HKSAR v. Samtani Manesh Vijaykumar

DCCC 315/2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 315 OF 2015

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Reasons for Sentence

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Charges

1.The Defendant pleads guilty to 8 charges of fraud (Charges 1 – 7 and 13). 

Background facts

2.He joined KGI Asia Limited (“KGI”) as an investment consultant in 2008.  His duty was to procure customers to open KGI investment accounts and he would invest in financial products structured by KGI for his customers.  The contract between KGI and his customers authorized him to buy and sell for his customers on a discretionary basis according to pre-agreed guidelines.  He was entitled to commission to be paid by KGI as his only form of emoluments.  He had 3 customers who fell to his fraud.  He received commission of $187,415.06 in total in respect of their accounts in the offence period. 

First victim: de Santis

3.This victim pertains to Charges 1 and 2.  In about January 2008, de Santis opened 4 KGI investment accounts by depositing $5,000,000 (HK$, applicable to each dollar sign hereinafter) in total into these accounts.  In December 2008, he closed 2 of these accounts.  At that time, the 2 remaining accounts had a total balance of about $3,000,000. 

4.Charge 1 relates to his emails sent to de Santis which falsely represented that the balance as at 3 August 2012 in one of the latter’s account was $918,537.03 despite the true balance being only $19,812.17. 

5.Charge 2 relates to his emails sent to de Santis which falsely represented that the balance as at 19 November 2012 in one of the latter’s account was $769,068.02 despite the true balance being only $10,337.19. 

6.By defrauding and keeping de Santis as a customer, he earned commission of $16,677.31 in total.

Second Victim: Abela

7.This victim pertains to Charges 3 – 7.  In about April 2010, Abela opened a KGI investment account for himself and his wife and another KGI investment account for his private company by depositing about $2,100,000 in total into these accounts.  Shortly before August 2011, Abela withdrew about $430,000 said to be profits from these accounts.  Abela’s express intention was to do low to medium risk date trades and stressed that he never wanted to enter long-term positions as he had previous bad experience with another company. 

8.Charge 3 relates to his emails sent to Abela which falsely represented that the balance as at 31 August 2011 in the couple’s account was $3,056,709.37 despite the true balance being only $2,159,039.12. 

9.Charge 4 relates to his emails sent to Abela which falsely represented that the balance as at 3 January 2012 in the couple’s account was $2,064,163.19 despite the true balance being only $131,662.59 (ie $129,799.48 + $1863.11, as per para. 21(a) of the Summary of Facts).  He also sent Abela emails which falsely represented that the balance as at 3 January 2012 in the private company’s account was $112,459 despite the true balance being only $111,259.60.  I disregard this minor discrepancy in sentencing the Defendant. 

10.Charge 5 relates to his emails sent to Abela which falsely represented that the balance as at 2 February 2012 in the couple’s account was $2,141,380.32 despite the true balance being only $101,526.01 (ie $99,662.90 + $1863.11, as per para. 23(a) of the Summary of Facts).  He also sent Abela emails which falsely represented that the balance as at 2 February 2012 in the private company’s account was $118,676 despite the true balance being only $15,751.30. 

11.Charge 6 relates to his emails sent to Abela which falsely represented that the balance as at 2 March 2012 in the couple’s account was $2,243,580.34 despite the true balance being only $41,986.45.  He also sent Abela emails which falsely represented that the balance as at 2 March 2012 in the private company’s account was $132,256.07 despite the true balance being only $5,032.96. 

12.Charge 7 relates to his emails sent to Abela which falsely represented that the balance as at 30 August 2012 in the couple’s account was $2,704,277.47 despite the true balance being only $2,170.55. 

13.By defrauding and keeping Abela as a customer, he earned commission of $149,121.64 in total. 

Third victim: Bryan

14.This victim pertains to Charge 13.  In about June 2011, Melanie Bryan opened a KGI investment account with an opening balance of $1,400,000.  The Defendant sent Melanie emails which falsely represented that the balance as at 13 November 2012 in her account was $1,412,011.42 despite the true balance being only $569,788.47.

15.By defrauding and keeping Melanie as a customer, he earned commission of $21,616.11 in total.

Arrest of the Defendant

16.The Defendant had been reluctant to meet de Santis for updating the status of his accounts.  As a result, on 22 November 2012, de Santis attended KGI’s office to enquire of his investment accounts.  De Santis learned from KGI his accounts had only about $9,000 left.  He reported to the police.  Upon arrest and caution, the Defendant admitted that he was wrong and dishonest to his customers regarding the status and balances of their investment accounts and that he had tried to recover investment losses but failed. 

Personal background and mitigation

17.The Defendant is now aged 33.  He was born in Dubai in an Indian family.  His paternal grandparents and parents came to Hong Kong and became Hong Kong residents.  His father was a merchant and his mother a housewife.  Before the Defendant was born, they moved to Thailand.  He received his education in Thailand.  He graduated in Finance and Banking in the university in Bangkok with full tuition scholarship and award for academic excellence.  In 2005, his elder sister removed to Hong Kong for better job opportunities.  In 2007, he followed her footsteps.  They supported their parents financially, who remained in Thailand.  His mother died in 2001 from kidney failure and his father died in 2008 due to bad health after a stroke. 

18.He has a clear record.  He lives with his elder sister, who is a single mother of 2 children, aged 4 and 5 respectively.  They rely substantially on his financial and pastoral support.  He took up a substantial share of the outgoings. 

19.In 2008, he worked as an investment consultant in KGI, Hong Kong.  He received commission between $20,000 and $60,000 per month.  He worked for 2 years as an operations manager in a company until April 2015.  From April 2015 until detained, he was the project manager in a company, earning about $25,000 per month, supplemented by freelancing in designing website, tutoring, and book-keeping, earning about $2,000 per month since April 2013.  On average, his income was over $25,000.  In his free time, he assisted his elder sister to handle IT matters and administrative work in her private tuition business. 

20.He suffered increasingly serious renal dysfunction since 2001.  In 2008, he had to live on regular dialyses and adapt to the attending frailty.  In 2013, he managed to receive a kidney donated for transplantation.  After the operation, his body did not respond as effectively as could be expected.  There were onsets of kidney failure of varying magnitude from time to time in response to possibly the minutest or unexpected turn of activity or environment.  He was frequently hospitalized, from a few days to weeks.  Dr. Chau Ka Foon, the medical specialist in Queen Elizabeth Hospital, had written 2 letters on his renal history and the features of post-transplantation management (pp. 20 and 39 – 40 of the mitigation bundle). Dr. Chau in particular highlighted the possibly inadequate facilities in the prison’s medical team to deal with the monitoring, medication and, if necessary, the emergency treatment.  There was long-term monitoring required of the Defendant and the responsible doctors to guard against infection and organ failure. 

21.The Securities and Futures Commission had disqualified the Defendant from the financial industry for life.  In March 2013, he was ordered bankrupt. 

22.There are many mitigating letters sent from the circle of his church, his work place, his friends and family. 

23.Mr. Chan, his counsel, submits in mitigation that the Defendant’s kidney problem had put him in precarious health and lethargy which seriously ripped him of the best judgment.  At times, he had dozed off after medication so as to miss out on the best placing positions for his customers. His primary intention in concealing the true balances in the accounts from his customers was to buy time for further trading to recover their investment losses.  The earning of commission was the corollary of, not the driving force for, the fraud.  His conviction and disqualification from investment consultancy work has wiped out many years of industrious studies and work. Despite the transplantation, now that his medical condition has remained unstable and generally poor, it shall qualify as an exceptional circumstance to suspend a term of imprisonment. 

24.There is a wish expressed by the Defendant for community service.  As his duty dictates, Mr. Chan asks me to consider it although it is not a most practical option in light of the Defendant’s poor health. 

25.Community service is not sought in view of the Defendant’s poor health. 

Sentencing considerations

26.Defence counsel in mitigation refers me to the case of CHAN Sai Kin CAAR 1/2011, which was a judgment in Chinese.  The Respondent was the sales manager of a printing company (“Tin Sze”, by transliteration).  He acquired a purchase order from a German company (“Taschen”) worth over the equivalent of over HK$5,000,000.  Unfortunately, as the date for delivery by sea drew close, it became apparent that Tin Sze would be unable to print enough in time.  The alternative of delivery of any belated portion of the goods by air would cast an unbearable cost on his company.  He shopped around for another company to do the printing in time for delivery by sea.  There was only one company (“Sun Fung”, by transliteration) available to print the remaining quantity, but at a very high price, albeit still considerably cheaper than delivery by air. 

27.He forged invoices for Taschen to pay Sun Fung part of the price as charged by Sun Fung.  The other part of the price charged by Sun Fung was made out of 2 sums payable by Taschen to Tin Sze for 2 transactions unrelated to this purchase order.  For reasons unknown but with no bearing on the sentence, Taschen agreed to this rather convoluted way to pay for the purchase order.  As a result, Tin Sze suffered loss, over HK$2,000,000 in total, for not being paid any money by Taschen for the quantity it had printed as well as the 2 sums under the 2 unrelated transactions.  What Tin Sze stood to benefit was the maintenance of its goodwill and relationship with Taschen. 

28.The sentencing judge put him on 240 hours of community service.  He had duly served all hours when the Court of Appeal heard the review of sentence lodged by the prosecution.  Yeung VP acknowledged the norm of imprisonment for breach of trust cases but refused to review the sentence on the grounds that most importantly it was a special case before the court as the fraud was perpetrated with no personal gain in mind.  Besides, he had completed all 240 hours of community service.  Further, he had already made over $200,000 as compensation to Tin Sze.  Community service might have been over-lenient but it would be unduly harsh to send him to prison at that juncture. 

Sentencing this Defendant

29.The Defendant’s conduct constituted a breach of trust.  However, the losses occasioned by the 2 customers, de Santis and Abela, were not the direct result of his conduct.  Their losses, though heavy ones, were fait accompli when he emailed them the deceptively more positive status of their accounts.  His concealment of the true picture of their investment portfolios from them had deprived them of an opportunity to fairly assess the viability of their investment portfolios and the competence of the Defendant.  He owed them an honest and timely withdrawal from his consultancy, which had been discharged in persistent ill health with equally ill judgment.

30.First victim, de Santis, pertained to Charges 1 and 2.  Under Charge 1, the true balance was $19,812.17 as at 3 August 2012 but he misrepresented to de Santis that it was $918,537.03.  Under Charge 2, the balance as at 19 November 2012 was $10,337.19 but he misrepresented to de Santis that it was $769,068.02.

31.If de Santis had been told of the true balance of only $19,812.17 as at 3 August 2012, he could have closed his account forthwith and avoided any further loss.  The true balance was only $10,337.19 as at November 2012. 

32.In short, the best scenario would have been for de Santis to have closed his account and avoided further loss from the true balance of $19,812.17 as at 3 August 2012. 

33.The second victim, Abela, pertained to Charges 3 – 7. Under Charge 3, the true balance of the couple’s account was only $2,159,039.12 as at 31 August 2011 but he misrepresented to Abela that it was $3,056,709.37. Under Charge 4, the true balance of the couple’s account was only $131,662.59 as at 3 January 2012 but he misrepresented to Abela that it was $2,064,163.19. Under Charge 5, the true balance in the couple’s account was only $101,526.01 as at 2 February 2012 but he misrepresented to Abela that it was $2,141,380.32. Besides, the true balance in the private company’s account was $15,751.30 as at 2 February 2012 but he misrepresented to Abela that it was $118,676.  Under Charge 6, the true balance was only $41,986.45 as at 2 March 2012 but he misrepresented to Abela that it was $2,243,580.34.  Besides, the true balance in the private company’s account was only $5,032.96 as at 2 March 2012 but he misrepresented to Abela that it was $132,256.07.  Under Charge 7, the true balance was $2,170.55 as at 30 August 2012 but he misrepresented to Abela that it was $2,704,277.47. 

34.If Abela had been told of the true balance of only $2,159,039.12 as at 31 August 2011, he could have closed his account forthwith and avoided any further loss.  A bit later, if Abela had been told of the true balance of only $131,662.59 as at 3 January 2012, he could have closed his account forthwith and avoided any further loss.  A bit later, if Abela had been told of the true balance of only $101,526.01 as at 2 February 2012, he could have closed his account forthwith and avoided any further loss.  A bit later, if Abela had been told of the true balance of only $41,986.45 as at 2 March 2012, he could have closed his account forthwith and avoided any further loss.  The true balance was only $2,170.55 as at 30 August 2012. 

35.In short, the best scenario would have been for Abela to have closed all accounts and avoided further loss from the true balance of $2,159,039.12 as at 31 August 2011. 

36.The third victim, Melanie Bryan, pertained to Charge 13.  The true balance was only $569,788.47 as at 13 November 2012 but he misrepresented to Melanie that it was $1,412,011.42.  Melanie did not suffer any loss due to the fraud. 

37.There can be no telling what de Santis and Abela would have done if they had been told in time what the true balances were.  The culpability of the Defendant lies not with the losses suffered by them arising from his further trading after each instance of concealment but his having deprived them of the true picture so that they could not make an informed decision on the disposal of their funds in the accounts. 

38.The Defendant’s situation was much different from that of CHAN Sai Kin (above).  He had received commission of $187,415.06 in total in respect of their accounts in the offence period.  He did not and cannot make any compensation to any party.  He has yet to serve any kind of sentence whereas Chan Sai Kin had completed his sentence already.  KGI’s goodwill will no doubt suffer tremendously in the wake of such offences made public knowledge. 

39.Given his bankruptcy and disqualification, there is little call for personal deterrence.  General deterrence remains to be the focus of his sentence.  The present case is far too serious to be dealt with by community service.  The offences were part and parcel of a wholesale ploy to conceal the true picture from the 3 customers.  I take 3 years’ imprisonment as the starting point for each of the offences.  One-third off for the pleas of guilty, the sentence is 2 years. 

40.The Defendant alleges a personal exceptional circumstance, so as to have the sentence suspended, on the basis that his medical and physical condition would deteriorate in the prison.  I am alive to the fact that the kidney transplantation was performed after the offences and his body has not responded to it favourably.  There have been sporadic onsets of discomfort and even hazard that require constant careful monitoring by himself and the medical team attached to the prison.  If he had not been received any transplantation, I can anticipate that he would still have been in a position to argue that having to undergo dialyses in prison would be most intolerable.  It appears that with or without the transplantation he would have a shield afforded by his medical and physical condition in a prison term.  I do not regard such shield, which is good for all seasons, an exceptional circumstance which justifies the suspension of a prison term.  I treat this circumstance rather as indicative of a harsher life in prison than that obtains in a person of normal health.  I give him a further reduction of 6 months in this respect. 

41.The eventual sentence is 18 months for each offence to run concurrently.  I do not find any exceptional circumstances to justify suspending his sentence.