HKSAR v. CHAN SIU TAI EDWARD AND OTHERS

DCCC900/2010

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 900 OF 2010

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Reasons for Sentence

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1.  The present case consists of six counts of evasion of liability by deception, and involves three defendants.

2.  Charges 1 and 2 are against the 3rd Defendant, Mr Cheung Chi-man (“D3”) only. Charge 3 is against D1, Mr Chan Siu-tai Edward (“D1”) only. Charges 4, 5, and 6 are against all three defendants.

3.  D3 pleaded guilty to Charges 4, 5, and 6, whilst the 1st and the 2nd defendant pleaded not guilty to the charges they are facing. On the application of the prosecution and with the leave of the court, Charges 1 and 2 against D3 and all charges against the 2nd defendant are left on the court file and not to be activated without the leave of this court or the Court of Appeal.

4.  D1 is acquitted of Charge 3, but convicted of Charges 4, 5, and 6 after trial. This sentencing exercise therefore only involves Charges 4, 5, and 6 against the 1st and 3rd defendant.

Facts found and Admitted

5.  According to the facts found by the court during the trial of D1, he was the sole director of Central Mak Industrial Limited (“Central Mak”), and the sole signatory of its bank account.

6.  The provisional agreement for the lease of the office premises of Central Mak was signed by D3, while the formal agreement was signed by D1.

Charge 4

7.  On 3 August 2007 the proprietor of Ming Shing Co. Ltd (“Ming Shing”), Mr Chan Shing-kong, visited the office of Central Mak and discussed business with a person named Ko Kin-keung Danny, who claimed himself to be a sales representative of Central Mak.

8.  On 7 August 2007, Ming Shing agreed to sell 20,000 kilograms of plastic resin to Central Mak for $273,812. The release order of the goods was handed to Ko on 14 August 2007. A cheque signed by D1 to pay for the goods was honoured on presentation to the bank for payment. The deal therefore went through successfully.

9.  On 16 August 2007, Ko, acting on behalf of Central Mak, made a further purchase of 20,000 kilograms of plastic resin from Ming Shing at the price of $275,134. The release order of the goods was delivered to Ko on 27 August 2007, who made payment by means of a cheque of Central Mak signed by D1. The cheque was, however, dishonoured on 27 August 2007 on presentation for payment to the bank.

10.  When Chan chased Ko for payment he was referred to one Mr Chan of Central Mak. Eventually sums of $2,000 and $8,000 were deposited into the bank account of Ming Shing. Then Chan could not get in contact with Mr Chan or Ko of Central Mak again.

Charge 5

11.  On 2 August 2007, Miss Cheung Shuk-yee, sales executive of Sunta Chemical Limited (“Sunta”), received a telephone call from a stranger named Ko Kin-keung, acting on behalf of Central Mak. As a result, she sold 800 packets of plastic resin to Central Mak for $274,252.24. A cheque of Central Mak signed by D1 was used to pay for the goods and was honoured on presentation for payment to the bank.

12.  On 14 August 2007 Ko made a similar purchase and the release order was delivered to Central Mak on 27 August 2007. A cheque of Central Mak signed by D1 in the sum of $274,252.24 payable to Sunta for the goods was dishonoured on 27 August 2007 on presentation to the bank for payment. Cheung was unable to get in contact with Ko, and when she rang Central Mak to chase for payment, she talked with one Chan Siu-tai, who promised to deposit the money into Sunta’s bank account within two hours. No money was, however, forthcoming.

13.  There is no evidence that this Chan Siu-tai was D1.

14.  Eventually, a sum of $5,000 only was deposited into Sunta’s bank account. Cheung was unable to get in contact with Ko or Chan again.

Charge 6

15.  Mr Cheng Wing-ho, sales representative of Ever China Petrolchemical Co. Ltd (Ever China), reached a deal with one Danny Ko to sell plastic resins to Central Mak for a price of $227,955.64. Central Mak paid for the goods with a cashier order which was honoured on presentation to the bank for payment.

16.  The second deal between Ever China and Central Mak for raw materials was in the value of $270,724.88. The release order for the goods was delivered to Central Mak on 27 August 2007, and payment was by means of a cheque of Central Mak signed by D1. The cheque was dishonoured on 27th August 2007 on presentation to the bank for payment.

17.  Cheng went to visit the factory in Boluo, China, set out in Ko’s name card, but was told by the people there that Ko was an employee of another factory. Cheng chased Central Mak for payment and talked to one Mr Wong. Eventually a total sum of $15,000 only was deposited into the bank account of Ever China. Cheng was unable to get in contact with any of the personnel of Central Mak.

Disposal of the plastic resins

18.  In mid-August 2007, 60 tons of plastic resin were sold to Koshin Industrial Limited by a person named Ko for a cash payment of $789,246.

19.  The facts admitted by D3 are along the same line as those found by the court in the trial of D1. In addition, D3 was arrested on 11 August 2008. He was identified in an identification parade by Cheung as the person who dealt with her and called himself Ko. A staff member of Ming Shing identified D3 in an identification parade as the person who gave him the cheque in payment for the goods delivered to Central Mak and which was subsequently dishonoured.

Criminal record

20.  D1 has 10 previous convictions of which four were connected with dishonesty. His last conviction took place on 19 October 2010 in which he was sentenced to 7 days’ imprisonment for an offence of theft.

21.  D3 has a clear record.

Background report - D3

22.  The court obtains a background report of D3 before sentencing. According to the report D3 is aged 40. He and his three siblings were brought up by his mother after his father abandoned the family during D3’s adolescence. He attended a course of the industrial training council and obtained a basic craft certificate after finishing Form 3 education. He co-habited with a girlfriend in China who had become pregnant. After his remand in the present case, the girlfriend had undergone abortion and had then gone back to her native place in Yunan.

23.  He has worked as a kitchen apprentice and hair stylist, and had gone into delivery business with his brother, which went bankrupt in 2007. He hadbeen on CSSA since the raid of Central Mak by the police, and had later begun to work for his brother for a daily wage of $700.

24.  He had helped his single-parent sister to raise her two daughters. The illness and later death of D3’s mother has landed D3 in huge debts of $190,000, resulting in D3 committing the present offences.

25.  The probation officer compiling the background report is of the view that D3 is not a deep-rooted criminal and is remorseful.

Mitigation

D1

26.  Counsel for D1 points out that there is no breach of trust in the present case. There is a delay in the prosecution of the present case because D1 was arrested in September 2007 and was released in March 2008, but was re-arrested again in July 2010, and then prosecuted.

27.  Counsel stresses that part of the price of the goods, though small in amounts, had been paid to the various victims. He asks the court to take into account the dates of the offences and pass a concurrent sentence on the charges.

D3

28.  Counsel for D3 points out that D3 has a clear record and pleads guilty to the charges, showing remorsefulness on his part. He asks the court to consider the case of HKSAR v Cheung Mee Kiu [2006] 4 HKLRD 776, and submits that the starting point for each of the charges should be slightly more than 2 years’ imprisonment. He asks the court to impose concurrent sentences for all the charges.

29.  As regards the background report, counsel points out that D3 agrees to its contents. He emphasises that the probation officer considers that D3 is not a deep-rooted criminal and is remorseful. He adds that D3 has suffered a lot because of the abortion of the girlfriend and asks the court to treat D3 leniently.

Sentence

30.  This was a very well-planned and organised scheme of fraud, and was also well-executed. The syndicate of which the 1st and 3rd defendants were members formed Central Mak and presented the company as a decent business institution to perpetrate the fraud. Office premises were rented through D3 and D1, and were sufficiently furnished and decorated as a decent office. Name cards of D3 contained false information about factories in China run by Central Mak in order to impress potential victims.

31.  The first business transaction with the various victims went through successfully to win their confidence. The fraud was carried out in the second business transaction when the cheques for payment of the goods were all dishonoured. Apart from several small sums of money being deposited into the bank accounts of the victims, the prices of the goods remained unpaid, and all personnel of Central Mak had disappeared.

32.  The court has no doubt that D3 was one of the masterminds of the syndicate. The court accepts that D1 played a relatively lesser role, but the court must point out that he was still an important cog in the running of the plot of fraud without whose involvement the scheme would not have been executed so smoothly and successfully.

33.  There are no sentencing tariffs in the present offences. It is for the simple reason that the circumstances under which they are committed may vary substantially from case to case, so do the sentences.

34.  The court is of the view that the culpability of the two defendants in the present case is on the high side.

35.  The court accepts that D3 is not a deep-rooted criminal and has suffered in the present case because of the abortion of his girlfriend that has taken place. D3 must, however, realise that this is the likely consequences when he embarked on this illegal venture and has to bear them.

36.  D3 committed the present offences due to economic reasons. The court must point out that this does not constitute an excuse to break the law and is by no means a ground for mitigation.

37.  In determining the sentence to be imposed, the court has made reference to the tariffs set down in the case of HKSAR v Cheung Mee-Kiu, which were perfected in HKSAR v Ng Kwok Wing [2008] 4 HKLRD, but bears in mind that the present case, while not involving breaches of trust, is much more sophisticated. The amount of money involved in each of the charges is $200,000odd, and the total amount involved in all the three charges is $800,000odd.

38.  Having considered the whole circumstances of the case, for Charges 4, 5, and 6, the court adopts a starting point of 2½ years’ imprisonment for D1, and 3 years’ imprisonment for D3.

39.  The court is of the view that there is nothing in the mitigation of D1 that merits a discount. He is therefore sentenced to 2½ years’ imprisonment for each of these three charges.

40.  After giving credit to D3 for his guilty pleas, he is sentenced to 2 years’ imprisonment for each of the three charges.

41.  Taking into consideration the nature of the case and the totality principle, the court orders that for both the 1st and 3rd defendant, the sentences of Charges 4 and 5 are to run concurrently, while 6 months of the sentence of Charge 6 are to run consecutively to those in Charges 4 and 5.

42.  D1 is therefore to go to prison for a total of 3 years, and D3 for a total of 2½ years.