Fraud offences in New South Wales

[19-930] Introduction
[19-940] Purposes of punishment — deterrent sentences
[19-950] Unhelpful to generalise about white collar crime
[19-960] Limited utility of statistics and schedules
[19-970] Objective seriousness — factors of universal application to fraud
1. Amount of money involved
2. Length of time over which the offences are committed
3. Motive
4. Degree of planning
5. Breach of trust
[19-980] Section 21A Crimes (Sentencing Procedure) Act 1999 and fraud offences
[19-990] Aggravating factors
Breach of trust under s 21A(2)(k)
Class of victims under s 21A(2)(l)
Multiple victims or a series of criminal acts under s 21A(2)(m)
Part of a planned or organised criminal activity under s 21A(2)(n)
The offence was committed for financial gain under 21A(2)(o)
[20-000] Mitigating factors
Mental condition
Absence of criminal record under s 21A(3)(e) and prior good character under s 21A(3)(f)
Remorse demonstrated by making reparation of loss under s 21A(3)(i)
Guilty plea under s 21A(3)(k)
Delay
Hardship to third parties
[20-010] The relevance of a gambling addiction
[20-020] Totality
[20-030] Special circumstances: Corbett’s case
[20-040] Commonly prosecuted fraud offences under previous statutory scheme
[20-050] Obtain money or valuable thing by deception — s 178BA Crimes Act 1900 (repealed)
Credit card fraud
[20-060] Make or use false instrument — s 300 Crimes Act 1900 (repealed)
[20-080] Fraudulently misappropriate money collected/received — s 178A Crimes Act 1900 (repealed)
[20-090] Obtain money etc by false or misleading statements — s 178BB Crimes Act 1900 (repealed)
[20-100] Directors etc cheating or defrauding — s 176A Crimes Act 1900 (repealed)
[20-105] Larceny by clerk or servant — s 156 Crimes Act 1900
[20-110] Crimes Amendment (Fraud, Identity and Forgery Offences) Act 2009
Fraud offences (ss 192E, 192F, 192G)
Identity crime offences
Forgery offences
Additional references

To top [19-930] Introduction

There is a range of fraud offences found in the Crimes Act 1900. The Crimes Amendment (Fraud, Identity and Forgery Offences) Act 2009 (repealed) amended the Crimes Act by repealing a number of provisions relating to fraud and forgery, replacing them with new fraud and forgery provisions, and inserting offences concerning identity crime. It commenced on 22 February 2010.

The amending Act, in Sch 2, repealed the various fraud and forgery offences created by ss 158, 164-178, 178A, 178B, 178BA, 178BB, 178C, 179-185, 185A, 186, 527, 527A, 527B, 528, 545A and 547A Crimes Act.

Schedule 1[3] inserted Pts 4AA and 4AB after s 193 Crimes Act (re-numbered s 192A by Sch 2 of the amending Act). Part 4AA contains the fraud offences and Pt 4AB contains the identity fraud offences. (See description of the new offences below in “Crimes Amendment (Fraud, Identity and Forgery Offences) Act 2009” at [20-110].) The amendments are said to bring NSW more in line with the national approach to fraud, forgery and identity crimes offences as the offences are modelled on the Model Criminal Code.

The following table extracted from R Johns, Sentencing in fraud cases, Research Monograph 37, Judicial Commission of NSW, 2012, p 5 compares the new fraud and forgery offences with selected corresponding repealed offences, and shows the identity offences inserted by the amending Act. None of the offences attract a standard non-parole period.

All offences under Pts 4AA, 4AB and 5 of the Crimes Act are to dealt with summarily unless elected otherwise: Sch 1, Table 1 Criminal Procedure Act 1986. When dealt with summarily in the Local Court the jurisdictional maximum of 2 years applies: s 267(2) Criminal Procedure Act. The total term of consecutive or partly consecutive sentences cannot exceed 5 years: s 58 Crimes (Sentencing Procedure) Act.

Crimes Act 1900
New offences Selected corresponding repealed offences
Section Offence Max penalty (yrs) Section Offence Max penalty (yrs)
Pt 4AA (Fraud)
s 192E(1)(a) Obtain property belonging to another by deception 10 s 179 Obtain property by false pretences 5
s 178A Fraudulent misappropriation 7
s 184 Fraudulent 7
s 176A Director cheat or defraud 10
s 192E(1)(b) Obtain financial advantage or cause financial advantage by deception 10 s 178BA Obtain money by deception 5
s 178C Obtain credit by fraud 1
s 178A Fraudulent misappropriation 7
s 184 Fraudulent personation 7
s 176A Director cheat or defraud 10
s 192F(1) Intention to defraud by destroying or concealing accounting records 5 s 174 Director or officer wilfully omit to make entry in records of property received 10
s 175 Director or officer wilfully destroy, alter, etc, records of company 10
s 192G Intention to defraud by false or misleading statement 5 s 178BB Obtain money by false or misleading statement 5
s 192H(1) Intention to deceive members or creditors by false or misleading statement of officer of organisation 7 s 176 Director or officer publish false statement 10
Pt 4AB (Identity)
s 192J Deal with identification information with intent to commit or facilitate indictable offence 10 N/A
s 192K Possess identification information with intent to commit or facilitate indictable offence 7 N/A
s 192L Possess equipment to make identification document or thing with intent to commit or facilitate indictable offence 3 N/A
Pt 5 (Forgery)
s 253 Make false document 10 s 300(1) Make false instrument 10
s 271 Forge will 14
s 265 Forge bank note 14
s 254 Use false document 10 s 300(2) Use false instrument 10
s 255 Possess false document 10 s 302 Custody of false instrument 10
s 256(1) Make or possess equipment for making false document with intent to commit forgery 10 s 302A Make or possess implement for making false instrument 10

Like all other areas of sentencing, the starting point in determining an appropriate sentence for a given fraud offence is its elements, the statutory maximum and other relevant sentencing considerations including aggravating and mitigating circumstances of the crime. The Table of standard non-parole period offences found in s 54D Crimes (Sentencing Procedure) Act 1999 does not contain any fraud offences.

McCallum J said in R v Curtis (No 3) [2016] NSWSC 866 at [24] with reference to R v Rivkin (2004) 59 NSWLR 284; (2004) 184 FLR 365 at [412]; R v De Silva [2011] NSWSC 243 at [52]–[53], [55]; R v Xiao [2016] NSWSC 240 at [90]; R v Joffe & Stromer [2015] NSWSC 741; 106 ASCR 525 at [97]; Khoo v R (2013) 237 A Crim R 221 at [10], [12] and [64]; Hartman v R [2011] NSWCCA 261 at [94]:

It is well established that it is wrong to regard white-collar crime as victimless. It causes loss (albeit unquantifiable) to individual traders and it causes harm to the community at large by damaging the integrity of the market as a level playing field.

To top [19-940] Purposes of punishment — deterrent sentences

Section 3A(b) Crimes (Sentencing Procedure) Act 1999 provides that one of the purposes of sentencing is to prevent crime by deterring the offender and other persons from committing similar offences. The courts have consistently held that general deterrence is a particularly important sentencing factor for fraud offences. Such crimes frequently involve a serious breach of trust and are usually only able to be committed because of the previous good character of the person who has been placed in the position of trust: Gleeson CJ in R v El-Rashid (unrep, 7/4/95, NSWCCA). Both personal and general deterrence are of particular significance for the offences which involve the systematic exploitation of the electronic banking system: Stevens v R [2009] NSWCCA 260 at [79].

Where the offence involves a breach of trust by an employee, particularly involving large or substantial sums, systematic dishonesty with planning and some sophistication, unless there are special features present, general deterrence requires that there be substantial sentences of imprisonment imposed: R v Pont (2000) 121 A Crim R 302 at [36]–[43] and the cases cited therein. It was said the imposition of periodic detention had an inbuilt leniency compared with the severity of a full time custodial sentence, and did not adequately reflect the element of general deterrence: R v Halabi (unrep, 17/2/92, NSWCCA); R v Todorovic [2008] NSWCCA 49 at [20]. In R v Mungomery (2004) 151 A Crim R 376, a case involving three counts of defrauding a company under s 176A Crimes Act 1900, Hulme J said at [41]:

The cases in this area also stress the importance of general deterrence. Organisations, be they business or government, cannot operate effectively without placing a good deal of trust in their employees. Opportunities for the abuse of that trust are legion and breaches are often difficult to detect. Commonly, offenders are able to continue their depredations for long periods. Often matters only come to light when the total amounts involved become too large to be overlooked. It seems to me an inevitable inference that there must be many cases where offending is never discovered — a factor also arguing for sentences which are substantial deterrents.

The difficulty in detecting and successfully prosecuting white-collar crime is also a reason why general deterrence is important: R v Wall (2002) 71 NSWLR 692 at [89]; applied in R v Donald [2013] NSWCCA 238 at [41]. In McMahon v R [2011] NSWCCA 147 Hoeben J (Hodgson JA and Grove AJ agreeing) noted that the:

community now views white collar crime very seriously, having regard to the fact that it is easy to commit and difficult and expensive to track down: at [83].

More recent authorities have held that in serious cases of white-collar crime, the purposes of punishment are best met by way of the imposition of full-time imprisonment rather than an intensive correction order: R v Hinchliffe [2013] NSWCCA 327 at [279]; R v Glynatsis (2013) 230 A Crim R 99 at [73]–[76].

McCallum J said in R v Curtis (No 3) [2016] NSWSC 866 at [51]:

punishment by a sentence of imprisonment has real bite as a deterrent to others in the case of white-collar crime. White-collar crime is a field in which, perhaps more than any other, offending is often a choice freely made by well-educated people from privileged backgrounds, prompted by greed rather than the more pernicious influences of poverty, mental illness or addiction that grip other communities. The threat of being sent to gaol, provided it is perceived as a real threat and not one judges will hesitate to enforce, is likely to operate as a powerful deterrent to men and women of business.

The weight of that factor is appropriately informed by the relative prevalence and detectability of the offence.

See further Intensive correction orders (ICOs) at [3-600]ff.

To top [19-950] Unhelpful to generalise about white collar crime

Care must be taken when applying general principles in relation to “white collar crime” offences. In R v Brown (unrep, 1/8/94, NSWCCA) Simpson J said:

white collar crime itself is so various in its manifestations and nature that it is scarcely susceptible of precise definition or of defined sentencing principles. I do not read the cases cited as laying down any proposition of the inevitability of a full-time prison sentence in any case which could be brought within the description of “white collar crime.

Hunt CJ at CL agreed with Simpson J and stated:

I do not accept that it is appropriate to lay down any rule that, in all cases of serious white collar crime, a sentence other than a full-time custodial one by itself demonstrates error requiring a Crown appeal to be upheld. There is a wide range in the nature of white collar crimes and necessarily a wide range in the nature of the appropriate sentences to be imposed.

Brown was applied in R v Boland (unrep, 13/10/98, NSWCCA) where Stein JA said: “It is trite that there is no rule that in all cases of serious white collar crime a sentence other than a full time custodian one is inapposite”.

To top [19-960] Limited utility of statistics and schedules

See generally the discussion at [10-010]ff.

In R v Woodman [2001] NSWCCA 310, (a two-judge bench decision) Wood CJ at CL stated that in sentencing offenders in relation to fraud offences, far greater assistance is gained from general sentencing principles rather than by reference to statistics or “schedules of fraud appeals” because of the enormous variation in objective and subjective circumstances involved: [22], [24]–[25]. Woodman was applied in R v Martin [2005] NSWCCA 190 where Johnson J said at [56]:

This Court has observed that reference to sentencing statistics is of limited value in the case of fraud offences, given the enormous variation in objective and subjective circumstances involved, and the Court has expressed concern when an attempt is made to compare sentences for a specific offence of dishonesty with other cases involving dishonesty of a different kind: R v Hawker [2001] NSWCCA 148 at paragraphs 17-18; Woodman at paragraphs 22-24; R v Swadling [2004] NSWCCA 421 at paragraphs 29, 54. In each of those cases, the Court has emphasised that far greater assistance is derived from reference to general sentencing principles with respect to white-collar crime.

The dangers of comparative sentencing for fraud cases was also discussed in R v Hawker [2001] NSWCCA 148 where Wood CJ at CL said:

There is a danger in endeavouring to extract a “range” from a limited group of decisions on appeal, or from sentencing statistics. Some of the cases here selected by the applicant were Crown appeals in which the principle of double jeopardy or that relating to special discretion attaching to Crown appeals, were applicable. Others were cases involving quite different objective and subjective considerations, as well as differing sums of money. Some involved offenders such as solicitors or others holding fiduciary office or positions of trust, and others of which involved employees of no great seniority. In some instances, the offences were relatively simple and of short duration, and in other cases they were complex and prolonged.

The need for care in attempting any such comparison as that suggested here was recently underlined by Spigelman C J in Slater [2001] NSWCCA 65 at paras 50–52.

In my view, greater assistance is to be derived by reference to general sentencing policy which has seen something of a hardening attitude to white collar crime in view of its difficulty of detection, and in view of the fact that its impact may fall upon a wider group of investors or creditors: Pont [2000] NSWCCA 419.

More recently in Scanlan v R [2006] NSWCCA 238, a case involving four counts of obtaining money by deception under s 178BA totalling over $396,000, Hoeben J said at [93]: “In offences of this kind statistics are of only limited value. Each offence has to be assessed on the basis of its own particular circumstances”.

See also Tweedie v R [2015] NSWCCA 71, where the applicant committed, inter alia, 27 offences under s 192E and the court said at [45]:

the database relied upon in relation to the fraud offences contained only five cases of sentencing in the District Court or resentencing in this Court which makes the statistics of no use at all.

See generally Use of information about sentences in other cases at [10-022] and Use of sentencing statistics — Hili v The Queen at [10-024].

To top [19-970] Objective seriousness — factors of universal application to fraud

The objective seriousness of a fraud offence is assessed by reference to the elements of the offence and the statutory maximum. The statutory maximum penalty acts as a “legislative guidepost” which the court is to take into account in determining the appropriate sentence for the offence: Muldrock v The Queen (2011) 244 CLR 120 at [27]. Although sentencing for fraud should not be approached in a formulaic manner, the courts have recognised several factors that bear generally upon the objective seriousness of a given offence. The interplay of these factors help to place the offence on the spectrum of like offences, bearing in mind the maximum penalty is to be reserved for cases which are in the worst category. The following features have been identified as influencing the assessment of the gravity of the crime:

1. 

The amount of money involved (R v Hawkins (1989) 45 A Crim R 430, R v Mungomery (2004) 151 A Crim R 376 at [40], R v Woodman [2001] NSWCCA 310, R v Finnie [2002] NSWCCA 533 at [59]) and whether the loss is irretrievable: R v Todorovic [2008] NSWCCA 49 at [19].

2. 

The length of time over which the offences are committed: R v Pont (2000) 121 A Crim R 302 at [74], [75], R v Mungomery (2004) 151 A Crim R 376 at [40].

3. 

The motive for the crime: R v Mears (1991) 53 A Crim R 141 at 145, R v Hill [2004] NSWCCA 257 at [6], R v Woodman [2001] NSWCCA 310 at [29].

4. 

The degree of planning and sophistication: R v Mille (unrep, 1/5/98, NSWCCA), R v Pont (2000) 121 A Crim R 302 at [43]–[44], R v Murtaza [2001] NSWCCA 336 at [15], Stevens v R [2009] NSWCCA 260 at [59], [78].

5. 

An accompanying breach of trust: R v El-Rashid (unrep, 7/4/95, NSWCCA), R v Pont (2000) 121 A Crim R 302, R v Hawkins (1989) 45 A Crim R 430.

The courts have also regarded the impact on public confidence: R v Pont (2000) 121 A Crim R 302 at [74], [75] and the impact on the victim: R v Pont at [74], [75] as relevant matters.

Factors 1–5 above are discussed in greater detail below.

1. Amount of money involved

The amounts of money involved in premeditated deception cases is a significant consideration in assessing the objective seriousness of the offence because it indicates the extent to which the prisoner is prepared to be “dishonest and to flout the law and to advance whatever are his own purposes”: R v Hawkins (1989) 45 A Crim R 430 at 435.

In R v Mungomery (2004) 151 A Crim R 376 Hulme J said at [40]:

authority makes it clear that the amount of money involved in premeditated deception is an important, and the period of time over which offences are committed a relevant, factor in determining the extent of criminality — see Hawkins (1989) 45 A Crim R 430, R v Mears (unrep, 14/3/91, NSWCCA), referred to by Wood CJ at CL and Sperling J in R v Woodman [2001] NSWCCA 310.

In R v Howard (unrep, 28/3/95, NSWCCA), the offender defrauded a total of $6,500 over a four year period. The court held that the offender was entitled to the benefit of the fact that the amounts subject of the charges were relatively small. However, in R v Finnie [2002] NSWCCA 533 at [59] it was held that although the amount of money defrauded is not determinative of the seriousness of the offence it “is relevant to a degree and particularly where the offences are premeditated, committed on a number of separate occasions and involve a degree of planning, and are for substantial amounts of money”.

Adams J said in Marinellis v R [2006] NSWCCA 307 at [34] that the fact that no actual loss has been incurred is a matter which reduces the objective seriousness of the crime(s). The proposition was not endorsed by McColl JA and Latham J.

In Stevens v R [2009] NSWCCA 260, although $209,182 of the $402,935 defrauded was recovered, the court noted that “the applicant’s criminality was not dependent upon whether the banks had been successful in retrieving any part of the money”; it was the amount fraudulently obtained that was to be reflected in the seriousness of the offences: at [69]. However, in Whiley v R [2014] NSWCCA 164, Adams J (Bathurst CJ and Hoeben CJ at CL agreeing) held that the undamaged return of vehicles obtained by deception significantly reduced the objective seriousness of the offences as “the extent of the loss … [is] the most significant … measure”: at [39].

In the case of a Ponzi scheme, the precise calculation of the scale and amount of the fraud is less significant than the brazen and continued conduct: Fasciale v R (2010) 207 A Crim R 488, endorsed in Finnigan v R (2013) 233 A Crim R 381 at [31]. In Finnigan, Campbell J (Macfarlan JA and Barr AJ agreeing) held that it “matters little” whether a victim was robbed of $300,000 or $500,000, in the overall context of a Ponzi scheme causing losses of $1.96 million to eight “mum and dad investors” over four years. That the effect on each victim was ruinous was more compelling than precise calculation of the amount involved: at [32].

Similarly, the value of individual transactions constituting individual counts becomes of lesser importance as the pattern of offending is more blatant, frequent and entrenched: Tweedie v R [2015] NSWCCA 71 at [31], where the offending in question was a systematic, frequent and fraudulent use of stolen credit cards.

2. Length of time over which the offences are committed

The length of time over which the offences are committed is a relevant factor in determining the level of criminality involved. The length of time can also be relevant to indicate the degree of planning and to show it was not an impulsive offence: R v Mears (1991) 53 A Crim R 141 at 145; R v Woodman [2001] NSWCCA 310 at [29] (two-judge bench); R v Murtaza [2001] NSWCCA 336 at [15].

In addition, where an offence is committed over a significant period of time this may ameliorate the weight that may be afforded to good character: Luong v R [2014] NSWCCA 129 at [21].

3. Motive

The motive for committing the offence will be a relevant factor when assessing the criminality: R v Mears (1991) 53 A Crim R 141 at 145. If the fraud is based on greed rather than need the sentence imposed should be longer: see R v Medina (unrep, 28/5/90, NSWCCA); R v Mears (1991) 53 A Crim R 141 at 145. However, the fact an offence is committed for a motive other than personal greed is not to be considered a matter of mitigation: Khoo v R (2013) 237 A Crim R 221 at [78].

4. Degree of planning

Offences committed on impulse have been distinguished from offences where there has been planning with a degree of sophistication: R v Mille (unrep, 1/5/98, NSWCCA), R v Pont (2000) 121 A Crim R 302 at [43]–[44]; R v Murtaza [2001] NSWCCA 336 at [15]. The fact that the offence was part of a planned or organised activity is an aggravating factor to be taken into account under s 21A(2)(n) Crimes (Sentencing Procedure) Act 1999: see Aggravating factors at [19-990] below.

5. Breach of trust

Breach of trust can be relevant where it is an element of the offence (for example, s 172 Crimes Act 1900), or as a key feature of aggravation: R v Pont (2000) 121 A Crim R 302 at [43]–[44], R v Murtaza [2001] NSWCCA 336 at [15]. The fact that the offence involved a breach of trust is an aggravating factor to be taken into account under s 21A(2)(k) Crimes (Sentencing Procedure) Act 1999: see Aggravating factors at [19-990] below.

What is a breach of trust? The breach of trust must be in direct contravention of what the offender was engaged to do: R v Stanbouli (2003) 141 A Crim R 531 at [35]. Hulme J said at [34]:

The cases where, traditionally, breach of trust has been regarded as exacerbating criminality are where it is the victim of the offence who has imposed that trust — an employer defrauded by his employee, a solicitor who appropriates trust funds to his own use — or where the criminality involves a breach of that which the offender was engaged or undertook to do, e.g. a teacher or baby-sitter who indecently deals with the subject of his or her charge.

General statements about breach of trust

In cases of serious white collar crime involving a breach of trust by a solicitor or another professional person standing in a similar position of trust, a full-time custodial sentence will be imposed, except in cases where there is some unusual feature: R v Boland (unrep, 13/10/98, NSWCCA); R v Pantano (1990) 49 A Crim R 328. Those placed in a special position of trust by the law and the community, such as solicitors and other professionals, who abuse that trust, call their profession into question and merit sentences calculated to ensure that other professionals will be left in no doubt that serious consequences will follow: Pont at [47].

Where the breach of trust is an element of the offence, it is not to be taken into account additionally as an aggravating factor: R v Martin [2005] NSWCCA 190 at [40] and see Aggravating factors at [19-990] below.

In R v Pantano (1990) 49 A Crim R 328, Wood J (with whom Carruthers J agreed) said at 330:

those involved in serious white collar crime must expect condign sentences. The commercial world expects executives and employees in positions of trust, no matter how young they may be, to conform to exacting standards of honesty. It is impossible to be unmindful of the difficulty of detecting sophisticated crime of the kind here involved, or of the possibility for substantial financial loss by the public. Executives and trusted employees who give way to temptation cannot pass the blame to lax security on the part of management. The element of general deterrence is an important element of sentencing for such offences.

Professionals
Legal practitioners

In the two-judge bench decision of Marvin v R (unrep, 1/11/95, NSWCCA), the offender, a solicitor, was convicted of forty-one counts of fraudulent misappropriation of funds contrary to s 178A Crimes Act 1900, and two counts of making and the using of a false instrument contrary to ss 300(1) and 300(2) Crimes Act 1900. Sully J said:

Any solicitor who misappropriates clients’ funds for whatever reason, great or small, arguably good or arguably bad, commits a serious offence, not only in terms of contravening the relevant particular provisions of the Crimes Act, but in terms of the betrayal of public trust and confidence which such behaviour represents. It is appropriate to say simply that that must always be regarded by the Courts, of all institutions, as serious conduct meriting in any but the most exceptional cases, a custodial sentence.

Marvin was cited with approval in R v Houlton (2000) 115 A Crim R 104 at [25]. The court in R v Smith (2000) 114 A Crim R 8 at [16] endorsed the sentencing judge’s observation that “It is necessary for the court to impose significant penalties as a lesson to other legal professionals … in a position of trust [so] that this kind of misconduct will not be tolerated”.

In Houlton, the respondent, a solicitor, pleaded guilty to five counts of fraudulent misappropriation totalling $347,000 under s 178A Crimes Act 1900, including 80 offences on a Form 1. His appeal against the three-year period detention sentence was dismissed. R v Hawkins (1989) 45 A Crim R 430 at 436 involved misappropriation of $6.6 million from clients and a company by a solicitor over a three and a half year period. Following a Crown appeal, the offender was resentenced to ten years with a balance of term of five years. Assi v R [2006] NSWCCA 257 involved fraudulent misappropriation and obtaining money by deception by a solicitor: ss 178A, 178BA. Following an appeal the offender was sentenced to a term of sentence of seven years and six months with a non-parole period of four years and six months.

The fact that the offender will be struck off the roll of solicitors can be to be taken into account as a matter of extra-curial punishment: Oudomvilay v R [2006] NSWCCA 275 at [19].

Accountants

In R v Sellen (unrep, 5/12/91, NSWCCA) the offender, a chartered accountant, fraudulently misappropriated $1.25 million of his client’s funds over a five year period. Following an appeal the offender was resentenced to five years imprisonment with a balance of term of three years.

Directors

R v Houghton [2000] NSWCCA 62 involved a company director fraudulently applying company property. He was convicted for 26 counts under s 173 Crimes Act 1900. Following his appeal his effective sentence was confirmed as a non-parole period of 18 months with a balance of term of six months. Barr J (Fitzgerald JA and Abadee J agreeing) said at [19]: “sentences imposed for offences involving such serious and persistent breaches of trust must be sufficient to deter others from offending, not least because they are so difficult to detect”.

R v Law (unrep, 7/10/93, NSWCCA) involved an offence under s 176A Crimes Act 1900 where the offender, a company director, defrauded clients and insurers of $180,000. His appeal against his sentence of two years and six months with a balance of term of 18 months was dismissed. After referring to the principles governing breaches of trust in white collar crime cases, including R v Pantano (1990) 49 A Crim R 328 and R v Halabi (unrep, 17/2/92, NSWCCA), Carruthers J said “the objective circumstances were of such seriousness that despite the subjective circumstances a lengthy custodial sentence was inevitable”.

Other professionals

Coles v R [2016] NSWCCA 32 involved a leading art dealer who sold $8 million worth of artworks to investors who were unaware the paintings had already been on-sold, or belonged, to others. The sentencing judge regarded the offending as “a brazen breach” of the trust his clients had reposed in him: at [13].

Senior employees

Positions of seniority in a company make it easier to cover tracks and discourage scrutiny and detection. The obligation to uphold the trust of employers in their employees and to deter breaches of such trust by senior employees means that the courts frequently respond to offences committed by senior employees with the imposition of a custodial sentence: R v Scott (unrep, 7/11/91, NSWCCA). This case involved a senior employee but a very small amount of money and a custodial sentence was imposed on the offender, however on appeal a sentence of periodic detention was imposed to preserve parity with the sentence imposed on the offender’s wife.

The court in R v Pantano (1990) 49 A Crim R 328 at 338 explained the different positions of employees and senior executives in sentencing for fraud offences:

Although it is difficult to generalise and each case must be taken on its merits, the cases in which a subordinate employee guilty of serious dishonesty should receive a sentence of the same order as a senior executive are likely to be relatively few. This is because of the control exercised by the senior executive, his greater ability to defer and perhaps avoid detection, his grosser breach of trust by reason of has senior position, his greater duties and greater responsibility.

Bank employees

The courts have regarded offences committed by bank employees as a “grave breach” of trust: R v Cornell [2015] NSWCCA 258 at [135]. Under the previous fraud statutory scheme it was held that, where there is a substantial fraud by a bank employee, generally a custodial sentence is normally required to deter others unless there are special circumstances: R v Chaloner (1990) 49 A Crim R 370 at 375. See also R v Halabi (unrep, 17/2/92, NSWCCA); R v Phelan (1993) 66 A Crim R 446; R v El-Rashid (unrep, 7/4/95, NSWCCA).

Employees other than professionals

In the case of employees other than professionals the court in Pont said at [76]:

Whilst it seems clear that there is such a principle as would require imprisonment in the absence of exceptional circumstances of defalcating professionals or others, eg., company directors, whose crimes are of considerable extent and wide effect, I am unable to conclude that there is a useful statement of such a principle of general applicability in cases where persons are in a position of trust, the position of trust arising out of an employer/employee relationship. Expressions of the necessity for general deterrence and condign punishment are of limited utility to define the appropriate nature of the sanction to be employed in such circumstances.

Nursing home operators

Fraud committed by nursing home proprietors, particularly making claims for work not performed (ghosting), should be regarded as the most serious fraud in the community. Such offences are committed against frail aged persons who are often not in a position to complain against dishonesty: R v Boian and Carter (1997) 96 A Crim R 582. Ghosting was held to be an aggravating feature taken into account in R v Giallussi [1999] NSWCCA 56 at [15].

To top [19-980] Section 21A Crimes (Sentencing Procedure) Act 1999 and fraud offences

Section 21A Crimes (Sentencing Procedure) Act 1999 sets out the aggravating and mitigating features which are to be considered, in addition to any other matters that are required or permitted to be taken into account by the court under any Act or rule of law, in determining an appropriate sentence to be imposed. Sentencers should make clear how they have taken an aggravating or mitigating feature into account under s 21A(2) to avoid double counting: R v Dougan (2006) 160 A Crim R 135 at [30]. Factors which are elements integral to the offence are not to be taken, of themselves, as aggravating features under s 21A(2) Crimes (Sentencing Procedure) Act 1999. For example, an offence under s 172 Crimes Act 1900 includes the abuse of a position of trust as an element of the offence. While mention of this abuse is permissible in respect of characterising the objective gravity of the offence, to pay “additional regard” under s 21A is impermissible “double counting” of an aggravating feature: R v Wickham [2004] NSWCCA 193 at [22]–[23]; R v Martin [2005] NSWCCA 190 at [41]–[42].

To top [19-990] Aggravating factors

Breach of trust under s 21A(2)(k)

A judge can only have “additional regard” to the abuse of a position of trust as an aggravating factor under s 21A(2)(k) Crimes (Sentencing Procedure) Act 1999 where the breach of trust is not an element of the offence. In R v Martin [2005] NSWCCA 190 the judge was found to err by having “additional regard” to s 21A(2)(k). The fraud offence the offender was convicted of (trustee fraudulently disposing of property under s 172 Crimes Act 1900) already involved the aggravating feature of “abuse of authority or a position of trust” as an element of the offence. While mention of this abuse is permissible in respect of characterising the objective gravity of the offence, to pay “additional regard” under s 21A is impermissible “double counting” of an aggravating feature: R v Wickham [2004] NSWCCA 193 at [22]–[23] applied.

In Martin the court said at [40]:

With respect to general fraud or dishonesty offences, where breach of trust is not an essential element of the offence, common law sentencing principles have recognised that abuse of a position of trust, where it exists on the facts of a particular case, is an aggravating factor on sentence. Examples of this include the following:

(a) 

larceny as a servant contrary to s 156 Crimes Act 1900 by a senior accounts clerk: R v Pantano (1990) 49 A Crim R 328 at 330;

(b) 

fraudulently omitting to account contrary to s 178A Crimes Act 1900 by a real estate agent: R v Woodman [2001] NSWCCA 310 at paragraphs 14-15;

(c) 

making false accounting entries contrary to s 158 Crimes Act 1900 and using a false instrument to the prejudice of another contrary to s 300 Crimes Act 1900 by a bank employee: R v El-Rashid (CCA(NSW), 7 April 1995, BC9504681 at page 4;

(d) 

defrauding the Commonwealth Bank contrary to s 29D Crimes Act 1914 (Cth) by a bank loans manager: R v Chaloner (1990) 49 A Crim R 370 at 375; and

(e) 

offences by a solicitor comprising forging of documents contrary to s 67B Crimes Act 1914 (Cth), defrauding the Commonwealth contrary to s 29D Crimes Act 1914 (Cth), forging and uttering bills and notes contrary to s 273 Crimes Act 1900, fraudulent misappropriation contrary to s 178A Crimes Act 1900: R v Hawkins (1989) 45 A Crim R 430 at 436.

In cases such as these, where breach of trust is not an element of the offence, there is scope for s 21A(2)(k) to permit a court to have “additional regard” to the abuse of a position of trust or authority in relation to the victim as an aggravating factor on sentence. This reflects the position at common law.

In Lu v R [2014] NSWCCA 307, the judge made no error in finding the aggravating factor under s 21A(2)(k) established. Although it was an element of the offence under s 176A Crimes Act 1900 (rep) that the offender be a director of a company, “not all company directors accept other peoples’ money for the purpose of investment”, which was the essence of the position of trust abused in that case: at [21].

The breach of trust must be in direct contravention of what the offender was engaged to do: R v Stanbouli (2003) 141 A Crim R 531 at [35]. In Stanbouli, Hulme J said at [34]:

The cases where, traditionally, breach of trust has been regarded as exacerbating criminality are where it is the victim of the offence who has imposed that trust — an employer defrauded by his employee, a solicitor who appropriates trust funds to his own use — or where the criminality involves a breach of that which the offender was engaged or undertook to do, e.g. a teacher or baby-sitter who indecently deals with the subject of his or her charge.

See also Section 21A Factors at [11-160].

Class of victims under s 21A(2)(l)

Where the victim was vulnerable, for example, because the victim was very young or very old or had a disability, or because of the victim’s occupation (such as a taxi driver, bus driver or other public transport worker, bank teller or service station attendant), s 21A(2)(l) Crimes (Sentencing Procedure) Act 1999 will be relevant. The aggravating feature under s 21A(2)(l) “the victim was vulnerable” is concerned with the vulnerability of a particular class of victim and is not directed to vulnerability in a general sense: R v Tadrosse (2005) 65 NSWLR 740. In Tadrosse, the general approach taken by the judge to the s 21A factors and the fact it was unclear in his reasons whether any particular factor was present for each offence, made it was impossible to know whether s 21A(2)(l) was applied to all or only some of the offences and if so which ones. The court concluded that there was no evidence that any of the victims fell within the categories under s 21A(2)(l): Tadrosse at [24].

See also Section 21A Factors at [11-170].

Multiple victims or a series of criminal acts under s 21A(2)(m)

The aggravating factor in s 21A(2)(m) Crimes (Sentencing Procedure) Act 1999 is concerned with the situation where a single offence contains a number of allegations of criminal acts that are part of a single course of criminal conduct. A charge of this nature will often be common in cases of fraud or dishonesty against a single victim or multiple instances of supplying drugs over a lengthy period: R v Tadrosse (2005) 65 NSWLR 740 at [28]. In Tadrosse, the sentencing judge erred by taking into account under s 21A(2)(m) that “the offence involved multiple victims or a series of criminal acts”. While there were clearly multiple offences with multiple victims and acts of criminality before the court, the applicant was going to be sentenced for each of them in accordance with the principle of totality: [29].

In R v Kilpatrick (2005) 156 A Crim R 478, the court held that the judge erred in referring to multiple victims in the context of the offences, each of which was individually charged. For s 21A(2)(m) Crimes (Sentencing Procedure) Act 1999 to be relevant it needs to be attached to a particular offence. It is not open to the sentencing judge to use that circumstance as a factor of aggravation where the multiplicity arises in the context of offences, all of which are charged and the subject of individual convictions: Kilpatrick at [17], Tadrosse at [28]–[29]; see also Stratford v R [2007] NSWCCA 279 at [29].

See also Section 21A Factors at [11-180].

Part of a planned or organised criminal activity under s 21A(2)(n)

The fact that the offence involved systematic dishonesty accompanied by planning, sophistication and repetition will aggravate the offence: R v Pont (2000) 121 A Crim R 302 at [43]–[44]. Offences committed on impulse have been distinguished from offences where there has been planning with a degree of sophistication: R v Mille (unrep, 1/5/98, NSWCCA), R v Pont (2000) 121 A Crim R 302 at [43]–[44]; R v Murtaza [2001] NSWCCA 336 at [15].

The aggravating factor was established in Yow v R [2010] NSWCCA 251 as the nine offences of making and using a false instrument were committed in the context of an organised criminal syndicate and the applicant had arrived in Australia with the sole purpose of using the counterfeit credit cards to obtain goods for the purposes of on-sale: at [13]–[14].

See also Section 21A Factors at [11-190].

The offence was committed for financial gain under 21A(2)(o)

This factor may be relevant to fraud offences but care must be taken by sentencers to ensure there is no double counting.

To top [20-000] Mitigating factors

Mental condition

This sentencing factor is discussed in more depth and with reference to High Court decisions at [10-460]. Briefly, mental illness is one of the factors that forms part of the complex interplay of factors relevant to the sentencing process. It may be relevant to the emphasis to be given to specific and general deterrence. It is also a matter which can reduce an offender’s moral culpability by affecting their ability to understand the wrongfulness of their actions, or to make reasonable judgments, or to control faculties and emotions. It is accepted that the nature and severity of the mental illness, may render a custodial penalty more onerous: R v Harb [2001] NSWCCA 249; R v Donald [2013] NSWCCA 238 at [75].

In cases of fraud, care must be taken where an offender has claimed a mental condition and the offence has involved deception over a long period of time. The court must take particular care in determining whether there is a causal connection between the offender’s mental condition and the commission of the offence(s). The following cases provide illustrations.

  • In R v Hinchliffe [2013] NSWCCA 327 the respondent made unauthorised transfers over a one-year period to a company of which he was the sole director. The sentencing judge erred in finding there was a causal connection between the offences and the respondent’s bipolar disorder: at [246]. The respondent did not give evidence at sentence. Over the course of the offending he was functioning in a responsible business position, which he had occupied with apparent success for years prior, and no character witnesses gave evidence to support a finding of any apparent difference in demeanor: R v Hinchliffe at [239].

  • The offender’s narcissistic personality disorder in De Angelis v R [2015] NSWCCA 197 was neither causally connected to the offending nor of sufficient severity to warrant any significant amelioration of sentence: at [62]. The nature of the offending was a vast, deliberate and continuing fraudulent scheme involving (inter alia) perseverance, cunning and intelligence: at [66].

  • In Hartman v R [2011] NSWCCA 261 a nexus was established between the offences and the applicant’s psychiatric condition: Hartman v R at [80]. In that case, the applicant was suffering from a genuine and long term depression spectrum that contributed to his compulsive insider trading. The offending gave him temporary but misguided relief from his major depressive symptoms: Hartman v R at [91]. The applicant’s moral culpability was lessened and some moderation of general deterrence warranted: at [92].

  • Similarly, in R v Donald [2013] NSWCCA 238, the respondent’s bipolar disorder was accepted to have compromised his ability to control his faculties and emotions but did not render him unable to understand the wrongfulness of his actions or to make reasonable judgments. The respondent’s moral culpability was moderately reduced, however there was still a significant role for general deterrence to play: at [76].

  • In R v Joffe & Stromer [2015] NSWSC 741 the offender’s mental condition was “to an extent casually connected” with the offences and thus reduced his moral culpability and the need for denunciation: at [121]. The judge also accepted that he was suffering from anorexia nervosa which would render any custodial sentence more onerous: [121].

Absence of criminal record under s 21A(3)(e) and prior good character under s 21A(3)(f)

Prior good character is a mitigating factor to be taken into account under s 21A(3)(e) and (f). However, in the case of fraud, where the offender has been appointed to a position of trust because of his or her good character, and it is abused, general deterrence will become a major consideration and good character will be of less relevance: R v Gentz [1999] NSWCCA 285 at [12]. In R v El Rashid (unrep, 7/4/95, NSWCCA) Gleeson CJ said:

Considerations of general deterrence are of particular importance in sentencing for crimes of this nature.

Such crimes frequently involve, as in the present case, a serious breach of trust. Such breaches of trust are usually only able to be committed because of the previous good character of the person who has been placed in a position of trust.

Similarly, where there are repeated offences over a period of time, or the offender has engaged in a course of conduct to avoid detection, prior good character will carry less weight: R v Smith (2000) 114 A Crim R 8 at [20]–[24]; R v Phelan (1993) 66 A Crim R 446; R v Houghton [2000] NSWCCA 62 at [18].

An offender’s lack of a previous criminal record will not be accorded the significance it might have had where he or she has committed a large number of offences over a long period of time: R v Chan [2000] NSWCCA 345 at [20] (a two-judge bench decision referred to in a schedule in R v Hare [2007] NSWCCA 303).

See also Section 21A Factors at [11-250].

Remorse demonstrated by making reparation of loss under s 21A(3)(i)

Section 21A(3)(i) Crimes (Sentencing Procedure) Act 1999 provides that remorse demonstrated by making reparation of loss is a factor to be taken into account as a mitigating factor. Remorse will only be relevant as a mitigating factor where the offender has provided evidence that he or she has accepted responsibility for his or her actions, and the offender has acknowledged any injury, loss or damage caused by his or her actions or made reparation for such injury, loss or damage (or both).

See also Section 21A Factors at [11-290].

Restitution can be a mitigating factor where it involves a degree of sacrifice. It can also indicate a degree of remorse where it occurs, after the defendant became aware of the full consequences of his criminality: R v Phelan (1993) 66 A Crim R 446, R v Giallussi [1999] NSWCCA 56 and R v Strano [2002] NSWCCA 531 at [76]. See also Subramaniam v R [2013] NSWCCA 159 at [53]–[54].

In R v Woodman [2001] NSWCCA 310 (a two-judge bench decision) Wood CJ at CL said at [32]:

The offer by the applicant to make reparation was of limited value to him, particularly in the absence of any earlier attempt to do so. It is not the case that an offender found guilty of fraud offences can purchase mitigation by way of a voluntary repayment. While the degree of sacrifice involved can be taken into account it cannot be overlooked that an order for compensation, or reparation does no more than require the return of illgotten gains to which the offender had no entitlement.

Moreover, as Hunt CJ at CL pointed out in Phelan (1993) 66 A Crim R 446:

It is more of a matter of aggravation when there has been a loss which is effectively irretrievable than a matter of mitigation where the loss has been made good.

Hidden J (McClellan CJ at CL and Grove AJ agreeing), in obiter remarks in Job v R (2011) 216 A Crim R 521, noted that the above observation should be approached with some caution. His Honour stated:

I doubt that the former Chief Judge was saying anything more than that, in determining sentence, an offence which has caused a loss which cannot be made good is likely to be viewed more seriously, but the extent to which reparation sounds in mitigation will depend upon the degree of sacrifice involved: at [50]; cf Blackstock v R [2013] NSWCCA 172 at [66].

In R v Fell [2004] NSWCCA 235, a case involving 14 counts of obtaining money by deception under s 178BA Crimes Act 1900 and 70 offences on a Form 1, the court found that the sentencing judge was entitled to have regard to fact that the respondent had repaid almost $280,000 to his employer. Aside from being demonstrative of contrition and remorse, the reparation significantly reduced the losses suffered by the victim. This itself was significant enough to have a mitigating effect on sentence: at [29].

The sentencing judge in Job v R erred by neglecting to take the applicant’s offer of restitution into account: at [48]. While its significance may well have been diminished by the fact the applicant had made no payment at the time of sentence, the undertaking to make reparation, and the steps he had taken to that end by putting two properties on the market, were entitled to some weight in his favour: at [48]–[49].

Guilty plea under s 21A(3)(k)

It was said before the guideline judgment of R v Thomson & Houlton (2000) 49 NSWLR 383 that pleading guilty is a factor which in white collar crimes especially, attracts a considerable measure of leniency: R v Falzon and Pullen (unrep, 20/2/1992, NSWCCA). In R v Halabi (unrep, 17/2/92, NSWCCA) the court said:

in white collar crimes the difficulty of detection and the difficulty and expense of investigation and proof means that particular consideration and greater discount should be allowed to an accused person who pleads guilty thus saving the State from the expense of proving the matters associated with the white collar crimes.

The length and complexity of a prospective fraud trial is a matter relevant to the utilitarian discount for a plea of guilty: R v Todorovic [2008] NSWCCA 49 at [24].

See also Section 21A Factors at [11-310].

Delay

Delay in having the matter finalised leaves the offender in a position of uncertainty and can be taken into account: R v Houlton (2000) 115 A Crim R 104 at [23], [41]–[42]; DPP v Hamman (unrep, 1/12/1998, NSWCCA); and R v Phelan (1993) 66 A Crim R 446. It is not every case where delay has occurred in the prosecution of an offender that a reduced sentence results, since each case depends upon its own particular circumstances: Coles v R [2016] NSWCCA 32 at [20].

Where delay is taken into account, it is preferable that is done so in the overall assessment of sentence rather than as a quantified reduction on the sentence imposed: R v Boughen (2012) 215 A Crim R 476 at [105].

See also Subjective Matters Taken into Account (cf s 21A(1)) at [10-530].

Hardship to third parties

Hardship to third parties can only be taken into account where there are exceptional circumstances: R v Caradonna (2001) 118 A Crim R 312 at [25]–[26]. In R v Lo and Ouyang [2004] NSWCCA 382, a social security fraud case, the offenders were sole carers of an 18 month old and three year old children. A Crown appeal against the sentence of home detention was held dismissed. The sentence was held to be within the permissible range.

In R v Cornell [2015] NSWCCA 258, the applicant committed two serious fraud offences. The applicant’s daughter had serious health issues requiring extensive care. Exceptional circumstances were accepted: at [129]. The court found the judge made no error in regarding those circumstances as warranting a reduction in the non-parole period but not the head sentence. The nature of the hardship would dissipate when the applicant was released on parole: at [146].

Exceptional circumstances may be relevant to whether a full-time custodial sentence should be imposed, the fixing of the head sentence or the determination of whether special circumstances exist and, if so, the appropriate length of the non-parole period: Cornell at [145].

See also Subjective Matters Taken into Account (cf s 21A(1)) at [10-490].

To top [20-010] The relevance of a gambling addiction

It is not uncommon for fraud offenders to suffer from a gambling addiction: R v Todorovic [2008] NSWCCA 49 at [12]–[13], [62]. A gambling addiction may explain why an offender has committed an offence(s) but it has been treated by the courts in the same way as a drug addiction. Latham J remarked in Le v R [2006] NSWCCA 136 at [32] that a gambling addiction “generally does not warrant the extension of leniency”. The passage was quoted with approval in R v Huynh [2008] NSWCCA 16 at [11]. In the guideline judgment of R v Henry (1999) 46 NSWLR 346 at [203], Spigelman CJ expressly rejected the proposition that an addiction to gambling is a matter in mitigation. This passage in Henry is discussed in Hulme J’s dissenting judgment in the case of R v Todorovic at [60]–[63]. Further to these authorities the court in R v Huang, R v Siu (2007) 174 A Crim R 370 at [42] quoted the following passage in R v Assi [2006] NSWCCA 257 at [27] as reflecting the current state of the authorities:

Although [the appellant’s] gambling habit may explain his fall into such serious criminal conduct and give some hope of rehabilitation in the future, it has been held to be a rare case where an offender can seek mitigation of penalty based upon an addiction to gambling, even where it is pathological: R v Molesworth [1999] NSWCCA 43.

A gambling addiction may be an important consideration in the assessment of the offender’s prospects of rehabilitation and likelihood of re-offending: Luong v R [2014] NSWCCA 129 at [23], [24]; Hartman v R [2011] NSWCCA 261 at [52].

To top [20-020] Totality

The majority of fraud cases involve multiple offences. The sentencer is required to apply the totality principle. In the case of imprisonment this may involve fixing an appropriate sentence for each offence and then consider matters of cumulation or concurrency: R v Pearce (1998) 194 CLR 610 at [45]. When carrying out this task the sentencer is required to have regard to the fact that the applicant is being sentenced for multiple offences and ensure that the ultimate sentence imposed is appropriate to the totality of the applicant’s offending and his personal circumstances: Stratford v R [2007] NSWCCA 279 at [29]. See also R v Chan [2000] NSWCCA 345 at [26].

However, the application of the totality principle must not result in a “blanket assessment” of each offence. In Subramaniam v R [2013] NSWCCA 159, the judge erred by imposing indicative sentences of two years, one month for each of the 23 fraud offences and three money laundering offences. This was notwithstanding significant variations in the amounts of money the subject of the deceptions in each offence and the fact the fraud offences carried a maximum penalty of 5 years while money laundering offences carried a maximum of 15 years: at [29]. The sentencing judge in Suleman v R [2009] NSWCCA 70 fell into similar error by treating all 14 counts of s 178BB as possessing the same level of criminality regardless of the amount invested or lost: at [38].

See further Concurrent and Consecutive Sentences at [8-200]–[8-230] and R v Tadrosse (2005) 65 NSWLR 740; R v Finnie [2002] NSWCCA 533.

To top [20-030] Special circumstances: Corbett’s case

In R v Corbett (1991) 52 A Crim R 112 at 117, the court said:

a feature of past sentencing for “white collar” crimes involving fraudulent abuse of trust, and sometimes involving fraud on the public purse, has been the imposition of lengthy head sentences, but with a substantial gap between head sentence and non-parole periods or minimum terms. This has probably been the consequence of a desire on the part of the courts, on the one hand, to reflect the need for general deterrence and, on the other hand, to give due account to the fact that the offenders involved frequently have no prior criminal history, are unlikely to re-offend, and have good prospects of rehabilitation.

However, imposing a lengthy parole period (for the reasons outlined in Corbett) may not be appropriate where the objective seriousness of the offences are considerable and characterised by a number of aggravating features: Scanlan v R [2006] NSWCCA 238 at [89].

The appellant in McMahon v R [2011] NSWCCA 147 relied upon R v Corbett at 116-117 to support a proposition that because white collar crime was non-violent when compared with other offences, there should be a substantial gap between the head sentence and the non-parole period. The court rejected the approach because it was “quite out of step with current community standards. The community now views white collar crime very seriously”: per Hoeben J at [82] with Hodgson JA and Grove AJ agreeing). The court at [85] instead adopted the approach in Hili v The Queen (2010) 85 ALJR 195. There is no overarching approach in fixing a non-parole period for white collar offenders. The relationship between the non-parole period and the total sentence will depend upon the facts of the case: Hili at [40], [44]. Although McMahon involved an offence against the Commonwealth what was said about Corbett’s case is nevertheless relevant to setting a non-parole period for a State offence.

The decision of Corbett has not been raised or considered by the NSW Court of Criminal Appeal since McMahon.

In Victoria, the position that white-collar crime should attract sentences with a substantial gap between the head sentence and non-parole period has been discredited since 1998: DPP v Bulfin (1998) 4 VR 114. In Bulfin, Charles JA (Winneke P and Callaway JA agreeing) referred to Corbett and observed that “to fix an unduly short non-parole period would … be quite subversive of the whole concept of general deterrence, notwithstanding that a significantly longer head sentence was imposed”. That position continues to be applied in Victorian courts today: DPP v Gregory (2011) 34 VR 1 at [66]; Dyason v R [2015] VSCA 120 at [44].

To top [20-040] Commonly prosecuted fraud offences under previous statutory scheme

The following text focuses on the most commonly prosecuted fraud offences in New South Wales. These offences were repealed by the Crimes Amendment (Fraud, Identity and Forgery Offences) Act 2009 but many cases remain in the system. For the new offences, see those described below in “Crimes Amendment (Fraud, Identity and Forgery Offences) Act 2009” at [20-110]:

  • obtaining money or valuable thing by deception: s 178BA (repealed)

  • make or use false instrument: s 300 (repealed)

  • fraudulently misappropriate money collected or received: s 178A (repealed)

  • obtain money etc by false or misleading statement: s 178BB (repealed), and

  • directors etc cheating or defrauding: s 176A (repealed).

Courts have applied the general principles above to these offences, and the following cases are cited by way of example. Case summaries of Crown and severity appeals for specific fraud offences can be accessed via the “Legislation” component of JIRS.

To top [20-050] Obtain money or valuable thing by deception — s 178BA Crimes Act 1900 (repealed)

Section 178BA Crimes Act 1900 provided:

Whosoever by any deception dishonestly obtains for himself or herself or another person any money or valuable thing or any financial advantage of any kind whatsoever shall be liable to imprisonment for 5 years.

In R v Hare [2007] NSWCCA 303 the court sets out 12 Court of Criminal Appeal cases involving offences under s 178BA, detailing the number of counts, the amount of money defrauded, the sentence imposed, the issues raised in the appeal, and the appeal outcome.

In the two-judge bench decision of Mitchell v R [2006] NSWCCA 72 the court also listed a number of Court of Criminal Appeal decisions involving s 178BA offences. Latham J said at [10] that:

the amount of money defrauded is but one factor in the commission of such offences, which bears upon the assessment of the offender’s criminality. Other factors, including the length of time over which the offences are committed, whether or not the offender occupies a position of trust, and the sophistication of the method employed to defraud the victim, play a part in placing an offence on the spectrum of offences of a like nature, bearing in mind that the maximum penalty is reserved for the worst class of case. The interplay of these factors in any given case, together with the subjective circumstances of the individual offender, is capable of giving rise to the imposition of seemingly disparate sentences, which might appear difficult to justify on nothing more than a relatively superficial comparison.

Examples of s 178BA offences of a high-level criminality can be found in Subramaniam v R [2013] NSWCCA 159 and McKittrick v R (2014) 243 A Crim R 155. In Subramaniam the applicant, a senior accountant, was sentenced for fraud of a “breathtaking” nature, involving 23 offences and the misappropriation of a total of $45,288,249: at [55]. In McKittrick the applicant operated a Ponzi scheme over a sustained period of time and defrauded 14 victims, in many cases of their life savings, while on bail for a similar scheme run in a different area: at [26].

Credit card fraud

In R v Araya (2005) 155 A Crim R 555, Johnson J (Rothman and Simpson JJ agreeing), cited R v Harrower [1999] VSCA 182 with approval where it was said by Brooking JA at para 10:

This case shows how someone can systematically abuse the system by fraudulently obtaining a stock of these plastic cards which stand in the place of money, and shows some of the injurious consequences of that abuse. Generally speaking, the kind of conduct disclosed here must attract severe punishment.

Johnson J said at [98]:

In my view, this statement has general application to the type of offence illustrated in the present case. Members of the community use credit cards for a very wide range of transactions conducted by telephone. The honest use of credit cards in this way is of great importance. In passing sentence for offences of the present type, general deterrence is an important factor. Further, where there is a pattern of fraudulent activity by an offender over an extended period using several credit cards and associated paraphernalia (such as fraudulent drivers’ licences), specific deterrence is also an important consideration on sentence.

These remarks become increasingly important given the rapid shifts towards a cashless society. In Yow v R [2010] NSWCCA 251 at [30], Fullerton J (Hodgson JA and Price J agreeing) made the following remarks:

The cost to the community of syndicated credit card fraud is not only that it undermines consumer confidence. The losses generated by frauds of this magnitude are invariably passed on to the consumer through the imposition of higher levies or fees. The general public who increasingly use credit cards as a convenient substitute for cash on a daily basis, and the financial institutions that offer and provide a secure range of credit card facilities to both traders and consumers, are entitled to expect that the perpetrators of fraudulent schemes of the kind with which the applicant was involved are appropriately punished both to deter those who may be tempted to participate in credit card fraud and to dissuade those who might be tempted by financial reward to come to Australia with the express purpose of doing so.

In Thangavelautham v R [2016] NSWCCA 141, Bathurst CJ (Hoeben CJ at CL and RS Hulme AJ agreeing), referring to a conspiracy to defraud, noted the need for general and specific deterrence for offences which “not only have the potential to cause serious financial hardship and embarrassment to a large number of consumers but also have the capacity to undermine confidence in this country’s financial system”: at [86].

To top [20-060] Make or use false instrument — s 300 Crimes Act 1900 (repealed)

Section 300 Crimes Act 1900 provided:

(1) 

A person who makes a false instrument, with the intention that he or she, or another person, will use it to induce another person:

(a) 

to accept the instrument as genuine, and

(b) 

because of that acceptance, to do or not do some act to that other person’s, or to another person’s, prejudice, is liable to imprisonment for 10 years.

(2) 

A person who uses an instrument which is, and which the person knows to be, false, with the intention of inducing another person:

(a) 

to accept the instrument as genuine, and

(b) 

because of that acceptance, to do or not do some act to that other person’s, or to another person’s, prejudice, is liable to imprisonment for 10 years.

In O’Keefe v R (1992) 60 A Crim R 201 at 204, a case involving nine charges under s 300(1) and nine under s 300(2), Lee AJ (Gleeson CJ and Priestly JA agreeing), said:

In these and similar cases, the consideration of general deterrence looms large.

It is of the utmost importance that employers carrying on business and entrusting members of their staff with control of money as must be done, should be entitled to maximum honesty in that activity and the courts play an important role and must play an important role in imposing sentences in cases of this nature which are often called white collar crimes — which will operate effectively as a deterrent to others

In R v El-Rashid (unrep, 7/4/95, NSWCCA) the respondent was a bank employee who defrauded two customers of US $120,000 and was convicted of two charges under s 300. Gleeson CJ said:

crimes of this kind are to be taken seriously …

Considerations of general deterrence are of particular importance in sentencing for crimes of this nature. Such crimes frequently involve, as in the present case, a serious breach of trust. Such breaches of trust are usually only able to be committed because of the previous good character of the person who has been placed in a position of trust.

In R v Tadrosse (2005) 65 NSWLR 740, the offender was convicted of six counts under s 300, one count under s 302, and two under each of ss 178B and 178BA. In that case, a total of over $200,000 was defrauded by the applicant using false documents. He was sentenced to six years imprisonment with a non-parole period of three years and six months.

See also Hancock v R [2012] NSWCCA 200 and Cranshaw v R [2009] NSWCCA 80. In Hancock, the applicant was sentenced for his role as the mastermind of a crime syndicate involved in the manufacture, distribution and use of false identity documents, from which he derived considerable rewards: at [77]. In Cranshaw, the offender was a “runner” in a similar syndicate and was sentenced for 37 counts under s 300(2), one count under s 302 and multiple counts under s 178BA.

To top [20-080] Fraudulently misappropriate money collected/received — s 178A Crimes Act 1900 (repealed)

Section 178A Crimes Act 1900 provided:

Whosoever having collected or received any money or valuable security upon terms requiring him or her to deliver or account for or pay to any person the whole or any part of:

(a) 

such money or valuable security or the proceeds thereof, or

(b) 

any balance of such money, valuable security, or proceeds thereof after any authorised deductions or payments have been made thereout,

fraudulently misappropriates to his or her own use or the use of any other person, or fraudulently omits to account for or pay the whole or any part of such money, valuable security, or proceeds, or the whole or any part of such balance in violation of the terms on which he or she collected or received such money or valuable security, shall be liable to imprisonment for seven years.

In R v Higgins [2006] NSWCCA 38, a case involving 15 counts under s 178A, Spigelman CJ stated at [12]–[13]:

The objective gravity of the offences was substantial. The amount of money misappropriated was over $1.7 million from a significant number of victims, all of whom were small investors and vulnerable to varying degrees, some to a very high degree of vulnerability.

The frauds took place over a period of some five years and involved premeditation and planning. Of particular significance is the gross breach of trust involved both directly to each investor for whom he was an adviser and by purporting to act with the authority of a financial corporation in whom the investors would also have trust. The element of general deterrence is entitled to considerable weight in white collar crimes involving a breach of trust (see eg R v Glenister [1980] 2 NSWLR 597; R v Pantano (1990) 49 A Crim R 328 at 330).

In that case the appeal against sentence was dismissed and the aggregate sentence was confirmed as term of sentence eight years, non-parole period five years.

In R v Higgins [2006] NSWCCA 326 (unrelated to the case cited above), the offender was a bank manager who visited nursing homes to provide banking services to customers. One elderly customer gave the respondent a cheque for $73,000 to invest on her behalf which the offender used for his own purposes. He was charged with one count under s 178A and was sentenced to a non-parole period of one year nine months, and a balance of term of one year three months. The court held that the sentencing judge did not err in declining to find that the breach of trust in this case was an aggravating feature under s 21A(2)(k) Crimes (Sentencing Procedure) Act 1999. The conduct of the respondent was in this case “an element of the offence”. A breach of trust in the sense of misconduct by a trustee may not necessarily be synonymous with abusing a position of trust as expressed in s 21A(2)(k). However, the judge was required to sentence the respondent for what he had done and to avoid what has become known as “double counting”. The court commented that it would be unproductive to analyse whether some form of breach of trust or underlying policy to that effect is a characteristic of an offence against s 178A.

In Assi v R [2006] NSWCCA 257, the court held that the amounts misappropriated is only one of the relevant considerations in determining the seriousness of the offences and it is not necessarily decisive. In this case, despite the fact that the amount of money misappropriated was not substantial compared to other offences, the appellant’s offences represented a period of repeated offending in which the applicant created false expectations for the victims who came to him for his help as a trusted member of the legal profession.

In R v Rizk [2005] NSWCCA 104, a case involving seven charges under s 178A, the court said at [15]–[16]:

There is a strong need for deterrent sentences where trust moneys are misappropriated.

the applicant’s gross breaches of trust, and the need to deter him and others from committing such breaches of trust, called for the imposition of a salutary and realistic non-parole period.

See also R v Boland (unrep, 13/10/98, NSWCCA) where the offender, a solicitor, was sentenced to a minimum of 18 months, with an additional term of six months for one count under s 178A involving $48,759.08.

To top [20-090] Obtain money etc by false or misleading statements — s 178BB Crimes Act 1900 (repealed)

In R v Howard (unrep, 28/3/95, NSWCCA) the offender pleaded guilty to seven charges under s 178BB. He was the manager of a cinema complex and over a period of four years falsified records so as to reduce the sum he was required to pay film distributors by a total of $6500. The court held that the offence was aggravated by the fact that the offences constituted a systematic, deliberate, carefully planned and executed fraud perpetrated continuously over a period of four years, but that it was ameliorated by the fact that the amount defrauded, in the context of fraud cases which come before the criminal courts, relatively small. A community service order or periodic detention would have been appropriate. The offender’s sentence was reduced from an 18 month fixed term to a term of 6 months concurrent with other sentences.

In R v Simpson (2001) 53 NSWLR 704 the offender was convicted of seven counts under s 178BB, with 25 offences taken into account on the Form 1. The offender committed the offences by obtaining loans totalling between $140,000 and $220,000 from three different banks using false names and forged documents. He was sentenced to imprisonment for three years and six months, with a non-parole period of two years and seven months.

The offender in Suleman v R [2009] NSWCCA 70 was sentenced for 15 counts of making a false statement contrary to s 178BB and 11 counts of using a false instrument to induce another. He was sentenced to an overall term of imprisonment of six years, four months, non-parole period four years, nine months. The court found it was not a mitigating factor that the offender hoped to be able to make the promised returns. The crux of the s 178BB offence was that the victim was induced by intentional false statements to risk money which they may not have risked, had the true situation been known: at [41].

To top [20-100] Directors etc cheating or defrauding — s 176A Crimes Act 1900 (repealed)

“Defraud” is not defined in the Crimes Act 1900 but has been taken to require a loss to the victim of something of value. The loss may be intangible, although, it must at best involve prejudice to the victim’s “proprietary rights”: Baldini v R [2007] NSWCCA 327 at [42]–[46]; Bikhit v R [2007] NSWCCA 202 at [49].

In Stratford v R [2007] NSWCCA 279 at [43] the Court of Criminal Appeal set out a number of decisions and their relevant features where the offender has been charged with an offence under s 176A or a similar offence.

In R v Giam (No 2) (1999) A Crim R 348 Dunford J said in relation to an offence under s 176A at [27]:

Courts have drawn attention in the past to the seriousness of white collar crime, and offences under s 176A in particular, as it involves not only fraud but also breach of the trust involved in being a director of a company. Such offences call for significant sentences, particularly where the amount fraudulently obtained is large: R v Glenister [1980] 2 NSWLR 597, R v Pantano [1990] 49 A Crim R 328.

In R v Carr (2003) 135 A Crim R 171, Howie J at [31] discussed the relevant factors in determining the seriousness of an offence under s 176A:

Having regard to the length of time over which the acts giving rise to the offence occurred, the serious breach of trust involved (in that the respondent was both a solicitor and a director of the company), the amount of money involved and importance of general deterrence the sentence was an appropriate one for that offence.

In R v Mungomery (2004) 151 A Crim R 376, a case involving three counts under s 176A, Hulme J said at [40]–[41]:

In this regard authority makes it clear that the amount of money involved in premeditated deception is an important, and the period of time over which offences are committed a relevant, factor in determining the extent of criminality — see Hawkins (1989) 45 A Crim R 430, R v Mears (unrep, 14/3/91, NSWCCA), referred to by Wood CJ at CL and Sperling J in R v Woodman [2001] NSWCCA 310.

The sentencing judge in R v Hinchliffe [2013] NSWCCA 327 erred in imposing an intensive correction order for five offences under s 176A (with an additional seven offences on a Form 1). Although a number of factors operated in the offender’s favour at sentence, the conduct involved defrauding the corporate victim on several occasions of approximately $1.5 million: at [261]. There is a significant degree of leniency involved in the use of an ICO and the purposes of punishment required full-time imprisonment: [278]–[279].

To top [20-105] Larceny by clerk or servant — s 156 Crimes Act 1900

Section 156 Crimes Act 1900 provides:

Whosoever, being a clerk, or servant, steals any property belonging to, or in the possession, or power of, his or her master, or employer, or any property into or for which it has been converted, or exchanged, shall be liable to imprisonment for ten years.

In Itaoui v R (2005) 158 A Crim R 233 the applicant stole $135,199.40 from her employer, Thomas Cook, over a period of 15 months. The Court of Criminal Appeal held that the applicant’s criminal behaviour in breach of trust of her employer clearly warranted a significant prison sentence for the reasons given by the judge including the importance of general deterrence.

In R v Swadling [2004] NSWCCA 421 the applicant, an accounts clerk, diverted a total of $322,766 of her employer’s funds into her own bank account over a period of 21 months. She was convicted of nine counts under s 156, with 11 offences taken into account on a Form 1. The appeal against sentence was allowed and the applicant was re-sentenced to an aggregate term of sentence of six years, three months, with a non-parole period of three years, three months. The court found that the offences were in the middle of the range of seriousness. The methods employed by the applicant were unsophisticated, she did little to cover her tracks, was a relatively junior employee and the amount taken was not large. Offences in the upper half of the scale of seriousness frequently involve larger amounts of money, more sophisticated methods and attempts to hinder or deflect detection and investigation, and are often committed by more senior employees.

To top [20-110] Crimes Amendment (Fraud, Identity and Forgery Offences) Act 2009

The Crimes Amendment (Fraud, Identity and Forgery Offences) Act 2009 (repealed) commenced on 22 February 2010. A comparative table with the corresponding repealed offences is set out above at [19-930]. The amendments introduced various new offences, some of which are described below. All offences discussed below are to be dealt with summarily unless an election is made to proceed on an indictment. There is no monetary limit applicable to fraud offences which may be dealt with in the Local Court.

Fraud offences (ss 192E, 192F, 192G)

Section 192E contains the offence of fraud, making it an offence for a person, by any deception, to dishonestly obtain property belonging to another or obtain any financial advantage or cause any financial disadvantage. The maximum penalty is 10 years imprisonment. This represents an increase from some of the repealed offences, for example, the 5 year maximum penalty which was applicable to obtaining money by deception under s 178BA. The introduction of a higher maximum penalty than existed for a corresponding repealed offence “requires some adjustment to the range of sentences that would formerly have been considered appropriate”: Baumer v The Queen (1988) 166 CLR 51 at 57. However, many of the sentencing principles discussed in cases dealing with the predecessor provisions remain relevant.

When sentencing for offences against s 192E it should be borne in mind that the provision captures offences which can run to defalcations in the millions of dollars: Matthews v R [2014] NSWCCA 185 at [21]. In that case, while the court acknowledged the need for deterrence in cases of credit card fraud, that need was satisfied by the imposition of a custodial sentence in circumstances of the unsophisticated deceptions amounting to just over $1,200: at [21]. The offender received two years, three months imprisonment, with a non-parole period of one year, three months.

The disparity in amounts involved in s 192E offences may be demonstrated by contrasting Matthews with Zhao v R [2016] NSWCCA 179, where a single count of s 192E related to a fraudulent benefit of US$730,773.39, with an offence involving an additional US$190,224.28 taken into account on a Form 1: at [10]. The offender in Zhao received three years imprisonment with a non-parole period of one year, eight months.

In Whiley v R [2014] NSWCCA 164, the court held that a starting point of 4 years for each of two offences against s 192E represented a far greater proportion of the 10-year maximum penalty than justified given the objective circumstances of the offences: at [40]. In each offence, the applicant had purchased a vehicle using a fraudulent cheque and a false name, but returned the vehicles shortly after, undamaged with the keys and a note apologising to each victim: at [39].

Section 192F makes it an offence to dishonestly destroy or conceal any accounting record intending to obtain property belonging to another, obtain a financial advantage or cause a financial disadvantage. The maximum penalty is five years imprisonment.

Section 192G makes it an offence to dishonestly make or publish, or concur in making or publishing, any statement that is misleading in a material particular intending to obtain property belonging to another or obtain a financial advantage or cause a financial disadvantage. The maximum penalty is five years imprisonment, the same maximum applicable to the predecessor offence under s 178BB.

Identity crime offences

In recognition of the growing problem associated with the theft and misuse of personal identification information, a series of identity fraud offences were created in Pt 4AB. It is now an offence to either deal in (s 192J), or possess (s 192K), identification information intending to commit or facilitate the commission of an indictable offence. The maximum penalty for the s 192J offence is 10 years imprisonment, and seven years imprisonment for the s 192K offence. The terms “deal” and “identification information” are defined in s 192I.

There are a number of features of identity crimes which involve aggravated effects on victims and the community generally when compared with other forms of obtaining benefit by deception: Stevens v R [2009] NSWCCA 260 at [2]. Therefore, the use of past sentencing practices for offences such as s 178BA (repealed) of the Crimes Act 1900, must be treated with some care: Stevens at [2]. The “ease with which identity crimes can be committed has expanded well beyond the traditional means of stealing mail or eavesdropping to obtain personal data” and the “significance of general deterrence in the exercise of the sentencing discretion will remain a matter to which particular weight must be given”: per Spigelman CJ at [6]– [7], applied in Krol v R [2011] NSWCCA 175 at [81].

In Chen v R [2015] NSWCCA 277, the offender was sentenced for his involvement in a large identity fraud operation as a producer of false credit cards, driver’s licences and Medicare cards. He received a sentence of six years imprisonment, non-parole period four years, six months, for six counts of s 192J, one count of s 192K, one count of possessing a false document (s 255) and five counts of possessing equipment to make false documents (s 256(1)). An additional 12 offences were taken into account on a Form 1.

The need for both personal and general deterrence, and the imposition of severe punishment, in cases of identity fraud was again reiterated by the Court of Criminal Appeal in Thangavelautham v R [2016] NSWCCA 141 at [37]; [104]–[105].

Forgery offences

Schedule 1[4] of the amending Act omits the old Pt 5 of the Crimes Act (except for Div 3, which becomes Pt 5A by the operation of Sch 2[22]), and inserted a new Pt 5 which contains the forgery offences and relevant definitions.

It is an offence for a person to make a false document intending it to be used to induce some person to accept it as genuine and, because of that acceptance, to obtain another person’s property, obtain any financial advantage or cause any financial disadvantage or influence the exercise of a public duty: s 253. The maximum penalty is 10 years imprisonment.

Section 254 makes it an offence for a person to use a false document, knowing that it is false, intending to induce some person to accept it as genuine and, because of that acceptance, obtaining another person’s property, financial advantage or causing any financial disadvantage, or influencing the exercise of a public duty. The maximum penalty is 10 years imprisonment.

In R v Grover; Grover v R [2013] NSWCCA 149 the offender used false driver’s licences to purchase cold and flu medication. The court dismissed the submission that head sentences of 15 months for each of two counts of s 254 were manifestly excessive; the fraudulently obtained cold and flu medication was for the purpose of on-sale to enable the pseudoephedrine to be used in drug manufacture and the offences were committed over an extended period and motivated by commercial gain: at [85]–[86].

Additional references

The Public Defenders Office provides Sentencing tables for fraud offences by employees and others in positions of trust at www.publicdefenders.nsw.gov.au, accessed 08/08/16.

The Explanatory Note to the Crimes Amendment (Fraud, Identity and Forgery Offences) Bill 2009 at www.legislation.nsw.gov.au, accessed 08/08/16.