R v Kennedy

Agreed Facts

1. The matter proceeded by way of Statement of Agreed Facts, which I will summarise below.

The first indictment

1. In each of the counts the subject of this indictment (201605746_11.2), the offender, an accountant, induced four clients to provide to him large sums of money which he falsely misrepresented to them that he would invest with Macquarie Bank, which he further represented was paying an attractive rate of interest. The monies were in fact never deposited with Macquarie Bank, but rather, were retained by the offender. The clients and the amounts in respect of which they were defrauded are as follows: 1. Cinzia Rubbino, $345,000; 2. Beryl Finger, $328,000; 3. Kathryn Harwood on behalf of the Christopher Donald Harwood Trust, $289,480.95; 4. Dr Paramalingam Lingathas, $325,000 (between 1 November 2007 and 31 August 2009), and $1,975,994 (between 1 June 2011 and 30 March 2014).
2. The offending the subject of the first indictment commenced on 1 November 2007, and the last offending occurred on 15 June 2015.

The second indictment

1. The second indictment (201616997_1.2) also concerns a similar misrepresentation, namely that if the client would provide the offender with funds, the offender would invest these funds at an advantageous interest rate with Macquarie Bank, which investment was never made. The monies were retained by the offender. The client the subject of the second indictment is Carol Merz, who reliant on the fraudulent misrepresentation of the offender, deposited with him the sum of $105,000.
2. The offending the subject of the second indictment occurred between 1 October 2013 and 30 November 2014.

The third indictment

1. The third and final indictment (201616997_2.2) is of a somewhat different character in that the offender was the accountant engaged by the directors of a furniture company, Brescia Furniture Pty Ltd. He was retained to provide taxation services. He was also the personal tax accountant for various members of the Brescia family. In the course of his retainer, the offender prepared quarterly investment activity statements ("IAS") and business activity statements ("BAS") for the company and the members of the Brescia family, for provision to the Australian Taxation Office ("ATO").
2. The first count is a rolled up charge. The nature of the rolled up charge, is that on a number of occasions, the offender produced IAS and BAS forms for the companies and members of the Brescia family, that indicated that taxation was payable to the ATO. The defendant falsified the payment slips attached to the IAS and BAS forms, by altering the EFT code. The effect of this fraudulent conduct was that the payments made pursuant to them would be directed by the ATO to accounts for entities associated with or controlled by the offender, and not the Brescia taxpayer.
3. Count one includes 55 occasions where it is agreed that the offender dishonestly and by deception, obtained a financial advantage in the manner which I have set out. This offending occurred between 5 June 2012 and 22 January 2015. The total of the amounts defrauded the subject of the first count is $625,141.
4. Count two is of a different character.
5. In August 2014, the offender called Vittorio Brescia, a member of the Brescia family, and told him that the company had a large capital gains tax bill as a result of the sale of a property. This was not true. The offender said that a cheque was required in the sum of $808,555.50 for payment to the ATO on account of this tax liability. Mr Vittorio Brescia arranged for a cheque to be drawn and for the offender to collect the cheque from the Parramatta branch of the ANZ bank. The offender represented that these funds represented by the cheque so drawn, would be paid into the ATO on account of the capital gains tax represented by the offender to be owing by the company.
6. On 29 August 2014, the offender paid the sum of $808,555.50 into the ATO account of an entity with which he was associated (Superior Rubber Pty Ltd), which caused the ATO account for that entity to have a positive balance. As a consequence, a refund was due to Superior Rubber Pty Ltd.
7. On 3 September 2014, the offender sent an email to Vittorio Brescia, attaching a receipt from the ATO indicating that the company had no further tax liability. Mr Brescia trusted the offender so he accepted the veracity of the correspondence.
8. On 18 September 2014, the ATO issued a refund cheque to Superior Rubber Pty Ltd in the sum of $549,150.18.
9. It was agreed in respect of this charge, that the offender by deception, dishonestly obtained a financial advantage in the sum of $808,555.55.

The Maximum Penalty

1. The offences are serious ones for which the Legislature has seen fit to now set a maximum penalty of 10 years imprisonment. It should also be noted that the maximum penalty of 10 years imprisonment in respect of the offences pursuant to section 192E(1)(b) represent a very substantial increase to the five year maximum penalty which was applicable to the offence of obtaining money by deception under the former section 178BA(1).
2. The introduction of the higher maximum penalty than existed for the corresponding repealed offence "requires some adjustment to the range of sentences that would formerly have been considered appropriate" (Baumer v The Queen (1988) 166 CLR 51 at 57).

Guilty Pleas

1. The offender entered guilty pleas for some of the offences at an early opportunity in the Local Court, and as to the balance of the offences, subsequent to the matters being listed for trial in this Court.
2. The offender submits that in respect of the early pleas, he should be afforded a discount on his sentence of 25%. This was not disputed by the Crown. This discount shall apply to the counts in Indictments 201616997_1.2 and 201616997_2.2.
3. As to the pleas in this Court, the offender submitted that a discount of 15% would be appropriate. In this regard, he relied on the proposition that in matters of white collar criminality, a guilty plea might be thought to entitle the offender to considerable leniency due to the fact that "in white collar crimes the difficulty of detection and the difficulty and expense of investigation and proof means that particular consideration and greater discount should be allowed to an accused person who pleads guilty thus saving the State from the expense of proving the matters associated with the white collar crimes" (R v Halabi (unrep, 17 February 1992, NSWCCA)).
4. The Crown submitted that an appropriate discount in respect of the pleas of guilty in this Court, should be 10%.
5. I will accede to the offender's submission and afford him a 15% discount on the later pleas, which discount shall apply to the counts in Indictment 201605746_11.2.
6. The guilty plea discounts have been applied to the indicative sentences which I shall set out later in these Reasons.

The Objective Seriousness of the Offence

1. The task in assessing the objective seriousness of the offence and then proceeding to impose an appropriate sentence consistent with that assessment, involves the Court considering all relevant matters, both objective and subjective, which inform the seriousness of the offence (Sivell v Regina [2009] NSWCCA 286 at [5], per McClellan CJ at CL).
2. McHugh J described the process involved as "instinctive synthesis", which His Honour went on to explain in the following terms in Markarian v R (2005) 228 CLR 357, at [51]: …I mean the method of sentencing by which the judge identifies all the factors that are relevant to the sentence, discusses their significance and then makes a value judgment as to what is the appropriate sentence given all the factors of the case. Only at the end of the process does the judge determine the sentence
3. The following factors have been identified over time by the Courts as relevant to the assessment of objective seriousness in sentencing for fraud offences: 1. the amount of money involved (R v Hawkins (1989) 45 A Crim R 430, R v Mungomery (2004) 151 A Crim R 376 at [40], R v Woodman [2001] NSWCCA 310, R v Finnie [2002] NSWCCA 533 at [59]); 2. whether the loss is irretrievable (R v Todorovic [2008] NSWCCA 49 at [19]); 3. the length of time over which the offences were committed (R v Pont (2000) 121 A Crim R 302 at [74], [75], R v Mungomery (2004) 151 A Crim R 376 at [40]); 4. the motive for the offences; 5. the degree of planning and sophistication (R v Mille (unrep, 1/5/98, NSWCCA), R v Pont (2000) 121 A Crim R 302 at [43]-[44], R v Murtaza [2001] NSWCCA 336 at [15], Stephens v R [2009] NSWCCA 260 at [59], [78]); and 6. breach of trust (R v El-Rashid (unrep, 7/4/95, NSWCCA), R v Pont (2000) 121 A Crim R 302, R v Hawkins (1989) 45 A Crim R 430).

Aggravating and Mitigating Factors

1. In addition to these common law principles, pursuant to the provisions of section 21A of the Sentencing Act, the Legislature has provided for both aggravating and mitigating factors to which the Court should have regard in assessing the objective seriousness of an offence. For present purposes, the following are relevant: 1. the offender has a record of previous offences (section 21A(2)(d)); 2. the injury, emotional harm, loss or damage caused by the offence was substantial (section 21A(2)(g)); 3. the offender abused a position of trust or authority in relation to the victim (section 21A(2)(k)); 4. the victims were vulnerable (section 21A(2)(l)); 5. the offence involved multiple victims or a series of criminal acts (section 21A(2)(m)); and 6. the offence was part of a planned or organised criminal activity (section 21A(2)(n)).
2. The only relevant mitigating factors are the offender's plea of guilty which I will take into account, though not explicitly, pursuant to section 21A(3)(k); as well as the offender's age.
3. I shall deal with these factors below.

The amounts of money involved

1. The amount of money involved has long been accepted as being important in the determination of the objective seriousness of the fraud offence (see for example, R v Finnie [2002] NSWCCA 533 at [59]). Relevant in this regard is also the fact that the loss may be substantially irretrievable (R v Todorovic [2008] NSWCCA 49 at [19]).
2. On 31 May 2019, I made orders by consent forfeiting certain assets to the State. It was agreed that these assets only have a value of approximately $108,550.
3. The amounts of money involved in the offender's frauds were significant. In respect of the first indictment, the monies lost totalled $3,263,474.95. The monies in the second and third indictments totalled $105,000 and $1,433,696.55 respectively.
4. In total, the offences the subject of the pleas of guilty amounted to $4,802,171.50. As I have indicated, the sum recovered is of approximate value of only $108,550. This leaves a total loss to the victims of $4,693,621.50.
5. It should also be noted that, in my view, other than in respect of certain of the sums in relation to companies of the Brescia group the subject of the third indictment, all of the victims of the offender's frauds were individuals, who thus suffered their losses in a truly personal sense.

The length of time over which the offending took place

1. The length of time over which the offending took place was similarly large. As I have indicated, in respect to the first indictment, the offending took place between 1 November 2007 and 15 June 2015. The offending the subject of the second indictment occurred between 1 October 2013 and 30 November 2014, and between 5 June 2012 and 22 January 2015 in respect to the third indictment.
2. It can be seen therefore that the offences took place continuously over an almost 8 year period.

The offender's motive

1. The motive of the offender was self-evidently greed. However, I do not place much store on this factor, as almost by definition, greed must be a motivating factor in most offences of this nature.

The degree of planning

1. The offender submitted that planning was an inherent characteristic of offending of this type, and can only be taken into account as an aggravating factor where the amount of the planning exceeds that which would ordinarily be expected of offending of this nature (R v Yildiz (2006) 160 A Crim R 218, at [37] - [39] per Howie J).
2. The offender drew my attention to the decision of Elyard v Regina [2006] NSWCCA 43, where the Court stated at [17] that: … it is necessary to distinguish cases where a factor identified in sub-s 21A(2) as an aggravating factor is an element of an offence or, in the sense described above, an inherent characteristic or a characteristic that appertains generally to conduct covered by that offence, on the one hand, and other conduct which cannot properly be so described.
3. In respect to most of the offences, I accept that this is the case. However, certain of the Brescia offences involved a higher degree of planning and sophistication, involving, as they did, the preparation of IAS and BAS statements, and thereafter the falsification of attached money slips by altering the EFT code so that the offender, through entities associated with or controlled by him, would be credited by the ATO.
4. The Crown submitted that these offences involved a high degree of planning and sophistication. I agree with this submission.

Breach of trust

1. The offender submitted that in respect of this factor, the Court ought to proceed with caution as a "special duty" did not exist between the offender and his victims (T6.44-50). This submission was based on the proposition that the relationship between the offender, as an accountant, and his clients, was not necessarily fiduciary in nature.
2. Whether the offender was in a fiduciary relationship with his victims is not capable of being determined on the facts before me, but it is unnecessary to do so. I take this view as I do not consider that the concept of breach of trust where it is considered as a common law factor in relation to objective seriousness, or a statutory factor pursuant to section 21(2)(k), is limited to breach of trust stricto sensu. It is clear that the principle applies to accountants (R v Sellen (unrep, 5/12/91, NSWCCA)).
3. The offender did acknowledge, however, that but for the offender's position as an accountant, the offending would not have taken place.
4. In my view, the breach of the offender's position of trust and confidence which his clients placed in him as an accountant, is a powerful factor in assessing the objective seriousness of the offence.
5. I should add, however, that in forming a view as to that matter, I have not double counted in the sense of taking the same matter into account for the purpose of my consideration of aggravating factors pursuant to section 21A.

Criminal History

1. The offender has a record of previous convictions.
2. The prior convictions are as follows: Charge Date Offence 11/11/1987 Misappropriation 15/12/1992 Being Officer Apply Property of Public Company (12 Counts) 07/12/2000 Fraudulently omit to account money >$15000 09/05/2001 Make/Authorise False Statement for Benefits (3 Counts) 05/12/2000 Not Keep Firearm Safely - Not Prohibited Firearm/Pistol 25/06/2001 Do Act Etc W/I To Pervert The Course Of Justice - SI

1. It can be seen from the above that the offender has a considerable history of offences of dishonesty which includes a custodial sentence for similar offending from the year 2000, for which he was imprisoned for 3 years with a 2 years 3 months non-parole period.
2. The offender accepted that this must be taken into account, but counselled against the Court considering it as an aggravating factor, applying section 21A(4), which provides that an aggravating or mitigating factor should not be considered if it would be contrary to any Act or rule of law to do so.
3. In that context, the offender points to the fact that at common law, the prior conviction does not operate to aggravate an offence, but rather, it deprives the offender of leniency or otherwise indicates that it is appropriate to give more weight to such factors as retribution, deterrence or community protection (Veen v The Queen (No. 2) (1988) 164 CLR 465, at 476.
4. The Crown submitted that the previous convictions of the offender was a relevant factor to be taken into account, and drew my attention to the decision of Weininger v The Queen (2003) 212 CLR 629 at [32], where Gleeson CJ, McHugh, Gummow and Hayne JJ stated: A person who has been convicted of, or admits to, the commission of other offences will, all other things being equal, ordinarily receive a heavier sentence than a person who has previously led a blameless life. Imposing a sentence heavier than otherwise would have been passed is not to sentence the first person again for offences of which he or she was earlier convicted or to sentence that offender for the offences admitted but not charged. It is to do no more than give effect to the well-established principle (in this case established by statute) that the character and antecedents of the offender are, to the extent that they are relevant and known to the sentencing court, to be taken into account in fixing the sentence to be passed. Taking all aspects, both positive and negative, of an offender's known character and antecedents into account in sentencing for an offence is not to punish the offender again for those earlier matters; it is to take proper account of matters which are relevant to fixing the sentence under consideration.
5. I am of the opinion that the previous convictions and incarceration for very similar offences of fraud are matters of high relevance in the sentencing process, and I propose to take them into account accordingly.
6. I should add that I am cognisant of the risk of double counting if I were to take them into account both pursuant to the provisions of section 21A and pursuant to common law principles. I propose to confine my consideration of them to the common law principles to which the parties have referred.

The vulnerability of the victims

1. The offender submitted that it would be in error for me to take into account, for the purpose of the aggravating factor, the victims of the fraud perpetrated by the offender, as they were ordinary members of the public. It drew my attention to the decision of the Court of Criminal Appeal in Regina v Tadrosse (2005) 65 NSWLR 740 at [26] - [27], where Hall J (with whom Grove and Howie JJ agreed) stated: [t]he provision is concerned with the weakness of a particular class of victim and not with the threat posed by a particular class of offender.
2. It could be said that each of the clients, being clients of the offender, were vulnerable in the sense that they placed their trust and confidence in the offender, which he abused. However, I have taken that factor into account in my consideration of the offender's breach of trust.
3. The Crown accepted that the principles set out above in Tadrosse are applicable, but pointed out that the exception to the general proposition made by the offender in relation to the vulnerability of the victims did not extend to count three of indictment one, that is to say, the offence concerning Ms Kathryn Harwood who was dealing with the offender for the purposes of investing money for her disabled brother who had received an inheritance.
4. It is an agreed fact that the offender was aware that Ms Harwood's brother suffered from a disability. The agreed facts narrate that the offender recommended that Ms Harwood set up a trust fund for her brother's inheritance, saying to her "it will protect everyone's interest if anyone dies. I understand your position as I have a Down syndrome son."
5. It follows that I consider that it is appropriate take into account the vulnerability of the victim in respect of count three in indictment one.

Financial gain

1. The offence was committed for financial gain (section 21A(2)(o)).
2. The offender submitted that it was not appropriate to have additional regard to such financial gain as an aggravating factor, because financial gain was an element in the offence. I agree with that submission
3. I did not understand the Crown to say anything in opposition to it.

Mitigating Factors

1. Other than the plea of guilty to which I have earlier made reference, and which I will take into account, the only other matter which the offender relied upon as a mitigating factor was his age.
2. The accused was born on 27 November 1941, and thus he is 77 years of age at the time that he will be sentenced, turning 78 this November.
3. The offender submitted that I should take his age into account, particularly for the purposes of not imposing a "crushing sentence".
4. While I accept that the offender's advanced age is a relevant mitigating consideration in this case, I do not believe that it is a powerful one. I take this view as the offending commenced when the accused was also of advanced years, and by definition, it concluded when he was at an even more advanced age.
5. The first offence occurred when the offender was 65 years of age, and the pattern of offending was repeated for over 7 ½ years, with the final offence being committed when the accused was 73 years of age. In these circumstances, I think it is difficult for the offender to contend that his age provides a significant mitigating factor to be brought to bear on the sentencing process.

Special circumstances

1. The offender submitted that his objective circumstances warranted a finding of special circumstances pursuant to the provisions of section 44 of the Sentencing Act, but did not go on to articulate the basis for that submission, beyond perhaps the issue of his age.
2. For the reasons set out above, I do not believe there are any special circumstances.

The offender's personal circumstances

1. Beyond his age, the offender has placed before the Court no evidence as to his personal circumstances.

Accumulation, concurrence and totality

1. In Pearce v The Queen (1998) 194 CLR 610, McHugh, Hayne and Callinan JJ said at [45] that: [a] judge sentencing an offender for more than one offence must fix an appropriate sentence for each offence and then consider questions of cumulation or concurrence, as well, of course, as questions of totality.
2. Questions of accumulation are discretionary and the Court is to consider whether the total sentence reflects the total criminality of the offences (R v Wilson [2005] NSWCCA 219 at [38]). As stated in R v XX (2009) 195 A Crim R 38 at [52]: [Whether the sentence for one offence] can comprehend and reflect the criminality of the other calls for the identification and an evaluation of relevant factors pertaining to the offences. These will include the nature and seriousness of each offence.
3. The index offences arose from separate incidents and represent a course of conduct. In those circumstances, some accumulation is necessary in the Court's discretion to comprehend the discrete acts of criminality. As stated in R v Wilson [2005] NSWCCA 219 at [37]: What is important is that, firstly, an appropriate sentence is imposed in respect of each offence; and secondly, that the total sentence imposed properly reflects the totality of the criminality.
4. The rationale behind the totality principle is that a 'just and appropriate' overall sentence is a sentence that satisfies all sentencing objectives applicable to the entirety of the criminal conduct (Azzopardi v The Queen [2011] VSCA 372).
5. In respect to the imposition of an aggregate sentence pursuant to section 53A of the Sentencing Act, Beazley P in Jeffree v Regina [2017] NSWCCA 72 stated at [43] that "when a court determines an aggregate sentence, the sentence so imposed must reflect the totality of the criminality involved." Her Honour cited R v Harris (2007) 171 A Crim R 267, wherein the Court endorsed D A Thomas' leading statement of the effect of the totality principle, which in turn was endorsed by the High Court in Mill v The Queen (1988) 166 CLR 59, where Wilson, Deane, Dawson, Toohey and Gaudron JJ said at 63: [t]he effect of the totality principle is to require a sentencer who has passed a series of sentences, each properly calculated in relation to the offence for which it is imposed and each properly made consecutive in accordance with the principles governing consecutive sentences to review the aggregate sentence and consider whether the aggregate sentence is 'just and appropriate'.
6. I intend to take matters of concurrence, accumulation and totality into account in the imposition of a sentence.
7. I should also note, in that regard, that it was common ground between the parties that I should be satisfied pursuant to the provisions of section 5 of the Sentencing Act that, having considered all possible alternatives, there is no penalty other than imprisonment that is appropriate to the offences. Absent this concession, I would have unhesitatingly come to the same conclusion.
8. As a consequence of this, on the first day of the sentencing hearing on 31 May 2019, it was agreed that I should revoke the offender's bail and remand him in custody, which order I made. As a consequence, the offender has been in custody since this date.

Conclusion

1. Having regard to the foregoing, I have come to the conclusion that the offences involve the upper range of objective seriousness and call for a sentence which reflects that seriousness. Of particular concern, is the fact that notwithstanding the fact that the offender has already been imprisoned for similar offences, the offender chose to embark on this course of further serious dishonesty at an advanced stage of life. I am left with no alternative but to conclude that he has learnt nothing from his previous term of imprisonment for offences of dishonesty.
2. The offender has expressed no remorse for his offences, and can only be taken to be indifferent to the financial suffering to which he has subjected his victims. I assess his prospects of rehabilitation as low, and subject to one matter, that his risk of reoffending is high.
3. The exception to the proposition which I have just expressed regarding reoffending, is that his risk of reoffending may be lessened by his age at the time of his release.
4. Section 3A of the Sentencing Act sets forth the purposes for which the Court may impose a sentence on an offender as follows: 1. to ensure that the offender is adequately punished for the offence, 2. to prevent crime by deterring the offender and other persons from committing similar offences, 3. to protect the community from the offender, 4. to promote the rehabilitation of the offender, 5. to make the offender accountable for his or her actions, 6. to denounce the conduct of the offender, 7. to recognise the harm done to the victim of the crime and the community.
5. I will not deal with each statutory purpose seriatim, but wish to record that given what I consider to be the offender's high risk of reoffending, a lengthy sentence is required in order to protect the community from the offender's fraudulently predatory behaviour. His offending also deserves significant punishment, both by way of personal deterrence, and general deterrence.
6. As to the latter, it is crucial in my view that persons who hold the monies of others, or advise them as to their disposition, should be aware that if they deal fraudulently with their clients, they can expect significant punishment.
7. The professions and occupations concerned, perform an important social and economic function, which function is predicated on their clients residing trust in the practitioner concerned. These practitioners need to be aware that breaching that trust will not be countenanced by the law.
8. The sentence of the Court will also have the effect of recognising the financial harm done to the victims, and serve to denounce the offender's conduct.

Aggregate Sentence

1. I believe that the matter is best dealt with by way of an aggregate sentence, this is so, as such a sentence, in my view best accommodates the requirements of accumulation, concurrence and totality. Accordingly, I formally indicate that such a sentence is being imposed (section 53A(2)(a) Sentencing Act).
2. I am also required to indicate the sentence that would have been imposed for each offence, had separate sentences been imposed instead of an aggregate sentence (section 53A(2)(b) Sentencing Act).
3. In setting forth the following indicative sentences, I have taken into account the matters set forth earlier in these Reasons in relation to objective seriousness, and aggravating factors. They are also taken into account in arriving at an aggregate sentence.
4. In relation to each indicative sentence, I have indicated the applicable discount which I have applied for the guilty pleas.
5. The indicative sentences are as follows:
6. Indictment 201605746_11.2: Count 1: 1 year, 8 months Count 2 (taking into account Form 1 matter): 3 years, 4 months Count 3: 3 years, 4 months Count 4: 1 year, 8 months Count 5: 5 years, 1 month
7. Indictment 201616997_1.2: Seq 4 1 year, 6 months
8. Indictment 201616997_2.2: Seq 51 3 years, 9 months Seq 57 3 years, 9 months
9. I propose to impose an aggregate sentence of a term of imprisonment of 7 years, with a non-parole period of 5 years and 3 months, such term of imprisonment to commence on 31 May 2019.
10. Ian John Kennedy: 1. You are convicted on each of the counts set forth in the Indictments. 2. You are sentenced to a term of imprisonment of 7 years, with a non-parole period of 5 years and 3 months. 3. Pursuant to the provisions of section 47 of the Crimes (Sentencing Procedure) Act 1999 (NSW), I direct that such term of imprisonment shall commence on 31 May 2019, and that the non-parole period shall expire on 30 August 2024, with the balance of the sentence to expire on 30 May 2026.

Amendments 25 July 2019 - First name of offender removed from case title 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: 25 July 2019