Citation: R (Commonwealth) v Schembri [2009] NSWDC 293
Court: NSW District Court
Date: 1 May 2009
Judge: Ainslie-Wallace DCJ
Background
The offender was tried jointly with her brother-in-law on charges arising from a scheme to obtain fraudulent GST refunds from the Australian Taxation Office. The scheme involved two companies: Unique Waterproofing Services, registered in the brother-in-law's name but effectively controlled by the offender and her husband, and Aquatrend Australia, of which the offender and her husband were directors.
Between October 2000 and August 2003, a series of Business Activity Statements were lodged with the ATO on behalf of both companies, claiming GST refunds based on fabricated expenditure. The claims totalled hundreds of thousands of dollars. Unique, which conducted no genuine business, had claimed expenditure of over $4.5 million without producing a single supporting invoice or receipt. Refunds totalling approximately $229,000 were actually paid before the ATO began investigating and disallowed further claims.
The brother-in-law was discharged after the jury could not reach a unanimous verdict against him. He later pleaded guilty to dealing with proceeds of crime. The offender was convicted by the jury on all counts and came before the court for sentencing.
Legal Issues
- Whether full-time custodial sentences were warranted for the offender's convictions under s 134.2(1) of the Criminal Code Act 1995 (Cth) for dishonestly obtaining, or attempting to obtain, a financial advantage by deception from a Commonwealth entity
- How the principle of totality should apply when imposing multiple sentences across 17 counts
- What weight to give the offender's personal circumstances, including her role as primary carer for her children and her claim that she acted under her husband's direction
Decision
Ainslie-Wallace DCJ found the offender's claim that she was merely acting on her husband's direction to be implausible and unsupported by the evidence. The court rejected her evidence as unreliable, a conclusion it observed the jury had also reached. Physical evidence, including the offender's fingerprints on BAS documents, handwriting analysis indicating she was likely the author of the forged signatures, and the use of her home fax machine to send fabricated supporting documents to the ATO, all pointed to active and knowing participation.
Her Honour assessed the Unique fraud as more serious than the Aquatrend fraud because Unique appeared to have been created solely for the purpose of committing the offences. This reflected a higher degree of premeditation and calculation. The attempted frauds, though unsuccessful, were treated as serious given the amounts sought.
The court accepted that taxation fraud warrants strong general deterrence. Her Honour noted that such fraud is prevalent, difficult to detect, and exploits the self-assessment system. The court found that absent exceptional circumstances, full-time custody was appropriate, and that no such circumstances existed here. The offender's role as primary carer for her children was acknowledged but did not displace the need for a custodial sentence.
Applying the totality principle, the court structured the sentences as a partially cumulative series to produce an overall term of seven years with a non-parole period of four years, backdated to the date of the offender's remand in custody on 20 October 2008.
Orders Made
- Counts 1 to 9: 3.5 years imprisonment each, commencing 20 October 2008, concluding 19 April 2012
- Counts 10 to 11: 3.5 years imprisonment each, commencing 20 October 2010, concluding 19 April 2014
- Counts 12 to 15: 3 years imprisonment each, commencing 20 October 2011, concluding 19 October 2014
- Count 17 (dealing with proceeds of crime): 2 years imprisonment, commencing 20 October 2013, concluding 19 October 2015
- Non-parole period of 4 years, concluding 19 October 2012
Key Takeaways
- The District Court confirmed that fraud against the revenue carries a strong general deterrence component, and that full-time custody is the appropriate sentence for offences of this kind absent exceptional or very special circumstances.
- A claim by an offender that she acted purely at a co-offender's direction will not necessarily reduce moral culpability, particularly where physical and forensic evidence demonstrates active and personal involvement in the commission of the offences.
- Where one company in a scheme is found to have been created solely for fraudulent purposes, the court may assess that strand of the offending as more serious than fraud involving a company with some legitimate activity, even if the monetary amounts involved differ.
- Applying the totality principle to multiple counts requires the court to structure cumulative and concurrent sentences so that the aggregate reflects the overall criminality without resulting in a disproportionate total sentence.
- Responsibility as a primary carer for children is a relevant personal circumstance at sentencing but does not, on its own, constitute the kind of exceptional circumstance that would displace the presumption of full-time custody for serious taxation fraud.
Legislation and Cases Referenced
Legislation:
- Criminal Code Act 1995 (Cth), s 134.2(1) (dishonestly obtaining a financial advantage by deception from a Commonwealth entity; maximum 10 years imprisonment)
- Criminal Code Act 1995 (Cth), s 400.4 (dealing with proceeds of crime; maximum 20 years imprisonment)
Cases cited: No cases were cited in the portions of the judgment provided.