18 February 2012

Excellence only?

'Making Sense of 'Moral Rights' in Intellectual Property' by Brian Lee in 84 Temple Law Review (2011) 71-118 offers what the author claims is "a novel account of the theoretical foundations of American “Moral Rights” laws in intellectual property".

Novel, yes, but in an Australian context decidedly unpersuasive ... at least for someone who's studied the Australian moral rights regime (recently highlighted here). There are times when the desire for novelty can be overdone.

Lee characterises moral rights as a feature of intellectual property -
which give artists the right to prevent purchasers of their works from altering those works, even after the purchase is complete, if the artist disapproves of the alterations. Conventional accounts of these laws’ foundations rely either on economic incentives or on creators’ “rights of personality.” Examination of the central provisions of both federal and state moral rights laws, however, reveals the implausibility of both those accounts: the central provisions that the laws actually contain are incompatible with what we would expect to find if the traditional accounts were correct, and no mere variant of the traditional accounts is likely to be plausible. Instead, these laws are best understood as resting upon a moral duty of respect for artworks’ creative excellence. Such an account both flows naturally from broader American cultural practices concerning respect for excellence and succeeds, where the other accounts failed, in providing a coherent explanation for the central provisions that we in fact observe in American moral rights laws. The Article further explains why these moral rights protections are given only to visual artists and not to creators of other works, and it shows how this analysis can inform debates about expanding creators’ legal rights of attribution. The Article also draws upon the considerable similarities between visual art and other products of human creativity to highlight the broader challenge that its analysis poses to the traditional, purely economic, understanding of the foundations of American intellectual property law more generally.

HIPAA

Minnesota Attorney General Lori Swanson has filed a lawsuit in a US federal court under the US Health Insurance Portability and Accountability Act of 1996 (HIPAA) - the primary federal health data privacy statute - against debt collection agency authority Accretive Health, Inc. regarding Accretive's failure to protect protected health information (PHI) and to disclose the extent to which the PHI was utilised. The action is the first brought by a state attorney general under HIPAA.

Swanson alleges [PDF] that Accretive lost a laptop featuring the unencrypted PHI of 23,531 Minnesota patients. Accretive Health provides two Minnesota hospitals with "debt collection, treatment coordination and revenue cycle management services". That provision involves Accretive collecting health information and quantifying over twenty medical attributes (eg HIV status, medical health conditions and heart conditions) in determining areas for cost-reduction. Quantification - the basis of much 'big medicine' - include measures of patient "frailty". The company provides contract negotiation assistance with insurers, receiving both a management fee and a percentage of savings from reductions in health care costs.

Accretive is alleged to have breached both HIPAA and Minnesota state debt collection and consumer protection statutes. The laptop went AWOL In a distibctly traditional way: an Accretive employee left the device laptop in a rental car overnight ... the next day there was no laptop. Swanson's complaint is that Accretive Health failed to initially identify and disclose the names of all of the patients on the device. The identity of approximately 6,000 additional individuals was disclosed only after one of the hospitals used an independent forensic investigator.

The Minnesota suit seeks statutory damages (up to US$50,000 per violation) on the basis that Accretive was in breach of the statutes by failing to -
Implement policies and procedures to detect, contain and correct security violations;
Implement policies and procedures that address workforce member access to personal health information;
Train agents and independent contractors as to how to respond to a data breach and how to properly handle personal health information;
Identify, respond to and mitigate the harmful effects of a security incident;
Implement policies and procedures related to portable devices;
Implement technical policies and procedures for electronic information systems that maintain electronic personal health information and limit access to workforce members;
Implement policies and procedures to comply with the HIPAA Security Rule.
In a nice example of bad practice the claim by Minnesota includes a screenshot sent by one of the hospitals to a patient who queried what personal information was on the missing laptop. Swanson indicates that -
The screen shot has personal identity information, such as the patient’s name, address, date of birth, and Social Security number. It also includes a checklist to denote whether the patient has 22 different chronic medical conditions and, if so, the condition of the patient. The medical conditions on the “checklist” include three mental health conditions (depression, bipolar disorder and schizophrenia); HIV; lung conditions like asthma; heart disease like high blood pressure and chronic heart failure; neurological diseases like Parkinson’s and seizure disorders; and metabolic disorders like diabetes and hypothyroidism. The screen shot also includes numeric scores to predict the “complexity” of the patient and the probability of an inpatient hospitalization, and a box to describe the “frailty” of the patient.
just the thing to encourage trust in the health service provider and its associate Accretive.

Minnesota seeks an order requiring Accretive to fully disclose to patients:
1) what information it has about Minnesota patients;
2) what information it has lost about Minnesota patients;
(3) where and to whom it has sent information about Minnesota patients; (4) the purposes for which it amasses and uses information about Minnesota patients.
The suit also asks Accretive to disclose whether it has sent health data about Minnesota patients to its so-called “Shared Services Blended Shore Center of Excellence” in New Delhi, India.

The lawsuit further seeks an injunction that restricts how Accretive treats and uses patient data going forward and to hold Accretive accountable for its violations of state and federal health privacy laws, debt collection laws, and consumer fraud laws.

15 February 2012

Moral Rights and the music business

Perez & Ors v Fernandez [2012] FMCA 2 will be welcomed by Australian copyright specialists as a judgment - following Meskenas v ACP Publishing Ltd [2006] FMCA 1136 - regarding moral rights provisions of the Copyright Act 1968 (Cth). Those provisions are discussed in Maree Sainsbury's Moral Rights and their Application in Australia (Federation Press, 2003) and Elizabeth Adeney's chapter (pp 637-675) in Moral Rights (Sweet & Maxwell, 2010) edited by Gillian Davis & Kevin Garnett.

The judgment states that -
These proceedings concern the infringement of copyright and moral rights claimed by the applicants (Mr Perez, an international recording artist known as “Pitbull” and two corporate entities associated with him) in a sound recording and musical work known as Bon, Bon. The infringements involved the respondent (Mr Fernandez, a disc jockey and music promoter in Perth) distorting the Bon, Bon work in a way which was said to be harmful to its author’s reputation, and then streaming that distorted version of the song from a website owned and operated by Mr Fernandez.

The applicants seek declarations as to infringements, injunctions, damages, interest and costs. Mr Fernandez initially resisted the application in its entirety (and indeed intended to seek its summary dismissal as an abuse of process, having regard to other proceedings between the parties in the Supreme Court of NSW) but these proceedings were partially settled and I made consent orders on 7 July 2011 which note the following undertakings given by Mr Fernandez and the following agreed statement of facts:
I, Jaime Fernandez, undertake to the Court that:
1. I will not, by myself, or by my servants or agents, make copies of, or communicate to the public in Australia, the whole or a substantial part of the Bon, Bon Sound Recording, or authorize any third person to do such acts in Australia, without the licence of the third applicant.
2. I will not, by myself, or by my servants or agents, infringe the first applicant’s moral rights in the literary and musical works comprised in the Bon, Bon Song.
Mr Fernandez also provided an apology on his website.
The song in question was created by Perez in the US during 2010 through addition of original lyrics and original music to two earlier songs known as We No Speak Americano and Tu Duo Fa L’Americano. Bon, Bon and the earlier songs are covered by the Copyright Act 1968 (Cth) . Perez's song is embodied in a Bon, Bon sound recording, covered under s 89 of the Act. Labels Mr 305 and Sweat It Out are the owners of copyright in the recording, with Sweat It Out having the exclusive license to make and distribute copies and otherwise exploit and protect the copyright in Australia.

Fernandez was "wholly responsible for the content that appeared on' the Suave website, created to promote events organized by Fernandez. During 2008 Fernandez obtained an 'Audio Drop' recording in which Perez speaks words to the effect of “Mr 305 and I am putting it down with DJ Suave”. Fernandez also obtained a recording containing Perez’s Bon, Bon song. Fernandez made a copy of the song, which he digitally stored that copy on his computer in MP3 format. He then combined the Audio Drop with the MP3 Copy, using and audio editing software program. In December 2010 Fernandez uploaded a copy of the edited recording to the Suave site, with members of the public having access to the recording - via streaming - from that time until 12 January 2011.

The judgment states that -
The applicants contend that Mr Fernandez’s use of the Audio Drop to produce a distorted version of Bon, Bon was conduct engaged in without authorisation and involved infringements of the rights of reproduction and communication to the public when Mr Fernandez streamed the altered version of the song on his website. This is said to amount also to infringements of Mr Perez’s moral rights to the integrity and authorship (as the author of Bon, Bon) pursuant to s.195AI of the Copyright Act. The conduct is said by the applicants to warrant the awarding of both compensatory and additional damages, including aggravated damages for moral rights infringement, as well as interest and costs.
Fernandez had full control over the maintenance of the website and admitted that on 15 December 2010 he personally added four songs to the site so that when it loaded the songs would automatically play. The first song was Bon, Bon.

The judgment goes on to state that -
The interference with the sound recording was based on the Audio Drop that had been provided to Mr Fernandez by Mr Perez’s agent, a man by the name of “Mr Barry London” who also goes by the stage name “Mr Purple”. An Audio Drop or oral message had been provided to Mr Fernandez for the purposes of promoting the tour. ...

On or about 30 September 2010 Mr Fernandez inserted the Audio Drop into the Bon, Bon track lasting for approximately 10 seconds into the song. Mr Fernandez was made aware of the fact that Mr Perez was disconcerted by the addition to the song and it was removed from the website no later than 12 January 2011.

Mr Fernandez states that he did not receive any income or derive any benefit as a result of the playing of the Audio Drop as part of the Bon, Bon Song. ...

Mr Fernandez was an unimpressive witness. His approach to giving evidence under cross-examination reflects poorly on his credit. He was at times untruthful, and gave answers which he thought would put his case in the best possible light, depending on what he perceived that case to be at any particular point in the cross-examination. When confronted with the inconsistency, falsity or improbability of his evidence, Mr Fernandez ranged between refusing to concede the obvious and seeking to draw immaterial and/or irrelevant distinctions, or was simply nonplussed by the illogicality of his answers.

It was made clear from the cross-examination that Mr Fernandez has a continuing grievance with Mr Perez resulting from the failed tour, and a sense of entitlement to leverage off Mr Perez’s reputation. This explains both his motive for engaging in the infringing conduct in the first place, and the approach that he took to the proceedings until the partial settlement.
Driver FM appears to have been unimpressed, stating that Fernandez -
• was untruthful as to his reputation as a promoter
• refused to acknowledge that the Audio Drop conveyed an association between himself and Mr Perez
• maintained an illogical and implausible position about his right to use the Audio Drop.
• obfuscated on the significance of the internet audience
• obfuscated as to his knowledge of copyright requirements
• resisted the inference that his infringing conduct formed part of a campaign against Mr Perez resulting from a failed tour
• obfuscated on his intention to use the edited Bon, Bon recording to leverage off Mr Perez’s popularity
• failed to provide an acceptable explanation for the negative response he gave in July 2011 to interrogatories.
In discussing the claimed infringements the judgment indicates that -
Fernandez’s distortion of Bon, Bon involved combining a promotional recording known as an “Audio Drop” on which Mr Perez perform the words “Mr 305 and I am putting it right down with DJ Suave” with a copy of Bon, Bon Mr Fernandez had reproduced without authorisation from the Armando album. “Mr 305” is known among Mr Perez’s fans to be a reference to himself, and “DJ Suave” is a reference to Mr Fernandez. Mr Perez had provided the Audio Drop to Mr Fernandez in order to assist in promoting the failed tour which is the subject of the NSW Supreme Court proceedings.

The combination of the Audio Drop with Bon, Bon makes it sound to the listener like Mr Perez is positively referring to Mr Fernandez at the beginning of the song, and that this reference forms part of the original work. Mr Fernandez then uploaded this altered copy of Bon, Bon to the Suave Website, such that it would immediately begin streaming whenever anyone visited the Suave Website. It was an act designed both to avenge Mr Fernandez’s grievances with Mr Perez arising from the subject matter of the NSW Supreme Court proceedings, and to promote Mr Fernandez.

Mr Fernandez’s conduct was engaged in without any authorisation and involved infringements of the rights of reproduction and communication to the public comprised in the Bon, Bon Sound Recording (owned by the second and third applicants) pursuant to ss.85 and 101(1) of the Copyright Act, and infringements of Mr Perez’s moral rights to the integrity of authorship (as the author of the Bon, Bon Song) pursuant to s.195AI of the Copyright Act, which provides: (1) The author of a work has a right of integrity of authorship in respect of the work. (2) The author's right is the right not to have the work subjected to derogatory treatment.

I accept that the applicants were harmed by the conduct of Mr Fernandez and that he benefited from it.

I accept from the evidence of Ms Martinez that the rap/hip hop genre is one in which an artist’s commercial and artistic associations really matter. Success in building a reputation, developing a fan base, selling records, attracting people to concerts, and ultimately entering into lucrative commercial sponsorships and endorsements depends in large measure on the other artists and brands the artist is seen to associate with. It is also a genre which has been closely linked to “DJ-ing”. Association between artists and DJs continue to play an important role in promoting and building audiences for rap/hip hop music.

Mr Fernandez is a prominent DJ and live music promoter in Western Australia. He conceded that as well as streaming the Mixed Bon, Bon Version on his website, he also played the altered version of the sound recording at public venues where he performed as a DJ. He benefited by falsely representing a positive association between himself and Mr Perez. I further accept that Mr Fernandez was motivated in part by animosity towards Mr Perez because of the failed tour and the legal proceedings resulting from that failure. I accept that Mr Fernandez, in altering the sound recording of Bon, Bon to represent himself as a subject of the song and then prominently streaming it from his website, intended to cause Mr Perez artistic, reputational and commercial harm as an act of retribution for the grievances he has for the failed tour, while at the same time leveraging off the infringement for the sake of self promotion.

When he was made aware of the infringement by his solicitors, Mr Fernandez did not simply remove the infringing content from his website, but replaced it with the Audio Drop alone. Service of process upon him proved difficult. He also initially disputed all issues in the proceedings although ultimately conceded a number of matters which have been discussed above.

Mr Fernandez, in effect, acknowledged his wrongful conduct by seeking to obtain licences from APRA and the PPCA (copyright collecting societies) which he thought would retrospectively excuse his conduct. The APRA licence is irrelevant to the sound recording and the PPCA licence is not retrospective. In any event, a licence from either PPCA or APRA does not permit the licensee to remix or alter sound recordings in any way.
In a useful addition to Meskenas Driver FM considers moral rights -
I accept the applicants’ legal submissions concerning moral rights. The moral rights protections in Part IX of the Copyright Act were introduced by the Copyright Amendment (Moral Rights) Act 2000 (Cth). They have independent existence from the bundle of “economic” rights protected by copyright, are inalienable to the author, and give protection to the investment of the author’s personality in his or her creation. Moral rights draw their jurisprudential force from civil law traditions and a number of international copyright and human rights conventions to which Australia is a party. Further, in his Second Reading Speech introducing the relevant amendments to the Copyright Act, the then Attorney-General said:
But this bill is not just about fulfilling international obligations. More importantly, it is about acknowledging the great importance of respect for the integrity of creative endeavour. At its most basic, this bill is a recognition of the importance to Australian culture of literary, artistic, musical and dramatic works and of those who create them.
Although Australia and other common law jurisdictions were slow to recognise moral rights, Part IX of the Copyright Act now gives full force to Australia’s international obligations in this respect. In 2011, an expert group of copyright academics convened by the Australian Copyright Council recognised moral rights protection as one of the four fundamental principles of Australian copyright law. The author’s moral rights recognised in Part IX of the Copyright Act comprise the right of attribution (not in issue here), and right of integrity of authorship. Specifically, s.195AI provides that the right of integrity of authorship is the author’s right “not to have the work subjected to derogatory treatment”.

Here, the act in question undertaken by Mr Fernandez consisted of the deletion of a prominent part of Bon, Bon (the Spanish words je, je, je, je, je, mira que tu estas rica) and its replacement with words performed by Mr Perez in an entirely different context (“Mr 305 and I am putting it right down with DJ Suave” – intended to promote the failed tour). This made it appear that Mr Fernandez was a subject of the song. This alteration was carried out skilfully (presumably drawing on Mr Fernandez’s DJ skills), and exploited the fact that Mr Fernandez already had in his possession the Audio Drop provided to him by Mr Perez. This created the impression that the author had authored the altered content himself and included it in the song. The reference to Mr Perez’s alter ego “Mr 305” particularly attracts the listener’s attention. The change made to the song by Mr Fernandez must be regarded as a “distortion” or “alteration” (if not a “mutilation”) of the work, which is material, thereby satisfying that element of s.195AJ.

The fact that Mr Fernandez’s treatment of Bon, Bon was “prejudicial to the author’s honour or reputation” (the second element which must be satisfied to engage s.195AJ) is evident in two ways.

First, given that the work had only recently been released in the United States, and not in Australia at the time of the infringement (Mr Fernandez obtained it from a friend in Chile), there will have been a class of listeners, who upon listening to Bon, Bon for the first time through the Suave Website, will have presumed that the altered section formed part of the authentic, original work. In other words, they would have presumed that Mr Fernandez was indeed a subject of the song, and that Mr Perez had written and performed it about him.

I accept the affidavit evidence provided by Ms Martinez that, associations between artists and DJs in the hip-hop/rap genre are highly significant. Artists go to great lengths to choose whom they associate with, and these associations form a central part of their reputation. In those circumstances, I accept that the fact that the reference to Mr Fernandez in the altered version of the song had not been authorised by the author should be regarded as prejudicial to him per se. Were it to be suggested otherwise, Ms Martinez’s affidavit establishes to my satisfaction that the association with Mr Fernandez is one which Mr Perez himself strongly considered to be prejudicial to his reputation, and which caused him anger and distress.

Secondly, there will have been an alternative class of listeners who were more intimately aware of both Mr Perez’s music and Mr Fernandez. This class is likely to have been alert to Mr Fernandez’s ruse. Persons in this class are also likely to have been aware of the circumstances of the failed Australian tour, and the fact that Mr Fernandez is suing Mr Perez in the NSW Supreme Court in relation to it. These are matters which Mr Fernandez has sought to publicise for himself. Listeners in this class will know the significance of Mr Perez’s associations as an artist, and will understand the alterations to the song made by Mr Fernandez to be mocking Mr Perez’s reputation.

The defence of reasonableness is not available to Mr Fernandez to excuse his conduct. In fact, an examination of the matters to be taken into account by the Court when deciding whether this defence is available, as set out in s.195AS of the Copyright Act, only serves to emphasise the harm caused by Mr Fernandez. In particular:
a) the nature of the work, which is one existing in a genre in which associations between artists is of considerable significance;
b) the purpose for which the work was used, which in this case was to either promote Mr Fernandez for his own benefit, or to mock Mr Perez as an act of retribution;
c) the manner and context, which in this case includes the fact that the work was streamed from Mr Fernandez’s own website, and the existing relationship between the parties.
Section 195AZA sets out the remedies that may be granted for an infringement of moral rights. In light of the relief which has now been obtained by way of the part settlement, the remedies which the applicants seek from the Court is an award of damages for loss resulting from the infringement pursuant to subsection (1)(b).

In Meskenas v ACP Publishing Pty Ltd], when considering the approach to be taken to awarding damages[44], the Court took account of the academic commentary on moral rights, which notes among other things, that an author may also claim for injured feelings arising from the infringement. In this case, the Martinez affidavit establishes to my satisfaction that such harm was suffered by Mr Perez. He is entitled to be compensated for it.

In Meskenas, the Court ultimately took the view that the compensation awarded for moral rights infringement should reflect that which it would have awarded for copyright infringement. The applicants submit that this approach would not be apposite here. In this case there are two distinct groups of applicants involved: Mr Perez sues on the basis of his moral rights; the second and third applicants sue on the basis of their copyright. Were the conflation of copyright and moral right damages in Meskenas to be applied here without appreciation of the underlying factual differences it would leave one class of applicant uncompensated at the expense of the other. Here, the copyright and moral rights causes of action should sound in separate and cumulative heads of damage, in relation to compensatory damages for copyright infringement and breach of moral rights. However, as I have already found above, the considerations relevant to an award of additional damages are those bearing on the award of damages for breach of moral rights, as matters bearing on the interests of Mr Perez.

In Meskenas the Court also noted the availability of aggravated damages for moral rights infringement, which were awarded in that case on the basis of the respondent’s conduct following the time when the infringement of the moral rights was made known. Mr Fernandez here has allegedly similarly aggravated the harm caused by his conduct after the infringement was made known to him, as has been set out above.

Mr Fernandez continues to deny that his conduct has resulted in any harm or embarrassment. His affidavit evidence continues to maintain that he is entitled to do as he pleases with the Audio Drop. I do not accept that Mr Fernandez has displayed contrition. The conduct following the infringement further aggravated the harm caused, for which, Mr Perez is also entitled to be compensated. However, Mr Fernandez is entitled to the benefit of his acknowledgment of his infringements (however belatedly).

An action for infringement of moral rights is actionable as a breach of statutory duty without proof of damage. What is required for a breach of the author’s right of integrity (provided for in s.195AI) is the subjection of the work to “derogatory treatment”, which means the doing of anything in relation to a work that results in a material distortion of, the mutilation of, or a material alteration to the work (or anything else) that is prejudicial to the author’s honour or reputation. A person infringes the author’s right of integrity if he or she so subjects the work to derogatory treatment].

In other words, all that is required is proof that Mr Fernandez’s act in respect of the Bon, Bon Song was prejudicial to Mr Perez’s honour or reputation, not that Mr Perez suffered damage. This approach has also been taken under the equivalent UK legislation.

The Copyright Act does not require that Mr Perez’s reputation has been prejudiced. All that is required is that the respondent’s act in relation to the work “is prejudicial”. That statutory language is derived from Article 6bis of the Berne Convention, which requires Australia to afford authors the right to object to derogatory treatment “which would be prejudicial to their honour or reputation” (emphasis added).

As is evident from the Martinez affidavit, issues concerning the reputation and honour of an artist in the rap/hip-hop genre in which Mr Perez creates are highly attuned:
- an artist’s honour and reputation depends on whom he or she associates with, and is a driver of artistic (and with it commercial) success. The artist goes to great lengths to control whom he or she associates with;
- given that evidence, the distortion of Mr Perez’s work, such as to create a false association, should be regarded as prejudicial to his honour and reputation as an artist per se;
- that it is in fact prejudicial is made clear by the circumstances of Mr Perez’s relationship with Mr Fernandez; it is not necessary for the applicants to lead evidence from members of the public as to the way the work would be received;
- that the treatment of the work was prejudicial may be presumed.
In Meskenas the Court awarded damages of $9,100 for breach of ss.195AO and 195AP of the Copyright Act, for breach of the author’s right of attribution, in circumstances where Raphael FM held that he would have awarded the same amount for copyright infringement (for both compensatory and additional damages).

However, the basis for compensation is not the same. Section 195AZA(1) provides that the remedies for moral rights infringement include “damages for loss resulting from the infringement”. Moral rights are not proprietary rights (a matter which is evident by the absence in the statute of any provision allowing assignment). Moral rights attach to the personality of the author. They may be compared, for instance, with the reputational interests protected by an action in defamation.

It is relevant to consider that prior to the introduction of Part IX one of the ways that Australia sought to comply with its Berne obligations with respect to the right of integrity, was pursuant to the law of defamation. There are clear parallels between the two laws (noting that defamation protects reputation, whereas moral rights protect both “honour and reputation”).

This means that the loss which is compensable includes not only pecuniary loss, but also damage to goodwill and reputation enjoyed by the author.

In awarding damages for moral rights infringement on this basis the Court should have regard to the matters described above, with respect to extent and value of Mr Perez’s reputation as an artist, and the harm caused by Mr Fernandez’s conduct. This includes the fact that the distortion of the work and the false association created by it occurred at a time when the song was newly released, the artistic significance which associations have within the genre in which Mr Perez creates, the fact that the distorted work was performed in nightclubs which reach the target audience for Mr Perez, and that the distorted work was communicated on the internet where its audience was potentially unlimited.

In addition, damages awarded under s.195AZA(1) may further provide compensation for injured feelings, and vindication of the artist, by way of an award of aggravated damages. A parallel here may be drawn with an award of damages under this limb in the law of defamation. An award of aggravated damages may also take account of the respondent’s conduct in the litigation. This would also accord with the approach taken in the law of defamation, where it has been held that conduct by counsel during the trial may also justify the award of aggravated damages through increasing the hurt done to the plaintiff.

In Meskenas, Raphael FM awarded the applicant a separate component of damages, which he characterised as aggravated damages, for the distress caused to the applicant, including by reference to the respondent’s conduct after the proceedings were commenced. In that case, his Honour considered that, the necessary factors going to flagrancy otherwise being absent in that case, the amount should be equal to that which he would have awarded under s.115(4) (ie. $8,000).

Here, it is submitted that the Court should have regard to the need to provide compensation to Mr Perez for the distress caused to Mr Perez as an artist both at the time of the infringement, the conduct of Mr Fernandez since that time, including the ongoing campaign which is said to be being waged by Mr Fernandez, and the need to provide vindication to Mr Perez as an artist. In doing so, the Court may have regard for the range of damages it would award under s.115(4) for infringement of the copyright.

The applicants seek $35,000 for the harm to Mr Perez’s reputation and $50,000 aggravated damages for distress to Mr Perez. That claim considerably overstates the applicants’ case, trespasses into matters more appropriate to be dealt with in the NSW Supreme Court proceedings, and gives no acknowledgment of Mr Fernandez’s concessions, undertakings and apology. I do not accept that Mr Perez’s reputation has suffered any lasting damage. His moral rights were infringed in circumstances which caused him distress, and which were serious, but Mr Fernandez ultimately saw the error of his ways and appropriately gave undertakings and an apology, however grudgingly. In all the circumstances, I have decided that an appropriate award of damages for the infringement of Mr Perez’s moral rights is $10,000.

Homicide

A recent post noted debate in Queensland about removal of the so-called 'homosexual panic defence'.

The Victorian Supreme Court in R v Baker [2012] VSC 19, a retrial, has sentenced Baker to 10 years imprisonment (minimum non-parole period of 7 ½ years) for manslaughter in a case where a 56 year old alcoholic assaulted a 76 year old whom he had visited with the intention of gaining money for sexual services. His seriously injured victim was left on the ground, being visited by Baker a day or so later and subsequently dying. Baker eventually alerted the police, after encouragement by a counsellor and solicitor. It's a sad tale, with questions about capacity and motivation.

The judgment notes that -
At the time of his death, Mr Pearce was a 76 year old retired butcher, who lived alone in a unit in Albert Street, Ballarat. You were a 50 year old unemployed alcoholic, living in various boarding houses. You had been friendly with Mr Pearce for several years. In the first part of 2006, he had allowed you to live in his spare room for about six months, and provided you with some financial support.

Some time between the 8th and 15th of January 2007, most likely between the 12th and the 14th, you visited Mr Pearce, intending to get money from him in return for sex. The two of you argued over money, and you assaulted Mr Pearce.

You grabbed him in a choking fashion, causing extensive bruising around the neck. You punched him to the face with at least moderate force, fracturing his right eye socket and cheekbone. You caused the fracturing of two of his ribs, with either a kick or punch. You caused at least one other blunt trauma to the head, leading to an intense haemorrhage of the entire left temporal muscle and a subdural haemorrhage overlying the left cerebral hemisphere. This last trauma could have resulted from impact to the floor. The subdural haemorrhage is the most serious of the injuries contributing to Mr Pearce’s death. These several unlawful and dangerous acts form the basis of the manslaughter charge. Mr Pearce had no offensive or defensive injuries. ...

You left Mr Pearce lying naked, helpless and clearly seriously injured, on the floor of his unit.

Some time later, you went and spoke to your acquaintance, Robert Pinkerton, and told him you had visited Mr Pearce to get some money, lost your temper and assaulted him. You told Mr Pinkerton you believed Mr Pearce was badly injured.

A day or so later, you went and saw Mr Pinkerton again. You told him you had been back to see Mr Pearce, who was still alive but seriously injured, and had tried to give him some water.

On 16 January, Mr Pinkerton and another man, Scott Martin, spoke to you about wanting a car. You said you knew where to get one. You gave them Mr Pearce’s keys and showed them where Mr Pearce’s car was. You did this so that anybody visiting Mr Pearce’s unit would think he was not at home, because his car was not parked out the front in its usual place.

On 17 January, Mr Martin and Mr Pinkerton drove Mr Pearce’s car to Melbourne, where they eventually abandoned it. They caught the train back to Ballarat.
A heavily intoxicated Baker subsequently visited an alcohol and drug counsellor, indicating that he had killed someone several days earlier.
You said you had not intended to kill the person, but had a fist fight following an argument about money. You said the death was not immediate, and the man had been lying on the floor. You said you had returned to the man over the next two to three days, and tried to give him water. You told him that you had told two men about the assault, and they had stolen the man’s car. You said you were certain the man had died about the 3rd or 4th day after the fight.

13 You told Mr Johnson you were very confused and had been drinking constantly. You said you wanted to contact the other two men, to tell them to go away, but [the counsellor] told you not to do so. You also expressed concern about the impact of these events on your own, elderly father.
The counsellor encouraged Baker to see a lawye, arranged an appointment with a local solicitor and took Baker to the solicitor's office, stopping on the way so Baker could buy a stubby of beer to drink. The solicitor arranged for a written statement (provided to the Victorian Police after signature the next day), which indicated that
you wished to report Mr Pearce’s death to the police [and] that on Monday 8 January 2007, Mr Pearce had indecently assaulted you “which resulted in [you] striking him several times”. The statement also said that “following the incident, Mr Pearce was still alive and able to talk and so [you] left the address.”
The police visited the victim's unit, forced an entry through the locked front door and found Pearce dead on the floor.

The Court states that -
I am satisfied that the claim in your police statement – that you struck Mr Pearce because he had indecently assaulted you – was untrue. I am satisfied that you assaulted him because of an argument about money. Your statement to police also did not disclose that you had left Mr Pearce injured and lying on the floor, or that you were well aware that he had remained there over a number of days, apparently unable to get up.

The prosecution urged me to conclude that you deliberately lied to the police about the indecent assault, either because you did not wish to reveal past homosexual behaviour, or because you wanted to set up a possible defence of self-defence. Your counsel argued that you were so drunk when you made your written statement, that I could not be satisfied that your statement was a lie (or, if it was a lie, that it was made for either of the purposes suggested by the prosecution). ...

Irrespective of whether or not you deliberately lied to the police about the indecent assault (about which I make no finding), I am satisfied that you did not tell the police all the details that you had told Mr Pinkerton and Mr Johnson. Instead, you made a statement which significantly understated your culpability for Mr Pearce’s death.
In sentencing the Court commented that -
The fact that you finally decided to come forward and tell the police about Mr Pearce’s death may demonstrate some degree of remorse, or it may be that you were motivated more by a concern to protect yourself (in case Mr Pearce’s death was discovered through some other means). The fact that you gave the police an account of what had happened, which considerably understated your culpability, causes me to have some doubts about the extent of any genuine remorse at that time. ... Apart from that very limited evidence, there is little to demonstrate any real remorse on your part
Hollingworth J concluded that -
As far as general deterrence is concerned, the taking of a human life is a most serious offence. The courts not only have a duty (by imposing appropriate sentences) to uphold the sanctity of human life, but must also try to deter others who, by resorting to violence, may cause loss of life. There is also a need for denunciation of what you did to Mr Pearce.

13 February 2012

Credulity

A reader has pointed me to a UK item regarding an identity scam.

The Daily Mail reports that
To his victims he was an Italian aristocrat, a tragic cancer sufferer, an IT executive, even a songwriter for a famous rock band.

In reality, Scott Travis was nothing more than a jobless conman living on benefits in a shabby council flat in Rochdale.

The smooth-talking chancer constructed a web of lies and fake identities – including Viscount Franco Dibella III – to swindle his girlfriend and a pensioner out of hundreds of thousands of pounds.

Fraudster: Scott Travis posed as an Italian millionaire to con his elderly victim, as well as his own girlfriend Gail Heyworth.

His charades allowed him to buy a £50,000 Lexus car, have cosmetic surgery and stay for six weeks in a £200-a-night hotel alongside showbusiness stars.

He enjoyed weekends in Monte Carlo, employed a chauffeur, drank £80 bottles of Bollinger champagne and wore suits from designer boutiques.

Among his lies, the 44-year-old even claimed to be awaiting a fortune in royalties after writing songs for the British rock band Whitesnake.

Last night, however, Travis was facing up to life behind bars after a jury took just ten minutes to convict him of stealing the £100,000 life savings of an elderly man he conned by pretending to have cancer.
Oh dear. Travis' claims were repellent and almost as colourful as that of the faux Mgqumeni Khumalo, who supposedly resurrected after being kept in a cave by South African zombies for the past two years. The imposter has been charged with fraud.
Thousands of fans flocked to his home and police used water cannon to control the crowd which gathered outside the singer's remote rural home when news of his 'resurrection' spread.

They were there to catch a glimpse of Khulekani 'Mgqumeni' Khumalo - an award-winning Zulu folk musician who died in 2009.

The imposter mounted a police truck to explain to the crowd that he had been kidnapped by zombies who had kept him trapped in remote cave.

He said: 'I have been suffering a lot at the place where I was kept with zombies.

'It was hell there and I am so grateful that I was able to free myself and return to my family and you, my supporters.

'I promise to continue singing once I gather enough strength.'

'I am Mgqumeni. I know that some of you might not believe, but yes, it's true. It's me.'

The man went on: 'I know there are some people who doubt that I am Mgqumeni. You must know that none can pretend to be someone he is not.'
In classic style the imposter's claims were backed up by the dead singer's grandfather, Hlalalimanzi Khumalo, reported as saying "At first I doubted it was he, but, as the time went on, I could see that indeed it was he and as a family we are excited." You would be excited, wouldn't you, if your dead grandson both resurrected (a feat that isn't common) and managed to fend off a cave-full of the flesh-eating undead. We certainly don't see that every day at the University of Canberra, although I do harbour suspicions about whether some colleagues are truly alive or indeed human.

The S African police are reported as becoming involved when Mgqumeni
was unable to answer simple questions about Khumalo's music career - such as when he won one of the country's top music awards.

Doubts were also raised about the fact that the 'resurrected' singer no longer had his distinctive gold tooth and that the deep scars on his face appeared to have healed.
Perhaps the zombies offered him a spot of Botox and cosmetic dentistry as part of the package.

The UK scammer is reported as having -
sowed the seeds for his latest fraud in 2003 when he befriended his elderly victim after reading a newspaper advert the pensioner had placed seeking companionship.

Posing as ‘Franco’, the orphan son of an Italian aristocrat who was set to inherit millions, Travis begged the man for £20,000 for cancer treatment, plus another £9,000 to pay off a gangster.

The pensioner initially went to police, who warned him he might be the victim of a conman, but he decided not to press charges.

Later, Travis returned and claimed he needed a further £35,000 to release cash from the will of his mother, whom he said had died in a car crash in Naples.

He even paid a friend £500 to pose as a gangster who went to the pensioner’s home saying he was going to hurt ‘Franco’ unless the victim paid £30,000.

The pensioner later told police: ‘He was very angry. He said: “If you don’t get my money I’ll shoot you and him.” I was scared to death.’

The court also heard from a taxi driver paid to act as chauffeur for Travis only to be left with an unpaid bill of £1,265. ‘I fell hook, line and sinker for the lies told by him,’ he said. ‘His stories were so good, anybody would have believed them. I felt used, abused and foolish.’

Travis, who was convicted of four offences of obtaining money orders by deception, one of fraud and two offences of blackmail.
I'm reminded of other scammers, some of whom I've highlighted in papers on identity crime.

Christopher Rocancourt for example famously swindled the US rich and famous by variously pretending to be the son of Sophia Loren, a Rockefeller heir, a movie producer, a global financier or the nephew of Dino De Laurentis. The New York Times, with just a dash of hyperbole, claimed that "Women threw themselves at his feet; men threw cash". He had earlier posed as 'Prince Galitzine Christo' and dabbled in diamond smuggling, passport forgery and armed robbery.

Robert Hendy-Freegard reportedly posed as an MI5 officer, convincing people into spending years in hiding while stealing over £650,000 of their savings. It is alleged that he persuaded students and other victims that they were on an IRA hit list through their association with him, leading them to go undercover for years in 'safe houses' and travel on spy missions that featured waiting for hours at railway stations for non-existent people. In Hendy-Freegard v R [2007] EWCA Crim 1236 the Court noted that -
The facts of this case are, happily, extraordinary. The appellant is a confidence trickster who combines seductive charm with an astonishing capacity to deceive. At the heart of what the judge rightly described as a 'web of deceit and lies' was his pretence that he was an undercover agent working variously for MI5 or Scotland Yard. Once his victims were under his influence he took control of their lives, directing them what to do and where to live. His directions often exposed them to substantial hardship. He treated them with callous cruelty and fleeced them and their parents of sums of money totalling approximately £500,000.

Some aspects of the appellant's conduct laid the ground for the charges of dishonesty of which he was convicted. The Crown searched, however, for an offence that would encapsulate all aspects of the appellant's conduct and, in particular, the deprivation, as a result of his malign influence and deception, of his victims' freedom to pursue their own lives. The Crown decided that the offence of kidnapping would fit this bill. A single count of kidnapping was charged in relation to each of the four victims on the basis that it could be shown that each had been induced by deception to make a journey that he or she would not have made had he or she known the truth and that these facts constituted the ingredients of the offence of kidnapping, as identified by Lord Brandon in R v D [1984] 1 AC 778. The judge accepted the latter proposition and directed the jury accordingly. He subsequently treated the two counts of kidnapping in respect of which the jury returned guilty verdicts as enabling him to impose sentences that reflected the overall seriousness of the appellant's behaviour.
Sydney security guard Richard Kahotea was less creative, using forged documents in support of claims that he was a senior ASIO operative, thereby gaining closed court hearings on four occasions and privileges for an associate. Kahotea was convicted and sentenced to 300 hours of community service for making a false statement under oath and using fabricated evidence.

The SMH reported that -
In May 2004 Kahotea told his partner, Suzanne McElroy, that he had resigned from the ASIO because the government was trying to blame someone in the intelligence community for the Bali bombing. He also told her her phones were being tapped, police said.

Ms McElroy panicked and fled to a friend's house, where she drank several glasses of wine. On her way home, she was stopped by police and charged with drink driving.

She appeared at Waverley Local Court in relation to the drink driving charge in June 2004, and asked the magistrate to take into account that she had been anxious and concerned about Kahotea's situation and that her phone had been intercepted by ASIO, police said.

After asking for the court to be closed, Kahotea gave evidence in support of her story. According to the documents tendered to the Downing Centre court, he said he was involved in intelligence in Australia and New Zealand and was the subject of an ASIO investigation that had resulted in Ms McElroy's phone calls being intercepted.
Why stop there?
Two years later, in May 2006, Kahotea appeared twice before the Waverley Local Court for breaching the order. On both occasions he asked for the court to be closed.

He later appeared in the Balmain Local Court on the same charge, and again asked for the court to be closed. According to the police statement tendered to the Downing Centre court, he told the Balmain court he had been a New Zealand defence and intelligence official, and tendered two documents in proof. The court accepted they were genuine.

There was only one problem. The documents have since been identified by the New Zealand Defence Force and the New Zealand Security Intelligence Service as forgeries, the Downing Centre court heard.

A document identical to that tendered to Waverley Local Court and a letter purporting to be Kahotea's resignation letter from ASIO was found on the hard drive of a laptop at his Glebe home, the court heard.

In a police interview Kahotea, who now works as a furniture removalist after his security licence was revoked, admitted to misleading the Waverley court by providing false evidence and to producing the ASIO resignation letter. However he denied forging the documents.
He received a sentence of 300 hours of community service for making a false statement under oath and using fabricated evidence. The SMH in 2008 stated that Kahotea said
his evidence in relation to Ms McElroy's drink driving charge had been "all bullshit" but that he really had been involved in "top secret" operations. He said people in the New Zealand Defence Force had made sure any inquiries about his history would be met with a brick wall.
Ironically the NZ Defence Force were experiencing problems two years later with the amazing Stephen Wilce.

Italian businessman Rosario Poidimani was arrested in 2007 over involvement in a scam centred on the claim that he was the king of Portugal (the last king having expired in 1932). Poidimani allegedly sold imaginary aristocratic titles and fraudulent diplomatic passports, underpinned by imaginary offshore bank accounts and an elaborate throne room. Poidimani has claimed to be innocent and as last month is apparently appealing a sentence of five years in prison for issuing false passports .

What's in a name?

Fans of the 'Golden Age of Hollywood' (aka the Studio System) and 1920s/1930s cafe society will recall controversy over US heiresses - the Paris Hiltons of the day - dallying with European aristocrats whose titles may or may not have been genuine and whose charm substantially outweighed their bank balances. Some uncertainty was inevitable when there had been regime change (the Bolsheviks preferred to eliminate the ancien regime rather than affirm emigre claims to noble lineage), archives had been burnt along with country houses, many exiles were poor and some people were simply on the make. Were the dashing Georgian aristos dancing with Barbara Hutton for real? Was LA restaurateur Mike Romanoff (born Hershel Geguzin), a close relative of the late Tsar or simply a food vendor with a gift of the gab? What's in a name ... and how do we assess claims?

With the tagline "His royal highness Prince Alan Djamirze of Circassia is not amused" the SMH notes an identity decision by the NSW Administrative Decisions Tribunal.

The article states that -
A NSW tribunal ruled last week that Mr Djamirze, 40, failed to prove that he was of royal lineage and therefore could not use the business name "HRH Prince Alan Djamirze".

Mr Djamirze, who resides in a less-than-palatial abode in Sydney's Hills district, says the proof to his princely entitlement is contained in his name.

He told The Sydney Morning Herald he was born into the Circassian Royal House of Dja Mirze and that "Mirze" means "Prince of the blood royal".

In finding against Mr Djamirze, the Administrative Decisions Tribunal said people could not register "a business name if the name suggests a connection with a member of a royal family" where no such connection existed.
The judgment is Djamirze v Director General, Department of Services Technology & Administration [2012] NSWADT 17, concerned with the Business Names Act 2002 (NSW).

The Tribunal notes that -
The Respondent registered the business name to the Applicant on 24 August 2010 pursuant to section 5 of the Business Names Act 2002 ("the Act").

However, shortly afterwards, on 14 September 2010, the Respondent sent the Applicant a letter and Notice under section 17(4) of the Act and advised that the business name had been registered inadvertently. The Notice advised that the name should not have been registered because it contravenes clause 6 of the Ministerial Prohibition. The Notice gave the Applicant the opportunity to make written submissions to the Commissioner for Fair Trading in relation to the proposed cancellation of the Registration.

The Applicant provided submissions in response to that invitation. However, the registration of the business name was cancelled on 21 October 2010 and a letter was sent to the Applicant informing him of the cancellation.

The Applicant subsequently sought an Internal Review of the decision to cancel the registration of the business name. The internal review affirmed the original determination. In cancelling the registration of the business name the Respondent has applied a Prohibition Order issued by the Minister for Fair Trading which specifically precludes the registration of a business name if the name suggests a connection with a member of a royal family and the connection suggested does not exist ("the Prohibition Order").

The Applicant has applied to the Tribunal for external review of the decision to cancel the registration of the business name.
The issues for consideration were -
Whether the business name "HRH Prince Alan Djamirze" suggests a connection with a member of a royal family?

Whether there is evidence to prove that the Applicant has royal lineage?

Whether the business name "HRH Prince Alan Djamirze" is capable of registration under the Act?

Whether the cancellation of the registration of the business name was made correctly?
Djamirze stated that -
The title "Mirze/Mirza" is only for those who belong to Royal clans. Title of HRH Prince Alan Djamirze is not a "created" title; it is a social hereditary title, which cannot be established by peerage patents as is not the cultural practice of the Circassians. The Circassians had no kings and Sovereigns of Circassia were the Princes. HRH Prince Alan Djamirze is a prince of Circassia. The social rank is a part of the monarch's name, as is the case of HRH Prince Alan Djamirze, "Dja-Mirze" Dja being the geographical distinction of the prince and Mirze pronounced "MIRZA" the title signifying prince of the blood royal the only hereditary title in Islamic nations ...
A "social hereditary title" would be different to that of Prince Leonard of Hutt or of the self-proclaimed Duchy of Avram (established in Tasmania during 1980 by John Rudge). The Duke apparently holds a Doctorate in Sacred Theology and a Doctorate of Divinity, degrees that I've elsewhere noted were presumably useful when he modestly added to a plethora of titles (including Grand Duke of Avram, Marquis of Mathra, Earl of Enoch, Viscount Ulom and Lord Rama)by appointing himself in 1982 as Cardinal and Archbishop of the Royal See of the Continent of Australia. "His Grace the Duke of Avram" produced his own coins and banknotes from the Royal Bank of Avram, unsurprisingly being smacked by the Australian Federal Police in 1985.

The Tribunal notes that Djamirze provided items in support of his assertion, including -
1. The Applicant's statutory declaration stating that "I am HRH Prince Alan Djamirze";

2. An Affidavit of Identification for HRH Prince Alan Djamirze

3. A letter from the Open Training and education network addressed to "HRH PRINCE ALAN D'JAMIRZE"

4. A letter from the Australian Taxation Office addressed to "HRH PRINCE ALAN D'JAMIRZE"

5. A letter from Centrelink addressed to "Hrh Pr Alan Djamirze"

6. A TAFE student identity card issued in the name of "Hrh Prince Alan Djamirze"

7. An International student identity card issued in the name of "DJAMIRZE HRH PRINCE ALAN"

8. A Westpac Debit card issued in the name of "HRH DJAMIRZE"
That's unsurprising ... some people use Prince as a given name (rather than as a title) and a cascade of identity documents (all you need is an initial 'breeder' document that you can use to spawn others) is common.

The NSW Government persuasively argued that -
[it] accepts that the word "Djamirze" may have historical meaning asserted by the [Mr Djamirze]. However, Ms Lu [for NSW] submits that the Applicant's argument that he is a Prince should be rejected.

Ms Lu concedes that the birth certificate translated by the Russian Translation Services shows the name of the Applicant and his parents, and that the Applicant was born in Ukraine. However, she submits that the birth certificate does not show that the Applicant has royal lineage or that the Ukrainian government has recognised the Applicant as having royal lineage. She argues that as the Ukrainian government is silent on the issue of the Applicant's alleged royal status, the inference to be drawn is that the Applicant is not a Prince, or at least recognised as a Prince.

She submits that if the Applicant is not recognised as a Prince by his birth country or any other Sovereign State, and if the Applicant is unable to satisfy the Tribunal of his royal lineage, by way of evidentiary proof, there is no good public interest policy why the Applicant should be recognised as a Prince at all.

In relation to the notation on the birth certificate that reads "Translator's note: Mirze a title means 'Prince of the blood royal" Ms Lu, submits that this notation does not appear on the original birth certificate. Therefore the Translator has exceeded his role as a Translator by providing his own personal commentary, which is not strictly a translation. She further submits that "Djamirze" is a Circassian word and there is no evidence that the Russian Translator has expertise in the Circassian language. She submits that the Translator has departed from his area of expertise and urges the Tribunal to disregard the notation made by the Translator.

... the Applicant's baptism certificate shows that the Applicant and his parents have royal titles. However, she submits that the baptism certificate cannot be used as evidence to prove royal lineage. This is because it is unclear what primary documents were used, if any, to obtain the baptism certificate. ... the Tribunal would fall into error if it were to accept the baptism certificate, which is a secondary document, as proof of royal lineage.

... there is no evidentiary document to support the information contained in the Applicant's family tree. She also notes that the family tree lacks specificity e.g. the year of birth and death of the individuals.

... the proper proofs of royal lineage may come from formal documents such as those issued by the Sovereign State or the relevant embassies.

Alternatively, [Djamirze] may seek recognition as a member of a royal family from the Protocol and Business Operations, NSW Department of Premier and Cabinet, or Protocol Branch, Australian Government Department of Foreign Affairs and Trade.

There is no evidence that the Applicant is recognised as a member of a royal family by the NSW Government or the Australian Government.

The Respondent submits that in the absence of documentary evidence, the Tribunal cannot recognise the Applicant as a member of a royal family. The decision to cancel the registration of the business name "HRH Prince Alan Djamirze" should therefore be affirmed.
The Tribunal concluded that -
It is not in dispute that the business name "HRH Prince Alan Djamirze" suggests a connection with a member of a royal family. The Applicant in fact asserts that he is a member of a royal family - a Circassian Prince.

The Prohibition Order precludes the registration of a business name if the name suggests a connection with a member of a royal family and the connection suggested does not exist. The burden falls on the Applicant to prove that connection.

I have considered all the material that the Applicant has provided in support of his claim. I agree with the Respondent's assessment of that material.

The only primary document that the Applicant has placed before the Tribunal is his birth certificate. That certificate does not show that the Applicant has royal lineage.

As the Respondent has correctly asserted, all the other documents placed before the Tribunal are secondary documents and there is no evidence to show what primary documents were used, if any, to obtain those documents.
In discussing the NSW Tribunal decision the SMH goes on to state that -
Representing himself at the tribunal, Mr Djamirze denied that it was a "created" title. "The Fair Trading Department have these ridiculous demands", Mr Djamirze said yesterday. "They were asking me for documents, for letters from the English Queen. Where does an indigenous Circassian man go to get a document saying he is a prince?"

Circassia, in the Northern Caucasus, ceased to exist after the Russians took over their land in 1864, he said.

Mr Djamirze is the son of the colourful businessman Viktor Djamirze, a one-time bankrupt whose business partners have included the convicted corporate criminal Alan Bond, the murdered businessmen Michael McGurk and Moses Obeid, the son of the controversial ALP powerbroker Eddie Obeid.

In 1994 Mr Djamirze's father and several uncles entered into a $4 billion deal with then bankrupt Mr Bond to buy a cache of violins and several kilograms of osmium-187, a weapons-grade radioactive isotope used in the manufacture of stealth bombers.

However, their arms dealing and musical enterprise with Mr Bond, who later went to jail, came to naught.
Can't go wrong with radioactive stuff and violins!
A decade later the Djamirzes had a new partner in Michael McGurk. This venture ended in acrimony over the rightful ownership of a 400-year-old miniature Koran in a jewel-encrusted case which Viktor Djamirze had obtained from an ex-KGB contact.

The whereabouts of the Koran, which McGurk tried to sell to the Sultan of Brunei for $8 million, are unknown. ''The secret's gone with Mr McGurk,'' Alan Djamirze said, referring to McGurk's 2009 murder. ...

Some past business ventures of the Djamirzes have failed to fly including an attempt to piggyback a Russian spacecraft to Australia on the back of a colossal Russian aeroplane and the establishment of an international cargo airline using old Russian Antonov planes.

12 February 2012

Laundering

The Australian Institute of Criminology has released three reports regarding the risks to Australian business and non-profit organisations of money laundering and terrorism funding -
Anti-money laundering and counter-terrorism financing across the globe: A comparative study of regulatory action (RPP 113) by Julie Walters, Carolyn Budd, Russell Smith, Kim-Kwang, Raymond Choo, Rob McCusker & David Rees

Money laundering and terrorism financing risks to Australian non-profit organisations (RPP 114) by Samantha Bricknell, Rob McCusker, Hannah Chadwick & David Rees - 83pp

Trade Based Money Laundering: Risks and regulatory responses (RPP 115) by Claire Sullivan & Evan Smith
The first report reviews approaches taken by nine countries regarding anti-money laundering and counter-terrorism financing (AML/CTF), following the 2001 revision of the 1990 Financial Action Task Force (FATF-GAFI) 'Recommendations' regarding AML and CTF. Those Recommendations aim to support criminalisation of money laundering and the financing of terrorism, to ensure that assets linked to money laundering or the financing of terrorism can be frozen and confiscated, and to ensure that financial institutions and other regulated businesses comply with the recommendations.

The nine countries under review (Australia, US, UK, France, Germany, Belgium, Singapore, China (HK SAR) and Taiwan) provide an indication of AML/CTF implementation and of measures taken in countries with different legal traditions and different types of risk. Most information in the report derives from publicly available documents published by regulatory bodies, financial intelligence units, law enforcement agencies, industry bodies and FATF-GAFI. Each regulatory regime was examined by reviewing the criminal and regulatory legislation, including asset recovery provisions and obligations against tipping-off.

The authors conclude that the AML/CTF regimes were "remarkably similar in their responses to, and implementation of, the Recommendations", with the key difference between the nine countries being the extent and size of the regulated sector (affecting the scale of reporting undertaken and the capacity to regulate and enforce compliance for large numbers of regulated businesses in some countries). All of the regimes include money laundering as a criminal offence that is distinct from the crime that generated the funds. Australia, the US, Belgium, Germany, Hong Kong, Singapore and Taiwan all restrict money laundering predicate crimes to serious offences.
The real difference in the potential application of money laundering offences in these nine countries lies in the maximum prison sentences tied to potential predicate crimes. An offence can only become a predicate crime for a money laundering charge where the maximum sentence available for the predicate crime satisfies the conditions for money laundering in a specific jurisdiction. Illegal logging crimes, for example, do not carry the required sentences to meet the definition of a predicate offence for money laundering in Australia. The same offence in Indonesia, however, carries a maximum sentence that satisfies the severity condition of a money laundering charge in that jurisdiction.
The authors note that "Taiwan is the only country in this report" that has not criminalised the financing of terrorism. Australia has criminalised financing individual terrorists, terrorist organisations and terrorist acts through providing funds and other resources. Singapore has specifically mentioned individual terrorists and acts. The UK and US have criminalised the funding of terrorist groups or acts. The Hong Kong SAR "has focused entirely on terrorist acts and purposes".

Reporting requirements within each country showed considerable variation, although all require at least some sectors to submit reports of suspicious financial transactions.
In Australia, the systematic reporting requirements introduced under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (AML/CTF Act) exceed those enacted in most of the other countries examined. While there were requirements in every country to submit a suspicious financial activity report in some form or other, Australia was the only country that required reports for each of the following — systematic reports for suspicious financial activity, high-value cash transactions, international movements of cash, international movements of value and international funds transfers — indicating the scope of the formal regime in Australia exceeds the others in this regard.
The report notes that -
Australia, the United Kingdom and Taiwan require all regulated entities to submit reports of suspicious transactions. The remaining six countries have caveats, or additional guidelines, for when a report of suspicious activity is warranted.

The United States limits the transactions considered for reporting of this kind with a monetary threshold. Belgium, France and Germany also limit the transactions that might warrant a report but do so by considering the crimes they might be connected to. France’s regulated entities must report transactions suspected to be connected to drug trafficking, organised crime, fraud against the European Communities, corruption, or terrorism financing. Belgium, like France, limits the reports received to those related to specific crimes which include terrorism or terrorist financing, organised crime, illicit trafficking, serious fraud and organised tax fraud, corruption, environment crime and counterfeiting. Belgium, however, only requires financial institutions to submit disclosures of suspicious transactions.

The approaches taken by Hong Kong and Singapore are somewhat different. Hong Kong and Singapore also limit the crimes that might trigger a transaction report to indictable offences in the case of Hong Kong and to drug trafficking or other criminal conduct in the case of Singapore. All individuals in Hong Kong, not just reporting entities, carry this obligation and an identical one to report suspicions of terrorist property. Singaporeans who come across transactions that might be connected to drug trafficking or criminal conduct in the course of business must submit a report. In addition, all persons in Singapore, and any Singaporean citizens overseas, must report any transactions suspected to be linked to the financing of terrorism.
The second report -
The exploitation of the non-profit sector for money laundering and, in particular, the financing of terrorism, is understood to have been a long-established practice. However, the methods and sources used by terrorist organisations to finance their activities became a key policy focal point after the terrorist attacks of 11 September 2001 and subsequent (predominantly government) examinations of terrorism funding substantiated the position that non-profit organisations were at an elevated risk of criminal exploitation. The vulnerability of non-profit organisations was related to their social purpose, the cash-intensive nature of their activities and the generally minimal form of regulatory oversight applied to their operations. Adding to this risk was the provision of services that relied on financial contributions and the good will of its supporters, the often regular transmission of funds between jurisdictions and less rigorous forms of administrative and financial management.

This report examines the risks to the Australian non-profit sector of money laundering and terrorism financing and describes the regulatory changes that could minimise risk. The report uses information derived from government, non-government and peer-reviewed literature, case law and regulator reports, and observations made by representatives from the non-profit sector, law enforcement and key regulatory agencies, and academia that were consulted for the study.
The third report considers trade-based money laundering (TBML), concluding that formation of a regulatory framework to deal with TBML would "be premature and unnecessary at this stage, as more research needs to be conducted to ascertain with greater precision the nature, risks and prevalence of TBML in Australia".

Sullivan & Smith aimed to examines the use of trade, principally international trade, to launder the proceeds of crime. They comment that -
TBML is known to be used to disguise proceeds of crime and to mask legitimately obtained funds that are directed towards terrorism and other criminal activity. TBML techniques range from simple fraud, such as the misrepresentation of prices, quantity or quality of goods on an invoice, through to complex networks of trade and financial transactions. While TBML schemes most commonly involve the misrepresentation of price, quantity or the type of merchandise, trade in intangibles (such as information and services) is emerging as a significant new TBML frontier—also known as service-based money laundering. TBML (and the approaches designed to address it) is defined in terms of international trade, rather than domestic trade.

There is a fine line between TBML and other money laundering methods and in practice, they often overlap. Many TBML schemes use financial transactions to launder funds. TBML may also result in evasion of income tax and excise and involve other financial crimes, although tax evasion may not be the primary objective. For clarity of analysis and to assist understanding of TBML and its ramifications, TBML is defined and differentiated from other types of money laundering and associated activities such as tax evasion.
They conclude that -
Several factors make trade attractive to money launderers. These include growth in volume and value of world trade and the relative ease of disguising the true nature of the trade, especially by comparison with other money laundering avenues, which are subject to closer scrutiny. There is anecdotal evidence that increased reporting and scrutiny of financial transactions, as a result of anti-money laundering/counter terrorism financing (AML/CTF) initiatives, is making trade more attractive as a vehicle for money laundering (FATF 2006). The concern is that, unless TBML is addressed, it will increase and become entrenched.

While TBML methods such as over- and under-invoicing and merchandise substitution are not new, there is a growing awareness of TBML among governments, experts, business and individuals.

The full extent of TBML as it affects Australia and its interests is currently unknown. This is of concern, given the ramifications of TBML. However, TBML is arguably a significant concern for a country like Australia that relies heavily on trade and foreign investment, although it is likely that TBML poses a more significant risk in regions where border security is not as restrictive, such as Free Trade Zones (FTZs) or the European Union.
Future Australian and international anti-trade based money laundering strategies

There has been little research conducted internationally and within Australia on TBML. With the Australian Government’s emphasis on evidence-based policy and regulatory development, there is a need for further research to be undertaken in this space to address existing gaps in knowledge concerning the nature and extent of TBML and how to design national regulatory measures to address them most effectively.

In collaboration with the respective trade bodies and subject matter experts, the Australian Government could, arguably, take a leading role in capacity-building and awareness-raising, both within government agencies and with existing reporting entities who facilitate trade through the provision of financial or logistical services (eg financial institutions) in Australia and with Australia’s trading partners. These agencies and service providers would benefit from a better understanding of TBML within the Australian context.