R v Iervasi

Supreme Court of NSW|2024-07-31|Before: Sweeney J

JUDGMENT

Antonio (Tony) Iervasi appears for sentence for five offences to which he pleaded guilty in the Local Court. They are four offences contrary to ss1311 and 1041G of the Corporations Act 2001 (Cth), of dishonest conduct in relation to a financial product, which each have a maximum penalty of 10 years imprisonment, and one offence contrary to ss 1311 and 911A of the Corporations Act, of carrying on an unlicensed financial services business, with a maximum penalty of two years imprisonment.
The offences contrary to ss 1311 and 1041G of the Act were that in particular date ranges, in the course of carrying on a financial services business, Mr Iervasi engaged in dishonest conduct in relation to a financial product or financial service, being that he represented to each investor that the returns they received were profits from trading when in fact they were not, and the returns paid to investors were derived from capital deposited by new investors. The time periods of the offending were: in sequence 1, between 13 December 2010 and 30 June 2014; in sequence 5, 1 July 2014 to 30 June 2015; in sequence 6, 1 July 2015 to 30 June 2016; and in sequence 7, 1 July 2016 to 21 April 2017.
The offence contrary to ss 1311 and 911A was that between 1 October 2010 and 21 April 2017 the offender carried on an unlicensed financial services business in this jurisdiction.
There were two charges to be dealt with on a s 16BA schedule, being matters in respect of which Mr Iervasi admitted his guilt and asked that they be taken into account when he is sentenced for the offence in sequence 7. They were, in sequence 8, that between 1 November 2016 and 30 December 2016, in the course of carrying on a financial services business, the offender engaged in dishonest conduct in relation to a financial product or financial service, being that he represented to each investor that the capital invested in his companies for the "US Election Special Trade" would be traded on Forex and Futures markets around the time of the 2016 USA presidential election, and that the capital invested for the US Election Special Trade had been so traded, whereas none of the capital deposited by investors for the US Election Special Trade was traded by the offender. The offence in sequence 9 charged the offender that between 1 December 2016 and 30 January 2017 he did, in the course of carrying on a financial services business, engage in dishonest conduct in relation to a financial product or financial service, being that he represented to each investor that the capital invested in his companies for the US President Inauguration Special Trade would be traded on Forex and Futures markets around the time of the inauguration of US President Donald Trump, and that the capital invested for the US President Inauguration Special Trade had been so traded at around that time, whereas none of the capital deposited by investors for that special trade was so traded by the offender.

Agreed facts

The facts were agreed. I will summarise them as follows, although some detail is necessary so the nature and circumstances of the offences can be understood.
In summary, between 2010 and 2017, the offender ran a business, Courtenay Trading, in which clients invested funds which the offender represented would be used predominantly for foreign exchange and futures trading. In addition, the trading business also offered clients the opportunity to invest in two one-off trades, again representing to investors that their capital would be traded (they being the two offences on the s 16BA schedule). However, clients' funds were not used for the stated purposes and only a very small percentage of investors' capital was traded. Instead, the offender used clients' funds to pay amounts each month to other clients, representing that they were returns from trading, and for his own business and personal purposes.
The offender's trading business was a Ponzi scheme. He was the principal. In total, the offender defrauded 585 "investors" between December 2010 and April 2017. They deposited a total of over $180 million to be traded.
At no time did the offender, or his corporate entities, hold an Australian Financial Services Licence, which he was required to hold.
The offender's trading business was run through two corporate entities, Courtenay House Pty Ltd and Courtenay House Capital Trading Group Pty Ltd. However, investors and employees were largely unaware there were two separate corporations. The offender was the sole shareholder of both companies. He was the sole director of one company, and for a time, sole director of the other. He was ultimately responsible for the activities of the companies.
The offender was described on the company's website as the "Director and Trader", with a promotional description of his successful business history, his researching of trading and his success in trading Forex and Futures.
The Courtenay companies engaged some people to refer new investors, market the business and manage some clients. These were Athan Papoulias, David Sipina and Anshul Gupta, the latter of whom initially reported to Mr Papoulias, and then primarily received instructions from the offender. A number of people were engaged to trade on behalf of Courtenay Trading.
The companies used a number of bank accounts in different aspects of the offending. From 2010 until 2017 the offender and companies held multiple trading accounts with brokers.
Between 13 December 2010 and April 2012, "investors" deposited funds into a nominated bank account for those funds to be traded by the offender. From at least April 2012, investors were offered three trading portfolios, (referred to as "standard products"): 1. "Swing trading" - the entry level for investing in Forex with the Courtenay companies, which purported to offer a 1.5% or 2% monthly return on the capital invested and a 5% risk on capital. Investors were told that swing trading was a daily trading, "trend-moving strategy". 2. "Extreme group" or "Forex extreme" - the second investing level, purporting a 4% monthly return on capital invested and a 10% risk on capital. This product was only offered to investors who had invested with the companies for three months. Investors were required to keep their swing trading account and put additional funds into the "Extreme group". 3. "Elite group" or "Forex live" - the highest level for investing in Forex, which purported a monthly return of 7.5% on capital invested, and a 15% risk on capital. The "Elite group" was only offered to investors who had invested with the Courtenay companies for a period of time and required a high capital investment.
The offences in sequences 1, 5, 6 and 7 refer to the offender's dishonest conduct in respect of those three "standard products".
In 2016-2017 investors were offered one-off investment opportunities said to exist because of market volatility during unique world events. Two special trades were offered: 1. "Extreme 3 - US Election" - investors were told that their capital would be traded in Forex and futures markets in November 2016 only, with a prospective profit of 25% against a 30% risk on capital, to take advantage of market volatility in the lead up to the 2016 US presidential election (US Election Special Trade). 2. "Extreme 3 - Inauguration Day" - investors were told their investment would be traded in Forex and futures markets in January 2017 only, with a prospective profit of 15% and risk on investment being 20%, to take advantage of market volatility associated with the inauguration of Donald Trump as US President (US Inauguration Special Trade). 3. The two offences on the s 16BA schedule relate to the "special trade" offers in the 2016 - 2017 financial year, being the offence period for sequence 7.
In May 2015, towards the end of the sequence 5 offence, the offender and Courtenay companies commenced a business relationship with Halifax Investment Services Pty Ltd and its related business, Australian Mutual Holdings. The purpose of the relationship was for the Courtenay companies to establish a retail trading fund managed by Australian Mutual Holdings. The Courtenay House Capital Investment (CHCI) fund was established and a Product Disclosure Statement was issued on 4 September 2015. Courtenay Trading was appointed the investment manager for the CHCI fund. No funds were placed in the fund by December 2015. From January 2016 a small amount of money was put in the fund but could not be transferred to trading accounts. In March 2017 Australian Mutual Holdings decided to close the fund. The offender dishonestly used the authorised representative status that Courtenay Trading obtained when the CHCI fund was established to falsely legitimise the trading business.

The offences in sequences 1, 5, 6 and 7

The offender conducted the Ponzi scheme from 2010 to 21 April 2017, when ASIC obtained freezing orders in respect of the Courtenay companies' assets. The offence in sequence 1 concerned the offender's trading business from 13 December 2010 until 30 June 2014. The trading business remained largely the same throughout that period.
The offence in sequence 5 covered the period 1 July 2014 to 30 June 2015. The agreed facts say "In this period the offender's dishonest conduct became more sophisticated as he took steps to escalate and grow the trading business".
The offence in sequence 6 covers the period from 1 July 2015 to 30 June 2016. The agreed facts say "In this period the offender's dishonest conduct again escalated; the quantum of investments more than doubled from the 2015 financial year to the 2016 financial year, and the offender took further steps to make the trading business appear legitimate".
The offence in sequence 7 covers the period 1 July 2016 to 21 April 2017. The agreed facts say "In this period the offender's dishonest conduct again escalated; he proactively created new opportunities for purported investments, which were not traded, and took further steps to create a dishonest appearance of a legitimate business."
The Ponzi scheme only came to an end when ASIC obtained its freezing orders.

The Ponzi scheme

From the business's inception less than 3% of the money invested by clients was traded. Most of the investors did not know this to be the case. To conceal that client funds were not being traded, the offender would change the percentage return at times of the year such as Easter and Christmas, to make the trading system look more realistic.
Of the trading that did occur during the period of the offending, only one or two of the 10 traders engaged by the business made money. The trading accounts were not profitable and were not sending any profit back to the Courtenay companies to pay investors. The offender knew that. The offender did not know what trading strategies the traders he engaged were using. He knew the business was not earning profits, and investors were paid purported returns from capital invested by investors. The offender knew that was a dishonest use of those funds, and inconsistent with the representations he made to investors about returns.
Analysis of the flow of funds from and to investors led to the following conclusions:

not all capital deposited was traded; if the capital was not traded, it could not generate a profit.
the funds which were traded largely did not generate profit.
in each financial year, the funds returned from trading were insufficient to account for the monies paid to investors.

The offence in sequence 1

In the period 13 December 2010 to 30 June 2014 the offender established, marketed and managed the trading business. The business remained largely the same throughout that period, although there was a steady increase in the amount invested by clients each year as the business grew.
When a person showed an interest in investing through the offender's business, he met or spoke with them. He would explain how the capital was purportedly traded and the anticipated monthly profit the investor could expect. When investors invested money they signed agreements with the offender or his company. When a new client signed up, written representations were made to the client about the trading process.
In the period 13 December 2010 to 30 June 2014 investors deposited just under $16 million for the standard products and over $6 million was paid to investors as purported profit (but from capital). From 2010 to late 2016 the offender controlled the company's bank accounts, from which he paid the purported returns. The offender sent statements of capital invested and false purported monthly returns to each investor.

The offence in sequence 5 - 1 July 2014 to 30 June 2015

In the 2015 financial year, during which the offence in sequence 5 was committed, the nature of the trading business remained the same, but the offender's dishonest conduct escalated. He increased the number of dishonest communications with investors, creating the false impression of a sophisticated and legitimate business, leading to investments more than doubling in the 2015 financial year, from over $11 million in the 2014 financial year to just under $25 million. Just over $15 million was paid to investors as purported profit. The offender paid himself $2,253,182 from the Courtenay companies' accounts in the 2015 financial year.
In the 2015 financial year the offender continued to market and run the business. He met with potential investors and explained the purported trading process, signed agreements with investors, and sent them welcome and update emails containing false statements about trading profits.
Throughout 2015 and 2016 the offender continued to send standard emails to investors, containing misrepresentations about trading and profits, which investors believed to be true.

The offence in sequence 6 - 1 July 2015 to 30 June 2016

In the 2016 financial year the offender's dishonest conduct further escalated as he took additional steps to grow the business and improve its appearance of legitimacy. Investments increased from just under $25 million in the 2015 financial year, to just over $43 million in the 2016 financial year. In that financial year, between $31 and $32 million was paid to investors as purported profits. The offender paid himself just over $2 million from the companies' accounts.
The offender continued to meet with potential investors and make false statements about the trading business, sign agreements with investors and send welcome emails.
In March 2016 the offender hired Athan Papoulias to market and further grow the business. His contract included growing the client base, increasing the pool of investment funds and improving the company's brand awareness. Mr Papoulias was described on the company's website as a "senior business analyst" with a description of his business successes.
The offender hired three additional traders, although no greater percentage of client investments was traded.
During this time the offender established the relationship with Halifax to set up the CHCI fund. As part of this process Courtenay Trading became an appointed licensee of the Market Bell AFSL for the purpose of the CHCI fund. Although that appointed licensee status did not extend to the trading business, the offender added a footer to his emails stating that Courtenay House Capital Trading Group was a Financial Services Representative, to give the trading business a false air of legitimacy.

The offence in sequence 7 - 1 July 2016 to 21 April 2017

During this time, the offender's dishonest conduct escalated further. He hired Mr Gupta, and instructed him to make payments and prepare client communications to make the business appear legitimate. Investments grew from over $43 million in the previous financial year to over $65 million in the 2017 financial year. Almost $53 million was paid to investors as purported profit. The offender paid himself over $1 million from the companies' accounts before they were frozen on 21 April 2017.
Throughout the 2017 financial year until then, the offender continued to meet with potential investors and signed agreements making statements about trading and expected returns. Mr Gupta was tasked to prepare statements of income for clients, for the previous years, using information provided by the offender. The purpose of such income statements was to reassure clients about the purported profits they were receiving. Mr Gupta was also tasked, from September 2016, to send clients monthly distribution emails, in formats provided by the offender.
In around September or October 2016 the offender trained Mr Gupta how to process payments of returns to investors from a company bank account. Mr Gupta paid purported returns as instructed by the offender. The purported returns were calculated on the product a client had invested in and the amount invested, not on any trading.

The US Election Special Trade offence on the schedule

In 2016 the offender decided to offer investors a one-off investment to coincide with the US presidential election, purportedly offering clients a way to invest in fast money markets.
Mr Gupta drafted email instructions for clients and draft trading agreements, which the offender amended and approved, and instructed Mr Gupta to send the emails to all clients, which Mr Gupta did in September and October 2016.
In November 2016 the offender told Mr Gupta to send an email to investors advising that trading had commenced. He approved the content of the email. The offender instructed Mr Gupta to send emails to clients during November 2016 and into December 2016 giving clients purported updates on trading activity. None of the funds deposited by investors for the US Election Special Trade were traded, and the emails sent to investors were not true.

The US President Inauguration Special Trade offence on the schedule

After the US Election Special Trade, the offender decided to offer a one-off investment to investors to coincide with the 2017 presidential inauguration. He tasked Mr Gupta to draft a new agreement. He instructed Mr Gupta to send an email to investors. Mr Gupta sent a draft email to the offender and Mr Papoulias; the offender suggested an amendment.
Mr Gupta sent the invitation for this special trade on 1 December 2016. On 19 December 2016 the offender told Mr Gupta to remind specific clients about the January special offer, and Mr Gupta did so. As a result of the invitation, investors deposited $15 million for the US Inauguration Special Trade.
On five occasions during January and February 2017 Mr Gupta sent emails to investors in the Inauguration Special Trade, as directed by the offender, purportedly giving them updates on the percentage profits, using figures given to him by the offender. None of the funds deposited by investors for this special trade were traded.

The offence in sequence 10 of carrying on an unlicensed financial services business

Under the Corporations Act, a person who carries on a financial services business must hold an Australian Financial Services Licence.
Mr Iervasi and his companies were required to hold such a licence, because he marketed his business to clients, signed agreements with investors, engaged consultants and traders for the business, opened trading accounts for the business, communicated with clients and paid or arranged for the payment of "returns" to clients. This conduct resulted in investors depositing money to the trading businesses, intending that their money would be used to generate a profit.
At no time did Mr Iervasi or his companies hold an AFSL. The purpose of an AFSL is for investors in licenced financial services businesses to have regulatory oversight by ASIC. There are requirements of honesty and legal compliance, among others, for obtaining a licence.
On 9 March 2011 the offender was told about a business which offered a 12 month membership to use its AFS licence, which ASIC permitted as long as the business monitored members' trades to ensure profits were made for customers. The offender replied that the letter of offer should state that they were appointed as a client services representative of the licensed business.
The offender admitted that he was aware of the AFSL regime from when he first began the trading business and was looking at licensing in July 2011. The offender set up his business and accounts to avoid needing a licence.
In December 2014 the offender received a letter from ASIC advising him of its concern that Courtenay Trading was carrying on a financial services business without holding a licence. In March 2015 ASIC sent a second letter to the offender about the same issue.
The offender admitted he knew he should have obtained a licence.
The offender said that in about March 2016 he engaged Mr Papoulias to help the Courtenay companies obtain a licence, but it never occurred.

Investigation and liquidation

In March 2017 ASIC commenced an investigation in relation to the Courtenay companies and associated entities. On 21 April 2017 the Supreme Court of New South Wales granted freezing orders in respect of the assets of the Courtenay companies and associated entities.
In May 2017 ASIC commenced liquidation proceedings in this Court, and the Court ordered that the Courtenay companies be wound up. Liquidators were appointed to each of the Courtenay companies. In March 2018 further asset preservation orders were made on the application of the liquidators. The liquidation of Courtenay Trading is ongoing. As at 11 April 2024, the liquidators advised that $22,759,821 had been paid to 502 unsecured creditors. They advised that other than for deposits received on or after 21 April 2017, unsecured creditors received about 28 cents in the dollar. The liquidators estimated that the gross financial loss sustained by unsecured creditors was over $77 million, and the estimated total net loss sustained by unsecured creditors was almost $55 million.
Expert accounting reports state that over the entire period of offending:

Investors paid more than $180 million to the Courtenay companies.
The Courtenay companies returned more than $40 million of investors' capital to investors.
The companies paid more than $114 million in purported "profits" to investors.
At least $25 million, approaching $26 million, of investor funds was not returned to investors.

Money paid to the offender's benefit

From December 2010 to 21 April 2017:

More than $9 million was the net quantum of money paid from the companies' bank accounts into the offender's bank accounts.
$812,000 was transferred from the company's foreign exchange trading accounts to the offender's bank accounts.
$2.5 million was paid from the Courtenay companies' bank accounts for outgoings for the offender's benefit. The offender admitted that he used investor funds for gambling, to lease properties, to pay for holidays, and to lease luxury cars.

Admissions

On two days in May and June 2017 the offender attended meetings with the liquidators of the Courtenay companies, during which he made admissions that:

From 2013 he started to pay investor returns from investor capital.
To keep the Courtenay companies going and pay the promised returns, he had to pay returns from investor funds.
Neither the US Election or US Inauguration Day funds were traded; the promised returns were paid on the pretence that the funds had been traded.

In May 2020 ASIC told the offender's legal representatives that if the offender took part in a voluntary interview as part of the investigation of the Ponzi scheme and made relevant admissions, that would be considered to be a degree of cooperation rarely seen by ASIC.
On 30 June 2020 the offender did participate in a cautioned, voluntary interview, during which he made admissions, which were referred to throughout the Statement of Agreed Facts, including that he knew very little of investors' funds were traded and that purported returns to investors were paid from capital invested, and that profit figures in statements to clients were false.
In April 2019 the offender reported to a New South Wales police officer that he had been kidnapped and bashed, and admitted to that officer that he had been running a Ponzi scheme.
On four days in August to October 2022, the offender provided further information to ASIC by way of assistance.

Victim Impact Statements

The Commonwealth Director of Public Prosecutions presented 30 Victim Impact Statements, 21 of which were read to the Court. They were anonymized.
I have taken into account the harm suffered by each of the victims who presented a Victim Impact Statement, as the harm was recounted in each of those statements. As they were anonymous, I will not refer to each individually.
They may be summarised as indicating the following harm consequential upon their loss of monies deposited with the offender. As well as the loss of life savings and family homes, the harm went beyond financial losses to breakdowns of marriages and family relationships, emotional, physical and mental health issues, and the need to delay retirement or resume working in the face of a loss of financial security in their mature years.

Assessment of objective seriousness

In assessing the objective seriousness of each individual offence against s 1041G I am conscious that the total offending has been broken into a number of offences, which, other than the first and last, are apportioned by financial years. Because of the way the offences have been so charged it is not possible to identify the number of victims in, and the loss occasioned by, each offence. However, the other factors relevant to assessing the objective seriousness of each offence - the time period of the offending, the offender's acts and role, the amount of money deposited as a result of the offender's dishonest conduct, and the offender's motivation, in each case to obtain money to spend on himself, can be identified.
In the first offence (sequence 1) from December 2010 to June 2014, the offender established, promoted and ran the Ponzi scheme for that period. He was the founder, promoter and face of the scheme. He dishonestly represented to victims how their funds would be traded, and he dishonestly represented to them that the returns they received were the result of trading. The dishonest representations cause victims to "invest" more money, and/or to persuade others to "invest" money with the offender's scheme. He had sole control of the money received and paid out as purported returns. The money deposited in this period of 3½ years was $16 million.
The planning involved in this offence was typical of a Ponzi scheme but still required establishing the veneer of a successful wealth creating business. This offence alone was of high seriousness.
The offence in sequence 5 occurred from 1 July 2014 to 30 June 2015. In this period the offender maintained the scheme and by his conduct created the impression of a successful, sophisticated business, including by false documentation which sought to reassure and persuade victims to "invest". Over this year, $24.9 million was deposited and $15.1 million was paid out as purported profits. This offence was also of high seriousness.
The offence in sequence 6 occurred between 1 July 2015 and 30 June 2016. During this period, the offender continued his dishonest conduct and increased it by hiring people to market the business. He also formed the relationship with Halifax. All of those actions were designed to make the scheme appear legitimate and successful. During this year, $43.2 million was deposited and $31.8 million paid out as purported profits. This offence was of very high seriousness.
The offence in sequence 7 occurred between 1 July 2016 and 21 April 2017. The offender's dishonest conduct continued. He hired Anshul Gupta to increase the scheme's image as legitimate and successful. During this period, $65.1 million was deposited and $52.9 million paid out as purported profits. Therefore, over a lesser period, significantly greater money was obtained. This offence was of very high seriousness.
The offences on the s 16BA schedule also occurred within the same financial year as the offence in sequence 7. They involved a further flurry of false communications to victims to elicit further significant funds and were both serious offences.
In assessing the offence in sequence 10 of conducting this scheme without a licence I take into account the time over which the offender did so, that he knew he required a licence to conduct his business legitimately, that he considered licensing requirements in 2011, but did not obtain one, that he was reminded by ASIC twice, in 2014 and 2015, of the need for a licence, and that he falsely represented to victims he had a licence after he formed the relationship with Halifax. Of course, the purpose of the licensing scheme, to protect members of the public and ensure integrity in the provision of financial services, was completely antithetical to Mr Iervasi's manner of offending. This offence was of high seriousness.
In assessing the totality of the offending, the course of conduct, I take into account the total period of offending, of about 6½ years, the nature and circumstances of the offending, which included sustained deceit, the large number of victims, the total amount of money they deposited, the total net loss to victims of $54 million, and the total amount of dishonestly obtained funds used for the offender's benefit, of about $12 million.
Counsel for the offender acknowledged that the sum of the total loss is large, the impact on the victims clear, and the offender's dishonesty "undoubtedly reprehensible". They were appropriate concessions, and I so find. The Crown described the offender's dishonest scheme as on an "egregious scale", again an apposite term which I adopt.

Subjective circumstances

Mr Iervasi did not give evidence on sentence. Some of his subjective circumstances were adduced in a report from Dr Stephen Allnutt, psychiatrist, who was cross-examined by the Crown.
Mr Iervasi is now 58 years old and was aged between 45 and 51 during his offending.

Good character

He has no prior criminal record, about which the parties made opposing submissions. The Crown submitted that the offender's good character should be given less weight because he capitalised on it to enable him to obtain the trust of his victims, and thereby commit the offences, and because the offending continued for so long, he was not of good character during the period after his offending commenced.
Counsel for Mr Iervasi disagreed that only a person of good character could succeed in running a Ponzi scheme, and submitted that his prior good character should be taken into account in mitigation.
Some people who commit offences of dishonesty have done so before, and do so again. I am not persuaded that there is evidence in this case to provide a basis for finding that the offender's good character enabled him to commit the offences, rather than his dishonest persuasiveness. I will take his prior and otherwise good character into account in his favour.

Mental and physical conditions

Dr Allnutt said in his report that before 2010 Mr Iervasi had not been diagnosed with any mental health problems, and had not attended on any relevant professional in respect of such.
In 2014 and 2015 his father and two brothers died and he reported suicide attempts. His brothers died from an inherited condition which also affected his mother and sister. In 2014 he commenced seeing a psychologist. She diagnosed him with adult ADHD, depression and anxiety. From 2014 he took antidepressant medication. After his arrest in 2017 he obtained treatment in hospitals for mental health issues.
Mr Iervasi told Dr Allnutt that during the period of the offending he sometimes drank alcohol to excess and he gambled and took cannabis, to deal with the stress or pressure of his "business". He reported experiencing symptoms of depression and anxiety from about 2011-2012. He said his gambling contributed to the end of his marriage. He continued to gamble until ASIC froze his accounts in April 2017.
Dr Allnutt diagnosed Mr Iervasi with adult ADHD, major depressive disorder, chronic post traumatic stress disorder (the latter as a result of a kidnapping incident about which I will say more later) and panic attacks. He said Mr Iervasi has now been diagnosed with the gene which caused the deaths of his family members, which is a significant stressor for him.
Dr Allnutt said Mr Iervasi did not manifest significant symptoms of a mental health condition, other than probable underlying ADHD, until approximately 2011-2012. He said he developed symptoms of a major depressive disorder with anxiety as a result of stress from his offending. He found relief for his depression and anxiety in gambling and substance use. Dr Allnutt said he is now abstinent from substances and has discontinued gambling.
Dr Allnutt said that because of Mr Iervasi's experience of kidnapping and his chronic post traumatic stress disorder and depression, he will experience incarceration more significantly than a person without those conditions. I accept that and take that into account. I note that Mr Iervasi has been working in custody as a cleaner.
Counsel for Mr Iervasi submitted that while it cannot be said that he commenced his offending because of his mental condition, his mental condition had some effect on his continued offending, and therefore, to a limited degree, decreases his moral culpability for his offending.
Accepting that he had the diagnosed depression, anxiety and ADHD, but having regard to the sophisticated nature of the offending conduct, which increased in sophistication and dishonesty over the period of the offending, I do not find that his diagnosed conditions reduce his moral culpability, or make him a less suitable vehicle for general deterrence.

Remorse and prospects of rehabilitation

Dr Allnutt said Mr Iervasi had insight into the nature of his offending. When challenged about this in cross-examination by the Crown, Dr Allnutt explained that Mr Iervasi did not have a mental condition which undermined his capacity to understand the nature of his complex offending.
Dr Allnutt said Mr Iervasi expressed remorse for his offending, and referred to particular comments "I feel bad. I've changed 200 to 300 clients lives… family and friends. I have changed their lives in a bad way. They had to restart… they are still suffering". The Crown submitted that it is difficult to assess whether the offender's expressions of remorse were genuine. I accept he has a degree of genuine remorse. His cooperative conduct during the investigation of his offending supports his being remorseful.
Dr Allnutt expressed the opinion that, given that Mr Iervasi has sought treatment in the past for his mental health issues, and is now abstinent from, and intends to remain abstinent from, substance use and gambling, he needs ongoing psychological support, but his prospects of rehabilitation are positive. I accept his professional opinion, which seems consistent with the circumstances of Mr Iervasi's life as stated in his report.

Pleas of guilty, contrition and cooperation with law enforcement agencies

Mr Iervasi pleaded guilty in the Local Court, for which I discount his sentences by 25%, his pleas having avoided a lengthy trial having to be conducted and the victims from having to give evidence and relive their losses and harm from the offending. Mr Iervasi's pleas of guilty are also evidence of his contrition, as are multiple other aspects of his conduct since his offending ceased.
Mr Iervasi cooperated with ASIC in its investigation of his offences by participating in a voluntary interview with ASIC and making admissions, described by ASIC as a degree of cooperation rarely seen by ASIC, in 2020, as well as subsequent admissions by way of assistance in 2022. He also made an admission about the nature of his scheme to a police officer in 2019.
The Crown submitted that Mr Iervasi's cooperation in the investigation of his own offending should not be the subject of a discrete quantifiable discount. However, I consider that I am required to do so in accordance with s 16A(2)(h) of the Crimes Act 1914 (Cth) and the Court of Criminal Appeal's decision in Weber v R [2020] NSWCCA 103 at [64]-[69].
In considering this aspect of the offender's cooperation with law enforcement agencies I have [REDACTED] taken into account [REDACTED]. For the offender's cooperation with law enforcement agencies in the investigation of his offences [REDACTED] I will reduce each sentence by 10%.
[REDACTED].
The combined discount [REDACTED] will be 40%.
I also take into account, as demonstrating Mr Iervasi's contrition, action taken by him to make reparation for loss resulting from his offending in two ways. One is his cooperation with the liquidators in 2017, meeting with them and making admissions, as a result of which the liquidators have distributed some monies to some victims. In addition, Mr Iervasi consented to reparation orders sought by, and made in respect of, five victims. I accept the Crown's submission that that was only one step in the process by which those victims attempt to recover their losses. Nevertheless, it is a step the offender did not have to take, but did, and I take that into account in his favour.

Extra-curial punishment

Mr Iervasi relies on an incident in April 2019 when he was kidnapped, severely assaulted and money demanded of him, as extra-curial punishment. The Crown disputed that that incident could be so treated, unless the Court was satisfied that the kidnapping and assault was related to these offences, in accordance with the Court of Criminal Appeal's recent decision in Melville v R [2023] NSWCCA 284.
Mr Iervasi relied on a statement of Detective Sergeant Matthew Perry, to whom Mr Iervasi reported the events on the evening of the day on which the kidnapping and assaults occurred. Mr Iervasi reported to Detective Perry that he had been kidnapped from his car in Centennial Park that day, thrown into a van, where he was punched in the face and kicked in his ribs, and his hands bound together with tape. He was then driven to a location where he was placed on a concrete floor, further kicked to his ribs and punched to his face. He was cut to the back of his left calf muscle with a knife, which left an injury approximately 15cm in length, which penetrated the muscle, caused heavy bleeding and required surgery. His assailants demanded $50,000-$100,000 and told him to call someone to obtain the money. He made some calls, which the detective later confirmed. Mr Iervasi was dropped near St Vincent's Hospital, where he was found to have a head injury, brain bleed, multiple broken ribs, a 15cm wound to his left calf and facial bruising. Detective Perry said Mr Iervasi made a full disclosure to him about his involvement in the Ponzi scheme. Detective Perry said Mr Iervasi refused to supply a statement or identify his attackers, although police believe that Mr Iervasi knew who had kidnapped and assaulted him. Detective Perry said in his statement "The matter was investigated in full until December 2019. We identified several suspects that we believe acted together to kidnap Mr Iervasi with the intention of recouping the money that Mr Iervasi had allegedly stolen from them."
On the basis of that statement from Detective Perry I am satisfied that the people who kidnapped and severely assaulted Mr Iervasi were people connected with his offending, "exacting retribution or revenge for the commission of the offence": R v Daetz; R v Wilson [2003] NSWCCA 216. That is some punishment imposed on Mr Iervasi by vigilantes, as a result of which the sentence imposed for his offending must be mitigated.

Delay

The offender sought to rely on delay in his being sentenced, since the investigation of his offending commenced, to mitigate his sentence. The Crown opposed that.
The relevant principles are (R v Todd (1982) 2 NSWLR 517, Giourtalis v R [2013] NSWCCA 216 and Scook v R [2008] WASCA 114):

delay is not of itself a mitigating factor.
delay will not ordinarily be a mitigating factor if it has been caused by difficulties in detecting, investigating or proving the offences and the period of delay is reasonable in the circumstances.
delay will not ordinarily be a mitigating factor if it is caused by the offender's obstruction of, or lack of cooperation with, prosecuting or investigating authorities.
delay will not ordinarily be mitigating factor if it results from the normal operation of the criminal justice system.
delay may be conducive to the emergence of mitigating factors if, for example, during the period of delay, the offender has made progress towards rehabilitation.
delay will ordinarily be a mitigating factor if it has resulted in significant stress for the offender or left him, to a significant degree, in "uncertain suspense".
delay caused by dilatory or neglectful conduct by the State, prosecuting authorities or investigating bodies may result in a discount of the sentence that would otherwise be imposed on the offender, if the court thinks it is an appropriate means of marking its disapproval of the relevant conduct.
these principles are not exhaustive or inflexible.

The Crown relied on evidence of key events and dates in the statement of Yon Astar of ASIC. The significant dates and events were:

on 9 March 2017 ASIC commenced its investigation into the Courtenay companies, Mr Iervasi and others.
ASIC sought and obtained freezing orders in April 2017.
140,000 documents were searched by keywords and reviewed between 9 March 2017 and June 2020.
examinations pursuant to ASIC legislation were conducted from May 2017 to February 2020.
statements were taken from about August 2018 until about August 2020.
expert reports were obtained from 10 December 2018 until 16 September 2022.
counsel was briefed to advise and prepare a brief of evidence from April 2018 to May 2020.
the brief of evidence was provided to the Commonwealth Director of Public Prosecutions on 21 May 2020. It contained 140,000 documents.
Court Attendance Notices were filed on 28 October 2021.
ASIC first made contact with the offender in about May 2017 and he participated in his voluntary cautioned interview on 30 June 2020.

Counsel for Mr Iervasi pointed to 3 periods of delay which he submitted should be taken into account:

the first being from December 2014, when ASIC sent him a letter about his conducting a financial services business without a licence, until 28 October 2021, when the offender was charged, being six years and 10 months, or nine and a half years until his sentence hearing, when his being unlicensed was an essential aspect of his offending.
the second being from 9 March 2017, when the ASIC investigation began until 28 October 2021, when the offender was served with Court Attendance Notices, four years seven months, when he was aware of the ASIC investigation from the time of the freezing orders in April 2017.
the third being the time between ASIC delivering a brief of evidence to the Commonwealth DPP on 21 May 2020 and 28 October 2021 when the Court Attendance Notices were served, one year and five months.

Counsel submitted that the delay was inordinate in the circumstances, but if it was found to be reasonable because of the complexity of the investigation, the delay should still be taken into account when the offender had made detailed admissions and was ready and willing to assist.
Counsel submitted that the time to conduct the investigation, or at least the time taken by the Commonwealth DPP to consider the brief of evidence, was inordinate. Counsel submitted that in the period of delay Mr Iervasi was cooperative for years to an exceptional extent, he rehabilitated himself in that time, and he has been in suspense about the sentence that will be imposed on him.
The Crown submitted that the period between 2014 and April 2017, when the offender remained silent and hoped his offending would remain undetected, could not be taken into account in mitigation of his sentence. The Crown submitted that the period between the commencement of the investigation on 9 March 2017 and laying charges was not undue or unreasonable, having regard to the evidence about the complexity of the investigation in the statement of Yon Astar. The Crown submitted there is no evidence that Mr Iervasi was in a state of uncertain suspense after the time ASIC obtained freezing orders, or any evidence that he has rehabilitated himself.
I am not persuaded that the period from 2014, when Mr Iervasi was alerted by ASIC to their being aware he was operating without a licence, until March 2017, can be taken into account to mitigate his sentence, when he continued to offend; he did not at that time stop offending or offer to cooperate or make admissions to assist ASIC.
I accept the investigation was complex, having regard to the scale of the offending. Mr Iervasi's interview did not occur until three years into the investigation. So although I accept that ASIC considered his cooperation significant, ASIC still needed to investigate in the period before he provided that assistance. I am not persuaded that there is a sufficient explanation for the time the DPP took between May 2020 and October 2021 to consider the brief and draft charges, despite the complexity of the matter and the documentary size of the brief of evidence.
I am not persuaded that I have a sufficient basis to express disapproval of the investigating and prosecuting authorities. However, the effects of the delay on the offender, given he has cooperated in various ways, must be given due weight. In terms of his rehabilitating himself in the period of the investigation, I note that he has not reoffended, that he attended hospitals for treatment, and according to Dr Allnutt, he is now abstinent from substances and gambling. I note Dr Allnutt's diagnoses of various conditions, including depression and anxiety, and although I accept there were other life stressors experienced by Mr Iervasi during that period, I am satisfied that those conditions would not have been assisted by his suspense as to his sentence. Therefore I am of the view that his total sentence must be reduced to take account of the four and a half year delay between the commencement of ASIC's investigation and the offender's being charged.

Deterrence and other purposes of sentencing

In accordance with s 16A(2)(h) of the Crimes Act I take into account general deterrence and specific deterrence in sentencing Mr Iervasi. I am also required to ensure that he is adequately punished for his offences. The indicative sentences for each offence must be reduced by the discounts Mr Iervasi is entitled to by law [REDACTED]. Those discounted indicative sentences will also have an impact on the aggregate sentence to be imposed on him.
There was no real issue that a sentence of full time imprisonment was the only appropriate sentence, but in accordance with s 17A of the Crimes Act, I am satisfied that is so. I have considered the sentencing cases to which I was referred by the Crown, with appropriate caution, as submitted by counsel for the offender.
The aggregate sentence will take account of the circumstance that the offending occurred in a continuous course of conduct, but will incorporate some degree of accumulation for each of the separate offences, including the offence of conducting the business without a licence, which although it overlapped with all of the other offences, was a separate aspect of offending.

Presentence custody

The sentence must date from 3 May 2024 when Mr Iervasi entered into custody in respect of these offences.

Indicative sentences

Applying the 40% discounts, I indicate the following sentences:

for the offence in sequence 1, 4 years 2 months imprisonment.
for the offence in sequence 5, 4 years 6 months imprisonment.
for the offence in sequence 6, 4 years 9 months imprisonment.
for the offence in sequence 7 and taking into account the two offences on the s 16BA schedule, 5 years 4 months imprisonment.
for the offence in sequence 10, 12 months imprisonment.

Sentence

The aggregate sentence will be 11 years imprisonment with a non-parole period of 7 years imprisonment, to date from 3 May 2024.
The sentence will expire on 2 May 2035. The non-parole period will expire on 2 May 2031.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 04 November 2024

At a glance

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Judgment (28 paragraphs)

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