Jersey Unreported Judgments

 2002/32

ROYAL COURT

(Samedi Division)

 

4^th February 2002

 

 

The Attorney General

-v-

John Rupert Jefferson Seal

 

 

1 count of:

fraudulent conversion.

 

 

Age:     37.       

 

Plea:    Guilty.  

 

Details of Offence:

Investment adviser, responsible for placing client funds; lost heavily as the victim of a widespread U.S. fraud.  One client was pressing for repayment.  Accused borrowed money from father to make the repayment, then dishonestly reimbursed father with another client's money.  Kept the truth from that client for some five years, despite repeated requests from the client for information, and investigation into the highly complex facts in Jersey, U.S.A. and British Virgin Islands.  Offence involved the sum of approximately £140,000.

 

Details of Mitigation:

Good character, guilty plea, remorse, absence of personal benefit; had committed offence through panic as a result of client funds becoming victim to a U.S. fraud; had not been able to face father with the truth; father had returned the funds to the client five years later when the truth came out, at a time when criminal proceedings had been commenced, and therefore was ultimately out of pocket; effect on wife and two small children.  The circumstances of the original dishonest transaction and the absence of personal gain were advanced as exceptional circumstances; plea of guilty particularly valuable, given the complexities of the case.

 

Previous Convictions:

None.

 

Conclusions:

18 months' imprisonment.

 

Sentence and Observations of Court:

15 months' imprisonment.

 

No exceptional circumstances; Kerr provides no guidance; integrity of finance sector has to be preserved.

 

 

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

Advocate J.D. Kelleher for the Defendant.

 

 

 

JUDGMENT

 

 

THE BAILIFF:

1.        This defendant has pleaded guilty to a single count of fraudulent conversion.  The offence involved the defrauding of a client of the US$ equivalent of approximately £141,500 by way of one dishonest transaction in December, 1996.  It is accepted by the Crown that Seal obtained no personal financial benefit from his fraud.  The offence took place because the defendant found himself in the position of having been taken in by fraudsters and being unable to confront his father with the fact that a loan which he had procured from him had been lost.  He resolved his dilemma by defrauding the client.  That client has now, even if only very late in the day following Seal's guilty plea, been repaid by the defendant's father to whom the money had been paid.

2.        This was, therefore, a serious breach of trust by a financial adviser acting in a fiduciary capacity.  The Court's well established policy in such cases for reasons to which we will come is that a custodial penalty is imposed other than in exceptional circumstances.  Mr. Kelleher has argued that such circumstances exist in two respects.  First, the dishonesty occurred in a moment of panic when the defendant realised that he had himself been taken in by sophisticated fraudsters.  He could not bring himself to tell his father whom he had persuaded to make the loan for fear that it would affect their relationship.

3.        In our judgment this is a mitigating and not an exceptional circumstance.  Many breaches of trust are committed under some pressure or another whether brought about by addiction to drugs or gambling; a desire to impress some other person; or, as here, by a desire not to lose the respect of a father.  That desire led to the failure of judgment that led to the criminality.  It is not an exceptional factor.  Secondly counsel submitted that the offence was not committed for personal financial gain and he referred to the case of AG-v-Kerr (16^th June, 1989) Jersey Unreported as support for the proposition that this was an exceptional factor.  Kerr was a stockbroker who used a client's funds in order to attempt to recoup a loss that Kerr had made on his own account.  He was not sentenced to custody.

4.        It is probably sufficient for us to state that Kerr is indeed difficult to reconcile with the stated policy of the Court and it is not, in our view, an authority that should be followed.  We do not think that the absence of personal financial gain is an exceptional factor.  It remains the policy of this Court that those who breach the trust of their clients and misappropriate funds entrusted to them must expect to receive custodial sentences not only to punish them but also and probably more importantly to deter others who might be similarly tempted.

5.        As the Crown Advocate has rightly reminded us this element of deterrence is particularly important in a community where the integrity and reputation of the Island in relation to the provision of financial services remains of vital significance. There are no exceptional circumstances to justify a departure from that general principle.

6.        We have taken into consideration all the factors in Barrick (1985) 7 Cr.App.R.(S) 142 and the mitigating factors which counsel has ably and fully put before us.  We have no doubt that a custodial sentence must be imposed but we have been able to give slightly more weight to the considerable mitigating factors than the Crown Advocate.

7.        Seal, you do not need me to tell you that you have brought shame upon yourself and great distress to your family.  For the reasons which we have already explained the Court has no option but to impose a custodial penalty.  The sentence of the Court is that you will go to prison for 15 months.

                                                 

Authorities

AG-v-Kerr (16^th June, 1989) Jersey Unreported.

Current Sentencing Practice: C.3-2C01: R-v-Oakes (4^th November, 1974).

AG-v-Picot (29^th May, 1900) Jersey Unreported; [1990] JLR N.19.

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

AG-v-Marsh (25^th January, 2002) Jersey Unreported; [2002/22].

AG-v-Hayden (16^th May, 1985) Jersey Unreported.

AG-v-Bellows (8^th February, 1999) Jersey Unreported; [1999/28].

AG-v-Pagett (1984) JJ 57.

AG-v-Delaney (13^th May, 1993) Jersey Unreported.

AG-v-Hanley (14^th October, 1993) Jersey Unreported.

AG-v-Hay (10^th July, 1995) Jersey Unreported.

AG-v-Stilwell (19^th January, 1998) Jersey Unreported; [1998/11].

Whelan: Aspects of Sentencing in the Superior Courts of Jersey: pp.76-78.

Ibid: Noter Up (1994-1995): p.31.

AG-v-Marriott (5^th February, 1987) Jersey Unreported.