HKSAR v. LAI LO

DCCC 66/2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 66 OF 2015

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REASONS FOR SENTENCE

1.  The defendant pleaded guilty to 2 charges of "Fraud". She deceived a friend a total sum of $2.41 million in 2 bogus property transactions. She has so far repaid $851,000 to the victim.

Summary of Facts

Background

2.  The defendant operated a real estate agency named Allgain Land Administrators Co. ("Allgain") situated at Ground Floor, 28 Waterloo Road, Yau Ma Tei.  Prior to 2012, she had acted as the real estate agent of Madam YU (PW1).  They became friends since.

Charge 1

3.  In November 2012, the defendant invited PW1 to invest jointly with others by purchasing a floor in a commercial building in Mongkok ("the 6^th Floor Property").

4.  About 17 November, in the office of Allgain, the defendant falsely represented to PW1 that by a provisional sale and purchase agreement dated 17 November 2012, PW1 and Goodwill Investment Company ("Goodwill") had purchased in equal shares from Pacific Max International Limited ("Pacific Max") the 6^th Floor Property at the price of $12,700,000.  The defendant showed PW1 the provisional agreement, which appeared to be in order.

5.  The defendant also informed PW1 that Goodwill was owned by her elder sister, LI Chunmei, and that the defendant could operate Goodwill's bank account.  Furthermore, the initial deposit ($2,540,000) had already been paid to Pacific Max by cheque.  The defendant showed PW1 a cheque in the same amount.

6.  Relying on the defendant's representation and upon her request, PW1 signed the provisional agreement in respect of the 6^th Floor Property as one of the purchasers.  She also gave the defendant a cheque (payable to Goodwill) in the sum of $1.27 million (being 50% of the $2.54 million initial deposit).  PW1's cheque was banked in later and cleared for payment.

Charge 2

7.  About January 2013, the defendant informed PW1 that the 6^th Floor Property had been sold and that PW1 was entitled to a share of the profit.  The defendant then asked PW1 if she was interested in purchasing a shop located in the same building ("the Ground Floor Property").  She told PW1 that profit would be guaranteed.  PW1 indicated her interest.

8.  About February 2013, in the office of Allgain, the defendant falsely represented to PW1 that by a provisional sale and purchase agreement dated 5 February 2013, PW1 and Goodwill had purchased in equal shares from City Vantage Limited ("City Vantage") the Ground Floor Property at the price of $22,350,000.  The defendant showed PW1 the provisional agreement, which appeared to be in order. She also showed PW1 a cheque in the sum of $2,280,000, being payment of the initial deposit to City Vantage.

9.  Relying on the defendant's representation and upon her request, PW1 gave the defendant a cheque (with the payee's name left blank) in the sum of $1.14 million (being 50% of the $2.28 million initial deposit).

10.  PW1's cheque was banked in later and cleared for payment.  The defendant gave PW1 a copy of this cheque with the payee's name being "Goodwill Invent Co. Ltd."  PW1 paid no attention to the payee's name written on the cheque.

11.  In the same month, the defendant gave PW1 a cheque (post-dated 18 July 2013) in the sum of $1.49 million issued by Goodwill, being the intended payment to PW1 for the amount she had paid for the Ground Floor Property plus profit ($1.14 million + $350,000).  At the defendant's request, PW1 did not bank in the post-dated cheque.

Discovery of the Fraud

12.  In June 2013, Allgain's office in Yau Ma Tei was closed.

13.  About 20 August 2013, the defendant told PW1 not to bank in the post-dated cheque issued by Goodwill due to insufficient funds in the bank account.

14.  About 21 August 2013, PW1 reported the matter to the Police.

15.  On 3 November 2013, the defendant was stopped and arrested at Lok Ma Chau when she tried to leave Hong Kong.  Under caution, she remained silent.  The defendant was interviewed by the Police on the following day with her lawyer present.  She refused to answer any questions.

16.  Police investigation discovered that Pacific Max has never agreed to sell the 6^th Floor Property. Its company shop and signature which appeared on the provisional agreement were forged.  Pacific Max did not receive any money or initial deposit as alleged in the provisional agreement.  Similarly, City Vantage has never agreed to sell the Ground Floor Property.  Its company shop and signature which appeared on the provisional agreement were forged.  City Vantage did not receive any money or initial deposit as alleged in the provisional agreement.

17.  According to the bank records, PW1's cheque ($1.27 million) in relation to Charge 1 was deposited into Goodwill's bank account, of which the defendant was an authorized signatory.  PW1's cheque ($1.14 million with the payee's name left blank) in relation to Charge 2 was deposited into the bank account of DENG Yanbing (rather than Goodwill Invent Co. Ltd. as appeared on the cheque copy which was shown to PW1 by the defendant).

18.  PW1 confirmed that the defendant has so far repaid $851,000 to her.  PW1 still suffers a loss in the sum of $1,559,000.

Mitigation & Sentence

19.  The defendant is 51 and has a clear record.  She is divorced (twice) and has a daughter and a son (respectively in university and F.1).  The defendant holds a mainland bachelor's degree.  She came to Hong Kong in her 20s and has worked as a teacher, a shipping clerk and a real estate agent.  Currently, she works the night shift at a convenience store.

20.  According the to the Psychiatrist's Report, the defendant has been suffering from depression since 2003.  Defence counsel Mr. CHENG informed me that her condition has become worse since her involvement in the present case.

21.  A letter written by the defendant was placed before me.  She explained in her letter that she did not intend to deceive PW1.  During the offence period, the defendant wanted to make some quick profits by speculating in the property market.  She therefore came up with the scam to convince PW1 to put in some funds.  But things did not go the way she expected.  Owing to the anti-speculation measures deployed by the government, the property market was no longer lucrative.  The defendant then invested PW1's money in the stock market hoping to generate the same profits for PW1.  Regrettably, her plan did not work.

22.  In mitigation, Mr. CHENG submitted that the defendant's original intention was a genuine property market speculation plan.  She wanted to make some quick profits together with PW1.  Unfortunately, the events took a wrong turn.  She then foolishly resorted to her fraudulent plans.  Mr. CHENG further submitted that during the offence period, the defendant was suffering from depression and under a lot of stress.  Unlike any typical hustler, the defendant did not cheat and run; she repaid PW1 to the best of her ability.  Letters from the defendant's family members were also placed before me; their contents are duly noted.

23.  PW1 is no doubt the most innocent party.  She suffered a substantial monetary loss and the defendant does not have the means to repay her in full.

24.  Prosecuting counsel Mr. WONG submitted a few cases on sentencing (including HKSAR v NG Kwok Wing [2008] 4 HKLRD 1017) for my reference.  The present case, however, does not involve the Barrick type of breach of trust.  Hence, the guidelines set out in NG Kwok Wing are not strictly applicable.

25.  The defendant most probably had a good intention; and I would not doubt the possibility that she wanted to make some quick profits from the property market together with PW1.  But what she did was plainly wrong.  She must be punished accordingly.

26.  Based on the sums involved and the amount of repayment made, I consider a starting point of 2 years' imprisonment to be appropriate for each charge.  With the guilty plea, the sentence is reduced to 16 months.  Apart from this, I see no other mitigating factors which warrant any further reduction.  I sentence the defendant to 16 months' imprisonment each for Charges 1 and 2.

27.  Having considered the totality principle, I order 6 months in Charge 2 to run consecutive to Charge 1.  Thus, the total prison term shall be 22 months.