Court rules on scammers’ appeal

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CONVICTED: Nicolas Giannos and Rosita Stanfield.

CONVICTED: Nicolas Giannos and Rosita Stanfield.

The Court of Appeal has upheld the conviction of two individuals found guilty of running a money-making scam in Samoa.

The decision was delivered by a panel of Supreme Court Judges including Justice Fisher, Justice Blanchard and Justice Panckhurst at the beginning of the month.

Nicolas Giannos and Rosita Stanfield, who were stopped from leaving Samoa and arrested at the Faleolo International Airport last year, were found guilty of obtaining by deception with Giannos further convicted of false accounting.

Through their lawyer, Leota Raymond Schuster, the couple appealed the decision – including the conviction of false accounting against Giannos.

In the end, the appeal against their convictions for obtaining money by deception was dismissed except Giannos’ conviction for false accounting, which was quashed.

This is the continuation of the ruling which we started publishing on Wednesday:

 

 [35] That the appellants did not believe their own claims is apparent from something said by Mr. Giannos when questioned by Central Bank officials on the day when the appellants went back to the bank with their “clarification”. (We have to say that the “clarification” was nothing of the sort: it was merely another way of stating the same result for the investors but in terms of entry price, which would of course in a commercial context reflect the value of the investment.) The unchallenged evidence of Ms Tafunai, the Manager of the Financial Market Department of the Bank was as follows:

“Mr. Pereira of the bank had asked for clarification because they had stated during their presentation during the 15th that an investor from that point in time which was May up to July would earn ten times more from their initial investment. 

Pereira had asked them to clarify as to how this was possible given the short spending time ; how would an investor receive ten times more from that initial investment and Mr. Giannos was quick to say that it was impossible for any investors to receive ten times more of return from his investment in that short time , what they actually meant was that up to 21 July I believe it would be cheaper for an investor or for somebody to invest with the UFUN so up to the 21 July it would be cheaper but after the 21 July it would be more expensive for an individual to invest with the UFUN ...” [36] So Mr. Giannos himself accepted that what the appellants had been telling the investors about a tenfold increase was “impossible.” In other words, there was no prospect of a tenfold increase resulting by 21 July. The representations were false. And, as we have said, the “clarification” was of the same nature and would have not changed the character of the representation even if it had been made to the investors or if they had actually understood the appellants to have been referring to entry prices.

[37] In the case of one investor, the representation had been more specific: that the increase in value would be from $1580 to $10,000 by 21 July – a more than sixfold increase. Such an increase was also “impossible.”

[38] In two cases the representation was that the investment would double by 21 July and in one that it would “double or treble” by that time. Such predictions though unlikely to be fulfilled, were somewhat less in the world of fantasy than those representing a sixfold or tenfold gain.

 In other words, even if the issue of Utoken was continuing to trade, it is unlikely that its assets, and therefore the value of an investment in its financial product, would be such that there would be doubling or trebling in value as a result of an IPO.

[39] However we need not take that further because in fact Ufun was not trading normally. 

It had, over a month earlier and before the appellants came to Samoa, had its headquarters in Bangkok shut down by the Thai police as part of a fraud investigation. Evidence of that had been given by a Thai police officer who was involved in the police raid on the Ufun office.

[40] Like the Chief Justice, we were entirely unimpressed by the appellants’ assertion through their counsel, and the evidence of Mr. Giannos, that the Ufun company shut down in Bangkok was unconnected with “their” Ufun – that it must have been an unrelated company which had taken the same name. 

Their cause was not assisted by the inclusion in their slide show presentation to the Central Bank and others of a photograph of the Ufun building which the Thai police officer identified as the one which was the subject of the police raid. [41] Nor were we impressed by the submission that any closure of the Bangkok operations of Ufun would have had no impact on its operations in Malaysia and Indonesia. Bangkok was the headquarters of the Ufun group. Ms Stanfield herself had said so in a letter to the Prime Minister of Samoa.

[42] Although there is no direct proof that the appellants knew of the closure of the Ufun headquarters, the Chief Justice was entitled to conclude that they must have known. Plainly they remained in contact with Ufun, as appears from Mr Gianno’s explanation to the Central Bank for the belated arrival of the “clarification” note – that it had not been available from Ufun at the time of the presentations made to investors and the bank. It is inconceivable that the forcible closure of the head office and the arrest of senior executives would have passed unnoticed by them even if, as they suggested, their dealings had been with the Malaysian branch. 

The deliberate failure to tell this to the investors they were enticing with representations of large increases in value was a very material omission of a particular that made their representation a deception in terms of s.172(2)(b). [43] For these reasons the appeals against the s.172 convictions must fail.

 

The false accounting

[44] On the other hand, we have concluded that Mr. Gianno’s appeal against the two convictions for false accounting must succeed. This is because the two ANZ International Telegraphic Transfer Application forms cannot properly be said to be “documents required or used for accounting purposes” in terms of s.198 of the Crimes Act. 

It is evident that their purpose is compliance with Samoan exchange control rules, not the keeping of ANZ’s financial accounts. They would not be required for the latter purpose nor has it been proved that they are relied upon by ANZ for accounting purposes. 

We are aware that in so concluding we are differing from the evidence of Ms Tuia of ANZ. She was its trade financial supervisor. She was not giving evidence as an accounting expert but because she had familiarity with remittance of moneys out of Samoa. She said, first of all, that the bank did not use the form for accounting procedures. 

They were used to check the telegraphic transfers but not for any other purpose. Despite that, she nevertheless accepted from counsel that the bank would rely on the forms “in terms of its accounting procedures.”

[45] With respect to the witness, we rather doubt that she had any idea that the question was directed to a phrase in s.198 and it seems to us that she must have been correct when she said that the forms were used only to check the telegraphic transfers. 

It is hard to see how they could have had any use in relation to the bank’s accounts. In any event, there was no adequate proof to the contrary from a properly qualified witness.

 

Appeals against sentence

[46] In submitting that the sentences imposed on the appellants were manifestly excessive Mr. Schuster stressed the absence of any loss to the complainants. 

He was not, however, able to refer us to any Samoan precedents suggesting that the sentences were out of line when the level of the amounts obtained by deception is taken into account. 

There were six victims of the offending who were induced to part with an aggregate sum of $41,149. The appellants, in a calculated and pre-meditated way, were preying on naive and/or gullible victims. They took advantage also of Ms Stanfield’s family connection, so that there was an element of abuse of trust.

[47] We have considered whether the overturning of the false accounting convictions should result in an adjustment downwards of Mr. Gianno’s three year sentence of imprisonment and have concluded that it should not. 

The false accounting, if it had been established, was a relatively minor matter as compared with the obtaining by deception, in respect of which he had played the leading role in the making of a series of false representations.

 

Result

[48] The appeals of Mr. Gianno sand Ms Stanfield in respect of their convictions and sentences for the s.172 offences are dismissed.

[49] Mr. Gianno’s appeal against his convictions for the s.198 offences is allowed and the convictions are quashed.

Honourable Justice Fisher

Honourable Justice Blanchard

Honourable Justice Panckhurst

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