Citation: R v Iervasi [2024] NSWSC 1116
Court: Supreme Court of New South Wales
Date: 2 September 2024
Judge: Sweeney J
Background
The offender operated a trading business, Courtenay Trading, through two corporate entities from late 2010 until April 2017. He represented to clients that their funds would be used predominantly for foreign exchange and futures trading, offering tiered investment products with promised monthly returns of between 1.5% and 7.5%. In reality, only a very small percentage of investor capital was ever traded.
The business was a Ponzi scheme. Returns paid to existing investors came not from trading profits but from capital deposited by new investors. The offender also diverted funds for his own business and personal use. At no point did the offender or his companies hold an Australian Financial Services Licence.
In total, 585 investors deposited over $180 million across the life of the scheme. The offender also offered two one-off "special trade" opportunities in 2016 and 2017, purportedly capitalising on volatility around the US presidential election and Donald Trump's inauguration. No capital deposited for either special trade was actually traded.
Legal Issues
- The appropriate aggregate sentence for five offences under the Corporations Act 2001 (Cth), including four counts of dishonest conduct in relation to a financial product and one count of carrying on an unlicensed financial services business
- Whether full-time imprisonment was the only appropriate sentencing disposition
- The weight to be given to mitigating factors, including a guilty plea, cooperation with authorities, the offender's personal circumstances, and a significant delay between the commencement of the ASIC investigation and the laying of charges
- How to structure an aggregate sentence to reflect the continuous course of conduct while incorporating some accumulation for separate offences
- The applicable discount for the guilty plea and any other entitlements by law
Decision
The offender pleaded guilty in the Local Court to all five charged offences. Two further matters (the two special trade offences) were admitted and listed on a schedule under s 16BA of the Crimes Act 1914 (Cth) to be taken into account on sentence for the sequence 7 offence. Her Honour found there was no real dispute that full-time imprisonment was the only appropriate disposition, and was satisfied of that under s 17A of the Crimes Act.
Sweeney J identified a 40% discount applicable to each indicative sentence, reflecting the offender's guilty plea and other entitlements recognised by law. Her Honour also reduced the total sentence to account for a four-and-a-half year delay between the commencement of ASIC's investigation and the offender being charged, noting that this delay would have caused prolonged uncertainty and stress, and that the offender's personal circumstances during that period would not have been assisted by the extended period of suspense.
The court treated the offending as a continuous course of conduct but incorporated some degree of accumulation across the separate offences. The unlicensed financial services business offence, while overlapping in time with the dishonest conduct offences, was treated as a distinct aspect of the offending for this purpose. General and specific deterrence were identified as significant sentencing considerations under s 16A(2)(h) of the Crimes Act.
An aggregate sentence of 11 years imprisonment was imposed, with a non-parole period of 7 years, commencing from 3 May 2024, the date the offender entered custody.
Orders Made
- Aggregate sentence of 11 years imprisonment, commencing 3 May 2024, expiring 2 May 2035
- Non-parole period of 7 years imprisonment, expiring 2 May 2031
- Indicative sentence for sequence 1: 4 years 2 months imprisonment
- Indicative sentence for sequence 5: 4 years 6 months imprisonment
- Indicative sentence for sequence 6: 4 years 9 months imprisonment
- Indicative sentence for sequence 7 (including s 16BA matters): 5 years 4 months imprisonment
- Indicative sentence for sequence 10 (unlicensed business): 12 months imprisonment
Key Takeaways
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Running a Ponzi scheme through which 585 investors were defrauded of over $180 million over approximately six years attracted an aggregate sentence of 11 years imprisonment with a 7-year non-parole period, even after a 40% discount for guilty pleas and other recognised entitlements.
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Significant pre-charge delay by a regulatory investigator (here, four and a half years between the commencement of ASIC's investigation and the laying of charges) can warrant a reduction in the total sentence, particularly where the offender experienced sustained personal uncertainty and stress during that period.
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A continuous course of criminal conduct does not automatically collapse all offences into a single sentence; the Supreme Court incorporated some accumulation to reflect the distinct nature of each offence, including the separate character of the unlicensed financial services business charge.
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Under s 17A of the Crimes Act 1914 (Cth), a sentencing court must be positively satisfied that full-time custody is the only appropriate sentence; in serious, large-scale financial fraud of this kind, that threshold was readily met.
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Dishonest representations made in connection with ostensibly legitimate investment products, including the use of an authorised representative status obtained for a separate fund to falsely legitimise an unlicensed business, are treated as aggravating features of the overall offending.
Legislation and Cases Referenced
Legislation
- Corporations Act 2001 (Cth), ss 911A, 1041G, 1311
- Crimes Act 1914 (Cth), ss 16A, 16BA, 17A
Cases
- Giourtalis v R [2013] NSWCCA 216
- Melville v R [2023] NSWCCA 284
- R v Daetz; R v Wilson [2003] NSWCCA 216
- R v Todd (1982) 2 NSWLR 517
- Scook v R [2008] WASCA 114
- Weber v R [2020] NSWCCA 103