Fraud, Forgery and Identity
Offences
The new additions to the
Crimes Act 1900 NSW
Overview
• 11 new offence provisions
– 4 new offences relating to Fraud
– 3 new offences relating to Identity Information
– 4 new offences relating to Forgery – I will not be focusing on
these new offences. They very closely replicate the existing make/use false
instrument charges under the old s300 offences. Section 256 creates new offences
of possessing implements for the making of false instruments – a credit card
skimmer is a good example. Those new offences carry a three year term.
• Over fifty previous sections repealed
• New sections are broader and less specific Note that
the new definitions are technical and very specific
• Penalties have risen significantly
New Section 4B – Dishonesty
1.Dishonesty means dishonest according to
the standards of ordinary people and known
by the defendant to be dishonest according
to the standards of ordinary people.
2.In a prosecution for an offence, dishonesty
is a matter for the trier of fact.
The Dishonesty Test
• Test comes from R v Ghosh [1982] 3 WLR 110, at 118119
• This is the test in the Criminal Code (e.g. 130.3)and
parts of the Corporations Law (e.g. 1041G)
• It was criticised by the High Court in R v Peters [1998]
HCA 7 and R v Spies [2000] HCA 43
• They pointed out that the subjective limb of the test
requires an analysis of both what the defendant knew
and what the defendant thought about what they
knew I.e. Did they realise that the ordinary person
would consider what they were doing was dishonest?
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- Consider what this means – NOT ‘Is my act dishonest?’ BUT ‘Would the ordinary person
consider my act to be dishonest?’
This is what the HC said in Peters by Toohey and Gaudron at par.16
– ‘There are also practical difficulties involved in the Ghosh test. Those difficulties arise
because, in most cases where honesty is an issue, the real question is whether an act
was done with knowledge or belief of some specific thing or with some specific intent,
not whether it is properly characterised as dishonest.’
– Further at par.17 ‘…the test is likely to confuse rather than assist in deciding whether an
act was or was not done dishonestly.’
– McHugh described what he considered to be dishonest (par.84)
• ‘Intention to prejudice the rights or interests of another’
• ‘Making or taking advantage of representations which are known to be false’
• ‘Concealing facts that they had a duty to disclose’
• ‘Engaging in conduct that they had no right to engage in’
Practically, there is a need to identify the act which is said to be dishonest. I’ll return to how
we find the dishonest act later.
What evidence could the prosecution rely on to show that an individual knew that an
ordinary person would consider their actions to be dishonest? The answer is not easy.
–
A British Case study (www.honestylab.com) found that there is very little consistency in determining what people
consider to be dishonest.
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One would expect that this tougher definition ought to assist the accused. But it probably won’t.
The evidence the prosecution can rely upon is actually expanded by this definition. If a person has
been previously had their actions scrutinised or received punishment for previous actions, then
they may have become aware that their actions were dishonest.
– E.g. A paperboy gets paid for how many pamphlets he delivers. So he attends a high rise
apartment building and dumps hundreds of them in the foyer. His boss finds out and tells him
that isn’t allowed and he has to deliver each pamphlet to a mailbox.
– He does it again and gets caught.
– Whether his actions were dishonest according to the ordinary standards and knowingly so the
first time is unclear, but having been specifically told by his boss how he must behave, there is
little doubt that his actions the second time are dishonest, and that he must know that they
are dishonest because his boss has told him so.
• This is an example of him engaging in conduct which he had no right to engage in.
This example could be extrapolated to many employment situations, where a great number of
frauds occur. An individual’s personnel file will now be relevant. Any discipline they’ve previously
received will be relevant. Is the person in touch with community standards?
Similarly, in a Cth matter we used an individual’s previous failed directorships of companies to show
that he understood the effects of trading whilst insolvent on creditors. That charge was under
s184(2) of the Corporations Act.
The fact that an individual was otherwise a good or bad employee or businessman would be
irrelevant normally but can now be used to show that they have become aware of the higher
standards expected of them.
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The effect of this is more than just esoteric. Magistrates and jurors inevitably use a natural
synthesis to determine whether a person has acted dishonestly, and inevitably they’ll
misunderstand the test they must apply.
So as practitioners it will be important to only allow in evidence which is strictly relevant, and
not allow the trier of fact to make value judgements based on material which should only be
used to establish whether they were aware of the standards of ordinary people.
192C Obtaining property belonging to another
(1) For the purposes of this Part, a person obtains property
if:
(a) the person obtains ownership, possession or control of
the property for himself or herself or for another person,
or
(b) the person enables ownership, possession or control of
the property to be retained by himself or herself or by
another person, or
(c) the person induces a third person to do something that
results in the person or another person obtaining or
retaining ownership, possession or control of the
property.
Definition of Obtaining Property
• This definition is now used in the three major fraud offences
192E-G
• Very similar to the definition in the Commonwealth Criminal
Code – s134.1
• Generally replicates common law understanding of what
transfer of property is for other larcenies
• Subsections (2) and (4) codify the existing understanding that
there must be an intention to permanently deprive but that
intention is manifested if the person treats the property as if it
were their own
• Subsection (b) is broadly designed for situations which would
have previously attracted s178A.
• Subsection (c) covers innocent agencies like deceiving a real
estate agent into transferring money from a property sale to
the wrong person
192D Obtaining financial advantage or causing financial disadvantage
(1) In this Part, obtain a financial advantage
includes:
(a) obtain a financial advantage for oneself or
for another person, and
(b) induce a third person to do something that
results in oneself or another person
obtaining a financial advantage, and
(c) keep a financial advantage that one has,
whether the financial advantage is
permanent or temporary.
(2) In this Part, cause a financial disadvantage
means:
(a) cause a financial disadvantage to another
person, or
(b) induce a third person to do something that
results in another person suffering a
financial disadvantage,
whether the financial disadvantage is
permanent or temporary.
•This definition also comes from the Cth
Code
•Similar in effect to s192C – obtain
property
•Can obtain directly, induce another, or
simply retain property
•Subsection (2)(b) - Financial advantage
can be temporary – this reflects existing
law – deception which buys someone time
to repay a debt will count Matthews v
Fountain [1982] VR 1045
192E Fraud
(1) A person who, by any deception,
dishonestly:
(a) obtains property belonging to another,
or
(b) obtains any financial advantage or
causes any financial disadvantage,
is guilty of the offence of fraud.
Maximum penalty: Imprisonment for 10 years.
(2) A person’s obtaining of property belonging
to another may be dishonest even if the
person is willing to pay for the property.
(3) A person may be convicted of the offence of
fraud involving all or any part of a general
deficiency in money or other property even
though the deficiency is made up of any
number of particular sums of money or
items of other property that were obtained
over a period of time.
Apparently a very simple section.
Possible break up of the elements of the
new Fraud offence:
1. The accused commits an act of
deception; and by that act;
2. obtains property belonging to another,
or obtains a financial advantage or
causes financial disadvantage.
3. The obtaining of that property or
advantage or causing of that loss is
dishonest (as defined)
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The element of dishonesty may now be
separated, as it is in similar
Commonwealth Legislation (s184(2)
Corporations Act, s134.1 Criminal Code)
– although bear in mind the use of
physical/fault elements in the Cth Code.
It is useful to separate out the
dishonesty for analysis purposes given
its greater complexity now
Comparison with old sections
Section 178BA
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It always required a deception,
dishonesty and a causal link
between the obtaining and the
deceptive conduct. R v Ho (1989)
39 A Crim R 145
This coincides with s192E if the
first limb of the definition of
‘obtains property’ is used.
If they could be convicted under
s178BA before, then they probably
can be convicted under s192E. (but
see further discussion of
dishonesty below)
•Elements
1.The accused, by a deception
2.Dishonestly obtained for the
accused or another;
3.Money, valuable thing or financial
advantage
It doesn’t look very different. The
new definition of dishonesty is the big
difference.
Comparison with old sections
Section 178A
•This section had very particular and specific
requirements. Andrews v The Queen 126 CLR
198
•The section existed for situations in which
money was legally obtained and fraudulently
kept or spent.
•This kind of offending will now often be
caught as a case of dishonest obtaining of a
financial advantage or causing of a financial
disadvantage.
•The old offence required specific
particularisation of the terms of receipt. This
will not be lost entirely. In order to establish
deception, it may well be necessary to
establish that terms existed, and were
deliberately ignored. (DPP v Ray [1974] AC
370 and R v Hamilton (1991) 92 Cr App R 54)
• Elements
1. The accused collected or received the
money or valuable security
2. Upon terms that he or she should
deliver, account for, or pay, the whole or
some part of such money.
3. The accused fraudulently
misappropriated the money or failed to
account for it in violation of the terms
upon which he collected or received it.
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This looks completely different
Misappropriation cases will need to rely
on s192E(1)(b), being obtaining financial
advantage or causing financial
disadvantage
Draft Charge
The[ accused] on [date] at [place] in the State of New South Wales, by a deception, namely
[describe deception], dishonestly obtained property belonging to another/obtained a
financial advantage /caused a financial disadvantage, namely [describe the property or
advantage obtained/retained]
Initial
dishonest
conduct
Obtaining
of
property
Old s178BA
This is a s192E using the first
limb of the ‘obtain property’.
Subsequent
dishonest
conduct
Old s178A
This is a s192E using the second
limb of the obtain property – ‘retains
property’ or keeping a financial advantage
Care should be taken with the use of ongoing offences and between dates. They should not overlap
the period of the obtaining because different definitions of ‘obtain property’ would be used at
different times, which cannot be acceptable.
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The Prosecution will need allege specifically whether the property was obtained or
retained as found in the definition of ‘obtaining property’.
This distinction is important because there needs to be a causal link between the
obtaining and the deception and dishonesty. If the first limb is used and property
has already passed from the victim to the accused, and then there is subsequent
dishonest conduct which the prosecution is seeking to rely upon, how can it be
causally connected to the obtaining?
Also, the risk of a scattergun approach to dishonest conduct is that Magistrates
and juries may be overwhelmed by suspicious behaviour and make their decision
without genuinely considering the relevant dishonest conduct.
Cases like this are very often grey – and the accused has often displayed sharp
business practices to find themselves accused of a crime.
– E.g. Telco salesperson is paid on commission for every phone line rental he signs up. But
he only gets a commission on phone lines which are activated (because the telco makes
their money based on usage, so they only want to pay commissions on active lines, not
dormant ones). So every time he signs up a customer he tells them to activate the line
even if they aren’t going to use it, so that his commission ticks over. Is it dishonest?
Example One
1.
2.
3.
4.
5.
Investment Advisor offers an investment in a specific property development in to a client.
Client invests funds with Advisor, transferring the money to the advisor’s account.
A few days later the advisor discovers he cannot invest the client’s funds into this development because it has
fallen through due to no fault of his own.
Advisor has a new nearly identical opportunity and invests funds into different property development without
telling the client.
The development goes bust and client loses their money.
Need to identify the conduct which is alleged to be criminal.
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The advisor obtained property at step 2, under the definition in subsection 192C(1)(a)
– But he was not deceptive or dishonest at this stage
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The advisor caused a financial disadvantage at step 4, which could be charged under s192E(1)(b)
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This must be the act which is alleged to be deceptive and dishonest
– He could be said to have made an ongoing representation as to where the funds would be deposited,
and it would be deceptive not to tell the client of the change (DPP v Ray [1974] AC 370). Query whether
the client would have agreed to the alternative investment anyway, so the deception was not causative
of the financial disadvantage
– The terms upon which the property was exchanged remain relevant and will need to be clearly defined –
When the property is retained and dishonesty is alleged, it is inevitable that the exact terms upon which
the property is retained will remain relevant just as it was under s178BA.
– Was it dishonest?
• Old test? Probably – see McHugh in Peters – Engaging in conduct he had no right to engage in.
• But maybe not under the new test – Advisor must have known he was being dishonest according to
ordinary standards. Need to get inside the mind of the advisor more so than before. He knew the
deals were near identical and risks were the same. He knew the client wasn’t very picky with his
investment choices. He couldn’t have foreseen the loss.
Example Two
1.
2.
3.
4.
Investment Advisor offers secured investments in a specific International Bank with higher than normal
returns. There is evidence that the advisor never intended to invest the money this way, for instance
because the facility being offered was a fabrication.
Clients pay money to advisor for this specific investment
Advisor invests funds in other high risk ventures and uses capital to pay interest payments, along with
sending false account reports to clients
Eventually the money runs out
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There are two sets of dishonest behaviour disclosed, at step 1 and 3. Step 1 would have amounted to a
s178BA, step 3 would have amounted to a 178A. This individual is in trouble regardless, but if the
evidence at steps 1 or 3 were weaker the case could easily have turned on the whether the crown had
charged under the correct subsection.
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Under s192E there are a multitude of ways the Crown could charge this conduct, and each different way
will affect what is alleged to be deceptive and dishonest, and what evidence is relevant.
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If the charge relates to step 1, the obtaining of property at the start, then query the evidentiary relevance
of step 3. The money has exchanged hands and the offence is complete. The evidence of continued
dishonesty can only be used to show the advisor’s dishonest intent from the outset. In this way the
expanded definition of dishonesty has the potential to make more damaging evidence relevant.
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If the charge is one of obtaining a financial advantage (as opposed to obtain property), the prosecution
can rely on the extended definition under s192D(1). The Crown would need to specify whether they were
relying on s192D(1)(a) relating to step 1, of the example above, s192D(1)(c), relating to step 3 of the
example above, or some attempt to argue that it was an ongoing offence in which all of the dishonest
conduct can form part of the specific deceptive and dishonest acts establishing the fraud.
How will it work?
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The single offence of s192E has perhaps a dozen different formulations applying to
different criminal behaviours.
Whilst it is a broad provision like s178A, it would be expected that the charge be
properly drafted, carefully particularised and explained to a jury (R v McQueeney (1989)
39 A Crim R 56)
In complex business cases, it will be essential to identify exactly what conduct the
prosecution alleges was deceptive and what act was dishonest and not allow into
evidence which shows that the accused was dishonest at an unrelated time.
Will the prosecution be able to call on other disgruntled clients to suggest that the
accused knew he was being dishonest. How better to become aware that you’re being
dishonest than to have people tell you?
Then it becomes almost credibility evidence. Jurors and Magistrates will be influenced
by evidence of poor business practice – www.honestylab.com
Expect a moveable feast during hearings and trials as the charge evolves with the
changing evidence.
Take note also that a conviction for fraud can be an alternative to any larceny and vice versa. Take
the Telco salesperson above. If he was paid directly by customers and took his commissions from
them, an alternative embezzlement by clerk charge could be leveled against him, even if he wasn’t
charged with it, a Magistrate could find it. In practice the Prosecutor would need to allege this
from the outset – R v Cameron [1983] 2 NSWLR 66 at 71.
Other Fraud Offences
Section 192 F – Intention to defraud by destroying or concealing accounting records
• This will be difficult to prove and rarely used. The old s175 offence carried ten years but only
applied to directors/officers (only three recorded cases between 2001-2008). This offence
carries five years.
• Corporations Act has similar but less serious provisions under s1307 and they are rarely used
also.
Section 192G – Intention to defraud by false or misleading statement
• This offence is not markedly different to the old s178BB taking into account the modernised
definitions addressed above.
Section 192H – Intention to deceive members or creditors by false or misleading statement of
officer or organisation
• Not dissimilar to the old section 176 – which only has three recorded cases between 2001
and 2008. Can’t see it being regularly used.
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The comments in relation to s192E and the interaction of the broader definitions will apply to
each of these sections
Identity Offences
identification information means information relating
to a person (whether living or dead, real or
fictitious, or an individual or body corporate) that
is capable of being used (whether alone or in
conjunction with other information) to identify
or
purportedly identify the person, and includes the
following:
(a) a name or address,
(b) a date or place of birth, marital status, relative’s
identity or similar information,
(c) a driver licence or driver licence number,
(d) a passport or passport number,
(e) biometric data,
(f) a voice print,
(g) a credit or debit card, its number or data stored or
encrypted on it,
(h) a financial account number, user name or
password,
(i) a digital signature,
(j) a series of numbers or letters (or both) intended
for use as a means of personal identification,
(k) an ABN. entification Information
•
Identification Information is defined
extremely broadly.
Section 192J – Dealing with Identification Information
Prosecution must prove intention to commit an indictable
offence
• It will be difficult for prosecution to establish an intention to commit an
indictable offence unless there is evidence of offences having already
been committed.
• Anticipate it being charged in conjunction with other offences such as
fraud, money laundering and false instruments.
• Also will have application for professional information thieves who sell the
information – but it will be difficult to show that they knew it would be
used for the commission of an indictable offence. Advertisers sell
subscriber lists legitimately.
• Heavy overlap between s192J and the new offence of Using false
document (s254) if the document is identification information
• You can commit this offence even if you deal in your own identification
information (like creating multiple identities)
Sections 192K & L – Possession of ID information or equipment
• Under s192K mere possession with intent is an offence. Similar difficulties
with proving intention to commit the indictable offence when there are so
many legitimate uses or only minor offences they may be intending to
commit.
• Query whether the mere possession of large quantities of identification
information without an obvious excuse will be sufficient to persuade
Magistrates and juries that the person must have had the necessary
intent.
• Useful to be aware that there are many legitimate uses for ID information
- advertising/marketing/identifying customers in genuine commercial
transactions.
• Also, many summary offences like fake ID’s for buying alcohol or getting a
driver’s licence, see schedule at the back – sorry no schedule – but examples
include ss.22 & 32 Road Transport Driver Licensing Act (20 pu’s) – false statement to get
license and improper reproduction of license photo.
Victim’s Certificates
• Section 309A Criminal Procedure Act
– Can be made upon application by the victim or on court’s own
initiative (s309A(7))
– Test is only on balance of probabilities that an identity offence has
been committed against the new part 4AB
– Most likely will be requested by Police/prosecutors on behalf of
victims when charges are laid
– Practitioners may find people seeking private applications
– It is already in use in Queensland, Victoria and South Australia.