HKSAR v. CHENG KOON WAH

DCCC16/2011

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 16 OF 2011

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Reasons for Sentence

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1.  The defendant has pleaded guilty to three offences of using a copy of a false instrument, contrary to section 74 of the Crimes Ordinance, Cap.200.

2.  He has agreed the summary of facts and I have convicted him of those offences.

3.  The offences involve applications for mortgages in respect of two properties and they involve the granting of a total of four mortgage loans in 2003.

4.  The defendant made a false claim of being employed by Winne Transportation Limited as managing director, and also being employed as managing director with a salary of $56,000 per month.  He made that false claim to obtain the mortgages.

5.  He was also involved in the use of copies of false documents, namely bank statements, which were used to substantiate claims in relation to his income and financial position.

6.  The defendant’s involvement in these offences involved him approaching two estate agents in early 2003.  He was looking for properties which required a small initial deposit and offered a cash rebate off that.  This was 2003, when the property market was depressed and cash rebates were being offered as an incentive to get people to purchase properties.

7.  Two properties were eventually recommended. They were at Ma On Shan called La Costa and Hung Hom called Bakerview.  Two mortgages were obtained on each:  a mortgage from the bank and a mortgage from the financial institution.

8.  In respect of obtaining three out of those four mortgages, supporting documents were needed, and these are the documents set out in the charges and are the false bank statements that show the defendant’s income and financial position; also, his employment by Winne as a managing director and the salary.

9.  The mortgages were granted and the cash rebates were given to the defendant by the banks and the property developer. Eventually, we know that the mortgage payments were defaulted upon and the properties were repossessed.

10.  The purpose of the mortgage fraud appears to be the obtaining of the cash rebates, which were on offer in those days from the property developers.

11.  The mortgages were respectively HSBC and Polynice, from the Bank of China and from Far East Finance.  On La Costa there was a mortgage of about 1.5 million from HSBC and about just over ½ a million from Polynice, and on Bakerview a mortgage of 1.25 million from Bank of China and 447,00 from Far East Finance.

12.  The Far East Finance mortgage did not require any further documentation.

13.  There were a total of three cash rebates obtained: $11,025 from the first mortgage on La Costa, $62,580 from the first mortgage on Bakerview, $108,600 for the second mortgage on Bakerview.  There would have been a rebate of $261,500 from Polynice on the second mortgage on La Costa, but that was withheld.

14.  It is apparent from a document submitted by the defence that these applications were part of much broader mortgage frauds taking place using the same modus operandi and I have seen case reports involving the mastermind of these offences, which showed a total of 13 properties being involved in, with cash rebates of 2.5 million and a number of other people involved, and the defendant’s involvement is limited to these two properties at La Costa and Bakerview, and it is conceded by the prosecution in the summary of facts that a man called “Fai Jai” perpetrated these mortgage frauds and the defendant appears to have been used to provide a face for the applications and also to negotiate and deal with the mechanics of obtaining the mortgages and the properties.

15.  The offences took place in 2003 and the defendant left Hong Kong in 2003.

16.  He was intercepted on 19 October 2010 at the Macau Ferry Terminal.  He made records of interview at that time, making broad admissions as to his involvement in these offences and conceding that he had received $40,000 from Fai Jai for the purchase of Bakerview and clearly admitting the falsity of the documentation and the representations made by him.

17.  The antecedents of the defendant are admitted. He is a man of clear record.  He is not a young man; he is aged 66 years old. He had been a kitchen worker since the age of 17 and, in fact, had retired as a kitchen assistant, and he is married in China.

18.  Of some significance to his sentencing is his physical condition, described in his antecedents as having a serious case of diabetes and has a spur on the right foot.

19.  I have a medical report from the Correctional Services Department in Hong Kong from Stanley Prison.  The defendant has diabetes and also treatment for an osteophyte on his right ankle.  It is a bone spur.  He is currently under observation and treatment in Stanley Prison.  He clearly suffers from long-term medical problems in his diabetes and hypertension, which is perhaps to be expected, considering his age.

20.  The offences were committed some time ago, back in 2003.

21.  The prosecution has provided details of what are considered to be the losses by the banks and the property developers.  The La Costa property, there is no loss incurred, and the Bakerview property, although it has been sold, the losses relate to loss of payment on the mortgage and interest, and they are particularised as being just over $1.6 million.

22.  As I have said earlier, the defendant’s involvement in this offence was his part of what appears to be a gang of persons, which would have involved, as I said earlier, a total of 13 properties worth 38 million. The leader, the mastermind received a total sentence of 7 years’ imprisonment.

23.  The defendant was a person involved in two properties.  Total mortgage is in the region of about 3.6 million and cash payments around about 180,000, with the bulk of the 261,000 from Far East Finance not, in fact, being paid; the defendant’s benefit being particularised by him at 40,000 in his records of interview.

24.  Of course, one has to determine the level of sentencing in a case such as this.  I bear in mind the defendant’s involvement as set out in the summary of facts.

25.  He was an active participant in the offences himself.  From his background and age, it does not appear that he was the man who was creating the conspiracy or the documentation, but people such as him are needed to bring forward these kind of frauds and he was a willing member in bringing forward that fraud and received benefit from it himself.

26.  He is an aged and somewhat unwell man now.

27.  The offences date to a time when the Hong Kong property market was subdued, which is perhaps a distant memory for most people now, but the defendant appears to have absented himself for a number of years and only was, so he cannot really receive much benefit from the fact that the offences committed a long time ago.

28.  Taking all these factors into account, I consider that the overall starting point for sentence on each of the three offences which the defendant has pleaded guilty should be one of 21 months’ imprisonment.

29.  He has pleaded guilty to each of those, so he will receive one-third discount which leads to a sentence of 14 months’ imprisonment on each of the 2nd, 3rd and 5th charges which he has pleaded guilty.

30.  These offences involve two separate properties. Having regard to the correct overall totality, what I will order is that the 2nd and 3rd charges will run concurrently to each other, but the 5th charge will run 4 months consecutively and 10 months concurrently to the 1st, to the 2nd and 3rd charges, giving an overall total of 18 months’ imprisonment for these offences.