HKSAR v. Li Tianbao and Another

DCCC 855/2011

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 855 OF 2011

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REASONS FOR SENTENCE

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1.Both defendants were convicted after trial of one joint charge of common law conspiracy to defraud and one joint charge of using false instruments.

2.The victim in the present case is a mainlander businessman, Liu Qiang, who wanted a business loan for one of his company’s projects in the Mainland. He attended certain finance talks held in Hong Kong and came to know a person called Wei Bing who introduced D1 to him.

3.The three men soon entered into a contract whereby D1 agreed to deposit one billion US dollars into the victim’s bank account so that the victim could put the money up as collateral for a loan (72 % of the collateral) from a bank, for which D1 would be paid a fee of $8.5 million HK dollars by the victim- a 2.5 million Reminbi up front and to be followed by the balance of 5.5 million HK dollars upon the deposit of the one billion dollars.

4.On 8 May 2011, the victim paid D1 2.5 million RMB through inter-bank transfer in the mainland, and afterwards D1 showed the victim some bank documents indicating that there was a balance of one billion US dollars in the victim’s HSBC account in Hong Kong.

5.On 18 May 2011, the three men traveled to Hong Kong from the Mainland to visit the HSBC main branch in Central for the purpose of confirming the one billion deposit. At the offices of HSBC, D2, who was impersonating a HSBC staff member by wearing a forged HSBC staff card with his photo on it, met up with D1 who then passed the victim’s passport to D2, D2 left and later returned with a brown envelope containing a forged HSBC bank statement of the victim’s account. The victim was shown the document indicating that he had a billion US dollars in his account.

6.During this time, the victim noticed D2 acting nervously and something different about the card worn by D2 from those HSBC staff working there, when D2 turned around trying to leave, the victim grabbed D2’s arm preventing him from leaving. The ensuing commotion alerted the security guards of the bank. A report was made to the police. D1, D2 and Wei Bing (who was waiting downstairs) were arrested.

7.The defendants together with persons unknown executed the fraudulent scheme described above and successfully swindled the victim out of 2.5 million RMB. In order to obtain the balance of 5.5 million as stipulated in the contract, both D1 and D2 staged a show at the offices of HSBC using a forged HSBC staff card and a forged bank statement in the name of the victim, which formed the subject matter of the charge of using false instruments, trying to deceive the victim into believing that the money had been transferred to his account so that he should pay D1 a further sum of 5.5 million.

8.Both defendants are persons of previous good character; D1 aged 50 while D2 is in his late 50s.

9.In mitigation, apart from briefly describing his background, his service in the army and later becoming a businessman, there really isn’t much put forward by way of mitigation for D1.

10.Insofar as D2 is concerned, the court was told that he had his own trading company albeit not a very successful one but he had been working very hard all his life supporting himself and the family. Counsel submitted that he used to live a proper and decent life until he got himself into this matter.

11.Counsel said that D2 did this out of foolishness and obviously he was not good at the job for the scheme went well until D2 appeared.

12.Counsel stressed that D2 played a relatively minor role in the scheme; he had not made any representations; he came into the scene at a rather late stage; he could not be described as the brains behind the scheme.

13.This is a rather sophisticated fraud involving different jurisdictions, Hong Kong and the Mainland, the preparation of various false documents, the use of the forged HSBC staff card to stage a show etc. all this must have been carefully planned well in advance.

14.I disagree with counsel for D2 when he said D2 only played a minor role in the scheme. The part that D2 played, i.e. a bogus HSBC staff member, formed the very essential part of the scheme; if successful, the defendants could have vanished with 5.5 million! Bearing in mind, this is no small sum of money.

15.Counsel for D2 also said D2 involved himself in the scheme at a relatively late stage. Though the evidence only shows he came into the picture on 18 May, I do not think that the forged HSBC staff card was made in that morning. It takes time to forge document like that, and they need his photo for it. The reasonable inference to be draw is that he joined the conspiracy sometime before 18 May.

16.In terms of culpability, I do not think that there is any real difference between the two defendants- their roles are equally crucial.

17.There are no tariffs for the offence of conspiracy to defraud, but in Ng Kwok Wing 『2008』4 HKLRD 1017 which is a case involving breach of trust, the Court of Appeal made a logical adjustment to the ranges of sentence laid down in Cheung Mee Kiu『2006』4 HKLRD 776 whereby the amounts of money cheated between 1 to 3 million, the range of sentence is 3 to 5 years.

18.Strictly speaking, the present case does not involve breach of trust, the defendants practiced a fraud on the victim trying to swindle him out of his money. However, in Ng Siu Ling CACC 160/2011 which is a fraud case, the appellant was found guilty after trial, in one of the charges involving slightly over 1.8 million, she was given a 4-year term for that. On appeal, her appeal against sentence was dismissed. 

19.In the present case, the victim has lost 2.5 million RMB (equivalent to 3 million HK dollars). There is nothing from the defence to indicate that the victim would be compensated in any way. 

20.I think fraud has become one of the constants of life and it takes myriad forms. While there are ever-increasing methods of fraud, there’s one born every minute. To reduce fraud, in my view, stiffer penalties for the fraudsters.

21.For the reasons given above, taking into account all the mitigation put forward, for each defendant, I take 5 years as starting point for the offence of conspiracy, while for the false instrument count, 2 years.

22.D1 is a mainlander, and the evidence shows that he only spent a brief period of time in Hong Kong; accordingly his clear record does not carry much weight as mitigating factor. 

23.D2, a Hong Kong resident, over the past 50 years or so has not been making any trouble to our society, this is something the court would recognize in sentencing, and for this matter I reduce each term by 2 months. The term for charge 1 then becomes 4 years 10 months, and for charge 2 one year 10 months.

24.Obviously the use of the false instruments was part of the scheme of the defendants to cheat the victim, I therefore order that the two terms to run concurrently with each other.

25.In D1’s case, the total term is one of 5 years and for D2, 4 years 10 months.    

Please refer to CACC89/2012 for the relevant appeal(s) to the Court of Appeal.