R(Commonwealth) v Schembri

CITATION: R(Commonwealth) v Schembri [2009] NSWDC 293

HEARING DATE(S): 12.12.2008, 20.12.2008, 27.2.2009, 9.4.2009

On being found guilty by the jury you are convicted: on counts 1 to 9 on each I sentence you to three and a half years imprisonment starting on 20 October 2008 and concluding on 19 April 2012. DECISION: On counts 10 to 11 on each I sentence you to three and a half years imprisonment starting 20 October 2010 and concluding on 19 April 2014. On counts 12 to 15 I sentence you to three years imprisonment starting 20 October 2011 and concluding on 19 October 2014. On count 17 I sentence you to two years imprisonment to start on 20 October 2013 and concluding on 19 October 2015. I set a non-parole period of four years to conclude on 19 October 2012.

CATCHWORDS: GST Fraud - Dealing with proceeds of crime

LEGISLATION CITED: Commonwealth Code s134.2(1) & s400.4

PARTIES: Regina (Commonwealth) Vicky Frances Schembri

COUNSEL: L Crowley of Counsel J Watts of Counsel

SOLICITORS: Commonwealth Director of Public Prosecutions Legal Aid Commission of NSW

THE DISTRICT COURT OF NEW SOUTH WALES CRIMINAL JURISDICTION

2007/11/0929 - Regina (Commonwealth) v Vicky Frances SCHEMBRI

1 HER HONOUR: Vicky Frances Schembri comes to be sentenced having been found guilty by a jury of nine counts of dishonestly obtaining a financial advantage by deception from a Commonwealth entity pursuant to s 134.2(1) of the Commonwealth Code. The maximum penalty for this offence is ten years imprisonment. She was also found guilty of six counts of attempt to obtain a financial advantage by deception for which the maximum penalty is the same. She was further convicted of dealing with proceeds of crime pursuant to s 400.4 of the Commonwealth Code, the maximum for this offence is twenty years imprisonment.

2 The offences relate to the lodging of business activity statements with the ATO which claimed a refunded GST purportedly paid by the company for which the claim was made. The offences concern two companies, Unique Waterproofing Services (Unique) and Aquatrend Australia. On 27 October 2000 Unique was registered as a business. The sole registered proprietor of it was Brett Lange, the offender's brother-in-law. Mr Lange had been charged with the same offences as the offender. They were tried jointly and the jury was unable to come to a unanimous decision about him on all charges and he was discharged. He subsequently pleaded guilty to the count of dealing with proceeds of crime and he will be sentenced later in the year.

3 On the same day, 27 October 2000, Lange opened up two bank accounts for the company. One of those accounts was styled "GST Payment Account". Shortly afterwards an application for an Australian Business Number for the company was made in his name for Unique.

4 On 13 May 2002 the company lodged six BAS claiming refunds of GST paid from October 2000 to March 2002. The claims were accepted and $29,467 was paid into the Unique GST account on 16 May 2002.

5 From 28 May 2002 cash was withdrawn by Brett Lange from that account and cheques were written against the account. Brett Lange agreed that he had made large cash withdrawals from the account. He said that he had set up the bank account and made the transactions on the account at his brother's direction. By 30 May 2002 all of the money paid into the account had been withdrawn.

6 The lodging of these six BAS forms the basis of counts 1 to 6 on the indictment.

7 Between 1 July and 24 December 2002, a further three BAS were lodged and claimed GST paid in the period April to December 2002. The claims were accepted and $199,819 paid into the GST account of Unique.

8 These claims form the basis of counts 7 to 9 on the indictment.

9 Again, after the refund money was deposited, there was a series of drawings on that account and all funds paid in were shortly thereafter paid out. By 16 January 2003 there was no money left in the Unique account.

10 On 7 November 2002 and 16 January 2003, Lange drew two cheques in favour of Aquatrend Australia (Aquatrend) in the sums of $50,000 and $89,000. The offender deposited them into the Aquatrend account. This transaction supports charge 17 on the indictment, deal with proceeds of crime.

11 Aquatrend was a company of which the offender and her husband, Michael Lange, were directors.

12 On 17 April 2003 a further BAS was lodged for Unique claiming a refund of $113,648.

13 On 1 August 2003 another BAS was lodged for Unique claiming a refund of GST of $5,560.

14 Neither claim was paid. The ATO began an investigation into the claimed refunds made by these two BAS.

15 These two BAS form the basis of counts 10 and 11 on the indictment, attempt to obtain a benefit by deception.

16 Between 6 June 2003 and 1 August 2003, four BAS were lodged with the ATO on behalf of Aquatrend claiming GST refunds in a total amount of $157,982. No money was paid on the claims.

17 These facts form the basis for counts 12 to 15 on the indictment.

18 Turning now to the Unique Business Activity Statements. Each BAS lodged on behalf of Unique was signed "B Lange". Evidence in the trial established that no fingerprints of Brett Lange were on the Unique BAS. The offender's fingerprints were found on two BAS, those relating to count 7 and count 10 on the indictment.

19 Handwriting analysis conducted on the BAS lodged on behalf of Unique, concluded that the writing on the forms and the signature was not Brett Lange's. The expert considered the writing on all of the BAS and the signatures "B Lange" and said that they were pictorially similar, which indicated that they were written by the same person. He also concluded that based on an analysis of the offender's handwriting, she had the capacity to make those signatures and the writing.

20 Unique conducted no business and earned no money. Virtually the only movement of money in and out of its bank account was the input of the GST refunds and the payment out from that account. The BAS lodged on behalf of Unique claimed an expenditure by it of $4,537,538. No receipt or invoice to support the claims was produced.

21 The Australian Tax Office records note Brett Lange as the contact person for Unique. The mobile phone number for him was registered in the offender's name.

22 In May 2003 Brendan Fisher, an officer of the ATO, was asked to verify the refunds claimed by Unique and tried to speak to Brett Lange. He spoke to a person who identified himself as Brett Lange and who agreed to send him documents to support the claimed refunds. A fax purportedly from Brett Lange was sent to Mr Fisher from the offender's home fax machine. That document purported to provide in summary form a proof of expenditure. It included a claim for money spent with a company that did not exist and for expenses from a company that had no record of any business dealings, either with Unique or Brett Lange.

23 The matter was then referred for investigation and an Australian Tax Office auditor attempted to contact Brett Lange on the nominated telephone number. On two occasions she rang the number and it was answered by a person who identified himself as Michael. On both occasions he said that he would have Brett Lange contact the auditor. It did not happen. Eventually she rang the number and spoke to a man who identified himself as Brett Lange who said he was in Queensland. No contact was ever made by the auditor and Brett Lange and the last two refund claims were disallowed.

24 Apart from the cheques paid into Aquatrend by the offender and the cash withdrawn from the Unique account that, according to Brett Lange, was drawn at the direction of Michael Lange, the cheques written on that account were all signed by Brett Lange. He said that his brother would ask him to sign blank cheques and he would comply.

25 Brett Lange's evidence to the jury was to the effect that he was the stooge of Michael Lange and the offender.

26 Aquatrend was incorporated on 25 September 2002. The offender and her husband were registered as directors. The principal place of business nominated for the company was the address at which the offender lived. Her husband, Michael Lange, lived there with her although she said that from time to time he would move out and then later return and resume their relationship. The offender claimed that she was his cat's paw, what she did was at his direction and request and in relation to which she asked no questions. For reasons that will later appear I reject this, as clearly did the jury, and I reject her evidence where it is not otherwise supported by independent evidence. She is not, in my view, a reliable witness.

27 Aquatrend was in the business of installing domestic swimming pools and doing associated landscaping work. There is no doubt that the company engaged in some work building domestic swimming pools although, on the evidence in the trial, there seemed only to be a handful constructed and of those, several resulted in refusals to pay and complaints to the Consumer Complaints Commission.

28 On 30 October 2002 the company opened a bank account to which the offender and Michael Lange were signatories.

29 On 7 May 2003 Aquatrend was registered for GST. The registration was backdated to 25 September 2002. Between June 2003 and August 2003, four BAS were lodged on behalf of Aquatrend that claimed $157,982 in GST refund. The BAS claimed that the company had spent $2,037,385 in capital expenses in the claimed period. Although Aquatrend did trade to a degree, there was no document or invoice that would substantiate the claimed expenses. Apart from the money paid into the account by the offender from the Unique account, about $51,000 was paid into the account and although there were some apparently legitimate expenses made in relation to the business they did not equate with the amounts claimed. None of these claims was paid by the ATO.

30 The four unpaid claims form the basis of counts 12 to 15 on the indictment; attempt to obtain a benefit by deception.

31 All Aquatrend BAS were signed in the name of the offender. During the trial she denied that the signatures on some of them were hers. Handwriting analysis of the BAS lodged on behalf of Aquatrend concluded that the offender signed each one. This was despite an apparent attempt to change the appearance of the signature on several of the BAS. The offender's fingerprints were found on two of them relating to counts 12 and 13.

32 When these claims were lodged, the matter was referred for internal investigation by the ATO.

33 In order to sentence it is necessary to determine facts consistent with the jury's decision. Some of the facts foundational to sentence were not disputed in the sense that it was conceded that they are implied in the jury's verdict. Other facts necessary to find for the purpose of a sentence were disputed either wholly or in part.

34 In determining the facts I take into account that those facts I find and on which sentence will be based must be consistent with the jury's verdict and where they are adverse to the offender I must be satisfied of that fact beyond reasonable doubt. Part of this fact-finding process involves a determination of the offender's credibility.

35 As I have already indicated I formed the view that the offender was unreliable witness. Her evidence was peppered with internal inconsistencies and was, in many respects, improbable. Her evidence was characterised by an initial denial from which she would later resile when presented with proof.

36 An example of this last aspect of her evidence is in her recorded interview with the ATO investigators. The offender was asked about the cheques deposited into the Aquatrend account from Unique. She first denied any knowledge of the cheques, later she said that she could not remember depositing them and finally said, when shown the deposit slips bearing her handwriting and her signature, admitted that she had deposited them but said that she did so on instructions from her husband, Michael Lange.

37 When she was interviewed by an officer of the ATO in 2003, the offender told him that Aquatrend was struggling financially. The banking records for Aquatrend do not suggest that the business was doing well. Given the other transactions on the Aquatrend account and the magnitude of the cheques banked it is in my view improbable that the offender had forgotten that she deposited the cheques.

38 A further example relates to the evidence of a conversation with Brendan Fisher of the ATO who rang the offender in June 2003 about the claimed expenses for Aquatrend. He said that he called her and discussed the size of the claimed figure. The offender said to him that it did not sound right and she would check the figure and call him back, which she did giving him a reduced figure. In her evidence she said that she could not give him the correct figure and said that she had called her husband, who was on a building site, and he was able to give her the correct figure that she then relayed to Mr Fisher. The offender had given evidence that at this time she had been preparing a summary of the business expenses on the computer using a spreadsheet. She said that this program kept a running balance of amounts put in. She had said that she put in figures based on invoices and receipts that she had been given. Although she agreed that for the period to which the particular BAS claim related the summary was complete she was unable to give Mr Fisher the correct figure. The telephone call records show no record of the calls she said were made. When faced with the telephone records and the absence of any call corresponding with her evidence about ringing her husband and he ringing her back, the offender said that she could not understand the records.

39 In her record of interview with the ATO investigators, the offender was shown a BAS for a company of which she was a director, Tigerlily. The BAS was signed "VS Lange". When asked whether it was her signature the offender said that she never signed her name like that so it could not be hers. Later in the interview she said she could not remember signing her name in that way. During cross-examination in the trial on this signature, she said: "I don't sign my name VS Lange". She was then shown a statement made to police in August 2005 about an incident between her and Michael Lange in which she signed her name "VS Lange". The offender said she could not remember using that name.

40 One of the cheques drawn on the Unique account was to a store in payment for a dishwasher. In her recorded interview the offender said that she gave her husband cash to reimburse this expense. In her evidence the offender denied that the dishwasher was for her and said that it was installed in Michael's mother's house and his mother had reimbursed the account for the money spent. The invoice for the purchase notes the offender as the purchaser and the dishwasher was despatched to where the offender was living at the time.

41 Such were the inconsistencies and inherent improbabilities in her evidence that I am of the view that she wholly lacks credibility. These are but a few examples to demonstrate why I have come to that view.

42 During cross-examination that extended over a number of days, the offender demonstrated an obvious command of the documents and a mastery of the events as they occurred. It is not consistent with the tenor of her evidence, nor her demeanour, as I saw it, to find that these examples are reflective of her being forgetful or not having a complete understanding either of the documents or processes involved in their completion.

43 I formed the view that the offender was a witness who was prepared to give an answer that she thought was expedient and then resiled from it when faced with the evidence to the contrary or to feign ignorance.

44 It is for these reasons that I do not propose to accept her evidence unless it is independently supported.

45 It was agreed for the purpose of the sentencing process I could make the following findings: that the offender completed, signed and lodged each of the BAS for Unique and for Aquatrend.

46 In order to sentence it is important to determine the role of the offender. In argument, counsel for the offender submitted that the appropriate finding was that the offender, with Michael Lange and Brett Lange, were joint principals in this fraud. It was conceded that the effect of the jury verdict was to find that the offender was a principal. It was argued that it was open to me to find that as between herself and Michael Lange, his role in the fraud was greater and more extensive than hers.

47 I accept that the lion's share of the refund money that was paid to Unique, was withdrawn at Michael Lange's direction and for his benefit and for the benefit of Aquatrend.

48 Brett Lange and Michael Lange incorporated Unique and Brett Lange opened the account at Michael Lange's direction. Brett Lange did not have a cheque book and signed blank cheques at Michael Lange's request. While the offender wrote a number of cheques that were drawn on the Unique account, Michael Lange also wrote cheques. I accept that many of the cheques written on the account appear to be for his benefit, his legal fees and personal expenses. Brett Lange withdrew large amounts of money in cash and handed it to Michael Lange.

49 However, I do not accept the offender's evidence that she received no benefit from the fraudulently obtained money. The money paid into the account of Aquatrend was applied both to business and domestic expenses. Although the offender said she had no access to that account, I find that she received the benefit of the funds paid into the Aquatrend account from Unique.

50 The finding of the jury is that the offender lodged the BAS for Unique and Aquatrend knowing that the claims for refunds were false and intending to deceive.

51 There was no evidence on which I could find that Michael Lange played a role in the lodging of the BAS. That does not exclude the finding that he was a co-principal with the offender in the commission of these frauds. He was present on the occasion in September 2003 when Mr Senat visited the home of the offender to make enquiries into the Aquatrend BAS. The person who identified himself as Michael to Miss Kozelj, the investigator from the ATO who rang looking for Brett Lange in relation to the Unique BAS, may well have been him.

52 I am prepared to find on the evidence that the offender was a co-principal of Michael Lange. I do not accept the submission that her role was significantly less important than that of Michael Lange. The offender was the face of these frauds. She completed the BAS making the false claims, spoke to those from the ATO who were investigating the claims and represented that the claims were genuinely based and created and forwarded to Mr Fisher of the ATO summaries of expenditure that I find beyond reasonable doubt she knew were totally exaggerated.

53 Even if it be accepted, as I think it must, that the offender did not receive the benefit of the bulk of the funds paid to the Unique account, she received a benefit both directly and indirectly. However, the amount of benefit received is not the sole basis for determining the relative roles of co-offenders. The evidence as a whole and the jury verdict satisfies me that she was significantly involved with Michael Lange in perpetrating these frauds and persisting in them. She knew the amounts of money involved in the fraudulent claims. I am not persuaded that she occupied a significantly inferior position in the frauds to Michael Lange.

54 As to Brett Lange, there is no evidence on which I could find that he was a principal with Michael Lange and the offender. Certainly there is no evidence on which it could be found that Brett Lange had any role in completing, signing and posting the BAS and this is consistent with the Crown's ultimate acceptance of the plea of guilty to the sixteenth count, deal with proceeds of crime, in full satisfaction of the charges against him.

55 It is reasonable to find that he was aware of what was taking place. He joined in the incorporation of the company, opened the accounts and operated the account at the direction of Michael Lange.

56 It was further considered that I could find as a foundational fact on sentencing that all the money from the Unique frauds was paid into an account operated by Brett Lange and from which he withdrew sums of money in cash and that the offender knew at all relevant times that neither company had incurred the expenses to support the claimed GST refunds. The offender knew that Unique was not trading and although Aquatrend traded, the offender knew that its expenses were not in the order claimed and did not reflect the business conducted by the company.

57 The following matters concern facts relied on by the Crown in sentence but which were subject to the dispute.

58 The Crown contended that the offender received a financial benefit for herself through the frauds. For the offender it was argued that there was no evidence on which it could be found that the offender received any personal benefit.

59 Of the funds paid into the Unique account, the offender wrote and signed cheques on that account. Some of the cheques were clearly in payment of personal expenses, for example wedding expenses. It was undisputed that the offender and Michael Lange were married during the period in which the false claims were made. The offender said that any cheques written were for Michael's share of the wedding expenses and she merely wrote and signed the cheques at his direction. The offender produced no document that supported her contention that the wedding payments related to half of the expenses nor to support her claim to have paid half of them from other funds and I reject her explanation for the cheque.

60 Other cheques were written to pay for expenses for her own business. The offender said that she repaid Aquatrend with cash for those payments and in relation to other payments she said that it was an offset because she had paid for printing for Unique. Again the offender produced no document to substantiate this claim. I have already referred to the cheque written for the purpose of a dishwasher which I find was installed in a house in which she was living and for her benefit.

61 Several cheques were written to a solicitor who apparently acted for Michael Lange but who I am satisfied also acted for the offender and Michael Lange jointly. On the reverse of one of those cheques was endorsed both the names of the offender and Michael Lange. Other cheques were written for equipment for her hairdressing and beauty salon that was operated through the company, Tigerlily.

62 The offender said that it was her husband who had insisted on the purchase of an oxygen machine for facials and he had paid for it. I do not accept her evidence that Michael Lange, a pool builder, insisted on buying a particular type of facial machine out of the Aquatrend accounts.

63 I am satisfied beyond reasonable doubt that the offender received a benefit from the fraudulently obtained funds both directly to buy the purchases to which I have referred and indirectly from the application of those funds to living expenses after payment into the Aquatrend account from which both domestic and business expenses were paid. It was argued that the offender's own business supported her contribution to domestic expenses, however, that does not exclude the offender receiving an indirect benefit from the use of the fraudulent funds and I am satisfied beyond reasonable doubt that she did. There was no evidence to support her contention that she had no use of the Aquatrend account to pay for domestic expenses.

64 The offences committed by the offender represent a sophisticated series of frauds. They were well planned. Unique was incorporated, bank accounts established and multiple false claims were made in relation to both Unique and Aquatrend. The offences were committed over a period of fifteen months.

65 The offender completed, signed and posted the eleven false BAS on behalf of Unique knowing that they were wholly false and knowing that Unique had not traded in any material way so as to incur the claimed expenses. After the first ten offences were committed in relation to Unique, the offender then completed, signed and posted the BAS for Aquatrend making false claims. She knew that the claims were either hugely exaggerated or plainly false. The criminal offending only stopped when the cheques for the refunds to Aquatrend were stopped and the investigation process started.

66 It hardly needs to be observed that this conduct exploited the process of self-assessment of claimed refunds in which claims are not automatically queried and verification sought.

67 The offender persisted in the dishonesty by giving the ATO false information during the investigation and audit process.

68 In the course of attempting to verify the claims made on behalf of Aquatrend, Brendan Fisher asked the offender whether she had invoices and receipts to support the claimed amounts. The offender, although asked to send him receipts and invoice, sent instead a summary in which various companies were nominated and a total of claimed expenses allocated to each company. The offender said that she was able to compile this summary for invoices and receipts given to her. She said that the amounts entered into the Excel program were supported by documents that were kept in the home office. Despite this, no original supporting documents were provided to Mr Fisher.

69 At various times in the investigation process and during the trial, the offender was asked why it was that she did not send the documents. She said, in the recorded interview with the ATO, that her computer "blew up". She said that there was no ink in the printer cartridge, that the fax machine was not working and she said that she scanned all of the invoices over three days and sent them to Mr Fisher. Mr Fisher said that he only received a small bundle of emailed documents from the offender. Documents to support the extent of the claimed refunds were never produced.

70 I am satisfied beyond reasonable doubt that the offender attempted to fend off Mr Fisher's investigation by claiming to have the documents and then not sending them but instead sending a summary which, on all of the evidence, could never have been a reflection of the amount spent by Aquatrend. She both attempted to deflect the investigation and gave false information to the investigators. In this way she attempted to maintain the frauds in the face of the investigation. The persistence and deceptive conduct engaged in her in this way increases the objective seriousness of her crimes. The amount of money obtained through the frauds for Unique was $348,559.58 and $229,321.58 was claimed but unpaid in relation to Aquatrend.

71 In relation to the proceeds of crime charge it was a continuation of the offender's criminal activities in relation to the companies. The offender well knew that the funds that she deposited into the bank account of Aquatrend were proceeds of crime because she had caused the false claims of Unique to be lodged. This is the effect of the jury's verdicts. It was a substantial amount of money. It is a separate act of criminality and not an extension of the BAS frauds because the money applied in this charge was fraudulently obtained on behalf of another business, Unique, and applied for the benefit of herself, her husband and Aquatrend.

72 In assessing objective seriousness and criminal culpability the defence argued that the offender's moral culpability was reduced because of the nature of her relationship with Michael Lange. It was submitted that the relationship between her and Michael Lange was volatile and characterised by domestic violence. She had been diagnosed with depression and was seeing a psychiatrist. It as argued that her domestic circumstances and depression were relevant in two ways: first, to reduce her moral culpability because she was acting under a form of duress from her husband and was not able to exercise her free will and secondly, that her depression prevented her from fully appreciating the extent and nature of Michael Lange's business dealings.

73 The offender gave evidence of there being domestic violence in her relationship with Michael Lange. Her sister gave evidence of seeing bruises and observing the relationship between the offender and her husband consistent with her sister's complaints of violence by him to her and I am prepared to find on all of the evidence that the relationship between the offender and her husband was characterised by violence, both verbal and physical, to her and beset by fear.

74 In July 2004 the offender was referred for psychiatric assessment and support to Dr Menendez. He became her treating psychiatrist and saw her monthly during 2004, thereafter regularly, though not as frequently, in 2005 and 2006. When he first assessed her he diagnosed a major depression dating back for some years. The offender's previous marriage had been marked by violence as well. Dr Menendez prescribed medication.

75 There was no contact between the offender and Dr Menendez between June 2006 and July 2008 when she returned to see him because she said she was concerned that her husband had an issue with the Taxation Department. In August 2008 Dr Menendez noticed that the offender was angry with her husband that her husband had involved her in his illegal activities without her knowing.

76 Dr Menendez's opinion was that because of her depression the offender was not able to exercise her own free will when called on to do acts at her husband's request and that her depression: "would have effected her capacity to know and understand the nature and extent of her husband's business dealings".

77 Dr Menendez said that in forming his opinions he relied on what he was told by the offender. Although the offender told him in July 2008 that her husband was involved in a court case with taxation, she never told him that her husband had involved her in illegal activities. She told him that she collaborated with her husband in running the business but did not say that he had forced her to do something illegal or that her husband had forced her to do anything in the business.

78 It became clear that Dr Menendez's conclusions about the offender's conduct relative to her depression were not based on any particular event recounted to him. When asked why he concluded that her depression would have impaired her capacity to understand the full extent and real nature of the business dealings, he said that the offender told him that she never understood what her husband was asking her to do and did not know what she was asked to do was wrong.

79 The offender did not tell him what it was that she did that turned out to be wrong other than, as he put it: "bad paperwork and cheque work", nor what she realised in hindsight that she did not understand.

80 Dr Menendez stressed that he did not question the offender's account of events nor seek particular details and that is perhaps understandable in the context of the therapeutic relationship with the offender. Despite consulting with Dr Menendez regularly during 2004 and 2005, the offender never mentioned to him any difficulties she had encountered with her husband's business. It was not until 2008 when proceedings had commenced that she returned to see him and told him that on which he based his opinion.

81 I do not doubt that depression may impair judgment and may rob a person of the capacity to make a complete understanding of the nature and consequences of his or her actions. Equally, I have no doubt that a relationship characterised by violence and fear may also cause people to act in a way which they might otherwise not or fail to act where better judgment might dictate otherwise. There was no challenge to Dr Menendez's diagnosis that the offender suffers from major depression. However, there is no factual basis to support the conclusions Dr Menendez reached about the offender and her understanding and volition in relation to these offences and, in my view, his conclusions have little weight in determining this issue.

82 The offender was interviewed by a psychologist, Ms Cieplucha, who made a report of her assessment.

83 The offender told Ms Cieplucha that her relationship with her husband had been characterised by domestic violence and that she had been physically and verbally abused regularly and frequently.

84 When discussing the offences, the offender told her that she understands the charges and accepts that she has been found guilty. She said that she had a poor memory for things that happened around the time of the offences, she told the psychologist that her involvement related to banking cheques on behalf of her husband. She said that she loved and trusted him and could not understand how she got involved. She also said that she became "involved" in the lodgement of the BAS through her desire to support and assist her husband.

85 There is no mention in this report of the offender being coerced or threatened to do things that she did not understand, nor that she did not understand the nature of her husband's business. The offender's account of her offending behaviour is less than that comprehended by the charges on which she was convicted. Ms Cieplucha expressed no opinion to the effect that the offender's mental health or history of domestic violence and abuse on her affected her judgment or her capacity to exercise free will.

86 I am not persuaded that the offender's actions that constituted the crimes were done while her judgment was impaired nor while unable to understand the full nature and extent of her husband's business affairs. The offender's evidence in the trial is directly to the contrary. She was able to give detailed answers to questions about the nature of the business of Aquatrend, the customers, the names of the contractors and where pools were installed.

87 She was clearly aware of the names of the suppliers to the company. What she said to the ATO investigators and auditors about her role in keeping a summary of the invoices and receipts does not support the picture of a woman merely doing things at her husband's request without knowing that they were wrong and not exercising any critical judgment about what she was being asked to do.

88 Whether the relationship with her husband caused her to be more vulnerable to joining in a criminal venture such as this cannot be determined on the evidence before me.

89 I am unable to find that the offender's moral culpability was diminished nor that she was unaware of what she was doing.

90 It was argued for the offender that she had shown contrition for the offences. Counsel referred to the presentence report. In it the author said:

91 "Miss Schembri does not dispute the police facts, however stated that she does not fully understand the charges. The offender appears to acknowledge the seriousness of her current situation and displays some insight into her offending behaviour. She has expressed regret and shame for her involvement in these offences and shown considerable anxiety as to the outcome of the matter."

92 The author of the report gave evidence on sentence. By "police facts" she was referring to the offender's interview with the ATO investigators and a summary of facts document prepared by the investigator for the ATO. It was during their discussion of the summary document that the offender said that she was confused. The offender told the maker of the presentence report that she did not recall exact amounts, dates or whether all of the deposits were made by her. The offender told the author that some deposits were made by her but at her husband's direction. The offender told the reporter that she understood the charges but did not understand why she was charged.

93 To the extent that the offender did express some remorse in her comments to the maker of the presentence report, they were heavily qualified and I also bear in mind that second hand reports of an offender's remorse of themselves are of little value in assessing whether an offender is genuinely remorseful.

94 It is difficult to make an assessment of the offender's prospects of rehabilitation. By all evidence, since 2006 she has been in another relationship with a good and supportive man and there is no suggestion of the return to the abuse and violence of her past relationships. Perhaps that is a good indicator for the future.

95 The offender is clearly an intelligent woman. She has operated a number of businesses. It is to be hoped that the fact of being in prison is the salutary lesson necessary to persuade her to rehabilitation.

96 The offender has no prior criminal convictions. A number of friends and acquaintances wrote to the court to the effect that they believed that this offence is out of character for her and to the effect that she was well regarded to the community. I accept that she was, before committing these offences, a person of good character.

97 Dr Menendez said that a period of imprisonment would have a deleterious effect on the offender's mental health. He believed that it might cause her depression to worsen. Dr Menendez had not seen the offender since she had been in custody.

98 Ms Cieplucha assessed the offender while in prison. She said that the offender appears to be experiencing high levels of anxiety and depression and signs of post-traumatic stress. She appeared emotionally stressed and vulnerable. She said that the offender was finding it difficult to cope in prison. Significant in her distress is the offender's separation from her children. Ms Cieplucha recommended intensive long-term intervention by appropriate mental health services. While she is in custody it was recommended that she have monitoring for her mental state. It was not suggested that this monitoring or intervention would not be available to the offender in prison. It may well be that the offender's current emotional state will make her period of incarceration more difficult.

99 The courts must assume that prisons can and do make provision for the physical and mental health care of the prisoners. There is nothing in the evidence on sentence that persuades me that the offender's health is such that it would operate either to mitigate her sentence or to cause a non-custodial sentence to be imposed if otherwise appropriate.

100 The offender has three children. Her son is aged thirteen and the two younger girls are aged eight and four. The two girls are being cared for by the offender's partner.

101 In March and April 2008 the offender attended the clinic that offers assessment and treatment of children and consulted Dr Baldwin, a clinical psychologist, in relation to the problems being experienced by the youngest child. The offender was worried that the child was having angry outbursts and there had been concerns expressed at her preschool that she had behaved in an inappropriate way towards another child. The offender wanted to know whether the domestic violence of her previous relationship had had an impact on the child. Dr Baldwin did not assess the child on these first consultations.

102 There were no further sessions after those April consultations. It seems that the behaviour that had caused the offender to consult the clinic abated. The offender's partner contacted Dr Baldwin in December 2008 after the offender had been remanded in custody. He was concerned about the child's behaviour, severe angry outbursts and she was becoming angrier and more out of control. She was having disturbed sleep.

103 Dr Baldwin assessed the child in January 2009 and has seen her five times since then. Dr Baldwin said, based on reports, it appeared that the child's angry outbursts were increasing and her normal mood was angry and upset. She had begun bedwetting which had not happened before.

104 Dr Baldwin said that the child met the criteria for an adjustment disorder with anxiety and depression based on the reports of significant emotional behavioural changes since the offender went to prison. She said that the child meets the criteria for a diagnosis of oppositional defiant disorder but for the fact that, as at the date of her evidence, the behaviours had not been present for the required six months but for five months.

105 Dr Baldwin said that the development of an oppositional defiant disorder will perhaps impede the child's transition to school and may have an impact on her ability to learn because of her disruptive and non-compliant behaviours.

106 She thought the child could potentially miss out on the learning stages in numeracy and literacy and her social development at school may be hampered because she tends to be aggressive. Dr Baldwin said that some of this aggression could trace back to the atmosphere of violence in the household of the offender and her husband with the result that the child has developed a very dependent relationship with her mother.

107 Apparently the older child is dealing with the separation from her mother better and has better coping skills.

108 Of particular concern to Dr Baldwin was the potential for an oppositional defiant disorder to develop into a conduct disorder. It is clear from her evidence that this is a diagnosis of a far more serious condition, it is associated with anti-social behaviours and is typically associated with adolescence. In essence Dr Baldwin thought that the child had an increased risk of developing a conduct disorder, although she could make no prediction of the probability of that occurring. Whether it occurs depends on a number of factors. She said that when the child and the offender were reunited and after a period of adjustment, which might of itself require the offender and the child to have psychological support, the present oppositional defiant disorder would resolve. She agreed that if the offender was to be imprisoned, then frequent contact between the child and the mother would be better for the ultimate outcome for the child.

109 Dr Baldwin agreed that there were strategies that if put in place would assist in stabilising the child's situation and hopefully prevent a deterioration such as having frequent contact with her mother, remaining in the care of her step-father and ongoing therapy.

110 Dr Baldwin was unaware of the program conducted in prisons that allows mothers and young children to be together. She said that a situation in which the child could be with her mother would be of benefit to her but it would mean she would be separated from her sister, to whom she is close, and from the other familiar aspects in her life.

111 It was argued for the offender that the effect of her imprisonment on the child was of such severity that a non-custodial sentence should be imposed on her.

112 I accept that the effect of the separation from the offender on the child has been very difficult for the child. She was apparently vulnerable before this and this has caused her additional behavioural difficulties. I am not persuaded that, unless the offender is released, the child will develop a conduct disorder. Dr Baldwin's evidence satisfies me that there are processes that can be put in place that will at least stabilise the child and perhaps assist her to improve.

113 Hardship to a dependent of an offender may only be properly taken into account in mitigation of sentence if the circumstances are exceptional. That the child of a prisoner is suffering because of the separation prison has caused is tragic but does not amount to exceptional circumstances, even in a case such as this where the child's reaction is severe. The child is presently being cared for by the offender's partner who has been, in effect, a father figure to her from when she was very young and there is a large and caring family network to support him and her. Dr Baldwin continues her support of the child. When the offender is sentenced she will be eligible to be assessed for entry into the mother and children's program if it be thought that the child will do better by living with her mother and seeing her sister on weekends at visits. That is a matter of both assessment by the authorities and if the offender is eligible, a matter of her judgment.

114 It is well accepted that frauds against the revenue should bear a strong general deterrent element. Taxation fraud is prevalent, difficult to detect and is an abuse of the self-assessment system of taxation.

115 The authorities are clear that absent exceptional or very special circumstances, a person convicted of a fraud of this type should receive a sentence of full time custody.

116 Having regard to all of the circumstances in this case I am of the view that a sentence of full time custody is appropriate to the objective seriousness of the offence.

117 In relation to each offence relating to Unique on counts 1 to 11 on the indictment I will impose a sentence of three and a half years on each offence. In imposing these sentences I accept that in relation to the frauds concerning counts 7 to 9, a far greater amount of money than in relation to counts 1 to 6, was obtained, however, my assessment of the criminality of the totality of the frauds relating to Unique is that they are of a slightly order than those of Aquatrend. Unique seems to have been created solely for the purposes of the commission of the frauds and as such is, in my view, a more deliberate calculated fraud.

118 In relation to the counts that relate to the frauds on Aquatrend, counts 12 to 15, I will impose sentences on each of three years. In relation to the offence of dealing with proceeds of crime I will impose a sentence of two years.

119 Turning to the question of totality, I will impose an overall sentence of seven years imprisonment with a non-parole period of four years. The commencement of the sentence will be backdated to the date on which the offender was taken into custody, 20 October 2008. On being found guilty by the jury you are convicted: on counts 1 to 9 on each I sentence you to three and a half years imprisonment starting on 20 October 2008 and concluding on 19 April 2012.

On counts 10 to 11 on each I sentence you to three and a half years imprisonment starting 20 October 2010 and concluding on 19 April 2014.

On counts 12 to 15 I sentence you to three years imprisonment starting 20 October 2011 and concluding on 19 October 2014.

On count 17 I sentence you to two years imprisonment to start on 20 October 2013 and concluding on 19 October 2015.

I set a non-parole period of four years to conclude on 19 October 2012.

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.