HKSAR v. Chong Ka Hai, Keefe and Others

DCCC1148/2011

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 1148 OF 2011

----------------------

---------------------

Reasons for Sentence

---------------------

1.D1 and D2, you were convicted after trial of two charges of joint fraud, contrary to section 16A of the Theft Ordinance, Cap. 210. Additionally, D1, you were convicted of two offences of evasion of a liability be deception, each contrary to Section 18B(1)(b) of that same ordinance.

2.D3, you were convicted of a single offence of dealing with property known or believed to represent the proceeds of an indictable offence, contrary to sections 25(1) and (3) of the Organised and Serious Crimes Ordinance, Cap. 455.  The fact of the cases have been dealt with exhaustively in my verdict and I do not intend to repeat them, save to say that the first two charges relate to a fraudulent course of conduct, as detailed in the evidence, to harvest a figure which the prosecution puts at just under $10 million, but as the evidence fell it became increasingly clear, for the reasons I shall explain later, that the exact figure cannot and was not determined and most probably was somewhat less. 

3.Charges 3 and 4 respectively relate to two cheques for 28,000 and 30,000 issued to PW2 purportedly to settle debts, but in fact were drawn on an bank account closed some seven years previously.  When PW2 finally tried to deposit those cheques they were, of course, dishonoured. 

4.Charge 5 against you, D3, is one of laundering a sum of money which is $2,830,000 obtained by fraud from PW2.  This, with your permission, was put through your bank account, and it was moved thereafter very quickly indeed after deposit.

5.D1, you had one conviction for a dissimilar matter which was in fact a subsequent conviction to the present charges.  D2 and D3, you are, of course, of hitherto clear record.  On your behalf, D1, Mr Chui, entered mitigation.  He told me that you are 43 years of age.  You were divorced in 2008 and you are the father of two sons.  You come from what he described as a rich family in which relationships were harmonious in your formative years.  You related particularly well to your grandmother. 

6.You went to secondary school in the UK, returning to Hong Kong in 1997.  Here you entered into a relationship with PW1, and it seems in the evidence that at one stage it was your intention to marry.  Some time after that relationship ended your grandmother died and you inherited money which you invested in the stock market.  However, Mr Chui says this was all lost. 

7.Chui pointed out that you had not benefited greatly from this fraud.  On a personal level you suffered from gout and have been on medication for ten years, and your mobility is thereby impaired.  At one stage you had worked as an insurance agent for AIA.  Mr Chui said it was sad to see a man from such a family so broke and involved in these offences. He said that he had explained the seriousness of these offences to you and you understood that imprisonment was a must.  You hoped for leniency.  He said that your previous conviction was not similar and it resulted in a community service order. 

8.Mr Cheng entered mitigation on behalf of D2 and D3.  He said that you both agreed with your antecedent statements.  He dealt first with you, D2.  This showed you to be 43 and residing with your girlfriend.  You were educated to Form 5 in Hong Kong and 6th Form in the United Kingdom.  In 1991 you came back and worked mainly in the financial field.  Very fairly he said there was nothing of real significance in your past. 

9.And you, D3, he said you are 44, Hong Kong born and educated initially.  You completed your education in the United Kingdom, returning to Hong Kong in 1988 to work.  You are a single man.  There is nothing of significance in your past also. 

10.Turning to the offences, Mr Cheng said the most important factor of the charges was the amounts.  For you, D3, the amount was clear, but other factors applied.  For you, D2, the approximate amount of which you were convicted was in total 5 million on each charge.  I had made it clear that I was unsure as to the exact amount.  The alleged amount provided by the prosecution was thereby just under 10 million.

11.I accept Mr Cheng’s proposition that it is very difficult to establish the actual amount.  PW2 accepted in court that she had received some moneys from both defendants.  She conceded that she was unsure how much had been paid back.  In cross-examination of PW1 and PW2 it became clear that the amounts in Exhibits D4 and D5 had been repaid to the two prosecution witnesses respectively.  Thus, it seemed that PW1 accepted that an aggregate of $700,000 had been returned, Exhibit D4, and PW2 $1.1 million, Exhibit D5.   

12.The whole accounting exercise was very complicated.  This is because of the passage of time, the amounts involved and the complicated nature of the transactions.  Mr Cheng also pointed out there was no record in any account of the payment of $44,000 to PW2 which arose from her investment of $2 million in October to November 2007.  She had said that the 2 million had been returned, but a profit of $44,000 could not be traced. Also the amount of $1.3 million investment which started the 5 million investment could not be distinguished.  This could not be found in any of the banker’s affidavits, being P50 to P64.  I did however accept, as I said in my verdict, that this amount had indeed been paid.  PW2 did explain that some documentation and receipts and accounts were actually held in China, in the mainland.

13.I was also referred to the aide-memoire provided by the prosecution.  Mr Cheng’s submission was therefore as the amount defrauded was that I should give you, D2, the maximum benefit of the doubt, and therefore maximum leniency as to the quantum.  He then referred me to two authorities which were extremely helpful.  In respect of the frauds, HKSAR v Cheung Mee Kiu, CACC99/2006.  He submitted this placed the range for this level of fraud at point B being 3 to 15 million, and giving a range of 5 to 9 years.  He asked me again to give you the benefit of the difficulty in working out how much actually had been defrauded. 

14.He then referred me to HKSAR v Leung Yuen Nan & Anor, CACC 1300/2010.  He submitted the review of like cases suggested for you, D3, with 2.83 million laundered at 3½ to 4 years.  Again he ended by suggesting as to quantum you should receive the maximum benefit of any doubts.

15.I turn now to the sentence.  D1, you are convicted, as I said, of two offences of fraud and two offences of evading liability by deception.  Whilst the frauds are of substantial amount the charges referring to $4,688,420 for PW1 and $5,691,860 for PW2.  As I have said before, I did convict on an approximate figure.  I fully accept that the evidence established it to be impossible to go to the exact figure and sums have been returned to both prosecution witnesses.  However, I can’t be sure and I am sure that it was a substantial amount being several million dollars.

16.At the time of the commission of the offences, in fact all of you were of clear record.  In mitigation Mr Chui, on behalf of you, D1, seemed to acknowledge the fraud.  So there were, in fact, elements of late remorse.  However, you had maintained your plea of not guilty throughout so you are not entitled to any discount on that ground.   

17.D2, you are a man of clear record.  You are convicted on Charges 1 and 2, which I have already indicated was the fraud of certainly several million dollars.  I have some problem with the exact quantum.  As Mr Cheng pointed out, there is nothing significant in your past or present circumstances.  In respect of both you D1 and D2, I do say that those frauds were deliberate, well executed and cynical.  You took advantage of relationships that you had carefully cultivated in order to facilitate your lifestyles. 

18.The question of sentence, I do take with you that both you D1 and D2, having been established in working together, should be equally responsible for the scheme.  I can see no reason to differentiate between your sentences.  I accept and acknowledge the application of the authority referred to HKSAR v Cheung Mee Kiu as to the present circumstances. 

19.Indeed, D1, you were, of course, convicted of two extra offences.  Whilst those are not quite as serious they were still premeditated and calculated to deceive PW2 into believing she has been repaid for goods and services she had provided.  You knew full well that the cheques you were providing were worthless. 

20.D3, you are convicted on Charge 5.  That is an offence of money laundering of $2.83 million.  I noted that you are of hitherto clear record.  Whilst there is no evidence of you being a part of the main fraud practice on PW1 and PW2, clearly your part was crucial in receiving and moving and thereby laundering the proceeds of part of the fraud.  The question of quantum does not arise here.  It is not problematic.  In your favour it is clear there is no international dimension to this crime and it is simple and unsophisticated for your part.  Clearly you acted under the direction and orders of D1 or D2, but most likely D2.  again I accept the sentencing authority provided of HKSAR v Leung Yuen Nan & Anor.  It is relevant, applicable and of assistance. 

21.Taking all factors into account the following sentences will be imposed. 

22.D1, on the 1st and 2nd charges you will go to prison for 5 years on each.  These will be served concurrently.  On Charges 3 and 5 you will go to prison for 2 months on each.  These will be concurrent to each other but consecutive to the 5 years, making the total imprisonment in your case 5 years and 2 months applying the principles of totality.

23.D2, you will go to prison for 5 years on each of the two charges concurrently, a total of 5 years' imprisonment.

24.D3, taking into account what I said regarding the money laundering that you indulged in, you will go to prison for 3½ years.