R v Rapana [2018] NZDC 5168 (16 March 2018)

Last Updated: 16 May 2019

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

IN THE DISTRICT COURT AT MANUKAU

CRI-2018-092-002948

[2018] NZDC 5168

THE QUEEN

v

ISAAC CRAIG RAPANA

Hearing:	16 March 2018
Appearances:	M Williams for the Crown P Tomlinson for the Defendant
Judgment:	16 March 2018

NOTES OF JUDGE D J McNAUGHTON ON SENTENCING

[1] Mr Rapana, you appear sentencing on two charges of using a document, six charges of obtaining by deception, one charge of misuse of a telephone, and one charge of accessing a computer system for a dishonest purpose.

[2] From 20 July 2015, you were employed by [company name deleted] as a commission-based salesperson. You had access to the company credit card for purchases on behalf of the company and you were authorised to do that by [the company’s principal].

[3] Between 16 February and 12 March 2016, you used the company credit card to top up your personal TAB account at the New Zealand Racing Board, you spent a total $7243 over this period in 36 separate transactions.

R v ISAAC CRAIG RAPANA [2018] NZDC 5168 [16 March 2018]

[4] Between 20 January 2016 and 4 March 2016, [the company’s principal] provided you with nine company bank cheques which were intended to be used to pay council consent payments for business customers. You requested that those cheques be made out to cash, so that you could put each of these council consent payments on your own personal credit card and thereby obtain Airpoints, and you would then cash the cheques in your own name. The total value of the cheques was $20,588.59. You cashed each of these cheques to their full value and kept the money. You made only one council consent payment to the value $2425.

[5] When your offending was discovered by [the company’s principal] on 13 March 2016, you made two reparation payments. One of $10,000 and one of $2000, and you were formally dismissed by the company on 4 April. While you were still employed by [the company], you had entered into discussions with six different customers about the purchase of sleep-outs. However, after being dismissed, you represented yourself to these people as still employed by the company, and you continued your discussions regarding the sale of these various sleep-outs and you told these people to pay instalments into your personal Westpac Bank account, instead of the company account.

[6] You dishonestly represented yourself as a partner in the business and you claimed it was standard practice to use your personal bank account, and on the basis of those representations, payments of $10,600, $3400, $20,000. $25,000, two separate instalments of $10,000 and $20,000 were made into your personal account by each of the six separate complainants. All told, the total fraud offending equates to a loss of

$103,748.05. During the period of your offending between 24 February and 3 May 2016, you spent over $50,000 at various gambling establishments, including the TAB and the Sky City Casino.

[7] The misuse of a telephone charge is on the basis of your phone call to Spark New Zealand purporting to be [the company’s principal]. You instructed the call taker to change [the company’s] landline number to a new disconnected number, and as a result of your actions, anyone calling the company from then on was not able to get through, and [the company] did not receive any customer phone calls for 10 days as a result.

[8] On 10 February 2015, you contacted the company’s [internet service provider], again representing yourself as [the company’s principal], and instructed the call taker to change the company’s internet password. There were two attempts, the second of which was successful, and that then provided you with access to the portable computer system and the company’s emails, and as a result, [the company’s principal] was locked out of his own [account] and unable to access his company’s emails.

[9] When you were interviewed about this by the police, you accepted that you had used a credit card for all 36 transactions without authority, you accepted that you had received and cashed the cheques, although you claimed you had paid the money back during an employment settlement. You accepted that you had received money from each of these six customers spoken to by the police, and you accepted that you had contacted some of them after you were no longer employed by the company. You told the police you were attempting to trade your way out. You acknowledged changing the company’s telephone number, which you said you did out of spite, and that you were pissed off at [the company’s principal].

[10] You claimed to the police that you had director responsibilities at the company, although you accepted you were not a director on paper, and that somehow that entitled you to spend company money. You claimed that you had created the company. You denied being dismissed, and told the police that instead you had resigned.

[11] You have a significant history of dishonesty offending. Your first conviction for theft was back in 2000, sentences of community detention and supervision were imposed in the Waitakere District Court on a number of theft charges back in 2011. You were sentenced the following year on a charge of obtaining by deception to supervision and ordered to pay reparation. Another conviction for obtaining by deception in 2014, again a community-based sentence of community work. In 2015, you were convicted of burglary. From the Bar, Mr Williams advises that that charge had an element of deception in terms of your then employer, and so too, one of the theft charges that followed in 2016. All told you have 11 previous convictions for theft, one for burglary and two for obtaining by deception. All dealt with by way of community-based sentences.

[12] The Crown have filed a number of victim impact statements, and I have heard from [the company’s principal] directly, who read out his victim impact statement. To summarise what he said, your offending has caused him significant emotional harm, and as a result of financial losses incurred, and a rush of clients approaching [the company] to get their money back, the business is no longer operating. He lost 15 kilograms over a period of four weeks. He is appalled that you then hired lawyers to claim constructive dismissal, using money which you had stolen from the company and clients, to pay for it. He says that the accumulated result of all of this stress has been a severe breakdown.

[13] He considered himself to be a strong person, but your offending and the destruction of the company has put him back years with no apparent end in sight. He refers to your spiteful offending, accessing the email system and changing the telephone numbers as simply other attempts to bring him down. He describes the losses after the three years invested in setting this company up, and the design and technical costs as devastating, and he estimates the accumulated total losses in excess of $500,000. He finishes by saying he is still alive and has survived this, but clearly there has been a huge emotional and financial cost.

[14] The victim impact statements from customers of the company are to a similar effect. [Victim 1] says that you stole their house deposit and have now made it impossible for him and his partner to buy a house to put on the land they had purchased. The couple are now stuck in a rental with mould and no ventilation, paying both rent and land taxes. He says he finds it very difficult to trust anyone now, and was already becoming a bit of a recluse since a serious car accident five years ago. He is still recovering from surgeries, and mobility is an issue. He says he will probably never work again. The money that he gave you was supposed to ensure that he provided something for the future. He describes himself now as depressed, a stupid, gullible cripple without his home or anything to show for the last 15 years of work. He says that is the first thing he thinks about when wakes up and the last thing before he goes to sleep.

[15] Mr Williams read the impact statement from [victims 2 and 3], a young married couple with [children]. The couple’s elderly grandmother was living in Australia

diagnosed with cancer, she required surgery but due to complications from a heart bypass operation just five years ago, there were serious risks. They decided that she should return to New Zealand for the operation. They made a decision to look for a self-contained two bedroom unit for their grandmother and they paid you $20,000 as a deposit. They waited for matters to progress, but eventually realised that they had been scammed and lost their deposit, and they ask, “Why did this happen to us, we don’t deserve this?”

[16] [Victim 2] describes having to take time off work and slipping into a mild state of depression. He and his wife separated for a period, she was resentful towards him because he was the one who initiated the contact with you. The couple are struggling to see a way forward. This has been a major set-back, they are still repaying their debt to the bank, and still have no unit for their grandmother.

[17] [Victim 4] describes your action causing great conflicts between him and his family. He says that you quickly gained his trust by using his religion as a point of difference from other builders. He too says he now finds it difficult to trust other people. His work as a social worker has come under review because his work practise has suffered, and he has had difficulties handling the emotion and the feelings of failure as a result of you ripping him off. He feels he has let his family down.

[18] [Victim 5] had promised her pregnant daughter a home, which was due to be completed before the baby was due. She had also purchased furniture and house items in the expectation that it was going to be built. You, it seems, were giving her advice on what to buy for the house. Again, this complainant experiences now serious trust issues, and to make matters worse, before this even happened, she had been ripped off by another company for $24,000 by one of their contractors who claimed bankruptcy after taking her money. She said she shared that information with you and you reassured her that this would not happen.

[19] And finally, [victim 6], who really is too angry and upset to even put his thoughts into writing. He describes a range of emotions and anger at having to find the funds to pay off the credit card, feeling betrayed, questioning his own judgment, a loss of trust and disgust.

[20] I have a pre-sentence report. Your compliance with community work has not been good, and there are currently nearly 90 hours outstanding from a sentence which was imposed four years ago. Your risk of re-offending is assessed as high, based on your criminal history. You told the probation officer that the company’s financial issues arose when a China based order never materialised, meaning the company lost customer deposits. You said the money was used from new customers to cover this loss. You say as the financial issues got worse, you became addicted to methamphetamine and gambling. You have expressed your remorse to the probation officer. You would like the opportunity to apologise to the victims. You say you intend to repay each of them given time. You say that you are willing to attend counselling to deal with your gambling and methamphetamine issues. You say you had been suffering from depression for some time.

[21] Although the Court did not request an appendix for an electronically monitored sentence, the probation officer recommends home detention and community work.

[22] You describe a dysfunctional upbringing, including violence, alcohol and drugs. Your father was a gang member. You say you were first introduced to gambling by an aunty, who would leave you feeding a pokie machine while she was working. You say that you have not taken your family life seriously until your child was born in November last year. You say you are now totally focused on parenting your daughter, you attend parenting classes. Your daughter has some health issues and you take her to appointments with paediatricians and other medical professionals.

[23] You are anxious about the possibility of prison sentence. Your partner of the past four years is supportive of you. You are employed in a middle management position and have been employed by this company for about a year. It seems they are aware of your offending and have offered to support you through any sentence. You suggest that there is a history of bipolar disorder within your family, and you were feeling very depressed at the time of the offending. You have been attending a counselling programme called Landmark, you also have issues with sleep apnoea.

[24] You say you have discussed cashing in your KiwiSaver, which currently has a balance of $15,000, and you are asking the Court to arrange a summary instalment order which would take money directly from your wages for reparation payments.

[25] The Crown submissions note that there is no guideline judgment in respect of this type of fraud offending. It is a matter of assessing the circumstances of each case, looking at the magnitude and sophistication of the offending, the type, circumstances, the number of victims, motivation for the offending, the amounts involved, the duration, impact on victims and so on.

[26] The aggravating factors present in this case are said to be, firstly, a breach of trust, a breach of trust between you and your employer, and of course an abuse of trust, abuse of the relationship of trust, which you had developed with the customers of the company. Your offending is said to be of a planned and premeditated nature. The Crown ask the Court to take into account the number of separate transactions. It is suggested that the obtaining by deception charges involve a more sophisticated con where you were approaching customers in your capacity as a sales manager after you were dismissed. Finally, the Court is asked to take into account the impact on the victims and the extent of the losses which exceed a hundred thousand dollars,

$103,748.05.

[27] The cases referred to by the Crown in submissions are Kiro v R1. A number of fraudulent schemes were set up with fake investment opportunities. The defendant there had defrauded his victims in a total sum of $249,765. Of that amount, $62,000 was repaid. The Judge there adopted a starting point of five and a half years’ imprisonment, which on appeal was described as stern, but not beyond the pale. Wylie J went on to consider starting points from a number of cases for fraud type offending, and those are set out in the Crown submissions.

[28] Mount v R2, $510,000 where the Court of Appeal had considered a six year starting point as appropriate. McGregor v R3, $473,000, a five year starting point was

1 Kiro v R [2016] NZHC 1550

2 Mount v R [2015] NZCA 489

3 McGregor v R [2015] NZCA 565

appropriate. Mears v R4, $380,000, the Court of Appeal upheld a starting sentence of four years, six months. R v Davis5, $278,000, of which $88,000 had been repaid. A starting point of four years’ imprisonment was considered within range. Bayley v R6, involving $317,000, where a starting sentence of three years was considered lenient. Finally, Helmsby Knight7, $157,000 where three years and six months were said to be at the lower end of the available range. The other case referred to by the Crown is Kirwan v Police8, where $90,000 was stolen in 141 separate transactions over six years. The defendant would sell parts owned by the company and list the parts as stock in the computer system. He would also book parts to jobs in the workshop while selling those same parts to other companies and individuals, and he altered the computer system to conceal his fraud. A starting point of three years’ imprisonment was adopted on appeal, reduced from three years, three months.

[29] It is suggested that your offending involves a similar amount of money, but the sophistication of your offending is significantly greater, and worsened by the defrauding of six members of the public, as well as your employer.

[30] The Crown would submit a starting sentence of four years as appropriate here, with an uplift of three to six months to reflect the misuse of telephone and accessing a computer system charges. It is submitted that that offending demonstrates a particular maliciousness in impeding [the company’s principal]’s ability to continue to run the business.

[31] The Crown submit your previous convictions for dishonesty would justify an uplift in the range of three to six months’ imprisonment. It is noted that you declined the sentence indication in June 2017. This is said to be a late plea of guilty, and any discount for guilty plea in the Crown’s submission should not exceed 10 percent.

[32] Mr Tomlinson, in his submissions, reiterates that there is no tariff. He accepts your offending was deliberate, but submits it was not particularly sophisticated. He

4 Mears v R [2014] NZCA 30

5 R v Davis CA658/2008 [2009] NZCA 26

6 Bayley v R

7 Helmsby Knight

8 Kirwan v Police

accepts there are a number of individual victims, together with your employer in the company. He emphasises your serious alcohol and gambling issues, and that you were undertaking counselling for both and had been referred to a psychologist. He submits a starting point between two years, nine months and three years is appropriate, referring to Mackley v Police9. A starting point of three and a half years adopted where the losses totalled $173,318.95. Montague v Police10, the sum stolen was between

$108,000 and $128,000, and the High Court took no issue with a starting point of three years. Kirwan v Police, already referred to, also Wilten v Police11, $91,148. A starting sentence was taken there in a range between two and a half and three years, opting for two years, nine months. Finally, Koha v Police12, three years, three months for a fraud involving $160,000. It is accepted there would be an uplift in respect of your previous convictions, but counsel seeks a modest uplift in the range of three months.

[33] Your offer of reparation is put forward as a mitigating factor, and so too your attendance at CADS.

[34] I have a report from Dr Joseph, a consultant psychiatrist. You have described to her symptoms of physical trauma, flashbacks and nightmares as a result of physical abuse from your stepfather many years ago. You described a previous history of hypervigilance and marked reactivity, and self-destructive behaviours. You say your father was in and out of prison as you were growing up. Your [relative] was diagnosed with bipolar disorder which runs in the family. You described some very serious assaults by your stepfather where you sustained a fractured arm and head injuries, and witnessing numerous assaults on your mother, and periods when you and your mother would stay at a women’s refuge. You describe your mother as often turning a blind eye to physical abuse of you. Eventually you ran away from home.

[35] You have given a similar explanation regarding the collapse of the business, which you describe as a joint venture with you as a business partner. You have told the psychiatrist that the business collapsed after the factory in China had shut down.

9 Mackley v Police [2014] NZHC 1561

10 Montague v Police CA498/93

11 Wilton v Police [2015] NZHC 427

12 Kora v Police [2015] NZHC 1251

They were unable to retrieve deposits from China, and that you were using payments of income, and customers to repay old customers.

[36] You report heavy use of alcohol throughout 2017. Despite your symptoms of post-traumatic stress disorder, the psychiatrist’s impression of you is high functioning in relation to employment and relationships. You have a strong, genetic susceptibility for substance use disorders, and would likely meet the criteria for an alcohol use disorder. Mild in severity, she says you appear to be in early submission.

[37] I have your letter submitted today which refers to a number of bad habits including excessive drinking, drug use, compulsive lying, and gambling. That sometimes you tried to convince yourself that you could change, and that you could do that without assistance. You describe yourself as putting everything into this company, being emotionally invested, as well as your own money and resources. You say seeing the company fall apart was very difficult. You tried to go out on your own, but the temptation of holding other people’s money for them got the better of you. You describe customers coming to the worksite, repossessing farm machinery until their buildings arrived, which added to the stress.

[38] You say you were taking people’s deposits to try and complete the projects on your own and completed four builds with your new business, but you also withdrew customers’ deposits and gambled those away at the casino. You say you got into a mindset where you thought you could spend the expected profit from each sale and make more money gambling, but that did not work. You say what you did was beyond naïve, stupid and delusional that you could address these problems by yourself and get the company out of the hole it was in.

[39] You express your sorrow for the pain caused each and every one of the victims who trusted you and you have let them down. You acknowledge they are now without their hard-earned savings and emotionally damaged. You want to get closure for yourself, for the victims and their families and your own families. You say the sooner you take responsibility for all of this and accept your punishment, the closer you will be to becoming the sort of father that your daughter should have. You say this has gone on too long and you need to be held to account.

[40] You ask the Court to consider home detention, although you accept that imprisonment is very likely. You offer $500 per fortnight by way of reparation. You say you have been unable to pay anything up until this point, due to your wife being on maternity leave and your family living on one income, and medical expenses.

[41] You ask the Court to consider a sentence including cognitive behavioural therapy and gambling counselling.

[42] Finally, I have a letter from your mother-in-law, who describes you as a supportive husband and a good father, and that you have taken steps to re-evaluate your life and address past behaviours.

[43] So in terms of the sentencing exercise on the basis of authorities provided by the Crown and the defence, it seems to me that your offending would fall within a range of starting sentences between three and four years’ imprisonment, and that would be taking into account the total amount stolen, which is significant. A gross breach of your employer’s trust, and an even worse breach of the individual customers’ trust, significant impacts on all of those people, which has come through loud and clear in the victim impact statements and what [the company’s principal] has said to the Court today. That also takes into account the duration and sophistication of your offending and of course, it is an aggravating feature of the offending, that there have been huge consequential losses as a result.

[44] The company has collapsed, not all of that is down to your offending, but it is clear that contrary to what you told the psychiatrist, the factory in China did not close down, materials were supplied to New Zealand from that Chinese factory. There were delays in meeting local standards, and expert assistance was required to evaluate the materials and report, and in the course of those delays, customers were asking for their money back, but as a result of you defrauding the company and individual customers, that was the straw that broke the camel’s back. The company ran out of working capital, and collapsed. So the consequential losses have been far greater than the losses which are a direct result of your offending against the company and the six individuals.

[45] So looked at in the context of the amount alone. Just over $100,000, a starting point of three to four years could be seen as out of range, but in my assessment, it is appropriate, given all those factors I have just mentioned. I would take a starting sentence in the middle of that range at three and a half years’ imprisonment.

[46] I agree with the Crown submission, your consequential offending in relation to the company’s telephone and its email account was spiteful and vindictive and aimed at [the company’s principal], and the sentence is going to be uplifted a further six months, taking that into account, which brings it to four years. I would uplift that sentence again by six months to take into account your previous history of dishonesty, and as I have said, some of that includes dishonesty in the course of employment against earlier employers. That brings the sentence to four and a half years, or 54 months.

[47] As to matters in mitigation, there does appear now finally to be a full-breasted acceptance of responsibility for the damage that you have caused, and some attempt to address your underlying issues, which go back many years, as evident in the psychiatrist report, and some attempt to deal with your alcohol issues through CADS and gambling counselling. Those have not been followed through in any full-blooded way, and I guess that is going to have to wait until you have completed the sentence, but to the extent that you do recognise your issues and have started to take steps to deal with them, and do accept responsibility, I would discount the sentence by six months to recognise that factor.

[48] If you were in a position to offer lump sum reparation today, I would take that into account to discount the sentence further. If you had come here today with the full amount, I would have discounted the sentence by a full third. But sadly, that is not the case, and your offer of reparation, well it is not realistic, given the sentence that I am going to impose, it just will not happen, and even if did, at the rate of $500 per fortnight, it would take eight years to repay all the money, so I am not prepared to discount the sentence at all on the basis of any offer of reparation.

[49] Your plea of guilty here is late. It is a year after the charges were laid, but I will discount the sentence by 15 percent to reflect that, which means an end sentence of 40 months’ imprisonment or three years, four months.

[50] So in respect of the individual charges, you are convicted and sentenced to imprisonment for three years, four months in relation to using a document times two, obtaining by deception times six.

[51] In respect of the misuse of a telephone charge, you are convicted and sentenced to imprisonment for one month.

[52] In respect of the accessing a computer system for dishonest purpose, imprisonment for two years.

[53] All of those sentences are concurrent, which means a sentence of three years, four months. You are also ordered to pay reparation in the sum of $15,000, and the Court registrar is to allocate reparation to the respective complainants on a pro rata basis.

D J McNaughton District Court Judge