HKSAR v. Tsang Mei Yuk, Sylvia

DCCC 104/2014

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 104 OF 2014

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Reasons for Sentence

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1.The defendant faces 7 charges of fraud, all contrary to s.16A(1) of the Theft Ordinance, Cap.210. She pleaded guilty to charges 1, 2, 3 and 7, admitted to the relevant summary of facts and was duly convicted. Charges 4, 5 and 6 were ordered to be left on the court file, not to be proceeded with without the leave of court.

Summary of facts

2.The defendant falsely represented to the 4 victims in the 4 charges that she was starting a mobile phone trading business, buying at a low price and selling them to mainland buyers to make a profit, promising regular payments of profits to them at bi-weekly intervals.

3.The victims fell for the defendant’s scheme and handed over various sums of money to the defendant thinking that they were investing in her business. There was in fact no such business. The defendant did pay some money to the victims from time to time, falsely telling them that the money was profit from the business. On other occasions when she was not able to deliver the promised profits, the defendant was able to persuade the victims to put up more money for her non-existent business. Again, the victims fell for the defendant’s lies and either withheld their request for the payment of their share of the profits or invested more money.

4.In July 2012, one of the victims requested the defendant for payment of the investment together with profits in the sum of $684,400. The defendant issued 4 Hang Seng Bank checks but they all bounced. There was no money at all in the relevant bank account when they were being issued.

5.Two of the victims confronted the defendant on 26^th July 2012 who confessed to the scam and that she had lost the victims’ money in gambling and repayment of credit card debts. The matter was reported to the Police. The defendant confirmed that the phone business was a scam and that she cheated the victims of their money to pay her own debts.

6.In the subsequent video recorded interviews, the defendant claimed that the purported return of profits she had paid to the various victims from time to time was just the victims’ own money. The rest of the money was used to pay her debts with financial institutions and loan sharks and for gambling in Macau.

Previous convictions

7.The defendant is of previously clear record.

Mitigation

8.The defendant is 52 years old. She is educated up to Form 5 level in Hong Kong. The defendant is married with an 18 year old son. The defendant’s husband suffers from depression and the defendant is the sole bread winner of the family. Her son is a student and according to the school reports submitted in mitigation, he is a good-natured, polite, responsible and hard working student who is doing quite well in school.

9.According to the defendant, because of her husband’s bad health, she is the sole bread winner of the family. The defendant said that she herself was the victim of a scam by a friend some years ago causing her to have to borrow money from financial institutions. She did not disclose the details of that scam. She has since been trying to repay those debts but without success. It is out of stupidity that she conceived the present scheme to defraud the victims’ money. She had used most of the money to repay her debts, while taking a small part of it to Macau for gambling.

10.Letters from the defendant herself, her husband, son and relatives are submitted to show the court that the defendant has always been a caring and responsible mother, always trying her best to make ends meet.

11.The defendant’s husband has been suffering from depression for some time and as a result of recent events concerning the defendant, he suffered further depressive episodes and has to continue to receive follow up treatment at Castle Peak and Pok Oi Hospital. Mr. Tong also suffers from high blood pressure and diabetes and has been relying on the defendant to look after him.

12.Ms. Wong pointed out that although the total amount of money particularized in the 4 charges we are dealing with presently is $2,111,062, given that the defendant had given back some of that money to the victims as pretended profits, the total actual loss comes up to about $1.4 million. There is no objection from the prosecution for this amount to be taken as the basis of the defendant’s sentence.

13.Ms. Wong also pointed out that the fraud was straightforward and lasted just around 8 months, the defendant came clean the first time she was confronted by the victims and had cooperated with the Police as soon as they were involved.

14.Ms. Wong referred to 3 cases[1] to remind the court that this is not a breach of trust situation.

15.In the case of HKSAR v Chik Wai Wan Stephen, the appellant and the victim were friends. By way of a forged financial report, the victim was induced by the appellant to invest US$2 million (translating to over HK$15 million) in a company where the appellant was a shareholder. The Court of Appeal first of all found that the trial judge, who is also the judge in our present case, had wrongly found that the case involved a breach of trust situation since it was just a case of someone deceiving a friend into investing into a company of which he was a shareholder. What the appellant had done was no more than a conman practiced in the art of deceit and was not acting in any professional capacity for the victim. The Court then found that the 9 years’ imprisonment starting point adopted was manifestly excessive in the circumstances and decided that a proper starting point should be that of 7 and a half years’ imprisonment.

16.The prosecution is not alleging that ours is a breach of trust case, nor do the facts support a breach of trust scenario given that there is no allegation that the defendant had acted in any professional capacity for any of the victims. Ms. Wong told the court that she had advised the defendant that it is likely she will be facing a term of imprisonment as a result of her criminal conduct.

17.Ms. Wong then referred the court to 2 District Court cases[2] involving the commission of fraud.

18.In the case of HKSAR v Li King Yin, the defendant was himself first a victim of an ‘inheritance entitlement’ fraud, where the defendant was to send money to someone in order to have money he purportedly inherited to be released to him. After paying some $200,000 Canadian dollars, the defendant ran out of money but the inheritance was not yet forwarded to him. In order to come up with more money, the defendant made up his own story of how he had made some money from an oil business in Africa and needed to clear the money through the Hong Kong Customs by paying administration and legal fees and told his friends, apparently in order to get them to lend him the money for the defendant to pay to the original fraud perpetrators. A total of HK$511,600 was given to the defendant by the victims.

19.The Deputy District Judge referred to the Court of Appeal case of HKSAR v Pike James Edward, CACC 486 of 2006 and came up with the final sentence of 20 months’ imprisonment.

20.In Pike James Edward, the appellant defrauded his cousin and her husband (“the Roches”) by falsely telling them that he was setting up a capital management company in Hong Kong to invest in stock index, foreign exchange etc., claiming that he could achieve high returns. The Roches believed the appellant and over a 1 year period transferred a total of US$82,000 into the appellant’s bank account, which was equivalent to approximately HK$639,000.

21.The appellant sent periodic statements and reports to the Roches showing a handsome return on their investment. When the Roches later indicated they wished to withdraw the money they had invested on an urgent basis, the appellant failed to repay any amount of money. The appellant was subsequently arrested for fraud and admitted after his arrest that he had never invested the Roches’ money and the money were used to cover his daily living expenses. The appellant eventually pleaded guilty to one count of fraud and was sentenced to 20 months’ imprisonment in the District Court. The learned District Judge adopted a starting point of 3 years imprisonment, reduced it by one third for the guilty plea and then further reduced the sentence by 4 months in recognition of the appellant’s previously good character. The sentence was upheld on appeal.

22.By reason of the appellant holding himself out as a professional fund manager for the Roches, it would appear that the Court of Appeal found that Pike’s was a breach of trust case. This is supported by the Court stating at paragraph 35 of their judgment that the starting point adopted by the trial judge was ‘within the range contemplated by this court (differently constituted) in the case of HKSAR v Cheung Mee Kiu [2006] 4 HKLRD 776 where it was laid down that the starting point would be from two to three years involving amounts of HK$250,000 to HK$1 million’, with Cheung Mee Kiu being the case where the Court of Appeal confirmed that the principle of sentencing in breach of trust cases in the English case of R v Clark remained applicable in Hong Kong.

23.Given that the learned Deputy District Judge in Li King Yin seemed to have relied on the case of Pike, it would appear that he had found his case to be a breach of trust situation as well. This finding would however seem contradictory to the findings in Chik Wai Wan Stephen and Au Wing Kun, since the defendant in Li King Yin was in fact ‘no more than a conman practiced in the art of deceit’ and was not acting in any professional capacity for any of the victims.

24.In the other District Court case of HKSAR v Cheong Bun-kwan cited by Ms. Wong, the defendant was the sole director of a limited company. She caused fictitious bills of lading to be issued, resulting in about $2 million being paid against the bills. Deputy District Judge To found that it was a case of breach of trust. The case of HKSAR v Ng Siu Ling, CACC 160/2011 confirming the guidelines originally set down in Cheung Mee Kiu where for fraud cases involving breach of trust for between $1 to $3 million, a proper starting point should be between 3 to 5 years’ imprisonment was referred to. Deputy District Judge To adopted a starting point of 33 months’ imprisonment. There was then a discount of 9 months for restitution, for the defendant’s clear record and for the delay in prosecution, resulting in the final sentence of 24 months’ imprisonment.

Sentence

25.The maximum sentence on conviction upon indictment for fraud under s.16A(1) is that of 14 years’ imprisonment.

26.The amount of money being defrauded in relation to charges 1, 2, 3 and 7 are $418,600, $173,400, $698,280 and $820,782 respectively, with a total of $2,111,062. As set out in the summary of facts, the defendant had returned some of the money she received from the victims to them as bait for the victims to invest more money, leaving a total unrecovered amount of $1,457,670.

27.Ms. Wong for the defendant agrees that the repayments of the purported profit was not restitution but urges the court to sentence the defendant on the basis of the lower sum. Ms. Chan for the prosecution did not raise any objection on that and I find that it is reasonable and fair to sentence the defendant on the basis of the lesser amount.

28.While the court does sympathize with the defendant’s personal circumstances and how she was victim of a scam herself, I find that they are not mitigating factors. Being a victim herself who had been put in dire circumstances as a result of her friend’s scam, the defendant was in a better position to understand the damage her fraud could cause to her victims. Yet she did not refrain from hurting other people and instead chose to cheat them of their money in order to alleviate her own situation. I find that she must bear the full consequences of her action.

29.The offences took place over a period of around 8 months. There was clearly premeditation on the defendant’s part. The frauds however were not sophisticated. The defendant did not use the money to maintain a lavish lifestyle but she did gamble part of the money away. There is no evidence as to what impact the victims had suffered as a result of the defendant’s frauds. The defendant confessed as soon as she was confronted by 2 of the victims. The defendant frankly admitted her crimes to the Police from the outset.

30.Bearing in mind all the circumstances of the case, in relation to charge 1, I adopt a starting point of 15 months’ imprisonment, reducing it to 10 months’ imprisonment upon her guilty plea.

31.In relation to charge 2, I adopt a starting point of 12 months’ imprisonment, reducing it to 8 months’ imprisonment upon her guilty plea.

32.In relation to charge 3, I adopt a starting point of 18 months’ imprisonment, reducing to 12 months’ imprisonment upon her guilty plea.

33.In relation to charge 7, I adopt a starting point of 2 years’ imprisonment, reducing it to 16 month’s imprisonment upon her guilty plea.

Totality

34.Standing back and applying the principle of totality, I order the sentences in charge 3 and 7 to be served consecutively, while the sentences in charges 1 and 2 to be served concurrently to the other sentences, resulting in a total sentence of 28 months’ imprisonment. I further reduce this sentence by 4 months in view of the defendant’s previous good character, resulting in the final sentence of 2 years’ imprisonment.