State v Yaleme (No. 2) [2015] PGNC 315; N8266 (20 October 2015)

N8266

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

CR (FC) 63 of 2015

THE STATE

V
JAMES YALEME
(No. 2)

Waigani: Batari J
2015: 20^th October

CRIMINAL LAW – Sentence – obtaining goods, money or credit by false pretence or willfully false promise with intention to defraud – accused obtained from complainant total of K15,000 and on loan arrangement – false cheque tendered as purported assurance – cheque bounced and offender avoided repayment - offence – sentence – guide - mitigating factors – restitution – relevance of – suspension of sentence – alternative to imprisonment – consideration of - sentence of 3 years suspended on terms appropriate - Criminal Code s. 404(1).

Cases cited:

Albert Age v The State [1979] PNGLR 589
The State v Mary Tengdui (2014) N5827
The State v Welford [1986] PNGLR 531
Wellington Belawa v The State [1988-89] PNGLR 496

Counsel:

J. Apo, for the State
R. Yansion, for the Accused

DECISION ON SENTENCE

20^th October, 2015

1. BATARI J: JamesYaleme, on 10/09/15 the Court convicted you on one count of obtaining money by false pretense with intent to defraud under s. 404 (1)(a) of the Criminal Code. The facts also supported the elements of willfully false promise. You are before the court again from remand to receive your sentence.
   
2. I will sentence you on these brief facts. In June/July of 2013 you approached the complainant, Jackson Andiki for a K2,500 loan. He was then a money lender in the informal sector. You are the proprietor of a company, Kobs Engineering Limited with two subsidiaries in JY Securities Services and J & J Bakery Services. Two weeks later, you requested a further loan and settled for K12,500. You undertook to repay both amounts with a 50% interest and also gave the complainant a signed, undated Cheque in the sum of K30,000 with instructions to bank it after three months. The bank dishonored the Cheque upon presentation.
   
3. The complainant made numerous failed attempts to locate you so; he intercepted and detained your company vehicle. It was then that you came out of hiding and laid a complaint with police. Your complaint backfired as you were then arrested and charged with this offence.
   

1. SENTENCE: FACTORS FOR CONSIDERATION
   

4. The maximum penalty prescribed under s. 404 of the Criminal Code for the offence of false pretence is, five years imprisonment, subject to the court’s discretion, judicially exercised under s. 19 of the Criminal Code to impose a lesser term. In this regard, sentencing principles in the often-cited case of Wellington Belawa v The State [1988-89] PNGLR, 496 is where to start.
   
5. I have also ordered from the Community Based Corrections (CBC) Office, a Pre-Sentence Report and Means Assessment Report. The reports are now before the court and both counsel have addressed pertinent issues on the question of appropriate penalty.
   
6. Belawa’s case sets out a number of factors recognized by the Supreme Court which are intended to guide the discretion of the sentencing authority on misappropriation convictions. In my view, the guidelines have wider application to other fraud and dishonest offences as in this case of false pretence or willfully false promise with intention to defraud. I will use those factors.
   1. The amount taken
      
7. The first major factor is the amount misappropriated. In essence, this factor concerns proportionality of punishment to the amount taken. That is, the larger the amount, the greater the punishment should be. Belawa’s case suggests that:
   1. Where the amount misappropriated is between K1 and K1,000, a jail term should rarely be imposed.
   2. Where the amount misappropriated is between K1,000 and K10,000, a jail term of up to two years is appropriate.
   3. Where the amount misappropriate is between K10,000 and K40,000 two to three years imprisonment is appropriate.
   4. Where the amount misappropriated is between K40,000 and K150,000, three to five years imprisonment is appropriate.
      
8. I make two observations on the foregoing; (i) the nominated amounts with the corresponding sentence range for each category is now surpassed by time lapse and change of law; (ii) the scale of penalties was no doubt, set consistently with the maximum sentences of five years for the less serious and 10 years for misappropriation with circumstances of aggravation.
   
9. But now that the new penalty law under s. 383A of the Criminal Code have sorted misappropriation cases into four categories of seriousness, a review of the principles in Belawa’s case will be necessary to realign the different categories of misappropriation with the new statutory sentencing regime.
   
10. The offence of false pretence or willfully false promise with intent to defraud under s.404 of the Criminal Code does not necessarily require proof that economic loss to the representee resulted: Albert Age v The State [1979] PNGLR 589 at 590 -591. However, using the principle in Belawa’s case as a guide, the penalty ranges for this offence should run parallel to but pitched on a lower scaling to that in Belawa’s case. I suggest the following as a guide:
    
    1. Where the amount or value of goods defrauded is between K1 and K1,000, a jail term should rarely be imposed.
    2. Where the amount or value of goods defrauded is between K1,000 and K10,000, a jail term of one year to two years is appropriate.
    3. Where the amount or value of goods defrauded is between K10,000 and K40,000 two to three years imprisonment is appropriate.
    4. Where the amount value of goods defrauded is in excess of K40,000 three to the maximum five years imprisonment is appropriate.
       
11. The total amount the subject of the conviction in this case is K15,000. This represents a substantial amount. It falls into the third category suggested above. The appropriate sentence is two to three years imprisonment as may be influenced by relevant mitigating and aggravating factors.
    
    2. The degree of trust in the offender including his or her rank
       
12. This factor is relevant where the prisoner occupied a position of trust and committed the offence in the course of his or her employment. The degree of culpability is determined by the repository of the trust held, viz, the greater the degree of trust and the higher rank, the greater the degree of culpability. The repository of trust in cases like the one before this Court lies in contractual relationships. Schemes of money lending in the informal sector I think, are largely unregulated, insecure and vulnerable to manipulation and abuse. They depend entirely on personal trust and honesty of their clients.
    
13. In this case, you were not the victim’s regular customer. To gain his trust, you gave him a K30,000 cheque in purported future repayment of the principal amounts plus interests. When the cheque bounced, you disappeared from the scene. Your conduct was no doubt calculated to deceive the victim and to avoid detection. You breached the victim’s trust. You only came out of hiding after he detained your vehicle albeit, improperly. Your demeanor clearly exhibited a high degree of culpability.
    
    100. The period over which the fraud or thefts have been perpetrated
         
14. The consideration here is that a chain of dishonest acts spanning over a period implies a confirmed state of “guilty mind”. Conversely, the offender who obtained the goods, money or credit by deceit on a one day “spur of the moment” is unlikely to repeat the act.
    
15. The evidence against you did not show a trail of false pretenses with intent to defraud the same victim though; there are suggestions of others falling victims to your scam. This conviction may be relevant if charges pertaining to other victims are sustained, upon prosecution. For now, I give you the benefit of doubt.
    
    4. The impact of the offence on the public and public confidence
       
16. The maintenance of public interest, trust and confidence in the formal sector employment under public or private law is the basis for consideration here. I am not sure if money lending in the informal sector is regulated. There is no evidence the complainant’s activity is properly registered with the IPA as a business activity.
    
17. This factor may have no immediate bearing to this case. However, the wider concern is the social ills that flow from unregulated money buying schemes that have become the norm amongst the low to middle income wage-earners. Highly inflated interest rates on repayment of the principal amount, meant the borrower is barely surviving on his/her meager earnings and it becomes a vicious circle when he or she has to keep borrowing out of necessity. Likewise, lenders are often hard done by when repayments are delayed or unsecured borrowers disappeared with impunity. In extreme cases where the activity is deemed illegal, the lender may have some difficulty enforcing his right or interest in a civil suit.
    5. Motive: How money or property dishonestly taken was used
       
18. The principle here concerns the motive for committing the offence. There is nothing before the Court on this aspect. In a carefully prepared submission, diligent counsel would pay some attention to reasons explaining the offender’s conduct. For instance, where the defrauded money, goods, or credit was out of necessity to feed a desperately impoverished family or for some other worthy cause, this can be treated as a mitigating factor. If the offender smokes, drinks or gambles, that would point to fraudulent gains being put to wastage and other worthless causes: Wellington Belawa –v-The State (supra).
    
19. In this case, you spoke of borrowing to sustain your struggling company. You were not open and forthright. The CBC reports clearly showed you are a businessman of some means from three separate sources. You failed to disclose your business or your personal income. It is reasonable to suspect that you made a reckless decision to borrow from an unsecured source for your own selfish purpose and gain, hoping that you will get away with it.
    
    6. The effect upon the offender himself or herself
       
20. Under this head, loss of employment and shame are the usual affliction on those who steal. There is also lesser opportunity for future employment because a person convicted of fraud is often deemed dishonest and untrusting. These factors have personal punitive effect which may be taken into account.
    
21. In your case, it is relevant consideration that this conviction will dim your business reputation, integrity and self-esteem. It is also trite, that no law abiding person in the community approves of anyone who thrives on stealing from others. Law abiding citizens frown upon such disgraceful conduct. Consequently, the offender is indirectly punished when he or she experiences personal distress and shame.
    7. Restitution
       
22. You have offered to repay the amount stolen within one week. This is helpful when the Court deliberates the possibility of restitution as part of or in addition to a term of imprisonment that might be warranted on the facts. Restitution is a commonly accepted mitigating factor because it restores the victim to the position he or it was in before the commission of the offence. The restitution factor carries more weight if this is made early and before detection or arrest. In The State v Welford [1986] PNGLR, 531, Justice Wilson stated at p. 256 where full restitution was made:
    

"in my view in a case such as this, the fact that restitution has been made is a significant fact in mitigation. It goes a long way to addressing the harm and is indicative of genuine remorse and unqualified recognition of wrong doing."

23. In Belawa’s case (supra) at p. 507 Barnett J expressed a similar view on the effect of restitution in these terms:
    

"...depending on the circumstances of the restitution, (it) may demonstrate remorse and that the prisoner is unlikely to repeat the offence."

24. The circumstances which His Honour may have in mind included cases where the prisoner takes the first step to admit his offence and proceeds to make restitution prior to his arrest and committal and pleads guilty at the earliest possible opportunity. In my view, the use of early restitution is more effective when combined with such other factors like plea of guilty, good background, exceptional circumstances like very young or very old age or medical condition. Whether the whole or part of the sentence is suspended is another issue to be decided on other factors that have not been included in reducing the sentence from the maximum prescribed penalty.
    
25. The offer for restitution is a relevant consideration for suspension of sentence. If an alternative to imprisonment will meet the sentencing purpose and objective of retribution, restitution and rehabilitation, then provided that the court is satisfied the offender has the means and ability to repay the monies stolen and he or she required time and opportunity outside prison to make full restitution, the court has discretion to suspend part or the whole of the sentence to be served outside prison. This view has support in the Supreme Court case of Doreen Liprin v The State (2001) PNGLR 6, per Amet CJ:
    

“I believe it is time to consider seriously whether offences of misappropriation of amounts of this kind warrants custodial sentences. I do not believe so. I believe the Court should be seriously designing alternatives to imprisonment that will achieve the purposes of retribution, restitution and rehabilitation in alternative ways than imprisonment.”

26. Your offer of restitution has good basis. You initially offered to repay by installments but the victim was obstinate with his exorbitant demand for full settlement. He initially demanded K30,000 -a 100% interest on K15,000. His claim increased to K60,000 then K80,000 for purported default fees. The court will only order restitution of K15,000 being the amount charged on the indictment. The complainant has recourse in a civil suit for the balance of his claim.
    
27. You initially indicated repaying K15,000 through a third party which I considered most unsatisfactory. However, it is now clear the amount will be from advance payment of your security services to the third party. Importantly, the complainant is more interested in restitution than seeing you go to prison.
    

(B) OTHER RELEVANT FACTORS

1. Custody
   

28. You were remanded for sentence on 10September, 2015 and have been in remand for one month and 10 days to date. Pre-trial custody periods are usually deducted from the head sentence. I will take this into account on sentence.
    
    2. Assistance to the Police
       
29. The principle here is that co-operation with the police has saved time and expenses in investigating a difficult case or has led to the arrest of the others or the main perpetrator. It is also indicative of remorse. In your case, you shifted the blame to the complainant. This factor has no or little relevance.
    100. Plea of guilty
         
30. In essence, a discount on the basis of this factor should provide the incentive in itself to plead guilty. You are not entitled to any discount reserved for a guilty plea.
    4. Personal circumstances
       
31. Your background and personal circumstances are fully set out in the PSR and the MAR. The reports will be read into the records.
    
32. The relevant factors are that you are a married businessman with a fairly large family and this is your first offence. Your children are young and those attending school will be affected by your incarceration. But then you should have considered their future and wellbeing when you embarked on your evil enterprise.
    5. Remorse
       
33. This factor has little significance from your conduct following the offence.
    6. Matters of mitigation special to the prisoner
       
34. There is nothing to consider under this head.

(C) SENTENCING OPTION: ALTERNATIVES TO IMPRISONMENT

35. The sentence that I propose to impose should serve both personal and public deterrence aspects of sentencing. It should also warn others who might be like minded, they will expect the same treatment if convicted.
    
36. I have also sought guidance from sentencing cases some, counsel referred to in the course of submissions in mitigation. I find the case of The State v Mary Tengdui (2014) N5827 (David, J) a useful reference to comparable verdict on sentencing from a number of recent National Court cases. The common range is from one to four years with three years being the most common. In most cases the sentences are wholly suspended.
    
37. From all that I have stated, I am of the view that a term of imprisonment is warranted. I propose to impose term of 3 years imprisonment. I have also considered whether to suspend the whole or part of the term, conditional on you repaying the complainant, the whole or portion of the amount defrauded.
    
38. Alternatives to imprisonment may be considered where, inter alia;
    • (i) A pre-sentence custody period is considered sufficient to have driven home to the offender, the gravity of his conduct and the serious consequences of his anti-social behaviour on his individual freedoms and choices in prison.
    • (ii) If restitution, rehabilitation and reformation have real chance of accomplishment outside prison, the court may take the risk to subject the offender to appropriate measures designed to influence his or her future behaviour through community work orders, supervision, treatment or preventive confinement.
    • (iii) The offender is not a threat to society and exhibits the potential to redeem his past through restorative justice.
    • (iv) The offender is recommended a suitable candidate for probation orders by the Probation Officer.
      
39. In your case, the experiences you have gone through, the short period in custody together with the sentence that I am about to impose, should bring home to you at personal level, no advantage is gained by falsely pretending or willfully promising others to obtain goods, money or credits with intent to defraud them.
    
40. I have reached the conclusion that you may be usefully punished by alternative orders to imprisonment. This is because I do not consider you to be a threat to the society and that you should be given the opportunity to restitute the victim K15,000 as he is happy to see. Such punishment should be beneficial you, the community and the victim.
    
41. The complainant insisted on you paying K80,000 in full. There is no legal basis for the Court to order restitution of that amount. You are only charged with K15,000. That is the amount the Court has jurisdiction to order restitution of and you have through your lawyers undertaken to repay it within a week.
    
42. The sentence of the court is as follows:
    1. You are sentenced to 3 years imprisonment IHL.
       
    2. The sentence is wholly suspended conditional upon repayment of K15,000 to the complainant, Jackson Andiki in person within 21 days or by 10 November, 2015.
       
    3. You shall be released to serve your sentence on probation orders on the usual terms under the Probation Act for 3 years and in addition you;
       
       • (i) Shall within 48 hours of your release from prison, report to the Probation Officer.
       • (ii) Shall enter into your own recognizance to keep the peace and be of good behaviour and to comply with all probation conditions for a period of three years with surety in the sum of K1,000 to be called upon to pay in the event of the breach of the bond or the probation orders, in default 12 months imprisonment.
       • (iii) Shall perform unpaid community work at a work site to be nominated and supervised by the CBC Office for a total of 300 hours.
       • (iv) Shall not leave or transfer out of the Port Moresby or the National Capital District for the period of probation, namely three years.
         
    4. CBC Office shall file with the Deputy Registrar, National Court at Waigani, reports on the progress of your responses to the probation orders with the first report due on 10^th November 2015 and thereafter, every six month.
       
    5. In the event of a breach of the orders in paragraph 49 (2) above, the probationer shall be arrested and detained and imprisoned to serve the balance of his suspended sentence.

____________________________________________________________
Public Prosecutor: Lawyer for the State
Yansion Lawyers: Lawyer for the Accused