HKSAR v. Cheng Ho Ming

DCCC 904/2017

[2018] HKDC 1009

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 904 OF 2017

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Reasons for Verdict

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1.The prosecution allege the defendant conspired to defraud with one named person called “Fung” and other persons unknown and to defraud clients at a financial intermediary known as “Kings Lok”. At Kings Lok, people were allegedly induced to enter into low interest loans to extinguish their existing debts, and a number of fraudulent means were set out in the indictment, which said that:

(a) Kings Lok would falsely represent they would assist customers to obtain a loan with low interest rates;

(b) falsely representing the customer has to pay certain sums to Kings Lok, and the payments would have this purpose:

(i) the money would be deposited with Kings Lok as a guarantee;

(ii) secondly, Kings Lok would open an account on the customer’s behalf and put the money into the account; or

(iii) that Kings Lok would help the customer to repay his existing debts, improving the customer’s credit rating;

(c) and this would induce and cause the customers to pay money to Kings Lok.

2.The defence say that the defendant’s connection to the activities at Kings Lok are insufficient to establish that, firstly, he was involved with Kings Lok and, secondly, that the evidence that has been given is not competent to show that the activities at Kings Lok were in fact fraudulent.

3.Prosecution relies on various admitted documents and mainly on the evidence of two witnesses:  PW1 and PW2.

4.PW1 had an outstanding loan with a company called “Cheung Shing” for $300,000 and he wanted to extinguish this loan.  He eventually met with one Benson Wong at Kings Lok.  Benson Wong would eventually arrange for the defendant to borrow 1.1 million to extinguish the existing debt.  This loan was to be at a low interest rate.  Nobody ever specified what that was. 

5.PW1 only wanted to borrow 500,000, and he apparently expected that Benson Wong would eventually reduce the loan to that figure.  Eventually, the defendant borrowed 1.1 million from a company called “Po Shun Finance”, who extended this figure by way of mortgage with a repayment of 23,000 per month.  PW1 received a cheque for a mortgage sum which he eventually cashed in the sum of $600,000.  He gave that to Benson Wong, receiving 30,000 to pay the first of the loan instalments.  Later, he gave a further $160,176 to Benson Wong.  The total amount given to Benson Wong was $730,200.

6.It never formed any part of PW1’s evidence why he gave that money to Benson Wong.  There was nothing about it being deposited with him as a guarantee for anything, or them opening an account on his behalf, but the money was used to repay existing debts.  He did establish that the money was never received back by him.

7.In the course of the investigation, PW1 identified the defendant as Benson Wong at an identification parade some two months later, and at trial and in evidence he specifically said the defendant was not Benson Wong.  He stated that he was mistaken when he identified the defendant as Benson Wong.  I found on the evidence he gave there is no reason to doubt his evidence in that respect.

8.And, given that evidence, it would be clearly unsafe for any court to rely on the 1st prosecution witness’ identification parade identification of the defendant as Benson Wong.  So, on the face of PW1’s evidence, there is nothing to link the defendant with Benson Wong.

9.PW2 was similarly involved with a man who was described as “Mr X” and it was eventually established that he operated out of Kings Lok’s premises.  She had a debt of around 300,000 and Mr X was to arrange a sum of 300,000 to pay off the debts, and she said in fact this was arranged. PW2 went to Kings Lok’s offices twice for about five minutes to do these arrangements.

10.Eventually, she, like PW1, went to get the $300,000 from a loan company, then cashed that money -- she went to get it from a loan company and cashed that sum -- and the evidence appeared to show that she was accompanied by the defendant when she did that, because the defendant was arrested at the time when he accompanied her to Kings Lok’s office after getting the money.

11.PW2 said that on the two occasions she was in Kings Lok’s office, arranging the loan with them, that it seemed to be Mr X on both occasions who dealt with her.  She did also say that she did not meet Mr X again after those occasions.  She also said she had no impression if Mr X accompanied her to get the money.  PW2, as I have said, returned to Kings Lok’s office with $300,000, accompanied by the defendant.  She said she thought Mr X would repay her debt with the $300,000 cash she had obtained.

12.PW2 was later unable to identify the defendant as the person who assisted her with the loan application, but, as I have mentioned, he was arrested at the time that she re-entered Kings Lok.  She never said or knew what the interest rate of the loan was.  She never said anything about money being deposited with Kings Lok as a guarantee.  She never said anything about an account being opened on her behalf and money being put into that account.  All she says is that she believed they would repay the loan.

13.It is clear from the summary of the evidence that it is apparent the prosecution cannot, on the evidence called from these witnesses, evidence a number of the particulars of the alleged conspiracy to defraud.

14.Also, I have noticed that certainly PW2, nor PW1 for that matter, could actually say there was a false representation to a low interest rate.  The only person who could evidence a monthly repayment was that of PW1.

15.All that the evidence of PW1 and PW2 could show is that a Kings Lok representative had said they could get a low interest rate to pay off their debt, that Kings Lok had acted as an intermediary in arranging a loan for them, that that loan was sufficient to extinguish the debt, that the Kings Lok representative expected that all or part of the cash obtained on the loan be paid to them.  The reason why that money was paid to them was never established, save that PW2 said it was for them to repay her debt.  For PW1, part was used to extinguish his debt; the balance he could not say.

16.From their evidence, the only basis of which a fraud could be sustained is if Kings Lok were taking the money for their own purposes.  That was a possible inference from the evidence.

17.However, only the 2nd prosecution witness could say the defendant was involved and only in the capacity of accompanying her to collect the money to pay off her loan.  It was not possible from PW1’s evidence to establish the defendant was Benson Wong and it was unsafe to rely on his identification.  The defendant could only be connected to that part of the evidence that was relevant to PW2. 

18.However, PW2’s evidence could not establish any fraudulent conduct or misrepresentation in relation to her loan application, nor could the PW2 establish that the defendant had made any representations to her in relation to her loan.  It was not possible from her evidence to draw as the only inference that the defendant was the person who dealt with her as Mr X. The 300,000, according to her, was given to pay off her existing debt.  This meant that no element of fraud could be established by her on this evidence.

19.The evidence, in my view, raises a suspicion that Kings Lok were acting fraudulent, but it is not possible to a criminal standard to connect the defendant to any part of their activities or any part of their potentially fraudulent activities.  The case simply fails on the burden of proof and the standard of proof. 

20.In my view, nothing can appear to be proved beyond reasonable doubt, so the charge must be dismissed.