COURT: This is a case of fraud, the extent of which could be reflected in the original charges that the defendant faced. But after the committal to this court for plea and sentence, there were many negotiations between the prosecution and the defence and, finally, the charges were whittled down to seven charges, which the defendant pleaded guilty to. They were Charges 2, 3, 6, 7, 8, 9 and 10.
Now, the scale of the fraud is wide-ranging, and the charges that has come before me for sentence deals with offences which happened in the years 2014 and 2015.
Now, as to the Summary of Facts in this case, the defendant has admitted that different victims did report to the police, sometime in July that their properties had been mortgaged by the defendant without their authorisation. Investigations revealed that in each case, the defendant had used forged powers of attorney in which the owners of the properties had purportedly appointed the defendant to be the lawful attorney to apply, for and obtain mortgage loans from different financial institutions, and in the last charge, from an individual.
In the 2nd and 3rd charges, the victim was or is the mother-in-law and elder brother of the husband of the defendant. They were the co-owners of a property in Tseung Kwan O. And on 17 September 2015, the mother-in-law of the defendant received a letter from a solicitors’ firm, demanding payment of an outstanding amount of $2.5 million from a financial institution called KP Financial Services Limited. Upon inquiries, the defendant finally admitted to her husband and her mother-in-law that she had mortgaged the property to financial institutions, and thus the case was reported to the police.
Police investigations then commenced, and it also revealed that the defendant had used a power of attorney prepared by a solicitors’ firm known as Messrs K L Leung & Co. through which the mother-in-law and the elder brother had purportedly appointed the defendant to be the lawful attorney in respect of this property, and applications for mortgage loans were made also to Wealth Asia Credits Limited. Between December 2013 and April 2014, five loan agreements were made between Wealth Asia and the defendant purportedly on behalf of her mother-in-law and her brother-in-law. And a total therefore of $13.48 million was borrowed from Wealth Asia, of which most of it had been paid, apart from 1.558 million, and that was in relation to the 2nd charge.
Further investigation also revealed that the defendant had used a power of attorney prepared by another firm of solicitors called Messrs Alan Ho & Co., again in which her mother-in-law and brother-in-law purportedly had appointed the defendant to be the lawful attorney in respect of the same property, and this was used for an application for a mortgage loan from KP Financial. And through this agreement, the defendant obtained $2.5 million, and KP Financial issued a cheque for 2.5 million payable to Messrs Alan Ho & Co., and in turn, the solicitors firm issued a cheque for about 2.192 million payable to the defendant which was deposited into the defendant’s personal bank account. And that amount that was loaned remained outstanding, and that is the subject matter of the 3rd charge.
The facts admitted by the defendant was that both her mother-in-law and brother-in-law had never signed any powers of attorney and their signatures were forged on the powers of attorney.
Now, in relation to the 6th and 7th charges, this involves the wife of the brother-in-law of the defendant. Ms Lau was the owner of a flat in Lohas Park in Tseung Kwan O. On 15 September 2015, she received a letter sent by a solicitors firm that a mortgage had been taken out from a financial institution known as Glory Sky Finance Limited for the amount of $2.9 million plus the default interest of $116,000 on her property. So, of course, this was reported to the police, and again investigation revealed that the defendant had used a power of attorney prepared by Messrs K L Leung & Co. in which Ms Lau purportedly appointed the defendant to be the lawful attorney in respect of her property for mortgage loans. And this application for mortgage loans was made to Wealth Asia.
As a result of this, four loan agreements were made in respect of this property. The total loan amount, was $5.47 million, of which an outstanding amount of 1.322 million is still unpaid. That was the 6th charge.
In relation to Charge 7, by way of a loan agreement dated sometime in July 2014, the defendant obtained a mortgage loan from Glory Sky in respect of the same property for $2.9 million, again using the forged power of attorney. And as a result, Glory Sky issued a cheque for $1,433,400 payable to the defendant and another cheque for $1,457,150 payable to Wealth Asia. And no repayment has been made for this loan in the 7th charge, and the $2.9 million remains outstanding.
So one can see that the defendant was running what can be termed a mini-Ponzi scheme. She would borrow or take a later loan from one financial institution to cover some of the outstanding loans which had been made on other previous loan agreements. And the defendant admitted that the victim in this case, Ms Lau, had never appointed the defendant as her lawful attorney to deal with her property and that the signatures purportedly of Ms Lau were forged.
Now, I move on to the 8th and 9th charges. In relation to the 8th and 9th charges, the victims were a Mr Or and a Ms Wong who are a married couple. Defendant was the insurance agent of Mr Or and Ms Wong in about 2003, and they were the co-owners of a flat in High Street, Western.
On 13 January 2016, the victims received a letter from Wealth Asia, urging them to repay to Wealth Asia the loan with interest amounting to $3,336,970.02, which had been a loan from a mortgage of their property. As they had never taken out any loans, they reported the matter to the police. Investigation revealed that the defendant had used a power of attorney dated October 2014 prepared by Messrs K L Leung & Co. in which both victims purportedly appointed the defendant to be the lawful attorney in respect of their property for the application of a mortgage loan from a financial institution called AA Mortgage Limited.
And by way of a loan agreement in December 2014, a mortgage loan of 1.6 million in respect of the victims’ property was granted. Three cheques were issued by AA Mortgage payable to the defendant. Now, this mortgage loan has been fully repaid.
Investigation also revealed that the defendant had used this same property to apply for a mortgage loan from Wealth Asia, which is the subject matter of the 9th charge, and this loan agreement was dated December 2014, and Wealth Asia granted a mortgage loan of 3.94 million in respect of this property. And again the defendant used the forged power of attorney in order to process the loan. And as a result of this loan, Wealth Asia issued a cheque for $1,336,482.20 payable to the defendant and it was deposited into the defendant’s personal bank account. The remaining amount of the mortgage loan was used to settle the defendant’s debt owing to Wealth Asia.
So by March 2015, the outstanding amount under the loan in Charge 9 was $3,166,311.39. After negotiation, the defendant entered into a new loan agreement with Wealth Asia in respect of the victims’ property with a lower interest rate. However, the defendant subsequently defaulted in payment of the mortgage loan. So the outstanding principal of the said mortgage loan was $3,075,640.02 and this is the subject matter of the 9th charge.
Both victims confirmed they had never appointed the defendant as their lawful attorney to deal with their property, and neither did they authorise anyone to take out a mortgage on their property. And the power of attorney used by the defendant was forged.
Now, in relation to the last count, the 10th charge, the victims, Ms Ng and Mr Kong, are a married couple. In about 2007, the defendant became the insurance agent of Mr Kong, and Mr Kong had at that time passed copies of the Hong Kong identity cards of himself and Ms Ng to the defendant for taking out new insurance policies. They were the co-owners of a flat in Provident Centre in Wharf Road, Hong Kong.
In 2015, both victims received a document from a solicitors firm which stated that the defendant had applied for a mortgage loan in respect of their property, and that the defendant had used a power of attorney to take out a mortgage loan on their property. The power of attorney, dated April 2015, prepared by a solicitors firm, Messrs Brian Chan & Associates, in which both victims - purportedly appointed the defendant to be the lawful attorney in respect of their property for a mortgage loan from a person called Mr Wong Chun-chun.
So by way of a loan agreement dated in April 2015, the defendant obtained a mortgage loan from Mr Wong for 2.5 million in respect of the victims’ property in the 10th charge with the use of the forged power of attorney. As a result, Mr Wong then issued a cashier order for $1.9 million and another one for $600,000 to Messrs Alan Ho & Co. which in turn issued two cheques for $1.2 million and $1.3 million payable to the defendant. Both cheques were deposited into the defendant’s joint bank account with her husband on 9 April 2015.
Until September 2015, Mr Wong received interest payment for a total of $249,500 for the mortgage loan, and the principal of 2.5 million is still outstanding. Both victims in the 10th charge confirmed they had never appointed the defendant as their lawful attorney to deal with their property. Neither did they sign on any power of attorney.
The defendant was initially first arrested in October 2014, and amongst other things, in a house search, documents were seized from the computer device seized from the study of the defendant’s residence. After the cases concerning the latter victims were reported to the police, the defendant then surrendered herself in October 2015 to the police. And under caution, the defendant admitted that she had used a copy of the identity card of Ms Lau, who is one of the victims in the 6th and 7th charges, without her knowledge. Other documents were also given to the police.
And in a subsequent video-recorded interview, the defendant claimed she was self-employed and had run two laundry shops which suffered financial problems and that some syndicate had used her to take out mortgages, using false powers of attorney, as she needed the money to settle her debts and expenses. And she recounted how she had passed the copy of Ms Lau’s identity card to someone called Mr Chiu to make a false power of attorney and that this was eventually passed to a legal executive in Messrs K L Leung & Co., for the preparation of her power of attorney.
So she gave some evidence to the police in her video-recorded interview in relation to how these loan agreements came about.
Now, as I have mentioned earlier, the defendant had initially been arrested on 30 October 2014 and was granted police bail on that day. However, she went on to commit the offences in relation to Charge 3, and Charges 8 to 10 whilst on police bail. And the total amount of the loans are in the region of $32,390,000, and outstanding payments remain at $13,855,640.02, and an appendix was helpfully appended to the Summary of Facts to which the defendant has admitted to, showing how these amounts were worked out.
So this is a very serious case of fraud. The defendant is now aged 45. She has previous convictions. She had a theft conviction in the past, in 1994, and charges of wrongly accepting payment in 2018. Well, those are very minor offences and it is of no great moment when I am considering the sentence that I should sentence her to for these cases.
As has been very helpfully pointed out in the cases supplied to me by counsel for the prosecution and also by Mr Jim, counsel for the defence, it has been said by the Court of Appeal in HKSAR v Ho Ka Keung [2009] 1 HKC 88 that for this type of commercial frauds, immediate imprisonment is necessary even for a first offence. And in this case, it is undoubtedly so.
Some of the factors that the Court of Appeal pointed out that may be considered was the nature of the fraud, the duration, the sophistication, the role played by the defendant, the extent of the risk to the victims’ proprietary interest and, to a minimum extent, actual loss sustained.
And in this case, as can be seen from the facts which I have detailed above, it is a sophisticated plot in that forged powers of attorney were used. There was a strong breach of trust both to her own relatives and also to the victims, other victims who were her clients when she was an insurance agent. She used their identity documents, which had been passed to her many years previously, in order to complete her scheme of fraud.
So there is some sophistication in it because by using these identity documents that had been passed to her so many years ago, she must have been hoping the detection would not be simple. The risk to the victims’ proprietary interest was indeed a great one, and to expect any of these victims to be able at the drop of a hat to repay the outstanding amount is totally unbelievable.
And so in this type of fraud, the factors when considering the length of sentence to be imposed, the actual-loss-sustained factor is not a great one because, as I have said, the defendant did use money which she obtained in the later loan agreements to try and cover some of the earlier loan outstanding. So it is a minimal factor in relation to when I consider the length of sentence.
And I must say that each case must turn on its own facts, and so although what has been said in previous cases may to some extent, be worth considering, however, each case has to be, in view of the wealth of creativity in this type of fraud, that one has to tailor the sentence to the facts before the court.
And another case which was referred to me was HKSAR v Wong Hiu Shui & Others, an unreported Court of Appeal case No. 589/2002 where forged minutes of a board meeting and resolutions of shareholders were used to obtain mortgages of 40 million, the defendants were convicted after trial. Both defendants were convicted after trial and sentenced to 9 years and 7½ years, and it was said that was a carefully-planned fraud. That is just one of the examples of the type of sentences to be expected in this type of fraud.
Now, in considering the overall criminality and the overall sentence to be handed down in this case before me, I have of course taken into consideration what Mr Jim has said in his submission in mitigation to me, that the parties had all along been negotiating, and so that is why the pleas were at this late stage. There were also -- the sentencing, I must say, had also been adjourned for some length of time because of statements that the defendant had furnished to the investigating authorities. However, as it turned out, those statements were of no practical use. Be that as it may, that is why the sentence in this case has taken such a long time.
Mr Jim has pleaded on her behalf that she is married and has two young children and that she suffers from mild anxiety as well as a thyroid gland problem, and that what she told the police about how she started on the slippery slope leading to her committing the fraud was because of her financial situation, and how she dug herself deeper and deeper into debt, and this was a scheme, that she was in fact used by fraudsters to be their pawn.
Well, I am not so sure about that, whether she was used by fraudsters because, as I have detailed earlier in the Summary of Facts, it is clear that she used her relatives’ trust in her, and somehow their signatures were forged for use for the loan agreements. She used identity documents given to her by her customers when she was an insurance agent to obtain the loan, using forged powers of attorney. So how far she was used, I am not convinced about that.
There was, as I said, a great breach of trust in this case. And the only mitigating factor I can see in this case is the fact that she did plead guilty to these charges and thus saving the victims from having to come forward to court to give evidence.
And so having considered the totality of these seven charges before me, I would view the overall criminality as affording a total sentence after trial of 12 years’ imprisonment. However, I do accept, I do agree with Mr Jim that she should be given 25 per cent reduction for her pleas because of what came before. So I think it is only right that she be given that reduction.
So the way I will sentence the defendant is in this way. Defendant, please stand. On Count 2, she is sentenced to 4 years’ imprisonment as a starting point, reduced by 25 per cent - that is one-quarter - reduced to 3 years’ imprisonment.
On the 3rd charge, also using a starting point of 4 years, it is reduced to 3 years because of her plea, and that 3 years, of that 3 years, 1 year will be served consecutive to Count 2.
On Count 6, again I would take a starting point of 4 years and reduce it to 3 years because of her plea.
And on Count 7, it will also be a starting point of 4 years which will be reduced to 3 years because of her plea, but 1 year of this sentence will be served consecutively to Count 6,
And then for Count 8 and 9, on Count 8, the starting point will be 5 years reduced to 45 months because of her plea.
And Count 9, again the starting point will be 5 years reduced to 45 months because of her plea, 5 months of which will be consecutive to Count 8, which makes it 50 months for Count 8 and 9.
And on the 10th charge, again the starting point will be 5 years reduced to 45 months because of her plea.
All right. Now, at the end of the day, as I said, the overall criminality is 12 years after trial. And giving her one-quarter off, the sentence will be reduced overall to 9 years’ imprisonment. So I will sentence the defendant in this way.
Now, as I said, Charges 2 and 3 is a total of 4 years’ imprisonment. Charges 6 and 7 is a total of 4 years, 2 years of which will be consecutive to the 4 years in Charges 2 and 3. Charges 8 and 9, a total of 50 months, of that, 18 months will be consecutive to Charges 2 and 3 and 6 and 7. And then Charge 10, as I said, it is 45 months. 18 months of that will be consecutive to the sentences in Charges 2, 3, 6, 7, 8 and 9. And that makes a total
sentence of 9 years’ imprisonment.