HKSAR v. WONG KA WING

DCCC 871/2023

[2024] HKDC 1543

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 871 OF 2023

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REASONS FOR SENTENCE

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1.  Mr Wong pleaded guilty before me to two charges of Fraud ie Charges 1 and 2, each contrary to section 16A of the Theft Ordinance, Cap 210.

2.  Particulars of Charge 1 are that he, between 15 December 2020 and 14 July 2021, both dates inclusive, in Hong Kong, by deceit, namely by falsely representing to Fong Wai Han that:-

(1)  He was genuinely involved in making investments for the said Fong Wai Han (“the said investments”);

(2)  The said Fong Wai Han did not have to bear any loss in the said investments;

(3)  He would return the money paid by the said Fong Wai Han on demand; and

(4)  He would provide financial statements in respect of the said investments to the said Fong Wai Han every 3 months,

and with intent to defraud, induced the said Fong Wai Han to effect payment of a total sum of $553,000 United States currency and $1,369,750 Hong Kong currency to him, which resulted in benefit to him, or prejudice or a substantial risk of prejudice to the said Fong Wai Han.

3.  Particulars of Charge 2 are that he, between 6 January 2021 and 14 August 2021, both dates inclusive, in Hong Kong, by deceit, namely be falsely representing to Lee Cheuk Chee, Deborah, that:-

(1)  He was genuinely involved in making investments for the said Lee Cheuk Chee, Deborah (“the said investments”);

(2)  The said Lee Cheuk Chee, Deborah, did not have to bear any loss in the said investments; and

(3)  He would return the money paid by the said Lee Cheuk Chee, Deborah, on demand,

and with intent to defraud, induced the said Lee Cheuk Chee, Deborah, to effect payment of a total sum of $155,000 Hong Kong currency to him, which resulted in benefit to him, or prejudice or a substantial risk of prejudice to the said Lee Cheuk Chee, Deborah.

Facts admitted by Mr Wong

4.  In July 2020, Mr Wong was introduced to PW2 Deborah Lee.  He taught PW2 to invest in the stock market and helped her make a profit of $80,000.  In November 2020, they started a romantic relationship.

5.  On 15 December 2020, PW2’s friend one Fong Wai Han (PW1)  asked PW2 for investment tips.  PW2 referred PW1 to Mr Wong.

Charge 1

6.  Mr Wong told PW1 that he specialized in stock investment and invited her to participate in an investment plan in which she would obtain 15% earnings for an investment of USD300,000 within 2 months.  PW1 was interested.  Mr Wong told PW1 to transfer money to him first; that an investment agreement could be signed later.

7.  On 4 January 2021, PW1 transferred USD300,000 to Mr Wong’s Chong Hing Bank USD account numbered 252-80-039979-2 (“the USD Account”).

8.  On 6 January 2021, the three of them met up.  Mr Wong provided an investment agreement (“Fong’s 1^st Agreement”)  for PW1 to sign.  He told PW1 that he would provide a financial statement to PW1 every 3 months.

9.  On 18 January 2021, Mr Wong told PW1 that a further USD223,000 was needed for the investment.  PW1 thus transferred USD223,000 to the USD Account.

10.  On 23 January 2021, Mr Wong told PW1 that the investment plan had yielded a 15% profit.  Between 21 and 23 January 2021, Mr Wong made multiple cheque deposits totaling $348,000 into PW1’s bank account.

11.  Mr Wong invited PW1 to make a further investment of $362,250.  Mr Wong said PW1 could take 80% of any earnings and he would keep the rest as commission.  Mr Wong also said that PW1 could terminate the investment at any time and take back the capital.  On 25 January 2021, PW1 transferred $362,250 to Mr Wong’s Chong Hing Bank HKD account numbered 262-20-605064-7 (“the HKD Account”).

12.  On 5 April 2021, Mr Wong invited PW1 to join a cryptocurrency investment plan, which required a USD130,000 investment.  Mr Wong said that PW1 could take 85% of any earnings and he would keep the rest as commission.  Mr Wong said PW1 could terminate the investment at any time and take back the capital.

13.  On 7 April 2021, Mr Wong told PW1 that a further sum of USD30,000 was needed for her second investment plan.  PW1 transferred USD30,000 to the HKD Account.

14.  On 9 April 2021, PW1 transferred $1,007,500 to the HKD Account to join the cryptocurrency investment plan.

15.  On 14 May 2021, the group of PW1, PW2 and Mr Wong met up again.  Mr Wong provided two investment agreements (“Fong’s 2^nd Agreement” and “Fong’s 3^rd Agreement” respectively)  for PW1 to sign.  Both agreements were in English and had a reference number.  Mr Wong was referred to as “The broker” but the license number column was left blank.  The two agreements contained similar terms, to the effect that Mr Wong would help PW1 invest a sum of money; that any profit would be split between the two of them; that PW1 would not bear any loss.  In particular:-

(a)  Under Fong’s 2^nd Agreement (reference no 20210002), Mr Wong would invest USD600,000 on behalf of PW1 during 1 May 2021 to 30 April 2022. PW1 could get 80% of any profit and Mr Wong would get 20%. Fong’s 2^nd Agreement also provided that a previous investment balance of USD750,000 was carried forward. Mr Wong told PW1 that Fong’s 2^nd Agreement would cover the investment under Fong’s 1^st Agreement. PW1 then returned Fong’s 1^st Agreement to Mr Wong; and

(b)  Under Fong’s 3^rd Agreement (reference no 20210003), Mr Wong would invest USD130,000 on behalf of PW1 in cryptocurrency. PW1 could get 85% of any profit and Mr Wong would get 15%.

16.  On 20 June 2021, since PW1 wanted to emigrate, she asked Mr Wong to terminate the investment and return the capital.  Mr Wong delayed payment by using various excuses.  From 14 July 2021 onwards, PW1 lost contact with Mr Wong.

17.  On 26 July 2021, PW2 paid PW1 $300,000 to compensate her losses because it was PW2 who initially referred PW1 to Mr Wong.

18.  Overall, PW1 suffered a loss of $5,035,150.  She has never received a financial statement from Mr Wong.

Charge 2

19.  After the meeting on 6 January 2021, Mr Wong invited PW2 to join the same investment plan as PW1.  PW2 was interested.  On 25 January 2021, PW2 transferred $155,000 to the HKD Account.  Mr Wong told PW2 that because of their relationship, there was no need to sign any agreement.  PW2 agreed.

20.  From 5 February 2021 onwards, Mr Wong moved in to live with PW2’s father.  Mr Wong promised to pay $20,000 monthly rent.  However, he stopped paying rent on 5 July 2021.  When PW2 asked Mr Wong for rent and the return of the investment capital, he used various excuses to delay payment.

21.  On 11 August 2021, PW2 met Mr Wong.  Mr Wong signed a debt note to the effect that he owed PW2 a total of $1,555,000 (which included PW2’s $155,000 investment, $28,000 outstanding rent, and various loans given to Mr Wong by PW2).  Mr Wong said he would earn enough money to repay the debt within a month.  PW2 lost contact with Mr Wong from 14 August 2021 onwards.

Investigation

22.  The HKD Account and USD Account were opened on 31 December 2020 and closed on 28 October 2021.  In the Opening Mandate, Mr Wong reported to be a sales supervisor at Circle K.

23.  The USD Account had only a handful of transactions.  On 4 January 2021, it received USD300,000 from PW1.  The next day, USD261,232.8 was transferred to the HKD Account, and USD38,767.2 was withdrawn by cash.  On 18 January 2021, the USD Account received USD223,000 from PW1.  The same amount was transferred to the HKD Account on the same day.  There were no other activities.

24.  The HKD Account had transactions between 2 January 2021 and 28 October 2021.  On 25 January 2021, PW1 and PW2 respectively transferred $362,350 and $155,000 to the HKD Account.  On 7 April 2021, PW1 transferred $232,500 to the HKD Account.  On 9 April 2021, PW1 transferred $1,007,500 to the HKD Account. Throughout the said period, $2,762,000 was transferred to the account of Chief Securities Ltd numbered 256-10-266611-2 (“the Chief Account”)  for the purpose of Mr Wong’s securities trading; that $2,600,800 was transferred from the Chief Account to the HKD Account.  From the HKD Account, 68% of the withdrawals amounting to $5,976,600 were made by cash.

25.  Mr Wong opened two trading accounts with Chief Securities Ltd.  The first trading account numbered P59303 (“P Account”)  was opened on 4 December 2009 and closed on 21 January 2021.  During the period, $1,570,000 was deposited and no money was withdrawn.  There were active investments between 6 and 19 January 2021.  The balance as at 19 January 2021 was $5,714.95.

26.  On 19 January 2021, a second trading account numbered M59303 (“M Account”)  was opened.  On 21 January 2021, the balance of $5,714.95 from the P Account was transferred to the M Account.  Between 21 and 24 January 2022, $1,191,000 was deposited into the M Account; $2,744,000 was withdrawn by cheque and $123,000 was withdrawn by cash.  The M Account was closed on 24 January 2022.

Arrest and caution

27.  On 11 March 2023, police arrested Mr Wong when he was leaving Hong Kong at Lo Wu Border Control Point.

28.  A cautioned VRI was conducted with Mr Wong on the same day during which he stated the following:-

(a)  He used to help people invest and he earned commission of around 10-20%; he worked alone without any licence;

(b)  He knew PW1 and PW2 both of whom gave him money to invest; there was no limit on the scope of investments; he invested in stocks, cryptocurrency and foreign currency;

(c)  He received $5-6 million from PW1; in January 2021, he gave PW1 some investment earnings; he later suffered a loss; he never lost contact with PW1; and

(d)  The transferals to the trading accounts were for stock investments; the cash withdrawals were for other investments.

29.  From 11 to 12 March 2023, another cautioned VRI was conducted with Mr Wong during which he stated:-

(a)  He helped others invest by trading in stocks; he did not have licence; the HKD Account and USD Account belonged to him; and

(b)  He received money from PW1 and PW2 for investment purpose; he transferred some of the money to the trading accounts for stock investments; he also withdrew some of the money in cash to make other investments such as cryptocurrency; he suffered “total” loss in the investments and no money could be repaid to PW1 or PW2.

Criminal record

30.  Mr Wong has a clear record.

Antecedents

31.  Mr Wong is aged 49 (45-46 at the time of the offences), educated to Master’s degree level.  He worked as a waiter before arrest.  Mr Wong is divorced and was living with his (adoptive)  mother in public housing in Cheung Sha Wan.

Mitigation

32.  Ms Annie Lai of counsel assigned by the Director of Legal Aid mitigated on behalf of Mr Wong.  The following is a summary of the mitigation submissions.

33.  Mr Wong earned a Master of Science in Chemistry from HKUST.  He has a son (18)  and a daughter (16)  both of whom are living with his ex-wife.

34.  Before being remanded in custody, Mr Wong lived with his (adoptive)  mother (93).  Mr Wong used to contribute $6,000 to his mother as living expenses and around $15,000 towards the maintenance of the two children.

35.  Mr Wong has had a stockbroker licence and worked in a brokerage firm between 2003 and 2008.  He quitted his job to look after his disabled son and daughter after 2008 and earned a living by speculating in stocks and foreign currencies since then.

36.  In this case, Mr Wong abused the trust reposed in him by PW1 and PW2. He induced them to invest their monies in his fraudulent investment scheme.  He sincerely apologizes for causing them great financial loss and is willing to accept the legal consequences of his wrongdoings.  He has since lost all his monies (including those ill-gotten gains from PW1 and PW2)  through speculating in cryptocurrency and is not in a position to make restitution.

37.  The main mitigating factor is that Mr Wong has frankly admitted his guilt and agreed to the facts of the case, saving court’s time and resources. Moreover, the court is urged to give Mr Wong the full 1/3 sentencing discount on each of the charges for his timely plea.

38.  In sentencing fraud cases involving investment scam and abuse of a trusted position, reference is usually made to the sentencing guidelines for the offence of theft involving breach of trust in HKSAR v Ng Kwok Wing [2008] 4 HKLRD 1017, which revised the sentencing bands laid down in HKSAR v Cheung Mee Kiu [see Headnote (1)]:

“(1)  The starting point set out in HKSAR v Cheung Mee Kiu for the offence of theft involving breach of trust would be revised 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 (HKSAR v Cheung Mee Kiu [2006] 4 HKLRD 776 revised).”

39.  See also Secretary for Justice v Kong Chi Kiu [2023] 1 HKLRD 72 in which the respondent set up a bogus investment scheme and made use of an Instagram account to lure people to put funds into a high-yield, short term investment plan.  At paragraphs 49 to 53, the Court of Appeal discussed the concept of “breach of trust” and after considering several similar cases, concluded that the respondent had breached the trust placed in her by those investors who expected her to deal with their monies as promised.

40.  Ms Lai accepted that Mr Wong was in a similar trusted position.  He befriended PW1 and PW2 and deceived them into parting with their monies for investing into his scheme.  The amount involved is substantial and there was a degree of planning in perpetrating the fraud.  Nevertheless, the fraud was never one that targeted the general public.  Mr Wong had acted alone and the plan simply involved encouraging PW1 and PW2 to put in further funds in stock and cryptocurrency investments by paying the first earnings ($348,000)  within a short period of time.

41.  Adopting the Cheung Mee Kiu guidelines as revised by Ng Kwok Wing, in respect of Charge 1, the amount of $5.6 million will attract a starting point of about 6 years.  In respect of Charge 2, the amount of $155,000 will attract a starting point of 18 to 20 months.  Ms Lai urged the court to take into account the actual loss to PW1 was $5,035,150.  Ms Lai accepts that $300,000 has been paid by PW2 to PW1 to compensate for PW1’s loss and this should not be a credit to Mr Wong.  The relevant net loss for the purpose of sentencing should be around $5,335,150.  Whilst the sentencing band should be determined by the amount particularized in the charge, the actual loss resulting from the fraud can be a matter of mitigation: paras 10, 11, 52, 57 of HKSAR v Chong Hung Shek [2019] 2 HKLRD 937.  Ms Lai therefore urges the court to consider a reduction in the starting point for Charge 1 on the basis of the actual loss to PW1.

42.  Finally, Ms Lai submits that as regards totality, since the investment scheme of Charge 2 overlaps with that of Charge 1, the court should consider ordering the sentence of Charge 2 to run either wholly or substantially with the sentence of Charge 1.

43.  Ms Lai submitted on behalf of Mr Wong two mitigation letters written in Chinese (with English translation)  respectively by Mr Wong and his ex-wife. The contents are generally that Mr Wong has reflected upon his past deeds and will contribute to society upon release.  The letter writers asked for a lenient sentence so Mr Wong may return home early and take care of his family member(s).

Sentence

44.  Although this case of fraud differs from the traditional employer-employee type of theft, it can nonetheless be encompassed under the extended notion of “abuse of trust” even if not “breach of trust”: Kong Chi Kiu (supra).  As such, I am of the view that the guideline sentences under Cheung Mee Kiu as revised by Ng Kwok Wing may apply.

45.  I accede to Ms Lai’s submission that the fact of a smaller net loss may be taken as a matter of mitigation.  In this case, the net loss under Charge 1 is slightly less than the total sum specified in the Particulars of Offence.

46.  For Charge 1, I adopt a starting point of 73 months’ imprisonment.  For the smaller net loss, I deduct one month from the starting point.  The final starting point is 72 months.

47.  For Charge 2, I adopt a starting point of 18 months’ imprisonment being the lower end of the range urged on by Ms Lai on the court.

48.  Mr Wong pleaded guilty in good time earning for himself the full 1/3 sentencing discount.  For his previous clear record, I will grant Mr Wong an additional one month off after the 1/3 discount on each charge.  There are no other mitigating factors of weight to justify any other reduction in sentence.

49.  The two offences of fraud though executed with similar modus operandi and covering more or less the same period of 7 months were targeted at different victims.  In principle, their related sentences ought to be served consecutively.

50.  However, I will order partially concurrent sentences on an application of the principle of totality bearing always in mind the fact this is the first time that Mr Wong is spending time in prison.

(Mr Wong, please stand)

51.  On Charge 1, the sentence is 47 months’ imprisonment.

52.  On Charge 2, the sentence is 11 months’ imprisonment.

53.  I order that 2 months of the sentence on Charge 2 are to run consecutively to the sentence on Charge 1.  The aggregate sentence is therefore 49 months’ imprisonment.