HKSAR v. CHOITHRAMANI VINOD GURDAS

DCCC 107/2022

[2023] HKDC 1520

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 107 OF 2022

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REASONS FOR SENTENCE

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Introduction

1.  The defendant pleaded guilty to 11 charges of fraud before me.

2.  The Summary of Facts admitted by the defendant revealed that he had falsely represented himself to the victims (PW1-PW14)  as a wealthy businessman and was able to obtain electronic products at significant discounts to market price.  As a result, these victims placed orders for mobile phones, tablets and computers with the defendant and payments were made by deposits into bank accounts of the defendant or his wife.  The defendant carried out the delivery himself and some victims had placed further orders before the past orders were fully fulfilled.

3.  Since February 2015, however, the defendant failed to deliver the goods but refused to refund.  He also became out of reach after March 2015 until being arrested in May 2015.

4.  Under caution, the defendant admitted, inter alia, that:-

(1)  He had been unemployed for 3- 4 years and was living on his wife’s income;

(2)  Since 2010, he claimed to his friends and acquaintances that he could source electronic products at a cheaper price but in fact, he would make up the differences between the actual buying price and the selling price seemingly at a loss and he explained that it was because he wanted to appear to be still working and “gain (or save his)  face”;

(3)  He had suffered a great loss as a result;

(4)  He was in control of the aforesaid bank accounts;

(5)  He had received more orders than he could have absorbed and he was not in the position to make refunds as requested; and

(6)  He suffered losses since September 2014, but he could not stop taking new orders because he would not otherwise have sufficient funds to meet the past orders. Therefore, he continued to take new orders in order to have money to satisfy the older orders.

5.  The case of the prosecution also showed that the defendant had partially fulfilled the orders but at the end, he still failed to meet the orders in full and did not make any/full refund, thereby causing loss to the respective victims. 

6.  The particulars and breakdowns of those unfulfilled purchases can be summarised as follows:-

	Type of Items	Total loss of the victims (HK$)	Victim
Charge 1	iPhones	620,400	PW1
Charge 2	Mobile phones and electronic products	254,210	PW2
Charge 3	Smartphones	18,616	PW3
Charge 4	iPhones	19,900	PW4
Charge 5	iPhones and electronic products	111,700	PW5
Charge 6	iPhones	391,900	PW6
Charge 7	“Apple” products	62,100 563,700 466,100 Sub-total: 1,091,900	PW7 PW8 PW9
Charge 8	iPhones & iPad	339,719	PW10
Charge 9	iPhones, iPads and other electronic products	235,500	PW11
Charge 11	iPhones	96,500	PW13
Charge 12	Tablets	50,000	PW14
	Total:	3,177,045

7.  In these circumstances, the defendant knew that his earlier false representation that he could obtain products at a discount and his inability to fulfil orders from September 2014 will result in prejudice to the respective victims and with this intent to defraud, he continued with his operation.  The fraudulent operation lasted at least for 6 months from September 2014 until the end of March 2015. 

Mitigation

8.  Mr. Lau, counsel for the Defence, prepared lengthy written submissions and relied on a bundle of case authorities, letters and materials.  I am prepared to acknowledge that Mr. Lau’s efforts should be appreciated.

9.  I was told that the defendant is now 54 years old.  He was born and raised in Hong Kong.  His businessman father since about 1965 operated a group of companies engaging in the trade of consumer electronic products.  The business grew and became well-known in Asia as traders of electronic products. The defendant once joined the group but in 1988, he went to Toronto to further his study.  In 1992, he returned from Canada and joined the group again.

10.  In 1994, the defendant married with his wife.  The couple has a 26-year-old daughter.

11.  Apart from joining his father’s company, the defendant himself also engaged in a variety of business, including selling electronic items.  He also took part in the business of football magazine in about 2003.

12.  The father’s business was closed eventually as a result of the change of business conditions.  On the other hand, the defendant continued with his own trading business, but it was comparatively small in scale.

13.  The defendant’s father is now 86 years old with deteriorating health. The mother is now 77 years old who was, sadly, diagnosed with breast cancer and kidney cancer in the past.  The defendant is the only son who stays in Hong Kong and could take care of the parents.

14.  Last but not least, the defendant had a clear criminal record.

15.  Mr. Lau pointed out that there is no tariff in sentencing fraud cases. Obviously the practice of deceit could take many different forms and the scale could range from a one-man band to a well organised syndicate, and therefore it is correct to say that each case has to be determined on its own facts.

16.  The Defence also took issue that this case does not involve an element of breach of trust or at least this case is less than typical a case of breach of trust given that the victims were mere buyers and there existed no special or professional relationship between the defendant and any of them and therefore, urged me to consider 1)  the sentencing guideline set out in HKSAR v Ng Kwok Wing [2008] 4 HKLRD 1017 does not apply in a straitjacket fashion and 2)  this case justifies a slight departure from the guideline to reflect the distinctive features in the present case.

17.  The prosecution cited the case of HKSAR v Ng Chi Ho HCCC  292/2016 and maintained that the present case is similarly a typical Ponzi scheme.  Briefly, the defendant in that case deceived his former school friends and colleagues into giving him monies to invest on their behalves with no intention whatsoever to really invest the monies as he represented.  Unlike the defendant in the present case, that defendant had the guilty intention at the outset because he committed the offences with a view to solving his financial problems.  That case involved a sum of over $22 m whereas the present case is slightly more than $3 m.  The prosecution emphasised that the defendant in that case induced persons to invest in iPhone by telling them that there would be lucrative profit margins and as the scheme got underway, he needed money to pay the earlier investors either dividends or profits for the previous non-existing investments thereby the offender could keep the operation going. Operation-wise, the present case bears this similarity.

18.  The court then continued:-

“26. Mr Turnbull submitted various sentencing authorities dealing with fraud related cases, including where misappropriation has occurred as a result of breach of trust. The two leading cases are well known: R v Barrick (1985)  81 Cr App R 78 and R v Trevor Clark [1998] 2 Cr App R 137. The cases have been followed in Hong Kong.

27. The Court of Appeal in HKSAR v Cheung Mee Kiu [2006] 4 HKLRD 776 held that the principles laid down in Clark apply in Hong Kong. In accordance with the bands set out in Clark, the Court provided the following guidelines:

“ (a)  over $15 million – 10 years or more;

(b)  $3 million to $15 million – 5 to 9 years;

(c)  $1 million to $3 million – 3 to 4 years;

(d)  $250,000 to $1 million – 2 to 3 years;

(e)  less than $250,000 – less than 2 years.”

28. However, in HKSAR v Ng Kwok Wing [2008] 4 HKLRD 1018, the guidelines were revised to ensure that the terms of imprisonment of each band were consistent with each other. The revised guidelines are as follows:

“ (a)  involving $15 million or more: 10 years or above;

(b)  involving $3 million to $15 million: 5 to 10 years;

(c)  involving $1 million to $3 million: 3 to 5 years;

(d)  involving $250,000 to $1 million: 2 to 3 years; and

(e)  involving $250,000 or less: below 2 years.”

29. The English Court of Appeal in Barrick examined the approach to sentencing of cases that involve a person in a position of trust who had used that privileged and trusted position to steal or defraud others. It stated that in determining the sentence in breach of trust cases, the Court should have regard to the following matters: (i)  the quality and degree of trust reposed in the offender including his rank; (ii)  the period over which the fraud or the thefts have been perpetrated; (iii)  the use to which the money or property dishonestly taken was put; (iv)  the effect upon the victim; (v)  the impact of the offences on the public and public confidence; (vi)  the effect upon fellow-employees or partners; (vii)  the effect on the offender himself; (viii)  his own history; (ix)  those matters of mitigation special to himself such as illness; being placed under great strain by excessive responsibility or the like; where, as happens, there has been a long delay, say over two years, between his being confronted with his dishonesty by his professional body or the police and the start of his trial; finally, any help given by him to the police.

30. The Court added that in these cases, in general, a term of immediate imprisonment is inevitable, save in very exceptional circumstances or where the amount of money obtained is small.”

19.  The court further rejected the contention that the case did not involve a breach of trust element.

20.  In HKSAR v Poon Kar Yue [2018] 6 HKC 146, the issue of what amounts to a breach of trust for the purpose of aggravating a sentence was discussed by the Court of Appeal, at paras 26 to 27:-

“26. It is a well-established principle of sentencing that where there exists a relationship of trust between a defendant and the victim of his crime, his criminality is seen in more serious terms, justifying a more severe, or different type of, sentence. The classic examples of such a relationship are an employer and employee, a professional and client, customer or patient, a teacher and pupil and a parent and child. However, there are other types of relationship which, depending on the facts and circumstances, may also fit within these categories; for example, a pastor and a member of the congregation, a police officer and a citizen and, in respect of a child, anyone who stands in loco parentis or an adult relative or friend of the family. There is also a relationship of trust between spouses, family members and close personal friends or colleagues. The defining quality of such relationships is that, by virtue of a person’s position or authority, he is entrusted with access to something or someone he would not otherwise have, which he then misuses or abuses for his own personal advantage or pleasure.

27. The danger with the label ‘breach of trust’ is that the concept of trust can be given a very wide meaning and extend into many aspects of human life and activity. For example, a taxi driver might be said to be trusted not to cheat on the fare, or place his passenger at risk. The chef of a restaurant is trusted to avoid unsafe and unhygienic practices in providing food to his patrons. Even the customer of a shop or supermarket can be said to be trusted not to take goods on display without paying for them. Yet, it would not normally be suggested that the taxi driver, the chef or the customer had abused a position or authority in relation to the ‘victim’ he would not otherwise have had, thus meriting an enhanced sentence.”

21.  In my judgment, the present case does involve an element of breach of trust albeit that it does not fall within the usual categories nor that there was a high degree of abuse of position.  I also do not agree that it is incumbent upon the court to identify to which category the case belong before a conclusion could be drawn because those listed out in Poon Kar Yue are only for reference and it is always a matter of degree in any given cases unless there is clear cut evidence or the prosecution takes a different stance.  Experience tells that it is often easier to describe what a matter is than to explain why it is and identifying the existence of a breach of trust element is one of those subjects.  It does not however detract from the fact that the prosecution can rely on the whole factual circumstances and pinpoint to salient features that support the existence of the element; whilst the Defence would always try to distinguish the labels applied to the relationship or the structure of the scheme and submit otherwise.  In the present case, but for the representations of the defendant, I am sure, those victims would only have approached and dealt with a company with satisfactory background instead of a person (the defendant); the defendant would have advertised his “business” if he treated them as ordinary customers and would not have limited the targets to friends and acquaintances.  It is repeatedly relied on by the Defence that the objective of the defendant in the beginning was to “gain face” or as I put it during the hearing, re-establish the position of the defendant in order to regain or restore his reputation.  That further indicates and explains why the defendant would only approach friends and acquaintances and therefore the relationship element must have played a role in “gaining” him face or keeping the bogus operation running. 

22.  I accept, however, the court may consider all the circumstances including both aggravating and mitigating factors in the case and adjust the sentence.

23.  There was another issue: delay.

24.  Clearly, there was a delay.  The offences took place in 2014-2015 and the defendant was arrested on 6 May 2015.  He was only charged until 2 December 2021.  There is a gap of 6.5 years.  The issue therefore is not whether there was a delay; it is whether the delay is unreasonable and to what extent it is unreasonable (i.e. it could be partially justifiable).

25.  As I said in HKSAR v Ho Chun Lung DCCC 65/2023, it is not always a fault finding exercise; even if the prosecution has been at no fault, the court may still consider the impact on the defendant resulting from the delay.

26.  The Defence also relied on HKSAR v Chiu Chi Wing CACC 243/2012, in which the Court of Appeal identified the factors regarding delay as a mitigating factor, at para.37:-

“First, delay is not, of itself, a mitigating factor.

Secondly, delay will not ordinarily be a mitigating factor if it has been caused by difficulties in detecting, investigating or proving the offences committed by the offender, and the period of the delay is reasonable in the circumstances.

Thirdly, delay will not ordinarily be a mitigating factor if it is caused by the offender’s obstruction or lack of co-operation with the State, prosecuting authorities or investigatory bodies, but the offender’s reliance on his or her legal rights is not obstruction or lack of co-operation for this purpose.

Fourthly, delay will not ordinarily be a mitigating factor if it results from the normal operation of the criminal justice system, including delay as a result of the offender or a co-offender exercising his or her rights; for example, interlocutory appeals and other interlocutory processes.

Fifthly, delay may be conducive to the emergence of mitigating factors; for example, if, during the period of delay, the offender has made progress towards rehabilitation or other circumstances favourable to him or her have emerged.

Sixthly, delay (not being delay of the kind described in the second, third and fourth guiding principles)  will ordinarily be a mitigating factor if:

(a)  the delay has resulted in significant stress for the offender or left him or her, to a significant degree, in ‘uncertain suspense’; or

(b)  during the period of delay the offender has adopted a reasonable expectation that he or she would not be charged, or a pending prosecution would not proceed, and the offender has ordered his or her affairs on the faith of that expectation.

Seventhly, delay caused by dilatory or neglectful conduct by the State, prosecuting authorities or investigatory bodies may result in a discount of the sentence that would otherwise be imposed on the offender, if the court thinks it an appropriate means of marking its disapproval of the conduct in question.”

27.  In Secretary for Justice v Chan Kit Bing [2001] 1 HKLRD 844, the defendant was interviewed by the police in November 1994 and was given unconditional bail in April 1995. 5 years then lapsed before she was rearrested.  The Court of Appeal considered the undue delay a mitigating factor and a suspension of sentence appropriate, at paras 19-20:-

“19. …However, this case did not follow a normal course. We have had to consider whether the delay, for which no good reason has been advanced, was a factor which can only be described as an exceptional circumstance. The case had involved a straightforward investigation of facts which were not complicated.

20. Ultimately, the best way of looking at the delay in this case is by appreciating the fact that the Respondent was 31 years old at the time of the offence. She is now 38 years old. Leaving aside the part played by the Respondent and the subsequent report about her lifestyle, which reveals that she has apparently completely rehabilitated herself, both of which are side issues, the delay was, in our opinion, a most powerful circumstance making the suspension of the sentence an appropriate method of disposal on the special facts of this case. It seems, therefore, that although the judge provided the wrong reason for suspending the sentence, justice in the end was done, subject only to the length of the sentence he imposed.”

28.  In HKSAR v Chu On Chi [2007] 4 HKLRD 310, the appellant pleaded guilty to six charges of fraud.  She admitted to all the offences when she was arrested by the police in December 2004 but no prosecution was laid against her until September 2006.  The Court of Appeal held that the 21-month delay in prosecuting the case was “extremely serious” when the prosecution case was primarily based on the admission.  It was said that further reduction on sentence should be considered.

29.  The Defence observed that:-

(a)  The victims reported the matter to the Police between March and May 2015. Each of them had subsequently taken multiple witness statements over a period of 3 years between late May 2015 to late July 2018.

(b)  The defendant was arrested on 6 May 2015.

(c)  After taking the witness statement with PW5 on 2 July 2015 and the arrangement of ID Parades for the victims, no further statements were taken thereafter until 9 July 2016 which was about a year later.

(d)  In year 2016, witness statements of the victims (except PW7 and PW9)  were taken between July and September.

(e)  After taking a witness statement with PW14 on 27 September 2016, no further statements were taken thereafter until 14 August 2017 which was more than 10 months later.

(f)  In year 2017, 2 witness statements with PW2 and PW5 were taken. An ID Parade was also arranged for PW14.

(g)  In year 2018, witness statements of the victims (except PW7 and PW9)  were taken between January and July.

(h)  The defendant was charged on 2 December 2021.

30.  I have the benefits of reading the chronology presented in the written submissions by the Defence.  I have also considered the replies of the prosecution.  I am not satisfied that this 6.5-year delay is justifiable despite that there were a number of victims and a number of transactions and fund flows involved.  More importantly, I am satisfied that the defendant has somehow reformed himself significantly since then.

31.  I also accept that the defendant is remorseful and the present case is not particularly sophisticated.  I am prepared to give further discount on the notion of delay. 

32.  On the other hand, I accept that the defendant did use the money received from the victims to purchase electronic products ordered. 

33.  According to the summary prepared by Mr. Lau, the Summary of Facts confirmed that the defendant had fulfilled some of the victims’ purchaser orders:-

(a)  In December 2014, PW1 ordered 120 iPhones at HK$600,000 from the defendant. The iPhones were received in January 2015.

(b)  Between October 2014 and February 2015, PW2 ordered and received about 170 electronic products worth HK$940,000 from the defendant.

(c)  Between June 2014 and February 2015, PW3 ordered and received about 9 electronic products worth HK$38,107 from the defendant.

(d)  In about December 2014, PW4, via PW2, ordered and received 1 iPhone from the defendant.

(e)  In about January 2015, PW5 ordered and received 15 mobile phones worth HK$76,300 from the defendant.

(f)  In 2013, PW6 ordered and received 5 iPhones and 1 iPad from the defendant. In about October 2014 onwards, PW6 further ordered and received about 60 iPhones from the defendant.

(g)  In June 2014, PW8 ordered 70 iPhones from the defendant. PW8 received the mobile phones in December 2014.

(h)  Between September 2014 and December 2014, PW10 ordered and received 85 electronic products worth HK$465,200 from the defendant.

(i)  Between November 2014 and February 2015, PW11 and PW12 ordered and received electronic products worth HK$286,700 from the defendant.

(j)  In January 2015, PW13 ordered and received 2 mobile phones from the defendant.

(k)  In January 2015, PW14 ordered and received 5 iPhones from the defendant.

34.  It begs the question as to why the defendant would foolishly engaged himself in such an operation when it would be clear to him that he would end up with a huge loss when he in fact did not have access to any discount.  He bought the items by paying the original prices, or sometimes, as advanced in mitigation, the resale prices which were even much higher; he was bound to suffer a loss.  Allegedly, he did so simply for “gaining face”, and to uphold the image as a member of a successful and wealthy family and did not want others to know about the downfall of the family’s financial situation. 

35.  Whilst I am prepared to accept this, especially on the strength of the mitigation letters and the helpful submissions from Mr. Lau, I cannot explain for one moment the conduct of the defendant.  

36.  Lastly, it was emphasised that there are other mitigations and in short, they are:-

(1)  After the arrest, the defendant was co-operative with the police throughout the investigation process.

(2)  The defendant joined a Football Club and became a member of the committee as an Event Officer from 2017 to 2022. As a volunteer, he coordinated and organized football matches, tournaments and leagues, and club gatherings. He also brought the team to foreign countries to participate overseas tournaments and competitions. This shows the progress of his self-motivated rehabilitation.

(3)  The defendant also spends more time with his family.

(4)  The defendant and the family was under great stress since his arrest.

37.  On family support, the Defence relied on a number of mitigation letters from the family and close friends of the defendant who described him as a man of good character, a kind and generous person; a generous person who is willing to help others while expecting nothing in return; a compassionate and loving family man who has a strong sense of responsibility and exhibited commendable character traits and therefore the defendant has been respected among his friends and peers. 

38.  In particular, the father of the defendant came in great shock and pleaded for leniency for the family to move on.  The mother described him as a family-oriented son who always priorities the family over himself.  The daughter trusted that the defendant deeply regrets his actions with genuine remorse.  The wife said that the defendant has been under immense stress since the arrest and she believed that her husband could rebuild his life and contribute positively to the society in the future.

39.  Reference had been made to the cases of香港特別行政區 訴 黃俊軒DCCC 265/2019, HKSAR v Sit Man Ying DCCC 637/2020, and 香港特別行政區 訴 廖思達 DCCC 687/2019.  It was suggested that the starting point for the present case could be as low as 3 years (for the case of 廖思達which does not involve an element of breach of trust).  Having made it clear in court to the parties that reference to cases (as opposed to case authorities)  is of limited value on the one hand, I am prepared to accept that an overall starting point of 5 years (if we are to strictly adopt the band of 5 to 10 years for $3m to $15m)  is not called for in the present case.

40.  Having carefully considered all the circumstances, it appears to me that the present case remains serious.  There were multiple victims and the amounts involved were large.  Whilst the operation was not sophisticated, there was a certain degree of planning such that the victims would continue to trust the defendant and place further orders when the previous ones were not fulfilled or completed.  The duration of the fraudulent practice was shorter than it was described in the particulars of charges, especially for Charge 3 and Charge 7.  It remains, however, that it was neither an isolated event nor a single incident.

41.  I shall adopt the following starting point for the individual charges.

(1)  Charge 1 ($620k): 2 years and 3 months (i.e. 18 months after plea);

(2)  Charge 2 ($254k): 1 year and 9 months (i.e. 14 months after plea);

(3)  Charge 3 ($18k): 3.9 months (i.e. 2.6 months after plea);

(4)  Charge 4 ($19k): 3.9 months (i.e. 2.6 months after plea);

(5)  Charge 5 ($111k): 12 months (i.e. 8 months after plea);

(6)  Charge 6 ($391k): 2 years (i.e. 16 months after plea);

(7)  Charge 7 ($1m): 2 years and 9 months (i.e. 22 months after plea);

(8)  Charge 8 ($339k): 2 years (i.e. 16 months after plea);

(9)  Charge 9 ($235k): 1 year and 9 months (i.e. 14 months after plea);

(10)  Charge 11 ($96k): 12 months (i.e. 8 months after plea); and

(11)  Charge 12 ($50k): 5 months (i.e. 3.3 months after plea).

42.  It would be more comprehensive if I could first arrive at an overall sentence in light of the totality principle.  All in all, I am of the view that an overall starting point of 4 years and 3 months (i.e. 34 months after plea)  is sufficient to reflect the overall criminality of the defendant in this case.  Based on the mitigations on delay, a further discount of approximately 10% would be justifiable.  Giving him this discount for unreasonable delay, the overall sentence would become approximately 30 months.

43.  This sentence is passed on the basis of the following formula a)  giving a rounded figure to reflect the guilty plea and a discount of approximately 10% for delay and b)  making Charge 7 partly consecutive to the other charges:

(1)  Charge 1: 16 months;

(2)  Charge 2: 13 months;

(3)  Charge 3: 2 months;

(4)  Charge 4: 2 months;

(5)  Charge 5: 7 months;

(6)  Charge 6: 14 months;

(7)  Charge 7: 20 months;

(8)  Charge 8: 14 months;

(9)  Charge 9: 13 months;

(10)  Charge 11: 7 months; and

(11)  Charge 12: 3 months.

44.  I shall further order that the sentences for Charges 1-6 and 8-9, 11 and 12 are concurrent to each other whilst 6 months in Charge 7 is also made concurrent to these sentences, i.e. 16 months + 14 months = 30 months.  I am prepared to grant the defendant a further discount of 3-month to reflect his other mitigations making it a total of 27 months’ imprisonment.  In essence, this is done by way of deducting this 3-month from Charge 7, making the sentence for Charge 7 one of 17 months’ imprisonment, i.e. 16 months + 11 months = 27 months.

Conclusion

45.  I see no other sentencing option proper nor is there any basis to suspend any of the sentences and therefore I make the order for these sentences accordingly.  The defendant is therefore sentenced to a total of 27 months’ imprisonment for all the charges.