HKSAR v. Wong Kam Fai

DCCC 687/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 687 OF 2012

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REASONS FOR SENTENCE

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1.The defendant pleads guilty to two charges of conspiracy to defraud, contrary to Common Law and punishable under section 159C (6) of the Crimes Ordinance, Chapter 200.

2.The charges concern the fraudulent obtaining of two mortgage loans, both in the sum of $5.5 million, from the Industrial and Commercial Bank of China (Asia) Limited.  In summary between January 2005 and May 2006 Kevin Kong (“Kong”), a solicitor, masterminded a scheme to apply for the mortgage loans.  Kong claimed to act on behalf of the registered owners of Flats 40D and 41D of Block 2, Le Sommet, No. 28 Fortress Hill Road in North Point, when in fact the genuine owners knew nothing about these applications.

3.Forged documents would first be submitted to the bank, including copy forged identity cards, bank statements and tax returns.  Kong then arranged for a femaleto impersonate Ting Lee, the true owner of  Flat 40D and Liu Wai-chun to impersonate Louisa Ng, the true owner of Flat 41D, for the purpose of being interviewed by the bank. 

4.The bank however did not approve Kong’s firm to handle the mortgage applications, which were referred to Messrs D.S. Cheung & Co.  Kong’s firm submitted to Messrs D.S. Cheung & Co a number of forged documents in respect of each property, including forged Sale and Purchase Agreements; forged Assignments and copy forged identity cards.

5.In respect of the mortgage loan for Flat 40D Kong arranged for the same femaleto again impersonate the true owner when attending the offices of Messrs D.S. Cheung & Co. 

6.The mortgage loans were approved by the bank on the  12th March and the 12th May 2006.  The bank remitted the loan amounts to the account of Messrs D.S. Cheung & Co.  Kong’s firm sent written confirmation purporting to be signed by the “owners” of the properties authorising payment of the mortgage loan to Add Magic Investment Limited (“Add Magic”), whose account Ng Tsz-wai, Jeans (“Jeans Ng”) was the only authorized signatory. 

7.The role of the defendant in respect of the mortgage loan for    Flat 40D was to impersonate the younger brother of Ting Lee (“Philip Ting”) when accompanying the female impersonating Ting Lee when she was interviewed by the bank and when attending the offices of  Messrs D.S. Cheung & Co.  Similarly the defendant, again impersonating the younger brother of Ting Lee, accompanied Liu Wai-chun, who impersonated the true owner of Flat 41D, when he was interviewed by the bank. 

8.After the loan amount for Flat 40D was credited to the account of Add Magic $5.35 million in cash was withdrawn by Jeans Ng, which was all handed to the defendant.  Similarly after the loan amount for Flat 41D was credited to the account of Add Magic $5.25 million in cash was withdrawn by Jeans Ng, which was again all handed to the defendant. 

9.The defendant was arrested in June 2012 when he admitted deceiving the bank in respect of the two mortgage applications, for which he received a total reward of $800,000.  When interviewed on video the defendant explained his main role in the mortgage loan for Flat 40D was to accompany the female impersonating Ting Lee and to answer any questions relating to the mortgage application.   

10.In respect of Flat 41D the defendant told the police he could not recall his role. In court Mr Cheng says the defendant’s role was the same as Flat 40D.  From the appeal judgment in Kong’s case it can be seen that the owner of Flat 40D was to be the co-borrower of Flat 41D, providing the reason why their attendance was necessary (see paragraph 21 of the judgment in HKSAR v Kong Hon-yui, Kevin CACC 473/2009).

11.In passing sentence I take into account everything said on behalf of the defendant by Mr Cheng, including the defendant has only one minor conviction in 1986 for attempted theft when he was bound over.

Sentence of other conspirators

12.I have been provided with a very helpful table prepared by the prosecution setting out details of all other suspects arrested.  I have also read the appeal judgment in HKSAR v Kong Hon-yui, Kevin      CACC 473/2009, which details the roles of the various parties to the fraud.

13.A total of 10 suspects, including the defendant, have been arrested.  Four suspects have been convicted and sentenced to various imprisonment terms, namely Kong, Liu Wai-chun, Jeans Ng, and Cheung Chi-fai. 

14.Kong was convicted after trial and sentenced to a total of 6 years imprisonment for conspiracy to defraud and conspiracy to deal with property known or believed to represent proceeds of an indictable offence.  I note on appeal against sentence the Court of Appeal expressed the view the sentence was lenient (see paragraph 134). 

15.Liu Wai-chun, who impersonated the owner of Flat 41D, pleaded guilty to conspiracy to defraud and attempting to procure an entry in a bank by deception, which charge relates to a third mortgage fraud.  Starting points of 4 years were taken on each charge resulting in sentences of 32 months imprisonment.  12 months of the sentence for the attempt charge was made consecutive to the conspiracy making a total sentence of 44 months imprisonment.  This means an overall starting point for the two frauds was 5 years and 6 months.

16.Jeans Ng pleaded guilty to a single charge of money laundering and was sentenced to 42 months imprisonment, after a one-third discount from a starting point of 63 months.  This was subsequently reduced on appeal on account of Ng giving evidence in the trials of Kong and Cheung Chi-fai (see CACC 265/2007).

17.Cheung Chi-fai was convicted after trial of aiding and abetting money laundering and sentenced to 65 months imprisonment.  Cheung is not specifically named in either of the charges to which the defendant has pleaded guilty, however, reference to his role can be found in paragraphs 31 and 32 of the judgment in HKSAR v Kong Hon-yui, Kevin. 

18.This was a very serious fraud on the bank.  Although not the mastermind behind the fraud, the defendant was clearly a key party to the fraud accompanying the purported owners when attending interviews with the bank and solicitors, no doubt to ensure everything went smoothly.  The defendant was also trusted to collect all the monies after Jeans Ng withdrew them from the bank.  The reward he received was substantial, in particular compared with Jeans Ng and Liu Wai-chun, who each received about $50,000 (see HKSAR v Kong Hon-yui, Kevin, paragraphs 31, 35, 36, and 43).

19.Mr Cheng accepts it is a difficult task to compare the roles of the various conspirators.  Each played different roles essential to carrying out the fraud.  If one was to look at the reward, clearly the reward received by the defendant was more substantial than that received by Jeans Ng and Liu Wai-chun but half that said to be received by Kong (see HKSAR v Kong Hon-yui, Kevin, paragraph 124). 

20.On the other hand as pointed out by Mr Cheng, Liu Wai-chun was described as a career criminal and Jeans Ng was a drug addict with a criminal record for dishonesty. The defendant as noted earlier has only one minor conviction over 25 years ago when he was 20.

21.In my view the defendant not being shown to be the mastermind little difference should be drawn between the different roles in the fraud and that a sentence, certainly no less than the total sentence imposed on Liu Wai-chun, Jeans Ng, and Cheung Chi-fai, is appropriate.

22.Taking into account the amount obtained was $11 million; the role of the defendant; the reward for the defendant was substantial namely HK400, 000 for each mortgage loan; and that the defendant has not been before the court since 1986, I am satisfied the proper starting point after trial on each charge is one of 5 years imprisonment.  

Surrender

23.The defendant left Hong Kong for the Mainland on the 4th July 2006, less than 2 months after the second mortgage loan had been received by the defendant from Jeans Ng.  No doubt one of the reasons he left was to avoid arrest in the event of a report being made to the police.  The defendant only returned to Hong Kong on the 4th June this year, almost 6 years later.

24.The defendant was arrested at the border.  The defendant told the police he returned to Hong Kong to clear the case and serve his imprisonment (see paragraph 28 of the admitted facts).  Mr Cheng submits by reason of surrendering the defendant is therefore entitled to a discount greater than one-third (see Mr Cheng’s written further submission).

25.The courts have said surrender to authorities is to be encouraged.  In HKSAR v Chow Tak-fuk CACC 428/2004 the defendant absconded to the Mainland for some 12 years when he returned to Hong Kong and was intercepted by the police at the border.  The Court of Appeal in upholding a discount of only 25% on a plea of guilty said:

“Whilst the courts must always encourage persons to surrender, so that some credit for that fact will normally be given, those who might be minded to flee should not be led to believe that if ultimately they return they will be in no worse position than had they not fled in the first place.”

26.In the present case when the defendant left for the Mainland he was not a wanted person.  This occurred a few days later on the 10th July 2006 when other culprits, who implicated the defendant, were arrested.   Mr Cheng submits the courts have drawn a distinction between suspects who surrender having absconded whilst on bail and those who surrender where no arrest has been made (see paragraph 4 of the further submission). 

27.I have carefully considered the cases submitted by Mr Cheng.    In addition I would mention three cases.  In HKSAR v Lam Kam-tou [2006] 4 HKLRD 103 the Court of Appeal, following R v Lam Kuen [1997] 4 HKC 429 (a case cited by Mr Cheng), said where a defendant left Hong Kong after committing offences but subsequently returned to Hong Kong and surrendered himself to the police these two factors cancelled each other out and therefore the defendant should be given the usual one-third discount. 

28.In HKSAR v Yuen Kwok-kee CACC 336/2005 the defendant having left for Australia before his crimes came to light returned to Hong Kong and surrendered to the police 7 years later.  The Court of Appeal upholding a discount of one-third said further discount was an exception rather than the rule.  Citing both R v Lam Kuen and HKSAR v Chow Tak-fuk the court said the wrong signal must not be sent out to encourage one to flee the jurisdiction after committing serious offences by giving further discount.

29.In HKSAR v Sun Yu-hing CACC 398/2010 the defendant left for the Mainland almost immediately after committing a robbery and was only arrested about two years later when he returned from the Mainland.  The Court of Appeal adopted the approach in HKSAR v Chow Tak-fuk in upholding a discount of 20%.

30.Whether a higher or lesser discount is appropriate is contextual and will depend very much on the individual circumstances.  Shortly after leaving Hong Kong suspects were arrested.  The defendant surely knew if he was then to return to Hong Kong he would be arrested.  Instead he waited six years before returning to Hong Kong during which time a number of trials have taken place.

31.In considering the appropriate discount to be given I take into account that at no time has a request been made to the Mainland authorities to arrest the defendant.  I also take into account that in two trials suspects have been acquitted, nevertheless, the defendant, when returning to Hong Kong, knowing he would be arrested, fully admitted his involvement and has pleaded guilty thereby ultimately saving court time. 

32.In all the circumstances I take the approach adopted in R v Lam Kuen and HKSAR v Lam Kam-tou that these matters cancel out the fact the defendant left the jurisdiction for almost 6 years and give the defendant the full one-third discount for his pleas of guilty, which reduces the sentence on each charge to 3 years and 4 months. 

33.Whilst this was an ongoing criminal enterprise sentence must reflect the bank was twice defrauded of substantial sums.  I am satisfied a total sentence of 3 years and 8 months imprisonment after plea is appropriate and properly reflects the defendant’s criminal culpability on the two charges.

34.The defendant is convicted and sentenced as follows:

Charge 1 – 3 years and 4 months imprisonment; and

Charge 2 – 3 years and 4 months imprisonment; 4 months consecutive and 3 years concurrent to charge 1