Today's New York Times reports that former hedge fund manager Mathew Martoma (on trial for alleged misbehaviour at SAC Capital Advisors) falsified his grades at Harvard Law School some 15 years ago.
In 1999, Mr. Martoma was expelled from Harvard for creating a false transcript when he applied for a clerkship with a federal judge, court papers unsealed on Thursday showed. Mr. Martoma used a computer program to change several grades from B’s to A’s, including one in criminal law, and then sent the forged transcript to 23 judges as part of the application process.
Then, during a Harvard disciplinary hearing to determine whether he should be expelled, Mr. Martoma tried to cover his tracks by creating a fake paper trail that included fabricated emails and a counterfeit report from a computer forensics firm that Mr. Martoma had created to help conceal his activities.
After Harvard expelled him, Mr. Martoma, who at the time was known as Ajay Mathew Thomas, legally changed his name to Mathew Martoma . . .
When he was at Harvard, Mr. Martoma told the law school administrators that he had falsified his transcript as a joke and did it mainly to impress his parents.Laughing all the way to the bank?
A Harvard Law School spokeswoman said on Thursday that the university had no record of Mr. Martoma’s graduating but could not comment further. She could not confirm whether he had attended or was expelled.
In R v Dimitri De Angelis [2013] NSWDC 79 the Court refers to the 'hard work, co-ordination, preparation, perseverance, extravagance, ruthlessness, exploitation of friendships, deviousness, cunning, heartlessness and intelligence' of an Australian fraudster, noting.
To various victims of his offences he made "a series of false and misleading representations". Some of those included the following:
- He had built a corporate empire with a group of companies that he had incorporated in 2001, the Crystal Rights Group.
- That he had sold the Crystal Rights Group to the US corporation Wal-Mart for hundreds of millions of dollars which meant that he had access to those vast amounts of money.
- He knew and was good friends with many important and famous persons throughout Australia and the world.
- He justified that last representation by producing false photographs made using a computer program called Photoshop. The photographs depicted himself with no lesser persons than Her Majesty Queen Elizabeth II, His Holiness Pope John Paul II, His Holiness the Dalai Lama, US Presidents George Bush Senior, George W. Bush and Bill Clinton and Australian Prime Ministers John Howard and Kevin Rudd. The photographs extended to persons in significant positions in private enterprise including Gail Kelly, Kerry and James Packer and Lachlan Murdoch.
Mr De Angelis had falsified ASIC documents, including documents that made it appear that Lachlan Murdoch and James Packer had made large investments in his enterprise and were shareholders. He represented to people that he owned fleets of luxury cars, as well as mansions and luxurious homes in Sydney and Melbourne.
Part of the proposition that he put to potential investors was that every one per cent investment in his company would be worth $6,000,000 when the company went public. He represented that the purported float was to be underwritten by Macquarie Bank and was being administered by Deloittes. The facts record that Mr De Angelis "persuaded persons to transfer and pay more than $8,500,000 to himself and to the company or its associated company Emporium Film Pty Limited".
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Count 6 alleges that Mr De Angelis defrauded Anne Keating of $100,000. He had met her in 2004 and she had invited him to her unit. That occurred in these circumstances. Ms Keating apparently received a call from the concierge in her unit on behalf of Mr De Angelis "asking whether the apartment was available for rent". The concierge brought the offender to her apartment. Mr De Angelis told Ms Keating "he was anxious to rent her apartment for his mother who would soon arrive from France for a few weeks." Mr De Angelis told Ms Keating that he owned 17 apartments. He pointed to a contract for sale of land. This was his means of introducing himself to Ms Keating and inveigling himself into her life. As I said, he manufactured a false contract for sale of land. He rented expensive rural or beach recreational properties. He manufactured false flight bookings. Indeed at one stage he repaid Anne Keating $450,000 which she had lent him, thereby giving the impression that he was genuinely financially responsible when in fact he had taken the money from somebody else in order to repay her. What I have just described are all attributes of the activity that Mr De Angelis engaged in in order to defraud Anne Keating of $100,000.
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The victims of counts 11 and 12 are Kevin and Jennifer Winward. They are both offences - as were the offences as against Mr Uren and Ms Gregory - against s176A of the Crimes Act. Count 11 involves Mr De Angelis defrauding the Winwards of no less than $2,075,000 and count 12 involves a fraud of $700,000. The agreed facts point out that the Winwards were owners of a company structure "for superannuation and investment purposes". It appeared to be a family superannuation company which involved their adult sons as well. Mr Winward at one stage said that "he and his wife were 'pretty naïve' as they had never been involved in an investment such as this before and needed to understand the processes involved".
The activity involved in defrauding the Winwards of this huge amount of money involved preying upon them through a contact which Mr De Angelis had in Melbourne. He persuaded them to part with superannuation funds which had been set up for themselves and their sons. He continued to prey on them despite them acknowledging that they were "pretty naïve".
The agreed facts also record this. In 2007 they were invited to the Presidential Suite at the Crown Casino in Melbourne by Mr De Angelis. There was a woman named Rhonda Wylie and several other people there as well including artists. The facts say that "Jennifer Winward heard Rhonda Wylie say to the offender 'James Packer has arrived and wants to have dinner with you' to which he replied 'Tell him I'll see him for breakfast'. She later heard her tell the offender that 'Red' had arrived from Perth and also wanted to see him. She understood 'Red' to be a reference to Eileen Bond. The offender continued to order expensive bottles of champagne and buckets of caviar while they were there." In addition, in order to assist him in defrauding the Winwards of so much money, he falsely manufactured Channel Ten logos to give the impression that he was associated with that corporation. At one stage the facts record that he "bombarded" the Winwards with SMS messages relating to the success of the company and its artists and pictures of himself with prominent people.
Count 13 is also an offence against s 176A and involves Mr De Angelis defrauding Assunta and Nuncio Pellicano of $950,000. Once again Mr De Angelis used the Presidential Suite at the Crown Casino and told the Pellicanos that he had been speaking to Lachlan Murdoch about an investment. He e-mailed a photograph of himself with Lachlan Murdoch and sent them a business plan. He also again gave the impression that he was contacting them from the office of the chairman of Citibank. He showed them a document which "appeared to be an HSBC statement with a balance of approximately $145,000,000". He told them he had a hundred employees and that he had a bodyguard.
Count 14 claims that Mr De Angelis defrauded Rex Growden of $1,300,000, thereby offending against s 176A of the Crimes Act. The facts record that "Rex Growden and his wife met the offender while they were eating at a Sydney restaurant when he began talking to them from his table nearby". He sent them numerous SMS messages attaching the usual photographs. He made extraordinary claims about his company and the prospects of investing. Again he told them of associations with Lachlan Murdoch and James Packer. Mr Growden "told the offender that the money would be paid out of his superannuation account, with his son Simon Growden acting as his financial adviser, so they needed to ensure that all documentation et cetera was finalised". He sent them an e-mail attaching "an ASIC search document which appeared to indicate that the offender, James Packer and Lachlan Murdoch were sole shareholders in a company called Emporium Pavicevic. (It should be noted that Mr De Angelis is also known as Slobodan Pavicevic.) He even sent a text message to Mr Growden addressing him as James thereby giving him the impression that he was sending a text to James Packer. Again he used the Channel Ten logo.
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I turn now to some personal information about Mr De Angelis. The information is limited. One source is a very helpful report from the experienced forensic psychiatrist, Dr Stephen Allnutt, who produced a report dated 24 December 2012 and who gave evidence before me on 23 January this year. Dr Allnutt had interviewed Mr De Angelis a number of times and had reviewed a large amount of information about Mr De Angelis's medical background, including treatment at various stages under psychiatrists and some admissions to hospital. In his report, which became exhibit 2, he said: "The varied clinical opinions in my view reflect the difficulty in this case; this is a man who has pled guilty to engaging in a large fraud of various experienced people who has a tendency to exaggerate his achievements (having regard to the documentation from Wikipedia that was amongst the evidence); this would suggest an underlying tendency to fabricate his history and information about himself to meet secondary gains; given that he is now facing charges and sentencing for these offences, it would be reasonable for clinicians to be concerned that his self report of symptoms might be unreliable."
Dr Allnutt fairly added that on the other hand: "People who are fraudulent have the same risk of mental illness as the general population and this needs to be considered in this case."
I add here that of course any history which comes directly from Mr De Angelis I regard as unreliable unless corroborated, for the reasons stated by Dr Allnutt.
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Dr Allnutt went on to say he was "reasonably confident of a current diagnosis of mood disorder, predominantly recurrent depressive disorder and anxiety disorder (with panic attacks) with a vulnerability to periods of hypomania; differential diagnosis includes bipolar affective disorder". Dr Allnutt said he was "unable to conclude a diagnosis of chronic psychotic disorder" although he was reluctant to definitively rule it out. He thought specifically the applicable diagnosis was one of narcissistic personality disorder.
Dr Allnutt ventured an opinion about Mr De Angelis's mental state around the time of offending. He was not seeing Mr De Angelis at the time and had to draw on Mr De Angelis's history and also evidence from other medical sources. He said he was "unable to conclude that he was driven by an underlying delusional motivation". He was of the opinion that a "significant feature that would have made impact on his offending behaviour would have been his underlying personality disorder which could be regarded as being a narcissistic personality disorder suffered by an individual with a poor self identity and self esteem derived from early abusive experiences in childhood; his offending could be seen in terms of an attempt to achieve success, not only for financial gain (secondary gain) but also an attempt to shore up an underdeveloped sense of self and self esteem (primary gain)."
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Dr Allnutt confirmed in evidence before me his diagnosis of narcissistic personality disorder. In cross-examination he said the offences which Mr De Angelis committed required reasonable judgment. He acknowledged it was a difficult case to express an opinion on because of the volume of information and documents and was "clouded by Mr De Angelis's unreliability in reporting". Cocaine was a significant factor contributing to mood fluctuations.
There were put into evidence various character references from people who appeared to know Mr De Angelis well. He is described, amongst other ways, as being a "complex individual". It was pointed out his life has been "one of psychological torment, abuse and loneliness". One person described him as a "confused, at times volatile, generous and sadly, irreparably damaged individual who craves acceptance and love but who sadly has only created destruction around himself for financial gain and public exposure he yearns for but, unfortunately, for all the wrong reasons". He is described as extremely kind hearted but with drastic outbursts "of total disconnection, self destruction, outrageous behaviour". He is said to show a genuine concern for those in need and the less fortunate in life and as being a person who is genuinely interested in people. I must take those character references in the context of my description of the offending which he has committed.
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There was an issue about whether the harm perpetrated to victims who are natural persons should be given more weight than the harm perpetrated against a corporation. The relevance of the issue to this case was the reference to various authorities which Mr O'Brien said often concerned corporations and I should regard the sentences imposed in those other cases as being based upon damage done to corporations rather than to natural persons. Mr Ramage QC argued there should be no distinction. I find as a matter of fact the impact on victims who are natural persons is worse than on a victim which is a large corporation. One is a real person; the other is a legal person. The shareholders are affected by the impact on a corporation but the impact there is indirect. As Mr O'Brien pointed out, the impact is literally shared by the shareholders.
Mr Ramage QC pointed to the sophistication of some of the victims and argued there was nothing particularly sophisticated about his client's conduct. I reject the latter submission. His client went to extraordinary lengths to present himself as a successful, experienced and well-connected company director and entrepreneur. Those efforts were very worthwhile in extracting millions of dollars from innocent victims who thought they were investors. They were very effective in persuading experienced and professional people. To defraud a couple of unsophisticated victims might not need much skill; to defraud 16 unsophisticated victims would need an adept fraudster; but to defraud 16 victims, some of whom were are in professional, academic, business or local government careers for a period of over some years, requires very skilled criminal craft and perseverance. Mr De Angelis demonstrated that.
As Mr Ramage QC says, his client made some extraordinarily, perhaps occasionally bizarre, claims. But Mr De Angelis went to a lot of trouble to make those claims convincing. The enterprise which Mr De Angelis engaged in over some four years, speaking generally, required . He was, after all, dealing with intelligent and sometimes professional people. His fraudulent behaviour involved a very large logistical exercise. It was not only fraudulent, it was predatory. He had to use great skill in forging or in arranging the forging of documents, including photographs.
