On July 23, 2020, a further $28,118.40 was paid into her account for the benefit of her and five workers.
However, the Ministry of Social Development (MSD), which administered the subsidy, became suspicious when it later noticed anomalies in the applications.
Subsequent investigations showed she never had employees, paid any wages or had ever actually traded.
Hohipa-Kahuroa was sentenced yesterday in Gisborne District Court after pleading guilty to three charges of dishonestly using a document to obtain a pecuniary advantage — an offence punishable by up to seven years in jail.
Judge Warren Cathcart imposed 17 months imprisonment but converted it to eight-and-a-half months home detention. The sentence will be followed by six-months release conditions.
Since being arrested, Hohipa-Kahuroa had repaid $1260 of the stolen money to the MSD, which was seeking reparation for the rest of it.
The court was told she had used some of the stolen money to clear personal debts and had bought a truck for $15,000, which she recently sold for $5000.
Counsel Mana Taumaunu said Hohipa-Kahuroa brought $2500 from that sale with her to court to offer as reparation.
The judge wanted to know what happened to the rest of the money, including the rest of the proceeds from the sale of the truck.
Someone needed to undertake a “serious inquiry” to retrace the money, he said.
He accepted Hohipa-Kahuroa had limited financial means and was on a sole parent benefit with four children in her care, but not that she had incapacity to repay at least some of the funds.
“You can’t come to court and say, ‘I don’t have to pay the money back because I’m being sentenced’. That’s not the case in law,” Judge Cathcart said.
The court was told Hohipa-Kahuroa had a prospect of work through her mother’s business — part of Mr Taumaunu’s submissions as to why she should get home detention.
The Covid-19 wage subsidy scheme started in March 2020 to provide rapidly available financial support for businesses and employers that had experienced a minimum of 30 to 40 percent decline in revenue due to the pandemic.
The subsidy could only be used for paying wages or salaries of employees named in the application.
Businesses were required to supply any information MSD required to make decisions about the application and to audit or review any subsidy granted.
It was a high trust model. Applications were often granted before they could be verified.
Hohipa-Kahuroa was the sole director and shareholder of Kaliopasi Ltd, which she incorporated in August, 2018, and removed from the companies register on December 18, 2019.
She was initially registered with the Inland Revenue Department as an employer but there was no record of her having any employees during the times specified in the applications. Neither was there any record of the company filing any tax returns or having actually traded.
All the wage subsidy applications were made in Hohipa-Kahuroa’s name. One she filed in the company’s name was at a time when she had removed it from the register. However, she reinstated it the following month.
The only PAYE returns she filed were for May, June, and July 2020 but didn’t show any PAYE had been deducted, which was necessary if the money had actually been paid as wages.
In August 2020, she acknowledged to MSD that she had no employees registered with IRD. She said she would speak to IRD about it but never did. Neither did she provide documents she agreed to provide MSD.
She didn’t respond when the MSD asked her to attend a formal interview and to repay the money.
In determining sentence, the judge said only prison or home detention was appropriate.
It wasn’t only the amount of the fraud that was important to assessing blameworthiness. Other relevant factors were the multiplicity of the offending, its duration, premeditation, the vulnerability of the victim, and importantly in this case, the breach of trust.
The unsuccessful attempts to defraud the system were as serious as the successful ones.
While the direct victim was the MSD, this sort of fraud on public agencies had much wider ramifications for the community and potential to undermine confidence in the subsidy scheme.
“The entire scheme rested heavily on the honesty of the applicants and you abused that trust for financial gain,” the judge said.
However, he accepted the offending was relatively unsophisticated.
He set a sentence starting point of two years, four months imprisonment and reduced it by 25 percent for guilty pleas and a further four months for personal circumstances.
There was nothing adverse about Hohipa-Kahuroa’s background. Reports showed it was positive, the judge said. The discount for personal circumstances was to reflect her previous good character, absence of any relevant convictions, childcare responsibilities and prospect of work.
He accepted Hohipa-Kahuroa was emotionally concerned about the predicament she would face in light of the case.
The judge said he took all that into account but noted they were the incidental consequences that arose from all offending of this nature.
“I don’t think anyone who has sat in that dock is not experiencing those types of feelings in cases of a similar nature,” Judge Cathcart said.
