HKSAR v. TSANG MAN FAI

HCCC 212/2020

[2020] HKCFI 2948

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CRIMINAL CASE NO 212 OF 2020

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REASONS FOR SENTENCE

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1.  The defendant pleaded guilty to three counts of Fraud before Magistrate Ho Chun-yiu and was committed on 7 September to the Court of First Instance for sentence. Before me, the defendant confirmed his pleas of guilty and his admission to the Summary of Facts prepared by the prosecution.

Summary of facts

2.  Since 2010, the defendant was one of the two shipping clerks working at a company called Hopstech Industries Limited, a family business owned by Ms Chung, her elder sister and her mother’s husband and one other investor.

3.  As a shipping clerk, one of the defendant’s duties was to deposit checks issued by Hopstech into the bank accounts of different logistic companies providing services to Hopstech.  It was also his duty to deposit checks for Hopstech’s subsidiary company, Newkey Technology Development Limited.

Count 1: Fraud

4.  In early 2017, the defendant created a letter issued in the name of one of the logistic companies, Sea Shell, and showed it to the account clerk of Hopstech.  The content of the letter was that Sea Shell had changed their bank account. As it turned out, the letter was not issued by Sea Shell and the account number stated in that letter belonged, in fact, to the defendant’s mother, Ms Lau.

5.  Since then, the defendant produced a total of 270 debit notes purportedly issued by Sea Shell seeking payments from Hopstech.  As a result, a total of $10,398,913.34 was paid into the defendant’s mother’s bank account by way of 271 check deposits.  The last payment was made on 2 May 2018. None of the said debit notes were, in fact, issued by Sea Shell and had all been forged by the defendant.

Count 2: Fraud

6.  In addition to the said 270 debit notes, the defendant also forged another 7 debit notes purportedly issued by Sea Shell to Newkey for shipping fees and showed them to the account clerk.  As a result, a total of $88,691.94 was paid into the defendant’s mother’s account by way of 4 check deposits.  The last payment was made on 24 April 2018.  Again, Sea Shell did not issue any of the 7 debit notes.

7.  Sometime around 2017 and 2018, the account clerk noticed that the logistics payments to Sea Shell as submitted by the defendant were larger than usual.  She, however, did not think too much about it because she trusted the defendant.

Count 3: Fraud

8.  On 7 May 2018, the defendant created another letter purportedly issued by Sea Shell, contents of which was that they were changing their bank account again and showed it to the account clerk.  This time, the stated account number was held in the name of the defendant’s nephew.  Sea Shell did not issue the said letter.

9.  Since the showing of the letter, the defendant had forged and produced to the account clerk a total of 38 debit notes purportedly issued by Sea Shell to Hopstech for shipping fees.  As a result, a total of $1,841,674.75 was deposited into the defendant’s nephew’s account by way of 38 check deposits. The last payment was made on 19 June 2018.  Again, the said debit notes were, in fact, not issued by Sea Shell.

10.  Sometime in June 2018, the owner of Hopstech noticed the significant increase in shipping expenditure.  Upon investigation, she found that a total of 313 shipping payments, being $12,329,280.03, supposedly made to Sea Shell for services rendered were never demanded nor received by Sea Shell.

11.  On 28 June 2018, the defendant did not go in to work.  He sent an email dated the same day confessing to have cheated the companies of their money and that he had fled to mainland China.  The case was reported to the Police on 30 June 2018.

12.  Police investigation of the flow of funds revealed that the defendant had received a total of $12,124,395 from the frauds he perpetrated on the companies, being about 98.3% of the total loss suffered by the companies at $12,329,280.03.

13.  The defendant returned to Hong Kong via Shenzhen Bay Port on 1 June 2019 and was arrested, as he had been put on the Immigration Departments’ watch list.

14.  In his later video recorded interviews, the defendant confessed to forging all the false debit notes.  He stole because he had lost a lot of money gambling, with a debt of about $4 million owed to money lenders.

15.  Once the stolen money from Hopstech and Newkey had been deposited into his mother or his nephew’s account, he would withdraw in cash or arrange for transfer of the money into his own bank accounts.  He had used up all the money he had stolen to settle his debts.

16.  The defendant explained that he forged the debit notes by crossing out the real amount on some old debit notes with correction fluid and printed on the amount he wanted and passed them on as genuine.

17.  According to the defendant, neither his mother, his nephew nor the nephew’s mother knew anything about the defendant using their bank accounts for the frauds.

Previous convictions

18.  The defendant is of previously clear record.

Mitigation

19.  The defendant was born in mainland China and came to Hong Kong in 1973.  He is 50 years old.  The defendant got married in 2009 and has a 11-year-old daughter and a two-year-old son, who was born after the defendant had fled in June 2018.  They are both living together with the defendant’s wife in the mainland.

20.  Mr Lee informed the court that the defendant suffered from coronary illness and had had surgery performed while he was in custody.  He is still recovering.

21.  Mr Lee also informed the court that the defendant had been addicted to all kinds of gambling since 2014.  He borrowed money to repay his gambling debts to money lenders, and, almost inevitably, was forced to commit the frauds in order to cover his debts.

22.  The defendant also pointed out that his ex-wife had required him to contribute $12,000 every month for the purchase of a home in Hong Kong, although she was the one who made the down payment for the property.  This monthly payment compounded his dire financial situation and created more pressure on him which led to his commission of the frauds.

Sentence

23.  The maximum sentence for the offence of fraud on conviction upon indictment is that of 14 years’ imprisonment[1].

24.  It is not disputed that each of the frauds perpetrated by the defendant involved his abuse of the trust reposed in him by his employers, and that this is an aggravating factor.  The guideline sentencing tariffs as laid down in the cases of HKSAR v Cheung Mee Kiu [2006] 4 HKLRD 776 and HKSAR v Ng Kwok Wing [2008] 4 HKLRD 1017 are, therefore, applicable.

25.  According to the guidelines tariffs, for cases of theft or fraud involving $3 million to $15 million, the range of sentence is five to 10 years’ imprisonment.

26.  In the present case, the amount involved in each count for the purpose of sentencing is: Charge 1 at HK$10,398,913.34; Charge 2 at HK$88,691.94; and Charge 3 at HK$1,841,674.75.

27.  It is not disputed that the total amount involved in the three counts in the present case is HK$12,329,280.03, and that the Cheung Mee Kiu guidelines should be applied to this amount for a global starting point.

28.  An arithmetical application of the tariff sentence would lead to a global starting point of 106 months’ imprisonment.

29.  This is the nominal global starting point that I adopt.  In so adopting, I have taken into consideration that the duration of the frauds spanned slightly more than one year; that the defendant created two fraudulent letters and hundreds of forged debit notes; and that he had exploited his friend and relatives by using their bank accounts in the frauds.  They were not one-off transactions but multiple transfers over a period of time.  There was clearly premeditation and planning.

30.  I do note, however, that the defendant had committed the frauds on his own and I have been told that the companies managed to survive the defendant’s frauds and are still in operation.

The defendant’s fleeing

31.  Although the defendant did flee in June 2018 when he sensed that he was going to be exposed, he did return voluntarily one year later, knowing full well that he will likely be arrested upon entry into Hong Kong, given that he had written the confession email when he took leave.  He was also aware that his relatives had been contacted by the Police for the use of their bank accounts to receive the payments made as a result of the defendant’s frauds.

32.  I accept that the defendant wanted to look after his newborn son before he had to return to Hong Kong to face the consequences of his actions.

33.  I find that the defendant should be given the full one-third discount for his guilty pleas, given that his conduct of returning to Hong Kong and his decision to plead guilty at the earliest opportunity show true remorse on his part.

Sentence

34.  For the sake of completeness and to provide for any eventualities, I will sentence the defendant as follows.

35.  The defendant is sentenced to 89 months’ imprisonment on Charge 1; 2 months’ imprisonment on Charge 2; and 15 months’ imprisonment on Charge 3. All three sentences are to be served consecutively, leading to a total sentence of 106 months’ imprisonment.

36.  The defendant is, therefore, sentenced to 70 months and 20 days’ imprisonment after granting him the full one-third discount for his timely guilty pleas, or 5 years 10 months and 20 days.