DISTRICT COURT OF QUEENSLAND

CITATION: The Queen v Gore [2020] QDC 264 PARTIES: The Queen v Craig Kirrin Gore (Defendant) FILE NO: 2413/18

DIVISION: Criminal PROCEEDING: Judge alone trial. ORIGINATING Brisbane District Court COURT:

DELIVERED ON: 27 October 2020 DELIVERED AT: Brisbane HEARING DATE: 27, 28, 30, 31 July 2020, 4 August 2020. JUDGE: Byrne QC DCJ ORDERS: Special Verdicts: Count 11: I find that the jurisdiction of this Court to try the charge has not been established on the balance of probabilities. I therefore find the defendant not guilty on count 11. All other counts: I find that the jurisdiction of this Court to try the charges has been established on the balance of probabilities. General Verdicts: Count 1: Not guilty Count 2: Not guilty Count 3: Guilty Count 4: Not guilty Count 5: Not guilty Count 6: Not guilty Count 7: Guilty Count 8: Guilty 2

Count 9: Guilty Count 10: Guilty Count 12: Guilty

CATCHWORDS: CRIMINAL LAW – GENERAL MATTERS – PROCEDURE – TRIAL HAD BEFORE JUDGE WITHOUT JURY – where the defendant applied for a judge alone trial under s 614 of the Criminal Code Act 1899 (Qld) – where no jury trial orders were made under s 615 of the Criminal Code (Qld) – where the accused was tried by a judge sitting without jury. CRIMINAL LAW – PARTICULAR OFFENCES –– FRAUD – VERDICT – where the defendant is charged with 11 counts of fraud to the value of $30,000 or more and 1 count of fraud – where the defendant has pleaded not guilty to all charges – whether the defendant is guilty or not guilty. CRIMINAL LAW – TRIAL HAD BEFORE JUDGE WITHOUT JURY –– VERDICT – whether the prosecution has proved beyond reasonable doubt: that the defendant gained a benefit or advantage for another, that the defendant’s conduct was done dishonestly, that the property subject to the charge was of $30,000 or more (excluding count 8). CRIMINAL LAW –– JURISDICTION – SPECIAL VERDICT - where issues of jurisdiction arise on all counts, but are specifically raised on counts 10 and 11 – whether proof of jurisdiction is established through section 12 of the Criminal Code (Qld) – whether the prosecution have proven on the balance of probabilities that the alleged offending occurred within the jurisdiction of the Court. CRIMINAL LAW – GENERAL MATTERS –– PROCEDURE – where the defendant has submitted the evidence raises a mistake of fact issue – where the offences are offences relating to property - whether sections 22 and/or 24 of the Criminal Code (Qld) are available in the circumstances of the case.

LEGISLATION: Criminal Code Act 1899 (Qld), s 1, s 12, s 22, s 24, s 408C, s 614, s 615, s 644.

CASES: Peters v The Queen (1998) 192 CLR 493. R v Dillon; ex parte Attorney-General [2016] 1 Qd. R. 56. Thompson v The Queen (1989) 169 CLR 1. R v WAF and SBN [2010] 1 Qd. R. 370. 3

R v Longford (1970) 17 FLR 37. R v Sitek [1988] 2 Qd. R. 284. R v Perrin [2018] 2 Qd. R. 174. Royall v The Queen (1990) 172 CLR 378.

COUNSEL: Mr. M.J. Copley QC with Ms. D. Younger for the prosecution. Mr. A.J. Glynn QC with Mr M. McCarthy for the defendant.

SOLICITORS: Office of the Commonwealth Director of Public Prosecutions for the prosecution. Fisher Dore Lawyers for the defendant.

Table of Contents

Introduction ...... 4 Principles of law ...... 9 Onus and standard of proof ...... 9 Impartiality...... 9 Verdict based on evidence...... 10 Evidence ...... 10 Inferences ...... 11 Circumstantial Evidence ...... 11 No propensity reasoning ...... 11 Separate Consideration of Charges ...... 12 Remotely received evidence ...... 12 Right to silence...... 12 The parties’ cases...... 13 Factual allegations...... 13 Overview...... 13 The complainants ...... 16 Dennis Super Fund Pty Ltd – counts 1 to 3...... 16 Wooster Super Fund Pty Ltd – counts 4 to 7...... 20 Bruce Super Fund Pty Ltd – count 8...... 23 Clive Super Fund Pty Ltd – counts 9 and 10...... 24 Russell Family Superannuation Fund Pty Ltd – counts 11 and 12...... 27 4

Other witnesses...... 29 Alison Leanne Pollock...... 29 Clinton Kane Buchanan ...... 30 Russell Green ...... 31 Mario Mey...... 31 Edward George Miles Hedge...... 33 David John Rylah...... 35 Formal admissions ...... 35 The defendant’s evidence...... 37 The parties’ cases ...... 37 Consideration...... 38 Special Verdict - Jurisdiction...... 38 Consideration of counts 1-10 and 12 ...... 40 The prosecution’s particulars...... 40 The availability of sections 22 and/or 24 of the Criminal Code in the circumstances of this prosecution...... 42 Credit issues, conflicts in the evidence and the reliability of the business records.....42 When did 1835 come into existence?...... 47 The defendant’s knowledge of the financial status of AF and AP/AG...... 49 Is it proven that the defendant caused the benefit or advantage to be gained by the relevant entity or entities? ...... 51 Is it proven that the defendant acted dishonestly?...... 52 Is it proven that the property was of a value of $30,000 or more in each count, other than count 8?...... 60 Conclusion...... 60

Introduction

[1] This is a trial by judge alone. The application for the trial to be conducted in this manner was granted on 26 June 2020.

[2] The defendant pleaded not guilty before me to 12 charges, each in similar terms, namely:1

1 The wording reflects the amendments made to counts 1, 4, 5 and 6 after arraignment. Re-arraignment was not sought, nor was it necessary. 5

COUNT 1 Between the eleventh day of July 2013 and the seventeenth day of July 2013 at Southport and elsewhere in the State of Queensland, CRAIG KIRRIN GORE dishonestly gained a benefit or advantage for Arion Financial Pty Ltd (ACN 163 193 253) and/or Arion Property Pty Ltd (ACN 163 361 144) from Dennis Super Fund Pty Ltd.

AND the property was of a value of $30,000 or more, namely $50,000.

COUNT 2 Between the first day of November 2013 and the twentieth day of November 2013 at Southport and elsewhere in the State of Queensland, CRAIG KIRRIN GORE dishonestly gained a benefit or advantage for Arion Financial Pty Ltd (ACN 163 193 253) and/or Arion Group Pty Ltd (ACN 163 361 144) from Dennis Super Fund Pty Ltd.

AND the property was of a value of $30,000 or more, namely $55,000.

COUNT 3 Between the eighth day of May 2014 and the twelfth day of May 2014 at Southport and elsewhere in the State of Queensland, CRAIG KIRRIN GORE dishonestly gained a benefit or advantage for Arion Financial Pty Ltd (ACN 163 193 253) and/or Arion Group Pty Ltd (ACN 163 361 144) from Dennis Super Fund Pty Ltd.

AND the property was of a value of $30,000 or more, namely $30,000.

COUNT 4 Between the eighth day of May 2013 and the twelfth day of July 2013 at Southport and elsewhere in the State of Queensland, CRAIG KIRRIN GORE dishonestly gained a benefit or advantage for Arion Financial Pty Ltd (ACN 163 193 253) and/or Arion Property Pty Ltd (ACN 163 361 144) from Wooster Super Fund Pty Ltd.

AND the property was of a value of $30,000 or more, namely $50,000.

COUNT 5 On or about the seventh day of August 2013 at Southport and elsewhere in the State of Queensland, CRAIG KIRRIN GORE dishonestly gained a benefit or advantage for Arion Financial Pty Ltd (ACN 163 193 253) and/or Arion Property Pty Ltd (ACN 163 361 144) from Wooster Super Fund Pty Ltd.

AND the property was of a value of $30,000 or more, namely $50,000. 6

COUNT 6 On or about the ninth day of October 2013 at Southport and elsewhere in the State of Queensland, CRAIG KIRRIN GORE dishonestly gained a benefit or advantage for Arion Financial Pty Ltd (ACN 163 193 253) and/or Arion Property Pty Ltd (ACN 163 361 144) from Wooster Super Fund Pty Ltd.

AND the property was of a value of $30,000 or more, namely $100,000.

COUNT 7 On or about the seventeenth day of January 2014 at Southport and elsewhere in the State of Queensland, CRAIG KIRRIN GORE dishonestly gained a benefit or advantage for Arion Financial Pty Ltd (ACN 163 193 253) and/or Arion Group Pty Ltd (ACN 163 361 144) from Wooster Super Fund Pty Ltd.

AND the property was of a value of $30,000 or more, namely $50,000.

COUNT 8 Between the first day of December 2013 and the twentieth day of January 2014 at Southport and elsewhere in the State of Queensland, CRAIG KIRRIN GORE dishonestly gained a benefit or advantage for Arion Financial Pty Ltd (ACN 163 193 253) and/or Arion Group Pty Ltd (ACN 163 361 144) from Bruce Super Fund Pty Ltd.

COUNT 9 Between the twelfth day of December 2013 and the eighteenth day of December 2013 at Southport and elsewhere in the State of Queensland, CRAIG KIRRIN GORE dishonestly gained a benefit or advantage for Arion Financial Pty Ltd (ACN 163 193 253) and/or Arion Group Pty Ltd (ACN 163 361 144) from Clive Super Fund Pty Ltd.

AND the property was of a value of $30,000 or more, namely $120,000.

COUNT 10 Between the twenty-sixth day of March 2014 and the twenty- seventh day of March 2014 at Southport and elsewhere in the State of Queensland, CRAIG KIRRIN GORE dishonestly gained a benefit or advantage for Arion Financial Pty Ltd (ACN 163 193 253) and/or Arion Group Pty Ltd (ACN 163 361 144) from Clive Super Fund Pty Ltd.

AND the property was of a value of $30,000 or more, namely $60,000. 7

COUNT 11 Between the tenth day of January 2014 and the fourteenth day of February 2014 at Southport and elsewhere in the State of Queensland, CRAIG KIRRIN GORE dishonestly gained a benefit or advantage, pecuniary or otherwise, for Arion Financial Pty Ltd (ACN 163 193 253) and/or Arion Group Pty Ltd (ACN 163 361 144) from Russell Family Superannuation Fund Pty Ltd.

AND the property was of a value of $30,000 or more, namely $150,000.

COUNT 12 Between the first day of April 2014 and the tenth day of April 2014 at Southport and elsewhere in the State of Queensland, CRAIG KIRRIN GORE dishonestly gained a benefit or advantage for Arion Financial Pty Ltd (ACN 163 193 253) and/or Arion Group Pty Ltd (ACN 163 361 144) from Russell Family Superannuation Fund Pty Ltd.

AND the property was of a value of $30,000 or more, namely $60,000.

[3] My role is to determine whether he is guilty or not guilty. He is presumed to be innocent, and will remain so unless and until I am satisfied of his guilt beyond reasonable doubt, the burden of proof of which lies on the prosecution at all times. There is no burden on the defendant to prove anything in this trial.

[4] In order to succeed on the prosecution, the prosecution must prove beyond reasonable doubt that, on each charge:

(a) The defendant gained a benefit or advantage for Arion Financial Pty Ltd (ACN 163 193 253) and/or Arion Property Pty Ltd (ACN 163 361 144) or Arion Group Pty Ltd (ACN 163 361 144) as the case may be.

(i) “Benefit” is broadly defined,2 and is broad enough to include a transfer of “money” to a bank account.3

(b) The defendant’s conduct must have been done dishonestly.

(i) To prove that the defendant acted dishonestly the prosecution must prove that what the defendant did was dishonest by the standards of ordinary honest people.4 There is no subjective aspect to this consideration.

(c) The property the subject of the charge was of a value of $30,000 or more.

2 Section 1 of the Criminal Code. 3 See also the definition of “property” at section 1 of the Criminal Code. 4 Peters v The Queen (1998) 192 CLR 493 at [18], [135]; R v Dillon; ex parte Attorney-General [2016] 1 Qd. R. 56 at [32], [48]. 8

(i) This circumstance of aggravation was charged in relation to each count, other than count 8.

[5] If a person dishonestly induces another to deliver property to another, it is immaterial whether the owner passes or intended to pass ownership in the property.5

[6] An issue has arisen in this trial as to the applicability of the exculpatory provisions under either or both of sections 22 and 24 of the Criminal Code. This will be considered in detail below.

[7] For some reason, only count 11 alleges that the benefit or advantage is “pecuniary or otherwise”. This accords with the wording of the offence provision, but this is the only count that alleges it. Prosecuting Counsel suggests that it be treated as surplusage, and defence Counsel does not suggest anything is to be made of it. The factual allegation in each charge alleges is the gaining of a pecuniary advantage or benefit, and so the particularisation is satisfied. It is an odd feature of the drafting of the indictment, but it can either be treated as satisfied or ignored, and in either event it need not be considered further.

[8] In the circumstances of this trial, the prosecution must also prove, on the balance of probabilities,6 that the particular offence was committed, in the relevant sense, in the State of Queensland. Each charge alleges that the offence occurred at Southport or elsewhere in the State of Queensland, and so proof of the commission of the offence, in the relevant sense, anywhere in the State will be sufficient.

[9] The issue of locality or jurisdiction notionally arises on all counts, but is most specifically raised in respect of counts 10 and 11. In those circumstances a special verdict should be taken.7

[10] Proof of jurisdiction is informed by the application of section 12 of the Criminal Code, which relevantly states:

“12 Application of Code as to offences wholly or partially committed in Queensland

(1) This Code applies to every person who does an act in Queensland or makes an omission in Queensland, which in either case constitutes an offence.

(2) Where acts or omissions occur which, if they all occurred in Queensland, would constitute an offence and any of the acts or omissions occur in Queensland, the person who does the acts or makes the omissions is guilty of an offence of the same kind and is liable to the same punishment as if all the acts or omissions had occurred in Queensland.

5 Section 408C(3)(f) of the Criminal Code. 6 Thompson v The Queen (1989) 169 CLR 1, 12, 13; R v WAF and SBN [2010] 1 Qd. R. 370, [40]. 7 Thompson v The Queen, supra at 15, 39. 9

(3) Where an event occurs in Queensland caused by an act done or omission made out of Queensland which, if done or made in Queensland, would constitute an offence, the person who does the act or makes the omission is guilty of an offence of the same kind and is liable to the same punishment as if the act or omission had occurred in Queensland.

(3A) It is a defence to prove that the person did not intend that the act or omission should have effect in Queensland.

(4) Where an event occurs out of Queensland caused by an act done or omission made in Queensland, which act or omission would constitute an offence had the event occurred in Queensland, the person who does the act or makes the omission is guilty of an offence of the same kind and is liable to the same punishment as if the event had occurred in Queensland.

(5) ….”

[11] The issues in the trial are whether the prosecution has proven on the balance of probabilities that the locality of the alleged offending, as that is informed by section 12 of the Criminal Code, occurred within the jurisdiction of this Court, and whether the prosecution has proven beyond reasonable doubt each of the elements of the respective counts, but in particular whether the issue of dishonesty has been so proven.

[12] For the reasons which follow I am satisfied beyond reasonable doubt of the guilt of the defendant only on counts 3, 7, 8, 9, 10 and 12. I am not satisfied of his guilt on the other counts.

Principles of law

Onus and standard of proof

[13] As noted earlier, the defendant is presumed to be innocent, and will remain so unless and until I am satisfied of his guilt beyond reasonable doubt on each count, the burden of proof of which lies on the prosecution at all times. There is no burden on the defendant in this trial to prove anything.

Impartiality

[14] In arriving at all verdicts I must act impartially and dispassionately; relying only on the evidence received at the trial; acting without prejudice or sympathy to the defendant, the complainants or anyone else; not letting emotion sway my judgment; and putting aside anything else I might have heard about the matter beforehand.

Verdict based on evidence 10

[15] My verdict must be based on the evidence I accept, taking into account the directions and warnings that I must follow and heed.

Evidence

[16] The issues must be resolved on all of the evidence, but that does not mean that I have to resolve all of the questions or inconsistencies which I consider might have been raised by the evidence, or which conceivably arise about the facts.

[17] The evidence which I accept and that which I reject may be based on many things, including what a witness had to say; the manner in which the witness said it; the general impression which he or she made when giving evidence; and my assessment of the other evidence, including that given by the other witnesses and the various other documents and material in evidence.

[18] In the case of conflicts in the evidence it is for me to decide whether they are important to resolve, or unnecessary, given the views which I reach about other parts of the evidence, when I assess the evidence and the cases which the parties have advanced.

[19] The honesty, accuracy and reliability of the evidence must be assessed using common sense and experience, and in light of the whole of the evidence adduced at the trial. I do however recognise that there are particular limitations on what can be concluded from a visual impression of the witness, and their demeanour in the witness box alone.

[20] There is a difference between honesty and reliability. A person might honestly believe what he or she said about what he or she heard or saw, and yet not be reliable in recollection, perhaps because of errors in observation, or of recall, or because of an inability to describe what they heard or saw. This might become apparent, when other objective evidence is considered.

[21] It is a matter for me to decide whether or not I accept the evidence given by any witness. If I conclude that particular evidence is not truthful or reliable, I will not take it into account in determining whether the prosecution has established guilt.

[22] The ultimate decision as to what evidence I accept and what I reject is mine. In arriving at my conclusions I may also take into account relevant parts of other evidence, including that of other witnesses and the facts which are not in dispute, in deciding whether to accept or reject a particular witness’ evidence, or a particular part of their evidence, or in deciding how persuasive I find evidence to be that I consider to be truthful and reliable.

[23] I am also not obliged to accept the whole of the evidence of a witness. I may accept some parts of a witness’ evidence and reject other parts, if I find some part of that evidence to be unreliable. Or I might not accept part of a witness’ evidence, because I consider that the witness had some motive to conceal, or to embellish the evidence which he or she gave, or to distort the truth. 11

[24] The fact that I do not accept a portion of the evidence of a witness does not mean that I must necessarily reject the whole of the witness’ evidence. I may accept the remainder of that witness’ evidence if I think it is worthy of acceptance.

Inferences

[25] Before drawing any inferences, I must be satisfied that they are reasonable ones to draw from the facts that I find established by the evidence. I must examine the evidence with care, and I must consider whether it is reliable, before drawing any conclusions from facts which I find established. This requires a process of reasoning undertaken with care and logic, avoiding speculation or conjecture to fill in any gaps in the evidence, but it is up to me to decide whether I accept particular evidence and if I do, what weight, or significance, it should have.

Circumstantial Evidence

[26] Both direct and circumstantial evidence are to be considered in this trial. It is not necessary that facts in dispute be proved by direct evidence. They may be proved by circumstantial evidence alone, by direct evidence alone, or by a combination of direct and circumstantial: that is, both direct and circumstantial evidence are acceptable proof of facts.

[27] To bring in a verdict of guilty based entirely or substantially upon circumstantial evidence, it is necessary that guilt should not only be a rational inference but also that it should be the only rational inference that could be drawn from the circumstances. Importantly, if there is an inference reasonably open which is adverse to the defendant and an inference in his favour, I may only draw an inference of guilt if it so overcomes any other possible inference as to leave no reasonable doubt in my mind.

[28] If there is any reasonable possibility consistent with innocence, it is my duty to find the defendant not guilty. This follows from the requirement that guilt must be established beyond reasonable doubt.

No propensity reasoning

[29] There is evidence in this trial that the defendant has told falsehoods, I accept sometimes deliberately, and done other things which may not reflect well on his credibility generally, such as using company money for personal expenses on occasions. In this trial, the sole issue in dispute is the proof beyond reasonable doubt of the dishonesty of the defendant at the time that he made representations which induced the respective investments. The prosecution has inclusively particularised certain representations as being relevant and, importantly in the circumstances of this prosecution, has particularised that the defendant had a particular knowledge as being relevant to proof of dishonesty, and nothing else.

[30] Acceptance that the defendant was dishonest in his representations or other conduct is irrelevant to proof of guilt unless that dishonesty is also relevant to proof of the 12

particulars provided. Where not relevant, I cannot use that finding of dishonesty to prove that he has committed any or all offences. To do so would be to act on mere evidence of propensity, which is impermissible.

Separate Consideration of Charges

[31] Twelve separate charges are preferred. I will return separate verdicts for each charge and I must consider each charge separately, evaluating the evidence relating to that particular charge to decide whether I am satisfied beyond reasonable doubt that the prosecution has proved its case on any or all of the preferred charges.

[32] As the evidence in relation to the separate charges is different, my verdicts need not be the same.

Remotely received evidence

[33] Some witnesses in the trial testified via audio-visual link, namely Mr Wooster, Mr Russell, Mr Dennis, Mrs Dennis and Mr Rylah, and Ms Richards testified by telephone. Each of those witnesses was interstate and, as I understand it, this was necessitated through the imposition of COVID-19 border restrictions and so was for an entirely benign reason.

[34] In respect of receiving evidence in that manner, I direct myself that:

(a) it is a routine practice of the court and I must not draw any inference as to the defendant’s guilt from it; and

(b) the probative value of the evidence is not increased or decreased because of it; and

(c) the evidence is not to be given any greater or lesser weight because of it.

Right to silence

[35] The defendant has a right to silence. He elected to not testify before me or to call evidence on his behalf, as is his undoubted right. He is not bound to give or to call evidence. He is entitled to insist that the prosecution prove the case against him, if it can.

[36] The prosecution bears the burden of proving the guilt of the defendant beyond a reasonable doubt, and the fact that the defendant did not give evidence is not evidence against him. It does not constitute an admission of guilt by conduct and it may not be used to fill any gaps in the evidence led by the prosecution. It proves nothing at all, and I do not assume that because he did not give evidence that adds in some way to the case against him. It cannot be considered at all when deciding whether the prosecution has proved its case beyond a reasonable doubt, and does not make the task confronting the prosecution any easier. It cannot change the fact that the prosecution retains the responsibility to prove guilt of the defendant beyond reasonable doubt. 13

The parties’ cases

[37] In arriving at my conclusions I must give careful attention to all of the evidence, not only that on which the parties have particularly addressed, and any cases which they have each advanced by the submissions. While I should pay particular attention to the evidence touching on the matters in issue, I must also have regard to the evidence as a whole. If I consider that there is a proper view of the evidence which neither party advanced, I am entitled to act on that view of the evidence.

Factual allegations

Overview

[38] The five complainants in this prosecution are corporate entities created to act as the corporate trustees of self-managed super funds (“SMSFs”). The beneficiaries of their respective SMSFs are in turn the directors of those corporate trustees.

[39] Each company was legitimately created prior to June 2013. In each instance the director (or where there is more than one director, one of them) contacted or were contacted by a representative from an entity known as Sleipner Financial Pty Ltd, a business involved in financial planning. The defendant was involved in Sleipner since at least 2012.

[40] As a result of advice given to each of the directors, the complainant corporate entities, and the respective underlying SMSFs were created. In each instance Macquarie Bank accounts were created into which cash was deposited for the purposes of the respective SMSFs. There is no evidence that the defendant had any role in the creation of these SMSF structures, and the prosecution does not suggest anything untoward about this process.

[41] On or about 17 June 2013, each of the complainants, or their directors, were notified by email that Sleipner had been bought by Arion Financial Pty Ltd (“AF”).

[42] It is convenient to pause here and reflect on the corporate history of AF. On 8 April 2013 AF was incorporated. At that time it had two directors, Perry Neil Cooper and Edward George Miles Hedge (known as Miles). ASIC records reveal that Mr Cooper resigned on and from 20 August 2013 and Mr Hedge also resigned, but not until 27 April 2015.8

[43] There was a related corporate entity, Arion Property Pty Ltd (“AP”), which was incorporated from 17 April 2013 and initially had the same directors as AF. On 13 November 2013, AP changed its name to Arion Group Pty Ltd (“AG”) and had only one director, namely Mr Hedge. Perry Cooper had also resigned his position from

8 Exhibit 51 annexure A doc CRG.0003.0001.0032. 14

AP on 20 August 2013. Mr Hedge also resigned from this position on 27 April 2015.9

[44] After the notification of the sale of Sleipner to AF, the respective directors of the complainant companies were contacted by a representative of AF. Sometimes this was the defendant in the first instance, and sometimes someone else, including David Silberstein, Michael Quinn and David Rylah, with the defendant making contact later. The nature of each of the discussions will be set out below, but in each instance the directors agreed to place money from the respective SMSF Macquarie Bank account into a “debenture”. Each director in their evidence has explained what their understanding of what this “debenture” was, based on what they were told by the defendant.

[45] In each instance a document was signed to record the terms of the investment. The document was prepared by persons on behalf of AF or AP/AG, broadly speaking, nominating a specific amount to be invested for a nominated period of time and at a specified interest rate. The documents were variously titled “Debenture Agreement”,10 “Capital Garunteed (sic) Debenture Agreement”,11 “Capital Guaranteed Debenture Agreement”,12 and “Agreement”13. In addition to the obvious misspelling above, there is reason to accept that little regard was had to accuracy in the preparation of some of these documents.

[46] Also signed by the directors were withdrawal forms from the respective Macquarie Bank accounts, resulting in the deposit of the various monies into a nominated Westpac account held at Rouse Hill in New South Wales in the names of either AF, AP or AG. These withdrawal forms had been completed (except for a signature) by Arion staff. By this means a total of $800,000 was deposited into the nominated Westpac accounts between 12 July 2013 and 12 May 2014.

[47] Formal admissions at the trial prove that the Westpac account operated by AF had a particular account number ending in 775 (“the AF Westpac account”) and the Westpac account operated by AP, which later became AG, had a particular account number ending 740 (“the AP or AG Westpac account”).14

[48] The monies deposited into these Westpac accounts were then transferred between each of AF and AP/AG such that it in effect became the joint property of both companies.

[49] The balance of the bank accounts from each of the entities was usually low at the times of each of the deposits. The prosecution allegation is that any funds deposited for the purpose of a “debenture” investment were dispersed within days for the

9 Exhibit 51 annexure A doc CRG.0003.0001.0036. 10 Exhibits 4, 11, 17 and 25. 11 Exhibit 19. 12 Exhibit 23 and 39. 13 Exhibit 31 and 32. 14 Exhibit 51 admissions 6 and 7. 15

purposes of keeping the businesses running. There was no evidence that any “debenture” funds – or any funds at all – were ever invested, and in fact there was direct evidence to the contrary.

[50] The prosecution contend that the defendant induced the complainants, through their respective directors, to pay the various sums of money on the premise that the money would be returned with interest. The precise representations, as alleged, differ in each instance and will be considered below.

[51] The prosecution tendered at the commencement of the trial a document containing the particulars alleged for each count.15 The critical particulars in each count are in identical terms. Those particulars for count 1 are:16

“The defendant dishonestly gained $50,000.00 for Arion Financial and/or Arion Property because at the time of making the representations as set out in paragraph 11, the defendant knew that:

a) Arion Financial and/or Arion Property was in a precarious financial position and had a number of debts to pay;

b) There was no real prospect of Arion Financial and/or Arion Property having the capacity to repay the money invested by the complainant by the end of the investment period; and/or

c) There was no real prospect of Arion Financial and/or Arion Property having the capacity to pay the promised interest rate on the investment at the end of the investment period.”

[52] In each instance the amount particularised reflects the amount alleged in the respective count and the entity AG was referred to instead of AP where appropriate in particulars elating to other counts. The reference to paragraph 11 is to a paragraph that particularised the representations made by the defendant and a separate paragraph alleged that the money was invested as a result of those representations. There were analogous particulars alleged in respect of each of the other counts on the indictment.

[53] It is against those particulars that the evidence in the trial must be assessed. The prosecution accepts that the second and third of the particulars require actual knowledge on the part of the defendant, as opposed to, for example, a suspicion or recklessness as to the state of affairs.17

[54] Issue was taken by the defendant with paragraph a) of the particulars in relation to each count. I will consider that issue below.

15 MFI-A. 16 These particulars are reproduced in the form that they are understood to have been following the amendment to count 1. 17 Closing address p 17 ll 6-9. 16

[55] An entity, 1835 Developments Pty Ltd (“1835”) was mentioned regularly during the trial. Although no formal proof of the registration and details of the company was adduced, it appears that it was interested in land sales and had reached an arrangement with the Arion companies to pay commissions and fees for each Arion client who was introduced to it and who entered into a land sale contract, styled a “long term settlement contract” (“LTSC”).

[56] In the course of the trial, it was formally admitted that the defendant used three different mobile phone numbers, however it was not admitted they were solely used by him.18

[57] Also, it was formally admitted that three email addresses were used by the defendant, although again not that they were used solely by him.19 One of these email addresses features regularly in the evidence and I will refer to it as “the arion.panel email”.

The complainants

Dennis Super Fund Pty Ltd – counts 1 to 3

[58] Both Mark Dennis and his wife Patrina Dennis testified in relation to counts 1 to 3.

[59] Mr Dennis testified that he had been contacted by a male from Sleipner asking if he was interested in establishing a SMSF. The proposition was discussed between him and his wife and with two persons from Sleipner before it was decided that they would progress. As a consequence, Dennis Super Fund Pty Ltd was registered on 18 April 2013. It was the corporate trustee for the SMSF. A bank account was created with the Macquarie Bank for the purposes of the SMSF and $214,000 was deposited into it.20

[60] In June 2013 Mr Dennis was made aware that Sleipner was taken over by AF.

[61] Shortly before 11 July 2013, Mark Dennis was contacted by “Craig” who said he was looking after their account, and arrangements were made for a telephone meeting between him and the Dennis’ to discuss investment strategies. The Dennis’ were interested in property investment and Craig suggested that rather than having their money sitting in an account making no interest, they should put it into debentures in the meantime.21 Craig explained that debentures were a “high interest earning, low risk product”, which appealed to the Dennis’. It was explained that debentures were guaranteed and that they would get the funds back in 90 days plus the interest that had accrued. Craig suggested an investment of $50,000.22

18 Exhibit 51 admission 16. 19 Exhibit 51 admission 21. 20 Ts 2-22 ll 4-40; Exhibit 29. 21 Ts 2-25 1 4 to 2-26 l 4. 22 Ts 2-26 ll 9-23. 17

[62] By email of 11 July 2013, stated to be from “Craig K. Gore”, an “Agreement” was sent to them. It referred to a sum of $50,000, a term of “90 days rolling” and interest accruing at 8.25%. The “Grantee” was stated to be AF. The “Grantor” was named as “The Dennis (SMSF) Pty Ltd”. This was not the correct name of the entity created for the Dennis’.23

[63] That document was signed on 16 July 2013, as was a pre-filled Macquarie Bank withdrawal form to facilitate the deposit of $50,000 into the AF Westpac account.24

[64] Mr Dennis said that they made the money available because it seemed like a solid investment. They were paying the company for financial advice, which seemed good, and it seemed a fair and reasonable way to move forward.25 Mrs Dennis gave a similar explanation.26

[65] In mid-November 2013, Craig again phoned Mr Dennis. Craig said that the cash sitting in the bank account was not earning interest and he proposed a further investment of $55,000 in a debenture. By email of 19 November 2013, which was sent from the arion.panel email address, and which included a message signed off as “Craig”, a pre-filled Macquarie Bank withdrawal was sent to facilitate the deposit of $55,000 into the AF Westpac account.27 It was signed and returned the same day.28

[66] There was no document tendered in the trial which purported to outline the precise terms of any agreement. The email of 19 November 2013 referred to an intention to send the “Debenture Document” under a separate email, but the evidence is silent as to whether that ever occurred. That email also stated that “Arion Financial will pool the funds for you at the prescribed rate”.

[67] The email returning the signed form indicated that the Dennis’ wanted to be contacted before the money rolled over, and a reply was sent to the effect that would occur and that the rollover date was 20 February 2014.29

[68] Mr Dennis said that the money had been invested on this occasion because, based on information they had been given, the first investment of $50,000 was travelling well and interest had accrued. They were still not in a position to buy a property, and wanted to earn some money from the money they had. He had thought it was a sound investment; low risk and high yield.30 Mrs Dennis testified the second amount was transferred because of a belief it was going “into a debenture account with Westpac”.31

23 Exhibit 31. 24 Exhibit 32. 25 Ts 2-29 ll 1-6. 26 Ts 2-51 ll 33-36. 27 Exhibit 33. 28 Exhibit 34. 29 Exhibit 35. 30 Ts 2-34 ll 24-30. 31 Ts 2-51 ll 45-46. 18

[69] The follow up in February 2014 did not occur, probably due to the passing of Mr Dennis’ brother. In April 2014, Mrs Dennis sent a series of emails reinforcing their wish to be kept informed. They induced an email sent from the arion.panel email address, signed “Arion Group” which included a reference to a “Guarantee Debenture Account”. Mr Dennis said this was a phrase he had come across in his dealings with Craig.32 On 15 April 2014, an email was received from the arion.panel email address attaching what purported to be a statement showing the interest earned on the debentures (“debenture statement”).33

[70] On 8 May 2014, Mrs Dennis received an email from the arion.panel email address. It referred to the settlement of a property and noted that until then there was “30K odd doing nothing”. It was suggested that a proportion of it should be “add (ed) … to the debenture account”.34 This knowledge of the funds available for investment is, in my view, strongly suggestive of the defendant being involved in the sending of the email.

[71] Following receipt of that email, there was further discussion with Craig, and on 10 May 2014 Mrs Dennis received an email from the arion.panel email address. It enclosed a document titled “Capital Guaranteed Debenture Agreement” and a pre- filled Macquarie Bank withdrawal form to facilitate the deposit of $30,000 into the AG Westpac account. The agreement was stated to be between AF as the “Grantor” and “The Dennis Super Fund Pty Ltd” as the “Grantee”, and provided for $30,000 to be invested on a “90 day rolling” term and attracting interest at 8.25%. Both forms were signed and returned.35

[72] Notably, although the purported debenture named AF as the “Grantor”, the pre- filled withdrawal form nominated payment to the AG Westpac account.

[73] Mr Dennis testified that the third investment was made for essentially the same reasons as the previous one; a belief that previous investments were performing well and an acceptance of the advice to take the money out of a non-interest bearing account and make some money on it.36 Mrs Dennis testified that similar reasons operated on her mind, although she was of the view that the statements she had seen were from Westpac and there was a belief that the funds would be invested in their name, not in Arion’s name.37 In cross-examination, she was adamant that they had been told the money would be invested by Arion for them, even though she accepted that the documents were in terms that the money was provided to Arion, without any requirement that they be invested in the name of the investor.

[74] Later, an email dated 23 June 2014 from the arion.panel email address was received referring to “your latest statements”. In fact two debenture statements were

32 Ts 2-38 l 25; Exhibit 36. 33 Exhibit 37. 34 Exhibit 38. 35 Exhibit 39. 36 Ts 2-43 ll 9-15. 37 Ts 2-52 ll 1-13. 19

attached, the first related to the first two investments and was dated 17 July 2014, and the latter related to the last investment and was dated 12 August 2014. That is, each were dated after the date of the email enclosing them. Each purported to be issued by AF.38

[75] In cross-examination, Mr Dennis accepted that he and his wife had initially invested in a property at Whyalla, then they invested in the debentures and it was then suggested that they invest in a LTSC at Cotton Park. His recollection was that the latter investment was based on the money from the Whyalla investment being returned.39

[76] He also accepted that he and his wife received an amount equivalent to their principal from IOOF at some later time, but maintained he did not receive any money from Arion.

[77] The complainant’s Macquarie Bank account statement records a withdrawal of $50,000 on 17 July 2013.40 This amount is recorded as received on the AF Westpac account statement on the same date with a notation including “Dennis Super Fund”.41

[78] The day prior to that first payment of $50,000 being received on 17 July 2013, the AF Westpac account had a balance of $2202.17 and the AP Westpac account had a balance of $268.48. A loan of $40,000 is recorded from AF to AP, as are many payments to other entities. By 25 July 2013 the balance of the AF Westpac account was $418.85 and the balance of the AP Westpac account was $599.28.42

[79] The complainant’s Macquarie Bank account records a withdrawal of $55,000 on 20 November 2013.43 This amount is recorded as being received into the AF Westpac account on the same date with a notation including the words “Dennis Super Fund”.44

[80] The day prior to that second payment of $55,000 being received on 20 November 2013, the AF Westpac account had a balance of $2,850.55 and the AG Westpac account had a balance of $432.39. A loan of $53,600 is recorded from AF to AG, as are many payments by AF to other entities. By 29 November 2013 the balance of the AF Westpac account was $2,130.55 and the balance of the AG Westpac account was $32.24.45

38 Exhibit 40. 39 Ts 2-47 l 21 to 2-48 l 7. 40 Exhibit 51 Annexure E doc CRG.0061.0001.0031. 41 Exhibit 51 Annexure B doc CRG.0046.0001.0179. 42 Exhibit 51 Annexure H Reconstruction 4 & 5 doc CRG.0003.0016.0005. 43 Exhibit 51 Annexure E doc CRG.0061.0001.0032. 44 Exhibit 51 Annexure B doc CRG.0046.0001.0200. 45 Exhibit 51 Annexure H Reconstruction 11 & 12 doc CRG.0003.0016.0009. 20

[81] The complainant’s Macquarie Bank account records a withdrawal of $30,000 on 12 May 2014.46 This amount is recorded as received on the AG Westpac account statement on the same date, with a notation including “Dennis Super Fund”.47

[82] The day prior to that third payment of $30,000 being received on 12 May 2014, the AF Westpac account had a balance of $15,933.86 (there having two days earlier been a loan payment by AG in the sum of $17,000) and the AG Westpac account had a balance of $52.94. On the same day AF also received a payment of $61,600 and AG also received a payment of $20,000. Various payments by way of a loan and partial repayment of the loan between AP and AF are recorded, as are payments to other entities. By 15 May 2014 the balance of the AG Westpac account was $22.14 and the balance of the AF Westpac account was $4,591.66.48

Wooster Super Fund Pty Ltd – counts 4 to 7

[83] Damian Wooster recalls being contacted by David Silberstein from Sleipner in 2013. Subsequently a SMSF was set up, with the corporate trustee as Wooster Super Fund Pty Ltd (“Wooster”) and with him as the sole beneficiary. Wooster was incorporated on 20 May 201349 and a cash account at Macquarie Bank was also established, into which $300,000 was deposited. By email of 17 June 2013 he was notified that Sleipner had been sold to AF.

[84] Mr Wooster was interested in purchasing real estate through his SMSF and had made an offer on a property. He received a call from Craig from AF that the sale had failed because of a bank valuation. Craig said he was looking after the super fund.

[85] Mr Wooster was interested in investing in certain properties but Craig dissuaded him from pursuing them. Some months after his first contact, Craig presented options around some LTSCs in a development called Cotton Park on the outskirts of Melbourne. Mr Wooster eventually entered into some contracts for the purchase of land there, seemingly in about July 2014.

[86] In the interim, Craig suggested that Mr Wooster invest money in debentures. Mr Wooster thought that the money in Macquarie Bank was earning interest at around 5%. Craig said that Arion was a large international company and had millions of dollars of funds and could get a good interest rate. His recollection was that he was offered 8.25% on a 90 day rolling period and he could withdraw the cash on two or three days’ notice, but if that occurred no interest would be paid for that period.50 Mr Wooster said he was aware from his dealings with Sleipner, and in turn Arion that they were accredited financial advisers, through MyAdviser.

46 Exhibit 51 Annexure E doc CRG.0061.0001.0035. 47 Exhibit 51 Annexure B doc CRG.0046.0001.0563. 48 Exhibit 51 Annexure H Reconstruction 24 & 25 doc CRG.0003.0016.0015. 49 Exhibit 1. 50 Ts 1-18 ll 18-36; 1-21 l 40 to 1-22 l 2; 1-53 l 4 to 1-54 l 8. 21

[87] Mr Wooster was attracted by the promised interest rate, by the ability to withdraw on short notice and the fact that the financial services licensing arrangement was in place. He initially invested $50,000.51

[88] There exists little documentation to support Mr Wooster’s recollections. He explained that he had subsequently fallen victim to a computer malfunction and he lost many documents that had been stored on it. His recollection was that he made three further investments; two of $50,000 and one of $100,000. He said he did that primarily because “the interest rate I was getting on the statements showed me that I was getting better than what I was getting at Macquarie”52 and because he understood he could take the money out at any time. He was always under the impression that monies “were being invested at Westpac at the Rouse Hill branch”.53 The idea to invest further amounts came from Craig on each occasion.

[89] Mr Wooster recalled signing a debenture agreement on at least one occasion he paid money. A document was tendered54 which recorded the payment of $250,000, the term was recorded as “90-day rolling” and an interest rate of 8.75%. It also recorded the “Grantee” as “The Wooster (SMSF) Pty Ltd” and the “Grantor” as AF. The nominated grantee is not the correct identity of the company registered on Mr Wooster’s behalf. Given he accepted in cross-examination that this document may have been provided at his request after his computer malfunction, and that it refers to the total of the money invested over four occasions, I consider it to have little value in proving the terms of any individual agreement.

[90] Mr Wooster recalled that on each occasion he was provided with a pre-filled withdrawal form facilitating the respective withdrawals from the Macquarie Bank account and the transfer of them into a bank account. One such form, dated 17 January 2014, 55 revealed that the deposit was in fact into the AG Westpac account on that occasion. Other withdrawal forms tendered at the trial reveal a completed document for $50,000 dated 12 July 2013 for depositing into the AF Westpac account, a form facilitating the transfer of $50,000 dated 7 August 2013 into the AP Westpac account, and a form facilitating the transfer of $100,000 dated 9 October 2013 into the AP Westpac account.56 There is no dispute all four deposits were made. It was Mr Wooster’s understanding that AF held their debentures with Westpac at the Rouse Hill branch.57

[91] In late 2014 Mr Wooster became concerned about his investments. He tried on many occasions to call, text and email Craig and he eventually received an email on 30 October 2014 which attached a document entitled “Statement”,58 a debenture

51 Ts 1-18 l 10 to 1-19 l 28. 52 Ts 1-21 ll 34 – 35. 53 Ts 1-22 l 5. 54 Exhibit 4. 55 Exhibit 3. 56 Exhibit 51, Annexure E, docs CRG.0061.0001.0056; CRG.0061.0001.0040; CRG.0061.001.0042. 57 Ts 1-40 l 27 to 1-41 l 5; 1–42 l 46 to 1–43 l 19; 1–44 l 30 to 1–45 l 22; 1–52 l 43 to 1– 3 l 13. 58 Exhibit 5. 22

statement. That debenture statement was addressed to Wooster Superannuation Fund Pty Ltd (but referred in its body to the account name as “The Wooster (SMSF) Pty Ltd”), was said to be “Statement 4” and was dated 17 October 2014. It referred to an interest rate of 8.25% and recorded the four deposits, as well as purported interest.

[92] The debenture statement also records the payment on 4 July 2014 to 1835 of three amounts of $36,000 and three amounts of $49,990, and a refund from 1835 of $25,800 on 8 July 2014. According to Mr Wooster the deposits were funded in part by a deposit of $25,000 from the SMSF account and the balance was from the debentures.59

[93] The email enclosing the debenture statement indicates the sender to be “Craig Gore” from the arion.panel email address. The signature block contained the words “arion-transparent”. Mr Wooster understood the email had come from Craig as it was a response to his communication to Craig.60

[94] Copies of a series of texts messages between Mr Wooster and Craig were tendered for the period 13 March 2015 to 20 April 2015. It was argued that they supported Mr Wooster’s testimony that he had made several unsuccessful attempts to contact Craig concerning his investments. It is notable that on 31 March 2015 Mr Wooster’s text refers to Craig’s daughter having undergone emergency surgery.61 The prosecution did not contest that that was in fact the case.

[95] Mr Wooster received a refund of $39,000 in, he thought, 2015 but only after he had contacted Miles Hedge, to complain. (Mr Hedge recalled that he had spoken with the defendant about Mr Wooster’s contact with him on 23 April 201562). That sum included an extra $2,000 as compensation for an earlier dishonoured cheque.

[96] The statement for Wooster Super Fund Pty Ltd with Macquarie Bank shows a transfer to AF of $50,000 on 12 July 2013, a cash withdrawal of $50,000 on 7 August 2013, a transfer to AP of $100,000 on 9 October 201363 and a transfer to AP of $50,000 on 17 January 2014.64 These amounts are recorded as received on the respective AF, AP and AG Westpac account statements on the same dates, with each entry bearing a notation, in part, “Wooster Super”.65

[97] The day prior to the first payment of $50,000 being received on 12 July 2013, the AF Westpac account had a balance of $3,354.29 and the AP Westpac account had a

59 Ts 1-51 l 44 to 1–52 l 21; 1–57, ll 37 – 41. 60 Also part of Exhibit 5. 61 Exhibit 6. 62 Ts 4-20, l 43 to 4-21 l 2. 63 Each of those transfers/withdrawals are recorded in Exhibit 51 Annexure E docs CRG.0061.0001.0049 - CRG.0061.0001.0052. 64 Exhibit 51 Annexure E doc CRG.0061.0001.0052; the withdrawal form at Exhibit 51 Annexure E. CRG.0061.0001.0044 records that the withdrawal is in favour of AG. 65 Exhibit 51 Annexure B docs CRG.0046.0001.0179; CRG.0046.0001.0400; CRG.0046.0001.0445 and CRG.0046.0001.0498 respectively. 23

balance of $709.78. Perusal of the Westpac account statements reveals that a total of $53,500 had been transferred, or “loaned”, by AF to AP, and those monies were rapidly dispersed. By 17 July 2013 the AF Westpac account had a balance of $2,207.17 and the AP Westpac account a balance of $268.48.66

[98] The day prior to the second payment of $50,000 being received on 7 August 2013, the AP Westpac account had a balance of $331.66 and the AF Westpac account had a balance of $69.72. Various payments are recorded as being made from the AP Westpac account and by close of business on 8 August 2013, it had a balance of $13,511.82 and the balance of the AF Westpac account had reduced to $19.72.67

[99] The day prior to the third payment of $100,000 being received on 9 October 2013 the AP Westpac account had a balance of $27.98 in deficit and the AF Westpac account had a balance of $35.53. Various payments by way of loans and repayments of loans between AP and AF are recorded, as are many payments to other entities. By 25 October 2013 the balance of the AP Westpac account was $3.35 and the balance of the AF Westpac account was $435.53.68

[100] The day prior to the fourth payment of $50,000 being received on 17 January 2014 the AG Westpac account had a balance of $17.04 and the AF Westpac account had a balance of $38.95. On this same day a deposit was made into the AG Westpac account by the Bruce Super Fund of $25,000. Various payments by way of loans and repayments of loans between AG and AF are recorded, as are many payments to other entities. By 28 January 2014 the balance of the AG Westpac account was $0.33 in deficit and the balance of the AF Westpac account was $48.95.69

Bruce Super Fund Pty Ltd – count 8

[101] Mr Bruce was initially contacted by Michael Quinn from Sleipner and a SMSF was created, including a Macquarie Bank account into which $100,000. was deposited. The complainant company was the corporate trustee for the SMSF and was registered on 16 November 2012.70

[102] David Silberstein contacted him, and he and his wife decided to invest in a property in Caboolture, however they were told the offer failed due to an issue to do with the valuation.71 After that occurred, Mr Bruce received a call from a man named Craig from Sleipner. As a result of conversations with him they decided to invest money from the SMSF to purchase a property in Whyalla, however because of delays in the process they elected not to proceed.72

66 Exhibit 51 Annexure H Reconstruction 2 and 3 doc CRG.0003.0016.0004. 67 Exhibit 51 Annexure H doc CRG.0046.0001.0184 and reconstruction 6 doc CRG.0003.0016.0006. 68 Exhibit 51 Annexure H Reconstruction 9 & 10 doc CRG.0003.0016.0008. 69 Exhibit 51 Annexure H Reconstruction 15 & 16 doc CRG.0003.0016.0011. 70 Exhibit 7. 71 Ts 1-61 l 35 to 1-62 l 13. 72 Ts 1-62 l 15 to 1-63 l 16. 24

[103] It was after this time that Craig phoned and proposed a debenture investment on a 120 day rolling period at an interest rate of 6.35%.73 He received an email, dated 17 January 2014, signed Craig from the arion.panel email address enclosing what was called a “Debenture Agreement” referring to a term of “120 day rolling”, an interest rate of 6.25% and a “deposit” of $25,000. The “Grantee” was named as “The Bruce (SMSF) Pty Ltd”, which was not the correct name of the corporate entity, and the “Grantor” was named as AF.74 He also received a pre-filled withdrawal form in the sum of $25,000 from the complainant’s Macquarie Bank account which facilitated the deposit of the funds into the AG Westpac account.75 Both documents were signed and returned.

[104] Notably, although the purported debenture named AF as the “Grantor”, the pre- filled withdrawal form nominated payment to the AG Westpac account.76

[105] Mr Bruce understood that the investment was for a fixed period of time at a fixed interest rate, and if he wanted to withdraw the money he had to communicate that wish as it would otherwise rollover for another 120 days.

[106] The investment was made because he and his wife were frustrated that their superannuation was not growing as they would have liked, the debenture seemed to be a reasonably safe short to medium term investment and Craig was very persuasive and made you think you could trust the information he was giving. It was also important to them that their capital would be returned.77

[107] In March 2014 he tried to communicate with Craig by calling his phone and sending text messages and emails. He was unable to contact him, but he did make contact with a Matthew Aird.

[108] The statement for Bruce Super Fund Pty Ltd with Macquarie Bank shows a cash withdrawal of $25,000 on 20 January 2014.78 Curiously this amount is recorded as received on the AG Westpac account statement on 17 January 2014, the same date as the date on the withdrawal form, which was a Friday. The entry in the AG Westpac account statement had, in part, a notation “Bruce Super”.79 The later date on the Macquarie statement is likely to reflect a delayed processing of the transaction for the purposes of the account statement rather than a later withdrawal.

[109] The effect of the receipt of this payment on the finances of AF and AG, and the expenditure of it, is reflected in paragraph 100 herein.

Clive Super Fund Pty Ltd – counts 9 and 10

73 Ts 1-66 l 9 to 1-67 l 23. 74 Exhibit 11. 75 Exhibit 12; Exhibit 51 Annexure E doc CRG.0061.0001.0060 76 ibid 77 Ts 1-67 ll 12 – 42. 78 Exhibit 13; Exhibit 51 Annexure E doc CRG.0061.0001.0065. 79 Exhibit 51 Annexure B doc CRG.0046.0001.0498. 25

[110] Mrs Clive testified on behalf of this entity. In 2012 her brother in law was contacted by Michael Quinn of Sleipner and a decision was made to create a SMSF, of which there were four beneficiaries; Mrs Clive, her husband, her brother in law, and his wife. The corporate trustee of the SMSF, Clive Super Fund Pty Ltd, was registered on 19 March 2013. A bank account was also opened at Macquarie Bank into which $180,000 was deposited. One of the objectives of the super fund was to purchase real estate.

[111] On 12 December 2013, she and the three other beneficiaries jointly held a telephone conversation with Craig. He suggested that, while looking for property, instead of keeping the money in Macquarie Bank they could invest in debentures. Mrs Clive’s recollection was that it would attract an interest rate of just over 6%, which was more than double what it was then earning.

[112] The same day she received an email from the arion.panel email address. The signature block was signed “Arion Panel (Craig)”. It referred to their discussion earlier in the day and in effect suggested investment in a debenture, referring to interest at 6.15% for a fixed period of 90 days. It emphasised that the money could not be drawn down earlier than the 90 days, but also emphasised that “the funds are capital guaranteed” and referred to the funds being “pooled”. A pre-filled withdrawal form facilitating a deposit of $120,000 into the AG Westpac account was also attached.80

[113] Mrs Clive testified that the fact they were told the capital was guaranteed was important to them, especially to her sister in law.81

[114] At trial the prosecution tendered a “Debenture Agreement” between “The Clive Super Fund Pty Ltd” and AG for a sum of $120,000, referring to an interest rate of 6.25% and to an investment term of “90 day rolling”, which was under an email dated 4 March 2014.82 Although Mrs Clive seemed to adopt that date as the date of the payment, she did also say that she couldn’t recall a date.83 Other evidence shows that the money was paid on 18 December 2013. The Macquarie Bank statement for the complainant company supports this date84 and the completed withdrawal form to deposit $120,000 into the AG Westpac account is dated 16 December 2013.85 The erroneous attachment of the email dated 4 March 2014 to this Debenture Agreement in the course of tendering the latter document is understandable in a document heavy trial, and I intend to treat the email as irrelevant.

[115] There was a further investment of $60,000 by this complainant, as a result of another phone conversation with Craig on 27 March 2014. It resulted in Mrs Clive causing an email to be sent that day to the arion.panel email address with a signed

80 Exhibits 15 and 16. 81 Ts 1-79 ll 35-45; 1-80 ll 1-32. 82 Exhibit 17. 83 Ts 1-82 l 37. 84 Exhibit 51 Annexure E doc CRG.0061.0001.0079. 85 Exhibit 51 Annexure E doc CRG.0061.0001.0075. 26

withdrawal form for the deposit of $60,000 into the AG Westpac account. Although Mrs Clive’s husband’s signature is dated 26 February 2014, I treat that as a typographical issue and I accept it was signed by both parties on 26 March 2014.86

[116] A form of an agreement was also signed. It was headed “Garunteed (sic) Debenture Agreement”. On this occasion the “Grantor” was nominated as AF, the interest rate was 6.5%, the term was “90 day rolling” and the amount was nominated as $60,000.87 Notably, although the purported debenture named AF as the “Grantor”, the pre-filled withdrawal form nominated payment to the AG Westpac account.

[117] The second investment was made because they thought they had received good interest on the first investment and because they weren’t getting a good interest rate while the money was sitting in the bank.88

[118] A series of emails on 26 and 27 March 2014 between the arion.panel email and Mrs Clive referred to contacting Macquarie Bank to confirm the transaction.89 Mrs Clive explained this was because there had been some issue with the release of the funds on the previous occasion. That this occurred is consistent with text messages sent between Mr Mey and the defendant at the time of the previous investment.90

[119] Between 10 June 2014 and 23 June 2014 there were a series of emails between Mrs Clive and the arion.panel email address. In summary, Mrs Clive indicated they wanted to use their funds to purchase a property, and the person using the arion.panel address apologised for the delay and assured her everything was “good to go”. Mrs Clive clearly thought she was corresponding with Craig, as she addressed one of the emails to him. She was not corrected. Interestingly, the person using the arion.panel email address on 18 June 2014 referred to a third party as “the debenture holder”.91

[120] The complainant received its money back some two years after initially seeking its return. Mrs Clive believed it had been paid by IOOF.

[121] The statement for Clive Super Fund Pty Ltd with Macquarie Bank shows a cash withdrawal of $120,000 on 18 December 2013.92 This amount is recorded as received on the AG Westpac account statement on the same date with the entry stating, in part, the notation “Clive Super Fund”.93

[122] The day prior to that first payment of $120,000 being received on 18 December 2013, the AF Westpac account had a balance of $504.07 and the AG Westpac account had a balance of $6.33. Various payments by way of loans and repayments

86 Exhibit 18; Exhibit 51 Annexure E doc CRG.0061.0001.0077. 87 Exhibit 19. 88 Ts 1-85 ll 21-28. 89 Exhibit 20. 90 Exhibit 49 Nos. 304 to 322. 91 Exhibit 21. 92 Exhibit 51 Annexure E doc CRG.0061.0001.0080. 93 Exhibit 51 Annexure B doc CRG.0046.0001.0484. 27

of loans between AF and AG are recorded, as are many payments to other entities. By 15 January 2014 the balance of the AF Westpac account was $38.95 and the balance of the AG Westpac account was $17.44.94

[123] The statement for Clive Super Fund Pty Ltd with Macquarie Bank shows a cash withdrawal of $60,000 on 27 March 2014.95 This amount is recorded as received on the AG Westpac account statement on the same date with the entry stating, in part, the notation “Clive Super Fund Rolling Plan 90 days”.96

[124] The day prior to that second payment of $60,000 being received on 27 March 2014, the AF Westpac account had a balance of $586.07 and the AG Westpac account had a balance of $81.59. On this same day a deposit was made in to AG Westpac account by 1835 Developments of $43,000. Various payments by way of loans and repayments of loans between AG and AF are recorded, as are many payments to other entities. By 8 April 2014 the balance of the AF Westpac account was $149.61 and the balance of the AG Westpac account was $1,604.46.97

Russell Family Superannuation Fund Pty Ltd – counts 11 and 12

[125] Mr Russell made contact with Matthew Aird from Sleipner in mid-2013 and after discussions and advice, the complainant company was registered on 27 November 2013.98 A bank account was created at Macquarie Bank for the purposes associated with the SMSF and $210,000 was deposited into it.

[126] In early 2014, Mr Russell was contacted by Craig from AF to discuss investment strategies. LTSCs were discussed, but that strategy was not taken up.

[127] In mid-January 2014, Craig again contacted Mr Russell and discussed investments in debentures. Craig led him to believe that provided he invested for a minimum of 90 days, he would attract a high interest rate, and the money was guaranteed.

[128] In February 2014, Mr Russell received an email which enclosed a document entitled “Capital Guaranteed Debenture Agreement” outlining a deposit of $150,000, the nominated “Grantor” was AG, a nominated interest rate of 6.25% and a term of “90 day rolling”.99 The “Grantee” was correctly named as the complainant.

[129] Mr Russell understood that it was guaranteed that, provided the money remained in the debenture for 90 days, interest would accrue at 6.25%, that it would roll over every 90 days and that the money and interest could be withdrawn at any time on 90 days’ notice.100

94 Exhibit 51 Annexure H Reconstruction 13 & 14 doc CRG.0003.0016.0010. 95 Exhibit 51 Annexure E doc CRG.0061.0001.0082. 96 Exhibit 51 Annexure B doc CRG.0046.0001.0533. 97 Exhibit 51 Annexure H Reconstruction 19 & 20 doc CRG.0003.0016.0013. 98 Exhibit 22. 99 Exhibit 23. 100 Ts 2-8 ll 10-25. 28

[130] The same email also enclosed a pre-filled withdrawal form in the sum of $150,000 from the complainant’s Macquarie Bank account which facilitated the deposit of the funds into the AG Westpac account.101

[131] Both the withdrawal from and the debenture agreement were signed and returned. Notably, although the purported debenture named AF as the “Grantor”, the pre- filled withdrawal form nominated payment to the AG Westpac account.

[132] He said that he made the money available for investment because “they” had earnt his trust by setting up the SMSF through the relevant bodies, there was a deal of persuasion to invest in something, and the investment seemed to be the safest option as opposed to LTSCs.102 In that regard, the phrase “capital guaranteed” meant that the capital was guaranteed.103 Under the terms of the agreement, Mr Russell thought he would get back his capital plus whatever interest it accrued for the period.104

[133] In April 2014, he was again contacted by Craig and there was a discussion about another investment in debentures. Because he had received a statement showing he had earned interest on the first investment and because he was offered another opportunity to invest in debentures, he agreed to invest a further $60,000.105 He subsequently received a document headed “Debenture Agreement” which referred to an investment of $60,000 on a “90 day rolling” basis and attracting interest at 6.25%. The “Grantor” was recorded as AG.106 The “Grantee” was the complainant and was correctly named. He also received a pre-filled Macquarie Bank withdrawal form for $60,000 in favour of the AG Westpac account. He signed it, dated 7 April 2014.107

[134] Mr Russell recalls seeing that the money transfers were to AG, rather than to AF, but there was no discussion as to why that was. He did not notice what company was the named “Grantor” in the agreement because he believed these people were there to do the right thing by him, and he had no reason to think they were what they were doing was suspect in any way.108

[135] In late 2014, he commenced speaking with Matthew Aird about getting his funds back.109 He did not retrieve his funds but was sent two debenture statements from AF, dated 14 February 2015 and 14 August 2015.110 The latter of the two statements was the last contact he had from anyone at Arion.

101 Exhibit 24. 102 Ts 2-9 ll 4-11. 103 Ts 2-8 ll 10-12. 104 Ts 2-8 ll 23-26. 105 Ts 2-9 ll 13-30; 2-17 ll 28-33. 106 Exhibit 25. 107 Exhibit 26. 108 Ts 2-15 l 16 to 2-16 l 10. 109 Ts 2-11 l 1; Ts 2-17 l 39 – Ts 2-18 l 16. 110 Exhibits 27 and 28. 29

[136] The complainant’s Macquarie Bank account records a withdrawal of $150,000 on 14 February 2014.111 This amount is recorded as received on the AG Westpac account statement on the same date with the entry stating, in part, the notation “Russell Family Su”.112

[137] The day prior to that first payment of $150,000 being received on 14 February 2014, the AF Westpac account had a balance of $4,542.20 and the AG Westpac account had a balance of $135.95. Various payments by way of loans and repayments of loans between AG and AF are recorded, as are many payments to other entities. By 17 February 2014 the balance of the AF Westpac account was $3,542.20 and the balance of the AG Westpac account was $1,335.96.113

[138] The complainant’s Macquarie Bank account records a withdrawal of $60,000, with the transaction listed as “90 days term” on 10 April 2014.114 This amount is recorded as received on the Westpac account statement on the same date with the entry stating, in part, the notation “Russell Family Su”.115

[139] The day prior to that second payment of $60,000 being received on 10 April 2014, the AF Westpac account had a balance of $149.61 and the AG Westpac account had a balance of $9.47. Various payments by way of loans and repayments of loans between AG and AF are recorded, as are many payments to other entities. By 24 April 2014 the balance of the AF Westpac account was $1,899.61 and the balance of the AG Westpac account was $45.18.116

[140] Although never receiving his money back from AF, he did eventually receive a refund of principal and some of the interest. He could not recall if it was paid by IOOF or MyAdviser, but he thought it was from the former.117

Other witnesses

Alison Leanne Pollock

[141] Ms Pollock was employed by MyAdviser Pty Ltd between September 2011 and June 2014, which at relevant times was wholly owned by IOOF. She was the general manager from February 2013.

[142] MyAdviser held an Australian Financial Services license which permitted it to allow authorised representatives to invest or provide services for financial planning, superannuation, insurance and investment products. MyAdviser appointed Sleipner

111 Exhibit 51 Annexure E doc CRG.0061.0001.0090. 112 Exhibit 51 Annexure B doc CRG.0046.0001.0514. 113 Exhibit 51 Annexure H Reconstruction 17 & 18 doc CRG.0003.0016.0012. 114 Exhibit 51, Annexure E, Doc CRG.0061.0001.0091. 115 Exhibit 51 Annexure B doc CRG.0046.0001.0543. 116 Exhibit 51 Annexure H Reconstruction 21, 22 & 23 doc CRG.0003.0016.0014; Annexure B doc CRG.0046.0001.0552. 117 Ts 2-18 l 24 to 2-20 l9. 30

as an authorised corporative representative in August 2012 and then similarly appointed AF in June 2013.118

[143] David Rylah and David Silberstein were the authorised representatives for Arion. The defendant was not authorised. 119 Ms Pollock was part of a risk management compliance and training committee which monitored compliance with the authorised representative agreements.120 By February 2013, in her role on that committee, she had been aware for some time that the defendant was associated with Sleipner.121

[144] In June 2013 she was present at a meeting, the purpose of which was to set up AF’s corporate authorised representative agreement (“CAR”).122 The actual agreement had been entered into in the preceding days. One of the discussions at the meeting was the level of compliance oversight that would be provided by MyAdviser.123

[145] Ms Pollock was unaware of any relationship between AF and AP, which became AG. Similarly she was unaware of an entity named 1835 Developments, and of any relationship between it and either AF or AP/AG.124

[146] Neither Sleipner nor AF were authorised to advise on or deal in debenture products. Similarly, there was no authority for authorised representatives to advise on or present debentures, they were however allowed to deal with government debentures. There was no authority to present investments that were not run by either AF or MyAdviser, nor was there scope for funds to be raised by the authorised representative.125

[147] The corporate authorised representative agreement was marked for identification but was not tendered on the trial.126

Clinton Kane Buchanan

[148] Mr Buchanan worked at Sleipner between July 2012 and January 2013. He worked with the defendant at that time, and described that the defendant undertook a supervisory and training role with staff tasked to initially promote SMSFs to clients.

[149] Once initial contact was made and information gleaned from potential clients, the information would be provided to David Silberstein who would complete a statement of advice, which he then presented to the clients with a view to them creating a SMSF.

118 Ts 2-71 ll 36-40. 119 Ts 2-70 ll 24-32. 120 Ts 2-72 ll 23-41. 121 Ts 2-75 ll 37-46. 122 Ts 2-77 ll 19-40. 123 Ts 2-77 l 39 to 2-78 l 23. 124 Ts 2-80 ll 11-21. 125 Ts 2-70 l 17; 2-80 ll 26-44. 126 MFI-B. 31

[150] Once that occurred, the client would be contacted with a view to having them purchase property. Mr Buchanan was due a commission of $5,500 for each property sold and some commission from any insurances that were taken out.127 Mr Buchanan left Sleipner in January 2013 because he was struggling to survive on the income he was earning.128

Russell Green

[151] Mr Green had known Craig Gore since 2012. He had also met his wife, Marina Gore. He worked with Craig Gore in both Sleipner and AF. He was initially employed as a web developer and became the general IT manager, but he could not recall if he held the latter position at Sleipner and AF, or only at AF.

[152] He recalled that Craig Gore wanted an email set up and he was clear he did not want his name to appear on the email address. The address created for him was the arion.panel address.129 He understood Craig Gore would be the only person using it but accepted his understanding could have been wrong.130

[153] It appeared to Mr Green that Craig Gore was managing the company,131 although he accepted that was only his opinion.132

Mario Mey

[154] Mr Mey performed a bookkeeping role at Sleipner, AF and AP/AG. He stopped working for AF in the middle or end of 2014, and took on a consulting role for 1835. He had known the defendant since 2002. The defendant was the only person by the name of “Craig” that worked at the Arion companies.133 In his bookkeeping role he had online access to both of the Arion Westpac accounts, and could move money between the accounts. He worked Monday to Friday and would check the accounts daily. He also had internet access to 1835’s bank accounts.

[155] To the best of his knowledge, Arion had no sources of income other than “deposits coming in from clients and customers”.134 Staff wages and other creditors were paid from the same source. To the best of his knowledge, the Arion companies had no loan facilities set up.135 From his memory, “there would have been” a movement of

127 Ts 2-60 l 42 – 2-61 l 28. 128 Ts 2-61 l 33. 129 Ts 2-3 ll 27-45. 130 Ts 2-67 ll 23-43. 131 Ts 2-65 ll 8-20. 132 Ts 2-67 ll 20-25. 133 Ts 3-13 l 16. There has been a clear mistranscription here. My recollection of the evidence is that the word “other” should appear between the words “any” and “Craigs”. 134 Ts 3-8 ll 21-27. 135 Ts 3-9 ll 40-45. 32

funds, in each direction, between Arion companies and 1835. Those transactions would have been performed by Mr Mey.136

[156] Craig Gore was Mr Mey’s point of contact to authorise the release monies payable. He would check with Craig Gore “based on the supplies and creditors and wages that we need (sic) to be paid for that particular week or fortnight”.137 Generally speaking, whatever balance there was in the accounts was dispersed.138

[157] Of the directors, Perry Cooper showed interest in the Arion companies’ financial position early on, but then resigned. Miles Hedge, from early or mid-2014, required cash flow information to be provided to him. Mr Mey would email him a list of creditor payments.

[158] In relation to cash flow reports, Mr Mey prepared forecast business expenses for the next six or 12 months, and the defendant prepared the sales information based on business activity. He understood that the defendant would then either forward it on or discuss it with Mr Hedge.139 That this was the process adopted is supported by, in one instance, the email exchange in Exhibit 45. An example of such a document was Exhibit 47.140

[159] Mr Mey explained the contents of Exhibit 47. One sheet of that exhibit showed a cash flow projection from the “Arion Consolidated Group” for the period July 2013 to December 2013, projecting a net profit of $1,140,000, including a net profit of just over $198,500 for the month of July 2013. The same document showed that in fact the net profit for the month was just over $43,800; a shortfall of about $155,000 for the month when compared with the projected profit.

[160] Mr Mey was also shown what he described as a Balance Sheet for AF in the month of August 2013, and which became exhibit 46. He initially testified that it was a balance sheet as at 31 August 2013,141 he later testified that it was a projected balance sheet from 7 August 2013 for the end of the month142 and later again testified that it was in fact a balance sheet for the month of July 2013.143 Each different answer was provided to different questioners, including me.

[161] He was separately shown a Balance Sheet for AP for the month of July 2013. 144 He did not waver on the period it represented.

136 Ts 3-10 ll 36-45. 137 Ts 3-9 ll 4-20. 138 Ts 3-9 l 46 to 3-10 l 5. 139 Ts 3-11 ll 12 – 34. 140 Ts 3-16 ll 25-43; 3-ll 7-38. 141 Ts 3-14 ll 38-40. 142 Ts 3-23 ll 19-40. 143 Ts 1-10 l 42 to 4-11 l 45. 144 Exhibit 48. 33

[162] Mr Mey prepared the accounts until “bank reconciliation stage” at which point they were sent to an accounting firm in Brisbane. He was unaware if Exhibits 46, 47 or 48 represented the final audited accounts.145

[163] Mr Mey testified that he had no direct involvement in members of the public paying for debentures. He would however either fax the completed withdrawal form to Macquarie Bank or email it to the defendant.146 He recalled there were two people who had invested in debentures and to whom interest payments were made. They were named Andrews (to whom principal was also repaid) and O’Keefe.

[164] Mr Mey was shown a document which became Exhibit 49, and which contained a selection of text messages between himself and the defendant over the period 17 July 2013 to 5 May 2014. There is some issue about whether the timing of the texts are based on UTC or on local time. The document suggests it is recorded as UTC. It does not matter greatly as the 10 hour difference is not a critical factor in any finding of fact.

[165] Mr Mey was taken through each message and identified that they were sent and received.147 For the reasons expressed at paragraph 277 herein, I am satisfied that each message was between Mr Mey and the defendant.

[166] He testified that there was an association between 1835 and AG, whereby AG would market real estate on behalf of 1835 to AF’s clients. On completion of a sale, Arion (or one of the corporate entities of Arion) and 1835 would share the commission.148 1835 was involved in land sales in Mount Cotterill (also referred to as Cotton Park) outside of Melbourne and in Whyalla in South Australia.

[167] Mr Mey was shown the general ledgers for both AF and AP for the financial year 2013-14.149 He was specifically taken to some entries which he said showed;150

“(a) There were instances where funds were transferred between each of AF, AG and 1835;

(b) Over that period AG received $1.235 million in sales figures;

(c) AF received fees for client data questionnaire lodgement fees, for putting clients into insurance policies, and for SMSF implementation fees;

(d) Monies representing debentures came into AG and were “shared across” with AF.”

145 Ts 3-52 ll 6-21. 146 Ts 3-24 ll 20-27. 147 Ts 3-26 l 18 – 3-41 l 34. 148 Ts 3-46 l 20 – 3-47 l 24. 149 Exhibit 51 Annexure H docs CRG.0003.0014.0002; CRG.0003.0013.0002. I have assumed that this document reflects the period also when the entity was known as AP. 150 Ts 4-2, l 26 - 4-10 l 18. 34

[168] Mr Mey recalled a conversation in about April 2014 with Miles Hedge about whether there were GST consequences from having debentures recorded as income rather than as loans.151

Edward George Miles Hedge

[169] Mr Hedge first met the defendant in March 2013 when he was invited to become a director of AF and AP, which later became AG. Also present at the meeting was Perry Cooper, Marina Gore (the defendant’s wife) and a solicitor who facilitated the meeting.152 It was initially envisaged that he and Cooper would buy the business from the defendant and Mrs Gore. Two payments to that end were made, but nothing came of the arrangement after that.153

[170] The Arion companies operated out of an office in Southport and, in “February/ March 2014” they also had an office in Sydney. Craig Gore and Mario Mey worked in the Sydney office, at times, while it was open.154

[171] The arrangement was that AF was to secure monies from investors and AP/AG became nothing more than a company through which payments were made.155

[172] Mr Hedge had no involvement in sales, “Mr Gore and his sales staff did that, but they were targeting self-managed superannuation funds”.156

[173] When Mr Hedge first became involved with the Arion companies, Marina Gore was “running the back office”. That occurred from March 2013 to June 2013, and perhaps may have gone through to August 2013, after which time she stopped and the defendant got more involved. From then on, Mr Hedge had more dealings with the defendant. He would discuss what creditors were to be paid. Mr Hedge never paid a creditor without discussing it with the defendant.157

[174] Mr Hedge was unaware of any other person named “Craig” who worked at Arion.158

[175] In March 2014 Mr Hedge became aware that there was “a large payment outstanding for tax”. He contacted the ATO who told him that a commitment had been made on 13 December 2013 to pay $10,000 per month, but no payments had been made. The defendant admitted to Mr Hedge that he made that arrangement

151 Ts 4-12 ll 1 – 23. 152 Ts 4-14 ll 1-22. 153 Ts 4-29 l 45 to 4-31 l 2. 154 Ts 4-15 ll 5-22. 155 Ts 4-15 ll 27-30. 156 Ts 4-15 ll 32-34. 157 Ts 4-16 l 10 to 4-17 l l8. 158 Ts 4-20 ll 26-28. 35

with the ATO. Mr Hedge then made an arrangement with the ATO to pay $62,000 per month to pay the debt.159

[176] On 28 May 2014, the defendant sent Mr Hedge an email160 wherein he wrote that the payment to the ATO (i.e. of $62,000) was “reliant on monies coming in to cover that from deals written in the last few weeks”.

[177] On 23 April 2015, Mr Hedge spoke to the defendant about the complaint he had received from Mr Wooster. He expressed surprise that Mr Wooster had recounted he was to be paid 8.5% interest. The defendant said words to the effect “that was the only way I could get people to invest”.161

[178] In cross-examination, Mr Hedge accepted that the initial business model of the Arion companies was to introduce financial advice customers to property deals. 1835 was created with that in mind. The business model had income coming to AG and AF from those property investments. The concept of the debentures was an interim measure while the property option and LTSCs were prepared and marketed, with the idea being the debentures would be repaid from other income, particularly income from marketing the properties.162

[179] The difficulty with the ATO arose because of a failure to remit all PAYG, and the ATO was demanding payment of $200,000 or $300,000. Originally, AP was designed to produce property investments for AF’s clients, but that ceased about the time that the tax issue arose. It the really just became a company through which accounts were paid.163

[180] Mr Hedge confirmed that he had a discussion with Mr Mey about the recording of the debentures as loans and not income so as to reduce the income of the companies for tax purposes.164

[181] His recollection was that under the CAR with My Advisor, it was initially envisaged that AF was not permitted to borrow money but that was amended to allow it to do so either just before the CAR was signed, or just after.

David John Rylah

[182] Mr Rylah had worked for Sleipner for some time, and it then became AF. He left in March 2014. Although his role was not clearly articulated in the evidence, it appears he at least worked in a sales role. Mr Rylah confirmed that the business model was to introduce AF clients into property investment.165

159 Ts 4-18 l 36 to 4-19 l 20. 160 Exhibit 50. 161 Ts 4-20 l 43 to 4-21 l 22. 162 Ts 4-21 l 34 to 4-22 l 21. 163 Ts 4-24 l 27 to 4-25 l 10. 164 Ts 4-30 ll 25-28. 165 Ts 4-35 ll 1-3. 36

[183] He said that he knew nothing about debentures, but once asked the defendant about them and was told they were a means by which clients could earn interest on their money while they waited to go into property investments.166

[184] Mr Rylah also testified that the process of providing superannuation advice was done under a licence from My Advisor. Staff from that organisation provided both training and an oversight/compliance role. As part of that advice provision, a document called a “statement of advice” was prepared. The defendant had no role in the preparation of those statements of advice.167

Formal admissions

[185] Numerous formal admissions were jointly made at the trial.168 They numbered 23 in total and covered routine matters such as corporation details for AF and AP/AG, the details of phone numbers and email addresses used by defendant and the details of bank accounts operated by AF and AP/AG.

[186] Attached to and forming part of the formal admissions were seven folders of documents. These voluminous documents included corporate registration documents, numerous banking statements for the period 1 July 2013 to 31 May 2014 including all banking statements for AF and AP/AG, banking records for an account held by 1835, banking records for an account held personally in the name of the defendant, banking records for an account held in the name of MAC Enterprises (Aust) Pty Ltd,169 banking records for another person who is not otherwise directly named or identified in the evidence,170 various Macquarie Bank records for all complainants recording all alleged transactions the subject of the present charges,171 as well as similar records in respect of an entity not otherwise named or identified in the evidence,172 telephone company records for the mobile phone numbers used by defendant, the general ledgers for both AF and AP/AG for the 2013-14 financial year and “account reconstructions and documents” which extracted various entries in the banking records and recorded the financial position of each of AF and AP/AG as at the dates of the documents.

[187] There was no oral evidence adduced to otherwise explain the reconstructions.

[188] The introduction of all of this documentation by way of formal admission means that it is admitted for the agreed truth of its contents.173 However the relevance of some of it, particularly that relating to entities that are not otherwise identified in the evidence is, to say the least, elusive.

166 Ts 4-32 l 22 to 4-33 l 16. 167 Ts 4-33 l 44 to 4-34 l 17. 168 Section 644(2) of the Criminal Code. 169 This company is apparently associated with Marina Gore – Ts 3-42 ll 14-16 170 Exhibit 51 annexures C, D and H doc CRG:0055.0001.0015 – CRG.0055.0001.0042. 171 Exhibit 51 annexure E. 172 Exhibit 51 annexure H docs CRG.0061.0001.0016; CRG.0061.0001.0014; CRG.0069.0001.0005. 173 R v Longford (1970) 17 FLR 37. 37

[189] It is highly unlikely that the parties would simply place a large amount of documentary evidence into the hands of the jury in a jury trial without an attempt to explain its contents and relevance. It is difficult to see why that has occurred in a judge alone trial. That is not to suggest that any prejudice flows to the defendant from my observations.

[190] In any event, given that has been the agreed course taken by the parties, they must be taken to accept that I am entitled to rely only on the aspects of the material highlighted to me,174 and I am also entitled to consider this material and use it as its relevance and weight appears to me.

The defendant’s evidence

[191] The defendant elected to neither give nor call evidence, as is his right. I have earlier directed myself as to the significance of this.

The parties’ cases

[192] The prosecution submit that I would accept that it is more likely than not that the conduct of the defendant on all counts occurred from the offices of Arion, which at all times were in Queensland. It recognises that counts 10 and 11 are charged as occurring at a time when Arion also had an office in Sydney. It submits that the usual residence of the directors in count 10 is in Queensland, and therefore I would accept that it is likely that they were in Queensland when the representations and payments were made. The prosecution points to no special feature of the evidence to further justify a favourable finding as to jurisdiction in respect of count 11.

[193] More generally, the prosecution contend that the comments made by the defendant to the respective directors can be seen to have induced or caused them to make the respective investments, and that he thereby gained the benefit or advantage for the named companies. The evidence, it is said, established that it was those comments that caused the directors to make the funds available. Senior Counsel emphasised that the bank balances at the time funds were invested, the usage of the funds very quickly thereafter for business expenses and the defendant’s knowledge of the companies’ financial situation mean that he knew that AF and AG were each in a precarious financial position and that there was no real prospect of paying interest or repaying the capital. Counsel noted that the monies received had not been invested, and there was no specific allocation made to cover these loans in the short term. It was submitted that even if the favourable financial forecast was correct, it forecast a profitable venture in the medium to long term, and whilst that was not precisely defined, one would have thought that unsecured loans that could be called on little notice were not catered for by those forecasts.

[194] In anticipation of a defence submission that section 24 of the Criminal Code was raised on the evidence, it was said that I would not be satisfied that an honest belief

174 See closing addresses pages 23 lines 40-46; page 45 lines 8-16. 38

was held, in respect of any count, that the money would be able to be repaid (with or without interest) but if I did, such a belief was not reasonable given the defendant’s knowledge of the financial affairs of AF and AG.

[195] The defendant submitted that what evidence there is about where the conduct the subject of count 11 occurred favours a positive conclusion that it is likely that it occurred in New South Wales, but in any event it cannot be shown that the conduct occurred in Queensland on the balance of probabilities. It was submitted then that the defendant must be acquitted on that count. No submissions were made concerning locality or jurisdiction on the remaining counts.

[196] More generally, emphasis was placed on the prosecution particulars. It was said that whether or not the companies were in a precarious position was irrelevant. The real issue was the knowledge of the defendant.

[197] The defendant submitted that the terms of each “debenture” were that the directors loaned the money to Arion on specific terms. There was no limitation as to what use the money could be put and so, it is submitted, it is irrelevant that there was no investment accounts set up to provide for the future repayment of the money. Counsel highlighted evidence that indicated that there was money coming into the Arion companies, with a potential for much more, he said, in the short term and so, it was submitted, it could not be proven beyond reasonable doubt that the defendant knew that there was no real prospect that either or both of the principal and the interest could not be repaid. The fact that at the end of the period some delays occurred in repayment does not establish the defendant’s state of mind at the time the payments were made.

[198] It was further submitted that the time at which the defendant’s knowledge needed to be considered was the time that the respective payments were made. At each of those times, the companies had access to loans from each other, and from 1835. That they chose to limit their access to funding from those sources was their choice, and the prosecution had not led any evidence to suggest that 1835 was a limited source of legitimate funding. It was said that it is misleading to consider the financial position only in snapshots of time, and the overall effect of the Arion companies’ financial position needed to be considered, and the prosecution had not led a financial analysis to provide that broader overview.

[199] As the prosecution had failed to establish the true financial position of AF and AP/AG, or the extent of the arrangement with 1835, it could not be proven the defendant had the particularised knowledge, or at least it could not be disproven that at the time of the representations that he did not honestly and reasonably, even if mistakenly, believe that it could all be repaid.

[200] Written but not oral submissions ere directed to the case of Mr Wooster, whose SMSF company invested in debentures of four occasions. It was said that the company received repayment of the debentures by transferring into LTSCs. It is for 39

the Crown, it is said, to show why that makes any representation dishonest as particularised and how the defendant knew months earlier that it would not amount to effective repayment.

Consideration

Special Verdict - Jurisdiction

[201] Mr Hedge testified that Arion operated out of an office in Sydney, in conjunction with its Southport office, in “February/ March 2014”. Given the likelihood that any dealings with clients occurred in or about the place where records are kept to facilitate ease of reference, I accept that is more likely than not that all relevant conduct of the defendant occurred in or about one of the Arion offices.

[202] Only counts 10 and 11 are alleged to have been committed wholly or partly in those two months.

[203] I accept that locality/jurisdiction is established on the balance of probabilities in respect of count 10, regardless of where Mr Gore was when he dealt with Mrs Clive, who was the contact point for all beneficiaries and who was involved in a Brisbane based business. Although there is no direct oral testimony confirming that, a number of emails she sent, or had someone else send on her behalf, bear the business address.175 Further, the Macquarie bank account statement bear a postal address to a firm of accountants in Brisbane.176 The evidence suggests that her husband and his brother worked together in the same Brisbane based business.177 On the whole of the evidence I am satisfied on the balance of probabilities that Mrs Clive and the other beneficiaries reside in Queensland, in the greater Brisbane area, and that she was in Brisbane at all relevant times.

[204] I consider the event for the purposes of section 12(3) of the Criminal Code to be the signing and returning of the withdrawal form as a result of the representations made by the defendant. Therefore, the defendant is liable as if his acts had all occurred in Queensland.

[205] The same cannot be said for count 11. In my view, there is no, or insufficient, evidence to link any relevant act or event to having occurred in Queensland.

[206] The oral evidence is silent as to the usual address of Mr Russell, however the address on the Macquarie Bank statements is in the Australian Capital Territory, as is the address on the purported debenture statements.178

175 Exhibits 17, 18, 20 and 21. 176 Exhibit 51 Annexure E docs CRG.0061.0001.0079; CRG.0061.0001.0082. 177 Exhibit 21. 178 Exhibits 27 & 28. 40

[207] Count 11 is charged as spanning a period of 35 days, commencing 10 January 2014 and finishing on 14 February 2014. Mr Russell testified that he was contacted by Craig about the middle of January 2014, when debenture investments were discussed. The evidence is silent as to more precisely what was discussed in January and what was discussed in February, and what, if any, effect any January discussions had on the ultimate decision to invest. What can be established is that the pre-filled withdrawal form was dated 13 February 2014, and the withdrawal occurred the following day. It can safely be assumed that a critical act or acts by the defendant occurred on or about 13 February 2014.

[208] A perusal of the defendant’s personal bank account statements reveals that he was periodically in Sydney from the beginning of February 2014 to the 14th of that month, namely on or about the 3rd, the 13th and the 14th.179

[209] While accepting it is more likely than not that any communication and sending of documents occurred from an Arion office, there is insufficient evidence to be satisfied that any act of the defendant that caused Mr Russell to invest occurred whilst the defendant was in the Queensland Arion office. The event, the signing and return of the withdrawal form is likely to have occurred in the ACT, but in any event there is no evidence to suggest it occurred in Queensland.

[210] While it can be accepted that the communications in January 2014 more likely than not occurred whilst the defendant was in Queensland, the evidence does not establish that those conversations had any real causative effect on the ultimate decision to invest. It can be accepted that conduct on, or perhaps just before, 13 and 14 February 2014 had that causative effect, and the bank records suggest that the defendant was in New South Wales on and about those days.

[211] Accordingly, in respect of count 11 I cannot be satisfied on the balance of probabilities that any relevant act or event occurred within Queensland, as contemplated by section 12 of the Criminal Code, and I find that the jurisdiction of the Court has not been established. There will be a verdict of not guilty entered on that count.

Consideration of counts 1-10 and 12

The prosecution’s particulars

[212] The prosecution’s particulars are reproduced in the essential aspects at paragraph 51 herein. Each party addressed on the basis that each of the three limbs of the particulars should be read as being in combination or in the alternative, even though that expressly appears only between the second and third limbs.

[213] The defendant takes issue with the sufficiency of the particulars in one respect. He submits that his asserted knowledge that the Arion companies were in a precarious

179 Exhibit 51 Annexure H docs CRG.0057.0001.0356; CRG.0057.0001.0357; CRG.0057.0001.0359; CRG.0057.0001.0360. 41

financial position and had a number of debts to pay is irrelevant. He submits that proof of those allegations does not establish any form of dishonesty, and in particular it does not establish that “he didn’t have a belief that the moneys owed under the agreement would be able to be paid at the relevant time”.180 The defendant contends that it is not unusual for a new, or relatively new company to borrow money to pay bills such as wages to tide it over until it achieves full cash flow.

[214] The term “precarious” is imprecise, as is the phrase “a number of debts to pay”, given that the latter does not refer to the number, nature or quantum of the debts said to be owing. That the latter term might shed light on the former does nothing to illuminate what is meant by either, with any precision.

[215] This limb of the particulars may imply, but does not allege, that the defendant was acting recklessly. An allegation of that nature should, in my view, be expressly alleged in the particulars. Without some accompanying allegation as to the defendant’s knowledge, belief or perhaps suspicion it cannot, in my view, be proven that it was dishonest, according to the standards of honest ordinary people, to obtain money by way of unsecured loan.

[216] The sufficiency of particulars must of course be assessed in light of the evidence. The effect of the evidence touching on the Arion companies’ financial status need only be broadly summarised for this purpose.

[217] During the 2013-14 financial year AF and AP/AG suffered cash flow problems and were tending to exist “hand to mouth” by about October 2013 onwards, and probably earlier. A number of payments, branded as loans, were made between each of those entities. There is no evidence before me as to the terms of the loans, and so I cannot conclude that these loans were themselves causing financial pressure, but in any event the loans between Arion companies were in reality just moving money within the one combined financial pool. I accept that in the latter part of that financial year a number of payments were made by 1835 to AG, but they were not branded as loans in either the bank statements or the general ledger.

[218] Further, in about December 2013 a debt to the Australian Tax Office in the order of $200,000 or $300,000 became apparent and no doubt increased the financial pressure on the companies, but in my view the existence of “a number of debts”, without more explanation does not assist with proof of dishonesty.

[219] This is against the background of a number of payments regularly being made to the defendant himself, to persons and entities identified in the evidence as being related to the defendant, to other employees and to persons and entities not identified in the evidence. The prosecution accepts that there is no evidence to suggest that these payments are anything other than legitimate business expenses, but submits that

180 Closing address page 29 lines 4-5. 42

they nonetheless placed financial pressure upon the Arion finances to ensure that they could be met.181

[220] That all assists with proof of the knowledge alleged in the second and third limbs of the particulars, which is acknowledged by the parties to be the central issue in the trial, but does not in my view cure the defect in the first limb of the particulars.

[221] I find that, in the circumstances of this prosecution, the particular in paragraph a), standing alone, is an insufficient basis to prove that the gaining of the benefit or advantage to AF and/or AP/AG was dishonest according to the standards of ordinary honest people.

[222] But it does not follow that the particular in paragraph a) is an irrelevant allegation; its proof may inform the basis for the knowledge particularised in particular paragraphs b) and/or c) even though it is not a sufficient basis to prove dishonesty on its own.

[223] There is another issue to be noted. There is a body of evidence from a number of the directors that attempts to contact Craig after their investments were made, and generally when they were trying to have their money returned. The prosecution does not rely on that body of evidence as a form of conduct revealing a consciousness of guilt.182 It submits that it simply forms part of the narrative of events. It also does not form part of the prosecution’s particulars. As such it is simply recognised as part of the overall narrative.

The availability of sections 22 and/or 24 of the Criminal Code in the circumstances of this prosecution.

[224] The defendant has submitted that the evidence raises section 24 of the Criminal Code, and that the prosecution must prove beyond reasonable doubt that he did not hold an honest and reasonable, albeit mistaken, belief that funds would be available to repay the capital and interest on each of the debenture investments at the end of the respective investment periods. That belief, if raised on the evidence, must have been held at the time the defendant made the respective representations.

[225] I consider that proof of the particularised allegation that the defendant knew that there was no real prospect that of companies having the capacity to pay the capital and/or the promised accumulated interest at the end of the respective investment period leaves no room for a conclusion that the defendant was honestly mistaken the funds would be available to repay the capital and interest on each of the debenture investments when they were called upon. Proof of the prosecution case, as particularised, leaves no room for the operation of section 24 in the circumstances

181 Closing address page 5 lines 13-17; page 7 l 29 to page 8 l 2. 182 Closing address page 20 lines 23-30. 43

of this case. Accordingly I need not consider the application of section 24 in the determination of the issues.183

[226] In the course of submissions I queried whether recourse should more properly be to section 22 of the Criminal Code given the offences were offences in relation to property. The defendant has submitted, and I accept, that the evidence does not establish any instance where the defendant was exercising an honest claim of right in respect of the investment. He was inducing investments to be made with property he had no claim of right over. Both that claim of right and an absence of fraudulent intention must be raised on the evidence for the exculpatory provision to apply.184 As the former is not raised, section 22 has no potential application.

Credit issues, conflicts in the evidence and the reliability of the business records

[227] There is a conflict in the evidence as between Ms Pollock and Mr Hedge as to whether the CAR authorised AF to borrow money.185 This potentially has some importance as the unchallenged evidence is that under the CAR, AF was not authorised to issue debentures, other than government debentures. On the other hand, the defendant seeks to categorise the issue of the “debentures” as simply being unsecured loans which AF/AG had borrowed, and was authorised to do so.

[228] The “debentures” issued by AF the subject of this trial are not what might be understood in law, or indeed finance, to be the usual form of debenture. The prosecution recognised that in its opening statement.186 I think the better view is that, regardless of how they were dressed up, they really just amount to unsecured loans that were borrowed by AF/AG. That is consistent with Mr Hedge’s view.187

[229] I am unable to resolve the conflict between the testimony of Ms Pollock and Mr Hedge as to the ability under the CAR for AF to borrow funds. The CAR was not tendered at the trial, and there is nothing about the evidence of each on this topic that allows me to favour one version over the other. Therefore I must take the view most favourable to the defendant, and that is in accordance with Mr Hedge’s account.

[230] There was little challenge to the honesty or reliability of any of the witnesses, save in respect of Mrs Dennis as to whether she was told something to the effect that their money would be going into a separate debenture account with Westpac.

[231] This is a conflict that I need not determine, for two reasons. First, the representation is not one that is particularised by the prosecution as having induced any of the investments by Dennis Super Fund Pty Ltd.188 Although drafted in a non-exhaustive manner, the closest that the particulars get to alleging that is an assertion that the

183 R v Sitek [1988] 2 Qd. R. 284, 285, 293 cited in R v Perrin [2018] 2 Qd. R. 174, [113], [259]. 184 R v Perrin, supra at [59], [60] & [259]. 185 See paragraphs 146 and 181 herein, respectively. 186 Opening address page 4 ll 21-22. 187 Ts 4-21 l 18; 4-22 ll 7-10. 188 See MFI-A paragraphs 11, 21 and 30. 44

defendant represented “that Arion Financial would pool the funds for them at the prescribed rate”.189 This is proven by the email referred to in paragraph 66 herein, which I accept was sent by, or on behalf of, the defendant.

[232] Second, the truth or falsity of that representation is irrelevant given the manner in which the prosecution has chosen to particularise its case, namely on a very narrow basis alleging a particular knowledge as the sole reason for a finding of dishonesty. Given that narrow basis for proof of the offence, any other representations which have not been alleged to be the cause, in whole or part, of the inducement to invest may provide some context for the reason for the investment but are not directly relevant to proof of the real issue in this trial, namely that of dishonesty.

[233] On the other hand and by way of example, Mr Wooster’s unchallenged testimony that “Craig”, whom I accept was the defendant, told him that Arion was a large international company, had millions of dollars in funds and could get a good interest rate was particularised as a relevant representation for the purposes of proving an inducement to invest.190 However the falsity of that representation, and I am satisfied that it was deliberately false, is irrelevant because that does not go to the defendant’s knowledge of the ability to repay the principal and/or interest at the time he uttered it. To rely on that lie to prove the alleged dishonest state of mind would be to give weight to evidence of mere propensity.

[234] By way of further example, on a number of occasions the defendant represented that the investment was on a “capital guaranteed” basis, or words to that effect. Some of the agreements were styled in that manner. But the fact is they were not guaranteed; the defence case itself acknowledges that they were not guaranteed, but rather suggests there may have been an expectation that funds would be available when required. This is inconsistent with the capital investment being actually guaranteed. This style of representation must be considered in the same manner as referred to in paragraphs 232 and 233 above.

[235] Issue was not expressly taken with Mr Mey’s credibility, however I consider that a cautious approach is required in the assessment of his evidence

[236] He presented as someone who was prepared to respond quickly without always considering the question asked in any real depth. This gave, at the least, a perception that he was prepared to give an answer that he thought the questioner would be satisfied with. That perception is supported by his changeable account as to what exhibit 46 represented.191 That changeable account was concerning given that he was employed as the bookkeeper, and it seems that he was trusted in the role, but he could not clearly settle upon precisely what an elementary bookkeeping document represented.

189 MFI-A paragraph 30. 190 See paragraph 86 herein; MFI-A paragraph 39. 191 See paragraph 160 herein. 45

[237] An example of this was that in evidence-in-chief Mr Mey testified that the only source of income into either Arion Westpac account was “deposits coming in from Clients and customers … potential clients and customers that had invested in Arion Group”.192 As will shortly become apparent, in cross-examination he readily accepted that there were another sources of income for the companies, most of which cannot be accepted as occurring.

[238] Given that he was substantially, albeit not solely, responsible for the business records’ accuracy, the caution to be applied to his testimony in turn applies to the assessment of those business records.

[239] There are aspects of those business records which cannot be accepted at face value and so, where possible, their accuracy should to be assessed against other evidence.

[240] It must be remembered that Mr Mey testified that these documents were prepared and then sent to accountants for the purposes of auditing and preparation of tax papers.193 He was unsure if the documents, in the form tendered, had been audited or not. Therefore, in their tendered form, they cannot be assured to be accurate.

[241] Emphasis was placed in cross-examination on pages 38 and 39 of the AG general ledger194 where there are numerous entries under the heading “Accounts Receivable” which, on their face, indicate that 1835 had provided a number of loans to AG, commencing 4 July 2013. The testimony of Mr Mey was that those entries represent “money coming in from an 1835 Development bank account”.195 That testimony cannot be accepted.

[242] The simple process of comparing these entries in the AG general ledger with the AG Westpac account statements shows that those entries are payments which include the debenture investments the subject of the trial, and similarly styled entries from other named entities (including the persons Andrews and O’Keefe whom Mr Mey said had received refunds from their debenture investments) and which appear to be other debenture investments themselves.

[243] The first entry in the AG Westpac statement referring to a payment by 1835 is dated 27 March 2014 for $43,000, and that payment is also reflected in the AG general ledger as an account receivable deposited into the AG Westpac account.196 Prior to that date there are 22 entries in the AG general ledger “Accounts Receivable” marked as a payment or deposit into the AG Westpac account and attributed to 1835 as the payee. Every one of those entries is noted in the AG Westpac account statement as having been paid by persons and entities other than 1835, including six which are the subject of this trial.

192 Ts 3-8 ll 21-32. 193 Ts 4 -6 l 46 – 4-7 l 9. 194 Exhibit 51 Annexure H docs CRG.0003.0014.0039 & CRG.0003.0014.0040. 195 Ts 4-5 ll 24-25. 196 Exhibit 51 Annexure B doc CRG.0003.0014.0040. 46

[244] Fifteen of those entries are also marked as being a “loan”. The labelling of the payments as “loans” may be explained by Mr Hedge’s desire to ensure that the debenture investments were recorded as loans rather than income, but that does not explain why that was not uniformly done, and why they were falsely attributed to 1835 as the payee.

[245] After that entry of $43,000 on 27 March 2014, there are 32 entries in the AG general ledger “Accounts Receivable” marked as a payment or deposit into the AG Westpac account and attributed to 1835 as the payee. Six of those entries are noted in the AG Westpac account statements as having been paid by persons and entities other than 1835, including three which are the subject of this trial.197 The balance of 26 payments appear to have in fact been paid by 1835, at least according to the Westpac account statements which were tendered till the end of May 2014. In payments recorded in the AG general ledger in June 2014 are presumed to be legitimate

[246] The payments in the “Accounts Receivable” section of the AG general ledger that I am satisfied in fact emanated from 1835 total $224,200, as opposed to the figure of $1,926,079.53, which might appear to be the case at first blush. All these discrepancies are concerning, and emphasise the need for caution before accepting any entry in the general ledgers, and in turn reflect poorly on Mr Mey’s credibility.

[247] Also emphasised in cross-examination was page 107 of the AG general ledger.198 On that page there are a number of entries that at face value appear to indicate total property sales income of about $1.235 million for AG, which accords with Mr Mey’s testimony.199 Each of these entries has an associated number, which matches the numbered entries in the “Accounts Receivable” section of the AG general ledger. Each of the dollar figures differs, a little downwards, in this section as opposed to the figures recorded in the “Accounts Receivable” section, but that is obviously an adjustment for 10% GST, and is of no moment for present purposes.

[248] In short each of those entries is also found in the “Accounts Receivable” section of the same general ledger but, of concern, the entries do not always correspond as to whether the money was received or paid out. These discrepancies are further reason to require close consideration of the contents of the general ledgers, and in turn affect the credibility of Mr Mey.

[249] Regardless of that, even if it were assumed that each entry in the sales recorded as incoming was in fact that, those entries are already accounted for in the “Accounts Receivable” section of the general ledger and do not represent additional income to that already considered.

197 The remaining three payments the subject of this trial are accurately reflected in the AF general ledger – Exhibit 51 Annexure H docs CRG.00030013.0013 - CRG.00030013.0014 – and the AF Westpac account statements. 198 Exhibit 51 Annexure B doc CRG.0003.0014.0108. 199 Ts 4-6 ll 38-40. 47

[250] Turning to the AF general ledger, the defendant sought to highlight pages 20 and 21200 in the cross-examination of Mr Mey. They contain entries representing income into AF. They can be accepted at face value, but with the additional observation, as was made by Mr Mey, that the larger figures appear to be, and in fact are, debenture investments.

[251] As was the case with the AG general ledger, the entries in these sections bear an associated number. Comparison with the associated entries in the “Accounts Receivable” section of the AF general ledger at pages 12 & 13201 demonstrates that the entries at pages 20 and 21 are the same as the entries in the “Accounts Receivable” section, albeit they are recorded without a GST component. They too include payments the subject of this trial. Accordingly, these entries are already accounted for in the “Accounts Receivable” section of the general ledger and do not represent additional income to that already considered.

[252] From that short exercise, it can be seen that the accuracy of the general ledgers for both companies is dubious, and although I have not attempted to comb through each entry in the general ledgers, the observations I have made are sufficient to require that the general ledgers for both companies should not be taken at face value in demonstrating the ability of AF, AG and/or 1835 to cover the future repayment of the “debentures” or provide loans of substance.

[253] Further, where there is a discrepancy between an entry in the general ledgers and the respective banking statements, I consider the banking statements to be the accurate source.

When did 1835 come into existence?

[254] The defendant’s submissions in part rely upon the proposition that there was both income emanating from, and an ability to loan monies from, 1835. The weight to be given to that submission depends on, in the first instance, the point in time when 1835 was created and, secondly, what its financial position was at any given point in time.

[255] There is no direct evidence as to when that entity came into existence, but that point in time can be estimated from the available evidence.

[256] According to Mr Hedge, 1835 was created to buy Cotton Park.202 His notes dated 26 September 2013 refer to the prospective purchase of land that was Cotton Park and the projected cash flow arising from the sales of the land.203

[257] Mr Mey testified that he was involved in setting up the bank accounts for 1835. He thought it was in 2014, but he could not be precise.204 The documents tendered as

200 Exhibit 51 Annexure H docs CRG.0003.0013.0021 &. CRG.0003.0013.0022. 201 Exhibit 51 Annexure H docs CRG.0003.0013.0013 &. CRG.0003.0013.0014. 202 Ts 4-21 ll 43-47. 203 Ts 4-28 l 26 to 4-29 l 31. 204 Ts 3-46 ll 6-18. 48

part of Exhibit 51 include Westpac Bank statements for 1835, showing that that account was opened on 11 February 2014.205 The evidence is silent as to whether there was an earlier account with a different bank and there was no other evidence on this point, so this may not be determinative of the date when 1835 was created but it does show that it was in existence by this date.

[258] The first date that 1835 is mentioned in any entry in either the AF or AP/AG Westpac accounts is 27 March 2014.206

[259] Chronologically, the first time 1835 is mentioned in the AF general ledger is on 13 May 2014,207 in respect of a payment by AF to 1835. There is no doubt it was in existence for some time prior to that date.

[260] Chronologically, the first date 1835 is mentioned in the AG general ledger is 4 July 2013208 in respect of an entry marked as a loan to AG in the “Accounts Receivable” section of the general ledger. For the reasons explained above,209 I do not accept that entry, nor any entry on that page and the following page of the AG general ledger referring to 1835, until an entry dated 27 March 2014, in fact reflect payments from 1835, although they do reflect actual payments.

[261] Otherwise, the first date 1835 is mentioned in the AG general ledger is 1 January 2014, under a heading of “Income” and a sub-heading of “Sales”, with a notation of “as per agreement”. 210 There are other similar entries on the same page of the AG general ledger. The associated entry in the “Accounts Receivable” section of the AG general ledger does not represent a deposit into the AG Westpac account, and in fact represents some form of payment out. However, in the absence of evidence on the topic, I cannot deduce what it represents. It does however at face value, and in the absence of evidence to the contrary, suggest that 1835 was in existence at this time.

[262] Mr Bruce testified that he and his wife decided to purchase land at Cotton Park. His testimony was not clear as to when this occurred, but the narrative of his evidence- in-chief seems to place it having been after 28 October 2013 and before an unstated date in December 2013.211

[263] Mr Wooster, who was unable to refer to any records, testified that Craig mentioned LTSCs to him, but that was after he had paid his debenture monies.212 The last debenture investment was on 7 January 2014. Further, a debenture statement issued to Wooster refers to payments to 1835 on 4 July 2014.213 There are other evidential

205 This statement is endorsed as “Statement No. 1”; Exhibit 51 Annexure B doc CRG.0055.0001.0006. 206 See paragraph 242 herein. 207 Exhibit 51 Annexure H doc CRG.0003.0013.0012. (AG general ledger page 11). 208 Exhibit 51 Annexure H doc CRG.0003.0013.0039. (AG general ledger page 38). 209 See paragraphs 240-242 herein. 210 Exhibit 51 Annexure H doc CRG.0003.0014.0108. (AG general ledger page 107). 211 Ts 1-64 l 42 to 1-66 l 10. 212 Ts 1-18 ll 10-16. 213 Exhibit 5. 49

references which support the proposition that the directors of some other complainants were being offered opportunities to buy land at Cotton Park in 2014. None of this evidence assists with establishing if 1835 was created earlier than 1 January 2014.

[264] Given all that evidence, I accept that 1835 was an operating entity no later than 1 January 2014. I cannot be satisfied as to precisely when 1835 came into existence, but it would likely have been no earlier than November 2013. Had it not been for the entry of 1 January 2014 in the AG general ledger in combination with Mr Bruce’s recollection, I would have found that 1835 was not in existence until on or about 11 February 2014.

[265] Turning to the issue of 1835’s financial position, the balance sheets and general ledgers for 1835 were not tendered at trial. Therefore the only evidence in this trial of 1835’s financial position comes from its own bank statements and from what can be gleaned from the entries in the general ledgers of AF and AG. This is obviously incomplete, and should be approached with caution, especially given that the defendant has no onus to prove anything, but it does provide some insight into its financial affairs.

[266] The Westpac account statement for 1835 was tendered as part of exhibit 51 is for the period 11 February 2014 to 9 May 2014. In that period there are total deposits of $142,407.85, of which $138,000 has originated from an entity called CEE Law Trust, which has also made payments into the AG Westpac account on occasion.

[267] The bank statements generally record a pattern whereby once funds are received, they are relatively quickly dispersed by payments to various entities, including AG.

[268] In the same period, after allowing for incorrectly named transactions as identified in paragraphs 241-243 herein, the payments I accept as being correctly recorded in the “Accounts Receivable” section of the AG general ledger as received from 1835 amount to $224,200.214 The only payments received in the AF general ledger amount attributed to 1835 relate to a sum of $16,500 on 27 June 2014, and the only entry in the AF general ledger referring to 1835 is an entry under the “Income” heading and the “Sales” sub-heading in the sum of $15,000 dated 27 June 2014.215 Again, this is obviously the same amount, allowing for a deduction for GST. The AF Westpac account statement for the month of June 2014 was not tendered at trial, and so I cannot say whether that was money actually paid to AF, but assuming it had been paid, it is a relatively small amount for the purposes of the present consideration.

[269] I consider that 1835 had, at best, a limited capacity to provide any loans to AF and/or AG. The bank statements do not support the proposition that it may have been in a position to loan sufficient to cover the principal and interest on any of the

214 See paragraph 245 herein. 215 Exhibit 51 Annexure H doc CRG.0003.0013.0022. 50

debenture investments given its ongoing commitments. Further, it too was a new business interest which, on the defendant’s case, often need time to financially get on their feet. Notably there is no evidence before me to suggest that it had a cash reserve on which it could draw to financially support AF and/or AG. Contrary to the defendant’s submission, I do not need to assume there may have been unless the prosecution positively proves otherwise.

The defendant’s knowledge of the financial status of AF and AP/AG.

[270] I find that the defendant had an involvement in the daily operations of each of AF and AP/AG in a manner and to a degree that he was effectively in control of the daily operations of the companies, and that he therefore had a controlling involvement in and general knowledge of the financial status of each entity at all times relevant to the charges before the Court. That is, despite the fact that he was not a director of either company.

[271] First, it is uncontentious that the defendant was effectively in control of the sales team.

[272] Second, the defendant was Mr Mey’s point of contact for authority to release any payments to creditors, as money was received. This evidence was effectively unchallenged and Mr Mey’s testimony in this respect is supported by the text messages in Exhibit 49 which show that the defendant exercised control over the flow of financial information to one of the then directors, Perry Cooper, in respect of the July figures,216 that he exercised control over the provision of financial information to the other director,217 and that the defendant more broadly sought and received information from Mr Mey as to the status of the bank accounts and also prioritised payments.

[273] Thirdly, Mr Hedge testified that the initial arrangement had been that he and Perry Cooper were to purchase Sleipner from Mr and Mrs Gore. I do not understand that to suggest that the Gores necessarily held an interest in their own names, but that they were the controlling persons who, by some means, held an interest in Sleipner, whether held by both or only by one of them. This evidence first arose in cross- examination and was explored briefly in re-examination,218 and it was not challenged.

[274] This is consistent with another aspect of Mr Hedge’s unchallenged evidence that Marina Gore ran the “back office” until June 2013, or perhaps through to July or August of 2013. This roughly coincides with the fact that AF and AP commenced

216 Exhibit 49 Nos 107 to 109 and 119 to 120. 217 Exhibit 49 Nos 227 to 230 and 556. 218 See paragraph 169 herein. 51

operations in early June 2013. Mr Hedge testified that once Marina Gore moved away from the daily business operations, Mr Gore became his point of contact. That is, the defendant then ran the “back office”.

[275] Fourthly, it is consistent with the impression held by Mr Green that the defendant was managing the company. Whilst he accepted he had little understanding of the running of the business from a financial perspective, the appearance to a person involved in the daily activities of the business is, in my view, of some weight.

[276] Fifthly, once Mr Hedge became more involved in the daily business operations, that is from April 2014 and when Mr Hedge was the sole director of both entities, he never made a payment without agreement from the defendant.

[277] Lastly, although not conceding that the defendant personally ran the business conducted by the two entities, Queens Counsel for the defendant conceded in submissions that the defendant had a real role and played a significant part of the business, and was “certainly conscious of what was going on in the business”.219

[278] I am satisfied that the text messages in exhibit 49 were in fact sent or received by the defendant, as opposed to someone else using his phone. That was the context of Mr Mey’s evidence and it was not suggested otherwise in cross-examination. It is unsurprising that they demonstrate that the defendant was unaware of the daily balances in each of the AF and AP/AG Westpac accounts on occasions. On the view I have formed, the defendant had many roles in the business to perform, including overseeing the sales operations as well as controlling finances. There was no reason for him to have a detailed daily knowledge of bank account balances, that role was Mr Mey’s. The queries of Mr Mey by the defendant are not inconsistent with the view I have formed.

[279] I also find that the defendant was generally aware of the debenture statements that were sent to some of the directors. That accords with Mr Mey’s unchallenged evidence that they were prepared, in part, because the defendant “would have requested copies for me (sic) to forward to clients who were invested in the company”.220

[280] I accept this evidence as it seems to me that it is highly unlikely that the defendant would control the payment of money, and be known by staff to do so, but that staff would prepare and send a statement concerning money owed by the companies without his imprimatur. There is no suggestion in the evidence that “Craig” expressed any surprise to directors that an investor had such a statement.

Is it proven that the defendant caused the benefit or advantage to be gained by the relevant entity or entities?

219 Closing address page 40 lines 1-11. 220 Ts 3-25 ll 14-23. 52

[281] No issue has been taken with this element, and it too can be dealt with relatively briefly.

[282] I accept on the whole of the evidence that the directors were dealing with the defendant when dealing with “Craig”, and that where an email was sent which suggested that it came from “Craig”, “Craig Gore”, “CKG” or any other reference to the defendant, it was sent by or on behalf of the defendant. As much was conceded by the defendant’s Counsel in his closing address.221

[283] The defendant has formally admitted using the arion.panel email address, but not that he was the sole user, as suggested by Mr Green. It appears that this email address was used by the defendant, but in a manner to give the appearance of a group access email. The message #314 in Exhibit 49 illustrates the point; the defendant instructed Mr Mey to send the defendant an email addressed to “panel” and notifying “panel” of an event that (based on the preceding text messages) the defendant was already aware of.222 Given its content, the direction is likely to be to a sales panel and not a governance or oversight panel, as the defendant submits.

[284] Therefore I cannot exclude the possibility that, other than where there is some form of identification in the email linking the message to the defendant, someone else has used the email account to send one or more of the messages which did not otherwise bear an indication that it or they had been sent by the defendant. However, given the degree of control and influence exerted by the defendant over the business activities of the Arion companies, it is highly unlikely that any other staff would send an email from that email address without his broad knowledge and imprimatur, if it was of any importance and especially if it concerned a financial matter.

[285] To have caused the nominated entities to gain the benefit or advantage referred to in each count, the defendant need not be the sole or even the major cause of the respective investment, although I consider that he was at least the major cause in each instance. It is sufficient if the defendant’s conduct is a substantial or significant cause223 of the act it is said to induce. I bear in mind that causation is not a philosophical or scientific question, but one that is determined by applying common sense to the facts as I find them and appreciating that the purpose of the inquiry is to attribute legal responsibility in a criminal matter.224

[286] I am satisfied beyond reasonable doubt that the defendant caused the nominated entities to gain the benefit or advantage referred to in each count, and at least by the means particularised by the prosecution in respect of each count. I say “at least” because the particularisation was often that the representations “included” certain stated representations. On some occasions I accept that other representations were also made by the defendant which had a causative effect.

221 Closing address page 24 line 19 to page 25 line 6. 222 This is obviously the event that Mrs Clive referred to as a delay in the first payment – see paragraph 118 herein. 223 Royall v The Queen (1990) 172 CLR 378, 411. 224 Royall v The Queen, supra at 387, 411, 425. 53

[287] In particular, I am satisfied to the criminal standard that the conduct directly attributable to the defendant caused the respective directors to “invest” the complainant’s monies. Broadly speaking, I am satisfied that the defendant spoke directly with each director about investing in debentures and thereby convinced them, by various representations, to invest and that in each instance he either directly sent to them, or caused to be sent to them, the various debenture agreements (however entitled) and the pre-filled withdrawal forms. In each instance, this is sufficient in my view to be satisfied, to the criminal standard, that he caused AF, AP or AG, as the case may be, to gain the stated benefit or advantage.

[288] I am also satisfied that in each instance, the benefit or advantage was gained on or before the last nominated date in each count, and in the case of counts 5, 6 and 7 on the only nominated date in those counts.

Is it proven that the defendant acted dishonestly?

[289] The issue of dishonesty in this matter turns on the financial positions of AF and AP/AG, which I have found the defendant had knowledge of. It is fruitless to consider the entities’ financial position separately. The banking and financial records reveal that the funds were shared between the two companies and effectively used as a collective pool of funds. Mr Hedge’s observation that AF was to receive moneys from investors and AP/AG became nothing more than a company through which payments were made was only partly correct. In truth, over time investors’ money was received directly into AG, thereby resulting in the distinction between the two entities being effectively lost. Mr Mey in his testimony repeatedly referred to the funds in terms suggesting they were being used as one pool of money.

[290] Each offence is complete on the gaining of the benefit or advantage, but the representations made by the defendant caused the gaining of the benefit or advantage. It is at the time they are made that the defendant’s dishonesty, or otherwise, must be assessed. There is nothing in any of the charged incidents to suggest there was a change of circumstances between the making of the representations and the receipt of the money.

[291] The indictment has been drafted in a manner which groups together the various counts relevant to each complainant, but the consequence of that is that they are not pleaded chronologically. The evidence is not always precise as to when the first representation was made by the defendant, but the following table sets out the chronological order based on the commencement of the contact, as revealed in the evidence. I have included the transaction the subject of count 11 as the receipt and expenditure of that money is relevant to this assessment of income as it may have impacted on the defendant’s knowledge, regardless of the jurisdiction issue.

Date Date Amount Date first Comp. Count Representations benefit/ maturing No. 54

commenced advantage gained

Date unknown 12/7/13 $50,000 10/10/13 Wooster 4 between 17/6/13 and 12/7/13

About 11/7/13 17/7/13 $50,000 15/10/13 Dennis 1

Date unknown prior 7/8/13 $50,000 5/11/13 Wooster 5 to 7/8/13

Date unknown prior 9/10/13 $100,000 7/1/14 Wooster 6 to 9/10/13

Mid-November 2013 20/11/13 $55,000 18/2/14 Dennis 2

12/12/13 18/12/13 $120,000 18/3/14 Clive 9

Date unknown 17/1/14 $25,000 17/5/14 Bruce 8 between 1/12/13 and 17/1/14

Date unknown prior 17/1/14 $50,000 17/4/14 Wooster 7 to 17/1/14

Mid-January 2014 14/2/14 $150,000 15/5/14 Russell 11

Date unknown prior 27/3/14 $60,000 25/6/14 Clive 10 to 27/3/14

Date unknown 10/4/14 $60,000 9/7/14 Russell 12 between 1/4/14 and 10/4/14

8/5/14 12/5/14 $30,000 6/8/14 Dennis 3

[292] I accept the defendant’s submission that caution must be exercised when assessing the financial position of the Arion companies by reference to the points in time captured by the reconstructions in Exhibit 51 Annexure H. It is therefore necessary to consider the bank statements for AF and AP/AG, as well as other financial records such as the general ledgers for both entities and other evidence to assess the financial position of the entities, as it was known to the defendant. 55

[293] A perusal of the general ledgers reveals that there are many transactions over the relevant period between AF and AP/AG that are nominated as loan payments. 225 In reality, they represent the movement of money from one bank account to the other. The volume of these transactions gives an appearance of large sums of money coming into both companies, but when the financial positions of both entities is treated as one, as all involved did, they are a distraction from their true collective financial position.

[294] A perusal of the bank statements of both entities, once the loan payments between each are excluded from consideration, reveals that the main sources of income of any significant value are the debenture investments the subject of this trial - they total $800,000 – as well as other similarly styled entries, which suggests they too are debenture payments, and payments from 1835, but only between 27 March 2014 and 13 June 2014. The latter category totals $224,200.226

[295] Broadly speaking, any money received into the AF Westpac account was quickly dispersed, often recorded in the bank statement as being a loan payment to AP/AG, leaving very low balances in the account. Again broadly speaking, any money received into the AG Westpac account was dispersed, although initially that account tended to have higher balances at any given time than the AF account. However from about October 2013 at the latest, there was often a very low balance in the AG Westpac account also, and the position seems to generally deteriorate as time goes on. By the latter part of 2013 onwards, the combined entities were living hand to mouth. Certainly the bank statements from that point on support Mr Mey’s testimony that “[E]ssentially, whatever balance the bank accounts had were (sic) dispersed accordingly”.227

[296] The defendant also points to the general ledgers of both AF and AG to submit that they support the proposition that he may have honestly believed that there was a real prospect that the companies would have the capacity to repay the principal and/or interest when it was called on. In particular the defendant points to entries on pages 38-39228 and further to page 107229 of the AG general ledger. Given the observations I have earlier made about the accuracy of those ledgers, given the often paltry balances in the AF and AP/AG Westpac accounts and given other observations I am about to make I am satisfied beyond reasonable doubt that the defendant could not have honestly held any such belief from, at the latest, early December 2013.

[297] Relevant to the assessment of the state of AF and AG financial affairs is that on 13 December 2013 the defendant contacted the ATO, using Mr Mey’s name, and made an arrangement to pay a debt of $200,000 or $300,000 by monthly instalments of $10,000 per month. I am satisfied that the defendant must have been aware of this

225 Exhibit 51 Annexure H docs CRG.0003.0013.003-CRG.0003.0013.007; CRG.0003.0014.0002- CRG.0003.0014.0006. 226 See paragraph 245 herein. 227 Ts 3-10 l 4. 228 Exhibit 51 Annexure H docs CRG.0003.0014.0039- CRG.0003.0014.0040. 229 Exhibit 51 Annexure H doc CRG.0003.0014.0108. 56

debt for some time prior to that date, but I am unable to be satisfied of how long. But I am satisfied that it must have been a few weeks at least. None of the promised instalments were paid, and there is no evidence to suggest that Mr Gore had made any attempt to provide for those instalments.

[298] I accept the defendant’s submissions to the effect that, given the terms of the debentures, there was no obligation on AF or AP/AG to in turn secure the loans through a specific or dedicated investment vehicle. There may have been representations as to how the money would be invested, but for the reasons earlier expressed that does not impact on the issue of dishonesty, as particularised by the prosecution. Whilst making separate provision in the financial structure for the repayment of the debentures and the accrued interest may have been a telling factor against the prosecution case, the failure to do so does not particularly assist the prosecution given the manner in which the issues have been litigated.

[299] Mr Gore had prepared a projected income for the first half of the 2013-14 financial year.230 It was prepared on a basis consistent with the business model; introduce AF clients to property investment and once they had been induced to invest in property, AF would receive fees and commissions, including $33,000 per property. That projection “budgeted” on 10 properties being sold to clients per month, and therefore receiving $330,000 per month in commission alone.

[300] There is no oral or documentary evidence directly proving that any properties were sold in the 2013-14 financial year to which AF or AP/AG would have an entitlement to a commission. Both Mr Dennis and Mr Bruce testified to the effect that there had been, respectively, an investment and an intended investment in property at Whyalla, and in the case of Mr Bruce also at Caboolture, but the evidence tends to suggest this was facilitated through Sleipner, not any Arion company.231 If I am wrong about that, it deals with a sum of $99,000 in commissions; a relatively small sum for present purposes which is not apparent on the general ledgers of either company. Wooster invested in six LTSCs concerning Cotton Park, but that did not occur until July 2014.232

[301] Further, the both the AF and the AG general ledgers for the 2013-14 financial year record nil income under the headings “Total property income” and “Total property option fee”.233

[302] In my view, it must have been apparent to the defendant that his projections were falling vastly overshooting the actual within a matter of a few months. In that few months, the only significant income emanating from outside the Arion companies was from debentures, which in themselves created a liability to be repaid with interest.

230 Exhibit 47. See also paragraph 158 herein. 231 See paragraphs 75 and 102 herein. 232 See paragraph 92 herein. 233 Exhibit 51 Annexure H doc CRG.0003.0013.0021.(page 20); Exhibit 51 Annexure H doc CRG.0003.0014.0108.(page 107) 57

[303] Although the balance sheet for AP234 is for the month of August 2013 and it is unclear on Mr Mey’s evidence whether the balance sheet for AF235 is for a different month or not, they each reveal something about the income and the then financial position of the combined entities.

[304] First, when the loan of in excess of $170,000 is properly accounted for in the combined financial position, the combined equity is relatively meagre. There does not seem to have been any capital input that far outstripped costs for the rest of the financial year.

[305] Second, AF (for whatever period is represented) incurred a quantum of “Accounts Payable” that exceeded the quantum of its “Accounts Receivable”.

[306] Thirdly, AP had incurred a little over $13,500 in “Accounts Payable” in that month, and had no “Accounts Receivable”.

[307] Accepting that each new business venture starts out with a degree of honest optimism as to its prospects, it must have become quickly apparent to the defendant that the combined business’ income was falling far short of his hopes. In addition to the observations concerning the respective balance sheets above, the variance between the actual income and the budgeted income for July 2013, as represented in Exhibit 47, reinforces the reality of the financial position in that early month of operation.

[308] In my view, this can only have been underlined when the second received debenture (the subject of count 1) fell due on 15 October 2013. That neither it nor the first debenture (the subject of count 4), which had fallen due five days earlier, was called on could not have allayed the realisation that they both remained due and were each continuing to accrue interest and that other debentures would also fall due with interest owing, in the context of the difficult financial position the companies found themselves in by about this time.

[309] I find that there was no pre-arranged capacity in 2013 for either AF or AP/AG to borrow from any entity, other than as between themselves.236 That capacity can be ignored as the state of financial health being considered is of the combined companies, and so to borrow from one simply moves money within that combined pool of funds. For the most part, from October 2013 onwards, at the latest, the combined balance of the two Westpac accounts was insufficient to cover the smallest of the debenture principal amounts, namely $25,000. On the occasions that or a higher amount could be covered, it was quickly dissipated on legitimate business expenses.

234 Exhibit 48. 235 Exhibit 46. 236 That there was no existing loan arrangement with a bank is confirmed by message # 369 in exhibit 49. 58

[310] I find that by about October 2013 the defendant must have held some doubts or reservations as to whether repayments could be made to cover any further “debenture” investments notwithstanding his initial optimism. But that is insufficient for the prosecution to prove its case in this trial. It has particularised its case as actual knowledge that there was no real prospect that either company had the capacity to repay the capital and/or the interest at the end of the investment period.

[311] I am satisfied beyond reasonable doubt that once the defendant was aware that the ATO had detected the indebtedness of the Arion entities to the tune of $200,000 or $300,000, he then knew that there was no real prospect that either company had the capacity to repay the capital and/or the interest at the end of the investment period.

[312] I am satisfied that he must have known of this debt for some time prior to his telephone call to the ATO wherein he set up a failed instalment plan on 13 December 2013. Given his control of payments to creditors, he must have known that the PAYG component of the wages was not being paid for some time. In any event I consider it highly unlikely that he would have contacted the ATO on the same day that he became aware that they had detected the debt. I am therefore satisfied he knew for some time that the ATO had detected the debt, at least a number of days but likely much longer, before he contacted them.

[313] In case it be thought that the defendant may have been misled by the erroneous entries in the AF and AG general ledgers, there is no evidence as to when they were created or that he ever looked at them. His knowledge of the financial affairs of the companies came from his dealings with Mr Mey, including his control over the finances. He could not have been under any illusion as to when 1835 was created, and the nature and extent of payments made by that entity to AF or AG.

[314] There was no real prospect of a sudden upsurge in the financial fortunes of the Arion companies at this time, let alone one to cover the tax debt and the ongoing liabilities, including the debenture investments. The implicit suggestion to the contrary in Exhibit 49 message 368 must be seen as an instance of false bravado; an optimism not honestly held.

[315] The failure to make any repayments according to the agreement he struck, in light of the consistently low combined balances of the Westpac accounts, fortifies my view that he must have held the particularised knowledge at a time that was at the latest some days or weeks prior to 13 December 2013.

[316] However, the prosecution has provided particulars as to the defendant’s knowledge of the ability to repay the “money invested … by the end of the investment period; and/or” … “the promised interest rate on the investment”. That is, the prosecution contend that the position concerning the repayment of the principal and interest can be considered separately or in combination. 59

[317] In each instance, the interest accruing was a relatively small amount, which would be far more easily paid than the associated principal. Whilst the defendant may well have realised there would be an inability to even pay the interest alone as time went by, I cannot be satisfied beyond reasonable doubt that the particularised dishonesty has been proven in respect of the repayment of the interest alone.

[318] I am however satisfied beyond reasonable doubt that the representations by the defendant relevant to counts 3, 7, 8, 9, 10, and 12 were made after the defendant was aware of the poor combined financial state of the Arion companies and after he was aware of the ATO debt, and that he knew at the time he made the respective representations to the directors concerned with those counts that there was no real prospect that AF and/or AG had the capacity to repay either the money invested by each of the respective complainants in those counts at the end of the respective investment periods, or the combined sum of the money invested and the interest that had accrued.

[319] My conclusion is not affected by the fact that Wooster entered into six LTSC’s in July 2014 and the defendant’s submission that the use of debenture funds demonstrates that the prosecution cannot prove that, months earlier, the defendant had the particularised knowledge. In effect, the submission is that the fact of the later purchase of LTSCs using, in part, debenture funds demonstrates the fact that AF and AG did have financial ability to repay the loans. On that basis, whilst the submission was limited in its terms to the matters involving Wooster, it might be thought to have a wider application.

[320] Mr Wooster testified that the agreements (which totalled $267,970) were funded by the funds from his debenture investments and a further capital payment of $25,000,237 meaning about $243,000 of debenture funds were used. But all this occurred about six months after the last of the subject representations to Mr Wooster and about two months after the last representation that is the subject of the trial.238

[321] On the assumption that AF or AG would have been paid at least $33,000 per contract in commission, the reality is that they had to find $45,000 to pay 1835 to cover the total costs of the LTSCs after Mr Wooster paid a further $25,000. There is no evidence before me as to whether that was in fact paid at that time, or whether it was treated as a loan, arranged to be paid over time, or any other arrangement. The fact of the entering into of the LTSCs in truth says little about the financial viability of AF or AG in July 2014, let alone months earlier.

[322] To the extent that it may evidence that AF and/or AG had some financial potential, the evidence does not disclose anything more than Wooster was an isolated investor. In any event, it was, as far as the direct evidence in the trial discloses, an unfulfilled potential that could not be honestly relied upon by December 2013.

237 See paragraph 92 herein. 238 8 May 2014 in respect of count 3. 60

There is no evidence of any subsequent sales to demonstrate there was in fact true potential.

[323] There are some other aspects of the evidence which do not by themselves prove dishonesty, but which are consistent with the conclusion that I have reached.

[324] The debenture agreements were titled in ways that were often tailored to appear enticing to the respective directors, and by using terms such as “guaranteed” and the like. On a number of occasions they purported to be entered into with incorrectly named complainants. If that was not deliberate, it is surprising, given that Sleipner, the forerunner of Arion, created the corporate entities on behalf of the respective directors. In time it became more common for the agreement to have been stated to be with the respective complainant and AG, rather than AF who held the CAR with MyAdviser. In one instance the “Grantee” was stated to be AF, and in all other instances the respective Arion company noted on the document was the “Grantor”. In every instance, regardless of how the Arion company was addressed, the document provided that the Arion company was entering into the agreement of its own account and that it should obtain independent legal advice, but no such declaration was made in respect of the complainants. This is unusual. One might ordinarily expect that declaratory warning would be directed to the consumer.

[325] There is a sloppiness in the preparation of documents which is suggestive of the Arion entities not having regard to the needs and rights of the complainants, and acting in a manner that is inconsistent with an approach requiring honest dealings with all its customers.

[326] This body of evidence, and the view I have taken of it, does not of itself prove the real issue in this trial of dishonesty. I have formed my final views about that issue independently of it, but I do note that the view I have taken concerning this attention to detail is consistent with the conclusion I have reached.

[327] There is evidence from the directors of the complainant companies that there was considerable delay in the return of the funds, and indeed from some that when funds were returned they were paid by an entity other than AF or AG (probably IOOF). The earliest time that efforts were made to have the money returned, as revealed in the evidence, was in March 2014. This body of evidence does not exhibit a consciousness of guilt, and is not relied on y the prosecution for that purpose, but the apparent avoidance of repaying monies from this time onwards is consistent with my findings.

[328] I have no regard to the evidence that when Mr Hedge confronted the defendant about having offered 8.5% interest on the investments, the defendant said words to the effect that it was the only way he could get people to invest.239 The prosecution contend that amounts to an admission that he was prepared to say whatever he

239 See paragraph 177 herein. 61

needed to and had “no real concern about whether it could be honoured or not”.240 I accept that it shows a willingness to make representations to have investments made, but it may equally be nothing more than saying whatever he needed to induce the investment, but still believing that the investment would be covered when required. Its equivocality is demonstrated by the reasons for acquittal on those counts in which the defendant’s dishonesty has not been proven. I consider the comment to be equivocal and of no real evidential value in determining the central issue in the trial.

Is it proven that the property was of a value of $30,000 or more in each count, other than count 8?

[329] No issue has been taken with this element, and it can be dealt with briefly.

[330] Apart from count 8, each count alleges that the “property” was of a value of $30,000 or more. The body of each charge alleges that the nominated entities obtained a benefit or advantage. For the purposes of the offence provision, the term “property” is defined in a manner that includes a “benefit or advantage”.241 Therefore where the circumstance of aggravation refers to “property”, it can be taken to be referring to the “benefit or advantage” referred to in the body of the substantive charge.

[331] In each instance I am satisfied beyond reasonable doubt that the benefit or advantage was of a value of $30,000 or more, and that in each instance the actual value is reflected in the respective circumstance of aggravation.

Conclusion

[332] I am not satisfied on the balance of probabilities that the jurisdiction of this Court to try the charge has been established in respect of count 11.

[333] I am satisfied on the balance of probabilities that the jurisdiction of this Court to try the charge has been established in respect of all other counts.

[334] Given the narrow particulars relied on by the prosecution, I am not satisfied beyond reasonable doubt that the defendant acted dishonestly when he made the various representations which caused the complainants to invest in respect of counts 1, 2, 4, 5 and 6. Accordingly the defendant is not guilty of those counts.

[335] I am satisfied beyond reasonable doubt that the defendant acted dishonestly when he made the various representations which caused the complainants to invest in respect of counts 3, 7, 8, 9, 10 and 12. I am also satisfied beyond reasonable doubt that the prosecution has proven all other elements of each of those counts. Accordingly the defendant is guilty on those counts.

240 Closing address page 10 line 21. 241 Section 408C(3)(a) of the Criminal Code.

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