HKSAR v. SZE KING YIN, MANFRED

DCCC640/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 640 OF 2012

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Reasons for Sentence

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1.  The defendant was convicted upon his own plea of one charge of conspiracy to forge documents, contrary to sections 71, 159A and 159C of the Crimes Ordinance, Chapter 200, and section 6 of the Criminal Jurisdiction Ordinance, Chapter 461, Laws of Hong Kong.

Facts

2. The defendant worked as a part-time waiter at Enoteca Restaurant in Quarry Bay since March 2012.  On 3 May 2012, inside the restaurant, a waitress noticed the defendant putting something in his pocket in a suspicious manner.  Since she suspected the defendant to have pocketed tips from customers, she paid particular attention on him.  About an hour later, she noticed the defendant putting a bill folder near his pocket.  She then saw the defendant scraping a credit card with a small card skimmer and using the bill folder to cover the credit card.  She reported what she had seen to her boss immediately.  Her boss immediately confronted the defendant and asked him to empty his pocket.  The defendant then took out a card skimmer from his trousers pocket.  He admitted that he had skimmed customers’ credit cards.  When the boss was discussing with his wife about this matter, the defendant left the restaurant.  A report was made to the police and the defendant was put on the wanted list.

3. On 4 May 2012, the defendant was intercepted at Shenzhen Bay Port.  He was arrested.  Under caution, he admitted that he had taken data of customers’ credit cards by skimming the cards with a skimmer.

4. A house searched was then conducted in the defendant’s home.  A USB cable (for connecting the skimmer to computer), a black bag containing a CD disc (containing software for retrieving data from the skimmer), two receipts issued by Western Union dated 17 April 2012 and 27 April 2012 for respective sums of HK$22,366 and HK$13,883, one parcel envelope (mailed from USA to the defendant and being used to carry the skimmer, the cable and the CD disc), and a bank statement on which credit card data was written, were found.

5. In subsequent video-recorded interviews, the defendant admitted that sometime in February 2012, he received a parcel from his friend Chiu Hon-yuen, Andy (“Chiu”) whom he came to know when he was living in the USA.  The parcel contained a card skimmer, a CD disc containing software for operating the skimmer and a cable for connecting the skimmer to a computer.  The skimmer he surrendered to his boss was sent to him by Chiu.  On 8 March 2012, he started working in Enoteca Restaurant as a part-time waiter.  A few days afterwards, he started using the skimmer to obtain data of customers’ credit cards.  He retrieved the data of these credit cards by connecting the skimmer to a computer with the cable provided by Chiu, and the information skimmed from a credit card would appear on the computer screen.  He then took photograph of the computer screen containing the stolen data and sent the photographs to Chiu by email for the purpose of manufacturing “fake” credit cards.  He had skimmed approximately 120 to 130 credit cards in total in the restaurant.  He sent the stolen credit card data to Chiu by email and he sent the data of 20 to 30 credit cards each time. He received a reward of US$50 for each workable credit card number. He had received rewards from Chiu three times, but he could not recall the exact amount.  He confirmed that the two receipts found at his home evidenced the rewards he received from Chiu.  He admitted that on 3 May 2012, he skimmed the data of a customer’s credit card.

6. Forensic examination revealed that data of 166 credit cards contained in a file attached to a mail sent out by the defendant were found in defendant’s email account.  The data of these 166 credit cards were also found in the record retrieved from the skimmer surrendered by the defendant to his boss.

Criminal record

7. The defendant has a clear criminal record.

Personal and family background

8. The defendant is 35 years old, married but currently separated from his wife who is now living in USA. He has no children. 

9. The defendant was born in Hong Kong.  When he was 4 years old, his father deserted the family.  The defendant was brought up by his mother and grandmother.  He migrated to the USA with his mother and grandmother when he was 17 years old.  He studied for the degree of business administration in a university in the USA, but he had to drop out after the first year because of financial difficulties.  He then worked in the restaurant of his uncle as well as other restaurants as chef or waiter.  He returned to Hong Kong in October 2010 for better opportunities after his uncle had failed in his restaurant business due to economy downturn. He lived alone in Hong Kong prior to his arrest.

Mitigation

10. Solicitor for the defendant Mr. Massie informed me that after the defendant had returned to Hong Kong, he had worked as a customer service representative in Goldman Sachs between February 2011 and July 2011, but he had to drop out of the job after suffering a torn ligament knee injury.  He underwent a surgery in September 2011 and could not work for some period of time.  He went into financial difficulties. On top of his knee injury, he also suffered from depression.  He could only live on disabilities allowance of $2,900 per month.  He was later made bankrupt in November 2011.  When the defendant was in such serious financial trouble, Chiu whom was known to the defendant for 10 years in the USA approached him and suggested him to make some money by skimming data of valid credit cards.  He promised him a reward of US$50 for data of each card.  The defendant agreed and committed the offence.

11. Mr. Massie realized that a term of imprisonment was inevitable.  He however urged this court to be as lenient as possible because the defendant had a clear record, he had pleaded guilty, he was co-operative with the authority by giving a full account of the offence upon his arrest, he felt shameful for himself and for bringing disgrace to his family and his ex-employer to whom he tendered his apologies.  Mr. Massie stressed in particular that although the defendant had sent out data of 166 credit cards and the potential loss stemming from the offence committed by the defendant could not be ignored, there had been no reported actual loss.  He referred to the case of HKSAR v Wong Ka Chi & Another (HCMA1063/2002) which was the only authority he managed to locate.  In this case, a starting point of two years’ imprisonment adopted by the sentencing magistrate was upheld on appeal.

Reasons for sentence

12. The offence committed by the defendant was a serious credit card fraud.  He entered into an illegal agreement with Chiu to obtain data of valid credit cards and send these data overseas for the purpose of making forged credit cards.  Had these data been used to make forged credit cards and these forged cards were used, it would be very difficult to discover the forgery because these forged cards contained valid credit card data.  For each forged credit card, the potential loss could be up to the credit limit of each victim.  Not only had the defendant entered into this illegal agreement, he had in fact carried out the illegal agreement. He admitted he had skimmed the data of 120 to 130 credit cards of customers, sent them overseas by email to Chiu, and obtained rewards 3 times with two of these rewards for the total sum of HK$36,249.  In fact, forensic examination revealed that the defendant had sent out data of 166 credit cards to Chiu and such data must be obtained by him through skimming customers’ credit cards.  It is also clear that he had carried out the illegal agreement for nearly 2 months, and but for the vigilance of his colleague, he would have continued with the offence and skimmed more credit cards of customers illegally in the restaurant.

13. There is no sentencing tariff for the offence that the defendant had committed.  Each case depends on its own facts.  However, it is quite clear that the sentence must achieve the dual purposes of punishment and deterrence.  To achieve these purposes, there is no doubt that a term of imprisonment has to be imposed.  Mr. Massie did not argue otherwise.  He only pleaded for a sentence as lenient as possible.

14. As far as the quantum of sentence is concerned, this Court cannot find any previous case that had the same factual matrix as the present one.  In Wong Ka-chi referred to by Mr. Massie, the appellants also skimmed credit cards of customers.  A starting point of 2 years imprisonment, which was the maximum jurisdictional limit of a magistrate in sentencing for one single charge, was upheld.  That case was clearly much less serious than the present one because only 3 credit cards had been skimmed, though the forged credit cards produced on the basis of these credit card data had caused an actual loss of HK$110,386.

15. In The Queen v Chan Sui-to & Another (CACC115/1996), the Court of Appeal stated in paragraph 13 of the judgment that in considering the appropriate sentence for credit card fraud, the sentencing court should consider various factors including:

“1. The size of the operation e.g. whether it involves large sums of money, whether it concerned a large number of persons or forged credit cards.

2. The planning that has gone into perpetrating the fraud, whether it is elaborate or simple, whether technical skills were used, and to what extent.

3. Whether there is an international dimension.

4. Whether the accused played a major role, e.g. running a syndicate, engaging in actual manufacture, organising the use of forged cards, or whether he is a mere "cog in the wheel" as a courier or a custodian or keeper.

5. Whether there is a plea of guilty.”

16. The Court of Appeal further stated in paragraph 30 of the judgment that,

“Allowing for the different facts and the varying degrees of culpability, it is impossible to formulate a set of principles of sentencing from those decisions. We think however it would be helpful to the courts if they were guided by some criterion. We would therefore suggest that an accused who plays an active but not necessarily a key role in a medium size operation involving between $50,000 and $150,000, with no elaborate planning and equipment, and without an international dimension, should receive a sentence of five to six years after trial. Sentences may be adjusted upwards or downwards according to circumstances.”

17.     In the present case, the size of operation was by no means small because the illegal acts had continued for about 2 months involving 166 credit cards, and the illegality was terminated only due to the discovery of the offence rather than the defendant’s voluntary repentance.  There was certainly a degree of planning between the defendant and Chiu.  There was a clear element of international dimension, and the defendant was playing a major role in that his participation was essential to the whole scheme of manufacturing forged credit cards with genuine credit card data.

18. As far as the harm resulting from the defendant’s offence is concerned, there was no evidence that actual loss had resulted.  However, the seriousness of the offence lay in the potential for losses in the future had the offence not been discovered.  It is quite clear from the authorities that it is proper for the sentencing court to take into account the amount of potential loss that could have been caused by the offence: HKSAR v Ng Swee-thiam [2000] 1 HKLRD 772; HKSAR v Shum Chung-wai [2002] 2 HKLRD 81; HKSAR v Cheng Sui-yin (CACC468/2005).

19. In the present case, the defendant was paid by Chiu three times.  He did not recall the exact amount he had received, but there was clear evidence that he received a total of HK$36,249 from 2 of these 3 rewards.  That was about the reward for data of 90 credit cards since the defendant received US$50 for the data of each workable credit card.  Since the defendant was only responsible for obtaining the credit cards data, it must be reasonable and irresistible to infer that someone else would make use of these data to manufacture forged credit cards, and use these forged credit cards either by themselves or by recruiting other persons to obtain property or pecuniary advantage in the commercial world by deception. All these people who engaged in this criminal enterprise would no doubt receive benefits no less than those received by the defendant, and the illegal gains to all these people involved in the criminal enterprise would no doubt be coming from the losses to be inflicted in the credit card industries, whether the ultimate loss would be borne by the banks, credit card companies or the credit card holders was immaterial.  When the defendant received about HK$36,000 for 90 credit cards, it would lead irresistibly to the inference that the potential losses would be over and above the medium size operation (i.e. between HK$50,000 and HK$150,000) referred to in Chan Sui-to, for which a sentence of 5 to 6 years after trial would be appropriate if the offence did not involve international dimension.  In the present case, of course, the international element did exist.

20. In Ng Swee-thiam, the 2^nd defendant there was convicted after trial of a number of offences including two counts of conspiracy to commit forgeries, a charge which was similar to the present one.  The Court of Appeal considered a starting point of 10 years’ imprisonment appropriate.  It must however be said that that case was more serious than the present one because the 2^nd defendant there was, putting it simply, operating two forged credit card factories.

21. I have considered the facts of the present case carefully.  I note that none of the cases I have considered bearing the same factual matrix as the present one.  I note that the defendant would not have manufactured the forged credit card himself, but his participation was essential to the whole illegal scheme.  I note that the defendant was handed credit cards by customers of the restaurant for payment of bills but he abused the purpose for which he was handed the cards.  I note that there was no actual loss caused by the defendant’s offence, but the potential losses could have been substantial, and the fact that there was no actual loss must largely due to the discovery of the offence.  I note the international element.  Having all these factors in mind, I am of the view that the appropriate starting point is 5 years’ imprisonment.

22. As far as mitigating factors are concerned, Mr. Massie rightly pointed out that the defendant’s dire financial difficulties only explained why he committed the offence and did not amount to mitigation. 

23. I have considered what had been said on behalf of the defendant carefully.  I find that the only valuable mitigating factor is his guilty plea for which he will be given the usual one-third discount.  There is no other ground for reducing the sentence, and there is no basis to suspend the operation of the prison term,

24. The defendant is therefore sentenced to a term of 40 months’ imprisonment.