R v Richards [2015] ACTSC 206

CRIMINAL - Sentencing - particular offences - dishonestly obtain a financial gain by deception - use false documents with intent to dishonestly induce a public official to accept them as genuine and obtain a gain

Crimes Act 1914 (Cth) ss 3ZL(1), 16A, 16(2), 21B

_Criminal Code Act 1995 (_Cth) ss 11.1(1), 134.2(1), 145.1(1)

Barbaro v The Queen; Zirilli v The Queen [2014] HCA 2; (2014) 253 CLR 58

R v Anderson [2012] QCA 215

R v Host [2015] WASCA 23

R v Peterson [2008] QCA 70

Commonwealth Director of Public Prosecutions (Crown)

1. The offender pleaded guilty to the following offences.

(a) Between 7 March 2010 and 7 October 2010, dishonestly attempt to obtain a financial advantage by deception (the sum of $12,272) contrary to ss 11.1(1) and 134.2(1) of the Criminal Code Act 1995 (Cth). The maximum available penalty is 10 years' imprisonment.

(b) Between 2 January 2007 and 7 October 2007, dishonestly obtain a financial gain by deception (the net sum of $327,942) contrary to s 134.2(1) of the Criminal Code. The maximum available penalty is 10 years' imprisonment.

(c) Between 16 June 2010 and 14 July 2010, knowingly use false documents with intent to dishonestly induce a public official to accept them as genuine and thereby obtain a gain contrary to s 145.1(1) of the Criminal Code. The maximum available penalty is 10 years' imprisonment. This offence relates to submitting false documents to substantiate a February 2010 Business Activity Statement (BAS) claim.

(d) In or about April 2002, use a false document (a false birth certificate) with intent to dishonestly induce a public official to accept it as genuine and dishonestly influence the exercise of a public function contrary to s 145.1(1) of the Criminal Code. The maximum available penalty is 10 years' imprisonment.

2. On 22 October 2014 the offender was charged with 48 offences. At the first mention date in the Magistrates Court his legal representative indicated that there would be a plea of guilty to the substance of appropriate charges. A large volume of material was served on the defence. On the fourth appearance in the Magistrates Court, the original charges were replaced with "rolled up" charges and the offender pleaded guilty. The matters were committed to the Supreme Court for sentence. Taking into account the pleas at the earliest reasonable opportunity and the strong prosecution case, I allow a discount of about 25% for the offender's willingness to facilitate the course of justice: s 16A of the Crimes Act 1914 (Cth).

3. On 23 April 2015 bail was refused. The offender has been in custody since that date. The sentences will date from 23 April 2015.

4. Offences (a), (b) and (c) relate to offending conduct between January 2007 and October 2010. The offender lodged 49 BAS with the Australian Taxation Office (ATO), on behalf of two entities, Infinite Aviation and NREA Pty Ltd, claiming goods and services tax (GST) refunds. Neither entity was entitled to a refund.

Dishonestly attempt to obtain financial advantage by deception between 7 March 2010 and 7 October 2010 - Offence (a)

5. In March 2010 the ATO commenced compliance activities in relation to Infinite Aviation. Between March and October 2010 the offender lodged five BAS for Infinite Aviation seeking total refunds of $12,272. The refund amount claimed was withheld because of the audit activity (see [13] below).

Dishonestly obtained a financial gain by deception between 2 January 2007 and 7 October 2007 - Offence (b)

6. On 29 November 2006 the offender registered for GST purposes as a sole trader, trading under the name of "Infinite Aviation".

7. Between January 2007 and October 2010 the offender electronically lodged 44 BAS for Infinite Aviation, claiming refunds totalling $227,256. In relation to 36 of the BAS, the ATO deposited refunds totalling $176,605 into the offender's bank account.

8. The offender did not operate a genuine business. Infinite Aviation did not provide flight training, charter aircraft or export custom aircraft parts (as claimed).

9. On 2 April 2008 the offender registered NREA Pty Ltd, trading as "National Register of Encumbered Aircraft" with the Australian Securities and Investments Commission (ASIC). On 17 April 2008 he registered NREA Pty Ltd for GST purposes.

10. Between December 2008 and October 2010 the offender lodged eight paper BAS for NREA, claiming refunds totalling $151,337. The ATO deposited that amount into a bank account in the name of "NREA Pty Ltd". The offender had sole control of the bank account.

11. NREA was not a genuine business. It neither chartered aircraft nor exported aircraft parts (as claimed).

12. On 23 July 2009, the offender submitted a number of documents to the ATO in response to an ATO request concerning April to June 2009 BAS claims made on behalf of NREA. The offender submitted tax invoices purported to be issued by NREA to third parties and by third parties to NREA, and print outs of bank records. The ATO made enquiries with the third parties and established that the documents were false.

13. In September 2010, the ATO commenced an audit of Infinite Aviation and NREA. On 22 October 2010, the offender wrote to the ATO claiming that paper documentation in relation to the audit period had been stolen from his car and electronic documents had been lost due to a hard drive failure on his personal computer. He offered to repay all refunds made to Infinite Aviation and NREA, together with any penalties.

14. In November and December 2010, ATO auditors interviewed the offender. He made some admissions.

15. On 1 December 2010, the offender provided further false documents in an endeavour to substantiate his business activities.

16. The ATO auditor determined that neither Infinite Aviation nor NREA had carried on an enterprise. All BAS claims were disallowed.

Knowingly use false documents with intent to dishonestly induce a public official to accept them as genuine and obtain a gain between 16 June 2010 and 14 July 2010 - Offence (c)

17. On 22 March 2010, the ATO commenced compliance activity in relation to the February 2010 BAS submitted by the offender for Infinite Aviation. The offender submitted a number of documents to the ATO to substantiate the claims made in the BAS. The offender forwarded emails to the ATO on 16 June 2010. The emailed contained tax invoices, purported to be issued by Infinite Aviation and the details of one bank transaction. The ATO made enquiries with the third parties to whom the invoices purported to be issued. The enquiries are established that the documents were false.

18. On 14 July 2010, the offender submitted further documents to the ATO for the purpose of substantiating the February 2010 BAS. The documents included bank transaction histories. The ATO made enquiries with the relevant banks, which established that the documents were false.

19. On 1 April 2002, the offender commenced employment in a full time managerial role with Air Services Australia (ASA), a corporation owned by the Commonwealth. ASA requires employees to be of good character. As part of the employment process a police record check is undertaken. The offender completed forms in which he gave a false date of birth, and he provided a corresponding false birth certificate to ASA. In February 1999 the offender had been convicted of obtaining a financial advantage by deception. He knew that, if he revealed the offence, it was unlikely that he would be employed.

20. The offender claimed that an officer of ASA knew that he had a prior conviction. He also claimed that he was not responsible for the offence. I do not accept those claims. The offender knew that, if he revealed the conviction, it was unlikely that he would secure employment. That is the reason why he submitted false information.

21. The offender was employed at SES 2 level as a business manager responsible for business development at ASA. He retained that employment until 19 November 2012. His employment was terminated as a result of the matters that are the subject of these proceedings.

22. In a record of interview with the Australian Federal Police on 6 March 2013, the offender admitted that he had provided a false date of birth and false birth certificate to ASA.

23. The offender was charged in October 2014. The reason for the delay is largely unexplained. The delay is of some, although limited relevance to the sentencing exercise in that the offender lost his employment in late 2012 and was "in limbo" until charges were laid in October 2014. There was an associated negative psychological impact on the offender and his family.

24. I turn to the objective seriousness of the offences. In determining the objective seriousness of the offences, I take note of:

(a) The period of time occupied by the offences and the number of activities undertaken during that period.

(b) The extent of the financial benefit sought or gained.

(c) The loss of public revenue.

(d) The degree of pre-meditation and planning.

(e) The use of false documents in an attempt to cover up the crimes.

(f) The breach of an employer's trust.

25. Offence (a) involved five lodgements over a period of seven months. Offence (b) involved 44 lodgements over a period of three years and nine months. I adopt the prosecution's characterisation of these crimes as involving a consistent and persistent demonstration of fraud over a significant period of time.

26. In relation to offence (a), the offender sought $12,272. In relation to offence (b) the offender sought and obtained $327,942, a very significant loss of revenue to the Commonwealth. In relation to count (d), the offender sought and obtained valuable employment with a Commonwealth corporation.

27. To date, the offender has repaid refunds with respect to Infinite Aviation in the sum of $87,118.47. The repayment has occurred through the garnishment of ASA wages. The prospect that the outstanding sum of approximately $240,000 will be repaid is remote. The offender has voluntarily repaid a further sum of approximately $61,000 to the ATO, but this sum has been applied by the ATO to other, unrelated tax debts of the offender.

28. The offender set up two entities for the sole purpose of making false claims. He was in full-time employment at the time and the entities never traded. The offender created a raft of false documents to support the activities of the entities.

29. The offender created the false birth certificate because he believed that he would not otherwise obtain employment with ASA, something that was of great value to him.

30. The use of false NREA documents is an aggravating feature in relation to offence (b). In October 2010, when he knew that his activities were the subject of inquiry, the offender asserted that relevant documents had been lost or stolen.

31. The offending conduct ceased only because it had been detected.

32. In relation to offence (d), the false certificate was provided to a prospective employer for the purpose of securing employment. There is a relationship of trust between an employer and employee, and employers rely upon employees to act on honestly. The lengthy employment of the offender by ASA was permeated by the dishonesty associated with its commencement.

33. The offender is now 40 years of age. He committed offence (a) when he was about 27 years of age. He committed the other offences when he was aged in his 30s.

34. The offender has a prior, albeit limited criminal record. Relevantly, this relates to an offence of dishonesty that was committed in 1998. In 1999 he received a recognisance to be of good behaviour for a period of 18 months. The prior criminal history does not aggravate any sentence, but it does disentitle the offender to leniency which might otherwise have been afforded.

35. The offender is one of three children. His parents were professional people but the offender's childhood home life was marred by parental alcoholism and associated domestic violence. It was an unhappy domestic environment. The offender's biological parents separated when he was in his teens. The offender was close to his mother. She remarried after the separation. The offender developed a close and loving relationship with his stepfather. The offender attributes his mother's early death in 2010 to her lengthy abuse of alcohol. The offender continues to enjoy a good relationship with his siblings. He has a reasonable relationship with his father, who is currently very ill. The offender assists his father.

36. The offender enjoys a strong and supportive relationship with his partner of approximately a decade. The couple has two children, now aged about four and seven years. The offender's partner describes the offender as a supportive partner and a good father.

37. Although he began to abuse drugs and alcohol while at school, the offender managed to complete Year 12. After leaving school, he obtained several responsible managerial positions, where he worked diligently. Following termination of the offender's employment with ASA, his partner has supported the family. The offender has debts of about $120,000, not including the outstanding sum that is the subject of these proceedings. The offender may be facing bankruptcy.

38. The offender is now socially isolated; largely a result of the great embarrassment associated with the commission of these offences. The offender has a history of physiological and psychological problems. He has suffered from chronic anxiety since at least 1999. It is likely that there is an underlying panic disorder. The offender has suffered from intermittent major depression. Anxiety and depression have been treated by medication and by cognitive behavioural therapy but with only modest success. In custody, the offender is receiving appropriate treatment. In the past, he has been medicated with benzodiazepines. The author of the medico-legal report, Associate Professor Robertson is concerned that the offender may have a benzodiazepine dependency.

39. The offender's anxiety was exacerbated in about 2000, when his stepfather developed cancer. At one stage, the offender moved to Brisbane to assist in the care of his stepfather. The offender considers that his stepfather's death from cancer in 2000 was the consequence of medical mismanagement. The circumstances surrounding the death of his stepfather were very traumatic for the offender.

40. The offender suffers from sleep apnoea. He was surgically treated for the condition some years ago, but the treatment was not successful. In 2008, the offender was diagnosed with testicular cancer. He underwent extensive treatment. The circumstances in which his stepfather died have made the offender particularly anxious about his own diagnosis of cancer.

41. The offender claims that he committed the offences for the purpose of assisting his family financially. He informed Ass Prof Robertson that he had "no choice" because he felt that he had to "provide for" his family. He described himself as having been "anxious and desperate" while he was committing the offences. Ass Prof Robertson referred to the offender's view of why he committed the offences as involving "a victim mentality". Ass Prof Robertson assessed the offender as having underlying antisocial personality traits.

42. The offender has accepted responsibility for the offending conduct.

43. Ass Prof Robertson stated that the risk of reoffending was affected by untreated or poorly treated anxiety, as well as the disinhibiting effects of taking benzodiazepine medication.

44. Character evidence shows that the offender is a thoughtful, reliable and supportive friend. The offender's brother confirmed that the offender has been supportive in a psychological sense and, to some extent, in a financial sense.

45. Ass Prof Robertson discussed the possible effects of full time imprisonment on the offender. He identified an increased traumatisation because offender suffers from anxiety and depression. Given the offender's underlying personality traits, there are also risks associated with exposure to criminals. However Ass Prof Robertson also noted that the offender is receiving appropriate treatment in custody and he stated that the receipt of appropriate treatment over a period of time will assist to stabilise the offender's psychological state.

46. The sentencing purpose of general deterrence is a relevant sentencing consideration, although it is not specifically mentioned in s 16A of the Crimes Act. General deterrence is important in the case of any premeditated crime that is relatively difficult to detect. It is highly relevant in cases of tax fraud because the collection of tax is dependent upon honest self-reporting and tax fraud has a significant impact on the wider community: R v Host [2015] WASCA 23. The impact on the public revenue extends beyond the loss occasioned by particular fraudulent activities. The Commonwealth must incur unrecoverable costs in auditing and investigating the activities of taxpayers generally because a small proportion of such persons do commit fraud: Host at [24]

47. The pre-meditation that was involved in the offences and the persistence and variety of the offender's dishonest conduct indicates that the sentences should reflect a high level of personal deterrence.

48. The offender's prospects of rehabilitation are uncertain and appear to be linked to him undertaking and maintaining treatment for anxiety and depression as well as possible benzodiazepine dependence.

49. Generally, offences involving tax fraud require stern punishment.

50. The prosecution helpfully referred the Court to a number of comparable cases. Each case differs in significant respects, but overall the cases do provide substantial guidance.

51. Host was a Crown appeal against sentence. Following late pleas of guilty, the offender was sentenced for 49 offences which spanned a period of four years and involved the total sum of $332,646. The offences were contrary to ss 134.2(1) and 145.1(1) of the Criminal Code. The offender was in his thirties, was a man of prior good character and was considered to have excellent prospects of rehabilitation. He had repaid the full amount of the frauds. At first instance, he was sentenced to an effective sentence of two years' imprisonment, to be released after serving eight months. The Court of Appeal of Western Australia resentenced the offender to an effective sentence of three years and six months' imprisonment, to be released after serving 21 months' imprisonment upon entering into recognisance to be of good behaviour for 21 months.

52. R v Peterson [2008] QCA 70 was an appeal against sentences imposed for offences of fraud that spanned a period three and a half years. They involved lodging 15 false BAS claims and resulted in the payment of $722,309. The offender had attempted to gain a further $95,078. The offender supplied the auditor with forged documents when he was audited. The offender was in his forties. He had a criminal history for dated offences of dishonesty. He had served a period of imprisonment. The offender pleaded guilty. The sentencing court had imposed a total sentence of seven years' imprisonment with a non-parole period of three years and six months' imprisonment. The appeal was dismissed.

53. In R v Anderson [2012] QCA 215, the offender appealed against sentences for tax fraud involving the filing of false BAS claims. The offences were committed over four and a half months and resulted in a gain of $53,000, of which $32,000 was recovered. The offender had sought a further $65,000 to which he was not entitled. The offences were dated. The offender had a long history of offences of dishonesty. The sentencing court had imposed concurrent sentences of three years' imprisonment, and ordered that the offender be released after serving 15 months' imprisonment. The appeal was dismissed.

54. The prosecution referred the Court to other decisions that were to a greater or lesser degree comparable. Overall, the cases disclosed that, for frauds of the type in question, often involving sums significantly less than the sums involved in the subject proceedings, sentences of three to four years' imprisonment are common.

55. The Commonwealth Sentencing Database indicates that, for multiple offences committed against s 134.2(1) of the Criminal Code, sentences of two to three years' imprisonment are common, and a sentence of up to five years' imprisonment is not unusual. Of course, sentencing statistics are only a yardstick against which the sentencing court compares sentences that it may have in mind: Barbaro v The Queen; Zirilli v The Queen [2014] HCA 2; (2014) 253 CLR 58 at [40].

56. In sentencing the offender, the Court is required to consider the matters in s 16A of the Crimes Act and other relevant matters. I believe that I have addressed, although not by express reference to the relevant part, those matters that are referred to in s 16A(2) of the Crimes Act and which are known and relevant in the present case.

58. For offence (a), dishonestly attempt to obtain financial advantage by deception contrary to ss 11.1(1) and 134.2(1) of the Criminal Code, I would have sentenced the offender to 16 months' imprisonment, but I have deducted 25% for the early plea of guilty and I sentence the offender to 12 months' imprisonment from 23 September 2015 to 22 September 2016.

59. For offence (b), dishonestly obtain a financial gain by deception contrary to s 134.2(1) of the Criminal Code, I would have sentenced the offender to five years' imprisonment, but I have deducted 25% for the early plea of guilty and I sentence the offender to three years and nine months' imprisonment from 23 September 2015 to 22 June 2019.

60. For offence (c), knowingly use false documents with intent to dishonestly induce a public official to accept them as genuine and thereby obtain a gain contrary to s 145.1(1) of the Criminal Code, I would have sentenced the offender to 16 months' imprisonment, but I have deducted 25% for the early plea of guilty and I sentence the offender to 12 months' imprisonment from 23 September 2015 to 22 September 2016.

61. For offence (d), use a false document with intent to dishonestly induce a public official to accept it as genuine and dishonestly influence the exercise of a public function contrary to s 145.1(1) of the Criminal Code, I would have sentenced the offender to two and a half years' imprisonment, but I have deducted 25% for the early plea of guilty and I sentence the offender to one year and 10 months' imprisonment from 23 April 2015 to 22 February 2017.

62. I have imposed an effective sentence of four years and two months' imprisonment from 23 April 2015 to 22 June 2019. I direct that the offender be released after serving two years and one month upon entering into a recognisance in the sum of $500 to be of good behaviour for a period of two years and one month.

63. Pursuant to s 21B of the Crimes Act I make a reparation order in the sum of $240,823.53 in favour of the ATO.

64. Pursuant to s 3ZL(1) of the Crimes Act I make an order for impressions of fingerprints to be taken in accordance with the short minute of order that I have signed.

I certify that the preceding sixty-four [64] numbered paragraphs are a true copy of the Reasons for Sentence of her Honour Chief Justice Murrell