Nakhl v R (Cth)

BATHURST CJ: I agree with the orders proposed by Hoeben CJ at CL and with his Honour’s reasons.

HOEBEN CJ at CL:

The total effective sentence imposed on the applicant was imprisonment for 10 years with a non-parole period of 6 years. The sentence commenced on 15 March 2019. The applicant will be eligible for parole on 14 March 2025 and the total sentence will end on 14 March 2029. A reparation order totalling $4,631,918.77 was also made in accordance with s 21B Crimes Act.

Between 1 January 2009 and 31 March 2013, the applicant worked as a financial adviser and provided financial advice to clients. In this period he provided advice to 12 clients who gave him a total of approximately $6,743,707 to invest on their behalf. None of the clients had expertise in financial planning.

The applicant gave financial product advice in the course of carrying on a financial service business in that, between 20 February 2009 and 30 April 2011, he was an authorised representative of Australian Financial Services Limited, now in liquidation, and he was authorised to give financial product advice.

In January 2010, the applicant purchased a financial adviser business, which had approximately 100 to 150 clients. On 26 August 2010, Sydney Financial Advisors Pty Ltd (SydFA) was incorporated.

The applicant was the sole director and ordinary shareholder. He maintained the day to day activities of the company, had about seven employees and operated from an office in Ultimo. On 2 March 2011, SydFA obtained an Australian Financial Services Licence which authorised it to give financial product advice. The 12 clients trusted the applicant to invest their funds, as he had promised.

The applicant used the clients’ funds as he pleased, including paying some of his personal and business expenses, depositing funds into his personal share and options trading accounts, making unauthorised investments on behalf of his clients, and using the funds to reimburse his other clients.

The applicant made false representations to his clients about the value of their investments and how their funds had been invested. He made false representations to his clients about the availability of capital protection, or a capital guarantee, and the true risk of some of his recommended investments. Several of the applicant’s clients told him that they wanted to limit their exposure to losses in their investing, and that capital protection or capital guarantee was an important consideration in their decision making.

As a result of the applicant’s dishonest conduct, the total loss to his clients was approximately $5,121,168.

Between 1 March 2009 and 12 December 2010, the applicant engaged in dishonest conduct in relation to financial services provided to Phillip Joy personally and Phillip Joy and Allan David Joy as trustees for the Phillip Joy Super Fund.

As a result of the applicant’s conduct, Mr Phillip Joy lost a total capital amount of $1,137,000 ($1,008,000 from the Joy Unit Trust Investment and $129,000 from the Joy Super Investment). The applicant has not returned any funds to Mr Joy.

Mr Phillip Joy became the applicant’s client in around early 2009. He was 62 years old, unemployed and looking for work. Part of the funds he wanted to invest was $50,000 from his late mother which he told the applicant he wanted to invest in something very safe.

In mid 2009, the applicant advised Mr Joy to establish a self-managed superannuation fund which the applicant would manage on Mr Joy’s behalf by purchasing shares in reputable Australian companies. The applicant also provided Mr Joy with a written document on 7 September 2009 titled “Fixed Interest Security” which detailed the terms of the investment. The applicant provided a further document on 9 October 2009 titled “Neutrally Geared, Capital Growth Managed Invest” to Mr Joy which detailed the terms of the investment and advised Mr Joy to borrow approximately $508,000, which he did.

In reliance on the applicant's advice, Mr Joy provided a total of $1,139,675 to the applicant. This comprised $1,008,000 to invest in the “Joy Unit Trust Investment” and $131,675 to invest in the “Joy Super Investment”.

By 10 September 2009, Mr Joy had provided $1,008,000 of capital to the Joy Unit Trust Investment. On the same day, the applicant withdrew $350,000 and invested it in a managed fund. This was in accordance with the agreed Joy Unit Trust Terms.

Between 14 and 24 September 2009, the applicant withdrew a total of $668,000 from the Joy Unit Trust Investment and used the money as he pleased. This included:

On 18 November 2009 the applicant gave a document to Mr Joy that stated, “total capital currently included under the Phillip Joy Unit Trust totals $1,008,000” and “Capital protection will be extended ...”.

The applicant redeemed the legitimate managed fund investment and instructed the fund manager to deposit the funds into an account controlled by the applicant. None of the $334,750 from the managed fund investment, which was the total at the time, was deposited into the Joy Unit Trust Investment, and none of it was returned to Mr Joy. As a result, all of Mr Joy’s initial capital investment of $1,008,000 had been used by the applicant as he pleased by 25 November 2009.

During this period, the applicant sent Mr Joy three portfolio valuation reports which purported to detail the current value of the Joy Unit Trust Investment. Mr Joy was therefore not aware that the applicant had in reality used all the funds as he pleased by 25 November 2009 until about April 2013.

Of the $131,000 Mr Joy invested in the Joy Super Investment, the applicant withdrew a total of approximately $124,000 and provided it to another of his clients. This withdrawal occurred between 15-22 July 2010 and was made without the consent or knowledge of Mr Joy.

Forty six days after the funds were provided by Mr Joy, the applicant had used all of the client’s money for his own purposes. Mr Joy lost a total capital amount of $1,137,000 ($1,008,000 from the Joy Unit Trust Investment and $129,000 from the Joy Super Investment). The applicant also used Mr Joy’s money to move funds into his bank accounts, to pay his credit card and to pay other clients.

Between 13 December 2010 and 10 October 2012, the applicant engaged in dishonest conduct in relation to financial services provided to Phillip Joy personally and Phillip Joy and Allan Joy, as trustees for the Phillip Joy Super Fund. The total loss to the Joy clients for this count was $2,175, being the remaining capital of the Joy Super Investment.

During this time, the applicant sent Mr Joy nine portfolio valuation reports in relation to the Joy Unit Trust Investment and a further nine portfolio valuation reports in relation to the Joy Super Investment. These reports indicated that all of Mr Joy’s capital was invested pursuant to the agreed terms. As a result, Mr Joy was not aware that the applicant had used all of his capital until about April 2013.

On 27 June 2012, the applicant sent Mr Joy an audio recording, which included the following statement “total portfolio is doing brilliantly”. The applicant stated in cross-examination that this statement was a complete lie.

The applicant also sent Mr Joy emails with attached graphs claiming that his investments had outperformed the ASX 200 index.

Between 1 January 2009 and 12 December 2010, the applicant engaged in dishonest conduct in relation to a financial product provided to Vincent Paul Belcastro and Joanne Belcastro personally and Vincent Paul Belcastro and Joanne Belcastro, as trustees for the Belcastro Super Fund.

As a result of the applicant’s dishonest conduct, the Belcastros lost a total of $1,254,595 from both their savings investment and their super investment.

The Belcastros were a married couple in their late 40s. The applicant contacted the Belcastros in late 2008 or early 2009, after the Belcastro's financial adviser died. The applicant said he was taking over the deceased’s financial advisory business.

The Belcastros wanted financial advice in relation to their retirement, as they were both looking to retire within three or four years. Their assets included $550,000 in superannuation and $1,000,000 in savings. Mrs Belcastro told the applicant she wanted very low risk investments for her half of the superannuation (approximately $225,000) and would prefer a capital guarantee. Mr Belcastro was comfortable taking higher risks with a small amount of his superannuation.

The applicant advised the Belcastros to put $1,000,000 of their savings into the applicant’s Commonwealth Bank account to obtain better returns. He said that the Commonwealth Bank account guaranteed a return, and that their capital was guaranteed. The Belcastros asked the applicant if the funds would stay in his bank account the same way that their current savings sit in a bank account, and the applicant said “yes”.

The Belcastros agreed to terms stated in the “Belcastro Savings Terms” and the “Belcastro Super Terms”. The Belcastros then provided $1,670,759 to the applicant. This money consisted of $1,065,000 (“the Belcastro Savings Investment”) and $605,759 (“the Belcastro Super Investment”).

On around 14 December 2009, the applicant requested the Belcastros to sign an authority which allowed the applicant to use up to $200,000 of the Belcastro Super Investment to trade in options on their behalf. The applicant did not explain to the Belcastros that by signing the authority they were authorising him to trade in options on their behalf. Nor did they understand the associated risks of trading in options.

On 21 December 2009, the applicant transferred $200,000 and used it to trade in shares and options on behalf of the Belcastros. By 29 April 2010, the applicant had lost $190,595 from trading options and shares. On 18 June 2010, the applicant transferred a further $100,000, taking the total amount of capital from the Belcastro Super Investment used to trade in shares and options to approximately $300,000.

By 16 October 2009, the Belcastros had provided $1,065,000 of capital to the Belcastro Savings Investment. Five days later on 21 October 2009, the applicant withdrew $1,064,000 from the account and deposited it into his personal margin loan account. This occurred without the consent or knowledge of the Belcastros.

The applicant sent eight false portfolio valuation reports in relation to the Belcastro Savings Investment, stating that the funds were invested, when he had in reality spent them for his own purposes. The applicant sent nine false valuation reports in relation to the Belcastro Super Investment, which did not accurately reflect how their funds were invested nor reflect the losses that the applicant had incurred trading options. The reports did not detail the amounts of capital the applicant had withdrawn to use as he pleased.

Between 31 January 2011 and 26 February 2013, the applicant engaged in dishonest conduct in relation to a financial product provided to the Belcastros personally and the Belcastros as trustees for the Belcastro Super Fund.

The Belcastros lost all of their remaining capital, being $416,000, but were able to redeem about $62,000 from a managed fund investment. Their net loss came to $353,346.

The applicant redeemed one of the managed fund investments, resulting in $103,876 being deposited into the Belcastro Super Investment. The applicant did not seek authority from the Belcastros, who did not want this investment to be redeemed.

The applicant withdrew a total of $47,000 from the Belcastro Super Investment and deposited the funds in his own business bank account.

In late 2011, the applicant falsely told the Belcastros that he had been successfully trading options and he gained their permission to invest a further $69,000 in options. He did not tell the Belcastros that he had already used approximately $495,000 of their capital since 21 December 2009 to trade in options and had sustained a loss of $190,000 by April 2010.

During this period, the applicant used a total of $265,000 from the Belcastro Super Investment to trade in shares and options. By 21 June 2012, he had lost $272,703 from the $265,000 invested.

The applicant provided 14 false portfolio valuation reports in relation to the Belcastro Savings Investment and 13 false portfolio valuation reports in relation to the Belcastro Super Investment. As a result, the Belcastros did not know that most of their investment funds had been used up by the applicant and not invested in accordance with the agreed terms.

The applicant made a further five false representations to the Belcastros that their funds were validly invested. The applicant sent a number of emails to the Belcastros reassuring them that all was well with their money.

Later in 2013 Mr Belcastro requested the return of his funds. The applicant said there were no funds to return.

Between 1 July 2010 and 16 November 2010, the applicant engaged in dishonest conduct in relation to a financial product for Marie White.

Ms White first met the applicant in January 2010 when he made a superannuation presentation at the school where she worked as a teacher. Ms White was 41 and had sold a property in the UK. She wanted advice as to what to do with the proceeds from the property sale while she was looking to buy a property in Australia.

The applicant told Ms White that he could put her money in a high interest account earning 7-8 per cent per annum. He told her that he could get better rates than the average person because he was a financial advisor. The advice given by the applicant was dishonest.

Around 3 September 2010, Ms White transferred $230,000 into the SydFA bank account in accordance with the terms agreed upon. This account was controlled by the applicant. The closing balance of the account was $230,596.

On the same day as Ms White’s deposit, the applicant transferred $190,000 into his personal bank account and his CommSec account. Three days later, he transferred $38,000 into his personal bank account and his credit card account. The applicant’s withdrawals were made without Ms White’s consent or knowledge.

In early November 2010, Ms White asked for the return of her funds. The applicant told her he was trying to get her money back. This was a false statement because the applicant had not invested her funds in accordance with the terms of their agreement.

On 11 November 2010, the applicant sourced funds from other bank accounts related to him and repaid $233,043 to Ms White.

Between 1 January 2009 and 12 December 2010, the applicant engaged in dishonest conduct in relation to a financial service provided to Andrew and Annette Gadsby as trustees for the AW Gadsby Super Fund.

Mr Gadsby was a company director of a small brand consultancy firm and Ms Gadsby was an art teacher. They had no financial qualifications. Ms Gadsby met the applicant when he made a superannuation presentation at the school where she worked.

On 29 July 2009, the Gadsbys met with the applicant and told him they wanted low risk investments. They also told the applicant they could not afford to lose any of their money because it was all they had for their retirement.

Between 29 July 2010 and 11 October 2010, the applicant advised the Gadsbys that their funds would be invested in a range of investments and a self managed super fund would be set up. He said most of the money should be invested in Exchange Traded Options (ETOs) which he described as quite safe, low risk, stable and could provide a reliable return on funds in the range of -2 to 11 per cent per annum. The applicant said that capital insurance could be provided that would guarantee they did not lose any capital.

This advice was dishonest, because the applicant was not able to provide capital insurance. Further, ETOs were not low risk and the worst return was below -2% per annum.

Between 1 April 2011 and 31 March 2013, the applicant engaged in dishonest conduct in relation to financial services provided to the Gadsbys as trustees for the AW Gadsby Super Fund.

As a result of the applicant’s conduct, the Gadsbys lost a total of $193,019.

This amount was the entire amount provided by the Gadsbys to the applicant. Three days after the initial funds were provided, the applicant transferred $180,000 to his own business bank account without the knowledge or consent of the clients. He then used these funds for his own purposes, which included but was not limited to transferring:

On 7 October 2011, the applicant told the Gadsbys that their investments were going “very well”. The applicant did not tell the Gadsbys that he had already used $180,000 of their capital as he pleased and that only $7,177 remained. He suggested they invest $20,000 of the Gadsby Super Investment in accordance with his “special strategy” and the Gadsbys agreed.

The applicant transferred a further $35,000 from the Gadsby Super Investment account to his own business bank account and used the funds as he pleased.

In November 2011, the applicant provided a false portfolio valuation report to the Gadsbys stating that all their funds were invested. The Gadsbys relied on the report and remained ignorant of the fact that the applicant had used their funds as he pleased and not invested it in accordance with the agreed terms.

In March 2013, the Gadsbys asked for the return of their funds from the super account. The applicant did not return any of their funds.

Between 1 June 2010 and 12 December 2010, the applicant engaged in dishonest conduct in relation to a financial service provided to Mr Bharucha and Ms Maharaj as trustees of the P Bharucha Super Fund.

Mr Bharucha was an engineer and employed as a senior power consultant. He had no financial qualifications and relied on the advice of the applicant. He was 63 and told the applicant that he planned to retire in a few years’ time. He wanted secure, low risk and conservative investments. Security was his primary concern and he wanted to avoid losing any money.

During a telephone conversation in mid 2010, the applicant told Mr Bharucha that he agreed security was very important given Mr Bharucha’s age and intention to retire soon, that he had a low risk, low return strategy and that capital would be guaranteed. He said that a self managed super fund should be established and that his funds would be invested in term deposits and Australian shares and property. Although disputed by the applicant, the Crown case was that the applicant guaranteed a return of about 10 per cent per annum, even with low risk investments.

The sentencing judge found that the oral representations by the applicant in mid-2010 that he could guarantee a return of about 10 per cent with low risk investments and that Mr Bharucha’s capital would be guaranteed, were dishonest.

Between 1 January 2011 and 23 October 2012, the applicant engaged in dishonest conduct in relation to a financial product provided to Mr Bharucha and Ms Maharaj as trustees of the P Bharucha Super Fund.

The total loss suffered as a result of the applicant's conduct was approximately $509,000.

Mr Bharucha’s self managed super fund provided a total of $688,000 to the applicant between 24 January 2011 and 20 December 2012 (“the Bharucha Super Investment”).

Between 24 February 2011 and 30 May 2011, the applicant withdrew a total of $545,000 from the Bharucha Super Investment for unauthorised trading. He bought options and sold uncovered call options, which were much riskier than the investment strategy authorised by the clients.

In mid March 2011, Mr Bharucha told the applicant “I want to play it down the safer side. I want to take the capital protection, with lesser profits”. The applicant replied “Yes, I think that is the way to go”.

On 8 or 9 May 2011, Mr Bharucha told the applicant “I want a lower risk investment with this money … This is quite a large amount. I want it to be safe and I don't want to lose any money”. The applicant replied “I will make low risk investments for you”.

On 27 June 2011, the applicant transferred $30,000 from the Bharucha Super Investment into his business bank account and used the funds as he pleased.

On 25 May 2012 the applicant sent Mr Bharucha an email that stated “We've protected every single client … in terms of your capital”.

On 25 May 2012, the applicant withdrew a further $100,000 from the Bharucha Super Investment and deposited the funds into other clients’ accounts. On 5 June 2012, the applicant emailed Mr Bharucha and said “The important thing is that the capital is preserved”. By 21 June 2012, the applicant had lost $221,726 of the super funds capital by trading shares and options.

On 21 September 2012, Mr Bharucha contacted the applicant and said he had further funds to invest. Mr Bharucha said that capital protection was his prime concern. The applicant recommended that the funds be invested in options. He told Mr Bharucha that his capital would be protected and that his trading had been going very well.

In total, approximately $544,000 of the clients’ funds were used for trading shares and options and $130,000 was spent by the applicant as he pleased.

The applicant sent five false portfolio valuation reports to the clients. The reports were relied upon by the clients, who believed that the funds were invested as agreed and that the capital was secure. The reports did not detail the amounts of capital the applicant had withdrawn to use as he pleased. Further, the amounts did not reflect the substantial losses the applicant had made trading in shares and options.

Between February and April 2013, the applicant met with Mr Bharucha. Mr Bharucha became aware that his funds had not been invested in accordance with the agreed terms and that the applicant had accrued large losses trading shares and options. The applicant did not return any of the funds. Mr Bharucha was able to recover around $179,000 from his investments.

Between 1 January 2011 and 26 February 2013, the applicant engaged in dishonest conduct in relation to a financial service purportedly provided to Phillip and Merlene Dudman as trustees for the PJ and MM Dudman Super Fund.

The applicant used $270,000 of the $280,000 which the Dudmans provided to him, as he pleased and without the consent or knowledge of the clients. The applicant did not return any funds to the Dudmans. However, they were able to recover about $48,000, bringing their total capital loss to $232,000.

The Dudmans were clients of the financial advisory business bought by the applicant. The Dudmans were in their 60’s and Mr Dudman told the applicant he was about to retire when the applicant contacted them in late 2010 or early 2011.

The applicant advised the Dudmans that a self-managed super fund should be established and that investments should be made in blue chip shares. The applicant said the return would be around 10 per cent per annum. He said their capital would be secure and protected from the fluctuations of the share market. The applicant provided written advice to the Dudmans specifying that $240,000 would be invested in shares that have ETOs held over them. He said the total expected return from the ETOs per annum was 11 per cent and that the worst return would be -2 per cent.

The investment advice from the applicant was dishonest as he could not provide capital protection or 10 per cent return per annum. The Dudman’s capital was not safely invested in shares and options, and the lowest return was worse than -2 per cent.

The applicant also sent a false portfolio report indicating that the $280,000 was invested in accordance with the agreed terms. The Dudmans relied upon the false report.

Between 5 May 2011 and 31 July 2012, the applicant engaged in dishonest conduct in relation to a financial product provided to Dhun Madon and Cyrus Madon as trustees for the Madon Super Fund.

The Madons were both in their 60’s when they met the applicant. They told the applicant that they did not want any risky investments and that their capital was to be completely safe so that they could provide for their retirement.

The Madons provided a total of $1,411,238 in funds. This included $861,238 invested in the Madon Super Investment and $550,000 invested in the Madon CBA Trust Investment.

Between 7 and 9 July 2010, the applicant invested $810,900 of the Madon Super Investment funds in accordance with the agreed terms.

About a year later, the applicant transferred $70,000 and then $220,000 from the Madon Super Investment funds into his business bank account and used the funds as he pleased. This included depositing the funds into the accounts of his other clients and transferring funds onto his credit card and into his personal margin loan account.

In October 2011, the applicant told Mr Madon that options were very safe and a good way to save money. The applicant told the Madons that as long as he was alive they would never lose their money. This was dishonest because options are inherently risky and the applicant could not ensure the Madons would not lose more if they invested in them.

On 27 October 2011, the applicant provided written advice to the Madons as to the value of their investments. He stated that the Madon Super Investment was currently valued at $911,252. This information was dishonest because by this stage the applicant had used $290,000 of the funds as he pleased.

On 15 November 2011, the applicant withdrew a further $200,000 from the Madon Super Investment and put it into broking accounts in his own name. Later, he withdrew a further $29,452 and then $80,000 from their funds and again put these funds into broking accounts in his own name.

By April 2012, the applicant had used approximately $600,000 of the funds as he pleased, including paying some of his personal expenses.

Around 14 November 2011, Ms Madon provided a further $300,000 to the applicant to invest. The applicant provided dishonest advice to Ms Madon, especially with regard to capital protection. He could not guarantee that Ms Madon would get her capital back. Nine days after these funds were received, the applicant deposited $170,000 into broking accounts in his name and $130,000 into other clients’ accounts.

On 3 May 2012, Ms Madon provided a further $250,000 to invest. The applicant used all $250,000 as margin to trade options on behalf of the Madons. This was unauthorised.

The applicant provided the Madons with 13 false portfolio valuation reports. The reports did not detail the amount of capital the applicant withdrew and used as he pleased. Furthermore, in reliance on the false valuation reports, the Madons provided the applicant with additional funds for him to invest, which totalled $550,000.

In July 2012, the Madons instructed the applicant to return all of their funds. He falsely told them the funds were in cash. In August 2012 the applicant provided the Madons with $762,773, which he obtained from selling personal assets and assets from other businesses.

The Madons were able to redeem approximately $95,000 from a managed fund and a further $131,000 from SydFA’s insurer. They also withdrew $80,000 of capital during the course of the investments. Therefore, the total loss to the Madons was $428,017.

In total, the applicant used almost $900,000 of the Madons’ money for his own purposes.

Between 1 December 2011 and 26 February 2013, the applicant engaged in dishonest conduct in relation to a financial product provided to Kayleen Crotti personally and Kayleen Crotti and Lindsey Jones as trustees for the Kay Crotti Super Fund.

In total, the applicant spent $634,000 of Ms Crotti’s money for his own purposes. No funds have been returned to Ms Crotti but she was able to recover $44,000 from her investments. Ms Crotti’s net loss was $1,012,016.

Ms Crotti was recently divorced and had a dependent child. She made it clear to the applicant that she wanted her funds to be protected. She was very inexperienced with handling money, having left school at 15 and never having held a bank account in her own name. Her former husband had given her a cash allowance.

The applicant advised her to invest $835,000 in shares and options and $93,000 in cash. He advised Ms Crotti that her capital would be protected and that this strategy would generate income of 1.5 per cent per month. He also advised her to set up a self-managed super fund that he would manage. Ms Crotti provided funds totalling $1,056,016.

Of the $1,056,016 provided by Ms Crotti to the applicant, $926,294 was to be invested in the Crotti Non-Super Investment and $129,722 was to be invested in the Crotti Super Investment.

Between 5 April and 8 May 2012, the applicant traded $288,000 of the Crotti Non-Super Investment in shares and options. On 8 May 2012, the applicant withdrew a total of $320,000 from the Non-Super Investment and transferred $85,000 into accounts in his own name and $235,000 into other clients’ accounts.

He charged Ms Crotti $30,000 for a “capital protection expense” that was not actually in place.

On 25 May 2012, the applicant emailed Ms Crotti with a voice recording of him attached. He said “We’ve protected every single client that is getting this voice recording in terms of your capital”. The applicant did not inform Ms Crotti that he had already spent $350,000 of her capital as he pleased.

On 28 May 2012, the applicant withdrew a further $194,000 from the Crotti Non-Super Investment and transferred $31,327 into his business bank account and the remaining $162,673 into his own bank and broking accounts.

By 28 May 2012, approximately four months after Ms Crotti gave the applicant $926,294 to invest, the applicant had used $544,000 as he pleased.

The applicant sent three false portfolio valuation reports relating to the Crotti Non-Super Investment to Ms Crotti, stating that the full amount was invested. The reports did not detail the amounts of capital the applicant had withdrawn to use as he pleased or lost trading shares and options.

The sentencing judge noted that although the applicant had pleaded guilty, he did not do so at the first available opportunity in that the plea came on the fifth day after the date set for trial. Accordingly, her Honour gave a reduction in sentence of 12 per cent for the utilitarian value of the plea.

The sentencing judge summarised the background to the offending as follows.

The sentencing judge noted that on 31 January 2012, the Australian Securities and Investment Commission (ASIC) obtained orders freezing the applicant’s assets. On 2 September 2012, the applicant placed his companies into voluntary liquidation and on 4 September 2013, he was made bankrupt.

Her Honour further noted that although the Belcastros, Mr Joy and Mr Bharucha had received partial compensation from a third party, there was no evidence that the applicant had repaid or entered into any arrangement to repay, any of his victims.

Tendered before her Honour were three video clips which were sent to clients. Her Honour described the content of the video clips as follows. Each clip showed the applicant confidently communicating with his clients and reassuring them that their investments were in good hands. In one of the clips, dated 12 April 2013, the applicant confidently discussed volatility in the share market and his strategy for dealing with volatility as a substitute for lack of growth. The other video clips had similar content.

Her Honour had before her a number of victim impact statements, three of which were read to the court. In relation to those statements, her Honour said:

There was also before the sentencing judge a 24 page affidavit sworn by the applicant. The applicant was extensively cross-examined on the contents of that document.

When dealing with the applicant’s subjective case, her Honour recorded the following which was not controversial. The applicant was born in February 1981. His parents were of Lebanese heritage. His father was retired and his mother is an accountant. At school he was bullied and ostracised. The applicant attributed this to being ethnically different and because he suffered from various health conditions, including Tourette syndrome. He obtained a job as a mortgage consultant in mid 2006 and was taught on the job. He was naturally good with figures. In 2007, he did a four day certificate course in mortgage broking and became employed in a mortgage broking business. In about 2006, he commenced trading as a sole trader. In 2008, he qualified as a financial adviser by completing a compliance course which included a written examination. He commenced working as a financial adviser in June 2008. In due course he purchased client books which allowed him to set up his own business at the age of 28.

Her Honour reviewed the contents of the affidavit as follows:

Her Honour noted that in the rest of the affidavit, the applicant set out the contributions he had made in recent times to charities and voluntary work which he had performed for the community. He had been working casually and had also attended university where he obtained a degree in Applied Mathematics. He had provided assistance to others who suffer from autism. He deposed to being medicated for depression.

Apart from her own comments in relation to the applicant’s affidavit, her Honour also had regard to the results of the cross-examination by the Crown Prosecutor. Her Honour set out those matters as follows:

Her Honour next had regard to a report from a forensic accountant, Alex Bell, obtained on behalf of the applicant. Her Honour did not see a need to go into his evidence in any particular detail because of the limitations which affected his report. The most significant limitation was that the report was based solely on what Mr Bell had been told by the applicant and his mother. Mr Bell had not been provided with full documentation, but only some bank statements. As a result, her Honour made the following observations and findings concerning the evidence of Mr Bell:

In summary, her Honour said:

Her Honour considered and assessed the psychiatric evidence which was before her. This evidence comprised reports from a psychologist, Dr Julie Peterson and two psychiatrists, Dr Olav Nielssen and Dr Yvonne Skinner. As well as providing reports, Dr Peterson gave evidence and was cross-examined.

Her Honour noted that it was uncontroversial that where it is established that an offender suffers from a mental condition, that may be taken into account in four ways:

Her Honour noted that a person’s mental condition can also be taken into account as a factor that goes into the subjective mix, along with other relevant subjective factors (s 16A(m) Crimes Act).

Her Honour further noted that there was a measure of agreement between the parties in relation to the medical evidence. It was agreed that the applicant did not suffer from a mental illness such that he did not appreciate the nature and quality of his actions or the moral wrongness of them. Dr Peterson, as a psychologist, was not qualified to give a medical diagnosis. The parties also agreed that the applicant did suffer from some mental condition, or conditions, although the relationship of those conditions to the offending remained in issue.

There was no issue that in January 2006, the applicant had issues that led to him having suicidal thoughts for some years. In the course of him receiving treatment, Professor Sachdev, a neuropsychiatrist, opined that the applicant’s primary disorder was possibly Tourette syndrome, with significant obsessive compulsive symptoms. Professor Sachdev thought his depression was secondary and that he did not suffer from bipolar disorder or schizophrenia.

Dr Skinner was retained by the prosecution. She interviewed the applicant twice and assessed his intelligence as in the superior range. She noted a degree of grandiosity when the applicant described his achievements. Dr Skinner found this to be consistent with a narcissistic personality type. Dr Skinner also watched videos of him. In her report, she said:

Dr Skinner reviewed his medical records from 2006 and also reviewed other reports, including those of Dr Nielssen in 2014. She noted the diagnosis of Dr Nielssen of autism spectrum disorder, obsessive compulsion disorder, Tourette syndrome and possible bipolar disorder. Dr Skinner also reviewed a number of witness statements, the applicant’s school records and the report of Dr Peterson.

Her Honour noted that Dr Skinner disagreed with Dr Peterson. Dr Skinner set out her findings under the heading “Summary and Conclusions” in her report of 20 April 2018:

Having carefully examined the contents of the reports and the cross-examination of Dr Peterson, the sentencing judge set out her conclusions as follows:

The Crown conceded that the applicant would find imprisonment more difficult.

Having examined all of the evidence, the sentencing judge accepted the Crown’s submission, which was based on the opinion of Dr Skinner:

On the basis of the foregoing material, her Honour set out her findings as to the facts and circumstances of the offences and their objective seriousness:

In relation to the applicant’s subjective case, her Honour took into account the absence of any prior convictions. That was qualified to some extent by the fact that the applicant could not have committed these offences without being of good character.

Her Honour found the issue of contrition to be a difficult one. On the one hand, there was the fact of the belated pleas of guilty as well as expressions of regret in the affidavit. On the other hand, it was put by the Crown that the applicant had still not accepted responsibility for his offending and that the pleas of guilty were made in the face of a very strong Crown case. Taking all of those matters together, her Honour concluded that the applicant was remorseful and contrite and that he was truly sorry for the losses incurred by the victims. Nevertheless, her Honour noted that the remorse was somewhat limited in that there was a lot of self pity in the affidavit and also an attempt to justify and excuse his conduct.

Her Honour found that expressions of contrition and remorse fed into the consideration of the applicant’s prospects of rehabilitation and the likelihood of him reoffending. Her Honour found that the assessment of those matters to some extent depended upon the applicant’s level of insight and the extent to which that might develop positively with time. Her Honour accepted the applicant’s submission that although his insight into the offending was once deficient, it was improving with the passage of time.

The findings made by her Honour were:

Her Honour also took into account testimonials provided for the applicant and the fact that the applicant had tutored and mentored through Mission Australia and had mentored young people who suffer autism.

For those reasons, her Honour found that the applicant did have good prospects of rehabilitation and was unlikely to reoffend. Her Honour found that the applicant was a very intelligent young person whom the videos showed to be charismatic.

Her Honour rejected the propositions that there should be a further discount applied to the applicant’s sentence because of his assistance to authorities in that while the applicant did not obstruct the investigation, he provided little assistance to it. Similarly, her Honour rejected the proposition that delay should be taken into account as a discounting factor. This was because of the complexity of the investigation that was required to set out fully the extent of the applicant’s offending.

Her Honour noted that when sentencing she had to take into account the four offences on the s 16BA schedule in that these offences represented additional criminality which must be reflected in the sentences ultimately imposed for the principal offences in respect of counts 1, 2, 4 and 5. Her Honour noted that each offence on the schedule carried a maximum penalty of 5 years and was a serious offence of a like nature to those for which the applicant was being sentenced.

Her Honour had regard to Pearce v The Queen (1998) 194 CLR 610; [1998] HCA 57 and noted its requirement that the court impose a sentence for each offence and then determine how the sentences were to be served. Her Honour had regard to the principle of totality in that there were eight separate counts on the indictment for which sentence was to be imposed. Her Honour noted that each offence was discrete in terms of its criminality and that no single offence fully comprehended the criminality of any other. It was therefore necessary for there to be a degree of accumulation.

On that issue, her Honour said:

The sentences ultimately imposed by her Honour were as follows:

It can be seen from those sentences that the sentence for count 3 sets a start point of imprisonment for 3 years. Count 6 is accumulated by 6 months on count 3. Count 7 is accumulated by 9 months on count 6. Count 8 is accumulated by 9 months on count 7. Count 1 is accumulated by 12 months on count 8. Count 2 is accumulated by 12 months on count 1. Count 4 is accumulated by 12 months on count 2. Count 5 is accumulated by 12 months on count 4.

The applicant submitted that her Honour’s finding that the offences were in the high range of objective seriousness was substantially influenced by her conclusion that there were no “unusual circumstances surrounding the offences”. The applicant submitted that that conclusion was contrary to established facts which her Honour found.

These were:

The applicant submitted that these factors were all very unusual for offences of this type. He submitted that the existence of these factors suggested that the seriousness or moral culpability of the offending was significantly lower than as categorised by her Honour.

The applicant further noted that her Honour found that the applicant’s mental conditions created, at least in part, a greater risk of him engaging in risky investments. This was so even though her Honour found that his narcissistic condition provided just “a small diminution in moral culpability”. The applicant submitted that despite that qualification, the effect of her Honour’s finding was that his mental condition provided a significant insight into why it was that he took so many risks with his client’s funds.

The applicant accepted that this Court could only reach a different conclusion to that of her Honour concerning the objective seriousness of the offending if her Honour’s finding was outside the range that was properly available to her to conclude and was therefore plainly unreasonable. The applicant further acknowledged that the Court of Criminal Appeal should be slow to determine such matters for itself differently – Mulato v Regina [2006] NSWCCA 282 (Mulato); Stoeski v Regina [2014] NSWCCA 161 at [46] (Stoeski) and Ramos v R [2015] NSWCCA 313 (Ramos).

The applicant submitted that despite those discretionary considerations, her Honour did overlook the significance of the very facts that she found which in turn lead to an erroneous assessment of the seriousness of the offending. The applicant submitted that properly characterised, each offence was marked by a desire by him to maximise profits for his clients in circumstances where he took too many risks to do so contrary to his express instructions. The applicant submitted that while his conduct was exceedingly reckless and was dishonest, he was not motivated merely by the type of greed which motivates scams to steal clients’ money through a “Ponzi style” scheme. The applicant submitted that at all times he intended that the victims received not just their money back but increased profits.

The applicant submitted that in those circumstances, it ought not to have been concluded that the offending was high range offending. He submitted that serious though the conduct was, it was not high in the range.

The applicant’s submissions on this ground focused on a limited number of factors relevant to the nature and circumstances of the offending rather than the whole of the applicant’s offending which the sentencing judge considered in determining the nature and circumstances of the offending. For example, the corollary to the applicant’s statement that he sought to maximise profits for his clients is that he deliberately disregarded the explicit instructions of his victims who were seeking safe, rather than risky and profitable investments.

It should also be noted that the applicant gave evidence that he believed that his clients’ funds were his own. It is difficult to reconcile that evidence (in chief) with the assertion that he was seeking to maximise profits for the benefit of his clients. It also sits uneasily with the unchallenged evidence that the applicant deposited clients’ funds into his own personal account and used those funds for personal expenses.

The applicant’s conduct was intentionally dishonest. There was no aspect of recklessness involved in what he did. What was important in formulating an appropriate sentence was the type of scheme the applicant had devised, not how it was different to other schemes. The applicant’s scheme was to dishonestly use his client’s money for his own purposes out of greed and to benefit himself financially. As part of that scheme, he systematically sought to deceive his clients by not only giving false assurances concerning where their money had gone, but in using technology to create a false impression that the funds deposited with him were safe. At no time did he attempt to provide security for the moneys made available to him.

An important element of the applicant’s scheme, and therefore his offending, was the concerted and continuing effort to deceive his clients into believing that the moneys given to him were secure. In some cases, this fraudulent façade was maintained for years as a result of false portfolio valuation reports and misleading videos. The applicant knew and intended his clients to rely upon those reports and videos as providing an accurate reflection of the value of their investments. This conduct prevented his victims from taking any timely action to rescue their investments.

Although on one occasion in her Honour’s lengthy judgment she did refer to each individual offence being in the high range, it is clear from the whole of the judgment that her Honour’s finding in that regard was directed towards the totality of the offending. This is clear from the fact that the individual sentences were not such as would be appropriate for an assessment of offences in the high range. What her Honour clearly had in mind was the total effect of the offending and the substantial moral culpability which it gave rise to. This can be seen at [138] hereof where her Honour referred to the authorities which endorsed a “broad brush” approach when sentencing for a number of offences.

In finding an absence of malice, I understand her Honour to mean that unlike more conventional offending, there was no intention on the part of the applicant to steal from the victims the funds which they had made available to him. Nevertheless, the effect for the victims was the same. This is particularly so when regard is had to the systematic efforts on the part of the applicant to deceive his victims as to what had happened to their money. The money was placed at risk and lost, regardless of the applicant’s intentions.

In any event, having lost over $5 million of his victims’ money over a period of four years, the applicant must have realised that the way he was applying moneys advanced to him by them was not only risky, it was almost certain to fail rather than produce positive results.

The findings made by her Honour as to his understanding of what he was doing, which involved a deliberate and consistent disregard of his clients’ instructions, well justify her Honour’s characterisation of the offending as being in the high range. Those findings were:

While buying a number of properties with his clients’ money, paying his credit card with their funds and covering his own trading losses with their funds might not involve deliberate malice as was found by her Honour, the effect was the same. This is so though his intention at the time may not have been to permanently deprive his victims of their money.

Importantly, none of her Honour’s factual findings have been challenged on appeal. Accordingly, each of those facts and the inferences which her Honour drew from them were available to be properly taken into account by her Honour when assessing the objective seriousness of the offending. Included in those factual findings was that the victims were vulnerable and dependent on the applicant for financial advice and that he was well aware of their vulnerability. Despite the applicant’s protestations that his overall intention was to maximise their profits, none of his victims made that request.

Finally, as the applicant acknowledged, a finding of objective seriousness is a matter classically within the discretion of the sentencing judge in performing the task of finding facts and drawing inferences from those facts. This is the effect of the judgments of Spigelman CJ and Simpson J in Mulato: see also Stoeski at [46] and Ramos. As Basten JA (with whom Rothman and Fagan JJ agreed) stated in Baines v R [2016] NSWCCA 132 at [15], consideration of the objective seriousness of an offence is an evaluative exercise that requires assessment of a range of factors which may be susceptible of significant differing views. His Honour said that the difficulties in intervening in such a determination were at their height in circumstances where there has been a trial in which the sentencing judge has been able to assess the evidence of the witnesses.

Here there was no trial but the sentencing judge heard two days of evidence, including evidence from the applicant. The sentencing judge was in a significantly more favourable position than this Court to assess the evidence of those witnesses.

This ground has not been made out.

The applicant accepted that the existence of eight different charges involving different victims required some degree of accumulation. He submitted, however, that there was a significant overlap in both the objective and subjective features of each offence. He submitted that the offences were all committed in the course of his business. The manner in which he conducted his business was central to an assessment of the seriousness of each charge. In each instance his motivations were similar or the same. His methodology of offending was the same or similar and the subjective features were the same in each instance. The applicant submitted that in those circumstances, a total effective sentence of 10 years was inappropriate having regard to all of the overlapping characteristics of the offences. The applicant submitted that the result “looks wrong” (Mill v The Queen (1988) 166 CLR 59; [1988] HCA 70 at [63] per Wilson, Deane, Dawson, Toohey and Gaudron JJ). This was because when the specific sentence for each offence were added together, the total effective sentence was disproportionately high, i.e. approximately 29.5 years. The sentence exaggerated the total criminality involved in all the offences.

As a start point, the applicant accepted that some degree of accumulation was necessary even though there were similarities between the counts. It is also trite to observe that the assessment of concurrency and accumulation involves a discretionary assessment by the sentencing judge. The only question here is whether her Honour’s exercise of discretion was so unbalanced that it required reduction in the amount of accumulation in order to observe the principle of totality.

There is no doubt that her Honour was well aware of the relevant principles. This was clear when her Honour said:

The relevant principles were set out and applied by Howie J (with whom Adams and Price JJ agreed) in Cahyadi v Regina (Cahyadi) [2007] NSWCCA 1. On this issue, Howie J said:

Her Honour determined that counts 1, 2, 7 and 8 were more serious because of the amounts involved. There was also the fact that counts 1, 2, 4 and 5 had to take into account the four matters on the s 16BA schedule. The effect of the four schedule matters was to increase the criminality involved in counts 1, 2, 4 and 5. Her Honour reflected that increased seriousness in the length of sentences and the start dates which indicated the extent of the accumulation (see [149] hereof).

Applying Cahyadi, it is clear that although there were similarities between the offences in that the applicant applied the same techniques to deceive his victims, the criminality in each offence was quite different. The amounts involved were different and the identity of the victim was different. It could not be said that the criminality in one of the offences encompassed the criminality in all.

Nevertheless, her Honour noted that although there was accumulation the extent of it would not be great. When one has regard to the total length of the sentences imposed, i.e. 29.5 years, but also has regard to the single non-parole period of 6 years with a head sentence of 10 years, it can be seen that the extent of the concurrency was considerable or put another way as her Honour did “the degree of accumulation [is] not great”.

This ground of appeal has not been made out.

The applicant submitted that this ground of appeal was interrelated with Grounds 1 and 2. He submitted that the total effective sentence was manifestly excessive when proper consideration was given to it and there should have been a finding that the objective seriousness was not as high as her Honour had assessed. The applicant submitted that in addition his subjective circumstances were by and large entirely favourable. He had pleaded guilty and shown some degree of remorse for his offending, he had no previous criminal record, he was unlikely to reoffend and his time in custody was likely to be more onerous for him than for most other offenders because of his complex mental condition.

The applicant submitted that the total sentence imposed was unreasonable or plainly unjust. This was either because of the discrete errors identified in Grounds 1 and 2 or otherwise because of the misapplication of some principle that was not overtly demonstrated in her Honour’s judgment. The applicant submitted that imprisonment for 10 years, which was the total effective sentence, was a very harsh sentence for an offender who committed the offences in the circumstances identified by the sentencing court.

The applicant submitted that this Court should impose a lesser sentence and that the independent exercise of the sentencing discretion ought lead to a different and less severe total effective sentence and non-parole period.

In Obeid v R (2017) 96 NSWLR 155; [2017] NSWCCA 221, R A Hulme J conveniently summarised the principles relevant to this ground of appeal. His Honour stated:

The difficulty confronting the applicant in making out this ground of appeal is as set out in the above quotation. There is no single correct sentence and sentencing is not a mathematical exercise. Sentencing judges are required to reach a sentence for each offence by balancing many different and conflicting features (Markarian v The Queen (2005) 228 CLR 357; [2005] HCA 25 at [27]; Barbaro v The Queen; Zirilli v The Queen (2014) 253 CLR 58; [2014] HCA 2 at [34].) As Hayne J stated in AB v The Queen (1999) 198 CLR 111; [1999] HCA 46 at [128]:

There is no issue that a non-parole period is one that must be imposed because justice requires that the offender serve that period in custody (Muldrock v The Queen (2011) 244 CLR 120; [2011] HCA 39 at [57]). The non-parole period represents the minimum period of actual incarceration that the offender must spend in fulltime custody having regard to all the elements of punishment. This includes rehabilitation, the objective seriousness of the offending and the offender’s subjective circumstances (Hili v The Queen; Jones v The Queen (2010) 242 CLR 520; [2010] HCA 45 at [40]).

The applicant’s grounds of appeal, including Ground 3, challenge discretionary findings which are quintessentially those of a sentencing judge. For the reasons set out above, the applicant has failed to make out the matters raised in Grounds of Appeal 1 and 2. The applicant’s real challenge is to the sentencing judge’s determination of the extent of the objective seriousness involved, the extent of the partial accumulation of sentences and the extent to which the sentence is said to be outside the appropriate sentence range.

The applicant has failed in relation to those first two grounds and in effect depends upon those grounds, either taken individually or collectively, as establishing the ground of appeal raising manifest excess. The applicant’s failure to make out Grounds 1 and 2 and his failure to raise any further matters in relation to Ground 3 mean that the applicant has failed to discharge the onus which he carries to establish that the sentence imposed by her Honour is unreasonable or plainly unjust.

This ground of appeal has not been made out.

It follows that the orders I propose are:

ADAMSON J: I agree with Hoeben CJ at CL.