The Queen v Huynh [2014] VSC 53

2 You were the owner and operator of a business called St Andrews Mortgage Solutions in St Albans and Sunshine. With an Australian Credit licence from ASIC to operate as a mortgage broker, your business placed applications for housing loans with lending institutions. Your conduct was discovered during an investigation into home loans obtained through fraudulent means by a number of persons using false or misleading information. Between November 2007 and February 2013, financial institutions approved home loans on the basis of fraudulent information and/or falsified documents supplied by St Andrews Mortgage Solutions on behalf of its clients, the borrowers. Investigators analysed 28 applications, all but one of which were successful resulting in a loan secured by a mortgage being made by a lender to your client.

3 As a licensed mortgage broker, you were trusted by lenders to supply correct information. Your primary role was to prepare your client's loan application and ensure that all the required supporting documents were provided. Your introducer agreements, as they are called, required you to use your best endeavours to ensure that information provided in relation to loan applications is accurate and requires that you not provide any information that you know or should know is false, misleading or forged. The agreements also required that you did not engage in any misleading or deceptive conduct or make any representation to any applicant as to the likelihood of the success of the application. You undertook that neither you nor your agents would receive any commission, charge or fee from an applicant in performing your services.

4 In each case, the application, which had been signed by you or your assistant, gave false and misleading information to the lender about the borrower's ability to repay the loan being sought. Income and asset values were declared on the home loan applications submitted by you that deceived the lender into accepting that its lending criteria had been met. Payslips, which were either fraudulently created or altered, were submitted with applications to substantiate the false information provided. In some cases, earnings were increased. In other cases, the payslip represented a false employment relationship. In some cases, borrowers did not have employment or any income to service their loan, other than the financial assistance they received from the Australian Government. In a number of circumstances borrowers made large deposits into their bank accounts in the weeks immediately prior to the loan application being submitted. A printout of the borrower's account balance provided to the lender suggested a savings history and an account balance sufficient to pay a deposit that was misleading.

5 You were arrested and charged on 25 February 2013. In your record of interview with police you admitted that you used a financial calculating program to establish the minimum wage income required to facilitate monthly repayments for the amount that your client requested for the home loan. When the client could not meet the lender's requirements, you suggested to the client that it was necessary to increase their income and assets to ensure the loan was successful. You required a cash fee from your client for the fraudulent documents that substantiated the increased income of the borrower. The cash fee ranged from $200 to $2,000.

6 You admitted to fraudulently constructing false payslips in the name of the client's current employer increasing the salary received. You also admitted to paying other companies to use their details to fraudulently construct false payslips indicating that the clients worked for that company when they did not. You agreed with the business owner that, should the financial institution contact them, they would confirm the borrower's employment. In return the business owner was given between $300 and $500 from the cash payment you had received. In some situations, this led to a client's home loan application containing a payslip for a company he or she had never worked for. However, the majority of payslips were produced in-house by your assistant Tu Cam Thai as authorised by you. A number of payslips uncovered by investigators were similar in appearance and used the same company names. A number of companies listed on the payslips were deregistered prior to the dates recorded on the false payslips. In the majority of cases, the payslips depicted annual salaries and wages in amounts that were false. Investigations revealed that information in the loan application was inconsistent with documents held by Centrelink, the ATO and the apparent employer companies. These falsified payslips were the key feature of your method of deceiving lenders.

7 You entered the borrower's personal information and fraudulent financial details into either a Loan Application document or an online Loan Application. The loan applications you created were signed by either you or Ms Thai and by your client as the applicant, with the applicant declaring, as you knew, that all information contained within the loan application was true and correct when it was not. You then facilitated the transfer of the loan applications and supporting documents, including the fraudulent payslips, to the nominated financial institution electronically through a software system called Symmetry, which allows a finance broker to electronically upload and send all documentation for an application to the relevant financial institution for consideration. These were 'low doc' loans and the lenders did not see the paperwork in its original form. This commercial practice, used by lenders and encouraged by borrowers, particularly depends on the integrity of the finance broker.

8 You told the police that the reason for your offending was that in the market that you were in, your clients told you that if you didn't do it, they would go to other brokers.

9 The 27 successful applications investigated resulted in your clients obtaining home loans totalling $9,411,688.30. Only one loan, the subject of charge no. 15, was not granted. That application was for a loan of $130,000. With each application if the borrower had disclosed his or her true financial position, or if you had disclosed the borrower's financial position as you understood it, the loans would never have been granted. You received upfront commissions of $41,231.14 and trailing commissions of $14,510.85, a total of $55,741.99. The trailing commissions ceased when your fraud was discovered. It was not possible to put an accurate figure on the cash payments that you received from clients, or the payments that you made for fictitious payslips. A number of your clients have confirmed that they paid a substantial fee. Your counsel suggested the cash payments received would not exceed $10,000.

10 Three properties were sold, apparently without loss to the lender, because the borrowers defaulted. The remaining loans are still being serviced and the current balance of all outstanding loans has reduced through those repayments. The lenders, once appraised that the loans were made on the basis of false information, have not called up the loans and have permitted the borrowers to continue to service them. No victim impact statements were produced. It is not to the point that the lenders have not suffered any loss. The lenders were exposed to a risk of loss. Your conduct has undermined the integrity of the commercial process of low documentation loans, a process that lenders use because the community demands that sort of service.

11 Your offending, although it started in 2007, mostly occurred over two years in 2010 and 2011. Your method took advantage of the low documentation regime particularly the fact that your falsified payslips would not be examined in their original form. The lender was limited to the scanned document sent through electronically. It involved a breach of trust, specifically breach of the terms of your agreements with lenders. You knew lenders relied on the honesty of the mortgage broker. You indulged in a carefully calculated course of conduct over a long period with repeated deliberate acts of dishonesty. Your conduct appears to have corrupted others who have in one way or another become involved in your scheme. Your offending was made possible by the licence you held on the basis that you were a person of good character. Your offending was assisted by your high level of education and training. These are common features of offending of this type and deterring others from the conduct that you indulged in is an important objective to be achieved by the sentence to be imposed in your case.

12 Home loans are an essential feature of the economy and conduct that strikes at the integrity of the system of application for home loans must be denounced by the imposition of an appropriate sentence.

13 As I have told you, the law characterises you as a continuing criminal enterprise offender. The maximum penalty, which I must apply, is doubled although that is one of a number of considerations that determine the appropriate sentence.

14 Although the financial advantage obtained for your clients was very substantial, the personal financial benefit achieved from your criminal behaviour was more modest when compared with many of the cases referred to me by the prosecutor. Moreover there is, fortunately for you, no loss suffered by lenders before they elected to accept the loans understanding that they were based on false information. You told the police that if you didn't produce an application that would gain the required finance other brokers would do so and I am satisfied that you were motivated by greed. Perhaps you started falsifying payslips because you wanted to help other members of your community to own their own homes in Australia, but I'm not persuaded that you continued your fraudulent activities for that reason. Your demand for cash payments from your clients on top of your commission satisfies me that you were motivated by the money.

15 These matters clearly warrant the imposition of a sentence of imprisonment for a substantial period. Although I take into account the increased maximum penalty pursuant to the continuing criminal offender sections of the Sentencing Act, I do not, however, propose to impose a sentence in your case that is disproportionate to the circumstances of your offending and the other matters that are relevant in arriving at a just and proper sentence.

16 You sought to cooperate with the Director of Public Prosecutions in the prosecution of your clients by giving evidence for the Crown if called on to do so. To that end, you provided a statement to police. The prosecutor informs me that your statement has no significant value and will not assist the Crown in the presentation of its case against approximately 20 former clients who have pleaded not guilty. Your evidence will not be called at those trials. The Crown contends that, at least in respect of some charges, your explanation is inconsistent with, not only how the Crown puts its case, but the knowledge that the Crown has from the co-accused. I am informed that mostly, the issue at these trials will be the accused's knowledge of the falsity of the information in the application, which, at first blush, suggests your evidence would assist the prosecution. Nonetheless, I accept what the prosecution has said are its intentions concerning your offer of assistance

17 I accept that your offer to assist in those prosecutions demonstrates a responsible attitude to your offending. Your offer, along with other evidence that I will come to, demonstrates that you are remorseful for your conduct and reinforces the prospect of your successful rehabilitation. Those are matters that I take into account in your favour in any event. This is not a case where the prosecutions you seek to assist are dependent on your assistance or a circumstance where you are placing yourself at grave risk by your cooperation. I do not propose to impose a less severe sentence than would otherwise have been imposed in the circumstances because of your offer to assist the prosecution.

18 The eldest daughter in your family, and with eight siblings, you left Vietnam by boat and arrived in Australia in 1983 when you were aged 13. You graduated with a science degree from Melbourne University in 1991. You are now an Australian citizen, 44 years old and married with two children. You have the support of your husband. Your elder son is 17 years old and he has just started Year 12 this year. I accept that your family values education and you worry that your conduct and its consequences may be detrimental to your son's studies. Your younger son, who is 13, is doing Year 8. Your counsel described you as a devoted mother and you established your mortgage broking business in 2006 to give you more flexibility to bring up your children. Your husband is a medical scientist working for a pathology company. Because he works shift work, you have carried the burden of raising the children.

19 You are currently unemployed and your family now relies solely on your husband's income. Following the police investigation, your business closed down and you face a lifetime ban from working as a mortgage broker or providing financial services. You have lost, or will lose, your employment, your business, and your occupational licence. Without your income there is a prospect that your children will no longer attend private schools. I accept that you recognise that your conduct has thrown your family into financial hardship and that recognition causes you anguish and concern.

20 Your counsel told me that you are shunned by your local community and, in evidence, your husband described your reaction of remorse, shame and embarrassment following on the discovery of your crimes. I accept that you feel remorse and shame. It is consistent with your subsequent conduct, particularly your early plea of guilty and your offer to assist in the prosecution of co-offenders. It bodes well for your prospects of rehabilitation as a law abiding member of the community.

21 There are a number of matters that I take into account in mitigation of the proper punishment and I will impose a less severe sentence than might otherwise have been appropriate. I accept that you pleaded guilty at the first opportunity. Not only has your plea of guilty saved the expense and inconvenience of a trial, it demonstrates your remorse at your offending. I also accept that you have no prior convictions and you were a person of good character. That is unsurprising in your case, as if you were not of good character, it is unlikely either that ASIC would grant you a credit licence or that you would have been able to successfully attract clients to the mortgage broking business that provided you with the opportunity to offend.

22 It is also significant that the majority of the loans are being repaid as required. The lenders have, save in the three instances when the security was enforced, elected, with knowledge of your conduct and the conduct alleged against the borrowers, to adopt the fraudulent transactions. I regard the financial advantage that you obtained for your clients as recovered by those lenders. I do not regard this circumstance as evidence of contrition or rehabilitation. You are fortunate that your conduct has not inflicted loss on any lender. The lenders' decision to continue with the loans mitigates the severity of your offending because it will not now be the cause of financial loss. The financial advantage that you obtained personally remains with you. It is limited to the commission of about $55,000 and the cash payments thought to be about $10,000. That figure in part reflects the extent to which you have personally profited from your conduct. There may have been an intangible benefit of having a successful business as well, but there is no evidence that satisfies me of that benefit to the requisite standard.

23 Orders have been made in respect of the family's assets under the Confiscation Act 1997 and those assets, which are mostly in joint names, are subject to forfeiture. The frozen assets include your family home and four investment properties, two of which have been sold. The net equity of both yourself and your husband in the properties is estimated at more than $532,000. Dealings with jewellery, bank accounts and cars, with a net equity of about $60,000, are also restrained. Your counsel invited me to proceed on the basis that it is possible that half of the family assets may be forfeited although forfeiture is not automatic on conviction and will be contested. In broad terms, the net value of the assets at risk of loss to you through forfeiture is about $300,000. I note that this estimate substantially exceeds what your business obtained in commissions from your conduct and that there was no financial loss sustained by any victim.

24 It is for you to persuade me that I should regard an anticipated forfeiture not simply as the deprivation of profits of crime but as constituting a punishment and a matter that properly mitigates the appropriate sentence. Apparently little thought has presently been given by your lawyers to the basis on which forfeiture will be opposed. I accept that your property is at risk of forfeiture but I am not persuaded that it will be regarded as tainted property. I accept that when the Crown seeks discretionary forfeiture, you and your husband will incur costs in relation to that application and any application to exclude his interests. Although I know that you claim only a half interest in the assets, I do not know what proportion of the assets was lawfully acquired, or how the commission of your crimes is related to the acquisition of those assets. Despite the uncertainty surrounding this question, I consider that I should give some weight in your favour to the risk that your interests in your investment assets, jewellery and cars may be forfeited and that such a forfeiture may be a punishment.

25 I also take into account that ASIC is likely, on conviction, to cancel your credit licence and ban you from the finance industry. Your conduct destroyed your mortgage broking business. Your counsel said you have completely given up the notion of being a mortgage broker. That reduces the prospect of you reoffending in the same way and I accept that the prospect that you may reoffend in any way is minimal. I regard your prospects of rehabilitation as good.

26 I have also had regard to the cases and statistical information to which I was referred by the prosecution, but I have ignored the submission made about the appropriate sentencing range, which has now been withdrawn.

27 My duty is to impose a sentence that punishes you for your offending to an extent and in a manner which is just in all of the circumstances. The requirement for general deterrence remains an important sentencing objective and the sentence you receive must be a sentence that will deter other persons from committing offences of the same or similar character. The sentence must manifest the court's denunciation of such conduct. Given your circumstances, I accept that the chances of you reoffending are limited. I consider that in the circumstances there is no significant need for specific deterrence as a purpose for this sentence.

28 That said, some mitigation of your punishment is warranted. I specifically take into account in your favour your early plea of guilty and your expressions of remorse. As I have said, I accept that you face a risk of forfeiture of assets. I accept that you have good prospects for rehabilitation and enjoy the support of your family.

29 Balancing all of the considerations that I have referred to, including the seriousness of the continuing criminal enterprise that this was, and taking into account all of the matters urged on me in mitigation by your counsel, I have concluded that the sentence that I must impose on you is a sentence of imprisonment.

30 On each charge, I convict you and sentence you as follows.

Charge 1 - sentenced to be imprisoned for a term of 2 years and 6 months

Charge 2 - sentenced to be imprisoned for a term of 2 years and 6 months

Charge 3 - sentenced to be imprisoned for a term of 2 years and 6 months

Charge 4 - sentenced to be imprisoned for a term of 2 years and 6 months

Charge 5 - sentenced to be imprisoned for a term of 3 years

Charge 6 - sentenced to be imprisoned for a term of 2 years and 6 months

Charge 7 - sentenced to be imprisoned for a term of 2 years and 6 months

Charge 8 - sentenced to be imprisoned for a term of 2 years and 6 months

Charge 9 - sentenced to be imprisoned for a term of 3 years

Charge 10 - sentenced to be imprisoned for a term of 2 years and 6 months

Charge 11 - sentenced to be imprisoned for a term of 3 years

Charge 12 - sentenced to be imprisoned for a term of 2 years and 6 months

Charge 13 - sentenced to be imprisoned for a term of 3 years

Charge 14 - sentenced to be imprisoned for a term of 3 years and 6 months

Charge 15 - sentenced to be imprisoned for a term of 2 years

Charge 16 - sentenced to be imprisoned for a term of 3 years

Charge 17 - sentenced to be imprisoned for a term of 3 years

Charge 18 - sentenced to be imprisoned for a term of 2 years and 6 months

Charge 19 - sentenced to be imprisoned for a term of 2 years and 6 months

Charge 20 - sentenced to be imprisoned for a term of 3 years and 6 months

Charge 21 - sentenced to be imprisoned for a term of 3 years

Charge 22 - sentenced to be imprisoned for a term of 3 years

Charge 23 - sentenced to be imprisoned for a term of 3 years

Charge 24 - sentenced to be imprisoned for a term of 3 years

Charge 25 - sentenced to be imprisoned for a term of 3 years

Charge 26 - sentenced to be imprisoned for a term of 3 years and 6 months

Charge 27 - sentenced to be imprisoned for a term of 3 years

Charge 28 - sentenced to be imprisoned for a term of 2 years and 6 months

31 It is appropriate to order some cumulation because you were in a continuing criminal enterprise. Looking at the totality of your criminal behaviour and considering the appropriate sentence for all of the offences bearing in mind the principle of parsimony to ensure that your total sentence is not excessive, I have determined to order some cumulation. I direct that charge 26 is the base sentence and that 6 months of the sentence imposed on charge 20 be served cumulatively on the sentence on charge 26. I direct that all other sentences be served concurrently.

32 That makes a total of four years' imprisonment, and I direct that you are to serve 2 years' imprisonment before becoming eligible for parole. I have imposed a shorter than usual non-parole period to particularly reflect your prospects of rehabilitation.

33 The records of the court will record the fact that you have been sentenced as a continuing criminal enterprise offender. Pursuant to s 6AAA of the Sentencing Act, I declare that the total effective sentence I would have imposed, but for your plea of guilty, would have been 5 years and 6 months' imprisonment with a minimum of 4 years before eligibility for parole.