CRIMINAL CASE NO. 40 OF 2010
A total of 14 banks have been defrauded between January 2007 and July 2007, on 301 occasions. In a period of slightly over six months, a total of $153 million of such invoice financing loans had been submitted and advanced by banks. You and your husband both were the major beneficiaries of these moneys.
The only consolation, as I say on the last occasion, in this case is that not all of the 153 million has been lost. Having said that, 21.47 million could hardly be described as small figures.
Your husband was the mastermind behind this fraudulent scheme and you assisted your husband in applying for banking facilities, signing on banking facility letters, company resolutions, exercising deeds of guarantee and transferring moneys.
Although you have a clear record, in a case as serious as the present one, your lack of criminal conviction in the past counts for very little.
As I said on the last occasion, although this case is not a case involving the use of letters of credit, comments made by the higher court regarding the use of letters of credit are equally applicable. The operation of invoice financing similarly requires the same degree of trust that the bank placed on their clients. The operation becomes vulnerable when false documents are introduced.
Although there are no sentencing guidelines, the Court of Appeal in Hong Kong SAR v Dai Chi Wai, CACC84/2010, a case involving letter of credit fraud, points out various factors that a sentencing court should take into account. This includes the amount of the loans, the number of banks, the period, the role of each defendant and the actual loss to the bank. These are some of the factors. There is no mathematical formula.
In the case of Dai Chi Wai, the Court of Appeal also makes reference to another case, Hong Kong SAR v Law Chi Man Kenneth, CACC356/2006, a case involving the use of false documentation in fictitious transactions.
In Law Chi Man Kenneth’s case, the appellant conspired with another person to make false representation to three banks in the form of false documentation purporting to show that the company was in active trading where, in fact, the company conducted no operations whatsoever. The total loan amount was 15.6 million and the total loss to the bank was 9.8 million. The Court of Appeal took the view that 6 years was not manifestly excessive.
In Hong Kong SAR v Lee Kwok Yun & Others, CACC117/2004, the 1st appellant, over a period of 10 months, assisted others to obtain from various banks 333 million credit by using 19 letters of credit and resulting in, to the banks, a loss exceeding 88 million, was given, on a plea, 6 years’ imprisonment. The Court of Appeal was of the view that the starting point of 9 years was not manifestly excessive.
The total amount of loans in the present case is 153 million and, as I say, the total loss to the banks is 21.4 million. Amongst the 14 banks, Citic Ka Wah Bank suffered the most, 6.8 million. In terms of moneys advanced, 17.5 million, and the number of transactions, 33, Citic Ka Wah ranks number 4.
The next in line is Industrial and Commercial Bank of China. ICBC suffered 6.4 million loss and in terms of moneys advanced, 25.7 million, and number of transactions, 46, ICBC ranks number 1.
Having considered all the circumstances of the case and the slightly lesser role that you played, in respect of Count 9, and Count 3, I am of the decision that the appropriate sentence for these two counts would be one of 4 years’ imprisonment each.
As to other counts, given the smaller amount in loans value and loss, the appropriate sentence would be one of 3 years’ imprisonment each. Similar to the other two defendants, 3 months each of Count 1 to Count 8 and Count 10 to Count 14 are to be served consecutively to Count 9.
The total sentence for the defendant is therefore one of 7 years and 3 months.