HKSAR v. LAU KWOK YAN

DCCC 995/2018

[2020] HKDC 497

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 995 OF 2018

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REASONS FOR VERDICT

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Charge

1.  The defendant is charged with one count of ‘Fraud’.  He is alleged to have perpetrated fraud by deceiving Kwok Yiu Wai into investing a total of US$117,000 in a petroleum deal.  Prosecution allege the defendant had made a number of false representations to Kwok, namely,

(i) he knew the Minister of Energy of Turkey (“the Minister”);

(ii) he was able to obtain quota of petroleum through the Minister;

(iii) funds were required for investment in the business of petroleum;

(iv) he intended to borrow funds from Kwok for investment in the petroleum business;

(v) the bank account numbered 673894xxxx at Citibank held in the name of Mustafa Tahtaci that he provided to Kwok for the transfer of the funds belonged to the Minister; and

(vi) he intended to return the funds to Kwok by 31 October 2006 and to pay a monthly reward of $50,000 United States currency to Kwok for the next twelve months.

Introduction

2.  Lam Tsang Fai (PW1) was introduced to the defendant by one Ms Wong.  The defendant asked PW1 to find people to invest in a petroleum project.  PW1 introduced his colleague Kwok Yiu Wai (PW2) to the defendant.  Upon the defendant’s explanation of the project, PW2 transferred to a foreign account US$53,000 on 18 September 2006 and US$64,000 on 22 September 2006.  The account owner was Mustafa Tahtaci (“Mustafa”).

3.  The defendant promised PW2 a reward of US$1 per ton of fuel oil for 50,000 tons over a period of at least 12 months.  They signed an agreement to that effect.

4.  PW2 did not get any reward.  Nor could he get back his capital.  He chased the defendant and made him sign an IOU on 15 February 2007.  According to the IOU, the defendant had to return HK$100,000 to PW2 first and the remainder of the capital plus interest later.

5.  PW2 received nothing from the defendant.  He made a complaint to the police.

6.  The police first interviewed the defendant on 13 April 2007.  He gave a statement (PP9).  At that time, he had not been arrested.

7.  On 3 August 2007, the defendant was arrested.  He gave another statement (PP11).

8.  PP9 is ruled admissible after alternative procedure hearing while PP11 is ruled inadmissible. 

9.  In PP9, the defendant claimed he was a commission-earning middleman in a petroleum deal.  Through PW1, he first knew Wong Yu Lam and later Mustafa, who was the boss of a Turkish company called KERN.  KERN would supply the fuel oil.  PW2 agreed to invest and paid into Mustafa’s account. However, KERN failed to execute its part and refused to return any money. 

10.  The defendant handed over the petroleum deal documents to the police.

Prosecution Case

11.  There are four prosecution witnesses and a number of exhibits (see the Exhibits List).

Investment

PW1 and PW2

12.  In 2006, PW1 Lam was the personal assistant to the boss of a commercial group.  PW2 Kwok was the group’s Financial Director.

13.  PW2 was a professional accountant in the United States and Hong Kong. He was also a US-qualified fraud examiner.

14.  In 2006, Ms Wong (a friend of PW1’s boss) introduced the defendant to PW1.  The defendant said he had a petroleum project in hand.  He asked PW1 to find people to invest in it.  PW1 related the matter to PW2.  The three met at night on 17 September 2006 in Zhongshan, China.

15.  The defendant told PW2 the project required US$203,000.  PW2 said he could only invest up to HK$1M.  The defendant expressed he could find other investors. 

16.  The defendant told PW2 that he knew the Minister of Energy in Turkey and some important persons.  He had contact to get 50,000 to 60,000 tons of fuel oil to sell in China each month.  It was possible to get a profit of US$1 for each ton.  The defendant said the deadline of the deal was 4 pm the next day, i.e. 18 September 2006.

17.  The defendant showed PW2 some documents and photos in his laptop computer.  The photos were purported to be of the Turkish Minister of Energy and some high-rank energy officials.

18.  PW2 found the defendant knowledgeable in his talk. The defendant promised PW2 that he could at least get back his capital.

19.  PW2 promised to put in US$53,000 first for payment of the pipeline fees (referable to pages 21-22 of P4).  [P4 consists of 35 pages.  It was given by the defendant to PW1 to show to potential investors for information. PW1 later gave them to PW2, who handed them over to the police when he complained of being cheated by the defendant.]

20.  The three returned to Hong Kong on 18 September 2006.  They went to the Bank of China in Sheung Shui.  There the defendant asked PW2 to remit the money to a Citibank account in the United States.  The beneficiary was Mustafa.  PW2 queried why it was not a company account.  The defendant said it would be alright.  PW2 remitted US$53,000 into that account.  The defendant told PW2 to wait for the profit, which would come within one to two months.

21.  PW2 wanted the deal to be put down in black and white.  He asked the defendant to go up to his office on 20 September 2006.  That day, PW2 prepared the typed content of P7.  It reads as follows:-

Loan Agreement

Party A: Mr. Kwok Yiu Wai Andy (Hong Kong Identity Card number D6xxxxx(x) of [PW2’s address in Hong Kong].

Party B: Mr. Timothy Lau Kwok Yan (Hong Kong Identity Card number K3xxxxx(x) of [the defendant’s address in Shenzhen, China].

Party A and Party B entered into an agreement on 18 September 2006 and the terms are as follows:

1. Party A has granted a loan of US$53,000 to Party B on 18 September 2006 (Appendix A for the evidence of this loan agreement).

2. Party B agreed and shall return the full loan amount of US$53,000 to Party A on or before 31 October 2006 following by a monthly cash payment of US$50,000 every month for the next twelve months starting from October 2006.

3. By September 2007, Party B shall return the full loan amount and cash return payment to Party A. The sum of the total payment is US$653,000.

4. Party B shall settle the said loan and the cash payment by deposit into Party A HSBC bank account of 004-xxxxxxxxx.

Party A	Party B
(signed)	(signed)

22.  On 22 September 2006, the defendant called PW1. After they had met, the defendant brought PW1 to the Bank of China in Mongkok.  He told PW1 that he had found another investor, who was now making transfer for the oil project.

23.  The said investor later went up to the defendant and PW1.  The defendant introduced him to PW1 as Mr Wong.

24.  The defendant asked PW1 to inform PW2 that there was another investor found. PW2 was asked to come out to meet them at the Bank of China at Admiralty.  There the defendant introduced Mr Wong (Wong Yue Lam) to PW2.  PW2 intended to speak to Wong but the defendant intervened. 

25.  That day, PW2 agreed to transfer another US$64,000 to Mustafa’s account.

26.  PW2 had brought along P7 with him. He added on it the handwritten part as follows:-

Supplementary clauses

1. In addition to the above arrangement, Party A further granted another loan of HK$500,000 to Party B (see Appendix B)

2. Party B agreed to return to Party A an amount of US$1.00 per ton based on the contract allocated and actual delivery by Mr. Mustafa Tahtaci in connection to the M100 ordered from China.

(PW2 signed)	21/9/06	(the defendant signed)
ID		ID

27.  The defendant and PW2 signed on P7 after PW2 had remitted US$64,000 to Mustafa’s account.

28.  PW2 could not get any money from the defendant as expected in October 2006 or later.  The defendant repeatedly asked PW2 to wait.

29.  PW2 later requested PW1 to give him those documents (P4) which the defendant had given PW1.  PW2 made some due diligence enquiry. 

30.  PW2 further chased the defendant for payment. On 15 February 2007, he and PW1 went to the defendant’s residence in Shenzhen.  Two ‘friends’ of PW1’s went with them but only waited downstairs.

31.  Inside the defendant’s residence, PW2 and the defendant argued. Eventually, the defendant was made to sign an IOU (P8). It was written out by PW2 in Chinese there and then.  The certified translation of P8 is as follows:-

I, LAU Kwok-yan Timothy [identity card numbered ], promise to (deletion) repay 100,000 Hong Kong Dollars (deletion) to creditor KWOK Yiu-wai Andy [identity card numbered ] (deletion) before 12:00 noon sharp on 26 February 2007 (by depositing the amount) to the account below.

KWOK YIU WAI ANDY

HSBC 004-xxxxxx-xxx

The repayment schedule of the outstanding (alteration) loan, (that is,) 821,977.00 Hong Kong Dollars, together with a reasonable amount of interest, shall be discussed on that day [refer to the loan interest rate offered by banks for the amount of reasonable interest].

(sd.)(illegible)

15.02.07

Police Investigation

PW3

32.  Police received a complaint from PW2, who thought he had been cheated by the defendant.  PW3 (DPC 47900 then but a sergeant now) took a witness statement from PW2.

33.  PW2 told PW3 he had been deceived into paying a total of US$117,000 for a petroleum deal.  The money was paid into a certain account and the defendant was the middleman.  PW2 accused the defendant of using false documents.

34.  At that time, the inspector in charge of the case considered there was no strong evidence against the defendant.  He instructed PW3 to make investigation from the defendant without making any arrest. PW3 thus treated the defendant as half-suspect-and-half-witness. 

35.  PW3 invited the defendant to come to the police station on 13 April 2007 to give a statement.  He did not arrest the defendant for any offence. Nevertheless, he took a Pol 857 statement form the defendant, which form was used for taking a written caution statement from an arrested suspect.

36.  As PW3 had chosen not to arrest the defendant, he did not say the word ‘caution’ to the defendant.  Yet, he reminded the defendant as follows:-

(It is) believed that you can provide information about this case and (you) are therefore invited to the police station to assist in the inquiries. However, LAU Kwok-yan, I remind you that you are not obliged to say thing unless you wish to do so, but what you say will be put into writing and may be given in evidence.

37.  PW3 asked the defendant to provide information relating to PW2’s complaint.  The defendant did.  [The statement is PP9; the translation is PP9b; the certified translation is PP9b.]

PW4

38.  PW4 is ex-DSPC45837.  He has retired from the police force since 2018.

39.  PW4 took over the investigation from PW3.  He asked the defendant to come to the police station on 3 August 2007.  PW4 then arrested the defendant for deceiving PW2.  Under caution, the defendant said, “Actually I am also a victim.  I will tell you about this matter and explain clearly.”

40.  The defendant gave a statement PP11; the translation is PP11a; the certified translation is PP11b.

Objection to PP9 and PP11

PP9

41.  PW3 did not caution the defendant as a suspect but invited the defendant to provide information in relation to PW2’s complaint.  Defence Counsel says the defendant was led to believe he was giving a witness statement rather than a caution statement. That was tantamount to an inducement.

42.  It is also complained that PW3 had not accurately recorded all the answers given by the defendant in the interview. The officer failed to confirm the content of the statement with the defendant.

PP11

43.  It is alleged that PW4 threatened to detain the defendant in order to make him cooperate.

44.  It is also complained that many answers in the statement had not been accurately recorded, and PW4 had not read over the statement to the defendant or let the latter read it for confirmation of the recorded content.

Mid-stage on Special Issues

45.  After Prosecutor has called all her witnesses, Defence Counsel submits there is no case for the defendant to answer on the special issues relating to PP9 and PP11.

46.  Counsel says PW3 and PW4 are not credible.

47.  Counsel says in relation to PP9, PW3 had not clearly cautioned the defendant.

48.  Counsel submits both PP9 and PP11 were not verbatim records of the interviews so their accuracies are in doubt. 

49.  I do not require Prosecutor to reply.  Obviously, there is a case to answer on the admissibility of PP9 and PP11.

Defendant’s Case on Special Issues

50.  The defendant elects to give evidence.

51.  The defendant is now aged 45. He says he had received education up to university level.  He has a clear record in Hong Kong and has not been involved in any police investigation previously.

PP9

52.  The defendant says he was asked to go to the police station on 13 April 2007 to provide information relating to PW2’s complaint. PW3 spoke to him in a friendly manner, saying he knew the defendant was also a victim.  The officer said the police were really after Amanda and Mustafa and the defendant was to assist the police.  The two talked about the case for one to two hours.  Then PW3 took a statement from the defendant.

53.  The defendant says he was unguarded because he had been told he was to provide information only.  He thus spoke freely before PW3. 

54.  The defendant says he was not issued with PP10 (Pol 153 – Notice to arrested persons/persons in custody) on 13 April 2007. He was only given a stack of documents by the police after he had returned to Hong Kong in 2018.  He found PP10 among those documents. However, the signature on it was not his.  The defendant says he never signed that way.

55.  The defendant says there are some answers on PP9 that were not accurately recorded by PW3.  On 13 April 2007, the officer asked him to have a look at the statement but also said there should be no problem with it. The officer had told him he could amend the statement anytime. The defendant trusted PW3 so he did not read the statement.  He just signed it.

56.  The defendant says had he been told he was a suspect, he would be more guarded and would check the content of the statement before signing it.

PP11

57.  On 3 August 2007, the defendant went to the police station upon being summoned by PW4.  The officer was fierce.  The defendant felt he had to answer him.  PW4 said the defendant should cooperate or the process would have to take a very long time to finish.

58.  The defendant answered PW4’s questions.  He feared he would be unable to leave otherwise. 

59.  The defendant says PW4 asked long questions and sometimes several questions at one time.  He answered the officer to his best to explain his case.  At one stage, PW4 grumbled, “So long!  How can we leave?”.

60.  The defendant says PW4 did not understand his answers at times.  After ten odd answers, the officer’s impatience was apparent. PW4 would relate to the defendant his understanding of the defendant’s answers.  He asked the defendant to nod his head if he agreed with his utterance.  At some stage, PW4 threatened the defendant that he might have to go to the ‘glass room’ downstairs to think better.

61.  The defendant continued to answer PW4 but he could not control how the officer recorded his answers in the statement. 

62.  At the end of the interview, PW4 left the interview room and later reappeared with a colleague.  That colleague stayed at the doorway while PW4 entered the room and placed a pair of handcuffs on the table.  He said to the defendant in a threatening tone, “Having signed it, you may leave”.  The defendant understood that if he did not sign the statement, he would be detained.  He then signed as instructed after each answer and on every page of PP11.

63.  The defendant says he was only asked to sign Pol 153 (PP12) after the statement PP11 had been finished.

64.  The defendant says PW4 did not read the statement to him.  Nor did the officer give him any opportunity to read it.

65.  The defendant says he found out only later that some answers were not correctly recorded.  The officer did not fully understand what he said and many details of his answers had been omitted.

Final Submission on Special Issues

66.  Both parties have prepared written submissions and elaborated them in court.

Prosecution

67.  Prosecutor says PW3 and PW4 are credible. 

68.  Prosecutor says PW3 was reasonable in not treating the defendant as a suspect when PP9 was taken because the officer did not have enough information to regard the defendant so.

69.  Prosecutor says the defendant was nevertheless made clear of his right to silence.

70.  Prosecutor submits the defendant’s evidence is shifting and his complaints against PW3 and PW4 are unbelievable. 

Defence

71.  Counsel says PW3 did not properly caution the defendant to let him be clear of his right to silence.  Also, the officer did not give the defendant an opportunity to confirm the accuracy of PP9.

72.  Counsel points out the alleged signature on Pol 153 (PP10) is completely different from the defendant’s true signatures on all other documents.

73.  As to PP11, Counsel says the defendant was not shaken under cross-examination.  The court should accept he was threatened by PW4 during the interview, otherwise the defendant would not sign the statement because he was concerned with its accuracy.  The defendant only signed it under fear and he had no chance to confirm it was all correctly recorded.

Ruling on PP9 and PP11

PP9

74.  The defendant complains he was not properly cautioned by PW3.

75.  PW3 says he did not have strong evidence against the defendant so he did not have reasonable suspicion of the defendant.  Thus he did not arrest the defendant or caution him.

76.  PW2 had complained to the police he was cheated by the defendant.  Though it was only a verbal complaint, PW3 should regard that as evidence against the defendant and thus formed reasonable suspicion of him.  The officer should arrest the defendant and make known to him that he was to be treated as a suspect.  Unfortunately, PW3 told the defendant that he was summoned to provide information to the police.

77.  PW3 did not use the word caution in his address to the defendant. Nevertheless, he clearly reminded the defendant of his right to silence and his right against self-incrimination.

78.  The defendant gives evidence in court.  He says he was willing to tell PW3 what had happened.  There was no threat, violence or inducement in that interview. 

79.  According to the defendant, PW3 was not oppressive or unfair. The officer only laboured under the misconception that the defendant should be treated as a witness cum suspect.  Even so, he had informed the defendant enough of his rights.  The defendant was not prejudiced to any extent.  He voluntarily gave the statement PP9 to PW3.

80.  The defendant’s second complaint against PW3 is that the officer did not record accurately of what he said and did not read the statement to him.  The officer simply asked him to have a look at the statement while telling him there should be no problem.  The defendant did not read the statement seriously, thinking it had been recorded to his benefit.

81.  I notice the signature allegedly made by the defendant on Pol 153 (PP10) is quite different from the defendant’s other signatures.  That is puzzling but it pales into insignificance for the consideration of admissibility. According to the defendant, he was willing to give the statement to PW3. The defendant’s real complaint on PP9 is its accuracy, which is a matter of weight for the jury.

82.  I rule Prosecution have proved beyond all reasonable doubts that PP9 is a voluntary statement.  There is no justification to rule it out.

83.  PP9, PP9a and PP9b are admitted into evidence and become P9, P9a and P9b: the ancillary Pol 153 (PP10, PP10a and PP10b) become P10, P10a and P10b.

PP11

84.  The defendant alleges PW4 threatened him.  The officer urged him to be brief during the interview and threatened him to sign the statement when it was finished.  PW4 denies all the allegations.

85.  The defendant gives evidence in court.  His answers often contain more than enough details.  He apparently suspects people might not understand him so he would repeat the same thing many times, using different expressions.  His answers are long and not easy to follow.  However, he can clarify himself if many follow-up questions are asked of him to afford him sufficient chance to explain his case.

86.  PP11 is a 17-page Chinese statement.  It consists of Questions/Answers 1-91 with Q/A 28 missing.

87.  PW4 admits the statement was not a verbatim record but he maintains it was accurate as much as he could make out of the defendant’s answers.

88.  Of the ninety answers, most are of merely one to two lines.  Others are a bit lengthier but all answers are easily comprehensible.  Such brief and clear expressions are inconsistent with the defendant’s style of giving evidence in the trial. In court, the defendant is long-winded, over-detailed, often repetitive and sometimes convoluted in his narration.

89.  PW4 admits he did not read the statement to the defendant but let the latter read it himself.  The officer fails to explain why he would not read the statement to the defendant after the long interview, which had lasted for four hours.

90.  Apparently, PW4 also failed to review the statement carefully or at all. He did not notice he had skipped Q/A 28. He had jumped from Q/A 27 to Q/A 29.

91.  In the circumstance, one cannot help doubting whether PW4 was really annoyed with the defendant’s many answers in that long interview and ended up recording PP11 as it is. Did he become impatient with the defendant in those four hours and behave menacingly as alleged by the defendant?

92.  The defendant gives evidence in court in relation to PP9 and PP11. He sounds credible and is not shaken by Prosecutor’s cross-examination.

93.  I cannot dismiss the defendant’s complaints against PW4 regarding PP11. Prosecution have not proved beyond reasonable doubts P11 is a voluntary statement.

94.  I rule PP11, PP11a and PP11b inadmissible; the ancillary Pol 153 (PP12, PP12a and PP12b) are also inadmissible.

No-case Submission

95.  After Prosecutor has closed her case, Defence Counsel submits the case against the defendant is so weak that no jury properly directed would convict the defendant.

96.  Counsel comments on the credibility of PW1 and PW2.  He also submits the prosecution fail to prove the petroleum deal promoted by the defendant was a fraud.

97.  Prosecutor replies the defendant had made false representations to PW2 about the investment.  She points out PW2 had not been paid at all.

Case to Answer

98.  Whether the petroleum project was a scam and the defendant was a fraudster are matters for the jury.  I disagree with Defence Counsel that the case should be taken away from the jury.  I rule the defendant has a case to answer on the charge of fraud.

Defence Case

99.  The defendant elects not to give evidence.  He has no witnesses to call or any exhibits to submit.

100.  The agreed facts say the defendant has a clear record in Hong Kong.

Final Submission

Prosecution

101.  Prosecutor says both PW1 and PW2 are credible and reliable.

102.  Prosecutor submits there are problems and errors in some of the investment documents in P4. 

103.  Prosecutor says the court can glean from the defendant’s voluntary statement P9 to find that his way of raising funds for the petroleum project was less than genuine. He had never told PW2 that KERN failed to supply the fuel oil and refused to return the money.

104.  Prosecutor says the defendant was not an innocent middleman as he claimed in P9; he was dishonest and made various false representations to PW2 in promoting the petroleum project which was a scam. As a result of the defendant’s deceit, PW2 paid a total of US$117,000 into Mustafa’s account.  PW2 did not receive the profit he had been promised nor did he get back his capital.

Defence

105.  Defence Counsel says PW1 and PW2 give confusing and conflicting evidence in court.  They are incredible and unreliable.

106.  Counsel submits the prosecution fail to prove the defendant was dishonest and the representations he made to PW2 were false.

Discussion

PW3 and PW4

107.  The two officers took statements PP9 and PP11 from the defendant respectively. Their evidence has been discussed in relation to the admissibility of the two statements (see paras 74-94 above).

PW1 and PW2

108.  These two witnesses testify on how the defendant approached them to promote the petroleum project.

109.  PW1 learnt about the investment from the defendant. He related it to PW2. The three had a long discussion on the subject in that Zhongshan meeting. PW1 should be able to tell how the defendant promoted the matter to PW2. Yet, he sounds as if he was indifferent to the matter and fails to detail how the defendant presented the petroleum project to PW2.

110.  As to PW2, he tries to impress the court that he accepted the defendant’s words totally and thus transferred funds to Mustafa’s account, not once but twice. It is strange as PW2 appears to be a prudent and smart person in court; he is a qualified accountant and also a fraud examiner.

111.  PW1 and PW2 both fail to explain satisfactorily why the defendant would sign the IOU at his Shenzhen’s home in February 2007, some months after PW2 had already paid the two sums of money into Mustafa’s account in September 2006.

112.  PW1 is vague as to what happened on that occasion, while PW2 only says the defendant signed the IOU after he and the defendant had a loud talk. He denies the defendant signed the document under duress but he admits two ‘friends’ of PW1’s came along and waited downstairs. PW2 cannot explain why those two men should come in the first place and waited for him, albeit downstairs.

113.  I do not believe PW1 and PW2 have told the court the whole truth of what happened on that occasion and about the whole investment.  They only give evidence to serve their own purpose.  PW2 is keen to establish the defendant borrowed money from him through cheating, while PW1 is anxious to exonerate himself of introducing the defendant to PW2 for the investment and causing PW2 to lose money.

114.  PW1 and PW2 are not entirely credible and reliable. I cannot be sure how the defendant exactly presented the petroleum project to them, e.g., how he mentioned his acquaintance with the Turkish source. PW1 is vague and PW2 makes different references in this regard: the Minister of Petroleum, the Minister of Energy and some high-rank officials.

Investment Documents (P4)

115.  It is not in dispute the defendant had invited PW2 to invest in a petroleum project.  He had provided documents for that purpose to PW1, which were passed onto PW2 later.  They are P4.

116.  Prosecutor submits there are irregularities in some of those documents (see paras 25-26 of her final submission). She refers to such parts that she considers as problematic. She says those can point to fraud.

117.  Yet in para 27 of her final submission, Prosecutor states “The prosecution is not relying on the argument that P4 are forged documents and does not need to prove the documents are forged. The prosecution has raised problems with the documents which show that when the Representations were made they were made dishonestly, based on the information D had at the time.”

118.  The various documents in P4 cannot be said to be forged on their face. There is no proof they contain any falsity. I am not convinced by Prosecutor that the so-called problems or mistakes in P4 are self-evident of any deceit. On the contrary, the documents constitute prima facie evidence of a petroleum project.

Fraud?

119.  Prosecutor submits the way the defendant solicited funds from PW2 was unreasonable so the said petroleum project must be less than genuine.

120.  The alleged return of the investment promoted by the defendant was lucrative. PW2 appears to be a smart person. He is a qualified accountant and also a fraud examiner. He had listened to the defendant for hours and seen the materials presented to him by the defendant before he agreed to invest. He accepted the project as genuine and feasible.

121.  Funds can be solicited from individual investors, not just from financial institutions. Many things are possible in the commercial world. There is no proof the alleged petroleum project was inherently improbable and therefore must be a fraud.

Dishonesty/Claim of Innocence

122.  There is no proof the petroleum project was a fraud. But even if it were, did the defendant know it was fraudulent and still promote it with guilty knowledge? Or was he an innocent middleman as he claimed to the police?

123.  Prosecution allege the defendant was a fraudster, who cheated PW1 and PW2.

124.  PW2 paid the two sums in September 2006. The defendant did not disappear immediately.  PW2 could still contact him for some months to chase for his money.

125.  P22a shows the defendant travelled in and out of Hong Kong quite often. It is not surprising because he resided in Shenzhen. He frequently left Hong Kong but always returned to the jurisdiction, even after the police first questioned him in April 2007 and later in August 2007. 

126.  The defendant had given his Shenzhen address to PW1 at a very early stage.  PW1 had previously visited the defendant there.

127.  Almost five months after PW2 had made his investment, he and PW1 went to the defendant’s residence in Shenzhen in February 2007.  On that occasion, the defendant was made to sign the IOU (P8).

128.  If the defendant had set out to deceive PW1 and PW2, why should he give his address to PW1 in the first place?  It is atypical that a fraudster would have made his residence known to his prey. A fraudster would not like to leave any trace; his address would be the last thing he wants his victims to know.

129.  The defendant did not disappear immediately after PW2’s investment.  He could still be contacted by PW2 for some months.  He did not move out of his Shenzhen residence and could be found by PW1 and PW2 there.  He travelled out of Hong Kong on many occasions but still came back.  He did the same even after the police had interviewed him twice.

130.  The immigration record P22a shows the defendant last left Hong Kong for China on 21 November 2007.  He only came back after 10 years on 27 August 2018.  Neither party tells the court why the defendant was away for so long. Nevertheless, Prosecutor makes it clear that she is not relying on the defendant’s long absence from Hong Kong as an indication of guilt.

131.  The defendant elects not to give evidence in court.  It is his right.

132.  P9 is a record of the defendant’s first interview by the police. That was made in April 2007 by the defendant voluntarily.

133.  In the special issue hearing, the defendant complains there are some inaccuracies in P9. But that complaint cannot be taken further as the defendant elects not to give evidence on the general issue.

134.  I read P9 carefully. It is a comprehensible statement. The recorded answers are coherent. Answer 2 is long and contains many details. I am sure the statement taker PW3 had conscientiously and faithfully recorded what the defendant told him in the interview, although not word for word.

135.  I disagree with Prosecutor that there are incriminating contents in P9. It is in fact an exculpatory statement. There the defendant explained he was a middleman in the petroleum project.  The fuel oil supplier KERN defaulted in its obligation and refused to pay back the investment money.  The defendant sensed there was something wrong with KERN after mid-October 2006.

136.  Prosecutor criticizes the defendant for not disclosing his suspicion to PW2.

137.  As said, I am not sure whether PW2 has told the court all the communications between him and the defendant. After all, the defendant only sensed something wrong with KERN sometime after PW2 had made his investment.

138.  Even if the defendant had not told PW2 of KERN’s default but kept on asking PW2 to wait for the profits, there could be many reasons for his doing so. He could be waiting for KERN to honour the deal eventually.

139.  The defendant was interviewed by the police again in August 2007. The written caution statement PP11 taken by PW4 is ruled inadmissible but before that written record was made, the defendant had verbally told PW4 that he was also a victim in the case.

Loan Agreement (P7) and IOU (P8)

140.  I find the IOU (P8) was made in dubious circumstance. On the other hand, P7 was voluntarily signed by the defendant.

141.  The defendant failed to pay dividends or to return the capital to PW2 in accordance with P7 or P8. His failure to pay in accordance with P7 or P8 might create civil liability on his part.  However, Prosecution fail to prove the default must be out of deceit.  There is nothing to rebut the defendant’s innocent claim to the police that it was a botched deal due to KERN’s failure to adhere to the fuel oil contract and KERN refused to return the investment money.

Verdict

142.  Prosecution fail to prove the petroleum project in question was a fraud, or the defendant had made any deceitful representation in his soliciting of funds for the project, or he was dishonest in failing to pay PW2 any profit or capital money.  I find the defendant not guilty of fraud.