HKSAR v. ARTURS LUDINS

DCCC 594/2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 594 OF 2013

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REASONS FOR SENTENCE

1.  The defendant pleads guilty to one charge of possessing sixty eight false instruments, contrary to section 75(1) of the Crimes Ordinance, Chapter 200 (charge 1) and one charge of using a false instrument, contrary to section 73 of the Crimes Ordinance (charge 2).

2.  In summary at about 12:36 p.m. on the 22 February this year the defendant, a Latvian citizen who came to Hong Kong as a visitor on the 20 December last year, went to ‘Watson’s Wine’ in Times Square where he used a forged American Express credit card in the name of Arthur Ludin to buy a bottle of whisky valued at $2,500. 

3.  The staff suspecting the card was a forgery called the police.  The defendant was arrested soon after.  The police found four more forged American Express credit cards in the name of Arthur Ludin or Arthurs Ludin in a wallet from the right back pocket of the defendant’s trousers. 

4.  Later the same day the police searched the 1/F, Cheong Ip Building, 344B Hennessy Road where the defendant was living at the time.  Inside a black Samsonite case the police found an encoder machine and 63 forged bank cards, eight of which were in the name of Arthurs Ludin, including two further forged American Express credit cards. 

5.  In a video interview, which I have had the opportunity of reading in full, the defendant told the police, inter alia, that in January a male called ‘Hang’, who he believed to be Indonesian, asked him to use counterfeit credit cards to buy liquor and computers in return for quick money of 40-50% of the value of the goods obtained.  After agreeing to the proposal “Hang’ later gave the defendant 67 forged bank cards and an encoder machine together with instructions on how to encode the cards. The defendant would encode the cards before using them and that if any of the cards did not work he could re-write new data onto the cards.

6.  The defendant admitted he used the forged credit card at Watsons and that on arrest four more forged credit cards were found in his wallet.  After Hang gave him the cards the defendant says that may be he used the credit cards three to four times per week to buy liquor and computers.  Some ofthe bank cards could not be used and others he tried to use but was not successful.

7.  One card found by the police in the Samsonite case is a visa gift card purported to be issued by the Bank of Communications (exhibit P18).  In the video interview the defendant says he bought this card in Hong Kong for HK$200 which he subsequently used resulting in a zero balance.  This card is a forgery by reason of the fact that the data on the magnetic strip of the card is inconsistent with that on the face of the card.

8.  I have carefully considered everything said by Mr Tracy on behalf of the defendant, including that the defendant fully cooperated with the police on arrest which has greatly assisted the prosecution, in particular as they have had difficulties in proving all the cards were forgeries.  I am satisfied from the very helpful table titled “Examination Results of the Suspected Credit Cards” the prosecution would at trial, from the available evidence from the Government Chemist, American Express and Visa have been able to prove forgery of all the cards either by direct evidence the cards were forged or by inference where the data on the cards is inconsistent with the face of the card or no data appears on the card at all without placing reliance on anything said by the defendant. I am satisfied the one third discount to be given on pleading guilty to the charges will fully reflect the defendant’s co-operation with the police.   

9.  I take into account the defendant has a clear record in Hong Kong. This however carries little weight where the offender is a visitor who has been in Hong Kong only a few weeks before committing serious crime.  The commission of offences by a visitor is an aggravating feature of sentence (see HKSAR v Aguilar Garcia Milner Javier CACC485/2012).

10.  In passing sentence I take into account the factors which a sentencing judge will need to consider in credit card frauds as set out by the Court of Appeal in R v Chan Siu To [1996] 2 HKCLR 128, including the size of the operation; the planning that had gone into perpetrating the fraud; whether there is an international dimension; and whether the accused played a major role.  The factors were not intended however to be exhaustive but provide valuable assistance to the court.  The courts have repeatedly stressed that deterrent sentences are to be imposed. 

11.  Mr Tracy submits this was a small scale operation for which a sentence of between 2-3 years imprisonment is appropriate.  Where the facts of the offence point to a small unsophisticated operation, involving one or a few forged cards uncomplicated by other evidence materially linking the offender to a larger operation, a starting point of 3 years or less may be appropriate (see for example HKSAR v Tu I Lang           CACC 464/2006).

12.  I disagree this is a small scale operation.  The defendant had a total of 68 forged bank cards, seven of which were forged American Express credit cards in the defendant’s name (exhibits P1-5 & P63-64), showing his link to a wider organisation that had caused cards to be printed specifically for him.  The remainder of the cards are described as debit cards and gift cards.  The defendant was also in possession of an encoder which he used to encode data on to the cards.

13.  I have not been told the exact nature of the 61 forged bank cards save that some are gift cards and some are debit cards.  During mitigation on the 10 September I asked Mr Tracy whether he drew any distinction between credit cards and debit cards and gift cards.  Mr Tracy replied: “Only a very general distinction that at least as regards the prepaid cards the order of loss would probably be lower than in the case of a credit card.”  By prepaid cards Mr Tracy was referring to the debit cards and gift cards.  Mr Tracy continued: “I have to concede that in principal it is open to the defendant with his encoder to re-programme so the distinction is not all that great in this case.  I would have to accept that.”

14.  I adjourned to the 16 September to consider sentence.  Having looked at the photographs of the cards and read the defendant’s record of interview I was not satisfied the concession, that there was no real distinction in this case between credit cards, debit cards and gift cards, was correct.  In my view there being a substantial difference between a case involving 7 forged credit cards and one involving 68 forged credit cards and therefore the likely sentence to be imposed I informed the parties of my view on the 16 September.

15.  I also related what I had found out about the nature of the cards stressing I would not rely on anything I found unless this was agreed by the parties although it appeared this may benefit the defendant as showing the cards to have relatively low cash value.  Mr Tracy explained the defendant’s position that in general terms debit cards and gift cards would inflict less economic loss than a forged credit card but conceded it was possible for the cards to be re-written and re-used and therefore to some extent bears comparison with a credit card. 

16.  Sentence was further adjourned until the 27 September for the parties to address me on the nature of the 61 forged bank cards.  On the 27 September Mr Tracy stated that the defence position was the 61 forged bank cards might be abused in some way but not abused in the same way or to anything like the same extent that a credit card can.

17.  Regrettably nothing could be agreed by the parties as to the nature of the cards.  Although somewhat unsatisfactory not to know the exact nature of the 61 forged bank cards I have decided after careful consideration not to further adjourn sentence. Whilst the impression I gained from the earlier mitigation was that for sentence purpose there was no real distinction between the different types of cards I am prepared to proceed to sentence on the basis that even if some of the 61 forged bank cards could be used like credit cards (as the defendant said in his video interview at counter 1362 although I note later at 1384 he said he was not successful) the 61 bank cards are still not to be equated with forged credit cards. 

18.  I am satisfied the proper approach to sentence is to regard the 61 forged bank cards as aggravating the possession of 7 forged credit cards in much the same way that the possession of the encoder is also an aggravating feature. 

19.  Whilst other sentences in similar cases may not assist as each case is to be decided on its own facts and circumstances I will refer to some cases to show the range of sentences imposed.

20.  In HKSAR v Lee Tsung Lin CACC 53/2002 (which I referred to the defence on the 16 September)the applicant was part of a Taiwanese gang of fraudsters who came to Hong Kong to obtain goods and services by using a large number of forged credit cards.  The applicant pleaded guilty to nine counts of using forged credit cards; two counts of possession of forged credit cards and one count of possession of equipment for making credit cards, including an encoder. One of the possession charges concerned 54 forged credit cards.  The Court of Appeal upheld a starting point of 7 years and 6 months imprisonment on this charge and 7 years imprisonment for possession of equipment for making credit cards.

21.  In Chan Siu To the Court of Appeal said that an accused who plays an active but not necessarily a key role in a medium sized 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.

22.  In HKSAR v Hau Ka Kit CACC 390/2005 a sentence of 4 years imprisonment was upheld for offences involving six forged credit cards, some of which were committed whilst on bail.  The forged credit cards were all in the defendant’s name.  A 4 year sentence was also said to be appropriate in Attorney General v Chan Piu Sang [1994] 1 HKCLR 211 for offences involving seven credit cards, some of which were also committed whilst on bail.

23.  Mr Tracy also refers the court to a number of cases including HKSAR v Bin Kei Chi & another CACC 181/2005 and HKSAR v Wong Chin Hang CACC 409/2008.  In Bin Kei Chi a starting point of 6 years imprisonment was upheld for possession of 25 forged credit cards at the airport, the cards having been put in the check-in luggage for use in Korea.  In Wong Chin Hang the Court of Appeal said the overall starting point for the use of three cards eleven times in a period of three days was 4 years imprisonment. 

24.  Many of the 61 forged bank cards state they are for use in the United States only. Mr Tracy submits that the defendant on receiving the cards in January soon found out that he could not use them in Hong Kong having failed when attempting to use some of the cards.  The defendant says he kept the cards in case he found a way to use them in the future.  Mr Tracy submits therefore the likelihood of use in Hong Kong was small.

25.  Whether or not all the cards could be used in Hong Kong the possession of forged bank cards which appear to be for use in the USA only in my view adds an international element to the offence.  I accept however there is no evidence the defendant came to Hong Kong as part of a gang specifically to commit credit card fraud and the case can therefore be distinguished from Lee Tsung Lin. 

26.  I am however satisfied by the number of forged bank cards and the use of an encoder the present case is far more serious than the cases of Wong Chin Hang, Hau Ka Kit and Chan Piu Sang.  By reason of the number of forged credit cards together with forged bank cards and an encoder the case in my view falls at least within a medium sized operation. 

27.  In determining the starting point I take into account there were seven forged American Express credit cards in the defendant’s name; sixty one forged bank cards many of which were stated to be valid in the USA only therefore adding an international dimension; that an encoder was used; the potential for loss from seven forged credit cards together with sixty one forged bank cards was clearly substantial and that the defendant is a visitor to Hong Kong.  In all the circumstances I am satisfied the proper starting point after trial is 5 years and 6 months imprisonment on charge 1 and 3 years imprisonment on charge 2. 

28.  Giving the defendant full credit for his pleas of guilty he is convicted and sentenced on charge 1 to 3 years and 8 months imprisonment and on charge 2 to 2 years imprisonment. The card used in charge 2 being one of the 68 cards in charge 1 I am satisfied concurrent sentences are appropriate.  The defendant is sentenced to a total sentence of 3 years and 8 months imprisonment.