HKSAR v. Lee Sau Nog

DCCC 751/2022

[2023] HKDC 843

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 751 OF 2022

----------------------------

----------------------------

-----------------------------------------

REASONS FOR SENTENCE

-----------------------------------------

1.D was convicted on her own plea and agreement to summary of facts to:-

(1)  one charge of using copies of false instrument, contrary to section 74 of the Crimes Ordinance, Cap 200 (1^st charge); and

(2)  7 charges of attempted fraud, contrary to section 16A of the Theft Ordinance Cap 210 and section 159G of the Crimes Ordinance, Cap 200 (2^nd to 8^th charge).

THE FACTS

2.On 16 March 2020 and 8 April 2020 respectively, the Government of the HKSAR announced the Retail Sector Subsidy Scheme (“RSSS”) and the Subsidy Scheme for Beauty Parlours, Massage Establishments and Party Rooms (“BMP”) relief measures under the Anti-epidemic Fund to provide relief to businesses facing financial difficulties during the epidemic or affected by various anti-epidemic measures. The RSSS and BMP were administered by the Human Resources Planning and Poverty Coordination Unit (“HRPPCU”) under the Chief Secretary for Administration’s Private Office.

3.Under the RSSS, each eligible retail store would receive a one-off subsidy of HKD 80,000. To be eligible, an applicant must be:

(1)  conducting substantial and substantive retail business at a fixed physical and individually operated store in Hong Kong; and

(2)  running a business that has commenced before 1 January 2020, and is still in operation at the time of application.

4.Under the BMP, each eligible beauty parlour or massage establishment would receive a one-off tiered subsidy, depending on its number of workers, of $30,000 (1 or 2 workers), $60,000 (3 or 4 workers) or $100,000 (5 or more workers). The eligibility requirements include the following:

(1)  The applicant operates its business independently at a fixed location in Hong Kong;

(2)  The eligible premises provides at least one of the following services for non-medical purposes as its main business: (a) Skin and facial care services; (b) Weight control and slimming services; (c) Nail treatment; (d) Tattooing and/or piercing; (e) Hair loss improvement and/or hairdressing; (f) Body massage and/or spa treatment; (g) Foot reflexology; and (h) Other beauty, care, prettifying and/or massage service on any part of the body; and

(3)  The relevant premises was in operation before 10 April 2020.

5.Applications were accepted via the online application systems at the official websites of the respective schemes. Applicants are required to submit supporting documents including:

(1)  Business registration certificate;

(2)  Recent photographs of the shop;

(3)  Address proof/utility bill of the shop;

(4)  MPF remittance statement showing the number and name(s) of worker(s) (for BMP applications);

(5)  Statement or passbook of bank account held in the applicant’s name.

The RSSS application (Charge 1)

6.On 23 March 2020, the HRPPCU received an online application under the RSSS. It was stated in the application that the business of “Dream Wedding Shop” operated a substantial and substantive retail business at a fixed physical and individually operated store named “Dream Wedding Jaspermakeup” at Flat 31, 4/F, Cosmopolitan Centre, 760 Nathan Road, Mong Kok, Kowloon (“Address-1”).

7.Among other things, the following supporting documents were submitted together with the RSSS application:

(1)  A copy of a rental receipt for Address-1 purportedly issued by LEE Lun (“PW6”) and dated 2 March 2020 (the “Rental Receipt”);

(2)  A copy of a Towngas bill for Address-1 purportedly issued by The Hong Kong and China Gas Company Limited and dated 26 February 2020 (the “Towngas Bill”).

8.It was also indicated in the application that D was the owner of the business. The email address [email protected] (the “Contact Email Address”), the mobile phone number 6408 7315 (the “Contact Telephone Number”) were provided as D’s contact information. A Bank of China account held in D’s name (the “BOC Account”) was provided for the receipt of funds.

9.The application contained a declaration that the information provided in the application form and the attached document(s) were true, complete and correct.

The BMP applications (Charges 2 to 8)

10.From 11 May 2020 to 13 May 2020, the HRPPCU received seven online applications under the BMP. It was stated in each of the applications that:

(1)  D was the owner of the business of “Jasper Beauty Salon” which operated a branch business independently at a fixed location in Hong Kong, which provided at least one of the following services for non-medical purposes as its main business: (a) Skin and facial care services; (b) Weight control and slimming services; (c) Nail treatment; (d) Tattooing and/or piercing; (e) Hair loss improvement and/or hairdressing; (f) Body massage and/or spa treatment; (g) Foot reflexology; and (h) Other beauty, care, prettifying and/or massage service on any part of the body;

(2)  The premises and services was in operation before 10 April 2020;

(3)  The number of workers was 5 or above.

11.Particulars of the seven applications are as follows:

Charge	Application Date	Application No	Name of branch business	Address of business
2	11 May 2020	BMP-FJFM99	DB. DESERVE BEAUTY	Flat 28, 11/F, Cosmopolitan Centre, 760 Nathan Road, Prince Edward, Kowloon (“Address-2”)
3	11 May 2020	BMP-DJPUDH	J. BEAUTY SALON	Flat F, 6/F, Double Mansion, 62 Pau Chung Street, To Kwa Wan (“Address-3”)
4	12 May 2020	BMP-CGJPDW	L. BEAUTY	Flat B7, 14/F, Hong Fai Building, No. 20 Kwong Shing Street, Cheung Sha Wan, Kowloon (“Address-4”)
5	12 May 2020	BMP-87A9TY	JASPER BEAUTY WORKSHOP	Flat F, 5/F, Sun Po Building, 27 Po On Road, Cheung Sha Wan, Kowloon (“Address-5”)
6	12 May 2020	BMP-9EZTZZ	JL. BEAUTY	Flat C, 6/F, Double Mansion, 62 Pau Chung Street, To Kwa Wan, Kowloon (“Address-6”)
7	13 May 2020	BMP-9N28GJ	JM. BEAUTY	Flat F, 23/F, Block 1, Pacifica, No. 9 Sham Shing Road, Lai Chi Kok, Kowloon (“Address-7”)
8	13 May 2020	BMP-ANIKWW	LASHES BEAUTY	Flat A, 7/F, Golden Plaza, 745-747 Nathan Road, Prince Edward, Kowloon (“Address-8”)

12.Among other things, the following supporting documents were submitted together with each application:

(1)  A copy of an electricity bill purportedly issued by CLP Power Hong Kong Limited (“CLP”) for the corresponding address;

(2)  A copy of a MPF remittance statement purportedly issued by BOCI-Prudential Trustee Limited (“BOCI-Prudential”) showing the names and information of 6 persons employed by the corresponding branch business;

(3)  Photographs purported to show the premises at the corresponding business address.

13.The same Contact Email Address and Contact Telephone Number were provided as D’s contact information. A Hang Seng Bank account held in Defendant’s name (the “HSB Account”) was provided for the receipt of funds in all applications.

14.Each application contained a declaration that the information provided in the application form and the attached document(s) were true, complete and correct.

Processing of the applications

15.On 13 May 2020, the HRPPCU rejected the RSSS application upon finding that the nature of the business of “Dream Wedding Shop” did not fulfil the eligibility criteria.

16.During vetting of the seven BMP applications in July 2020, staff of the HRPPCU (“PW1”) found these applications suspicious due to the inconsistent font sizes in the supporting documents. On 3 July 2020, PW1 reported the case to the police.

17.On 10 July 2020, PW1 requested PricewaterhouseCoopers (“PwC”), which assisted the HRPPCU in application vetting, to arrange for a face-to-face vetting session for D in respect of the BMP applications.

18.Upon request, an accounting manager of PwC (“PW3”) sent an email to the Contact Email Address on 13 July 2020 requesting D to attend a face-to-face vetting session at PW3’s office on 15 July 2020. On 14 July 2020, PW3 received an email from the Contact Email Address stating “See you tomorrow”.

19.At the vetting session on the afternoon of 15 July 2020, PW3 checked D’s HKID card to verify her identity, and inspected the original documents submitted by D. D signed on every page of the printout of each application to confirm that: her application satisfied the eligibility requirements; the application and supporting documents were submitted by her; and she understood the declaration contained in the application.

Arrest

20.D was arrested at Address-2 on the morning of 27 August 2020.

21.The following items were found during the search of Address-2:

(1)  A rent receipt template book with the same typesetting as the Rental Receipt;

(2)  A CLP electricity bill purportedly posted to Address-3, same as the copy submitted with BMP application no. BMP-DJPUDH;

(3)  MPF remittance statement purportedly issued by BOCI-Prudential, same as the copy submitted with BMP application no. BMP-CGJPDW;

(4)  ATM card and cheque book for the HSB Account, and ATM card for the BOC Account;

(5)  Other documents related to Address-1 and Address-3 to Address-8.

Police investigation

Documents submitted with the RSSS application

22.PW6 is the brother of the landlord of Address-1, and handled the leasing matters on his brother’s behalf. PW6 confirmed that he had no knowledge about the Rental Receipt and had never issued the Rental Receipt to D. The Rental Receipt was forged.

23.According to the staff of Towngas (“PW4”), Address-1 was not registered for gas supply between 9 May 2014 and July 2020, and no bill was issued to Address-1 on 26 February 2020. The customer ID that appeared on the Towngas Bill in fact belonged to Address-2. The Towngas Bill was forged.

Documents submitted with the BMP applications

24.According to the staff of CLP (“PW5”), the information on the seven electricity bills submitted with the seven BMP applications did not exist in or did not match the records of CLP. These seven electricity bills were forged.

25.Enquiry with the MPF Authority revealed no record of the businesses named as the employer of the seven MPF remittance statements submitted with the seven BMP applications. These seven MPF remittance statements were forged.

Business registration records

26.The business of “Dream Wedding Shop” was registered by D as its proprietor on 27 February 2012 with business commencement date indicated to be 23 February 2012. On 5 May 2020, the business name was updated to “JASPER BEAUTY SALON”. The business address was updated to Address-1 on 23 April 2019.

27.At commencement, the nature of business was indicated to be “Wedding dress rental, makeup service and wedding photography”. It was updated to “Beauty and makeup service, and retail of beauty and makeup products” on 5 May 2020.

28.Between 5 May 2020 and 12 May 2020, D registered the seven branch businesses (corresponding to the seven BMP applications) but the commencement of businesses were all backdated to 23 February 2020.

Enquiry in relation to the business addresses

29.The owner of Address-2 confirmed that Address-2 was rented to D for residential use since September 2019. No sign of business was observed during search of Address-2 on 27 August 2020.

30.The owner and/or occupier of Address-3, Address-4, Address-5, Address-7 and Address-8 confirmed that there were no such businesses reported in the BMP applications.

31.Address-6 was owned by D’s mother and occupied by D’s brother-in-law. No sign of business was observed during search of Address-6 on 27 August 2020.

32.Some of the photographs submitted with the BMP applications were found not to match the appearance of the corresponding addresses.

Subscriber check

33.It was confirmed by subscriber checks that D was the subscriber of the Contact Telephone Number for the period between 1 March 2020 and 1 September 2020.

Summary

34.D, on 23 March 2020, used copies of false instruments, namely the Rental Receipt and the Towngas Bill, which were, and which she knew or believed to be false, with the intention of inducing the staff of the HRPPCU to accept them as copies of genuine instruments, and by reason of so accepting them to do or not to do some act to his own or any other person’s prejudice.

35.For each of the BMP applications, D, between the date of the application and 15 July 2020, by deceit, namely by falsely representing to officers of the HRPPCU that:

(1)  She operated the business independently at a fixed locations at the address stated in the BMP application, which provided beauty/massage services; and was in operation before the 10^th day of April;

(2)  The information provided in the BMP application form and the attached document(s) (including supplementary information and document(s) (if any)) are true, complete and correct,

and with intent to defraud, attempted to induce officers of the HRPPCU to grant a subsidy in the amount of HKD 100,000 (for each application), which would result in benefit to D, or in prejudice or a substantial risk of prejudice to the Government of the HKSAR.

MITIGATION

36.D is 33 years old with a clear record. She is married in 2016 with 3 children aged from 4.5 to 1.5 years old. Her husband is a bank manager with monthly salary of $70,000 plus bonus.

37.D was born in a working class family. Her parents ran a vegetable stall in wet-market and from the time she was in Form 1 she was required to help out after school. She finished her secondary education and worked as a make-up artist during the day time. She managed to start up her own beauty parlor business in 2012.

38.As the business prospered, her monthly contributions to her parents also increased reaching $50,000 a month even after her marriage.

39.In 2017, D’s beauty parlor was located just opposite the Mong Kok Police station. As a result of the unrest/disorder in the Mong Kok area at this time period of time onwards, D’s business was seriously affected. Despite this, she was able to continue the business by changing her working pattern and visit the homes of her clients.

40.In 2018, following the birth of her eldest son, she and her husband decided to buy their own home. The home was purchased from a developer in 2019 with the expectation of them moving in in late 2020. As a result, she needed to obtain a mortgage; this was after she had made 2 down payments of about $600,000 in December 2019 and March 2020.

41.In normal circumstances D would have been able to manage a stable income to meet the needs of her parents and her own family. However, the civil unrest that arose at this time created great difficulties for her business. Despite her hardships, her parents refused to take any sort of cut in their monthly contributions. This resulted in D’s savings becoming depleted.

42.Not only did D’s parents refuse to take a reduction in their contributions, they insisted that D contribute $200,000 to assist her brother start his own business.

43.It was at this point in time that her bank advised that her mortgage to buy her own home might not be approved to the full amount sought as she was also a guarantor to her parent’s flat and the bank was of the view that accordingly she was not in a sufficient financial position to secure a mortgage. This would have meant that she would lose the money from her 2 down payments of almost $600,000 that she had already made.

44.This was the circumstances that existed that lead to D committing the offences which she currently faces.

45.D was arrested in August 2020. She has been reporting to the TST police station on a daily basis since then. Her first court appearance was at the Eastern Magistrate’s court on the 29.6.2022 and she has from that point in time onwards been ready to plead guilty.

46.There has been no loss to the Government of anyone else as a result of her conduct and the nature of the offending was such that there was never any likelihood of anyone being deceived, resulting in the government suffering a financial loss.

47.The offending was not the worst of its kind. The case involved attempts only and was very unsophisticated and amateurish. No one was taken in or deceived by D’s actions; or ever likely to have been. The 8 counts are all interwoven with count 1 being used in order to facilitate the attempted fraud counts.

DISCUSSION

48.The RSSS and BMP are intended to provide relief to businesses facing extreme financial difficulties during epidemic or affected by various anti-epidemic measures. They are supposed to help those businesses in genuine need of assistance which in turn would help their employees to go through the difficult times. They were ad hoc in nature so that the money could be passed to the needy as soon as possible. Unlike the “Comprehensive Social Security Assistance” provided by the Social Welfare Department, the applicant has to go through a financial means test. The applications under RSSS and BMP were to a large extent based on the trust basis between the applicants and the government without going through thorough review processes.

49.D has pleaded guilty to the charges at the first opportunity. Since she was caught red-handed, it is difficult to see how she could have any other choice but to plead guilty.

50.D is the sole perpetrator of the 8 offences. She filed one online application for Charge 1 on 23 March 2020. For Charge 2 to Charge 8, she filed 7 on-line applications within 3 days from 11 to 13 May 2020. Her acts were highly calculated, unscrupulous and unrelenting. She had gone through some precise calculations and arrangement.

51.For Charge 1, D had submitted forged rental receipt and Towngas Bill for the application of the fund of RSSS.

52.For Charge 2 to 8, in order to achieve her criminal purpose of obtaining the fund for BMP, D had submitted seven sets of forged electricity bills and MPF statements. The addresses provided were D’s own residential address, her mother residential address and the rest of the addresses just do not exist. She was even bold enough to attend the interview arranged by the HRPPCU, knowing full well that those were scam applications.

53.For the purpose of sentence, I find that the court could follow the guidelines for defrauding public fund, instead of the guidelines for theft involving breach of trust with downward adjustment.

54.Counsel for defence concedes but asks the court to consider imposing a community service order in lieu of imprisonment or suspending the sentence.

55.Cheung JA made the following observations in HKSAR v Leung Wai Kei [2007] HKCLRT 193:

“27. … the CSSA Scheme is intended to help those in genuine need of assistance. Our society does not tolerate any act of defrauding public funds by dishonest means.

28. … … in appropriate cases, the court is under a duty to impose a deterrent sentence in order to curb the offence. However, a regime of draconian penalties and severe laws is neither a panacea nor the only solution for evils in our society.

45. … … for this type of offence, which is usually committed by disadvantaged members of our society, a non-custodial sentence or a suspended sentence is more appropriate for the defendants, their families and our society as a whole.”

56.Cheung JA pointed out that the following considerations are appropriate when determining what sentence is to be imposed:

“(1) The court should first consider whether a custodial sentence is necessary;

(2) If a custodial sentence is appropriate, the court may consider imposing a community service order in lieu of imprisonment or suspending the sentence;

(3) In cases involving some intentional and persistent fraud, an immediate custodial sentence is justified.” (my emphahsis)

57.Cheung JA also pointed out that the following factors should be considered by the court:

“(1) whether the defendant pleaded guilty;

(2) the amount involved and the length of time over which the offence was committed. It should be noted that, even where a huge total amount is involved, this may be an accumulation of small amounts received by the applicant per week/per month;

(3) the circumstances leading to the offence. There is an obvious difference between a legitimate claim which became false due to a change of circumstances and a claim which was false from its inception;

(4) the purpose for which the money has been used: using the money for providing household necessities will more readily attract the court’s sympathy than spending the money on luxuries;

(5) the defendant’s character and previous records;

(6) circumstances specific to the defendant, such as illness, disability, family difficulties, etc; and

(7) whether the defendant has voluntarily repaid, in whole or in part, the amount that has been overpaid to him.”

58.Bearing in mind the “views” above, it can be seen, with respect to D, that:

(1)  she pleaded guilty to all 8 offences.

(2)  the offence was committed within a short period of time and if the applications were successful, D could have obtained a substantial amount of $780,000.

(3)  As agreed by defence, right from the beginning, all applications made by D were not genuine.

(4)  the money was not strictly spent on household necessities. D claimed that they were used to (i) support her mother’s monthly contribution of $50,000; (ii) assist D’s elder brother with $200,000 to set up his own business; and (iii) secure a mortgage of her new flat of almost 12 million dollars. They were all for D’s own economic interests.

(5)  D is of clear record.

(6)  D is now 33 years old, married with 3 young children. Currently she is 6 months pregnant and will give birth to her fourth child in September 2023. Her husband works as a bank manager with monthly salary of $70,000 with bonus.

(7)  the government has suffered no loss due to the early discovery of the false instruments used by D.

59.The RSSS and BMP were ad hoc arrangement to assist those business entities facing financial difficulties during the epidemic. However, D lodged eight applications by extensive forgery including false rental receipts, electricity bills and MPF statements. For the 7 applications under BMP, 42 employees stated on the respective MPF statements (6 employees x 7 applications) are purposefully made up to commit the fraud.

60.Our society does not tolerate any act of defrauding public funds by dishonest means. In my view, it is a serious offence to defraud public funds and a heavy sentence should be imposed to reflect the gravity of the offence. Therefore, an immediate custodial sentence should be imposed on D in order to achieve deterrence. The schemes are intended to help those in genuine need of assistance. D has abused the schemes. There existed no exceptional circumstances to justify the suspension of the imprisonment term. In view of the serious nature of the offences, CSO is definitely not a choice. This case involved intentional and persistent fraud, an immediate custodial sentence is justified.

61.Counsel submitted that the 8 counts are all interwoven with count 1 being used in order to facilitate the attempted fraud counts. I do not accept this contention. In fact, the 8 charges are separate and distinct offences involving different culpabilities and eight different sums of subsidy.

62.Had the application of the RSSS and BMP been successful, D would have obtained $780,000 ($80,000 for RSSS and $100,000 x 7 for BMP). Following the guidelines laid down by the Court of Appeal in Leung Wai Kei, the involved amount of $50,000 to $100,000, the term of imprisonment should be 9 to 15 months. For the amount over $200,000, the sentence is over 2 years. The appropriate starting points for charges are as follows:

Charge	Amount involved	Starting point	1/3 discount
1	$80,000	12 months	8 months
2	$100,000	15 months	10 months
3	$100,000	15 months	10 months
4	$100,000	15 months	10 months
5	$100,000	15 months	10 months
6	$100,000	15 months	10 months
7	$100,000	15 months	10 months
8	$100,000	15 months	10 months

DELAY

63.I have examined the “Chronology of Event” prepared by the Prosecution. I find that prompt investigation was carried out upon discovery of the matter. A considerable period of time was obviously necessary in investigation of a case of this nature and complexity. I am satisfied that there was no delay in prosecution.

64.For the relevant principles of delay, I have considered the Court of Appeal’s decision in HKSAR v Chiu Chi Wing CACC 243/2012, where a number of factors identified in the Court of Appeal of Western Australia in Scook v The Queen were cited. See paragraph 37 of the judgment. I do not seek to repeat all of them.

65.Counsel submitted that since the arrest, D gave birth to the third child and is now pregnant with the fourth one. He said the delay in the present case falls within “the circumstances favourable to D have emerged” as spelt out in the Chiu Chi Wing case and therefore is a valid mitigating factor.

66.Generally speaking, pregnancy is no bar to the imposition of a sentence upon the accused is appropriate to the offence: Secretary for Justice v Dank and Anor [2008] 4 HKC 483,491. D should be able to receive proper treatment and care while serving her sentence. However, D’s pregnancy may enable the court, as an act of mercy in the exceptional circumstances, to impose a lesser sentence than would otherwise be appropriate: R v Chan Kui Sheung [1996] 3 HKC 279. I will grant D a discount of 2 months.

TOTALITY

67.The money involved in these 8 charges is the sum of $780,000. Charges 1-8 occurred on different dates and involved 8 sets of different false documents and circumstances of application. The offences themselves must have been carefully planned. They involve extensive scam. The sentences of those charges should technically be consecutive. Further, D committed multiple offences within a short span of time. That aggravating feature has to be reflected in the sentence.

68.In the light of the totality principle, I am of the view that an overall sentence of 30 months after plea would be appropriate. Due to the humanitarian ground on her pregnancy, I exercise my discretion to reduce the sentence by 2 months. The resulting sentence is 28 months.

69.I order that the sentences in Charges 1 to 3 to run consecutively. The sentence for Charge 4 to 8 to be served concurrently with Charge 1 to 3. In other words, D is sentenced to a total of 28 months’ imprisonment (8+10+10 months).

70.Undoubtedly, D and her family will suffer, but this consequence is something which she should have considered before she embarked on committed the offences: HKSAR v Shum Chung Wai [2002] 2 HKLRD 81. As for the D’s alleged hardship to her family, she was very much the author of her own misfortune.