HKSAR v. Alex Dann
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DCCC1292/2010 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CRIMINAL CASE NO. 1292 OF 2010 ----------------------
--------------------- Reasons for Sentence --------------------- 1.The defendant in this case has pleaded guilty to three charges of evasion of liability by deception, contrary to section 18B(1)(b) of the Theft Ordinance, Cap.210. 2.The particulars of the 1st charge are that on 25 May 2000, with intent to make default of an existing liability of Tontine Holdings Limited to make payment of HK$12 million in respect of a subscription by Legend Field Limited for 20 million G-Prop Holdings Limited warrants, dishonestly induced Legend Field to wait for payment by deception, namely, representing in a faxed letter from himself to Legend Field and dated 25 May 2000 that the funds had been placed with a bank in Portugal, that he had contacted the bank to arrange the return of the funds, and that he saw no reason why the funds would not be returned the following week. 3.The 2nd charge is a similar charge of evasion of liability by deception. The date is 30 May 2000, and it relates to representations by the defendant that he understood that arrangements had been made by the bank with a fiduciary to give the necessary instructions to the bank for the closure of the fiduciary’s account and then return the funds to the complainant. 4.The 3rd charge is dated 1 June 2000, again, an evasion of liability by deception, the false representation in this case being falsely representing in a faxed letter to Legend Field dated 1 June that the funds were being returned to Tontine the next week and he would ensure that Tontine would immediately remit the funds to Legend Field Limited. 5.The 4th charge, to which the defendant pleaded not guilty, was a charge of using a copy of a false instrument. The prosecution have indicated that they are prepared to offer no evidence on this charge and I dismissed that charge. 6.As regards the facts admitted by the defendant in this case, they state that the defendant is a 62-year-old Israeli-born UK resident who, at the time of the offences, resided in London. He also holds an Israeli passport and an Australian passport. 7.When he was admitted to bail, only the Australian passport was surrendered to the authorities. I note that the usual condition when bail is granted is that defendants are required to surrender travel documents. That is the standard clause stipulated in the bail notices in Hong Kong. 8.The defendant had known, through business, two Hong Kong residents, a Louis Lo and a Sam Zuchowski. Zuchowski was the chairman of a company called G-Prop Holdings Limited. It was a publicly listed company on the Hong Kong Stock Exchange. 9.The complainant in the case is Joseph Lau. Mr Lau is the chairman of Chinese Estates Holdings Limited and the brother of a Thomas Lau. Joseph Lau also knew Louis Lo through business. Lau had, through Louis Lo, met the defendant. 10.Sometime in January 2000 the publicly listed company, G-Prop Holdings Limited, sought to raise funds through the issuance of unlisted warrants. The date for the commencement of the placement of the warrants was 22 January and it was to close on 10 February 2000. 11.In that month, the defendant met with Sam Zuchowski in London, where he was asked to take part in the warrant issue and, in particular, identify potential investors in the city for the warrant issue. 12.The same month, the complainant Joseph Lau was told by his friend Louis Lo of the G-Prop warrant issue. He decided to participate in the issue and purchased warrants to the value of HK$12 million. The arrangements for the purchase were to be made through Dann in the United Kingdom. The complainant made it known to Dann that the arrangements for the purchase were to be carried out by his secretary called Carman Wong. 13.On 22 January 2000 the complainant Joseph Lau asked his secretary to purchase a BVI company which was to be used as the vehicle to acquire the warrants. She duly did so, acquiring a BVI company called Legend Field Limited. The beneficial owner of that company was Joseph Lau. 14.Some days later, the defendant contacted his secretary and obtained the details of Legend Field from her. The defendant told her to forward the sum of US$1,542,337.15 to a bank account in the name of Tontine Holdings Limited at the Westminster Bank, Jersey, via the Chase Manhattan Bank in New York. 15.Joseph Lau, who was not in Hong Kong at that time, was told of these instructions by his secretary. He instructed her to contact his brother, Thomas, and to request him to remit the funds required, and Carman Wong did as instructed. 16.On 1 February 2000 the defendant faxed to Carman Wong the remittance instructions, including details of the Tontine bank account at the National Westminster Bank in Jersey. That same day, Thomas Lau instructed his bank, Standard Chartered, to remit the funds requested to Tontine’s account with the National Westminster Bank. 17.On 2 February 2000 the sum of HK$12,003,238.87 was telegraphically transferred to Tontine’s account in the Jersey bank. 18.Sometime thereafter, Joseph Lau repaid his brother the funds he had sent on his behalf to Tontine’s account for the purchase of the warrants. 19.On or about 23 February 2000 the placement for the warrants was cancelled as there were insufficient buyers for the warrants. Joseph Lau then instructed his secretary, Carman Wong, to seek a return of the funds that he had paid to Tontine. 20.In the period late February to early March 2000, Carman Wong contacted Dann on a number of occasions, seeking a return of the funds. On some of the occasions, she spoke by telephone to the defendant. On each occasion, he sought to avoid the issue. 21.On 14 April 2000 Carman Wong sent to the defendant a fax requesting a return of the funds to Joseph Lau’s bank account in Hong Kong. The defendant also spoke to Carman Wong by telephone, saying that the warrant placement may be reinstated. 22.Further attempts were made by Carman Wong to contact the defendant, seeking a return of the funds. On each occasion, the defendant claimed he was busy with business meetings and was unable to speak to her. Count 1 23.On 25 May the defendant faxed a letter to Legend Field Limited in Hong Kong. It was received by Carman Wong. In the faxed letter, he set out the alleged history of the receipt of the funds and their whereabouts. 24.In the letter the defendant claimed that the funds had been pending receipt of a list of all subscribers for the placement for the full amount of the placement of US$3.5 million. 25.He claimed the funds had passed to control of a bank. He named the bank as the Caixa de Credito Agricola Mutuo de Oeiras CRI in Portugal as being the recipient of the funds. He claimed that he had attempted to contact his banker friend in Portugal without success as his friend’s father had died, accepted complete responsibility for the funds and accrued interest thereon and would ensure a return of the funds. 26.The defendant knew that these representations were false. Count 2 27.On 30 May 2000 the defendant again faxed a letter to Legend Field Limited. He stated in the letter that he had discussed the matter of the return of the funds with the chief officer of the Portuguese bank and arrangements were being made for the closure of the account and return of the funds. 28.The defendant knew that these representations were false. Count 3 29.On 1 June 2000 the defendant faxed a further letter to Legend. In that letter he asserted that the funds would be returned to Tontine “next week” and that he would ensure that Tontine would remit the funds to Legend. 30.He also enclosed a letter purportedly issued by the Portuguese bank. It was dated 1 June 2000. In the bank’s letter it was stated that payment would be made on the maturity of the deposit, 30 days from 8 May 2000. 31.Again, the defendant knew that the representations contained in both letters were false. 32.On 8 June 2000 Joseph Lau did not receive the funds owed to him. 33.On 12 June 2000 Joseph Lau telephoned the defendant about the matter. The defendant claimed to him that there was something wrong with the signatures of the Portuguese bank and he could not get back the money deposited there. He told Joseph Lau that once he received the funds, he would return them. 34.That same day, Joseph Lau instructed a firm of solicitors in the United Kingdom to seek the return of his funds. A civil action was duly commenced. 35.About the same time, the defendant spoke to Joseph Lau by telephone, requesting him not to take legal action, as he would repay the money. Arrest and cautioned statement of the defendant 36.On 6 December 2005 the defendant was apprehended at Hong Kong Airport as he was attempting to leave Hong Kong after visiting the territory. 37.He was questioned about the outstanding amount owed to Joseph Lau. He claimed to investigators that the case had been settled civilly and produced a copy of a document issued from the High Court of Justice in England. 38.That document provided was a consent order pursuant to which the defendant in the civil case, Tontine Holdings Limited and Monica Dann (the defendant’s wife), agreed to pay the sum of $1.8 million to the complainant in the case, the complainants being Legend Field and Joseph Lau. The payments were to be made periodically on set dates in the amount of $300,000 each. 39.This information was volunteered to the investigators prior to the defendant being arrested or cautioned. 40.The defendant also produced to investigators a copy of the letter from a legal firm, Richards Butler, in London, which had been written to the Commercial Crime Bureau. It advised them that the civil proceedings had taken place in the United Kingdom and that Dann had breached terms of the consent order. 41.That same day, the defendant was cautioned and interviewed. He declined to say anything. 42.Subsequently, the defendant was admitted to bail, one of the conditions being that he surrendered his travel documents. He did so, handing over an Australian passport to investigators. 43.On or about 7 February 2006 the defendant failed to answer his bail and absconded from Hong Kong. A warrant for his arrest was issued. It is not known how he left Hong Kong. Subsequent enquiries 44.Investigations continued into the matter and evidence was obtained from the Tontine Holdings’ bank account in Jersey. The Tontine account was controlled by the defendant’s former wife, Monica Dann. This showed that after receipt of the funds, certain amounts were paid out to Dann. 45.There were continuing withdrawal of monies from the account, the details of which are as follows:
46.The Portuguese authorities revealed that the Portuguese bank which the defendant claimed held Joseph Lau’s funds, had its banking licence revoked by court order in 1990. The loss of licence prevented the bank from engaging in any financial transactions. The revocation was confirmed by the Supreme Court of Justice in 1998, following upon which a liquidator was appointed. The arrest of the defendant 47.On 8 July 2009 the defendant was arrested by authorities in the United Kingdom. He has been in custody since that time, pending his extradition. 48.On 23 April 2010 an extradition hearing was held in the UK. Dann’s counsel sought to oppose the extradition to Hong Kong. 49.On 8 August 2010 the UK court ordered the defendant’s extradition to Hong Kong. 50.The defendant appealed against that extradition order. The appeal was listed to be heard on 2 November 2010, and on or about 1 November 2010, the defendant withdrew his appeal against extradition. 51.On 24 November 2010 he was escorted back to Hong Kong by officers of the Commercial Crime Bureau, arriving on 25 November 2010.The outstanding amount 52.The sum of HK$12 million is still outstanding. 53.The defendant has a clear record. 54.The defendant is aged 62 and was born in Israel. He moved to Melbourne in Australia in 1956 with his parents and older sister. 55.He received tertiary education and obtained a diploma in business studies. He then worked as a stockbroker in Melbourne until the market collapsed when he was aged 26. 56.He then moved to South Africa and to Rhodesia where he met his wife. In 1979 they moved from Africa to England and settled in London. He initially worked as a stockbroker, but later set up his own business as a highly successful investment consultant. 57.In 1995 Tontine was incorporated as a BVI trust company. 58.From 1990 to 2000, the defendant enjoyed a good lifestyle, lived in a farmhouse in Sussex and was able to privately educate his two sons. 59.I am told that he and his wife are now divorced, although their relationship remains cordial. His elder son is a barrister in London and his younger son is at Bristol University. 60.Counsel emphasised that when the defendant received the monies in this case, it was for genuine investment reasons. The G-Prop Holdings Limited warrants proposal was a legitimate project. It was after the defendant had received the money from the victim that the major subscribers pulled out and the warrants deal fell away. 61.The defendant accepts the money ought to have been refunded and instead he used the money as his own. He retained the money legitimately procured and failed to repay it. 62.The complainant in this case issued civil proceedings against the defendant in London, and in February 2002 these were stayed by consent on condition that the defendant repay the money he received at the rate of $300,000 per month. Clause 6 of the consent order stipulated that the claimants would notify the Hong Kong police that the matter had been amicably settled. 63.I am told that the defendant fully intended to discharge those obligations but his financial situation deteriorated because of the collapse of the dot-com and other markets. 64.The victim then took steps in 2003 to have the defendant made bankrupt and wind up Tontine. Legend Field was the sole petitioner for the bankruptcy and the winding up. At about that time, the defendant’s wife divorced him. 65.In late 2005 the defendant came to Hong Kong for personal reasons. He had been advised that the bankruptcy had expunged the debt. He was arrested by the police and granted conditional bail, one of the conditions being that he was not to leave Hong Kong. 66.At that time, his mother, who was in her 80s, was seriously ill with cancer and died in January 2006. The defendant tried in vain to vary the conditions of his bail to facilitate a visit to his mother before she died. 67.Counsel said that after his mother died, the defendant went to pieces and stupidly decided to abscond. He returned to England where he worked for the following three years at addresses known to the authorities. He was arrested in July 2009, pursuant to a provisional warrant, and has been kept in custody since. 68.The defendant appealed against the judge’s order to extradite him only in relation to Charge 4, on the basis that dual criminality had not been established. 69.Further evidence in relation to that matter was served upon the defendant in late October 2010 and the defendant then withdrew his appeal. His challenge to the extradition process was confined to objections regarding the fourth charge and the prosecution have now offered no evidence in respect of that charge. 70.The defendant has managed to accumulate HK$250,000 from friends and relatives, and offers that by way of compensation or contribution to the cost of the case. 71.As counsel for the defendant has rightly acknowledged, the offences to which the defendant has pleaded guilty are very serious. 72.They involve a considerable amount of money, none of which has been recovered, and involve a gross breach of trust on the part of the defendant. 73.The defendant was arrested in Hong Kong and absconded. The prosecuting authorities in Hong Kong have incurred much time and considerable expense in securing the defendant’s extradition from England. 74.The Court of Appeal, in considering the appropriate sentences for cases of theft involving breaches of trust, provided guidelines which state that for amounts involving 3 to 15 million Hong Kong dollars, the appropriate sentence is between 5 and 9 years, HKSAR v Cheung Mee Kiu [2006] 4 HKLRD 776. 75.I bore in mind that in this case, there was nothing dishonest about the defendant’s original receipt of the money. He started to use the money as his own when his financial situation deteriorated. 76.I reminded myself that the defendant had spent time in custody in England awaiting extradition. The defendant was arrested on 8 July 2009 and extradited on 24 November 2010, a period of 16½ months for which the defendant will receive no reduction in sentence from the prison authorities. 77.I also bore in mind that the defendant did abscond from Hong Kong. 78.Having considered all the circumstances and taking into account his contribution of HK$250,000 towards compensation or cost, I take the view that a starting point of 6 years’ imprisonment is appropriate for the offences to which the defendant has pleaded guilty. 79.He is entitled to a discount to reflect his guilty plea, but bearing in mind that he absconded from the jurisdiction, the appropriate discount in this case is 25 per cent rather than the usual one-third. 80.I considered the length of time already spent in custody in England. 81.I bear in mind that his absconsion from Hong Kong and his abandonment of his appeal against extradition in November 2010 and the circumstances surrounding his taking of that decision. 82.As an act of mercy, I have decided to reduce the sentence by 6 months, which was the period between the initial extradition hearing and the date of his actual extradition to Hong Kong. 83.The defendant will therefore go to prison for a period of 4 years on each charge, the sentences to run concurrently. 84.Charge 4 will be dismissed. 85.I order that the amount of $250,000 be paid to the victim.
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Cases cited in this judgment