HKSAR v. WONG LOK TIN AND ANOTHER

CACC 209/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 209 OF 2002

(ON APPEAL FROM DCCC NO. 1069 OF 2001)

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REASONS FOR JUDGMENT

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Hon Yeung JA (giving Reasons for Judgment of the Court):

Background

1. The applicants, Wong Lok-tin (A1) and Ngai Hing-wai (A2) appeared before Deputy Judge Jenkins in the District Court on a joint charge of conspiracy to defraud. They were both convicted as charged and sentenced to 4 1/2 years imprisonment. They originally sought leave to appeal against both conviction and sentence.

2. A2 had abandoned his application and A1 had abandoned his application for leave to appeal against sentence.

3. After the hearing, we also dismissed A1's application for leave to appeal against conviction. We indicated that we would give our reasons in writing and this we now do.

The Facts

4. The case was again a Loco London gold and silver fraud. In July 1999, two "shelf" companies by the names of Victory King Ltd. (Victory King) and Yat Cheong (China) Ltd. (Yat Cheong) were purchased from Victon Registrations Ltd. Victory King is a BVI registered company.

5. On 16 October 1999, A1 became a director of both Victory King and Yat Cheong and the only shares in the two companies were transferred to him. A1 therefore became the only director and shareholder of both companies. On 20 October 1999, A1 also became the sole signatory to Yat Cheong's only bank account with HSBC.

6. On 1 November 1999, A1 signed a two-year tenancy agreement to rent the entire 14 Floor of the Hong Kong Trade Centre in Central (the office premises) in the name of Yat Cheong.

7. The monthly rent was $45,000 exclusive of rates and management fees. A cashier order for $101,255 was paid as deposit for rent and other incidental expenses. At the time of signing the tenancy agreement, A1 gave a name card and his mobile telephone number to the landlord's representative. A1 was described as the Director of Yat Cheong in the name card. A1 also signed a personal guarantee in respect of Yat Cheong's liability under the tenancy agreement.

8. The office premises were then decorated as an office in general trading or Loco London Gold and Silver bullion trading.

9. In fact there was no genuine trading. Instead, unsuspecting and vulnerable job seekers were recruited purportedly as menial workers in the company. They were then deceived into opening trading accounts for trading in London silver bullion. The victims deposited large sums of money into those accounts and the money was subsequently misappropriated.

10. Not unlike other Loco London Gold and Silver frauds, after the three victims reported for work, co-conspirators who pretended to be fellow employees befriended them. The victims were given light menial work and after a few days, they would be induced by being shown that significant money could be made from 'trading' in Loco London silver.

11. The victims were persuaded to open trading accounts to trade in Loco London silver. Initial successes were invariably followed by huge losses. The victims would be asked to provide further money to cover the losses and to continue trading. When the victims could afford no more, they were made to leave Yat Cheong.

12. The police raided the office of Yat Cheong twice, on 30 November 1999 and 16 February 2000 and seized documents therefrom. Yat Cheong carried on its business after the two raids.

13. The trading practices of Yat Cheong were examined by bullion trading experts with reference to those documents. It was found to have significant variations from normal trading practice and the ability of Yat Cheong to function as a normal bullion trader was very much in doubt.

14. It was also revealed that the victims were allowed to deal in very large transactions with very little margin deposit. The suggestion was that Yat Cheong could not be genuinely engaged in London Silver transactions.

15. A1 surrendered himself to Waterfront Police Station on 17 January 2000 and was arrested. Under caution, he elected to say nothing and made no admission.

16. A1 was served with a Production Order dated 7 August 2000 issued pursuant to s.4 of the Organized and Serious Crimes Ordinance, Cap. 455. A1 did not respond to the Production Order nor did he provide any document as required. Under caution, again A1 did not say anything.

Prosecution Case

17. The prosecution alleged that there was a conspiracy to defraud the victims who were ignorant people with little education. They were ostensibly employed as cleaners or odd-job workers and then persuaded to invest in bogus Loco London silver. It was suggested that A1 was a party to such conspiracy.

18. The evidence against A1 was largely uncontested. The evidence against him centered on the setting up of Yat Cheong. There was no suggestion that A1 had any direct dealings with any of the victims.

Defence

19. A1 did not challenge the existence of the fraud as such. He however claimed to be ignorant of the fraud. The suggestion was that Wong Chung-ming (Wong), one of the alleged co-conspirators had cheated him.

20. According to A1, Wong, a mere acquaintance whom he met casually, told him that he was a bankrupt and was therefore unable to set up a building material company. He asked A1 to do so on his behalf and agreed to pay him $10,000.

21. A1 then became the director and shareholder of Yat Cheong and Victory King as well as the sole signatory to the account of Yat Cheong. He signed the tenancy agreement on the instruction of Wong or his representative. He said he signed the guarantee without consulting Wong as he thought Yat Cheong was a normal company and there would not be any problem with him signing the guarantee. He said the name cards describing him as the director of Yat Cheong were given to him by Wong's representative.

22. A1 denied the evidence that he had produced the cashier's order and the company chop when he signed the tenancy agreement. He said he did receive cash $10,000 from Wong one week later.

23. A1 admitted that he was aware of the investigation by the police and in January 2000, he went to the police station with a lawyer arranged by Wong. He said he elected to remain silent after the lawyer advised him of such a right.

Findings of the Judge

24. The judge rejected the evidence of A1. The judge accepted the evidence of the prosecution. The judge found that there was a conspiracy to defraud the victims and that A1 was a knowing perpetrator to such conspiracy.

25. The judge said A1 had a financial interest in Yat Cheong when he signed the tenancy agreement and the guarantee and paid over $100,000. The judge rejected his evidence that he was not fully aware of the nature of the documents he signed. The judge also relied on the name cards which described A1 as the director of Yat Cheong to refute his suggestion that he was just a nominal director of Yat Cheong.

26. The judge rejected the suggestion that A1 had been cheated. The judge found that the so-called Loco London silver trading was a sham and was set up to defraud the victims. The judge found the existence of the conspiracy and that A1 was part of such conspiracy. He therefore convicted A1.

Grounds of Appeal

27. A1 attacked the judge's finding that he had a financial interest in the unlawful business of Yat Cheong. He suggested that he was merely involved in setting up Yat Cheong but was not a party to its unlawful business.

28. Mr. Burkett, on behalf of A1 suggested that the prosecution evidence is insufficient to enable the judge to draw the irresistible inference that A1 was a party to the conspiracy to defraud.

29. We found we were unable to accept Mr. Burkett's submission at all. To win the confidence of potential victims, it was clearly necessary to set up Yat Cheong as a reputable and trust-worthy company. That explained why respectable office premises were rented and suitably decorated and furnished, elaborate stationery and forms, including name cards with a false description, were printed.

30. A1 was deeply involved in the setting up of Yat Cheong. He became the sole director and shareholder. He was also the sole signatory to the bank account. He rented the office premises at $45,000 per month and stood surety for Yat Cheong in respect of the tenancy.

31. A1 also allowed himself to be described as director of Yat Cheong in his name cards which he freely handed out. He even paid to the landlord a cashier order for over $100,000 as rental deposit for the office premises.

32. The conspiracy in question is a substantial one involving careful planning. Without the active participation of A1, it was not possible for the conspiracy to get off the ground.

33. Despite his arrest on 17 January 2000, A1 did nothing to disassociate himself from Yat Cheong and allowed it to continue trading. He did nothing to assist the police in the investigation and refused to provide any information.

34. A suspect is of course entitled to exercise his right of silence and the exercise of such right cannot be construed in any way prejudicial to the suspect. But A1's refusal to respond to the Production Order was inconsistent with the suggestion that he himself had been cheated by Wong.

35. It was emphasized that A1 had no direct dealings with the victims. There was no such need. In a conspiracy involving a lot of people and lasting for a prolonged period, different co-conspirators can join in at different stages and take up different roles. Indeed the fact the A1 did not have direct dealings with the victims was an indication of the sophistication of the scheme.

36. The judge was entitled to reject A1's evidence that Wong had cheated him and that he was not a party to the conspiracy.

37. The judge had not referred to A1's refusal to respond to the Production Order, but on the undisputed evidence adduced by the prosecution, the judge was entitled to infer that A1 had entered into an agreement and had taken part in the agreed course of conduct in furtherance of the conspiracy to defraud the victims.

38. A1 was rightly convicted and there was nothing unsafe or unsatisfactory about such conviction. A1's application for leave to appeal against conviction was therefore refused.