HKSAR v. Chiu Raymond Kar Lok

DCCC 122/2014

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 122 OF 2014

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Reasons for Sentence

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1.The defendant has been convicted after trial of five fraud charges.

2.I gave full reasons in my verdict including an analysis of the facts and evidence against the defendant.  I do not intend to repeat myself.  

3.I found the defendant had made five clean import loan applications with false documents to induce the bank to grant loans totalling HK$7.675 million over a period of about two weeks.

4.The defendant deceived the bank by falsely representing that his company, Gold Union, was buying shoes from Mandar Rue, a supplier, and needed credit of 90 days.  He produced invoices, and packing lists that had false information in that they alleged Gold Union was the buyer in that transaction.  But when money fell due and was unpaid, the defendant told HSBC that in fact he owed Mandar Rue a debt and that Mandar Rue gave him the documents he supplied to the bank to obtain loans to repay the debts.  In essence, he borrowed money from HSBC to cover his own debts.

5.His defence was weak and doomed to fail.  The evidence against him was overwhelming.  Not only were there admissions to HSBC staff, but the prosecution proved that the transactions behind the goods in the documents he supplied did not involve Gold Union as a party.

6.Many witnesses were called including two from South Africa at an expense to Hong Kong taxpayers which, in my view, was an unnecessary expenditure.  Their evidence was not challenged or disputed in any material aspect.

7.The crux of this case is that the defendant applied for loans when there were no real transactions behind them.  I suspect the truth is, as he told HSBC, he was in financial difficulty, owed money and used the bank’s money to cover his debts.  As PW3 said, it was very daring of him to do this.  In my view, it was very arrogant.

8.The use of false documents to obtain loans from banks is a serious offence.  Banks have to rely to a large extent on the truthfulness of documentation and their clients.  Banks can be subjected to great risk if this type of offence is rampant.  And if the banks start to refuse to readily loan money to businesses for fear of loss, then legitimate businesses will start to suffer.  There is also a danger of affecting the reputation of Hong Kong as an international finance centre. 

9.By way of background, the defendant is 59 years old, until now had a clear record.  He has had two families, and his second family has young children.  But I have been told that his family had left him when he was arrested.  It has also been reiterated, and I accept, that there is no evidence any of this money went into his own pocket.

10.I have been given two authorities by the prosecution to consider, HKSAR v Yu Lai Lai Agnes CACC242/2013, and HKSAR v Dai Chi Wai CACC84/2010.  I have considered both authorities.  But for offences of this nature, there are no guidelines.

11.What I have to look at or for is relevant factors that affect the sentence.  Those include the loss suffered by the bank, the period of time in which the fraud was perpetrated, the role of the defendant and whether there was more than one institution involved.

12.Here, there is only one bank that has suffered a loss,   and the loss to HSBC was 5.675 million or thereabouts.  The reason this figure is lower than the previous figure I gave is because the defendant had $2 million in HSBC as security against his loans.  Obviously, the bank has taken that as partial payment.

13.The salient factors relevant to sentence are the following: the defendant was found guilty after trial, until now he had a clear record; the loss is, as I have said, about HK$5.6 million; and HSBC was defrauded over a period of about two weeks.

14.Defendant, please stand up.

15.After considering the facts and mitigation, I take a global approach and find a starting point of 3 yeas and 3 months appropriate.  I will take that starting point for each charge.  I will, having heard mitigation, reduce that starting point by 3 months.  That is to reflect that you are 59 and previously had a clear record.  That reduces the starting point by 3 months to a starting point of 3 years.  There are no other reasons for any further discount.

16.For Charges 1 to 5, each charge, you are sentenced to 3 years’ imprisonment.  All five sentences will be served concurrently.  Do you understand that sentence, a total sentence of 3 years?

DEFENDANT: Yes.