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District Court 14 June 2022

R v Ferguson

[2022] NSWDC 356

Fraud & dishonesty
SENTENCING CHIEF FINANCIAL OFFICER SUBSTANTIAL SUMS MISAPPROPRIATED BREACH OF TRUST OFFENDER THE VICTIM OF A DATING SCAM CATFISHING

Citation: R v Ferguson [2022] NSWDC 356
Court: District Court of New South Wales
Date: 14 June 2022
Judge: Grant DCJ

Background

The offender was the Chief Financial Officer of a registered club in regional New South Wales. She held sole signatory authority over the club's bank accounts. Between December 2020 and January 2021, she made a series of unauthorised transfers totalling approximately $1.094 million from the club's accounts to various third-party accounts.

The transfers arose from a "catfishing" romance scam. Following a difficult marriage involving verbal, emotional and physical abuse, the offender separated from her husband in January 2020. Lonely, depressed and vulnerable, she joined an online dating website and formed a relationship with a fictitious persona named "William David Rodavan." The scammer fabricated a story about needing funds to compensate families of workers killed in a workplace accident overseas. The offender had first exhausted her own personal funds (approximately $225,000) before accessing the club's money, genuinely believing the scammer would repay everything.

When the offender realised the funds would not be returned, she voluntarily disclosed everything to the club's Chief Executive Officer and provided a comprehensive list of all transactions. She was dismissed. By the time of sentencing, she had repaid over $300,000 to the club. She faced three charges of dishonestly obtaining a financial advantage by deception under s 192E(1)(b) of the Crimes Act 1900, each carrying a maximum penalty of ten years' imprisonment.

  • What was the appropriate sentence, given the combination of the objective seriousness of the offending and the offender's unusually strong subjective circumstances?
  • What weight should be given to the offender's role as a victim of the romance scam as a mitigating factor, including her motive and honest intention to repay the funds?
  • Whether an Intensive Correction Order (ICO) served in the community was appropriate, rather than full-time custodial imprisonment, having regard to community safety as the paramount consideration under s 66 of the Crimes (Sentencing Procedure) Act 1999.

Decision

Grant DCJ accepted that the offending was objectively serious. It involved a significant breach of trust by a senior financial officer, the misappropriation of over one million dollars, and a net loss to the club of approximately $1.094 million. The maximum penalty of ten years' imprisonment served as an important guidepost. The Crown submitted that full-time imprisonment was warranted.

However, the court found the offender's subjective circumstances to be exceptionally strong. The offender was herself the victim of a sophisticated romance scam. Her motive was not greed, a lavish lifestyle, gambling or addiction. She had a genuine, if mistaken, belief that the funds would be repaid. The court accepted that she had made voluntary disclosure, cooperated with authorities, pleaded guilty at the earliest opportunity (attracting a 25% discount), expressed genuine remorse, and had excellent prospects of rehabilitation. She had no prior criminal history.

The court also assessed the victim impact evidence carefully. While acknowledging the real financial loss and the betrayal of trust, the court noted that the club's own 2021 annual report recorded record financial performance, zero debt, and cash reserves of $3.4 million. The court accepted the emotional and institutional harm caused by the breach of trust but declined to overstate the ongoing financial detriment.

Weighing all of these factors, including community safety as the paramount consideration under s 66 of the Crimes (Sentencing Procedure) Act 1999, the court was satisfied that an Intensive Correction Order (ICO) was appropriate. An ICO is a sentence of imprisonment served in the community under supervision, rather than in a correctional facility. The court found this was more likely to address the risk of reoffending than full-time custody, and that the offender's circumstances were exceptional.

Orders Made

  • An Intensive Correction Order was imposed.
  • Conditions of the ICO included:
  • That the offender not commit any offence.
  • That the offender be under the supervision of the Albury Community Corrections Office.
  • That she report to the Albury Community Corrections Office by telephone within seven days.
  • The court was satisfied that exceptional circumstances existed, and no additional conditions were imposed on the ICO under s 73A(1A) of the Crimes (Sentencing Procedure) Act 1999.

Key Takeaways

  • A serious breach of trust by a CFO, involving misappropriation of over $1 million, does not automatically require full-time imprisonment where the offender's subjective circumstances are sufficiently exceptional.
  • Under s 66 of the Crimes (Sentencing Procedure) Act 1999, community safety is the paramount consideration when determining whether to impose an ICO, but it does not exclude consideration of other relevant factors. As confirmed in Mandranis v R [2021] NSWCCA 97, community safety is subordinated rather than exclusionary of other sentencing considerations.
  • Being the victim of a sophisticated romance scam was treated as highly relevant to the offender's motive and moral culpability, particularly where the offender had a genuine (if mistaken) intention to repay misappropriated funds.
  • The District Court scrutinised victim impact statements against other available evidence, including the club's own annual report, and did not accept all claimed ongoing harms at face value.
  • Voluntary disclosure, early guilty plea, cooperation with authorities, genuine remorse, and strong rehabilitation prospects collectively formed a compelling basis for a non-custodial sentence even in a case of significant white-collar offending.

Legislation and Cases Referenced

Legislation:
- Crimes Act 1900 (NSW), s 192E(1)(b)
- Crimes (Sentencing Procedure) Act 1999 (NSW), ss 17D, 25D(2)(a), 66, 73A(1A)

Cases:
- Abellanoza v R [2021] NSWCCA 4
- Blanch v R [2010] NSWCCA 304
- Cahyadi v R (2007) 168 A Crim R 41
- Goodbun v R [2020] NSWCCA 77
- Kable v DPP [1995] 36 NSWLR 374
- Kovacevic v Mills [2000] 76 SASR 404
- Mandranis v R [2021] NSWCCA 97
- Mourtada v R [2021] NSWCCA 211
- Postiglione v The Queen (1997) 189 CLR 295
- R v Curtis (No 3) [2016] NSWCCA 866
- R v Fangaloka [2019] NSWCCA 173
- R v Gentz [1999] NSWCCA 285
- R v Moon [2000] NSWCCA 534
- R v Pantano (1990) 49 A Crim R 328
- R v Pont (2000) 121 ACR 302
- R v Woodman [2001] NSWCCA 310
- Sarah-Jane Vaughan v R [2011] NSWCCA 4
- Singh v R [2020] NSWCCA 353
- Veen v The Queen (No 2) (1988) 164 CLR 465
- Yardley v Betts (1979) 22 SASR 108