By Paul Gregoire and Ugur Nedim
Bruce Alan Johnston was a senior accountant for Newcrest Mining Limited, involved in the development of the Cadia East Mine.
Between 1 July 2010 and 27 August 2013, Mr Johnston prepared 156 invoices in the name of Bramph Consultancy Services. But no such entity existed, and the funds were placed into bank accounts controlled by Johnston.
The invoices were purported to be for consultancy services in relation to the Cadia Mine project. The total amount of money Johnston transferred into his accounts was $1,257,847. He gradually gambled the funds away.
Johnston used online betting agencies, and a phone app to place his bets. At the height of his gambling spree, Johnston was placing up to 100 bets a day on several sports.
The fraud was discovered when someone noticed that no GST was being charged on the invoices. Newcrest senior management spoke with Johnston about the matter on 21 November 2013.
The father-of-two confessed to the crime, and was arrested and charged on 25 July 2014.
Guilty of fraud
Mr Johnston appeared in Orange District Court on 27 March 2015. He was charged with one count of fraud under section 192E(1)(b) of the Crimes Act 1900 (NSW). The maximum penalty for the offence is ten years imprisonment.
Fraud under section 192E does not carry a ‘standard non-parole period’ (SNPP). An SNPP is a reference point or guidepost for the sentencing court when determining the minimum time a person must spend behind bars before being eligible to apply for release on parole.
Sentencing was deferred to allow Mr Johnston time to complete an eight week rehabilitation program at the St John of God residential centre to deal with his gambling addiction. It was foreshadowed that this would assist the sentencing judge in determining the defendant’s prospects for rehabilitation.
On 5 June 2015, Mr Johnston appeared in Sydney’s Downing Centre District Court for sentencing. Judge Mark Williams ultimately sentenced him to 6 years and 6 months imprisonment, with a non-parole period of 4 years.
Johnston had entered an early guilty plea, which resulted in a 25 percent discount on his overall sentence. The original sentence prior to the discount was assessed as 8 years and 8 months in prison.
A significant breach of trust
The sentencing judge noted that Johnston repaid his former employer $250,000 in restitution. As a consequences, the company agreed to release him from any further financial liability.
Mr Johnston told the court that his gambling addiction had begun whilst he was a teenager. He said he was extremely remorseful for his crimes. And psychiatrist Dr Krishnaswamy was of the opinion that with continued treatment, Johnston’s prospects for rehabilitation were good.
Judge Williams found that the offence involved a substantial breach of trust. He added that gambling and drug addiction were different, as “gambling does not physically alter a person’s mind or body and that a gambler knows what he or she is doing.”
Gambling is not a mitigating factor
Mr Johnston appealed the severity of his sentence to the NSW Criminal Court of Appeal (NSWCCA), which heard the case on 31 January this year and delivered its judgment on 17 March. NSW Chief Justice Tom Bathurst, along with Justice Peter Johnson and Justice Desmond Fagan, presided over the court.
Johnston’s lawyers argued that the sentencing judge had made an error by neglecting to factor in the role that his gambling addiction had played in his offending conduct. The lawyers also submitted that the judge findings regarding a hierarchy of addiction, placing gambling below drug addiction, were erroneous at law.
“This court has consistently held that the fact that offences were committed to feed a gambling addiction will not generally be a mitigating factor at sentence,” Chief Justice Bathurst confirmed. His Honour added that this is especially true when general deterrence is a concern.
The judge noted there was no evidence to suggest that Mr Johnston “lacked the capacity to exercise judgment” during the time he was committing the frauds.
The Chief Justice reasoned that if gambling were a mitigating factor in sentencing, it would lead to a situation where problem gamblers might think they could get away with committing serious crimes.
According to His Honour, the sentencing judge had not postulated a hierarchy of addiction, but made his remarks to demonstrate that Johnston’s gambling had not lead to a situation where he had completely lost his capacity to make rational decisions.
A rolled up charge
Johnston also appealed on the ground that it was manifestly excessive. As to whether this was so, the Chief Justice noted that although there was only one charge of fraud, the offending conduct actually involved 156 “fictitious transactions.”
His Honour explained that Johnston was concerned that the head sentence of 8 years and 8 months was excessive when compared with the maximum penalty of 10 years. The Chief Justice noted the offender had submitted “that a sentence of that nature was reserved for the worst class of cases.”
However, the court found that this line of thinking fails to take into account that the offending involved “a considerable number of transactions over a period of some years.”
On top of that, the offender breached the significant amount of trust his employer had placed him in.
His Honour found that Johnston’s prior good character was not a significant factor in sentencing. “It is generally only persons of good character who are placed in positions of trust so as to enable offences such as the present to be committed.”
On the other hand, His Honour made it clear that general deterrence was of considerable importance in cases of this type, where the offences are prevalent in society and relatively easy to carry out and even to get away with.
Chief Justice Bathurst remarked that while the sentence may seem severe in comparison to the maximum penalty, if one considers the specific factors of the case, the sentence was not “unreasonable or plainly unjust.”
His Honour therefore decided to dismiss the appeal. Justices Johnson and Fagan agreed with that decision.