HKSAR v. MYKOLA KHLIUPTA AND ANOTHER

DCCC 1138/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 1138 OF 2012

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Reasons for Sentence

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1.  The defendants pleaded guilty to a charge of conspiracy to steal. They also faced a charge of possession of false instruments. The prosecution have requested that that second charge remain on the court file in view of the defendants’ guilty plea to the first charge. I accede to that request and the second charge will remain on the court file, not to be proceeded with without the leave of this court or the Court of Appeal, and the conviction in respect of the first charge will be recorded.

2.  The facts admitted by the defendants state that the defendants arrived in Hong Kong as visitors on 6 June.  They were permitted to stay for a period of two weeks.  They checked into the Kings Hotel on Jaffe Road in Wanchai.  They paid for five days which came to $6,270.  On 11 June, the 1st defendant paid to extend their stay until 18 June, paying cash of $11,500.

3.  Between 8 June and 12 June 2012 inclusive, a total of 22 plastic discount cards of a similar type were retained by bank Automated Teller Machines located principally in the Wanchai and Causeway Bay areas of Hong Kong.  Although the cards were encoded with VISA or MasterCard account data, the appearance of the cards aroused suspicion.  On 12 June the matter was reported to the Commercial Crime Bureau of the Hong Kong Police.

4.  After viewing closed-circuit television footage of the Automated Teller Machines, the defendants were revealed to be the persons using or attempting to use the discount cards at the relevant times.

5.  Inquiries were made in the Wanchai area and it was discovered that the defendants were living in the Kings Hotel and the police decided to put them under surveillance. 

6.  Their movements were monitored on 12 June 2012. At 8 o’clock in the evening the defendants were observed entering the ATM area of a bank on Des Voeux Road Central.  The 1st defendant and then the 2nd defendant withdrew cash from the same ATM.  They left the bank separately but walked in the direction of Pedder Street and were followed by two officers. 

7.  Seven minutes later they entered the ATM area of Citibank on Pedder Street.  They approached two of the ATMs.  They were seen to use the ATM and the 2nd defendant suddenly walked out from the bank and loitered on the pavement outside.  A short while later he re-entered the ATM and used an ATM near to the 1st defendant to withdraw cash.  They left that bank and then later walked along Des Voeux Road.

8.  A few minutes later, this was at 23 minutes past 8, the officers observed the defendants approaching an ATM outside the Chiyu Banking Corporation at the ground floor of Des Voeux Road Central.  The 2nd defendant approached an ATM with the 1st defendant standing beside him.  They then swapped over to use the ATM machine.

9.  Later, at 2028 hours, they were seen to go to the ATM area of the Standard Chartered Bank and withdraw cash.  They left that bank and were subsequently detained by the police.

10.  Officers searched D1’s black coloured bag and inside that bag the police came across five forged discount cards; $43,765.70 in Hong Kong dollars and 346 Euros; a Marlboro brand cigarette box containing 13 suspected discount cards and a slip of white paper upon which was written a column of 20 four-digit numbers.  Two mobile phones were found in his right front trouser pocket.  He was arrested using simple English and no caution was administered because it was apparent he spoke little English.

11.  The 2nd defendant was searched and inside a bag that he was carrying the police found $20,305 in cash and seven forged discount cards.  He was also in possession of a brown wallet containing a further seven forged discount cards and a slip of paper on which were written 15 four-digit numbers.

12.  The defendants were taken to Central Police Station.  Both of them were later interviewed and, under caution, the 1st defendant gave evasive and dishonest answers to the questions that were asked of him.  The 2nd defendant declined to participate in any interview.

13.  Bank evidence disclosed that the defendants has used 32 discount cards which were seized, 18 from the 1st defendant and 14 from the 2nd.  All the cards were examined and found to represent false instruments.  The characteristics of the cards that were seized from the defendants were identical to the cards retained by the various relevant bank ATMs between the 8th and 12 June.

14.  Enquiries disclosed that between the 8th and 12 June the defendants made or attempted to make a total of 69 withdrawals including those transactions observed by the police on 12 June 2012.  The transactions were made or attempted using a total of 38 discount cards encoded with overseas VISA card or MasterCard account data.

15.  Twenty three of the cards were recovered from the defendants and the remaining 23 were retained by various ATMs located in Central, Wanchai, Causeway Bay and Tsim Sha Tsui in Kowloon.

16.  With regard to the 69 transactions, the defendants attempted to withdraw a total of $128,000 but were successful in only obtaining $57,500.

17.  The cards seized were checked and they were found to contain three tracks of data including the account number, the name of the account holder, the expiry date of the card and the issuing country of the VISA and MasterCard credit cards.  These cards are not the product of VISA or MasterCard and the presence of the account data on the cards is unauthorised.

18.  I am told that the defendants have clear records both here and in the countries of origin. 

19.  As regards the 1st defendant, I am told he is 35 years of age, he is married, there are no children of the marriage, and I am told that his wife is in court today.

20.  The 1st defendant was born in the Ukraine and has lived there all his life.  Since completing secondary education, he has run a trading internet company selling bedding items from which he earns approximately the equivalent of HK$7,000 a month.  Obviously whilst he has been detained in Hong Kong he has not been able to run that company and once he is released from prison and returns home he will have to start all over again.

21.  The 2nd defendant is 23 years of age.  He is also married and they have a 9-year-old daughter from a previous relationship of his wife.  He also comes from Kiev in the Ukraine but was educated to Degree level in transportation.  In the Ukraine he worked for a road traffic authority earning the equivalent of HK$7,000 per month.

22.  I am told that the defendants came to Hong Kong legitimately as tourists and after they arrived here they were approached in a café and told that there was an easy way to make money by using these cards and they were to be paid a percentage of the money which they obtained. 

23.  By way of mitigation, I was told that all the victims are banks and the defendants decided to plead guilty as soon as they received sensible legal advice.  The banks will be fully compensated for their losses from the moneys seized from the defendants.

24.  Clearly, offences of this kind are serious offences and demand the imposition of immediate custodial deterrent sentences. The offences involve the unauthorised use of credit card data and they have an international dimension. 

25.  I have been provided with two District Court judgments dealing with very similar offences.  One of those is the case of HKSAR v Darren Cavanagh and James Edward Gilhooly, DCCC 572/2008, and the second case is HKSAR v Alim and Serdal, a case in 2009.  The cases involve very similar facts to the present case and I propose to follow the sentencing rationale of those cases.

26.  Taking into account all the mitigating features of this case and taking into account that the banks will be compensated for their losses, I propose to take a starting point of 3 years for the offence and reduce that by one-third to reflect the guilty plea.

27.  Each of the defendants will go to prison for 2 years.