HKSAR v. LEE KA WING

DCCC 30/2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 30 OF 2015

____________

____________

REASONS FOR SENTENCE

1.  Lee Ka Wing you have pleaded guilty to one charge of fraud, contrary to section 16A of the Theft Ordinance, Chapter 210.

2.  Full details of the offence are set out in the facts admitted by you on the 10 June.   In summary in January 2005 Mr Wang Shu Xiang, a mainland business man, sought your assistance in seeking customers in Hong Kong for his textile business on the Mainland.  With your assistance Mr Wang registered the business in Hong Kong under the name “Good Fortune Manufactory Company”.  A bank account was also opened with the Bank of China.

3.  Your responsibility was to obtain orders from customers and forward them to the Mainland factory; collect payment and manage the accounts in Hong Kong.   

4.  From 2008 one of the customers was Mandarin Associates Limited.  Communication with the staff of Mandarin Associates Limited with you was by way of email.  After goods had been ordered and received by Mandarin Associates Limited you would send the invoice to them for settlement.  Payment would then be made into the Bank of China account of Good Fortune Manufactory Company, either by cheque or online banking. 

5.  On the 13 July 2011 without the authority of Mr Wang you emailed the staff of Mandarin Associates Limited informing them the bank account details had changed from the Bank of China to HSBC.  The account holder was also called Good Fortune Manufactory Company which company was registered in the name of your younger brother.  I note this bank account had been opened in May 2010 and not for the purpose of defrauding Mr Wang.  Although your younger brother was the authorised signatory of the bank account you had control of the bank account. 

6.  Mandarin Associates Limited having no reason to suspect the email was not genuine thereafter made payment of the invoices into the HSBC bank account.  Between the 20 July 2011 and the 10 August 2012 Mandarin Associates Limited made payment into the HSBC account in respect of nine orders in the total sum of HK$1,823,825.48. 

7.  After payment was made by Mandarin Associates Limited to the HSBC account you diverted the monies to various other accounts, including two accounts of which you were the authorised signatory.  

8.  Between 17 October 2011 and 10 May 2012 you made five payments into the Bank of China account in the total sum of HK$878,341.76.  On each occasion, in order to cover up you had earlier diverted monies paid by Mandarin Associates Limited, you submitted to Mr Wang false records (which I have seen) purportedly issued by Mandarin Associates Limited showing they had had made full payment of various invoices.

9.  In August 2012 when Mr Wang queried these payments with Mandarin Associates Limited your fraudulent conduct was discovered and a report made to the police in January 2013.

10.  In passing sentence I have carefully considered everything said on your behalf by Mr Davies, in particular that for many years you had a good working relationship with Mr Wang.  Mr Davies explains that at the same time you were also running your own trading business however when the business ran into financial difficulties you sent the email to Mandarin Associates Limited in order to divert money to your business.   I am told you are now bankrupt. 

11.  I take into account since your arrest you have been working as clerk with CSL.  You are married and have a young daughter.  I take into account you have no previous convictions.  This must however be viewed in context this was not an isolated act of dishonesty but involved the diversion of money nine times over a period of nearly thirteen months. 

12.  By diverting payments made by Mandarin Associates Limited you breached the trust placed in you by Mr Wang to run the business in Hong Kong.  In passing sentence I have considered the principles laid down in R v Clark (1998) 2 Cr App R 137 as applied inHKSAR v Cheung Mee Kiu [2006] 4 HKLRD 776 as adjusted in HKSAR v Ng Kwok Wing [2008] 4 HKLRD 1017.  The guidelines state the proper starting point after trial is between 3-5 years imprisonment where the amount stolen was between HK$1-3 million and between 2-3 years imprisonment where the amount stolen was between HK$250,000 and $1 million.

13.  Over a period of nearly thirteen months you diverted nine payments in the total sum of HK$1,823,825.48 of which you subsequently paid HK$878,341.76 to the Bank of China account of Good Fortune Manufactory Company.  This leaves a balance outstanding of $945,483.72 which has not been paid to Good Fortune Manufactory Company. 

14.  Taking into account the amount diverted; the degree of trust reposed in you in running the Hong Kong company; that the monies were diverted over a period of nearly 13 months; that you did pay Good Fortune Manufactory Company nearly half the money diverted from the payments made by Mandarin Associates Limited; and that when making payment to Good Fortune Manufactory Company you used false documentation to cover up your earlier diversion of the payments received from Mandarin Associates Limited, I am satisfied the proper starting point after trial is 3 years imprisonment. 

15.  Giving you full credit for your plea of guilty reduces the sentence to 2 years imprisonment. 

Delay

16.  As noted earlier the case was reported to the police in January 2013.  You were arrested in July of that year.  You were charged and first appeared in court, some eighteen months later, in January this year when the case was transferred to the District Court.  The first indication of a plea of guilty was by letter from your solicitors one week before the trial was due to commence.  

17.  Delay in bringing an offender to justice is a mitigating factor which may be taken into account in sentence.  All the circumstances must be looked at including whether the offender has acknowledged guilt; the size of the investigation and whether the time taken to bring the case to court was longer than necessary (see for example HKSAR v Cheung Suet Ting CACC 226/2009 and HKSAR v Chiu Chi Wing CACC 243/2012).

18.  Mr Tracy explained that after arrest the investigation took about seven months involving enquiries with Mr Wang and the staff of Mandarin Associates Limited and also with several banks.  Mr Wang and the staff of Mandarin Associates Limited submitted over 500 pages of documents which required analysis before the file was sent to the Department of Justice for advice. 

19.  The file was sent to the Department of Justice in February last year with final advice being given nine months later in November.  Mr Tracy explained that in the interim the Department of Justice directed further enquiries to be made and that at the same time the Department of Justice were also considering a separate but related case.        

20.  Cleary time was required to investigate the case.  On what I have been told I cannot say there has been a delay by the police in investigating the case or in the Department of Justice in giving legal advice.  Eighteen months from arrest to charge does however seem to be a long time for what does not appear to be a very complex case.  Arguably the case could reasonably have been brought to court earlier than it was (see HKSAR v Wong Ka Wah CACC 260/2006).

21.  In the circumstances I am satisfied by reason of the time taken to bring the case to court the sentence should be reduced by 1 month. You are convicted and sentenced to 1 year and 11 months imprisonment.