HKSAR v. Tsang Yau Ming

DCCC385/2010

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 385 OF 2010

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Reasons for Sentence

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1.Tsang Yau-ming, you have been convicted by this court after trial of two counts of fraud, contrary to section 16A of the Theft Ordinance. Each fraud was perpetrated by you over a period of approximately four and a half years between February or March 2004 and 31 August 2008. During the period covered by the fraud you occupied a responsible position within the credit control department of ORIX Asia Limited, a local restricted licence bank, the business of which included making mortgage and other loans to its clients.

2.Very shortly after the start of the period covered by the charges, your position was that of senior associate officer.  In October 2006, you were promoted to the position of assistant manager.  Your department, the credit control department of the bank, was responsible for dealing with clients who had defaulted or were overdue on instalments under their loan agreements or were in bankruptcy liquidation or individual voluntary arrangements.  You were the officer within the credit control department who had responsibility for handling defaulting mortgage loans.

3.I do not propose to repeat again the details of how payments made by or on behalf of defaulting clients were handled by ORIX but, essentially, your position put you in a position in certain circumstances when cheques were received from defaulting clients or from those acting on their behalf to instruct the accounts department of your bank to which loan accounts the proceeds of those cheques should be credited.  You did this by means of booking instructions directed to the accounts department.

4.It is clear that, starting in 2004, you decided to abuse this power to your own benefit.  This involved abusing the trust that the bank had placed in you by dishonestly instructing the accounts department of the bank to credit the proceeds of cheques which had been paid by or on behalf of a particular client to the loan account of a client handled by you who had not made those payments.  Over the course of the years, you caused the proceeds of 28 cheques totalling $693,819.76 to be misdirected in this way. 

5.In order to realise the proceeds of these cheques for your own benefit, you practised a fraud on a client to whose account you had misdirected the payments, Madam Ho Mei-ling.  You realised that she was financial difficulty and having difficulty in paying the monthly instalments due on her mortgage on time.  In the course of telephone conversations with her, you befriended her, and despite her initial reluctance, you first persuaded her to allow you to pay two monthly instalments, in respect of which she was overdue, on her behalf.  You claimed to her that this was because you had extra money in the form of savings which you were prepared to lend her and she could then repay you by means of post-dated cheques in sums she could comfortably manage to afford.

6.Some time later, you managed to persuade her to allow you to pay her monthly mortgage instalments on her behalf as they fell due on a continuing basis.  You pretended that you were able to do this from your own money.  The agreement you reached with her was that she would then draw cheques in sums she could afford to repay what she believed were loans from you.

7.Towards the end of 2003 and the beginning of 2004, you found yourself in a position to misdirect a particularly substantial cheque to ORIX drawn by the Hong Kong Housing Society in the sum of $285,229.04. You set about persuading her in the face of her obvious reluctance to partially repay the principal on her mortgage loan on the pretence that it was your money.  Eventually, she agreed and you credited that cheque together with two other misdirected cheques and a cheque for $473.85 drawn by her, which you claimed to be needed for accountancy purposes and bank charges, to her account.

8.From March 2004 until August 2008, she paid you a total of $335,069.15 by means of 86 cheques and one bank transfer, believing that she was refunding you your own money which you had paid to the bank on her behalf.  In reality, what she believed were loans from you were the proceeds of cheques you had wrongfully credited to her account. 

9.It is apparent from these circumstances that these offences represented a scheme of fraud involving, so far as Charge 4 is concerned, serious abuse of trust by you towards your employer, ORIX Asia Limited.  It continued for four and a half years until it was detected.  It was a scheme that affected not merely the interests of ORIX but also Madam Ho and the several debtors of ORIX, the proceeds of whose cheques were misdirected.

10.Since the frauds were discovered, the payments credited to Madam Ho’s account have been reversed and credited to the correct accounts.  Those representing ORIX have agreed with Madam Ho that they would treat the $335,069.15 she paid to you as payments made to them under her mortgage loan agreement.  They have also agreed to forego any overdue interest that would otherwise have been payable by Madam Ho during the period of the fraud.  That interest amounts to $34,341.32.  Currently, the total loss to ORIX is $369,410.47.  ORIX has obtained judgment against you in the High Court in a sum which includes this figure.  Whether and to what extent ORIX will be able to recover this sum is uncertain.  You were made the subject of the bankruptcy order in May last year.

11.In deciding the appropriate starting point in this case, I have borne in mind the principles laid down by the English Court of Appeal in the case of Clark and what was said by the Court of Appeal in Hong Kong in HKSAR v Cheung Mee Kiu.  I have taken into account the fact that you are a family man of 39, of previous good character, who through your own efforts had achieved a position of responsibility within the bank.  I bear in mind that the effect of your conviction is to ruin the prospects of a future career in banking.  This sort of background is, however, not uncommon among those who commit the criminal offence of breach of trust. 

12.I have also taken into account that significant parts of the prosecution case or prosecution evidence was agreed by you and that you yourself did not give evidence.

13.Taking all the circumstances into account, I am satisfied that the appropriate starting point on each charge is 2 and a half years’ imprisonment, and that there should be an overall starting point of 3 years’ imprisonment.  I do not find any circumstances warranting any discount from the starting points to which I have referred.  There has been no indication of any remorse on your part.

14.I pass sentence as follows.  On Charge 3: 2 and a half years’ imprisonment; on Charge 4, 2 and a half years’ imprisonment, 6 months of which are to run consecutively to the sentence on Charge 3.  So that means a total sentence of 3 years.