HKSAR v. LI KA WING

DCCC 792/2023

[2025] HKDC 568

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 792 OF 2023

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REASONS FOR SENTENCE

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1.  The defendant (D1)  pleaded guilty to three charges of fraud (Charge 1-3), one charge of attempted fraud (Charge 4)  and five charges of dealing with property known or believed to represent the proceeds of an indictable offence (Charge 5-9). D2 was jointly charged with D1 for Charge 5-9 in which D2’s case had been dealt with in another proceeding.

2.  The fraud charges laid against D1 have no specific sum particularized.  They are all laid out as “resulting in benefit to D1 and/or his wife or in prejudice or a substantial risk of prejudice to Showtex Hong Kong Limited (‘SHK’).”

THE FACTS

3.  SHK is the Hong Kong branch of a Belgium-based company.  The main business of SHK is to supply flame retardant curtain fabrics, install projection screens for stages and provide event decoration services.

4.  At all material times, D1 had been a Project Manager of SHK.  ZHAO (D2)  was the sole director of Maban Trading Co Limited (“MTC”)  and the sole authorized signatory of MTC’s bank account.

5.  Among other things, D1 was responsible for sourcing business for SHK.  He was required to input sales details handled by him in the computer system of SHK (“the System”), prepare quotations and invoices, deploy the workshop and technical team of SHK for preparation of products and subsequent installation works.  SHK members, including D1, were not allowed to offer anything of material value including discount to customers without the consent of SHK.

Charge 1 (fraud)

6.  On 21 June 2018, Mr Leung (“PW1”)  of Manymany Creations Limited (“MMC”), approached D1 for a service order of setting up projection screens in a shopping mall for an exhibition (“Installation Project”).  Prior to the exhibition, D1 was required to temporarily install the projection screens in the mall for a mockup (“Mockup Project”).  On 25 June 2018, D1 provided PW1 with a quotation of SHK of $167,960, but later suggested PW1 to engage a subcontractor of SHK claiming that the subcontractor could provide the services of SHK to MMC at a lower price.  On 12 July 2018, D1 provided PW1 with an invoice of $75,000 from Magic Square Group (“MSG”).  Believing that MSG was a subcontractor of SHK, PW1 accepted the invoice and settled the payment with MSG upon D1’s request on the same day.

7.  Subsequently, D1 deployed staff of SHK to install the projection screens at the mall.  D1 also created in the System two invoices of SHK totaling $30,000 purportedly issued to MMC for the works.  PW1 confirmed that MMC had not received those two invoices from SHK.  On 13 July 2018, the Mockup Project was completed.  On 19 July 2018, the two invoices were settled with SHK by cash deposited into the bank account of SHK.

8.  MSG was not a subcontractor of SHK.  The normal price of SHK of the materials for the project should be $74,355 for which D1 had made a substantial discount at $30,000 without the consent of SHK. As a result, SHK had suffered a loss of $44,355.  In this matter, D1 had gained $49,000.

Charge 2 (fraud)

9.  On 9 August 2018, D1 provided a quotation of $260,000 of SHK to MMC for the Installation Project.  Similar to the Mockup Project, D1 later suggested to PW1 to engage a subcontractor of SHK for the project at a lower cost of $220,000.  PW1 agreed.  On 14 January 2019, D1 provided PW1 with two invoices of MTC totaling $220,000.  In the belief that MTC was a subcontractor of SHK and upon D’s request, PW1 paid $110,000 as down payment to MTC on 28 January 2019.

10.  D1 later deployed SHK staff members to install the screens.  D1 also created in the System two invoices of SHK totaling $65,000 purportedly issued to MMC for the works.  PW1 confirmed that MMC had not received those two invoices, which were later settled by D’s personal cheque.  On 27 February 2019, MMC paid the balance of $110,000 by depositing the sum into the account of MTC.

11.  MTC was not a subcontractor of SHK.  The normal price of SHK for the items for Installation Project should be $193,167, for which D1 had made a substantial discount at $65,000 without the consent of SHK.  SHK suffered a loss of $128,167 for the Project.  In this matter, D1 had gained $151,000.

Charge 3 (fraud)

12.  On 29 October 2018, Mr Yeo (“PW2”)  of CommBax Sdn Bhd (“CBSB”), a Malaysian company, approached D1 for purchasing fabric materials from SHK for a cruise.  On 30 October 2018, D1 provided PW2 with a quotation of SHK in the sum of around $399,000.  PW2 later requested D1 to upgrade some materials (“the Upgrade”), to which D1 had created in the System another quotation of $90,000 purportedly issued to CBSB.

13.  On 28 January 2019, D1 referred MTC to PW2 saying that MTC dealt with the same factory as SHK and would provide the same materials as SHK at a lower price.  PW2 therefore believed that MTC might be connected with SHK and agreed to D1’s proposal.  Subsequently, D1 provided PW2 with a quotation of MTC of $375,000 and two invoices of MTC at $337,500 and $37,500 respectively.  D1 had also provided PW2 with another quotation of MTC and three other MTC invoices for the Upgrade totaling $122,000.  CBSB later transferred three sums of $337,305, $85,500 and $74,000 to MTC on 25 February 2019, 5 March 2019 and 23 April 2019 respectively for settlement of the invoices.

14.  SHK and its factory had no dealings with MTC. D1 had used his personal cheque to settle a sum of $105,000 with SHK for an order of materials similar to those in this Malaysian Project from the company Meilleur Enterprise (“ME”).  ME was a company registered by D1’s sister LI Mui Yung and the materials concerned were shipped to Singapore and received by PW2 upon arrangement of D1 on 12 March 2019.  PW2 stated that the normal price for the items in the orders of CBSB should be $359,613.  D1 had made a substantial discount without the consent of SHK.  As a result, SHK had suffered a loss of $254,613.  In this matter, D1 had gained $383,805.

Charge 4 (attempted fraud)

15.  On or about 1 December 2018, Madam Wong (“PW3”), a freelance producer engaged by C5 Projects Ltd (“C5P”), approached D1 for purchasing fabric materials from SHK for a drama performance at the Hong Kong Academy for Performing Arts (“APA”).  On 19 March 2019, D1 provided PW3 with a quotation of $195,800 of SHK but he later claimed to PW3 that SHK was unable to do the cut and hem work for one of the materials (“the Work”)  due to the tight schedule and insufficient manpower.  D1 said SHK would arrange another company to take up the project.  D1 later provided PW3 with an invoice of $195,800 of MTC.

16.  D1 later requested a staff from the workshop of SHK to prepare the relevant materials.  D1 also created in the System an invoice of $52,000 of SHK purportedly issued to Cubedecor Workshop Ltd (“CWL”)  for purchase of materials.  On 21 March 2019, the invoice of $52,000 was settled with SHK by D’s personal cheque.  The normal price of SHK for the items of APA Project was $56,031.

17.  CWL confirmed that D1 engaged CWL to handle the Work at $10,500 in mid-March 2019 and D settled the payment with CWL on 1 June 2019.  PW3 confirmed that CWL had not purchased the materials from SHK.

18.  On 24 March 2019, D1 provided PW3 with another invoice of $175,000 of MTC to C5P saying that the fee for APA Project was discounted and later delivered the materials to C5P on 25 March 2019.  PW3 had not paid D1 upon the advice of SHK after discovering the above matters.  In this project, if C5P had duly settled the invoice of MTC, SHK would have suffered a loss of $175,000 and D1 would have gained $112,500.

Charges 5 to 9 (money laundering)

19.  D2 had given the bank account details of MTC to D1.  They then dealt with criminal proceeds totaling $716,805 by using that bank account to receive payments:

(i)  $110,000 received from MMC (charge 5);

(ii)  $337,305 received from CBSB (charge 6);

(iii)  $110,000 received from MMC (charge 7);

(iv)  $85,500 received from CBSB (charge 8); and

(v)  $74,000 received from CBSB (charge 9).

20.  Further, D1 paid D2 a service fee of $12,000 for the transactions made using MTC’s bank account.

MITIGATION

21.  D1 is now aged 53 with a clear record.  He is married with two adult children in their 20s. One of them is still studying in university.

22.  D1 studied in financial management up to a professional diploma level.

23.  D1 worked for SHK for six years till 2019.  He started as a sales executive and was then promoted to project manager in 2015.

24.  In October 2021, D1 worked as a sales manager for a different company which supplied construction equipment and earned around $24,000 per month.  He resigned from that job in April 2024.

25.  Mr Chan for D1 referred to HKSAR v Ng Kwok Wing [2008] 4 HKLRD 1017 for the sentencing guidelines for cases where there has been a breach of trust.

26.  In the present case, D1 acted in breach of trust in scamming his employer SHK a total sum of $427,135 for Charge 1 to 3, over a period of about 10 months.  SHK stood to lose an additional $175,000 for Charge 4 had D1’s scamming activity not been discovered. Adding those figures together, the total amount is $602,135.  Mr Chan invites the court to sentence D1 on this basis.

27.  For the money laundering offences, Mr Chan referred to HKSAR v Boma Amaso [2012] 2 HKLRD 33 and HKSAR v Hsu Yu Yi [2010] 5 HKLRD 545 where the Court of Appeal set out the factors to be considered when sentencing money laundering cases.

28.  Mr Chan also submitted that delay in the present case falls within the “sixth kind” as held in HKSAR v Chiu Chi Wing CACC 243/2012 case.  D1 was arrested in May 2020, but he was only charged in August 2023.  It had caused D1 a significant degree of uncertain suspense and therefore is a valid mitigating factor.

29.  D1 has experienced stress and anxiety since his arrest.

30.  Furthermore, his wife is suffering in poor health.  She decided to postpone her heart surgery in order to support D1 presently.

31.  D1, his wife and his daughter wrote mitigation letters in which they asked for leniency.  D1 expressed that he is utterly remorseful, and he promises he will not re-offend.  After serving his sentence for the offences in this case, he desires to resume employment to continue to take care of the family.

32.  D1 and his wife donated $1,500 to Po Leung Kuk’s Child Sponsorship Programme in January 2025 which shows his kind-hearted nature in supporting children in need.

CONSIDERATIONS

33.  Fraud and money laundering are both very serious.  Each offence carries a maximum sentence of 14 years’ imprisonment.  There are no sentencing guidelines for either offence.

34.  Before sentencing D1, I have considered all mitigation advanced on his behalf as well as authorities cited by Mr Chan.

35.  D is a man of clear record.

(Charge 1-4 Fraud and attempted fraud)

36.  The sentencing guidelines for the offence of theft involving breach of trust cases laid down by the Court of Appeal in Cheung Mei Kiu and Ng Kwok wing involving less than $250,000 is below 2 years; $250,000 to $1 million is 2 to 3 years.  The above guidelines have been affirmed in HKSAR v Yeung Chiu [2010] 3 HKLRD 339.

37.  In HKSAR v Ng Tik Ki Chaneki CACC 68/2011, the Court of Appeal said:

“51. Criminal frauds take on an almost infinite variety of shapes, seeking to inflict all manner of harm. For such reasons, in respect of crimes of fraud, there is no sentencing ‘tariff’ as such.

…

54. guidelines are intended to assist the court in arriving at the correct sentence; they do not purport to identify the correct sentence itself: see R v Millberry [2003] 1 WLR 546, 556 per Lord Woolf CJ.”

38.  Therefore, the guidelines in Ng Kwok Wing and Yeung Chiu are not straitjackets and the court must consider other factors including the quality and degree of trust reposed in the offender.

39.  In HKSAR v Leung Chun Hei [2023] 2 HKLRD 391 the Court of Appeal, after considering a number of cases[1] in relation to theft and fraud involve a breach of trust, made the following observation:

“15. In summary, the following could be discerned from the above cases:

(1)  Irrespective of whether the charge was one of theft, fraud, or conspiracy to defraud, the Guidelines were invariably referred to when the defendant was shown to be in a position of trust.

(2)  Where an amount has been particularized in the charge, that sum, instead of the actual loss, would form the basis, amongst other things, for the determination of the applicable band.

(3)  The actual loss, if less than the particularized amount, might, depending on the circumstances, constitute a mitigating factor.

(4)  The amount involved is only one of the factors to be taken into account when determining the sentence.”

The amount that D has defrauded SHK not being particularized for the charges of fraud

40.  The charges of fraud laid against D1 have no specific sum particularized.  I believe that it was because it is not easy ascertaining the amount of fraud involved in the present case due to the convoluted and meticulous ways D1 had performed the scams.

41.  It is obvious from the facts in the prosecution’s case that the quotations by SHK ($167,960 + $260,000 +$489,000[2] + $195,800 = $1,112,760)  were higher than that offered by D1’s alleged SHK subcontractors ($75,000 + $220,000 + $497,000[3] + $175,000 = $967,000).

42.  I refuse to adopt Mr Chan’s submission to sentence D1 on the basis of SHK’s actual loss of $602,135.  As highlighted in the case of Leung Chun Hei (above), the actual loss suffered by SHK only constitute a mitigating factor for D1.  I also bear in mind that the amount involved is but just one of the factors to be taken into account when sentencing D1 in a position of trust.

43.  After careful consideration, in order to quantify the amount, I deal with the sentence based on the total invoiced sum of $967,000[4] that D1 had issued to each customer of SHK.  It was part of the summary of facts that staff of SHK were not allowed to offer discount to customers without the consent of SHK.  Given these sums were less than would have been charged by SHK, the difference is more than $145,000 ($1,112,760 – $977,000).  Without saying, it is advantageous for D1 if I based these figures as a pointer of the amount of fraud exercised by him on SHK.  Mr Chan agreed to sentence D1 on this basis.

44.  Although D1 was unsuccessful in Charge 4, it would not have reduced his criminality to any significant extent.  The fact that he continued to attempt to defraud SHK demonstrates the boldness and extent to which he was prepared to commit the offences.  The same sentence for substantial crimes applies to attempted ones: see section 159J(1)(b)  of the Crimes Ordinance, Cap 200.

45.  The trust reposed on D1 by SHK was high.  He acted in an egregious and calculated way.  In my view, there was a high degree of sophistication in the fraud exercised on SHK’s customers in the short time span of 10 months.  The court must take the fact that D1 was acting with premeditation and persistence into account.

46.  In the present case, there are a number of features for which I have to impose a sterner sentence.  Using the same modus operandi, D1 made secret profits of his own as the Project Manager of SHK.  He was solely responsible for devising and implementing the fraudulent scheme.  They include:

(i)  He made scam business proposals to SHK’s customers by falsely representing that subcontractors of SHK would provide the same materials as SHK at a lower price;

(ii)  He deployed the workshop and technical team of SHK for preparation of products and subsequent installation works for his own personal monetary gain;

(iii)  He input untrue sales details in the System;

(iv)  The frauds relating to the charges were practised for 10 months. The case only came to an end because of the discovery by SHK;

(v)  He dealt with the money with D2’s MTC bank account.

47.  D1 made clear that he is unable to restitute SHK.

48.  Given the gravity of D1’s breach of trust, I am going to adopt a starting point for each charge as below.  D1’s guilty plea entitles him to receive a one-third reduction in his sentence.

Charge	Invoiced sum paid by SHK’s customers to D	Actual loss of SHK	Starting point of sentence (months)	Sentence after 1/3 discount (months)
1	$75,000	$44,355	6	4
2	$220,000	$128,127	21	14
3	$497,000	$254,613	27	18
4	$175,000	$175,000	18	12
Total	$967,000	$602,135

49.  The offences were committed on different occasions.  They were separate and distinct.  The sentences should, in principle, run consecutively.  However, the sentence would be excessive. Given the above features and SHK’s actual loss, applying the totality principle, I take the view that an overall term of 30 months should sufficiently reflect the criminality involved in this case.

50.  I note that D1’s wife's heart issue has caused concern to D1.  However, I find that his family plight could not be of assistance to him in mitigation.

51.  According to the chronology of events of the case provided by the prosecution, this case involved overseas witness and bank accounts, with three persons arrested.  This reflects that there had been a degree of complexity in the investigation.  Four pieces of legal advice have been sought.  Bearing in mind the timeline of the events, I find that there had been no unreasonable delay in D1’s prosecution.  There is no reduction in sentence on this basis.

52.  D1 claimed to have suffered from anxiety due to the present case.  It is well-established that ill-health will seldom, if ever, be a basis for reducing the sentence of crimes of gravity: Yip Kai Foon v HKSAR (2000)  3 HKCFAR 31.  Moreover, D1’s present health condition is not of such a nature and extent that could exercise the court to reduce his sentence.  D1 can seek very good medical treatment within custody. I trust also that the Correctional Services Department would be also to provide and arrange appropriate medical care to him if need be.

53.  Apart from the guilty plea, there is no mitigating factor which warrants any further reduction of the sentence.

54.  I therefore order the sentences of Charge 1 to 3 to run concurrently to each other. I also order that 12 months’ imprisonment of Charge 4 to run consecutively to the combined sentences on Charge 1 to 3.  That brings a total of 30 months’ imprisonment (18+10).

(Charge 5-9: Money laundering)

55.  In Secretary for Justice v Wan Kwok Keung [2012] 1 HKLRD 201 referred to Hsu Yu Yi, where Cheung JA set out the amounts of money involved and the sentences passed in a number of previous similar cases.  It was noted that a sentencing starting point of 3 years or so had been adopted in cases where the amount of money involved is between $1 million and $2 million.

56.  Here are the starting point of for sentence in proportion to the amount black money and discounted by one-third for his pleas of guilty:

Charge	Amount of money laundered	Starting point of sentence (months)	Sentence after 1/3 discount (months)
5	$110,000	9	6
6	$337,305	12	8
7	$110,000	9	6
8	$85,500	9	6
9	$74,000	9	6

57.  The money laundering offences added nothing to the culpability to the fraud offences.  Features that D1 received the profits were reflected in the sentence for fraud.  As such, I order the sentence of Charges 5 to 9 to run concurrently. The sentence for these five charges is therefore 8 months’ imprisonment.

CONCLUSION

58.  The sentences for the two groups of offences, ie fraud and money laundering, should be made concurrently to avoid double counting.

59.  Based on the above reasons, the total term of sentence is therefore 30 months’ imprisonment.