Serious Fraud Office v Papu [2017] NZDC 21687 (21 September 2017)

Last Updated: 12 April 2018

EDITORIAL NOTE: CHANGES MADE TO THIS JUDGMENT APPEAR IN [SQUARE BRACKETS].

IN THE DISTRICT COURT AT MANUKAU

CRI-2017-092-001988

[2017] NZDC 21687

SERIOUS FRAUD OFFICE

v

ELIZABETH DURBIN PAPU

Hearing:	21 September 2017
Appearances:	G Kayes and N Greive for the Crown J Billington QC for the Defendant
Judgment:	21 September 2017

NOTES OF JUDGE S MOALA ON SENTENCING

[1] Elizabeth Durbin Papu, you appear for sentencing having pleaded guilty to two charges of theft by a person in a special relationship. The maximum penalty is seven years’ imprisonment for each charge.

[2] The facts are that the [the victim church], has its headquarters in South Auckland with churches throughout New Zealand, Australia, Samoa and America. You are the daughter of the head pastor of the church. You were employed as a finance administrator of the Northern Division of the church in 2006. The Northern Division is responsible for organising, managing and co-ordinating the 16 branches of the church in the northern area. All 16 of these branches are based in Auckland. The Northern Division is also responsible for collecting, recording and distributing donations and tithes received from the 16 branches. As finance administrator you had unfettered access to finances of the church. You had full access to the bank accounts

SERIOUS FRAUD OFFICE v ELIZABETH DURBIN PAPU [2017] NZDC 21687 [21 September 2017]

and had responsibility for recording transactions in the financial records and for reconciling the bank statements.

[3] A review of the church’s annual returns by another Government agency in 2013 led to a referral to the Serious Fraud Office. The Serious Fraud investigation identified a number of payments made to your bank account from the church bank account which appeared to exceed the amounts owed to you for salary and reimbursement of expenses. A schedule of these payments is attached to the summary of facts. I ask that it be attached to my sentencing decision [Editorial note: summary of facts are not attached]. The funds were transferred into three different bank accounts. You attended a voluntary interview with the Serious Fraud Office and admitted that you had made these payments from the church accounts into your own bank accounts. You used online banking to transfer the funds. You admitted that you took money from the church to fund a gambling habit and that you knew you were not authorized to take the money.

[4] The church used accounting software called Cash Manager to record its financial transactions. You were the person responsible for recording the transactions in the accounting software. The bank accounts of the Northern Division are included in the financial statements of the church which were compiled by a chartered accountant each year. This meant that you had to hide the money that was taken by manipulating the financial records of the church otherwise the accountant would have recognised that money was missing.

[5] You admitted to using two methods for hiding the money you had taken. The first method used was for you to record deposits to the bank accounts at less than what was actually banked. You then transferred the difference between the amount recorded and the amount banked to your personal bank accounts. This allowed for you to take money and ensure that the balance of the bank accounts agreed with the balance recorded in the financial records. The second method you used was to code the money you took to a legitimate expense account.

[6] Because your work was never reviewed, your deception was not discovered. The accountant who prepared the financial statements only collated information

provided by you, so his work was not in depth enough to uncover the deception. Your offending occurred between 17 February 2011 and 28 April 2015. It involved 430 separate transactions. The total amount of the money that you transferred into your own accounts without authorization was $1,056,222.

[7] The Serious Fraud Office investigation also revealed suspicious transactions in a bank account with the name [account name deleted]. [The Committee] is the international governing body for the church. The church maintained a separate bank account for funding and expenses associated with [the Committee]. You were responsible for these bank accounts in your role as financial administrator and had access to and control over the funds held in the accounts. One of the bank accounts was used for the church’s involvement with [the investment programme]. [The investment programme] was an unsuccessful investment programme that tried to raise funds for the church. The bank account for [the investment programme] showed spending directly at casinos and cash withdrawals made at casinos totalling $555,630 involving 216 separate transactions between 6 December 2013 and 3 July 2015. The majority of this money was spent at SkyCity Casino in Auckland.

[8] When interviewed you admitted taking money from this bank account and gambling it. This bank account was not part of the financial records of the church, so you did not have to manipulate any financial records to hide the missing money from this account. The total amount of funds that you took from this account without authorisation was $555,630.

[9] When you were initially spoken to by the Serious Fraud Office you were fully co-operative and you admitted the facts that I have just outlined.

[10] You are 52 years of age and you have no previous convictions at all.

[11] I do not have a victim impact statement per se but from reading the restorative justice report I am very clear as to how the victims, the church leaders, view your offending. They are very forgiving. They absolutely support you and think that you are a really good person who has made a terrible mistake. I note however that the money that you have taken has come from the members of the church and not just

from the leadership. That money comes from the blood, sweat and tears of many Samoan families. Their children and their families have gone without so that they can contribute to the church because God and the church is a priority and is everything to these people. They place their trust in the church and people like you and they expect of their leadership will act with integrity and honesty in dealing with this money. I do not need to tell you, you already know that.

[12] I have read a pre-sentence report which is really positive for you. It speaks of the gambling and the stress that you were under at the time. You did not really appreciate the full extent of your dishonesty because you were in the throws of your depression and your gambling. It was not until the investigation uncovered it that you realised the extent of it. You did not see it as stealing. You just saw it as borrowing and you mentioned that you had every intention of paying it back. Let us be clear, it is stealing. You have a supportive family. You recently sold your house to the church and you have paid $100,000 in reparation to the church. You have been assessed as being of low risk of re-offending. I can understand why because apart from this offending which took place over four years, you otherwise have an unblemished character.

[13] I have read many character references describing you, as a wonderful, generous, kind woman who has given a lot to your family, to your community and particularly to your church community.

[14] I take into account what the report-writer said about your remorse, that it is genuine. Everything I have read on the file tells me that your remorse is genuine and the regret is there. This is something that you are ashamed of and this is a fall from grace for you but also for your family. I take into account that they are all affected by it including your father. I can only imagine how he must feel about your offending and the trust that you have breached by taking the money from the church.

[15] I note from that pre-sentence report that there is a suitable address for an electronically-monitored sentence and the report-writer speaks highly of you. I accept that you have done everything within your power to make things right since the offending came to light.

[16] I have also read a comprehensive restorative justice report, from the outset it is a very positive report for you. You again expressed your remorse. I note that you have felt extremely low and thought about self-harm as a result of what has happened. I accept that that is all genuine. I accept that there has been forgiveness of you by the church leadership. Some of them have even said that if you are sentenced to imprisonment that they would serve that sentence for you, such is the high regard in which you are held by these people. There is also pain that they have expressed in that meeting. I have read that some of them were very upset and very angry at you but the overall end result is that they do not wish any harm towards you. They forgive you. They want the Judge to impose a merciful sentence, they do not want you to be punished by way of a sentence of imprisonment and they are prepared to allow you to continue working in the church and giving back. I accept that they have done that because of your character and the person that you are.

[17] I have read the submissions filed by the Serious Fraud Office, the Serious Fraud Office says that given the authorities for this type of offending the appropriate starting point should be between six and seven years’ imprisonment. In oral submissions today Mr Kayes acknowledged the submissions made by your lawyer. Some of those decisions are quite old and that if I take into account the fact that they are quite old I can adopt a starting point at the lower end of that range, being six years’ imprisonment. The Serious Fraud Office says that there should be a discount for your previous good character and a discrete discount for your remorse and your efforts at rehabilitation. After a 25 percent discount for your guilty plea the Serious Fraud Office says an end sentence of imprisonment or, depending on the discounts I give, the Serious Fraud Office do not want to make any submissions about home detention but note that you would be an appropriate candidate for home detention.

[18] Your lawyer has filed submissions and a lot of material on your behalf. He has relied on two authorities to recommend a lower starting point of four to five years. Today he accepts that that range could be four to six years. He says that a significant discount should be given for the strong mitigating features in your case including your previous good character, efforts at rehabilitation, the circumstances in which you found yourself at the time, (being overworked and stressed and depressed) and the gambling problem that you have. He also seeks a discount for the remorse which is

clearly demonstrated by the restorative justice report but also by the $100,000 in reparation. He says that after a 25 percent discount for your guilty plea, the sentence will be in the range of two years where I can consider you for a sentence of home detention. He said in oral submissions today that when I step back, the fairness of the situation requires a sentence that is less than imprisonment.

[19] In sentencing you today I take into account the purposes and principles of sentencing. For cases of fraud I must hold you accountable and responsible for what you have done. I must take into account that you need to be deterred and there needs to be denunciation and protection of the community from the offending although I note that you are otherwise a good person. I take into account the reparation that has been paid, I must also take into account your rehabilitation and re-integration.

[20] In terms of the principles of sentencing I take into account the gravity of the offending. Do not be mistaken Ms Papu, I consider this offending as very serious given the length of time, the amount involved, and who you were stealing from. I take into account that I must impose a sentence that is consistent with other cases that are similar to yours. I note that the effect of the offending is not just on the victim, which is the church, but on your family as well as you. I take into account your personal and cultural background in imposing the sentence. I am mindful that you have given a number of years of service to this church community.

[21] In terms of the aggravating features I take into account the extent of the loss and harm. We have spoken about the fact that it is over $1,500,000 in total, you have taken from the church community. They are victims. I take into account the number of transactions. The Serious Fraud Office has referred to the number of members in the church as of April 2014, that there are approximately 844 members. I think about them, and I take into account the impact it will have on them. I take into account that these contributions by them were intended for the good of the community, and not for you to gamble and spend as you wish. The amount is significant. I take into account that you were in a position of trust, and everyone seems to have trusted you, not just your father but all of the church leaders. You were left unchecked for that period of the offending. They were entitled to trust you and you acted honestly with the money, and breached the trust that they had in you. I take into account the period of the

offending, four and a half years is a very long time. I have looked at those individual transactions. I know that if your father raised you right, you have had a conscience, you would have been thinking about it every time you took that money. As I said, I take into account the number of transactions as well.

[22] I have considered carefully what the appropriate starting point should be given those aggravating factors. I take into account the Court of Appeal decision of R v Varjan 1, where the Court said:

“Culpability is to be assessed by reference to the circumstances and such factors as the nature of the offending, its magnitude and sophistication, the type, circumstances and number of the victims, the motivation for the offending, the amounts involved, the losses, the period over which the offending occurred, the seriousness of breaches of trust involved, and the impact on victims.

[23] The Serious Fraud Office have relied on three particular decisions as well as others that have been provided to me: Bourton v R, 2 R v Farrell,3 and Serious Fraud Office v Clement, 4 to support their recommended starting point of six years’ imprisonment. I have read those decisions.

[24] I have also been given two decisions by Mr Billington in support of adopting a lower starting point: Fitzmaurice v Police 5 and R v Love.6 I have read those decisions in relation to Fitzmaurice v Police, I understand why your lawyer has provided it but, I distinguish that case on the basis that the amount involved was

$149,000. Your period of offending was slightly lower but I consider your offending a lot more serious than the case of Fitzmaurice v Police. In terms of R v Love. The starting point in that case was slightly lower given that there was a co-offender, his partner. Lang J said in that decision that if Love he had been offending on his own the starting point would have been five to five and a half years’ imprisonment.

1 R v Varjan CA97/03, 26 June 2003.

2 Bourton v R [2014] NZCA 151

3 R v Farrell DC Wellington CRI-2005-004-014197, 6 December 2005

4 Serious Fraud Office v Clement DC Wellington CRI-2003-085-002206, 12 March 2004

5 Fitzmaurice v Police [2013] NZHC 494

6 R v Love [2016] NZHC 2394

[25] So from my review of the authorities I am satisfied that given all of the differences and similarities in the cases, the starting point that is appropriate for your offending is six years’ imprisonment.

[26] I then look at the issue of discounts. Having regard to the strong mitigating features that I have referred to. I am prepared to give a 25 percent discount for those mitigating features. I am going to give an additional amount that is separate for the remorse but for the remaining mitigating features, the previous good character, the rehabilitation that you have done, all of the letters in support, the restorative justice, I give a 25 percent discount for that. I then give you an additional 25 percent discount for your guilty plea. The real issue is do I get down to a place where I can consider you for home detention. I have thought carefully about what Mr Billington has said about the context of your offending and the fact that you were not using the money for a lavish lifestyle. It was to fund a gambling problem which I accept is an addiction and is really hard to deal with when you are in the throws of it.

[27] When I step back from the situation, from all the information before me I am satisfied based on the authorities and the statutory factors that in this case a sentence of imprisonment is required. The purposes and principles of sentencing cannot be achieved by any less restrictive sentence or a combination of any other sentences.

[28] I adopt that starting point of six years’ imprisonment. I give you the 25 percent discount for the mitigating features. A 25 percent discount for your guilty plea, that takes me down to three years and I am prepared to reduce that further by three months, for the remorse that you have displayed.

[29] So, the end sentence for you is one of two years and nine months’ imprisonment, that is the sentence.

S Moala

District Court Judge