HKSAR v. Leung Chung Kwong

DCCC 376/2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 376 OF 2013

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REASONS FOR SENTENCE

The defendant pleaded guilty to 3 charges of "Theft". He has stolen a total of $6.78 million from his employer over a period of 13 months.

Summary of Facts

Background

2.Followide Company Limited ("Followide") was set up by Mr. CHOI (PW1) and Madam LAU (PW2).  It engages in jewellery trading.

3.Followide held accounts with different banks, including Bank of China ("BOC"), Standard Chartered Bank ("SCB") and Chong Hing Bank ("CHB").

4.The defendant was employed by Followide as an accountant since 1998.  He resigned in May 2011.  When PW2 took up his post, she discovered that the defendant has stolen a total sum of $6,782.926.77 from the company.

Charges 1& 2

5.Between 12 April and 30 August 2010, the defendant presented a total of 18 bearer cheques, which amounted to an aggregate sum of $1,024,863.72, for PW1 to sign.  He disguised those cheques as payments to suppliers or rental payments.  PW1 signed them without verifying the cheques and invoices.  The defendant deliberately made the cheques "bearer" by not "crossing" them.  As a result, after PW1 had signed them, the defendant added his name and personal bank account number at the back of the cheques.  He then either cashed or deposited them into his own bank account, without PW1's consent.  The sums of those cheques were drawn from Followide's SCB account (No.003-251-0-009809-7).  This is Charge 1.

6.Applying the same modus operandi, between 22 October 2010 and 3 May 2011, the defendant presented a total of 35 bearer cheques, which amounted to an aggregate sum of $2,448,063.05, for PW1 to sign.  The sums of those cheques were drawn from Followide's CHB account (No.041-279-10100390).  This is Charge 2.

Charge 3

7.Apart from the fraudulent cheque payments mentioned above, PWs 1 and 2 also discovered that between 12 April 2010 and 25 March 2011, the defendant had on 20 occasions stolen cash in a total sum of $3,310,000.

8.In the course of business, Followide would from time to time receive US currency in cash from its customers.  Money exchange agencies were appointed by Followide to exchange the foreign currency into HK Dollars.  The agencies would give the HK currency in cash (the "Exchange Sum") to the defendant.  He was then responsible for depositing the cash into Followide's SCB or CHB account.  But instead of doing so, the defendant simply appropriated the sum each time. 

9.In order to cover up his stealing act, the defendant would prepare a cheque to be drawn from Followide's BOC account for PW1 to sign; the amount of that cheque would be less than the Exchange Sum. At the same time, he would also prepare a cheque to be drawn from his personal bank account.  The combined sum of both cheques would equal to the Exchange Sum. Finally, the defendant would deposit both cheques into Followide's SCB or CHB account, thereby creating a false impression that the Exchange Sum was deposited into Followide's bank account.

Arrest of the defendant

10.After the scam was discovered, the defendant admitted fully to PWs 1 and 2 and signed a confession note on 13 June 2011.  He also sold his residence and returned $1,579,259 to Followide.

11.PWs 1 and 2 reported the matter to the Police.  On 13 July 2011, the defendant was arrested.  Under caution, he admitted the 1^st and 2^nd offences.  He admitted that for each payment invoice, he would prepare 2 cheques for PW1 to sign.  The 1^st cheque was used to settle the invoice and he would appropriate the sum drawn from the 2^nd cheque by depositing it into his own bank account.  He claimed that he had lost all the money in gambling.  He, however, denied the 3^rd offence.

12.Immigration records confirmed that the defendant had frequent visits to Macau during the offence period.

Mitigation & Sentence

13.The defendant is now 63 and has a clear record.  He has received secondary education.

14.Defence counsel Mr. FONG informed me that although not professionally qualified, the defendant has been working as an accountant for 25 years.  In his mitigation letter, the defendant mentioned that he has been working in the accounting field for over 40 years. Mr. FONG submitted that the primary cause of the present offences is the defendant's gambling habit.  Mr. FONG explained that the victim company had complete trust in the defendant, which enabled him to manipulate its bank accounts.  The defendant lost money in gambling; he, therefore, wanted to win back the money to repay his company.  The more he lost, the more he stole; and it became a vicious cycle.

15.The defendant finally resigned from Followide in 2011 as he knew he could not control the problem anymore.  Upon discovery of the offences, his wife immediately divorced him. His daughter also refuses to speak to him.  The wife and daughter have moved to Canada.  Mr. FONG informed me that the defendant's right ear has a complete loss of hearing.  In his mitigation letter, he mentioned that he also suffers from diabetes and heart problems.

16.This case is a classic Barrick type of breach of trust situation.  The defendant stole money from his employer.  I understand that the defendant might have had his personal problems as a compulsive gambler, but they are not excuses for committing the present offences.  In this case, PWs 1 and 2 are the most innocent parties.  They suffered a substantial monetary loss and the defendant simply does not have the means to compensate them adequately.  He was only able to repay 23% of what he had stolen to Followide.

17.According to HKSAR v NG Kwok Wing [2008] 4 HKLRD 1017, if the amount stolen by an employee is $3 million to $15 million, the sentence should be 5 to 10 years' imprisonment.

18.The defendant has stolen a total of $6.78 million in Charges 1 to 3.  Since all 3 charges are inter-connected and took place within the same time frame, I consider it appropriate to deal with them globally.  In my view, a global starting point of 6 years' imprisonment is appropriate.  A one-third discount will be given for the guilty pleas.  I am aware of the defendant's age and health conditions.  He is not young and may be suffering from some of the usual health problems for people of his age; however, they do not warrant a discount for old age and ill-health.  I bear in mind that upon discovery of the offences, the defendant has immediately sold his home and returned $1,579,259 to Followide.  For this, I am prepared to grant him a further discount of 6 months.  Hence, the overall sentence should be 3.5 years' imprisonment.

19.To achieve this overall sentence, for Charges 1 to 3, I adopt a starting point of 3 years, 4.5 years and 5 years respectively.  A one-third discount is given for the guilty pleas, reducing the sentences to 2 years, 3 years and 40 months respectively.  I order (i) the sentences of Charges 1 and 3 to run concurrently; and (ii) 2 months in Charge 2 to run consecutive to Charges 1 and 3, thereby arriving at a total prison term of 3.5 years for all 3 charges.