HKSAR v. CHEN ZHIGANG

DCCC1272/2011

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 1272 OF 2011

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Reasons for Sentence

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1.  Defendant has pleaded guilty to Charge 1, conspiracy to steal, contrary to section 9 of the Theft Ordinance, Cap. 210, and section 159A of the Crimes Ordinance, Cap. 200. Particulars of that offence are that he conspired between April 2011 and 8 June 2011 with three named persons and others unknown to steal from ATMs situated in Hong Kong. Charges 2, 3 and 4 were alternative charges to Charge 1.

2.  Charge 5, the defendant pleaded guilty to breach of condition of stay contrary to section 41 of the Immigration Ordinance, Cap. 115.  He overstayed his tourist visa by approximately seven months. 

3.  The facts agreed by the defendant are as follows.  In June 2011 several banks complained to the Commercial Crime Bureau that their ATMs were being targeted, in particular in the Nathan Road area. The attempts were made to withdraw cash with bank cards containing data of overseas card holders.  Commercial Crime Bureau investigated the complaint and suspected the defendant. 

4.  On 8 June last year he was put under surveillance.  He was followed for approximately two hours in the Nathan Road area.  He was seen using 16 different ATM machines.  He was then followed back to his guesthouse and arrested not long after.  The police found on the defendant 16 bank cards and $6,400 in cash.  In his guesthouse where he was residing they found many incriminating exhibits.  The exhibits seized included 64 bank cards, a card tipping machine with a roll of gold foil, an embossing machine, a magnetic strip card reader, a laptop and various USB memory sticks, various online banking devices, $57,600 in cash, 607 ATM withdrawal slips, eight pieces of blank white cards with self adhesive tape, five sets of PRC identity cards with relevant bank documentations and statements, a PRC identity card and a US driving licence both bearing the defendant’s image but not his name, as well as various remittance receipts. 

5.  When the defendant was arrested for theft he admitted he had stolen the money.  Subsequently, in a record of interview, the defendant fully cooperated with the police.  He made a full admission. However, in that record of interview he did not tell the police he was forced to commit the crime as it has been put forward today.  He did tell the police that he came to Hong Kong to escape from creditors.  Once here he met, online, some criminal elements.  He agreed to manufacture forged bank cards.  Once that agreement was made he received data from other people and inputted the data onto bank cards using the magnetic strip card reader and the computer.  He explained that an associate who resided in the United Kingdom gave him instructions over the Internet, and he had altered the data of the 80 bank cards that were found on him and in his guesthouse.

6.  He explained that the machinery and the batch of bank cards were delivered to his guesthouse.  He had to account for each successful cash withdrawal and would receive 11 to 12 per cent of the proceeds of each withdrawal.  Investigations revealed that 688 withdrawals were attempted at 20 different banks in a period of just under three months.  Of those 688 attempted withdrawals 214 were successful, resulting in a loss to the banks of $475,800.  474 attempts were unsuccessful.  If they had been successful the banks would have suffered a further loss of $993,700.

7.  The facts of this case are very serious and a term of imprisonment is inevitable.  I have heard mitigation put forward on behalf of the defendant.  I have heard that he is now 29 and a university graduate, as well as married and from the mainland.  In Hong Kong he has a clear record, but as he is not a Hong Kong resident it is of little value, this fact. 

8.  It has been explained that he had started his own business some three years ago, but unfortunately it failed with significant amount of debt, which led to him having to leave Mainland China to escape creditors approaching him and his family.  Once in Hong Kong it seems he got involved with some criminal elements, which led to this offence.  I imagine he got involved out of desperation because he would be unable to find work in Hong Kong on a tourist visa. 

9.  Despite the submission and mitigation there is no evidence that he was forced in that he had a knife held to his throat to commit these offences.  There are several factors which are very relevant when considering sentence.  These factors are very similar to those referred to in the authority of the R v Chan Sui To CACC115/1996.  That authority refers to credit card fraud schemes. 

10.  What is relevant here is that clearly the operation was sophisticated.  There was obviously an international element to this scheme.  It took place over a period of time.  It was a systematic operation.  There were many, many bank cards that meant the potential for loss was substantial, and this is of paramount relevance.  Moreover, the defendant had the capability and the machinery to make more and more cards to continue and perpetuate this offence.  The actual loss is relevant, and it was over $475,000.  There is no evidence of any repayment to date. 

11.  I accept there is no evidence that the defendant was the mastermind.  As is usual in cases of this nature, the mastermind would not be the one walking the streets trying ATM after ATM, risking arrest.  I accept the defendant is a cog in a wheel of a sophisticated operation.  Nevertheless, these operations could not go ahead without people like the defendant.  These types of offences cause huge losses and potential losses to financial institutions and have a great effect on the reputation of Hong Kong.  It was stressed in mitigation the defendant would be willing to give evidence against any accomplice.  However, seven months have passed since the defendant was arrested and there has been no further arrest.  It is not likely to happen. Therefore his submission is not something I place great weight on.  The best mitigation today is the defendant’s plea of guilty.    

12.  Prosecution counsel has referred me to an authority, HKSAR v Ionut Leonard Oancea & Ors DCCC782/2011.  In that authority other similar authorities are referred to.  That authority is relevant and similar.  The amount stolen in that authority is much higher than the amount stolen here, but the defendant in this case was in possession of sophisticated machinery capable of perpetrating and continuing this offence. Ultimately this was a well organised and well executed operation designed to cause losses, huge losses to many banking institutions indiscriminately. 

13.  Defendant, please stand up.  After careful consideration of the facts of this case, the exhibits seized, the relevant factors to sentencing I have outlined, the mitigation put forward on your behalf, your clear record in Hong Kong and your plea today, I will take for Charge 1 a starting point of 4 years and 6 months.  Because of your plea you are entitled to a discount of one-third.  For Charge 1 you will ultimately be sentenced to a term of 3 years’ imprisonment.

14.  Charge 5, the overstaying in Hong Kong offence, I take a starting point of 3 months.  You are entitled to a discount of one-third for your plea.  For Charge 5 you are sentenced to 2 months’ imprisonment. 

15.  The 3 year sentence of Charge 1 and the 2 months sentence of Charge 5 will be served concurrently.  That is a total of 3 years’ imprisonment.