Case Document

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CACC 196/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 196 OF 2007

(ON APPEAL FROM DCCC NO. 982 OF 2006)

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BETWEEN

	HKSAR	Respondent
	and
	HO Ka Keung (何家強)	Applicant

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Before: Hon Tang VP, Yuen JA and Wright J

Date of Hearing: 29 August 2008

Date of Judgment: 14 November 2008

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J U D G M E N T

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Hon Tang VP:

1.I have read in draft and agree with the judgment of Wright J.

Hon Yuen, JA:

2.I have read in draft and agree with the judgment of Wright J.

Hon Wright J:

3.The applicant was convicted of a single charge of fraud and sentenced to serve a period of 30 months imprisonment. The charge arose as a consequence of the submission by a company, Sky Pacific, acting as an insurance broker, to an insurance company, New York Life Insurance Worldwide Ltd of proposal forms in respect of life insurance. The essence of the prosecution case was that by submitting forms which contained material misrepresentations New York Life was induced to issue policies of insurance. By issuing the policies its proprietary interests were placed at substantial risk. The motive for this conduct was said to be that, after the policies had been issued, Sky Pacific would receive a commission equivalent to 138% of the first annual premium payable upon each policy.

4.The applicant had been approached by a third party, one Chiu, herself already operating an insurance brokerage, to become a director and shareholder of Sky Pacific. He did so in return for a monthly reward of $12,000.

5.The prosecution case was, and this was the evidence before the judge, that two of the misrepresentations made were that the proposer who had signed the proposal form, first, was a genuine buyer of life insurance and, secondly, himself or herself had paid the premium due when that was not so. Each proposer who testified supported the prosecution allegations: two proposers denied even having signed the proposal form or having heard of Sky Pacific.

6.The applicant sought leave to appeal conviction and sentence. We heard argument in respect of the application relating to conviction on 29 August 2008 and dismissed, by a majority, that application on 31 October 2008. We invited the applicant to supplement orally his written grounds of appeal against sentence if he wished to do so. He has indicated that he does not.

7.The first ground of appeal is that the starting point of 30 months imprisonment is manifestly excessive in support of which the applicant submits that the judge had not properly considered the role that he played; the nature of the fraud; the fact that there was only one victim; and the fact that the applicant received only a salary of some $12,000 per month. The second ground of appeal is that the judge had failed to consider a Community Service Order, this ground being expressed as "... only predicated upon [acceptance] that the applicant has only limited involvement and/or criminality, and/or that he is only an aider/abettor or had only turned a blind eye to Chiu’s fraud.”

8.For what was, in essence, a straightforward matter, this trial lasted an long time: the judge was fully aware of the role which the applicant played. In sentencing the applicant he recognized that the prime mover seemed to be Chiu but said of the applicant:

10.  ... Chiu set up Sky Pacific with the sole purpose of doing business with New York Life and no other company.

11.  You agreed to be the nominal head of the company. You signed documents that led to the incorporation of Sky Pacific. Your name appears on the various documents that were produced in evidence to me as being a director and shareholder of the company....

13.  ... You put your name to the documents required to take out professional indemnity insurance as required by PIBA...

14.  You went... to a branch of the Hang Seng bank where you took part in the opening two bank accounts...

15.  Having taken part in these various processes you then filled in either the whole or a sizeable portion of the application to PIBA...

16.  You went along to the [PIBA] interview towards the end of 2002...

17.  … after you had taken part in setting up of Sky Pacific and after you had caused it to become an authorised broker, you continued to be associated with the company...

25.  I accepted that there was no evidence that you had directly known of the ways in which these wholly unethical ways of attracting business were carried out, but what I did tell you was this. In convicting you, I held that you were in effect presiding over boilerplate factory...

28.  You told me that your job was to ensure that the forms were properly completed. How you were able to do that, I was simply unable to see...

29.  Furthermore you told me that your role was to ensure that the premiums had been paid,... However, on being queried about this you rapidly accepted the fact that you had no idea whatsoever whether the premiums had been paid...

30.  Indeed it is also clear that you surrendered responsibility for the bank accounts of Sky Pacific to Irene Chiu. …

31.  ... you also withdrew sums of money in cash from the accounts...

32.  I told you in convicting you that I was not convicting you as a passive bystander. I told you that I was convicting you because you had positively acted to set up Sky Pacific; you had positively acted to ensure that it was an authorised broker and then you had taken positive steps to hand over operation of Sky Pacific to Irene Chiu. You clearly were aware of the fact that the only purpose of Sky Pacific was to act as a boilerplate factory by completing the forms without any reference whatsoever to those whose names appeared on the proposal forms.

34.  ... you clearly knew that you were presiding over a farce and a farce that was designed by deceit to defraud New York Life. You clearly knew of the commission structure because you had gone along to New York Life after Sky Pacific had been incorporated and after it had received membership from PIBA and was therefore an authorised insurer. You spoke to a man named James Liu at New York life...

35.  He apparently went through with you the commission structure. You clearly knew it was commission that was going from New York Life to someone in Sky Pacific so you clearly ran Sky Pacific as a boilerplate factory knowing that none of the safeguards you were supposed to preside over... had been carried out.

39.  However it is quite clear that you were prepared to sign to give the appearance of reputable dealing to any policy of assurance that was put before you.... You were prepared to sell your expertise and knowledge of the salary of $12,000 a month. You knew that there were safeguards.

56.  Your actions can only lead to increased cynicism on the part of the public Hong Kong... your actions serve only to be put off members of the public who may genuinely want to take advantage of the offer is being made quite properly by life insurance companies.

9.The judge then set out in detail other matters that had been placed before him in mitigation on behalf of the applicant, including all the matters personal to him. He also expressed himself, in colloquial terms, as being aware of the possible temptations provided by the commission structure offered by New York Life.

10.The judge then took a starting point of 30 months imprisonment but found that there was no mitigation available to the applicant to reduce that sentence.

11.This was a carefully structured, ongoing and substantial fraud in which the applicant played an active and vital role, even if it were not he who had conceived of the scheme. It is well established that commercial frauds will attract, other than in exceptional circumstances, an immediate custodial sentence, even for a first offender. Obviously the length of that sentence will be determined by reference to factors such as, but not exclusively, the nature of the fraud itself; the duration of the fraud; its sophistication; the role played by the convicted person; the effect it may have on the marketplace; whether there are cross-border or international implications; and the nature and extent of the risk to the victim's proprietary interests, as well as, albeit to a minimal extent, the extent of any loss actually sustained.

12.The sentence of 30 months imprisonment imposed by the judge was entirely appropriate for this offence and this offender. It was not, by any stretch of the imagination, manifestly excessive.

13.This was not a matter in which a Community Service Order sensibly could have been a sentencing option when the extent of the applicant’s involvement is considered, and when he has not shown the first sign of remorse.

14.I would dismiss the application.

Hon Tang VP:

15.The application for leave to appeal against sentence is dismissed.