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7
Supreme Court 12 August 2011

Regina v Shawn Darrell Richard

[2011] NSWSC 866

Fraud & dishonesty
CRIMINAL LAW SENTENCING ROLLED UP CHARGES OFFENCE LOSSES AMOUNTED TO $26.6MILLION OFFENDER DEMONSTRATED CONTRITION DISCOUNT FOR EARLY PLEA OF GUILTY

Citation: Regina v Shawn Darrell Richard [2011] NSWSC 866
Court: Supreme Court of New South Wales
Date: 12 August 2011
Judge(s): Garling J

Background

The offender was a director of Astarra Asset Management Pty Limited and associated companies within the Trio Capital Group, operating in the financial services industry. Between November 2005 and September 2009, he dishonestly diverted $26.6 million of superannuation fund investments into overseas funds located in Caribbean tax havens. Those funds were of questionable value and wholly inappropriate for superannuation investment. None of the $26.6 million was recovered.

The offender personally received a net annual salary exceeding $110,000 and additional personal payments totalling over $1.3 million. A company of which he was a director received a further $5.3 million from the conduct. The scheme only came to light when the Trio Capital Group collapsed.

In December 2010, the offender signed a Statement of Facts admitting the conduct, entered into an Enforceable Undertaking with ASIC permanently prohibiting him from providing financial services in Australia, and entered early pleas of guilty in the Local Court. He was committed to the Supreme Court for sentence.

  • What sentence was appropriate for two "rolled up" charges under ss 1041G(1) and 1041E(1) of the Corporations Act 2001 (Cth), covering a course of dishonest conduct causing $26.6 million in losses?
  • How should the sentencing court balance the objective seriousness of the offending against subjective mitigating factors, including early guilty pleas, cooperation with authorities, and demonstrated contrition?
  • What weight should general deterrence carry in sentencing for white collar financial offences of this scale?
  • What discount, if any, was warranted for the offender's cooperation with law enforcement agencies?
  • Was a recommendation for protection within the prison system appropriate given the confidential circumstances of the offender's custodial risk?

Decision

Garling J approached sentence under Part 1B of the Crimes Act 1914 (Cth), noting that this framework imports general common law sentencing principles, including the primary obligation under s 16A(1) to impose a sentence of severity appropriate to all the circumstances. His Honour identified general deterrence as a principle of particular importance for white collar offences, drawing on the frequently cited passage in R v Radich [1954] NZLR 86, which describes deterrence as one of the main purposes of punishment and cautions against sentences so lenient that they fail to operate as a powerful disincentive.

The objective seriousness of the conduct weighed heavily. The offending was sustained over nearly four years, involved deliberate and knowing dishonesty, caused losses of $26.6 million that were never recovered, and was committed by a person in a position of trust within the financial services industry. The personal financial gain to the offender reinforced the gravity of the criminality.

Mitigating factors were given meaningful weight. The offender entered early guilty pleas, cooperated with law enforcement, demonstrated genuine contrition, and entered into a permanent enforceable undertaking with ASIC. His Honour took these matters into account by way of discounts to the sentence that would otherwise have been appropriate.

Garling J also noted that the offender would be required to serve his sentence in protection within the special management area, a more restricted and more difficult custodial environment, and took that factor into account in fixing the non-parole period. Having regard to all matters, his Honour determined that a period of two years and six months in custody before release on a recognizance release order was appropriate.

Orders Made

  • Charge One: Term of imprisonment of two years and six months, commencing 22 July 2011 and concluding 21 January 2014.
  • Charge Two: Term of imprisonment of two years and six months, commencing 22 October 2012 and concluding 21 April 2015.
  • Recommendation to prison authorities that the offender be placed in protection in the special management area.
  • Recognizance release order: The offender to be released after serving two years and six months (on 21 January 2014), subject to a condition of good behaviour for the remaining fifteen months of the total sentence.
  • Breach of the good behaviour condition without reasonable excuse would expose the offender to return to custody for the balance of the sentence.
  • The recognizance may be discharged or varied under s 20AA of the Crimes Act 1914 (Cth).

Key Takeaways

  • General deterrence carries particular weight in sentencing for white collar financial offences under the Corporations Act, especially where the conduct is sustained, deliberate, and causes very large financial losses to third parties such as superannuation fund members.

  • Under s 16A(1) of the Crimes Act 1914 (Cth), federal offence sentencing requires a sentence of severity appropriate to all the circumstances, with the list of factors in s 16A(2) operating as a non-exhaustive catalogue rather than an exclusive code.

  • Early guilty pleas, cooperation with law enforcement, demonstrated contrition, and voluntary enforceable undertakings to a regulator are all capable of reducing an otherwise appropriate sentence, but those discounts operate within the broader obligation to reflect objective seriousness.

  • Where a custodial term will be served in a more restricted environment, such as protection within a special management area, the sentencing court may take into account the additional hardship that custodial environment involves when fixing the period to be served.

  • A permanent ban from providing financial services in Australia, accepted by way of an Enforceable Undertaking with ASIC prior to sentencing, formed part of the overall picture of the offender's circumstances, alongside the criminal penalties imposed by the court.

Legislation and Cases Referenced

Legislation:
- Corporations Act 2001 (Cth), ss 1041E(1), 1041G(1)
- Crimes Act 1914 (Cth), Part 1B, ss 16A(1), 16A(2), 16F(2), 20AA
- Australian Securities and Investments Commission Act 2001 (Cth)

Cases:
- Braun v R [2008] NSWCCA 269
- Director of Public Prosecutions (Cth) v El Karhani (1990) 21 NSWLR 370
- Director of Public Prosecutions v Bulfin [1998] 4 VR 114
- Higgins v Regina [2006] NSWCCA 38
- Hili v The Queen [2010] HCA 45
- House v The King (1936) 55 CLR 499
- Johnson v The Queen (2004) 78 ALJR 616
- Mill v The Queen (1988) 166 CLR 59
- Putland v The Queen (2004) 218 CLR 174
- R v Boulden [2006] NSWSC 1274
- R v Corner (NSWCCA, 19 December 1997, unreported)
- R v Doff [2005] NSWCCA 119
- R v Howard [2003] NSWSC 1248
- R v Jones [2004] VSCA 678
- R v Kane [1974] VR 759
- R v MacDonell (NSWCCA, 8 December 1995, unreported)
- R v Pantano (1990) 49 A Crim R 328
- R v Radich [1954] NZLR 86
- R v Rivkin (2003) 198 ALR 400
- R v Ruha [2010] QCA 010