HKSAR v. Wong Git Yuen, Albert

DCCC 589/2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO.589 OF 2013

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Reasons for Sentence

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1.The 2 defendants in this case face one joint charge of Fraud, contrary to s.16A of the Theft Ordinance, Cap.210. Particulars of the charge are that they between 28 December 2008 and 5 July 2010 with intent to defraud falsely represented to HSBC staff that 59 invoices issued to The Dairy Farm Company Limited were genuine and accurate and induced them to process and approve loan applications in the sum of $6,135,258.24 which resulted in benefit to Asia Intelligence or in prejudice to HSBC.

2.D1 pleaded guilty to the charge and was convicted. D2 pleaded not guilty to the charge whereupon the prosecution offered no further evidence against her and D2 was duly acquitted. This reasons for sentence deals therefore only with D1’s sentencing.

Summary of Facts

3.D1 is the husband of D2. At the material time, the couple operated Asia Intelligence (HK) Limited, business of which is the supply of snacks to the 7-11 chain stores. Hong Kong Dairy Farm Company Limited is the parent company of 7-11 and responsible for payment for the goods supplied by Asia Intelligence. There is a payment period of 45 days.

4.In order to obtain revolving loans, D1 presented invoices issued to Hong Kong Dairy with a “Notification of Receivables” signed by D2 (manager of Asia Intelligence) as proof of business in support of loan applications to HSBC. HSBC would collect payment from Hong Kong Dairy on behalf of Asia Intelligence, deduct any repayment owed to HSBC and forward the balance to Asia Intelligence.

5.In August 2010, Hong Kong Dairy was asked to settle some debts allegedly owed to Asia Intelligence. An audit check revealed that no such outstanding debt existed. Staff of Hong Kong Dairy and HSBC liaised and discovered 32 sets of invoices with transaction amounts inflated and 27 sets of fake invoices from Asia Intelligence. The matter was then reported to the Police.

6.During further investigation, staff of HSBC discovered that between 28 December 2008 and 5 July 2010, based on 59 forged invoices submitted by Asia Intelligence, HSBC granted a total amount of $6,135,258.24 in revolving loans to the company. The loans had ultimately been settled in full by the defendants, with only interest payment of about $100,000 outstanding.

7.Shortly after August 2010, the defendants closed down their business and moved from their last known address. They remained at large until 5 August 2012 when D1 was located by Police in Sham Shui Po.  D1 was arrested and admitted under caution to have applied for revolving loans from HSBC using forged invoices.

8.In the subsequent video recorded interview, D1 said that his company ceased operation on 16 August 2010 and he had not returned for fear of running into his creditors. D1 was the only person who withdrew money from the HSBC account in the name of the company. D1 admitted to supplying forged invoices in order to obtain overdrafts of around $5 million from HSBC. The chop of Dairy Farm Company was photocopied onto the forged invoices but D1 had forgotten when he created them.

9.D2 surrendered to the Police 2 days after D1’s arrest. D2 remained silent upon her arrest.

10.Ms. Tsang, the accountant of Asia Intelligence at the material time was interviewed. Ms. Tsang was employed by D2 in October 2007. She stated that D2 handled the company’s business and monetary transactions while she was mainly responsible for the calculation of salaries of the company’s staff. Ms. Tsang recognized the company chop and D2’s signature when shown the forged invoices.

Previous convictions

11.The defendant is of previously clear record.

Mitigation

12.Mr. Bruce prepared a very helpful written submission in mitigation. I shall not repeat the contents here save to highlight the following.

13.The actual loss suffered was $100,000 in interest payments. The defendant had borrowed $110,000 from his family members and caused the money to be deposited with his solicitors, ready to make restitution. Today the prosecution confirmed that the money had been paid.

14.The money obtained by the defendant through his fraudulent conduct was not for personal entertainment or to support a luxurious lifestyle. The defendant was driven to commit the offences because of his failing business and the loans were in fact applied back towards the business.

15.The fraud did take place over a relatively long period of time involving 59 forged invoices and there was some amount of planning. It was suggested nevertheless that it was not a sophisticated scam.

16.The defendant is deeply remorseful for what he has done. He suffers from depression and anxiety as a result of his case.

17.The defendant had been involved in a lot of charitable work. His was not a case of “checkbook charity”, as Mr. Bruce puts it. The defendant was personally involved, giving his time and effort to help others. He is a person of positive good character.

18.Mr. Bruce referred to a number of cases to assist the court in sentencing, with the qualification that he found it a challenge to find comparative cases. I agree with his observation and find that the cases are not of much help.

19.In any event, after hearing from Mr. Bruce, I ordered a Community Service Order report to be prepared for me to consider. I explicitly told the defendant that it is highly unlikely that he will be able to avoid an immediate custodial sentence.

Sentence

20.The maximum sentence for fraud under s.16A is that of 14 years’ imprisonment.

21.The fraud took place over a period of time of about one and a half year, involving the defendant creating and submitting 59 forged invoices. The loan applied for amounted to a total of just over $6.1 million. The defendant did not surrender himself after he saw that there was no hope to keep his business afloat. He chose to close down his business and disappear. It was not until some 2 years later that he was located again. Although there is restitution, it came only after his arrest. It would have been a much stronger mitigating factor had the defendant repaid the $110,000 at any time during the 2 years that he was in hiding and definitely before he was arrested and found out that he will be charged.

22.I find that the fraud was for personal gain. The ability to keep one’s own business running is a personal gain, even if one of the collateral effects is to carry on to keep his staff in employment.

23.Furthermore, it is not an entirely victimless crime even though HSBC would not be suffering any monetary loss. The defendant’s loan applications were supported by forged documents, other businesses would have been competing for funds and the forged invoices would have given the defendant an unfair advantage, meaning that some other people could have been deprived of a chance to keep their business afloat and keep their staff in employment as a result of the defendant’s wrongdoing.

24.On the other hand, the defendant is a charitable person and had given a lot to society. Restitution was late but it was done. He is of previously good character.

25.Balancing all the factors, given the circumstances of the case, I find first of all that a Community Service Order is not the appropriate sentence.

26.I further find that the integrity of the operation of the banking system must be jealously guarded, any exploitation by way of fraud must be deterred. I therefore find that an immediate custodial sentence is necessary in the circumstances.

27.I find that given the length of time the fraud had been going on and the amount involved, an appropriate starting point is that of 3 years’ imprisonment. Despite the restitution being late, I find that some credit should be given and for that I will reduce the sentence by 4 months. I will further reduce the sentence by 2 months in recognition of the previous good character and charitable acts of the defendant. I will then grant the defendant the full one third discount and sentence him to 20 months’ imprisonment.