HKSAR v. FAN MING KEI, ANTHONY AND ANOTHER

DCCC 4/2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 4 OF 2015

----------------------

----------------------

---------------------

Reasons for Sentence

---------------------

1.  D1 and D2 were convicted after trial each for four counts of fraud, contrary to section 16A of the Theft Ordinance, Cap 210.

2.  For Charges 1 to 4 against D1, D1 had falsely represented to 4 different policyholders that their respective 4 insurance policies with Zurich International Life Limited (“Zurich”) were taken out with Convoy Financial Services Limited (“Convoy”) as insurance intermediary and that D1 was the handling technical representative (“TR”).

3.  However, the said policies were in fact taken out with GET Wealth Management Limited (“GET”) as intermediary and D2 as the handling TR instead.  All along the said 4 policyholders did not know that their policies were entered through GET, nor did they know D2 at all.  They would not have taken out the policies had they known the handling TR was D2.

4.  It was transpired that D1, acting for Convoy, when meeting with the above policy holders, had initiated new policies to be taken out with Zurich as if Convoy were the intermediary, while in fact GET with D2, were named in the applications without the knowledge of the policyholders.

5.  It was also found that by such arrangement, D1 would have earned more commission through GET than that through Convoy for about $100,000 more.

6.  For Charges 5 to 8 against D2, D2 had falsely represented to Zurich that the above policies were taken out through GET with D2 as the handling TR.  In particulars, that D2 had fully explained the contents of the assurance scheme and declared having gone through the Financial Needs Analysis Form (FNA) with the respective policy holders, but in fact D2 had not done so.

7.  Believing such policies were genuinely taken out with GET and D2 as handling TR, Zurich approved the policies and released to GET commissions totalling about $600,000.  Had Zurich known that such policies were not duly entered, Zurich would not have approved the policies nor released the commissions.

8.  It was also transpired that D2 was never the agent of any of the above policyholders, nor did they ever know D2 or GET, yet D2 had signed on all these application forms pretending that he had gone through with the policyholders of all the necessary financial analysis information.

9.  D1 is aged 39, and D2 is 37, both of clear record.  D1 is married, with 2 sons of tender age.  The elder son has suffered from heart disease and needs constant care while his wife has also recently found with liver tumours.

10.  D1 had been working in Convoy since 2002 until 2012 before working in GET as marketing director. D1 regretted his wrongdoing and Mr Leung submits that it was simply jumping the gun before formally joining GET.  Convoy no doubt was a rivalry and had reported this matter to police.  Mr Leung sees that there was no loss suffered by the policyholders and D1 is also more than willing to make restitution to Convoy if necessary.

11.  There also comes numerous letters from his wife and relatives, former colleagues and clients, all commending D1 as a responsible father and son, good colleague, and excellent agent.

12.  D2 is married and has been working in the insurance industry since 2004 and later in 2014, he was promoted to be the chief distribution officer in GET.  His employer showed strong appreciation for his hard working and is even willing to re‑employ D2 after the trial.

13.  According to the background report, D2 admitted his wrongdoing due to his recklessness, negligence and flimsy law-abiding concept.  Mr McGuinniety also submits that all reports are very positive and favourable to the 2nd defendant.

14.  There also comes letters from his wife and colleagues and also himself, all saying that the 2nd defendant is a good and caring husband and is a person with integrity and courtesy.

15.  Fraud is a serious offence.  The present case is akin to conspiracy to defraud where the interests of Zurich and policyholders were much at stake.  Without D1’s initiation and D2’s active participation, the plot would not have been able to be carried through.

16.  D1 had misled his clients to sign on various documentation, leaving some blank spaces, whereupon false information was filled in, whilst the 2nd defendant helped in to sign as if he were the adviser.

17.  The evidence against both was strong and compelling.  D1 must have known what he has been doing, and D2 also knew full well that these were all false when he signed.

18.  It was clearly not a case of jumping the gun as alleged, but a blatant fraud against clients and Zurich.  It could also not be said merely as any negligence nor reckless act, but in fact, a premeditated and calculated plan.  Besides, the serious nature was not merely reflected by the monetary gains but the underlying protection concerning greater insurable interest to the policyholders would have been adversely affected.

19.  With the falsity of information filled in the application form, the validity of the policy would be much questioned.  It could not be said that there was no loss to the client. 

20.  To D1, it was clearly a breach of trust scenario as against his client, and to both, it involved senior personnel of the insurance sector.  The integrity of the system and to the insurance business was put at risk.

21.  Given the serious nature of the offence, Community Service Order would not be a suitable option, not to mention that both of them were convicted after trial.  In fact, the apparent benefit to D1 had been shown. As the actual and potential benefit and loss may be difficult to measure, I do not intend to make any restitution order here.

22.  As to D2, it was hard to believe that he had no interest at all.  Even if so, the synergy effect as he admitted, i.e. the indirect business gain and expansion was still there.

23.  As to the overall criminality concerned, I assess the appropriate sentence for D1 and D2 shall be 2 years and 18 months’ imprisonment respectively.

24.  However, taking into account all the mitigation factors submitted, for example, that D1 is willing to make full restitution, and that both defendants are of clear record, and now that even 3 out of 4 policy holders are still willing to engage the 1st defendant.  After full consideration, I shall therefore adopt 20 months and 14 months’ imprisonment for D1 and D2 respectively, and I also consider that the concurrent sentence is appropriate in the circumstances.

25.  Therefore, for

D1

Charges 1 to 4: Each 20 months’ imprisonment and all be run concurrently.

D2

Charges 5 to 8: Each 14 months’ imprisonment and all also be run concurrently.

26.  So D1, 20 months’ and D2, 14 months’ imprisonment for all charges.