HKSAR v. NG CHUN TO, RAYMOND

DCCC 405/2009

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 405 OF 2009

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Reasons for Sentence

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1.  The defendant was convicted after trial for 4 charges of conspiracy to defraud.

2.  Between September 2005 and May 2008, defendant had conspired with Cheung Ching-ho (“CCH”) and others to defraud respectively 4 different liquidity providers (“LP”) and other persons as might be induced to trade in derivative warrants (“DW”) issued by those respective 4 warrants issuers by dishonestly causing employee(s) of above LP to render favourable prices to people connected with the defendant and/or create a false or misleading appearance of active trading of DW and/or offer secret profit to above employee(s) as inducement or reward to do the above act(s). 

3.  It was found that the defendant had orchestrated through CCH and others to operate a warrant pushing scheme based in Mainland office to trade derivative warrants (DW) listed in Hong Kong.  The exercises were to employ various trading accounts, i.e. 50 dummy accounts in 27 brokerage firms to keep on buying and selling selected DWs to create a false impression of active trading, so to enhance the price and lure other investors to trade and be sold for a profit and there were also insiders from LP to help buy back the DWs unsold to ensure the profitability of the scheme.

4.  Under the recruitment of CCH, about 10 people were working in Mainland office.  By controlling the above dummy accounts, the group was able to push the selected DWs as informed by the defendant through CCH of the quantity and accounts to be used so that any particular account may not earn so much to arouse suspicion. 

5.  The offences were serious not only because of its scale involving a group of person undergoing the pushing exercises and by means of employing more than 50 accounts in 27 securities firms the detection of which was rendered very difficult and time-consuming, but also that the scheme was very sophisticated with the insiders of LP also involved whereupon daily activities were closely monitored and designed.

6.  Defendant had by CCH been able to stay behind the scene and was very cautious and careful not to leave any traceable record, had it not been the very thorough investigation, say, by comparison of all these dummy accounts; the evidence from the co-conspirators; the strong and telling circumstantial evidence including the common travel movement record; the surveillance evidence showing close connection with CCH and other insiders; the vast sum of cash found, 5 million in 2 safes, 34 million in defendant wife’s safe deposit boxes and over 110 million in both the defendant and wife’s bank accounts or from their associated companies; and also other handwritten notes and documents found, the real mastermind behind CCH, the defendant, would have never easily been discovered.

7.  The group had through the above exercises earned substantial profit, one could see from the cash withdrawals of the dummy accounts that millions were withdrawn from each account in the said period of time (AF1 / Table A).  The prosecution had also helpfully summarised in Annex A - C in sentencing submission all the deposits and withdrawals from those accounts; the total cash deposits in bank accounts and found in deposit boxes and the profits arising from those 4 selected DWs.

8.  When referring to those 4 selected DWs, the profit was about 5.1 million, however, one may easily tell from all the account statements that there were many more other DWs the group had traded in where the total withdrawals from those accounts were about 450 million and that the total cash found in bank deposits and deposit boxes were about 150 million.  On those figures, I note that the defence also submitted that there were other unrelated personal investment in those dummy accounts and that there were other third parties in their associated companies, nonetheless, the personal investment were comparatively very insignificant and so were the revenue generated from those associated companies as shown in their respective tax returns.  Thus it would be a fair approach to consider the above level of amount as the profit generated by the group as well as the profit that went to the defendant.

9.  The defendant is aged 47 and a person of clear record.  He is married with 3 children whom are all now studying abroad.  Mr Bruce SC submitted the matter had been hanging over more than 6 years causing both physical and mental stress on the defendant, particularly it was a retrial because of the misconduct of ICAC officers and the delay was no fault on the part of the defendant. 

10.  His wife and 2 children also submitted letters to plead leniency where Ms Cheng also said that the defendant felt sad and remorseful and had truly learnt his lesson.

11.  Conspiracy to defraud is a serious offence, there was no tariff and each case would be decided on its own facts. Given the scale and sophistication of the offences committed, the very substantial sum of money involved and the profit made and all the circumstances as stated above, I assess that it should attract imprisonment terms of 6 years or more, however, considering that substantial part of the prosecution case was admitted and that it was a retrial where no doubt this matter had dragged on the defendant through years, it would be appropriate to reduce to 5.  But one must also note the forceful submission of Mr Bruce SC, particularly that the lengthy proceedings was due to the misconduct of the investigation officers and not from the defendant.  I therefore assess the overall sentence of 4½ years’ imprisonment be appropriate.  The offences were overlapping in some period of time, I consider that for each charge the sentence should be 4½ years and that all be run concurrently.  Defendant is convicted after trial and I do not see any reason for further deduction.

12.  Therefore the overall sentence of 4 charges is 4½ years’ imprisonment.