Buried in the Commonwealth Criminal Code is the lesser-known offence of “Dishonestly cause a risk of loss to a Commonwealth entity”. The maximum penalty on indictment is a massive 10 years’ imprisonment (Commonwealth Criminal Code Act 1995 (Cth) s 135.4(5)).

Let’s recap what the offence involves here: a risk of loss. There’s no need to actually steal anything, and there’s no need to or even actually cause loss to the Commonwealth or anyone else. Merely risking a loss is a serious crime.

What kinds of malefactors and fraudsters is this offence being applied to in this case?

It’s being used against our essential early childcare educators.

We recently represented a client in Sydney who was charged with this offence.

She worked at a Childcare Centre (now shut down). She provided what is called family day care (FDC), which involves an educator, like our client, providing day care from their own residence.

Our client used an application on her phone to sign children in and out of her care. She was accused of having overstated these hours of care, triggering exaggerated childcare subsidies (CCS) to be paid to her employer, the Childcare Centre.

The prosecution claimed that she caused a risk of loss of over $5,000. The actual loss was a few hundred dollars, over several months. But the charge is ‘risk’ of loss to the Commonwealth. You might ask: what actions would amount to a risk of a loss, for an early childhood educator?

In this case, it came down to bookkeeping and time-accounting systems over which our client had little control, other than simple time input.

However, a risk of loss was calculated by the prosecutors as including all the money she legitimately earned for the Childcare Centre. This was considered legally a risk of loss even though it was money she earned for her employer by the provision of her labour. We had considerable head-scratching moments and glazed eyes staring at the figures, until it dawned on us that these numbers did not add up.

To give an example. If she worked a 5-hour shift, but input 5.5 hours on the timesheet, then 5.5 hours of subsidy were paid to her employer. However, she was be charged with causing a risk of loss of 5.5 hours, even though there was no risk of loss in any sentient view for the five hours she actually performed the service. Sounds like Enron-accounting by the prosecutorial state (at least to me).

We took the matter after she had pleaded guilty with other lawyers, so we were stuck with the plea. But we crunched the numbers and were able to present a case in mitigation to the Local Court at Liverpool that sloppy record keeping was her worst sin in this scheme.

The lesson more broadly for the public here in my view is that time and value take on a wholly new incorporeal essence and exist without any need for tangible form, for proving this offence. It is a cautionary point for anyone contracting for services with a provider who is being paid by the Commonwealth government.

Any error (however minor) in timekeeping of a few minutes in say, as here, an app, can lead to serious dishonesty-offence charges for causing a risk of loss to the Commonwealth for the whole day’s work. Our client did not even gain anything or have anything to gain from her supposed criminal activity.

On one of the occasions in question, our client misstated her hours of care by 5 minutes, which was said to have caused a risk of loss to the Commonwealth for the whole day’s work. The CCS being about $8.60 per hour, the actual loss to the Commonwealth was only 72 cents on this day, although she was charged with causing a risk of a few hundred dollars of loss. On another occasion, our client even understated her hours, the subsidy therefore being underpaid, but this led to a discrepancy which was said to have caused a risk of loss to the Commonwealth for the whole day’s work. This is ridiculous, embarrassing, and Kafkaesque. It should not legally stand going forward. Hopefully a higher-court decision challenges this interpretation.

Eight Educators were swept up in this investigation of the Child Care Centre. There were four separate volumes of evidence. For a matter proceeding in the Local Court, the bundles and volume of evidence produced by the Commonwealth prosecution overly complicated the matter.  

Many of the materials were duplicated, irrelevant and erroneous. It included expert reports, multiple Strike Force surveillance (yes, a sting, like of king-pin drug dealers), CCTV surveillance, forensic accounting statements and endless company records. All this effort to discover that our client’s employer had a somewhat unfit for purpose recordkeeping system.

The volume of material forced all eight co-accused into submission.

On many of the occasions our client was said to have faked her hours and caused a risk of loss to the Commonwealth, the surveillance evidence was full of errors, mistaking our client for her mother. The risk of loss calculated was grossly exaggerated.

This case is a frightening lesson. Amongst the confusion and layers of company and government bureaucracy was a dodgy Childcare Centre, which swept up the educators working there in a mess.

Our client ended up with a charge which was in many respects outlandish in its calculations and cost her in legal fees and undue stress. Upon review, it made no sense, and she faced being convicted for a fraud offence due to her dodgy workplace.

Luckily, we were able to ventilate these issues in the court, which led to the client receiving a non-conviction dismissal as sentence; an excellent result, but one she should not have had to work so hard with us to obtain.

The broader lesson beyond the law is, if your employer contracts with the Commonwealth, then be careful who you work for.

*Disclaimer: This is intended as general information only and not to be construed as legal advice. The above information is subject to changes over time. You should always seek professional advice before taking any course of action.*