Siwek v R

Court of Criminal Appeal (NSW)|2017-07-21|Before: Hoeben CJ, Adamson J, Bellew J

Judgment

HOEBEN CJ at CL: I agree with Bellew J.
ADAMSON J: I agree with Bellew J.
BELLEW J: John Siwek ("the applicant") pleaded guilty before the Local Court to the following offences: 1. Between 12:00pm on 1 September 2012 and 12:00pm on 22 June 2013 at North Sydney, did, by deception, that is, by direct (sic), without authority, the payroll company Talent 2 to transfer funds into his personal Commonwealth Bank account, dishonestly obtain a financial advantage / cause a financial disadvantage, to wit, $15,525.82 from Ebsco Industries (Crimes Act 1900 s. 192E(1)(b)). 2. Between 12:00pm on 20 July 2013 and 12:00pm on 3 August 2013 at North Sydney did, by deception, that is, by direct (sic), without authority, the payroll company Talent 2 to transfer funds into his personal Commonwealth Bank Account, dishonestly obtain a financial advantage / cause a financial disadvantage, to wit $6,008.75 from Ebsco Industries (Crimes Act 1900 s. 192E(1)(b)). 3. Between 12:00pm on 15 April 2005 and 2:00pm on 23 November 2006 at North Sydney did dishonestly obtain for persons unknown money, to wit $170,376.11, by deception, namely transferring money from the bank account of Ebsco into an unknown bank account without authorisation from Ebsco management (Crimes Act 1900 s. 178BA(1)). 4. Between 12:00pm on 28 November 2006 and 2:00pm on 31 December 2007 North Sydney did dishonestly obtain for the said John Siwek money, to wit $256,408.50, by deception, namely transferring money from the bank account of EBSCO into his personal bank account without authorisation from EBSCO management (Crimes Act 1900 s. 178BA(1)). 5. Between 12:00pm on 2 January 2008 and 2:00pm on 21 December 2008 at North Sydney did dishonestly obtain for the said John Siwek money, to wit $269,370.30 by deception, namely transferring money from the bank account of Ebsco into his person bank account without authorisation from EBSCO management (Crimes Act 1900 s. 178BA(1)). 6. Between 12:00pm on 9 January 2009 and 2:00pm on 15 February 2010 at North Sydney did dishonestly obtain for the said John Siwek money to wit $314,198.36, by deception, namely transferring money from the bank account of EBSCO into his personal bank account without authorisation from EBSCO management (Crimes Act 1900 s. 178BA(1)). 7. Between 12:00pm on 25 February 2010 and 2:00pm on 29 December 2010 at North Sydney did by deception, that is, by transferring money from the bank account of EBSCO into his personal bank account without authorisation from EBSCO management, dishonestly obtain a financial advantage, to wit $257,037.21 (Crimes Act 1900 s. 192E(1)(b)). 8. Between 12:00pm on 14 January 2011 and 2:00pm on 29 December 2011 at North Sydney did by deception, that is, by transferring money from the bank account of EBSCO into his personal bank account without authorisation from EBSCO management dishonestly obtain a financial advantage, to wit $240,503.57 (Crimes Act 1900 s. 192E(1)(b)). 9. Between 12:00pm on 3 January 2012 and 2:00pm on 17 August 2012 at North Sydney did by deception, that is, by transferring money from the bank account of EBSCO into his personal bank account without authorisation from EBSCO management, dishonestly obtain a financial advantage, to wit $186,588.07 (Crimes Act 1900 s. 192E(1)(b)).

THE FACTS

The sentencing judge found the facts to be as follows (commencing at ROS 1): During the eight years and eight months when Mr Siwek was engaged in a systematic exercise of diverting funds from the company accounts to his own benefit there was a change in the law so that the conduct in question became thereafter categorised for legal purposes as a breach of s.192E(1)(b) of the Crimes Act 1900, an offence of dishonestly obtain financial advantage by deception, the maximum penalty being increased to ten years' imprisonment for such a breach. The offences described in the documentation as sequence 95 and s.97 are all under s.192E(1)(b). In relation to sequence 95, the amount in question taken was some $257,000; for sequence 96, some $240,000; for sequence 97 some $186,000. These are approximations and the precise figures are set out in the documents, particularly exhibit SA. Some matters on a form 1 which has been appropriately signed by the offender and by myself are taken into account in relation to the sequence numbered 95. Each of the sequence offences, if I can so describe them, represents an agglomeration of a number of different actions by the offender. Mr Siwek was working for an American multi-national corporation as an accountant, for which position he was well qualified. He obtained a Bachelor of Economics degree from Monash University in his youth and has worked consistently in financial areas for many years. In his mid-life he came under the influence of a drinking problem and an addiction to gambling in the form of a game called "craps" in which he indulged frequently at the Star Casino - an institution purportedly designed for the pleasure of the citizens of Sydney, but which often represents doom and disaster for its customers, as it has done for this man. He has not spent any time in custody in relation to these matters. He is relevantly a person of prior good character except for some offences of driving with the prescribed concentration of alcohol. This is consistent with the drink problem that he has developed over the last several decades. He is a man of almost 70 years of age, born on 1 June 1947. As a result of his gambling he has several times had to lose a house to pay off the debts resulting from his tragically incompetent and unsuccessful wagers. The circumstances of the various offences are detailed in a document headed "Agreed Facts on Sentence" which is set out in exhibit SA. I have broadly outlined the failure of the offences and I will refer to some other aspects of the facts. The company he worked for is a multi-national corporation based in the southern states of America, but which has many and varied business activities throughout the world. He started working there in October 2004 and by virtue of his position he was entrusted with the task of initiating electronic funds transfers from the company's operating accounts. The company banked with the National Australia Bank. The task of sending electronic funds transfers was entrusted to Mr Siwek in particular. He had a dedicated computer because of his role as the accounting manager and he was the only one who used that particular machine. He was the only person at the company to have the log-on details and the password that were required to access the National Australia Bank's on-line banking system for the company. He was, therefore, in a position of substantial trust because his employers depended on him accurately and honestly to distribute the funds as the company's activities required. In April 2005 he began a process without authorisation of transferring funds to some bank account to which he had access. There were a total of 91 fraudulent transactions between 28 November 2006 and 31 December 2007. This indicates the multiplicity of the individual actions in which the offender engaged and those transactions totalled something over $256,000, which is reflected in the first of the offences to which he has pleaded guilty, sequence 92. I will not detail the facts for each of the other matters, but they are essentially the same, that he would utilise his trusted position to divert funds to his own interests. I have already spelt out the approximate figures involved for each of the offences which are themselves "rolled up", so to speak, compilations of a number of different activities. In addition, the offender managed the office's payroll and some of the offences involved misusing that financial structure to his own interests in the same way that I have described and for his own purposes. The payroll fraud was relatively minor compared to the other matters, but indicates the degree to which the offender was in the grip of a systematic desire to obtain funds for his gambling. The fraudulent activity was noticed in 2013 when the General Manager of the Australian operations of the company identified what was described as a bonus which she was able to work out was not in fact a bonus and was unauthorised. Further investigations were then set in place and the misbehaviour of the previous years was uncovered. Mr Siwek at no stage denied his misbehaviour, but he did ask for an opportunity of paying back the money and he asked could it be dealt with "in-house" if possible. The company representatives took advice and formed the view after further investigations that it could not be dealt with "in-house", it should be dealt with by the police and so it was. He indicated his desire to do his best to pay back the money, but it turns out to have been so much that he could not pay it all back and, indeed, he had some difficulties in working out precisely what he would have had to have paid back. The quantity taken in total was some $1.7 million and he did make a serious effort to pay back what he could and that is to his credit. In evidence in the sentence proceedings was a document, exhibit S2, which is a deed of settlement and release between the company and Mr Siwek. He paid back a substantial amount, some $450,000, which for civil law purposes was accepted as a settlement and release of the civil law obligations. Nonetheless, that left him and left the company over a million dollars out of funds. The breach of trust is a significant matter and where companies and institutions rely on trusted individuals to handle their funds to some extent general deterrence of such behaviour becomes an important consideration in sentencing and so it is here.

THE GROUNDS OF APPEAL

Grounds 1 and 4 assert, in effect, that the sentence is manifestly excessive. In those circumstances it is appropriate to deal firstly with Grounds 2 and 3, each of which assert a specific error on the part of the sentencing judge.

Ground 2 - The sentencing judge erred in not allowing any sentence discount for monies re-paid

The findings of the sentencing judge

As set out at [7] above, his Honour made reference to the fact that of the approximately $1.7 million obtained by the applicant as a consequence of his offending, he had re-paid an amount of $450,000.00, and that a settlement had been reached pursuant to which he was released from any further civil liability. However as his Honour pointed out, that still left an amount in excess of $1 million which was not re-paid. His Honour then said (at ROS 5): I take into account the mitigation of the criminality represented by paying back the money to the extent that he has been able to do so and the significance of that is that it represents some measure of contrition and diminishes the objective culpability of the offence to some extent.

Submissions of the applicant

In written submissions, the applicant appeared to accept that the remarks of the sentencing judge set out at [9] above indicated that he had taken the partial repayment of the money into account. However, he submitted that the sentencing judge had erred by not specifically discounting the sentence to reflect that circumstance. Before this Court, the applicant submitted that the sentence imposed did not reflect his partial repayment of the monies he obtained. This submission tended to suggest that if the matter had been taken into account by the sentencing judge, it was not given sufficient weight.
The applicant further submitted his repayment of a sum of $450,000.00 amounted to more than a "civil matter", and that it demonstrated his contrition for committing the offences. In this regard, he emphasised that it had been open to him to use the money in question towards the payment of his legal fees, but that he had chosen to use it to repay his former employer.

Submissions of the Crown

The Crown submitted that the sentencing judge was under no obligation to even indicate, much less apply, a specific discount to reflect the fact that he had taken into account the applicant's partial repayment of the money he had obtained from his offending. It was submitted that such partial re-payment did not inevitably lead to a substantial reduction in sentence and that in any event, it was apparent that his Honour had taken into account this factor when reaching his determination.

Consideration

In R v Weismantel [2016] NSWCCA 204 R A Hulme J (with whom Beazley P and R S Hulme AJ agreed) observed (at [17]): … quantification of the extent to which a mitigating factor has been taken into account is encouraged in relation to pleas of guilty (R v Thomson; R v Houlton (2000) 49 NSWLR 383; [2000] NSWCCA 309) and statutorily required in relation to assistance to authorities (s 23 of the Act). It is otherwise regarded as an erroneous engagement in a two-staged approach to sentencing: see most recently Flaherty v R; R v Flaherty [2016] NSWCCA 188 at [76]-[77].
Flaherty v R; R v Flaherty (2016) 92 NSWLR 290; [2016] NSWCCA 188 (to which his Honour referred) Simpson JA (with whom Hoeben CJ at CL and Price J agreed) observed (at 308; [76]-[77]): [76] In Wong v The Queen; Leung v The Queen [2001] HCA 64; 207 CLR 584, Gaudron, Gummow and Hayne JJ said: "74 … the reasons of the Court of Criminal Appeal suggest a mathematical approach to sentencing in which there are to be 'increment[s]' to, or decrements from, a predetermined range of sentences. That kind of approach, usually referred to as a 'two-stage approach' to sentencing, not only is apt to give rise to error, it is an approach that departs from principle. It should not be adopted. … 76 … So long as a sentencing judge must, or may, take account of all of the circumstances of the offence and the offender, to single out some of those considerations and attribute specific numerical or proportionate value to some features, distorts the already difficult balancing exercise which the judge must perform."
Not only was the sentencing judge not obliged to specify and apply a discount to reflect the applicant's partial repayment of the monies, it would have been an error in approach for his Honour to have done so. Moreover, it is apparent from the sentencing remarks that his Honour took this factor into account as part of the applicant's overall subjective case.
It follows that this ground is not made out.

Ground 3 - The sentencing judge erred in not allowing any sentence discount for gambling addiction

The evidence before the sentencing judge

Before the sentencing judge was a report of Dr Olav Nielssen, Psychiatrist. The history provided by the applicant to Dr Nielssen included the following (at p. 2): Mr Siwek confirmed that the offences took place over a period of seven or eight years. He said that all the money went on gambling. He said "I would always lose my own money first ... I was on a good salary ... I paid the bills and after that I would lose". He said that he had never been overseas and did not take a long holiday during the years he worked for the company. He said "I lost a house in Melbourne ... a unit in Waverton ... I sold the house in Roseville and now half the house in Lane Cove ... if I read about it fifteen years ago I would say it couldn't happen". Mr Siwek said that he won a lot of money on Baccarat soon after the casino opened and bought several nice cars with the proceeds. However, he said that he started playing craps in about 1996, and said that he lost more than he could afford from the outset, including all of a redundancy payment from a previous employer. He said "it was part of my lifestyle .., I would work and go to the casino every second night and lose a couple of thousand dollars". Mr Siwek said "I could not play the game v/ithout drinking, as he said "if I wasn't drinking I had no enjoyment .,. it [gambling] seemed silly". He said that he was drinking as many as ten beers each night, drinking every second night. He said that he was not taking any mild altering medication. He said that playing craps involved quick decision-making, and often involved staking a lot of money to win a small amount. He said that he was never approached, counselled, warned off or excluded from the Casino and said "they loved me". He denied seeking counselling to help him to overcome his gambling behaviour, and was able to give up completely without assistance after being charged with the offences. When asked about the background to his gambling, Mr Siwek said that he grew up in a poor household, but started going to horse racing and trotting meetings with his older brother during his teenage years. He said that he lost half his wages on one occasion as an apprentice, and stopped gambling altogether for a period during his late twenties. He said that he used poker machines after moving to Sydney in 1981, as they were not available in Victoria at that time, but said that he had never been especially attracted to poker machines. However, he said that poker machines led him to other games. He said that he had played card games at the casino, but enjoyed craps the most, as it involved interaction with other gamblers and rapid calculation of the odds, which he found addictive. He said that he realised that he could never win in the long term.
The applicant gave evidence on sentence which was accepted by the sentencing judge and which was generally consistent with the history he gave to Dr Nielssen.

The findings of the sentencing judge

The sentencing judge observed (at ROS 2) that the applicant had come under the influence of (inter alia) "an addiction to gambling in the form of a game called "craps" in which he indulged frequently at the Star Casino…" Later (at ROS 6) his Honour made reference to the evidence given by the applicant of a link between his alcohol and gambling addictions. His Honour found that as a consequence of the steps taken to address those matters, the applicant had strong prospects of rehabilitation.

Submissions of the applicant

The applicant submitted that a gambling addiction was recognised as "a mental problem" and that his addiction had been causative, at least in part, of the offending. It was submitted that in these circumstances, it was an error on the part of the sentencing judge not to apply a specific discount to reflect that circumstance.

Submissions of the Crown

The Crown submitted that it was clear that the sentencing judge had taken into account the applicant's addiction to gambling as part of the overall subjective case. The Crown further submitted that in any event, it remained the case that the applicant had engaged in a significant fraud and that there was nothing in the report of Dr Nielssen to support a conclusion that the applicant suffered from any mental illness, much less that such illness was causative of his offending.

Consideration

Generally speaking, the fact that offences are committed to feed a gambling addiction will not be a mitigating factor on sentence: Johnston v R [2017] NSWCCA 53 at [36] per Bathurst CJ (Johnson and Fagan JJ agreeing) and the authorities cited therein. Even if addiction to gambling explains a fall into serious criminal conduct, rarely can an offender seek mitigation of penalty based upon such an addiction, even when it is pathological: Johnston at [36] citing Assi v R [2006] NSWCCA 257 at [27] per Howie J (Tobias JA and Rothman J agreeing). It is been expressly held that such principles apply equally to cases of fraud to feed a gambling addiction: Johnston at [41] per Bathurst CJ.
The sentencing judge found that the applicant's efforts to overcome his gambling addiction were reflective of his favourable prospects of rehabilitation. That finding was open, and was favourable to the applicant. A finding to the effect of that propounded by the applicant would have been erroneous.
In these circumstances, this ground is not made out.

Ground 1 - The sentence is demonstratively too long

Ground 4 - The legislation for the maximum 5 years and 10 years was not intended for the circumstances of the offence

Each of these grounds effectively asserts that the sentence is manifestly excessive. It is therefore appropriate that they be dealt with together.

Submissions of the applicant

The applicant submitted that the sentence imposed equated to 80% of the highest maximum penalty which was available, and that this was inconsistent with the favourable findings which had been made by the sentencing judge. He submitted that his offending did not fall towards the upper end of the scale, and that, in particular, there was an absence of "meticulous clever planning" in the form of (for example) the creation of a multiplicity of bank accounts. The applicant went so far as to categorise his offending as amounting to "a simple naïve transfer of monies from one company bank account to one bank account which (he) controlled", and which involved no sophisticated planning. Before this Court the applicant expanded upon that submission and argued that his offending involved little more than the transfer of funds, unaccompanied by any disguise.
The applicant further submitted that the manifest excess of the sentence imposed upon him was demonstrated by the sentence imposed by her Honour Judge Baly SC in the District Court in R v Roth [2015] NSWDC, 18 December 2015 unreported. The applicant submitted that the circumstances of the offending in that case (which was of a similar nature), as well as the nature of that offender's subjective circumstances, were (but for one matter, namely that offender's bipolar disorder) effectively "on all fours" with the present case.

Submissions of the Crown

The Crown submitted that the applicant's offending was characterised by a number of circumstances, including the fact that: 1. he was the accounting manager for the company; 2. he had engaged in a serious breach of trust, and made improper use of his position; 3. he had taken steps to disguise the relevant transfers; 4. his offending occurred over a significant period of time; and 5. his offending involved a substantial amount of money.
It was further submitted that the sentencing judge had made allowance for a considerable degree of concurrence in the sentences he imposed, and that in all of the circumstances, the sentence was not manifestly excessive.

Consideration

In order to succeed on either of these grounds, the applicant must establish that the sentence imposed was unreasonable or plainly unjust: Markarian v R (2005) 228 CLR 357; [2005] HCA 25.
The circumstances surrounding the offending are set out in [7] above. Such offending was sustained over a period of time and involved a gross breach of trust. The agreed facts tendered to the sentencing judge recorded that by virtue of the misuse of his position, and the associated misuse of the privileges attaching to it, the applicant had fraudulently obtained a total of $1,716,016.69 over a period of 9 years.
One of the applicant's roles at the company was initiating electronic funds transfers, in favour of various vendors and suppliers who performed duties and services for the company, from an operating expense account. In order to initiate such transfers, specific software was installed on the applicant's computer as a consequence of his managerial position. Consistent with that, the only person who was aware of the details necessary to gain access to the on-line banking system was the applicant. Perhaps even more importantly, the applicant had the requisite authorisation to initiate transfers through the system, and did not require approval from any other person.
All of these circumstances tend to demonstrate the true nature of the offending. They run contrary to the proposition that the offending amounted to nothing more than a naïve transfer of monies. Moreover, they highlight the gross breach of trust in which the applicant engaged.
It is evident from the remarks of the sentencing judge that he had regard to all relevant mitigating factors advanced on behalf of the applicant, who was represented by senior counsel on sentence. As to the specific complaint raised in ground 4, the sentencing judge said the following at the conclusion of his remarks on sentence (at ROS 9): For the purposes of s 53A of the Crimes (Sentencing Procedure) Act, I am required to indicate what the sentences would have been had I been sentencing individually for these matters. In relation to sequence 92, two years and three months and likewise for sequences 93 and 94. For sequence 95, three years and three months and for sequences 96 and 97, in each case, two years and nine months.
It is apparent from those remarks that none of the indicative sentences approached the maximum penalty.
Finally, to the extent that the applicant relied on the decision in Roth, it must firstly be noted that this Court has emphasised on a number of occasions that care must be taken when attempting to draw comparisons between sentences imposed in cases of like offending: see for example RLS v R [2012] NSWCCA 236 at [132]. In particular, it is important to consider the entirety of the circumstances which resulted in a particular sentence being imposed in a particular case. A brief reference to her Honour's reasons in Roth demonstrates two important factors which distinguish the circumstances of that case from the present. Firstly, the amount of money involved in that offending was $291,500.00, which was obviously substantially less than that involved in the present case. Secondly, there was evidence before her Honour that the offender in that case had been diagnosed with bipolar disorder. Her Honour was satisfied that there was a causative link between that mental illness and the offending. Quite apart from any other consideration, that necessarily meant that considerations of general deterrence became of less significance. Such factors formed no part of the applicant's subjective case.
In these circumstances, I am unable to accept the submission advanced by the applicant that the decision in Roth demonstrates that the sentence imposed upon him was manifestly excessive.
It follows that neither of these grounds are made out.

CONCLUSION

I propose the following orders: 1. Leave to appeal granted. 2. Dismiss the 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: 01 August 2017

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