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Victoria Police v Raymond [2022] VMC 34 (19 December 2022)

Last Updated: 22 December 2022

IN THE MAGISTRATES’ COURT OF VICTORIA
AT MELBOURNE
CRIMINAL DIVISION

Case No. N11246314

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REASONS FOR SENTENCE

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CRIMINAL LAW – Offences of drug trafficking, drug possession and dealing with property reasonably suspected of being the proceeds of crime – Windfall gain – Bitcoin.

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HIS HONOUR:

THE CHARGES 1-2 AND 5-8

1. Mr Raymond has been charged with the following charges:

   (a) charge 1, trafficking in LSD between 3 April 2012 and 5 April 2012;

   (b) charge 2, trafficking in DMT between 17 April 2012 and 1 May 2012;

   (c) charge 4, dealing with property reasonably suspected to be proceeds of crime amended to between the dates of 31 January 2021 and 19 August 2021;

   (d) charge 5, possession of a small amount of cannabis on 19 August 2021;

   (e) charge 6, possession of Psilocin on 19 August 2021;

   (f) charge 7, possession of Armodafinil on 19 August 2021; and

   (g) charge 8, possession of a small amount of cannabis on 9 December 2021.

2. With respect to charges 1 and 2, the following matters make it appropriate to impose an adjourned undertaking without conviction:

   (a) the trafficking occurred some 10 years ago;

   (b) at the time of the commission of the offences, Mr Raymond was a young offender;

   (c) Mr Raymond has no prior convictions;

   (d) the offending was of relatively low level albeit it had an element of sophistication through the use of “Silk Road”; and

   (e) there is no suggestion of further offending from 2012 until the offending conduct in 2021.

3. With respect to charges 5, 6, 7 and 8, I consider that these matters may also be dealt with by way of an adjourned undertaking without conviction given they relate to small quantities of drugs not possessed for any purpose related to trafficking.

CHARGE 4 – DEALING WITH PROPERTY REASONABLY SUSPECTED OF BEING PROCEEDS OF CRIME

4. Charge 4 alleges that Mr Raymond, between 31 January 2021 and 19 August 2021, dealt with 107.97 bitcoin. As set out at paragraph 12 of the prosecution summary, Mr Raymond sold 28.45 bitcoin for $1,864,069 and retained a further 79 bitcoin. As at 30 January 2021, the value of one bitcoin was $51,104. Thus, the value of the property dealt with, at the time of the dealing, was in the region of some $5.46 million Australian Dollars.
5. Issues arise as to how the seriousness of the dealing should be characterised and in particular:

   (a) to what extent, if any, the original value of the bitcoin in 2012 is relevant; and

   (b) whether, the fact that the value of the bitcoin at the time of the dealing arises from a windfall gain can be taken into account in determining the seriousness of the offence.

6. There is a dearth of relevant authority as to the significance of the amount of proceeds dealt with when considering sentence with regard to a charge under s 195 of the Crimes Act 1958.
7. However, the structure of Division 2A of the Crimes Act 1958 is similar to that of Division 400 of the Criminal Code 1995 (Cth) in that both contain offences of dealing with proceeds of crime and a separate lesser offence(s) of dealing with property reasonably suspected of being proceeds of crime (s 195 Crimes Act 1958 and s 400.9 Criminal Code 1995 (Cth)).
8. In Arjuna Samarakoon v The Queen (Samarakoon)^[1], the Court noted:

In examining the objective seriousness of an offence under s400.9, there is very little room for differentiation based on the state of mind or knowledge of the accused as to whether or not the money was proceeds of crime.

....

Although it will be important to assess precisely what the accused did in the commission of the offence, the structure and purpose of div 400 clearly support the proposition that the value of the proceeds of crime will be a paramount consideration in assessing the objective seriousness of the offence. (emphasis added)

9. While the structure of Division 2A of the Crimes Act 1958 does not mirror Division 400 of the Criminal Code 1995 (Clth), it is clear that the value of the proceeds of crime is, at least, a significant consideration to the objective seriousness of a charge under s 195 of the Crimes Act 1958. However, it remains important to ‘assess precisely what the accused did in the commission of the offence’.
10. Section 193 of the Crimes Act 1958 defines ‘proceeds of crime’ as ‘property that is derived or realised, directly or indirectly, by any person from the commission of’ inter alia a Schedule 1 offence. ‘Deal with’ is defined to include ‘receive, possess, conceal or dispose of’.
11. It is clear that Mr Raymond falls to be sentenced on possession of the bitcoin and monies received from its sale in 2021 and it is the value in 2021 which is relevant for sentencing purposes.
12. Section 195 of the Crimes Act 1958 was introduced by the Crimes (Money Laundering) Act 2003. In the second reading speech (6 November 2003), the following was noted:

This is part of a national initiative to tackle money laundering and organised criminal networks. Money laundering is a process of converting cash or other property derived from criminal activity to make it appear legitimately obtained.

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This bill strengthens Victoria’s laws against people who profit from or facilitate crime. Like the recent amendments to the Confiscation Act 1997, this bill is part of the government’s commitment to ensuring those who engage in criminal activity as a business can be effectively dealt with under the law and do not profit from that activity.

....

The bill also creates a new offence comparable to the existing offence of dealing with property that may reasonably be suspected to be proceeds of crime.

13. That reference is a reference to s 123 of the Confiscation Act 1997. That section reads:

(1) A person must not receive, possess, conceal dispose of or bring into Victoria any money, or other property that may reasonably be suspected of being proceeds of crime.

14. In the second reading speech to the Confiscation Act 1997, the following was noted:

Some 10 years ago all states and the commonwealth agreed to introduce legislation providing for the confiscation of the proceeds of crime. The move followed a number of royal commissions into organised crime which focused attention on the profits made from criminal activity and the increasingly sophisticated devices used by criminals to conceal their profits.

15. What is clear from the second reading speech is that the purpose of the legislation was to address two distinct issues:

    (a) the profits made from criminal activity including drug trafficking, which ‘can reap enormous profits for those involved at the expense of the broader community who pay the price in ruined lives’; and

    (b) ‘the increasingly sophisticated devices used by criminals to conceal their profits’.

16. The Second Reading Speech concluded as follows:

The changes being introduced recognise that drug trafficking and organised crime are serious threats to society. In order to combat profit motivated crime the economic aspect must be addressed and the financial motivation for criminal activity must be targeted. The law must be able to deal with situations where persons have amassed substantial wealth over a period of time as a result of criminal activity and sophisticated criminal enterprises.

17. For sentencing purposes, there is a clear distinction between situations where the amount of proceeds have a correlation between unlawful activity and where the amount of proceeds have little to no correlation with unlawful activity because of some supervening event. By way of example, the deleterious effects of drug trafficking do not become ten times more serious simply because a person has successfully gambled the original proceeds at ten to one odds. The fact of the successful gambling has meant there is no longer a correlation between the amount of proceeds and the original unlawful activity from which the proceeds had their genesis.
18. This is not to say that the quantum at the time of the dealing is irrelevant nor that the Court is restricted to the original value of an asset in determining the seriousness of the offending. Where, as in this matter, there is positive evidence demonstrating that the quantum of the proceeds does not truly reflect the criminality of the dealing, the Court may take this into account in determining the seriousness of the dealing. This is simply an application of the principle in Samarakoon^[2], that the Court must assess precisely what the Accused did.
19. It should be borne in mind that, where the criminality of the dealing arises in the context of money laundering, this principle will have little to no role to play. This is because the criminality involved engages the second purpose behind the legislation, to prevent the concealing of the profits (direct or indirect) of criminal activity.
20. In a written submission dated 12 December 2022 (only served upon the Court and defence today), the prosecution initially sought to suggest that Mr Raymond had in fact sought to conceal the provenance of the proceeds. As I understand it, this submission was put on the basis that Mr Raymond had entered into a memorandum of understanding in relation to the bitcoin and had transferred monies earmarked for the payment of tax. Mr Ralph indicated that it was the position of defence that this conduct did not necessarily reflect an effort to ‘launder’ the proceeds but rather was intractably neutral. I note that in the original summary to which Mr Raymond pleaded guilty, there was no suggestion these actions were in aid of laundering the proceeds. It was indicated to the prosecution that as this allegation was a fact adverse to the Accused and/or aggravating, the prosecution would need to prove the matter beyond reasonable doubt. Ultimately, the position agreed by the parties was that the allegation could not be established beyond reasonable doubt, though equally, the converse could also not be established by defence as a mitigating factor. Accordingly, I do not sentence Mr Raymond on the basis he deliberately sought to conceal or ‘wash’ the proceeds in 2021.
21. I note that consistent with R v De Simoni^[3], I must be careful not to sentence Mr Raymond on the basis that that the property was the proceeds of crime. This does not prevent me from recognising the agreed position that the quantum of the proceeds does not correlate with criminal activity other than the sales in 2012.

Appropriateness of a Community Corrections Order

22. Counsel for Mr Raymond has drawn my attention to the sentence in DPP v Donato (Donato).^[4] That case related to a charge of dealing with property reasonably suspected of being the proceeds of crime in relation to some $5.25 million dollars. It is clear from this decision that, in appropriate circumstances, it may be appropriate to impose a Community Corrections Order (CCO) with no custodial component.
23. As in Donato, this is a serious example of the offence under s 195 of the Crimes Act 1958 by virtue of the quantity involved. Equally however, in the unique circumstances of the present cases, all relevant sentencing considerations may be met with a CCO.
24. I note that a CCO assessment was ordered in the matter on 28 November 2022. Mr Raymond was assessed as suitable for the order and of low risk of reoffending.

Ex-Curial Punishment

25. Counsel for Mr Raymond sought to rely upon the significant media attention in relation to this matter as a form of ex-curial punishment to Mr Raymond. While public opprobrium leading to a significant impact upon an offender may be taken into account, in the present case there is no evidence before me of any significant psychological impact.

Conviction

26. Counsel has urged upon me that, taking into account the matters set out in s 8 of the Sentencing Act 1991 and, in particular, Mr Raymond’s lack of prior convictions and the impact on his employment prospects, that a conviction should not be recorded.
27. The fact remains that Mr Raymond chose to engage in a concerted effort to obtain the monies reasonably suspected of being the proceeds of crime. Given this fact and the amount of monies involved, I consider a conviction on this charge to be appropriate.

Sentence on Charge 4

28. I have concluded that a 20 month CCO is appropriate with the following special conditions:

    (a) 180 hours community work; and

    (b) assessment and treatment for drug dependency.

^[1] Arjuna Samarakoon v The Queen [2018] VSCA 119.

^[2] Samarakoon [2018] VSCA 119.

^[3] R v De Simoni (1981) 147 CLR 383.

^[4] DPP v Donato  [2022] VCC 1053.