By Paul Gregoire and Ugur Nedim
A Ponzi scheme is a type of fraud whereby a person who claims to be a successful investor lures victims into providing their funds for false business ventures. As the original investors spread the word about their above-market returns, they attract new investors whose funds are then used to make interest payments, or pay out “investment profits”, to the earlier investors.
All the while, the person at the helm of the scheme invests little or none of their victims’ money into actual investments, instead using the funds for their own purposes; often living lavishly on the hard-earned funds of their trusting investors.
Ponzi schemes have been likened to houses of cards – certain to collapse when they become so big that new funds are insufficient to cover payments to earlier investors. The inevitable collapse is often hastened where a large number of earlier investors demand to be paid out.
Multi-million dollar Ponzi scheme
Such a scheme was led by Hamish McLaren. Now in his early 50s, the Sydney man went by a variety of names and stories. He preyed on often vulnerable people with excess cash – taking as much as he possibly could regardless of their circumstances.
From May 2011 through to July 2017, McLaren defrauded 15 people of over $7.6 million. Certain victims became suspicious, which eventually led to his arrest. McLaren ended up pleading guilty to 18 charges. And prior to sentencing, he provided the court with a letter of remorse.
Acting NSW District Court Judge Colin Charteris said on sentencing McLaren in June 2019 that he may have considered him a first time offender back in 2011 when his initial crimes occurred, but that had been “swamped by the behaviour that continued on over the next six years”
“Regrettably, I have come to the view that Mr McLaren is not remorseful”, the acting judge said on handing down his sentence. “Mr McLaren is sorry for no one other than himself. He is sorry for his own predicament. He is not truly sorry for the ruinous results of his outrageous conduct.”
Time to consider his crimes
McLaren pleaded guilty in the NSW Local Court to 17 counts of dishonestly obtaining a financial advantage by deception, contrary to section 192E(1)(b) of the Crimes Act 1900 (NSW). This offence carries a maximum penalty of 10 years imprisonment.
The convicted con artist also admitted his guilt to one count of the offence of knowingly dealing with the proceeds of crime, under subsection 193B(2) of the Crimes Act. A person convicted of this crime is liable to up to 15 years inside.
In handing down the sentence on 20 June 2019, Judge Charteris made clear that in his opinion, although McLaren maintained regret, his actions over many years spoke otherwise. And while the offender claimed mental health issues lead him to commit the crimes, it was “likely driven by greed”.
For the 17 counts of fraud, his Honour sentenced McLaren to an aggregate sentence of 16 years prison time, with a non-parole period of 12 years. And for the charge of money laundering, he got a fixed sentence of 7 years and 6 months to be served concurrently with the aggregate sentence.
This was the overall sentence after a 25 percent discount was applied due to the utilitarian value of McLaren’s early guilty plea.
An axe to grind
On 17 June 2020, McLaren appealed his sentence to the NSW Court of Criminal Appeal (NSWCCA) on two grounds.
The first consisted of the sentence being “unbalanced and attended by error in principle”, as the judge focused on the “objective criminality” of McLaren’s offences, which rendered his early guilty plea, subjective circumstances and rehabilitation whilst on remand “of little consequence”.
“In essence, it was submitted that the judge became the victims’ advocate and exhibited a lack of judicial impartiality and detachment,” explained NSWCCA Justice Peter Hamill in the full findings of the appeal.
His Honour further set out that McLaren’s legal team’s submission held that while Judge Charteris applied the 25 percent discount for the early guilty plea, it actually meant that the sentence prior to reduction consisted of 21 years prison time, with a non-parole of 16 years.
And in referencing a number of statements from the court transcript, the lawyers argued that the sentencing judge “effectively transmogrified himself as a champion of the victims”.
Justice Hamill found that it was “impossible to avoid the conclusion that there is real substance” to McLaren’s position, as there was “an accumulation of comments and observations” from the sentencing judge that displayed an overall “lack of temperance and impartiality”.
His Honour found a reference made by Charteris about McLaren not speaking to police or giving evidence during proceedings inappropriate, as was some of the “quasi-religious flavour” of his statements.
The appeals judge then raised concerns over a “pep-talk” the sentencing judge gave to media, asking reporters to cite the overall length of the sentence handed down – 16 years – rather than citing the non-parole period, as, he advised, a lot of inmates don’t get early release on parole.
The NSWCCA found ground one made out, as the initial judge had focused “almost exclusively” on the objective seriousness of offending. And Justice Hamill said that if any subjective circumstances had been considered, then it was difficult to accept an initial head sentence of over two decades.
A sentence too long
The second ground was that the original sentence was manifestly excessive. And while the first ground being made out meant that McLaren would be resentenced, which made consideration of the second ground redundant, the justice provided ruling on the it anyway.
To ascertain whether the original sentence was excessive, Hamill considered sentences from comparable past judgements. And in doing so, his Honour found that McLaren’s original sentence had been “substantially out of proportion” with that of other similar fraud cases.
A “crushing” sentence
In sentencing, Justice Hamill agreed with Judge Charteris in that the offending was “very broad mid-range” of objective seriousness. However, the NSWCCA judicial officer found the District Court judge didn’t properly apply totality during the original sentencing exercise.
The principle of totality stipulates that when a court sentences an offender for more than one crime, or when they’re already serving an existing sentence for a related offence, the aggregate sentence must be just and appropriate when taking into account the overall offending conduct.
According to Justice Hamill, the original sentence was “crushing”. In resentencing, the justice said he didn’t lose sight of the seriousness of crimes and agreed that there was a “lack of genuine contrition”.
But he did give weight to McLaren having no prior record and his personal circumstances.
On 15 February 2021, Justice Hamill ordered that McLaren be sentenced to 12 years imprisonment, with a non-parole period of 9 years. And NSWCCA Justices Clifton Hoeben and Stephen Rothman agreed with his Honour’s orders.