HKSAR v. Foo Shyang Yeong

DCCC 819/2019

[2020] HKDC 844

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 819 OF 2019

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Reasons for Sentence

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Charge

1.D pleads guilty to a charge of fraud. 

Facts

2.PW1 (M/David Matthew Shafer) is the Executive Director of Kogan HK Limited. The company deals with online purchases and sales of consumer electronic products such as mobile phones, computers and cameras.       

3.On 23^rd and 26^th July 2014, D reached Llyod Chee (“Llyod”), the merchandiser of Kogan HK Limited via social media platform “Skype”. D introduced himself as King FOO, a Malaysian merchant running an electronic products company in Hong Kong named Grand Grace Trading Limited (“Grand Grace”). D asked Llyod if Kogan HK Limited was interested in choosing his company as its overseas supplier. D and Llyod then exchanged email addresses.

4.On 29.9.2014, Lloyd received an email from D attaching a copy of business registration record of his company Grand Grace and some photos of electronic products.  Lloyd later proposed a meeting to be held at D’s company between PW1 and D on 14 October 2014. D agreed.

5.On 14.10.2014, PW1 together with his merchandiser, Russell Pround, went to the office of Grand Grace at Room 12N, 17/F, Wah Fat Industrial Building, No. 10-14 Kung Yip Street, Kwai Chung (“the Premises”), and met D. Upon inspecting the Premises and the warehouse, PW1 agreed to enter into a supply agreement with D’s company, namely Grand Grace. PW1 instructed Lloyd to draft a supply agreement, which was sent to D’s email. The signed copy of the supply agreement was then signed by n and sent back to Lloyd via email on 15.10.2014. D signed the supply agreement as the duly authorised representative of Grand Grace. The supply agreement was between Grand Grace (as supplier) of the one part. The other part of the supply agreement was Kogan HK Limited together with Kogan Australia Pty Ltd (as buyer). Lloyd signed the Supply Agreement on behalf of Kogan HK Limited and Kogan Australia Pty Ltd. Kogan HK Limited and Kogan Australia Pty Ltd is collectively referred to as “Kogan”.

6.An airfreight delivery company called Toll Global Express was entrusted which provided tracking codes to Kogan for tracking the delivery progress of goods delivered by Grand Grace to Toll Global Express.

7.On 21.10.2014, the said Kogan made their 1^st purchase order of USD$172,486.80 with Grand Grace.  On 22.10.2014 Kogan confirmed that the delivery company had received a large portion of goods from Grand Grace. PW1 caused remittance of USD$172,486.80 to the designated HSBC account no: 165-773581-833 provided by D on 22.10.2014. The value of aforesaid large portion of goods was later confirmed to be of the amount of US$154,641.90.

8.Having gained trust in D’s company after the first purchase, PW1 (on behalf of the said Kogan) placed 5 more purchase orders (2^nd to 6^th purchase order) with Grand Grace between 27.10.2014 and 30.10.2014.

9.For the 6 purchase orders between 22.10.2014 and 30.10.2014, PW1 remitted US$753,516.14 (= HK$5,834,641.21) in total to D’s same designated HSBC account.

10.When enquiries were made as to why the goods had not been delivered, D replied that his employees worked slowly and needed time to send out the goods. However, no goods were delivered thereafter. D eventually became completely out of reach after 30.10.2014. The value of goods that had been delivered to the said Kogan pursuant to the 1^st purchase order was US$154,641.90. The said Kogan therefore suffered loss of US$598,874.24 (US$753,516.14 – US$154,641.90).        

11.Upon money being remitted to D’s bank account, ATM withdrawals, cash withdrawals, and money transfers were carried out by D on 14 occasions between 23.10.2014 and 30.10.2014 in the total sum of HK$5,834,734.77.

12.PW2, an employee of the said Kogan working in Shenzhen, China, was instructed by PW1 to attend Grand Grace’s office (the Premises) at Kwai Chung, to enquire about the late delivery.  On 5.11.2014, PW2 visited the Premises and found that it had been vacated.  PW2 reported the case to police on the same day.

13.On 5.11.2014, police visited the Premises, which was found vacated with no CCTV system found thereat.

14.The landlord of the Premises (namely the registered office of Grand Grace) was Fortune Winner Holdings Ltd.  M/LAM Yee-kit, Michael (PW3) had advertised the lease of the Premises on an online platform.  A tenancy agreement was signed on 27.8.2014 between Fortune Winner Holdings Ltd and by D on behalf Grand Grace for the lease of the Premises for a term of 1 year from 1.9.2014 to 31.8.2015.

15.Company search of Grand Grace revealed that D was appointed as Director of Grand Grace with effect from 24.7.2014.

16.Business registration document of Grand Grace showed the registered office was Flat 12N, 17/F, Wah Fat Industrial Building, No. 10-14 Kung Yip Street, Kwai Chung (the Premises).         

17.The bank account no.165-773581-833 of FOO SHYANG YEONG (“HSBC Bank Account”) was opened by D with HSBC branch at 238 Nathan Road Branch on 26.8.2014. D was the sole bank account holder.

18.After D’s departure from Hong Kong on 30.10.2014, D had not come to Hong Kong until 12.8.2019. On 12.8.2019, D was arrested at Hong Kong International Airport when he attempted to enter Hong Kong from Malaysia.  Under caution, D said he had nothing to say.

19.After arrest, D was interviewed by the police. He denied defrauding PW1 and Kogan and all allegations of fraud.

20.D now admits that from 23^rd July 2014 to 30^th October 2014, he had by deceit, namely falsely representing to PW1 that Grand Grace would provide goods as per instructions of Kogan and with intent to defraud, induced PW1 to cause transfers of a total sum of US$598,874.24 to D’s bank account with the Hongkong and Shanghai Banking Corporation Limited in the account numbered 165-773581-833 which resulted in benefit to D in the sum of US$598,874.24 or in prejudice or a substantial risk to Kogan.     

Mitigation

21.D is 36 years old, a Malaysian national. He followed his cousin to come to work in Hong Kong in 2014 but left when his cousin left, not long afterwards. He returned to Malaysia. He has a clear record in Hong Kong.

22.His counsel Mr. Mak refers me to 2 cases.

23.In HKSAR v Wong Git Yuen Albert [2013] HKDC 1938, the defendant operated a business supplying goods to 7/11 chain stores. He submitted 59 false invoices of 7/11 in order to obtain overdrafts from HSBC for a period of 18 months. A revolving overdraft of over HK$6,000,000 in total was granted to him, which he repaid fully except for interest payment of about HK$100,000. The judge took a starting point of 3 years.

24.In HKSAR v Peter Raymond Baird DCCC 242/2011, the defendant operated a company R. R was to buy a consignment of diamonds from exporter M. The contract sum would be secured by a standby letter of credit issued in the name of the defendant’s another company P. The US$700,000 for the standby letter of credit would be deposited by M into P’s account as an escrow agreement, which would be held for 14 days. The defendant knew that P would not procure a standby letter of credit. P withdrew over US$600,000 from the fund. The defendant managed to induce M not to take any action within the 14 days to recover the deposit in escrow. Eventually no money could be recovered by M. The judge took 3 years 6 months as the starting point.

25.It is mentioned at para. 25 in the Reasons for Verdict that the defendant was in breach of the escrow agreement, and therefore in breach of trust. Mr. Mak refers to this in his written mitigation but clarifies in Court that it is not his contention that Baird was sentenced on the basis of breach of trust. I agree that Baird features parties in a purely contractual relationship and not a relationship of trust. Despite his reference to breach of trust in his Reasons for Verdict, the judge does not, rightly so in my view, mention breach of trust as a consideration in his Reasons for Sentence.

Sentencing D

26.I regard the difference in the sentence between Wong Git Yuen Albert (3 years) and Baird (3 years 6 months) lies in the former’s nearly full recovery of money (over HK$6,000,000) and the latter’s non-recovery of all money (over US$600,000).

27.In our present case, there was much planning and false setup. D then induced Kogan to place more orders and pay more by making actual delivery at the outset. That led to a loss of near US$600,000 in total to Kogan. I take 3 years 6 months as the starting point here for the non-recovery of all money. There is a one-third discount for the plea of guilty. The sentence is 2 years 4 months.