HKSAR v. LAM CHI KIT, KELLY

DCCC 1167/2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 1167 OF 2013

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Reasons for Sentence
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1. There were two defendants in this case. D1 faces Charges 1 and 2 alone, but Charge 3, together with D2. D1 pleaded guilty to and was convicted of Charges 1 and 2. On the application of the prosecution, Charge 3 was ordered to be kept on file, not to be proceeded with without leave of court.

2. The facts are set out in the Summary of Facts, I shall not repeat them here.

3. The defendant is of previously clear record. The maximum sentence for fraud under section 16A of the Theft Ordinance is that of 14 years’ imprisonment.

4. As for the mitigation put forward by Miss Cheung, again I shall not repeat them here now.  The gist is that the defendant had a long history with the victim companies’ directors or shareholders.  The defendant committed the offences out of a mistaken belief that he was entitled to take back his own business and recovering the loss of profit from his previous joint venture with those people. 

Sentencing authorities

5. The applicable sentencing guidelines is that of Cheung Mee Kiu.  For the total amount of around $18 million in our present two charges, the starting point would have been above 10 years.  I find, however, that this should not be the figure that the defendant is sentenced upon.  There is evidence that the defendant had made payments to Jiaming, the real suppliers, after he fraudulently induced Nafecs and Seasonal to make deposits into his fake 3D bank account. 

6. I accept what was put forward in mitigation and find that of the $18 million total of the two charges, around 10 million of that the defendant had received had been paid onto Jiaming as payments.  It was payment for the supplier of the goods that were eventually delivered to Nafecs and Seasonal.  The defendant is therefore to be sentenced on the basis of having the benefit of around HK$8 million.

7. In the English case of R v Barrick, the court set out factors to be considered when dealing with breach of trust sentencing.  The court set out nine items, and I shall not repeat them here.

8. In our present case, defendant was the sales manager and contact person of 3D in relation to Nafecs and Seasonal.  He was the only person who handled the purchase orders and other follow-up actions for 3D.  In fact, the defendant was the only full-time staff of 3D.  The quality and degree of trust reposed in the defendant by 3D is therefore substantial.

9. The email that the defendant had sent to Nafecs informing them falsely that 3D and its supplier factory had changed names was dated 31 December 2007.  About six months later, defendant instructed Nafecs to deposit payment into a new bank account.  In 2008 Nafecs placed eight purchase orders with the fake 3D Company.

10. Between 24 September 2008 and 3 December 2009, Nafecs paid a total of around US$1.9 million into the fake 3D Company bank account.  The fraud was therefore perpetrated over a period of about 14 months in relation to Charge 1.

11. As for Charge 2, according to paragraph 13 of the Summary of Facts, also in 2008, Seasonal placed 57 purchase orders with the fake 3D Company.  Between November 12, 2008 and January 5, 2009, Seasonal deposited a total of around US$508,000 into the said fake 3D Company bank account.  This fraud appeared to have been perpetrated over a relatively shorter period. 

12. According to the defendant’s video-recorded interviews, about 8 to 10 million renminbi had been paid in cash to Jiaming.  Yet, according to paragraph 15 of the Summary of Facts that the defendant had admitted to, neither PW2 nor Li Liang, nor the other persons in charge of Jiaming had received any payments for goods from the defendant personally.

13. This matter was clarified in mitigation. Defendant produced copies of receipts to show that a total of around 8.9 million renminbi had been paid to Jiaming.  Although the defendant cannot say in detail how the money was used, the money being the total financial benefit of around HK$8 million.

14. Miss Cheung said that the defendant did not use the money from the frauds to support a lavish lifestyle.  But the defendant did support his family including his son in the 4-year period between his first arrest to his being formally charged. 

15. I do not have evidence as to the effect of the defendant’s frauds upon 3D.  I was told that it is still in operation and civil actions involving 3D and the defendant are still ongoing.  Given the nature of the frauds, there should not have been much impact on the public and public confidence.  Also, given that the defendant was the only full-time staff employed by 3D, there would have been no effect on any fellow employees.

16. Miss Cheung had painted a very clear picture of the history of the defendant’s involvement with 3D and PW2.  I accept that the defendant committed the offences out of a want for revenge to get back what was rightly his as well as out of his mistaken belief that it was a proper and legitimate way to claim back what he perceived to be his all along. 

17. As for delay, I find that the defendant has made out a case of serious delay in prosecution.  The defendant had admitted to his guilt as early as 20 January 2009.  When he was first arrested and interviewed under caution, he had named Nafecs as one of the affected customer companies, volunteered information about asking his sister to open a bank account as well as employing his sister to deal with the documents in relation to the fake 3D Company and the money in the fake 3D Company bank account.

18. There would have been sufficient material to prosecute the defendant and his sister for Charges 1 and 3.  The investigation could not have been that difficult given that there would have been documentation and witnesses from Nafecs who could speak to the misrepresentation by the defendant and the payment of money to the fake 3D Company via the fake company account.  Yet, the defendant was not formally charged until November 2013, almost five years later. 

19. The explanation given by the prosecution for the delay is that after the defendant had left 3D and the company had lost contact with the defendant since January 2009, 3D had had great difficulty locating all the documents.  The company was only able to locate the documents in relation to Seasonal, that is Charge 2, in April 2011.  It took more than two years for them to locate the documents.

20. The file was then sent to the Department of Justice for legal advice in early 2012, some three years after the defendant’s first arrest and cautioned video-recorded interviews.  The Department of Justice’s advice was for further investigation to be conducted.  The file was resubmitted for advice in February 2013.  The advice to charge the defendant was issued in July.  Four months later, the defendant was formally charged.

21. Although it is not stated in the Summary of Facts, I was told by counsel for the defendant that the defendant had also volunteered information about Seasonal in the January 2009 video-recorded interviews.  Again, if that is the case, there was no good reason why it took until April 2011, some two years and three months later, before new evidence were located. 

22. I find that the delay in locating the documents was substantial and unreasonable in the circumstances.

23. The defendant was released unconditionally in early 2010 after his first arrest.  He was understandably surprised when arrested again, almost four years later.  During this 4-year period, he had left the employment of 3D, secured a job as a tour guide in mainland China.  Because of his familiarity with mainlanders and his language abilities, he was able to lead tours around Europe.

24. Over that 4-year period, he was able to earn a steady income of around $8,000 per month.  He quit his job only recently in order to face his trial.  I find that the defendant should be allowed some discount in the sentence as a result of this unreasonable delay.

25. The actual financial benefit to the defendant as a result of the two frauds, as I mentioned above, I accept the explanation given by the defendant in relation to the payment of 8 to 10 million renminbi to Jiaming.  His version of fact of payments made to Jiaming or 3D is not fanciful.  Given the fact that it is stated in the Summary of Facts that he did pay USD 294,502.5 to 3D by way of seven transactions, there could have been no other reason for such payments other than to pay for the supply of goods by Jiaming to the fake 3D Company of the defendant.

26. In order to satisfy the purchase orders of Nafecs and Seasonal made through his fake 3D Company, the defendant had to come up with the goods and Jiaming would obviously not do it for free.  I find that on the balance of probabilities, without going into the authenticity of the receipts produced by the defendant, the defendant did make the 8.9 million renminbi dollars payment to Jiaming.

27. That being the case, having taken all the other factors mentioned above into consideration, and adopting a combined approach, as in combining the two figures in the two charges, I find that an overall proper starting point, upon the application of the Cheung Mee Kiu guidelines, is that of 5 years and 6 months’ imprisonment. 

28. I will however reduce this sentence by 1 year for the unreasonable delay that the defendant has suffered.  The defendant is therefore sentenced to 3 years’ imprisonment after granting him the full one-third discount for his guilty plea.  I will impose the same sentence on Charge 1 and 2 and order the sentences to run concurrently.  This is the sentence.