HKSAR v.MAK CHUN KONG

DCCC483/2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 483 OF 2013

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Reasons for Sentence

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1.   The defendant is convicted after trial of one charge of conspiracy to defraud, contrary to Common Law and punishable under section 159C(6) of the Crimes Ordinance, Chapter 200.  This is the 1^st Charge in the Amended Charge Sheet.

Facts

2.   According to the facts established by the prosecution, the defendant had conspired with his wife Tam Wing-hung both before and during the currency of their marriage and with other person unknown to defraud Standard Chartered (Hong Kong) Bank (“SCB”) and Citibank (Hong Kong) Limited (“Citibank”).  They had dishonestly agreed to use the identities of other persons to apply for credit cards from these banks with false or forged documents, and to use such credit cards after they had been issued to obtain cash advances and to pay for goods and services, so as to bring benefits to themselves and to cause losses on the banks. 

3.   Pursuant to this illegal agreement, the defendant and his co-conspirators had made a total of 13 applications for credit cards between 28 March 2012 and 6 September 2012, with 10 applications to SCB and 3 applications to Citibank, in the names of 9 persons who had not made and were unaware of the applications.  The information given in each application for credit card relating to the residential address, contact phone numbers and employment of the purported applicant or cardholder was false.  Forged proofs of address and forged proofs of income were also submitted to support the applications.  As a result of these 13 applications made dishonestly by deceit, SCB and Citibank were induced to approve 12 of the applications and issued 12 genuine credit cards upon such false information.  Only one application was rejected by Citibank.

4.   With the credit cards issued, the defendant and his co-conspirators made use of them to obtain economic benefits and cause losses on SCB and Citibank:

(1) On 16 occasions between 29 April 2012 and 20 July 2012, 6 of the credit cards issued had been used to obtain cash advances from SCB for the total sum of $138,600.

(2) Between 9 May 2012 and 30 September 2012, 8 of the credit cards issued had been used to place orders and pay for goods purchased online from Apple Store worth a total sum of $366,754. In fact, another 2 credit cards had been used to place two purchase orders for goods worth a total sum of $24,752, but these two purchase orders were subsequently cancelled.

(3) The defendant and his co-conspirators had engaged the secretarial services of Business Centre (Hong Kong) Limited and Servcorp Hong Kong Limited to receive on their behalf goods delivered to them by Apple Store pursuant to the purchase orders they had placed with Apple Store with the fraudulent use of the credit cards. They paid Business Centre for its services by cash deposits, but they used two of the credit cards issued to make two payments respectively on 6 and 15 August 2012 to Servcorp for its services in the total sum of $4,800.

(4) The two banks had also lost late charges and service charges for the sum of $7,290 and loss of interest for the sum of $10,013.26 arising out of these credit card transactions.

5.   Accordingly, the total loss to SCB and Citibank was $527,457.26.

6.   This offence came to light only on 8 October 2012 when the defendant appeared in person to collect goods obtained dishonestly through the fraudulent use of one of the credit cards from the driver engaged by him to collect the goods from Servcorp.

Criminal record

7.   The defendant has two previous convictions involving 3 offences.  In September 2002, he was sentenced to Detention Centre for the offence of going equipped for stealing.  In February 2003, he was sentenced to 4 years’ imprisonment for the offences of robbery and perverting the course of public justice.

Personal and family background

8.   The defendant is 29 years old.  He was born in Hong Kong.  He has received education up to Form 3.  He was a renovation worker at time of his arrest with a monthly income of $9,000.  He is married but his wife lives apart.  He lives with his mother.  His parents have divorced.  He has one elder brother and one elder sister.

Mitigation

9.   Learned counsel for the defendant Mr. Tong submitted that this case did not involve manufacturing of forged credit card, there was no international element, and the operation was not sophisticated.  He argued that although the banks had suffered a loss of around half a million dollars, the amount should not be the major sentencing consideration.  He submitted that since the defendant had only received up to Form 3 education, he could not have been the mastermind of the offence, and he was likely to act under the command of his wife who was still at large, a factor which should not be counted against the defendant.  He further submitted that the court should not speculate whether the defendant would continue with the offence but for his arrest on 8 October 2012.

Reasons for sentence

10.   In a nutshell, the offence committed by the defendant was a conspiracy to commit a credit card fraud and the conspiracy had been carried out.  There is no sentencing guideline for this type of offence as the circumstances in which this kind of offence is committed can have substantial variations.  I am grateful to the learned counsel for the prosecution Mr. McNamara for supplying me with a note of relevant sentencing cases to assist me in arriving at the proper sentence.  Mr. Tong took no issue with these authorities.

11.   In HKSAR v Chan Sui-to[1], the Court of Appeal held that a sentencing judge should consider 5 factors before deciding the level of sentence, although the list was not intended to be exhaustive. Those factors were:

(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, organizing 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.

12.   In The Queen v Lai Chong-ning[2], the applicant and his friend used copies of identity cards of other persons to apply for 42 credit cards.  They filled into the applications forms the addresses of post boxes which they knew were not secured by locks. It was not regarded by the sentencing judge as a syndicated operation.  The offences last for four months.  The total amount obtained was $128,100.   The starting point of 5 years’ imprisonment was upheld by the Court of Appeal.

13.   In HKSAR v Chan Yuk-kwan[3], the applicant obtained from his wife photocopies of identity cards of other persons to apply for credit cards. Those other persons were clients of his wife who was an estate agent.  He used a vacant flat as the correspondence address for the applications.  Two men helped him steal bank statements which were altered to tally with the names on the applications as income proof.  The two men also passed him tax assessments whose names were altered for the applications to the banks. He obtained credit cards from 5 banks.  These cards were used either by himself or the two persons who operated with him, and the losses occasioned to the banks over a period of 4 months amounted to $148,000.  He pleaded guilty to a total of 13 charges of obtaining pecuniary advantage or property by deception.  The Court of Appeal considered that according to the totality principle, a sentence of 4 years’ imprisonment before plea would adequately reflect the overall criminality disclosed by all offences.

14.   In HKSAR v Chow Fu-keung[4], the appellant conspired with another person to defraud a number of banks and credit card companies to grant credit arrangements in the form of credit card accounts by making false representations on his address and occupation.  Photocopies of false bank passbooks and bank statements as evidence of salary payments and bogus employment letters were submitted.  A total of 13 credit card companies were subject to false applications made by the appellant.  He opened a bank account at Citibank and created a shell company to assist in the scheme of deception.  4 credit cards were eventually obtained and a total sum of $138,850 was outstanding on these cards at the date of the appellant’s arrest.  The Court of Appeal considered a starting point of 5 years’ imprisonment appropriate.

15.   In HKSAR v Lai mei-yuk[5], the appellant submitted fraudulent credit cards applications to various banks by using the identity of her colleague and obtained 4 credit cards.  She used the cards to obtain cash advances and pay for goods for the total sum of $79,056.  The sentencing judge took the view that the size of the operation should be regarded as small according to the classification in Chan Sui-to, and sentenced the appellant to a total of 2½ years’ imprisonment upon her guilty plea to 13 charges including charges of using a false instrument, fraud, theft and access to a computer with dishonest intent, representing a starting point of imprisonment for 3 years and 9 months for the overall sentence.  On appeal, the sentence was reduced to 2 years to take into account full restitution made by the appellant which was not a mitigating factor before the sentencing judge.   There was no indication in the judgment of the Court of Appeal that it found the starting point too high.

16.   In the present case, the offence lasted for a period of about 6 months.  Pursuant to the illegal agreement made between the defendant and his co-conspirators, they made 13 applications for credit cards and successfully obtained 12 credit cards.  The losses to the two banks were $527,457.26.

17.   As to the role played by the defendant, I do not accept the argument that since the defendant was only educated up to Form 3, he could not have been the mastermind.  As defence counsel has argued, the operation itself was not particularly sophisticated, and I am sure that it did not require a person of great intellectual ability to commit it.  As to whether the defendant was acting under the command of his wife, there was no such evidence.  On the contrary, there was evidence which this Court accepted that the defendant and his wife had acted together to collect goods obtained through dishonest use of credit card fraudulently obtained from Servcorp.  This Court had also found that the defendant had engaged the service of drivers to collect goods from the service company to which the goods dishonestly obtained were delivered, and that the defendant had discussed directly with the staff of SCB by masquerading as the purported applicant Leung Tung-ki in an application for credit card which led to the issuance of Card 12 by SCB.  Whether or not the defendant was the mastermind of the offence, I am sure beyond reasonable doubt that he played an active role in the commission of the offence. 

18.   There is no doubt whatsoever that a term of imprisonment is called for.

19.   As to the quantum of sentence, the offence committed by the defendant was much more serious than the offences disclosed in the cases mentioned above in terms of the duration of the offence, the number of credit cards fraudulently obtained and the amount of losses suffered by the banks.  I do not agree with defence counsel that the amount lost by the banks should not be a major consideration.  It was made clear in Chan Sui-to that the amount of money involved was a factor that determined the size of the operation.  In Chan Sui-to, the Court of Appeal suggested that an accused who played an active but not necessarily a key role in a medium sized operation involving between $50,000 and $150,000, with no elaborate planning and equipment, and without an international dimension, should receive a sentence of 5 to 6 years after trial.  I appreciate that Chan Sui-to was decided in 1996 when $50,000 to $150,000 could be used to buy more things than the same amount of money could have done in 2012, but the fact remained that the defendant and his co-conspirator had caused an aggregate loss of slightly over $520,000 to the banks.  The size of operation in this case could not be less than what the Court of Appeal in Chan Sui-to had described as the medium size operation.

20.   Furthermore, even though the offence was not particularly sophisticated and there was no international element, the defendant and his co-conspirators did make use of secretarial service companies to receive goods obtained dishonestly to hide their identity and to minimize the risk of being arrested. 

21.   Having all these factors in mind, I am of the view that the appropriate starting point of the term of imprisonment is 5 years and 9 months.

22.   The defendant was convicted after trial. It was his right to put the prosecution to prove the charge against him.  He will not receive a heavier sentence because of his plea, but he will not be entitled to any discount that he might otherwise have for a guilty plea. 

23.   There is no restitution made by the defendant.

24.   The only mitigating factor is that the defendant had agreed to most of the prosecution evidence.  Although the agreed evidence was mostly bank records and the evidence of the purported cardholders or applicants whose identities had been misused and it would be difficult for the defendant to dispute such evidence in any event, some recognition should be made that he did help shortening the trial.  His sentence will be reduced by 3 months on this ground.

25.   Having considered the mitigation made by defence counsel, I cannot find any ground to reduce his sentence further.

26.   The defendant is accordingly sentenced to imprisonment for a term of 5 years and 6 months.

[1] [1996] 2 HKCLR 128.

[2] CACC729/1996.

[3] CACC26/2001.

[4] CACC525/2000.

[5] CACC427/2003.