Jersey Unreported Judgments

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You are here: BAILII >> Databases >> Jersey Unreported Judgments >> 1998/94 - AG v Young, Cantrade Private Bank and Williams [1998] UR 94 (8 May 1998)
URL: http://www.bailii.org/je/cases/UR/1998/94.html
Cite as: [1998] UR 94

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Royal Court

(Samedi Division)

8 May 1998

Before Sir Godfray Le Quesne, QC, Commissioner,

and Jurats Gruchy, Herbert, Rumfitt, Potter, Tibbo, and Bullen.

 

AG

-v-

Robert John Young;

Cantrade Private Bank Switzerland (CI) Ltd., and

Alfred George Williams

 

Sentencing by the Superior Number of the Royal Court, to which the first and third accused were remanded on 26 March 1998, by the Inferior Number, following their conviction on not guilty pleas, and to which the second accused was remanded on 14 January 1998, on guilty pleas to the following charges:

ROBERT JOHN YOUNG

4 counts ofinducement to take part in arrangements with respect to the management of property by statements known to be misleading, false or deceptive, contrary to Article 12(c) of the Investors (Prevention of Fraud)(Jersey) Law, 1967: counts 1A, 2C, 3A, 5A., on each of which counts concurrent sentences of 4½ years imprisonment were passed.

CANTRADE PRIVATE BANK SWITZERLAND (CI) LTD

4 counts of inducement to take part in arrangements with respect to the management of property by the reckless making of misleading, false, or deceptive statements, contrary to Article 12(c) of the Investors (Prevention of Fraud)(Jersey) Law, 1967: counts 1B, 2B, 3B, 4B., on each of which counts a fine of £750,000, making a total of £3,000,000, with £300,000 costs was imposed.

ALFRED GEORGE WILLIAMS

4 counts of inducement to take part in arrangements with respect to the management of property by statements known to be misleading, false or deceptive, contrary to Article 12(c) of the Investors (Prevention of Fraud)(Jersey) Law, 1967: counts 1A, 2A, 3A, 5A, on each of which counts concurrent sentences of 1½ years imprisonment were passed.

C.E. Whelan Esq., Crown Advocate;

Advocate AR Binnington and Advocate D Wilson for Cantrade Private Bank Switzerland (CI) Ltd.

Advocate DF Le Quesne for RJ Young

Advocate S Young for AG Williams

JUDGMENT

THE COMMISSIONER: These defendants have to be sentenced for making misleading statements which induced people to invest money or offer to invest it. The two individual defendants made those misleading statements knowing them to be misleading; the bank made them recklessly but not dishonestly.

The court regards these as serious offences. One, the making of misleading statements knowing them to be misleading, is obviously more serious than the other but both of them are serious. Jersey is now replete with corporations exhorting people to entrust them with money for investment. To persuade people by untruths to part with money in this way is, in the view of the court, highly anti-social behaviour. It may cause much hardship to individuals. It is obviously inconsistent with commercial honesty and it must prejudice mutual confidence between people, which is important for a well-ordered society.

We wish to make it absolutely clear that we are sentencing these defendants for the offences of which they have been convicted and only for those offences. That is to say we are sentencing them for the offences of by false statements inducing Mr Cerny to allow Dr Young to trade his funds outside the TTS system; inducing Mr Lee likewise; inducing Mr Bradley to offer to accept new conditions of business put forward by Troy; inducing Colonel Wallace likewise and inducing Mr Gudgeon to allow Dr Young to trade his funds outside the TTS system.

I emphasise this because we have heard much of events which took place before these offences were committed. It has become clear that some investors lost large sums of money before these offences had been committed. There has been no suggestion in this trial that these defendants were criminally responsible for those earlier losses, there is no charge before us arising out of them and we have excluded them entirely from our attention in deciding upon sentence. Some of those earlier matters have been relevant for other purposes, but we have not allowed them to have any influence upon the sentences which we pass.

I come to the offences of the separate defendants. First, the offences of Dr Young. There are some features of his offences which emphasise their seriousness. The false statements which he made include the false figures which appeared in the quarterly statements sent by Mayo to each investor, figures which were themselves dependent upon the monthly figures supplied by Dr Young with full knowledge of the use to which Mayo would put them. The statements usually, though not invariably, informed the investors that the value of their investments was increasing when in fact it was diminishing. In this way, therefore, Dr Young was making repeated false statements on a matter of obvious importance and influence to the investors over a period of years.

There is also a consideration of a different kind. Dr Young was attracted by the facilities offered by Jersey for the conduct of a business such as he was carrying on. He was allowed to come and live in Jersey and take advantage of the facilities and opportunities which Jersey offers. These facilities and opportunities he abused by the conduct of which he has been convicted here, conduct which could only bring discredit and possibly even prejudice upon this Island as a financial centre and upon the commercial community here.

On the other hand, attention has also to be paid to certain features of Dr Youngs offences which may tend to reduce their seriousness. As regards Mr Cerny and Mr Lee, who were persuaded to allow Dr Young to trade their money outside the TTS system, the new system which he was proposing to introduce was less dangerous to investors than the old. The accounts in the bank were to be held in the investors own names and the investors would, therefore, receive regular and direct statements from the bank of what their balances were. As far as Mr Cerny and Mr Lee were concerned, in the few months for which these new arrangements operated, they operated not to Cernys and Lee’s loss but to their profit.

Mr Bradley and Mr Wallace were induced only to make an offer, that is to take a provisional step from which they could draw back and did draw back.

There is the further consideration that, by contrast with some cases in which false statements have been broadcast world-wide in the hope of attracting investment, the statements made by Dr Young were made to a relatively small number of people.

As regards Mr Williams, the seriousness of his offence is emphasised by the fact that he, too, uttered deliberate and repeated falsehoods on a matter which was likely to be, and in fact was, of great influence upon potential investors. We are unable to accept the suggestion which has been made to us that Mr Williams did not know or realise or understand what he was saying when he said it.

On the other hand, Mr Williams case, too, has certain features which operate in the opposite direction. There are those which I have already mentioned in the case of Dr Young and, in Mr Williams case, there is also the consideration that there is no evidence that he derived any personal gain at all from what he did.

In general, Mr Williams falsehoods in our view, serious though they were, were secondary to Dr Youngs. It was Dr Young who was the protagonist in the deception of the investors.

I come now to matters of mitigation. In Dr Youngs case we have been able to discern only one; that is that this is his first offence. Nothing is recorded against him. The same is true of Mr Williams. This is his first offence. Nothing is recorded against him.

It is also to be remembered in the case of Mr Williams that, at the time when he was asked first by Dr Young to provide his certificates, he was in the midst of a period of great strain, both personal and professional. This cannot excuse the false certificates which he gave, but it may help to explain the extraordinary haste with which he gave them when first asked and, thereafter, in consequence, was in great difficulty when he was asked to repeat them.

There is also the consideration that we have been informed that the pendency of these charges has had, and continues to have, a very serious effect on Mr Williams health.

There is one other consideration, as I come to the question of what is the proper sentence. The Law provides that the maximum penalty for an offence under this Article is 7 years imprisonment. It is, therefore, necessary, when considering any case, to compare that case with the worst possible offence under the article and to see how any sentence which might be suggested for the offence before the court compares with the maximum which the Law permits.

The difference between the maximum which the Law permits and the sentence for which the Crown has moved in Dr Youngs case is 1 year. In the Courts view, 1 year is inadequate to reflect the distinction between Dr Youngs offences and the worst offences which might be committed under Article 12.

There must, therefore, be some reduction of the conclusions. Mr Le Quesne urged upon us certain earlier cases which he said indicated the proper approach to a sentence. A number of them were cases of breach of trust. We do not find any assistance in those cases. Offences of breach of trust are not the same as offences under Article 12, and the considerations which relate to offences of breach of trust are not necessarily applicable to offences under Article 12.

There was only one Jersey case under this Law to which Mr. Le Quesne was able to refer us. That was the case of AG -v- Kirch & Lapidus (1987-88) JLR N-7; (5 May 1987) Jersey Unreported, which, because of the difference between its circumstances and the circumstances of this case, does not offer any useful help.

There was also the English case of R -v- Markus [1976] AC 35, upon which Mr Le Quesne placed great emphasis. It is not difficult to see why he did so because that was a case of what the English Court of Appeal described as "a vast fraud". The sentence which had been passed at the trial upon the appellant was 7 years, the statutory maximum, and the court reduced it from 7 years to 5. Mr Le Quesne submitted that if 5 years was an appropriate sentence for participation in "a vast fraud", 4½ years could not be appropriate in the present case. We have considered the case of Markus with much care and have decided that when its features are closely examined it does not provide guidance to be followed in the present case.

I say that, in particular, for two reasons. First, one consideration was present there which has no counterpart here. The Court of Appeal said at p50:

The second reason is this: That the court reduced the sentence from 7 years to 5, but did it, they said, and again I quote their words:

In those circumstances, we find that R -v- Markus is not a case from which general guidance can be extracted for use in other cases.

Taking all these matters into consideration, the decision of the Jurats is that the sentence on Dr Young must be imprisonment for 4½ years.

I now come to Mr Williams. Bearing in mind all the matters to which I have referred, the Jurats have come to the decision that the conclusions must be reduced in his case, too. The sentence upon Mr Williams will be imprisonment for 18 months.

Finally, I come to the case of the bank. This raises considerations which did not occur at all in the cases of the individual defendants. The bank admitted recklessly making, through Mr Stoneman, misleading statements. These were statements of a character which was obviously important because they were very reassuring to potential investors.

Banks occupy a special and important position in modern society. They are regarded by people as safe places for custody, either of money or of valuables, and reliable and cautious providers of advice. This bank, instead of fulfilling that function, made recklessly misleading statements by which people were induced to invest. This conduct would be reprehensible in anyone. It is especially reprehensible in a bank.

This bank is a subsidiary of the Union Bank of Switzerland, a very large bank, very well-known and, hitherto at least, of good reputation. The name of this bank, in those circumstances, was specially valuable to the promoters of the Troy business.

The bank was given permission to carry on business in Jersey. It had to obtain permission before it could start business legally. It might have been thought that after that the bank would have displayed special vigilance to avoid any infraction of Jersey’s law. In this case it did not. It is deplorable that the bank should have behaved in the way which it has, by its own plea, admitted.

In deciding upon the appropriate sentence, we have to bear in mind that the bank’s offence has been the reckless and not dishonest making of misleading statements. It is, in that respect, to be distinguished from the offences of the other defendants. We also bear in mind that the bank were not the promoters or the operators of the scheme in the course of which these false statements were made; they were bankers to the operators or promoters. Finally, we bear in mind that, now that the scheme has collapsed and investors are left with serious losses, the bank has made offers of compensation and continues to make them to any investors who are prepared to take advantage of them. We were told that, as a result, the bank has already paid compensation, for which it may or may not be legally liable, of some millions of dollars.

Bearing all that in mind, the Jurats have come to the conclusion that the conclusions of the Crown in the case of the bank are right. The bank will be fined £750,000 on each of the four offences to which it has pleaded guilty. It must pay £300,000 towards the costs of the prosecution.

Finally, we shall draw this conviction formally to the notice of the Finance and Economics Committee of the States so that they may give to it such attention as they think right in carrying out their duties under the Banking Business (Jersey) Law, 1991.

Authorities

R -v- Page & Ors. (2 May 1996) Unreported Judgment of the Court of Appeal of England (Criminal Division)

Saunders & Ors. [1996] 1 Cr.App.R 463

R -v- Markus [1976] AC 35

Barrick (1985) 7 Cr.App.R(S) 142

Whelan: Aspects of Sentencing in the Superior Courts of Jersey: pp76-81

Ibid: Noter-Up, May 1995-1996: pp. 24-25

AG -v- Stilwell (19 January 1998) Jersey Unreported

Dimsey (1981) 3 Cr.App.R(S) 32

Lawrence (1983) 5 Cr.App.R 220

Stubbs (1988) 10 Cr.App.R(S) 97

Clark [1996] 2 Cr.App.R(S) 351

Fairbairn (1980) 2 Cr.App.R(S) 315

Cleminson (1985) 7 Cr.App.R(S) 128

Costs in Criminal Cases (Jersey) Law, 1961: Article 2

R -v- Associated Octel Ltd [1997] 1 Cr.App.R(S) 435

R -v- Port of Ramsgate & Ors. (28 February 1997) Unreported Judgment of the Central Criminal Court of England

AG -v- Kirch & Lapidus (1987-88) JLR N-7; (5 May 1987) Jersey Unreported