DPP v Arthur [2017] VCC 330 (20 March 2017)

	Home \| Databases \| WorldLII \| Search \| Feedback County Court of Victoria


IN THE COUNTY COURT OF VICTORIA	Revised Not Restricted Suitable for Publication

DIRECTOR OF PUBLIC PROSECUTIONS

v

SCOTT ARTHUR

JUDGE:	HIS HONOUR JUDGE LACAVA
WHERE HELD:	Melbourne
DATE OF HEARING:	15 March 2017
DATE OF SENTENCE:	20 March 2017
CASE MAY BE CITED AS:	DPP v Arthur
MEDIUM NEUTRAL CITATION:	[2017] VCC 330

APPEARANCES:	Counsel	Solicitors
For the Crown	Mr D. Porceddu
	Ms C. Foot
For the Accused	Mr A. Hands

1 You have pleaded guilty to two charges of conspiracy to defraud. The maximum penalty for each of these offences is imprisonment for 15 years. Because the amount of money involved in each charge exceeds $50,000 each of the charges is a continuing criminal enterprise offence within s.6H of Schedule 1A of the Sentencing Act 1991, the Act. You are not a continuing criminal enterprise offender, however, and cannot be sentenced on that basis.

2 The circumstances of your offending are contained in a prosecution opening tendered in evidence and marked as Exhibit A on the plea. The summary was summarised in open court by Mr Porceddu who appeared with Ms Foot to prosecute.

3 With one minor exception, which will be referred to in the transcript of the hearing, your counsel, Mr Hands, agreed that the prosecution summary was accurate and forms a proper basis of fact upon which I can proceed to pass sentence upon you.

4 The prosecution summary is a lengthy document of some 32 pages in length. It is not necessary that I here again set out in detail what is there set out except in a summary way. These sentencing remarks however should be read in conjunction with what is contained in the prosecution summary.

5 The offending in Charge 1 is a conspiracy between you and William Jordanou and Robert Zaia to defraud the Commonwealth Bank, the CBA, and Rhino Money, Rhino, between July 2007 and 14 December 2012, a period of five and a half years.

6 At the relevant times you, and your co-offenders, were partners in an accounting firm Zaia Arthur & Associates. The firm was set up via a corporate structure. Zaia’s then wife was a director as were you. Zaia was an undischarged bankrupt. You and your co-offenders were the principals in the accounting firm. You and Zaia are qualified accountants. Jordanou joined the firm as a financial advisor and finance broker.

7 In Charge 1, the three of you conspired to defraud the CBA and Rhino by submitting false information and documentation to the CBA and Rhino or their agents in support of loan applications by borrowers for the purposes of property development. Your role was to create the false documents and was thus an essential part of the conspiracy. There are 14 loans that are encompassed by the conspiracy in Charge 1. The total of the loans obtained from the CBA and Rhino by this means approached $45m. Of this approximately $15m has been lost.

8 In Charge 2 you and Zaia and Jordanou conspired to defraud various lending institutions also by submitting false information in support of applications for loans to finance the purchase of motor vehicles. This conspiracy extended over a period of four years from September 2009 to September 2013. Again, your role was to create the false documents and was thus also an essential part of this conspiracy. Charge 2 encompasses 12 loans by this means by which in excess of $2m was obtained.

9 The full circumstances of each overt act said to evidence each conspiracy are set out in the summary. You created the documents on the instructions of Zaia and Jordanou. You prepared documents such as false tax returns for borrowers, false taxation assessment notices, and false payslips. The purpose was to deceive the lenders into believing the various borrowers had financial substance and could service any borrowings. This would give the appearance of reduced risk for the lender and make it more likely any loan application would be approved. In the transaction described as the Buronga Rise Development at paragraph 72 and following in the summary, you created a false contract of sale and false information that some lots of land had been pre-sold and that $230,000 was held in trust. All of that information was false and created by you.

10 Zaia and Jordanou dealt with the clients on whose behalf loans were applied for and they instructed you what to prepare and what information to include in the false document. The clients were unaware of the false documents being used on their behalf.

11 Mr Hands submitted that your role in the offending was relatively minor describing you as a “back room boy and his role was a minor one." Whilst I accept your role was subordinate to that of Zaia and Jordanou, who initiated the conspiracy and perpetuated it, the various loans could not have been obtained without your participation. The production of the false documentation in support of the loan applications by you was an essential part of the success of the conspiracy. It could not have been achieved without your input. I do not accept the submission that your role in this offending should be categorised as minor. I accept that your co-offenders had most of the direct dealings with the clients. Your offending was planned, sophisticated and in breach of trust and extended over more than five and a half years.

12 All the documentation went to the CBA and the other lenders from the firm of Zaia Arthur & Associates of which you were principal. That carries with it a presumption as to honesty.

13 The CBA and other lenders were entitled to trust the accountants for the various borrowers to submit legitimate documentation, not false documentation. A lender is entitled to accept the implied assurance from an accountant who purports to act for a tax payer submitting a loan application to it, that any copies of taxation returns or taxation assessments submitted in support of a loan application are genuine copies and accurate. In other words, that all the information submitted is truthful. That the CBA and the other lenders did not question the authenticity of the false documentation produced by you and submitted to the CBA and the other lenders bears out I think the commercial reality and that is that banks and other lending institutions trust accountants, who are very much at the coal face of commerce in this country, to be honest.

14 This offending is thus very serious. It involves a breach of commercial trust and strikes at the heart of commercial banking transactions. Whilst much of the money loaned in the first charge was secured and recovered, or is recoverable, by the lenders that is only of marginal weight in mitigation. At the heart of each conspiracy was the obtaining of the loans by deceptions. Deceptions which were created by you. The amounts obtained in the conspiracy in Charge 1 were very large as was the actual amount lost.

15 It is accepted by the prosecution that you did not benefit financially from your crimes. I accept you appear to have followed the instructions of Zaia and Jordanou but mainly Zaia. I accept that in acting as you did you probably submitted to the will of Zaia and Jordanou. That explains your offending but it does not excuse it. You were at all times acting as a qualified accountant. You were a professional person holding yourself out as a person to whom clients could entrust their financial affairs and those who dealt with you in turn could trust you. You are of average intelligence. You knew that the various loan applications were supported by false information. You knew that what you were doing was wrong yet you allowed yourself to underpin this fraudulent scheme for five and a half years. In my opinion your moral culpability for this offending is high.

16 To your credit you have pleaded guilty to the charges and you have thus saved the time and cost of what would have been lengthy committal proceedings and a very lengthy trial. The prosecution initially filed a draft indictment containing 176 charges of obtaining financial advantage by deception and obtaining property by deception. Those charges were then broken up into five separate trials. Although you did not plead guilty until last Wednesday I treat you as having indicated that you would plead guilty at an early time.

17 You were charged on 30 May 2014. Subsequently, there have been five committal mention dates and one special mention date. A committal hearing scheduled for 20 April 2015 was adjourned to the 22 May 2015 at which time you indicated an intention to plead guilty to an “appropriate indictment."

18 You signed a 16 page statement implicating Zaia and Jordanou on the 20 April 2015. A proposed plea hearing in August 2015 was adjourned and in November 2015 your plea hearing was vacated because there was difficulty reaching agreement as to the form of the final charges that you would plead guilty to and the content of the summary of facts.

19 Last Tuesday counsel indicated to me that agreement had been reached with the prosecution and you would plead guilty. There are in excess of 16,000 pages of depositions and there has been no contested committal. You are entitled to a reduction in sentence by pleading guilty at an early time and saving the substantial time and costs of what might have been a lengthy and expensive trial, perhaps even a number of trials. I also treat your pleas of guilty as being indicative of genuine remorse.

20 Importantly, you gave an undertaking before me to give evidence against Zaia and Jordanou on their trial. Your statement made on the 20 April 2015 is of substantial benefit to the prosecution. Your undertaking to assist the prosecution and give evidence against the others is a substantial mitigating factor in the sentencing of you. It is also indicative of remorse and acceptance by you of responsibility for the offending and shows your willingness to facilitate the course of justice. It is well recognised that cooperation is unlikely to be forthcoming without potential inducements. You provided a 16 page confessional statement to the police on 20 April 2015. That statement implicates you and your co-conspirators and details the method used to commit your deception. Your disclosures are full and frank and the statement will no doubt be of benefit to the prosecution of your coaccused. You have accordingly provided a high level of assistance to the authorities and, as such, you are entitled to receive the maximum benefit for your cooperation.

21 You have no prior convictions. Having regard to the fact that you have pleaded guilty to the charges and because of your cooperation with the prosecuting authorities I am satisfied that you are remorseful and that it is highly unlikely that you will again offend in this way and I am satisfied that your prospects for rehabilitation are good.

22 Your counsel submitted that there has been substantial delay in bringing this matter before the court. He submitted that you have had this matter hanging over your head for nearly three years and that accordingly I should reduce the sentence. Whilst I accept there may have been some delay in the charges coming on for trial, I am not convinced that delay is a significant matter involved in the sentencing of you. This offending occurred over a long period of time and was not detected until about May of 2014. Whilst you indicated initially that you would plead guilty and you did give a confessional statement in April 2015 you did not finally agree to plead until last Tuesday. This was a trial up until Tuesday. The investigation here was extensive and the preparation for trial extensive. They are the matters that have occasioned some delay but I am not convinced that they should reduce the sentence. The fact is such large fraud trials cannot be disposed of quickly in the normal working of the court.

23 You are aged 46 years. You were born on 4 July 1970. Your parents and sibling are said to have moved around a lot particularly in Western Australia where your father obtained work in a goldmine. After moving back and forth from Western Australia the family settled in Wantirna in Melbourne in about 1980. This gave you some stability in primary and secondary education. I was told that you had a flair for figures and this led you to seeking a career in accounting. After leaving secondary school you completed a business course and then you undertook an accountant trainee position. This was the beginning of a long career in bookkeeping, accounting and taxation.

24 Your parents separated and divorced when you were a teenager and this is said to have had a profound effect upon you. You lived with your mother who settled in Ferntree Gully after the divorce. You have had a relationship for many years and you have a son aged 15 of that relationship. The relationship ended some time ago and you have lost daily contact with your son. You continue to have the full support of your mother who was present in court on your plea.

25 I received into evidence a psychological report of Mr Joblin dated 2 July 2015. That report sets out in more detail much of your background history. You told Mr Joblin that you were proud of the fact that you had achieved your ambition of running your own accountancy practice. You told him that you did not have much to do with the clients of the practice who were involved in property development and that Jordanou and Zaia were mostly involved in that work.

26 When these crimes came to the attention of authorities the practice closed and went into liquidation and soon after you were bankrupted having guaranteed the lease of the premises where the firm conducted its practice and you obtained work as a bookkeeper. In his report Mr Joblin said, inter alia:

28 The basic purposes for which a court may impose a sentence are punishment, deterrence, both specific and general, rehabilitation, denunciation and protection of the community. In sentencing, I must have regard to a range of matters such as the seriousness of the offence, your culpability for it, your personal circumstances and those of the victim, if any. I am required to balance the interest of the community in denouncing criminal conduct with the interest of the community in seeking to ensure that as far as possible offenders are rehabilitated and reintegrated into society.

29 Offending involving white collar crime on this scale calls for a stern sentence. This is because of the need to apply general deterrence and to adequately reflect denunciation of your offending. This kind of offending strikes at the heart of this area of commerce which concerns commercial business borrowing from financial institutions. It almost always involves a breach of trust, as here, by offenders who are qualified professionals who have never previously been found to have breached the law, as here. That is why stern sentences are called for as a general deterrent to others who may be tempted to offend as you have. This kind of fraud is difficult to detect and investigate and such investigations are costly and time consuming. They take up a lot of resources in investigation and prosecution, as has been the case here.

30 At the centre of the crime rests the fact that the information upon which the loans were based was false and this affected the commercial risk to the lender. The offending here extended over several years involving large sums of money as is often the case with this kind of white collar crime. For these reasons a lengthy term of imprisonment must be imposed.

31 Your counsel asked me to consider making a Community Corrections Order or to impose a term of imprisonment wholly, or partially, suspended. I reject these submissions. I agree with the submission of the prosecution that only a term of immediate imprisonment and the fixing of a non-parole period is the appropriate disposition. Your level of offending, planned and sophisticated as it was, is too high, the period over which the offending is too long, and the amounts involved in the fraud too large, for me to consider making a Community Corrections Order or imposing a suspended or partially suspended sentence. In my view the submission made on your behalf is unrealistic.

32 Would you please stand, Mr Arthur. On Charge 1 you are convicted and sentenced to a term of imprisonment of eight years.

33 On Charge two you are convicted and sentenced to a term of imprisonment of four years.

34 I direct that one year of the sentence imposed on Charge 2 cumulate upon the sentence imposed on Charge 1 making a total effective sentence of nine years imprisonment.

35 I direct you serve a minimum term of six years before being eligible for release on parole. I declare that I have reduced your sentence as a result of the undertaking that you have given to give evidence if called upon in accordance with the statement dated 20 April 2015 and marked as Exhibit B and I direct that a declaration to that effect be recorded in the records of the court.

36 Section 6AAA of the Act requires me to state the total effective sentence and non-parole period that I would have imposed had you pleaded not guilty and been convicted. Had you been convicted after a trial, in addition to not receiving the benefit of a plea of guilty, you would not have received the benefit of cooperation with the authorities and accordingly, I would have sentenced you to 15 years imprisonment with a non-parole period of 11 years.

37 I declare that five days pre-sentence detention be reckoned as having been already served under the sentences passed this day and I direct that a declaration to that effect be entered into the records of the court and five days pre-sentence detention be deducted administratively. The prosecution seeks the making of a forensic sample order within s.464ZF of the Crimes act 1958. The making of that order was not opposed by your counsel and for the reasons stated in the order I have signed that order which means that a police officer may approach you to take a forensic sample from your body which in this instance is a swab from the inside of your mouth.

MR HANDS: No Your Honour but in discussion you did mention about the fact that he would be held in protective custody. I don't think the sentence mentions that.

I bring to Your Honour's attention. We'd seek leave to add point one to the current indictment number.

HIS HONOUR: Yes, thank you. Can you take Mr Arthur into custody please. I'll just leave the court whilst the Bar table is reconstituted.

County Court of Victoria

DPP v Arthur [2017] VCC 330 (20 March 2017)