R v Idolo [1998] VSC 276; [1998] VICSC 57

The Commonwealth offences each carried a maximum penalty of imprisonment for 10 years or a fine of $60,000 or both and the State offence carried a maximum penalty of imprisonment for 10 years or a fine of $120,000 or both.

After a plea in mitigation, the applicant was sentenced on each of the Commonwealth charges, that is counts 1 to 10, to a period of two years' imprisonment, each expressed to commence on the date of its imposition. In respect of count 11 the applicant was sentenced to a period of imprisonment of two years and six months. Since all sentences were to be served concurrently, the effective total sentence was one of two years and six months. The judge directed in respect of counts 1 to 10 that, after serving a period of one year's imprisonment, the applicant be released on giving security by recognisance in the sum of $500 that he be of good behaviour for a period of

12 months. In respect of count 11 his Honour ordered that the applicant serve a minimum of one year's imprisonment before becoming eligible for parole. His Honour also made a reparation order against the applicant for $17,138.22 in favour of Telstra Corporation Ltd, against which the offences had been committed.

The applicant was engaged by Telstra Corporation Ltd (Telstra) from 22 April 1992 until 5 May 1995 to work on their retail and inventory computer system project, which was known as the MOSS project. During that period he was located at 181 Victoria Parade, Collingwood. From 8 May 1995 until 25 September 1995, when his engagement was terminated, he was employed again as a computer programmer by Telstra on what was called the Telstra Integrated Pay and Personnel System project, known as TIPPS, on the fourth floor, Riverside Quay, South Melbourne. The MOSS project is a retail and inventory computer system for Telstra mobile telephones. When equipment such as mobile telephones and associated accessories is sold through Telstra shops and purchased on account, the sales person at the shop enters details of the purchase on a computer data base, referred to as the MOSS inventory, which in turn operates a computer called VIR. Each night a batch process takes the details of all the sales and passes them on to one of the digital billing systems called MICA or the analog billing system, called RACE, depending on the type of mobile telephone purchased, whether analog or digital. It is only after this process occurs that a bill is produced and forwarded to the purchaser for payment.

The applicant was a team member on the MOSS project from April 1992 to May 1995 when he was transferred to the TIPPS project. While he was on the MOSS project his duties included the development, implementation and support of what are called the interfaces with RACE and MICA. He was, according to the evidence, the main analyst for the MOSS project in relation to the development of the interface between MOSS and the MICA and RACE billing systems. Using his detailed knowledge of and access to the MOSS system, the applicant altered data in the MOSS interface in such a way as to prevent charges in respect of the purchase of a number of mobile telephones being billed to the accounts of the purchasers. He also altered data in the interface which caused monetary credits to be added to his own personal Telstra accounts and certain Telstra accounts of a friend of his, one Vincent Rusciano. At no time was the applicant authorized to make alterations of those kinds.

On the night of 29 August 1995, unfortunately for the applicant, the batch process failed, prompting an investigation. Certain unauthorized alterations to data, involving in particular an attempt to credit an amount of $1099 to a Telstra account in the name of Vesticom Pty Ltd, a company associated with the applicant, were identified and eventually traced to the applicant's computer logical terminal identification. The source of the alterations was traced to the applicant's personal computer at Riverside Quay in South Melbourne. As a result of these findings, the applicant's work area at Riverside Quay was, on 25 September 1995, searched by members of the Computer Crime Section of the Commonwealth police and his personal computer was seized. Later, when the hard drive in the computer was analyzed, a text file was found which gave instructions in computer programming language for the adding of credits to the applicant's Telstra account. The exercise had been attempted on 29 August and had caused the the batch system to crash. On 25 January 1996 search warrants were executed by the Australian Federal Police at the applicant's premises and at his work station at Telstra and at the premises of his friend, Rusciano, and also at the premises of a company, Heine Management Ltd, Rusciano's employer, and those of Eurolynx Corporate Services Pty Ltd, a company associated with Heine. On the same day the applicant was interviewed by the Federal police.

Because of the alteration of data in the Telstra computer by the applicant, invoices to the value of $14,774 did not issue and various accounts of Telstra's customers were incorrectly credited to the value of $5645. As I have indicated, the further attempt on the part of the applicant to credit a Telstra account in the sum of $1099 was unsuccessful.

The applicant's modus operandi can be explained by reference to two or three only of the 11 offences with which he was ultimately charged. The facts which supported count 1 were in substance these. On 29 November 1994 Rusciano, as an employee of Heine Management Ltd, purchased three analog mobile telephones from the Telstra retail shop in City Road, South Melbourne. He arranged for the three units to be charged to the account with Telstra of Heine, the value of the purchase being $2667. The details of the transaction were recorded in the MOSS inventory and should have been charged to Heine's Telstra account. Rusciano collected the instruments from the shop on 29 November 1994 but the applicant altered the data in the interface to prevent the details being transferred to either of the MICA or RACE billing systems. Accordingly, no invoices were sent and Telstra received no payment for the three telephones in question. On the same date,

29 November 1994, the applicant, through his personal company, Vesticom Pty Ltd, invoiced Heine for three mobile telephones at a cost of $1350, which sum Heine paid to Vesticom by a cheque which was banked into that company's account on 5 December 1994.

Count 1, the facts of which I have briefly described, was the first of the Commonwealth offences which concerned blocking of the computer system to prevent the sending of invoices for purchases. There were several other counts which depended upon facts reflecting a similar scheme on the part of the applicant which were different in various respects which I need not now mention.

Count 2, another Commonwealth offence, exemplifies the kind of activity in which the applicant engaged with a view to crediting to the account of Vesticom in Telstra's books, of which the applicant ultimately obtained the benefit. On 10 February 1995 the applicant altered data in the MOSS interface which caused an amount of $2548 to be credited to the Telstra account of Vesticom, which credit purported to be in relation to the return of certain telephone equipment. There is no record on the MOSS inventory system of actual returns of equipment to match the credit which Vesticom received.

The last count, count 11, the State count, arose when, on 25 August 1995, the applicant himself purchased three digital mobile telephones and associated equipment from Telstra. He arranged for the purchases to be charged to the Vesticom account, the value being $2859. The details of the transaction were recorded in the MOSS inventory. The applicant collected the equipment, the amounts for which should have been debited to the Vesticom account. The applicant, however, altered the data in the interface to prevent details being transferred to either of the MICA or RACE billing systems. As a result, Telstra received no payment for those items.

Most of the offences concerned goods or credits to a value of $2000 or $3000, but two of the offences involved amounts between $1000 and $2000 and two of them amounts under $1000, namely $999 in the case of count 6 and $699 in the case of count 7.

Rusciano was also charged with certain offences arising out of his operations jointly with the applicant. Rusciano was dealt with summarily upon his pleas of guilty and avoided incarceration. There was and is no suggestion, however, that the applicant should on that account be dealt with on a similar basis. Rather, the applicant relies on the single ground that each of the sentences imposed on him was manifestly excessive in all the circumstances of the particular offences and of the applicant, himself. By way of particulars, it is said that there was a failure to give sufficient weight to mitigating factors personal to the applicant, including pleas of guilty and an early indication of those pleas, his age and previous good character, his good prospects of rehabilitation, the delay in his prosecution and the loss of his career path. Counsel for the applicant before us acknowledged that the judge had taken all these factors into account in imposing sentence, but contended that His Honour undervalued them.

The applicant is now 35 years old, having been born on 5 May 1962, and was 32 or 33 years old at the time he committed the offences. He was born in Trieste, Italy, into an unsophisticated family and came to this country as a babe in arms with his unskilled parents and an elder sister. After an education at government schools, he acquired a tertiary qualification in computer technology at about the age of 22 years. Since about 1990 he has made his services as a computer programmer available through his company, Vesticom, but relying on an agency to obtain engagements essentially at an hourly rate. According to counsel's submission on the plea, the applicant was intermittently involved in the creation and maintenance of the MOSS inventory data base and the MICA and RACE billing systems dealing with the inventory of purchases and billing to Telstra's customers accounts as I have described. During his able and realistic plea, the applicant's counsel characterized his client's conduct as amounting essentially to a fraudulent scheme of two people, the applicant and Rusciano, the applicant providing his inside knowledge of the data system of Telstra. It was a criminal scheme of conduct in respect of which the learned judge was satisfied that a custodial sentence to be immediately served was alone appropriate by way of punishment. His Honour regarded the applicant's commission of the offences as serious examples of them. His Honour noted that at the time he committed them the applicant was under contract to Telstra, albeit through his company, as a computer consultant, that he had a high degree of expertise in the computer field and that, while under contract with Telstra, the applicant had necessarily obtained detailed and expert knowledge of its computer data base. His Honour further noted that the applicant fraudulently used that knowledge to alter the data base in such a manner that he was able to commit frauds on Telstra as he did, obtaining about $20,000 from his criminal activities over a period of some nine or ten months.

His Honour further observed that the evidence demonstrated a high likelihood - a near certainty - that the applicant's fraudulent activity would not be discovered. It was when the applicant inadvertently caused the computer system to fail on 29 August 1995 that the fraud was discovered when, after the data base was re-established, the applicant again endeavoured to change data on it. Although the applicant was not aware of it at the time, it was as a result of the discovery of his fraudulent activity that his contract was brought to an end by Telstra and extensive investigations undertaken to get to the bottom of the scheme.

The learned sentencing judge noted that at the time of his perpetration of his fraudulent scheme the applicant was receiving "a more than adequate income". The applicant was then married with a dependent wife and two infant children, but there was no suggestion that he was under financial strain. His Honour concluded that the applicant's motivation for the commission of the offences was simply to achieve financial gain from the illicit exercise of his expertise. These findings have not been challenged.

The judge observed further that, but for the extenuating circumstances which were put before him, a substantial sentence of imprisonment would have been called for, and this essentially for the following reasons. First, the applicant acted in grave breach of the trust that was reposed in him in his relationship with Telstra. Secondly, the question of general deterrence loomed large in the circumstances of the case. His Honour observed, in my respectful view with perfect justification, that computer technology can be implemented only by means of the exercise of their skills by persons expert in the field. The integrity of the computerised system, and therefore confidence in it for those who either own it or who have a valid interest in it, is dependent upon the integrity and honesty of such experts. Thirdly, the applicant's scheme was dependent upon a sophisticated form of fraud, the likelihood of detection of which was remote.

In the course of what the learned judge described as a frank and thorough plea, he was pressed with the following considerations by way of mitigation. First, the applicant, at the age of 35, had no convictions and, apart from his commission of the offences with which his Honour was concerned, had so far as appeared led a thoroughly blameless, responsible and honest life. Secondly, there was the plea of guilty which was said to have been an early one. Thirdly, the delay between the applicant's interview by the police in January 1996 and his being charged with offences in June 1997 was to be considered. The apprehension generated in the mind of the applicant in the meantime was said to have been of itself a significant punishment. Fourthly, it was pointed out that the criminal charges have had a sad and severe affect on the applicant's private life, especially his marriage which had in any event been in difficulty, separation of his wife and children having now occurred. Fifthly, it was said that the potential effect of the criminal convictions, and especially of any imprisonment, upon the applicant's future business career is dire. Finally, it was said that, in an endeavour to preserve his situation and his future prospects in the computer industry, no one had been told of the offences apart from the applicant's wife. He was at the time of sentence living with his parents, neither of whom he had told of his predicament, and his sister also remained ignorant of it. The applicant had told none of his business associates or friends for fear that, if knowledge of his offending were discovered by people in the computer industry, his prospects as a computer consultant would disappear. The unfortunate result of all that was that counsel upon the plea was unable to call any evidence in support of mitigatory circumstances.

The learned judge expressed himself to take account of the injunction imposed by the Commonwealth Crimes Act that a custodial sentence should be imposed only as a last resort, and he said also that he took "full account" of the requirement of s.16G of that Act, reducing the sentence because it would not be subject to remissions. Conceding that His Honour took account of all the matters to which it was necessary that he should have regard, Mr Grace submitted before us that a proper consideration of them all should have led to the imposition of a

non-custodial sentence. Alternatively, it was said that any custodial sentence should not have been one to be immediately served. It was said also that in any event the sentence imposed was too long, both as to the total effective term of two and a half years and as to the minimum term of 12 months. Mr Grace sought to demonstrate the validity of these contentions by reference to several individual matters which the judge said that he had taken into account. First, Mr Grace seized on his Honour's statement that he took "full account" of the direction contained in s.16G of the Commonwealth Crimes Act. Applying what he asserted to be an acceptable or conventional rule of thumb, Mr Grace argued that the judge's starting point for the sentences for the Commonwealth offences was, or could be assumed to have been, three years' imprisonment. This, it was contended, was manifestly excessive for each of the ten offences, some of which concerned amounts under $1000, having regard to matters personal to the applicant that were to be considered. In beginning with a real sentence of three years' imprisonment, so it was argued, the judge treated each of the Commonwealth offences as more serious than the single State offence for which imprisonment for two and a half years was ordered. I consider that this submission tends in the first place to read rather too much into the learned judge's use of the words "full account" in connection with his application of s.16G. We were referred to no authority which required the judge to reduce by one third the sentence which he would impose upon the Commonwealth offences, apart from any adjustment necessitated by s.16G, nor do we know, because the judge did not say, what adjustment he did make pursuant to that section. Mr Grace's submission does not on that account lose all its force. At best, however, I think it is to be taken into account as one consideration among a number in the evaluation of the sentences that were imposed for the Commonwealth offences. The submission does not, in my opinion, lead to a conclusion, as counsel would have it, that the judge's commencing point was three years' imprisonment or that the commencing point, whatever it was, was too high.

The other substantial points made by Mr Grace relied on the period of time which elapsed between the applicant's commission of the last of the offences charged, on 29 August 1995, and the date of sentence, 6 March this year. This is a period of a little over two and a half years. Mr Grace made of this two points. First, he said, the period was so long as to conduce to anxiety in the mind of the applicant such as was calculated of itself to act as a kind of punishment. In this connection, the remarks of Sir Lawrence Street in R. v. Todd (1982) 2 NSWLR 517 at 519 are often cited. They were approved, albeit in a somewhat different context than that which we are now concerned, in Mill v. The Queen (1998) 166 CLR 59 at 64-6, and the notion was most recently applied by this court in R. v. Miceli (unreported, 23 June 1997) especially at page 6.

The matter of delay in the context bears two aspects. There is the natural anxiety occasioned to a person suspected of or charged with an offence until arraignment. See also R. v. Law [1995] QCA 444; (1995) 84 A.Crim.R. 142, especially at 145, to which Mr Grace referred us this morning. If this period is unduly long it may, and ordinarily will, be appropriate to reflect it by way of mitigation of the sentence to be imposed.

Apart from sheer elapsed time, the question whether a delay is undue may be determined by reference to a range of factors. Among these I may mention the nature of the offence, its complexity, its sophistication, the extent of investigation by the authorities that is necessary in order to prepare a charge for it and proof of it, and, if a series of offences, the period over which they were committed, the degree of co-operation with the authorities by the suspect or accused person and, conversely, any lack of it, or indeed any obstruction of the authorities by him or her. Of course, I am not intending to be exhaustive in that catalogue. What is undue delay deserving of mitigation of punishment is essentially a matter of degree to which common sense is to be applied. The other aspect of delay is that it is usually appropriate to take undue delay into account when rehabilitation is a real prospect, and, as I said in Miceli, at page 6:

has been at large and has ordered his affairs during

the period of the delay with a view to reorganising

So it has happened in the present case. Counsel relied on each of the two aspects of delay that I have mentioned, especially perhaps upon that referable to the applicant's evidence of effective rehabilitation of himself since he last committed an offence.

The learned judge did not attribute delay to the applicant, nor I think did he exonerate him entirely from any responsibility for such delay as occurred. We were handed by the Crown a chronology, upon which I shall not dwell. I observe merely that the necessary investigation was presumably more than ordinarily complex and technical. The applicant made no very useful admissions. Having been charged in June of 1997, he did offer in October 1997 to plead guilty if the offences were dealt with summarily. The Crown declined the offer and the applicant was ultimately arraigned on 25 February this year.

The greatest period of delay perhaps was that between 25 January 1996 when the applicant was interviewed by the police and 11 June 1997 when he was charged, yet the delay during that period is not altogether unexplained. The matter was referred in June 1996, after a delay of some six months following the interview (which is not explained) to the Director of Public Prosecutions, who sought that further inquiries be made, and a hand-up brief was not finalized until June 1997, about a year later. It does appear that during that period of a year there were present to the minds of those responsible for the preparation of the prosecution case certain reservations as to proofs. We have not been provided with details of the reservations, but that is not to say that they were not legitimate. One of the factors in the preparation was that the case against Rusciano had also to be investigated and prepared. Speaking for myself I think that, although the preparation of the prosecutions was by no means spectacularly expeditious, it was not attended by a large undue delay. Even so, the judge was no doubt right to take account of the overall delay and to make an allowance for it in the applicant's favour.

The judge did take account of all relevant matters of mitigation. The synthesis which he was to make of them for was him. The criticisms which have been levelled at the judge in the course of a very capable submission to us tends, in my opinion, to undervalue the matters upon which the judge chose to place particular value in coming to his conclusion. This was not just a case in which the applicant put his hand in the till of his employer, or someone akin to an employer, nor is it like a case such as that which was before us yesterday, in the Crown appeal of Rogers, where a clerk in the employ of the Commonwealth Department of Social Services applied her computer, which she used in the ordinary course of her employment, to divert Commonwealth money to herself. A large part of the criminality of the present applicant's conduct stemmed, in my view, and I think in the view of the learned sentencing judge, from the abuse of the peculiar knowledge and expertise which the applicant had both of the affairs of Telstra and of the working of computers. In engaging the applicant as it did, Telstra was entitled to expect that that knowledge and that expertise would be honestly applied for reward, and Telstra was in that respect entitled to be seriously disappointed. So also were the innumerable members of the community who place reliance on Telstra. That, I think, made the case a grave one and the judge was in my opinion entitled to treat it as one deserving a sentence of immediate incarceration.

That the judge gave not ungenerous effect to the matters in mitigation which were placed before him is reflected in, among other things, the minimum term of 12 months, which he imposed in respect of the State offence, an offence which he was entitled to treat as being marginally more serious than any of the Commonwealth offences. Finally, I would refer to the length of the recognisance which the judge provided for in the case of the sentence for the Commonwealth offences. It was for a period of only 12 months after the period of incarceration for the Commonwealth offences had been served, and will, it seems, expire before the head sentence for the State offence expires.

My conclusion is that error of the learned sentencing judge has not been shown and accordingly I would propose that the application be refused.

PHILLIPS, C.J.: I agree with the conclusions expressed by Tadgell, J.A. and I would subscribe to his reasons for reaching them.

ORMISTON, J.A.: I also agree with what Tadgell, J.A. has said for dismissing this application.

PHILLIPS, C.J.: The order of the court is that the application for leave to appeal against sentence stands dismissed.

I certify that this and the 15 preceding pages are a true

copy of the reasons for judgment of the Appeal Division,

Court of Criminal Appeal (Phillips, C.J., Tadgell and

Ormiston JJ.A.) of the Supreme Court of Victoria delivered