HKSAR v. Ng Chi-wong & Others

CACC000386/2002

CACC 386/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 386 OF 2002

(ON APPEAL FROM DCCC 787 & 1063 OF 2001)

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Coram: Hon Stuart-Moore VP, Stock and Ma JJA

Date of Hearing: 6 May 2003

Dates of Judgment: 6 May 2003 and 6 June 2003

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J U D G M E N T

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Stuart-Moore VP (giving the judgment of the Court):

Introduction

1.On 27 July 2002, following a trial lasting well over a month in the District Court before Deputy Judge Browne, Kwok Tin-lai (D2) and Ng Mee-lan (D6) were convicted of conspiracy to defraud. D3 was similarly convicted after trial but D5 was acquitted. Ng Chi-wong (D1), D4 and D7 all pleaded guilty to this conspiracy at the outset of the trial.

2.D1 was sentenced to six years' imprisonment against which he has sought leave to appeal.

3.D2 and D6 received sentences of four years' imprisonment. They each sought leave to appeal against conviction and D2 also sought leave to appeal against her sentence. D6 did not pursue her application in relation to sentence and this was, accordingly, dismissed.

4.At the conclusion of the hearing on 6 May 2003, we also dismissed D2 and D6's applications in relation to conviction and D2's application regarding sentence. Additionally, in D2's case, under the terms of section 83W of the Criminal Procedure Ordinance, Cap 221, we ordered that three months of the time she had spent in custody pending her applications, having regard to their complete absence of merit, should not be counted towards the sentence she is presently serving.

5.So far as D1's application was concerned, we reserved judgment.

6.We now provide our reasons for dismissing D2 and D6's applications and give our judgment in relation to D1.

7.We are greatly indebted to Mr Vincent Wong, appearing on the Respondent's behalf, in a case in which the papers are voluminous, for his industry and very considerable attention to detail. The accuracy of his summary, together with its clarity, has provided invaluable assistance. In large measure we propose to adopt the evidential framework which he has supplied to us in relation to the evidence against each of the Applicants.

8.Broadly, the prosecution's case was that a company known as Billion Legend Development Limited ('Billion Legend') was set up for the purposes of defrauding members of the public. A number of victims were prosecution witnesses at trial. Three of these were defrauded of substantial sums of money, in some instances amounting to their life savings, on the initial pretext that they were going to be employed by Billion Legend. In the event, they were persuaded to invest in what they were told was the 'Loco London Gold Market'. The prosecution alleged that no genuine investments were ever made and that in reality this was simply a scam to milk gullible victims of their hard-earned savings.

9.Billion Legend was incorporated on 5 May 1999. The shareholders were Ng Mee-lan (D6), who was also appointed the company secretary, and someone called 'Yim'. They each held a 50 percent shareholding. Both of them resigned their directorships on 6 August 1999.

10.In his Reasons for Verdict, the judge summarised the activities of the company in this way:

"The company placed adverts in local newspapers inviting applications usually for minor clerical jobs with the company. Once employed, they were deceived into paying money to the company for apparent investment in the Loco London Gold Market (LLG). They were later told that all their money was lost, and in some cases they were told that they in fact owed further sums of money to the company because of the manner in which they had traded in the market. Some of the victims realized what was going on, and they left the company voluntarily. Others were told to leave once they had lost all their money." (Appeal bundle p. 57)

11.The position adopted by D2 and D6 at trial and in their applications in this court was that whilst Billion Legend had engaged in fraudulent activities, there was insufficient evidence to prove that they were involved as members of the conspiracy.

D2's conviction application

12.Ms Lily Yew, on D2's behalf, advanced two substantive grounds of appeal against conviction, namely that the judge had erred in finding D2 to have been a party to the conspiracy and that the evidence was so tenuous against D2 that her conviction was unsafe or unsatisfactory.

13.The evidence in respect of D2 was looked at in depth by the trial judge.

14.D2 was arrested on two occasions, firstly on 14 October 1999, and secondly on 21 January 2000, following police raids on the premises. In addition, police went to Billion Legend to investigate on 7 June 1999 when D2 was again present. On the two occasions when D2 was arrested, she stated that she would not answer any questions.

15.Briefly, the evidence against D2 was that on 7 June 1999, a police officer went to Billion Legend after PW2 had made a complaint. This followed PW2's loss of $179,640 after she had applied for a job at Billion Legend with a purported monthly salary of about $5,000. The officer found D2 working as one of the two receptionists. He was told to wait. Later, a lawyer came to the premises and spoke to him. During the thirty-five minutes he was there, the officer saw no one at Billion Legend apart from D2 and the other receptionist.

16.On 14 October 1999, when the police first raided Billion Legend, D2 was again one of the two receptionists on duty. She was then identified by PW2 as one of the receptionists she had seen in May 1999 and as the person who had handed her a job application form. The other receptionist was called 'Suen' who, at some stage after her arrest, committed suicide.

17.On 21 January 2000, police raided Billion Legend for the second time and D2 was again arrested. In this raid, a file containing ninety-two paper advertisements in relation to staff recruitment at Billion Legend and twenty-one completed job application forms, together with two documents containing details of appointments for job applicants, were taken from the reception desk. D2's 'employment' at Billion Legend as a receptionist had extended over a period of nine months. Throughout this time, its activities had been entirely bogus.

18.D2 elected to give evidence, and again this was looked at in considerable detail by the judge. D2 said that she had applied for the job with Billion Legend at the suggestion of 'Angel', who had been a friend of hers at school although she was unable to recall any other details about her. She said that she was told that Billion Legend dealt with securities, and that she was given work as a receptionist with another called 'Suen'. A button set into the reception desk controlled the door through to the office area but she asserted that she spent little time in the main office and had no dealings with any of the victims in that part of the premises. D2 stated that she took no part in placing of the advertisements on behalf of Billion Legend and she claimed that this was done by the other receptionist. As to her first arrest, she said that she was told by lawyers that she need not say anything, and that going to the police station was just a formality. After her release, she said that she was told by the managers that she had been arrested only because some of the victims had lost money. However, as she was just a receptionist, she was told she should go back to work. D2 also said that she received reassurance from lawyers. On the second police raid, she stated that she was again advised by lawyers that she need not say anything. According to D2, throughout the nine months she was at Billion Legend, her suspicions were never aroused that she had been caught up in a conspiracy to cheat.

19.The judge examined D2's answers to questions in cross-examination noting that she had agreed there were some ten to twenty staff working at the office although these people were not always the same. The only ones who were constantly there apart from herself were 'Suen', the managers, and someone called 'Cheuk'. She said that she knew the company dealt in securities, but no one mentioned 'Loco London Gold'. She admitted that she had herself filled out a job application form but said she had not asked for a copy of it. She could neither recall the day she started work nor who had interviewed her for the job. D2 admitted that at the reception desk there was a file containing a large number of job advertisements although she, as the judge put it, "did not look at all the adverts and had never seen anything describing the company as either an online information company or an overseas development company", which appeared amongst many other descriptions in the advertisements. D2 agreed that most of the calls she received, numbering about ten each day, were from persons seeking employment as odd-job workers or accounts clerks. D2 also accepted that none of the callers asked to open any accounts. Importantly, although the advertisements referred to a total of at least twenty-four members of staff whom the job applicants were to contact when they telephoned, D2 said that she did not know if those names were fictitious. She said that 'Suen' would instruct her to call up persons for interview and when they arrived they would be given application forms to complete. She claimed that she did not feel this to be strange and that she had not seen any of the completed application forms found at the reception desk. As many new recruits were turned into clients, she did not consider that the large turnover in staff was strange. D2 asserted that she would seek instructions from 'Suen' about whether or not new recruits were to be let into the inner office. D2 blamed 'Suen' for making several of the decisions implemented by herself. As to this aspect of the defence case, the prosecution alleged that D2 was laying the blame on 'Suen' as a convenient way of avoiding blame falling on herself, knowing full well that 'Suen' was dead.

20.After his lengthy consideration of the evidence, the judge rejected the evidence of D2.

21.In essence, the judge found that the defence version that D2 had been an innocent dupe who had acted in a state of ignorance over such a long time, during which there had been a police visit followed by a raid midway through the operation of this bogus company, did not tally with the person he saw in the witness box who was plainly "an intelligent, articulate and quick-witted young lady ..... not overawed in the slightest about having to give evidence ..... neither na?ve nor unwise".

22.The judge referred to a number of matters which related to D2's credibility including the way in which she had said she became involved in Billion Legend. This was "vague and unconvincing" for someone whose first job this was. Also, D2 had no recollection of the alleged school-friend who had given her the details, or of the person who interviewed her, or the date of her employment. There was, in fact, no documentation at all. The judge observed that working in the capacity of the receptionist for that period of time, "it must have been glaringly obvious to D2 that the only 'customers' of the company were persons who had been induced to go there looking for employment". D2 had admitted that she received calls from job seekers, and that she made a note of their details, later calling them back for an appointment for interview. The judge observed that the job of receptionist was most important as this was the first point of contact for callers who would need assurance that the company was operating legitimately.

23.As to the advertisements in the press, to which replies were constantly being received, these involved almost always unskilled work which offered higher rates than usual, often accompanied by criteria such as "age under 55", or "age under 58" and "no experience required". Sometimes, when advertisements were repeated, the format, the font and the contact person were slightly changed. The judge observed that:

"Some of the advertisements refer to Billion Legend as an online information company. Certain adverts request the job seeker to contact somebody in the Personnel Department or the Human Resources Department. A variety of jobs are advertised: sundry duties, commercial clerk, office assistant, accounts clerk, cleaning worker, merchandiser, stock keeper, general labourer, telephone operator, cleaner, development assistant manager, clerk, reception worker, and person required to work outdoors. Six telephone numbers were used. All the adverts contain details of a contact person at the company. The adverts instruct job seekers to ring the numbers given - one of the numbers at Billion Legend - and ask for a certain person. That person is identified only by a surname. 24 different surnames were used." (Appeal bundle p. 75)

24.In Exhibit P83, consisting of ninety-two newspaper recruitment advertisements which were found by police in the reception area at the time of the second raid, amongst the job descriptions on offer from Billion Legend, there appeared the following descriptions of the company, amongst others: (i) "Overseas development company requires junior accounting clerk"; (ii) "Foreign Company Part-time clerk"; (iii) "A merchandising trading company"; (iv) "Office attendant required by a computer software company"; (v) "Computer goods agent"; (vi) "Market information Analyst urgently required by merchandise agent"; (vii) "Operating clerk required by a merchandise agent trading company"; (viii) "A foreign business firm"; (ix) Merchandiser". It was clear that these advertisements were taken out in the expectation that potential victims would reply and that D2, as a long-term receptionist, must have been in a position to address these incoming calls and to have been prepared to deal with the enquiries being made by people interested in the jobs apparently on offer. Equally plainly, Billion Legend was not only taking out job advertisements on a frequent basis, but was assuming various different guises in those advertisements, sometimes by altering the format and layout of the advertisements, and at other times, by representing that it was something other than the 'securities company' which D2 had asserted it was, using some twenty-four different 'contact persons'.

25.With these matters in mind, the judge found that:

".... it must have been perfectly obvious, certainly by that stage [arrest of 14th October 1999] that the advertisements offering employment were false. She must have known that false names were being used in the advertisements. She realised that the seekers of modest jobs were being persuaded to become clients of the company and were complaining of losing substantial sums of money. She and her co-receptionist, Suen, had control of who came in and out of the reception area and who could go from that area to the main office. It is apparent from the evidence of the victim witnesses that their movements inside the premises were carefully monitored, in particular their access from the reception area to the main office area." (Appeal bundle p. 95)

26.The judge also found that D2 had contributed to the carrying out of the conspiracy. He said:

"I have not the slightest doubt that D2 knew exactly what was going on at Billion Legend, and played a crucial role in the conspiracy. The role of the receptionist was most important. They were the first point of contact with Billion Legend. They would of course know that the advertisements for jobs were simply the bait used to lure the victims to the company in order to deceive them. The receptionist would have to be very careful not to convey to anyone who might telephone or call at Billion Legend, be it job seeker or police officer, that Billion Legend was anything other than a legitimate and bona fide company. Control over access to the company, and particularly to the inner office, was vital. Victims were to be kept isolated from other victims and their movements were carefully controlled within the office. The receptionists would have to be very careful what they said to the victims either on the telephone or when the victims or others arrived at the premises." (Appeal bundle pp. 96-97)

27.Realistically, as Mr Wong said, D2 had seen job-seekers coming and going over the space of some nine months. If they were fortunate, they would depart with feelings of disappointment at not being able to obtain a job. The less lucky ones would have lost all their money and left in anger and despair. He asked, rhetorically, how a wholly fraudulent outfit such as Billion Legend could have risked employing someone in such a key role over the whole life of the company who was an innocent dupe or an outsider to what was going on, who had been given no preparation or knowledge and who, for this reason alone, could have unwittingly exposed the fraud at any time.

28.The evidence against D2 was not only compelling, it was overwhelming. D2's grounds, accordingly, failed and her application was dismissed.

D6's conviction application

29.Turning next to the application, made by Mr Duncan Percy on D6's behalf, one ground of appeal was advanced. This, in effect, alleged that the conviction was unsafe or unsatisfactory because of the "paucity of evidence" against D6. Mr Percy submitted that there was no evidence of active participation by D6 in the management of Billion Legend and no evidence that she had known of the fraudulent activities of the company as she had never visited its premises after they were set up in May 1999. Furthermore, D6 had resigned her position as a director in August 1999 having become suspicious of the company's operation in June of that year.

30.The prosecution called various witnesses to show D6's connection to Billion Legend and invited the judge to conclude from this evidence that D6 was knowingly involved in setting up a bogus company. If this could be proved, Mr Percy rightly accepted that D6 would be guilty of the conspiracy alleged against her even if she had tried to abandon the enterprise when she realised the police were aware of Billion Legend's activities.

31.PW9, a property agent, was approached by D6, together with someone called 'Wong' and a female, to rent commercial premises. Later, on 28 April 1999, D6 signed the offer to lease the premises which were to be used by Billion Legend and, on 3 May 1999, she signed the Tenancy Agreement. 'Wong' wanted to pay the whole of the sum owing in cash. This was approximately $162,000. However, this was not acceptable to the landlord. In the result, the whole group concerned with the transaction then went to the bank where two banker's drafts were obtained.

32.On 4 May 1999, someone called 'Li', together with D6 and a woman called 'Yim', approached Success Corporate Services Limited to set up a company. The identity cards belonging to D6 and 'Yim' were photocopied and the necessary documents to effect the incorporation of the company were duly prepared. D6 signed the documents and 'Li' paid $7,745 to set up the company, with D6 and 'Yim' each being made 50 percent shareholders. In addition, D6 was shown as the company secretary.

33.On the following day, a current bank account was opened. D6 and 'Yim' were made joint signatories. However, although $1,000 was initially deposited, no subsequent transactions were ever recorded.

34.On 12 June 1999, D6 went to Tsim Sha Tsui Police Station together with a solicitor called 'Kong', following PW2's complaint that she had been defrauded by Billion Legend. There they met DSPC 496 (PW6) who said that 'Kong' introduced D6 as the "person-in-charge". D6 handed to him 28 pages of documents (Exhibits P12-16, 97 and 98). Some of the documentation related to PW2.

35.Thereafter, on 6 August 1999, as we have said, both D6 and 'Yim' ceased to be directors. D6 was questioned by police on 11 December 1999 and again on 21 March 2000 in the presence of a lawyer. She chose on both occasions to remain silent.

36.D6 gave evidence at trial. This included evidence about her background and criminal record. She explained that she had a friend called 'Ah Hung' whom she had known for ten years who had asked her to be a partner in starting a company. This was notwithstanding the fact that D6 had told 'Ah Hung' that she had two sons, was on public assistance, and had no money. D6 said that she was asked to start the company by leasing premises and obtaining the business registration. She was assured that the company would not be doing anything illegal and she was told she would receive a salary of $3,000 per month and a bonus if the company made money. She admitted going to the property agent and signing the offer to lease although she said she did not understand it. She agreed that she had signed documents to set up the company and that she had been told that she would be a shareholder director and secretary. She accepted also going to the bank to open the company account. However, the bank documents and company chop were held by 'Mr Li'. D6 said that she made her visit to the police station on 12 June 1999 at the direction of someone from Billion Legend. She was told to meet a solicitor and take an envelope to the police station and she stated that it did not cross her mind to look at the documents. Subsequently, she decided she no longer wished to be involved and arranged a change in directorship.

37.Mr Percy relied in these proceedings upon the case of HKSAR v Cheung Kwok-kuen CACC 171/2001 (unreported) and in particular the way in which the evidence against 'D3' in that case was approached by this court. There, we were again concerned with similar allegations to those in the present case. 'D3' in that case was a director of a company which was known as 'Million Profit'. The evidence against 'D3' was described in the judgment as "extremely slender" and this court (differently constituted) quashed his conviction. In sum total, 'D3' was shown to have been one of two statutory directors and a shareholder. He had signed two company minute sheets apparently recording his presence at two meetings and he was living in premises purchased by 'D1' for which the monthly mortgage payments of $31,189.90 were paid by 'D1', the financial controller of the company, who was responsible for laundering the proceeds of the fraud. The court noted that a signature on minutes did not necessarily mean that an actual meeting had taken place, and that there were many reasons why 'D3' might be in occupation of the residential premises purchased by 'D1'. It was noted in particular that 'D3' was never an authorised signatory who could withdraw money from bank accounts. The case for the prosecution in that appeal ultimately appeared to be based upon the fact of directorship coupled with the occupation of the residential premises by 'D3'. In this regard, the judgment (at para. 48) reads:

"Whilst his connection to the flat provides evidence casting some suspicion on D3 as someone who may have been financially benefiting from his directorship of Million Profit, we feel unable to say that this was sufficient to have established his guilt to the required standard."

38.In the present proceedings, Mr Wong rightly pointed out that Cheung Kwok-kuen's case (above) was decided on its own facts which are to be distinguished from the present case where D6 had physically attended to the leasing of the company premises and had signed the lease documents. D6 had then attended to the incorporation of the company and signed the necessary documents to this end. Furthermore she had attended in person to the opening of the company bank account and became a joint signatory with 'Yim'. D6 had also played an active part in coming forward when required to do so and presenting herself at the police station with a solicitor in order to submit documents which it was hoped would explain away the complaint of PW2. For these purposes, she was introduced as the "person-in-charge". This was some two months after becoming director and secretary of Billion Legend. As Mr Wong emphasised, she was, in doing this, playing an important role towards defending and maintaining the fraudulent enterprise in the face of a justifiable complaint from a disgruntled victim.

39.The judge gave careful attention to all the evidence in D6's case in making an assessment about her role. Dealing with his approach to some of the evidence, he said:

"The evidence of the estate agent, Mr Choi (PW9), was that the person he dealt with in relation to the letting of premises to Billion Legend called himself Mr Wong, not Mr Li. She said that she paid no attention to what name had been used by this person when he dealt with Mr Choi. She was asked if she agreed that by signing the offer to lease she would have made herself liable for the rental payments. She said that Ah Hung and Mr Li would take care of that. She was asked how she knew that she could trust them, and she said she thought that they would not deceive her. She was asked why she never visited the premises of Billion Legend, and she said that she felt it would serve no useful purpose.

I did not believe her evidence as to the fact that she thought she was getting involved in a legitimate trading company. Her version of events as to how she became involved with Billion Legend is littered with inconsistencies and implausibilities. She has no previous experience of involvement with a company, and yet she asked no questions as to what her responsibilities or her duties would be. She agreed to sign the offer to lease premises in Tsim Sha Tsui where Billion Legend operates. The rental commitment for that was $26,812.50 per month. She said she agreed to sign this because she trusted Ah Hung and Mr Li; but she does not even know Ah Hung's name and address, and had met Mr Li for the first time that day. At that transaction this Mr Li was using the name Wong, and large amounts in cash were being paid over. She agreed to sign the documents for the opening of a bank account, yet all the documents were taken by Mr Li. She must know there is no movement on the account because she is a co-signatory of the account, so there can be no movement without her signing the documentation. She never visited the premises of Billion Legend, although she was not working. She said she agreed to go to the police station on 12 June because she was requested to do so by Ah Hung. She said she never looked at any of the documentation that was produced at the station. I do not believe that. She continued, after that visit, to act as a director of the company until 6 August 1999, when she and her original co-director, Yim, resigned. D6 claimed that after her visit to the police station on 12 June 1999, she learnt for the first time that the company was involved in trading in London Gold. Her version of events was that she thought this was a trading company. She said she did not understand what trading in London Gold meant. She apparently asked no questions of Kong, nor did she ask questions of the representative from Billion Legend. The reason for that is quite clear; she was perfectly well aware of what the company was up to. She claimed that as soon as she was concerned about the probity of the company, she took steps to distance herself from the company, yet her resignation as director does not take place until 6 August.

I do not know why the conspirators decided to change the directors in August, but I do not accept that the change came about in the circumstances described by D6. In common with her co-conspirators, I am satisfied that D6 was confident, or had been assured that as regards the criminal scheme in which she had involved herself, the criminality of this scheme could not be established by the police; she was confident of that." (Appeal bundle pp. 113-114)

40.In respect of D6, there was ample evidence on which to convict and certainly no reason was advanced in these proceedings which would justify any interference with the sensible, fair and balanced approach adopted by the judge. Accordingly, we refused to give leave to appeal and her application was dismissed.

Sentence generally

41.In sentencing, the judge was well aware of the principles he needed to apply. Helpfully, for the purposes of achieving consistency, other cases of a similar kind had been brought to his attention. The judge cited a passage from the judgment in HKSAR v Chiang Chun-wai CACC 11/2001 (unreported) at para. 8 which reads:

"Those who enter into heartless and cruel scams of this kind, and who are prepared to fleece gullible and blameless victims of as much of their hard-earned savings as they can lay their hands on, should expect to receive heavy sentences, not merely as punishment for the offence but as a deterrent to others with a similar mind."

The judge then continued, having regard to previous decisions of the court, by saying:

"For those involved in conspiracies of this kind, sentences of 4 years' imprisonment have been held to be appropriate. Lengthier sentences are appropriate for those prominently involved in the organization of the conspiracy and for those who continue after being arrested." (Appeal bundle p. 122)

42.The judge referred to the comparatively small number of victims in the present case and he bore in mind the sums of money in which they had been defrauded. The total, for the victims who had come forward, involved actual losses of $680,634. Importantly, the conspiracy had continued over a period of nine months, during which there was an investigation and a raid before the final raid brought its operation to an end.

D1's sentence

43.The Summary of Facts which D1 admitted when he pleaded guilty described him as "the manager of the company who played a key role in this fraud". Sometimes he called himself 'John'. On other occasions he was 'Alan'. Briefly, D1 was identified by three victim witnesses.

44.D1 was identified as 'Alan', the manager of the company, by PW1 who lost $170,000. D1 had gone on to demand settlement of the account and $650,000 to "save" the account.

45.D1 also encouraged Hung Yuet-ngor (PW3) to open an account. Later, when she did so, he prepared the agreement and received $109,000 from PW3. It was D1 who told PW3 that she had lost all her money and he then required her to pay $300,000 to cover the loss. She was reduced to tears but D1 was unmoved. On this aspect, the Summary of Facts reads:

"D1 then asked (PW3) about her valuables kept at home and told her that he would clear the account for her. Later D1 returned and told (PW3) that her account was cleared but she needed to pay $70,000 the next day to compensate the company as otherwise they would assign debt collecting company to get the money from her, (PW3) became very frightened and said she would report to police. Then Ah Wing told (PW3) to sell her ornaments to compensate the company. D1 asked (PW3) to make compensation that day if she did not wish to be disturbed by anybody. (PW3) agreed to find money. Then D1 assigned Suki and Ah Wing to accompany (PW3) to get money. After they left the company, D1 telephoned Ah Wing and wanted them to go back to the office of Billion ...." (Appeal bundle p. 38)

46.D1 interviewed a third victim, Wong Miu-ngor, for a job which had been advertised as 'office assistant'. Despite this, D1 asked her to learn how to do "calculation" work. D1 later participated in various episodes in which money was seen passing from D1 to other conspirators, in an effort to deceive Wong Miu-ngor into believing it was easy to earn money. Fortunately for her, she was saved from suffering any personal loss by the timely police raid on 21 January 2000.

47.The factor which perhaps most seriously aggravated D1's offence, which also applied to D2, was that he continued his dishonest activities after his arrest on 14 October 1999 when he was fortunate enough to have been given bail. In D1's case, there was the further aggravating feature of his bullying of PW3 and the threats of putting a debt collecting company onto her. This was an abhorrent piece of conduct, which we view as particularly nasty and cruel.

48.Three grounds of appeal were advanced on D1's behalf by Mr Robert Andrews.

49.In the first of these, he submitted that the starting point of seven years' imprisonment, which the judge had taken for D1, was manifestly excessive having regard to all the circumstances.

50.We have set out already the general framework of the case against D1. He was plainly the most significant player in this whole affair with a greater involvement than any of the others at Billion Legend. He was undaunted by his arrest midway through the events and carried on as if nothing had happened.

51.Our attention has been drawn to the decision in HKSAR v Cheung Kwok-kuen (above), where a starting point of eight years' imprisonment was considered appropriate for someone who was not found to have been the mastermind but who had played the major role in the conspiracy and who had laundered the proceeds. Whilst this was not a guideline case, plainly, in the present case, the seven-year starting point was not open to criticism.

52.The second ground amounted to a complaint that D1 had, in effect, been punished for testifying on behalf of some of his co-defendants. This contention was advanced because the judge reduced D1's sentence by only one year instead of giving him the usual one-third discount to reflect his plea. In this regard, Mr Andrews relied on HKSAR v Chan Man-chau CACC 503/1999 (unreported) in which this court affirmed what was said in R v Lawless [1998] 2 Cr App R (S) 176 that a discount normally given to a defendant who has pleaded guilty should not be reduced as the result of giving evidence for a co-defendant which the jury rejects lest this should inhibit a potentially important witness from giving evidence for the defence. Leong JA (as he then was) said:

"In our view, the purpose of discount for plea was to give the defendant credit for showing remorse and saving court time in proceedings against him. Whether he gave evidence for his co-defendant should have no effect on the credit he would have been given. Even if he does give evidence which eventually is not believed and the trial of the co-defendant has been thereby unnecessarily prolonged, much to the dislike of the trial judge, still there is no justification to penalise him for giving evidence. If the 2nd applicant had pleaded not guilty, but he did not give evidence in his own defence, instead he had chosen to give evidence for the 1st applicant and his evidence was rejected, could a longer sentence be imposed on him because of him giving evidence for the 1st applicant? The answer must be 'No'. If it were the opposite, a defendant who pleaded guilty and gave evidence for his co-defendant but was not believed, would be in a worse position than if he had pleaded not guilty. As Liu JA said in R v Yu Hong-kit CACC 323/1995, the fundamental concept is that 'no man should be discouraged from testifying in a court of law'. The authorities referred to in the respondent's argument do not indicate anything contrary to this principle.

In the case of R v Lawless [1998] 2 Cr App R (S) p. 176 it was held that it was wrong not to allow a defendant who had pleaded guilty a discount for his plea on the ground that he had given evidence for a co-defendant who was convicted. Thomas LJ said at p. 177:

'... It is of course well recognised that unless there are special reasons to the contrary, which sometimes there are, a person who pleads guilty is entitled to credit for his plea of guilty and for his expression of remorse. This appellant did not get that credit. The reason that he did not get it was the fact that he gave evidence on behalf of the co-accused and that evidence was rejected by the jury. As I have said, in our judgment that approach is wrong in principle. Unwittingly the recorder was in truth sentencing this appellant for something in respect of which he had not been convicted, namely telling lies in the witness box. Needless to say a co-defendant is not to be encouraged to go into the witness box and tell a pack of lies. However, it is also important that a co-defendant should not be inhibited from giving evidence on the basis that if that evidence should be disbelieved he will lose the credit which otherwise he would get for his plea.'

..... We see no reason why the approach in the case of Lawless should not be followed. The fact that the 2nd applicant's evidence had been disbelieved is not inconsistent with the 2nd applicant being remorseful."

53.In the present case, amongst other things said about D1, the judge said:

"33. D1 also played the role of manager when PW3 (referred to in the admitted summary of facts as PW4) was defrauded of $109,000 in November 1999. PW3 said in evidence that she knew D1 as 'Manager John', and in the summary of facts D1 admitted he was called Manager John when he had dealings with PW3. However, when D1 gave evidence on behalf of a co-accused, he asserted that he had never claimed that he was Manager John and that Manager John was a different person.

34. D1 also challenged an assertion in the summary of facts that he had ever threatened PW3 that if she did not pay the $300,000 which she owed to the company, he would instruct a debt collecting company to collect the money from her. I allowed counsel for D1 to cross-examine PW3 about this alleged assertion. PW3 was adamant that D1 had made such a threat, and I believed her. Significantly, it was never put to PW3 that she was incorrect in identifying D1 as being known as Manager John.

35. D2 and D3, who gave evidence, also claimed that D1 was not Manager John. I did not believe them. I am satisfied they were lying. This is significant because on the evidence it was quite clear that Manager John played a very significant role in this conspiracy, and I am sure beyond reasonable doubt that D1 was the Manager John at these premises." (Appeal bundle p. 123)

54.Later, the judge said:

"I have considered very carefully what credit should be extended to D1 to reflect his guilty plea. A guilty plea is taken as a sign of remorse and it also saves court time and expense. In this case, D1 challenged assertions in the admitted facts, and gave evidence which I disbelieved. Taking into account all these factors, I have decided that his sentence should be reduced by a period of one year." (Appeal bundle p. 124)

55.It was submitted by Mr Wong that whilst it was an important element in D1's evidence to attempt to minimise his own responsibility and to reduce the true level of his involvement and culpability, this did not stand alone. In regard to the false evidence given by D1, this was easily demonstrated from the fact that D1 had resiled from the Summary of Facts which he had formally admitted. It was hardly surprising, therefore, that the judge rejected his version and found his evidence to have been untruthful.

56.However, more importantly, Mr Wong submitted that the situation which had arisen was to be distinguished from what was said in Chan Man-chau (above), because what had occurred was more akin to a discredited version set to one side after a Newton inquiry. In such circumstances, it is well established that a judge is entitled to reduce the discount he would otherwise have given. In R v Chan Leong [1995] 3 HKC 108, where a Newton inquiry had been properly held, following which the sentencer reduced the discount which would otherwise have been accorded to the defendant, the approach (at p. 111) adopted by this court was that:

".... the appellant had challenged the facts stated by the prosecution and had lost in his challenge. The magistrate was not 'punishing' the appellant for challenging the facts. Nor was he saying that he was giving the appellant no credit at all for his guilty plea - as the district judge did in R v Lee Chau Pang (Crim App 93/95, 7 June 1995, unreported). He merely concluded that to an extent, the defendant had lost the benefit of the remorse apparently shown by his guilty plea, and accordingly, imposed a heavier sentence than the normal 'tariff' on a guilty plea. We cannot see how he can be faulted in any way in his approach."

57.The two areas of his testimony in which D1 had sought to downplay his role were, firstly, concerned with his denial that he had been the manager calling himself 'John' and, secondly, his denial that he had threatened PW3. Obviously, these were matters which went to D1's culpability and, as to both, his version was rejected as untruthful. However, as the judge was well aware, the matter did not end there. D1's counsel, who had been permitted to remain in court throughout most of the trial for the purposes of maintaining a 'watching brief' on behalf of his client, was permitted to cross-examine PW3. As observed by the judge, she had refuted any suggestion that D1, whom she knew as manager 'John', had not made any threats towards her. She was adamant that he had done so.

58.Plainly, there was force in Mr Wong's argument that by embarking on this course, D1 had lost some of the credit to which he was otherwise entitled for pleading guilty. This then became a matter for the judge to exercise his discretion in deciding by how much the discount should be reduced. We do not, in this case, consider that we have been provided with any good reason why we should further reduce the discount which was considered appropriate by the judge. He had a full knowledge of all the facts as they applied to D1 and was in the best position to make an assessment of the proper sentence to impose in all the circumstances which had arisen.

59.It was lastly argued, although it is fair to say that Mr Andrews did not press the point with any enthusiasm, that D1's sentence was too heavy when compared to the sentence imposed on D3 who also played the role of a manager and whose sentence was only four years' imprisonment. However, the part played by D3 was in a wholly different category. D3 had worked as a member of the fraudulent syndicate for only about two months before the second raid which brought its activities to an end.

60.Mr Andrews also compared the roles of D1 and D2 but we were left equally unpersuaded that any disparity existed in their sentences. D1 was thirty-five at the time of his conviction which made him about thirteen years older than D2 and he was the driving force behind the operation. There was, for D1, no mitigation aside from his plea in the limited circumstances we have already described.

Conclusion on D1's sentence application

61.Having regard to our conclusions in relation to the grounds of appeal advanced on D1's behalf, his application is dismissed.

D2's sentence

62.Turning to the application by D2 in relation to her sentence, it was submitted by Ms Yew that as D2 was "under twenty-one years old", the judge had erred in sentencing her to a period of imprisonment before obtaining all relevant background reports about her. This ground was misconceived and apparently based on an error made by the judge when he commented, during the sentencing process:

"45. D2 is 18, she has a clear record, and she left college a short time prior to her involvement in this matter.

46. Section 109A of the Criminal Procedure Ordinance states that no court shall sentence a person of or over the age of 16 and under 21 years of age to imprisonment unless the court is of the opinion that no other method of dealing with such persons is appropriate.

47. I considered very carefully all the matters urged upon me in mitigation by counsel on behalf of D2. In my view, imprisonment is the only suitable penalty for criminality on this scale.

48. As I have previously indicated, a sentence of 4 years is appropriate in cases such as this. However, D2 carried on with the conspiracy after her arrest and after she had been released on bail by the police.

49. Taking into account all the circumstances, and in particular her age, I have decided not to increase the starting point as regards D2." (Appeal bundle p. 125)

63.This was an unfortunate error in the otherwise meticulous handling by the judge of a difficult case. Plainly, as Ms Yew accepted, the evidence showed D2 to have been twenty-one years old at the time of sentencing. The best illustration of this is to be seen in D2's record of interview where, albeit she answered no questions about Billion Legend, her date of birth is shown as 20 September 1980 (Appeal bundle p. 133). If this was correct, as it turned out to be, D2 was nearly twenty-two at the date of sentencing and, as such, did not meet the requirements for the operation of section 109A of the Criminal Procedure Ordinance.

64.We do not know on what basis the judge formed the view that D2 was only eighteen on the date of sentencing but it had the effect that instead of receiving an enhanced sentence for her continuation in the conspiracy after her first arrest, she undeservedly received no additional sentence at all.

65.In her second ground, Ms Yew submitted that a four-year starting point was too high. As we have indicated already (see para. 41 above), this submission was difficult to maintain having regard to the observations of this court said in Chiang Chun-wai (above).

66.In the last ground, which was equally without merit, it was contended that D2 had been given no discount for her clear record or youth. Neither of these factors deserved to be reflected in a shortening of D2's sentence. In fact, given all the circumstances which made this such a serious offence and her complete lack of remorse, there was no room, realistically, for the trial judge to have exercised any leniency towards her. In the event, as we have seen, in the mistaken belief that D2 was only eighteen, the judge gave her a benefit to which she was not entitled, saying that, despite the fact that D2 had continued with the conspiracy while on bail after her first arrest, he would not increase the starting point.

67.It is not without interest, as Mr Wong was able to draw to our attention, that D2 later appeared with others in DCCC 402/2002 where once again she, together with others, was charged with a conspiracy to defraud. This time, the period covered was between 18 February 2000 and 20 July 2000. The method of operation was more or less the same as in the present case. Supposedly, the company in DCCC 402/2002 involved commodities and silver trading. D2 was charged yet again as the 'receptionist'. On 1 November 2002, she pleaded guilty before Deputy Judge Jenkins who took a starting point of three and a half years. He reduced this to two years and four months on account of the plea of guilty and ordered that only eighteen months of that sentence should be served consecutively to the present sentence. In all the circumstances, we are left wondering whether the full background to D2's position was ever set out as it has been in these proceedings because the leniency she has been shown, despite her remorseless conduct, has been remarkable.

68.Accordingly, utterly lacking in any merit as her applications had been, not only in relation to sentence but conviction also, we ordered three months' loss of time (see para. 4 above).

Submission of papers to the Director of Public Prosecutions

69.One of a variety of aspects of this case which made it particularly serious was Billion Legend's use of so-called 'lawyers' in an attempt to add credence to a company which in fact only operated to fleece gullible members of the public. We are led to understand that although police met up with a solicitor called 'Kong' on 12 June 1999 (see para. 34 above) and although a 'lawyer' had earlier attended Billion Legend's offices on 7 June 1999 (see para. 15 above), no investigation was ever mounted into this conduct with a view to establishing whether any offence had been committed by them. We consider that such behaviour by lawyers, which seems to have played its part in stalling the criminal investigation process, merits some enquiry.

70.Accordingly, we propose, as we indicated at the conclusion of the hearing of these applications, to forward the papers to the Director of Public Prosecutions with a view to consideration being given to an investigation into the conduct of the lawyers in question and, in particular, to the commission by them of any criminal or disciplinary offences.

Representation:

Mr Vincent Wong, SGC, of the Department of Justice, for the Respondent.

Mr Robert Andrews, instructed by Director of Legal Aid, for D1/Applicant.

Ms Lily Yew, instructed by Messrs Eric C.K. So & Co. (assigned by Director of Legal Aid) for D2/Applicant.

Mr Duncan Percy, instructed by Messrs Jack Fong & Co. (assigned by Director of Legal Aid) for D6/Applicant.