HKSAR v. FONG SHIK YEE

DCCC 931/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 931 OF 2012

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Reasons for Sentence

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1.  Defendant, you were originally charged with 45 charges on the indictment. You have pleaded guilty to 26 of those charges. The remaining of the charges to which you pleaded not guilty have remained on the court file and are not to be pursued with without leave of the court.

2.  The 26 charges to which you have pleaded guilty to are charges of theft, contrary to section 9 of the Theft Ordinance and fraud, contrary to section 16A(1) of the Theft Ordinance.  The theft charges were committed between October 2005 to July 2006 and relate to you stealing a chose in action, namely shares belonging to other people. 

3.  The fraud charges relate to the company, Tiffit, to which you were a director of and at the making of false records in the books of accounts in relation to the buying and/or selling of shares of their clients. 

4.  In a nutshell, you were selling your clients’ shares behind their backs and depositing the money that was sold for the shares into your husband’s account.  You would then have shown in the company’s books of accounts the fact that the share transactions were all completed (purchased and/or sold) and monies deposited or withdrawn by the client when in fact they were not. 

5.  After the clients shares were sold and money deposited into your husband’s account, further shares were purchased purportedly by the clients when in fact they were not.

6.  You and your husband were the directors of a securities company called Tiffit Securities (Hong Kong) Limited.  This was established in August 2000.  Tiffit was licensed by the Securities and Futures Commission of Hong Kong to deal in and advise on securities and to provide automated trading services to its clients.  Both you and your husband were registered with the SFC as Tiffit’s registered dealer’s representatives, registered securities dealers and two of Tiffit’s four responsible officers. 

7.  Between June and July of 2006, upon the request of the SFC, you and your husband, Kwok, provided Tiffit’s monthly financial returns and transaction records for inspection.  It was then discovered that Tiffit had failed to maintain the required minimum $3 million of liquid capital and there had been a misappropriation of clients’ shares. 

8.  On 14 July 2006, the SFC had invited yourself and your husband to attend a meeting at the Tiffit’s office but you did not attend that appointment.  Three days later on 17 July 2006, you left Hong Kong for Australia.  On 18 July, the following day, the SFC made a report to the police and on the same day it prohibited Tiffit from carrying out securities transactions and dealing or disposing of any relevant property.  The SFC appointed KPMG to conduct an audit check on Tiffit’s clients’ cash securities accounts.  As at 7 September 2006 a total of approximately $50 million-worth of shares was reportedly missing.  A total of 445 clients were involved those included the 24 clients to which you have pleaded guilty to stealing their shares.

9.  Your husband was arrested shortly after the inspection and charged with an offence of money laundering in the sum of approximately HK$19 million.  He was tried before His Honour Judge Browne and before the close of the prosecution case and after calling approximately I believe 30-odd prosecution witnesses, your husband reversed his plea to one of guilty. 

10.  On 29 August 2007, your husband was sentenced for the money laundering offence to a term of 3 years and 4 months’ imprisonment.  Judge Browne took a starting point of 4 years’ imprisonment and reduced that term by 15 per cent to reflect your husband’s guilty plea.

11.  Approximately two months after that in October 2007, a warrant was issued for your arrest.  Almost four years later in August 2011, you were arrested in Australia.  Extradition proceedings then began for your return to Hong Kong.  You surrendered to Hong Kong voluntarily under the warrant and you returned to Hong Kong on 1 June 2012.  You were brought to court on 4 June 2012 and charged for these offences. 

12.  Since you were arrested in Australia, you have been in custody in Australia and of course on your return to Hong Kong have further been remanded in custody.

13.  Your counsel, Mr Lawrence Lau, has mitigated fully and thoroughly on your behalf and I have taken into account all that he has had to say.  You are 56 years of age and are of clear record.  You married your husband in 1976 and had three children.  Your children, I believe, are now in their thirties.  You had come from a simple fishing family, however improved yourself by attending evening school and although was a full‑time housewife when you married, when your children were out of their primary schools you then assisted your husband in this securities business. 

14.  Your husband had been given his broker’s licence by his father who had run the same type of business.  I am informed that you had worked very hard to pass the examination to become a licensed broker despite your limited background.  I have seen a very heartfelt letter from your three children to say that you have been a very good mother and concentrated on their lives, and were a good wife.  You are a person who put your family first and were caring to others. 

15.  Your family moved to Australia to give your children a better education sometime in the 90’s and they have all now completed either a Bachelor’s or Master’s degrees as well as become citizens in Australia, as have you. 

16.  The Tiffit Securities Company, I am informed, was held 90 per cent by your husband and 10 per cent by yourself.  This was your family business.  After the SARS, Tiffit suffered in the recession and in 2005 you were informed by your husband that the company suffered liquidity problems and could not maintain the minimum $3 million liquid capital. 

17.  Mr Lau has said explained the commission of these offences by you was because your husband had told you to commit these offences in order to try and save the company.  You foolishly did as you were told, for the sake of the family and the company and committed the wrongdoings. 

18.  This was even though at that time in 2003, your husband had even left you to go and live with his girlfriend and yet you still continued to assist him because of the fact that this was the family business.  Your drive to commit these crimes was really to keep the business afloat.  You received no personal gain.  All the money from the sale of these shares, as can be seen, I believe, from the previous case of Judge Browne’s and I believe in this prosecution’s case, went into your husband’s account. 

19.  What is clear to me as Mr Lau has submitted, you did not commit these crimes because of any greed or for the advancement of an extravagant lifestyle. 

20.  You accept that you had committed grave wrongdoings by breaching your fiduciary duties both to your clients and to your staff and ignored the industry’s regulatory compliance, running the risk of losing all their money.  You accept that you had engineered your own downfall.

21.  Mr Lau has asked me to take into consideration your remorse, the fact that you have pleaded guilty and you did not challenge the extradition and returned to Hong Kong voluntarily.  He has also asked me to take into account your husband’s sentence of a starting point of 4 years’ imprisonment to which Judge Browne had taken and asked me where possible to give a parity of sentence.  Mr Lau accepts the offences are different. 

22.  Your husband was facing a single count of money laundering, however, Mr Lau submits that the culpability is much the same, save that your husband was the instigator of this scheme and that he was the one who had the money deposited into his account. 

23.  In the husband’s case, it was also a breach of trust as he knew of the predicate offence.  Mr Lau has asked me not to impose a starting point higher than that in your husband’s case.  He, however, has acknowledged that the court for breach of trust cases are bound by authorities for breach of trust and has submitted to me the case of Cheung Mee Kiu and CACC 379/2008 of Lee Lai Kit, Kitty.  Mr Lau has also asked me to take into account the 10 months you had spent in custody in Australia prior to surrendering back to Hong Kong as the Correctional Service Department have no jurisdiction to take that into account.

24.  Defendant, the offences to which you have pleaded guilty to are very serious offences.  They involve a huge magnitude of breach of trust.  You had been in a fiduciary duty to your clients and had sold their shares behind their backs.  You were the director along with your husband of a stockbrokerage or a securities company.  Clients placed money with you trusting you to buy and sell their shares for them.  These would probably, for some of them, have been their life savings.  Millions of dollars were stolen from them.  Trading in stocks and shares in Hong Kong as elsewhere is highly regulated by the Stock Exchange regulations and procedures and by the Securities Ordinance.  High standards of integrity are expected of brokers. Brokers must comply with strict procedures regulating their conduct.  The public and their clients obviously have confidence in the system and those who work in it.  You and your husband acted in a way that undermined this confidence.  The courts must take a very serious view of such behaviour. 

25.  In breach of trust cases the courts have laid down tariffs and guidelines for the amount of money which was stolen.  As can be seen from annex A to the summary of facts, the amount of unauthorised sales of shares was in the amount of $14.5 million-odd.  The amount of unauthorised purchases of shares was an amount of $7.4 million.  The total loss to the clients or the total stolen therefore in this case before me of the 26 charges is an amount of about $7.1 million.  In your husband’s case for the money laundering, the money laundered into his account was about $19 million, however, Judge Browne took into account only $12 million because some of that money was used to buy back shares. Therefore, a similar amount of about $7 million in your case and in your husband’s case had been stolen.

26.  I accept Mr Lau’s submissions that the case facts of this case are very much the same.  Both you and your husband were in this together.  You may have been the main operator in that you were the licensed broker who was buying and selling the shares, however, all of the money was going into your husband’s account and from that account the purchase back of further shares was made.  For that reason, there should be some parity of sentence.

27.  Your husband was sentenced in 2007.  It appears to me that as soon as you had whiff of the fact that you may well be arrested you had left Hong Kong.  You had fled to Australia and it was not until about four years later that you were eventually arrested.  By this time, I believe your husband had been sentenced and served his term.  It is now approximately five years since your husband was sentenced and almost six to seven years since the commission of these offences.  If you had been sentenced at approximately the same time as your husband, I am sure that Judge Browne would have adopted the tariff guidelines for the offences of breach of trust to which you have pleaded guilty to.  That tariff, looking at the guideline cases, for $7.1 million-odd would be a starting point of 6 years, 6 months’ imprisonment. 

28.  Years after Judge Browne sentenced your husband the Court of Appeal set out guidelines for the purposes of sentencing in money laundering cases.  In essence saying the court can take into account the predicate offence and sentence on similar principles.  That guideline was not available to Judge Browne at the time he sentenced the husband.  If it was, I have no doubt that Judge Browne would have sentenced on a similar starting point of 6 years, 6 months’ imprisonment. 

29.  In those circumstances, in my view the level of sentence of which your husband was sentenced for money laundering may not have been appropriate.  I do not consider that I should reduce your sentence to that level.  I do however consider that there should not be too great a disparity of sentence.  So in those circumstances, I am prepared to give some like to your sentence so that it can be on a parity with your husband’s.  I am prepared to take a starting point in this case on totality basis at one of 5 years’ imprisonment.

30.  In those circumstances, defendant, taking into account the principle of totality, I take a starting point of 5 years’ imprisonment.  Giving you full credit for your plea of guilty, that term shall be reduced to one of 3 years, 4 months’ imprisonment.  I accept that your period of incarceration in Australia would not be counted in Hong Kong, therefore I exercise my discretion to take into account the time you spent in Australia in custody of 10 months and reduce that 3 years, 4 months to one of 2 years, 6 months’ imprisonment and that shall be my sentence for you in total for these 26 offences.

31.  I shall now sentence you individually for each separate offence.  These sentences which I pass now are after I have given you the one-third discount:-

Charge 1 - 1 year, 6 months’ imprisonment

Charge 2 - 4 months’ imprisonment

Charge 3 - 6 months’ imprisonment

Charge 6 - 4 months’ imprisonment

Charges 10, 11 - 1 year, 6 months’ imprisonment

Charge 14 - 1 year, 4 months’ imprisonment

Charge 18 - 1 year, 4 months’ imprisonment

Charge 20 - 1 year, 4 months’ imprisonment

Charge 22 - 8 months

Charge 23 - 1 year, 8 months

Charge 25 - 6 months

Charge 26 - 6 months

Charge 27 - 1 year, 4 months

Charge 29 - 2 months

Charge 30 - 1 year, 8 months

Charge 31 - 1 year, 4 months

Charge 33 - 4 months

Charge 34 - 2 years

Charge 36 - 1 year, 4 months

Charge 40 - 1 year, 6 months

Charge 41 - 1 year, 8 months

Charge 42 - 2 months

Charge 43 - 2 months

Charge 44 - 8 months

Charge 45 - 1 year, 8 months

32.  To make the total sentence reflect the 2 years, 6 months, charge 34, that is one of 2 years’ imprisonment, shall run consecutive to charge 3 which is 6 months’ imprisonment, making a total of 2 years 6 months’ imprisonment.  The remaining sentences shall run concurrent to each other.