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District Court 21 March 2020

R v Bazouni

[2020] NSWDC 61

Fraud & dishonesty

Citation: R v Bazouni [2020] NSWDC 61
Court: District Court of New South Wales
Date: 21 March 2020
Judge: Weinstein SC DCJ

Background

The offender was employed as a lending manager at St George Bank, a role that gave him authority to approve loans up to $600,000 using the contract price as a valuation, provided the loan-to-valuation ratio did not exceed 80 per cent. Between April and November 2013, he participated in a scheme involving the fraudulent purchase of serviced apartments at Nelson Bay. Loan applications were submitted to the bank using inflated contract prices of $575,000 per unit, a figure the offender himself proposed because he understood the bank's lending guidelines. Independent valuations later showed the true values were far lower.

Each of the six transactions involved the submission of fraudulent documentation in the names of third parties, resulting in loans of $460,000 per unit (two units per transaction, totalling $920,000 per loan). The offender processed and approved these applications himself, without obtaining independent valuations. He received financial benefits through his company's bank account.

A jury convicted the offender on 1 November 2019 of five counts of dishonestly obtaining a financial advantage by deception and one count of attempting to do so, contrary to section 192E(1)(b) of the Crimes Act 1900. He was taken into custody on the day of the verdict. Sentencing proceeded before Weinstein SC DCJ, with three co-offenders having already been sentenced separately by Judge Norrish QC in October 2018.

  • Whether the offender acted intentionally or merely recklessly in committing the offences, as this distinction affected the factual basis for sentencing
  • Whether the offender was an indispensable participant in a joint criminal enterprise, or a more peripheral one
  • The appropriate aggregate sentence, having regard to the totality of the offending
  • Whether the parity principle required adjustment to the sentence, given the co-offenders had been sentenced on different facts and with different subjective circumstances
  • Whether special circumstances justified departing from the standard non-parole period ratio

Decision

Intentional versus reckless conduct. The central factual dispute was whether the offender knew he was participating in fraud or merely turned a blind eye. His Honour found beyond reasonable doubt that the offender acted intentionally. The jury had plainly rejected the offender's own evidence that payments he received were unrelated commissions for efficient loan processing. The court accepted the evidence of co-offender AB, found to be credible despite having given evidence under an inducement, that the offender was involved in planning the scheme from the outset and was in fact the person who identified the $575,000 purchase price figure to fit within the bank's lending guidelines.

Role in the enterprise. The court found the offender was indispensable to the joint criminal enterprise. Without someone in his position, the loans could not have been approved. He had both the authority and the inside knowledge to structure each transaction so that it would pass through the bank's approval process. A fifth basis for this finding was the strong circumstantial case presented by the Crown, reinforced by the striking similarities across all six transactions, which the court found were not coincidental.

Parity and co-offenders. The three co-offenders had very different subjective circumstances and had pleaded guilty to some offences, with others dealt with on a Form 1 (a mechanism under NSW sentencing law allowing related offences to be taken into account without separate conviction). His Honour considered parity but concluded that the offender's greater culpability, his position of trust as a bank employee, and his contested facts hearing warranted a materially different sentence.

Aggregate sentence. The court imposed a five-year aggregate term of imprisonment with a non-parole period of three years. The non-parole period represented 60 per cent of the head sentence, departing from the standard 75 per cent statutory ratio on the basis of special circumstances. Indicative sentences for each individual count were stated as required by section 53A(2)(b) of the Crimes (Sentencing Procedure) Act 1999 (NSW), ranging from nine months for the attempt count to eighteen months for three of the substantive counts.

Orders Made

  • The offender was sentenced to an aggregate term of imprisonment of 5 years
  • Sentence commences 1 November 2019 (backdated to date of custody)
  • Non-parole period of 3 years, expiring 31 October 2022
  • Head sentence expires 31 October 2024
  • The non-parole period was set at 60 per cent of the head sentence (departing from the standard 75 per cent ratio) due to special circumstances

Key Takeaways

  • A bank employee who uses insider knowledge of lending guidelines to structure fraudulent loan applications, and who personally approves those applications, is likely to be treated as an indispensable and centrally culpable participant in a joint criminal enterprise.
  • Where a sentencing court resolves a factual dispute about a defendant's mental state, adverse findings must be established beyond reasonable doubt, while facts favourable to the offender need only be established on the balance of probabilities.
  • The parity principle does not require identical sentences across co-offenders where their roles, culpability, plea histories, and subjective circumstances differ materially.
  • Under section 53A of the Crimes (Sentencing Procedure) Act 1999 (NSW), a court imposing an aggregate sentence must still specify indicative sentences for each individual count, even though the aggregate term governs the overall period of imprisonment.
  • Departure from the standard non-parole period ratio of 75 per cent is available where a sentencing court identifies special circumstances, allowing a longer period on parole to assist with rehabilitation.

Legislation and Cases Referenced

Legislation
- Crimes Act 1900 (NSW), s 192E(1)(b) (dishonestly obtain financial advantage by deception) and s 344A(1) (attempt)
- Crimes (Sentencing Procedure) Act 1999 (NSW), s 53A (aggregate sentences)

Cases
- Green v R; Quinn v R (2011) 244 CLR 462
- Markarian v The Queen [2005] HCA 25
- Muldrock v The Queen (2011) 244 CLR 120
- R v Cornell [2015] NSWCCA 258
- R v Finnie [2002] NSWCCA 533
- Veen v The Queen (No 2) [1988] HCA 14
- Mill v The Queen (1988) 166 CLR 59