HKSAR v. Hunt, Perry David and Others

DCCC 829/2014

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 829 OF 2014

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Reasons for Sentence

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1.The charge sheet contains a total of seven charges.  Upon plea bargaining, D1 now pleaded guilty to one count of conspiracy to steal (Charge 1) and one count of possession of false instrument (Charge 2). 

2.To accurately reflect the nature of the seized plastic cards, I invited prosecution to apply for making a minor amendment to the particulars of the offence relating to Charge 5.  The words “namely, false credit cards” are to be amended to read as “namely, cards with false credit cards account data”.

3.Counsel for D2 and D3 has no objection.  I also explained to both D2 and D3 as to the purpose of such a minor amendment. 

4.D2 and D3 pleaded guilty to the offence of possession of equipment for making false instruments (Charge 5). 

5.The remaining charges against all three defendants respectively are left on court file.

Brief facts

6.On 4 March 2014, staff of the Wing Lung Bank discovered that an automated teller machine (ATM) situated at No. 262 Queen’s Road West had retained one plastic gift card with magnetic strip (P1). It was revealed that the said gift card was used for withdrawing a total sum of $4,700 on two occasions on the same day, but the attempts were unsuccessful.

7.A report was made on 5 March.

8.CCTV footage captured D1 was the one making the withdrawals.

9.On 6 March 2014, the police located D1 and put him under observation.

10.At about 12:45 am, D1 was seen visiting a branch of the Wing Lung Bank situated at the above address again.  D1 used a similar gift card (Exhibit P26) and attempted to withdraw, by means of four transactions, a total sum of $8,000 from the ATM.  The attempts were unsuccessful.

11.The police intercepted D1 when the latter left the  branch.  Upon body search, a total of 28 gift cards (P3 to P6, P19, P26 and P28 to 37) were found on D1.  An ATM receipt of the Wing Lung Bank (Exhibit P27) in relation to one of the unsuccessful withdrawals was also found on D1.  D1 also possessed a notebook (Exhibit P24) with many numbers written thereon.

12.D1 was then escorted back to his hotel room, Room 1503, in Island Pacific Hotel.  The police discovered another 39 similar gift cards (Exhibit P45 to P83) and cash in the sum of $87,000 in a bag. 

13.Police investigation revealed that D1 was acquainted with D2 and D3, who are Romanians and were living in Room 710 of the same hotel.

14.The police raided Room 710.  A card encoder (Exhibit P148) was discovered in the false ceiling of the hotel room and two laptop computers (Exhibit P149 and 150) were found in the room.  No similar gift cards were recovered.

15.Enquiry with the banks in Hong Kong revealed that at least 10 gift cards in D1’s possession had been used between 4 March and 6 March 2014.

16.The CCTV footages showed that D1 attempted to make 42 withdrawals totalling $77,500.  D1 succeeded in making withdrawals amounting to $10,400 on five occasions.

Video recorded interviews of the three defendants

17.Subsequently, in the video-recorded interviews, D1 admitted and/or claimed that:

(1) he used the gift cards to withdraw money from ATMs and he knew that it was illegal to do so;

(2) the 39 gift cards found in his hotel room belonged to him;

(3) about four weeks ago in London, D1 was recruited by a person called “John” to do something for him in Hong Kong. All the flight tickets and accommodation were paid by John and D1 would get £1,000 as a reward. D1 came to Hong Kong on 3 March 2014 and met two accomplices of John (D2 and D3) at the Island Pacific Hotel. In the latter’s hotel room, D2 gave about 30 gift cards to D1. D1 also claimed that the notebook (Exhibit P24) contained PIN of the gift cards. The passwords were written by D3;

(4) on 4 March 2014, D1 used gift cards provided by D2 to withdraw $35,000 from ATM, but only succeeded in withdrawing 17,000. D2 passed some new cards to him on the night and told D1 to throw away the used cards. D2 also asked D1 to remit the stolen proceeds to London;

(5) on 5 March 2014, D1 tried to withdraw $8,000 with the gift cards;

(6) D1 identified the gift cards seized from him. He kept the receipt (P27) from the ATM when he failed to withdraw money. He used his phone to contact John, who was in London;

(7) D1 confirmed that the cash in the total sum of 87,000 found in his hotel room was the stolen proceeds. Pending further instruction, it was intended that the monies would be remitted to London on 8 March.

18.D2, in his video-recorded interviews, admitted and/or claimed that:

(1) D2 operated a shop in Romania. D3 was an electrical technician working in England;

(2) D2 came to Hong Kong with D3 on 25 February 2014. D2 had visited Hong Kong with D3 once in December 2013. They came to Hong Kong for sightseeing;

(3) they stayed in Room 701 of the hotel on this occasion;

(4) they met D1 in the hotel. D1 approached them for a drink and D1 visited their hotel room for a chat on some occasions;

(5) D2 went with D1 to buy a SIM card for the mobile phone;

(6) D2 had no knowledge of the encoder found in the hotel room;

(7) the two laptop computers belonged to D2, and D3 would use those two computers sometimes.

19.D3, in the video-recorded interviews, admitted and/or claimed that:

(1) he worked as a car mechanic in England earning about ₤1,800 Pound Stirling per month;

(2) he came to know D2 in London one to two months ago;

(3) he came to Hong Kong with D2 on 25 February 2014 and lived in Room 710 of the hotel since 28 February 2014;

(4) he denied the card encoder and the laptop computers found in the hotel room belonged to him. The computers belonged to D2.

Further investigations and forensic examinations

20.Traffic movement records show that both D2 and D3 came to Hong Kong on 25 February 2014 and D1 came to Hong Kong on 3 March 2014. 

21.D2 and D3 stayed in Room 710 of the hotel while D1 in Room 1503 at the material time. 

22.CCTV footages from the hotel show that the three defendants first met up at the bar of the hotel on 3 March at about 8:30 pm.  When D1 entered the bar, both D2 and D3 were there already and D2 waved at D1.  They sat together.  Later, all three defendants went to Room 710 and, at about 9:12 pm, D1 and D2 left the hotel.  They returned to the hotel at about 9:57 pm and stayed in Room 710 with D3.  D1 left the room at about 11:46 pm. On 4 and 6 March 2014, D1 was seen visiting Room 710 shortly before D1 left the hotel on the day. 

23.All the 68 gift cards (28 cards found on D1, 39 cards found in D1’s hotel room, and one card retained by the ATM) were sent to the Government Laboratory for examination.  The magnetic strips of each card were found to contain either two tracks or three tracks.  Out of all the gift cards, 65 cards contained at least one track of encoded data. 

24.Staff of the VISA International and MasterCard Worldwide confirmed that data so encoded on those 35 gift cards were assigned by VISA to banks in the UK.  Both VISA International and MasterCard Worldwide confirmed that they do not authorise any encoding of the said data onto those 35 gift cards. 

25.The card encoder (Exhibit P148) and two laptop computers (Exhibit P149 and 150) found in D2 and D3’s hotel room were examined. 

26.The encoder can read data from magnetic cards into a computer and also can write data from a computer onto the magnetic strip through a compatible software. 

27.The expert also found a software called “MSR505C MagCard Write/Read utility programme V1.05” in the two laptop computers.  This software was capable of activating the encoder reading and writing data onto the cards with magnetic strips. 

28.No data of the seized gift cards could be found in the card encoder and the two laptop computers.

Mitigation

D1’s mitigation

29.A written mitigation submission was tendered on behalf of D1.

30.D1 is aged 52 and was born in the UK.  He received education up to the secondary school level in the UK.  D1 is a widower and has three children.  D1 worked in the construction industry for over 30 years, but he was unemployed since 2007 due to his knee injury.  D1 was living on the dole with £4,000 per month.  D1 had a clear record in Hong Kong. 

31.It was submitted that D1 pleaded guilty to the charges in order to reflect his remorsefulness.  The two offences to which D1 pleaded guilty should be regarded as the same incident or in the same series of incidents.  D1 only succeeded in making five withdrawals totalling $10,400. He cooperated with the police once arrested and made frank admission.  D1 did not make the fake cards, but was just a foot-soldier in this operation. 

32.It was submitted that, subsequent to the death of his wife, D1’s drinking problem got deteriorated.  D1 got acquainted with the man called ‘John’, who eventually recruited him to commit the present offences. 

33.D1’s lawyer also submitted four District Court cases to show that the range of sentence was from 3 years to 6 years, even though there is no sentencing guideline for this kind of offences.

34.D1 also submitted his mitigation letter.

D2 and D3’s mitigation

35.Counsel for D2 and D3 submitted an e-mail from D2’s fiancée and D3’s daughter respectively for the purpose of the mitigation.

36.D2 is aged 32 and ran a food vending shop in Romania.  He also worked as a freelance driver in a resort hotel.  He lived with his fiancée and has a 2-year-old son.

37.D3 is aged 57.  His wife lived in London.  He has one son and one daughter.  D3 worked in the car service industry as a repair mechanic, earning about £1,800 per month.  D3 also traded used cars. 

38.It was submitted that D3 came to Hong Kong with D2 with a plan to expand his business, while D2 came to Hong Kong to look for possible equipment for his wife’s beauty service business.

39.Counsel for D2 and D3 submitted two Court of Appeal cases - namely, HKSAR v Ho Wan Chung, CACC 374/2003, and HKSAR v Lai Hon Kwan & Two Others, CACC 317/2000 - and also two Magistracy Appeal cases:  HKSAR v Wong Ka Chi & Anor, HCMA 1063/2012, and HKSAR v Shair Wai Tong, HCMA 630/2012.

40.It was submitted that one of the laptop computers was newly bought by D2 in Hong Kong.  It was said D2 accessed to Google to download the compatible programme. 

41.No gift cards were found on D2 and D3.

42.It was submitted that both of them did not receive any reward.

43.The laptop computers did not contain any stolen data.  D2 and D3 were simply in possession of the equipment for making false instruments.

44.At one stage, it was submitted that both D2 and D3 were not aware of the existence of the encoder, which was hidden in the false ceiling of the hotel room.

45.Today, counsel for D2 and D3 responsibly further submitted that D2 and D3 would not say that they were not aware of the existence of the encoder hidden in the false ceiling.

Sentence

46.D1 is aged 52 and a British.  D2 and D3 are Romanians.  All of them had no criminal record in Hong Kong.  They came to Hong Kong as visitors.  D1 was a construction worker in the UK.  D2 was a worker in a family store in Romania and D3 a car mechanic.

47.In his mitigation letter, D1 said he once was a happy married man until last March when his wife died of a cancer disease.  D1 became an alcoholic.  He met someone who could offer him £1,000 for the week.  D1 confessed that he could only blame himself in entirety and he let down a lot of people.  D1 said he is remorseful and, after discharge from prison, he promised to “give it my best shot and work very hard to get back up there”.

48.D2’s fiancée in her e-mail dated 24 November 2014 said that she knew D2 since 2000 and moved to live with him in 2004.  She regarded D2 as a trustful, friendly and honest person who worked very hard in order to have a decent life.  She was sure that D2 was deeply sorry for what he had done.

49.D3’s daughter in the e-mail dated 23 November 2014 regarded her father as a simple and sensible man and worked very hard to support the family.  She misses her father a lot and wants him home soon.

50.There is no doubt that this fraudulent operation is similar to those of using false credit cards.  A syndicate worked behind this operation by acquiring the credit card data, encoding these data onto the magnetic strips of the gift cards or plastic cards, and arranging other accomplices to come to Hong Kong to implement the scam. 

51.By making use of foot-soldiers, the syndicate made access to ATMs and avoided personal contacts with salespersons or a third party.  That certainly would reduce the chance of human detection. 

52.ATMs in Hong Kong are open for business 24/7 and, through ATMs, it provides an easy way to withdraw cash as frequently as they want to.  It is clear that such a scam could cause much damages to the banking system in Hong Kong.

53.We can also see an international element in this operation.  D2 and D3 came to Hong Kong on 25 February, a few days earlier than D1, who arrived in Hong Kong on 3 March.  They stayed in the same hotel.  D2 and D3 greeted D1 at the bar in the hotel on the night of 3 March. 

54.As far as the bank record was concerned, D1 attempted to use the gift cards to steal money from ATMs on two occasions on 4 March, but to no avail.  D1 was put under surveillance on 6 March and eventually the police arrested D1 after the latter made four unsuccessful attempts to withdraw money.

55.Bank records show that D1 successfully withdrew a total sum of $10,400 on five occasions and yet the police recovered cash in the sum of $87,000 in D1’s hotel room.  In the video-recorded interview, D1 admitted that he only succeeded in withdrawing $17,000 and also the monies were stolen proceeds.  The monies would be remitted to London.

56.D2 and D3 were in possession of the encoder and also the laptop computers in which software of compatibility programme was installed.

57.Upon plea bargaining, D1 pleaded guilty to one charge of conspiracy to steal and one count of possession of false instruments (namely, 35 gift cards), and D2 and D3 to Charge 5 of possession of equipment for making false instruments (namely, the encoder and the computers containing compatible utility programmes).

58.D2 and D3 were not charged with the offence of conspiracy to steal.

59.That said, when considering the appropriate sentence, this court has to consider the factual background of the offence of the conspiracy charge and its relationship with the offence of possession of equipment for making false instruments.

60.The real mastermind of the whole scam might well be that person called ‘John’ or his syndicate, but the role of D1 to D3 was important in order to execute the scam and to reap the fruit of the operation.

61.Although D2 and D3 were clever enough not to keep those encoded or stolen data in the equipment, I do not accept the mitigation put forward by defence counsel for D2 and D3 on the last occasion.

62.Defence counsel now has rightly amended the version of events by withdrawing the remark to the effect that D2 and D3 had no knowledge of the existence of the encoder prior to the raid.  The existence of the encoder would not be in dispute and inference can be made that D2 and D3 were aware of the existence of the same. 

63.Although, strictly speaking, the present case is not related to the uttering of false credit cards per se, the use of stolen credit cards account data allows the sentencer to consider the case of R v Chan Sui To & Anor [1996] 2 HKCLR 128, where sentencing guidelines and consideration of using false credit cards were enunciated.

64.I have also considered various similar cases in District Court. 

65.In HKSAR v Kavangh Darren & Anor, DCCC 572/2008, where two British used cards with stolen credit cards data withdrawing $447,000-odd dollars. 238 gift cards were recovered.  The court used a starting point of 4 years.

66.In HKSAR v Ionut Leonard Oancea & Two Ors, DCCC 782/2011, the defendants are Romanians and they came to Hong Kong from Spain and used gift cards with stolen credit card data to withdraw cash from ATMs.  The illicit 628 successful withdrawals resulted in $1.56 million-odd dollars being stolen.  The 472 failed attempts would have netted $1.1 million-odd.  The District Judge in that case used a starting point of 5 years.

67.In HKSAR v Milos Cosmin & Two Ors, DCCC 224/2014, all three defendants are Romanian passport-holders.  They came to Hong Kong to commit similar offences like the present one.  They used gift cards encoded with stolen credit card data and eventually withdrew a total of $548,100 from ATMs.  The defendants pleaded guilty to the charges and were sentenced to 4 years’ imprisonment.

68.I have to say that this case was a well-organised and well-executed scam.  They made full use of the advanced state of banking system in Hong Kong, with the aim at swindling banks and financial institutions in Hong Kong out of large sums of money. 

69.A deterrent sentence is called for in order to convey a strong message to those potential culprits who intend to come to Hong Kong to perpetrate similar crimes. 

70.The most significant mitigating factor for all defendants in the present case is their guilty plea.

71.I have to say that, even though their pleas were the outcome of plea bargaining, this is a wise move, as their plea would make them entitled to have one-third discount in sentence.

72.Taking all factors into account, for Charge 1 against D1, I would adopt a starting point of 4 years and, with his plea, I reduce the sentence to 32 months.

73.For Charge 2 against D1, which involved 35 plastic cards, I would adopt a starting point of 3 years and, with his plea, the sentence is reduced to 24 months.

74.I take the view that the possession of these gift cards with stolen account data can be regarded as part and parcel of the conspiracy charge.

75.As such, I would take a lenient stance and order that these two sentences against D1 are to be served concurrently.

76.As regards Charge 5 against both D2 and D3, their admission of guilt has to be considered in the factual context of the present case.

77.D2 and D3 were each separately charged with one count of money laundering offence and the charge was now left on court file.  I will not take this into account when sentencing D2 and D3 on Charge 5.

78.The encoder and the associated compatible programme in the computers are much more “powerful” and instrumental in perpetrating the scam than possessing a skimmer for stealing account data.

79.I also accept that the defendants are remorseful for their crime.

80.As such, I would lower the starting point to one of 2 years and, with the plea of D2 and D3, I reduce the sentence to 16 months.