It’s all in the fine print

At long last it seems that the press have twigged to the internet-reported cases as a cost-effective (and legally safe) source of reportage.

Last weekend the Sun-Herald published a report on a case which I had been preparing my own short post, only to get bogged down on the details.

It concerned a Ms Vu, 36, described in the article as “an unemployed single mother of two.” The article said that she was “ordered to pay back almost $1 million to NSW taxpayers after a court found her lavish lifestyle was funded by the proceeds of crime.”

As the article continued:

Thi Thanh Houng Vu, 36, said her parents and big wins on poker machines and playing blackjack at the Star casino and the Canterbury Leagues Club paid for her love of Louis Vuitton and regular trips to Vietnam, Thailand and Hong Kong. But her luck ran out when the police discovered her sole income between October 2003 and October 2009 was $160,896 from Centrelink.

The final paragraph of the Sun Herald‘s report said,

“Acting for the NSW Crime Commission, Ian Temby, QC, said Vu had in the period before October 28, 2009, engaged in ”serious crime-related activity”. Vu’s lawyer did not contest this.

That is not quite correct.

Under NSW’s Criminal Assets Recovery Act there are, broadly speaking, two types of orders which can be made.

The first is type is assets recovery orders. These orders forfeit specific assets to the crown.

The second type is proceeds assessments orders and unexplained wealth orders. These orders require a payment of a specified amount to the crown. All of the property of the person subject to the order is charged with payment of the amount.

The regime is draconian. For example, it has been held that there is no requirement to reduce the proceeds assessment order if there has already been an assets recovery order.

But the real sting in the act is that, notwithstanding the Sun Herald‘s report, it is not true that the money ordered to be paid is repaid, and it is not necessary to prove that the money is the proceeds of crime. Once it is established that a person has committed a crime of the requisite type, all of that person’s property whenever obtained can be made the subject of an assets recovery order and an amount equal to all of the money received by that person in the past six years can be ordered to be paid under a proceeds assessment or unexplained wealth order, unless or save to the extent that the person can prove that they came by the property or income by means of lawful activity. (There is some further protection offered to innocent third parties which I haven’t the patience to go into here.)

And the crimes of the requisite type are defined quite broadly. They include drug related crimes, and also fraud-related crimes which are punishable on indictment with a sentence of five years or more.

There is no need for any specific link between the crime which the person is found to be committed and the property they hold or income they obtained.

The serious crime used to trigger the Crime Commission’s powers over Ms Vu occurred when Ms Vu sought and obtained a mortgage of $184,000 in 2008 to purchase a flat in Bankstown from her sister. The total stated price was $230,000 and Ms Vu’s sister said that Ms Vu paid her the remaining $46,000.

In order to obtain the loan, Ms Vu’s income needed to be substantiated to the bank. This was done by means of a reference and some payslips from a Coogee Bay tobacconist which falsely said Ms Vu was employed there at a wage of $45,000. In fact Ms Vu had scarcely worked at all since she came to Australia in 1994, and had always been on the single parent’s benefit. The reference and the payslips were false.

Ms Vu’s lawyer did not contest that if Ms Vu was responsible for this, it was a fraud and would qualify as serious crime activity. The argument was whether Ms Vu had anything to do with it. There was a suggestion that it was all the mortgage broker’s work.

The judge was having none of this. “The very clear inference is that the Defendant well knew that these statements were being made on her behalf in support of the application, even if the evidence does not permit a clear finding to be made that it was the Defendant herself who created the false documents.”

At the time this was an offence under section 178BB of the Crimes Act and punishable by a sentence of up to 5 years’ imprisonment.

Ms Vu said that she had substantial winnings at the casino which, unlike her losses, did not show up on her loyalty card records. The judge did not believe her. A further attempt to argue that the order should be limited to the advance obtained under the mortgage received short shrift.

The amount of $922,000 ordered to be paid was determined by subtracting from all of Ms Vu’s expenditure over the relevant period (about $1.2 million, including the whole $230,000 paid for the flat) the amount which was obtained lawfully by her. The latter was about $300,000 on the Crime Commission’s analysis. The lawful income not include any amount advanced by the bank under the mortgage.

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