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Supreme Court 20 March 2015

R v Anthony James Dickson (No 18)

[2015] NSWSC 268

Fraud & dishonesty
SENTENCING CRIMINAL CODE ACT 1995 S 135.4(5) S 11.5 AND S 400.3(1) SENTENCE AFTER LONG TRIAL PROCEEDS OF CRIME

Citation: R v Anthony James Dickson (No 18) [2015] NSWSC 268
Court: Supreme Court of New South Wales
Date: 20 March 2015
Judge: Beech-Jones J

Background

The offender, a highly experienced tax and finance professional, was convicted on two counts following a lengthy jury trial. The first count concerned a conspiracy to dishonestly cause a loss or risk of loss to the Commonwealth by causing a company, Neumedix Health Australasia Pty Ltd (NHA), to lodge false depreciation claims in its tax returns. The second count concerned a conspiracy to deal with property believed to be the proceeds of crime.

The scheme centred on a series of financing transactions arranged between the offender, ANZ Banking Group, and several of ANZ's major corporate clients including BlueScope Steel, Gunns, and Incitec. NHA acquired units in trusts that generated large taxable profits, meaning NHA was required to declare substantial amounts of deemed income. To eliminate the resulting tax liabilities, the offender and his co-conspirator agreed that NHA would claim enormous depreciation deductions based on purported acquisitions of medical technologies. Those agreements were shams: no genuine obligation to acquire the technologies, or to make the associated payments, was ever intended or incurred.

Between October 2006 and December 2009, the trusts distributed a total of approximately $68.4 million in cash to NHA. Because no real tax liability would be incurred under the false depreciation scheme, the offender and his co-conspirator treated those funds as available for their own benefit. They agreed to transfer the money offshore to entities associated with the offender and then repatriate it to Australia, largely for personal enrichment. The intended loss or risk of loss to the Commonwealth was quantified at approximately $135 million.

  • What were the objective and subjective circumstances bearing on sentence for each offence, including the scale of the intended tax loss and the nature and duration of the conspiracy?
  • Whether the false depreciation agreements submitted to the Australian Taxation Office were all shams, and what actual loss resulted from the conspiracy?
  • How the sentences for the two offences should be structured, having regard to principles of cumulation and totality, to reflect the overall criminality without being crushing?
  • What weight should be given to personal deterrence, given the offender's sophistication, his exploitation of secrecy surrounding offshore corporate structures, and his conduct throughout the proceedings?

Decision

Beech-Jones J found that count 1 placed the offender's conduct among the worst category of tax fraud offences. The intended loss to the Commonwealth was approximately $135 million, the scheme ran for approximately six years, the offender was the architect of the plan, and he used his professional expertise to exploit the opacity of offshore corporate structures. The actual loss arising from the commission of the offence was more limited, amounting to a delay in obtaining a tax assessment, because the ATO audit ultimately uncovered the scheme.

On count 6, his Honour found the conspiracy to deal with proceeds of crime was a very serious example of the offence. The funds distributed to NHA were proceeds of the tax fraud conspiracy, and the offender and his co-conspirator deliberately moved them offshore and repatriated them for personal benefit over an extended period. The maximum penalty for this offence was 25 years' imprisonment, reflecting Parliament's recognition of the gravity of dealings with proceeds of crime.

His Honour placed significant weight on the need for personal deterrence. The offender showed no contrition, maintained his innocence throughout, had exploited his professional position, and had sought throughout the proceedings to attribute blame to his co-conspirator and others. Mitigating factors, including the offender's prior good character, his age (62 at sentencing), and health issues, were taken into account but did not substantially reduce the sentences.

Applying the principles from cases including Markarian, Pearce, and Hili v The Queen, his Honour sentenced the offender to seven years and six months on count 1 and nine years on count 6, partially cumulated to produce an aggregate term of 11 years with a non-parole period of seven years.

Orders Made

  • Count 1 (conspiracy to dishonestly cause a loss to the Commonwealth, contrary to s 135.4(5) of the Criminal Code Act 1995 (Cth)): imprisonment for seven years and six months, commencing 22 December 2014 and expiring 22 June 2022.
  • Count 6 (conspiracy to deal with property believed to be proceeds of crime, contrary to ss 11.5(1) and 400.3(1) of the Criminal Code Act 1995 (Cth)): imprisonment for nine years, commencing 22 December 2016 and expiring 21 December 2025.
  • Aggregate sentence of 11 years, commencing 22 December 2014 and expiring 21 December 2025.
  • Single non-parole period of seven years fixed pursuant to s 19AB(1) of the Crimes Act 1914 (Cth), expiring 21 December 2021.

Key Takeaways

  • A tax fraud conspiracy intended to cause a loss of approximately $135 million to the Commonwealth, sustained over six years and engineered by a sophisticated professional using offshore corporate structures, was characterised by the Supreme Court as falling within the worst category of offending under s 135.4(5) of the Criminal Code Act 1995 (Cth).
  • Where the actual loss from a tax fraud conspiracy is limited (here, only a delay in assessment because the scheme was detected), this does not substantially diminish the objective seriousness of the offence; the intended loss and risk of loss remain highly relevant sentencing considerations.
  • The treatment of cash distributions as personal funds, in circumstances where the offender knew no genuine tax liability would be incurred because of a false depreciation scheme, supported the jury's finding that those funds constituted proceeds of crime for the purposes of s 400.3(1).
  • Partial cumulation of sentences for related but distinct conspiracies is appropriate where the offences, though connected, targeted different legal interests: the tax offence harmed the Commonwealth's revenue, while the proceeds of crime offence involved the offender's personal enrichment through offshore movements of funds.
  • Absence of remorse, a sustained attempt to deflect blame onto others, and exploitation of professional expertise are factors that attract significant weight on personal deterrence, even where an offender otherwise has good character and health difficulties.

Legislation and Cases Referenced

Legislation

  • Criminal Code Act 1995 (Cth), ss 11.5(1), 135.4(5), 400.3(1)
  • Crimes Act 1914 (Cth), ss 16A, 16F, 17A, 19AB
  • Income Tax Assessment Act 1936 (Cth), ss 16F, 19AB, 177F(3), 263, Part IVA
  • Income Tax Assessment Act 1997 (Cth), s 5.5
  • Proceeds of Crime Act 2002 (Cth)
  • Taxation Administration Act 1953 (Cth), s 255-5

Cases

  • Markarian v The Queen (2005) 228 CLR 357
  • Hili v The Queen; Jones v The Queen (2010) 242 CLR 520
  • Pearce v R (1998) 194 CLR 610
  • Bui v The Queen [2012] HCA 1
  • Director of Public Prosecutions (Cth) v De La Rosa [2010] NSWCCA
  • Nahlous v R (2010) 77 NSWLR 463
  • Cahyadi v R (2007) 168 A Crim R 41
  • Liles v R (Cth) [2014] NSWCCA 289
  • R v Cox [2013] QCA 10
  • R v Dickson; R v Issakidis (No 12) [2014] NSWSC 1595
  • Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471
  • Federal Commissioner of Taxation v Jackson (1990) 27 FCR 1