threat' was the threat of exposure of the Plutus conspirators' illegal activities; although, as the Crown put it more specifically, the exposure was to be not only to law enforcement authorities, but also more public exposure through the media and involved one of the Plutus conspirators, Adam Cranston's father, then a Deputy Tax Commissioner.
In the Court of Criminal Appeal's decision in Turner v R [2021] NSWCCA 5 ('Turner'), the matters that the Court had regard to (at [70]-[72]) when assessing the objective gravity of the offending included:

the nature of the threats;
the period of time over which they occurred;
the amount of money obtained under the threats

In Benasic and Malavetas v R (1987) 77 ALR 340 at 342, the Court also noted whether the nature of the treat involved violence was relevant, and also the nature of the accusation or threatened accusation; including whether there were reasonable grounds for the making of the accusation or threatened accusation.
The Crown also noted that additional considerations that were pertinent in similar offences included the sophistication of the offending, the motivation for the offending and the impact of the blackmail upon the victim; as well as whether the duration of the threat was communicated to the victim, the degree of planning and premeditation involved; whether the offender acted with others in making the demand and whether the offender instigated the offence and his or her general role in making the demand with the menaces.
In Turner, Garling J (with whom Payne JA and Davies J agreed) observed (at [68]) that blackmail offences have always required emphasis in sentencing on general deterrence and protection of the community.

[11]

Uncharged conduct

One matter in which the parties were at odds was the significance of the offender's conduct after the second blackmail demand, which, the Crown submitted, tended to show that the offender was intending to exert even more pressure upon the Plutus conspirators, to ensure ongoing payments. The offender's planning involved his compilation of incriminating material and the dissemination of it to Barrett. The plan was frustrated upon the offender's arrest.
I accept the Crown's submission that whilst the offender's conduct, post-dating the physical ingredients of the offence, up to May 2017, could not aggravate the offending, it remained relevant to proving that his offending conduct was not isolated but formed part of an ongoing course of conduct, confirmed his predominant motive (greed), reinforced the need for subjective deterrence and illuminated his culpability; and, in these ways, may lead to the imposition of a more severe sentence than might otherwise be imposed if the uncharged conduct was not taken into consideration. The Crown cited observations of the South Australian Court of Criminal Appeal in R v Tran & Tran [2011] SASCFC 153 at [28]-[30]. Another example of uncharged conduct being taken into account, albeit conduct that occurred prior to the offending, was in Turner at [46], to illuminate whether or not the offending was isolated or out of ordinary occurrences, or whether they were partly of a sustained course of criminality.
In R v Wilkinson (No.5) [2009] NSWSC 432 at [61]-[62] Johnson J demonstrated how post-offence events could be taken into account when weighing objective gravity, in the way that they illuminate the surrounding circumstances. By 26 April 2017, all but $750,000 of the $25 million blackmail sum had been paid but because of the garnishee order, that balance had not been paid. The efforts made in May 2017 to exert pressure upon the conspirators to pay the balance were said to be directly related to the enforcement of the blackmail. They undercut the argument that the offending amounted only to two isolated incidents resulting in diminished weight to be accorded to considerations such as specific deterrence and denunciation.

[12]

Overall evaluation of objective gravity

In my opinion, the offender's offending was well above the mid-range of objective gravity. The quantum of the blackmailed monies was plainly very high. The planning was extensive over a period of 3 months. There was a high degree of pre-meditation. Further, the circumstances in this particular case that what was threatened to be exposed was the high scale of tax fraud that had been and was continuing to be actually engaged in by the victims, rather than a threat of falsely alleging such activity was significant. This was not a case, like Turner, or R v Pughe [2019] NSWDC 897 ('Pughe'), where the serious indictable offence threatened to be disclosed was in the past. It was continuing to be engaged in by the conspirators.
Further, the veracity of the threatened accusation - the fact that it was true - and the co-offenders' indications that the accusation was likely to be proven - the co-offenders' revelation of incriminating material - both made the threat more credible and, thus, the blackmail more effective.
The circumstances of the blackmail made the detection of the underlying criminal activity, the tax frauds, more difficult as the perpetrators were likely to (and did) not only accede to the threat, but were also likely to take steps to conceal the fashion in which they did so. Given the truth to the underlying threat, it tended to make it even less likely that the victims would complain about the blackmailing than if the threatened accusation lacked credibility. The Agreed Facts suggested that Cranston, at least was aware that he was being extorted (Fact 41). Further, as the Crown noted, the threat of disclosure of real criminal wrongdoing might have (although in this case was not shown to have) led to efforts to destroy evidence of the underlying wrongdoing.
The blackmailing was made to multiple victims. The threats of media disclosure might also have had added salience in relation to the victim, Cranston, because of the position of his father.
I also accept the Crown's submission that regard may be had to the conduct from February to May 2017 as negating any suggestion of isolated conduct.
I do not accept the Crown's submission that the conduct was in the high range of objective seriousness. The first, and main, respect, was the impact of the blackmail was comparatively less than other cases of offending. I distinguish, here, between the identity of the victim and the impact of the threat on the victim. I accept the Crown's submission that the principle of equal justice before the law would be impaired if I was to take into account that the victims here were engaged in serious and on-going criminal activities. But nevertheless, I accept that the impact here upon the Plutus conspirators of the blackmail who, to put it rather crudely but not wholly inaccurately, were able to pay off the blackmailers as an 'overhead' of their sophisticated and lucrative enterprise, was of a lesser order than the lonely old man who is extorted into handing over his life savings upon threat of disclosure of indecent conduct towards a much younger woman (Attorney General's Reference No 40 of 2002 (John Alexander Collard) [2003] 1 Cr App R (S) 98) or the ostensibly respectable suburban accountant who yields payment of close to $1 million because of the threat of disclosure of online activities (Turner and Pughe). Secondly, the serious indictable offence threatened - the tax frauds - although of course very serious, were of a comparatively lesser order than other serious indictable offences, such as for example, sexual assault, murder or violent physical assaults. Thirdly, whilst acknowledging the degree of planning, and accepting that the offending conduct was not isolated, there were only two threats within a reasonably short period of time. In comparison, the threats in Turner were of a much longer duration, and, in that way, the psychological damage inflicted on the victim was, on that account, protracted.
What I have said so far applies commonly to the offender and Rostankovski. In terms of their comparative roles and responsibility for the offending, I find that the offender's role and responsibility was higher than Rostankovski. The mechanisms by which the offending occurred can be said, in a composite way, to be the brainchild of the offender: the recruitment and engagement of Barrett and, subsequently, Chalabian for the collection of the proceeds. Rostankovski did not have the financial or other wherewithal to conceive of the offending, whatever his motives. It was the offender who conceived of the idea to press for an additional $20 million that formed the second blackmail demand.

[13]

Principles

The offence under s 400.3(1), involving an intentional dealing of at least $1 million, makes this offence the most serious within the graduated scale of offences for money laundering. An essential element is actual belief in the offender that he or she is dealing in the proceeds of crime at the time of dealing.
In Kim v R [2016] VSCA 238 at [61] the Victorian Court of Appeal emphasised that evaluation of the objective gravity of the money laundering offence required consideration of what the offender did, including the actions constituting the dealing, the period of time over which the offence was committed, the number of transactions involved, the amount of the offending and the role of the offender in the money laundering arrangement (including whether the offender was author or instigator of the arrangement and the degree of authority reposed in the offender in carrying it out). The amount of money is highly significant. Generally, a larger number of transactions involving small amounts of money will be more serious than a single transaction of a larger amount (which may betoken an isolated offence). How the money is dealt with and the offender's awareness of how the money is dealt with is also relevant.
In R v Li (2010) 202 A Crim R 195, Barr AJ at [41] (Allsop P, Basten JA, McClellan CJ at CL and Simpson J agreeing) observed that it was difficult to generalise about the sentencing exercise for this offence, but added: "Perhaps the most important will be an exact appreciation of what the offender did, what acts he performed and with what authority and over what period of time. The total value of money or property involved will be important, and whether the money or property belonged to the offender or to another. The degree of planning or deceit that led to the commission of the offence and whether actual loss resulted, and the extent of such loss, will be important. Just as there is a distinction between recklessness and belief, the precise nature of proved belief may vary so as to affect the sentence. There will be a range of possible strengths of belief, rising to certain knowledge"
Senior Counsel for the offender submitted that more severe penalties should be ordered where the money laundering venture was an aspect of organised crime and cited as authority for that contention the Court of Criminal Appeal's decision in R v Huang; R v Sui (2007) 174 A Crim R 370 at [36].
In R v Anquetil [2020] NSWSC 995 at [92], Payne J identified as relevant considerations to the determination of the objective gravity of the money laundering offence the duration, quantum and conduct engaged in to effect the money laundering.

[14]

Evaluation of objective gravity

I accept the Crown's submission that the offender's offending was well above the mid-range and towards the high end of the range of offending for conduct of this kind.
I accept, in particular, that the sum of money involved, and the extent to which it exceeded the monetary threshold for the offence in question, although not a conclusive consideration, is nevertheless highly material. So too is the awareness of the illegal source of the funds. These two matters have been described as the primary indicators of objective gravity for the offending: R v Guo (2010) 201 A Crim R 403 at [85]-[91]; R v Li (2010) 202 A Crim R 195 at [18], [41]; R v Ansari (2007) 70 NSWLR 89 at [122]. Further, there was a sophisticated and organised level of planning with the plain intention of concealment. I find that the offender was the architect of that scheme. The extensive agreed facts (numbered 72 to 81) show that it was offender who was taking the lead role in working with Chalabian to effect the disposition of the proceeds even if the co-offender, Rostankovski was 'kept in the loop'.
I reject the supposed distinction between disposition of the blackmail funds for investment, rather than laundering purposes. Those purposes were not mutually exclusive. To the contrary, the form of the assets acquired served the dual purposes of assisting concealment and also generating the object of obtaining financial gain; motivated entirely by greed. The offender well knew that the monies he dealt with were the result of nefarious conduct by the Plutus conspirators. Also, contrary to the offender's submission, I find that there were a significant number of transactions. Even if there were not the purely 'structured' dissipations of monies redolent of the concealment from financial institutions, and regulatory authorities, that difference is not material where, as here, the offender himself was a principal who benefited from the concealment. His sole motivation was greed.
I stop short of finding that his conduct fell within the high range of offending. I accept the offender's submission that a missing factor which would have inclined me to make that finding was the involvement in organised crime. The offending conduct was intimately connected to the blackmailing and, in that sense was intended to exploit and conceal the fruits of that offending. But there was no suggestion of a sustainable criminal enterprise into the future, such as might be seen with organised crime.

[19]

Antecedents, character, age and physical and mental condition (s 16A(2)(m); CSP Act, s 21A(e) and (f))

The offender is now 51 years old (46 or 47 when he offended), with two dependent children from two partners. The relevance of the offender's domestic associations will be considered later in these remarks.
The offender is a property developer. He was previously bankrupted due to difficulties encountered during the global financial crisis, but he since recovered.
Other than an inconsequential (for present purposes) drink driving offence, he has no past criminal record to speak of.
Although there were no express testimonials as to his prior good character, such as might have been indicated by good works for the community, the absence of a consequential criminal history facilitates my acceptance of his having a prior good character; which can reduce the need for specific deterrence. Conversely however, for the type of offending for which the offender has been involved, the weight accorded to prior good character is reduced because it assisted him in the commission of the offending (R v Rivkin (2004) 59 NSWLR 284 at [410]). In relation to the money laundering offence, in particular, it has been said that an offender's prior good character is of less significance than might otherwise be the case when the activity is engaged in for profit, over a significant period of time and involves a large number of transactions: R v Huang (2007) 174 A Crim R 370 at [36]; R v Guo (2010) 201 A Crim R 403 at [89]. In this case, the period of offending was not especially long and although there were numerous transactions, they were not of the number typically associated with the 'structured' money laundering of substantial enterprises. Nevertheless the point about prior good character assisting in the accumulation of profit by illegal means retains force.
I take into account the circumstance that the offender has certain physical and mental conditions, as disclosed in the letters or reports of the psychiatrist, Dr Nielssen, the psychotherapist Dr Marlowe and the general practitioner, Dr Wright. Dr Wright noted that he is a Type II diabetic and had shown deteriorating control over that condition in the last year. The offender takes antidepressants and even antipsychotic medications. Dr Nielssen diagnosed him as having a depressive illness and substance use disorder. I note that he commenced to see Dr Marlowe only after his arrest, from September 2019. Dr Wright referred to hypercholesterolemia, mixed anxiety and depression, back pain, hyperextension, back pain, insomnia and chronic sinusitis. In 2019 he suffered a seizure.
Senior Counsel for the offender disavowed any suggestion that these conditions contributed to the offending conduct. There is no serious suggestion that any of these conditions reduced his culpability. Further, although there was a suggestion that at least part of the motivation for the offender's blackmailing was a personal animus against one of the Plutus conspirators, that feature was a very slight part of his overall motivation. Overwhelmingly, his conduct was driven by greed.
Senior Counsel submitted, in reliance upon Dr Wright's opinion, that his 'fragile' health status will deteriorate within the custodial environment and make his time in custody more onerous. Whilst I accept his condition will not improve under incarceration, I do not, with respect, place a great deal of store in Dr Wright's evidence, which does not amount to much more than a bare assertion. No such similar opinion is ventured by Dr Nielssen, a psychiatrist, who prepared a report. Dr Nielssen said that the main elements of a treatment plan, other than counselling, would be available in the custodial setting.
Although Dr Nielssen also opined that he thought that the offender might face intimidation from militant inmates because of his cultural background, I regard that evidence as speculative and in expressing this opinion, and his other opinion about the effect of hardship upon the offender's other family members, I considered that Dr Nielssen went perilously close to, if not actually exceeding, the ambit of his expertise.

[24]

Past and future assistance to law enforcement authorities (ss 16A(2)(h), 16AC, CSP Act, s 21A(3)(m) & s 23)

Past assistance and future co-operation to law enforcement authorities are relevant and separate bases for discounts on sentencing under the Crimes Act, and also the CSP Act. The two sentencing regimes differ upon the requirement to specify the discounts and the considerations which the Court is required to take into account.
With reference to the money laundering offence, under the Crimes Act, the discount for future assistance should be quantified (s 16AC(2)); even if the discount for past co-operation is not mandated (Lee v R [2020] NSWCCA 307 at [105]). The considerations are not mandated other than the general requirement to determine the degree to which the offender has co-operated (s 16A(2)(h)). That said, it is well-established that the typical considerations relevant to informing the assessment are: the effectiveness and value of the assistance, the extent to which the offender disclosed everything of relevance and not tailored the disclosure to material already known; the extent to which the cooperation related to offences which are otherwise difficult to detect and investigate; the extent to which the co-operation disclosed the offender's guilt in respect of other offences; the motive for co-operation (including whether it is motivated by genuine contrition rather than self-interest); and whether the offender's co-operation caused others to co-operate (Commonwealth Director of Public Prosecutions v Wallenius Wilhelmsen Ocean AS [2021] FCA 52 at [262]).
With reference to the blackmail offence, under the CSP Act, discounts for past assistance, future assistance (and a guilty plea) should be separately specified (CSP Act, s 23(4)(c)). The extent of the discounts for past and future assistance is affected by the considerations set out in s 23(2).
A combined discount for guilty plea and assistance should not ordinarily exceed 50%. Even at the level of 50% the assistance should be of a 'very high order' (R v Sukkar (2006) 172 A Crim R 151 at [54]). A discount above is regarded as 'exceptional' (Buckley v R [2021] NSWCCA 6 at [85]).
As to the offender's past assistance, the AFP has described it, overall, of being of high value. Nevertheless, I note that in the earlier part of his purported assistance to the authorities, in 2019, he was regarded as not being fully frank and forthcoming. The agreed facts I referred to earlier also indicated his downplaying his role in the blackmail offence. His assistance was more beneficial from September 2020 and March 2021. In his favour, information was supplied which was not available to police from other sources. Nevertheless, the information he has furnished has not actually led to further charges being laid or, for that matter, any guilty pleas from co-offenders.
As to offender's future assistance, in relation to the trials of other persons, the Crown submits that this is also of high value. He has signed an undertaking to give evidence, having provided statements, in respect to two co-offenders. He has also given evidence in respect to a third individual who is yet to be charged. His evidence in each of the matters has been described as highly probative.
On the materials before me, I am satisfied that a 50% discount should apply, taking into account the guilty plea (25%). I am not satisfied that all matters, viewed collectively, warrant a combined discount in excess of 50%. It is difficult to be precise in apportioning figures, but I am inclined to think that the future assistance might prove to be of greater value than the offender's past assistance, so the respective discounts are 20% and 5%, respectively. The past assistance, whilst valuable, has not resulted in tangible successes such as the laying of charges or guilty pleas from co-offenders. It became valuable from September last year; a significant period of time after his arrest. I think the real value in the offender's assistance lies in his statements to the AFP and his undertaking to give evidence against co-offenders.

[26]

Hardship to family members (s 16A(2)(p))

In Elshani v R [2015] NSWCCA 354, Adams J (Gleeson JA and Beech-Jones J agreeing) accepted that the effect of an offender's incarceration upon family members is relevant to the sentencing exercise. To that extent it reflects the position at common law. The rider, however, is that the offender must demonstrate 'exceptional hardship' to a family member or dependent: R v Zerafa (2013) 235 A Crim R 265 at [93].
The offender submits that his partner, who is without family in Australia, will have to raise their 6-year old son without the offender's assistance whilst he is incarcerated. She considers that his absence from the home might impact upon her own capacity to maintain full-time employment working as a senior clinical pharmacist. She has also reported acute stress in dealing with the process of his charging and sentencing. I note that no additional 'hardship' is relied upon in connection with 6-year old son, such as, for example, any disability.
I am not persuaded that the circumstances, as disclosed in the evidence, meet the test of exceptional hardship. To the extent that the offender's partner has suffered acute stress associated with the charging and sentencing, this does not materially go beyond the stress commonly associated with spouses or partners facing the prospect of being separated from an offender. I note also that in Ms van Schreven's letter to the Court, she goes no further than to suggest that her partner's incarceration 'could' impact upon her ability to work full-time. She does not address whether she has given any consideration, given the status of her employment, to whether she could obtain external assistance with the care of her children, at least whilst she is at work; nor suggests that she would not have the financial resources to acquire such assistance. Hardship of the kind she will likely endure may be thought to be an inevitable consequence of the offender being apprehended and incarcerated.
I acknowledge the evidence of hardship to the offender's daughter, in terms of her acute anxiety at coping with her father's charging and likely custodial sentence. However, whilst regrettable, I do not classify that as amounting to exceptional hardship in a way that will mitigate penalty in any material way. His daughter was reported to have a concern about the effects of media coverage, but of course, the offender's sentencing proceeding is currently subject to non-publication orders.
Nevertheless, I acknowledge that this will be the first time the offender is in prison and separation from his wife and family will be onerous for him. I think this can validly sound in consideration of the length of the non-parole periods for the offences.

[30]

Comparable cases on money laundering offences

The Crown drew attention to Anquetil, with the reservation that the decision was subject to a Crown appeal against sentence which has been heard but not yet determined. In Anquetil, the offender was sentenced for his role in the Plutus tax fraud conspiracy. He pleaded guilty to two federal offences, one being his participation in a conspiracy to defraud the Commonwealth of a sum of over $100 million; and the other money laundering offence for which he personally dealt with the sum of approximately $28 million (there was also a scheduled offence). The sentencing judge characterised the money laundering offence as being well above the mid-range of objective seriousness; noting that the amount laundered was at the upper end of offences previously dealt with. The sentencing judge noted that the offender had incorporated and used various corporate entities and created records to disguise the transfer of funds. The offender was given discounts both for his pleas and past and future assistance and received a sentence, for the money laundering offence, of 6 years (from a starting point of 12 years); though that sentence was affected by the schedule offence. In this case, there is no additional federal offence which the offender has asked to be taken into account.
In R v Hammond [2020] NSWSC 888 another offender was sentenced for her role in the Plutus tax fraud conspiracy. She pleaded guilty to the two counts of conspiracy to defraud the Commonwealth and also conspiracy to money laundering. She belatedly became involved in both conspiracies, and insofar as she was involved in the latter conspiracy, she assumed the identity of directors of the second tier entities for the purpose of facilitating the movement of the proceeds of the frauds. She obtained a comparatively small financial gain for her involvement in both conspiracies and whilst her motivation was partly financial, she was also motivated by misguided trust and loyalty. After receiving an overall discount for her pleas and past and future assistance, her starting sentence of 6 years for the money laundering offence was reduced to 3 years.
The Crown also cited two sentencing decisions for money laundering involving a different tax fraud conspiracy, involving the false lodgement of company tax returns with inflated depreciation expenses for the cost of acquiring medical technologies; with the consequence of reaping significant tax losses. The decisions were Dickson v R [2016] NSWCCA 105 and R v Issakidis [2018] NSWSC 378, two co-offenders, Dickson and Issakidis, were both charged with counts of tax fraud conspiracy and a money laundering conspiracy. They dealt with the sum of approximately $68 million in cash payments which were sent to offshore accounts disguised as payments for medical technologies, but thereafter repatriated through elaborate commercial structures, often disguised as loans. The period of money laundering was 6 years and 7 months. Both pleaded not guilty. Neither showed any contrition and both were motivated by greed.
Following a Crown appeal, Dickson received a sentence of imprisonment for 12 years for the count concerning conspiracy to money launder. Issakidis, who, amongst other things, was regarded as having good prospects of rehabilitation, and low prospects of offending upon his release, did not appeal the sentence he received for the conspiracy to money launder; which was 8 years and 3 months.

[33]

Totality, concurrency and accumulation

Because I am sentencing for multiple offences, in the case of both co-offenders, I am required to fix an appropriate sentence for each offence, and thereafter consider accumulation, concurrence and totality.
I consider that it is important that an element of accumulation is required to comprehend the full extent of the criminality, and recognising the different features of the criminality. The money laundering was plainly connected and occurred within a short period of time, and to some degree was planned before or almost contemporaneously, to the blackmailing. Both offences shared the common motivation of greed. I am also conscious, however, that the overall effect of the sentencing should not be 'crushing'.
The structuring of the sentences is complex, not only because of the discounts, but also the mix of federal and state offences. I propose to follow the example of Director of Public Prosecutions (Victoria) & Commonwealth Director of Public Prosecutions v Swingler (2017) 269 A Crim R 526 at [75]-[90]).
The offender has spent two days' in custody, so that will be taken into account in terms of the commencement date for the state offence.
In my view the notional starting point for head sentences should be 10 years' imprisonment for the blackmail offence and 15 years for the money-laundering offence, respectively. But after the combined discount (50%) that I have referred to has been factored into for each of those sentences, the appropriate sentences are 5 years (for the blackmail offence) and 7 years, 6 months (for the money laundering offence) respectively. Then, applying the totality principle, factoring in notional concurrency and some notional accumulation, the notional total effective head sentence would be 10 years' imprisonment. The separate sentences I impose will reflect the application of that principle in the way I have indicated.
As indicated, I consider that the same non-parole period should apply to both offences.

[34]

The offender

Mr Hausman, please stand.
You are convicted of counts 1 and 2 on the indictment.
Having taken into account, for each offence, your pleas and your past and future assistance to law enforcement authorities (yielding a combined discount of 50%): On count 1, you are sentenced to a term of imprisonment for 5 years, commencing on 30 March 2021 and ending on 29 March 2026, with a non-parole period of 3 years expiring on 29 March 2024. On count 2, you are sentenced to a term of imprisonment for 5 years, commencing on 30 March 2024 and ending on 29 March 2029, with a non-parole period of 3 years, expiring on 29 March 2027.
I am required to set out the period of imprisonment and non-parole period I would have imposed in relation to count 2, being the money laundering offence, but for your undertaking to assist in the future (s 16AC of the Crimes Act) for your future assistance to authorities. But for your undertaking (yielding a 20% discount), I would have imposed a period of imprisonment of 6 years and 3 months' imprisonment for count 2, being the money laundering offence, with a non-parole period of 3 years and 9 months. If you do not adhere to your undertaking to assist in the future, the Commonwealth Director of Public Prosecutions may appeal against the adequacy of the reduced sentence I have imposed under s 16AC(3) of the Crimes Act.
I am also required to state the penalty that would have been imposed in relation to count 1, the blackmailing offence, but for your assistance. In contrast to the requirements of federal sentencing law, however, the requirement to state the impact of your assistance extends to both the past and the future (s 23(4) of the CSP Act). The discount on this sentence, for past and future assistance, is a combined discount of 25%. That means that but for your past and future assistance, you would have received a sentence of imprisonment on the blackmail offence of 6 years and 8 months.
I am required to explain the sentence imposed for count 2, being the money laundering offence. I have imposed an effective term of imprisonment of 5 years to commence on 30 March 2024 and a non-parole period of 3 years. You are eligible for release on 29 March 2027. This means that you will be imprisoned for a period of not less than 3 years for your laundering offence. However, what I have just said only applies to the laundering offence. Your sentence for this offence (count 2) commences immediately upon the expiry of the non-parole period for your blackmailing offence (count 1) and the term for your sentence for the money laundering offence has been adjusted having regard to the length of your sentence for the blackmailing offence. If you are granted parole at the end of your sentence for the money laundering offence, from 29 March 2027, you will serve the balance of your sentence in the community, but your parole will be subject to conditions determined by the relevant parole authority, which conditions may be amended or revoked. If you fail, without reasonable cause, to comply with the conditions of parole, your parole may be revoked and you may be taken back into custody to serve the remainder of your head sentence.