R v Murray [2011] VSC 513

2 Pursuant to s 6H of the Sentencing Act 1991 (Vic) and the value of the transactions which underpin each count, you fall to be sentenced as a continuing enterprise offender. That therefore exposes you to maximum penalties of 20 years imprisonment rather than 10 years in respect of the Victorian offences. However, the Crown has not submitted that in imposing sentence on you I should increase the sentence in accordance with that increase. The range of sentence that the prosecutor put to me is consistent with that position.

3 These offences occurred between 3 May 2007 and 22 June 2010. At the time you were the Chief Executive Officer of a company called Sonray Capital Markets Pty Ltd ("Sonray") which was a company established by your brother-in-law, Russell Johnson. Johnson may also be charged in relation to these matters. The business of Sonray concerned what Dr Lyon S.C., for the Commonwealth Director of Public Prosecutions, described in opening the plea proceedings as "financial product trading and advice".

4 In June 2010, Sonray was placed into administration. On 27 October 2010, following a resolution by the company's creditors to wind up the company, it was placed into liquidation. The approximate shortfall facing the company as at that date was $46.7 million. That is a massive loss. The charges against you arise from that shortfall and reflect your conduct in causing it.

5 You hold two diplomas in financial services that were completed in 2003 and 2004, respectively. You had begun working in a small chartered accounting firm in 2000.

6 As I earlier noted, your connection with Russell Johnson arises because he is now married to your sister Jill. For a time you worked with Johnson as a junior trader. Sonray was Russell Johnson's company and was incorporated in July 2003. The plan was for the company to trade in futures and, in particular, a product called Contract For Difference ("CFD") which is designed to enable investors to profit from speculation on a rising and falling stock market. After incorporation of the company Johnson offered you a 15% shareholding in the business, and the shares which represented that interest were issued to your company SKM International Pty. Ltd., although as I understand it you were not aware of those shares issuing. In 2005 you became Chief Executive Officer of Sonray and in February 2008 you became responsible for the trading desk, trading on behalf of up to 30 clients of the company. As the company had grown, friends and associates of yours became clients of Sonray. It is relevant to note that those who know you and Johnson refer to Johnson as the more dominant personality of the two of you. I am willing to accept that the effect of that relationship on you played a role in what occurred in relation to the company and the investor's funds. I also accept, as does the prosecutor, that your workload at Sonray was extremely onerous.

7 As I understand it, Sonray's trading occurred by way of its relationship with Saxo Bank A/S. Saxo Bank is an international investment bank based in Denmark. It deals in various investment products including foreign exchange and CFD. In December 2003, agreements were signed by Sonray and Saxo Bank that enabled Sonray's clients to trade in various products by way of a trading platform provided by Saxo Bank. In effect, Saxo Bank licensed its financial products to Sonray to sell under Sonray's name. In January 2004, the Australian Securities and Investments Commission ("ASIC") granted Sonray an Australian Financial Services Licence ("AFSL").

8 The provision of clients' funds to carry out the trades was Sonray's responsibility. Initially, funds were transferred by Sonray to Saxo Bank but, due to some difficulties caused by the logistics of those transfers, in 2006 a change was made to what is described as a daily netting process where the withdrawals and deposits of Sonray's clients were reconciled. That information was incorporated into what is described as a Client Configuration Manager ("CCM"). As you have described it in your later statement, this was a software package which contained various modules including a cash management module. It enabled Sonray's staff to manage clients' funds and also view account balances and their trading position. Some clients had access to what I gather was a limited amount of this information. In order to trade, clients of Sonray needed to deposit funds with an additional, marginal buffer. Those funds went into what is known as "segregated" client accounts. So far as Saxo Bank was concerned, they could not see details of individual investors but rather the user numbers involved in the particular transactions.

9 The offences you committed with Russell Johnson were enabled because unlike others on Sonray's staff, the two of you had unlimited access to the CCM including the cash management function. The result was that you and Johnson were able to, and did, record funds in the CCM where in fact the client had not deposited funds into the required segregated account. Trades were entered and debited and money was withdrawn.

10 The Crown did not contend that what appears to be an anomaly, which allowed you and Johnson to have that kind of access, was planned dishonesty. Instead, the anomaly appears to have simply been something that occurred in relation to the establishment of the system. As I understand your offending and the details of why it occurred, as set out below, it was primarily designed to meet the increasing shortfall between the company's income and its operating expenses including one particular operating expense that I am about to describe. Thus, as I follow the way the case against you is put, your actions were primarily concerned to fill large financial holes which appeared in Sonray's financial structure.

11 One such "hole" apparently concerned a project which is referred to in the material as "Project Mojo". According to your statement made to ASIC on 14 July 2011, "Project Mojo" was about Russell Johnson's plan to develop what you described as Sonray's own wholesale platform. The idea was to enable Sonray to move away from the relationship with Saxo Bank because it was thought that Saxo Bank would establish a presence in Australia and become a competitor to Sonray. The cost of the development of this project apparently well exceeded the planned $500,000 and on an overall basis Sonray found itself unable to service the operating costs of the company as well as the increasing costs of "Project Mojo".

12 In your statement, you said that in order to meet this problem Johnson told you it would be necessary to "drag money out of a friendly account", referring to the segregated client account, to meet these costs. You said this conversation occurred in or around April 2008 when Johnson entered your office, closed the door and held a private conversation with you. You understood Johnson's instruction to mean that funds from a trading account were to be withdrawn from the clients' accounts and transferred into Sonray's operating account. You said in your statement that you were concerned about the instruction and that you voiced that concern to Johnson, making it clear that you were not happy about what he was proposing. Nonetheless you complied with the instruction you were given, knowing that the action was unlawful. According to you, Johnson consoled you with the assurance that such action would only be necessary for a short period and that he would take responsibility for replacing any funds that were taken. You do not describe any particulars of how he said he would do that and you must have wondered whether it was possible.

13 In November 2009, a commercial lawyer, Jan McPherson, joined Sonray in a role similar to that of Chief Operating Officer. In a statement produced to the Court during your plea, she has described the desperate efforts made between the end of 2009 and June 2010 to try to reconcile the client accounts and also to persuade Saxo Bank to buy Sonray, which they declined to do. In late February 2010 you had supported the need for an audit of the accounts and once the reason for the so-called "hole" in the accounts had been revealed to Ms McPherson you expressed the desire to do whatever could be done to recover the funds on behalf of your clients. That failed also. Ms McPherson gave evidence before me and described you as being a person who worked far too hard and seemed to be suffering physically from doing so. Despite what has occurred, and despite your offending which I gather has had a financial effect on her too, she expressed a willingness to continue to support you.

14 I turn then to the individual counts to which you have pleaded guilty. I will briefly summarise the factual basis of each, which is, in turn, extracted from the summarised Crown opening. On your behalf, it was made clear by Mr Richter QC that no issue was taken with the Crown's summary of the evidence.

15 Count 1 is a count of false accounting and is at the centre of the case, primarily because, in financial terms, this count represents over half of your offending.

16 This count concerns the accounts held at Sonray that belonged to a friend of yours, Carey Anderson, with whom you had gone to school. Two new accounts were recorded as being opened by him in May 2007 (the "Anderson Accounts"). In your statement you have described opening the second account in his name which you later used without his knowledge.

17 You regarded this account as a "friendly account", of the kind that Johnson had discussed with you in April 2008. By bypassing the usual procedures, you made deposit entries against the Anderson Accounts, but those entries were false because they were not funded by actual cash in the segregated accounts. As a result of these false entries, there was a total loss on the Anderson Accounts in excess of $23 million between May 2008 and February 2009. A total of $3,790,000 was unlawfully transferred from the Anderson Accounts into the Sonray operating account.

18 In July 2008 you told Russell Johnson that you were using the Anderson accounts for the purpose of sending money into the operating account of Sonray in order to fund Project Mojo. You claim that he told you that amounts would be made good. Of course that never happened and Johnson apparently never said where the money would come from to fill this "hole".

19 Count two is also a count of false accounting. This count concerns the accounts of the Deague family. The Deague family had operated a business known as Asian Pacific Building Corporation Pty Ltd ("APBC"). William Deague was also a friend of yours. He and his family deposited money with Sonray in order for you to trade on their behalf and on behalf of APBC (the "Deague Accounts"). This count concerns the false accounting entries that were necessary following a request by Mr Deague on 20 October 2008 to withdraw $1.5 million.

20 In an email dated 30 October 2008, Murray advised the Chief Financial Officer of APBC that the amount of $1,879,000 was to be deposited into that company's bank account. You then set about creating deposits in the Deague Accounts and in an additional account which was not related to APBC or Mr Deague (account SXH1081). By 17 November 2008, a number of withdrawals and payments totalling $1,892,000 had been completed. There were three false accounting entries.

21 On 30 October 2008, the balance in account SKM000112 (which was a Deague account) was $1,377.03. You made a deposit entry into the CCM of $531,000 and arranged for a withdrawal of $530,000 to be made from the same account.

22 On 30 October 2008, you requested a withdrawal be made from account SXH001081 in the name of JNA Global Pty Ltd. There is no connection between JNA Global Pty Ltd and Mr Deague. However, on 12 November 2008 the payment of $150,000 was credited to the APBC bank account; and on 17 November 2008 you created a deposit entry into CCM against the JNA Global account SXH001081 of $150,000. On 17 November 2008, a withdrawal entry was created in the CCM on Anderson account SKM000200 for a sum of $255,000. The $255,000 was paid into the APBC account on 17 November 2008.

23 On 5 November 2008, you instructed Tony Worland, the Chief Financial Officer of Sonray, to pay $957,000 from Anderson account SKM000200. You provided Worland with the bank details of APBC.

24 On 24 May 2010, Deague requested that you withdraw $1,190,000 from the Deague Accounts. You processed the withdrawal request. On 24 May 2010, the amount of $1,190,000 was requested to be withdrawn from one of the Anderson Accounts (SKM000200). The withdrawal was entered into the CCM and processed in accordance with your email instructions. The reason that the withdrawal was effected through the SKM000200 account was because there were insufficient funds in the Deague Accounts that could be utilised to service the amount to be withdrawn. At that time, the Deague Accounts were, overall, in a negative balance.

25 You thus created deposits in the Deague Accounts. The result was payments of amounts totalling $1,892,000 in November 2008 and a further amount of $1,190,000 in May 2010. As I follow the pattern outlined by Dr Lyon on behalf of the Commonwealth Director of Public Prosecutions, false entries were being created into different client accounts in order to meet the Deague family's requests for payment of money.

26 Count three is a further count of false accounting in relation to the Deague Accounts. Money had been withdrawn from these accounts but spreadsheets which you prepared and supplied to Mr Deague, optimistically and falsely represented the status of the accounts. Money was, in fact, withdrawn from these accounts and used for other purposes. This particular count concerns the withdrawals from the APBC account with Sonray for the benefit of other clients as part of this continuing process. There are four particular payments involved:

A: Deposits and withdrawals - payment to Swan Global Pty Ltd $450,000

27 On 19 November 2009, two withdrawals were made and entered into the CCM from a Deague account, of $325,000 and $125,000, respectively. $450,000 of that money was paid to your CBA Netbank Saver Account and then transferred to another Commonwealth Bank account in your name. From that bank account two bank cheques were drawn, one for $110,000 payable to Sonray and the other of $300,000 made payable to Swann Global Pty Ltd ("Swann"). Your father, John Murray, is a director of Swann and the purpose of this payment was to assist your father's company.

28 The balance of $40,000 was money that was used by you for your personal benefit.

29 Iris Blue Pty Ltd was a company owned by Diane Dowd who was a client of Sonray but did not have online access to her account. She had invested $500,000 in Sonray and, on the basis that she believed that she had made trading profits, requested the withdrawal of $501,422.56. On 20 June 2007, that amount was withdrawn from one of the Deague Accounts and paid into the name of Iris Blue Pty Ltd. In fact there is no account with Sonray in the name of Iris Blue or Diane Dowd and the source of the $501,422.56 was trading funds in an account in the name of APBC.

30 Diane Dowd's daughter Arabella Koz opened an account with Sonray in 2005 and deposited money for the purpose of trading. Between 3 May 2007 and 27 October 2008, eight withdrawals were entered into the CCM by you against the Deague Accounts and amounts totalling $57,500 were transferred to Arabella Koz's account.

D: Payment to SKM International Pty Ltd of $300,000 and subsequent payment to Sonray

31 On 1 December 2008, you paid the sum of $300,000 into the HSBC account of SKM International Pty Ltd ("SKM"). SKM is a company associated with you. The source of that money was, in fact, a withdrawal entered into one of the Deague Accounts on 27 November 2008, which came from the Deague segregated account. The bulk of the money was then paid into the Sonray bank account and used to pay expenses connected with Project Mojo.

32 Count 4 is a count of theft and concerns a sum of $1,990,000. That sum had been deposited to Sonray by the Deague company, APBC, on 4 May 2010 and had been used in the Sonray operating bank account rather than applied for trading. As you accepted in the course of your statement, this sum of money should have been transferred into the segregated client account instead of being used to pay Sonray's operational costs. It appears from your statement that you and Johnson had agreed that if you were to be asked about this sum of money you were going to lie about it and say that it was a capital injection from Mr Deague rather than a deposit for the purpose of trading.

33 Count 5 concerns the misleading of an auditor. This arose because in late 2008, ASIC contacted Sonray seeking information about CFD providers. They requested that Sonray engage an independent expert to complete a solvency and compliance review.

34 In June 2009, Sonray was requested by ASIC to engage an independent expert to undertake an audit and solvency review of Sonray. The result was a meeting with Paul Lewis of PricewaterhouseCoopers in June 2009 to carry out the review. Mr Lewis was engaged by letter, dated 30 June 2009.

35 It was agreed between Johnson and yourself that if any information was requested about the source of capital injections the auditor would be told, and he was told, that the injections had been made by a network of family and friends. Of some concern was a sum of $5.2 million which is referred to in the auditor's report as capital injections, as discussed.

36 In fact, that $5.2 million equity injection was from two sources. One was the creation of deposits and withdrawals in the SKM account and the second was the deposit of $1,990,000 made on 4 May 2009 by APBC and intended for trading. Neither you nor Johnson advised the auditor or Chief Financial Officer of the company, Tony Worland, of this. On your behalf, Mr Richter QC has submitted that your willingness to agree to the auditor conducting a solvency and compliance review should stand to your credit because you would have realised that had it gone ahead, the deficiencies would have been revealed and that therefore I should conclude that "in a funny sort of a way" you were looking to get caught. However, the fact is that the auditor was misled. I consider that your later willingness to outline in detail what had occurred is much more in your favour than this is.

37 Count 6. On 6 December 2007, a deposit amount of $441,000 was entered into the CCM by you against the Palray Consulting Pty Ltd ("Palray") client trading account, SKM000128. This account was controlled by your father, John Murray. No actual cash was deposited into the segregated account. Immediately prior to the upload there was a balance of $759.71.

38 On the same day, Johnson requested the Sonray back office to withdraw $441,000 from the Palray account and to pay it to a bank account controlled by John Murray.

39 You have told ASIC in your record of interview that Johnson asked you to create the entry so a debt owed by Johnson and his wife (being your sister) to John Murray could be repaid. This arose from a loan by John Murray to his daughter and son-in-law so they could purchase a house. You were aware that no cash had been deposited by Johnson at the time the deposit entry was created but you were given some assurance by Johnson that this would be, in some way, corrected in the future.

40 The $441,000 was paid from the segregated account.

41 Charge 7 concerns a charge of false accounting in relation to other accounts at Sonray apart from the Anderson Accounts that were being used to hedge the positions of the global Sonray trading book.

42 You have admitted that the hedging activity undertaken in certain accounts involved entering trades to take an opposite position to trades entered by other Sonray clients. This activity was undertaken in an effort to ensure that Sonray's overall cash position (i.e. the global 'omnibus' level of all client margins) remained positive. These transactions were as follows.

43 On 26 January 2009 an unfunded deposit of $1,000,000 was entered into Russell Johnson's RAJ000002 account. A further 12 unfunded deposits were made into the account during the period until 30 June 2009. The total of all deposits was $6,850,000. All deposits were entered into the CCM by you and were described by you in your record of interview.

44 Account number SXH001081 was opened in the name of JNA Global Pty Ltd by another school friend of yours, James Andronis. Andronis had only ever deposited $30,000 into this account. You entered three withdrawals into the CCM for JNA Global account SXH001081. Only one was processed, being an entry on 30 October 2008 for a withdrawal amount of $150,000. This was paid to a bank account associated with the Deagues and is included in the material earlier referred to in connection with the transaction for $1,892,000. In turn the AUD$150,000 withdrawal referred to above was countered with a deposit entry of the same amount on 17 November 2008 into the JNA Global SXH001081 account. Excluding this particular false deposit of AUD$150,000, the unfunded and fictitious false deposit accounting entries total AUD$763,899.42, including withdrawals between October and December 2008 made by Andronis totalling $250,000. You advised Andronis on 19 August 2008 that his account balance was $202,400.

45 An account numbered SKM000204 was in the name of Nicolas and Denis Roche. In order to create the payment of $150,000 to Andronis, you entered a deposit of AUD$152,304 in the CCM to account SKM000204 on 18 December 2008. That same day the withdrawal of AUD$150,000 was processed in the CCM and paid to Andronis.

46 In the period 29 September 2008 to 30 March 2010, you uploaded into CCM a total of AUD$1,581,435.40 to account SKM000174 (held in the name of Charles Gibson). Previously, the Gibsons had deposited $85,000 cash into this account. None of the entries created by you were funded with physical cash deposits. You supplied false trading account records to the Gibsons and to their accountant, who required the records for taxation purposes. In the year to 11 May 2010, the Gibsons withdrew $556,000 cash from this account, believing it to be trading profits generated by you from trading on their behalf.

47 Between 28 September 2008 and 24 March 2010 a number of unfunded deposits were made into CCM against account SKM000183 (held in the name of Nero Corporation Pty Ltd) by you. They totalled AUD$2,164,416.56. There was no physical cash deposit.

48 You have also admitted to entering hedging trades on account SXH001404 (held in the name of Chevron Pty Ltd). On 20 May 2010 a number of FX trades were entered into by Murray, all of which were unsuccessful with losses totalling AUD$1,966,597.43. Losses incurred on unsuccessful trading carried out by you were corrected by inserting unfunded deposits to return the client to a position they would have been in without the unsuccessful trading. Accordingly, on 20 May 2010, a false deposit was entered into the CCM by you with a notation "FX Allocation Reba (te)". The amount of the deposit was AUD$1,787,679.76.

49 You have also admitted that the error day desk account was also used as a hedging account to reduce Sonray's collective net exposure to Saxo. That account was known as 'ERRORDESKD'. On 12 December 2008, you uploaded into the CCM an unfunded amount of AUD$250,000. On 16 December 2008 and 12 January 2009, you entered into a total of seven foreign exchange trades, all of which were unsuccessful. Combined losses on all seven trades was AUD$1,850,032.92. On 10 September 2009, you entered into CCM a deposit of AUD$1,320,000 and titled the deposit clear out error ac (SXDB.010.001.00010). The effect of this was to return the ERRORDESKD account to a small positive position. There was, in fact, no deposit of physical cash of AUD$1,320,000, which together with the unfunded deposit of 12 December 2008 made the total of unfunded deposits AUD$1,570,000.

50 Count 8 concerns the offence of obtaining a financial advantage by deception. Sonray's clients paid the company a commission for entering into trades. Saxo also paid commissions to Sonray for trades it executed on behalf of Sonray. The level of payment of the commissions varied according to the type of trade entered into.

51 Saxo paid commissions to Sonray at regular intervals. In relation to foreign exchange trading, because Saxo was a market maker, it was able to match trades executed by Sonray clients with other Saxo clients and make money by trading the spread. This meant that Saxo was potentially able to profit, and did so, from foreign exchange trades entered into by Sonray and under normal business arrangements it paid commission to Sonray. Sonray for its part has received a financial benefit in commissions of $6,128,208 from the trading it conducted arising out of the false accounting entries into the CCM portal.

52 In an email dated 6 July 2009, Johnson indicated to you that the commissions "will have to be the answer going forward". The Crown asserts that this reference is in connection with raising cash for the ongoing operating expenses of Sonray. Mr Richter pointed out during his plea that the financial advantage that this count is primarily concerned with is less to do with the commissions received and more to do with the ability to keep trading without being closed down by Saxo Bank, all the while hoping that some rescue of the situation would materialise.

53 Counts 9 and 10 are counts of false accounting and theft respectively. You had three accounts in either your name or a company name associated with you. The account numbers were SKM000001, SKM000002 and SKM000003 and the Crown has referred to these as the "Murray Accounts". As at 30 June the balance of the first account was AUD$1,640.20, and as at 1 July 2008 AUD$1460.68 and AUD$164.63 of the other two accounts respectively. Commencing 15 July 2008 and ending on 15 February 2010 you entered a number of unfunded deposits into the CCM against the Murray Accounts. The total of the unfunded deposits was $2,414,000.

54 In the period 2 July 2008 to 4 March 2010, you withdrew a total of $266,500 from the Murray Accounts and paid to yourself and/or bank accounts associated to you, as a result of those unfunded deposits. A further $909,963.33 was lost in trading losses. You have admitted that you entered the deposits into the CCM and arranged for the withdrawals to be made from the Murray Accounts.

55 As to the $266,500, it has been put on your behalf and apparently accepted that in your capacity as CEO you were paid very poorly and that sum covered a period from July 2008 to March 2010 and was primarily spent on living expenses. The sum remains a substantial amount going to your benefit unlawfully but to the extent that it can be argued that greed was a part of your motivation, in overall context of this case it was relatively less significant.

56 As Dr Lyon S.C. submitted your offending is of a very serious nature. The conduct occurred over a significant period of time and whilst these offences were committed not directly for your immediate personal gain but rather to maintain the existence and trading activities of Sonray, you permitted yourself to deceive people who not only placed trust in you but were your personal friends. You made a mockery of that trust. Your acceptance of the meaningless promises made by Johnson to rectify what was occurring, which you must have known could never be fulfilled, highlighted your willingness to engage in this criminal conduct.

57 As Dr Lyon has submitted an important consideration for me in sentencing you is that of general deterrence - that is, a sentence which demonstrates that conduct such as yours which represents a gross breach of trust will be sternly punished. For these reasons, I consider that a term of imprisonment is the only appropriate penalty in this case. There was no argument to the contrary from your counsel on the plea, and I direct that these reasons be entered in the Court records.

58 However, as was submitted on your behalf, the conduct summarised above was primarily aimed at keeping the business of Sonray afloat, at least so far as you were concerned, in the hope that the company would be rescued by being sold and the "hole" plugged. I have not been provided with any evidence of you living an excessive and indulgent lifestyle of the kind often encountered in cases of this kind. "Enormous rewards" do not seem to have accrued to you[1] and I do not believe you seriously considered that discovery of these matters could be avoided.

59 Finally, I note that under s.206B of the Corporations Act 2001 you will, by virtue of the length of your sentence, be automatically disqualified from holding a position of management in a corporation for five years from the date of your release from custody. I take that into account in the sentence that I impose on you.

60 Sonray had been placed into administration in June 2010, and by 27 July 2010, ASIC was already progressing its investigation and had asked you to participate in a voluntary record of interview. You indicated a willingness to co-operate at a very early stage, on 8 September 2010. You underwent a public examination in this Court on 23 and 24 September 2010 and participated in a record of interview on 27 and 28 September 2010. You entered a plea of guilty at the earliest possible opportunity in the Magistrates' Court on 22 February 2011 and then in this Court on 7 March 2011.

61 In that record of interview and in your subsequent statement made on 14 July 2011, you effectively did the work for the investigators and, I accept, provided those investigators with a candid account of what you had done in conjunction with Russell Johnson.

62 You told the investigators that Sonray collapsed because of poor management decisions made by both you and Johnson which was in turn connected with expanding costs and funding of Project Mojo from the creation of false deposits and withdrawals from the segregated account.

63 When the market collapsed in mid to late 2008 there was pressure from Saxo Bank. It was under this pressure that money was used inappropriately in order to fill the gaps that were opening up in the company's financial operations. Most of this activity was carried out by you, as you admit.

64 As I have already said, you have made a long record of interview and a statement in relation to these matters which the Crown appears to accept is a true and detailed account of the activities of you and Johnson. During the course of the plea you have given evidence before me in which you stated that both documents were true and correct.

65 In particular, in the course of the proceedings before me you have given a sworn undertaking that you will give evidence in accordance with that record of interview and your statement,[2] if and when called upon to do so, against any other person but presumably, primarily, against Russell Johnson. You are entitled to receive a discount on your sentence for the cooperation that you have undertaken to provide in any future prosecution of Johnson and, in respect of count 5, I have reduced your sentence on that basis by six months.

66 Your cooperation with the authorities was also highlighted by the evidence of Andrew Price who is the Senior Management Financial Services Officer with ASIC and the principal investigator. He agreed that he had volunteered to give evidence and part of the reason for that was that the speed with which the investigation was able to proceed given your cooperation was unprecedented. Mr Price is convinced of the truthfulness of what you told the investigators. He also expressed the strong view that you have shown remorse at all times in your conversations with him and he was satisfied that you were being truthful.

67 I have earlier mentioned Ms Jan McPherson who was initially engaged to advise on the proposed sale of Sonray. In October 2009 she agreed to join the company as the Chief Operating Officer to deal with queries from ASIC and a proposed audit of the company. She became aware of a number of things including Johnson's use of Sonray funds for private purposes. You later strongly supported the proposal for an audit which, it is put, was likely to uncover what you had done. As I understand it, on Friday, 18 June 2010, Russell Johnson informed Ms McPherson that there was a hole which you and he had created. She then informed you that there was no choice but to report what she had been told and you accepted that. She described your expressions of guilt and remorse. She described how she has supported you since and maintained contact with you.

68 Your co-operation in this matter to date has been exceptional. It displays remorse, a willingness to accept responsibility for your actions and a desire to rectify that which you can in the circumstances. I have taken your past cooperation into account in sentencing you in relation to count 5, and in addition to the discount given for your undertaking to give assistance in future, I have reduced your sentence on this count by a further six months.

69 You are 33 years old, and you were born in Western Australia to a professional family. You had a normal upbringing and a more privileged education, particularly at Melbourne Grammar School. After leaving school you completed Diploma level training in finance and worked in that field for some 10 years. Most of that time you worked at Sonray. In 2002, you met your wife Chelsea and married on New Years Eve in 2007. You have one child and your wife is pregnant with your second child. I gather that your relationship is strong despite the significant consequences of your actions in this case.

70 Unsurprisingly, upon being discovered in relation to these matters, you have been under considerable stress. Apparently, you have also experienced chronic work stress in the past. At the time of your plea being made you were unemployed and since then you have been a remand prisoner. I am sure that has come as a very sobering experience for you. I am told that you are left with virtually nothing.

71 You have been assessed by Mr Patrick Newton a forensic psychologist. You had significant symptoms of depression and anxiety. You told Mr Newton that your key motivation for the offences you had committed had been to try and keep the company trading so that customers would not suffer investment losses. As I understand it, the Crown does not dispute that motivation.

72 I accept, as was submitted on your behalf, that your depression and anxiety will make your time in custody more difficult particularly to the extent that you are in any way isolated or become subject to significant stress.

73 You have also been psychologically assessed by Mr Torrey Orton who is a psychologist who, in many respects, corroborates the conclusions of Mr Newton in relation to the rate at which you have worked. Both have considered you to be at risk due to this case and your involvement in it. However, you appear to have made considerable progress in adjusting to the reality of what you now face.

74 There could be no question that until your offending in this matter you were a person of good character. You have no prior convictions, and some 17 people, including some who themselves suffered loss as a result of your activities, have been willing to provide written references as to your good character. Many of them deal with the reaction that you have had to these circumstances and several of them used the word remorse and that is an important consideration. Others regard you as a person of integrity notwithstanding these offences and make the point that the way in which you have conducted yourself in your cooperation with the authorities and in particular the candour that you have displayed is a truer representation of your character. I accept that is so.

75 Consistent with authority, the Crown has submitted that good character is not as significant a mitigating factor in this case as it is in connection with other offences, given the importance of general deterrence in sentencing for so-called "white-collar crime". Whilst I follow the reasoning behind that submission, the quality of the character evidence put on you behalf is exceptional, even from some who suffered as a result of your actions and, with that in mind, I have given it appropriate weight in determining your sentence.

76 The Crown also submitted that, consistent with authority, there is no principle requiring a wider than normal gap between the head sentence and the non-parole period. Be that as it may, it seems to me that your rehabilitation is well advanced through, among other things your plea of guilty and your extensive co-operation. In sentencing you I should act to encourage that progress.

77 The Crown submitted that an appropriate range of sentence would be between 5 and 6½ years imprisonment as a head sentence, with 3½ to 4 years for you to serve before being considered eligible to be released on parole. In my opinion, that range is too high. I regard your remorse and your cooperation, both past and promised for the future, to be exceptional in the circumstances. I also consider that it is extremely unlikely that you will engage in future offending following your release, and consider that both considerations of general and specific deterrence are appropriately served by the sentence I am about to impose on you.

78 In my opinion the appropriate sentence to be imposed on you is as follows:

79 I direct that 6 months of the sentence on count 2 to be served cumulatively with the sentence on count 1. The remaining sentences are to be served concurrently with the sentence on count 1.

80 I direct that the sentence imposed in respect of count 5 (the Commonwealth offence), commence this day, 14 October 2011, and be served wholly concurrent with the sentences on counts 1, 2, 3, 4, 6, 7, 8, 9 and 10 (together, "the State Offences"). There is no need to express a non-parole period in respect of the sentence on count 5.

81 The is result is a total effective sentence of five years imprisonment. I direct that you serve a minimum term of two years and six months before being eligible to apply for parole.

82 Given that the sentence I have imposed on you in respect of count 5 is a sentence of one year imprisonment, s.19AC of the Crimes Act 1914 (Cth) would generally require that I make a recognizance release order on that count. However, I am of the view that such an order is inappropriate given the "nature and circumstances of the offence",[3] particularly in the context of your pleas of guilty to each of the State Offences and the combined effect of the sentences on each of those counts, which are to be served concurrently with the sentence on count 5. For those reasons, I will not make a recognizance release order in respect of count 5, and I direct that that fact and those reasons be entered in the record of the Court.

83 Further to the discount pursuant to s 21E of the Crimes Act 1914 (Cth) identified for the purposes of the Commonwealth sentencing regime for your undertaking to assist the authorities (above, at [65]), I have also taken your extensive cooperation, both past and as promised, into account in sentencing you for the State Offences. Pursuant to s. 5(2AB) of the Sentencing Act 1991 (Vic), I direct that that be noted in the records of the Court.

84 However, pursuant to s 6AAA of the Sentencing Act 1991 (Vic) I declare that but for your plea of guilty in relation to the State Offences, the sentence I would have imposed on you would have been a sentence of 10 years imprisonment with a minimum of six years to serve before being eligible to apply for parole. Your plea of guilty and very significant level of cooperation are factors that are inextricably linked, and I direct that the records of the Court reflect the fact that I have discounted your sentence in accordance with the Victorian sentencing regime on that basis.

85 I declare your pre-sentence detention is 81 days, including today, and I direct that that fact be entered in the records of the Court and that that period be reckoned as having been served as part of your sentence.

[1] See DPP v Bulfin [1998] 4 VR 114 at p 131-2.

[2] Undertaking dated 18 July 2011, made pursuant to section 21E of the Crimes Act 1914.

[3] Section 19AC(4) states that "the court may decline to do [make a recognizance release order] if, having regard to the nature and circumstances of the offence or offences concerned...the court is satisfied that such an order is not appropriate."