MAGISTRATES COURT OF THE AUSTRALIAN CAPITAL TERRITORY

Case Title: DE SMET v KHANDELWAL

Citation: [2016] ACTMC 7

Decision Date: 24 June 2016

Before: Magistrate Dingwall

Decision: See [53]

Category: Decision

Catchwords: CRIMINAL LAW – dishonestly obtaining a financial advantage by deception under section 134.2(1) of the Criminal Code (Cth) – conduct constituting a deception – meaning of financial advantage – meaning of dishonesty.

Legislation Cited: Acts Interpretation Act 1901 (Cth) ss 2, 25Commonwealth of Australia Constitution Act 1900 (Cth) s 81Crimes Act 1914 (Cth) s 4JCriminal Code Act 1995 (Cth) ss 133.1, 134.2Evidence Act 2011 (Cth) s 184Income Tax Assessment Act 1936 (Cth) ss 164, 166, 174-5, 177Taxation Administration Act 1953 (Cth) ss 4A, 8AAZLF

Cases Cited: Elias v Director of Public Prosecutions [2012] NSWCA 302Fisher v Bennett (1987) 85 FLR 469Harriman v R [1989] CLR 590John Richard Walsh [1990] V. R. 80Macleod v The Queen (2003) 214 CLR 230Matthews v Fountain [1982] VR 1045Peters v The Queen (1998) 192 CLR 493R v Finlayson [1912] 14 CLR 675William Sai Ming Ho & Anor (1989) 39 Crim A R 145

Parties: Commonwealth Director of Public Prosecutions (prosecutor)Tony James de Smet (informant)Rishi Khandelwal (defendant)

Representation: CounselMr J Pappas (defendant)SolicitorsCommonwealth Director of Public Prosecutions (prosecutor) Mr B Aulich (defendant)

File Number: CC 8785 – 8790 of 2010

CC 8792 – 8805 of 2010

CC 8808 – 8813 of 2010

CC 8815 – 8817 of 2010

CC 8819 – 8828 of 2010

CC 40315 – 40352 of 2011

CC 40354 – 40367 of 2011

CC 40369 – 40382 of 2011

CC 40384 – 40402 of 2011

CC 40404 – 40417 of 2011

CC 40419 – 40476 of 2011

CC 40478 – 40489 of 2011

CC 40493 – 40494 of 2011

CC 40496 – 40511 of 2011

CC 40854 – 40903 of 2011

CC 40905 – 40931 of 2011

MAGISTRATE DINGWALL

1. In this matter the defendant, Rishi Khandelwal, is charged with 302 counts of dishonestly

obtaining a financial advantage by deception contrary to s 134.2 (1) of the Criminal Code

(Cth) (“the Criminal Code”) which is contained in the Schedule to the Criminal Code Act

1995 (Cth). Subsection 134.2 of the Criminal Code provides as follows:

“134.2 Obtaining a financial advantage by deception

(1) A person is guilty of an offence if:

(a) the person, by a deception, dishonestly obtained a financial advantage

from another person; and

(b) the other person is a Commonwealth entity.

Penalty: Imprisonment for 10 years

(2) Absolute liability applies to the paragraph (1) (b) element of the offence.”

“Commonwealth entity” is defined in the dictionary to the Criminal Code as meaning “the

Commonwealth” or a “Commonwealth authority”. “Commonwealth authority” is in turn

defined as meaning “a body established by or under a law of the Commonwealth”. Certain

bodies specified in the meaning provided in the dictionary are excluded as a

“Commonwealth authority”. The excluded bodies do not include the Commissioner of

Taxation. Although “body” is not defined, “person” is defined as including “a

Commonwealth authority that is not a body corporate”. That definition supplements

s 2(c)(1) of the Acts Interpretation Act 1901 (“ Acts Interpretation Act”) which provides

that “person” includes “a body politic or corporate as well as an individual”.

2. The first charge, in order of lodgment of informations, is CC 8785 of 2010. As amended, it

alleges the following:

“That he, in the Australian Capital Territory, on 13 July, 2009 by deception,

dishonestly obtained a financial advantage from another person, namely the

Commonwealth, contrary to subsection 134. 2 (1) of the Criminal Code Act

1995 (CTH).”

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The other 301 charges are in the same terms other than for the date of the alleged offence.

The dates alleged in respect of all charges fall within the period commencing on 2 April

2008 and ending on 19 July 2010.

3. Apart from the value of the financial advantage obtained, the prosecution has provided

particulars (MFI P137), relating to each charge as follows:

“Particulars of Deception

1. The deception exercised in each case was the lodgment by the

defendant of an income tax return in the name of another person, in

circumstances where

a) the information contained in each of the income tax returns was false

b) the defendant knew that the information contained in the income tax

returns was false, and

Particulars of Financial Advantage

1. In respect of each of the charges the prosecution alleges that the

defendant obtained a financial advantage, namely the payment of a tax

refund to which he was not entitled. The prosecution alleges that the

defendant received the moneys paid as income tax refunds through bank

accounts held in the names of other people to which he had access.”

4. The defendant has pleaded not guilty to all charges.

5. The hearing of the charges proceeded as a summary hearing. Both the defendant and the

prosecutor consented to the charges being heard and determined by the Magistrates Court,

I note that the prosecutor also requested, pursuant to s 4J (4) of the Crimes Act 1914 (Cth),

that the charges be heard and determined by the Magistrates Court on the basis that, in

respect of each charge, the value of the property does not exceed $5000. Given that both

the defendant and the prosecutor consented to a summary hearing and the likely cost and

length of any trial on indictment, I considered it appropriate that the charges be heard and

determined by the Magistrates Court pursuant to s 4J(4) of the Crimes Act 1914 (Cth).

6. The defendant raised no objection and, indeed consented, to all charges being heard

together.

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7. Although there are 302 charges, the prosecution alleges that the offences alleged to have

been committed by the defendant are essentially a repetition of each other. It alleges that in

relation to all charges the defendant lodged, or caused to be lodged, with the Australian

Taxation Office (“the ATO”) an income tax return which represented that the taxpayer

named in the income tax return had been employed in Australia during the relevant

financial year; had earned the amount of income stated; and that the amount of tax stated

had been withheld by the employer named in the return. It further alleges that those

statements were false because the named taxpayer had not been employed by the named

employer during the relevant financial year; had not received the amount of income stated;

and the stated amount of tax had not been withheld by the stated employer in respect of the

stated tax payer for the relevant financial year.

8. The prosecution alleges that, in respect of the income tax return which is the subject of

each charge, a tax refund was caused to be credited to the bank account nominated by the

defendant in the income tax return. It further alleges that, as a result of his lodgment of the

income tax returns, and the crediting of refunds to a number of bank accounts nominated

by him in the various income tax returns, and in respect of which he had access, he was

able to withdraw the money caused to be credited into those accounts and, in fact,

withdrew from automatic teller machines much of the money that had been so credited.

9. The prosecution alleges that, by reason of the falsehoods contained in each tax return, and

the deception flowing from them, the defendant acted dishonestly. The financial advantage

which he is alleged to have obtained from the Commonwealth in respect of each charge is

the crediting of the relevant tax refund to the bank account nominated by him. It alleges

that, at that point, the offences were complete as the defendant then had access to the

money credited to the bank account and was, consequentially, in a better financial position

than he had been in prior to the tax refund being credited to the bank account.

Evidence

10. The first matter to be noted in respect to the evidence presented is that, pursuant to s 184

of the Evidence Act 2011 (Cth), the defendant made a number of formal admissions of

matters of fact. He admitted as follows:

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“1. I lodged or caused to be lodged with the Commissioner of Taxation, the

Income Tax Returns particularised in each and every charge before the

Court;

2. In the evening of 3 August 2010 I drove my Nissan Coupe 350Z vehicle

registered number NSW ARR-23P to an underground car park at the

Gungahlin Shopping Centre and left the vehicle at that location;

3. On 3 August 2010 I attended the Escape Internet Cafe on the top floor of

the Canberra Centre where I accessed an internet computer terminal;

4. At all times material to these charges I was employed as a public servant

by the Australia (sic) Government in the Department of Health and

Ageing (Foods Standards Australia and New Zealand);

5. I admit the results of the fingerprint examination of the 228 paper based

tax returns contained in the report of Rachael Kennedy dated 1 April

2011;

6. I was the subscriber to mobile telephone services numbers 0433400031

and 0402677659;

7. At all times material to these charges I held the following bank accounts:

Australia and New Zealand Banking Group Limited (account

number: 45646210 11926303);

Commonwealth Bank of Australia (account number: 290310

484870): and

National Australia Bank (account number: 75117816)”.

11. Due to the large number of charges and the modus operandi alleged to have been adopted

by the defendant, the evidence presented by the prosecution is lengthy, extremely

voluminous and complicated. The complications are greatly increased by the fact that all

charges were heard together.

12. The prosecution has led evidence which is directly relevant to each charge. This evidence

has been helpfully marshalled and cross-referenced in Excel based spreadsheets provided

to me as aides memoire. The spreadsheets have been placed onto a computer disk along

with facsimile copies of a large number of the documents in evidence. These include ATO

records in respect of electronic funds transfers, electronic income tax returns and manually

prepared income tax returns; bank records; Department of Immigration and Citizenship

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(“DIAC”) records; statements signed by employers named in income tax returns; copies of

documents indicating fingerprints found on them; and NetBank transaction records. The

spreadsheet contained on the disk allows cross-referencing to the facsimile copies of

documents by means of hyperlinks. By using the spreadsheets and hyperlinks, I have been

able to consider the evidence that is directly relevant to each charge.

Did the defendant lodge the income tax returns?

13. Based on this the defendant’s formal admissions, I am satisfied beyond reasonable doubt

that he lodged the income tax return that is the subject of each charge.

Was the information in the income tax returns false?

14. The prosecution has established, through evidence called from a number of witnesses, that

approximately 165 of the employers nominated in the income tax returns lodged by the

defendant had no record of employing the taxpayer named in the respective income tax

return. In a small number of cases, the employer had a record of employing the named

taxpayer for a short period of time, but that period is inconsistent with the earnings stated

in the income tax return.

15. The prosecution has also established, through exhibit P141, that in respect of each charge,

the taxpayer named in the income tax return did not earn the income stated in the return

and that the withholding tax stated in the return had not in fact been withheld by the stated

employer.

16. I am satisfied beyond reasonable doubt that, at the time the accused lodged each income

tax return, the person named in the return as the taxpayer was not present in Australia and

that, not only was the named person not in Australia at the time each income tax return

was lodged, he or she had, in almost all cases, not been present in Australia for a period of

time sufficient to earn the amount of income stated in the income tax return. I am also

satisfied beyond reasonable doubt that the amount of income tax stated to have been

withheld by the employer in each income tax return had not in fact been withheld.

Was the defendant’s conduct a deception?

17. Section 133.1 of the Criminal Code provides as follows:

“In this Part:

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. . .

deception means an intentional or reckless deception whether by words

or other conduct, and whether as to fact or law, and includes:

(a) a deception as to the intention of the person using the deception or any

other person; and

(b) conduct by a person that causes a computer, a machine or an

electronic device to make a response that the person is not authorised

to cause it to do.”

The offence provision, s 134.2, is contained in the Part to which s 133.1 refers.

18. The evidence clearly establishes that, upon the lodgment of each of the income tax returns,

the return was processed through the computer operated by the Australian Taxation Office

(“ATO”), which, together with the Commissioner of Taxation, constitute a statutory

agency of which the Commissioner is the head (see s 4A, Taxation Administration Act

1953). A return that was lodged electronically was automatically processed by the

computer and, provided various checks in relation to the completeness of the return were

met, the computer would generate a password and then encrypt the return twice and send a

lodgment reference to the lodging party. Once the return was decrypted, the computer

automatically submitted it to the Electronic Lodgment System and assessment calculations

were performed to determine a tax liability. It then generated a Notice of Assessment, and

any taxation refund calculated to be owing to the taxpayer was sent by cheque or

Electronic Funds Transfer to the bank account nominated in the income tax return. Where

a return was lodged manually, information contained in the return was manually input into

the computer and then processed in the same way as in the case of a return that was lodged

electronically. In both cases, the examination of the information contained in the return,

the calculation of the tax liability or credit, the issuing of a Notice of Assessment and the

payment of any taxation refund occurred without any further human intervention.

19. Counsel for the defendant submitted that false information in an income tax return is not

sufficient to constitute a deception unless there is further evidence establishing that the

wrong or misleading material deceived the person ultimately said to have provided the

financial advantage, or suffered the financial disadvantage. He submitted that, because the

prosecution alleges it was the Commissioner of Taxation who was deceived by the false

income tax returns and it was the Commonwealth who suffered the financial disadvantage,

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the offence is not proven because s 134.2 of the Criminal Code requires the deception to

have been practised against the Commonwealth entity from whom the financial advantage

was obtained. He cited no authorities in support of this submission.

20. There is clear authority for the proposition that, in order to establish an offence against

s 134.2 (1) of the Criminal Code, it is not necessary to establish that the person upon

whom a deception is practised is the person from whom the financial advantage flows (see

Elias v Director of Public Prosecutions [2012] NSWCA 302 and William Sai Ming Ho &

Anor (1989) 39 Crim A R 145). Accordingly, in this case, it matters not if it was the

Commissioner of Taxation who was deceived and the Commonwealth from whom the

alleged financial advantage flowed.

21. In any event, in view of the definition of “deception” contained in s 133.1 of the Criminal

Code, I am of the view that it is unnecessary for the prosecution to prove that any person

was deceived. It is sufficient if it establishes that the defendant’s conduct caused a

computer to make a response that he was not authorised to cause it to do. Such a deception

may occur without any person being aware of it. In this regard, I note, contrary to the

assertion of Counsel for the defendant, the prosecution did not, in its particulars, allege

that it was the Commissioner of Taxation who was deceived.

22. I am satisfied beyond reasonable doubt that the lodging of the income tax returns in this

case clearly resulted in the ATO computer responding to the information contained in the

returns, that that response included calculating the amount of the taxpayer’s liability for

income tax, the issue of a Notice of Assessment and the transmission of a tax refund by

Electronic Funds Transfer.

23. Counsel for the defendant further submitted that, even if a deception has been established,

the prosecution must prove that it is the wrong or misleading information which caused the

financial advantage to be bestowed. He submitted that, in the case of income tax returns

lodged either manually or electronically, it is the Commissioner of Taxation’s computer’s

internal review of the documentation and the issue of a password which are the threshold,

and process, which causes the computer to calculate and process a taxation refund or not.

It is not the mere lodgment of an income tax return which has that effect.

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24. In my view, this submission takes a much too narrow view of the causative effect of the

lodgment of an income tax return. The starting point of the whole process undertaken by

the computer is the lodgment of the income tax return. It is central to the process because it

contains the information upon which the computer operates. I am satisfied beyond

reasonable doubt that in each case it was the lodgment of a false income tax return which

caused the computer to make the response that it did.

25. Counsel for the defendant further submitted, in effect, that the lodgment of the false

income tax returns did not amount to deception because the income tax system operated on

self-assessment which presumed all the particulars in the claim were correct and, in the

absence of evidence to the contrary, is deemed to have been made by the taxpayer named

in the return. It follows, as I understand this submission, that it cannot be established that

the defendant’s conduct in lodging the income tax returns caused the computer to make a

response that he was not authorised to cause it to do.

26. He referred the court to s 164 of the Income Tax Assessment Act 1936 (“the Assessment

Act”) which provides:

“Every return purportedly made or signed by or on behalf of any person shall be deemed to have been duly made by the person or with the person’s authority until the contrary is proved.”

He noted, that upon receipt of a return, the Commissioner of Taxation is obliged by s 166

of the Assessment Act to make an assessment, inter alia, of the tax payable and by s 174 to

give notice of that assessment in writing to the person liable to pay the tax and that s 175

provides that the validity of any assessment “shall not be affected by reason that any of the

provisions of this Act have not been complied with”. He further noted that s 177 of the

Assessment Act (a provision which was in force at all relevant times but deleted in 2015)

provides that a copy of an assessment “shall be conclusive evidence of due making of the

assessment and . . . that the amount and all the particulars of the assessment are correct”.

He also noted that s 8AAZLF of the Taxation Administration Act 1953 requires the

Commissioner of Taxation to refund any surplus or credit standing in a taxpayer’s favour

in a Running Balance Account, subject only to exceptions which are not relevant to this

matter.

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27. He submitted that, in light of these provisions, until a Notice of Assessment that has been

issued by the Commissioner of Taxation is amended, or set aside, there is a statutory debt

created in favour of the taxpayer, established conclusively by production of a copy of the

assessment in respect of the relevant income tax return, which is deemed, in the absence of

contrary proof, to have been made by the taxpayer or with the taxpayer’s authority.

Notices of Assessment issued in respect of many of the subject income tax returns were

tendered by the defendant. I note that the prosecution did not contend other than that a

Notice of Assessment was issued in respect of each matter.

28. In the submission of Counsel for the defendant, the calculation by computer of a taxation

refund, in the circumstances of this case, was the response caused by the alleged

deception, it was not the payment of a taxation refund. In each case what was generated

was a Notice of Assessment which had the effect of creating either a statutory debt owed

by the Commissioner of Taxation in favour of a named taxpayer or debt owed by the

taxpayer in favour of the Commissioner of Taxation, which debt could be expunged by the

issue of an Amended Notice of Assessment.

29. Counsel for the defendant seemed to also submit that, even if the defendant’s conduct

caused one computer, the ATO computer, to make a response to another computer or to

facilitate the processing of information by that other computer, causing it to so respond did

not amount to deception when what resulted from the ATO computer was the creation of a

debt owed to the taxpayer named in the return.

30. In my view, it is immaterial whether only one computer was caused to respond to the

defendant’s conduct or several. Clearly the use of the singular “computer” in s 133(1) of

the Criminal Code includes the plural (see s 25, Acts Interpretation Act). The issue is

simply whether the defendant’s lodgment of each false income tax return caused one or

more computer “to make a response” that the defendant was not authorised to cause it to

do.

31. I am satisfied that the only inference available to be drawn, beyond reasonable doubt, from

all the evidence, including the vast amount of circumstantial evidence which I detail later

in these reasons, all of which I find clear and compelling, is that, in respect of all the

income tax returns which are the subject of charges, the returns were not made by the

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taxpayer or with the taxpayer’s authority. This fact provides the contrary proof referred to

in s 164 of the Assessment Act. Accordingly, if it is necessary to overcome the deemed

validity of the income tax return and related Notice of Assessment which is the subject of a

charge, that fact is the starting point. If the income tax return itself loses its deemed

validity, it must follow logically that any Notice of Assessment based on the return must

also lose its deemed correctness. It would clearly be absurd that the lodgment of a false

income tax return by a genuine taxpayer, with the consequent issue of a Notice of

Assessment and payment of a tax refund, would not render that taxpayer liable under

s 134.2 of the Criminal Code. This must be all the more so when the income tax return is

lodged by a person who is not the taxpayer and is not authorised to do so by that taxpayer.

In my view, the various provisions of the Assessment Act relied upon by counsel for the

defendant in advancing his submission are irrelevant when considering conduct proscribed

by the Criminal Code. In my view, where the falsity of an income tax return is established,

as it has been established in this case, the provisions of the Assessment Act which may, in

other circumstances, provide deemed validity to an income tax return and related Notice of

Assessment become inapplicable by reason of the proved falsity of the income tax return.

32. I am satisfied beyond reasonable doubt that by lodging each income tax return which is the

subject of charge, the defendant caused a computer to make a “response” which he was not

authorised to cause it to do. He clearly was never authorised to lodge any of the returns;

nor was he ever authorised to cause the ATO computer to issue a Notice of Assessment in

favour of the taxpayer named in each return; nor was he ever authorised to cause the ATO

computer to respond by forwarding tax refunds, to which neither he nor the named

taxpayer was entitled, to the various bank computers involved. The lack of authority is

clearly to be inferred in respect of each charge from the fact that the declared income had

not been earned and the declared amount of tax had not been withheld. Neither the

taxpayer nor the defendant had any legal entitlement to the tax refund which was caused to

be issued.

33. In light of s 133.1 of the Criminal Code, it is clear that the defendant’s conduct was

deceptive even though it was a computer which responded to the falsehoods contained in

each income tax return. It is also clear from the evidence that the computer was operated

by and on behalf of the Commissioner of Taxation through the Department for which he

was responsible, the ATO.

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Did the defendant obtain a financial advantage by the deception?

34. In considering whether the defendant obtained a financial advantage as a result of the

electronic transfer of funds by the ATO computer to the bank account nominated in each

income tax return, it is necessary to consider the evidence of the system employed by the

defendant in respect of all the transactions which are subject of the charges and other

circumstantial evidence, including his conduct in relation to the income tax returns as a

whole; the bank account nominated in each income tax return; and items seized through

searches of his place of residence, his place of work, his motor vehicle and two lockers at

the ANU Sports Centre.

35. I admitted this evidence as being circumstantial evidence relevant to proving dishonest

intent; proving that the defendant was engaged in a formulated plan or system; and

rebutting any potential defence of mistake or innocent agency. In my view, the evidence is

the sort of circumstantial evidence found to have been admissible in Harriman v R [1989]

CLR 590 and R v Finlayson [1912] 14 CLR 675.

36. That evidence establishes the following::

In relation to the manually lodged income tax returns, the bank account

details into which the refund was to be paid was written at the bottom of the

first page of the return lodged by the defendant and, in relation to the

electronically lodged returns, the person lodging the return had authorised

payment into a nominated financial institution.

In respect of each of the charges, the tax refund relating to the lodged

income tax return was made by Electronic Funds Transfer to the

Commonwealth Bank of Australia account nominated in the return.

Each tax refund was paid into a bank account which, with 19 exceptions,

was held in the name of a person different to the taxpayer named in the relevant

income tax return. The name of each of the bank account holders and details of

many of the account numbers were recorded on an Excel spreadsheet, named

“database 09”, found on the defendant’s computer.

The defendant kept a diary in which he systematically recorded details of

the names of taxpayers named in the income tax returns lodged by him

alongside the names of the bank account holders and the last four digits of the 11

bank account numbers into which refunds were paid. These details were

recorded in respect of 257 of the income tax returns which are the subject of

charges. I note that in his formal admissions the defendant admitted that the

diary belonged to him and that the writing in it was his.

The defendant had the means to withdraw the tax refunds after they were

paid into the nominated bank accounts. He was found to be in possession of a

large number of Commonwealth Bank of Australia (“CBA”) Keycards and

documentation that enabled him to withdraw funds from the bank accounts into

which the relevant tax refunds had been paid, or from accounts into which the

tax refunds had been transferred. In respect of 274 of the charges, the defendant

was in possession of bank Keycards and documentation relating to the accounts

into which the refunds were paid.

The bulk of the CBA Keycards were seized by the Police in the early

evening of 3 August 2010, after search warrants had already been executed on

the defendant’s residence, workplace and lockers located at the ANU Sports

Centre throughout the day. They were seized under an additional warrant to

search the defendant’s vehicle for a second time as he had driven it to an

underground car park at the Gungahlin Shopping Centre and left it there that

evening. The clear and unequivocal inference to be drawn from this is that he

drove the vehicle to the car park and left it there unattended for the purpose of

concealing from the Police what was highly incriminating evidence. The CBA

Keycards seized from the vehicle were contained in card holders in a manner

designed to conceal their existence. Each Keycard was covered by an

innocuous looking business card which, in many cases, had the name of the

holder of the Keycard, concealed below it, written in small letters on its face.

This, together with the defendant’s established activities concerning the income

tax returns and CBA accounts, establishes that he was using the Keycard for a

guilty purpose.

A large volume of correspondence from CBA was seized during the

execution of the search warrants on 3 August 2010. It reveals how the

defendant came to be in possession of the CBA Keycards. All the

correspondence seized was addressed to either former residences occupied by

the defendant or post office boxes used by him. There were six such post office

boxes located in five different suburbs of Canberra. Although these post office

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boxes were not rented in the defendant’s name, he had in fact rented them and

had control over them. Receipts for payment of the rental in respect of all the

post office boxes, and some post office box application forms, were seized

during the execution of a search warrant on the defendant’s residence on 3

August 2010. The application forms used to rent these post office boxes show

that they were rented in the names of persons recorded in the spreadsheet

named “database 09” found on the defendant’s computer. Also seized at the

defendant’s residence was a letter, dated 7 June 2010, purportedly signed by

Iman Prihandono, relating to the post office box rented in O’Connor. The letter

stated that the lock on the box was jammed and authorised the writer’s

partner,“Ms Surbi Khandelwal”, to act on his behalf and collect any mail until

the lock was fixed. Ms Surbi Khandelwal is the defendant’s wife.

The defendant’s wife’s National Australia Bank records reveal that in late

2009 and early 2010 her address was 2/24 De Burgh Street, Lyneham. The

defendant’s National Australia Bank records show that in the middle of 2009

his address was 12B, 54 Forbes Street, Turner. The defendant’s Australia and

New Zealand Bank records show him living at 2/24 De Burgh Street, Lyneham

in 2009.

When the Police executed a search warrant at 2/24 De Burgh Street,

Lyneham on 3 August 2010, they seized four letters addressed to the defendant

at that address.

When the Police searched the defendant’s computer, located at his place

of work, they found, and took a copy of, the defendants resume created in 2007

showing that his address at that time was unit 33C, Currong Apartments, 59

Currong Street, Braddon and that, between December 2005 and February 2007,

he had resided as a Senior Resident at Toad Hall, ANU.

Some items of CBA correspondence, relating to bank accounts nominated

in various of the income tax returns, into which income tax refunds were paid,

were mailed to each of these addresses.

The evidence relating to the post office boxes hired by the defendant and

the addresses to which CBA sent correspondence relating to the bank accounts

into which the tax refunds were paid allows of no other inference than that the

defendant had arranged for CBA to send correspondence relating to those

accounts to himself, addressed either to post office boxes he had rented or

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addresses where he resided. This correspondence included a large number of

Keycards and their corresponding PIN numbers. This provided him with the

means to withdraw the tax refunds deposited into those accounts.

Letters addressed to the ATO updating details, including BSB and CBA

account numbers, were located in electronic form on a Sandisk thumbdrive

which was seized during the execution of a search warrant in respect of the

defendant’s motor vehicle at the time it was parked in the garage of his

residence. These letters are all written in the same style, as if authored by the

same person. Also located on the thumbdrive was an electronic copy of a Peer

to Peer Evaluation form for the defendant and a version of the spreadsheet

named “database 09” which had been found on the defendant’s workplace

computer.

One of the letters found on the thumbdrive, dated 15 April 2008, purports

to be from Endah Punawati. It states that she is currently at Unilodge in

Childers Street. Department of Immigration and Citizenship records show that

Endah Punawati last left Australia on 16 December 2006. The letter instructs

the ATO to change the bank account details to a specified BSB and bank

account number in the name of Endah Punawati. In fact, the bank account

referred to in the letter was held in the name of Niaz Akbar. DIAC records

show that that person was not present in Australia in 2008.

A CBA MasterCard in the name of Niaz Akbar was concealed in the third

slot of the 15th page of the business card holder found in the boot of the

defendant’s motor vehicle.

A letter found on the thumbdrive, dated 1 April 2008, purporting to be

from Nadine Murshid states that her address is 26 Childers Street, Canberra

City. DIAC records show that she last left Australia on 6 November 2006. The

letter advises the ATO to change her bank account details to a BSB and a bank

account number held in her name. CBA records show that this account was in

fact held in the name of Amit Gupta. DIAC records show that Amit Gupta was

not present in Australia throughout 2008.

A CBA Keycard in the name of Amit Gupta was concealed in the third

slot of the first page of the business card holder found in the boot of the

defendant’s motor vehicle.

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A letter found on the thumbdrive, dated 3 April 2008, purporting to be

from Amneh Shaikh states that her address is 24 Cotonwood Park, Freda

Bennett Circuit. DIAC records show that she was not present in Australia in

2008. The letter advises the ATO to change her bank account details to another

BSB and account number. CBA records show that this account was held in the

name of Pia Corinna Reyes. DIAC records show that Pia Corinna Reyes was

not present in Australia throughout 2008.

A CBA Keycard in the name of Pia Corinna Reyes was found in the first

slot of the 39th page of the business card holder found in the boot of the

defendant’s motor vehicle.

An undated letter found on the thumbdrive, purporting to be from SM

Anisul Haque, advises the ATO to change his bank account details to a BSB

number and account number in his name. CBA records show that this account

was held in the name of Biju Akkattu Thankpappan. DIAC records show that

Biju Akkattu Thankpappan was not present in Australia throughout 2008.

A CBA Keycard in the name of Biju Akkattu Thankpappan was found in

the second slot of the 10th page of the business card holder discovered in the

boot of the defendant’s motor vehicle.

The only inference that can be drawn from these letters, the fact that they

were found on the thumbdrive seized from the defendant’s motor vehicle and

the fact that Keycards or MasterCard’s in respect of the new accounts

nominated in each letter were found in the business card holder seized from his

motor vehicle, is that the letters were written by the defendant so as to change

the bank account details held by the ATO in respect of the purported taxpayers

in order to ensure that tax refunds would be paid into accounts which he could

then access.

Bank account details held by the ATO in respect of a taxpayer can be

updated by ATO staff if they have the required access and authority from the

taxpayer.

ATO records show that, in relation to the taxpayer named in the income

tax return which is the subject of a number of the charges, a person contacted

an ATO customer service officer by telephone and changed the bank account

details. There is no direct evidence that these telephone calls were made by the

defendant, however, on a number of occasions, a person purporting to be the

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named taxpayer failed to provide accurate proof of identity in the first

telephone call made to the ATO. An inference can be drawn from this that on

each of those occasions it was not the real taxpayer who contacted the ATO. In

this regard, it is significant that each of the names found in the ATO records

relating to the charges were also found in the defendant’s spreadsheet found on

his work computer. In respect of each of these names, there is recorded on the

spreadsheet the individual’s address, contact telephone numbers, Tax File

number, and, in some instances, an ATO Notice of Assessment number.

Mr Richard Ziolkowski was, for a period, a fellow employee of the

defendant. He spent several weeks working in the cubicle next to the defendant.

Between April 2010 and July 2010, he heard the defendant making a large

number of telephone calls during which he used the names of other people. He

heard the defendant make several such calls a day. The defendant provided the

person, to whom he was speaking on the phone, with the names and dates of

birth of other persons and updated contact details and addresses.

The ATO records in respect of telephone calls made to change the bank

account details, including the person’s inability to provide accurate proof of

identity, and Mr Ziolkowski’s evidence leads, in my view, to no other inference

being capable of being drawn other than that it was the defendant who made the

various telephone calls purporting to be the taxpayer.

CBA bank records reveal a very distinctive and unusual pattern of

transactions that is inconsistent with an inference that the tax refunds were

being received by the taxpayers named in the income tax returns which are the

subject of the charges.

Each of the tax refunds made, with 19 exceptions, was paid into a bank

account which was held in a name that was different to the taxpayer named in

the income tax return. The name and details of each of the receiving bank

accounts were recorded in the defendant’s spreadsheet named “database09”. 51

of the 52 names of account holders and the last four digits of their account

numbers were also recorded in the defendant’s diary in an order which matched

the name stated in the income tax return with its refund receiving account. A

total of 52 names were used to hold the 302 bank accounts nominated in the

income tax returns for the purpose of effecting the electronic transfer of the tax

refunds.

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The chronology of CBA transaction records contained in exhibit P142

generally shows the existence of one account which appears to have been

opened and operated in a normal fashion by the actual account holder. These

original accounts initially show the normal daily types of transactions to be

expected, such as irregular amounts being paid to various shops and businesses.

After, according to DIAC records, the account holder of the original account

had departed Australia, the account is seen to lie dormant, apart from the

reduction of monthly fees and, in a few cases, electronic transactions from a

foreign country.

After a period of apparent dormancy, the original account receives an

electronic transfer of a small amount of money. In a large number of cases this

initial electronic transfer is made from a CBA account number 2903 10369725

held in the name of Biju Thankappan. This person’s details and his account

number are recorded in the defendant’s spreadsheet called “database 09” and a

CBA Keycard in the name of Biju Akattu Thankappan was found in the

business card holder seized from the defendant’s motor vehicle. After the initial

electronic transfer is made to the original account, approximately five or six

Netbank Saver accounts are opened in the name of the original account holder.

These Netbank Saver accounts are then activated either by the electronic

transfer of a small sum of money or by the deposit of a tax refund from the

ATO.

Throughout the period during which the offences were allegedly

committed by the defendant, CBA Netbank Saver accounts were available to

CBA customers who had access to online banking. Netbank Saver accounts

were opened online through the CBA online banking website. In order to

access the CBA online banking website and open a Netbank Saver account a

customer needed a unique Netbank client identification number and password.

A client could obtain a Netbank identification number by telephoning CBA and

passing a simple proof of identity test, such as providing a date of birth, address

and other sundry personal details. In this regard, I note that each of the names

used in relation to the charges are to be found in the defendant’s spreadsheet

named “database 09” and that, in respect of each of these names, the person’s

address, contact telephone numbers and Tax File Number are recorded. Once a

CBA customer has access to the online banking system they can open Netbank

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Saver accounts online without providing any further identification. The

Netbank Saver account is then activated once money is transferred into it.

Thereafter, money can only be transferred into and out of the account by

telephone or online banking transfers.

The CBA records contained in exhibit P142 show that the Netbank Saver

accounts were generally activated shortly before, or by, the payment of a tax

refund into the account. A large number of the tax refunds deposited into the

Netbank Saver accounts were then transferred across to the original accounts,

either electronically or by telephone. Either on the day the funds were

transferred into the original account, or shortly thereafter, the funds were

withdrawn in amounts of $1000 to $2000 from automatic teller machines

located in Canberra.

Some of the ATO tax refunds that are the subject of charges were paid

directly into the original account and withdrawn from automatic teller machines

in Canberra shortly after. These original accounts had no other recorded

transactions, during the period of the defendant’s alleged offending, other than

the receipt of tax refunds directly or by transfer from their associated Netbank

Saver accounts, withdrawals from automatic teller machines in Canberra in

large uniform amounts and the deduction of monthly banking fees.

The Netbank Saver accounts were not used for any purpose other than the

receipt of tax refunds and the transfer of those refunds to the original account

from which cash could be withdrawn.

The withdrawals of cash from the original accounts were clearly not being

made either by the persons in whose name the accounts were held, or the

persons who were named as taxpayers on the income tax returns, because they

were not physically present in Australia when the cash was physically removed

from automatic teller machines.

37. The foregoing facts and inferences, and the following particular facts established by the

evidence, are relevant to establishing who withdrew the tax refunds transferred to the

various CBA accounts referred to above, or on whose behalf the withdrawals were made -

1. The defendant was found in possession of 287 CBA Keycards for accounts

held in the names of other persons.

2. 263 of those CBA Keycards were for accounts into which tax refunds

relating to income tax returns, which are the subject of charges, were paid.

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3. The defendant kept those CBA Keycards in business card holders in a

manner which concealed his possession of them.

4. He attempted to hide the CBA Keycards from the Police by leaving his

motor vehicle in the Gungahlin shopping centre carpark.

5. The defendant kept details of the names of all the purported bank account

holders in his Excel spreadsheet named “database 09”.

6. The defendant kept methodical hand written records in his diary of the

names of the purported taxpayers and the names of the holders of the

corresponding bank accounts into which each tax refund was to be paid.

7. The defendant was found to be in possession of hardcopy and electronic

documents relating to overseas students which gave him personal details of

some of the account holders, sufficient to enable him to pass the CBA proof

of identity requirements in order to obtain a CBA online Netbank

identification number and a generic password.

8. Having obtained a CBA Netbank identification and password, he was able

to conduct transactions on the original accounts, and the newly opened

Netbank Saver accounts, on the Internet and by telephone without any

further proof of identity.

9. The CBA Netbank Saver accounts into which the tax refunds were

deposited were transacted upon in a manner that makes it clear that the sole

reason for their creation was to receive and transfer tax refunds, which were

not in fact payable to the person named as the account holder in the income

tax return.

10. 237 of the tax refunds deposited into the receiving Netbank Saver accounts

were largely transferred to the original accounts. They were then drawn

down through automatic teller withdrawals in Canberra.

11. The persons named as account holders of the Netbank Saver accounts were

not present in Australia when the tax refunds were physically withdrawn

from the original accounts.

12. Only 52 names were used to create all the bank accounts into which the 302

tax refunds were paid.

13. Apart from 19 instances, each of the tax refunds that is the subject of a

charge was paid into a bank account which was held in a name different to

that of the purported taxpayer.

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14. On 201 occasions funds from Netbank Saver accounts, into which tax

refunds were paid, were electronically transferred to original accounts, thus

enabling cash to be withdrawn from automatic teller machines, by a person

using the defendant’s IP computer address at his place of work.

15. The defendant’s CBA account numbered 290310406565 engaged in a

number of transactions with a number of the CBA bank accounts used to

receive and transfer tax refunds which are the subject of charges.

16. The defendant was found in possession of large bundles of $50 notes at his

place of residence (total $9,305.00), in his lockers at the ANU Sports

Centre (total $50,000 in one and $60,000.00 in the other) and his drawer at

his place of work (total $60,000.00).

17. Large amounts of cash, representing tax refunds, were withdrawn from an

automatic teller machine located at the ANU, the same place as where his

lockers were located.

18. The defendant’s and his wife’s banking records reveal that they were each

earning moderate sums of money and had a modest amount in assets. This

tends to render inexplicable his possession of $179,305.00 in cash unless it

represented the cash withdrawals recorded in exhibit P142.

19. One of the purported taxpayers, Andewi Rokhmawati, had no knowledge of

the seven tax refunds paid into accounts held in her name. She had no

knowledge of six of those accounts having been opened and believed the

seventh account in her name had been closed. She was unaware of the

income tax return lodged in her name in September 2009 and had not

earned the income stated in the return, nor did she receives the tax refund as

a result of the lodgment of the income tax return. She had never met the

defendant or his wife and had no idea how her details came to be recorded

on the defendant’s spreadsheet named “database09”. She was also unaware

of the existence of the CBA Keycard found in the defendant’s possession

and did not know how he came to be in possession of it.

20. Two of the purported taxpayers, Yunrdi Afrullah and Cynthia Wuisang,

had never met the accused or is wife and had no idea how their details came

to be recorded on the defendant’s spreadsheet named “database0 9”

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38. In my view, the only inference capable of being drawn from the CBA records, together

with all the other circumstantial evidence, is that it was the defendant who orchestrated the

deposit of the relevant tax refunds into banks accounts, over which he had control and

from which he had the capacity to withdraw funds; that he also orchestrated their use in

order to receive tax refunds flowing from the lodgment of the income tax returns, which

are the subject of the charges; and that he, or someone acting on his behalf, withdrew cash

from the original accounts by use of an automatic teller machine.

39. Counsel for the defendant submitted that even if it is found that the defendant, by

deception, caused the ATO computer to transmit a tax refund to the account nominated in

each of the subject income tax returns, and he had the capacity to, and did, withdraw funds

from accounts over which he had control, the prosecution has failed to establish that he

obtained a financial advantage.

40. In support of this contention, he submitted as follows:

“It is important when considering the mechanism of a taxation refund to remember that neither the Commonwealth nor the Commissioner of Taxation effect a refund by delivering cash or money to a taxpayer. The refunds are effected by electronic means into nominated bank account.

“Once such a deposit is made the money is not held by the bank as agent or trustee for the customer but becomes the property of the bank.

“The nominated customer or account holder has, at the point at which the credit balance is established, a chose in action to compel the payment not of the funds banked but funds equivalent in amount together with any interest earned or other entitlement pursuant to the contract between the bank and the customer.

“Credit balances created in a bank account fraudulently do not constitute a chose in action whereas such credit balances created legitimately but by virtue of underlying fraudulent conduct do create a chose in action in the same way as credit balances created by mistake.

“The accused has not been charged with stealing a chose in action.

‘For the purpose of Chapter 7 of the Criminal Code ‘property’ is defined to include: ‘(d) a thing in action or other intangible property. . .’.

“The accused has not been charged with obtaining property by deception although it is doubtful that any chose in action belonged to a Commonwealth entity in any event so as to bring the case squarely within Section 134.1 of the Criminal Code.

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“Division 134 of Chapter 7 of the Criminal Code maintains a distinction between property and financial advantage.

“There is no statutory alternative to a charge under Section 134.2 of the Criminal Code.

“The difficulty presented by the creation of a credit balance in another person’s named account does not attach to a charge pursuant to Section 134.1 of the Criminal Code because sub-sections (9) and (10) specifically deal with the transfer of monies either to an alleged offender’s account or to the account of some third person and create a deemed property in the funds as well as a deemed dishonest obtaining.

“In the circumstances alleged against this accused it does not avail the Crown to establish that he, by whatever deception or device, caused a transfer of funds from the Commissioner of Taxation to a nominated bank account thereby establishing a credit balance and a chose in action unless it can be shown that he, the accused, in contradistinction to any other person then and thereby obtained a financial advantage.

“In no instance does the Crown purport to show access to the accounts and the credit balance (or chose in action) in the accused’s name or in any way which could be compelled by the accused at law or in equity.

“In relation to the Commonwealth Bank, Net Bank saver accounts the evidence of Mr Adam Meakins, Bank Compliance Officer, established that any credit balance could not be withdrawn directly but had first to be transferred to another account.

“To the extent that any transfer was from one account to the account of another person the establishment of the second credit balance would have the effect of creating another but different chose in action. The transfer out of the Net Bank saver account would extinguish the original chose in action.

“Absent a definition of ‘obtaining a financial advantage’ which incorporates advantaging a third person the offences cannot, on the evidence adduced, be made out.

“Further, it must be borne in mind that the advantage to be obtained must be a ‘financial advantage’ and not just an advantage of some theoretical kind.

“A chose in action is personal to the holder of the account and does not inure for the benefit of any third party no matter what arrangements might be made for the third party to draw against any credit balance.”

41. In summary, the submission is that, upon the electronic transfer of a tax refund into the

account nominated in the income tax return, a chose in action was created. This chose in

action is an item of property and the payment of its value can be enforced by action taken

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by the account holder and no other person. Accordingly, any financial advantage flowing

from the Commonwealth as a result of the defendant’s alleged deception was obtained by

the person entitled to enforce the chose in action. The transfer of the tax refund into the

account did not immediately create an advantage to the defendant. In no instance was the

defendant the account holder and in no case was money paid directly to the defendant or

transferred into any bank account held in his name.

42. “Financial advantage” is not defined in the Criminal Code nor the Acts Interpretation Act.

It is not a phrase that has been given any particular meaning by the common law. It is

simply a phrase that is to be given its plain meaning. In Fisher v Bennett (1987) 85 FLR

469, Miles CJ said at 472:

“... I do not think that it is necessary to resort to dictionary definitions of the word ‘financial’ or the word ‘advantage’. I think that it is inescapable that an advantage involves a particular situation which is more beneficial to the person concerned than another relevant situation with which it is compared. A financial advantage involves a situation which from the financial aspect is more beneficial than another situation. When one speaks of obtaining a financial advantage by deception there is imported in my view the notion of improving a financial situation by means of that deception.”

43. Similarly, in John Richard Walsh [1990] V.R. 80, O’Bryan J (the other two members of

the Court of Criminal Appeal agreeing) said at 81:

“Attention focused upon the meaning of the words ‘financial advantage’. In Matthews v Fountain [1982] VR 1045 Gray J observed that:

‘The concept of financial advantage is a simple one. It is expressed by the use of two common words, each of clear meaning.’

I agree that the words should be given their plain meaning and that no narrow construction should be given them.”

44. If the determination as to what amounts to a financial advantage is restricted to an

examination of the legal character of money standing to the credit of the person who is the

holder of a relevant bank account, the defendant’s submission is undoubtedly correct – he

did not obtain the legal capacity to enforce the choses in action created in favour of the

account holders and therefore obtained no benefit recognised at law.

45. However, the phrase “financial advantage” is not a legal concept akin to “chose in action”

or even “property”. A court seeking to determine if there has been a financial advantage

obtained is simply required to determine factually whether the person said to have

obtained a financial advantage has achieved, by his deception, a personal financial

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situation which is more beneficial to himself than that which would have existed had he

not engaged in the deception. To limit the words “financial advantage” in the way

advocated by Counsel for the defendant would be placing a narrow construction on them

and would be failing to give them their plain ordinary meaning.

46. I have already found that the defendant, by his conduct in lodging the false income tax

returns, caused the ATO computer to calculate a tax refund payable to the named taxpayer

and to electronically transfer money, by causing a credit, equivalent to the tax refund, to

appear in the nominated bank account. I have also found that the defendant had control of

all the relevant bank accounts, utilised by him in giving effect to his scheme, when the tax

refunds were credited to them. I have also found that he had the capacity, which in many

instances he, or a person acting on his behalf, utilised by using automatic teller machines,

to withdraw money from the original accounts. As a result of this, his personal financial

situation was clearly more beneficial than it was before, or if he had not, engaged in the

conduct of lodging the false income tax returns.

47. I am satisfied beyond reasonable doubt that the defendant did obtained a financial

advantage by his deception.

Was the financial advantage obtained from the Commonwealth?

48. It is clear as a matter of fact and law that the functions of the Commissioner of Taxation,

and the office of which he is the head, include the recovery of taxes which taxpayers are

required to pay by law, and to make refunds of tax withheld by an employer of a PAYE

employee where the amount withheld exceeds the amount of income tax payable by the

employee. It is also clear at law, and from the evidence, that whatever monies are received

by the Commissioner of Taxation in the form of payments of tax by taxpayers, are the

property of the Commonwealth and are held in one Consolidated Revenue Fund (see s 81,

Commonwealth Constitution). It follows that any payment made out of the Consolidated

Revenue Fund, even if made by the Commissioner of Taxation, is a payment made by the

Commonwealth.

49. Accordingly, I am satisfied beyond reasonable doubt that the financial advantage obtained

by the defendant was obtained from the Commonwealth because in each case the

Commissioner of Taxation, acting on behalf of the Commonwealth, paid out of the

Consolidated Revenue Fund the tax refund which is the subject of each charge.24

Did the defendant intentionally engage in the deception and did he do so dishonestly?

50. In my view, there is overwhelming evidence, both direct and circumstantial, that the

defendant intentionally engaged in the deception alleged in each charge and I so find

beyond reasonable doubt.

51. Unless the statute using the word “dishonestly” uses it in a special sense, an act is to be

regarded as dishonest if it was dishonest according to the standards of ordinary, decent

people (see Peters v The Queen (1998) 192 CLR 493 at 506 and Macleod v The Queen

(2003) 214 CLR 230 at 256).

52. In the case of s 134.2 of the Criminal Code no special meaning is given to the word

“dishonestly”. Accordingly, applying the standards of ordinary, decent people, I am

satisfied beyond reasonable doubt, on the basis of strong and overwhelming evidence, that

in respect of the deception which is alleged in each charge the defendant acted dishonestly.

Verdict

53. In light of the foregoing, I am satisfied beyond reasonable doubt that the defendant is

guilty of each of the 302 offences with which he has been charge and I find each charged

proved.

P. G. Dingwall

Magistrate

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