IN THE COURT OF APPEAL OF NEW ZEALAND
I TE KŌTI PĪRA O AOTEAROA
CA439/2019
[2020] NZCA 48
BETWEEN

KELVIN CLIVE WOOD
Appellant

AND

THE QUEEN
Respondent

Hearing:

26 February 2020

Court:

Clifford, Simon France and Lang JJ

Counsel:

K H Maxwell for Appellant
M R L Davie and M K Thomas for Respondent

Judgment:

11 March 2020 at 12 pm

JUDGMENT OF THE COURT
A

The application for an extension of time is granted.

B

The appeal against sentence is allowed.

C

The sentences of six years and three months’ imprisonment are quashed.
Concurrent sentences of five years and six months’ imprisonment are
substituted.

D

The minimum term of imprisonment of two years and 11 months is
quashed. A minimum term of imprisonment of two years and six months
is substituted.

____________________________________________________________________
REASONS OF THE COURT
(Given by Lang J)

WOOD v R [2020] NZCA 48 [11 March 2020]

 [1]

Mr Wood pleaded guilty in the District Court to representative charges of

obtaining money by deception1 and theft by a person in a special relationship.2
On 24 July 2019, Judge Ronayne sentenced Mr Wood to six years and three months’
imprisonment on those charges.3 He also made an order under s 86 of the Sentencing
Act 2002 requiring Mr Wood to serve two years and 11 months of his sentence before
being eligible to apply for parole.
[2]

Mr Wood appeals against sentence on the basis that the Judge adopted an

overall starting point that was too high and failed to give him adequate discount for
mitigating factors. He contends this resulted in a sentence that was manifestly
excessive. Mr Wood also contends the Judge erred in imposing a minimum term of
imprisonment.
[3]

Mr Wood filed his notice of appeal nine working days out of time. The delay

is short and no prejudice appears to arise. We therefore grant the necessary extension.
The offending
[4]

At the time of sentencing Mr Wood was 70 years of age. Prior to his arrest for

the present offending he had been involved in the banking and finance industry his
entire working life.
[5]

In or about 1999, Mr Wood commenced a foreign exchange brokerage. For the

next 18 years he provided financial services to clients through two companies.
One company offered retail foreign exchange services (the retail company) whilst the
other accepted funds from clients for investment purposes (the investment company).
The investment company began accepting funds for investment from about 2007.
Two other persons, one of whom was Mr Wood’s son, were also directors of the
investment company at various times but neither was involved in the day to day
running of either business.

Mr Wood was solely responsible for running both

businesses.

1
2
3

Crimes Act 1961, ss 240(1)(a) and 241(a).
Crimes Act, ss 220 and 223(a).
R v Wood [2019] NZDC 14274.

 [6]

Clients who deposited funds with the investment company did so after

providing Mr Wood with instructions regarding the manner in which their funds were
to be invested. Options for investment included placing funds on term deposit,
purchasing and holding foreign currency and investing funds in other ways.
[7]

Between 2008 and 2017, 21 clients deposited a total of approximately

$22 million of funds with the investment company. All did so in reliance on
assurances by Mr Wood that their capital would not be at risk. Mr Wood pooled these
funds and did not separate them into different bank accounts or sub-accounts. As a
result, he became unable to keep accurate records of each client’s investment.
[8]

During the same period the investment company suffered losses from foreign

exchange trading activities. As a result, Mr Wood knew from December 2008 that it
was unable to repay the sums invested by clients. None of the clients was aware their
capital had been eroded by the foreign exchange trading losses. Rather than advise
clients of this situation, however, Mr Wood provided them with investment reports
purporting to show the current balances of their investments. The frequency of the
reports varied depending on the requirements of each client.
[9]

The reports contained false information regarding the investment activities

undertaken on behalf of clients. In some instances Mr Wood created fictitious returns
on clients’ investments. Other reports referred to foreign currency transactions that
did not occur. As a result, the investment reports painted a false picture of the value
of clients’ investments. This led clients to believe their capital was intact and they
were achieving a return on their investments when neither was the case.
[10]

Between December 2008 and May 2017 Mr Wood knowingly provided at least

223 false investment reports to the 21 clients who had invested funds with
the investment company. This aspect of Mr Wood’s offending led to the representative
charge of obtaining funds by deception.
[11]

The charge of theft by a person in a special relationship was laid because of

the manner in which Mr Wood dealt with funds deposited by clients with
the investment company. From January 2010, Mr Wood began departing from the

 terms on which he had agreed to accept funds for investment. In particular, he began
using funds obtained from new investments to repay interest and/or capital owing
under existing investments.

The clients who provided the funding for these

transactions did not know their funds were being used to repay other investors.
[12]

The use of investors’ funds in this way meant Mr Wood was operating what

has now become known as a “Ponzi” scheme. Such a scheme relies on new funds
deposited by investors to repay interest and principal owing to existing investors.
Throughout this period Mr Wood caused the investment company to continue to
engage in foreign exchange transactions in the hope that he could recoup the losses it
had already incurred.
[13]

In early 2017 Mr Wood instructed his solicitor to advise the Financial Markets

Authority (FMA) that he wished to disclose fraud on his part. On 19 May 2017 he
voluntarily attended an interview with the FMA in which he admitted he had been
involved in fraudulent activity. He told the FMA he believed the investment company
owed 20 clients a total of approximately $8 million in investment capital. This
prompted the FMA to refer the matter to the Serious Fraud Office (SFO) for
investigation.
[14]

The investment company was placed in liquidation on 16 June 2017.

The liquidators subsequently ascertained that it owed 28 unsecured creditors a total
sum of just over $9.7 million. Later the same month the retail company was also
placed in liquidation.

The liquidators of that company ascertained it had four

unsecured creditors who were owed a total of just over $3 million. The liquidators
acknowledge, however, that there is some duplication of claims between creditors of
the two companies.
[15]

In July and August 2018 Mr Wood voluntarily attended interviews by the SFO

in the company of his lawyer.

During these he admitted that approximately

$9.8 million of principal and interest was still owing by the two companies to
investors. He also admitted providing false investment reports to clients between 2008
and 2017 to enable the companies to continue to trade. He said he knew the
companies’ clients would have sought to withdraw their funds if they knew the true

 situation regarding their investments. He said the investment company continued to
trade during this period because he believed it could trade its way out of trouble.
The sentence
[16]

The Judge noted that Mr Wood’s offending contained numerous aggravating

factors. First, it had occurred over a period of approximately nine years between 2008
and 2017.4 Secondly, it involved a substantial loss to a large number of investors.5
It also involved a significant breach of trust, because clients had entrusted their funds
to Mr Wood relying on his assurances that he would protect them from loss. The Judge
pointed out that although Mr Wood did not gain personally from the offending,
he nevertheless drew an income from the business.6
[17]

In addition, the offending had a major impact on those who lost the funds they

had invested with Mr Wood. Many were elderly, and had lost their life savings as a
result of investing money with him. This meant they were deprived of the funds they
had accumulated for their retirement. These victims were particularly vulnerable
because they had no prospect of recovering their losses by returning to the workforce.7
The Judge referred to several victim impact statements in which the victims described
the devastation they had suffered as a result of the offending.
[18]

Finally, the offending was premeditated.8 It involved carefully orchestrated

actions over a considerable period and using numerous different forms of deception.
The Judge considered Mr Wood’s offending was comparable to that in Ryan v R, in
which a starting point of nine years imprisonment was selected.9 The offending in that
case also involved the use of a Ponzi scheme. Taking these factors into account, the
Judge selected a starting point of eight years and nine months’ imprisonment.10
[19]

The Judge then applied discounts to reflect Mr Wood’s previous good character

(two per cent), his cooperation with the authorities (three per cent), remorse
4
5
6
7
8
9
10

At [39].
At [27].
At [13].
At [40].
At [38].
Ryan v R [2018] NZCA 586.
R v Wood, above n 3, at [42].

 (two per cent) and his age and associated health issues (three per cent).11 This resulted
in a total discount of ten per cent, or 11 months.
[20]

From the resulting sentence of seven years and ten months’ imprisonment, the

Judge allowed a discount of 19 months, or 20 per cent, to reflect Mr Wood’s guilty
pleas. This produced the end sentence of six years and three months’ imprisonment.12
[21]

The Judge then considered whether to impose a minimum term of

imprisonment. He concluded the usual provisions as to eligibility for parole would
not be sufficient to reflect the sentencing purposes of denunciation, deterrence and the
need to hold Mr Wood accountable for his offending.13 He therefore made an order
requiring Mr Wood to serve a minimum term of imprisonment of two years and
11 months before being eligible to apply for parole. This represented slightly less than
50 per cent of the sentence.
The starting point
[22]

On Mr Wood’s behalf Ms Maxwell submitted that the Judge erred in several

respects when fixing the starting point of eight years and nine months’ imprisonment.
She contended Mr Wood’s offending justified a starting point of no greater than
eight years’ imprisonment.
[23]

First, Ms Maxwell contended the Judge erred in placing weight on the fact that

Mr Wood had drawn an income from the business because his only income came from
the retail business and none of the charges relate to that business.
[24]

Ms Maxwell contended the Judge was also wrong to conclude Mr Wood’s

culpability was similar to that of the offender in Ryan v R. Unlike the present case,
the offending in Ryan involved the creation of a Ponzi scheme from the outset to

11

12
13

We think it likely that the Judge considered a global discount of ten per cent was appropriate for
mitigating factors other than the guilty pleas and then apportioned this between individual factors.
It is very difficult, however, to assess the appropriateness of individual discounts when they are
so small. A global discount reflecting all four factors is much more readily understood.
At [43].
Sentencing Act 2002, s 86(2)(a), (b) and (c).

 facilitate theft of funds by the offender. There were also approximately 900 victims
in that case.
[25]

Ms Maxwell contended a more relevant case for present purposes was Arnott

v R, in which a starting point of seven years’ imprisonment was selected for offending
involving the dishonest misappropriation of approximately $2.5 million over a
four year period between April 2008 and May 2012.14 Ms Maxwell also referred us
to Cherry v R, in which a starting point of eight years’ imprisonment was selected for
offending involving the theft or misappropriation of approximately $4.7 million over
a five year period between June 2002 and February 2007.15
[26]

Ms Maxwell pointed out, however, that in both Arnott and Cherry the offender

used at least part of the funds for personal gain when that is not the case here.
In addition, she said care needs to be taken when comparing the sums involved in
those cases with those lost by the victims of Mr Wood’s offending. Although the sums
involved in Arnott and Cherry were less than those in the present case, the passage of
time and consequential impact of inflation meant the sums lost through the offending
in Arnott and Cherry would now be worth considerably more.
[27]

Even taking into account the matters raised by Ms Maxwell, however, we

consider Mr Wood’s offending was more serious than that in either Arnott or Cherry.
Mr Wood offended for a much greater period and the victims of his offending suffered
considerably greater losses than was the case in either of those authorities.
[28]

We do not see value, however, in undertaking a detailed comparison between

the culpability of Mr Wood’s offending and that of the offenders in Ryan, Arnott and
Cherry. As always, the appropriate starting point will fall within a range and the issue
for present purposes is whether the starting point selected for Mr Wood’s offending
fell within or outside that range. We consider the most relevant factors for present
purposes to be the length of time over which the offending occurred, the numerous
forms of deception it required, the total amount lost by investors and the effect of the
offending on the victims. The fact that Mr Wood derived no personal gain largely

14
15

Arnott v R [2015] NZCA 236.
Cherry v R [2013] NZCA 636.

 reflects the nature of a Ponzi scheme, in which the primary motivation of the offender
will generally be the need to use incoming funds to repay existing investors.
[29]

We consider these factors, all of which the Judge correctly identified, amply

justified the starting point of eight years and nine months’ imprisonment.
Mitigating factors
[30]

As the Judge acknowledged, Mr Wood was able to rely on several mitigating

factors other than his guilty pleas. The first was previous good character. He did not
begin to offend until he was in his late 50s. Prior to that he had led a blameless life,
and the references provided to the Judge at sentencing make it clear he had undertaken
many worthwhile roles in the community. We consider a greater discount than the two
per cent allowed by the Judge was required to reflect this factor.
[31]

It is also difficult to see how Mr Wood could have co-operated more fully with

the authorities.

He made the first approach to the FMA.

He then frankly

acknowledged his offending in voluntary interviews by both the FMA and SFO.
Again, we consider this factor warranted more than the three per cent applied by
the Judge.
[32]

When combined with the remorse Mr Wood has demonstrated and his age and

associated health issues, we consider a discount of at least 16 months, or 15 per cent,
was required. This reduces the sentence to one of seven years and five months’
imprisonment before taking into account the guilty pleas.
[33]

The Judge applied a discount of 20 per cent to reflect Mr Wood’s guilty pleas.

As we have already observed, however, Mr Wood acknowledged his wrongdoing from
the outset. He first appeared before the Court on 23 October 2018 and was remanded
without plea until 13 November 2018.

On that date he was remanded to

6 December 2018, when a duty solicitor entered not guilty pleas on his behalf and
elected trial by jury. The charges were then adjourned to case review hearing on
20 March 2019. By March 2019 Mr Wood was represented by counsel and entered
his guilty pleas at the case review hearing. These must obviously have been signalled
to the prosecution earlier, however, to enable a summary of facts to be agreed.

 [34]

This was undoubtedly a complex prosecution and we consider the entry of

guilty pleas at first appearance in such a case would be unusual. In practical terms we
therefore consider Mr Wood entered his guilty pleas at the earliest opportunity.
Furthermore, the pleas saved the state the cost of a lengthy trial.

In those

circumstances we consider a discount of 23 months, or 25 per cent, was warranted to
reflect Mr Wood’s guilty pleas. This produces an end sentence of five years and six
months’ imprisonment.
Minimum term of imprisonment
[35]

Ms Maxwell sought to persuade us that a minimum term of imprisonment was

not justified in the present case. She relied in support of this submission on Mr Wood’s
advanced age and the other mitigating factors to which we have referred. Ms Maxwell
contended that the sentencing purposes of deterrence, denunciation and the need to
hold Mr Wood accountable for his offending did not require the imposition of a
minimum term, and that the Parole Board is best placed to determine when Mr Wood
should be released on parole.
[36]

We do not accept this submission. If Mr Woods is not required to serve a

minimum term of imprisonment he will now be eligible to apply for parole after
serving just 22 months of his sentence. That outcome needs to be considered having
regard to his overall culpability and the substantial losses he caused vulnerable victims
to suffer. When that is done we consider the usual parole provisions would be
insufficient to recognise the sentencing purposes of deterrence, denunciation and the
need to hold Mr Wood accountable for his offending.
[37]

Adopting the approach taken by the Judge, we consider Mr Wood should serve

a minimum term of two years and six months, or slightly less than 50 per cent, of his
sentence before being eligible to apply for parole.
Result
[38]

The application for an extension of time is granted.

[39]

The appeal against sentence is allowed.

 [40]

The existing sentences of six years and three months’ imprisonment are

quashed. In their place we substitute concurrent sentences of five years and six
months’ imprisonment.
[41]

The minimum term of imprisonment of two years and 11 months is quashed.

A minimum term of imprisonment of two years and six months is substituted.

Solicitors:
Crown Law Office, Wellington for Respondent