1195/ 2008

DCCC 1195/ 2008

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 1195 OF 2008

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Reasons for Sentence of D1 and D3

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The charge

1. D1, D2, and D3 plead guilty to a charge of conspiracy to use false instruments, contrary to sections 73, 159A, and 159C of the Crimes Ordinance, Cap. 200.  The Particulars of Offence stated as follows:

D1, D2, and D3, between May 2008 and 9 September 2008, in Hong Kong, conspired together and with persons unknown to use false instruments which were, and which they knew or believed to be false, namely twenty pieces of counterfeit credit cards, with the intention of inducing somebody to accept them as genuine, and by reason of so accepting them to do or not to do some act to his own or other person’s prejudice.

The facts of 5 September 2008

2. D1, D2, and a person called “Paul” went to a travel agent, GSTL, to purchase three round-trip Korean Air tickets for D1, D2, and D3 respectively for 10 September 2008 to depart Hong Kong to Rome via Seoul.     

The facts of 9 September 2008

The arrest of D1, D2, and D3

3. D1 checked in at the counter.  He waited for D2 to arrive.  After D2 arrived and checked in at the counter, D1 and D2 went to the departure gate together.  Later, the police stopped them for enquiry on suspicion of possession of counterfeit credit cards.  They were arrested. 

4. D3 checked in at the counter.  D3 then went to use an ATM machine.  After that, he used a notebook computer (“Computer”, later seized as an exhibit), which he had brought along.  Later, the police stopped D3 near the departure gate for enquiry on suspicion of possession of counterfeit credit cards.  He was arrested.   

The body search on D1

5. The body search on D1 yielded:

(1)   Ten counterfeit credit cards in his name;

(2)   One Korean Air boarding pass in his name to Seoul;

(3)   One Korean Air boarding pass in his name to Rome;

(4)   One itinerary issued by GSTL addressed to him;

(5)   Cash Euro $1,400;

(6)   Cash HK $300;

(7)   One NOKIA mobile phone with one “3” SIM card (no. 6430-3654);

(8)   One “3” SIM card (no. 6901-3407).

The body search on D2

6. The body search on D3 yielded:

(1)  Ten counterfeit credit cards in her name;

(2)  One Korean Air boarding pass in her name to Seoul;

(3)  One Korean Air boarding pass in her name to Rome;

(4)  An itinerary issued by GSTL addressed to her;

(5)  One NOKIA mobile phone with one “CSL” SIM card (no. 6390-0383);

(6)  One “3” SIM card (no. 6097-1307).

The body search on D3

7. The body search on D3 yielded:

(1)  The Computer;

(2)  One Korean Air boarding pass in his name to Seoul;

(3)  One Korean Air boarding pass in his name to Rome;

(4)  An itinerary issued by GSTL addressed to D3;

(5)  Cash Euro $300;

(6)  Cash US $705;

(7)  One HTC mobile phone with one SIM card (no. 5192-5361);

(8)  One NOKIA mobile phone with one SIM card of a China mobile phone number.

The admissions by D1

8. Subsequently, D1 said:

(1)   In July 2008 he met Paul through a friend, “Marco”;

(2)   Paul offered to pay him (D1) for a job using counterfeit credit cards abroad;

(3)   He agreed to take up the job;

(4)   To discuss using counterfeit credit cards abroad he met up with Paul and D2;

(5)   D1 gave his full name to Paul for purchasing the air-tickets;

(6)   On 9 September 2008, he and D2 went to Shenzhen each to collect 10 counterfeit credit cards from a person called “Long”;

(7)   He would take those 10 counterfeit cards embossed in his name to Rome;

(8)   Long gave him (D1) cash Euro$1,400 for smooth customs passage.

The admissions by D2

9. Subsequently, D2 said:

(1)  He met Paul through a friend;

(2)  Paul offered to pay her (D2) 10% of the value of the fraudulent purchases for a job of using counterfeit credit cards abroad;

(3)  She agreed to take up the job because she wanted to earn money to repay her credit card bills;

(4)  To discuss using counterfeit credit cards in Italy she met up with Paul and D1;

(5)  She went with Paul and D1 to purchase the air-tickets to Rome;

(6)  On 9 September 2008, she and D1 went to Shenzhen each to collect 10 counterfeit credit cards from a person called “Long”;

(7)  She would take those 10 counterfeit cards embossed in her name to Rome.

The admissions by D3

10. Subsequently, D3 said:

(1)   His friend, “Ah Yan”, asked him to travel to Rome in the same flight as Ah Yan’s two employees, D1 and D2;

(2)   He was not to meet up with D1 and D2 yet in Hong Kong;

(3)   D1 and D2 would take and use 20 counterfeit credit cards to make purchases in Rome;

(4)   He was to send the merchandize back home;

(5)   He would be rewarded with a free trip to Rome and HK$500 per day with all expenses paid;

(6)   He was given cash of Euro $300 and US $705 for smooth customs clearance;

(7)   The seized Computer was borrowed from a friend;

(8)   After checking-in, he had gone online using the Computer;

(9)   The seized itinerary issued by GSTL was given by Ah Yan;

(10)   The seized SIM card (no. 5192-5361) was given by Ah Yan for contact in Rome;

(11)   He had saved the phone number of D2 in the phonebook of his mobile phone.

The potential for loss

11. There were 8 VISA credit cards among the 20 counterfeit credit cards.  The issuer’s potential loss per VISA card is about US$3,000.  The total for 8 could have been US $24,000 (equivalent to HK $187,200).

12. There were 12 MasterCards among the 20 counterfeit credit cards.  The issuer’s average potential loss per MasterCard is about US$1,300.  The total for 12 could have been US $15,600 (equivalent to HK $121,680).

Prosecution’s additional facts

13. The Computer seized from D3 contained data of 34 other credit card accounts.  There is no dispute that D3 had gone online before the arrest.  The prosecution argue that, if the Court is satisfied that D3 knew of the presence of such data, D3’s culpability might have to be considered in the light of such knowledge.  The prosecution submit that there is no reason for D3 not to know of it because he had used the Computer online and such data were not encrypted. 

14.  I have sought to clarify with the prosecution as to how the present conspiracy, presently stated in the Particulars of Offence to include only the use of 20 existing counterfeit credit cards can somehow be magnified, by the Summary of Facts, to include a conspiracy for the manufacturing of thirty-four other counterfeit credit cards.  I ask if the prosecution are minded to amend the Particulars of Offence to include such extra number and feature.  The prosecution’s response is that they regard such extra number and feature as mere “background” of the case.  As such, no amendment is required.   However, the Court may, if considers it reflective of an increased culpability, impose a higher sentence on the defendants. 

15. A similar situation had arisen in HKSAR v Chan Wai Kin CACC 237/2005.  In that case the applicant (2^nd defendant) pleaded guilty to a conspiracy to use 3 false Visa cards.  There were 2 additional matters put before the Court for consideration of sentence as follows:

(1)   In another conspirator’s (1^st defendant’s) house were seized a variety of items were found, including 30 false credit cards, a magnetic stripe card-encoder and a computer with other material used to encode information to and from the magnetic stripes on false credit cards;

(2)   Enquiries revealed that a number of the false credit cards had been used in fraudulent transactions.

16. Stuart-Moore VP had this to say, at para. 3:

[I]t is right to emphasise that the applicant’s plea of guilty was limited to conspiracy involving the 3 Visa cards found in the possesson of the conspirators at the time of their arrest.”

17. It is clear that the prosecution ought not to sneak in material outside the scope of the indictment through the backdoor under the cloak of “background”.  This practice is not approved by the Court and must stop.  I must eschew from consideration the Computer and the data on 34 credit card accounts stored in it when I come to sentence the defendants.     

The Defendants’ personal circumstances

18. D1 is now 21 years of age.  He is single.  He was educated up to F.3 level.  He worked as a hair saloon apprentice for two years until 2007.  Since then he remained unemployed before arrest.  He was sentenced to Rehabilitation Centre for two convictions of possessing false documents in February 2007.  He committed the present offence, at the age of 20, to repay his mother’s debt owed to a finance company.  His counsel asks me to reduce his sentence due to his young age.      

19. D3 is now 25 years of age.  He has a clear record.  He is single.  He was educated up to Higher Diploma level in Australia.  As his parents could no longer finance his further studies, he had to return to Hong Kong.  He ran an internet auction business before arrest.     

The principles of sentence

Options in sentencing credit card fraudsters

20. There are no sentencing tariffs for credit card fraudsters but the customary sentence is imprisonment.  In HKSAR v Cheung Ka-wo CACC No 136/2001 Stock JA pointed out that：

11．It is well known that in this jurisdiction severe sentences are given to those who commit offences of the kind with which we are presently concerned as a deterrent to others who are like-minded.  One justification for this is that the integrity of the credit card system is highly important in this day and age and the confidence which people, as Mr Madigan pointed out in the course of his argument, are entitled to place on this aspect of modern commercial life is necessarily eroded by others who attempt to beat the system by fraudulent methods.

Determining the length of imprisonment

22.     In HKSAR v Cheng Sui-to [1996] 2 HKCLR 128, 131, the Court of Appeal held that a sentencing judge would need to consider 5 factors before deciding the level of sentence, although Yang CJ went on later to say that this was not intended to be an exhaustive list.  These factors were as follows: 

“	1.	The size of the operation e.g. whether it involves large sums of money, whether it concerned a large number of persons or forged credit cards.
	2.	The planning that has gone into perpetrating the fraud, whether it is elaborate or simple, whether technical skills were used, and to what extent.
	3.	Whether there is an international dimension.
	4.	Whether the accused played a major role, e.g. running a syndicate, engaging in actual manufacture, organising the use of forged cards, or whether he is a mere ‘cog in the wheel’ as a courier or a custodian or keeper.
	5.	Whether there is a plea of guilty.

The factor of “Potential for loss”

22.     In HKSAR v Yau Wai Chun CACC 417/ 2000 Stuart-Moore VP raised the issue of “potential for losses” as reflecting the degree of culpability.  That case dealt with a medium-sized operation.  He referred to Chan Sui-to (supra) and said:

10．In R v Chan Sui-to and Another [1996] 2 HKCLR 128, where some guidance was given in regard to sentencing in cases involving the fraudulent use of credit cards, the court stated at page 134A:

"Allowing for the different facts and the varying degrees of culpability, it is impossible to formulate a set of principles of sentencing from those decisions. We think however it would be helpful to the courts if they were guided by some criterion. We would therefore suggest that an accused who plays an active but not necessarily a key role in a medium size operation involving between $50,000 and $150,000, with no elaborate planning and equipment, and without an international dimension, should receive a sentence of five to six years after trial. Sentences may be adjusted upwards or downwards according to circumstances.

The sum of money involved is of course only one of the factors to be taken into account. It is not even the most significant factor."

11. As a corollary to this, the court stated in HKSAR v Ng Swee Thiam and Others [2000] 1 HKLRD 772 at 778, that it was the "potential for losses" which was the most important consideration in that case. This, it should be said, will often have relevance, as it does in the matter presently before us. It has long been recognised in Hong Kong that those who indulge in fraud of this kind can expect to be given severe sentences as it erodes the confidence which people are entitled to have in a society where great dependence is placed on the credit card method of payment. (See: Attorney General v Chan Piu-sang and Another [1994] 1 HKCLR 211).

Examples of sentence

23.     In HKSAR v Bin Kei Chi & Anor CACC 181/2005, the two applicants pleaded guilty to, among other charges, the joint possession of 25 false credit cards.  It was a medium-sized operation with an international element.  The sentencing judge took a starting point of 6 years’ imprisonment.  It was reduced to 4 years due to his plea of guilty.  The Court of Appeal upheld the sentence.  

24.     In HKSAR v Kita Yashushi & Anor CACC 470/2006, each of the two applicants pleaded guilty to the charges of using a false credit card to purchase a Rolex watch (the charge of using a false instrument), which purchase was verified by a false passport (the charge of using a false passport), and possessing 3 false credit cards and the false passport.  The Court of Appeal regarded that the starting points should have been:

(1)   3 ½ years for using the false credit card;

(2)   18 months for using the false passport; and

(3)   3 ½ years for possessing the 3 credit cards and the false passport.

Taking in account the pleas of guilty, the sentences became 28 months, 12 months, and 28 months respectively.  The 28 months’ sentences were to run concurrently but 4 months of the 12 months’ sentence was to run consecutively to the other charges.  Each applicant was sentenced to 32 months in total.

Alleged young age of D3

25.     D1’s solicitor submits in mitigation that D1 was 20 years of age when he committed the offence.  He should receive a more lenient sentence due to his young age.

26.     The robbery caseof Attorney General v Li Chi-ko [1987] HKLR 1233 is authority to the effect that a 20-year-old defendant is not being young for a discount.   The Court of Appeal had held in that, save in exceptional circumstances, a term of imprisonment ought to be imposed in a case of serious robbery.  Youth of itself was not such an exceptional circumstance, although extreme youth may be (per Yang, then-Acting C.J., at 1234) that he did not think the 3 defendants there were of extreme youth.  I see no reason not to apply it to our present case.   

Further discount for clear record

27.     D3’s counsel submits in mitigation that D3’s clear record warrants an extra discount.  She accepts, however, that D3 does not have what is normally referred to as a “positive good character”.  I refer to HKSAR v Leung Shuk-man [2002] 3 HKC 424 where the applicant pleaded guilty to a number of theft charges and was given the usual one-third discount.  On appeal, her counsel sought to argue that more discount should have been given due to her clear record.  In rejecting this argument, Stuart-Moore Ag CJHC said, at 427 - 428:

In any event, the Appellant was given a one-third discount which is normally to be regarded as the high watermark of the discount accorded to a defendant showing remorse by pleading guilty, whether or not a defendant is able to claim previous 'good character' in the sense of 'clear record'. Positive good character may well entitle a defendant to a slightly enhanced discount such as in the example of an offender who has worked without payment for a charitable cause within the community. This Appellant was entitled to no more than a one-third discount for her plea.

The sentence I pass

28.     Applying the 5 non-exhaustive factors laid down in Chan Sui-to (supra), our present case reveals the following features:

(1)     There were 20 counterfeit credit cards.  The potential loss in our present case amounted to HK $308,880, namely HK $187,200 for 8 VISA Cards + HK $121,680 for 12 MasterCards.  Allowing for the upward adjustment of price level from Chan Sui-to (supra) which was decided on 22 June 1996, it can be classified as “a medium-size operation”.  There were at least 6 people, namely D1, D2, D3, Paul, Long, and Ah Yan;

(2)     The planning was not sophisticated;

(3)     There was an international element involving the collection of the counterfeit credit cards in Shenzhen, and the shopping in Rome;

(4)     Each defendant’s role was not essential but active;

(5)     There is a plea of guilty.

29.     Our present case falls within the band of 5 to 6 years’ imprisonment suggested in Chan Sui-to (supra).  I take a starting point of 5 years’ imprisonment for D1 and D3.  I reduce it by one-third because of the plea of guilty plea.  There are no other mitigating factors.  I sentence D1 and D3 to 3 years and 4 months’ imprisonment.