SECRETARY FOR JUSTICE v. KONG CHI-KIU

CAAR 5/2022

[2022] HKCA 1745

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

APPLICATION FOR REVIEW NO 5 OF 2022

(ON REVIEW FROM DCCC NO 768 OF 2021)

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REASONS  FOR  JUDGMENT

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Hon Macrae VP (giving the Reasons for Judgment of the Court):

1.  On 26 April 2022, the respondent pleaded guilty before HH Judge E Yip (“the Judge”) in the District Court to thirteen charges of fraud, contrary to section 16A of the Theft Ordinance, Cap 210 (Charges 1 to 13), and two charges of dealing with property known or believed to represent the proceeds of an indictable offence, contrary to section 25(1) and (3) of the Organized and Serious Crimes Ordinance, Cap 455 (Charges 14 and 15). The Judge sentenced the respondent on the same day to an overall term of 2 years and 4 months’ imprisonment.

2.  On 17 May 2022, pursuant to section 81A of the Criminal Procedure Ordinance, Cap 221, the applicant made an application for leave to appeal to the Chief Judge of the High Court (“the Chief Judge”). Leave was granted by the Chief Judge on 18 May 2022, who also directed that the date for the filing of the substantive application be extended for 7 working days. The substantive application was duly filed with the court on 26 May 2022.

3.  On 8 November 2022, we allowed the application for review and substituted for the original sentence, a term of 3 years and 9 months’ imprisonment. We said that we would hand down the reasons for our decision in due course, which we now do.

Facts admitted by the respondent

4.  Between an unknown date in February and 16 August 2017, each of the victims in Charges 1 to 12 had either viewed the respondent’s online Instagram account offering a high-yield, short-term investment plan allegedly run by the respondent’s company, ‘Self International Ltd’, or been introduced to the plan by her employees. Unaware that it was in fact a scam, each of the victims deposited various amounts of money with the respondent to invest for them. The victims in Charges 1, 2 and 13 (PWs 1, 2 & 9) had been recruited as the respondent’s employees to promote the investment plan to others.

5.  The respondent initially distributed quick and generous interest to the victims in Charges 1, 2, 5, 6, 8, 11 and 12, which effectively encouraged them to invest further funds. However, the victims of Charges 3, 4, 7, 9 and 10 never received anything in return at any stage. The respondent then disappeared and the victims reported the matter to the police.

6.  In August 2017, the respondent was arrested. She admitted under caution that she had set up Self International Ltd exclusively for the purposes of the scam. Her home in Fairview Park became her employees’ living quarters. At one time, she had 80 “clients”, but 30 at the time of her arrest. She had never made, nor did she ever intend to make, any investments for her clients. The deposits made were used to pay investors interest in order to sustain the fraud, or to repay her own debts, or were kept in a bank account controlled by her in Australia. At all material times, neither she nor Self International Ltd filed any tax returns.

7.  The 12 victims suffered a combined loss of $1,666,675 as follows:

Charge	Net loss to victim ($)
1	36,000
2	126,860
3	386,500
4	1,000,000
5	20,525
6	28,625
7	10,000
8	45,300
9	3,001
10	1,700
11	4,384
12	3,780
Total	1,666,675

8.  In May 2017, the victim of Charge 13, which was also a fraud charge, paid $27,831 to the respondent, who had promised to acquire two business class air tickets for her. No tickets were ever purchased and the electronic tickets which the victim received from the respondent could not be used to check in online. The respondent then disappeared. The victim lost the said amount.

9.  Charge 14 concerned an HSBC account opened in September 2016 in the name of the respondent (“the HSBC Account”). From March to August 2017, which covered most of the period in Charges 1 to 13, there were mirrored deposits and withdrawals from the HSBC account on a monthly basis. Deposits totalling $2,435,785.22 were made: the withdrawals totalled $2,438,065.52. The respondent accepted that she knew, or had reasonable grounds to believe, that the deposits in whole or in part, directly or indirectly, represented the proceeds of indictable offences.

10.  Charge 15 concerned a Standard Chartered Bank account opened in March 2017, also in the name of the respondent (“the SCB Account”). From March to June 2017, which covered part of the period of Charges 1 to 13, there were similar mirrored deposits and withdrawals from the SCB Account on a monthly basis. Deposits totalling $1,157,386.11 were made: the withdrawals totalled $1,157,382.28. The respondent again accepted that she knew, or had reasonable grounds to believe, that the deposits in whole or in part, directly or indirectly, represented the proceeds of indictable offences.

Background and mitigation

11.  At the time of sentence, the respondent was 26 years of age, although at the time of the offences she would have been 21. She had not been before the courts before. In 2017, she had been diagnosed by a private psychiatrist with panic disorder and had three brief admissions to Castle Peak Hospital in the same year, where she was diagnosed on each occasion with Adjustment Disorder. That remained her diagnosis at the time of her sentence[1].

12.  Apart from the respondent’s guilty plea, Mr Kelly, who acted for the respondent at the sentencing hearing as he did before us at this application, asked the court to consider her relatively young age at the time of the offences. He also asked the court to bear in mind a particular hardship for the respondent, which was that she had given birth to a child after her arrest[2], and would only be permitted to keep the child with her in prison until the child reached the age of 3 years of age[3].

Reasons for sentence

13.  The Judge considered that Charges 1 to 12 were all similar instances of a fraud, in which the respondent set up a company, an Instagram account, and recruited staff to defraud investors. Her criminality and culpability in each instance was the same, although the loss to each victim differed. The Judge assessed the starting point for sentence in proportion to the loss, which he then discounted by one-third for her pleas of guilty:

Charge	Net loss to victim ($)	Starting point of sentence (months)	Sentence after one-third discount (months)
1	36,000	6	4
2	126,860	6	4
3	386,500	12	8
4	1,000,000	27	18
5	20,525	6	4
6	28,625	6	4
7	10,000	6	4
8	45,300	6	4
9	3,001	3	2
10	1,700	3	2
11	4,384	3	2
12	3,780	3	2

14.  In respect of Charge 13, the Judge adopted a starting point of 6 months’ imprisonment, which he reduced to 4 months’ for the respondent’s plea.

15.  Of the two accounts set up to collect the victims’ deposits, the Judge found, in respect of the laundering of $2,435,785.22 deposited into the HSBC Account (Charge 14), the respondent knew that $666,675 were the proceeds of the fraud charges, while she had reasonable grounds to believe that the remaining sum of $1,769,110.22 were the proceeds of other indictable offences. He adopted a starting point of 3½ years’ imprisonment on Charge 14, which he reduced to 2 years and 4 months’ imprisonment for her plea.

16.  Charge 15 concerned two tranches of deposits into the SCB Account. The Judge found that the respondent knew the amount under Charge 4 ($1,000,000) was the proceeds of her fraud upon PW3; while she had reasonable grounds to believe that the remainder of the funds were the proceeds of other indictable offences ($1,157,386.11 - $1,000,000 = $157,386.11). The Judge took 27 months’ imprisonment as a starting point, which he reduced to 18 months’ imprisonment for the respondent’s plea.

17.  Looking at the totality of sentence, the Judge ordered the sentences on all charges to run concurrently with the sentence on Charge 14, which was the longest individual sentence. In the result, the respondent was ordered to serve a sentence of 2 years and 4 months’ imprisonment.

The filing of the application for review

18.  Mr Kelly initially indicated in his written submissions that he would challenge the validity of the application for review on technical grounds arising out of the Chief Judge’s grant of leave and the time limits prescribed by law. As a result, Ms Chan, who with Ms Lo appears on behalf of the applicant, joined issue with the argument and duly filed a further set of submissions in response. However, we were informed that the day before the hearing, Mr Kelly had notified Ms Chan that he would not be pursuing the point. However, he did not inform the Court, whose members were thereby obliged to read into the issue and the numerous authorities placed before it by both sides. As a result, all three members of this Court spent several hours researching a highly technical issue, which they did not realise, although the applicant knew, was not in fact going to be pursued. With respect, it was unacceptable not to have informed the Court in advance that an important part of the respondent’s argument was not in fact going to be pursued. Mr Kelly did apologise to the Court, but we wish to say we take a dim view of such conduct, which resulted in a considerable waste of time and resources on the Court’s part.

The grounds of review against the sentence

19.  The applicant’s grounds of review are framed as follows:

Ground 1:  The sentence passed in respect of the fraud charges was manifestly inadequate and wrong in principle;

Ground 2:  The sentence passed in respect of the money laundering charges was manifestly inadequate and wrong in principle;

Ground 3:  The Judge erred in principle in ordering the sentences on all 15 charges to run concurrently with each other;

Ground 4:  The resultant overall sentence of 28 months failed sufficiently to reflect the criminality and culpability of the respondent.

A 5^th ground merely states in general terms that the resultant sentence was manifestly inadequate and wrong in principle.

Applicant’s submissions generally

20.  It was Ms Chan’s overall submission that the 15 charges could be broken down into three separate categories: the fraud charges (Charges 1-12); the money-laundering charges (Charges 14-15); and the fraud upon someone who was not a victim of any of the 12 fraud charges, in respect of money given by her to the respondent to purchase two business class airline tickets (Charge 13). Charges 1-12 involved multiple frauds against multiple victims over a protracted period, and although there was a degree of overlap between them and Charges 14-15, the latter charges added to the respondent’s culpability on the former charges and would have warranted partly consecutive sentences; while Charge 13 was wholly different from the others and would have justified a wholly consecutive sentence, subject to the issue of totality. The Judge’s order that all sentences should run concurrently was, therefore, wrong in principle and had thus led to a manifestly inadequate sentence.

Ground 1

Applicant’s submissions

21.  Ms Chan submitted that the appropriate starting point in respect of Charges 1 to 12 should have been at least 4 years’ imprisonment. She relied on the aggravating features discussed in HKSAR v Leung Yiu Fai[4]as follows:

“43. … First, the fraud was practised on the general public at large, any public member would have the risk of falling into his prey and the number of victims could be very high. Second, the applicant’s offence has serious negative effects on the growing trend of online trading activities, rendering the public wary of the same and affecting the interests of people acting in good faith in these activities. Third, cyber frauds are easy to imitate and easy to put into practice. The absence of deterrence may open floodgates to numerous similar offences. Fourth, since online trading does not involve face-to-face transactions, offenders may disguise their identities by various means and it makes detection of these crimes very difficult. Fifth, the loss of the victims is in general very difficult to recover.

44. The court will impose heavier sentences on some immoral, abhorrent and despicable offences targeting at the public, like street deception and phone deception, in order to deter such offences and protect the innocent public from harm. The amount of money involved in this type of offences is not necessarily large. Even if the defendant has no criminal record, a starting point as high as 3 to 4 years will be adopted. (See cases like HKSAR v Liang Ya Qiong & others [2009] 1 HKLRD 334, HKSAR v Wu Mudi [2008] 5 HKLRD 179, HKSAR v Hung Yung Chun [2011] 2 HKLRD 167, HKSAR v Cen Huakuo [2015] 2 HKLRD 945, etc.)

45. To some extent, the fraud committed by the Applicant is similar to street deception and phone deception in that they are all abhorrent and despicable offences targeting at the public. This type of offences must be deterred to protect the innocent public from harm.”

22.  Leung Yiu Fai was concerned with an online fraud, in which the defendant had falsely represented that he had admission tickets for Ocean Park for sale. Some 36 victims were deceived over a period of slightly more than a month, with a total loss to them of $63,180. The Court of Appeal approved a starting point of 2½ years’ imprisonment before considering an enhancement under the Organized and Serious Crimes Ordinance.

23.  The applicant highlighted the following aggravating features in the present case:

(i)  The respondent’s fraud targeted the general public: the victims learned about the fraudulent investment schemes online, via Instagram, which could be viewed by anyone. Furthermore, the investments could be made in small amounts (as low as $200, as in the case of PW4 on the first occasion)[5], thereby attracting investments by the community at large. Her fraudulent investment scheme had attracted as many as 80 clients at its height;

(ii)  While the modus operandi of the fraud was not complicated, it was carefully planned, the respondent having set up her own company for the sole purpose of perpetrating the scam; she recruited at least three staff members (who were themselves the victims in Charges 1, 2 and 13) to promote her investment plan. Virtual identities were used to lure victims to the scheme, which is a typical feature of online fraud;

(iii)  The offences lasted for about 6 months; at least 12 known victims were identified; the frauds were carefully planned and executed; and a large sum of $1,798,638 was involved; all of which called for the imposition of a deterrent sentence.

24.  Ms Chan submitted that the starting point in respect of Charge 4, which involved $1 million, should itself have attracted a starting point of not less than 4 years’ imprisonment.

25.  Citing the decision of the Court in R v Kwok Chi-keung[6], that repeated breaches of the law warranted a more severe punishment than a single offence, Ms Chan argued that an overall sentence of 27 months’ imprisonment in respect of Charges 1 to 12, where the total amount of $1,798,638 was deposited (with a net loss to the victims of $1,666,675), was manifestly inadequate and should have been much greater.

26.  The applicant further submitted that the Judge had erred in basing his sentence on the net loss rather than the total sum paid by the victims in the course of the frauds. Although a sum of $130,000 had been “returned” to some of the victims by the respondent, the purpose, as found by the Judge, was clearly to encourage further, larger investments and thereby perpetuate the fraud[7], rather than to make genuine repayments; accordingly, it was illogical to regard such payments in the respondent’s favour. Ms Chan argued that it was the amount of the fraud particularised in the charges which should determine the appropriate sentencing band, while the actual loss was simply a matter of mitigation: see HKSAR v Chong Hung Shek[8].

27.  Finally, the applicant submitted that Charge 13 was factually different from Charges 1 to 12 and would have merited at least a partly consecutive, partly concurrent, sentence with the remaining charges.

Respondent's submissions

28.  Mr Kelly contended that the applicant had wrongly characterised the fraud charges as cases of online fraud. Relying upon the Court’s reasoning in Leung Yiu Fai that one of the features of online fraud, which warranted heavier sentencing, was that such frauds did not involve face to face transactions, thus making detection of such crimes very difficult[9], he pointed out that the victims in Charges 1 to 7 and 11 had all met with the respondent in person and did not involve this aspect of online fraud. However, he accepted that Charges 8, 9, 10 and 12, where the victims had never met the respondent, fell within the ambit of online fraud in its strict sense.

29.  In respect of Charges 1 to 7 and 11, Mr Kelly suggested that the Judge had probably had in mind the sentencing guidelines for the offence of theft involving breach of trust cases laid down by the Court in HKSAR v Ng Kwok Wing[10]:

“(2) The starting points 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).”

Accordingly, since Charges 1 to 7 and 11 were non-online fraud in nature and did not involve a breach of trust, the Judge was entitled to adjust the starting point of 3 years’ imprisonment (on Charge 4 involving $1 million) down to 27 months’ imprisonment.

Ground 2

Applicant’s submissions

30.  Observing that the Court in HKSAR v Boma[11] had stipulated that deterrence for such offences must be a paramount consideration, Ms Chan referred to the guidelines suggested in Secretary for Justice v Wan Kwok Keung[12]:

“In HKSAR v Hsu Yu Yi [2010] 5 HKLRD 545, Cheung JA set out the amounts of money involved and the sentences passed in a number of ‘money laundering’ cases. The sentencing starting point is 3 years or so where the ‘black money’ involved is between $1 million and $2 million; 4 years or so where it is between $3 million and $6 million; and could be over 5 years where it is above $10 million.”

Accordingly, the appropriate starting point in respect of Charge 14 (involving some $2.5 million) should have been about 3½ years’ imprisonment; while in respect of Charge 15 (involving about $1.15 million), the starting point should have been about 3 years’ imprisonment. When the two charges were viewed together, however, the overall sentence for the two offences ought to have been in the region of 4 years’ imprisonment.

31.  Ms Chan further highlighted the following features identified in Boma, which she contended were applicable to the present case[13]:

(i)  The serious nature of the predicate offence (involving online investment fraud targeting the public at large), for which the maximum penalty was 14 years’ imprisonment;

(ii)  The mens rea of the respondent, namely her actual knowledge of the nature of the predicate offence and of the proceeds of the victims in Charges 1 to 12; and her reasonable grounds to believe that the remaining sum (of about $1,794,533.33), which corresponded to the proceeds of unidentified victims of other indictable offences;

(iii)  The facts of this case, the degree of planning and organisation, involving receipts from some 80 investors, and the making of profitable repayments to some of the victims, in order to entice them to make further investments;

(iv)  The significant degree of the respondent’s participation in the predicate offence, inasmuch as she was the only person who dealt with the proceeds of the frauds; and

(v)  The multiplicity of transactions concerning different victims over a period of about 6 months, involving a total of some $3.65 million.

32.  Ms Chan argued that not only was the starting point for Charge 15 too lenient, by ordering the two sentences on Charges 14 and 15 to run concurrently, the effective starting point of 3½ years’ imprisonment was manifestly inadequate.

Respondent's submissions

33.  Mr Kelly responded that the difference between the respondent’s suggested starting point and the Judge’s actual starting point did not warrant interference by this Court on the basis that it was manifestly inadequate. The power of review was designed for the resolution of disputes of sentencing principle and/or the rectifying of significant errors of sentencing discretion: see Secretary for Justice v Cheng Tsz Hin[14].

Ground 3

Applicant’s submissions

34.  Ms Chan referred to the decision of the Court in HKSAR v Chan Kim Chung Nelson[15], which held:

“These considerations lead naturally to the approach which a court should adopt in sentencing an offender who is guilty both of the predicate offence and a connected s.25 offence. The question for the purpose of sentence of the s.25 offence must always be whether its commission adds anything to the culpability disclosed by commission of the predicate offence. If it does, then that extra culpability must be reflected in the overall sentence imposed….”

In the present case, the respondent admitted that she had had some 80 clients, which had later reduced to about 30. The twelve victims in Charges 1 to 12 had deposited a total of $1,798,638 with the respondent. However, the remaining sums of $1,769,110.22 (Charge 14) and $157,386.11 (Charge 15), for which the respondent had reasonable grounds to believe were the proceeds of indicatable offences represented the respondent’s additional criminality on top of the fraud offences.

35.  Ms Chan referred to HKSAR v So Ka Wai[16], where the applicant had been charged with one count of fraud totalling $52,181 involving 60 victims of online fraud; and another count of money laundering involving $223,947.87, which represented sums deposited into bank accounts related to the defendant. It was conceded by the defence in that case that the monies withdrawn from the bank accounts must have represented monies deposited by unidentified victims of the internet fraud “who had not bothered to make a report” to the police[17]. The Court of Appeal, in considering whether the sentencing judge was entitled to order a substantial part of the sentence for money laundering to be served consecutively to the sentence for the fraud offence, agreed that the sentencing judge was entitled to order the sentence for the money laundering charge to be served consecutively to the sentence on the fraud charge, subject to the totality principle[18].

36.  Accordingly, Ms Chan submitted that the Judge in the present case was wrong to order that all sentences imposed on the fraud charges should run concurrently with each other, and with the sentences imposed on the money laundering charges. Consecutive or partially consecutive sentences for the fraud and the money laundering offences should have been imposed, subject to the issue of totality.

37.  As regards Charge 13, the charge related to the purchase of airline tickets, which was a completely different offence from the online fraud charges. Moreover, the victim (PW9) was one of the respondent’s employees, so there was a further element of breach of trust in that offence. In the normal course, the sentence for this offence ought to have been made to run consecutively, or at least partly consecutively, with other sentences, subject to the totality principle.

Respondent's submissions

38.  Mr Kelly argued that partly consecutive sentences were not mandatory as long as the Judge considered, as he did, that the overall sentence adequately reflected the additional culpability of the money laundering offences. He contended that the Judge had correctly considered totality in the overall sentencing process[19].

39.  In respect of Charge 13, Mr Kelly submitted that the victim was one of the respondent’s employees, who was promoting (albeit unwittingly) the fraudulent investment scheme. Therefore, the Judge would have been right to take a global view of the matter and order that particular sentence to run concurrently with the others, in accordance with the one transaction rule.

Ground 4

Applicant’s submissions

40.  Ms Chan submitted that the resultant, overall sentence of 2 years and 4 months’ imprisonment failed sufficiently to reflect the criminality and culpability of the respondent. She highlighted the following features in the present case:

(i)  Multiple charges of fraud and money laundering were involved;

(ii)  The offences spanned some 6 months;

(iii)  Multiple victims were involved;

(iv)  Sophisticated planning and organisation had been used in the fraud offences; for example, creating an Instagram account, setting up a private company and the recruitment of staff;

(v)  The respondent’s young age had been rejected as a mitigating factor, the Judge regarding her “as more sophisticated and mature than an average girl of her age”[20];

(vi)  The fact that the respondent had a young child was also rejected as a mitigating factor, the Judge noting that she was “rather irresponsible”, since “despite her arrest in August 2017, she had elected to have a child without a proper future plan”[21];

(vii)  The respondent’s clear record carried little weight where multiple offences were concerned over a significant period of time: see Shun Ming and Others v R[22];

Respondent's submissions

41.  Mr Kelly responded that a lenient sentence did not make a manifestly inadequate one. The sentence was within the range of sentences open to the sentencing judge and suggested that the sentence advocated by the applicant was not much greater than the one passed. Therefore, this Court should not interfere upon review.

Discussion

42.  We accept Ms Chan’s characterisation of the three different sets of charges, namely fraud (Charges 1-12); money-laundering (Charges 14-15); and fraud (Charge 13). Having done so, the Judge ought to have considered whether any of the charges merited consecutive, or partly consecutive, sentencing before going on to address the final issue of totality. In our judgment, it was wrong to have made all of the sentences concurrent with each other in this case. The fallacy of this approach is clearly demonstrated by the judge’s adoption of a starting point of 3½ years’ imprisonment in respect of Charge 14, which he reduced to 2 years and 4 months’ imprisonment for plea, before ordering all other sentences to run concurrently with this sentence, on the basis that[23]:

“[a]s the highest sentence is 2 years 4 months for Charge 14, it is also the total sentence.”

43.  Even if we were to accept that the sentence on Charge 14 was otherwise correct, it effectively meant that there was no meaningful sentence on the other charges. Charge 14 overlapped with Charges 1-3 and 5-13 to the extent that the proceeds of those frauds entered the respondent’s HSBC Account along with other amounts from other unidentified victims. Yet, the most serious fraud was committed on PW3 (Charge 4), who went so far as to re-mortgage her flat in order to give the respondent $1 million to invest in her fraudulent scheme. This money, none of which was ever recovered, was paid into the respondent’s SCB Account and became part of the funds, together with other amounts from other unidentified victims, which formed Charge 15. The respondent later admitted withdrawing the $1 million almost immediately and transferring $500,000 to a joint account with her ex-husband and the other $500,000 to a friend in Australia in case her accounts in Hong Kong were frozen. We might say here that we are quite surprised that the Judge did not call for witness impact statements in this case, at least from this unfortunate victim (PW3), who apart from losing her entire $1 million must now bear the burden of increased mortgage payments as a result of the respondent’s depredations.

44.  Nor was there any effective sentence in respect of Charge 13 involving the defrauding of someone, who was in fact working for the respondent, of $27,831 in respect of the purported payment for airline tickets. It may be noted that PW9 did actually receive some supposed electronic tickets from the respondent, which were discovered to be bogus when she tried to check into her seats; while the money had been paid into the respondent’s ex-husband’s account. This was a nasty offence in which the respondent’s unwitting employee had been tricked into paying for something the respondent offered to obtain, claiming that she would partly utilise her air miles. The money was never repaid.

45.  We agree with the Judge that the applicant was plainly mature beyond her years, although we are rather sceptical that she could have initiated such a brazen scheme single-handedly. She is clearly a cunning and manipulative con-woman, who through pure selfishness and greed has defrauded innocent people, some of whom could doubtless ill-afford to lose their money. Yet no attempt has ever been made to pay anyone back, nor was there any offer of restitution. Her crimes were shameless and despicable.

46.  We accept Ms Chan submissions. There are numerous aggravating features in this case. Firstly, this was an internet fraud, which by its very nature has unlimited reach, is relatively easy to perpetrate but difficult to detect and from which it is often impossible to recover losses. As such, there must be a significant element of deterrence for those contemplating committing such offences. We were not impressed by the respondent’s argument that since she had met some of the victims in person, it could not be said to be an internet fraud in its strict sense. The fact is there were other victims the respondent had never met, including the unfortunate victim of Charge 3. When she did meet her so-called “clients”, it was for the purpose of further promoting the subterfuge or in order to present a profitable “return” on the investment so as to encourage further, larger deposits.

47.  Secondly, the scheme was deliberately engineered from the outset in order to defraud vulnerable members of the public. This was not a case where there was ever any bona fide investment scheme. The whole operation was set up by the respondent as a fraud, staff were recruited by her who were themselves defrauded and left unpaid, while all of the money was either spent on herself, given to her ex-husband or spirited out of the jurisdiction for her own use.

48.  Thirdly, there were a number of offences committed over a period of about 6 months. This was not a single incidence of fraud of short duration: there were multiple victims who were defrauded over a significant period of time.

49.  Fourthly, there was a significant element of breach of trust in these offences. Yet the Judge never mentioned the term and nor, with respect, did the applicant at this application until we raised it ourselves. We suspect there may be a misconception about this issue, which we should address.

50.  All of the victims of the frauds had given money to the respondent in order for her to invest in a high-yield, short-term investment plan managed by the respondent’s company. In common parlance, they had entrusted her or her company to deal with their money in the way that she said she would. They did not know that the respondent would not invest their money, that she was nothing but a con-woman or that the scheme was a complete scam. They would have believed that she was investing their money as she had been entrusted to do.

51.  We do not see that the fact that the respondent and her company were a sham, or that the respondent was not a professional or qualified investment broker or adviser, should affect the issue that she was entrusted with money by investors who believed her to be someone who would invest their money. In HKSAR v Cheung Curtis Ka Kim[24], the Court commented of a similar situation, in which the applicant claimed himself to be a fund manager and persuaded his six victims to put funds into another bogus investment scheme:

“Clearly, the victims believed that (the applicant) was who he said he was, that he had the financial credentials and acumen to invest their money on their behalf and that he would deal with their funds as directed and promised. It would be rather absurd if the applicant found himself in a better position because he was not in fact what he claimed, and who he was believed, to be.” (Emphasis supplied)

52.  This issue was recently addressed by Zervos JA (sitting as a Single Judge) in HKSAR v Wong On Ni[25]:

“It is appropriate to briefly comment on the concept of a ‘breach of trust’, given the judge’s characterisation of the case. It is commonly understood that a breach of trust refers to the circumstance where the offender is in a position of trust who had used that privileged and trusted position to steal or defraud others. See R v John Barrick (1985) 81 Cr App R 78. The characterisation that the present case was not strictly a ‘breach of trust’ comes from an opinion expressed in HKSAR v Au Wing Kun, unrep., CACC 391/2006, 22 June 2007, at [6], when dealing with a case where the offender had been entrusted with a large sum of money to purchase stocks on behalf of various investors. The qualification that it was ‘not strictly’ a breach of trust case is equivocal and seems to leave open the possibility that it could have involved a breach of trust. It was noted that the applicant was not acting in a professional capacity but rather had befriended his victims and was in reality ‘no more than a conman practised in the art of deceit.’ The sentiment expressed in Au Wing Kun was addressed by this Court in HKSAR v Cheung Curtis Ka Kim, unrep., CACC 141/2017, 22 January 2018, at [25] to [29], in which Macrae JA (as Macrae VP then was) attributed the characterisation of ‘not strictly’ a breach of trust case on a more informal arrangement between friends. The Court held in the circumstances of the case that there was a breach of trust where persons entrust sums of money in the hands of someone they believed to be an experienced financial manager and investor and whom they trusted would handle their money in a particular way.”

53.  In our judgment, the respondent breached the trust placed in her by those who expected her to invest their money; although we rather think that whether one describes this as a ‘breach of trust’ case hardly matters, given the egregious, calculated and shameless way in which she set out to defraud any members of the public who unfortunately chanced upon her Instagram account[26].

54.  In the circumstances, we accept the breaches of sentencing principle by the Judge, which have been set out and criticised by Ms Chan, and we also agree with her submissions that the overall sentence was manifestly inadequate. It was for these reasons that the application was accordingly allowed.

55.  We would have adopted in respect of the respondent’s criminality an overall starting point of 6 years and 3 months’ imprisonment, which, allowing for her pleas of guilty, should have resulted in an ultimate sentence of 4 years and 2 months’ imprisonment.

56.  We have arrived at this sentence by adopting a total starting point of 4 years’ imprisonment in respect of Charges 1-12, having made an assessment of the individual starting points for each charge with appropriate adjustments for the various aggravating features; and starting points of 4 years’ and 3½ years’ imprisonment in respect of Charges 14 and 15 respectively. These will be reduced to terms of 2 years and 8 months’ imprisonment on each of Charges 1-12, to run concurrently with each other; and terms of 2 years and 8 months’ and 2 years and 4 months’ imprisonment on Charges 14-15 respectively, to run concurrently with each other. We order 16 months of the concurrent term on Charges 14 and 15 to run consecutively to the sentence on Charges 1-12, with the remaining 16 months to run concurrently with the sentence on Charges 1-12. The sentence thus becomes 4 years’ imprisonment. We adopt a starting point of 6 months’ imprisonment on Charge 13, which we reduce to 4 months’ imprisonment for the respondent’s plea. We order 2 months of this sentence to run consecutively to the 4 years’ imprisonment on Charges 1-12 and 14-15, with the remainder to run concurrently, thus making an overall total sentence of 4 years and 2 months’ imprisonment.

Discount for review of sentence

57.  We must next give consideration to any appropriate discount of this sentence, given that this is an application for review and there will inevitably be a particular hardship for the respondent in facing up to a new sentence that is significantly longer than that passed by the Judge. Indeed, the new term which we consider to have been appropriate represents an increase in her sentence of just over 78.5%. We must also bear in mind that, while no criticism has been made of the delay in this case, the fact is that the offences were committed more than 5 years ago. During that period, the respondent’s case has been delayed by two General Adjourned Periods (“GAPs”) due to the Covid-19 pandemic, as well as by her pregnancy.

58.  In these circumstances, we were prepared to discount the sentence which should have been passed by 5 months, though had it not been for the delays occasioned by the two GAPs referred to, we would have considered a lesser period of discount. Accordingly, in the exercise of our powers under section 81B(1)(a) of the Criminal Procedure Ordinance, we substituted for the sentence of 2 years and 4 months’ imprisonment, a sentence of 3 years and 9 months’ imprisonment.