Cooper v Serious Fraud Office [2014] NZHC 806 (16 April 2014)

Last Updated: 24 May 2014

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CRI-2013-404-359 [2014] NZHC 806

BETWEEN	GLENN WILLIAM COOPER Appellant
AND	SERIOUS FRAUD OFFICE Respondent

Hearing:	14 April 2014
Counsel:	T Clee for Appellant T Simmonds for Respondent
Judgment:	16 April 2014

_{JUDGMENT OF KATZ J}

This judgment was delivered by me on 16 April 2014 at 1:00 pm

Pursuant to Rule 11.5 High Court Rules

Registrar/Deputy Registrar

Acting Solicitor: M Williams, Serious Fraud Office, Auckland

Counsel: T Simmonds, Auckland

T Clee, Auckland

COOPER v SERIOUS FRAUD OFFICE [2014] NZHC 806 [16 April 2014]

Introduction

[1] On 16 January 2013, the appellant, Mr Glenn Cooper, entered guilty pleas in the Manukau District Court to five charges (each laid indictably) of dishonestly using a document pursuant to s 228(1)(a) of the Crimes Act 1961. On 29 November

2013, Mr Cooper was sentenced by Judge S A Thorburn to a term of 19 months’ imprisonment, together with an order for reparation of $25,000. Mr Cooper now appeals that sentence on two grounds:

(a) the sentence imposed on him was manifestly excessive, due to insufficient discounts being provided to account for his remorse and guilty pleas; and

(b) the Judge was wrong to impose a sentence of imprisonment

(and reparation) rather than home detention.

Factual background

[2] Mr Cooper describes himself as a property investor. He was also involved with putting together property deals and acting as a broker.

[3] During 2011 Mr Cooper was involved in a number of property transactions, involving properties in Tokoroa and Manurewa. His general modus operandi was to purchase a property at mortgagee sale using either an associated company, a friend or a relative as the purchaser. He then on-sold these properties at an increased price to people who were heavily indebted, purportedly in order to assist them to consolidate their debts. For example, his first victim responded to a debt consolidation advertisement that he had placed in the local newspaper.

[4] False sale and purchase agreements (concealing Mr Cooper’s interest in the properties from banks and investors) and misleading loan application forms were prepared by Mr Cooper and submitted to banks to obtain funding to purchase the properties. The vendors listed on the agreements were generally the original owners, who had already sold their property to one of Mr Cooper’s associated entities. Mr Cooper forged their signatures on the sale and purchase agreements, thereby

concealing his own involvement or the profit he was making on the on sale. The banks approved the requested loans and the victims then purchased the properties.

[5] To further encourage investors to become involved in one of these transactions Mr Cooper did not require payment of a deposit (contrary to what the loan agreements indicated). He also gave investors a cash “rebate” once the loan funds were advanced. For example, one property was purchased by a company owned by Mr Cooper’s wife for $160,000. It was on-sold to the victim for $248,000. The deposit referred to in the relevant documentation was fictitious. In addition the victim was paid a $10,000 “rebate”. Mr Cooper’s profit was $26,500.

[6] In addition, two properties in Tokoroa were purchased by one of the victims at the suggestion of Mr Cooper. He prepared a loan application for those properties which was provided to the ANZ National Bank. It was false in that it indicated that the purchaser intended to live in at least one of the properties.

[7] The difficulty with Mr Cooper’s “business model”, apart from it being fraudulent, was that it was simply unsustainable. It involved selling properties at inflated prices to vulnerable and commercially naïve people who simply had no way to service the mortgages they had been burdened with. Although Mr Cooper may have “consolidated” their existing debts as promised, their debt levels had also increased drastically, to unsustainable levels.

[8] The sentencing Judge had this to say about Mr Cooper’s schemes:

[9] His modus to obtain money quickly and easily like this was clearly to engage with a certain gullible, commercially naïve and easily persuadable section of the public and it is very clear (and this is perhaps one of the sad reflections upon his lack of integrity really in terms of human respect for others), that he was in his own interests dominated by the drive to gain by whatever means, even if dishonestly to his creditors, money by resultantly putting people into a high watermark of mortgage commitment with every possibility that they would fail. He of course would not have any responsibility for the borrowing and thus if it all went down the gurgler, it would be the people to whom he had sold who would sustain the losses through forced sales and inability to service the mortgages that they had obtained through his process. It is heartless. I have put that rather in quite a complicated and clumsy way, but it is heartless and it is incredibly selfish and self-centred. The result is of course that these transactions soon became of interest to the lending banks because people were having struggles and

trouble and agreements were looked at and the fraudulence in respect to who in fact was the vendor became apparent.

[9] When interviewed, Mr Cooper stated that an earlier Serious Fraud Office investigation in 2010 had resulted in banks calling in his loans, closing his accounts and generally being unwilling to deal with him. He claimed that because of this he was “backed into a corner” and as a result he did some “out of line stuff” with the agreements. He confirmed that he was trying to hide the fact that he was involved in the transactions from the banks.

[10] Against this background, I now turn to consider Mr Cooper’s specific appeal

grounds.

Was the sentence manifestly excessive?

The sentencing Judge’s approach

[11] Judge Thorburn concluded that the appropriate starting point for sentencing was about three years’ imprisonment. He noted that losses both to the individuals concerned and the banks concerned were in excess of $300,000 and that the money involved in terms of the advances was in excess of $800,000. The benefit to Mr Cooper was said, on a best case scenario for him by his counsel, to be in excess of $100,000 and by the Crown (on a worst case scenario) in excess of $200,000. The Judge concluded that the benefit to Mr Cooper was at the very least in excess of

$100,000.

[12] The Judge then noted that sentencing is not an exact science and that although a three year starting point could be justified he would give Mr Cooper “a little more benefit” and would therefore start his consideration at two years nine months.

[13] The Judge acknowledged that Mr Cooper had pleaded guilty quickly and stated that he was “relatively comfortable” with a 20 percent discount, but that “I am also going to allow him, in addition, a discount for remorse”, which he set at

5 percent. An offer of $25,000 reparation was also made, for which the Judge gave six months credit. The end sentence was 19 months’ imprisonment on each charge.

[14] Counsel for Mr Cooper accepted that the starting point of two years nine months’ imprisonment was within the available range, although in his view it was at the upper end of that range. He submitted, however, that more credit should have been given by the Judge to reflect Mr Cooper’s guilty pleas and remorse. In particular, he argued that a discount of 25 percent rather than 20 percent should have been given for the guilty pleas and a discount of 8 percent rather than 5 percent should have been allowed for remorse.

[15] I am not satisfied, however, that the sentencing Judge erred in the exercise of his discretion in relation to either the guilty plea discount or the discount for remorse. The 20 percent figure was within the appropriate range.

[16] A sentencing Judge is not automatically required to give the maximum discount in each case where there are early guilty pleas. In this case the pleas were entered just over two months after the first appearance. Although the Judge did not elaborate on his reasons for choosing the figure of 20 percent, the respondent had noted during the sentencing hearing that Mr Cooper had chosen to dispute certain aspects of the summary of facts and victim impact statements. As a result two of the victims were required to give evidence at a disputed facts hearing.

[17] Counsel for Mr Cooper submitted that this should not be factored into the appropriate guilty plea discount, as the SFO were late in providing certain information requested. Nevertheless, even once the requested information was provided, the disputed facts hearing proceeded, albeit in relation to fairly narrow issues. At the conclusion of the disputed facts hearing Judge Bouchier made findings that both victims were honest and credible witnesses “who had clearly been duped by Mr Cooper”.

[18] Mr Cooper was, of course, entitled to dispute the alleged facts surrounding his offending. However, one of the justifications for a guilty plea discount is that victims have been spared the considerable stress of appearing at trial. In this case two of the victims were not entirely spared that stress. They had to give evidence and be cross-examined at the disputed facts hearing. Their version of events was, however, upheld.

[19] In the overall context of this case I am accordingly satisfied that the guilty plea discount of 20 percent was within the acceptable range.

[20] I am also of the view that there is no basis for this Court to interfere with the

5 percent remorse discount. In assessing remorse the Judge had available to him extensive oral and written submissions from the parties, a pre-sentence report, a letter of apology from Mr Cooper, an affidavit from Mr Cooper’s wife and the judgment of Judge Bouchier regarding the disputed facts hearing. The Judge was well placed to evaluate the level of Mr Cooper’s remorse. In my view the discount provided is well within range.

Was the Judge wrong to impose imprisonment rather than home detention?

[21] Counsel for Mr Cooper submitted that the Judge erred in failing to properly consider a sentence of home detention. He referred to several cases, including R v Jarvis,¹ in support of his submission that home detention was the appropriate sentence in this case. In particular, it was submitted that the Judge placed too much weight on the seriousness of the offending and the principles of deterrence and denunciation, and failed to properly turn his mind to the option of home detention.

Relevant legal principles

[22] There is nothing in the Sentencing Act that suggests a presumption either for or against a sentence of home detention being imposed instead of a short period of imprisonment, either generally or in respect of particular types of offences.² As the

_{learned author of Hall’s Sentencing observes, the sentencing Judge may frequently}

¹ _{R v Jarvis DC Invercargill CRI-2011-025-1844, 5 April 2002.}

² R v Vhavha [2009] NZCA 588; [2010] BCL 109 per William Young P, dissenting; endorsed in

Osman v R [2010] NZCA 199 and adopted in Doolan & Moses v R [2011] NZCA 542.

be in a better position than an appellate court to determine the seriousness of offending for the purposes of determining whether home detention (as opposed to a community-based sentence or imprisonment) is the appropriate sentencing response.³

[23] The role of the appellate court on an appeal against a refusal to grant home detention is not to revisit or review the merits of the sentence. Rather, the issue is whether the sentencing Judge is either plainly wrong or has erred in exercising his or her sentencing discretion by applying an incorrect principle or giving insufficient or excessive weight to a particular factor.⁴

[24] In R v Manikpersadh the Court of Appeal stated that:⁵

[T]he proper approach of an appellate Court in cases such as this is that “the choice between home detention and a short sentence of imprisonment is the exercise of a fettered discretion, with appellate review focusing, as in other sentencing appeals to this Court, on the identification of error, if any, in the court below”.

[25] Similarly, in Fraser v R, the Court of Appeal observed that:⁶

As this Court has previously pointed out, an appeal against a Judge’s refusal to impose home detention rather than a short-term sentence of imprisonment is an appeal against the exercise of a “fettered discretion” – a discretion constrained by the purposes and principles of sentencing set out in ss 7 and 8 of the Sentencing Act 2002. There is nothing in the Sentencing Act suggesting a presumption for or against imposing home detention rather than imprisonment, only the sentencing principle that the Court must impose the least restrictive outcome appropriate in the circumstances. Further, this Court has made it clear that an appeal against a refusal to grant home detention is not an opportunity to review or revisit the merits. What the appellant must do is demonstrate an error by the Judge in exercising his sentencing discretion.

_{(Footnotes omitted)}

3. Hall’s Sentencing (online looseleaf ed, LexisNexis) at APII.5.22 citing R v D (CA253/2008) [2008] NZCA 254.

⁴ _{James v R [2010] NZCA 206, (2010) 24 NZTC 24,271.}

⁵ _{R v Manikpersadh [2011] NZCA 452 at [12].}

⁶ Fraser v R [2013] NZCA 250 at [20].

Discussion

[26] Applying these principles to the facts of this case, I observe first that the Judge expressly turned his mind to whether home detention would be appropriate. He said that:

[19] I am not going to adjourn to consider an electronically monitored home detention sentence. This is the next point of concern and Mr Clee has addressed me earnestly on that, and as too from a different point of view has Mr Simmonds. I would say that Mr Clee’s suggestion in his sentencing memorandum of home detention for a few months is markedly out of the ballpark and always was.

[20] I rely upon general dicta as to be found in the case of R v Rose a long time ago, that in cases of overt dishonesty exploiting others imprisonment is to be expected. In Jiao v Barge as well and in other cases; there is no assumption that home detention will be embarked upon. This type of offending has to be underscored by a strong message of deterrence and denunciation which, at the end of the day, is and I conclude in this case, to be a stronger message than personal circumstances and for that reason I determine that this is a case where I would not consider electronically monitored sentencing. The sentence is as announced 19 months’ imprisonment.

(Footnotes omitted)

[27] Mr Clee submitted before me that R v Rose⁷ is of limited assistance in determining whether home detention or imprisonment is the appropriate option in dishonesty cases involving the exploitation of others, as it pre-dated the availability of home detention as a sentencing option. I accept that submission.

[28] I further note that the reference to Jiao v Barge appears to be an error (it is a civil case). Counsel for the respondent submitted that the correct reference should have been to R v Varjan⁸ which was cited to the Court (whereas Jiao v Barge was not). R v Rose and R v Varjan were both relied on in the respondent’s sentencing submissions at the District Court, as cases which recognise the importance of denunciation and deterrence for calculated fraudulent offending that is motivated by

_{financial gain.}

⁷ _{R v Rose [1990] 2 NZLR 552; (1990 5 CRNZ 638 (CA).}

⁸ R v Varjan CA97/03, 26 June 2003.

[29] On appeal a number of further authorities were referred to by the appellant, which were apparently not before the sentencing Judge. In a number of those cases home detention was ultimately imposed by the Court. I have reviewed those cases but, in my view, none of them provide particularly strong support for the appellant’s submission that Judge Thorburn erred in imposing a sentence of imprisonment.

[30] Brown v New Zealand Police⁹ involved the fraudulent obtaining of loans. The behaviour was not directed towards the public at large or vulnerable individual, but a single financial institution. Further, Mr Brown was not motivated by greed or personal interest, but rather a misguided concern to ensure that the original lending institution did not suffer loss. He made no personal benefit and had taken significant steps to minimise the loss to the lender, with the likely outcome that no loss would result. Such facts are far removed from the present case.

[31] Similarly, Garnett v R¹⁰ is of no assistance as the facts of that case (involving a mother of two very young children, one of whom had very serious health issues) are far removed from this one. Indeed the Court of Appeal noted in its decision that “the very real difficulties in relation to the children put this case very much in a category of its own”.¹¹

[32] The facts of Ransom v R¹²are also very different to this case. That was a benefit fraud case and accordingly did not involve the exploitation of vulnerable victims in the way that this case does. Further, the Court of Appeal expressly noted that a significant factor in their decision to allow the appeal and substitute a sentence of home detention was their concern of the impact of Mrs Ransom’s imprisonment on her six year old child, who had considerable difficulties of his own, which had

_{been exacerbated by his mother’s absence from the family home.}

⁹ _{Brown v New Zealand Police HC Whangarei CRI-2011-488-000027, 12 May 2011.}

¹⁰ _{Garnett v R [2010] NZCA 173.}

¹¹ _{At [37].}

¹² Ransom v R [2010] NZCA 390, (2010) 25 CRNZ 163.

[33] Counsel for Mr Cooper also relied on the recent decision of R v Kumar¹³ in which Judge R Collins sentenced Mr Kumar to 12 months’ home detention in relation to various charges of mortgage fraud on the Bank of New Zealand. That case bears a number of similarities to the present one, in that innocent parties were duped into purchasing properties at ramped up prices. From a starting point of three years Mr Kumar was given credit of three months for being a first offender (unlike Mr Cooper who has two historic dishonesty convictions), having health issues and rehabilitation prospects. A further four month discount was allowed for co-operation with authorities, then a seven month guilty plea discount, which brought the sentence down to 22 months. The Judge noted that “had that additional four month discount not been available to you, I would have unquestionably have sent you to jail”. There is no real analysis of why home detention was ultimately chosen as the preferred option, other than the following comment:

But as the Court of Appeal has said on many occasions, home detention is a significant penalty and should in no way be seen as a soft option.

[34] R v Kumar appears to have been very much on the cusp between home detention and a short term of imprisonment. The sentencing followed an earlier sentence indication. It appears from the Judge’s sentencing notes that he possibly may not have had full details of the offending available to him at the time of his original sentence indication. Certainly the sentence indication (and accordingly the ultimate sentence) appears to have been at the lenient end of the spectrum of cases that have been put before me. I also note that the Judge acknowledged at the time of sentencing that he “may well have been in error in adopting a three year starting point”. (The SFO had argued for a starting point of four years). Ultimately, however, each case turns on its own facts and sentencing is not an exact science.

[35] Finally, counsel for Mr Cooper relied, as he had in the District Court, on R v Nandan¹⁴ and the District Court decision of Jarvis v R. Nandan pre-dates the availability of home detention and there is accordingly no discussion of the relative merits of home detention as opposed to a short term of imprisonment. The primary

_{focus of the case was in adjusting Mr Nandan’s sentence to reflect parity of}

¹³ _{R v Kumar DC Auckland CRI-2013-092-005585, 2 April 2014.}

¹⁴ R v Nandan CA 136/98, 2 September 1998.

sentencing as between co-offenders. Jarvis v R involved the sentencing of a person who had sold Blue Chip investment products. The sentencing Judge considered that the principles of deterrence and denunciation would be adequately met by a sentence of home detention on the facts of that case. I note, however, that Ms Jarvis’s culpability appears to have been significantly less than that of Mr Cooper. The

Judge noted that:¹⁵

But, I wish to make it very, very clear that I am not sentencing you as the front person, or the face, of Blue Chip or Blue Chip Southland or whatever else it was called; you are not those persons. You were simply a low ground salesperson for a local organisation.

[36] Mr Cooper, on the other hand, was the “mastermind” behind the mortgage fraud scheme in this case, not just a low level salesperson of a fraudulent product developed and designed by someone else.

[37] I have considered the cases relied on by Mr Cooper (most of which were not before the sentencing Judge) in some detail. The respondent referred to a similar number of cases where the sentencing judge had exercised his or her sentencing discretion by imposing a short term sentence of imprisonment rather than home detention.¹⁶ I do not propose to traverse them in any detail. I accept the respondent’s submission that the practical reality is that, for every case where home detention has been imposed for this type of offending, it is possible to find another case where the Court has imposed a short term sentence of imprisonment rather than

home detention.

[38] As will be apparent from my brief review of the cases relied on by the appellant, the cases are all highly fact specific and this is reflected in the sentencing outcomes. The issue of whether to impose a sentence of home detention or a short term of imprisonment is often finely balanced. Some cases fall on one side of the

_{scale and some fall on the other.}

¹⁵ _{At [2].}

¹⁶ By way of recent example, see Huirua v Min of Economic Development [2013] NZHC 2785; J v R [2014] NZCA 63; Pou Ferguson v R [2014] 36; Kumar v R [2014] NZHC 146; Adams v Police [2014] NZHC 42.

Personal circumstances

[39] Mr Cooper submitted that an additional factor in support of home detention in his case is that his wife has health issues. He provided an updated affidavit from her (sworn 9 April 2014) in which she deposes that she is on a waiting list for ankle surgery, which will hopefully take place in the next few months. Due to the impact of related medical issues she is likely to be in a wheel chair for three to four months following surgery and will need to rely on Mr Cooper for support during this period.

Conclusion on home detention

[40] In my view the sentencing Judge was entitled to conclude that the seriousness of Mr Cooper’s offending was such that a sentence of home detention would not adequately reflect the need for denunciation and deterrence. A conclusion that a short term of imprisonment was appropriate in all the circumstances was well within the scope of the Judge’s sentencing discretion.

[41] The Judge was correct to identify that denunciation and deterrence are important factors in this type of offending, particularly where the victims are vulnerable and commercially naïve members of the public who were effectively conned into becoming involved in purchasing properties, at inflated prices, that they simply could not afford.

[42] The updated information regarding the health issues of Mr Cooper’s wife is not sufficient to tip the balance in favour of home detention. In relatively rare cases (such as Garnett and Ransom, which I have discussed above) personal circumstances can result in a sentence of home detention being imposed when imprisonment would otherwise be the appropriate sentencing outcome. This is not such a case. The sentencing Judge concluded that personal circumstances in this case do not outweigh the seriousness of the offending and the requirements for deterrence and denunciation. The updated information that has been provided does not cause me to reach a different view.

[43] As Mr Cooper has established no error in the exercise of the Judge’s

discretion, the sentence of imprisonment must stand.

Result

[44] The appeal is dismissed. As a result, it is now necessary for Mr Cooper to commence his sentence of imprisonment. His bail will continue on its current terms until 12 noon tomorrow, 17 April 2014, by which time Mr Cooper is to surrender

_{himself to the Registrar of this Court for transfer to prison.}

Katz J