Jersey Unreported Judgments

 2002/40

ROYAL COURT

(Samedi Division)

 

12^th February 2002

 

 

The Attorney General

-v-

Neil Jeffrey Barnes

 

Sentencing by the Superior Number of the Royal Court, to which the Defendant was remanded by the Inferior Number on 14th December, 2001, following guilty pleas to:

 

2 counts of:	Obtaining money by false pretences (counts 1, 2);
1 count of:	Attempting to obtain money by false pretences (count 3);
2 counts of:	Larceny (counts 4, 5);
7 counts of:	Fraudulent conversion (counts 6, 7, 8, 9, 10, 11, 13).

 

[The defendant pleaded not guilty to count 12 (malicious damage) on 14^th December, 2001, which plea was accepted by the Crown].

 

Age:     31.

 

Details of Offence:

Barnes was Managing Director and beneficial owner of one half of issued share capital of Offshore Nautical Supplies Limited (ONS) a Jersey registered company dealing with the sale of luxury power boats. During the two year period that Barnes was Managing Director he issued five cheques totalling £12,346.21 (Count 6 to 10 inclusive) drawn on ONS's bank account.  The cheques were paid into Barnes personal account.  Fictitious entries on the cheque stubs as to the payee of those cheques designed to disguise his dishonesty.  Barnes also persuaded a customer of ONS to write a cheque in the sum of £40,000 made payable to Barnes on the pretext that the company bank accounts had not been set up (Count 11).  In addition Barnes obtained a cheque from a customer of ONS and inserted his own name as the payee of the cheque and credited the cheque to his own personal bank account (Count 4 - £20,000).  ONS traded at a loss (estimated £600,000 loss over two year period) and in February and March 2000 Barnes sought to cover up the extent of the companies financial difficulties by injecting money into the company accounts.  He did this by obtaining personal loans from two finance companies totalling £240,000 (Counts 1 and 2).  In support of the applications for these personal loans he forged the signature of the other director of the company, made false statements with regard to his salary, and falsely stated that he had received £20,000 of director's fees in 1999 and was due to receive in excess of £50,000 director's fees in the year 2000 (when in fact he received no director's fees in 1999 and was not expected to receive any fees in the year 2000).  Barnes also attempted by means of same false representations (Count 3) to obtain a personal loan in the sum of £151,000 from a third finance company.   That company refused to grant the application.  Barnes criminal conduct came to light very shortly after he had obtained the first of the personal loans from one of the finance companies.  The monies from the finance companies were paid to ONS (as the owner of the boats concerned).  None of this money was extracted by Barnes.  ONS paid off one of the companies (In the sum of £110,000).  The second finance company have instituted civil proceedings in the Royal Court against ONS for the recovery of the sum of £130,000.    The Crown did not treat the fraudulent obtaining of money from the two finance companies and the attempt to do so from a third, as a breach of trust in relation to ONS.  The breach of trust as regards ONS involved the sum of approximately £70,000.  Barnes used £110,000 (representing £70,000 extracted from the company and £40,000 of a client's money) to fund an extravagant life style.

 

Barrick Factors

Degree of Trust

Barnes had a high degree of trust as a Managing Director responsible for the day to day running of the company.

Period of offending

Approximately two years.

Use to which money was put

£110,000 used to fund extravagant lifestyle.

Effect of victim

Financial losses suffered by ONS.  The Neil family who are beneficial owners of JCN who part own ONS, concerned that their reputation may have been tarnished by Barnes' activities.

Impact of offences on public and public confidence

The only member of the public to suffer losses was Mr Jakobsson (£40,000 count 11).  In relation to the impact on the public confidence Barnes was not a sector employee.

Effect on fellow employees

Barnes put pressure on two employees of ONS to lie to Simon Neil regarding the financial status of the company.

Effect on Offender

Lost job.

Offenders own history

Previous good character and offence out of character.

Crown takes a starting point of 6½ years.

 

Details of Mitigation:

Plea of guilty.  Co-operated with police.  The misappropriated cash (Counts 5 and 13) would have been difficult to prove and so plea was very valuable in relation to these counts (but in prosecution's view plea of guilty largely inevitable in relation to the remaining counts on the indictment because of the extensive "paper trail").  Positive good character.  Remorse.  No age related mitigation.

Mitigation (amplified to defence counsel)

The defence counsel reiterated mitigation set out above but submitted that starting point taken by the Crown of 6½ years was too high and/or alternatively that the credit given for mitigation was insufficient.  Emphasised the fact that the breach of trust element of offences was amounted approximately £110,000 and that Barnes took the money in expectation that the company would be profitable and that he, as beneficial owner of half of the company, would be entitled to profits in due course.   Out of depth in running the company and the company finances.  He accepted full responsibility.   Did not obtain any personal benefit from the £240,000 obtained from the finance companies and the Court should not speculate what use money would have been put had Barnes not been discovered.  No loss to third finance company in respect of the attempted offence (Count 3).  Effect on Barnes was greater than that stated by prosecution in that he lost his liberty, prospect of marriage, his good name, and reputation and career in the boat building industry and was ruined financially.  Defence sought to obtain a further reduction on account of delay between the date offences first coming to light in May 2000 and the date that Barnes was arrested on warrant in England in September 2001.  Low risk of re-offending.  Remorse expressed at early stage.  Brought shame on himself and his family.  Apologies again to the Court.  Spent 6 month's in custody (equivalent of 9 month's sentence). Used, and is using,  time spent in custody profitably.  Attended Alpha course and became librarian and has computerised and categorised prison library.  Defence counsel suggested starting point of 5½ years, and allowing for all mitigation, a final sentence of 3 years.

 

Previous Convictions:

One speeding conviction but treated as being a first offender and of positive good character.

 

Conclusions:

4 ½  years' imprisonment on each count, concurrent (starting point 6 years).

 

Sentence and Observations of Court:

3 ½ years' imprisonment on each count, concurrent. (starting point: 6 ½ years).

Court highlighted the difficulty of setting a starting point generally and particularly in breach of trust cases which vary so much on their facts.  Court stated that starting point adopted by the Crown of 6½ years was an appropriate starting point but attributed greater weight to mitigating factors ( in particular  plea of guilty, cooperation, and good character).

 

P. Matthews, Esq., Crown Advocate.

Advocate J.C .Gollop for the Defendant.

 

 

 

JUDGMENT

 

THE DEPUTY BAILIFF:

1.        Barnes was the managing director of Offshore Nautical Sales Limited from April, 1998 to April, 2000.  The company was engaged in the business of selling yachts.  During that time the defendant stole or fraudulently converted from the company some £70,000.  In addition, he fraudulently converted £40,000 which belonged to a customer, Mr Jakobsson, being the sale proceeds of a boat.  In other words, he received for himself a total of some £110,000. 

2.        Furthermore, he obtained loans of £240,000 from two finance companies on the basis of false statements, which sums were paid to the company.  He also attempted to obtain a further £151,733 from another finance company.

3.        The Court has frequently said that when considering cases of breach of trust, the factors listed in the English case of R-v-Barrick (1985) 7 Cr.App.R. 142 are matters which this Court must also consider.  Turning to the most relevant of those for this particular case, we would say that this is a case where there was a high degree of trust; full responsibility for the day to day running of this company was vested in the defendant.

4.        The offending took place over a two year period and, as we say, resulted in the defendant obtaining £110,000 for himself, together with loans of £240,000 from hire purchase companies.  In other words there were victims in the aggregate for a sum of £350,000.  The monies were used to fund a lavish lifestyle so that he could keep up with the clients with whom he was coming into contact.  This was not a case of money being used for essentials, it was used for expensive holidays, meals, presents to his girlfriend and so forth.

5.        We have also considered the effect on the victim as outlined by the Crown, not only the financial loss to the company, but also the possible loss to the reputation of those involved.

6.        Hitherto, in cases such as this, the Court has not articulated or fixed upon a starting point.  That is not done in England or other jurisdictions with which we are familiar.  This Court remains of the view expressed in Mallet (2000) JLR 155 that the concept of starting points is not helpful in cases which can be as varied in their circumstances as fraud cases.  As both counsel accepted in this case one cannot find a precedent for a starting point in any jurisdiction.  The court simply does not have a feel for starting points.  One finds oneself having to look for comparable cases where a finishing point has been arrived at in order to try and work out what the starting point might have been.  The real issue, in our judgment, both for the defendant and the public is the finishing point.  In other words what is the sentence which is right for this offence, taking into account this defendant's circumstances including of course his guilty plea if that is the case.  It is, accordingly, that upon which we have concentrated most.  Nevertheless in view of the comments of the Court of Appeal we must do our best to fix upon a starting point.

7.        Bearing in mind that this was a breach of trust case in relation to £110,000 and also included the fraudulent obtaining of a further £240,000 and an attempt to obtain a further £151,000 we agree that the correct starting point is that suggested by the Crown, namely 6½ years.  However, we do not think that the Crown has allowed sufficient for mitigation.  First, the Crown has asserted that a full discount should not be given for the guilty plea in this case because, it is said, of the strength of the documentary and other evidence against the defendant.  However, we think that in cases of complexity such as this, a guilty plea is normally a thing of value and we think that it was of value in this case.  Furthermore the defendant showed considerable co-operation once he was interviewed.  We think that that should all be reflected in a full discount for a guilty plea and co-operation.

8.        Secondly, Mr Gollop has referred to his client's previous good character; the fact that he is extremely remorseful as was indicated in his interview with the police; and he has also referred to various references which we have read.  It is clear that the defendant has brought shame upon himself and upon those close to him.  That is, of course, almost invariably the case in circumstances such as this but it nevertheless remains a point available in mitigation.

9.        Mr Gollop has also referred to the question of delay.  It took some seventeen months from the complaint until the police could obtain a warrant to arrest the defendant in the United Kingdom where he had gone.  We have to say that such delay is often the case in financial frauds and it usually does not lie with a defendant who has committed such a fraud then to complain of the fact that it is rather difficult to investigate.  We are satisfied that the delay in this case was not unreasonable and therefore does not give rise to any additional reduction in sentence.

10.      Nevertheless, making allowance for all the matters which we have described, particularly the guilty plea, the co-operation and his previous good character, we think that a deduction greater than that given by the Crown is appropriate.  Stand up, please, Barnes.  The sentence of the Court is one of 3½ years' imprisonment, concurrent, on each count.

11.      We will now, with the consent of both counsel, transpose ourselves into the Inferior Number sitting in a civil capacity consisting of Jurat Rumfitt and Jurat Potter and we make a disqualification order under Article 78 of the Companies (Jersey) Law, 1991 disqualifying the defendant from acting as a director for a period of four years.

 

Authorities

 Barrick (1985) 7 Cr. App. R. 142.

Clark (1988) Cr. App. R. 137.

Mallet (2000) JLR 155.