HKSAR v. Cheah Hanson and Another
Read the full judgment text of CACC 134/2019 on BabelCite. This Court of Appeal judgment was delivered on 28 September 2020.
1. The 1 st and 2 nd applicants, who were D1 and D2 respectively, stood trial before District Court Judge K Lo (the judge) in relation to a series of fraud related offences.
Cited by 2 cases · Cites 3 cases
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CACC 134/2019 [2020] HKCA 603 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CRIMINAL APPEAL NO 134 OF 2019 (ON APPEAL FROM DCCC NO 184 OF 2014) _______________
_______________ Before: Hon Zervos JA in Court Dates of Hearing: 23 July and 6 August 2020 Date of Judgment: 28 September 2020 ________________ J U D G M E N T ________________ Introduction 1.The 1st and 2nd applicants, who were D1 and D2 respectively, stood trial before District Court Judge K Lo (the judge) in relation to a series of fraud related offences. 2.D1 and D2 were jointly charged with fraud (Charge 1), two charges of using a false instrument (Charges 3 and 5), and dealing with property known or believed to represent the proceeds of an indictable offence (Charge 8). D1 faced two additional charges of fraud (Charges 2 and 4), and one additional charge of possessing false instruments (Charge 6). D2 faced one additional charge of possessing false instruments (Charge 7). 3.On 30 November 2018, the judge convicted after trial D1 of all charges he faced, Charges 1 to 6 and 8; and D2 of Charges 1, 5, 7 and 8 but acquitted him of Charge 3. On 17 April 2019, the judge sentenced D1 to a total of 5 years’ imprisonment, and D2 to a total of 3 years and 10 months’ imprisonment. 4.On 29 April and 2 May 2019, D1 and D2 respectively, filed a notice of application for leave to appeal against conviction and sentence. The charges 5.The two defendants faced a charge sheet, containing eight offences, which variously alleged that they committed the offences as follows.[1] 6.Charge 1 jointly charged D1 and D2 with fraud, contrary to section 16A of the Theft Ordinance, Cap 210, in which it was alleged that, between early August and 16 August 2008, D1 and D2 by deceit namely by falsely representing to Sami Said Al-angari that there was an investment program called a Bond Trading Program in which he could invest a principal of US$1 million to be placed as a deposit at the Hong Kong and Shanghai Banking Corporation (HSBC), and after the end of 3 months, he would receive a minimum profit of US$4 million plus his principal, induced him to remit US$1 million to D1’s account, which resulted in benefit for D1 and D2. 7.Related to Charge 1 was Charge 8, in which D1 and D2 were jointly charged with dealing with property known or believed to represent the proceeds of an indictable offence, contrary to section 25(1) and (3) of the Organised and Serious Crimes Ordinance, Cap 455. It was alleged that, on or about 20 August 2008, D1 and D2, together with Li Jing Qian, dealt with the sum of US$1 million particularised in Charge 1, knowing or having reasonable grounds to believe that it represented the proceeds of an indictable offence. 8.Charge 2 charged D1 with fraud, in which it was alleged that, between 16 and 20 August 2008, D1 by deceit namely falsely representing to Sami Said Al-angari that an overpayment of US$1 million to the HSBC bank account in his name on 16 August 2008 would be invested in an investment program similar to that mentioned in Charge 1, and induced him to believe that the sum would be so invested, which resulted in benefit to D1. 9.Charge 3 jointly charged D1 and D2 with using copies of false instruments, contrary to section 74 of the Crimes Ordinance, Cap 200, in which was alleged that, on a day in 2009, D1 and D2 used copies of false instruments, namely a time deposit certificate dated 12 March 2009 showing a deposit of £6,000,000,000 and a “Confidential Memo” related to the time deposit certificate that were both purportedly issued by the HSBC Bank PLC. 10.Charge 4 charged D1 with fraud, in which it was alleged that, between 28 October and 23 November 2011, D1 by deceit namely by falsely representing to Sami Said Al-angari that the sum of US$70,000 was needed to pay bank charges for the release of US$2 million to Sami Said Al-angari, and induced to remit the sum of US$70,000 to D1’s account, which resulted in benefit to D1. 11.Charge 5 jointly charged D1 and D2 with using a false instrument, contrary to section 73 of the Crimes Ordinance, Cap 200, in which it was alleged that, on or about 2 November 2012, D1 and D2 used a false instrument, namely an image file of a letter dated 2 November 2012, purportedly issued by Standard Chartered Bank (Hong Kong) Limited (SCB) stored in the internal memory of a “Samsung” mobile telephone. 12.Charge 6 charged D1 with possessing false instruments, contrary to section 75(1) of the Crimes Ordinance, Cap 200, in which it was alleged that, on or about 20 November 2012, D1 had in his custody or under his control instruments, namely (a) an internal computer hard disk containing: (i) 5 image files of time deposit certificates; (ii) 5 image files of “HSBC EuroClear Password” relating respectively to time deposit certificates purportedly issued by HSBC Bank PLC; (iii) 4 image files of “Confidential Memo” relating respectively to time deposit certificates purportedly issued by HSBC Bank PLC; (iv) 4 image files of “Confirmation Letter” relating respectively to time deposit certificates purportedly issued by HSBC Bank PLC; (v) 4 image files of documents containing bank codes relating respectively to time deposit certificates purportedly issued by HSBC Bank PLC; (vi) an image file of a certificate of balance of US$5,000,000,000 purportedly issued by HSBC; and (vii) an image file of a letter titled “Availability and Reservation of Funds” purportedly issued by HSBC; (b) internal memory of a “Samsung” mobile telephone containing an image file of a letter dated 2 November 2012 purportedly issued by SCB; and (c) an “Asset Management Agreement” dated 14 August 2008 purportedly signed by PW1. 13.Charge 7 charged D2 with possessing false instruments, in which it was alleged that, on or about 21 February 2013, D2 had in his custody or under his control instruments, namely (a) an external computer hard disk containing: (i) 3 image files of time deposit certificates purportedly issued by HSBC Bank PLC; (ii) 3 image files of “HSBC EuroClear Password” relating respectively to time deposit certificates purportedly issued by HSBC Bank PLC; (iii) 3 image files of “Confidential Memo” relating respectively to time deposit certificates purportedly issued by HSBC Bank PLC; (iv) 3 image files of “Confidential Letter” relating respectively to time deposit certificates issued by HSBC Bank PLC; (v) 3 image files of documents containing bank codes relating respectively to time deposit certificates purportedly issued by HSBC Bank PLC; (vi) a pdf file of a “certificate of balance” of €500,000,000,000 purportedly issued by HSBC Bank PLC; (vii) a pdf file of a “Certificate of Time Deposit” of US$10,000,000,000 issued by HSBC Bank PLC; (viii) an image file of a bank statement showing a balance of US$4,491,315,239 purportedly issued by HSBC; (ix) an image file of a “FYC Dollar Account Deposit Form” showing a deposit of US$4,500,000,000 purportedly issued by HSBC; (x) an image file of a “Certificate of Balance” of US$210,000,000 purportedly issued by HSBC; (xi) an image file of a letter titled “Confirmation of Funds” purportedly issued by HSBC; (xii) an image file of a “Certificate of Balance of US$5,000,000,000 purportedly issued by HSBC; (xiii) an image file of a letter titled “Availability and Reservation of Funds” purportedly issued by HSBC; and (b) an internal computer hard disk containing an image file of a letter dated 2 November 2012 purportedly issued by SCB. The brief facts 14.The central allegations of this case concern D1 and D2 defrauding a Saudi Arabian businessman, Sami Said A1-angari (PW1). 15.In 2007, D1 became acquainted with PW1, and represented himself to PW1 as an experienced fund manager. Eventually, D1 introduced PW1 to a “Bond Trading Investment” programme, variously referred to as the “Bond Trading Programme” (BTP) or “Private Placement Programme” (PPP). PW1 was asked to invest a principal sum of US$1 million to be deposited with the HSBC for a period of 3 months, whereupon he would receive a minimum profit of US$4 million plus the principal of US$1 million. 16.On 13 August 2008, D1 sent an email to PW1, detailing the terms of the investment, and enclosing an Asset Management Agreement (AMA) for him to sign. (Exhibit P36(1)[2]). The text of the email read:
17.The AMA attached to the email bore the date 14 August 2008. It was between Fortress World Limited, represented by its Executive Director, D1, referred to as the Asset Manager, and PW1, referred to as the Fund Contributor. It set out the terms and conditions as basically stated in the covering email. It also listed the HSBC bank account of Fortress World Limited and the contact details of the bank officer responsible for the account, Mr Ronnie Kan. D1 and D2 were shareholders and directors of Fortress World Limited and the only two signatories to the bank account. It was not in dispute that the contact particulars and the name of the HSBC bank officer were false.[3] 18.A draft of the AMA had previously been sent to D1 by D2, who instructed D1 to amend the draft “for the USD1 million from Sami”. The draft agreement was purportedly a previous AMA between Fortress World Limited and someone else. (Exhibit P37(1)[4]). (Charge 1) 19.On 16 August 2008, PW1 remitted a total sum of US$2 million to D1’s personal account at HSBC in Hong Kong. He only intended to remit US$1 million but by mistake his bank transferred US$2 million. D1 emailed PW1 on 20 August 2008, (Exhibit P36(2)), and made the following proposal about the overpayment:
20.PW1 agreed for D1 to invest the additional US$1 million in a similar investment programme. (Charge 2) 21.On 21 August 2008, D2 sent an email to D1 instructing him that “Now that Sami’s USD1 million is received, you should complete the Asset Management Agreement with him.” (Exhibit P37(2)[5]). D2 also made reference in this email to a joint venture agreement with Li Jing Qian (LJQ). He asked D1 to sign the joint venture agreement and send back a scanned copy for him to execute, after which he would email the final version to LJQ. 22.It was subsequently discovered that HSBC had no such bond trading investment programme as represented to PW1. 23.An AMA had been seized from D1’s office which bore the date 14 September 2008 in the preamble of the agreement and 14 August 2008 at the end of the agreement, above the provision for signatures. It would appear that the first date was a mistake. The agreement purported to be between Integro Energy Limited, as the Asset Manager, and PW1, as the Fund Contributor, for the US$1 million that PW1 placed with D1. The agreement was purportedly signed by PW1, but he denied it was his signature. D1 testified that the reason why the Asset Manager was changed from Fortress World Limited to Integro Energy Limited was because it had a bank account with the LGT bank which offered lower banking charges.[6] 24.It was alleged that, after D1 received the US$2 million from PW1 on 19 August 2008, he dealt with the funds in the following manner. On 20 August 2008, he transferred US$1 million to a local HSBC account held in the name of LJQ. (Charge 8). He transferred the remaining US$1 million as follows: on 21 August 2008, US$75,000 to Highlink Corporation Ltd (Wong Yat Hin, Alan (PW4) gave evidence that it was either a loan or investment from D1);[7] on 18 September 2008, US$385,926.54 to Travelzen Group Ltd (D1 was one of the directors of the company); on 22 September 2008, US$50,000 to D1’s bank account, which was followed by a transfer of HK$1,937,910 to LJQ’s bank account; on 3 October 2008, US$198,428.04 to Foo Boon Seng (Foo); and on 10 October 2008, US$150,000 to Chui Tak Kwong, Duncan (this was a loan from D1). 25.After PW1 had failed to receive any money as promised, he repeatedly requested D1 to terminate the investment and return his funds to him. It was alleged that D1 gave various excuses putting off repayment of the funds, telling PW1 that the funds were invested and producing documents to verify that was the case. There was one occasion on a day in 2009, when D1 produced to PW1 copies of false documents purportedly issued by the HSBC Bank PLC, namely a time deposit certificate in the amount of £6,000,000,000 (Exhibit P125); and a “Confidential Memo” (Exhibit P124). The time deposit certificate stated that the sum of £6,000,000,000 had been received from Sino Era Limited, a company represented by D1. PW1 was told by D1 that his US$2 million had been pulled together with other funds from other investors, which had been deposited in the HSBC Bank PLC account. (Charge 3) 26.On 23 November 2011, some 3 years after the US$2 million was given to D1, another sum of US$70,000 was remitted by PW1 to D1, at D1’s request. D1 represented to PW1 that he was short US$70,000 that was needed to pay bank fees for the release of the funds.[8] D1 kept the money in his account until 10 February 2012, when he exchanged the funds into Hong Kong dollars and withdrew HK$500,000 in cash the same day. (Charge 4) 27.On 2 November 2012, PW1 and his solicitor, Mui Moosdeen Azmat (PW5), had a meeting with D1 about the repayment of PW1’s money. D1 claimed that the money had been transferred to another bank, the SCB, and showed them an image on his mobile telephone, displaying a letter dated 2 November 2012, purportedly issued by SCB (Exhibit P93), confirming what he told PW1 and his solicitor. The letter was false. It had been sent by D2 to D1, shortly before D1’s meeting with PW1 and his solicitor (Exhibit P37(81)). (Charge 5) 28.On 20 November 2012, police officers arrested D1 and seized from his residence a Samsung mobile telephone (Exhibit P148) and a notebook computer (Exhibit P149). They also seized from D1’s office an AMA purportedly signed by PW1, which also bore the signatures of D1 and D2. 29.D1’s mobile telephone contained an image of the false SCB letter dated 2 November 2012 (Exhibit P93) and his notebook computer contained images of the two false HSBC documents (Exhibits P70 and P101) and a large number of similar false documents purportedly issued by HSBC or HSBC Bank PLC (Exhibits P70 to P92). (Charge 6) 30.On 21 February 2013, police officers arrested D2 and seized from him a Fujitisu notebook computer (Exhibit P168) and an external hard disk (Exhibit P169). 31.D2’s notebook computer contained an image of the false SCB letter dated 2 November 2012 (Exhibit P118) and his external hard disk contained images of the two false HSBC documents (Exhibits P95 and P101) and a large number of images of false documents purportedly issued by HSBC or HSBC Bank PLC (Exhibits P95 to P117 and P43 (44)). (Charge 7) 32.It was confirmed by HSBC and SCB and made an admitted fact at trial that all the documents particularised in Charges 3, 5, 6 and 7 were false. The judge’s reasons for verdict 33.Before turning to consider the judge’s reasons for verdict, it is appropriate to note that D1 and D2 in the conduct of their respective defences basically blamed each other for the fraud perpetrated on PW1. D1 claimed that he relied on D2, who deceived him, and that he did not know that the PPP was false. Whereas, D2 claimed that he was not a party to any dealings with PW1 and D1 had falsified the AMA that was submitted to PW1. 34.Both D1 and D2 gave evidence at the trial, which the judge described in considerable detail.[9] She also set out very comprehensively the prosecution evidence and concluded that the AMA and the other documents particularised under the charges were all false instruments.[10] The judge addressed the evidence in relation to the frauds on PW1, which she found proven.[11] 35.D1 in his evidence explained that he and D2 were school friends and that later in 2003 to 2004 they attempted to go into the oil trading business together. It did not eventuate. In early 2006 or early 2007, D2 introduced to him the PPP programme where people traded bonds or bond like investments for substantial profits using assets from wealthy benefactors. One such a benefactor was Foo, who together with D1 and D2 set up a company with the intention of engaging in oil trading using his assets. According to D1, Foo showed them a certificate of balance with US$1,000,000,000 and proof of funds in HSBC-UK. 36.Another such benefactor was LJQ with the Hua Xia Bank in China, who was able to deploy assets for the PPP programme. In the middle of 2007 or early 2008, D2 told D1 of this development and asked him to find an investor to fund the project. As a consequence, D1 approached PW1. 37.D2 in his evidence canvassed various investment programmes that he had with others that gave a high return on the money invested, which apparently for one reason or another did not come to fruition. He said that he was not involved in the fundraising activities that D1 had with PW1, which was a matter between them. He said that if D1 could raise US$1 million they could participate in the PPP with LJQ, but PW1 was never an investor in it. 38.The judge found on the evidence that D1 represented to PW1 that his funds would be deposited in HSBC-HK, and become part of the investment programme he offered. This was evidenced by D1’s email to PW1 on 20 August 2008. However, after the funds were remitted into D1’s account, he transferred US$1 million to the account of LJQ. The judge noted that according to D1, the funds were paid to LJQ for him to defray bank charges purportedly to start a PPP using a bank instrument owned by LJQ at the Hua Xia Bank. The judge found that the funds were not deposited into HSBC-HK, as represented.[12] 39.In his video record of interview, D1 admitted that under the AMA it was provided that the funds from PW1 would be deposited at HSBC-HK and were not to be used for bank charges in order for D1 or D2 to participate in a joint venture agreement with LJQ.[13] 40.The judge found that PW1 was never an investor in a PPP with HSBC or in any other PPP intended under the AMA.[14] 41.The judge also found that the asset manager in the AMA was a company, Fortress World Limited, in which D1 and D2 were directors and shareholders and that particulars of the contact details of an officer at HSBC were false, which both D1 and D2 must have known was the case at the time.[15] 42.In her reasons, the judge explained that what actually took place was as follows:
43.Having rejected D2’s explanations that he was not involved in D1’s dealings with PW1, the judge after a comprehensive review of the evidence found that D2 was a joint party with D1 in defrauding PW1. She noted:
44.It was D2’s evidence that in respect of the PPP with LJQ, D1 was responsible for fundraising the US$1 million, while he was the one working with Hua Xia Bank.[16] The judge found that D1 and D2 were partners and worked together on all the PPPs, and rejected D2’s evidence that D1 was arranging fundraising with PW1, which had nothing to do with him.[17] 45.It was also D2’s evidence that when D1 was being chased by PW1 for the return of his money, he promised to repay PW1 out of profits from other projects. The judge queried why would D2 do so, unless he was involved in the fraud on PW1.[18] 46.The judge found that D2 knew that PW1’s money would not be placed with HSBC-HK as represented in the AMA, which he supplied to D1.[19] She held:
47.Having rejected the defences of D1 and D2, the judge concluded:
48.After her comprehensive review and evaluation of the evidence, the judge found D1 and D2 guilty of Charge 1. 49.Having concluded that the investment programme offered by D1 and D2 was false, the judge found that D1 made the same false representation to PW1 about investing the additional US$1 million in a similar investment programme. She found that D1 used PW1’s funds for his financial benefit and contrary to the purpose for which those funds were to be put and without PW1’s authorisation.[20] The judge found D1 guilty of Charge 2. 50.There was also the US$70,000 payment by PW1 to D1 supposedly to pay bank charges to release PW1’s funds. The judge rejected D1’s evidence and found he falsely represented to PW1 that this was the purpose for the funds, which he instead used for his own benefit.[21] The judge found D1 guilty of Charge 4. 51.It was not in dispute that the other charges, Charges 3, 5, 6 and 7, all concerned false instruments. The judge found D1 guilty of Charges 3, 5 and 6, and D2 guilty of Charges 5 and 7, but not guilty of Charge 3. 52.The judge reasoned that as a consequence of the conviction of D1 and D2 on Charge 1 they were also guilty of dealing with the proceeds of the fraud on PW1, namely US$1 million.[22] The judge found D1 and D2 guilty of Charge 8. D1 and D2’s appeals against conviction 53.I turn to consider the conviction appeals of D1 and D2. D1’s appeal against conviction 54.D1 is represented by Mr Jeremy Cheung and Mr Harrison Cheung, who on his behalf, have filed amended perfected grounds of appeal, consisting of ten grounds of appeal against conviction on Charges 1 to 6 and 8. 55.Ground 1 alleges that the judge erred in failing to deal with the email correspondence between D1 and D2 and wrongly concluded that D1 and D2 were acting together. 56.Mr Cheung complains that the judge did not give due regard to the documentary exhibits (the email correspondence) produced by D1, and had she done so, it would have shown that D1 was not aware of the falsity of the PPP. He contends that the judge, instead, placed considerable emphasis on D1’s educational background and working experience to come to the conclusion that he must have known that the PPP contained false representations because it could not have generated the profits in the short period suggested. He submits that the judge failed to take into account the incontrovertible facts that: (i) the PPP investment did exist; (ii) D1 had placed reliance on D2’s representations because of their long acquaintance; (iii) there was no evidence which established that D1 was aware or made aware of the falsity of the PPP; and (iv) D2 confessed that he had deceived D1. 57.In response, Mr Phil Chau, for the respondent, argues that the email correspondence did not provide any proof that D1 was not aware of the falsity of the PPP, and that was the finding of the judge. He notes that the email correspondence included some in which it appeared D1 was chasing D2 for money or inquiring about the progress of the PPP. He points out that the judge in any event considered whether D1 or D2 was unaware of the non-existence of the PPP or misled in relation to it. In the end, the judge came to the view that D1 and D2 had made false representations to PW1 by way of the AMA that D2 had sent to D1, to which D1 made minor amendments before forwarding to PW1.[23] 58.Ground 2 alleges that the judge erred in finding that PW1 relied on the representations made in the AMA. 59.Mr Cheung complains that the judge was wrong to conclude that the AMA was “one of the main inducements resulting in PW1 remitting the monies”.[24] In support of this argument, reference is made to certain aspects of PW1’s evidence in order to illustrate that he had not relied on the AMA in providing the funds to D1. In cross-examination, PW1 agreed that if D1 had sent the email without the AMA he still would have remitted the funds to him.[25] 60.In response, Mr Chau submits that the judge considered these aspects of PW1’s evidence but concluded that just because he was prepared to remit the money without the AMA, did not mean that he did not rely on it in the circumstances. He points out that the judge specifically addressed this issue in her reasons where she concluded that PW1 did rely on the AMA as he sought advice in relation to it, and in any event he stated that he would not have remitted the money if it was not applied as represented.[26] 61.It should be noted that what the judge actually said was that “the representation made by the defendants” in the AMA sent to PW1 was one of the main inducements resulting in PW1 remitting the funds to D1. She was referring to “the representation” that the funds would be invested in a PPP giving the return as stated. This representation, which the judge found was false, was contained in the covering email, attaching the AMA, from D1 to PW1 (Exhibit P36(1)).[27] PW1 testified that he would not have remitted the funds if they were not applied as represented.[28] 62.Ground 3 alleges that the judge failed to consider D1’s argument that he genuinely believed PW1’s money would be invested in HSBC’s PPP when he sent the AMA. 63.Mr Cheung complains that the US$1 million did not remain in D1’s bank account and was sent to LJQ in accordance with D2’s instructions because it was an investment in the PPP arranged by LJQ. 64.In response, Mr Chau submits that the judge considered whether D1 genuinely believed that PW1’s money would be invested in a PPP with HSBC. She noted D1’s explanations about the onward remittances of the funds but rejected them as she did not find his evidence credible in light of other evidence.[29] She came to the view, on the evidence, that the funds were misappropriated and not transacted as represented and claimed to PW1.[30] 65.Ground 4 alleges that the judge erred in not giving sufficient weight to D1’s argument that he would have disappeared had he been involved in a fraud on PW1, but instead maintained continuous communication with him. 66.Mr Cheung complains that the judge did not take into account the fact that after D1 had received the US$2 million he had frequent communications with PW1, which was inconsistent with someone who had defrauded PW1 of this sum of money. 67.Mr Chau points out that this argument was rejected by the judge in her reasons.[31] He notes that the judge went into considerable detail in analysing the exchange of emails where D1 appeared to be chasing D2 for money or inquiring about the progress of the PPP.[32] He also notes that it was part of the fraudulent scheme to give PW1 the false impression that the funds had been properly invested so as to obtain further funds from him. 68.Ground 5 alleges that the judge erred in not attaching sufficient weight to D1’s repayment of US$100,000 to PW1. 69.Mr Cheung contends that D1’s repayment of US$100,000 to PW1 puts in doubt any notion that he intended to defraud him. He points out that the repayment occurred almost 2 years before the sum of US$70,000 was sent to him by PW1 to pay for bank charges for the release of the US$2 million as particularised in Charge 4. 70.Mr Chau notes this was a matter that was considered by the judge in her reasons. D1 had testified that he offered to pay PW1 part of the US$2 million but PW1 insisted on the whole of his principal and profit. However, the judge found that this partial repayment contradicted D1’s evidence that PW1 had refused to accept part payment of the monies. She found that this reflected on the credibility of D1.[33] It was the prosecution’s case that the partial repayment was to “keep him … on a leash to invest further”.[34] 71.Ground 6 alleges that the judge erred in concluding that D1 promised to return US$2 million to PW1 as particularised in Charge 4. 72.In support of this ground, Mr Cheung refers to D1’s case that he requested the funds from PW1 as a loan to pay for bank charges. He notes that it was D1’s evidence that he made this request of PW1 for the loan because he did not have the funds himself. He also refers to the email communication (Exhibit P37), which makes no reference to the fact that the payment of US$70,000 was to release the US$2 million. 73.Mr Chau submits that the problem with this argument is that it does not address all the evidence on this issue. He also points out that the argument was rejected by the judge, who, in her analysis of the evidence, concluded that the US$70,000 was extracted from PW1 on the false pretence that it would release the US$2 million which would be repaid to him. 74.Ground 7 alleges that the judge erred in not attaching sufficient weight to the fact that most of the false documents were sent from D2 to D1 and therefore D1 could have been deceived by D2. 75.Mr Chau argues that by this ground, D1 is again relying on his evidence that he did not know or believe the documents supplied by D2 were false. However, the judge carefully considered D1’s evidence and found that he was not credible.[35] 76.Ground 8 alleges that the judge erred in finding PW1 to be a credible witness. 77.Mr Chau points out that the judge in her reasons for verdict set out in considerable detail the evidence of PW1 and the two defendants. She rejected the evidence of the two defendants and accepted the evidence of PW1, and in doing so explains why that was the case. Having rejected the evidence of the two defendants, the judge then addressed the evidence against each defendant in relation to each charge, which principally came from PW1 and various exhibits. 78.Ground 9 alleges that the judge did not adequately consider the fact that PW1 had authorised US$150,000 out of the additional US$1 million to be invested in Highlink Corporation Limited. 79.Mr Chau points out that this argument was considered by the judge. In her analysis of the evidence, the judge found that D1 had falsely represented to PW1 that the additional US$1 million would be invested in a similar investment to that of the initial US$1 million. She referred to the email sent by D1 to PW1 on 20 August 2008 and noted that the emails between D1 and PW1 concerning Highlink were dated 5 and 10 August 2008 (exhibit D57), which predated the email in relation to the additional US$1 million. 80.Ground 10 alleges that the judge failed to separately consider the case of each defendant where appropriate. 81.This is a general complaint that the judge did not employ a methodical approach to her analysis of the evidence and failed to separately consider the case for and against each defendant. 82.Mr Chau submits there is no merit to this complaint, and refers to the fact that the judge carefully considered the case for and against each defendant separately in relation to the charges relevant to them. Discussion on D1’s appeal against conviction 83.The basis of D1’s appeal against conviction is to repeat his submissions at trial and to question the judge’s findings of fact. The grounds of appeal advanced on behalf of D1 have been thoroughly addressed and answered by Mr Chau in his submissions in response. I do not consider the grounds to be reasonably arguable. 84.As already noted, the judge considered the email correspondence produced by D1, but concluded that D1 knew that the representations he made to PW1 were false as evidenced by his dealings with PW1 and the flow of funds after D1 received them. The funds of PW1 were not dealt with as represented to him, and this false representation was set out in D1’s email to PW1 dated 13 August 2008, as well as in the attached AMA. As noted by the judge, PW1 testified that he would not have remitted the funds if they were not applied as represented. 85.The judge rejected D1’s evidence and found him not credible. She rejected the assertion that he genuinely believed that PW1’s money would be invested in a PPP with HSBC, and that he did not intend to defraud PW1 as evidenced by his partial repayment of US$100,000 and his continuous dealings with PW1. She also rejected the assertion that the US$70,000 was a loan from PW1. 86.It is argued on behalf of D1, that because the false documents in question were received by him from D2, this supports the proposition that he was deceived by D2 about the falsity of them. The difficulty with this argument is that there were instances D1 used those documents in circumstances in which he would have known that they were false, such as at the meeting with PW1 and his solicitor at which D1 produced an image of a false letter from SCB (Exhibit P93). 87.The judge addressed the issue in relation to the payment of US$150,000 to Highlink. She noted that in relation to this matter D1 relied on communications that predated the payment of the additional US$1 million. In any event, the evidence and the flow of the funds clearly established that D1 had misappropriated the money for his own purposes. 88.It is simply incorrect to state that the judge failed to separately consider the case of each defendant where appropriate. She provides a comprehensive overview of the evidence as well as referring to the specific evidence relevant to each defendant. She also discusses and evaluates the case for and against each defendant in relation to the charge relevant to them. D2’s appeal against conviction 89.D2 appears in person and advances three grounds against his conviction on Charges 1 and 8. He confirmed at the leave hearing that he does not appeal his convictions on Charges 5 and 7. 90.Ground 1 complains about the “wrongful admission of evidence” by the judge, and that as a consequence she erred in assessing the evidence against D2 in relation to Charges 1 and 8. 91.In response, Mr Chau, submits that the arguments in support of this ground were advanced before the judge, which she rightly rejected. He is highly critical of D2’s complaints which he states are based on an incomplete and inaccurate view of the judge’s reasoning and findings. 92.D2 submits that the judge relied on three matters that resulted in her wrongly concluding that he was involved in defrauding PW1. 93.The first matter was that D2 forwarded an AMA to D1. D2 argues that he had no dealings with PW1 and the only evidence that linked him to D1’s dealings with PW1 were two emails dated 13 August 2008 (Exhibit P37(1)) and 21 August 2008 (Exhibit P37(2)). He further argues that by the email dated 13 August 2008 he sent a template of the AMA (Exhibit P36(1)), which unknown to him had been falsified by D1, who then submitted it to PW1. 94.Mr Chau refers to the email from D2 to D1 dated 13 August 2008, attaching an AMA, in which D2 told D1 to amend the draft for the US$1 million from PW1. He also refers to the email from D2 to D1 dated 21 August 2008, in which D2 told D1 that having received US$1 million from PW1, D1 should complete the AMA with him. 95.Mr Chau points out that the judge found that the false representations that induced PW1 to provide the funds were contained in the AMA he sent to D1; D2 reminded D1 to complete the AMA with PW1; D1 and D2 were directors and shareholders in Fortress World Limited, which was listed as the Asset Manager in the AMA; and D1 and D2 were cooperating in the alleged PPP. It is also worth noting that the contact details of the bank officer in the AMA were false, which would have been known to D1 and D2. 96.The second matter was that the AMA that D2 sent to D1 and the one D1 sent to PW1 were similar. The fact is the two documents were similar, and the judge made the point that the false representations remained constant in both versions of the agreement. In other words, the false representations were in the version that D2 sent to D1. It is also worth noting that the AMA was an agreement for the purpose of investing money in a PPP, which did not exist. 97.The third matter was that D2 had requested D1 to find a financier. Mr Chau points out that this ignores the detailed reasoning of the judge in coming to the conclusion that D2 had knowledge of and was involved in the fraud on PW1. He also notes that it is wrong for D2 to suggest that the judge found that he and D1 were concerned in raising US$1 million so that they could take part in the PPP organised by LJQ, as if such an arrangement existed. The judge was merely summarising D2’s evidence on this matter. 98.Ground 2 under the heading “omission of evidence”, complains that the judge in four instances failed to give any or sufficient weight to evidence that was favourable to his case, namely (i) his evidence in respect of the relationship between D1 and PW1, as a fund manager and investor respectively; (ii) the splitting of the US$2 million into Charges 1 and 2 and that he was not named as a defendant in Charge 2; (iii) PW1’s evidence that the agreement was not needed for him to transfer the funds; and (iv) his evidence as to the authenticity of the PPP, and the absence of evidence that the documents from Hua Xia Bank were fraudulent. 99.In response, Mr Chau notes that these points were advanced by D2 at trial, which the judge considered and dismissed. He submits it cannot be said the judge was plainly wrong in doing so. 100.As for the first point, the judge did consider D2’s evidence about the investor and fund manager relationship between PW1 and D1, but she ultimately concluded that, although D1 and D2 had separate roles, they were both involved in the fraud on PW1. The judge in a lengthy dissertation of the evidence concluded that D2 was involved in the fraud and there was no ambiguity in her findings about the relationship that D1 and D2 had with PW1. 101.As for the second point, D2 submits that if he was a party to the fraud in Charge 1, he should also have been a party to the fraud in Charge 2. This is a matter of evidence on which the prosecution would consider when deciding whether to lay a charge and against whom. This argument does not assist D2 in relation to his conviction on Charge 1. 102.As for the third point, about PW1’s evidence that he was prepared to remit the money even without the AMA, is not entirely accurate. As already noted, PW1 was asked if D1 had sent the email without the AMA would he still have remitted the funds to him and he said he would have.[36] Furthermore, the covering email from D1 set out the false representation that the funds would be invested in a PPP. The judge found that PW1 relied on this false representation as contained in the AMA, and that he sought advice about the agreement before he remitted the money to D1. She also noted that PW1 testified that he would not have remitted the money if it was not dealt with as represented to him.[37] 103.As for the fourth point, concerning the claim that there was evidence supporting the authenticity of the PPP, this had been rejected by the judge. There was no evidence to support the existence of a PPP functioning in the way that was alleged by either D1 or D2, except from their own claims and email correspondence. 104.Ground 3 complains that there were two material irregularities during the course of the trial. First, the judge failed to address the primary issue of his criminal liability under Charge 1, and therefore under Charge 8. Secondly, the judge misdirected herself on the issue of “common purpose” between himself and D1, as required by the authority of HKSAR v Maeda Hisato [2017] 3 HKLRD 605. 105.As to D2’s reliance on the principles in Maeda Hisato, Mr Chau argues that the case against D2 was that he was a joint principal together with D1 and that they acted in concert to defraud PW1. Discussion on D2’s appeal against conviction 106.Essentially, D2 seeks to reargue his case and advances on appeal the same arguments he advanced at trial. 107.There is no substance to the complaints under the first ground, in which D2 basically takes issue with the judges reliance on the evidence of (i) D2 forwarding the AMA to D1; (ii) the AMA submitted by D2 to D1 being largely the same as the one D1 submitted to PW1; and (iii) D2’s evidence that if D1 could raise US$1 million they could take part in the PPP of LJQ. D2’s submissions focus narrowly or inaccurately on the evidence in question, without addressing the evidence in detail and in context with other evidence. The AMA submitted by D2 to D1 was for the purpose of D1 submitting the same with some minor amendments to PW1 to sign. On 13 August 2008, D2 requested D1 to amend the draft AMA he submitted to him for the US$1 million from PW1.[38] The AMA submitted by D2 to D1 purports to offer an investment program as proposed to PW1. It is not an agreement for fundraising purposes as claimed by D2. After the US$1 million had been received from PW1, on 21 August 2008, D2 requested D1 to complete “the Asset Management Agreement with him”.[39] As noted by the judge, D1 and D2 were working as partners in relation to this deal and the agreement submitted by D2 to D1 contained false particulars that remained in the agreement submitted by D1 to PW1. 108.The matters raised under the second ground were considered by the judge, but she determined that these matters went against the grain of her overall assessment of the evidence. She rejected the notion that the US$1 million from PW1 was for the purpose to raise funds from him and that this was consistent with the term “Asset Manager” used in the AMA. She explained PW1’s evidence in relation to the transfer of the funds and the issue that he would have remitted the funds without the AMA. As already noted, PW1 was asked that if D1 had sent his email without the AMA would he have remitted the funds and he said he would have. The email falsely represented that PW1’s funds would be invested in a PPP as did the AMA. In any event, as noted by the judge, PW1’s evidence was that he would not have remitted the funds if they had not been applied as represented to him. There was no confusion created by the prosecution due to the fact that D2 was not charged with the defrauding of the additional US$1 million as alleged in Charge 2. It was a matter of evidence which the judge addressed and found D1 guilty of that charge. 109.It is complained under the third ground that there were material irregularities in the judge’s analysis of the case against D2. The judge did not fail to address the relevant legal principles in relation to D2’s criminal liability under Charges 1 and 8. It was clear from the outset that the prosecution case was that D1 and D2 were joint principals in a fraud on PW1 by inducing him to invest with them the sum of US$1 million. There was no doubt as to their common purpose in carrying out this fraud. They defrauded PW1 of US$1 million by falsely representing to him that his funds would be invested in a BTP which would give him a return of US$4 million plus his principal at the end of 3 months.[40] See HKSAR v Chan Kam Shing (2016) 19 HKCFAR 640, at [9]. D1 and D2’s appeals against sentence 110.In sentencing D1 and D2, the judge first examined in detail the mitigation that had been presented on their behalf before proceeding to explain the charges and her approach in sentencing each of them. 111.The judge noted that D1 was a highly educated person who worked in the financial industry and was well regarded as evidenced by the testimonials that were submitted in mitigation. She noted that it was submitted by his counsel that D1 did not embezzle all the money. As for the first US$1 million, it was submitted that D1 transferred the full amount to D2’s bank account on 20 August 2008. As for the second US$1 million, it was submitted that D1 transferred to D2 the sum of US$252,000 on 22 September 2008; D1 paid to Highlink two sums of US$75,000 on 21 August and 30 September 2008 (which was said to be an investment in Qatar Venture as instructed by PW1); D1 paid to Foo the sum of US$198,000 on 3 October 2008 (which was said to be an investment in Sino Era 6B); D1 repaid PW1 the sum of US$100,000 on 9 April 2009: and only disposed of two sums of money for his own purpose, namely US$386,000 (the Travelzen loan) and US$150,000 (loan to Duncan Chui). It was also submitted that the US$70,000 stayed in D1’s account for a few months before he paid it in cash to D2 in February 2012. 112.D1’s counsel addressed the relevant sentencing principles and urged the judge to adopt as an appropriate starting point on the fraud charges of 4 years’ imprisonment on Charges 1 and 2, and 18 months’ imprisonment on Charge 4. It was submitted that the money laundering offence in Charge 8 should be treated concurrently with the fraud offences as it did not add to the culpability of D1. It was also submitted that the charges relating to false instruments in Charges 3, 5 and 6 should be treated concurrently. The judge was also addressed on the issue of the totality principle, D1’s previous good character and the delay in bringing the proceedings against D1 to trial. It was acknowledged that the delay was principally due to D2 seeking to conduct ancillary proceedings in relation to the case. 113.D1’s counsel submitted that D1 had himself been misled by D2 and had lost over HK$4 million in relation to the purchase of property in June 2011. It was said that although D1 was the person in direct contact with PW1, he always acted upon instructions from D2. It was explained that D1 was not the one who came up with the fraudulent plan or the false documents or instruments, but was merely the one who carried out the plan. 114.The judge noted that D2 was well educated and had attained various positions in the petroleum industry. She gave an overview of his background and the impact that the case had on him and his family. She also noted the various testimonials submitted on his behalf that vouched for his good character. 115.D2’s counsel also addressed the judge on the appropriate starting point for the charges on which D2 was convicted. He provided an overview as to D2’s involvement in Charge 1 and related financial transactions. As to the appropriate starting point for Charge 1, he stated in his written submission the following:
116.D2’s counsel invited the judge to order that the sentence for the money laundering offence in Charge 8 be served concurrently with the sentence on Charge 1. He also invited the judge to order concurrent sentences for the offences relating to false instruments in Charges 5 and 7. The judge rejected counsel’s submission that the commission of these offences supported the intention of the defendants to repay PW1. She also rejected the claim by D2, which she described as “something totally unbelievable”, that he took action against LJQ and was able to obtain a cheque from him in the sum of HK$10,312,910 in January 2013, which would have been sufficient to repay PW1 for the US$1 million, but because he was arrested in March 2013 he could not cash the cheque. 117.The judge went through each charge, describing the circumstances of the criminality and the culpability of the D1 or D2 as was relevant. 118.In sentencing, the judge adopted on Charge 1 against each of D1 and D2 a starting point of 4 years’ imprisonment which she reduced by 6 months for D1 and D2’s previous good character to 3 years and 6 months’ imprisonment; on Charge 2 against D1 a starting point of 3 years and 9 months’ imprisonment which she reduced by 5 months for D1’s previous good character to 3 years and 4 months’ imprisonment; on Charge 3 against D1 a starting point of 12 months’ imprisonment which she reduced by 3 months for D1’s previous good character to 9 months’ imprisonment; on Charge 4 against D1 a starting point of 20 months’ imprisonment which she reduced by 2 months for D1’s previous good character to 18 months’ imprisonment: on Charge 5 against D1 and D2 a sentence of 9 months’ imprisonment; on Charge 6 against D1 a starting point of 12 months’ imprisonment which she reduced by 3 months for D1’s previous good character to 9 months’ imprisonment; on Charge 7 against D2 a starting point of 12 months’ imprisonment which she reduced by 3 months for D2’s previous good character to 9 months’ imprisonment; and on Charge 8 against D1 and D2 a starting point of 2 years and 6 months’ imprisonment which she reduced by 4 months for D1 and D2’s previous good character to 2 years and 2 months’ imprisonment. 119.The judge finally addressed the issue of the totality of the sentences in relation to each of D1 and D2. She considered that the overall starting point for D1 should be 5 years and 6 months’ imprisonment and after taking into account his background and good character, resulted in a sentence of 5 years’ imprisonment. Similarly, she considered that the overall starting point for D2 should be 4 years and 6 months’ imprisonment and after taking into account his good character and previous contribution to society, arrived at a sentence of 3 years and 10 months’ imprisonment. 120.In deciding on the ultimate sentence that should be passed on D1 and D2, the judge treated the money laundering offence in Charge 8 as not adding to their culpability to the fraud offence in Charge 1. She went on to consider the totality of the sentences bearing in mind the overall culpability of the defendants in the case. She noted that the commission of these offences took place over a period of 4 years and described the role played by each of them in the offences for which they were convicted. She went on to consider the circumstances of the case and of each defendant. On the issue of the delay in bringing the proceedings against the defendants, she observed that it was not the fault of the prosecution, and was mainly attributed to D2 seeking time to mount his defence. 121.The judge determined her sentence of 5 years’ imprisonment on D1 as follows. She first made the sentences on Charge 1 of 3 years and 6 months’ imprisonment and Charge 8 of 2 years and 2 months’ imprisonment concurrent to each other. She then made 2 months of the sentence on Charge 3 of 9 months’ imprisonment consecutive to the concurrent sentences on Charges 1 and 8 (totalling 3 years and 8 months’ imprisonment); 2 months of the sentence on Charge 5 of 9 months’ imprisonment consecutive to the total sentence on Charges 1, 3 and 8 and 3 (totalling 3 years and 10 months’ imprisonment); and 2 months of the sentence on Charge 6 of 9 months’ imprisonment consecutive to the total sentence on Charge 1, 3, 5 and 8 (totalling 4 years’ imprisonment). She finally made 8 months of the sentence on Charge 2 of 3 years and 4 months’ imprisonment consecutive to the total sentence on Charges 1, 3, 5, 6 and 8 (totalling 4 years and 4 months’ imprisonment); and 4 months of the sentence on Charge 4 of 18 months’ imprisonment consecutive to the total sentence on Charges 1, 2, 3, 5, 6, and 8 (totalling 5 years’ imprisonment). 122.The judge determined the sentence of 3 years and 10 months’ imprisonment she imposed on D2 as follows. As she did with D1, she first made the sentences on Charge 1 of 3 years and 6 months’ imprisonment and Charge 8 of 2 years and 2 months’ imprisonment concurrent to each other. She then made 2 months of the sentence on Charge 5 of 9 months’ imprisonment consecutive to the total sentence on Charges 1 and 8 (totalling 3 years and 8 months imprisonment); and 2 months of the sentence on Charge 7 of 9 months’ imprisonment consecutive to the total sentence on Charges 1, 5 and 8 (totalling 3 years and 10 months’ imprisonment). Discussion on the sentence appeals 123.I have set out in some detail the judge’s approach in sentencing D1 and D2 in order to illustrate the meticulous care and consideration that she took in determining the appropriate sentence that she should impose on each of them. 124.It is complained by D1 that the judge did not consider the inordinate delay of 3 years in bringing proceedings against him, notwithstanding the delay was mainly caused by D2 and not the prosecution. The judge addressed the issue. She noted that delay in the court proceedings had arisen because D2 sought to raise funds to apply for a letter of request. She did not consider that it amounted to a mitigating factor that could be utilised by D1. It would seem that in any event given the nature and circumstances of the criminality involved and the issues raised by the defence it would take time to bring the case to trial. There is no substance to this ground of appeal. 125.It is complained by D2 that in relation to Charge 1 the judge erred in adopting the same starting point against him as she did with D1, and in failing to make any allowance for the lesser role played by him in this offence. 126.The judge clearly viewed D1 and D2 as joint offenders of the fraud in Charge 1. She mentioned that D2 had been convicted “jointly” with D1 and described the different roles they played in perpetrating the fraud on PW1.[42] 127.It is also difficult to understand how D2 can complain about the sentence passed on him by the judge when his counsel submitted to her that the appropriate starting point for Charge 1 should not be more than 5 years’ imprisonment and the ultimate sentence should not be more than 4 years’ imprisonment. As already noted, the judge sentenced D1 and D2 to 3 years and 6 months’ imprisonment for this charge.[43] There is no substance to this ground of appeal. Conclusion 128.I am not persuaded that there are reasonable grounds of appeal against conviction and sentence for D1 and D2 and I accordingly refuse their applications. 129.I inform D1 and D2 that they have the right to renew their applications for leave to appeal against conviction and sentence to the Court of Appeal, but they are also warned that one of the consequences of so doing may be that the Court could make an order for the loss of any time which they have spent in custody pending their appeals, if the Court were to come to the view that there was no justification for the renewal of their applications.
Mr Phil Chau, counsel-on-fiat for Department of Justice, for the respondent Mr Jeremy Cheung and Mr Harrison Cheung, instructed by S K Lam, Alfred Chan & Co, for the 1st applicant The 2nd applicant appears in person [1] Appeal Bundle, 1-9. [2] Appeal Bundle, 845-851. [3] Reasons for Verdict, at [318] and [319]. [4] Appeal Bundle, 852-858. [5] Appeal Bundle, 859. [6] Reasons for Verdict, at [125]. [7] Reasons for Verdict, at [86]-[88]. [8] Reasons for Verdict, at [25]-[30]. [9] Reasons for Verdict, at [107]-[216] (D1’s evidence); and at [217]-[281] (D2’s evidence). [10] Reasons for Verdict, at [1]-[106]. [11] Reasons for Verdict, at [302]-[392] for Charge 1, and at [393]-[402] for Charge 2. [12] Reasons for Verdict, at [310]-[311]. [13] Reasons for Verdict, at [313]. [14] Reasons for Verdict, at [314]. [15] Reasons for Verdict, at [317]-[321]. [16] Reasons for Verdict, at [334]. [17] Reasons for Verdict, at [333]. [18] Reasons for Verdict, at [337]. [19] Reasons for Verdict, at [339] and [340]. [20] Reasons for Verdict, at [398]-[400]. [21] Reasons for Verdict, at [412]-[414]. [22] Reasons for Verdict, at [445]-[449]. [23] Reasons for Verdict, at [341] and [342]. [24] Reasons for Verdict, at [346]. [25] Appeal Bundle, 935J-K. [26] Reasons for Verdict, at [343]-[347]. [27] Appeal Bundle, 845-851. [28] Reasons for Verdict, at [341]-[347]. [29] Reasons for Verdict, at [392]. [30] Reasons for Verdict, at [392]. [31] Reasons for Verdict, at [350]. [32] Reasons for Verdict, at [135]-[161]. [33] Reasons for Verdict, at [386]-[392]. [34] Reasons for Verdict, at [216]. [35] Reasons for Verdict, at [392]. [36] Appeal Bundle, 935J-M. [37] Reasons for Verdict, at [329]-[349]. [38] Appeal Bundle, 852-858. [39] Appeal Bundle, 859. [40] See Appeal Bundle, 1 (Charge 1) and 19-25 (Prosecution Opening). [41] Appeal Bundle, 221, Mitigation for D2, dated 22 February 2019, at [8]. [42] Reasons for Sentence, at [72] and [110]. [43] Reasons for Sentence, at [53] and [75]. |
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