R v Zhong

The Facts

1. A document titled "Agreed Facts on Sentence" was tendered. That document indicated that in June 2013 Strike Force Wilmot was established by the New South Wales Police Cyber Crime Unit to investigate fraudulent activity against Australia's major banks. The common methodology employed was the recruiting and use of "mules" who would be instructed by the principle to open a bank account or use their existing account for the purpose of committing the fraud. The mule would attend a bank in New South Wales or interstate, having been provided an account authority form to link their account to that of the intended victim. Money would then be transferred from the victim's account to the account of the mule, whereupon the mule would attend at branches of the bank and make large cash withdrawals.
2. On 28 February 2013 the young person RP opened two Commonwealth Bank accounts at that institution's Hornsby branch. A Netbank facility was also established in the name of RP. On the following day, 1 March 2013, the offender drove to Hornsby and picked up the young person. The offender was in company of another unknown male. The offender then drove to the domestic terminal at Kingsford Smith Airport and travelled with RP to Brisbane by aircraft. The offender flew under an assumed name. On the same day at about 10.45am RP attended at a Brisbane branch of the Commonwealth Bank and at the direction of the offender provided to the bank an account authority form that had been provided to him by the offender. The authority form was a false document that had been made by the offender. At RP's request the bank then linked his account to the account of the victim, a Mr Scholefield. Shortly after midday on 1 March 2013 $100,000.00 was transferred from Mr Scholefield's account to the account of RP. At 1.35pm on the same day a further $80,000.00 was transferred from Mr Scholefield's account to RP. This sum of $180,000.00 is, on any view, a substantial amount of money. Within a short time of those funds being deposited a total of $100,000 was withdrawn from RP's account. Sometime later a further unsuccessful attempt to withdraw the remaining $80,000.00 was made. RP gave the sum of $100,000.00 to the offender. In exchange the offender returned to RP $7,000.00 in cash. The obvious conclusion to be drawn is that the balance of $93,000.00 was retained by the offender. There is certainly nothing in the Agreed Facts to suggest otherwise. On the same day RP and the offender travelled back to Sydney on different flights.
3. Some days later on 6 March 2013, Jessica Castillo provided her Commonwealth Bank account details to a male friend. On 7 March 2013 that same male friend told Ms Castillo to meet a person who she did not know at Strathfield. She did so. The male person that she met was the offender. He was using the false name, Michael. Sometime later on the same day the offender gave Ms Castillo an account authority form that he had made and which contained details of the proposed victim, a Mr Richard Coates. The offender instructed Ms Castillo about what to say to the bank staff and he then drove her to the Top Ryde branch of the Commonwealth Bank. At about 1.25pm she entered the branch and attempted to link her Commonwealth Bank account with the account of Mr Coates using the fraudulent account authority form produced by and provided to her by the offender. The attempt to link the accounts was unsuccessful and Ms Castillo left the Top Ryde branch, met the offender and told him what had occurred. Not to be deterred the offender then drove Ms Castillo to the Lindfield branch of the Commonwealth Bank where she was again instructed to seek to link her Commonwealth Bank account to the account of Mr Coates. At about 2.40pm she entered the Lindfield Branch of the Commonwealth Bank and sought to do as the offender had directed her. A vigilant bank employee became concerned by what she had been told and contacted Police. Police attended at the bank and arrested Ms Castillo. At about 2.20pm on 7 March 2013 and then again at 3pm and 3.01pm that same day, the offender sought to log in to the Commonwealth Bank Netbank facility of Richard Coates. He did so with the intention of committing the offence of fraud.

Objective Seriousness

1. As I have earlier observed, the fact that Parliament has prescribed such significant penalties for the offences that are before the Court indicates that these offences are, on their face, objectively serious. In addition, the amount of money involved in the fraud upon Mr Scholefield was substantial, totalling $180,000.00. There is a significant degree of sophistication and planning involved in the offending. So far as the offences of 1 March are concerned, they involved interstate air travel, the offender flying under an assumed name, and his returning to Sydney on a different flight from that of RP. Importantly, both offences on 1 March and 7 March 2013 involved the offender in the production of false documents that were used in pursuit of his criminal activity. His offending is aggravated by the fact that he engaged with and enlisted others in that criminal activity. In my assessment, this offender was a player of some significance within the criminal enterprise of which he was a member. His personal involvement in the production of relevant false documents allows me to draw this conclusion.
2. It is relevant to note that the offences were committed at a time when the offender was serving a sentence of imprisonment for like fraud offences. On 4 December 2012 (some three months prior to the commission of these offences) the offender had been sentenced in the Local Court at Burwood to various intensive correction orders for the offences of recruit other to assist in carrying out criminal activity, recruit child to carry out or assist in carrying out criminal activity, dishonestly obtaining property by deception (8 counts), dealing with identity information to commit serious indictable offence (3 counts), goods in custody (2 counts), and dishonestly obtaining or dealing in personal and financial information (6 counts). All of the intensive correction orders to which he was then subject were to be served concurrently and the longest of them was for a period of 18 months. That sentence was not to conclude until 3 June 2014. Tendered without objection by the prosecutor were the Police Facts in respect of these earlier offences. They indicate that during 2012 the offender was involved in an elaborate fraud operation involving multiple false identities, the procurement of "mules" to assist the fraud syndicate (some of whom were under 18 years of age), and an elaborate system of obtaining personal data regarding victims. Regrettably, the sentences of imprisonment imposed for these earlier offences did not deter the offender from continuing his dishonest criminal behaviour. The conduct for which he is now to be sentenced has, in my assessment an obviously similar "flavour" to the earlier offences.
3. Cybercrime and crimes of the type committed by this offender are serious because they attack and undermine the confidence of citizens in financial institutions. As a result offences such as these call for the imposition of sentences that pay significant regard to the need for both general and specific deterrence. The cost to financial institutions in seeking to prevent this type of conduct means that there is a resultant cost to the community who rely on the safety and security of the funds that they faithfully and diligently deposit into banks. Members of the community who deposit their funds in this way have a legitimate expectation that they will be kept safe. Conduct that undermines that expectation is to be treated with the utmost seriousness.
4. The scheme in which this offender was involved was carefully thought out, well planned and involved the active production of false documentation that was sought to be relied upon in the commission of the offences. There were a series of criminal acts involving more than one victim. The offences were a breach of the conditional liberty to which the offender was at that time subject and the quantum of money involved was not insubstantial. There is nothing to suggest that they were motivated other than by greed. Indeed, the Pre-Sentence Report dated 10 January 2018 indicates that the offender told the author "that his involvement was motivated by his desire to better his financial situation and he saw the offence as being a way to 'make a quick buck' ". Further, the offender's letter of apology says: "The reason why I committed those offences was because I was going through a tough time in my life where I didn't have the capability to pay for my rent/living expenses and to feed my drug addiction". This explanation appears to be at odds with what is indicated in the Agreed Facts concerning the offender's purchase of an Audi motor vehicle for an amount of $65,600 at a time shortly before the commission of these offences. The offender clearly had access to substantial quantities of cash at the relevant time. Unfortunately many offences occur as a consequence of drug addiction. The authorities make it clear that this is not a mitigating factor.
5. In my view, all of the offending can be assessed as falling at a point below the mid-range of objective seriousness for offences of this type. I have concluded that the two offences involving the production of false documentation are the most serious of the four offences for which the offender is to be sentenced. The possession of stolen property is to be regarded as next in objective seriousness followed by the charge involving the unauthorised use of the computer function. The possession of stolen property matter and the unauthorised use matter can properly be regarded as falling towards the lower end of objective seriousness for offences of this type. Nevertheless, they are offences that are extremely serious particularly when viewed in the context of their involving a breach of the conditional liberty that the offender was at the time enjoying courtesy of the intensive correction orders that had been earlier imposed upon him. To put it plainly, whilst serving a sentence of imprisonment, this offender continued to commit like offences of a fraudulent nature. Such conduct warrants condign punishment.

The Offender's Submissions

1. Mr Chhabra for the offender appropriately conceded that the 'section 5 threshold' was crossed and that no sentence other than imprisonment was appropriate. He went on to submit that an overall sentence of 2 years imprisonment or less would be within range and that in those circumstances the Court should order the preparation of an intensive correction order assessment report with a view to having the matter disposed of in that way in the likely event that the offender was suitable for such an option. He submitted that an intensive correction order would be a proportionate and appropriate punishment given the delay between the offending and sentencing, the offender's proven rehabilitation to date, the voluntary cessation of his offending, his mental condition, his remorse and his plea of guilty. Of course an intensive correction order would only fall for consideration in the event I determined that an overall sentence of 2 years imprisonment or less was appropriate. In the alternative, Mr Chhabra submitted that if I was not persuaded that an intensive correction order assessment should be ordered, then the factors set out above would warrant a finding of special circumstances.
2. It seems to me that the thrust of Mr Chhabra's submissions can essentially be put into two categories, firstly the impact of delay and secondly the effect of rehabilitation which encompasses the offenders mental condition and what is said to be his cessation of offending. I will deal with each of these issues in turn.

Delay

1. I have not been provided with any explanation as to why there was a delay in the offender being charged with these offences. There is however no suggestion that the delay was as a result of any conduct by him. Delay is not in and of itself a mitigating factor on sentence however it may be so regarded when viewed in combination with other relevant sentencing factors favourable to an offender. It is a factor to be taken into account to the extent that it effects general concepts of fairness: Robertson v R (2007) 177 A Crim R 121 per Rothman J. However it "should not be allowed to dictate a sentence that is not appropriate to punish the particular offender or is not proportionate to the circumstances of the particular offence: per Howie J in R v Moon (2000) 117 A Crim R 497 at [81].
2. In R v Donald [2013] NSWCCA 238, Latham J at [28] and following reviewed a number of pertinent decisions dealing with this question and particularly the Western Australia decision of Scook v R [2008] WASCA 114 and the decision of R v Barker: R v Gibson [2006] NSWCCA 20 per Howie J. It seems to me that a consideration of what her Honour said and adopted in Donald indicate the following matters of general principle:- 1. Delay associated with progress towards rehabilitation may be mitigatory of penalty. 2. The reason for the delay is not ordinarily relevant, although it may be if it is due to conduct by the offender, in which event, little or no leniency ought to be afforded. This is particularly so if the delay is caused by the offenders obstruction or lack of co-operation. The exercise of legal rights by an offender is not obstruction or a lack of co-operation. 3. It is not possible to identify all of the factors which in combination with delay will be mitigatory. Each matter will depend on its own circumstances. 4. Delay will ordinarily not be a mitigating factor if it is caused by difficulties in detecting or investigating the relevant criminal conduct and the delay is in the circumstances, a reasonable one. 5. Delay will not be a mitigating factor if it results from the usual operation of the criminal justice system. 6. Delay may sometimes be conducive to the emergence of other mitigating factors particularly progress towards rehabilitation. 7. Delay may be a mitigating factor if it results in significant stress for an offender and leaves him or her in a "state of uncertain suspense", or if during such period, the offender has adopted a reasonable expectation that he or she would not be charged and has ordered his or her affairs accordingly. 8. Where rehabilitation is shown during the delay, mitigation arises because of the fact of that rehabilitation rather than because of the delay itself.
3. I note that there is no suggestion in either the written or oral submissions, nor is there any sworn or other evidence from the offender to the effect that he has suffered from what the authorities refer to as a "state of uncertain suspense" as a result of the delay. It is of course for the offender to establish this ground on balance: Sabra v R [2015] NSWCCA 38 at [47]. Further there is simply no evidence to suggest that the offender formed the view that he would not be charged with the offences.
4. The question to be asked is "What are the consequences of the delay to the offender?" As I have observed, there is no sworn evidence from him. His letter of apology, which was Item 1 in the defence tender bundle, makes no reference to any impact that the delay in commencing the proceedings has had upon him. Indeed, the evidence is that rather than there being any adverse effect upon him by the delay, there has been a positive impact in that he has used the time fruitfully to expand upon his education and to settle into a more law abiding lifestyle. To that extent, there has been progress towards rehabilitation and I will deal further with this aspect shortly. I also note that the psychological report of Chafic Awat dated 8 January 2018 does not either directly or indirectly touch upon the issue of delay and how it may have adversely impacted upon the offender. The Court simply has no evidence available that would enable it to conclude that there has been any adverse impact upon the offender by reason of the unexplained delay in the prosecution of the case. I am not satisfied on balance that this offender has been in a "state of uncertain suspense" such as would warrant my finding that a discrete mitigatory allowance for delay is warranted. More recently in R v Hall [2017] NSWCCA 313, the Court of Criminal Appeal provided some helpful general guidance on the issue of delay. In that decision, R A Hulme J with whom Simpson JA and Wilson J agreed, said the following (at [99]); "It is important that concepts of "delay" and "stale crime" not be regarded as automatically leading to certain consequences in sentencing. There is a need to consider the underlying circumstances and how they impact upon the assessment of sentence. As Gleeson CJ observed in R v Engert (1995) 84 A Crim R 67 at 68: "It is…. erroneous in principle to approach the law of sentencing as though automatic consequences follow from the presence or absence of particular factual circumstances. In every case, what is called for is the making of a discretionary decision in the light of the circumstances of the individual case, and in the light of the purposes to be served by the sentencing exercise".

The Offender's rehabilitation

1. Since these offences were committed in 2013, I accept that the offender has undertaken higher education including obtaining a TAFE Certificate and a Bachelor degree in Commerce. He is presently undertaking a Master's Degree. He has maintained full time employment for a lengthy period and is well regarded by his employer. He has entered into a settled and long term relationship and enjoys participation in a stable family environment that is provided by his partner's parents. I am told that he regularly attends at church. He is now aged 27 years and is still a relatively young man. In addition it is submitted that he has voluntarily ceased criminal activity.
2. The psychologists report tendered by the offender outlined his disadvantaged childhood. The author of that report opines that the symptoms described to him by the offender as being experienced during his childhood meet the criteria for a diagnosis of Generalized Anxiety Disorder and a Major Depressive Disorder. He further opines that from about the age of 17 years, the offender suffered from a substance abuse disorder. The author also opines that at the time of his offending in 2013 he continued to suffer from all of these conditions and that there was a psychological nexus between them and the offences before the Court. All of the conclusions reached by the psychologist rely upon the self-serving and untested out of court statements of the offender, and as such should be treated with caution bordering on circumspection and given little if any weight: see R v Qutami [2001] NSWCCA 353; AK v R [2016] NSWCCA 238 at [99], and more recently Imbornone v R [2017] NSWCCA 144 at [57].
3. On the issue of his voluntary cessation of offending, I note that when the matter was before the court on 11 January 2018 there was also listed a single charge of possession of a prohibited drug being cocaine. That is an offence that is said to have occurred more recently. The offender entered a plea of not guilty to that charge and it has been listed for hearing at a later date. Mr Chhabra indicated that the issue was one of "possession". This plea of not guilty does not appear, on a preliminary consideration, to be consistent with certain of the matters set out within the psychological report of Chafic Awit tendered in the offender's case. At the top of page 7 of that report the psychologist makes reference to this possession charge and says the following: "In relation to the possession of a prohibited drug offence, please refer to the New South Wales Facts Sheet [H67797578]. Mr Zhong has shown remorse in relation to the offence before the court, and has accepted responsibility for his actions. He advised that over the last 8 years he would turn to illicit substances as a means of numbing his mind. He advised that this is not an excuse for his behaviour or for his breach of bail, but the use of illicit substances was due to an addiction that began in his late teenage years, and had always been a method for him to escape his reality. He advised that with the increasing stress he was facing due to upcoming legal proceedings, and the real threat of being imprisoned, he made the impulsive choice to turn to a long imbedded behaviour to relieve stress".
4. Whilst the offender retains the presumption of innocence and I make no finding in respect of the matter that is still to be heard, I am nevertheless entitled to take into account all of the contents of the psychologist's report that was tendered by the offender. His apparent admission to the psychologist appears at odds with that which was indicated to the Court during the course of the sentencing submissions and militates against a conclusion being reached that he ceased offending a considerable time ago and/or that his rehabilitation is as well advanced as Mr Chhabra would contend. This is not to say there has not been some rehabilitation by the offender during the period between his offending conduct and this sentencing proceeding. There most definitely has been and he will be given credit for that in the overall sentence to be imposed.
5. Agreement was reached between the parties that the offender would pay compensation to the Commonwealth Bank pursuant to s.97(1) of the Victims' Rights and Support Act 2013 (NSW). A Short Minute of Order was provided to the Court and I was invited to make that order by consent. I propose to do so. Such a direction to pay compensation is not to be regarded as a mitigating factor on sentence as it reflects a civil rather than a criminal liability: Upadhyaya v R [2017] NSWCCA 162 at [9].
6. Mr Angelovski on behalf of the DPP submitted that no sentence other than one of full time imprisonment ought to be imposed. He pointed to the fact that the offending was serious, that the offender was subject to an intensive correction order at the time and that the Pre-Sentence Report indicated his compliance with that order was less than satisfactory. He stressed the need for both general and specific deterrence.
7. As I have earlier mentioned, it was ultimately submitted by Mr Chhabra that this was a matter where the Court would consider the imposition of an intensive correction order. I have considered that submission and note that whilst such an order is undoubtedly a substantial punishment it nevertheless reflects a significant degree of leniency as it does not involve the immediate incarceration of the offender. The imposition of an intensive correction order should not be utilised as a means of imposing an entirely inappropriate sentence: R v Cahill [2015] NSWCCA 53 at [114]. In my view, an overall sentence of 2 years or less would not reflect reasonable proportionality between the offending conduct and the sentence itself, nor would it reflect appropriately the need for general and specific deterrence, the need for punishment, the need for community protection, the need to make the offender accountable for his conduct, the need for denunciation, and the need to recognise the harm done to the victims. In my assessment, there is no alternative but for the sentences that are to be imposed to be served by way of full time imprisonment. The sentences will be reduced by 25% to represent the offender's pleas of guilty.
8. I have concluded that the appropriate sentences in respect of each of the offences are as follows:- 1. For each of the two offences of make false document, a sentence of 3 years imprisonment less 25% making a sentence of 27 months imprisonment for each offence. 2. For the offence of possessing stolen property, a sentence of 2 years imprisonment less 25% making a sentence of 18 months imprisonment. 3. For the offence of unauthorised use of computer function, a sentence of 12 months imprisonment less 25% making a sentence of 9 months imprisonment.
9. Following my determination of the length of each sentence, I must, consistent with authority, consider issues of totality, concurrence and accumulation. The overall sentence must be just and appropriate in all the circumstances and in the Local Court, must not exceed the jurisdictional limit of 5 years imprisonment for multiple offences. While I was not specifically addressed on the issue, I have concluded that this is an appropriate case for the application of s.53A of the Crimes (Sentencing Procedure) Act 1999 (NSW) and the imposition of an aggregate sentence. In compliance with the statutory requirement the indicative sentences for each offence are as set out in paragraph 26 hereof.
10. I have concluded that an appropriate aggregate sentence would involve a total term of imprisonment of 3 years and a non-parole period of 20 months, each of which will commence today 30 January 2018. I have found special circumstances having regard to his relatively young age, the fact that this will be his first time in full time custody and the fact that there are some demonstrated prospects of rehabilitation that will be assisted and promoted by a longer period of time being supervised on parole in the community. This factor is subject of to the caution that I have earlier remarked upon.

Orders

1. In respect of all sequences the offender is sentenced to an aggregate term of imprisonment which consists of a non-parole period of 20 months and a total term of 3 years both to date from 30 January 2018. The offender will be eligible for release subject to supervision on parole on 29 September 2019.
2. By consent, I make an order pursuant to the Victims' Rights and Support Act 2013 (NSW) in accordance with the Short Minute of Consent Order signed by the parties and dated today. Deputy Chief Magistrate Christopher O'Brien Downing Centre Local Court 30 January 2018

Note: A sentencing appeal to the NSW District Court is pending in this matter.

Amendments 06 April 2018 - Inserted note at end of decision regarding pending appeal DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 06 April 2018