R v Mooney [2017] ACTSC 358 (3 November 2017)

Last Updated: 20 December 2017

SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

MURRELL CJ:

1. The offender is to be sentenced on three counts of obtaining property by deception contrary to s 326 of the Criminal Code 2002 (ACT) (Criminal Code) (Counts 1–3), one count of using a false document contrary to s 347 of the Criminal Code (Count 4) and one count of obtaining financial advantage by deception contrary to s 332 of the Criminal Code (Count 5).

2. For each offence, the maximum penalty is 10 years’ imprisonment and/or a fine (the fines vary, but in each case they are substantial).

3. Over a four-year period between November 2010 and December 2014, the offender used her position as the finance officer in a not-for-profit organisation (the organisation) to make unauthorised payments to herself (Counts 1–3) and to make unauthorised personal purchases on the organisation’s credit card (Count 4). She did this on hundreds of occasions, gaining a total benefit of $157,609.06. In addition, in July 2014 the offender forged a loan agreement between herself and the organisation in order to cover up an unauthorised “loan” for the offender to purchase a new car (Count 5).

Pleas of guilty

4. The offender was committed for trial on 71 charges.

5. In November 2016, the Crown filed an indictment containing nine counts. Four of the counts were abandoned when the offender pleaded guilty. Of the four counts, two concerned the background to Count 4, and two concerned allegations that were later withdrawn. However, the course of criminal conduct upon which the Crown relied in support of the five counts that proceeded did not differ greatly from the course of criminal conduct that was the subject of the November 2016 indictment.

6. In December 2016, the matter was listed for a three to four week trial commencing in late June 2017.

7. Following discussions between the parties, on 20 April 2017, the offender agreed to plead guilty to the “rolled up” charges upon which she is now to be sentenced. On 7 June 2017, she entered guilty pleas.

8. Although the pleas of guilty were entered relatively late, the agreement to enter the pleas was made two months before the scheduled trial date and the trial would have occupied at least three weeks. The pleas of guilty spared considerable stress to the employees of the organisation who would have been required to give evidence against their former colleague had the trial proceeded.

9. Consequently, the pleas had significant utilitarian value. The offender should receive a sentencing discount of 15 to 20 per cent.

Facts

10. In July 2010, the offender commenced employment as finance manager for the Transport Industries Skills Centre Inc, a not-for-profit government funded organisation that provides training for the transport and motor vehicle driving industry in the ACT and south-east NSW. It is a relatively small organisation. During the offender’s employment from 2010 to 2015, the organisation comprised approximately 10 to 20 personnel.

11. The offender was responsible for financial management and transaction processing, compliance, general administration and human resources (including payroll). She participated in strategic development and planning.

12. In mid-2013, the offender and two other employees were appointed executive officers and formed a three person management team. As an executive officer, the offender reported to the Chief Executive Officer (CEO). Mr Waldron was the CEO until early 2014, when Mr Brennan became the CEO.

13. The offender was employed full-time, working a 40 hour week. However, as she was a sole parent and said that she had health problems, she was allowed flexibility in the hours that she worked. Sometimes she would work from home in order to complete urgent work. There was no agreement that she could accrue “overtime” or “time in lieu”; those matters were not discussed.

14. The organisation banked with the Commonwealth Bank of Australia (CBA). The offender had access to usernames and passwords that enabled her to access the organisation’s CBA accounts. Along with the CEO and general manager, the offender had a Netlock Security USB and password generator fob. The CEO kept his USB and fob in a safe for use in emergencies. The offender knew the safe combination.

15. The offender had a credit card that was to be used for business purposes only.

Count 1

16. The software that enabled payroll payments required the online approval of two authorised persons, who needed to use their Netlock USB and password generator fob to complete the approval; the system was equivalent to requiring two authorised signatories to a cheque.

17. On nine occasions between June 2011 and September 2013 (four occasions in 2011 and five occasions in mid-2013), when the offender processed the payroll payments she claimed 376 hours of unauthorised “time in lieu”, overpaying herself the sum of $12,326.92. The money was credited to her bank account and she spent it.

Count 2

18. In about November 2013, the offender approached the CEO and asked to reduce her work hours to 32 hours per week, saying that she had received medical advice that she should do so because of an eye injury. It was agreed that the offender could reduce her work hours and would be paid on a pro rata basis. It was not agreed that she would receive a 25 per cent casual loading in lieu of benefits such as annual leave and sick leave.

19. However, between November 2013 and December 2014, the offender processed 37 weekly salary payments in which she approved payments to herself at a casual rate (25 per cent above the agreed pro rata rate), resulting in an overpayment of $29,267.06. The money was credited to her bank account and she spent it.

Count 3

20. On 35 occasions between February 2011 and February 2015, the offender either claimed unauthorised “overtime”, paid herself an unauthorised casual hourly rate or paid herself twice. The total overpayment was $34,353.23. The money was credited to the offender’s bank account and she spent it.

Count 4

21. The offender had access to a pool of work cars for personal use. Generally, she used a particular Mitsubishi Lancer.

22. In October 2013, the offender approached the CEO and asked whether she could salary sacrifice and receive a car. The CEO asked her to speak to the organisation’s accountants regarding industry practices. On the issue of a car, he heard nothing further from the offender.

23. On about 29 October 2013, the offender attended a car dealership, where she purchased a new Hyundai vehicle. In order to do so, she used the Mitsubishi Lancer that she had been using (one of the organisation’s company cars) as a trade-in vehicle, receiving a trade-in of $7,000, which was offset against the purchase price of the new car. As to the remainder of the purchase price, the offender “authorised” the payment of $28,700 from the organisation’s bank account to her personal account, withdrew the money and applied it to the car purchase.

24. The offender set up a loan repayment scheme between herself and the organisation.

25. The offender wrongly claimed $6,665 as backpay and offset that amount against the balance of the “loan”.

26. In mid-2014, the organisation’s accountants sought to clarify and correct entries in relation to the “loan”. They sought a copy of the loan agreement.

27. On 11 July 2014, the offender emailed to the accountants a copy of a “loan agreement” dated 28 October 2013, which was signed by the offender and the CEO (via a computer generated signature).

28. The document showed that there was a loan between the organisation and the offender of $28,700. Repayments were being offset against the offender’s annual “provision” for a fuel card in the amount of $3535, an allowance for a work vehicle of $10,000 and missed wage increases for the financial year 2011/2012 of $6,665, being a total offset of $20,200. Consequently, the balance of the “loan” was said to be $8,500. The repayments were to be deducted from her wages on a tax-free and interest-free basis.

29. The CEO was unaware of the “loan agreement” and did not authorise use of his digital signature. The “loan agreement” did not come to the attention of the CEO or his successor until after the offender resigned from the organisation.

30. The CEO’s signature was on the hard drive of the offender’s office computer. The CEO had arranged for a digital copy of his signature to be kept on the organisation’s computer system to be used for the sole purpose of email correspondence.

Count 5

31. Staff members, such as the offender, who had been issued with a corporate credit card were required to account for all expenditure by submitting receipts that established that card expenditure was for work purposes.

32. In the organisation’s software, credit card expenditure was pooled into a single account, making it impossible to establish the bona fides of individual transactions via this means. The balance of each credit card was paid automatically at the end of each month by direct debit from the organisation’s CBA account.

33. Between November 2010 and February 2015, the offender used her corporate credit card for unauthorised personal purchases of goods and services totalling $81,661.85. These included personal electricity and telephone accounts, food and beverages.

34. In February 2014, Mr Waldron retired as CEO and Mr Brennan assumed the role. In February 2015, Mr Brennan asked the offender for details of the transactions. The offender was reluctant to provide details. She fraudulently “reconciled” some of the transactions on her company credit card against legitimate company cost codes. Other transactions were “offset” against unauthorised “time in lieu”. By these means, the offender sought to “legitimise” the transactions. She also concealed credit card expenditure in the financial reports provided to the CEO, the external accountants and the auditor.

Detection of offending

35. When Mr Brennan became CEO in February 2014, the organisation was struggling financially. Consequently, Mr Brennan approached the offender as the financial manager and asked to see the financial reports. A second request was made in September 2014. However, the offender procrastinated and did not provide reports.

36. In December 2014, the organisation’s auditor provided Mr Brennan with a financial report, which was the first set of accurate financial figures to be seen by Mr Brennan. Mr Brennan was concerned about the organisation’s financial situation and he engaged the services of an external consultant (KPMG).

37. On the advice of KPMG, the organisation undertook a close examination of expenditure. It revealed that the system for recording credit card expenditure made it very difficult to trace individual items of expenditure.

38. Mr Brennan asked the offender for the file containing credit card statements and receipts. She provided him with credit card statements and a “time in lieu” record for herself and three other employees. Mr Brennan observed that the offender had used the organisation’s credit card for many personal expenses. He was concerned that the offset arrangement had not been authorised, there was no clear record of “overtime” and that the “time in lieu” documents relating to the offender appeared to have been generated retrospectively.

39. On 2 March 2015, Mr Brennan, Mr Waldron and the General Manager, Mr Dobie, met with the offender. She conceded that she had been using her corporate credit card for private purchases. However, she asserted that Mr Waldron had agreed to an arrangement whereby the offender offset her credit card purchases against “time in lieu”. The offender offered to repay the organisation and resigned.

Victim impact

40. Mr Waldron was CEO of the organisation from its foundation in 1993 until his retirement in early 2014. Under his leadership, the organisation prospered and grew from one person to an organisation that employed over 20 people. Mr Waldron was highly committed to the organisation. He was responsible for recruiting the offender and he held her in high regard.

41. In his victim impact statement, Mr Waldron expressed his distress at the offender’s misconduct and the manner in which she betrayed the respect, confidence and friendship that he, the staff and the organisation had extended to her. He believes that the offender’s misconduct could only have contributed to the organisation’s financial difficulties. He also believes that it had the potential to undermine his work in building the organisation over two decades. He is acutely embarrassed that the offender defrauded the organisation during his tenure as CEO.

42. Mr Dobie, the general manager, provided a victim impact statement on behalf of Mr Brennan, the current CEO, the staff and the organisation. He referred to the loss of staff morale associated with the revelation of the offender’s misconduct. Staff became anxious and mistrustful of each other. He expressed concern about reputational damage associated with the offender’s misconduct, noting that the organisation was a not-for-profit organisation that prized its reputation. He described the disruption and lost productivity suffered by the organisation, not to mention the direct financial loss caused by the crimes and the indirect financial loss associated with the need to investigate the offender’s misconduct and quantify the loss.

43. There is no doubt that the offender’s misconduct caused substantial financial and non-financial loss to the organisation and had a significant psychological effect on numerous personnel within the organisation.

Objective seriousness

44. Count 1 involved nine separate occasions of misconduct over a period of more than two years. The offender benefited to the extent of $12,326.92.

45. Count 2 involved 37 separate occasions of misconduct over a period of 13 months. The offender benefited to the extent of $29,267.06.

46. Count 3 involved 35 separate occasions of misconduct over a period of four years. The offender benefited to the extent of $34,353.23.

47. Count 4 occurred against a background of a number of dishonest acts, which culminated in the generation of a false “loan agreement” that was designed to conceal the offender’s flagrantly dishonest use of the organisation’s funds for the acquisition of a personal motor vehicle, in circumstances where she had access to a work vehicle in any event.

48. Count 5 involved 529 dishonest transactions from which the offender gained a total benefit of $81,661.85.

49. Each offence involved a very significant breach of trust. As the person primarily responsible for the company’s day-to-day finances, the offender was afforded a high level of respect, trust and responsibility in relation to financial matters. Mr Waldron had a great deal of confidence in her and permitted her flexibility in the manner in which she undertook her work. Because of her role and the confidence that she had inspired, her work was not closely supervised. Over a long period, the offender abused her employer’s trust.

50. Further, from at least 2014 she did so in circumstances where she knew that the organisation’s financial performance was deteriorating and her criminal conduct could only contribute to that deterioration.

51. The offences were not sophisticated, but they did not need to be sophisticated in order to avoid detection. When suspicions were aroused, the offender attempted to conceal her misconduct, albeit in a relatively clumsy manner.

52. The offender’s misconduct ceased only because it was detected.

53. The organisation is a not-for-profit organisation. I note that it has not been reimbursed for any of the financial loss.

54. In the absence of any other suggestion, I conclude that the offences were motivated by a desire for personal gain. On the other hand, there is no evidence that the offender’s criminality enabled her to lead an extravagant lifestyle or accrue assets.

55. Overall, the gross breaches of trust that were involved, the variety of the means by which the offender defrauded the organisation, the period over which she did so, the number of occasions during that period when she committed dishonest acts, her attempts at concealment, and the total benefit that the offender gained present a dismal picture of largely inexplicable dishonesty by a trusted employee who held a position of significant responsibility.

Subjective circumstances

56. The offender is now 44 years old. The offences commenced when she was in her late 30s.

57. She has no relevant criminal history.

58. The offender was the youngest of four children. She informed the author of the pre-sentence report that her childhood was marred by domestic violence perpetrated by her father. The offender’s father died when she was 13 years of age. Thereafter, the level of household violence reduced, but there were regular verbal and physical arguments between the offender’s older brothers.

59. The offender is single. She lives with her 20 year old son in rental accommodation. She enjoys a good relationship with her son. In addition, the offender supports her mother.

60. In about 2010 or 2011, the father of the offender’s son committed suicide and, in about 2011 or 2012, her brother committed suicide.

61. The offender holds a number of qualifications including Certificates IV in health care (ambulance), in training and assessment and in work health and safety, a diploma of project management, and an advanced certificate in nursing (enrolled nurse).

62. The offender works full-time and has done so throughout her adult life. Currently, she holds three part-time positions.

63. The offender has been diagnosed with post-traumatic stress disorder (PTSD) and adjustment disorder with mixed anxiety and depressed mood. Between the early 1990s and 2008 or 2009, the offender worked as a paramedic and was required to attend many traumatic situations, including deaths from accident and injury. Her general practitioner noted that the offender started experiencing PTSD symptoms during this employment. However, prior to December 2013, when she consulted her general practitioner with symptoms of PTSD, the offender reportedly attempted to self-manage her condition with meditation and natural therapies.

64. In February 2016, the offender first consulted a clinical psychologist, Dr Collins. He considered that she was suffering from PTSD with secondary anxiety and depression. Her reported symptoms included flashbacks to traumatic events experienced when she was a paramedic (particularly one incident in 2000), irritability, impaired concentration and interrupted sleep.

65. Between February 2016 and June 2017, the offender consulted Dr Collins on 12 occasions. However, over that period he detected no overall improvement in her condition. She continued to report flashbacks and nightmares of road accidents. Dr Collins concluded that she was becoming very anxious about the looming court proceedings and was also affected by the post-operative death of her sister-in-law in July 2016, after more than a month on life support.

66. In the opinion of Dr Collins, the offender’s symptoms of PTSD, especially reduced sleep and impaired concentration, would make it difficult for her to function day-to-day. However, Dr Collins felt unable to speculate on any relationship between the symptoms and the offending conduct.

67. The offender’s general practitioner stated that, because of PTSD symptoms, at the time of the offences, the offender may have experienced impaired decision making.

68. The offender’s condition of PTSD is relevant in a general way, but the evidence does not establish (or even go beyond speculation) that it caused or contributed to the offences. The evidence about the offender’s mental health does not significantly inform sentencing purposes.

69. According to the author of the pre-sentence report, the offender showed limited insight into her misconduct and has demonstrated limited remorse. The pre-sentence report states that the offender attempted to minimise her involvement by apportioning blame to her employer.

70. The offender was assessed as having a low risk of re-offending and, commensurate with that risk, as being suitable for a low level of intervention by ACT Corrective Services.

Delay

71. The defence submitted that the delay in finalising the proceedings should be taken into account when she was sentenced because it caused her additional stress. One aspect of the complaint was that the DPP failed to negotiate appropriate charges until very late in the piece. Another was that there had been a three month delay between July 2017 (when the matter was listed for sentence but not reached) and October 2017, when the sentence was heard.

72. This argument is without merit. At any point from March 2015 (when the first of the frauds was discovered) the offender could have admitted guilt, but she did not do so. She could have indicated the offences to which she was prepared to plead guilty, but she did not do so.

Comparable cases

73. An appropriate sentence is to be determined primarily by reference to the legislated maximum penalty, the objective seriousness of the particular offence, the offender’s subjective circumstances, relevant sentencing purposes and other matters prescribed by statute. Where several sentences are imposed, the sentences must be structured so as to ensure that the total sentence reflects the total criminality.

74. Comparable cases cannot govern whether a proposed sentence is appropriate, but can be useful as a “yardstick” against which to measure a proposed sentence: R v Kilic [2016] HCA 48; 259 CLR 256 at [22].

75. The Court was referred to a number of cases in this jurisdiction, including the following.

76. The Crown referred to R v NQ [2017] ACTSC 317 (NQ). For four offences of obtaining property by deception contrary to s 326 of the Criminal Code and one count of theft, the offender was sentenced to a total of three years’ imprisonment (reduced from four years for the pleas of guilty), suspended after 15 months. The offender was a 47 year old woman with no relevant criminal record who misappropriated $406,876.80 from the Canberra Police Community Youth Club (a not-for-profit organisation) while working as an assistant to the CEO and, later, Chief Financial Officer of the Club. The offences spanned almost three years and were associated with the offender’s gambling addiction. The offender had experienced a very disadvantaged childhood and, at [47], the sentencing judge referred to Bugmy v The Queen [2013] HCA 37 by way of explaining what (in his Honour’s opinion) some might consider to be a lenient sentence.

77. I do not accept the defence submissions that NQ involved substantially more serious conduct than the present case. The amount of money was significantly larger than that in the present case, but the overall period of offending was shorter. As to subjective circumstances, this offender does not have the extremely disadvantaged background of the offender that was critical to the sentencing exercise in NQ, although she does suffer from PTSD and advanced other considerations in relation to her psychological wellbeing.

78. In R v Ok [2016] ACTSC 132, for one count of obtaining property by deception, the offender was sentenced to one year and four months’ imprisonment (reduced from one year and eight months for the offender’s plea of guilty), suspended after four months. The offender was a 52 year old woman who misappropriated $60,000 from her employer, a fruit market store, through thousands of separate cash register transactions over a period of four years. The offender knew that the store was in financial difficulty at the time. The offender had experienced trauma and extreme poverty growing up in Cambodia during the war. She was later diagnosed with PTSD and major depressive disorder. There was no clear causal connection between the offender’s mental health conditions and the offence.

79. In R v Reid [2016] ACTSC 24, for seven counts of obtaining property by deception, the offender was sentenced to three years and two months’ imprisonment (after a 25 per cent discount for the offender’s pleas of guilty), suspended after eight months. The offender was the manager of a bank branch, who removed $338,103.70 from customer accounts for his own benefit over a period of 12 months. The offences involved significant breaches of staff and customer trust. The offender had no prior criminal history. It was suggested that he had a gambling addiction. However, there was no evidence that this was the reason that the offender committed the offences.

80. The defence referred to R v Riordan [2015] ACTSC 26. For one count of obtain property by deception and one count of theft, the offender was sentenced to one year and nine months’ imprisonment (after a 25 per cent discount for the offender’s guilty pleas), wholly suspended upon the offender entering into a three year good behaviour order. The good behaviour order included a condition requiring the offender to complete 300 hours of community service. The offender was a 43 year old woman, who misappropriated $52,869.76 from her employer over a period of seven or eight months. She had been abused as a child and had had contact with ACT Mental Health over a number of years.

81. The defence also referred to R v West [2015] ACTSC 134. For one count of knowingly making false statements that were capable of being used in connection with a claim for benefits, the offender was sentenced to two years’ imprisonment (reduced from three years for the offender’s guilty plea). The sentence was suspended after four months upon the offender entering into a three year good behaviour order. The offender was the practice manager at a health clinic. Over a period of 18 months, she made false Medicare claims, thereby gaining $68,868.90. The offender had a gambling addiction and was suffering from depression. At [66], the sentencing judge found that the offender’s depressive condition, combined with her gambling addiction, moderated the culpability for her offending.

82. In four of these sentence decisions, the sentencing court required the service of a relatively short period of full-time imprisonment and suspended the remainder of the sentence. In each case, there may have been a good reason to do so, but I see no reason why, as a matter of principle, white collar offenders should be required to serve by way of full-time imprisonment a shorter period of the whole sentence than other offenders.

83. On the other hand, many first time offenders who receive a sentence of full-time imprisonment may reasonably hope to receive a short nonparole period of about 50 per cent.

Sentencing purposes and other sentencing considerations

84. In this case, the individual offences and the totality of the criminal conduct were objectively serious and the offender’s subjective circumstances were of only moderate strength. The offender is to be sentenced for five offences, each of which carries a maximum penalty of ten years’ imprisonment.

85. The Court is required to have regard to the sentencing purposes in s 7 of the Crimes (Sentencing) Act 2005 (ACT) (Sentencing Act) and, in so far as they are known and relevant, to the features in s 33 of the Sentencing Act. I have referred to the relevant s 33 matters above.

86. As the facts of this case illustrate, white collar crime can go undetected for a long time and result in significant personal, reputational and financial loss to the individuals and entities that are the direct and indirect victims of the crime. General deterrence is a prominent sentencing purpose.

87. The offender has been assessed as at low risk of re-offending. However, despite the lack of any relevant criminal history, the courses of criminal conduct in which she engaged and her qualified insight and remorse (the offender continues to attempt to minimise her involvement) suggest that specific deterrence is an important sentencing consideration and mean that the offender’s prospects of rehabilitation are uncertain.

88. Punishment, accountability and recognition of harm to the direct and indirect victims of the offences are also important sentencing purposes. Further, transparency in business is in the community’s interests. Dishonesty within the business community tends to undermine community confidence in the business sector; consequently, recognition of harm to the community is also an important sentencing purpose.

89. The defence accepted that the only appropriate sentences were sentences of imprisonment, but contended that the offender should not be required to serve any period of full-time imprisonment. It was submitted that the relevant sentencing purposes would be adequately addressed by a community based sentence of imprisonment.

90. I am satisfied that the only appropriate sentence is imprisonment. Further, the maximum available penalties, objective seriousness of the offences (both individually and cumulatively) and lack of powerful subjective circumstances, mean that the sentences must involve a significant period of full-time imprisonment.

Sentence

91. The offender is sentenced as follows:

1. Count 1: 10 months’ imprisonment, less a discount of about 15 per cent, arriving at a sentence of 8 months’ imprisonment from 01.11.17 – 31.06.18
2. Count 2: 15 months’ imprisonment, less a discount of about 15 per cent, arriving at a sentence of 12 months’ imprisonment from 01.03.18 – 28.02.19
3. Count 3: 18 months’ imprisonment, less a discount of about 15 per cent, arriving at a sentence of 15 months’ imprisonment from 01.07.18 – 30.09.19
4. Count 4: 18 months’ imprisonment, less a discount of about 15 per cent, arriving at a sentence of 15 months’ imprisonment from 01.11.18 – 31.01.20
5. Count 5: 2 years’ imprisonment, less a discount of about 15 per cent, arriving at a sentence of 20 months’ imprisonment from 01.03.19 – 31.10.20

That is a total period of three years’ imprisonment, which I consider to be a period that appropriately reflects the total criminality.

92. I fix a nonparole period of 18 months’ imprisonment from 01.11.17 to 30.04.19. The offender will be eligible for release to parole on 30.04.19.

Reparation

93. To date, the offender has not paid any compensation to the organisation.

94. Pursuant to s 19 of the Sentencing Act, the Crown sought a reparation order in the sum of $157,609. The defence did not oppose the making of such an order.

95. Pursuant to s 109 of the Sentencing Act, the Court may order that reparation be paid by stated instalments.

96. I make a reparation order requiring the offender to pay reparation in the sum of $157,609 by way of instalments of $300 per fortnight, commencing on 01.08.19.

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Amendments

20 December 2017 Replace “31.05.19” with “30.04.19” Paragraph: [92]