Jersey Unreported Judgments

2002/199

ROYAL COURT

(Samedi Division)

 

18^th October, 2002.

 

 

The Attorney General

-v-

Timothy John Nelson

 

 

6 counts of:	Fraud (count 1, 2, 3, 4, 5, 6);
1 count of:	Fraudulent Conversion (count 7);
4 counts of:	False accounting (8, 9, 10, 11).

 

 

Age:     39

 

Plea:    Guilty pleas to counts 1-7; conviction at criminal assize on counts 8-11.

 

Details of Offence:

 Shareholder and director of insurance broking company deliberately overcharged clients for insurance and used the surplus to settle the affairs of other, unrelated clients. (Counts 1 - 7; value some £18,000). Additionally falsified accounts to enable him to pay commissions to third parties. (Counts 8 - 11; created and disguised a deficit of some £300,000, which the company eventually had to find; was rewarded in bonus and dividend on the strength of apparently successful performance.  Offences spanned an 8 year period).

 

Details of Mitigation:

 No previous convictions; guilty plea on the lesser counts; young family; defence submitted that this was an exceptional case in that not motivated by greed and not premeditated.  Caught between demanding employer and demanding professional clients; misguidedly seeking to please everyone; psychological report showed him to have a personality which markedly sought to avoid confrontation and to be compliant.

 

Previous Convictions:

None.

 

Conclusions:

 

 

Count 1:	18 months' imprisonment.
Count 2:	18 months' imprisonment, concurrent.
Count 3:	18 months' imprisonment, concurrent.
Count 4:	18 months' imprisonment, concurrent.
Count 5:	18 months' imprisonment, concurrent.
Count 6:	18 months' imprisonment, concurrent.
Count 7:	18 months' imprisonment, concurrent.
Count 8:	4 years' imprisonment, concurrent.
Count 9:	4 years' imprisonment, concurrent.
Count 10:	4 years' imprisonment, concurrent.
Count 11:	4 years' imprisonment, concurrent.
	5 years' Disqualification Order as a Company Director under Article 78 of the Companies (Jersey) Law 1991.

 

 

Sentence and Observations of Court:

 

Counts 1 - 7:	Conclusions granted.
Counts 8 - 11:	3½ years' imprisonment on each count, all concurrent.
TOTAL	3½ years' imprisonment.
	Disqualification granted.

 

No exceptional circumstances.  Custodial sentence required.  The benefit to the accused was indirect, so that the kind of criminality differed slightly from that encountered in the cases cited by counsel.  This distinction was reflected in the sentence.

 

C.E. Whelan, Esq., Crown Advocate.

Advocate A.D. Hoy for the Defendant.

 

 

JUDGMENT

 

THE DEPUTY BAILIFF:

1.        You were a trusted shareholder, director and employee of Shepherd & Co.  In particular you were left in charge of the general insurance side of the business.  You broke that trust.  You dishonestly told clients that their insurance premiums were higher than they were, thereby making excess profit for the Company, although that had to be repaid later.  Furthermore, having made a poor decision on the Solitaire account, by agreeing in 1997 to pay out more by way of commission than was available, you concealed this from the Company by the false accounting.

2.        The consequence was that you were paid salary, bonus and dividends on the basis that the company was successful, whereas in fact there was a deficit in the region, in aggregate, of some £300,000.  There was a high degree of trust and the offences were committed over a considerable period.  The effect on the victim, the company, was serious. The sum of £300,000 had to be made good by the other shareholders and a new company had to be started to take over the business.

3.        There is very powerful mitigation, which Advocate Hoy has put forward on your behalf.  You have pleaded guilty to counts 1 to 7, but you did not plead guilty to counts 8 - 11 and therefore the sentence on those must be more than if you had pleaded guilty.  You have no previous convictions.  More than that it is quite clear from the references that we have seen that you have a positively good character and that you are respected and trusted by friends, colleagues and acquaintances.  It is also the case that the effect on your family has been devastating and will be devastating if you are sent to prison.  Your reputation has been lost and your future employment prospects are affected.

4.        The Court's policy in cases of financial fraud of this nature is clear.  It is important for the Island that this is so.  The policy is that a sentence of imprisonment is inevitable save in exceptional cases.  We would repeat what was said in the case of A.G. -v- Kirkland (24^th September, 2001) Jersey Unreported; [2001/200]:

"It is one of the tragedies of cases like this that there is almost invariably very powerful mitigation.  We cannot put it better than it was put in Barrick itself at p.145 when the court said this:

"He (meaning the defendant) will usually, as in this case, be a person of hitherto impeccable character.  It is practically certain ... that he will never offend again and, in the nature of things, he will never again in his life be able to secure similar employment with all that that means in the shape of disgrace for himself and hardship for himself and also his family."

Inevitably therefore factors such as these factors cannot by themselves be said to be exceptional because, as the court says in Barrick, they appear in most cases.  The Court has to look for something more if it is to be exceptional.  But it is not right to search for factors which in isolation may amount to exceptional circumstances.  In deciding on sentence a court looks at all the circumstances to see whether, taken in their totality, they can be said to be exceptional."

5.        We have listened carefully to all Mr Hoy has said on your behalf, but we are unable to say that the circumstances of this case are exceptional.  It follows that there must be a custodial sentence.  We turn next to consider the length.  Again we have taken into account the strong mitigation put forward on your behalf.  We also think that there is a distinction to be drawn between this case and for example, the four cases to which Crown Advocate Whelan made reference in his summary.  In all of those the offender, in effect, stole money from the company for his or her own benefit.  What you did was different; you made poor decisions, or you misled the clients, but you did not take any money from the company directly for your own benefit.  However, of course, you did benefit indirectly by drawing bonuses and dividends totalling over £400,000 between 1997 and 2000, based upon figures which you knew to be false.  Nevertheless, we think that the criminality of what you did can be said to be slightly different to that of an offender who steals money directly from the company for his or her own benefit.

6.        In those circumstances we feel able to reduce the conclusions slightly; but we will have to take into account that you pleaded not guilty on the four counts and, therefore you do not have the discount of approximately one-third, which you otherwise would have had.  The sentence of the court is as follows: on counts 1-7: 18 months' imprisonment; on counts 8-11: 3½ years' imprisonment; all of those to be concurrent, making a total of 3½ years. 

7.        We then transpose ourselves, with consent of counsel, into a civil court and we make a Disqualification Order under Article 78 of the Companies (Jersey) Law, 1991 for a period of five years which you did not oppose.

Authorities

A.G. -v- Picot (1990) JLR N.19.

A.G. -v- Kirkland (24^th September, 2001) Jersey Unreported; [2001/200]

Whelan: Aspects of Sentencing in the Superior Courts of Jersey (2^nd Ed'n) pp.142-151; 183-190; 173-176.

Clark (1998) 2 Cr. App. R 137.

Companies (Jersey) Law 1978: Article 78.

Barrick (1986) 7 Cr. App. R. (S) 142

A.G -v- Petch (01 April, 1993) Jersey Unreported

A.G -v- Murphy  (14^th April, 2000) Jersey Unreported [2000/68]

A.G -v- Donnelly (13^th October, 2000) Jersey Unreported [2000/199]

A.G -v- Barnes (12^th February 2002) Jersey Unreported [2002/40]