Werden v The Queen [2015] VSCA 72

This was the appeal of a convicted mortgage fraudster, former lawyer, Gabriel Werden. It is instructive for those who wish to avoid mortgage fraud.

The fraudster created an account online with SAI Global, a licensed Land data broker which allows access to Landstat (Victorian Titles Office) products and information via its website, in a nominated company name. The fraudster used the account many times to search for and obtain company details and property Title extracts. 

Charge 1 – ME Bank $230,000 (failed)

In June 2010 the fraudster contacted a man who owned vacant land in Manns Beach which he and his wife had advertised for sale on internet site DIY (Do It Yourself) property sales. 

The fraudster claimed to be Tony Tont and told the man he wished to purchase the property.

In July 2010 the fraudster lodged a home loan application online with ME Bank for $230,000 to purchase the property. The fraudster lodged the application in the name of Tony Tont of an address in Essendon.

The fraudster provided falsified documents to support the home loan application in the name of Tony Tont including copies of a Victorian driver’s licence, Victorian birth certificate, signed Contract of Sale, a Telstra bill, a Telstra Super statement, a Victorian Teachers Credit Union (VTCU) account, an ING Masterfund statement, PAYG payment summary, and pay slips. 

To add authenticity the documents were stamped as being a true copy of the original and signed by a claimed solicitor, being a “David Peterson”.

The loan was processed by ME Bank and identified as fraud and declined. 

Charge 2 – CBA $240,000 (failed)

In July 2010 the fraudster contacted a mobile banker with the CBA, claiming to be Mark DeSilva of an address in Essendon. He advised he was seeking finance for land he had purchased at Manns Beach.

The fraudster forwarded falsified documents to via email to support the application. These included a VTCU statement of account with the same account number and two company payslips. As a result the mobile banker submitted a home loan application to the CBA for $240,000.

A valuation was conducted on the land at Manns Beach, which came in too low. The mobile banker attempted to meet the fraudster in person but the fraudster informed him he was interstate and correspondence could only be by email.

The loan application was subsequently declined.

Charge 3 – AMP $240,000 (failed)

In July 2010 the fraudster contacted the vendor of vacant land in Woorien North which had been advertised for private sale on the internet site for $95,000.

The fraudster claimed to be Tony Tont and told the vendor he wished to purchase the property on behalf of an overseas investor for $300,000 with a rebate clause that the remaining $210,000 is returned to him.

The fraudster next contacted, a legitimate mortgage broker for AMP, claiming to be Mark Grosso of an address in Essendon. He informed DD he was seeking finance for land he had purchased at Woorien North.

The fraudster forwarded an AMP home loan application and falsified documents to via email to support the application. Again, company payslips were forwarded, a VTCU statement, an Optus bill and a birth certificate were also included which were all falsified documents. 

A false licence number was also put forward by the fraudster. The phone number provided by the fraudster was the same as that provided when he claimed to be Tony Tont and Mark DeSilva in the first 2 applications.

The broker commenced the home loan application but had some concerns and requested to meet the fraudster in person. The fraudster had no further contact with DD and no official loan application was submitted to AMP.

Charge 4 – CBA $240,000 (failed)

In August 2010 the fraudster contacted a mobile banker with the CBA by email claiming to be Mark Grosso of an address in Essendon, seeking finance for land he had purchased at Woorien North.

The fraudster forwarded a home loan application and falsified support documents including a birth certificate, Optus bill, 2 company payslips and a VTCU statement to NF to prepare and lodge a loan application. 

The mobile banker had concerns regarding the application and contacted CBA group security. An email was then forwarded to the fraudster on the requesting further documents and to meet in order to progress the application.

The fraudster made no further contact.

Charge 6 – ME Bank $240,000 (failed)

In August 2010 a legitimate borrower observed a re-financing advertisement in the Herald Sun newspaper placed by the fraudster and contacted the fraudster discussing how he wanted to re-finance property he owned in Lockington in order to borrow $60,000.

The fraudster had contact with the borrower over a five to six-week period during which he requested and received photocopies of the borrower’s identification and rates notice. 

He sent documents to the borrower for him to sign. Once signed the documents were sent back to the fraudster. The fraudster also sent a courier to the address to collect the certificate of title to the property from the legitimate borrower which was delivered to a letterbox at an address in Essendon, from which the fraudster collected it.

The fraudster next lodged a home loan application online with ME Bank for a loan of $125,000 to purchase property at an address in Lockington. The fraudster lodged the application in the name of Ronald Jarvis of an address in Essendon.

The fraudster forwarded falsified documents to support the home loan application. These included an Optus bill, CUA statement, payslips from his claimed employer, a Telstra Super account and a birth certificate with the same number as in charges 3 & 4. This was supposedly certified by a Certified Practising Accountant. The loan was processed by ME Bank and identified as fraud and declined. 

Charge 8 – AMP $460,000 (succeeded)

In August 2010 a legitimate borrower observed a re-financing advertisement in the Herald Sun newspaper run by the fraudster and contacted the fraudster to discuss the re-finance of a property in Roxburgh Park.

The fraudster had regular phone contact with the legitimate borrower and couriered a re-financing document to him in Roxburgh Park, which he signed. The document was then couriered to a letterbox at an address in Essendon, where the fraudster collected the document.

The fraudster emailed a mortgage broker for AMP claiming to be Alan Farmer of an address in Essendon, requesting finance for an urgent property settlement regarding property he had purchased in Roxburgh Park.

The fraudster forwarded falsified documents to support the home loan application. These included a photocopy of a drivers licence and birth certificate supposedly certified, 2 company payslips, a PAYG summary, a signed contract of sale as well as a Telstra bill. As a result the broker submitted a home loan application to AMP for $460,000.

The loan was approved with settlement took place in September 2010.

The fraudster had requested thirteen cheques be made out in different names for various denominations. This was done to minimize the risk of detection. A conveyancer from a legal services firm attended the settlement on behalf of the fraudster and received the settlement cheques. They were collected by courier and delivered to a letterbox at an address in Essendon.

The fraudster collected the cheques and mailed them to ING where they were deposited into false bank accounts which he had opened to launder the money. Once the cheques had cleared the money was withdrawn at different automatic teller machines around Melbourne.

Charge 9 – CBA $126,000 (succeeded)

In September 2010 the fraudster contacted a legitimate mortgage broker Taree, New South Wales. He claimed to be Martin James of an address in Essendon, seeking finance for land he had purchased in Lockington.

The fraudster forwarded falsified documents to support the home loan application. These included payslips from his claimed employer, a driver’s licence, birth certificate and a CUA statement. 

The broker submitted a home loan application to the CBA for $240,000 on the 25th July 2010. A loan of $126,000 was approved with settlement taking place on the 17th September 2010.

The fraudster requested seventeen cheques be made out to different names for various denominations. This was done to minimize the risk of detection. A conveyancer from a legal services company attended the settlement on behalf of the fraudster and received the settlement cheques. They were collected by courier and delivered to an address in Essendon.

The fraudster then collected the cheques and mailed them to ING where they were deposited into false bank accounts in fictitious names which he had opened to launder the money. Once the cheques had cleared the money was withdrawn at different automatic teller machines around Melbourne.

Charge 11 – AMP $360,000 (succeeded) 

In August 2010 a legitimate borrower observed a re-financing advertisement in the Herald Sun newspaper posted by the fraudster and made contact. He wanted to re-finance a property he owned with his mother, in Kilsyth in order to borrow $60,000.

The fraudster had regular phone contact with the legitimate borrower and mailed a re-financing document to him at Kilsyth via Express Post. The legitimate borrower signed the document and returned it via Express Post mail to an address in Essendon. The fraudster then collected the documents.

In September 2010 the fraudster emailed a legitimate broker for AMP claiming to be John Scenna of an address in Essendon, requesting finance for an urgent property settlement regarding property he had purchased in Roxburgh Park.

The fraudster forwarded falsified documents to support the home loan application. These included a photocopy of a drivers licence, birth certificate, company payslips, a CUA statement and a PAYG summary. As a result the broker submitted a home loan application to AMP for $336,000.

The loan was approved and settlement took place that same month. The fraudster had requested eleven disposal cheques be made out to different names for various denominations. A conveyancer from a legal services company attended the settlement on behalf on the fraudster and received the settlement cheques. They were collected by courier and delivered to a letterbox in Essendon.

One cheque was issued to the borrower the amount of $60,000 and forwarded to her at her address in Roxburgh Park, by courier. The remaining cheques were forwarded by mail to ING where they were deposited into false bank accounts the fraudster had opened to launder the money. Once these cheques had cleared the money was withdrawn at different automatic teller machines around Melbourne.

Charge 12 – AMP $520,000 (failed)

In October 2010 a legitimate borrower responded to one of the advertisements for re-financing placed in the Herald Sun newspaper by the fraudster and wanted to re-finance property he owned in Berwick. The fraudster had regular phone and email contact with the borrower regarding the re-financing.

The fraudster next contacted a broker for AMP claiming to be Justin Mandy of Glenroy, requesting finance for a property settlement regarding property he had purchased in Berwick.

The fraudster forwarded falsified documents to support the home loan application. These included a photocopy of a drivers licence and birth certificate supposedly certified by a Certified Practising Accountant, two company payslips, a PAYG summary and contract of sale. He further provided a VTCU statement. 

As a result the broker submitted a home loan application to AMP for $520,000 on the 8th October 2010. The loan was initially approved subject to valuation and later declined as suspected fraud.

Charge 13 – AMP $130,000 (failed)

In October 2010 a legitimate borrower observed are-financing advertisement in the Herald Sun newspaper and contacted the fraudster regarding re-financing vacant land he owned in Endeavour Hills.

The fraudster had regular contact with the borrower and forwarded a document to him in Endeavour Hills regarding the home loan.

A short time later the fraudster contacted am AMP broker claiming to be Alan Turner of Glenroy, requesting finance for an urgent property settlement for land he had purchased in Endeavour Hills.

The fraudster forwarded falsified documents to support to the home loan application. The broker commenced an application for $130,000 but did not lodge it as he suspected it to be fraudulent. 

Charge 14 – ME Bank $264,000 (failed) 

In October 2010 a legitimate borrower responded to one of the advertisements for re-financing placed in the Herald Sun newspaper by the fraudster and wanted to re-finance a property he owned in Cranbourne. The fraudster had regular phone contact with the borrower regarding the re-financing.

The fraudster lodged a home loan application on line with ME Bank for $264,000 to purchase the property in Cranbourne. The fraudster lodged the application in the name of one of the other borrower victims. 

The fraudster forwarded falsified documents to support the home loan application. These included a photocopy of a birth certificate supposedly certified by a CPA, company payslip, PAYG summary, VTCU statement, AGL account and Telstra Super account.

The loan was processed by ME Bank and identified as fraud and declined. 

Charge 15 – ME Bank $136,000 (failed) 

In October 2010 the fraudster lodged a home loan application on line with ME Bank for a loan of $136,000 to purchase property at 2/38 John Hunter Drive, Cranbourne. 

The fraudster lodged the application in the name of John Mitchell of an address in Glenroy. The fraudster forwarded falsified documents to support the home loan application. These included photocopies of a birth certificate supposedly certified, a Yarra Valley Water bill, a company payslip, a CUA statement and a Telstra Super statement. The loan was processed by ME Bank and identified as fraud and declined.

Charge 16 – CBA $496,000 (failed) 

In early November 2010 the fraudster contacted a legitimate broker in Taree claiming to be Justin Mandy of Glenroy, requesting finance for a property settlement regarding property he had purchased in Berwick.

The fraudster forwarded falsified documents to support the home loan application as Justin Mandy. These included a company payslip, a photocopy of a driver’s licence and birth certificate supposedly certified, a PAYG summary, a CUA statement and an AGL invoice. As a result AF submitted a home loan application to the CBA for $496,000 on the 5th November 2010. The loan was processed by the CBA and conditionally approved and later declined as suspected of fraud.

Charge 17 – CBA $136,000 (failed)

In September 2010 a legitimate broker responded to an advertisement for re-financing placed in the Herald Sun newspaper by the fraudster wanting to re-finance a property he owned in Colac. The fraudster had regular phone contact with the borrower regarding the re-financing.

The fraudster contacted the broker in Taree claiming to be Michael Fletcher of an address in Glenroy, requesting finance for a property settlement regarding property he had purchased in Colac.

The fraudster forwarded falsified documents to support the home loan application: a photocopy of a driver’s licence and birth certificate supposedly certified by a CPA, 2 company payslips and a VTCU statement. As a result AF submitted a home loan application to CBA for $136,000 on the 11th October 2010.

The fraudster was in regular contact with the broker and informed him the land to be purchased had changed from one in Colac to one in Endeavour Hills, for the same purchase and loan price. An amended application with the Endeavour Hills address was submitted to the CBA. The loan was approved with settlement taking place on 31st December 2010.

The CBA had been monitoring the application suspecting it of being a fraud however a communication breakdown allowed the settlement to occur and the fraudster obtained the bank cheques after settlement.

The fraudster had requested seven disposal cheques be made to out to different names for various denominations. A conveyancer from a legal services company attended the settlement on behalf of the fraudster and received the settlement cheques. They were collected by courier and delivered to an address in Glenroy.

The fraudster then collected the cheques and mailed them to a number of credit unions in Victoria, New South Wales, and Queensland, where they were deposited into false bank accounts which the fraudster had opened to launder the money. 

CBA cancelled the cheques prior to the funds clearing. The CBA suffered no financial loss and the Title to the property did not change.

Charge 19 – AMP $350,000 (failed)

In June 2011 a legitimate borrower responded to the advertisement for home loans placed in the Herald Sun newspaper by the fraudster and wanted to re-finance property he owned in Ferntree Gully. The fraudster had regular phone contact with the borrower regarding the re-financing.

The fraudster lodged a home loan application on line with AMP for a loan of $360,000 to purchase property in Ferntree Gully. The application was lodged in the name of David Shawlin of an address in Brunswick.

The fraudster forwarded falsified documents to support the home loan application as David Shawlin. These included photocopies of a driver’s licence and birth certificate supposedly certified, company payslips, PAYG summary and a contract of sale.

The loan application was identified as fraud by AMP and upon request from investigators the loan was progressed as normal. The loan was conditionally approved and dropped to $297,000 after the property had been valued.

The loan contracts were forwarded to the fraudster by Express Post on Wednesday the 27th July 2011 when, after being delivered to a letter box at an address in Brunswick, the fraudster collected them. 

This pick-up was observed by police. The documents were signed by the fraudster and returned via mail arriving at a mortgage services company on Friday 29 July 2011.

The loan did not progress to settlement as the fraudster was having difficulty with the out-going mortgagee.

Charge 20 – CBA $440,000 (failed)

In late June 2011 a legitimate borrower responded to the advertisement for home loans placed in the Herald Sun newspaper by the fraudster and wanted to re-finance property he owned with his wife in Mirboo North. The fraudster had regular phone contact with the borrower regarding the re-financing and requested the borrower to attend at a post office to have his identification verified to assist with the process.

The fraudster mailed an ING identification form to the borrower who upon receiving the document attended at his local post office and had the document witnessed and sent off. The fraudster then opened an ING deposit account with the borrowers details by ringing ING and having the mailing address changed to an address in Brunswick.

The fraudster contacted a mortgage broker claiming to be Jason Theodore of Brunswick, requesting finance for a property he had purchased in Mirboo North.

The fraudster forwarded falsified documents to support the home loan application. These included photocopies of a birth certificate and licence, company payslips from, PAYG summary and CUA bank statement. 

As a result the mortgage broker submitted a home loan application to CBA for $440,000 on the 4th July 2011.

The loan was conditionally approved subject to valuation and subsequently declined due to an identified discrepancy in the CUA statement provided by the fraudster. He had incorrectly added an amount when falsifying the document. 

Contact was soon lost.

Charge 21 – Westpac Bank $656,000 (failed)

In June 2011 a legitimate borrower responded to the advertisement for home loans placed in the Herald Sun newspaper by the fraudster and wanted to re-finance property he owned in Doreen. The fraudster had regular phone contact the borrower regarding the re-financing; the borrower passed on to the fraudster his private details including driver licence number.

The fraudster contacted a mortgage broker claiming to be Michael Charles of Brunswick, requesting finance for a property he had purchased in Doreen.

The fraudster forwarded falsified documents to support the home loan application as Michael Charles. These included copies of a birth certificate and driver’s licence supposedly certified, company payslips, a CUA statement and a contract of sale. As a result the mortgage broker submitted a home loan application to Westpac Bank for $656,000 on the 15th July 2011. 

The loan was conditionally approved subject to valuation. The property was valued and as a result the loan amount was amended to $628,000 subject to satisfactory identification of Charles which did not take place.

The fraudster also attempted to open savings accounts in the borrowers name with ING and Suncorp using his personal details with a mailing address in Brunswick.

Charge 23 – AMP $520,000 (failed)

In July 2011 a legitimate borrower responded to an advertisement for home loans placed in the Herald Sun newspaper by the fraudster and wanted to re-finance property he owned in Wheelers Hill. The borrower provided his private details to the fraudster who said he would speak to a number of lenders.

The fraudster lodged a home loan application on line with AMP for a loan of $520,000 to purchase the property in Wheelers Hills. The application was lodged in the name of Jason Theodore of Brunswick. The fraudster forwarded falsified documents including copies of a birth certificate and driver’s licence supposedly certified by a solicitor, company payslips, PAYG summary, contract of sale and VTCU statement.

The loan application was identified as fraud by AMP and declined.

Charge 22 — Westpac Bank $162,000.00 (settlement with police involvement – day of arrest)

In late June 2011 a legitimate borrower responded to an advertisement for home loans placed in the Herald Sun newspaper by the accused and wanted to re-finance a property in Paynesville.

The fraudster had regular phone contact with the borrower regarding the re-financing and requested that she forward copies of her driver licence, pension card, rates notice and mortgage documents. The borrower forwarded copies of the requested documents by Express Post to an address in Brunswick.

The fraudster contacted a mortgage broker claiming to be David Chawlin of Brunswick, requesting finance for a property he had purchased in Paynesville.

The fraudster forwarded falsified documents to support the home loan application. These included copies of a birth certificate and driver’s licence purportedly certified, company payslips, PAYG summary and a CUA statement. As a result the mortgage broker submitted a home loan application to RAMS (Westpac Bank) for $162,000.

The loan was approved with settlement taking place on Tuesday the 9th August 2011. The fraudster had requested ten cheques be made to out to different names for various denominations. 

A law clerk from a legal services company attended the settlement on behalf on the accused and received the settlement cheques. She had commenced following instructions to fill in deposit slips to deposit the cheques into accounts nominated by the accused when she was spoken to by investigators. The cheques were handed to investigators and not banked.

Defence

All the essential elements of the charges, other than the identity of the offender, could be established by evidence of documents, emails and telephone communications used to perpetrate the frauds.

The accused conceded that the relevant offences had occurred. Nor was it in issue that the same person had committed all the offences. The accused claimed he was a patsy of the real culprit. 

The evidence linking the accused to the frauds

At the time of his arrest, the accused had in his possession, a diary with entries in his own handwriting, a laptop, a Lexar memory stick and three mobile phones.

The diary contained detailed notes relating to the frauds including names, phone numbers and other details. The laptop and USB contained copy documents used in the frauds and the three mobile phones had numbers utilised for the purpose of carrying out the deceptions. 

Multiple fake documents and identities had been used in multiple frauds making it clear the culprit of one was the culprit of the others. 

Surveillance evidence showed the accused picking up mail from letterboxes with which he had no apparent connection. The surveillance evidence also showed him posting envelopes after collecting mail and sitting in his car when telephone records indicated calls were made relating to the offences. 

The accused’s explanation

The accused sought to explain away the circumstantial case against him by reference to his dealings with a finance broker from New South Wales by the name of Mark.

The accused said he first met Mark at a local Red Rooster restaurant. During the course of the meeting Mark asked the accused about himself and the accused told Mark that he used to be a solicitor and sales was a new thing for him. 

Mark spoke about his finance broking business and how it had done very well in Sydney and that he was now in the process of setting up in Melbourne. He told the accused that he was looking for somebody to manage the business in Melbourne and offered him the job with a salary of $120,000. 

A few days later Mark offered the accused a job involving ‘a little bit of running around’ and included picking up mail from two addresses in Brunswick, as Mark was shifting offices from Brunswick to the city.

The accused said that he started collecting Mark’s mail from the two Brunswick addresses. Two or three weeks prior to the accused’s arrest, Mark told him that he was going away and showed him how to use three other mobile phones, asked him if he would check messages on them and also told him he may be required to access a laptop and ‘send stuff.’ Later that night Mark said he wasn’t going away after all.

The accused claimed the information in his diary relating to the deceptions, namely details of clients’ names, telephone numbers and other matters relating to property transactions was written down by him as either copied from Mark’s diaries or as told to him over the phone by Mark by way of updates and explanations. 

The accused gave evidence he believed Mark and had no cause to think he was involved in fraudulent activity. Rather, he found Mark to be ‘very charming and very genuine.’

The Appeal

There were various grounds raised in the appeal. One of which was the fact the trial judge’s questioning bore the character of an investigative interrogation. 

The appeal court noted:

That form of inquiry is, or should be, beyond the realm of judicial activity. Under our law a criminal trial is not, and does not purport to be, an examination and assessment of all the information and evidence that exists, bearing on the question of guilt or innocence’. It is a trial, not an inquisition: a trial in which the protagonists are the Crown on the one hand and the accused on the other. Each is free to decide the ground on which it or he will contest the issue, the evidence which it or he will call, and what questions whether in chief or in cross-examination shall be asked; always, of course, subject to the rules of evidence, fairness and admissibility. The judge is to take no part in that contest, having his own role to perform in ensuring the propriety and fairness of the trial and in instructing the jury in the relevant law.

The line that a trial judge walks when asking questions of a witness is a narrow one. There is nothing wrong with questions designed to clear up answers that may be equivocal or uncertain, or, within reason, to identify matters that may be of concern to himself. However, once the judge resorts to extensive questioning, particularly of the kind that amounts to cross- examination in a criminal trial before a jury, then he is treading on thin ice. The thinness of that ice will depend upon the identity of the witness being examined (here the person on trial), and on whether the questions appear to be directed towards elucidating an area of evidence that has been overlooked or left in an uncertain or equivocal state, or directed towards establishing a point that is favourable or adverse to the interests of one or other of the parties.

It is worth repeating what has been said by this Court on many other occasions. The task of restoring the credit of a Crown witness or of destroying the credit of a witness should always be left by the judge to the Crown Prosecutor.

Looked at as a whole, his Honour’s questions are fairly characterised as questions designed to clear up matters that might be regarded as uncertain and equivocal. The questions in effect put the accused’s account of what he was told and understood about Mark into a connected sequence.

The judge’s questions did not cross the line into cross-examination and result in a miscarriage of justice. They clarified the accused’s evidence, the credibility of which was in forensic terms critical to his case. They did so at a point in the evidence where the accused’s counsel could immediately respond to the matters summarised in answers to the judge by asking further questions in re-examination. There was nothing unfair about this. 

Another ground related to this ATM photo:

The accused said ‘look at my nose — very big. Look at the photo. That guy has a boxer’s nose.’

The prosecutor submitted that the nose of the person shown in the ATM photographs did in fact look like the accused’s and the jury should reject what the accused had said as to this.

The trial judge directed the jury. 

I give you this strong direction. You can only use this evidence  of the similarity of the noses as one small part of the whole of the prosecution case. You cannot conclude, just from these photographs, that Mr Werden is guilty. It would be impossible to do so and you cannot do that and you should not do it.

The Court of Appeal held that regardless of whether there had been any miscarriage in the trial in relation to photographic evidence or otherwise conviction was inevitable. The circumstantial case was overwhelming. No reasonably credible explanation of the evidence had been advanced on behalf of the accused. 

Lessons for Mortgage Professionals

  • The frauds that were prevented were prevented because the fraudster was careless in arithmetic in his forged documents. 
  • The fraudster was able to circumvent the new face to face identification regime (at least where Australia Post is used) by targeting a property owner looking for a loan and pretending to be a broker.
  • The fraud spree was only stopped when a bank pretended to not to have detected the fraud and worked with police to ensnare the fraudster. It is submitted that lenders have a duty to proceed with identity fraud loans in cooperation with the police when they are detected, not terminate the loan. 
  • The fraudster targeted a regional broker, likely because the broker and lender would be less suspecting. 
  • The broker never submitted to a face to face with a lender or broker. 
  • Cheques directions were fragmented and a settlement agent was used. 
  • Couriers and Express Post was used to Post Office boxes. 
  • An outgoing mortgagee thwarted one fraud. 

Click here to read the full judgement.

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