Nathan Downey is appealing his prison sentence, handed down after he fraudulently obtained around $200k to fund his own lifestyle. Photo / NZME
Nathan Downey is appealing his prison sentence, handed down after he fraudulently obtained around $200k to fund his own lifestyle. Photo / NZME
A man who defrauded taxpayers to the tune of $200,000, much of which was spent on his “hedonistic” lifestyle that included gambling and adult entertainment, has again appealed, saying he should be serving his sentence at home, not in a cell.
While Nathan Downey’s lawyers say he should have been sentenced to home detention instead of his prison sentence of just over 20 months, the Crown says the judge made no errors in his decision.
He fraudulently obtained around $196,000 from the Ministry of Social Development (MSD) by making 19 applications for the Covid-19 wage subsidy scheme, 13 of which were successful. The applications were made in the name of his company, Protective Systems Ltd, using names of fictitious employees. The company had no employees.
He used $57,000 to pay contractors, but the balance was for “personal expenses”, including online gambling, adult entertainment clubs and fast food, according to the MSD.
The wage subsidy scheme was a crisis measure to keep New Zealanders in jobs, with payments intentionally designed to be distributed quickly through a high-trust model.
He has since repaid the money he obtained. Crown lawyer Tessa Simpson told the court the repayment came after a “windfall inheritance”.
While the District Court judge who sentenced him reached a sentence below two years, which allows for the sentence to be switched to home detention in place of imprisonment, he concluded denunciation and deterrence were the key sentencing factors and declined home detention.
Downey has previously unsuccessfully appealed his sentence in the High Court, leading to today’s hearing in the Court of Appeal. He watched the hearing via video link from prison.
In court today, Downey’s lawyer Nick Chisnall said deterrence and denunciation should be paired with rehabilitation considerations. Chisnall said the District Court judge acknowledged much of Downey’s offending was explained by addiction. He also disputed that deterrence and denunciation couldn’t be achieved with a home detention sentence.
The Ministry of Social Development managed the scheme, which operated on a "high trust model". Photo / Bevan Conley
Chisnall said there are societal benefits to home detention, including lower rates of reconviction, and “more importantly, positive support for rehabilitation and reintegration”.
“The judge also accepted Mr Downey will not receive meaningful treatment for his addiction in prison,” he said.
Chisnall said the District Court judge’s comparison to a 2016 case of fraud against a Red Cross fund for Christchurch earthquake victims wasn’t a fair comparison. He said in that case, one person’s breach of trust meant another would miss out. The same couldn’t be said for a fund totalling billions of dollars managed by the state.
The fact Downey repaid the money “speaks volumes to his remorse”, Chisnall said.
In reply, Simpson said the leave to appeal shouldn’t be granted as no substantial miscarriage of justice had occurred.
She said his offending was used to, in Downey’s own words, “fund a hedonistic lifestyle”. She said the sentencing analysis was sound and should stand.
“The sentencing judge said the offending was entitled, intentional and exploitative.”
“The MSD was processing applications within days, often the same day, which was necessary to provide the support intended. The Crown says Mr Downey’s offending was a huge abuse of public trust in such a generous scheme.”
“New Zealanders are still facing the impacts of the billions paid into that scheme.”
The bench reserved its decision.
Ethan Griffiths covers crime and justice stories nationwide for Open Justice. He joined NZME in 2020, previously working as a regional reporter in Whanganui and South Taranaki.
