HKSAR v. CHOY KAM-KUEN AND ANOTHER

DCCC 631/2021

[2022] HKDC 874

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 631 OF 2021

________________________

________________________

________________________

REASONS FOR SENTENCE

________________________

Charges

1.  D1 is convicted after trial of following charge:

1^st Charge (against D1 only)

Statement of Offence

Fraud, contrary to section 16A of the Theft Ordinance, Cap. 210.

Particulars of Offence

CHOY Kam-kuen, between the 15^th day of July 2015 and the 29^th day of July 2015, both dates inclusive, in Hong Kong, together with other persons unknown, by deceit, namely by falsely representing to YEH Shun-yiu that:

(i) World Link (Holdings)  International Enterprise Limited (“World Link”)  would help to arrange a loan for him;

(ii) in order to process the loan application, he had to pay $173,200 Hong Kong currency (“the administrative fee”)  upfront to the said CHOY Kam-kuen; and

(iii) if the loan application was unsuccessful, the administrative fee would be refunded to him in full amount,

and with intent to defraud, induced the said YEH Shun-yiu to commit an act or a series of acts, namely to first obtain an intermediary loan, and to pay the administrative fee to him, which resulted in benefit to himself and/or the said World Link, or in prejudice or a substantial risk of prejudice to the said YEH Shun-yiu.

2.  D1 and D2 are convicted after trial of the following charge:

2^nd Charge (against D1 & D2 only)

Statement of Offence

Fraud, contrary to section 16A of the Theft Ordinance, Cap. 210.

Particulars of Offence

CHOY Kam-kuen and WAN Kin-ming, between the 23^rd day of November 2015 and the 30^th day of November 2015, both dates inclusive, in Hong Kong, together with other persons unknown, by deceit, namely by falsely representing to NG Wai-ping that:

(i) World Link (Holdings)  International Enterprise Limited (“World Link”)  would arrange a revolving mortgage for him;

(ii) in order to process the loan application, he had to pay $1,799,550 Hong Kong currency (“the said sum”)  upfront to the said World Link for settling his outstanding loans with Public Bank (Hong Kong)  Limited (“the outstanding loans”);

(iii) upon settlement of the outstanding loans, the loan application would be processed and completed; and

(iv) if the loan application was unsuccessful, the said sum would be refunded to him in full amount within 90 days,

and with intent to defraud, induced the said NG Wai-ping to commit an act or a series of acts, namely to first obtain an intermediary loan, and to pay the said sum to the said WAN Kin-ming as settlement of the outstanding loans, which resulted in benefit to themselves and/or the said World Link, or in prejudice or a substantial risk of prejudice to the said NG Wai-ping.

Prosecution’s case proved on 1^st Charge

3.  At all material times, PW1 and his wife were the joint owner of a flat in Shatin.  The flat was mortgaged to Hang Seng Bank.  They also took out loans from Hang Seng Bank, Dah Sing Bank, Bank of China and UA.  As at 15 July 2015, the day he was first contacted by the fraudsters, they owed the aforesaid lenders $502,700 in total. 

4.  On 15 July 2015, PW1 received a cold call from someone who claimed to be an employee of Bank of China.  That person offered to help him get a low-interest loan.  He showed interest in it.  That person asked him to bring his identity card, address proof and income proof to World Link’s office for an appointment on 21 July 2015.

5.  On 21 July 2015, PW1 arrived at World Link.  The receptionist led him and his wife to a room.  Inside was a male who gave his name card to PW1. The name card stated “Kenny Cheung, Financial Planning Officer of World Link”.  He claimed to be the manager and that his name was Kenny Cheung (“Kenny”).  Kenny said as follows:

(1)  World Link was a subsidiary of Bank of China;

(2)  World Link could arrange a low-interest loan for PW1;

(3)  World Link could consolidate the loans of PW1;

(4)  World Link could help PW1 apply to the Bank of China and other banks including Hang Seng Bank and Prime Credit for a second mortgage;

(5)  PW1 could borrow $780,000;

(6)  World Link would charge a handling fee of $200,000 for World Link;

(7)  If the application was unsuccessful the fee would not be charged by World Link.

6.  PW1 agreed to these terms as he found them favourable.  Kenny asked him to sign a contract to facilitate him (Kenny)  to apply for the low-interest loan and to have it stated that if unsuccessful in the application the handling fee of $200,000 would be returned to PW1.  PW1 was not given a copy of the contract though he had asked for it.  Kenny said he would give it to PW1 later.  PW1 left.  This meeting lasted 30 – 45 minutes.

7.  After the meeting he received a phone call from Kenny telling him that he and his wife would have to go to a company called M Success Finance Company (“M Success”)  to borrow the money and he had helped PW1 to borrow the money.

8.  On 29 July 2015 he was taken to M Success in Mong Kok by two males who claimed to be World Link staff.  He signed the loan agreement with M Success and got a cash cheque for $262,400 and a crossed cheque for $517,600.  The two males brought him to cash the cheques.  He got $262,400 in cash and $517,600 into his account. The two males then brought him to the office of World Link. Inside the same room he saw Kenny.  Kenny asked for the handling fee of $200,000. PW1 hesitated because no application for the new loan had been made. Kenny told him not to worry and gave him a rebate of $41,600, so PW1 only needed to give him $153,200 but there was an additional handling fee of $20,000.  PW1 gave Kenny Cheung $153,200, for which Kenny issued an invoice. PW1 also gave Kenny $20,000 for which there was no invoice.  Kenny told him to wait for the processing of the second mortgage application which would take one to three months.  This meeting lasted about 45 minutes.

9.  Afterwards, PW1 was unable to contact Kenny by phone or the office of World Link up to 7 September 2015.  He reported the matter to the police the same day.  The police went up to World Link but could not find Kenny.  Later the same day Kenny called PW1 and said it would take the banks one to two months to process. 

10.  PW1 asked the three banks on his own and learned that they had not received his application.  A few days later PW1 went up to World Link in the normal working hours but it was closed, no light was on and nobody was inside. He made a report to the police.

11.  On 26 November 2015 the police arrested D1 at the office of World Link for the offence of conspiracy to defraud.  They seized, among others, a handwritten notebook (“Notebook”)  with contents like template scripts for making cold calls to offer to help flat owners apply for low-interest loans. 

12.  At a properly held identification parade on 14 February 2017 PW1 identified D1 as Kenny. 

Prosecution’s evidence on 2^nd Charge

13.  At all material times, PW2 was the owner of 2 flats in Yuen Long.  The flats were mortgaged to Public Bank (Hong Kong)  Limited (“Public Bank”).  They also took out other loans from the same bank.  As at 23 November 2015, the day he was first contacted by the fraudsters, he owed this bank $2,040,000 in total.   

14.  On 23 November 2015 he received a call from someone who claimed to be Ms. Yuen of a company working with OCBC Wing Hang Bank promoting a property refinancing plan.  The terms were quite attractive.  He said he would consider it. 

15.  On 24 November 2015 Ms. Yuen called him again.  He said he was interested in it.  He provided her the particulars of his two flats for valuation.  She said she could help him apply to OCBC Wing Hang Bank for a new mortgage at a very low interest rate.  He agreed to go for it.  She asked him to go to World Link the following day with the necessary documents for processing.     

16.  On 25 November 2015 he went to the office of World Link.  The receptionist lady led him into a room where a male was seated.  PW2 sat down.  That male gave PW2 a name card in the name of KC Choy (“Choy”).  PW2 gave Choy the necessary documents for the mortgage.  Choy said he could help PW2 get a mortgage for both flats with OCBC Wing Hang Bank for $2,100,000. PW2 could have $1,800,000 of it to redeem his mortgage with Public Bank and $300,000 of it for his own use.  The interest rate would be 1.8% per year whilst Public Bank had been charging 4.5% per year.  He agreed to take up this loan and asked Choy to arrange the matter for him.  Choy took PW2’s documents out of the room for photocopying.  He returned after a few minutes.  PW2 was asked to sign some document which Choy said was proof he had been to World Link.  PW2 was not given a copy of it. The meeting lasted about half an hour from the time of PW2’s arrival at World Link to the time of leaving World Link.   

17.  On 26 November 2015 Ms. Yuen told PW2 on the phone that someone would inform PW2 to go to a law firm to deal with the new mortgage. 

18.  On 27 November 2015 he received a call to the effect that he was to go to a solicitors’ firm called “Au Tong Tsang” (“Au Tong Tsang”)  on 30 November 2015.

19.  On 28 November 2015 he received a call to remind him of the appointment of 30 November 2015.

20.  On 29 November 2015 Ms. Yuen called him again and told him the phone number of someone called “Mr. Lee” so that PW2 and Mr. Lee could meet up at Sheung Wan Station.  Mr. Lee would take PW2 to sign some documents at Au Tong Tsang.

21.  On 30 November 2015, he met up with Mr. Lee at Sheung Wan Station.  Mr. Lee took him to Au Tong Tsang.  An employee of Au Tong Tsang brought him into a room.  Mr. Lee did not enter the room but waited outside on a sofa.  The employee asked him to sign some documents relating to his borrowing $1,800,000 from Shun On Finance Limited (“Shun On”).  He did not understand what was going on.  He called Ms. Yuen to enquire why he had to borrow money from a finance company.  Ms. Yuen told him that it was just a procedure for Public Bank to be repaid so that Public Bank could transfer his mortgage to OCBC Wing Hang Bank. He believed her and signed the document such as a loan agreement with Shun On. As he had to pay government levies of $450, he only got a cheque for $1,799,550.  Mr. Lee took him to the bank and asked him to take cash.  He called Ms. Yuen to enquire why cash was needed.  Ms. Yuen replied that cash would be quicker to clear his existing mortgage.  So he withdrew the sum in cash.  Mr. Lee took him to Wong Ka Hing solicitors’ firm.     

22.  Mr. Lee entered its conference room with him.  Already inside was a male sitting at the table.  They did not have to wait long until someone who he supposed to be the lawyer called Wong (“Lawyer Wong”)  entered the room.  Lawyer Wong explained the terms of the contract between PW2 and World Link, which were:

(1)  PW2 needed to hand over $1,800,000 to World Link as proof of his asset to facilitate World Link to apply a mortgage for PW2;

(2)  PW2 needed to hand over all relevant documents to World Link to apply for the mortgage;

(3)  PW2 could not mortgage his two flats to others;

(4)  It would take 90 days to do the mortgage for PW2, and if the mortgage could not be done in 90 days the $1,800,000 would be returned to him.

23.  Lawyer Wong announced that Tang seated there was from World Link representing World Link to sign.  Then Lawyer Wong asked PW2 and Tang to sign the contract in 3 originals, which they did.  After that, Lawyer Wong also signed.  Then PW2 placed the bag containing $1,800,000 cash on the table and pushed it across the table as Tang representing World Link and Lawyer Wong were on the other side of the table.  PW2 then left at the same time as Tang.  They took the same lift down and then separated.

24.  Later PW2 called Ms. Yuen to tell her the money was given to Lawyer Wong’s office and he reminded her to do the mortgage as soon as possible.

25.  PW2 estimates that the duration from entering the office to leaving the office was 20 minutes.  He mostly looked at Lawyer Wong explaining the terms of the contract.  

26.  At a properly held identification parade on 14 February 2017 PW2 identified D1 as Choy. 

27.  At a properly held identification parade on 19 April 2017 PW2 identified D2 as Tang. 

28.  As regards 1^st Charge, my finding is that D1’s accomplice made the cold call to pretend to offer a prospect for a favourable loan to PW1.  D1 first met with PW1 to pretend to process the loan for PW1.  He called PW1 to go to M Success to borrow money.  He met PW1 again, this time to take PW1’s money allegedly for further processing of the loan.  D1 is convicted as charged.    

29.  As regards 2^nd Charge, my finding is that D1’s and D2’s accomplice made the cold call to pretend to offer a prospect for a favourable loan to PW2.  Following up on the cold call, D1 in turn met with PW2 to pretend to process the loan for PW1.  Following up on D1’s meeting, someone in turn brought PW2 to borrow money.  Following up on money thus borrowed, D2 in turn met with PW2 to sign contract for World Link and receive the money from PW2, allegedly for further processing of the loan by World Link.  D2 was also a knowing participant to World Link’s fraud on PW2.  D1 and D2 are convicted as charged.

Mitigation

30.  D1 is 40 years old.  He has a clear record.  At the time of the offence he was 35.  He had not completed F.7 when he left school.  He was married in 2011.  His daughter is 3 years old now.  He has been working steadily in the telecom industry since early 2017.  He provides for his family and his parents. 

31.  D2 is 42 years old.  He has a clear record.  At the time of the offence he was 33.  After Form 4 he began to work.  He had been a decoration worker, a driver, and then a salesman.  He was married in 2011.  His son is 6 years old now.  He provides for his family, his wife’s family and his parents.  He also helped his disabled sister-in-law to get a job.  

32.  From D1’s arrest on 26 November 2015 to his being charged on 25 May 2021, there was a time lapse of 5 ½ years. 

33.  From D2’s arrest on 12 October 2016 to his being charged on 25 May 2021, there was a time lapse of 4 years 7 months. 

34.  The prosecution by a letter dated 11 August 2022 in substance attributes the time lapse to the complexity of the case and the large number of suspects, hence the lengthy investigation, not the fault of the police or the prosecution. The defence do not take issue with that.  Defence counsel merely asks me to consider that notwithstanding the absence of fault of the police or the prosecution, D1 and D2 had been under the pressure of upcoming legal proceedings long after their arrests.      

Sentencing considerations

35.  Mr. Lau for D1 refers to 2 cases of fraud by a refinancing intermediary. The first case is HKSAR v Lai Kin Hang Erwin & Others DCCC 312/2016.  The facts were similar to 1^st Charge in our case.  There were 20 victims in 18 cases being deceived of about $2,800,000 by way of consultancy fee to the defendants’ company.  They also had to pay for the bridging loans at extortionate interests.  The judge put the defendants into 3 groups: first, director and shareholder of the company, a starting point of 6 years; second, supervisor or actively involved member of the frontline fraudsters, 4 ½ years; third, frontline perpetrators such as cold callers or salespersons not taking an active role, 4 years.                  

36.  The second case is HKSAR v Cheung Ka Chun & Another [2018] HKDC 481.  D1’s facts were similar to 1^st Charge in our case.  The 2 victims were deceived of monies in the nature of consultancy fee $157,000 and $143,575 respectively (1^st Charge and 2^nd Charge thereof).  He took an active role in contacting and meeting the victims.  There were other fraudsters working with him.  D2’s facts were similar to 2^nd Charge in our case.  The first victim was deceived of $800,000 whereas the second victim was deceived of $1,900,000 as guarantee money lodged with D2’s company purportedly for a low-interest loan (3^rd Charge thereof).  D2 was present when the first victim handed over $200,000 of the $800,000 to his accomplices.  He also sent the first victim a message to pretend the money had been paid to discharge part of the existing loan.  D2 acted as the director and shareholder of the company.  He did not play any role in handling the second victim.  The judge observed that the fraud targeted people in need and under financial pressure.  The scams were premeditated, well-planned and executed.  D1’s starting point was 4 years 3 months for each charge.  They cannot be regarded as a single transaction.  After totality adjustment, D1’s total sentence on his guilty plea was 42 months (1^st and 2^nd Charges).  D2’s sentence was 32 months on a guilty plea (3^rd Charge).    

37.  HKSAR v Chu On Chi CACC 484/2006 is a clear example of a sentence reduced due to delay in prosecution, among other decided cases. 

Sentencing D1 and D2

38.  Each charge demonstrates how a syndicate had set up a company with the pretense of affiliation with major banks and finance companies tasked with getting low-interest loans for property owners.  It had template scripts for cold calls to address different situations of victims. It had meetings with victims in presentable offices.  It had a posse of frontline members to serve, in fact monitor, the victims.  The whole setup was clearly carefully contrived by financial and legal professionals.  The victims, who were initially in need of money, suffered the loss of money and also had to pay up their new loans at understandably high interest rate to the finance companies.  Such fraudsters can expect no lenient sentence.

39.  For 1^st Charge, D1 served PW1 in the office twice.  The starting point is 4 years.  There is 5 ½ years’ time lapse from his arrest to his being charged.  There was no allegation against the prosecution, the police or D1 but it can be understood that it was a grave burden on him to have to wait that long.  I reduce his sentence by 3 months.  There is no other mitigating factors, D1’s sentence is 3 years 9 months.

40.  For 2^nd Charge, D1 served PW2 once in the office.  D2 signed the agreement and received PW2’s money in Lawyer Wong’s office.  The setup and execution was more sophisticated than 1^st Charge.  PW2 lost heftily.  Their roles were different but equally important.  The starting point is 4 years.  There was no allegation against the prosecution, the police or D1 but it can be understood that it was a grave burden on D1 and D2 to have to wait that long.  I reduce their sentence by 3 months.  D1’s and D2’s sentence is 3 years 9 months each. 

41.  By totality, I order 9 months of 2^nd Charge to be served consecutively to 1^st Charge, D1’s total sentence is 4 years 6 months.