In fact, it was a total scam which he made sound very convincing. All of these moneys were taken between December 1997 and August of 1998, which is now some 19 years, approximately, ago. When some of the victims became nervous about the defendant’s scheme, they began to ask for their money back, but the defendant gave various excuses before he completely disappeared off everyone’s radar.
As it turns out, he had ultimately gone to the United States of America. He is a citizen of the United States, and while he was there, after these offences, it seems that he took up a teaching post, and was able to live without being disturbed until, about 14 years later, the law ultimately caught up with him.
The defendant’s arrest was on 9 December 2012, and he was then detained pending extradition. He was kept in custody in the United States until 7 February 2014, and the reason for that is that he had contested the extradition application.
On 15 October 2012, the court finally rejected the defendant’s arguments against extradition, but he wasn’t satisfied with that decision, and he went on to file a petition for Habeus Corpus on 5 December 2012, and then proceedings were further delayed by the defendant’s application for the appointment of counsel to represent him.
Eventually, the Habeus Corpus application was denied. That was on 18 December 2013. But still, he persisted in his fight against coming back to Hong Kong. He had two motions to stay the order for extradition to the appeals court, and finally, he was sent back to Hong Kong on 8 February 2014.
All in all, the defendant had been kept in custody for approximately 23 months in America.
I have carefully considered various judgments of the Court of Appeal, both in Hong Kong and in the United Kingdom as to the attitude to be taken to time spent in custody pending contested extradition proceedings. I am satisfied, as Lawton LJ said in R v Joseph Jerome Scalise and Arthur Rachel [1985] 7 Crim App R 395, that the defendant, and I quote: “Played the system.”
Of course, as seems to have been said in R v Peffer Terrence [1992] 13 Crim App R 150, and in numerous other cases, the sentence passed by the court, when taking into account time spent in custody pending extradition, is one where the court is given a discretion to determine what, if any, allowance is to be made, and there is no rule which binds the sentencer to make a particular deduction from the sentence.
One example very close to the present case as to the proper approach to be taken to time spent in custody for this reason is HKSAR v Michael Wang CACC 184/2006. In that appeal, several other cases relating to the exercise of the judge’s discretion in this regard are helpfully summarised, including R v Law Yiu Wo [1994] 2 HKCLR 204, and HKSAR v Lam Tze Leung, unreported, CACC 476/2004.
Having considered the position of the defendant now before me, it seems perfectly clear that he played the system in the hope that he might be able to evade justice in Hong Kong. As such, therefore, he is the author of his own misfortune.
I am prepared, however, to allow two months only of the time that the defendant spent in custody pending extradition, which is the time, slightly rounded up in his favour, between his arrest on 9 March 2012 and the first hearing in court on 4 May 2012, when the defendant indicated he would contest his extradition.
So far as the time that the defendant has spent in custody from 8 February 2014 until now, this, of course, is counted towards the inevitable sentence to be imposed today for offences as serious as these.
But it should be clearly stated that the various delays that have been occasioned in Hong Kong have all been brought about by the defendant himself. If he had pleaded guilty earlier on, he would have had his case dealt with years ago. In fact, the case was listed for trial on 15 June 2015, nearly two years ago, but the defendant couldn’t be tried, apparently, because he was seeking fresh representation. All the indications were that he’d be contesting the charges. So the trial was refixed for 5 May 2016, but the defendant’s counsel on that occasion found himself unable to continue to represent the defendant. So once again fresh counsel had to be found.
And so it is that after about 3 years and 2 months in custody in Hong Kong, we have finally arrived at sentence today, just over five years after the defendant’s arrest in 2012.
In mitigation, it has rightly been said, that the defendant pleaded guilty when first arraigned last month. And so accordingly, he is entitled to the full discount on sentence that he received. And there is nothing else, really, that materially affects mitigation.
The defendant was in his early 50s when he committed these offences, and after he had committed them, he chose to hide away, well aware of the gravity of his crimes. That’s why in America, there was such a long delay before his arrest. He was in hiding.
The way this scam operated from the start was by persuading a Cathay Pacific Airways pilot, the first witness in the bundle of statements, PW1, to invest in the defendant’s scheme after the defendant had painted a highly optimistic and what it turns out to be, an entirely false picture about the state of his finances. The defendant was offering to accept investments which for tax reasons, as he called it, would have to be wired to his offshore company, called Kwong Fai Limited, which was registered in Nassau in the Bahamas, and which, according to him, managed the Kwong Fai 88 Investment Programme.
The defendant showed PW1 performance figures which purported to show huge profits over the past 14 years. PW1 was taken in by this, and he invested 35,000 United States dollars in the scheme, and then introduced, because of his conclusion that this was a good investment, other pilots to the same scheme. They are all identified on the indictment. There were six more victims, at least.
In the same month that the first victim, Richard Hayes, began to invest with the defendant, PW1 asked for $20,000 of his investment to be returned to him, and it was duly returned. And later, in August 1998, by which time PW1 had introduced all of the other victims to the defendant, or at least his scheme, PW1 found that a further US$30,000 had been credited to his account, so that he had actually made a $15,000 profit on his initial outlay of 35,000.
Now this, of course, is a ploy, which is so often to be seen in scams of this kind, allowing the introducer of victims, who is an innocent party, to think that all is well with the scheme which is being put forward by the person operating the scam.
However, when the victims in this case each began to worry about their investments and started to ask for their money back, excuses were given, and not long afterwards, the defendant disappeared.
We know now that he physically left Hong Kong on 10 November 1998. Police were informed in January 1999 about what had happened, and this was because PW1, who felt responsible for introducing his friends to this scheme, quite innocently, had been told by the defendant that the money had been invested in the mainland, contrary to his sales talk, that all the moneys would be invested in the United States.
I am satisfied that aside from US$10,000, not a single cent of the money obtained from these six victims has been repaid. I am also satisfied that there is no trace which can be found of the whereabouts of any of the money obtained.
If money had been repaid by way of compensation or restitution, it would have been powerful mitigation. As it is, there is no such thing.
This was a highly lucrative scam, which continued for at least eight months, with lies and excuses being given for months after that, to stall for time, while the victims tried to get their money back. PW1, as I say, is responsible for innocently introducing his friends to this scheme, who were all of them airline pilots with Cathay Pacific, conducted a number of investigations into the defendant’s background. Amongst other things, he discovered that the defendant had 11 offshore companies, but there was still no trace of the stolen funds. None at all.
The Summary of Facts provides many details which I shall not repeat in these remarks, but they are important in explaining how such large sums were obtained from apparently perfectly sensible people. Amongst other things, immediately after these moneys had been paid over to the defendant, he would keep in close touch with his victims, assuring them all the time that their so-called investments were progressing well. It is now known, of course, that after the defendant left Hong Kong on 10 November 1998, he did not return here at all until he had been extradited from the United States.
The prosecution has shown, from a fund flow chart, which has been prepared to illustrate what happened to those funds, that in fact, none of the moneys was invested in the way the defendant had promised. The bank records of Kwong Fai’s accounts show that the moneys which were paid by these six victims were withdrawn within days, and were then transferred to the defendant’s personal account at the Hang Seng Bank in Hong Kong, and from there, dispersed elsewhere.
When he was interviewed, the defendant said nothing, as he was perfectly entitled to, except that Kwong Fai was incorporated by him.
And so it is that aside from his plea of guilty and the two months spent in custody prior to his extradition, there’s really nothing in this case which assists him in mitigation. If he hadn’t run away and tried to hide, he would have been dealt with nearly 20 years ago.
Mr Whitehouse informed me that the defendant has, and I quote:
“No knowledge or memory of where the funds he stole went to.”
I do not accept that for one moment. Not surprisingly, this is put down by Mr Whitehouse to the defendant having a form of dementia, but he was in no position to tell me that. We have here a medical report, and it shows that all things considered, the defendant is in reasonably good health for his age, and there is no suggestion of dementia.
Also before me are the impact statements of the various victims who have suffered so badly at this defendant’s hands. In particular, Mr Hayes and Mr Coverdale. Both of these victims of theft suffered hugely. The first, Mr Hayes invested $1,402,000-odd, United States dollars, that is, and Mr Coverdale, 1.5 million United States dollars.
Mr Hayes outlines in his account the stress which he has suffered as a result of his loss, pointing out that this money represented, in effect, his life savings, which were meant for his retirement. He had a breakdown caused by the stress, then his marriage broke down, and in fact, he blames the death of his wife which followed the breakdown on her inability to cope with the loss. In short, it had totally ruined his life.
The defendant was residing at a well-known hotel in Hong Kong where Mr Hayes used to stay when he was working as a pilot. He describes the defendant as inviting him into his room at the hotel, where the defendant had many computers, all of which purported to show how the investments that had been made had increased. This, of course, was entirely false information, but it was very persuasive, and it was so persuasive that not only Mr Hayes, but five other pilots all fell for it.
About Mr Coverdale, well, he had worked for 25 years for Cathay Pacific, and the theft from him has deprived him of a pension. He had to find what he described as a small job in Korea, and he has been there since 2001, and I quote from his statement:
“My whole life was ruined by this man.”
The stress of losing his entire pension led to heart problems, and he is now on heart medication. Both Mr Hayes and Mr Coverdale spent some money attempting to trace the defendant, but he had covered his tracks so well, though it seems that he had been to Monaco and to the Lebanon for a while, but eventually, it was impossible to find out where he was, and that is why the eventual arrest took so long.
The delays in this prosecution have been the defendant’s responsibility, caused by hiding from his victims, and then fighting extradition, and in fact, playing games, probably, with the system here in Hong Kong, taking another three years and two months before we get to today.
The defendant, as he was committing these crimes, would have been well-aware of the likely impact on the individuals he was defrauding. They, of course, had worked for their savings, and he was stealing their life savings from them.
Even by today’s standards, these were enormous thefts, and the defendant must now pay the penalty for his dishonest and heartless offences.
So I will turn now to the sentence for these offences. Each offence needs to be dealt with individually. However, it is important that an overall sentence needs to be arrived at, which covers the totality of the defendant’s dishonest activities.
Here, the sentence needs to reflect dishonest gains of just over HK$25 million, or as I said earlier, US$3,252,000, and all those years ago, no doubt that was an even larger sum than it is today. The sentencing guideline for theft applicable to this case are those which are in R v Barrick 81 Crim App R 78. These guidelines are not particularly helpful, because effectively, they indicate that a sentence of 3 and a half to 4 and a half years’ imprisonment should be imposed for theft of over £100,000, that is, pounds sterling. The losses here suffered by Mr Hayes and Mr Coverdale alone, with the other four victims, they are nine or ten times that amount. The total losses incurred, of $25 million were never contemplated under the guidelines in Barrick.
It has to be said, and here, I agree with Mr Whitehouse, that the present case is not strictly a case of breach of trust. The defendant was in no special professional category such as a solicitor or a banker or an accountant is. The defendant, to put it bluntly, was a bare-faced conman, or a confidence trickster.
The sentencing guidelines in Barrick suggests for amounts of less than $10,000, a term of imprisonment ranging up to about 18 months, and for thefts of between £10,000 and £50,000, 2 to 3 years’ imprisonment. And where greater sums were involved, such as over £100,000, as I said before, 3 and a half to 4 years would be justified. These are all Sterling amounts, because the case, of course, was decided in Britain.
Now, those guidelines were for breach of trust cases in the strict sense. But as I say, the judgment simply didn’t anticipate thefts on a scale encountered in the present case, so that I have been given, really, little or no assistance by the Barrick guidelines.
Theft, both before and after 1998 carried a maximum sentence of 10 years’ imprisonment, so that there would need to be more than a single charge to impose a sentence over 10 years following a contested trial.
Now, the same maximum sentence is also provided, that is, 10 years, by Section 18D of the Theft Ordinance, Cap 210, for offences of procuring an entry in certain records by deception. Counts 17, 19 and 21 are offences of this type. And as this led to a combined loss of US$1.5 million or HK$11,625,000 to the victims of these acts of deception, I shall treat them in exactly the same way as the theft charges. Each count on the indictment, therefore, requires a separate sentence, bearing in mind that a global sentence with totality in mind has to be arrived at.
These were premeditated offences. They were spread over at least 8 months when the defendant must have believed that he had got away with this, when he had hidden himself away, eventually in the United States.
And he has, furthermore, managed to conceal the fruits of his dishonesty, so that nothing has been recovered, and since that time, has refused to say where they are. He says he refused because he has told Mr Whitehouse that he has no memory of what became of the funds. Utter nonsense. Utter nonsense. If there had been some restitution, he would have received considerable reduction in sentence. As it is, there has been none, and I have had my credibility stretched beyond reason by what I have heard in the mitigation.
Even looking at the more recent theft guidelines, which of course have no application here, and I am talking now of Ng Kwok Wing [2008] 4 HKLRD 1018, the sums taken by this defendant exceed the $15 million mark by $10 million. And it serves, that case, to illustrate the enormity of these crimes, crimes which are not at all victimless. The defendant dealt with these victims himself, and knows exactly what he was doing when he did it.
I am satisfied that a starting point here of not less than 13 years’ imprisonment after trial is appropriate for a case of this gravity. As I have said already, the defendant is entitled to a full discount for his pleas of guilty.
On count 1, the starting point I shall take for the theft of US$55,000, or HK$426,250 is 27 months. After discount, his sentence on that count will be 18 months.
Count 2, the value of the theft here was US$11,923, or about HK$92,403. Starting point will be 6 months, and after discount, the sentence will be 4 months.
Count 3, the value of the theft here was US$500,000, or HK$3,875,000. Starting point will be 5 and a half years’ imprisonment, reduced to 3 years and 8 months, which is the sentence on that count.
Count 4, the theft was US$100,000, or HK$775,000. The starting point will be 2 and a half years, and after discount, the sentence on that count, Number 4, will be 1 year and 8 months.
Count 5, the theft here was US$400,000, HK$3,100,000. The starting point will be 5 years’ imprisonment, reduced to 3 years and 4 months’ imprisonment, which is the sentence on Count 5.
Count 6. The theft of US$120,150, or HK$930,000. The sentence is 2 years and 9 months, reduced to 1 year and 10 months, which is the sentence on count 6.
Count 7. The value of the theft here was US$200,000, in Hong Kong dollars terms, 1,550,000. Sentence starting point, 3 years 9 months, reduced to 2 and a half years, that is your sentence, 2 and a half years on Count 7.
Count 8, 9 months’ imprisonment will be the sentence for the theft of US$15,000, HK$116,250, reduced to 6 months, which is the sentence of Count 8.
The approximate total loss on those 8 counts is HK$10,864,903, and it was Mr Richard Hayes who lost all of that money, and I have taken a notional 10 years starting point for the offences on that group of offences. I am going to order that whilst most of the sentences run concurrently with each other, 3 years of the sentence on count 5 will run consecutively to the sentence of 3 years and 8 months on count 3, and that makes a sentence, altogether, of 6 years 8 months on those 8 counts.
Now, of course, there are further counts.
Count 10, this was a theft from Mr Donaldson of US$100,000, or HK$775,000. 2 and a half years is the starting point for that, reduced to 1 year 8 months’ imprisonment, which is the sentence on Count 10.
Count 12, the theft here was US$50,000 from Mr Boyens, or HK$387,500, starting point 9 months, reduced to 6 months.
The same applies on counts 13 and 14, where the loser was Mr Clapson, exactly the same figures, US$50,000 in each case, and I shall take a starting point of 9 months for each, reduced to 6 months, as the sentence on Counts 13 and 14.
Counts 17, 19 and 21 are the offences of procuring the making of a debit entry in the records of a Luxembourg bank where the loser was Mr Coverdale. Count 17 represents a loss of US$600,000 or HK$4,650,000, the starting point on Count 17 will be 5 years and 9 months’ imprisonment, reduced to 3 years 10 months’ imprisonment. That is the sentence on Count 17.
Count 19, here, the loss was US$400,000, or HK$3,100,000. The sentence will be one of 5 years, starting point, reduced to 3 years and 4 months.
Count 21, the loss, US$500,000, or HK$3,875,000, the starting point will be 5 and a half years’ imprisonment, reduced to 3 years and 8 months, which is the sentence on count 21.
Count 23, a theft from Mr Lowe of US$100,000, or HK$775,000, the starting point on this will be 2 and a half years’ imprisonment, reduced to 1 year and 8 months’ imprisonment.
Now, those sentences will run concurrently with each other, and also with earlier sentences, save for this. I would have made 2 years of the sentence on count 17 consecutive, but I reduce that to 1 years and 10 months, to reflect the fact that there are two months in America which can be counted towards your sentence, and so it will be 1 year 10 months of the sentence on Count 17, which is to run consecutively to the 6 years and 8 months imposed on the earlier counts.
That makes a total sentence of 8 and a half years’ imprisonment. The three years that you spent in custody in Hong Kong, of course, will count towards your sentence. I will make an order in terms, so far as the exhibits are concerned.