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Supreme Court 6 December 2024

R v Alex & Ors

[2024] NSWSC 1565

Fraud & dishonesty
CRIMINAL LAW SENTENCE FEDERAL OFFENDERS CONSPIRACY TO DEAL IN PROCEEDS OF CRIME

Citation: R v Alex & Ors [2024] NSWSC 1565
Court: Supreme Court of New South Wales
Date: 6 December 2024
Judge: Fagan J

Background

Five offenders were sentenced following a lengthy jury trial concerning a large-scale scheme to defraud the Commonwealth through non-remittance of Pay As You Go (PAYG) withholding tax. The scheme operated through a labour hire business in Queensland conducted via two companies, GHRC Consolidated Pty Ltd and Civil Personnel Consolidated Pty Ltd. Under the Taxation Administration Act 1953 (Cth), an employer who withholds PAYG from wages is legally obliged to remit those amounts to the Commissioner of Taxation, typically within eight days after each payday for large withholders.

The four principal offenders began operating the labour hire business from 1 July 2018, with the first failure to remit PAYG occurring in August 2018. A fifth offender joined as a consultant in mid-April 2019. A sixth participant, Connell, pleaded guilty separately to aiding and abetting one of the principals in dishonestly causing loss to the Commonwealth. The AFP obtained interception warrants as early as January 2019 and conducted covert surveillance for 18 months, accumulating an extensive body of audio evidence before arrests were made on 21 July 2020.

The trial commenced on 12 February 2024, ran for approximately six and a half months, and included 56 days of Crown evidence, closing addresses, and a five-week summing-up period. The jury returned guilty verdicts on both counts in late August and early September 2024. The total PAYG losses to the Commonwealth arising from the scheme were assessed in the tens of millions of dollars across both the principal business and a separate formwork contractor, Superform (Queensland) Pty Ltd.

  • Whether each offender was guilty of conspiracy to dishonestly cause a loss to the Commonwealth, contrary to s 135.4(3) of the Criminal Code (Cth) (maximum penalty 10 years)
  • Whether each offender was guilty of conspiracy to deal with money of $1,000,000 or more believed to be proceeds of crime, contrary to ss 11.5(1) and 400.3(1) of the Criminal Code (Cth) (maximum penalty 25 years)
  • What sentences were appropriate for each offender, having regard to their individual roles, the duration of their participation, and applicable mitigating factors
  • How to sentence Connell for aiding and abetting a principal offender's dishonest conduct across two separate enterprises, including one (Superform) that was outside the scope of the jury's verdict

Decision

The jury convicted all five trial defendants on both counts. Fagan J sentenced each offender individually, taking into account the jury's verdicts, findings of fact drawn from the trial evidence, and the particular role and duration of involvement of each participant. Culpability was assessed as highest for the business owner and progressively lower for those with more peripheral or time-limited roles. The standard of proof beyond reasonable doubt was applied to facts increasing objective seriousness, while mitigating facts were assessed on the balance of probabilities.

Sentences for the four principal offenders and Bryers resulted in effective overall head sentences of 8 years and 6 months on the two counts, with single non-parole periods of 6 years fixed under s 19AB of the Crimes Act 1914 (Cth). Kirschberg and Bryers, both of whom ceased meaningful participation before the end of the charge period, received the same effective head sentence structure as the more active principals, though the commencement dates of individual terms differed to reflect partial custody already served.

For Connell, who pleaded guilty before trial as an accessory, Fagan J indicated a pre-discount sentence of 1 year and 9 months. After applying the discount for the guilty plea, Connell received a head sentence of 1 year and 6 months. Given that Connell's involvement was characterised as minimal and peripheral, his sentence included a recognisance release order after serving 8 months.

Fagan J also observed that the AFP and ATO could have disrupted the fraud in January 2019 when Business Activity Statements already disclosed $3.6 million in defaulted PAYG. Earlier intervention using the Commissioner's existing statutory powers could have prevented a further $7 million in losses over the subsequent 18 months of investigation, as well as an additional $3 million in losses associated with Superform. These observations were directed at regulatory practice, not at the offenders' culpability for sentencing purposes.

Orders Made

George Alex, Lindsay Kirschberg, Gordon McAndrew, Pasquale Loccisano, and Mark Bryers:
- Each offender sentenced to imprisonment on Count 1 (conspiracy to cause loss to the Commonwealth) and Count 2 (conspiracy to deal with proceeds of crime), with terms running partially concurrently
- Effective overall head sentence of 8 years and 6 months for each
- Single non-parole period of 6 years fixed for each, pursuant to s 19AB of the Crimes Act 1914 (Cth)
- Specific commencement and expiry dates differ between offenders to reflect pre-sentence custody

Lucas James Connell:
- Sentenced to imprisonment for 1 year and 6 months, commencing 6 December 2024 and expiring 5 June 2026
- Recognisance release order: to be released on 5 August 2025 (after serving 8 months) upon giving security to be of good behaviour for the remaining 10 months
- Warned that breach of the recognisance may result in proceedings before a Magistrate under s 20A of the Crimes Act 1914 (Cth)

Key Takeaways

  • A large-scale PAYG non-remittance scheme conducted through labour hire companies attracted effective head sentences of 8 years and 6 months for the principal offenders, with non-parole periods of 6 years, reflecting the substantial financial loss to the Commonwealth and the sustained nature of the conduct.
  • Where multiple counts carry different statutory maxima (here, 10 years and 25 years respectively), the sentencing court structured partially concurrent terms to achieve an overall sentence commensurate with the totality of the offending, applying the totality principle under federal sentencing law.
  • Peripheral involvement and early cessation of participation did not, of themselves, reduce an offender below the same effective head sentence range as the most active conspirators, though individual circumstances were reflected in the commencement dates and in the case of Connell, a significantly shorter term.
  • A guilty plea as an accessory, combined with minimal and peripheral involvement, resulted in a recognisance release order rather than full-term imprisonment, consistent with the court's assessment that Connell's offending sat at the lower end of the range.
  • Fagan J's observation that earlier regulatory disruption by the ATO and AFP could have prevented tens of millions of dollars in additional losses did not affect the sentencing outcome but reflects an ongoing judicial commentary on the resource costs and revenue consequences of prolonged covert investigations in tax fraud matters.

Legislation and Cases Referenced

Legislation:
- Criminal Code (Cth), ss 11.5(1), 135.1(5), 135.4(3), 400.3(1)
- Crimes Act 1914 (Cth), ss 19AB, 20A
- Taxation Administration Act 1953 (Cth), Schedule 1, ss 12-35, 16-70, 16-75, 16-95, 16-140

Cases:
- Chang v R [2016] NSWCCA 296
- Dickson v R [2016] NSWCCA 105
- DPP (Cth) v Goldberg (2001) 184 ALR 387; [2001] VSCA 107
- El-Chaar v R [2007] NSWCCA 16
- Kitson v R [2022] NSWCCA 166
- Kljaic v R [2023] NSWCCA 225
- R v Adam Cranston [2023] NSWSC 1004
- R v Anquetil [2020] NSWSC 995
- R v Cartwright (1989) 17 NSWLR 243
- R v Dev Menon [2023