Fraud 3 million dollar | Case Study
Charges: Obtain property by deception (fraud) x 4 (Between dates charge).
The client was working for a company as a manager. It was a large company with a number of employees. The client was having huge difficulties at home and was suffering depression. The client decided to improve his situation by writing fake invoices to the company, from a company that he created.
The client wrote a huge number of invoices and was falsely paid over 3.4 million by the company. The client did this for two years and then stopped. Unfortunately for the client 2-3 years later he fiddled with the petty cash which triggered an investigation and ultimately an audit and consequently the client was charged with 3.4 millions dollars worth of fraud.
Because the matter related to 4 charges all involving singular deceptions totalling more than $50 000 each, it allowed the crown to open the case on the basis that the client had engaged in a ‘continuing criminal enterprise’. This meant that the crown could rightly submit to the Judge that double the maximum penalty was open on the charges. That is that the usually 10 year maximum was taken to 20 years by virtue of the quantum’s involved and the multiple charges.
The case presented a huge amount of problems. As it was a;
- Breach of trust from an employer over a significant period of time being 2 years.
- In circumstances where the client had purchased houses, cars, and had affairs utilising the ill gotten gains (problematic as it was on a for greed, not need basis).
On the face of it, there was not a great deal that could be said. But when we uncovered the layers it became apparent that there was a lot going on with the client that could be used in mitigation to reduce his sentence.
- The clients then partner suffered severe post natal depression to the extent she was unable to work.
- The client himself has been diagnosed with personality disorder and depression.
As soon as we were engaged we got the client regularly seeing a forensic psychologist and a treating psychologist to both treat and assess the client’s level of depression.
The offending seemed to be more about improving his partners situation to assist her in lifting out of her depression and also to assist the client to lift himself out of his own depression.
We obtained the full medical history for his partner all 140 pages, then obtained the clients full medical history a further 70 pages. Critically the records revealed a diagnosis of depression one year prior to the offending beginning. Further there was record of the medication prescribed.
This was critically important because depression prior to offending can lead to some moderation of general and specific deterrence as a sentencing principle.
The forensic psychologist has already diagnosed the client as suffering depression prior to the incident but the medical records provided the evidence that was required to lead to a moderation of the sentence imposed.
The leading case is the Court of Appeal decision of Verdins, but more recently the principles in that case have been clarified in the case of O’Neil. O’Neils case stated that any application of the principles set out in Verdins, needed to be rigorously tested. Subsequently forensic physiological conclusions that someone suffered depression prior to the offending was not good enough, there needed to be other contemporaneous records supporting the conclusion. In this case it was the medical records that predated the offending.
When people break the law and are caught it can have dire consequences on their mental health. This is a dilemma of their own making and therefore the condition cannot attract a sentencing discount. The court have even said that mental health diagnoses that occur during the course of offending should also not attract discount because those doing the wrong thing are often worried about being caught and this can have a deleterious effect on someones mental health. I state these propositions simply for the purposes of this article, but to most people they make sense.
That is why the early medical records in this case were critical and when combined with both the treating psychological report and forensic psychological report meant that some discount was warranted in this situation.
The next task regarding this case was to ascertain where all the money went. The client had assisted in liquidating 1.3 million of the assets he still retained, to reduce his debt. But the courts always like to know where all the money went. In this case this was important for two reasons
- To show that the money initially was not going towards supporting a mistress and that any money that did go towards the mistress was a small portion of the total amount.
- To demonstrate that no money was left. It is an important sentencing considering that the Judge is not left wondering whether the client had set aside a couple of million dollars as a get out gaol present at the conclusion of the sentence. If the Judge does form this conclusion it can drastically impact gaol time.
Following the forensic analysis of the money trail and the above materials the following became clear
- that the client’s partner was very mentally ill prior to beginning the offending,
- that the client himself was suffering from a significant level of depression prior to offending,
- that the money was used to try to lighten the load of his partners suffering by improving her situation,
- and to improve his own situation,
- that the client had co-operated to liquidate all his assets when finally caught, a demonstration of remorse and
- that importantly had stopped offending prior to being caught also demonstrative of remorse.
The above factors were very important sentencing considerations and resulted in the client receiving a sentence of 5 years with 3 years to serve, a very lenient sentence for this level of deception.