HKSAR v. CHEUNG KIN KEUNG AND ANOTHER

DCCC 157/2018

[2020] HKDC 16

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 157 OF 2018

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Reasons for Sentence

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1.  In this case both defendants have been convicted after trial, the 1st defendant on the 1st charge of theft, and both defendants on a subsequent and related charge of dealing with property known or believed to represent proceeds of indictable offence.

2.  I do not propose to rehearse the facts of the cases against the defendants, they are set out already in the course of a reasons for verdict that I have given, but I will observe that the offences against the 1st defendant arise out of his employment by NEC Tokin, are related to that employment and constitute a breach of trust to that employer.

3.  It can be seen from the 1st charge that the amounts involved in the thefts are considerable, shows in action of almost HK$23 million and over US$2 million.  The 2nd charge deals with the disposal and the dealing with some of that property by the 1st defendant and the 2nd defendant where that property constitutes some HK$11 million-odd, and a further sum in excess of US$1.3 million.

4.  It can be seen from that that the case itself involves considerable sums of money stolen and dealt with over a lengthy period of time.  In the charge, the period is limited to 1 January 2005 to 11 July 2012.  The defendant, we know from the previous history of the case, was employed by NEC Tokin in their accounting and administration department and had been in positions of responsibility such as accounts clerk and accounts manager of that department.  In 2012, the extent of the defendants’ theft from that company was established.

5.  What I will observe at this stage is the thefts show a large amount of money taken over a considerable period by a person in a position of authority and responsibility and displayed a degree of sophistication in the way in which the money was stolen and the way in which the design of the fraud or the theft meant that the company itself would be, in the normal course of events, unable to easily show -- be easily find out that it was, in fact, the victim of a considerable theft.

6.  As far as the 2nd defendant’s involvement in the case is concerned, he is involved, it would appear, purely as a result of his association with the 1st defendant.  They were, it would appear from the evidence, to have been lovers throughout the period and they were, as a couple, enabled to live a high life from the 1st defendant’s theft from NEC Tokin. And the money was, or certainly some of the money, the amounts set out in the charge, was enjoyed in the course of their personal lives and also used to invest in items such as property, gold ornaments and the like.

7.  My finding in respect of the 2nd defendant is that he must have had, he did himself have, reasonable grounds to believe that the money that he dealt with was the proceeds of an indictable offence. Whereas for the 1st defendant, obviously, having stolen the money in the first place, he must himself have known that the money were the proceeds of the indictable offence that he was committing at the time.

8.  Turning to the background of the defendants, the 1st defendant is now aged 47.  He is a man of previous clear record, educated to Form 5 in Hong Kong and worked in NEC Tokin between the period of 1997 and 2012.  He is in good health, he is single and I believe both his parents now have passed away, but he has a number of sisters and brothers who render him considerable support and speak highly of him.

9.  What is known about the 2nd defendant?  Again, he is a man aged 43 with no previous convictions or criminal record, a holder of bachelor degree from the University of Hong Kong and a master’s from Chinese University.  During the period, it would appear he worked as a broker in securities companies.  He had a residential address in Chai Wan and what is known is since he clearly absconded from this trial at the early stages, he has not been able to be contacted, so little or nothing is known about his present whereabouts or his present circumstances.  

10.  Turning back to the 1st defendant, I did obtain a background report on him.  It reveals a number of things about his family and his personal background.  And what can be gained from this report is that his family, especially his brothers and sisters, think highly of him, they will render their support and encouragement to him.  They stand by him despite what has happened in the past and they see that the defendant’s behaviour through this period has been one that is out of character for him.

11.  The other factor that, of course, is evident from the report is that the defendant has waited a considerable time since his first arrest and has to a certain extent formed another life for himself during the period in which he has been on bail for these offences.  He now is self-employed as a taxi driver working with what is described as irregular income and he was doing that job up until 16 December 2019.

12.  It can be said and seen from the report that the defendant has been awaiting trial or awaiting the outcome of this trial for a considerable period of time and that is a matter raised by the defence in their mitigation and in their submissions as to the appropriate sentence to be passed on the defendant.

13.  I turn to the offences of which the defendants have been convicted.  I turn to the 1st defendant.  On the 1st charge, I have already outlined the amounts and the period of time over which those offences took place and the defendant’s responsibility for that offence.  The offence can be classified as a theft from employer which is a breach of trust case.  In respect of those offences, there are guidelines issued by the court.

14.  Given the large amount of money in the 1st charge, the guideline for this defendant would lie in a sum beyond HK$15 million where the starting point for sentence can range from 10 years upwards.  That, obviously, is far beyond the jurisdiction of this court. A decision was made to proceed with this matter in this court where the jurisdictional limit is 7 years’ imprisonment.

15.  Mr Ng for the defendant says that the defendant is entitled to a discount from the starting point and as the starting point is limited to the jurisdictional limit then that is the appropriate starting point to be taken by this court when determining the degree of discount.  There is authority to that effect, although, I do not propose to outline it for the purpose of this decision, but I accept that any discount that the defendant is entitled to from the operational starting point for this charge should come from the jurisdictional limit of this court.

16.  The defendant pleaded not guilty.  He has been convicted after trial and the defence put forward the fact there is one mitigating factor the court can take into account when determining the final sentence for this defendant on the 1st charge.  That is the length of time the matter has taken to come to conclusion.  The defendant had first been arrested for this offence on 19 October 2012, which is now some over seven years ago now.

17.  The decision was made to bring this case forward in the High Court originally and after advice had been taken, the committal of this matter to the High Court did not, in fact, take place until 9 January 2017 and that is a considerable period of time from the defendant’s first interception and arrest in respect of this matter.

18.  A decision was taken by the prosecution that the case should not proceed in the High Court and the matter was eventually remitted back to this court for trial and I understand the transfer to the District Court, which is this court, took place in February 2018, the matter not coming to trial until October 2018 which is in total some six years after the defendant was first arrested for these matters.

19.  Since then, the process of trial was not completed until 16 December, I believe, 2019, due to the matters such as listing of the case and matters that arose during the trial, but certainly there is operative delay up until at least October 2018 and as a fact the defendant has not had the matter resolved until December 2019 which is some over seven years from when he first became aware that he would be subject to criminal prosecution in this matter.

20.  Mr Ng also puts forward in mitigation the fact that he says there has been considerable recovery of assets in this matter through civil proceedings that have proceeded alongside these criminal proceedings.  It could be seen from the evidence that some of the money had gone into the investment in property during the period and everybody in Hong Kong knows the considerable rises in residential property values during this period and the defendant, and certainly the company, was the beneficiary of those rises in the course of the civil proceedings.

21.  In respect of the matters in the charge or the sums set out in the charges, it would appear there had been no or little loss to the company overall as a result of the recovery of assets in the civil proceedings.  Furthermore, the company, NEC Tokin, I am told has been sold, in any event, to a United States company.

22.  The relevance of that to this case, to the starting point for sentence is not entirely clear given the guideline starting point, which could be over 10 years’ imprisonment, is considerably over 10 years’ imprisonment, and also the fact that the guidelines are based on the amount taken during the theft rather than the amounts recovered or lost by the company.

23.  In any event, I consider that the appropriate starting point for sentence on the 1st charge must be the jurisdictional limit of the court, which is 7 years’ imprisonment.

24.  Defendant, I have set out the delay that has occurred in the case.  That is the basis on which that sentence can be mitigated.  There is no, again, guideline for how the court should quantify the deduction from the starting point of any deduction for this factor.  It should be taken, perhaps, an overall figure taken having regard to the length of time that the defendant has been facing the charge and the changes to his life that have occurred during that period which must now end as a result of a period of imprisonment.

25.  I consider that in this case I will reduce the sentence from the jurisdictional limit of 7 years by a total of 9 months to reflect the head of delay.  That this is on the 1st charge, the defendant will be sentenced to a sentence of 6 years and 3 months’ imprisonment.

26.  Now I turn to the 2nd charge.  The 1st defendant faces that charge on the basis that he knew the money that he was dealing with was the proceeds of an indictable offence.  I consider that the sentence on that charge should be similar to the sentence on the 1st charge.  I will impose a sentence for the defendant on the 2nd charge of 6 years’ imprisonment which will run concurrently to the 1st charge as the cases arise out of the same basic facts.  That means the overall sentence for the 1st defendant will be one of 6 years and 3 months’ imprisonment.

27.  The 2nd defendant also needs to be sentenced for this offence.  He, again, was convicted after trial.  Little is known of his present position.  There is in respect of this offence, again, no guideline for the sentence that should be imposed.  The money laundering, as it is described, is a serious offence and sentences of imprisonment are routinely imposed by the courts but the ways in which a person can become involved in this offence and the ways in which these offences are committed are many and varied so that no broad guideline can be set out by the courts.

28.  A number of factors must be considered.  Relevant ones in this case would be the amount of money, which is a major consideration, the nature of what is called the predicate offence, that is the 1st defendant’s thefts, to which extent the 2nd defendant’s activities would have assisted the underlying crime of theft or hindered its detection, the degree of sophistication and to what extent this defendant, the 2nd defendant, participated in the underlying offence and in the activities of money laundering, the length of time the offence lasted and the benefit that the defendant derived from the offence.

29.  There is no international element so there is no need to consider that.

30.  Taking those factors into consideration, obviously, the amounts of money were considerable.  The amounts were spent on living, as I said earlier, a high life and also investing profitably in property.  The basis on which I have convicted this defendant, the 2nd defendant, is he had reasonable grounds to believe the money resulted from the commission of indictable offences or an indictable offence, but the nature of that offence was not necessarily known to this defendant.  The defendant, of course, derived considerable benefit from the commission of the offence over a considerable period of time.

31.  I consider, taking all those factors into consideration, that this defendant, that is the 2nd defendant’s sentence on the 2nd charge should be one of 4 years’ imprisonment. 

32.  So the 1st defendant is sentenced to a period of 6 years and 3 months’ imprisonment in total and the 2nd defendant for a period of 4 years’ imprisonment.  Those will be the sentences of the court.