HKSAR v. CHOW HOI CHING, HELEN

DCCC 825/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 825 OF 2012

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Reasons for Sentence

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1.  Madam, you pleaded guilty to one charge of fraud and not guilty to a second charge of fraud. Each of these was contrary to 16A of the Theft Ordinance, Cap 210. The charge to which you pleaded not guilty, which was the 1st charge, was ordered to be left on file, not to be proceeded with, say, without leave of this court or the Court of Appeal.

2.  The prosecution case, as briefly as I can put it, is as follows.  The Royal Bank of Scotland acquired ABN AMRO Bank Hong Kong in 2008.  In 2010, it changed its name to RBS NV.

3.  In August 2003, you joined ABN AMRO as a senior relationship manager, and in early 2008, you were promoted to relationship director at the IFC branch.  As a relationship manager, otherwise known as an RM, you were responsible for handling your clients’ accounts. Clients entrusted you to perform such things as making transfers of money, fixed deposits and investments.  

4.  On about 16 April of 2009, ABN AMRO received a complaint from one of its clients concerning the unauthorised transaction of an account. On 24 April of that year, the bank suspended you, and Mr But Fuk-hing, senior investigating officer, PW13, conducted inquiries.

5.  On 30 April of 2009, you were arrested at home and your office was searched.  Your computer was seized which is Non‑documentary Exhibit No. 1.  Computer forensic examination by PWs 19 and 20 revealed Word files containing soft copies of the bank statements with false transaction records which had been received by PWs 3 and 4.  That is Exhibits 71 and 72.  These relate to Charge 2.

6.  According to PW13, the computers at the bank could only be operated by using a specific username and password.  All the above soft copies of the bank statements with the false transaction records were stored under your name.  Only you would therefore be able to access them.

The Banking Mechanism for Effecting Transfers

7.  Miss Shing Wai-fun, PW12, branch operation manager, was responsible for monitoring the daily operation of the IFC branch and scrutinising the banking instructions from bank clients.  When an instruction was received from a client, that instruction would be passed to a teller who was responsible for verifying the personal data of the client and the bank account balance.  For transactions of 50,000 to $200,000, the instruction had to be verified by a customer service officer, over 200,000 by a branch operation manager. 

8.  Also, instructions could be given in three ways. 

i. Instructions given in the prescribed banking forms:

(a) The client handed in the form in person. Generally, the handling RM would collect the signed form and pass it to a teller. The stamp “in person” would be affixed to the form and the teller would write down the name of the RM who handed in the form at the bottom corner of the form.

(b) Alternatively, the client sent the form to the bank by mail. The handling RM would pass the form to a teller. When the transaction was 250,000 or more, verification by another RM was needed before the form was passed to the teller.

ii. Instructions not on the prescribed banking form by fax:

Where the fax specified a particular RM or involved over $50,000, another RM would call up the client and verify the instruction before passing them to a teller.

iii. Instructions given over the phone:

Phone instructions were limited to where the client transferred money between his or her own bank accounts, the upper limit being about HK$10 million.

9.  For change of personal particulars such as correspondence address, clients only needed to give instructions by submitting a prescribed form.

10.  Miss Hui Chun-han, associate relationship officer, PW7, assisted you to process clients’ instructions.  She said that if you told her that the client gave instruction in person, she would affix the “in person” stamp to the form.  You would then sign next to show that you had witnessed the client signing on the instruction form.  PW7 prepared the instruction forms to your instructions.

11.  Charge 2, that is the charge to which you have pleaded guilty.  This relates to unauthorised transfers of money from bank accounts. 

PW2: Dunn Shio-yu

12.  On 19 November of 2003, PW2 opened bank accounts for investment securities and funds, and you were entrusted by the bank to handle his banking affairs.  

13.  On 13 January of 2009, the bank received a bank instruction form, Exhibit 31, purportedly signed by PW2 requesting a transfer of $287,356.32, that is US dollars, to an ABN AMRO account which was No. 0120002766 held by a Mr Chuang Yu-chao.  According to PW14, Mr Chuang was handled by you.  The money was transferred that same day, Exhibit 2, BUT‑783.  Mr Chuang is not a Hong Kong resident and will not come to Hong Kong to testify.

14.  PW2 did not sign the bank instruction form, Exhibit 31. PW2 did not authorise the transfer nor did he know or have any dealings with Mr Chuang.  In government chemist report, Exhibit 24, PW16 opined that the signature in Exhibit 31 was not written by PW2.

15.  PW7, Miss Hui Chun-han, PW9, Siu King-hing, and PW11, Shing Wai-fun, identified your handwriting and initials on the bank instruction form, Exh 31.  Your initial appears next to the stamp “in person,” indicating that you were the handling RM and that you had witnessed PW2 signing the bank instruction form.

16.  Telephone conversation records of the bank show PW11 did query this transaction on 13 January of 2009.  In reply, you claimed it to be a business settlement from PW2 to Mr Chuang (Exhibit 98).

17.  The US$287,356.32 has never been returned to PW2.  Therefore, RBS had to repay him the amount. 

PW3: Miss Lai Chui-yee, and PW4: Mr Chan Heung-ming

18.  PW3 and PW4 were husband and wife.  On 30 June of 2004, they opened a joint account with the bank.  On 12 January of 2009, the bank received an instruction form purportedly signed by PW3, which is Exhibit 65, requesting a transfer of US$840,336.13 to account No. 0120002766, the account held by Mr Chuang Yu-chao.  The account of Mr Chuang was handled by you.  The transfer was made on 12 January of 2009, Exhibit 2, BUT‑413.  Chuang will not come to Hong Kong to testify.

19.  PW3 did not sign Exhibit 65 nor did PW3 and PW4 authorise the transfer nor did they know of any dealings with Chuang or his account.  PW16 in the government chemist report, Exhibit 24, opined that the signature on the instruction form was not written by PW3.  PW7 identified your handwriting on the bank instruction form, Exhibit 65.

20.  Telephone conversation records of the bank show PWs 11 and 12 query the transaction on 12 January of 2009, and you claim Chuang sold a flat to PW4.  That is Exhibits 96 and 97.

21.  On 9 February of 2009, PWs 3 and 4 became aware of the transfer when PW3 received her monthly bank statement, Exhibit 2, BUT413.  PW3 confronted you at the office on 10 February of 2009.  You claimed to have mistakenly transferred this sum to set up a time deposit for PWs 3 and 4.  PW3 requested you to cancel the time deposit and transfer the US$840,336.13 to another joint bank account, a bank account they held with Citic Ka Wah Bank.

22.  Telephone conversation records, Exhibits 99 to 101, at the bank show PW3 query this transaction on 10 February of 2009.  You said you would cancel the time deposit and issue a new bank statement.  Thereafter, you merely transferred another US$840,336.13 from PW3’s US dollar savings account to the Ka Wah Bank account on 10 February 2009 (Exhibit 2, BUT-418).

23.  On 12 February of 2009, PW3 deposited a cheque (Exhibit 2, BUT-420) to transfer another US$1 million from her joint bank account at ABN AMRO to the Ka Wah Bank account, believing there were sufficient funds.  In fact, there were not sufficient funds due to your unauthorised transfer earlier.  In order to cover the deficit, you transferred US$231,000 from one of your clients’ accounts held by Mr Lee Wen-ching and Miss Chi Hsui-li of Everplus Universal Limited to the account of PWs 3 and 4 on 13 February of 2009 (Exhibit 2, BUT-419).  The transfer of US$1 million was then made to the Ka Wah Bank account on 13 February 2009.  PWs 3 and 4 neither knew Everplus Universal Limited or Mr Lee Wen-ching and Miss Chi Hsui-li or their company accounts.  They will not come to Hong Kong to testify.

24.  On 17 February of 2009, PW3 received a bank statement for 1 February of 2009 to 12 February 2009 by fax and mail from you showing the US$840,336.13 transferred back to PW3’s account, Exhibits 66 and 67.  The entries appear consistent to PW3’s belief.  These bank statements are false.

25.  In early April 2009, PW3 received another statement by mail from you.  The balance appeared correct, but the balance with the bank statement is in fact false.  RBS later confirmed the genuine bank statements (Exhibit 2, BUT-417 and 424) had not been mailed to PWs 3 and 4. According to bank records, the bank received three instruction forms on 26 February, 5 March and 30 March of 2009 for a change of correspondence address purportedly signed by PW4 (Exhibit 62 to 64).  PW4 did not sign any of these.  PW7 and PW11 identified your handwriting on the bank’s instruction forms for the changes of correspondence address.  PW16 in the government chemist report, Exhibit 24, opined that PW4’s signature on all three forms were not written by PW4. 

26.  PW17 later retrieved soft copies of those faxed and mailed false bank statements, Exhibits 71 and 72, received by PWs 3 and 4 from your computer, Non-documentary Exhibit 1, and this was at your RBS office. 

27.  Because of your conduct, apart from the risk of prejudice, RBS had to repay HK$4,726,011.02 to PWs 3 and 4.

PW5: Miss Chan Wai-ping

28.  On 27 December of 2000, PW5 opened a bank account at the bank.  You were entrusted to handle her affairs. 

29.  In mid‑February 2009, PW5 received a call from you, stating that due to a mistake by other bank staff, PW5’s correspondence address was changed to another address.  You promised to fix the problem and PW5 would receive a notice for change of address later.  Since the call, PW5 did not receive bank statements.

30.  On 20 February 2009, the bank received an instruction form for the change of correspondence address, Exhibit 87, purportedly signed by PW5.  However, PW5 had not signed it.  PW16 in the government chemist report, Exhibit 24, opined that the signature appearing on the form was probably not written by PW5.  PW7 identified your signature and handwriting on the form.

31.  In April 2009, PW5 checked with ABN AMRO and found her correspondence address had been changed without her consent.  The bank received eight bank instruction forms purportedly signed by PW5 between 17 February and 17 March of 2009, making request for the transfer of a total sum of US$2,574,442.59 (Exhibits 88 to 95) to other accountholders of ABN AMRO. The money was so transferred (Exhibit 2, BUT-15 and 26).  PWs 7 to 9 and 11 identified your signature and writing on the bank instruction forms, Exhibits 88 to 95.  Your signature appeared next to the affixed stamp of “in person” and “confirmed with the customer,” showing you as the handling RM and implying you had witnessed PW5 signing the bank instruction form and/or that you had confirmed the instruction with PW5.

32.  Particulars of the transfers are contained in the Brief Facts on pages 12 and 13, and I do not intend to read each of those out.  They are well-documented.

33.  PW5 did not sign the bank instruction forms nor authorise the transfers.  She did not know the beneficiary accountholder or have any dealings with them.  PW16 in the government chemist report, Exhibit 24, opined that the signatures on those forms were probably not by PW5.

34.  Telephone conversation records of the bank show that PW11 queried the transaction for the transfer of US$540,000 to Mr Chuang Ying-yann on 17 February of 2009.  When PW11 asked you about this, about their relationship, you claimed Chuang to be a customer of PW5 and that you introduced him to open accounts at the bank.  The phone records are Exhibit 104.

35.  The US$2,574,442.59 transferred to the beneficiary accounts had never been returned to PW5.  So, consequently, RBS had to repay HK$20,019,022.57.  The beneficiary accountholders are all non-Hong Kong residents and refuse to testify.

36.  In conclusion, the HK$28,876,653.31 involved in Charge 2 has been paid as compensation by RBS.  There is a form of how that was paid, and again that is within the records.  So I will not go through that.  Mr Harris, I do not think there is any need, and those are the facts which you admitted and were convicted on.

37.  You are a person of hitherto clear record.  At the request of defence, I adjourned the case for a psychiatric report to be provided by defence and for a probation officer’s background report.  Those are now before me, and Mr Harris indicated on the last occasion that we met that you agreed with the accuracy of their contents.

38.  Mr Iu placed before me two cases to assist me in sentencing: Secretary for Justice v Schmitt Charles Lee, Court of Appeal Application for Review No. 12 of 2006, and HKSAR v Cheuk Sau Yee (D1) DCCC1121 of 2008.  Whilst they certainly assist me with general principles, each involves numerous offences and much higher losses to the relevant banks.

39.  In addition to the two reports, Mr Harris also provided me with an extensive file of supporting letters which I will refer to at a later stage. 

40.  Mr Harris entered mitigation on your behalf.  In referring to your pleas of guilty to the second offence, he said you did not suggest that it was anything other than very serious.  He said that this was not an easy case to sentence given the court’s duty to the public weighing this against the mitigating features put forward by the defence.  He accepted this was a breach of trust, and the sentence would be measured in years rather than months. 

41.  He submitted that you were a lady of impeccable character held in the highest of regard.  The prevailing situation was that by the mid-2000s, the investment market was bullish.  There was the Midas-touch principle.  People were assured of high returns on their capital investments. Income was pretty much guaranteed.  In 2003, you had commenced to work for ABN AMRO and began to climb the ladder.  By 2008 to 2009, you held a very senior position in the bank.  By 2006, you were responsible for very many clients’ investments. 

42.  2007/2008 saw the collapse of the market.  The Lehman Brothers was the start.  Investments were decimated.  Losses were being suffered.  The market was caught unawares.  You did not react properly.  You did not face up to your clients.  Initially, you paid losses out of your own pocket to try and cover what had been lost.  Naïvely, you believed that someone would wave a magic wand and make everything come right.  Of course, that was never going to happen.  

43.  Soon you could not do that any longer, so you began to use certain clients’ accounts to reimburse others.  Effectively, what you were doing is you were robbing Peter to pay Paul.  In April 2009, having been discovered by the bank, you were dismissed and then arrested by CCB.  You yourself did not get so much as a dollar out of the many misappropriations by you, hence, your plea of guilty

44.  Mr Harris then went on to deal with the investigation of you and the ultimate charge.  He said that very fairly the defence had no criticism of the police nor of the DOJ in the time and manner of the investigation.  It was and had to be a thorough and painstaking exercise. Many of the prosecution witnesses were abroad, and there was a large amount of forensic evidence to look at.

45.  He made the point that you had intended all along to plead guilty to Charge 2.  He also wished to correct a mistake in the psychiatric report and that was that the police when releasing you from bail had indicated that there would be no further charges.  The police in fact had always made it clear that charges would follow, and you were aware of this.

46.  He said defence was asking for the usual one-third discount and also for a further discount for the delay which was not the fault of the police nor the DOJ.  The fact was that you were arrested in April 2009 and that there was no charge until June 2012.  This had led to enormous pressure which is evidenced by the psychiatric report.

47.  You are a lady of almost 40 whose fall from grace was particularly sad given your earlier achievements.  You excelled at school in Hong Kong, then at high school in California, going on to obtain a degree with a distinction in biology, and I believe that was in California too.  On returning to Hong Kong, you first worked at the Regent Hotel, then HSBC, then Standard Chartered, and finally you moved to ABN AMRO.  A bullish market led to little control of the investment industry.  The SFC finally did require risk disclosure of products.  There should have been better risk management support in the earlier days.  However, you take full responsibility for what occurred.

48.  Mr Harris indicated that all the family have been here to support you throughout: as a daughter, sister and fiancé.  Whilst in Tai Lam, you had been visited every day so as to be shown support from your family.  Had it not been for these problems, he also made the point that you would have been married to your fiancé of five years by this point.  In Tai Lam, you had tried your best to guide and help inmates with problems larger than your own.

49.  Mr Harris then moved on to the sentence. He submitted, as I have said, that you should get the full one‑third discount and extra discount for the appreciable delay in dealing with this matter whilst not blaming anyone for it.  Professor Lee’s psychiatric report spoke of the anguish and the worry caused to you and indeed to the whole family.  He went on to say that you accepted you must be punished severely but asked the court to take into account the unusual facts.  You clearly will never re‑offend in this way again as you will never be able to be employed again in the financial sector.  The stain can never be removed from your character.  His plea was to keep the term of imprisonment as short as consistent with the court’s public duty.

50.  I turn now to the sentence.  This is a very serious fraud involving in excess of HK$28 million.  It is a breach of trust with no prospect of the Royal Bank of Scotland ever being compensated.  I fully accept the facts do not and cannot show that you benefited in any financial way from this fraud.  Indeed, I proceed on the basis that you did not, and for reasons which are entirely unclear, you moved funds between clients, you yourself making decision who should lose and who should not.  In the end of course, as we know, it was the Royal Bank of Scotland that was the loser.

51.  It is clear to me that you were a lady of great ability; hence, your immense achievements in a very competitive and pressurised environment, that of investment banking.  The many letters from family, friends, clients and colleagues are eloquent as to the high regard and esteem in which you were held.  As a matter of comment and positive character that despite all, all your family and longstanding boyfriend-fiancé have not deserted you.  Despite all that you have done, they have stood by you throughout.  

52.  It is also clear from the psychiatric report and the application of common sense that you have suffered immensely because of the time between arrest and charge and arrest and resolution.  You and your family have lived with the knowledge that ultimately you would be facing a prison sentence.  It is to your credit that you attach no blame to either the police or the DOJ.  Indeed, it is in my opinion entirely correct that you should not do so in view of the complexities and difficulties of this investigation.  That it took so long is attributable to the scale of the fraud and the steps that you yourself took to perpetrate that fraud.  That the circumstances and time have led to your descending into acute depression is well attested to by Professor Lee. 

53.  I accept also the profound adverse effect that this has had on your fiancé who himself has stood by you throughout.  You have by your own acts destroyed your career and it would seem a course of planning marriage to your fiancé to be postponed indefinitely.

54.  The questions which remain unanswered are as to what led you to this offence.  Was it pressure at work?  Was it your own instability, your own dishonesty and refusing to accept failure or a mixture?  I think most likely a mixture.  We will never know. 

55.  There is credit and mitigation, to some extent in the somewhat irrational use of your own savings to try to protect the interests of your customers.

56.  In conclusion, the aggravating features here are the large sum involved which the bank has had to repay, the relative sophistication and premeditation of your acts within the fraud and the extreme breach of trust which this has entailed.  The mitigating factors are your use of your own funds, as I said, somewhat irrationally to try and minimise the effect upon your customers, your clear record and indeed your positive good character which is attested to by the volume of letters that I have received.

57.  Also a great mitigating factor is the fact that you did not benefit financially in any way yourself, and finally I refer to the effect that it has had upon you in your descent into chronic depression which the psychiatric report tells me about.  Your family, it is clear, has also suffered greatly in this. 

58.  I fully accept that the normal one-third discount for a plea of guilty should apply.  However, the question of the lengthy process of arrest to disposal and the effects on you and your family which are not the fault of the police nor the DOJ I take into account in setting the starting point rather than giving them a separate discount.

59.  Therefore, taking all these matters into account, I take as a starting point in this case 6 years’ imprisonment reduced to 4.  You will go to prison for 4 years.  And I ask also that the psychiatric treatment for depression be continued in prison, and that will be placed on the warrant.