HKSAR v. TSUI HING WAI

DCCC209/2009

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 209 OF 2009

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Reasons for Sentence

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The Charges and Pleas

1.  The defendant pleaded guilty to one charge of furnishing false information, contrary to Section 19(1)(b) of the Theft Ordinance (the 1st charge) and five counts of evasion of liability by deception, contrary to Section 18B(1)(b) of the same ordinance (the 2nd, the 4th, the 5th, the 7th and 8th charges).

2.  He admitted the facts pertaining to the charges.

3.  I ordered the remaining two charges of evasion of liability by deception to be kept on the court file and not to be proceeded with without leave.

The Facts

4.  I shall not repeat the facts in great details as they are set out in full in the Summary of Facts prepared by Mr Cahill.

5.  Briefly stated, Golden Dynasty (HK) Limited (“GD’), the victim of Charge 1, was a jewellery supplier at all material times. The defendant joined GD as a sales agent on 27 November 2006 and resigned on 27 November 2007.

6.  On 17 April 2007, the defendant’s wife, Han Yan (“Han”), started Winson Trading & Development International Limited (“Winson”) and acted as its sole director.

7.  On 10 May 2007, the defendant started Prosper Light Trading Limited (“Prosper”) and acted as its sole director.

8.  On 13 June 2007, Han started Vivienne Jewellery Company (“Vivienne”) and acted as its sole director.

9.  On 12 February 2008, Han started Jade Mall Limited (“Jade Mall”) and acted as its sole director.

10.  At all material times, the defendant was acting for and on behalf of these companies.

11.  In the course of his work, the defendant had to obtain a specific amount of jewellery from GD’s depot attendant each day. Records would be kept for the jewellery sold and returned unsold.

12.  In about December 2006, the defendant went to Golden Bauhinia (“GB”), a jewellery company, and presented himself as GD’s sales representative to promote GD’s jewellery to GB.

13.  Between December 2006 and April 2007, GB traded with GD through the defendant and payments were made upon some invoices.

14.  In about July 2007, PW2, the account manager of GD, conducted random check on the sales record of the defendant and found some irregularities including lateness in submitting the sales proceeds to the account staff and that some invoices submitted by the defendant had remained unpaid.

15.  If the defendant successfully sold the jewellery, the defendant would issue and sign an invoice with three carbon copies detailing the issuing date, the purchaser’s name, the payment due date, the model number, the goods description, the quantity and the price.

16.  The purchasing company would also sign and affix its company chop on the invoice. The defendant would keep the original invoice for collection of payment.

17.  One carbon copy would be given to the purchasing company on the spot, whereas the remaining two carbon copies would be submitted to the accounts office and the person in charge of the depot.

18.  After the defendant’s resignation, PW2 conducted a thorough cross-check on the defendant’s sales record against the invoices submitted by the defendant during his employment.

19.  PW2 found a number of invoices issued on various dates that were either wholly or partially unpaid or unsettled. These invoices indicated delivery of GD’s jewellery to 4 companies, including GB.

20.  Enquiries with GB revealed that the staff of GB had not seen the defendant for a few months. The signatures on the invoices purportedly issued to GB did not belong to any staff of GB and the company chop purporting to be that of GB on the invoices did not belong to GB.

21.  GB had stopped trading with GD in April 2007, whereas 16 of the 26 false invoices referred to in Charge 1 were dated after that month.

22.  The staff of GB were shown other invoices referred to in Charge 1, purportedly issued by GD to GB, and confirmed that the signatures and the company chop of GB made on the invoices were not theirs and the GD’s jewellery indicated thereon had never been supplied to GB. These were the 26 false invoices supplied by the defendant to GD’s accounts department for accounting purposes.

23.  On 28 November 2007, GD, with its legal representatives, pursuant to a court warrant, searched and seized from Vivienne’s premises three items of jewellery worth $13,441, being items referred to in two of the false GD’s invoices.

24.  The balance of the jewellery referred to in the 26 invoices was never recovered. This amounted to $412,925 (Charge 1).

25.  PW7, the victim of Charge 2, had been a friend of the defendant for 20 years. Han and the defendant employed PW7 as the manager of Winson and Vivienne in early September 2007.

26.  Between 11 September 2007 and 7 January 2008, PW7 lent money to the defendant totalling $618,000, either by cash or through bank transfer from his own or his company’s account to the defendant’s two personal bank accounts.

27.  From 7 January 2008, the defendant started to default on the loan.

28.  On the 3 February 2008, the defendant gave 10 post-dated cheques referred to in Charge 2 which were issued either by the defendant personally or by the defendant’s wife on behalf of Vivienne or Winson to PW7 or PW7’s wife in repayment of the borrowed money. All the cheques were subsequently dishonoured (Charge 2).

29.  PW9, the victim of Charges 4 and 5, operated a jewellery trading business under the name of Po Lung Jewellery (“Po Lung”). In September, Po Lung started trading with Vivienne through the defendant. On each occasion, the defendant would select the jewellery and invoices would be issued and signed and stamped with Vivienne’s company chop by either the defendant or his wife, Han, for each transaction.

30.  Between 5 October 2007 and 5 February 2008, Po Lung supplied jewellery totalling $1,068,384 to Vivienne, of which $997,883 has remained unsettled. The defendant issued seven post-dated personal cheques in payment:

i. On 4 January 2008, the defendant issued six personal cheques to the value of $226,432 (Charge 4), one of which was dishonoured, and the remaining five were retained by Po Lung for presentation. Bank records indicate that the account upon which these cheques were drawn had, at all material times, insufficient funds.

ii. And then on 24 January 2008, the defendant issued another personal cheque for $138,000 (Charge 5). This cheque when presented for payment was dishonoured.

31.  PW10 was a sales representative of a jewellery trading company, Schachter & Namdar Asia Limited (“Schachter”). Schachter started trading with Vivienne in September 2007.

32.  Between 12 November 2007 and 16 January 2008, Schachter supplied jewellery totalling $792,530 to Vivienne through the defendant, but the defendant only settled $36,189 of that sum by one cheque, leaving an outstanding balance of $756,341.

33.  Between 12 December 2007 and 16 February 2008, the defendant issued nine post-dated personal cheques in purported payment to Schachter. PW10 attended Vivienne to collect the outstanding payments and was given the following:

i. On 19 January 2008, the defendant issued three personal cheques for $185,710. When Schachter presented the cheques for payment on the same day, these cheques were dishonoured (Charge 7).

ii. On 16 February 2008, the defendant issued five personal cheques for a total of $135,533, but the cheques were all returned dishonoured (Charge 8).

34.  PW10 contacted the defendant on numerous occasions, but the defendant claimed that he was unable to settle the outstanding payments due to financial difficulties.

35.  On 28 March, the defendant was arrested at the Lok Ma Chau border control point by the police and interviewed under caution.

36.  On 19 November 2008, when the defendant was arrested and cautioned for further offences, he admitted holding two personal bank accounts which had been used to issue cheques to the jewellery suppliers.

37.  Banking records indicate that at all material times the accounts upon which the defendant drew the cheques referred to in Counts 2, 4, 5, 7 and 8 had either insufficient funds or had been closed at the time of presenting.

38.  The total value of the cheques in Charge 2 amounts to $550,500. The total value of the cheques in Charge 4, 5, 7 and 8 are $226,432; $138,000; $185,710 and $135,533 respectively, amounting to a total of $1,236,175.

Written Mitigation

39.  Mr Kwan put in a skeleton mitigation for the defendant. The contents are self-explanatory and I shall not repeat the same.

40.  Some of the contents necessitated follow-up investigations and follow-up investigations were made in respect of:

i. The relationship between KDC271/85 and DC579/91.

ii. The claim in paragraph 11 that Mr Yiu, the victim of Charge 2, was in fact a loan shark and the debt owed to Mr Yiu in Charge 2 was the aggregate amount of principals and high interests, contrary to the facts estimated by the defendant (paragraph 13 of the Summary of Facts).

iii. The claim in paragraph 12 and 13 that Mr Chan(?), the victim of Charges 4 and 5, had bought jewelleries from the defendant and failed to pay for the goods.

The Criminal Record

41.  The defendant was convicted of one count of making false representation to Immigration officer in 1978.

42.  In 1985, the defendant was convicted of four counts of obtaining property by deception and six counts of evasion of liability by deception and was sentenced to 18 months’ imprisonment, suspended for 2 years (KDC271/85).

43.  In 2004, the defendant was convicted of two counts of theft and was sentenced to a total term of 28 months’ imprisonment (DC579/91).

44.  In April 2009, the defendant was sentenced to 3 months’ imprisonment following his conviction for an offence of offering an advantage to an agent.

45.  In the written mitigation advanced by Mr Kwan for the defendant, it is said that the two cases in 1985 and 2004 arose from the same series of transactions that took place in the 80s at the time when the defendant was in debt as the suppliers of the defendant failed to pay for the jewelleries supplied by the defendant.

46.  For the matters raised in paragraphs 4 to 6 of the written mitigation, I raised queries with the defence at the hearing on 3 July, that for DC579/91, from the case number, the defendant could not have been brought to court before 1991, and by 1991 KDC271/85 could have been long over.

47.  Mr Kwan told me that the defendant jumped his bail in respect of DC579/91 in or about 1991 and he only returned in or about 2004 to face the music. Mr Kwan reiterated that the two cases took place at or about the same time, against the same background as stated in the written mitigation.

48.  At the hearing on 6 July, Mr Cahill provided me with a document titled “Further Elaboration on Criminal Record of The Defendant”. It appears from the information that the offences in respect of KDC271/85 took place in 1984 and the defendant was sentenced in 1985. For DC579/91, the defendant committed the offences in 1990, he jumped his court bail in 1991 and surrendered only in 2004. He was sentenced in September 2004. In other words, KDC271/85 and DC579/91 were distinct and separate cases.

49.  Mr Kwan accepted the information supplied by the prosecution in relation to the defendant’s previous convictions.

50.  It appears from the information before me that KDC271/85 and DC579/91 both involved obtaining of jewelleries and dishonoured cheques by the defendant. The companies involved were operated by the defendant though registered in the names of people related to him.

51.  Mr Cahill informed me that Yeung Wing-keung(?) referred to in the written mitigation had filed a bankruptcy petition. Of the unsecured creditors listed were Winson and Vivienne. Yeung stated that he owed $263,000 to Winson and $1.56 million to Vivienne.

Charge 2

52.  The police took a further statement from Mr Yiu over the weekend. Mr Yiu denied that he was a loan shark. The amount $618,000 was the aggregate sum of loans lent by Mr Yiu to the defendant, not aggregate sum of principals and interests.

53.  Mr Kwan accepted at the hearing on 6 July that the $618,000 was the aggregate sum of loans to the defendant. He says Yiu had acted as a loan shark on other occasions, but that is not relevant to Charge 2 and it is not relevant in sentencing as far as Charge 2 is concerned.

Charges 4 and 5

54.  The police took a further statement from Mr Chan over the weekend. According to Mr Chan, and it is accepted by Mr Kwan for the defendant, that after the cheques in relation to Charges 4 and 5 were bounced, the defendant offered to sell diamonds worth around $200,000 to Mr Chan.

55.  It was agreed between the defendant and Mr Chan that of those diamonds, one-third of its value would be used to set off the money owed to Chan by the defendant, totalling $997,000. For the balance, Chan should pay the defendant $67,000 in cash and the balance of 67,000 by two cheques.

56.  Chan gave the defendant $67,000 and two cheques as requested. The two cheques were however bounced. In other words, for the sum of $970,000-odd, Mr Chan had the benefit of some diamonds worth $67,000 and a cash payment of $67,000. The defendant still owed Mr Chan a total sum of $863,000-odd.

Further Mitigation on 6 July

57.  Mr Kwan, in the light of the information provided by Mr Cahill, submitted that on Charges 4 and 5, as one-third of the worth of the diamonds supplied by the defendant to Mr Chan was used to set off the money owed to Chan and two cheques given by Mr Chan to the defendant totalling $67,000 were dishonoured, effectively $134,000 was used to set off the liability owed by the defendant to Mr Chan.

58.  Mr Kwan submitted that Yeung Wing-keung admitted in the documents filed in relation to his bankruptcy proceedings that he owed around $1.8 million to Winson and Vivienne.

59.  For Charges 7 and 8, Mr Kwan added that the agreement to repay referred to in the written mitigation was reached after the bouncing of the cheques.

60.  On the charges of evasion of liability by deception, Mr Kwan submitted that the defendant did not intend to make permanent default of the debts. He issued cheques recklessly in the hope that the cheques could be honoured. He had tried various means to find the funds but failed to do so.

61.  Mr Kwan asked me to see Charges 4 and 5 as one group, being liability of Vivienne owed to Po Lung, and to see Charges 7 and 8 as another group, being liability of Vivienne owed to Schachter.

62.  Mr Kwan asked me to bear in mind the totality principle for the six charges that the defendant pleaded guilty. Mr Kwan asked me to pass concurrent or partially concurrent sentence for the two groups of offences as identified.

63.  Mr Kwan submitted that the documents revealed that of the dishonoured cheques, only two were related to the closed account, and the bank account was closed after the cheques were issued but not at the time.

Discussion

64.  In my judgment, the guidelines in HKSAR v Cheung Mee Kiu [2006] 4 HKLRD 776 apply to the present case as far as Charge 1 is concerned. I appreciate the charges in Cheung Mee Kiu were conspiracy to steal, conspiracy to defraud and theft, whereas Charge 1 of the present case is one of furnishing false information.

65.  Quite apart from the fact that Cheung Mee Kiu and the present case both concerned malpractices by those in the jewellery trade, both cases concerned breach of trust.

66.  The defendant was employed by GD as a sales agent and was entrusted with jewellery of GD. The defendant abused the trust that GD placed on him, he used false invoices to conceal the misappropriation of the jewellery that he obtained on trust from GD. I have no doubt that the goods obtained were used in the defendant’s own business. GD suffered a total loss of $412,925.

67.  The facts as revealed were more serious than an outright theft of the goods as the defendant was using false invoices to cover up his dishonest acts and to deceive his employer.

68.  The defendant is not a man of clear record. He had on two previous occasions committed dishonesty-related offences when he was in the jewellery business.

69.  The fact that the defendant was in debt to others in the 80s or 90s is irrelevant in the present case.

70.  The fact that the defendant failed in his business due to economic downturn and the reconstruction works gave him no excuse to victimise others, be it his employer, GD, or fellow traders like Po Lung and Schachter.

71.  On Charge 1, given the fact that GD suffered a total loss of $412,925, and following Cheung Mee Kiu, in my judgment, a starting point of 2½ years would have been appropriate. However, it was the third time that the defendant committed dishonesty offence in the jewellery business, a higher starting point is called for. For the reasons given, Charge 1 calls for a starting point of 3 years’ imprisonment.

72.  The defendant is entitled to one-third reduction for his guilty plea. Apart from his guilty of plea, I can see no other mitigating factor, and for the reasons given, I sentence the defendant to 2 years’ imprisonment on Charge 1.

73.  Charge 2 concerned 10 cheques and the total value of the cheques amounts to $550,500.

74.  PW7 and the defendant had been friends for 20 years and he lent the money to the defendant totalling $618,000. The defendant evaded his liability towards his old friend via dishonest and reckless issuance of cheques when he had no realistic prospect of making the payments.

75.  On Charge 2, I take a starting point of 12 months’ imprisonment and the defendant is given a one-third reduction for his plea.

76.  For the reasons given, I sentence the defendant to 8 months’ imprisonment on Charge 2.

77.  Charges 4 and 5 were offences committed against a fellow trader, i.e., Po Lung. Charge 4 concerned six cheques totalling $226,432. Charge 5 concerned one cheque for $138,000. The total liability that remains unpaid is over $863,000 after all the set-off previously mentioned.

78.  Although the amounts involved for the cheques on Charges 4 and 5 are smaller when compared to Charge 2, as I said, it was the third time that the defendant offended the law in the jewellery business with dishonest use of cheques.

79.  There is no other mitigating factor apart from the guilty pleas. The defendant had no excuse to pass on his financial difficulties to his fellow traders by dishonest and reckless issuance of cheques.

80.  On Charge 4, a starting point of 12 months’ imprisonment would have been appropriate. As it was the third time that defendant offended with dishonest use of cheques in the jewellery trade, I increase the starting point to 15 months.

81.  On Charge 5, a starting point of 10 months would have been appropriate. Bearing in mind the sum involved and that the defendant was evading his liability against Po Lung for the second time, as I find that the defendant was in fact offending for the third time through dishonest use of cheques, I increase the starting point to 12 months.

82.  For Charges 4 and 5, the defendant is entitled to a one-third reduction for his guilty pleas. For the reasons given, on Charges 4 and 5, I sentence the defendant to 10 and 8 months’ imprisonment respectively.

83.  Likewise, Charges 7 and 8 were committed against a fellow jewellery trader, i.e., Schachter. Charge 7 concerned three cheques for $185,710. Charge 8 concerned three cheques for a total of $135,533. An outstanding balance of $756,341 remains unpaid.

84.  Likewise, it was the third time that the defendant offended the law in the jewellery business with dishonest use of cheques. There is no mitigating factor apart from the guilty pleas.

85.  On Charge 7, a starting point of 10 months would have been appropriate. As it was the third time the defendant offended with dishonest use of cheques in the trade, I increase the starting point to 12 months.

86.  On Charge 8, a starting point of 10 months would have been appropriate. As I find it an aggravating factor that the defendant was in fact offending for the third time through the dishonest use of cheques, I increase the starting point to 12 months.

87.  The defendant is entitled to a one-third reduction for his guilty pleas. On Charges 7 and 8, for the reasons given, I sentence the defendant to 8 months’ imprisonment for each charge.

Sentences

88.  Charge 1, 2 years’ imprisonment; Charge 2, 8 months’ imprisonment; Charge 4, 10 months’ imprisonment; Charge 5, 8 months’ imprisonment; Charge 7, 8 months’ imprisonment; Charge 8, 8 months’ imprisonment.

89.  In assessing totality, I bear in mind therefore Charges 2, 4, 5, 7 and 8, the total value of the cheques amounting to a total of $1,246,175.

90.  Bearing in mind the totality principle, in my judgment, a total sentence of 3 years’ imprisonment should adequately reflect the overall culpability of the defendant. For all the charges that he has pleaded guilty to, it would represent a notional starting point of 4½ years.

91.  To achieve this end, I order that the term of imprisonment for Charges 2, 4 and 5 shall run concurrently with each other, but consecutive to the sentence for Charge 1.

92.  The terms of imprisonment for Charges 7 and 8 shall run concurrently with each other, but 2 months of which shall run consecutively to the terms of imprisonment for Charges 1, 2, 4 and 5.