HKSAR v. Wong Chou, Johnny

DCCC 193/2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 193 OF 2015

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REASONS FOR SENTENCE

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1.The Defendant was convicted after trial of one count of fraud, contrary to section 16A of the Theft Ordinance, Cap 210.

2.I do not intend to repeat the facts again herein.  I have given full reasons in my verdict delivered on 28 October, 2016. Briefly, the Defendant worked at Manulife (International) Ltd. (Manulife) from April 2002 until April, 2011. His last post at Manulife was District Director.  In November 2011, the Defendant was approached by a rival insurance company, American International Assurance Company (Bermuda) Ltd. (AIA) and invited to join AIA as District Director. Between December 2010 and January 2011, there were several meetings between senior representatives of AIA and the Defendant to negotiate the terms of his employment with AIA, including the recruitment package to be offered to him.  The Defendant was asked to submit his income proof documents for the past 24 months to AIA for the calculation of the recruitment package. AIA received the Defendant’s income proof documents which purportedly contained his income information at Manulife for the past 24 months i.e. December 2008 to November 2010. The income proof documents included 3 types of documents: ‘the statement of agent’s account’, ‘the notification of remuneration paid to persons other than employees for the year ended 31 March, 2010’ and ‘statement of advisor’s account summary’. The falsified income proof documents were crucial for AIA to be able to calculate his average annual income over 2 years and to calculate the signing fee they would offer to the Defendant upon his joining AIA.  The Defendant submitted these falsified documents in order that a larger signing fee would be paid to him, and in so doing he falsely represented to AIA that the contents of these documents were true and correct, and with intent to defraud, he induced AIA to pay him a signing fee of $4,400,231.28 (This was $6,544.42 less than the signing fee shown on the LOU Exhibit P18 to reflect that he was paid an advance of $2 million upon which interest was calculated – see Exhibit P21), resulting in a benefit to him or a prejudice or substantial risk of prejudice to AIA.  The additional amount he received was $1,351,528.87.  The senior management at AIA would not have approved the offer contained in Exhibit P1 including the offer in respect of the signing fee had they known that the income proof documents submitted by the Defendant for the calculation of the recruitment package including the signing fee or any one of them was not genuine.  The Defendant was arrested by the ICAC for the present offence on 10 April, 2013.

Previous convictions

3.The Defendant has a clear criminal record.

Antecedent Statement

4.The Antecedent Statement was read into the record by the Prosecution. No issue was taken on its contents. It disclosed that the Defendant was born in China and is now aged 45 years.  He has completed his tertiary education.  He had worked for Manulife from April 2002 until April 2011 and then for AIA from May 2011 until June 2013.  He was arrested for the present offence on 10 April, 2013.  He had no significant health issues. He was divorced.

Mitigation

5.In mitigation, Mr. Shek submitted that the Defendant was divorced, but he had a son aged 2 ½ years with his current girlfriend.  As a result of the present incident, he was no longer working in the insurance industry. He worked in various businesses travelling between Hong Kong and China.  He had been a ‘high-flying’ insurance agent, but had lost it all as a result of the present offence – his reputation had been tarnished.   He was genuinely talented – by inflating his income, the validation requirement set by AIA had also been increased – he had to generate that much more premiums for AIA within 2 years of his joining AIA to validate the amount of signing fee that he had received, or the signing fee or a percentage thereof, depending on how much he had underperformed, would have to be repaid to AIA.   However, he had been able to meet the validation requirements during the time he had been with AIA – he had generated the business for them.   Mr. Shek said that this was a single fall from grace, and the offence was unlikely to be repeated.  The Defendant had lost his reputation in the industry.  Mr. Shek also submitted that the Defendant was a person of positive good character – he had performed charitable works. He also submitted that the Defendant would be repaying to AIA the extra amount that he had been paid as a result of the falsified documents submitted.

6.It was submitted that the present facts did not involve a breach of trust, as the Defendant was not an employee of AIA at the time of the offence.  Mr. Shek submitted the case of HKSAR v. Leung Chiu Ping, DCCC 372/2015, where the defendant had admitted one count of fraud and was sentenced to 8 months’ imprisonment, suspended for a period of 2 years.  The starting point taken had been 12 months’ imprisonment – the defendant there was a civil servant, the fraud being one involving the Home Financing Scheme allowance and had lasted almost 10 years, and there had been full restitution.  He submitted that that case was a useful benchmark – he asked the Court to consider a Community Service Order, but I informed him I did not think it appropriate as I viewed the offence as one where a Community Service Order was not appropriate. 

7.After hearing Counsel in mitigation, I adjourned the matter until 14 November, 2016 for a Background Report, remanding the Defendant in custody.

8.When the matter resumed before me on 14 November, 2016, the Background Report I had asked for was before me.  Mr. Shek informed me that the Defendant agreed with the contents save for some matters that he addressed me on.   He submitted that the Defendant had co-habited with his current girlfriend since mid-2013, not since 2012 as set out in the report.  He also said the Defendant had received his degree in Canada in 1995.  He also submitted that the Defendant now accepted responsibility and regretted what he had done. Mr. Shek submitted that the Defendant now withdrew what he had said to the Probation Officer when he was interviewed and he no longer maintained his innocence, as written in Paragraph 3 of the report. Mr. Shek also asked the Court to strike out the words in the 3^rd sentence of that paragraph ‘Even though he was convicted’   and the words ‘without his knowledge’ in the 3^rd sentence of Paragraph 4, as that was no longer the Defendant’s position.  He submitted that the Defendant had been unable to arrange repayment to AIA but he accepted that it was his responsibility to repay AIA. Mr. Shek said the Defendant’s achievements and his income were impressive – he had been looked up to by his subordinates and he had learned a harsh lesson.

9.Letters from former colleagues and friends were submitted, all commending him as a good friend and colleague and an excellent agent and seeking leniency for  the Defendant.. There was also a letter from the Defendant himself, saying that he had reflected on the incident while in custody and he accepted his responsibility and had learnt his lesson.  As a result of his ‘mistake’, he had lost his ‘empire’ that took him 14 years to build but only one mistake to lose.  As a result, he had lost his marriage of 20 years, his reputation and his honour as well as his annual income of millions in the insurance field which he had loved. Since his arrest by the ICAC on 10 April, 2013, his work with AIA had been terminated, and whilst he was being investigated, he had been unable to find any finance related employment. He had to turn to being a business consultant in China that required him to travel all over China to conduct business. He is the sole provider in his household – he could not be a good husband or a good father to his newborn baby son. He has aged parents who are not in good health and they have been worried by the present proceedings. He was unable to be by his father’s bedside when his father was hospitalized in 2014.  He had added to his elderly parents’ burdens and felt he had not been a good son.  Whilst in custody he has had time to reflect, and he wants to be a good son, a good husband and a good father.  He said he has learned from his past mistakes and will not re-offend. He seeks leniency.

10.Mr. Shek referred to the decision in HKSAR v. Leung Chiu Ping, supra, a decision from my learned sister, Deputy District Judge Judge Ivy Chui.  He submitted that in that case, false documents were used to perpetrate a fraud on the employer over a prolonged period of time, whilst here, it was a one-off submission of false documents. He submitted that leniency here was merited, and the Defendant was in a prime position to rehabilitate. A long prison sentence would not make rehabilitation more effective.

Sentence

11.Section 16A of the Theft Ordinance, Cap. 210, provides that a person convicted of fraud is liable upon conviction on indictment to imprisonment for 14 years.

12.Fraud is a serious offence. Here falsified income documents were submitted by the Defendant to AIA that he knew AIA would be using to calculate the signing fee and recruitment package that they would be offering him for him to consider in deciding whether to join AIA. His income on the falsified income documents was inflated to show that he was earning more than what he in fact earned so that the signing fee that was offered to him and subsequently paid to him was more than it should have been if he had submitted his actual income documents.   It was a deliberate and pre-meditated act on his part to submit these falsified income documents. It was also sophisticated to manufacture such false documents.  At the time, he was working with Manulife – AIA was a rival of Manulife.  AIA’s recruitment of the Defendant was a very confidential matter – ‘hush hush’ as it has been described and the Defendant himself said it would not have been proper for someone of his high standing at Manulife to be seen at the offices of AIA. AIA relied upon the income documents submitted by the Defendant – AIA could not verify the accuracy of these documents. The Defendant knew the purpose for which AIA required the income proof documents.  By submitting the false income proof documents, representing that he had been earning more than he had actually earned, the Defendant successfully obtained a signing fee that was greater than he would otherwise have got.  The nature of the fraud was bold and AIA was deceived by the Defendant. To that extent, in my view there is an element of breach of trust, the trust that AIA had that the Defendant would submit true income proof documents. Therefore it is not the Barrick type of breach of trust, and the tariff for such breach of trust cases is not strictly applicable.

13.There is no tariff for offences of fraud. Each case depends on its own facts. Factors to be considered include the amount of money being deceived, the period over which the fraud was perpetrated, the sophistication of the fraud and the effect on the victim.

14.I have heard full mitigation.  I have carefully considered all that has been urged upon me in mitigation by Mr. Shek on behalf of the Defendant, as well as the contents of the various letters before me and also the contents of the Background Report.  I accept what Mr. Shek has submitted, that the Defendant is now remorseful for what he has done and is willing to accept his responsibility, albeit late in the day.   The evidence against the Defendant in my view was   both strong and compelling. He must have known what he was doing by submitting the false income proof documents – it was a premeditated and calculated plan for monetary gains. Mr. Shek submitted that in any event, what the Defendant earned  for AIA in the period that he was with AIA exceeded the amount he was required to earn to avoid the ‘claw back’ provision – be that as it may, it does not in my view lessen his culpability. The additional signing fee he gained as a result of the false income proof documents submitted is substantial.  He has said that he will repay AIA – but to date no repayment has been forthcoming.

14. Mr. Shek has referred to HKSAR v. Leung Chiu Ping, supra, as demonstrating a useful benchmark. I do not find it so – the facts are quite different and distinguishable from that herein – the defendant there had pleaded guilty from the outset and made full restitution. Little purpose will be served by comparing sentences imposed in other cases on the basis of different facts. I doubt one can find an identical case with identical circumstances.

15.Given the serious nature of the offence, I consider that the circumstances herein are such that a non-custodial sentence would not be appropriate.  A Community Service Order would not be a suitable option in the circumstances.

16.The Defendant was convicted after trial – he showed no remorse until a very late stage, after he had been convicted.  I accept that as a result of the present conviction, the Defendant has now lost what was a successful career in the insurance industry – that this is a single fall from grace and the offence is unlikely to be repeated. His incarceration will obviously be a heavy burden for his family. Having considered the circumstances of the offence, including the degree of culpability, an appropriate sentence would be one of 3 years’ imprisonment. The Defendant has a clear record, and Mr. Shek has submitted details of the Defendant’s charitable works and contribution to society amounting to his positive good character. Bearing these matters in mind, I shall reduce the sentence by a further 6 months to reflect this.  The Defendant is sentenced to 2 years and 6 months’ imprisonment.   I have considered whether there are any exceptional circumstances to warrant my suspending this sentence of imprisonment.  I can see none.  The Defendant is therefore sentenced to 2 years’ and 6 months’ imprisonment.