IN THE COUNTY COURT OF VICTORIA RevisedNot Restricted

Suitable for Publication

AT MELBOURNE CRIMINAL DIVISION

Case No. CR-14-01035CR-14-01036CR-14-01497

DIRECTOR OF PUBLIC PROSECUTIONS

v

ROBERT GIANELLO, WOEI-JIA JIANG & ESRA OGRU

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JUDGE: Her Honour Judge HampelWHERE HELD: MelbourneDATE OF HEARING: 20, 21, 29 August 2014, 9 October 2014, 5 November

2014DATE OF SENTENCE : 7 November 2014CASE MAY BE CITED AS:

MEDIUM NEUTRAL CITATION: [2014] VCC

REASONS FOR SENTENCE---

Subject:Catchwords: Legislation Cited:Cases Cited:Sentence:

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APPEARANCES: Counsel Solicitors

For the Prosecution Mr A. Sharp CDPP

For the Accused – Gianello Mr C. Dane QC(9 October and 5 and 7 November 2014)Mr K. McDonald(20 and 21 August 9 October and 5 and 7 November 2014)

Law Corp Lawyers

i-1

For the accused – Jiang

For the accused – Ogru

Mr T. Alexander

Mr D. Grace QC(9 October, 5 and 7 November 2014)Ms M. Marich(29 August 2014)

Caanan Lawyers

Marich Legal

ii-1

HER HONOUR:

1 Esra Ogru, Robert Gianello and Woei-Jia Jiang, you come to be sentenced for

the roles each of you played in defrauding Phosphagenics Limited (PHG), a

publicly listed company, and Vital Health Sciences Limited (VHS), its

subsidiary, of just over $6 million.

2 Between November 2004 and July 2013, that is, the period covered by the

charges, you, Dr Ogru, held various high level positions of trust with VHS and

Phosphagenics. You commenced as Phosphagenics’ Vice President of

Research and Development, became a director of VHS and later

Phosphagenics. You were promoted over time to Chief Operating Officer and

then to Chief Executive Officer of Phosphagenics. It was by virtue of these

positions that you held that you were able to defraud these companies. Of the

total of approximately $6 million defrauded, you, Dr Ogru, received a personal

monetary benefit of just under $4 million. You, Dr Gianello, received a

personal benefit of just under $680,000, and you, Dr Jiang, received a

personal benefit of just over $1.1 million.

3 Most of the money was obtained through a false invoicing scheme. The

scheme was elaborate in its detail but revolved around a simple deceit.

Between November 2004 and June 2008, false invoices were submitted to

VHS or Phosphagenics on behalf of companies controlled by Dr Gianello.

Between June 2008 and June 2013, the false invoices emanated from

companies controlled by Dr Jiang. Dr Ogru, you determined the amount to be

claimed in each invoice and the services purportedly performed. You had

invoice templates for the companies controlled by Dr Gianello and Dr Jiang,

and each of Dr Gianello, Dr Jiang and you shared in the task of preparing and

submitting the false invoices. Dr Ogru, you then, in your capacity as the

responsible officer of Phosphagenics or VHS, approved the false invoices for

payment.

VCC:.. 1 SENTENCE

4 When VHS or Phosphagenics paid the amounts fraudulently invoiced to the

relevant company, you then split the payment with Dr Gianello for the period

up to mid-2008, and Dr Jiang for the remainder of the time, in the proportions

that you had agreed with each of them. Further false invoices were prepared

to provide an appearance of authenticity to the transfer to you of your share in

each of the fraudulent claims.

5 You, Esra Ogru, have pleaded guilty to the following charges of obtaining a

financial advantage by deception by this scheme:

Charge 1 covers the period from 29 November 2004 to 8 April 2008. VHS

paid a total of $1,087,812 claimed in 44 false invoices submitted to it from Dr

Gianello’s company, Bynex Research Services Pty Ltd. You received

$510,215 and Dr Gianello retained the balance of $577,597.

Charge 2 covers the period of 19 June 2008 to 8 July 2010. VHS paid a total

of $1,331,495 claimed in 39 false invoices submitted to it from Dr Jiang’s

company TABridge Pty Ltd.

Charge 3 covers the period from 19 July 2010 to 15 May 2013.

Phosphagenics paid a total of $2,979,140 claimed in 89 false invoices

submitted to it from Dr Jiang’s company, TABridge Pty Ltd.

Charge 4 covers the period 1 March 2013 to 25 April 2013. Phosphagenics

paid a total of $81,400 claimed in three false invoices submitted to it to by CK

Australia Pty Ltd, a company registered in Dr Jiang’s wife’s name but

controlled by him.

6 Thus, pursuant to charges 2, 3 and 4, a total of $4,392,035 was

misappropriated. Of that, you received $2,717,513 and Dr Jiang received

$1,100,026. The balance of just under $500,000 was divided between a joint

venture entity, PMP-Vic, controlled by you, Dr Ogru, and you, Dr Gianello,

Pharma Max and IPR, companies registered in Robert Gianello’s wife’s name

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but controlled by him, and an independent third party, Pharmasynth Pty Ltd.

This last cluster of payments appears to have been for services actually

provided in respect of the search to find a drug to save your daughter’s life, a

matter to which I shall refer later, but which Phosphagenics and Vital Health

Services had not commissioned and had no obligation to pay.

7 You, Robert Gianello, have pleaded guilty to three charges of obtaining a

financial advantage by deception arising out of these same circumstances:

Your charge 1 covers the same period concerning Dr Ogru’s charge 1,

namely, 29 November 2004 to 8 April 2008, and the same amount, namely,

$1,087,812 paid by VHS based on false invoices submitted to it from your

company Bynex Research Services. The only difference between the charge

to which you have pleaded guilty and the charge to which Dr Ogru has

pleaded guilty is a difference in the number of false invoices, one more than

that described in her charge, that is, 45, not 44. As for Dr Ogru, so for you, it

is accepted that you received $577,597, and Dr Ogru retained the balance of

$510,215.

Your charge 2 covers the same period concerning Dr Ogru’s charge 2,

namely, 19 June 2008 to 8 July 2010, and the same amount, namely,

$1,331,495, paid by VHS based on false invoices submitted to it from Dr

Jiang’s company TABridge Pty Ltd. Again, the only difference between the

charge to which you have pleaded guilty in respect of the TABridge/VHS

invoices and the charge to which Dr Ogru has pleaded guilty is a difference in

the number of false invoices pleaded, in this case one less, 38, not 39. Of

that amount covered by charge 2, on my understanding just under $500,000

was paid to PMP-Vic, the joint venture vehicle established for the benefit of

you and Dr Ogru, and Pharma Max and IPR, the companies registered in your

wife’s name but controlled by you. Your personal benefit, after making

allowance for services actually provided by you and others, but in respect of

which VHS was not liable, is estimated to be approximately $100,000.

VCC:.. 3 SENTENCE

Your charge 3 covers a longer period, a lesser amount and fewer false

invoices in respect of the TABridge/Phosphagenics invoices the subject of Dr

Ogru’s charge 3. Your offending is said to have spanned the period from 19

July 2010 to 20 August 2013. The amount defrauded is $2,216,610, not the

$2,979,140 the subject of Dr Ogru’s like charge, and it relates to 67, not 89,

false invoices submitted to Phosphagenics from TABridge Pty Ltd. Of that

amount, $77,460 was paid to PMP-Vic, and again it would appear that that

payment was in respect of services actually provided, but in respect of which

Phosphagenics was not liable. The remainder was divided between Dr Ogru,

the main beneficiary, and Dr Jiang.

8 You, Woei-Jia Jiang, have pleaded guilty to three charges of obtaining a

financial advantage by deception arising out of these same circumstances:

Your first charge is charge 4 on the joint indictment by which you and Dr

Gianello were charged, and is in respect of moneys paid by VHS based on

false invoices submitted to it from your company, TABridge Pty Ltd. It covers

the same period as charge 2 on Dr Ogru’s indictment and charge 2 in respect

of Dr Gianello on your joint indictment, namely, 19 June 2008 to 8 July 2010.

The total financial advantage obtained by deception is the same as for your

two co-offenders, namely, $1,331,495. Again, the number of false invoices

pleaded as involved is different: 32 for you, as opposed to 38 for Dr Gianello

and 39 for Dr Ogru.

Your second charge is charge 5 on the joint Gianello/Jiang indictment, and is

in respect of moneys paid by Phosphagenics based on false invoices

submitted to it from TABridge Pty Ltd. Again, the time period for this charge

differs slightly from the time period set out in the Phosphagenics/TABridge

charges concerning Dr Ogru and Dr Gianello. That is charge 3 on Dr Ogru’s

indictment, and charge 3 on the joint Gianello/Jiang indictment. All the

Phosphagenics/TABridge charges have the same commencement date,

namely, 9 July 2010, but yours finishes on 24 May 2013, where Dr Ogru’s

VCC:.. 4 SENTENCE

concludes on 15 May 2013 and Dr Gianello’s concluded on 20 August 2012.

Your charge concerns 85 false invoices, Dr Ogru’s 89 and Dr Gianello’s 67.

The total amount pleaded as defrauded in respect of you on this charge is

$2,979,140, the same amount charged in respect of Dr Ogru, and greater than

the amount charged in respect of Dr Gianello.

Your third charge is charge 6 on the joint Gianello/Jiang indictment, and is in

respect of moneys paid by Phosphagenics based on false invoices submitted

to it from the other company controlled by you, CK Australia, I think properly

described as CK Australia Biotech and Life Service Ventures Pty Ltd. This

covers the same offending by Dr Ogru which is the subject of charge 4 on her

indictment. The amount defrauded is the same, namely, $81,400, and the

number of false invoices, namely, three, is the same. The timeframe again

differs slightly, between 2 May 2013 and 10 June 2013 for you, between 1

March 2013 and 25 April 2013 for Dr Ogru.

9 Of the total sums obtained from VHS and Phosphagenics by the deceptions to

which you, Dr Jiang, were a party, namely, $4,392,035, you passed

$2,717,513 on to Dr Ogru and retained $1,100,026 for yourself. The

remaining amount, that approximate half million dollars, was disbursed to

PMP-Vic, the Gianello entities Pharma Max and IPR, and the independent

third-party, Pharmasynth, to which I have already referred.

10 Esra Ogru, you face additional charges which do not involve your co-

offenders. Charges 5 and 6 concern the obtaining of $267,186.30 and

$278,703.06 from VHS and Phosphagenics respectively, as reimbursement

for credit card payments made by you, and which you falsely asserted had

been made on behalf of VHS and Phosphagenics. This credit card offending

occurred between 27 November 2006 and 13 November 2013. In total, 17

false claims were made against VHS and 20 against Phosphagenics.

11 And charge 7 concerns the false attribution of responsibility to Phosphagenics

VCC:.. 5 SENTENCE

to pay for goods and services provided by a company, Axcytogen Pty Ltd.

Between 5 February 2009 and 15 October 2012, I think, Phosphagenics paid,

under five separate invoices, a total amount of $120,995.70 to Axcytogen. In

fact, the goods and services were provided to two entities associated with

you, namely, PMP-Vic and Zarion Pty Ltd.

12 It is hard to understand how three such highly talented and highly

academically qualified people find themselves pleading guilty to charges of

such gravity. Each of you has been awarded a PhD in biochemistry. You, Dr

Gianello, remained at Monash University after obtaining your PhD and were

employed as a research officer or research fellow. You met Dr Jiang whilst he

was completing his PhD and working in the same research group as you at

the university, and you met Dr Ogru in similar circumstances and, in fact,

became one of her supervisors for her PhD.

13 In December 2002, after Dr Ogru had been awarded her PhD, she, through

her service company, was retained by VHS, a fully owned subsidiary of

Phosphagenics, which was a publicly listed biotech company, and given the

title of Vice President, Research and Development, of Phosphagenics. Her

duties included coordinating and managing VHS research which was

conducted at Monash University. So it was that she became the supervisor of

Dr Gianello who, although employed by Monash on a full-time basis, was

deployed full-time on the VHS research being conducted through that

university.

14 It would appear Dr Gianello was working extended hours on the VHS

research. Although this was described in the course of a plea hearing as

unpaid overtime, it is not clear to me whether research fellows employed at

Monash in the circumstances in which Dr Gianello was had any expectation of

or entitlement to overtime.

15 According to the agreed summary of facts, Dr Ogru suggested to Dr Gianello

VCC:.. 6 SENTENCE

that he establish a company which could charge VHS for the work that he was

doing on its projects outside normal business hours. Dr Gianello established

Bynex and began invoicing VHS. Initially, the invoices reflected work actually

done as an employee of Monash but outside normal business hours, that is, in

respect of the work he was engaged in at Monash’s direction, that is, the VHS

research. This arrangement soon changed, and Dr Ogru and Dr Gianello

agreed that Bynex would provide false invoices to VHS, and divide between

themselves the moneys dishonestly obtained as a result. As the person in

charge of research and development, Dr Ogru was able to create descriptions

of goods and services provided by Bynex which related to various of its

research projects, and to attribute different false invoices to different projects.

All invoices were marked to Dr Ogru’s attention, and she was the one

responsible for approving them for payment.

16 The emails quoted in the agreed summaries reveal the true nature and extent

of the collusion between Dr Ogru and Dr Gianello to carry out this deception,

in coming up with plausible descriptions for goods and services purportedly

provided, the particular research projects of VHS to which they could be

attributed, the amounts that they could charge each month, and the purposes

to which they were planning to put the moneys they were receiving. They are

at times shocking in their gloating over the amounts that each of them were

receiving, and the financial benefits that they were getting for themselves as a

result.

17 Whatever rationalisations Dr Gianello and Dr Ogru could have used in an

attempt to describe the original payments to him as overtime or as advance

payment for work which was legitimately to be undertaken as part of the VHS

research conducted at Monash during the first 12 months of their

arrangement, there is no smokescreen of legitimacy which can justify the

conduct covered by the period of the Bynex charges. This was straight-out

collusion in a blatant defrauding of the companies who were the source, one

VCC:.. 7 SENTENCE

way or another, of the legitimate earnings of both of you.

18 This arrangement continued unchecked and undetected from mid-2004

through to early 2008, when the then Chief Financial Officer of

Phosphagenics, Mr Hodges, discovered Dr Gianello’s interest in Bynex and

raised his concerns with Dr Ogru about the propriety of a company in which a

person employed full-time on VHS research had an interest, receiving

hundreds of thousands of dollars a year for providing services to VHS or

Phosphagenics. At this stage, Dr Gianello was still employed by Monash and

still working in the research group conducting the VHS research. Dr Ogru

sought to distance Dr Gianello from Bynex, falsely telling the CFO that all

services provided by Bynex were, in fact, provided by Dr Gianello’s wife,

Louise Gianello (née Simpson). She falsely represented her as a person with

relevant expertise in her own right and whose service arrangement with VHS

predated the assignment by Monash of Dr Gianello to the VHS research being

conducted at Monash.

19 Dr Ogru and Dr Gianello then took further steps to conceal the true nature of

the Bynex scam, and to ensure their continued ability to divide the spoils of

false invoices that had been provided to VHS. Dr Ogru unsuccessfully

attempted to persuade another scientist to submit false invoices in his name

to VHS. Dr Gianello established two further companies where Louise

Simpson was nominated as the sole director but which, in fact, were

controlled by him, and submitted false invoices in their names. Mr Hodges,

the CFO, queried them with Dr Ogru when his own enquiries revealed that

they purported to charge for services provided before the companies were

incorporated. Dr Ogru appears to have allayed the CFO’s concerns, and the

invoices were never paid. Email exchanges between Dr Ogru and Dr Gianello

at this time appear to acknowledge that the Bynex scam had come to an end.

20 On 1 July, Dr Gianello became an employee of Phosphagenics as a result of

Phosphagenics’ decision to employ directly the scientists who had been

VCC:.. 8 SENTENCE

conducting Phosphagenics or VHS research at Monash as Monash

employees.

21 Coincidentally, at the same time that the CFO was raising his concerns about

Dr Gianello’s connection with Bynex and the large sums of money being paid

to Bynex by VHS, a chance contact between Dr Ogru and Dr Jiang led to Dr

Gianello and Dr Ogru organising to meet Dr Jiang. They had lost contact with

him since he had left Monash not long after obtaining his PhD in 1999.

Discussions about a legitimate business venture between Phosphagenics and

VHS and Dr Jiang, or entities associated with him, in relation to the sourcing

by Dr Jiang of offshore contract research organisations who could conduct

studies on Phosphagenics’ behalf quickly turned to illegitimate profits, that is,

ways to profit from Dr Jiang’s use of his contacts in Taiwan to introduce

contract research organisations to Phosphagenics.

22 Again, it is striking that in this case, as in the case of the Bynex defrauding,

that none of the parties seemed in any way concerned that they were

agreeing to embark on or discussing embarking upon or continuing with

blatant and large-scale defrauding of Dr Ogru’s employer. Up to this stage, no

case of need, pressing personal circumstances or psychiatric or psychological

condition which might go some way to explain the behaviour of any of you

existed.

23 Before the contract research organisation discussions had advanced further, a

personal calamity struck Dr Ogru. On 1 May 2008 she gave birth to her first

child, who it was soon discovered was suffering from an autosomal recessive

condition known as MoCD Type A. No baby born with this condition had ever

survived. Dr Ogru set herself to finding a cure and, with the assistance of

colleagues in the scientific community here and abroad, identified a potential

although untried cure involving intravenous infusion with a substance known

as cPMP. By early June 2008, just over a month after the child’s birth, all

necessary medical, ethical and legal approvals had been provided for this

VCC:.. 9 SENTENCE

experimental treatment. A quantity of the drug had been imported, tested and

deemed fit for intravenous use and, on day 37 of the baby’s life, the cPMP

treatment began. Within a few weeks, her biochemical condition had

normalised and her deterioration was arrested.

24 I will return to the significance of this for Dr Ogru in sentencing terms. It is

necessary to mention it now because of its significance to the narrative in

respect of the course of offending. Three weeks after the baby’s birth, Dr

Ogru sought the assistance of Dr Jiang to find a facility which could

manufacture cPMP in compliance with the guidelines necessary to obtain

approval for importation and use of the product in humans. The following day,

Dr Gianello met Dr Jiang and explained Dr Ogru’s needs and the urgency of

the request more fully. Dr Jiang spent some considerable time over the next

weeks using his expertise and contacts to source the necessary

manufacturing facility.

25 Meanwhile, on 3 June, whilst the search for the cure and the process for

obtaining the necessary approvals for its administration to the baby were still

underway, Dr Ogru emailed Dr Gianello asking him to chase Dr Jiang for an

invoice, adding, “We need to get cash flow going”.

26 On 19 June 2008, about two weeks later, Dr Gianello sent Dr Jiang a sample

invoice to be used as the basis for an invoice to be sent on behalf of

TABridge, Dr Jiang’s company, to VHS claiming $63,800 for services provided

by TABridge to VHS in May and June of 2008. The description of the services

provided was for not for his work at Dr Ogru or Dr Gianello’s request in

sourcing a facility for the production of cPMP, or in respect of any services, in

fact, provided by Dr Jiang or TABridge to Phosphagenics or VHS.

27 Dr Jiang prepared an invoice in accordance with the sample, keeping the

description of the services provided but substituting an amount of $12,980 for

the amount contained in the sample invoice sent to him by Dr Gianello. This

VCC:.. 10 SENTENCE

amount of $12,980 reflected Dr Jiang’s estimate of the value of the time that

he had spent working on cPMP matters at the request of Dr Ogru and Dr

Gianello at his usual charge-out rate. By the time Dr Gianello submitted an

invoice to Dr Ogru for approval for payment to TABridge by Phosphagenics,

the amount claimed had increased to $24,970. Dr Ogru approved the invoice

and payment was duly made to TABridge. Email exchanges between Dr

Gianello and Dr Jiang over the next weeks discuss the mechanisms for and

the percentages of the division of the spoils between Dr Ogru, Dr Gianello and

Dr Jiang.

28 It is clear that by this stage, all three parties were actively participating in a

scheme to obtain moneys to which they had no entitlement from

Phosphagenics or VHS for their own benefit.

29 After the first invoice prepared by Dr Jiang, all subsequent invoices the

subject of the TABridge charges were prepared by Dr Ogru or Dr Gianello,

approved by Dr Ogru and ultimately paid into a bank account in the name of

TABridge. For all invoices after the first two, rather than taking a share, Dr

Jiang retained a fee. The fee was initially $2000, but by April 2010 it was

increased to $3000. It would appear that Dr Jiang was, in effect, laundering

the funds and being paid a fee for receiving the moneys and facilitating the

transfer of all but his fee to Dr Ogru and Dr Gianello in accordance with their

directions. Further false invoices for services falsely claimed to have been

provided were created after Dr Jiang received the funds and passed them on

at the direction of either Dr Ogru or Dr Gianello so, again, adding a cloak of

apparent legitimacy to the scheme.

30 As with the Bynex scam, the TABridge scam required a considerable amount

of work on the part of all parties to create the steady stream of false invoices

and process the payments. Yet, it would appear, at no time did that give any

of you pause to think about the legality or the morality of what you were doing.

Although Dr Gianello received little personal benefit after the Bynex scam

VCC:.. 11 SENTENCE

came to an end, he was actively involved in the discussions which led to the

implementation of the TABridge scam and the preparation of the false invoices

for it.

31 By early 2013, there was a new Chief Financial Officer at Phosphagenics.

She raised questions with Dr Ogru in relation to the TABridge invoices, which

led Dr Ogru to take steps to try and conceal from her and the board the true

situation. It was this that led to the substitution of CK Australia for TABridge

from April 2013. In early June 2013, Dr Ogru, Dr Gianello and Dr Jiang began

preparing a document allocating the false TABridge invoices against various

programs in an attempt to mislead the CFO and the company’s auditors into

believing they were invoices for valid research and development work

conducted on the company’s behalf.

32 Meanwhile, Ms Legg, the CFO, had conducted further inquiries of her own,

which led her to report her concerns to the audit committee, and the audit

committee to commission the auditors to investigate. Dr Ogru in turn tried to

get Ms Legg dismissed. Ms Legg was asked to account for her actions. She

provided a report on her investigations to Mr Harry Rosen, the joint CEO of

Phosphagenics. It was only then that Dr Ogru acknowledged her

misappropriations through TABridge to Mr Rosen, and was stood down. She

told Mr Rosen she had to do it, and that it was for the benefit of her family. It

should be noted that the TABridge misappropriations commenced immediately

after the birth of Dr Ogru’s child and after the former CFO, Mr Hodges, had

raised his concerns about the propriety of Phosphagenics paying substantial

amounts to Bynex whilst Dr Gianello was employed full-time on

Phosphagenics’ and VHSs research through his employment at Monash

33 It was only after further investigations took place that the misappropriations

through Bynex and the attempts to use the other Gianello entities, Pharma

Max and IPR, were revealed. These investigations also led to the discovery

of the false claims for credit card reimbursements which are the subject of Dr

VCC:.. 12 SENTENCE

Ogru’s charges 5 and 6. They occurred over roughly the same period as the

Bynex and TABridge defrauding. Dr Ogru’s average annual spend on the

credit cards was in excess of $300,000. Over $400,000 of the money falsely

claimed over that period to have been spent on Phosphagenics or VHS was

spent on jewellery, another $220,000-plus on clothing, nearly $400,000 on

transactions of under $500 each, said to be for general household expenses,

and over $50,000 on duty free and department store spending.

34 The final charge to which Dr Ogru has pleaded guilty is a charge in relation to

her activities in connection with the commercialisation of cPMP as a cure for

MoCD. After the successful treatment of Dr Ogru’s child with cPMP, she, Dr

Gianello and Professor Schwarz, the German professor whose life work on

cPMP had provided the knowledge and expertise which had justified the

decision to permit the experimental treatment of the child, Dr Gianello, Dr

Ogru and Professor Schwarz agreed that work with cPMP should continue

and that they would explore ways to commercialise it. It was for this purpose

that Dr Gianello incorporated PMP-Vic in late July 2008, that is, about two

months after the commencement of the successful treatment of the child. It

was, in effect, a vehicle for a joint venture between the companies

representing the interests of Professor Schwarz and his team in Germany,

and Dr Ogru and Dr Gianello. Although Dr Gianello was registered as sole

director, so concealing any public link between Dr Ogru and PMP-Vic, a

matter Dr Ogru’s emails indicated she was keen at that stage to keep from

Phosphagenics’ knowledge, it is common ground that they were both actively

involved in its work and were to share any profits it made.

35 As part of PMP-Vic’s activities in relation to the manufacture and use of cPMP,

it retained the services of a company called Axcytogen. On five occasions

between October 2009 and December 2012, invoices for services performed

by Axcytogen for PMP-Vic were not paid by PMP-Vic but by Phosphagenics.

Dr Ogru either altered a legitimate invoice from Axcytogen or created an

VCC:.. 13 SENTENCE

entirely false one, to give the appearance the invoices were for work

performed for Phosphagenics in relation to its affairs. She authorised them for

payment and they were duly paid.

36 In 2011, an American company, Alexion, bought all rights to the joint venture’s

work in developing cPMP. As a result, PMP-Vic, Dr Ogru and Dr Gianello

became entitled to be reimbursed by their German partners for all funds

injected into the joint venture. US$680,000 was paid into a bank account

controlled by Dr Gianello as a result and divided between himself and Dr

Ogru. None of that was used to reimburse Phosphagenics for the amount that

it had, without its knowledge, paid Axcytogen for work done on PMP-Vic’s

behalf, and even after the sale of the joint venture’s intellectual property in

respect of the manufacture and use of cPMP to Alexion, Esra Ogru continued

to fraudulently present Axcytogen’s accounts for work done for PMP-Vic to

Phosphagenics.

37 It is clear that this is long-term, persistent, barefaced, commercial, fraudulent

activity. It is also clear that up to May 2008, when Dr Ogru’s child was born,

there can be no explanation for the offending other than greed. Dr Ogru and

Dr Gianello put their ill-gotten gains into lifestyle spending: paying off their

mortgages, building up their assets and enabling themselves and their

families to live more comfortable lives than they could have on their legitimate

earnings.

38 The Bynex scam came to an end at about the time the child was born, but

coincidentally, because Dr Gianello’s association with Bynex was exposed. It

was not for any reason connected with the discovery of the child’s condition or

the search for a cure. Although Dr Gianello’s personal financial gain

thereafter was substantially reduced, that was as a result of the decision,

which he played an active role in carrying into effect, to use Dr Jiang’s entity

TABridge as the vehicle for submitting false invoices from mid-2008. It is

unclear whether Dr Gianello’s transfer from the Monash payroll to that of

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Phosphagenics at about the same time played any role in what appears to be

his acquiescence in the cutting off of the substantial additional income stream

that he had enjoyed between 2004 and mid-2008.

39 I have come to the conclusion that the defrauding which occurred after the

birth of the child was, by and large, similarly properly to be characterised as

springing from greed, not need. A relatively small amount of the moneys

obtained by the fraudulent scheming after the birth of the child are attributable

to the search to find a cure, the consequent research and clinical trials into

cPMP, or the ongoing treatment and care needs of the child. That amount has

not been able to be quantified, but the prosecution accepts that some of the

diverted funds from the invoice scam and the fraudulent credit card claims

after May 2008 are properly so characterised.

40 The methodology of the scams changed after the child’s birth, from splitting

the proceeds from the Bynex invoices between Dr Ogru and Dr Gianello in

agreed amounts, to paying Dr Jiang a flat fee for laundering the proceeds of

the false TABridge invoices. As a result, a substantially greater proportion of

the fraudulently obtained funds after June 2008 were diverted to Dr Ogru’s

benefit. After the introduction of TABridge as the vehicle for the false invoice

scheme, some of the funds were used to meet the needs of the child: to

modify the house, to provide around the clock care, to provide therapy and

treatment, to source and test the drugs. Some of the funds so obtained were

used to support the research and development activities of PMP-Vic, which

had a number of purposes: to enable continued treatment of the child under

clinical trial conditions, to ensure a continued safe supply of cPMP for her and

to benefit from the commercial development of cPMP so as to be able to treat

other children similarly afflicted. Otherwise, the fraudulently obtained moneys

funded the same sort of lifestyle spending that occurred before the birth of the

child.

41 Similarly, the pattern of credit card spending showed similar trends before and

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after the child’s birth. All of it before May 2008 is personal, lifestyle spending.

After, in addition to that same type and volume of lifestyle spending, there is

some spending which I am told related to expenses associated with the

search for a cure, meeting the care needs of the child and the conducting,

through PMP-Vic, of the clinical trials to which I have just referred.

42 In his plea submissions, Mr Grace acknowledged that, given Dr Ogru’s means

generally and the likelihood of the provision to her of substantial financial

assistance from Mr Rosen had she asked him for help, that it was not

accurate to characterise the spending of fraudulently obtained money on the

child’s needs as springing from need.

43 So far as you, Dr Jiang, are concerned, there is again no explanation other

than greed or personal gain, for your benefitting.

44 It is clear, therefore, that, subject to matters personal to each of you, general

deterrence and denunciation are significant sentencing considerations. Each

of you are persons otherwise of good character. None of you has previously

been convicted of any offences. Each has earned good reputations,

personally and professionally, and each had the capacity, by reason of your

high academic attainments, to obtain employment commensurate with your

skills and attainments and to earn a good income by honest endeavour in your

chosen field. None of you suffers any disability, psychiatric illness or

psychological condition, misfortune or other impediment which precluded you

from being able to fulfil your potential.

45 The positions you held, your academic and professional attainments and your

status in the community were used, exploited, by you to carry out these

protracted frauds. For each of you, in different ways, this is properly

characterised as a breach of trust, and a profound one. The community

rightly holds those who attain a PhD in respect, if not awe. The need for

absolute rigour in research and integrity in research, methodology and

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analysis in order to be awarded a PhD is well-known. Companies employing

or engaging the services of those who have achieved a PhD should be able to

take comfort in the fact that those individuals have satisfied their examiners of

the integrity of their work, and that clearly carries personal integrity with it.

46 For you, Dr Ogru, this was a profound breach of trust as a high-level

employee who was entrusted with supervising the company’s scientific

research program and who ultimately rose to exercise the authority and power

of a Chief Executive Officer and a director. Mr Rosen, your co-CEO and

fellow director, was, it would appear, not only a friend but a mentor of yours.

He had nurtured your career and placed great trust in you. Not only did you

deceive him and betray his trust, you acknowledge that he most likely would

have assisted you financially if you had approached him.

47 For you, Dr Gianello, as a highly qualified researcher, research fellow, whose

services were retained by a university with an enviable reputation for

conducting and supervising public and private quality research in your chosen

field and generally, Phosphagenics was entitled to expect that the researchers

that it engaged in research it funded and commissioned from Monash

University would not embark upon a course of systematically defrauding it.

Similarly, when you became an employee of Phosphagenics, it was entitled to

expect that you would not assist others to defraud it or personally benefit from

such conduct. You were one of Dr Ogru’s PhD supervisors. You should have

been modelling integrity, in research and in personal qualities and life, to her,

not only during the time of supervision, but thereafter.

48 And for you, Dr Jiang, lending your name and reputation to a scheme to

defraud a company that you were hopeful of doing legitimate business with,

and instead being prepared to debase your talents and your high

achievements by making money as a money launderer, is a gross breach of

trust and a gross failure of the standards that you had set yourself and that

people were entitled to expect of you.

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49 Good reputation counts for less when sentencing for offences such as this, as

it is your good reputations and your standing in the community generally, and

with Phosphagenics in particular, which allowed each of you to put yourselves

in the positions you did to commit these offences.

50 By reason of Part 2B of the Sentencing Act, each of you comes to be

sentenced as a continuing criminal enterprise offender in respect of each

charge. That increases the maximum sentence for each offence to which you

have pleaded guilty from the ten years which is normally on the statute books,

to 20 years imprisonment. I direct that the record reflect that each of you

comes to be sentenced in respect of each offence as a continuing criminal

enterprise offender, and these are continuing criminal enterprise offences.

51 Each of you has pleaded guilty and did so at an early stage. Each of you has

cooperated at an earlier or later stage and to a greater or lesser extent with

Phosphagenics and ASIC.

52 Dr Ogru admitted her misappropriation of funds through the TABridge device

to Mr Rosen in late June 2013, after reading Ms Legg’s report which, it can be

inferred, exposed the scam. She resigned as a director in July 2013 and, by

October 2013, had entered into a deed of arrangement with Phosphagenics

where she acknowledged her liability to repay it an amount a little in excess of

$6 million, that is, the amount agreed to be the total of funds misappropriated

by her conduct. Shortly after that deed was signed, ASIC commenced its

formal investigation and, although she declined at that stage to participate in

an interview with ASIC, once charged, she entered her pleas of guilty at

committal mention.

53 She also entered into a deed with Phosphagenics in relation to the accounting

to it of any future benefits flowing from the sale of PMP-Vic’s intellectual

property in the development of cPMP to Alexion.

54 Dr Gianello’s involvement in the Bynex scam was detected soon after Dr Ogru

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admitted her misappropriation in respect of the TABridge scam. He was

dismissed from his employment at Phosphagenics as a result. After

unsuccessful negotiations over the terms of a deed of settlement,

Phosphagenics issued proceedings against Dr Gianello, his wife, as a co-

director of Bynex, and Bynex in the Supreme Court in late October 2013, and

judgment was entered against him in December 2013 for the full amount

claimed, namely, $6,053,722, together with interest and costs. He too entered

into a deed with Phosphagenics in relation to the directing of any future

entitlement to benefits flowing from the sale of PMP-Vic’s intellectual property

in the development of cPMP to Alexion.

55 Dr Gianello cooperated with ASIC when it served notices to produce

documents on him in February 2014, and in June 2014 he signed a statement

outlining his involvement and that of his other participants. He offered to give

evidence in any proceedings against co-offenders if called upon to do so, and

gave a sworn undertaking to that effect upon the plea hearing. He too

pleaded guilty at committal mention stage.

56 Within days of Dr Ogru’s admission to Mr Rosen, Dr Jiang admitted his

involvement in the TABridge scam to Stuart James, a director of

Phosphagenics. Dr Jiang knew Mr James because he and Mr James were

both directors of another company, Progen. Progen was at that time Dr

Jiang’s employer. Dr Jiang, at this stage of acknowledging his involvement to

Mr James, indicated then that he intended to make full restitution and also

tendered his resignation as a director of Progen.

57 In March 2014, Dr Jiang participated in a formal interview with ASIC. He was

the first to do so. He made full admissions in respect of his own conduct and

gave a full account of Dr Ogru’s conduct. He gave a formal undertaking to

ASIC to give evidence against Dr Ogru, and he confirmed that undertaking on

oath at the hearing of the plea. He was the first to make admissions to the

investigating authorities, the first to offer his cooperation and the first to

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undertake to give evidence against his co-accused. Like Dr Ogru, he entered

into a deed of settlement with Phosphagenics in December 2013 in respect of

the full amount of the moneys defrauded and in respect of which he played a

role, thereby avoiding the need for the issue of proceedings and the entry of

judgement against him, and he too pleaded guilty at committal mention.

58 Consistently with the guilty pleas, the entry into the deeds of settlement or the

entry of judgement in the case of Dr Gianello, partial restitution has already

been made by each of you and recovery efforts are continuing. I was told that

it is anticipated that approximately 5.2 million of the total amount of just in

excess of six million has been or is likely soon to be recouped. So far as I

understand it, 3.8 million has been received. Dr Ogru, unlike your co-

offenders, you have managed to keep possession of the family home,

because it has been bought at market value by your father and the proceeds

handed on to Phosphagenics. Dr Gianello has been bankrupted, his home

has been sold and his other assets identified by the trustee in bankruptcy and

are in the process of realisation. Approximately half of the amount that he

personally benefited has been recovered, and it is anticipated a further

amount will be once the remaining assets are liquidated. So far as Dr Jiang is

concerned, he has sold his house, his other assets and his car, signed over

his term deposit and emptied out the contents of his bank account. An

amount about $100,000 in excess of the amount that he personally benefitted

has been recovered.

59 I accept that each of you has demonstrated your acknowledgement of

responsibility by your pleas of guilty, by your acknowledgement of

indebtedness or submission to court proceedings in respect of same and by

your cooperation in the recovery process.

60 In respect of each of you, I accept this conduct counts in your favour as

evidence of remorse. Therefore, in addition to the utilitarian value your early

pleas of guilty have, the pleas support the other evidence of restitution and

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cooperation in demonstrating remorse on the part of each of you.

61 I accept that for each of you the effect of the revelation of the fraud and your

participation in it has had significant personal and professional repercussions.

Each of you are shamed, personally and professionally, and the

consequences of detection for you and your families has had and will continue

to have a significant deterrent effect on each of you. The families of each of

you has already and will continue to suffer hardship, and I accept that for each

of you imprisonment will be more onerous as a result. The effect, all these

consequences of detection, in my view, count in your favour when considering

specific deterrence and your prospects for rehabilitation. I consider each of

you should be regarded as having good prospects for rehabilitation.

62 Dealing then with matters personal to each of you.

63 Esra Ogru, you are 39 years old and you had epitomised the success story of

the intelligent, hardworking child of immigrant parents who came to Australia

to give themselves and their children a better life. You are the oldest of three

and your mother, in her testimonial, speaks glowingly of your maturity and

responsibility as a child in caring for your younger sisters while your parents

worked long hours to establish themselves. You excelled at school and

university and, after being awarded your PhD, you moved straight into high

status and highly paid employment with Phosphagenics, a start-up biotech

company. You had married and, with your husband, had bought a house. He

was adapting to life in Australia and carving out a successful business himself.

64 When I asked why somebody with your personal and professional

achievements and potential would embark upon this fraud, the only answer

that your counsel could give was that you had wanted everything in a hurry

and had a sense that you were entitled to more than you were achieving at

the time.

65 I have already made reference to the discovery, within days of the birth of your

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first child, that she had MoCD. This is not something any parent can prepare

for, and it is almost impossible to understand the suffering of parents faced

with what you were faced. You were confronted with medical advice that this

was a fatal condition. No child had ever survived. It was your determination

not to accept that prognosis that led you to applying your knowledge and skills

as a biochemist and to enlist the assistance of friends, colleagues and other

scientists in the race to find a cure, or the hope of a cure. Your persistence,

drive and refusal to take no for an answer resulted in the discovery of the work

by the team of scientists working out of a German university led by Professor

Schwarz. I have read the decision of the Family Court authorising treatment

for the child. As the judge said, the choice was stark: without treatment, the

baby would surely die. With it, there was a chance she would survive. As it

turned out, the treatment was successful, in that it normalised her biochemical

condition and stopped her deterioration.

66 I want to make it clear that I have deliberately refrained from identifying the

child by name in order to maintain her dignity and privacy. She is profoundly

disabled. She suffered irreversible brain damage in the first few weeks of life

and suffers quadriplegic cerebral palsy of the most severe type. She has

multiple complex needs. She requires daily intravenous injections of cPMP

and can only obtain nutrition by gastrostomy. Even so, her body weight is

below the third percentile of children of her age, because of the difficulty in

absorbing sufficient nutrient. A multidisciplinary team manages her care. The

team includes a developmental paediatrician, a general paediatrician, a

paediatric neurologist, a plastic surgeon, an orthopaedic surgeon, dieticians,

occupational therapists and other therapists.

67 Her paediatric neurologist, Dr Lindsay Smith, said this in his report:

In judging the quality of her life, the initial impression may be that this is not a life well lived. However, she is happy, cherished, loved and delightfully interactive. Over the course of her life, I have seen her on many occasions, and have

VCC:.. 22 SENTENCE

always found both parents to be extremely supportive, dedicated and willing to do whatever is required in her best interests.

68 It is clear the child requires an extremely high level of support because of her

complex needs, and that support has been provided by you and your husband

throughout her life. Your devotion to her, to saving her life and to caring for

her is obvious. Your husband is the primary carer, as you have continued in

paid employment, but you are the person generally responsible for her care at

night. That includes taking her through the process of the 15-minute

intravenous infusion of cPMP which must be done daily and under clinical and

sterile conditions, monitoring her feeding and breathing at night. These are

not simple tasks. All require meticulous attention and care over extended

periods. You are also the person who, given your own expertise as a

biochemist, takes primary responsibility for seeking the necessary advice and

asking the relevant questions in order to assist you and your husband to make

informed decisions about her care. You have always assumed primary

responsibility for scheduling and administering her many medications and her

many and varied medical appointments for treatment and monitoring.

69 You and your husband now have a second child, aged two. The path to

conceiving a child who did not carry this same genetic abnormality has, I

accept, been a long and traumatic one. Her stem cells have been harvested

and preserved in the hope that they may someday be able to provide life-

sustaining treatment for your older daughter. It is clear, however, that she is a

cherished and loved child in her own right as well.

70 The circumstances of your older daughter raise complex and irreconcilable

considerations. Her prognosis is uncertain. It is clear that considerable

hardship will be caused to your husband and those family members and other

people who will have to share the burden of her care during what was

acknowledged to be the inevitable incarceration resulting from your

wrongdoing. The effect on her as a person and the effect on her care of your

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absence is unable to be predicted with any certainty. What can be said is that

this is a case where the hardship caused by your absence is such that the

sentence that otherwise would be appropriate must be tempered by mercy.

71 On the other hand, as Mr Sharp pointed out in the course of his submissions,

in your case the breach of trust is not just a breach of Phosphagenics’ trust.

Once your daughter was born and you assumed the extraordinary level of

responsibility for finding a cure and then caring for this profoundly disabled

child, you owed her a duty of trust as well. To continue your course of

defrauding Phosphagenics when you had accepted and embraced

responsibility for her complex needs, and then to embark upon the long and

painful steps to conceive a second child without the abnormality whilst

continuing your course of criminal conduct, much of it following the same

pattern of lifestyle support as existed before the child’s birth, is in some ways

more culpable. Fraud of this magnitude must almost always attract a

sentence of imprisonment. In that sense, your behaviour in continuing to

defraud Phosphagenics to give yourself a more comfortable lifestyle is

properly characterised as irresponsible selfishness, and it stands in stark

contrast to the devotion that you have displayed for caring for your child’s

needs.

72 You recognised that the successful treatment of your child with cPMP had the

potential to be applied to other children born with the same genetic disorder.

Your conduct in establishing the circumstances necessary for a proper clinical

trial to be conducted in relation to the cPMP treatment of your child and to the

manufacture of stocks of cPMP for treatment for other children born with this

disorder reveals a combination of altruism, a desire to use the knowledge

gained for the benefit of other children so afflicted and an exploitation of the

trust of Phosphagenics by concealing your interest in PMP-Vic and applying

Phosphagenics’ funds to advancing PMP-Vic’s potential for commercial gain

from the commercial development of cPMP.

VCC:.. 24 SENTENCE

73 I am told that as a direct result of the successful administering of cPMP to

your child and the decision to establish treatment for her under clinical trial

conditions, 12 other children born or diagnosed in utero with this disorder

have been successfully treated with cPMP and survived. The value of this to

those children and families and other children yet to be born who are

discovered to suffer from this disorder is inestimable, and your contribution to

making this happen is clearly an enormously valuable one.

74 I want to make it clear I make no criticism of you for seeking to benefit from

the commercial development of cPMP. However, your conduct in applying

some of the moneys misappropriated from Phosphagenics to the commercial

development of cPMP by the various means I have detailed, including

directing the payment of some of the funds obtained through the TABridge

scam to PMP-Vic; fraudulently presenting invoices for services provided by

Axcytogen to PMP-Vic to Phosphagenics for payment; and passing off credit

card payments relating to PMP-Vic’s investment in the commercial exploitation

of cPMP as expenses incurred by you on behalf of Phosphagenics and in

relation to its activities, cannot be justified as part of an honourable, altruistic

but misguided attempt to advance the interests of science in developing cPMP

for the treatment of children born with this disorder. No amount of

rationalisation of the public benefit in developing cPMP for this use can hide

the fact you shamelessly exploited your employer by diverting part of the

funds you misappropriated to an area of scientific research and endeavour

from which you hoped to gain.

75 As your counsel acknowledged, this is grave offending. The total moneys

fraudulently diverted from Phosphagenics and the amount you personally

received are very high, in the order of $6 million and $4 million respectively.

Your offending spanned a period of nearly nine years. Over that time, 180

separate false invoices were created and approved for payment by you.

Thirty-seven separate false credit card claims were made. It was a

VCC:.. 25 SENTENCE

sophisticated fraud involving many layers of concealment. The breach of trust

was of a very high order. You owed a fiduciary duty to the companies you

served. You took active steps to frustrate investigations, telling lies to the

successive Chief Financial Officers, changing entities and seeking to corrupt

or coopt innocent third parties into the fraud. Although neither Dr Gianello nor

Dr Jiang can shirk responsibility for their conscious, indeed, enthusiastic

decisions to participate, you were the initiator, and the Bynex, TABridge and

CK Australia scams could not have occurred without your abuse of your

position in Phosphagenics.

76 Similarly, the passing off to Phosphagenics of the Axcytogen invoices

submitted to PMP-Vic for work done for it were your responsibility. And the

credit card frauds are your responsibility and yours alone. You not only lied to

Ms Legg, but you tried to dismiss her when she, by doing her job, put you at

risk of exposure. She is to be commended for the moral strength that she

showed in the face of that adversity, in doing what was, after all, her job in

accounting faithfully to her employer, to the directors and to the shareholders

of the company for the proper management and administration of the funds of

the company. Her role in bringing this to light and the strength she must have

shown in the face of your opposition is something that should be properly

acknowledged.

77 Your motive is properly to be characterised as greed, both for the period

before the birth of your child and, for the reasons I have expressed, after as

well. That is so even though the desire to care for your daughter and to find a

cure for her and for other children so afflicted at someone else’s expense is a

less selfish reason than the accumulation of assets and the acquisition of

clothes, jewellery and other consumer items.

78 The gravity of the offending also bears on the severity of the consequences

for you of its discovery. You are publicly and privately shamed. Your

reputation is tarnished. You resigned from Phosphagenics in disgrace. You

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had to relinquish your position on the various prestigious government advisory

committees and boards to which you had been appointed. You will be

disqualified from holding a position as a director or managing a corporation for

a period. Whilst you have secured a well-paid international consultancy

position advising, somewhat ironically, on investment in biotechnology and

healthcare stocks, your career opportunities are likely to be diminished. You

are bound by the deed of settlement to make restitution. All assets that you

and your husband had amassed, apart from the family home, have been sold

or will be sold, and the family home is no longer in your name or that of your

husband, but in your father’s name, so you have become his tenants and his

dependents. A defined percentage of your future earnings must be paid to

Phosphagenics until the full debt is discharged. You are left, at the age of 39,

with none of the assets that you had so gleefully built up over the period of

your defrauding, and you will have to start again. It is a salutary lesson for

you, and it should be for others tempted to act as you did.

79 I have found this a very difficult sentencing exercise. Ultimately, I have

decided that a just punishment, whilst acknowledging the need to denounce

and deter, must be tempered by mercy for the plight that you, your husband

and your children, through that cruel twist of genetic fate, have found

yourselves in. In my view, this tempers not only the sentences for the

individual offences and the total effect of sentence, but applies by the fixing of

what is otherwise an extraordinarily low non-parole period.

80 Dr Ogru, can you please stand.

81 Esra Ogru, on the seven charges to which you have pleaded guilty, you are

convicted.

On charge 1, the Bynex/VHS fraud, you are sentenced to be imprisoned for a

period of two years.

On charge 2, the TABridge/VHS fraud, you are sentenced to be imprisoned for

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a period of two years, six months, and I make that the base sentence.

On charge 3, the TABridge/Phosphagenics fraud, you are sentenced to be

imprisoned for a period of two years, six months.

On charge 4, the CK Australia/Phosphagenics fraud, you are sentenced to be

imprisoned for a period of one year and six months.

On charge 5, the credit card fraud relating to VHS, you are sentenced to be

imprisoned for a period of two years.

On charge 6, the credit card fraud relating to Phosphagenics, you are

sentenced to be imprisoned for a period of two years.

On charge 7, the Axcytogen fraud, you are sentenced to be imprisoned for a

period of one year.

I direct that the sentence on charge 2 be the base sentence, that the whole of

the sentence on charge 1, one year of the sentence on charge 5 and six

months of the sentence on charge 7 be served cumulatively upon each other

and upon the base sentence.

That makes a total effective sentence of six years, and I fix the period of two

years as the time that you must serve before being eligible for parole.

I declare, pursuant to section 6AAA of the Sentencing Act 1991 that, but for

your pleas of guilty, I would have sentenced you to be imprisoned for a period

of eight years and I would have fixed a non-parole period of three years.

82 Is the arithmetic correct? Do the sentences reflect what I said I intended to

do, and are there any further orders required in respect of Dr Ogru?

83 COUNSEL: No further orders, Your Honour, and by my calculations, yes, your

Honour is correct.

84 COUNSEL: Yes. That is correct, your Honour.

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85 HER HONOUR: Thank you. Can you remove Dr Ogru, please.

86 Robert Gianello, you are now 60 years of age, and find yourself, instead of

enjoying the reputational and financial rewards of a career dedicated to

scientific research at the highest of levels, disgraced, bankrupt and struggling

to find any form of gainful work in your chosen field.

87 After obtaining your undergraduate and postgraduate qualifications at

Monash, you obtained employment as a research fellow there in 1986. You

conducted research on projects funded through ARC grants or, as became

common in your field, sponsored by companies engaged in the emerging

biotech industry. You were, as I have already noted, one of Dr Ogru’s

supervisors when she was doing her PhD. When she, after completing it,

became the Vice President, Research and Development for Phosphagenics in

2003 and so became responsible for the research being done in the

biochemistry department at Monash funded by VHS, you were working on

VHS-funded research and so came under her supervision. Although

ultimately you became an employee of Phosphagenics, not Monash, that

appeared to have come about as a result of administrative or commercial

arrangements between Monash and Phosphagenics, a reflection of the fact

that you and others in the team were, although at Monash, engaged full-time

on Phosphagenics work, that is rather than by any conscious step by you to

leave the university for employment in the private sector.

88 The evidence presented to me all paints a picture of a dedicated scientist,

working for the love of the work and not for the financial rewards. What

ambition you had was for the success of the projects that you worked on. You

were not, it would appear, motivated by a desire to make a lot of money or rise

through the departmental hierarchy at Monash, and this impression was, in a

most favourable way, reinforced by the evidence given by your former wife.

89 You have been married twice. You have maintained, obviously, very good

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relations with your first wife, and you are equally obviously a caring and

loving husband of your second wife. You have two adult sons from your first

marriage and a young, late primary school-age boy from your second. You

are by all accounts a devoted father to all of your sons, and you have earned

the high esteem of family, friends and colleagues.

90 A very impressive array of character evidence, in testimonials and oral

evidence, was presented on the plea: from your first wife and the two sons of

that marriage, your sister, your cousin, family friends who have known you

since childhood, friends from university, friends from your neighbourhood

through your children and schooling, and from your current sister-in-law. All

attest to the shock they experienced to discover the man they knew had been

committing these frauds, that you had engaged in such large-scale fraud over

such a protracted period. Their evidence, both written and oral, all showed

the struggle to reconcile this with the man they knew and valued.

91 You too are struggling to understand how you find yourself in this position.

You have sought to justify it in a number of ways: the force of Dr Ogru’s

personality, the effect of seeing the disparity of rewards flowing to those

employed in the private sector compared to those in research departments or

units at universities, a sense of grievance and entitlement that that

engendered, the pity engendered by the grievous plight of Dr Ogru’s child and

the scientific pursuit of a cure to benefit her and other children so afflicted and

other children afflicted with similar genetic disorders.

92 None of these are adequate or, indeed, any justification. As the summary

makes clear, the Bynex scam, from which the large part of your personal

benefit was derived, ran for four years and came to an end before Dr Ogru’s

child was born. It came to an end because you were at risk of exposure, not

because of the circumstances of the birth of the child. The Bynex moneys you

received went to lifestyle, not life-saving scientific research. Whilst some of

the moneys misappropriated through the TABridge scam went to the search

VCC:.. 30 SENTENCE

for a cure, they were diverted to the vehicle through which you and Dr Ogru

stood to gain if the commercial development of cPMP was successful. Most

of the money obtained through the TABridge scam went to Dr Ogru’s personal

benefit, just as it had before the birth of the child, and a significant percentage

of the TABridge funds diverted to PMP-Vic. Approximately $100,000 went to

you for lifestyle matters or some research that was a choice of yours to

embark upon.

93 This, then, must be understood to be the measure of your moral and legal

culpability. Although it can correctly be said that you gained little personally

from the TABridge scam compared to the Bynex scam, your role in facilitating

it cannot be ignored, and this too must be seen as a measure of your moral

and legal culpability.

94 The effect for you too has been devastating, personally and professionally.

You have lost your employment. You and your wife have been bankrupted.

Your family home and all of your assets have gone in restitution. You and

your wife and young son have moved in with her parents, living in an annexe

to their home. You are dependent upon them. At 60, you are left with no

assets and limited employment prospects.

95 Your wife suffers from an anxiety condition and, although she has professional

qualifications and ran her own business for some years, she has not been

able to engage in paid work for some years. The hardship to her and to your

young son caused by your offending has been and will continue to be

considerable. This is not the life that she thought that the two of you would be

living, or the three of you would be living, as you moved into your sixties.

96 Following the successful use of cPMP for Dr Ogru’s child, your help in finding

a cure for another inherited disorder, AHDS, was sought by the mother of a

child suffering from that condition. AHDS is a rare condition, and children

born with it suffer mental retardation, impaired speaking ability, progressive

VCC:.. 31 SENTENCE

spastic quadriplegia, muscle weakness and seizures. The plight of the

children born with it and of their families is, indeed, a desperate one. You have

devoted a considerable amount of your time and energy to researching and

conducting clinical trials on a substance known as DIPTA. Like cPMP with

MoCD, DIPTA is an experimental treatment and is still in its early days of

testing and evaluating for safe use in humans. DIPTA is not easily

manufactured and there is no commercial interest in manufacturing it.

Parents of children suffering this disorder are struggling to find supplies. It

was successfully administered to two children with the condition in a clinical

trial and, as a result of work that you had done after being contacted by the

mother of one of these children and since then, the success of the treatment

has led to your expertise in this area being sought internationally.

97 Although Dr Ogru provided some initial funds for the clinical trial in respect of

the use of DIPTA, that funding soon ran out. No other funding was able to be

secured and you continued to work, unpaid and injecting your own moneys

into the clinical trial, until the combination of the depletion of your own

resources, followed by the exposure of your involvement in the defrauding of

Phosphagenics, led to the drying up of funds and the consequent suspension

of the clinical trial. You have since continued to assist the parents of children

suffering from this order to source, test and encapsulate the supplies of DIPTA

so as to enable a continuing administration of the drug to them under the

supervision of paediatric research departments such as that running under Dr

Flora Wong at Monash University.

98 Your devotion to trying to secure and continue treatment for the children in the

DIPTA trial and other children afflicted with the condition is, I accept, genuine

and complete. It could almost be called obsessive. It is clear that the parents

of the children who have been treated with DIPTA and given hope of a better

future are enormously grateful to you and very dependent upon you. The

mother of one of those children gave powerful evidence on the plea of her

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dependence on you to continue to source and test supplies of DIPTA, and the

feared, possibly fatal, consequences for her child if you are unable to continue

the work you have been doing since the clinical trial was suspended of testing

and preparing and encapsulating DIPTA for safe, sterile administration to her

son under the supervision of the paediatric unit at Monash Medical Centre.

99 These circumstances were relied on by Mr McDonald as circumstances which

also should enliven the exercise of mercy. Although it was put that you were

the only person able to locate, test and encapsulate DIPTA for administration

to this particular child, the other evidence did not bear that out. The child’s

treatment is supervised by Dr Flora Wong at Monash Medical Centre, and the

child’s mother gave evidence that Dr Wong and Monash are working with her

and others with knowledge and expertise in the area to source DIPTA and to

find somebody else who will be able to manufacture and safely encapsulate it.

I do not consider in the circumstances that your role to date in the

development of the trials in relation to the use of DIPTA and the supervising of

its manufacture and encapsulation for its safe use, whilst clearly showing a

measure of the person you are, calls for the exercise of mercy.

100 As for Dr Ogru, so for you I consider that no sentence other than one of

imprisonment is appropriate. I do not consider the sentencing options

contended for by your counsel, namely, a sentence of imprisonment followed

by a community correction order or a fully suspended sentence, are

appropriate, having regard to the gravity of the offending, notwithstanding the

mitigating features relied upon on your behalf.

101 Your offending too is properly characterised as grave. Although your personal

benefit was not as great as that derived by Dr Ogru overall, you personally

took advantage of just over half of the proceeds of the Bynex scam and you

played that significant role that I have described in facilitating the TABridge

scam, which was the vehicle for the vast majority of the funds being

misappropriated after the Bynex scam was brought to an end. Although the

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period of offending is not as long as Dr Ogru’s, it is still a substantial period:

four years for the Bynex scam and three and a half for the TABridge one.

Although your personal benefit from the latter scam is substantially less than

that derived by Dr Ogru and Dr Jiang, it is still significant. Again, as with Dr

Ogru, your role in the defrauding involved the creation of numerous false

invoices over the extended period of your involvement, and is properly to be

regarded as a sophisticated and sustained scheme. Your motive for

participation in the Bynex scam can only be characterised as greed, and your

attempt to rationalise your motive for participating in the TABridge scam does

you no credit when it is considered that you benefited to the amount of about

$100,000 yourself and you acquiesced in and, indeed, took positive steps to

encourage the defrauding of Phosphagenics to advance the interests of your

commercial venture in PMP-Vic.

102 Your undertaking to cooperate, although given later than the undertaking

given by Dr Jiang and now not necessary by reason of the guilty pleas by Dr

Ogru, is nonetheless a matter which also properly justifies the reduction of the

sentence otherwise appropriate. I note on the record that you have given a

sworn undertaking to cooperate by giving evidence in accordance with your

interview in any proceedings against Dr Ogru, and I must warn you that if you

are called upon to honour the undertaking and you do not honour it, the

prosecution can apply to the Court of Appeal for you to be resentenced.

103 I consider your moral culpability in respect of the Bynex scam to be the same

as Dr Ogru’s and that it is less than hers in respect of the TABridge matters.

The personal matters weighing in your favour are reflected both in the head

sentence and in the significant gap that I have fixed between it and the non-

parole period.

104 Dr Gianello, can you please stand.

105 Robert Gianello, on the three charges to which you have pleaded guilty, you

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are convicted.

On charge 1, the Bynex/VHS charge, you are sentenced to be imprisoned for

a period of two years.

On charge 2, the TABridge/VHS scam, you are sentenced to be imprisoned

for a period of two years.

On charge 3, the TABridge/Phosphagenics scam, you are sentenced to be

imprisoned for a period of two years.

I direct that the sentence on charge 1 be the base sentence and that the

whole of the sentence on charge 2 be served cumulatively upon it.

That makes a total effective sentence of four years, and I fix a period of two

years as the time that you must serve before being eligible for parole.

I declare, pursuant to section 6AAA, that, but for your pleas of guilty, I would

have sentenced you to a term of imprisonment of six years and fixed a non-

parole period of three.

106 Do the orders reflect what I said I intended to do? Is the arithmetic correct

and are there any other further orders that need be made in respect of Dr

Gianello?

107 COUNSEL: Your Honour, it is correct.

108 COUNSEL: It is correct, Your Honour.

109 HER HONOUR: Could you remove Dr Gianello, please.

110 Woei-Jia Jiang, you are now 51 years of age and you come before the court

as a man whose significant scientific and professional achievements and high

personal reputation have been badly damaged by your participation in this

fraudulent operation. You obtained your initial qualifications in Taiwan and

came to Australia as a young adult to undertake your PhD at Monash

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University. Your wife and firstborn daughter soon followed, and your family

made its life here. Later, a second child was born. You had no extended

family here and you, your wife and your two daughters became and have

remained a small and close-knit family unit. They, and your family in Taiwan,

are rightly enormously proud of you for having achieved so well.

111 Having been awarded your PhD, you went into private industry and pursued a

successful career in the research and development of drugs which could

better treat common diseases such as asthma and diabetes. More recently,

your work has focused on treatments for certain cancers, and you have

expressed great pride in working to make a contribution to better treatment

options or the cure or the development of cure for these diseases. So far as

your professional work was concerned, you clearly saw yourself and took

pride in seeing yourself as contributing to something worthwhile to improve

the health and quality of life from people suffering from disease.

112 The way you perceived yourself in your professional life and the way you

perceived yourself in your family and your dealings with your friends and

colleagues, stands in stark contrast to your decision to participate in this

fraudulent scheme. I accept on the powerful character evidence that was

placed before me in the testimonials and from the oral evidence of your wife

that this is seen for you, as it was for Dr Gianello, as inexplicable, out-of-

character conduct.

113 You have not sought to blame anybody other than yourself for your

participation. The only explanations that I can see for your decision to

participate are that you came into an existing racket run by two people who

you knew, trusted and valued as close friends. You had known each of them

since your days as a PhD student and you had come to regard them as family,

something significant for you given that you had no family here other than

your wife and children. It is all the more remarkable because it came about as

a result of an entirely fortuitous, unplanned or accidental re-establishing of

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contact between Dr Gianello and Dr Ogru in 2008, when you had not seen

them for years. That led to an approach initiated by Dr Ogru and Dr Gianello

to you.

114 Maybe the fact that they, people you trusted, were already participating in

such a scheme and appeared to express no moral qualms about it, led you to

drop your standards and to join in. Maybe too the highly emotional

circumstances surrounding the birth of Dr Ogru’s child and the desperate

search for a cure combined to cloud your judgement and so to take that first

step of submitting an invoice to Phosphagenics which could at one level be

rationalised as payment for the time you had spent on the search for a cure,

even though you were well-aware that Phosphagenics had not retained you to

do any such work and the invoice contained a completely false description of

the work undertaken.

115 However, as you yourself acknowledge, this last is not an adequate

explanation for that first step that you took. You knew Mr Rosen, Dr Ogru’s co-

CEO of Phosphagenics, personally, and you acknowledged to your counsel,

who transmitted it to me in the course of the plea, that you knew you could

easily, instead of accepting Dr Ogru’s assurance that Phosphagenics had

undertaken to reimburse you for your time that you had spent in the search for

a cure, have contacted Mr Rosen direct and cleared it with him. Nothing,

however, like that can explain how you then came to acquiesce in a scheme

that had no vestige of a link to reimbursement for work genuinely undertaken

in respect of the search for a cure for all of the subsequent TABridge and then

CK Australia invoices.

116 In the letter that you wrote to the court and was tendered in the course of the

plea, you said:

I am deeply ashamed of what I did and I sincerely apologise for my conduct. I accept full responsibility for my conduct and I understand the damage that I have caused. I know that no words can diminish the harm I

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have caused.

117 I accept that this is a genuine and sincere statement of your position. It is

borne out by your conduct since the matter was exposed. I am told and

accept that in late June 2012, as Dr Ogru was taking her final desperate steps

to try to conceal her wrongdoing, you decided that you were not prepared to

participate in that. You had the courage and acceptance of responsibility to go

and speak directly to Mr James, one of your co-directors in Progen, the

company you were then employed by, who was also a director of

Phosphagenics. You then faced the whole board of Progen and told them

personally of your wrongdoing and resigned. You were the leader of a major

project of Progen’s, and it is a mark of your standing with them and your

acceptance of responsibility that you agreed to go back under a 12-month

contract at a much lesser rate of pay in order to pursue that project and make

sure that the expertise that you had and that was special to that project was

retained for the benefit of the project and the benefit of Progen.

118 You cooperated early and fully with the authorities. You participated in an

interview, made a statement and signed the undertaking to cooperate by

giving evidence against Dr Ogru. You signed the deed of agreement

acknowledging your responsibility for payment of all moneys of which

Phosphagenics was defrauded by your conduct, and you have actively

cooperated in the realisation of your assets in order to honour that agreement.

The amount of restitution made by you is about $100,000 in excess of the

amount of personal benefit you derived. And you are bound, as are the

others, to continue to make restitution to Phosphagenics, both by a nominated

percentage of any future earnings as well as the handing over of any future

assets that come your way.

119 Every asset you and your wife had worked for and built up here in your life in

Australia has gone. The family home has been sold and you are living in

rental accommodation. Your wife, who had not been in paid work for many

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years and who had devoted herself to caring for you and your two children,

has had to find paid work. She has no formal qualifications and is not

confident about her command of English. Her employment options are

limited, and she works as a low-paid casual child care worker. Your oldest

daughter has just finished university and has been contributing to the family

from her earnings. The plans that you and your wife had made for your future

have gone. The plans that you had made to provide a similar private

education with all the extras for your younger daughter that you had provided

to your older daughter have, obviously, had to be altered, and I accept that

you feel bitterly the burden of responsibility for that.

120 Your wife’s evidence on the plea was very moving. She spoke of the shock

that she had experienced when you told her what you had done. She said

she believed that you and, indeed, the whole family, were good people, but

now she sees you as different. She says that she can’t trust you any more

and she doubts her own judgement, because she did not see that the person

she believed you were could be capable of committing the frauds that you

committed. Family loyalty is very important to her. She said that you are just

a small family and all you have is each other. She has stood by you and,

obviously, intends to do so despite this blow to her. But it is clear that what

has happened has shaken the very foundations of her life, her sense of who

she is, her sense of who you are and the way she has seen the whole family.

You understand that, accept it, and I accept that that is a considerable burden

of punishment for you and will weigh oppressively on you.

121 Your professional reputation and career path are clearly affected significantly

by this. Although your skills and expertise are such that you are likely to be

able to gain employment, your career path in managing or being a director of

a company, or being entrusted with other people’s money, is obviously clearly

blighted.

122 For you too, this is grave offending. Your personal benefit was in excess of a

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million dollars, of approximately $4 million was obtained by the device that you

lent yourself to. Although your wife said in her evidence that as a family you

were not rich, but happy, it is clear that much of the money went to personal

use: to lifestyle, to building up assets or to investment in research and

development of drugs or products which you hoped might not only help people

afflicted with illness or disease, but also bring you personal gain. As with your

co-offenders, the offending involved numerous transactions over a

considerable period: for you, four years and nine months. It came to an end

only through discovery. Although you did not personally prepare any of the

TABridge invoices after the first, you were well-aware of how much money

was being received because you were the one who then, again using false

invoices, transferred it as directed by Dr Ogru or Dr Gianello. Thus, you too

took part in what can properly be characterised as a sophisticated and

sustained fraud using false documents.

123 Your undertaking to cooperate, although now not necessary by reason of the

guilty pleas by Dr Ogru, is nonetheless a matter which properly justifies the

reduction of the sentence otherwise appropriate. I note on the record that you

have given a sworn undertaking to cooperate by giving evidence in

accordance with your interview in any proceedings against Dr Ogru, and I

warn you too, as I did Dr Gianello, that if you are called upon to honour the

undertaking and you do not honour it, the prosecution can apply to the Court

of Appeal for you to be resentenced.

124 I consider your moral culpability to be lower than that of your cooffenders,

because you came into that existing scheme already run by them. However, it

is still high and, again, the personal matters weighing in your favour are

reflected both in the head sentence and the significant gap between it and the

non-parole period.

125 Woei-Jia Jiang, can you please stand.

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126 On the three charges to which you have pleaded guilty, you are convicted.

On charge 4, the TABridge/VHS fraud, you are sentenced to be imprisoned for

a period of two years and six months.

On charge 5, the TABridge/Phosphagenics fraud, you are sentenced to be

imprisoned for a period of two years and six months.

On charge 6, the CK Australia/Phosphagenics fraud, you are sentenced to be

imprisoned for a period of one year, six months.

All sentences are concurrent. That makes a total effective sentence of two

years, six months, and I fix a period of 12 months as the time that you must

serve before being eligible for parole.

I declare, pursuant to section 6AAA of the Sentencing Act 1991, that, but for

your pleas of guilty, I would have sentenced you to be imprisoned for a period

of three years and nine months and to have served a period of two years

before being eligible for parole.

127 Again, do the sentences I have pronounced reflect what I said I intended to

do? Is the arithmetic correct and are there any further orders?

128 COUNSEL: They are correct, Your Honour. No other orders.

129 COUNSEL: Yes. Thank you, Your Honour. Correct.

130 HER HONOUR: Thank you. Can you please remove Dr Jiang.

131 Can I thank all counsel for what has been considerable assistance in a very

complex and difficult matter. Adjourn.

- - -

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