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Supreme Court 15 December 2023

R v Kelu; R v Millner

[2023] NSWSC 1537

Fraud & dishonesty
CRIME SENTENCING FEDERAL OFFENDERS PROTRACTED INVESTIGATION

Citation: R v Kelu; R v Millner [2023] NSWSC 1537
Court: Supreme Court of New South Wales
Date: 15 December 2023
Judge: Cavanagh J

Background

Following a trial running from 29 May to 11 July 2023, two offenders were each convicted by a jury on two counts of conspiring to dishonestly cause a loss to the Commonwealth, contrary to section 135.4(3) of the Criminal Code Act 1995 (Cth). The conspiracies were carried out in two discrete periods: one in 2012 and one in 2013. Both offenders had pleaded not guilty and contested the charges at trial.

The schemes involved the purchase and sale of solid gold, arranged and organised by the offenders working together, with the intention of defrauding the Commonwealth of goods and services tax (GST) revenue. The 2012 conspiracy caused a loss of approximately $15.9 million, and the 2013 conspiracy caused a loss of approximately $24.9 million, producing a combined loss to the Commonwealth of $40,911,685. The Australian Taxation Office indicated that, with administrative penalties and interest charges, the total amount owed was substantially higher, though the court did not treat those additional amounts as relevant to sentencing.

Only approximately $16.8 million of the principal loss had been recovered at the time of sentencing, with ongoing proceeds of crime proceedings underway. Despite extensive financial analysis, the Crown was unable to establish what had become of the unrecovered funds, though it sought a finding that the offenders were motivated by financial greed and had made a substantial gain.

  • What sentences were appropriate for two federal offenders convicted of two counts each of conspiracy to dishonestly cause a loss to the Commonwealth?
  • How should the court treat the partial recovery of the loss to the Commonwealth, and the unproven extent of each offender's personal benefit, in assessing the objective seriousness of the offending?
  • What weight should be given to each offender's personal circumstances, including health conditions and character evidence, in mitigation?
  • How should the non-parole periods be fixed under section 19AB of the Crimes Act 1914 (Cth) where two federal offences were sentenced together?

Decision

Cavanagh J conducted an extensive sentencing process, complicated by the volume of material, a late application by one offender to adduce further evidence, and the withdrawal of instructions by the other offender from his legal representatives mid-hearing. After withdrawing, that offender sought to re-characterise his conduct as involving no wrongdoing and attributed his conviction to misunderstanding, including a claim that the schemes were a large-scale scientific endeavour. His Honour was not persuaded by these submissions.

The court found that the offending was serious, involving a coordinated, deliberate, and sustained fraud on the Commonwealth spanning two separate years. The jury's verdicts necessarily involved rejecting any suggestion that the offenders' conduct lacked dishonesty, as dishonesty was an essential element of the charges. The Crown did not establish the precise personal benefit received by each offender, but the court accepted that financial greed was a motivating factor and that a substantial gain had been made.

The court accepted that the non-recovery of the balance of the loss was not an aggravating feature, consistent with the Crown's own position. Mitigating material was received from both offenders, including psychiatric and medical reports, general practitioner letters, and character references. Each offender's individual circumstances were taken into account in fixing the sentences, which were structured as partially cumulative terms to reflect the two separate conspiracies.

For each offender, the court imposed an effective head sentence of eight years' imprisonment, with a single non-parole period of four years and six months fixed pursuant to section 19AB of the Crimes Act 1914 (Cth).

Orders Made

Mr Millner:
- 2012 conspiracy: five years' imprisonment commencing 13 July 2023, expiring 12 July 2028
- 2013 conspiracy: six years' imprisonment commencing 13 July 2025, expiring 12 July 2031
- Single non-parole period of four years and six months commencing 13 July 2023; first eligible for parole 12 January 2028
- Effective head sentence: eight years commencing 13 July 2023, expiring 12 July 2031

Mr Kelu:
- 2012 conspiracy: five years' imprisonment commencing 23 November 2023, expiring 22 November 2028
- 2013 conspiracy: six years' imprisonment commencing 23 November 2025, expiring 22 November 2031
- Single non-parole period of four years and six months commencing 23 November 2023; first eligible for parole 22 May 2028
- Effective head sentence: eight years commencing 23 November 2023, expiring 22 November 2031

Key Takeaways

  • A coordinated, multi-year GST fraud involving over $40 million in losses to the Commonwealth, achieved through organised gold trading schemes, warranted an effective custodial sentence of eight years with a non-parole period of four years and six months for each offender.
  • The court accepted the Crown's position that partial recovery of the defrauded amount was not an aggravating feature, and declined to have regard to administrative penalties and interest charges when assessing the sentences; the relevant figures were the amounts of GST revenue actually lost in each conspiracy year.
  • Where the Crown could not prove the precise benefit obtained by the offenders, the sentencing court nonetheless made a finding that financial greed was the motivation and that a substantial gain had been made, based on the overall circumstances of the schemes.
  • Under section 19AB of the Crimes Act 1914 (Cth), where two federal offences are sentenced together, a single non-parole period may be fixed across both sentences, enabling the court to construct a coherent overall sentencing structure across partially cumulative terms.
  • An offender who withdraws instructions from legal representatives and advances unmeritorious submissions on sentence, including a fundamental challenge to the jury's verdict, does not thereby improve their position; the Supreme Court here rejected the contention that the offending involved no dishonesty or genuine loss.

Legislation and Cases Referenced

Legislation:
- Criminal Code Act 1995 (Cth), s 135.4(3)
- Crimes Act 1914 (Cth), ss 16F, 19AB
- Proceeds of Crime Act 2002 (Cth)

Cases:
- Bennett v R [2015] NSWCCA 56
- Chang v R [2016] NSWCCA 296
- R v Dev Menon; R v Willmott [2023] NSWSC 474
- Dickson v R [2016] NSWCCA 105
- Director of Public Prosecutions (Cth) v De La Rosa (2010) 205 A Crim R 1; [2010] NSWCCA 194
- Director of Public Prosecutions (Cth) v Goldberg (2001) 184 ALR 387; [2001] VSCA 107
- Director of Public Prosecutions (Cth) v Gregory (2011) 34 VR 1; [2011] VSCA 145
- Hili v R; Jones v R (2010) 242 CLR 520; [2010] HCA 45
- Imbornone v R [2017] NSWCCA 144
- Liles v R (Cth) [2014] NSWCCA 289
- Markarian v R (2005) 228 CLR 357; [2005] HCA 25
- Mill v The Queen (1988) 166 CLR 59; [1988] HCA 70
- Pfitzner v R [2010] NSWCCA 314
- R v Adam Cranston [2023] NSWSC 1004
- R v Anquetil [2020] NSWSC 995
- R v Bin Huang; R v See Hon Siu (2007) 174 A Crim R 370; [2007] NSWCCA 259
- R v Boughen; R v Cameron (2012) 215 A