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R v Kelly[2016] QCA 293

 

SUPREME COURT OF QUEENSLAND

 

CITATION:

R v Kelly [2016] QCA 293

PARTIES:

R
v
KELLY, Brian John
(applicant)

FILE NO/S:

CA No 62 of 2016

DC No 1895 of 2015

DIVISION:

Court of Appeal

PROCEEDING:

Sentence Application

ORIGINATING COURT:

District Court at Brisbane – Date of Sentence: 29 February 2016

DELIVERED ON:

15 November 2016

DELIVERED AT:

Brisbane

HEARING DATE:

23 September 2016

JUDGES:

Morrison and Philip McMurdo JJA and Boddice J

Separate reasons for judgment of each member of the Court, each concurring as to the order made

ORDER:

The application for leave to appeal against sentence is refused.

CATCHWORDS:

CRIMINAL LAW – APPEAL AND NEW TRIAL – APPEAL AGAINST SENTENCE – GROUNDS FOR INTERFERENCESENTENCE MANIFESTLY EXCESSIVE – where the applicant orchestrated and coordinated fraudulent schemes and induced 36 people to invest $1,332,550 – where the applicant laundered this money for his own personal gain – where only $209,968 was returned to investors, and $159,000 of that was returned by banks who had become suspicious of the activities – where the applicant had undertaken a similar scheme in Victoria and pleaded guilty at Melbourne County Court, but was given the chance to make restitution – where the offending the subject of this appeal occurred in Queensland shortly after the offending in Victoria – where the applicant pleaded guilty to one count of fraud and one count of money laundering in the District Court in Brisbane – where the learned sentencing judge sentenced the applicant to eight years and seven months imprisonment, with a parole eligibility date set at 6 February 2017 – where a declaration was made that 600 days presentence custody was time served under the sentence and 152 days of non-declarable presentence custody was also taken into account – where the applicant seeks leave to appeal against his sentence on the sole ground that it is manifestly excessive – whether the sentence is manifestly excessive

R v Carlisle and Crouch, unreported, District Court of Queensland, DC No 270 of 2015, O'Brien CJDC, 30 July 2015, considered

R v Crouch; R v Carlisle [2016] QCA 81, cited

R v Henderson [2014] QCA 12, considered

R v Lovell [2012] QCA 43, cited

COUNSEL:

A J Kimmins for the applicant

G P Cash QC for the respondent

SOLICITORS:

Legal Aid Queensland for the applicant

Director of Public Prosecutions (Queensland) for the respondent

  1. MORRISON JA:  Mr Kelly set up a number of companies and an elaborate organisational façade, in order to pretend that he was running legitimate investment schemes.  In fact the schemes were non-existent.  He orchestrated and coordinated the fraudulent schemes.
  2. He induced 36 people to invest $1,332,550 in the schemes.  Having obtained their money, Mr Kelly used a system of bank transfers, cheques and cash withdrawals to launder the money so that it could not be traced by the investors.
  3. Of the $1,332,550 invested, only $209,968 was ultimately returned to investors.  About $940,432 of investors’ funds were never retrieved.
  4. He pleaded guilty to:
  1. one count of fraud, in that on various dates between 21 March 2013 and 8 February 2014 he dishonestly obtained money from a number of people, to the value of more than $30,000; and
  2. one count of money laundering, between 6 May 2013 and 8 February 2014.
  1. In addition he pleaded guilty to other summary offences: two counts of possessing tainted property,[1] possession of dangerous drugs,[2] and possession of a thing used in connection with the consumption of a dangerous drug.[3]
  2. He was sentenced to imprisonment for eight years and seven months, with a parole eligibility date set at 6 February 2017.  A declaration was made that 600 days in pre-sentence custody (between 7 February 2014 and 30 September 2015) was time served under the sentence.  Another period of 152 days (between 1 October 2015 and 28 February 2016) could not be declared as time served but was nonetheless taken into account.
  3. Mr Kelly seeks leave to appeal against his sentence on the ground that it is manifestly excessive.

Circumstances of the offending

  1. An agreed schedule of facts[4] was provided to the learned sentencing judge.  What follows is drawn from that and other matters stated to the learned sentencing judge during the hearing.

Background to the offending - the Victorian scheme

  1. From 2009 – 2010 Mr Kelly was involved in creating and coordinating another fraudulent boiler-room scheme run through a company called TJP Management Pty Ltd (TJP).  The complainant investors in that scheme were “cold-called” and invited to invest with TJP.  Investors made deposits either by cash transfers or cheques into nominated accounts.  The funds were never invested and the investors did not receive dividends or their investments back.  The funds were withdrawn in cash or transferred into other accounts held in fictitious names.  The total amount obtained from 69 complainant investors across Australia was $979,200.  Mr Kelly was held responsible for fraudulently obtaining $107,600 from ten complainants in Victoria.
  2. Mr Kelly was arrested in relation to the TJP scheme on 15 October 2010, and was released on bail on 20 October 2010.  On 9 December 2013 Mr Kelly was arraigned in relation to a nine-count indictment and pleaded guilty in the Melbourne County Court.  The sentence was part-heard and was adjourned to enable Mr Kelly to arrange restitution.  Mr Kelly returned to Queensland and engaged in similar schemes as detailed below.  He was arrested on 6 February 2014 by Queensland Police, and remanded in custody.  A warrant had been issued for Mr Kelly’s arrest from Victoria.

The Queensland schemes

  1. Police started an investigation because of complaints by a number of people who had fallen victim to a fraudulent investment scheme.  They had invested funds but did not receive a dividend or return of their funds.
  2. Mr Kelly was the principal of the schemes.  He established two fraudulent businesses, M6 Trading Group Pty Ltd (or M6 Securities Group) and Finance Management Group Pty Ltd (FMG).  Mr Kelly had 12 other associates, but he was the one responsible for the commencement, coordination and management of the scheme, and associated fraudulent companies.  He also coordinated the laundering of funds and was a beneficiary of the misappropriated money.
  3. Investors were “cold-called” and offered investments in stocks, shares, securities, index or performance based broking.  The scheme utilised legitimate business operation tools, telemarketers, sales staff, and professional web sites that mimicked a genuine stock trading business website (Baker Young Stockbrokers).
  4. The complainant investors had made deposits into nominated accounts.  The identity of the ultimate recipients of those funds was disguised, as was the manner in which the funds were then laundered.  Six people[5] were engaged as “cash mules” to withdraw the deposits and pass the money onto three others.[6]
  5. The investigation revealed that $182,150 was then deposited into an account held by one Cheree Connolly, for Mr Kelly who did not have an operating bank account at the time.  Connolly was the de-facto partner of Mr Kelly.  The investigation revealed that Mr Kelly was personally handed $15,000 in $5,000 amounts (through three withdrawal transactions) over a two day period by Harrold (one of the “cash mules”).  Harrold had been “recruited” by Mr Kelly as a result of a chance meeting at a tavern.  Harrold opened a Commonwealth Bank Account and permitted the funds to be transferred into that account in his name.  He was paid $250 for each transaction.  The investigation revealed that co-offender Presotto had engaged an acquaintance, Thornton, and had her open a National Bank Account to facilitate the transfer of funds into that account.  Thornton handed $10,000 in $5,000 amounts (through two withdrawal transactions) over a single day to Mr Kelly personally.
  6. The money trail after the withdrawal of funds from accounts otherwise remained undiscovered, and the Crown was unable to identify the ultimate recipient or recipients of the remaining outstanding monies taken from the investors.  The total amount fraudulently obtained from complainants was $1,332,550.

M6 Securities Group and FMG

  1. In preparation for the fraudulent schemes, Mr Kelly orchestrated the setting up of bank accounts, a professional webpage, telephone numbers, an office space and telemarketers, so the scheme would appear genuine and induce people to invest.  He recruited co-offenders Lowe and Presotto to assist him in the running and coordination of the fraudulent schemes.  Lowe worked alongside Mr Kelly, recruited “cash mules” to open bank accounts, coordinated the withdrawals of cash after deposits were made by investors, and also made calls to invite people to invest in the FMG scheme.  Presotto was utilised as a middle man, acting as an intermediary between Mr Kelly and Lowe and the lower level members of the scheme.
  2. The fraudulent company “M6 Securities Group” was created to piggyback off the legitimate Australian-based business M6 Securities Pty Ltd.  The legitimate company was based in Perth and was created in 2009.  The director of M6 Securities Group was named as Graham Anderson, (an alias Mr Kelly adopted when contacting and meeting investors).  The fraudulent “M6 Securities Group” was allegedly based in Perth and had a virtual office in Sydney.
  3. In March 2013 a Web domain “m6securitiesgroup” was created.  Mr Kelly utilised the services of an associate (Fisher), who resided in Thailand, to create the website for M6.  Mr Kelly transferred money to Fisher via Western Union as payment.  As part of the scheme Mr Kelly created, and had produced, documents and prospectuses for the company M6 to provide to investors.  Mr Kelly rented an office space on Montague Road, West End, Brisbane.  That office was utilised as the “headquarters” of the scheme and was used to call and email investors.
  4. Mr Kelly coordinated the registering of “M6 Trading Group Pty Ltd” with ASIC.  Co-offender Odmark was listed as the sole director and shareholder of the company, and M6’s registered office and principal place of business was recorded as IBM building Level 3/1060 Hay Street, Perth, Western Australia.  Mr Kelly’s fingerprints were located on the registration paperwork provided to ASIC.  The company was registered to give the appearance of a genuine investment company which would induce people to invest.
  5. From late March 2013 or early April 2013, Lowe and other unknown persons started “cold-calling” potential investors and inviting them to invest in M6 Securities Group.  The callers would use the aliases “Graham Anderson”, “John Patterson”, “Alan Johnson” or “Stephen McGurk”.  M6 was made out to be a business that traded in buying and selling stock on the Australian and Singaporean stock market.  Investors were told the business was located in the IBM building in Perth.  They were sent emails from the address “[email protected]”, and were directed to the website “www.m6securitiesgroup.com”.  The email address and website appeared to be genuine and encouraged investors to believe that M6 was a legitimate company.
  6. From April 2013 Kelly, Lowe and Presotto recruited Odmark, De Luca, Siemons, Thornton, Aston and Harrold to either allow the use of their existing bank accounts, or open new bank accounts, into which investors would be directed to deposit investment funds.  The accounts would be opened under the direction of Mr Kelly, Lowe or Presotto, in either the “cash mules” own names, or under M6 or FMG.  Mr Kelly directed these accounts to be opened in others’ names to disguise the trail of money.  The accounts were opened at a number of different banks and branches in Brisbane and the Gold Coast area.  Once new accounts were opened the internet banking details and any associated ATM cards were provided to Kelly, Lowe and Presotto.
  7. Once investors agreed to invest they were sent application documents and a login and password to the members’ section of the M6 website.  Investors were requested to complete documents and return them to the company.  The documents and company prospectus sent to investors were professional in appearance and appeared to be genuine.  Investors were instructed to transfer funds electronically into one of 11 different bank accounts (the accounts held by the “cash mules” Odmark, De Luca, Siemons, Thornton, Aston and Harrold).
  8. On 8 April 2013, the first complainant investor deposited money into a St George Bank account (opened by Odmark) in the belief that he was investing with M6 Trading Group.  Over a 10 month period from April 2013, investors made “investments” of between $1,000 and $200,000 at a time.  The minimum start-up deposit was $1,000.  Investors were often called by the telemarketers and encouraged to make more investments and increase the amounts they had already deposited.
  9. Thirteen investors met with Mr Kelly who posed as “Graham Anderson”, “Alan Johnson” or “Stephen McGurk” from M6 Securities Group.  All complainant investors described this person in strikingly similar manner, and subsequently identified him during photo-board identification interviews.  Mr Kelly made himself out to be the director of the company and that he was extremely experienced in the financial world.  Mr Kelly travelled to Sydney, Hervey Bay, Townsville, Kingaroy and Toowoomba to meet investors in person and discuss potential investments.  He told them elaborate lies as to his experience in investment banking and the success of the company, in an attempt to induce them to “invest”.

The money laundering

  1. Once an investor had deposited a sum of money Mr Kelly contacted Lowe and Presotto, who would contact the relevant “cash mule” (operator of the account), and direct them to withdraw an amount of cash from a particular bank branch.  Withdrawals were made from branches in the Gold Coast and Brisbane area.  Lowe or Presotto would normally transport the “cash mule” to the relevant bank and wait while the withdrawal was made.
  2. All withdrawals (but one) were made in cash.  Sums of between $40 and $50,000 were taken in single cash withdrawals.  The Crown was unable to identify the ultimate recipient or recipients of the majority of the withdrawn cash funds.
  3. One three occasions Lowe made deposits of the cash into Connolly’s accounts.  Withdrawals of cash would normally be made the day after the deposit was made by the investor.
  4. After 13 November 2013 complainant investor Lily Podger started to investigate the legitimacy of M6 after documents she sent to the company were returned.  Podger tracked down Odmark’s personal mobile number and requested the money she has invested to be returned.  As a result the money was returned to her.  Mr Kelly then closed down M6 and started to use FMG, in the same way.[7]
  5. From November 2013 Mr Kelly, Lowe and others began to make calls in relation to FMG.  FMG was operated in an identical way to M6.  The office space at Montague Road, West End was utilised and Mr Kelly had a company prospectus and documents produced.  Investors were again “cold-called” and spoken to by an “Alan Johnson”, “Charles Gordon” or “David Cogger”.  Again FMG was based upon a legitimate company, Financial Management Group Pty Ltd, which had been in operation for over 20 years.  Geoffrey Salter was the Secretary and Director of the legitimate Financial Management Group Pty Ltd.  Mr Kelly or another offender registered a phone under Salter’s name, which was used by a male purporting to be “Cogger”.
  6. Once again Lowe and Presotto recruited others, “cash mules” Wagner, Harrold and Aston, to open banks accounts which were used to facilitate payments made by investors investing in FMG.  Between 27 November 2013 and 1 February 2014 complainant investors “invested” $22,000 into the FMG scheme.  Again withdrawals of the deposits were made in cash and the Crown could not discover the ultimate recipient or recipients of those funds.

Financial analysis

  1. Between 4 April 2013 and 6 February 2014, a total of 36 complainant investors deposited a total of $1,332,550 into 11 different bank accounts.  A total of 87 deposits were made in total by complainant investors.  The deposits ranged from $1,000 - $200,000.  There were 121 cash withdrawals, made either in person at bank branches, via ATM or EFTPOS transactions.  One withdrawal was made via a cheque which was ultimately dishonoured by the banking institution.  On five occasions deposits were transferred from the original deposit account into other accounts held by offenders.
  2. Of the invested sums only $209,968 was returned to seven complainants.  Of that amount $50,968 was returned by Mr Kelly or other offenders, and the remaining $159,000 was returned by banks who became suspicious of the offenders’ activities.
  3. The sum of $182,150 was deposited in cash into Connolly’s bank accounts during the offending period.  Mr Kelly had direct access to this money.  It was deposited into Connolly’s accounts to launder the money and disguise the trail from the original deposits made by the complainant investors.
  4. Taking into account the amount returned to the complainants ($209,968) and the amount deposited into Connolly’s bank accounts ($182,150), an amount of $940,432 of withdrawn funds was unaccounted for.
  5. Mr Kelly orchestrated and coordinated the fraudulent schemes.

Arrest

  1. In January 2014 the M6 business ceased operation due to a number of complaints made by investors who had invested money but had not received interest payments, or wanted to withdraw their investments.  Investments in FMG continued until the last deposit on 5 February 2014, the day before Mr Kelly’s arrest.
  2. On 6 February 2014 police executed a search at Mr Kelly’s rented property and the office address in West End.  Police found a number of items that linked Mr Kelly to M6 and FMG.

The summary counts

  1. There was a separate agreed schedule in respect of these counts.  The facts can be dealt with more briefly than those in respect of the fraudulent schemes.
  2. When police executed search warrants at Mr Kelly’s house a large number of luxury goods, including a motorcycle and jewellery were located.  Various receipts were found, totalling $11,454.  Mr Kelly did not have a legitimate source of income, and had not filed a tax return since 2008.  Also found were a small amount of cocaine and the $20 note used to snort the cocaine.
  3. That the items were purchased with the money obtained from the fraudulent activities was not disputed.
  4. The motorbike was the only item of tainted property which did not emanate from the Queensland offences.  It was acquired prior to those offences, but out of the offences in Victoria.[8]

Mr Kelly’s personal circumstances

  1. Mr Kelly was born on 11 May 1980, and was 32-33 years old at the offending and 35 at the sentence.
  2. His criminal history was minor and largely irrelevant.
  3. Counsel for Mr Kelly told the learned sentencing judge something of Mr Kelly’s background and current circumstances, without objection:[9]
  1. he spent his formative years in Victoria; his parents separated when he was approximately 10 years of age; his father was an alcoholic and abused his mother, who also suffered from alcoholism and some drug dependence; she re-partnered with another man who was also drug-dependent; during his teenage years he recalled witnessing his stepfather using drugs around him and his sister;
  2. he developed addictions early in life; he started using ecstasy at an early age, and abused alcohol from the age of 16; by the age of 23 he was regularly abusing LSD and other psychedelic drugs, and by the age of 27 he was heavily into cocaine;
  3. his abuse of methylamphetamine led to complete addiction; the addiction to methylamphetamine predicated his offending in Queensland and Victoria; he spent that money on drugs, legal expenses and lifestyle;
  4. he had expressed his remorse in conferences with his counsel; his future goals were to reconnect with his son, who was six; he had missed more than two years of his son’s life, which was the primary devastating aspect for him; he wanted to become a useful member of society rather than a burden upon it, which he had been for the last five years.
  1. Mr Kelly made a personal statement to the learned sentencing judge, in which he apologised to his victims and expressed remorse.[10]

References

  1. Two references were provided to the learned sentencing judge.[11]  Each spoke well of Mr Kelly, although neither seems to have been based on any experience beyond personal friendship.

Approach of the learned sentencing judge

  1. The learned sentencing judge was referred to comparable cases, including R v Henderson,[12] R v Carlisle and Crouch,[13] R v O'Hara,[14] and R v Gadaloff.[15]
  2. Counsel for Mr Kelly tendered a series of certificates relating to courses done whilst in prison.  It was submitted that Mr Kelly had “done every course that he possibly physically can ...”.[16]
  3. The learned sentencing judge enumerated the factors he took into account in setting the sentence:
  1. the early pleas of guilty; his apology in court, accepted to be genuine even though the remorse was belated;
  2. Mr Kelly’s age and criminal history, noting it to be “largely irrelevant”;
  3. the considerable period of pre-sentence custody; the fact that the custody from 1 October 2015 was also in respect of the Victorian offences; that the non-declarable 152 days would be taken into account by adjusting the sentence by reference to that five months;
  4. the nature of the offending; it was a “very elaborate fraud”; Mr Kelly was the principal offender who had “orchestrated the establishment of companies, oversaw daily running and directed other offenders to launder the fraudulently obtained funds”; he was “responsible for the commencement, coordination and management of the scheme and associated fraudulent companies”; he had “orchestrated a sophisticated and elaborate fraudulent scheme”; the behaviour was “callous, cunning and deceitful”;
  5. 36 complainants had deposited $1,332,550 in 11 different bank accounts; only $209,968 was returned to them, of which almost $51,000 came from Mr Kelly and the other offenders; the balance came from the banks; Mr Kelly personally benefited to the extent of just over $200,000;
  6. the fact that in 2009 and 2010 he had engaged in a similar fraudulent scheme in Victoria, which obtained $979,200 from complainants across Australia;
  7. that he was on bail in respect of the Victorian charges when the present offences were committed; the Victorian proceedings had been adjourned to enable him to make restitution for the Victorian offences;
  8. his long history of drug addiction, in particular methylamphetamine;
  9. the tendered character references which spoke highly of him;
  10. the courses done in jail;
  11. the report of Dr Curtis, seen in light of the fact that there was no link between any mental illness (major depression) and the commission of the offences; “any depressive illness that you suffer does not have any direct relevance to the imposition of sentence”;
  12. the need for proportionality in the sentence, personal and general deterrence, and denunciation of the conduct;
  13. the impact on the victims;
  14. the maximum penalties for each offence; and
  15. the comparable cases.
  1. Taking into account the aggravating and mitigating factors the learned sentencing judge imposed a sentence of eight years and seven months’ imprisonment, with parole eligibility set after having served three years.  His Honour expressed it thus:[17]

“Having carefully considered the aggravating factors and the mitigating factors, I have decided that the appropriate sentence in your case is nine years imprisonment.  However, as I have said, there is five months during which time you have been in custody but which cannot be declared as imprisonment served under the sentence.  I therefore intend to set a head sentence of eight years and seven months, and I intend to set your parole eligibility date after you have served three years.”

  1. The parole eligibility date was set at 6 February 2017.  That date reflects the three years to be served, less the 600 days declared as time served, as well as the 152 days not declared.  Thus it can be seen that the five months that was not able to be declared was allowed off the head sentence and the bottom.

Victim impact statements

  1. Twelve victim impact statements were tendered.  Generally speaking they told of the devastation upon discovering that they had been duped, and the significant impact on their lives, from losing their invested money.  Many were at or close to retirement age and the loss of the money not only harmed their finances but caused embarrassment and strain on family relations.  Many said their lives had been ruined.  Others expressed their shock and anger, and detailed the detrimental effect on their physical and mental health.  For one the pain was acute as he persuaded his daughter to invest as well.

Report by Dr Curtis

  1. Dr Curtis, a psychologist, prepared a report which was tendered at the sentence hearing.  During the course of submissions it was criticised by the learned sentencing judge as unconvincing, for at least these failures:[18]
  1. it had no regard to the agreed schedule of facts, and did not mention those areas where the agreed schedule conflicted with what he recorded as being told by Mr Kelly; and
  2. whilst it recorded the opinion that Mr Kelly “suffers from a mental disease of residual major depressive order” and he “suffered from mental diseases when he offended”, there was no attempt to link any mental disease with the offending.
  1. It was accepted at the sentence hearing that the report had those limitations and in the end it was relied upon for the assistance it gave to Mr Kelly’s background and drug addiction,[19] and not for “any linkage to the offending” beyond the drug addiction.[20]  Given that fact was not in contention, his Honour was entitled to place little weight on the report.
  2. Before this Court, counsel for Mr Kelly did not place any weight on the report or suggest that the learned sentencing judge had given it inappropriate weight.

Discussion

  1. At the time of sentence the maximum penalty for count 1 was 12 years’ imprisonment, and count 2, 20 years.
  2. The case urged before this Court was based simply upon the comparable cases that the learned sentencing judge had been referred to.
  3. Henderson involved two offenders charged with fraud.  Henderson was found guilty after a trial, whilst his co-offender (O'Hara) pleaded guilty.  Henderson was sentenced to nine years with parole eligibility set after service of four years.  The maximum for the offence at that time was 10 years.  The offending consisted of Henderson and O'Hara participating in a fraudulent scheme where the public were telephoned to solicit investment, supposedly to receive significant returns.  Henderson managed the scheme and O'Hara made the calls.  The scheme ran over a period of 15 months.  There were 59 complainants and payments of $1,832,991.  No complainant received any money back.
  4. The scheme was described by the learned sentencing judge as cynical and cruel, “predatory in nature, demonstrating a meanness not regularly seen in court”.  Further, it was said that it “might well be in the category of the worst sort of case”.  There was no remorse or acceptance of responsibility by Henderson.  His personal gain was about $145,700.  He was not the founder of the scheme, but involved from early on.
  5. There were parity issues raised as between Henderson and O'Hara.  O'Hara had pleaded guilty to two charges of fraud.  His offending also included another similar scheme under which he dishonestly induced 17 people to pay $460,000.  He was sentenced to seven years for the same scheme as Henderson and three more (cumulative) for the additional scheme.  As a result O'Hara was sentenced to ten years, with parole eligibility after serving three years.
  6. The Court did not accept that there were parity considerations requiring the sentence to be moderated.[21]  By reference to comparable cases[22] the Court also took the view that the sentence for Henderson was not manifestly excessive.  Various factors were identified in the analysis leading to that conclusion, including: whether the sentence was after a trial or a plea of guilty; whether the offender was the orchestrator, or central architect, of the scheme; and the nature of the offending.
  7. This Court also characterised the offending in Henderson in this way:[23]

“This offending was particularly wicked in that it involved the deliberate setting up of an entirely fraudulent scheme in order to dupe members of the public into parting with their money in circumstances where there was no intention whatsoever of ever repaying it.”

  1. The sentence of nine years was held to be “comfortably within the appropriate exercise of the sentencing discretion”.[24]
  2. There are many similarities between Henderson and the present case.  The descriptions of the nature of the offending can be directly applied to Mr Kelly’s offending, and he was sentenced on the basis that he was the architect or orchestrator of the scheme.  However, Mr Kelly’s position is worse in that there was the extra charge of money laundering and the offences were committed while on bail.  There is a further factor in Mr Kelly’s case.  The Victorian County Court gave him the benefit of a chance to make restitution for his Victorian offending, and he abused that by operating a similar scheme in Queensland, the sole aim of which was to defraud many more victims rather than make any restitution for the crimes he had already committed.
  3. It is true that Henderson was sentenced after a trial, but the maximum penalty was less then, and O'Hara’s sentence was on a plea and for an extra charge.  O'Hara’s sentence lends support to Mr Kelly’s sentence being within the bounds of the sentencing discretion.
  4. It is also true that Henderson involved a greater number of complainants, greater loss and a scheme that ran over a longer time.  However, in my view, those sort of distinctions have a limited utility once the scale of the offending reaches the point that Henderson did, and Mr Kelly’s does.  Each involves multiple victims of scurrilous predatory behaviour, designed from the outset to strip victims of their property, with not the slightest redeeming feature about it.  Each involves very significant sums of money, into the millions of dollars, subscribed and lost, $1.8m in the case of Henderson and $1.1m in the present case.  Each involved a personal gain to the offender of similar scope ($207,000 in Mr Kelly’s case, and $145,700 in Henderson).
  5. In my view, Henderson does not compel the conclusion that the present sentence is manifestly excessive.  Indeed, it supports the conclusion that the sentence on Mr Kelly was within the bounds of an appropriate exercise of discretion.
  6. The learned sentencing judge was referred to the first instance decision in Crouch and Carlisle but this Court had the benefit of its decision on the application for leave to appeal sentence in that case.[25]  It was a sentence of 10 years on a plea of guilty to charges of fraud.  Parole eligibility was set at four years.  Carlisle was 28 at the time of offending, and 31 at sentence.  His criminal history, which included public nuisance, assault, property and drug offences, did not include an offence of this type.  Crouch was 31 at the time and 34 at sentence.  His criminal history included offences involving drugs, traffic offences, assault and dishonesty (theft and fraud).
  7. For about one year the offenders operated a fraudulent scheme similar to the one run by Mr Kelly.  In total, 311 investors were involved, paying over $5.6m.  Only $586,000 was recovered, $4.9m being lost.  The victims were similar to those in this case, many being retirees who lost their life savings.  Though running and managing the scheme, the offenders were not the orchestrators or architects of the scheme and refused to reveal who was.  The proceeds were used to live a life of luxury.
  8. Henderson was relied upon by Carlisle and the Crown.  The focus of the application for leave to appeal the sentence was on the parole eligibility date, it being contended it should have been one third, not four years.  However it was also said that the mitigating factors warranted a lower head sentence.  Those factors were the small monetary gain, the early plea, cooperation with authorities, rehabilitation since the arrest, and the delay (three and a-half years).
  9. Henderson also referred to R v Lovell,[26] a case where the 12 year maximum penalty applied.  That was a plea of guilty to three counts of fraud (a Ponzi scheme), and a 12 year sentence but with a cumulative element on a lesser charge that made the effective sentence 13 years.  The 12 year sentence was reduced to 10 years, with a consequent alteration to the parole eligibility date.  The frauds extended over six and a-half years and the losses were almost $11.5m.  The offender was about 20 when it started and 30 when it ended.  He had a prior history that included dishonesty offences.
  10. The Court in Lovell referred to previous fraud cases where sentences between 10 and 12 years were imposed,[27] noting that each involved very high sums defrauded and lost.[28]  The Court substituted 11 years for the effective 13 years, describing the offending as being “in the worst category of aggravated frauds”.[29]  The alteration was to recognise mitigating factors, namely the early plea, modest cooperation, comparative youth and rehabilitative prospects.[30]  The Court said:[31]

“Such a sentence is unquestionably a severe punishment for a 31 year old man who has never before been to prison.  It is unquestionably a sufficiently heavy sentence to provide an effective deterrent to the applicant and to others who might consider preying on unsophisticated investors through fraudulent Ponzi schemes.  It is sufficiently severe to demonstrate that the community, through the court, strongly denounces such conduct.”

  1. In Crouch and Carlisle the Court described the offending in this way:[32]

“The applicants pleaded guilty to their involvement at a high level in a staggeringly audacious fraudulent scheme defrauding some 311 people, often the retired, elderly and vulnerable, of their savings, sometimes their life savings.  The victim impact statements record the devastating effects of the offending, which involved nearly $5.6 million, very little of which has been or will be recovered.  The fraud was perpetrated over a 12 month period and involved five companies.  The maximum penalty was 12 years imprisonment and this despicable offending was towards the upper end of the range of seriousness for such an offence.”

  1. The head sentence was not altered, the Court taking the view that Henderson and Lovell warranted the sentence imposed:[33]

“The cases emphasised at first instance and in this Court, Henderson and Lovell, support a head sentence of 10 years imprisonment to reflect the gravity of this audacious fraud which has so seriously harmed the peace of mind and prosperity of some 311 people.  A 10 year rather than a nine year sentence is warranted to deter and appropriately punish the applicants and to deter others who might otherwise be tempted by greed to participate in such offending.”

  1. In my view Crouch and Carlisle supports the conclusion that the sentence imposed here, nine years, was well within the exercise of the sentencing discretion.
  2. As can be seen form the review above, Mr Kelly received a lesser sentence than those in Lovell, Daswani or Cook.  Whilst they all involved much larger sums defrauded and ultimately lost, all of them imposed sentences towards the top of that available because of the pernicious nature of the fraud perpetrated upon unsuspecting victims.  However, none of them had the feature seen in Mr Kelly’s case, that not only was the offence committed while on bail, it was in defiance of the Victorian County Court’s grant of bail to enable restitution to those victims.  None of them suggest that the nine years imposed here was outside the exercise of appropriate discretion.
  3. I am unpersuaded that the sentence imposed on Mr Kelly was manifestly excessive.

Conclusion

  1. For the reasons expressed above, I would refuse to grant leave to appeal against the sentence.
  2. I propose the following order:
    1. The application for leave to appeal against sentence is refused.
  3. PHILIP McMURDO JA:  I agree with Morrison JA.
  4. BODDICE J:  I have read the reasons for judgment of Morrison JA.  I agree with those reasons and with the proposed order.

Footnotes

[1] The list of tainted property is too long to set out, but included: two couches; 19 cushions and pillows; a bed; a pink chopper motorcycle; Louis Vuitton bags, boxes, pouches, earrings and jewellery; a Tiffany pouch, and Tiffany earrings and jewellery.  See AB 9.

[2] Cocaine.

[3] A rolled up $20 bill used to snort cocaine.

[4] AB 85-89.

[5] Odmark, Aston, Harrold, Wagner, Thornton and Siemons.

[6] Webb, Presotto and Lowe.

[7] AB 16.

[8] AB 17-18.

[9] AB 32-33.

[10] AB 36 lines 27-39.

[11] AB 180, 182.

[12] [2014] QCA 12.

[13] District Court, 270 of 2015, O'Brien CJDC, 30 July 2015.

[14] [2014] QCA 257.

[15] [1999] QCA 286.

[16] AB 25 line 31.

[17] AB 43.

[18] AB 26.

[19] AB 27.

[20] AB 29.

[21] Henderson at [117]-[123].

[22] R v Heiser & Cook; ex parte Attorney-General (Qld) [1997] QCA 14; R v Gadaloff [1999] QCA 286; R v Hinterdorfer [1997] QCA 199.

[23] Henderson at [127].

[24] Henderson at [131].

[25] R v Crouch and Carlisle [2016] QCA 81.

[26] [2012] QCA 43.

[27] R v Cook and Heiser, ex parte Attorney-General [1997] QCA 14, 12 years substituted for nine years; R v Daswani [2005] QCA 167, 12 years; R v Cross, unreported, Indictment 126/2006, District Court, Maroochydore, Robertson DCJ, 16 May 2006, 10 years.

[28] Cook, $3.3m; Daswani, $11m with $6m lost; Cross, $7.645m, with $3.7m lost.

[29] Lovell at [11], per McMurdo P, Atkinson J concurring.

[30] Lovell at [12].

[31] Lovell at [13].

[32] Crouch and Carlisle at [28].

[33] Crouch and Carlisle at [31].

Close

Editorial Notes

  • Published Case Name:

    R v Kelly

  • Shortened Case Name:

    R v Kelly

  • MNC:

    [2016] QCA 293

  • Court:

    QCA

  • Judge(s):

    Morrison JA, Philip McMurdo JA, Boddice J

  • Date:

    15 Nov 2016

Litigation History

EventCitation or FileDateNotes
Primary JudgmentDC1895/15 (No Citation)29 Feb 2016Date of Sentence.
Appeal Determined (QCA)[2016] QCA 29315 Nov 2016Application for leave to appeal against sentence refused: Morrison, Philip McMurdo JJA and Boddice J.

Appeal Status

Appeal Determined (QCA)

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