HKSAR v. Chan Chun Hung
Read the full judgment text of CACC 553/2002 on BabelCite. This Court of Appeal judgment was delivered on 16 July 2003.
1 This is an application for leave to appeal against sentence imposed by HH Judge Chua on 23 October 2002. The applicant pleaded guilty to twelve charges of conspiracy to defraud and asked for eleven other offences of conspiracy to defraud to be taken into consideration. He was sentenced to four years' imprisonment in respect of each charge. The sentences are ordered to run concurrently.
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CACC000553/2002 CACC 553/2002 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CRIMINAL APPEAL NO. 553 OF 2002 (ON APPEAL FROM DCCC NO. 489 OF 2002) ____________________________________
_______________________________ Coram: Hon Stock JA and Pang J in Court Date of Hearing: 16 July 2003 Date of Judgment: 16 July 2003 ________________ J U D G M E N T ________________ Hon Stock JA giving the judgment of the Court: Introduction 1This is an application for leave to appeal against sentence imposed by HH Judge Chua on 23 October 2002. The applicant pleaded guilty to twelve charges of conspiracy to defraud and asked for eleven other offences of conspiracy to defraud to be taken into consideration. He was sentenced to four years' imprisonment in respect of each charge. The sentences are ordered to run concurrently. The facts 2The summary of facts, which was agreed, takes in all twenty-three offences and we have culled the following facts from that summary. It revealed that on twenty-three occasions between January 1998 and July 2000 the applicant, with the help of a friend who was also his assistant in the business, successfully applied for letters of credit from six different banks and, through this vehicle, obtained facilities to an extent of $36.499 million. All the underlying transactions were bogus. 3At all material times, the applicant (D1 at trial) and Wong Kin Ching (Wong) were shareholders and directors of Hung Cheong Toys International Limited (Hung Cheong) which was wholly owned by a listed company since 1998. The case arises from the signing by the applicant and Wong on behalf of Hung Cheong of various application forms and supporting documents by which Hung Cheong applied for the issue by various banks of letters of credit in favour of four companies, namely, Chun Lee Material Trading, Wing Fung Hong Trading, Wing Tai Woo Metal Steel Company and Men Fai Enterprises, which had purportedly sold goods to Hung Cheong. 4Ms Li Yeung who was the applicant's girlfriend was the sole proprietress of Chun Lee and Wing Tai Woo, and her younger sister Li Hung was the sole proprietress of Wing Fung Hong and Men Fai. 5Man Man Kwan (who was D4) is the former husband of Li Hung and was the applicant's assistant. Ms Wong Wan Kuen was an Executive Director of Hung Cheong, who was responsible for accounting work and assigning general duties to the staff of Hung Cheong. 6In mid-1996, Man, upon the applicant's instructions, assisted the applicant to set up Chun Lee as a beneficiary vehicle for Hung Cheong to apply for letters of credit with banks for bogus underlying transactions. Li Yeung was on his instructions or appointment to be the sole proprietress of Chun Lee. He also asked Man to rent a flat in Shatin which was to be the registered address of the company. He then arranged for Li to come to Hong Kong and asked Man to accompany her to the Business Registration Office to arrange for registration of the company. He also asked Man to accompany Li to open a current account with the Overseas Trust Bank (OTB), and to prepare a company chop of Chun Lee for receiving letter of credit funds from the banks. This was done. 7Blank letterheads and contracts for Chun Lee were printed, and on the applicant's and Man's instructions there were also prepared false documents to support payments under the letters of credit. There were in fact no genuine business transactions between Hung Cheong and Chun Lee. After letter of credit payments were received from the OTB by Chun Lee, the applicant, Man or a Mr Wu Wai Sun, former manager of Hung Cheong, accompanied Li to withdraw cash from OTB and deposit it into the various Hung Cheong accounts. 8In late 1997, the applicant feared that the banks would be alerted to the fraud were Chun Lee to remain the only beneficiary. So he instructed Man to establish Wing Fung Hong as a beneficiary. He said that he would appoint Li Hung to be the sole proprietress of Wing Fung Hong; he asked Man to rent a flat for the registered address of the company for Li Hung to come to Hong Kong; and he asked Man to accompany her to the Business Registration Office so that the company could be registered. He also asked Man to accompany her to open a current account with the Yien Yieh Commercial Bank (Yien Yieh), and to prepare a company chop of Wing Fung Hong for receiving funds from banks which were to issue the letters of credit. 9Letterheads, contracts and false documentation to support supposed transactions were again produced and when letter of credit payments were received from Yien Yieh by Wing Fung Hong, Man and Mr Wu accompanied Li Hung to withdraw cash from Yien Yieh and deposit it into the various Hung Cheong accounts. 10In early 1999, Man, upon the applicant's instructions, assisted him to set up Wing Tai Woo and Men Fai as further beneficiary vehicles to enable Hung Cheong to apply for bogus letters of credit on bogus transactions. On the applicant's instructions Li and Li Hung were appointed sole proprietresses of Wing Tai Woo and Men Fai, an apartment was rented and the companies were registered, and accounts were opened with the National Commercial Bank for Wing Tai Woo and with Wing Hang Bank for Men Fai. 11False documents were again prepared and letter of credit payments were received from the banks and the proceeds were deposited into the various accounts of Hung Cheong. 12By the time these matters came to light, it transpired that the applicant and Wong had signed blank letter of credit application forms for use in future applications. 13On 4 October 2000, the applicant informed Man that the ICAC was conducting a search operation at the office of Hung Cheong in Shatin and he instructed Man to take away and dispose of any relevant documents in his possession. Man disposed of documents in relation to the four companies concerned. The charges 14Each charge was in a form common to letter of credit conspiracies to defraud. We set out the first charge only, as an illustration:
15Between 13 January 1998 and 15 July 2000, the conspiracy involving Chun Lee resulted in the issue of eight letters of credit applied for by Hung Cheong in favour of Chun Lee as beneficiary for various sums totalling $12,051,910.70, five of which formed the first five charges, totaling, $6.652 million. The scheme and its extent is best illustrated by a table.
Other offences taken into consideration
16In relation to charges 6 and 7 and three other offences between 13 August 1999 and 25 April 2000, the applicant and others conspired together to defraud the banks into issuing five letters of credit in favour of Wing Tai Woo for various sums totalling $9,152,919. Two of these conspiracies are reflected in the twelve charges, namely, charges 6 and 7; the sums involved in the two charges are $2.805 million.
other offences taken into consideration
17Between 22 April 1999 and 29 April 2000, the applicant and Man conspired on five separate occasions with Li Hung and Wong Wan Kuen to defraud the banks into issuing letters of credit in favour of Wing Fung Hong for various sums totalling $6.857,963. Charges 8, 9 and 10 reflected three of these conspiracies, in the total sum of $2.828 million.
Other offences taken into consideration
18Finally, between 19 June 1999 and 7 July 2000, the applicant and Man conspired on five separate occasions with Li Hung and Wong Wan Kuen to defraud the banks into issuing letters of credit in favour of Men Fai for various sums totalling $8,426,254.06. Two of these conspiracies were reflected in charges 11 and 12 in the sum of $2.267 million.
Other offences taken into consideration
19There were never any genuine underlying business transactions. It follows that the amounts defrauded in the activities reflected in the charges was $14.552 million, and all together $36.499 million. Sentencing 20The applicant was born in 1957; so he was aged about 43 years when the offences commenced. He may be treated as a person of previous good character. 21In her Reasons for Sentence, the judge noted that save for the sum of $10,000 all the sums advanced by the banks found their way into the bank accounts of Hung Cheong and not into the applicant's personal pocket. In due course, she noted, the money was repaid to the issuing banks except in two instances involving the Dao Heng Bank but that was subsequently settled by a pledge of Hung Cheong's shares. 22She noted as well the submission made on the applicant's behalf that his was a rags to riches story and that he had as a result of these offences fallen hard, and had been declared bankrupt. The history of his downfall is traced to the expansion of the business in 1997 when public listing was planned. Loans were obtained, but in 1998 the economic climate changed and banks called in their loans; and production costs increased and the company was forced to borrow from a finance company, and in due course the applicant set about the frauds of which he has been convicted. 23The judge concluded that in this case the only factor deserving discount was his plea of guilty. She said:
24The judge adopted a starting point of six years' imprisonment and reduced the term by one-third to reflect the pleas of guilty. Accordingly she sentenced the applicant on each count to a term of four years' imprisonment and ordered all sentences to run concurrently; thereby arriving at a total of four years' imprisonment. The grounds 25The written submissions import grounds which are a little wider perhaps than those encapsulated in the perfected grounds of appeal. The judge referred in her Reasons for Verdict to a decision of this Court HKSAR v Cheung King [2001] 3 HKLRD 68. She said that in that case:
26Mr Choy, who appears for the applicant upon this appeal, and who had said everything that can possibly be said on his behalf, contends that that case was not intended to establish a guideline and was decided very much on its own facts to which he has taken us. He says that because the case turned on its own facts, it would be wrong in principle for the judge mechanically to add one and a half years to that sentence for this case to reflect what he refers to as the 'big shot' principle. 27With respect, the judge did not do that. She prefaced her comments about that case with the remarks that there was no Court of Appeal decision which set down tariffs for this type of case and that Cheung King indicated with what gravity these cases are viewed. So there has been no error in principle by the judge, as has been suggested. Nonetheless, the fact remains that this case is altogether more serious than that, both in the role which this applicant played and in the amounts involved. 28This was a case in which the scheme was initiated by this applicant; and it was a most elaborate scheme which progressed for over eighteen months and targeted several banks and involved also the creation of a number of bogus companies to enable the scheme to continue, drawing into the fraud and its planning a number of other persons. The amounts which were fraudulently obtained were very substantial. In our judgment, the judge cannot properly be criticised for the starting point which she adopted. 29Then it is said that the judge failed to give sufficient consideration to the fact that in December 2000 the applicant was kidnapped by a disgruntled creditor in Shenzhen. He was released on payment of $1 million. We have some difficulty in understanding how that can be a mitigating factor. 30We have recited the fact that the judge said that she was of the view that "the only factor deserving of a discount in sentence for D1 is his plea which has saved time and costs." Mr Choy asserts that there was a notable mitigating fact which was not there mentioned, namely, that the banks have been repaid, and also that that occurred, he contends, as a result of the applicant's voluntary effort. 31Restitution at the voluntary instigation of a defendant, particularly well before trial, is a mitigating factor and it is not described as such by the judge. 32It is clear that the judge was well aware that the banks were no longer out of pocket, save in a small amount. She makes that amply clear twice in her Reasons for Verdict: see pages 28C and 31C of the bundle. 33The implication in Mr Choy's submissions when first this application came before us was that the repayments were not merely responses to debtor's action or pressure, but evidenced the type of proactive conduct at an appellant's instigation for the pure benefit of the creditor which merits further credit. No one was in a position at the first hearing of this application for leave to provide details, so we adjourned so that the history and circumstances of repayments could be investigated. 34The fact transpires that in all but two of the twenty-three occasions with which we are concerned, the sums due to the banks under the letters of credit were paid on the due date and, in a few instances, one day late. These repayments are, in the circumstances, hardly cause for praise. The nature of the exercise was, in essence, similar to a cheque kiting one, in the sense that the sums due for one letter of credit were paid with the proceeds of the next one that had been fraudulently obtained. In relation to two sums due to the tune of just over $3 million, these payments were effected after the holding company of which the applicant was at one stage majority shareholder entered upon a debt restructuring agreement with its creditors. We have read a string of documents placed before us but, whilst the fact that the banks have in the event suffered no loss is a mitigating factor, which was a fact recognized by the judge, there is nothing over and above that so far as concerns the applicant's own conduct which in the circumstances of this case, in our judgment, merits a further reduction in sentence. Result 35In the event, we find no ground for disturbing the sentence imposed by the judge and, accordingly, this application for leave to appeal against sentence is dismissed.
Representation: Mr Edwin Choy instructed by Messrs Haldanes for the Applicant Mr Jackson Poon SGC of the Department of Justice for the Respondent |
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