HKSAR v. SHAWN HANNA

DCCC918/2011

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 918 OF 2011

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Reasons for Sentence

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1.  The defendant, Mr Hanna, has been convicted after trial of one offence of conspiracy to defraud. This fraud involved the operation of Solazymepe in Hong Kong.

2.  The nature of the fraud can be seen from the verdict that I gave earlier and I do not propose to go into any detail in the sentencing phase of that fraud, but in summary, I will say it operated a fraudulent scheme whereby it induced investors to invest in on the promise that they were actually becoming investors in a company called Solazyme United States. 

3.  The fraud was elaborate, involving the creation of a fake press conference involving actors and media presentation.  The fraud itself operated in a virtual manner out of a website where details of purported investments were kept.  Investors were offered various incentives to participate.  It would appear that none of the investments actually existed in the real world and the investors could not, when they wanted to, get any part of their money out.   

4.  In total, the Hong Kong investors and victims lost in the region of half a million dollars, but no doubt there were other people who did not complain and other people outside of Hong Kong who were also victims. 

5.  The defendant’s role is set out in my earlier verdict.  He started to work in the company from March onwards and had a role, or certainly a room describing him as the manager of the Hong Kong office.

6.  There was some evidence that he was involved when investors came to the office but of course no investments seem to have been made out of the Hong Kong office, which was a kind of front office.

7.  Later, the evidence clearly shows he was involved in the planning of a company called Webs Private Equity, which was to add a further layer of corporate respectability to this fraud.  

8.  The existence of Webs Private Equity I found was necessary due to the fact that at least the staff of Solazymepe were clearly aware that the entire Solazymepe operation was fraudulent.

9.  The defendant from the evidence appears to have been involved in setting up a further conference for Solazymepe at the end of July, and in the making of the transition of the fraud to the overarching identity of Webs Private Equity, assisting in making something that could be sold to existing investors.

10.  The evidence shows that his role was what I would call a “behind the scenes” public relations role. 

11.  Defence counsel has made certain observations about the nature of the evidence in the case.  They are well-made observations necessarily that the defendant was not actively taking part in meeting investors or anything like that, and there is no evidence that he ever sold anything to any investors, and many of the victims were involved before the defendant even came into the picture, and perhaps as importantly is there is no evidence the defendant received any substantial sums of money as a result of his investment in this fraud.      

12.  We know that he received some ¥11,000 renminbi at one point and also had the use of a flat in Hong Kong.  The defendant himself was here from Canada and appears to have no other means of supporting himself, and may well have been glad of the fact that he had the ability to live somewhere and was prepared to carry on primarily because of that.  It can be said, and again as submitted by counsel, that he was obviously not on the inside team of the fraudsters.  He was useful to them in the role that he played.  

13.  I do note however that he was an owner of Webs Private Equity, one of the owners on the business registration.

14.  The defendant is a Canadian citizen.  He is of clear record, obviously, in Hong Kong.  I have been told and accept for the purposes of both the trial and for these proceedings that he has a clear record in Canada.  

15.  He is a well-educated man having a degree, and also a qualified project manager.  He is aged 47 years and is currently divorced.  He has two children, both living in Canada, 14 years and 4 years old.  Clearly, any time spent in Hong Kong means that he is not spending time with his family. 

16.  In sentencing for these cases, it is clear between counsel and myself that there is no identifiable tariff for cases of conspiracy to defraud and particularly not these kind of cases.  In submission, reference was made to the existence of what are called the London Loco Gold and Silver cases, but of course they operate clearly on a different modus operandi to the modus operandi of this case.

17.  The Solazymepe fraud was clearly a serious fraud involving considerable expense on behalf of the fraudsters.  The activities of this company in Hong Kong were clearly designed to give this operation a veneer of respectability.  The defendant was involved in that part of the operation.    

18.  The evidence also shows the defendant must unequivocally, and to a criminal standard, have been aware of the fraudulent nature of this operation by at least late May/early June until the time of his arrest.  He was involved as a legal owner of Webs Private Equity, so his involvement in the continuation of the deception in Hong Kong could not be classed as minor.      

19.  Clearly, a fraudulent activity and criminality of this kind requires a sentence of imprisonment to be imposed. 

20.  I consider that having regard to all the factors that I have set out, the correct sentence for imprisonment for the defendant on this charge should be one of 39 months’ imprisonment, and that is the sentence I impose.