HKSAR v. FONG SIU LUN, MARK

 DCCC959/2009

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 959 OF 2009

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Reasons for Sentence

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1.  The defendant has pleaded guilty to two charges.  The defendant is one of eight defendants who were charged with a total of 29 charges.  The defendant was charged inter alia with two charges of conspiracy to defraud which are charges 1 and 3 on the charge sheet.

2.   The 1st charge the defendant alleged that the conspiracy was committed with three co-conspirators and the particulars of that charge are that he, together with these three co-conspirators, between late 2006 and 28 April 2007, conspired together with a Chinese male and other persons to defraud, Pacific Century Cyberworks Limited by dishonestly and falsely representing that in respect of PCCW Telecommunications Service application forms submitted by the defendant, that they purportedly dealt with individuals, whose particulars and signatures appearing on the service application forms, were genuinely applying for services. 

3.  In relation to the second charge against the defendant - the third charge on the charge list, he is alleged to have conspired with four others to commit that offence.  The period of the offence was between June 2007 and 22  April 2008.  As with the 1st charge, this related to the submission by the conspirators of application forms for telecommunication services which were bogus.  However, in respect of this charge, the companies involved were not only PCCW but also Hong Kong Broadband Network Limited, Hutchison Global Communications Limited and TVB Pay Vision Limited. 

4.  There was a 3rd charge on the charge sheet preferred against the defendant and the prosecution requested that that charge remain on the court file not to be proceeded with without the leave of the court and I acceded to that application. 

5.  The facts admitted by the defendant state that at the material times the 3rd defendant was employed as a sales person at various telecommunication companies, including PCCW, Hong Kong Broadband, Hutchison and TVB.  The 3rd defendant was responsible for promoting products to potential customers.  If the customers were interested in the products, they had to fill in relevant subscription forms with their personal particulars and sign the forms.  If payments were to be settled by credit cards, and invariably they were, the card details would also be recorded on the forms and the customers were supplied with a copy of the completed subscription form for their records. 

6.  At the end of the day, the 3rd defendant and other salesmen, were required to submit completed subscription forms to his supervisors and, during the day, he would also report the particulars of customers subscriptions to supervisors by telephone in order to shorten the processing time.

7.  Upon the receipt of the subscription form, staff of the customer service team of the employer companies would verify the orders by calling the customers in order to confirm the subscription details.  If the application related to new customers, arrangements would be made for the installation of equipment at their premises. 

8.  In respect of his employment with the various telecommunication companies, the 3rd defendant earned a basic salary ranging from $5,500 to $6,500 per month.  In addition to his basic salary as a salesman, he would earn commission calculated on the number of subscription orders he secured each month and for which installation was successfully completed or services provided. 

9.  Since late 2006, D3 and his friends, Madam Hung, who is D1 in these proceedings and a Mr Leung, who is D2 in these proceedings, had been submitting bogus sales orders to their employer companies including PCCW, HK Broadband, Hutchison and TVB.  The trio generated false Hong Kong Identity Card numbers using a designated formula found on the Internet and matched the same with fictitious names and addresses of their associates of non-existent premises. 

10.  These falsified personal particulars were either used by the trio for submitting sales orders to their employers or for selling to other sales persons for submission to various telecommunication companies. 

11.  In February of 2008 D2 rented a unit in a factory building in Tai Kok Tsui, which I will refer to as the headquarters, for the purposes of filling out bogus sales orders.  The rental expenses of the headquarter which, I am told came to some $5,000 per month was shared between D1, D2 and D3. 

12.  In order to pass the verification process carried out by the customer service staff of the companies, the trio purchased mobile phone prepaid SIM cards and put the relevant phone numbers on the sales orders as the contact numbers of the fictitious subscribers.  They took turns to answer the verification calls by posing themselves as the relevant subscribers. 

13.  For the installation of telecommunication services at the addresses of their associates, the trio or their associates would be present at the premises to ensure that the installation works were duly completed.  Where the premises were non-existent premises, the trio would ask the technicians to install the telecommunication services at some other premises, which were controlled by them. 

14.  In respect of bogus sales orders for which the installation works could not be completed, although the trio was not able to earn any sales commission, they could avoid being blamed by their supervisors for poor performance. 

15.  On 21 April 2008, D1 to D3 were arrested inside the headquarters with large numbers of seizures including 435 customer copies of sales orders bearing false personal particulars; 208 mobile phone prepaid SIM cards; three Hong Kong Identity Cards belonging to other persons; and 67 credit cards in the names of D3, D2 and other sales persons of the telecommunication companies. 

16.  In relation to the 1st charge, the facts are that at the material time D3, D1 and another gentleman who was D6 in the charge sheet, were employed by PCCW as sales persons.  On the suggestion of D1 in order to meet their sales quotas, D3 and D6 purchased from D1 sales orders, which contained fictitious customers information at the cost of $200 to $350 each.  Some of the customers’ information which appeared on those sales orders was obtained from a Chinese male, known as Keung Kor, or from other unknown associates of D1 and D6, including a person called Yung Chi-ping who is D8 on the charge sheet. 

17.  In addition D3 allowed D1 to submit, on his behalf, bogus sales orders to PCCW and also personally provided D6 with fictitious customers’ information.  Having falsified the customer’s signatures on the sales orders, D3, D1 and D6 then submitted the same to PCCW.  These bogus sales orders purported to show that the three defendants had personally dealt with the relevant customers and that the customers had applied for PCCW Telecommunication services. 

18.  The three defendants also agreed that D1 would ensure that the installation process relating to the sales orders of D3 and D6 were duly completed. 

19.  ICAC investigation revealed that during the material period, namely between late 2006 and the end of April 2007, the three defendants respectively submitted 6, 7 and 54 sales orders to PCCW.  The customers’ particulars recorded on the sales orders were fictitious.  The occupants in relation to 13 of the addresses recorded in the sales orders confirmed that their premises were about to be demolished and they never applied for PCCW services.

20.  PCCW subsequently suspended the customers’ accounts relating to the bogus sales orders due to default payments.  In respect of the 7 bogus sales orders submitted by D3, this defendant, PCCW has paid him a total sum of $3,310 as commission.  When interviewed under caution, D3 admitted his involvement in the in the offence.

21.  With regard to the 3rd charge, at the material time, D3, D1 and D2 were employed by Hutchison and TVB as sales persons whilst D2 was also a PCCW sales person and D3 was also a Hong Kong Broadband sales person.  Between June 2007 and 22 April 2008 the defendants adopted the same fraudulent scheme as they did in connection with the 1st charge.  The three defendants agreed to and submitted a total of 286 bogus sales orders to Hutchison, TVB, PCCW and Hong Kong Broadband.  And the bogus sales orders purported to show that the three defendants had personally dealt with the relevant customers and the said customers had applied for telecommunication services as set out in the orders. 

22.  The customers’ accounts relating to these bogus sales orders had been subsequently suspended due to default payments.  Out of the 286 bogus sales orders, 265 customers’ copies of the relevant subscription forms were seized from the headquarters.  The contact telephone numbers used in 271 of the bogus sales orders were found to be related to the mobile phone prepaid SIM cards seized from the headquarters or from the 2nd defendant. 

23.  Some of the customers information which appeared on these bogus sales orders was obtained by the 2nd defendant from Chinese males known as Ah Lung, Fei Ming and Mr Wong, at a cost of $250 to $300 per set.  A Chinese female known as T.B. Wah had provided Leung with credit cards belonging to others for making the bogus sales orders.  In addition, the 2nd defendant had requested D3, D1 and another defendant, D4, to falsify a report the loss of their credit cards and provide the same to him.  He also acquired from his associates some reported lost credit cards.

24.  ICAC investigation into this offence revealed that out of the 286 bogus sales orders D3 had submitted 45, 18 and 15 bogus sales orders to TVB, Hutchison, HK Broadband respectively and that the credit card data for five fictitious customers related to the credit cards of the 1st defendant and another person.  These credit cards were seized either from the headquarters or from the 2nd defendant.

25.  When interviewed under caution, the 3rd defendant admitted his involvement in the offence.  In respect to the bogus sales orders submitted by the 3rd defendant, he received from Hutchison, TVB, HK Broadband a total sum of $26,408.37 by way of commission. 

26.  I am told that the defendant has one matter recorded against him in 2002 for an offence of wounding.  He was placed on probation for a period of 12 months.  I am told that the defendant is 25 years of age.  He was educated to Form 5 standard.  His father works as a taxi driver and his younger sister is currently at university in Hong Kong. 

27.  I am told that the defendant is the only son of the family.  He was not successful at school and he left after Form 5 as he had failed in most of his subjects.  When he left school he worked in various occupations.  His father was in court on the previous occasion and I see that he is in court today. 

28.  I am told that the defendant has been filial son and has regularly contributed to the family finances.  The premises in which the family live are subject to a mortgage and he has been helping the family to pay off the mortgage. 

29.  Two letters were placed before the court the first one being from the defendant’s father.  The father speaks of the great distress of the family in regard to the defendant’s involvement in this matter.  His father said that the defendant deeply regrets what he has done and that he says that he feels that the defendant was influenced by others to commit the offences.  His father also confirms what his counsel said in mitigation that the defendant is a filial son and has shouldered the family responsibility.

30.  I have been handed a letter from a lady who is a supervisor at a company called I-Cable which also deals in telecommunications.  Whilst these charges have been pending the defendant has been employed by that company until August of this year.  She states that she has found the defendant to be a responsible and honest worker and believes that he was misled by others into the commission of these offences. 

31.  With regard to the offences, I was told in mitigation that when the defendant worked for PCCW, a colleague of his was the 1st defendant.  It was on her suggestion, the defendant says, that he became involved in the 1st offence.  He said that this was borne out of the expectations of the employers that they would be able to find two customers per day. 

32.  I was told that notwithstanding that they worked long hours, over 10 hours per day on many days, they failed to find even one customer.   They were employed on a relatively low basic salary and to make the job worthwhile they depended on the commission payments for customers introduced by the salesman.  Moreover, if they failed to meet the monthly quota of 30 customers a month, their employment would be terminated and I was told that the defendant was anxious to keep his job even if it was just on the basic salary.  I was told that it was against that background that D1 suggested the idea of making bogus applications. 

33.  Counsel pointed out that in respect of the 1st charge, the amount obtained by the defendant was only $3,310.  I am told that the defendant left PCCW in 2007 and it was later that he started working for the other companies.  I was told that after he had started working for those companies, D1 introduced him to D2 who is a 33-year-old male.  And it was urged upon me that the defendant’s involvement in the offence was very much at the instigation and encouragement of the 2nd defendant who was clearly the mastermind of that conspiracy. 

34.  It was pointed out again, in respect of that charge and also the 1st charge that in overall terms the loss sustained by the company was relatively minor compared to other offences of this kind.  This type of case is distinguishable from street deception types of cases because the victims in this case were large companies rather than individuals who might be financially ruined by the involvement in such deceptions.

35.  I am told that the overall amount involved in the whole conspiracy came $150,000.  This was over a period of 16 months and there were 8 defendants involved in the case.  The two conspiracies admitted by the defendant obviously involve a breach of trust.  The fraud was perpetrated on the employers of the conspirators.  The first conspiracy lasted for about four months and the second for just over 10 months. 

36.  At the time of the first conspiracy the defendant was employed by PCCW and I am told that he became involved in that conspiracy at the instigation of D1 a female of similar age to the defendant.  The defendant left PCCW in April 2007 and commenced employment with a freight company.  In September 2007 he started to work for Broadband.  Counsel for the defendant informs the court that whilst working for that company D1 introduced the defendant to D2 who is aged 33 and claims that it was under his influence that this defendant became involved in the second conspiracy. It was D2 who rented the headquarters although all contributed to the $5,000 per month rent. 

37.  Counsel for D3 urged the court that the defendant is naïve and easily influenced and he urged the court that the amount of money involved was relatively small.  It was urged upon the court that at the outset the main motivation for committing the offence was not the desire to defraud the employers but simply out of the defendant’s wish to remain in employment.  The defendant was employed on a relatively low basic salary and, despite working considerable overtime, found it impossible to meet the company’s target of introducing two customers per day.

The court was told that if in any month they had introduced less than 30 customers their employment would be terminated.  I was told that it was under this pressure that the defendant agreed to join a scheme to submit bogus application forms.

38.  The loss to the company on the 1st charge is $3,310 and on the second $26,408.37.  The total amount involved in the two conspiracies was about $150,000 and in total 8 people have been charged with various offences relating to these conspiracies. 

39.  With regard to the first conspiracy, D1 to D3 allegedly submitted 6, 7 and 54 bogus sales orders respectively to PCCW.  Thirteen of the addresses were about to be demolished and no applications had been made by the occupants for any services. 

40.  With regard to the second conspiracy out of 286 bogus sales orders, 265 customers’ copies of the relevant subscription forms were seized from the headquarters.  271 telephone numbers were found to relate to the mobile phone prepaid SIM cards seized from the headquarters or from the second defendant. 

41.  Some of the personal information recorded on the bogus applications has been obtained by D2 by paying persons $250 to $300 per set.  Credit cards belonging to others have been used for making bogus applications.  D2 had requested D3 and other to report the loss of their credit cards so they could be used.  Of the 286 bogus applications, 45, 18 and 15 had been submitted by D3 to TVB, Hutchison, and Hong Kong Broadband respectively.  Credit card data of five fictitious customers related to credit cards of D1 and another person.  A total of 67 credit cards were recovered from the premises in the names of the defendant and other sales persons.

42.  I accepted what was urged upon the court in mitigation that the defendant is a filial son whose family heavily relied upon his contribution to meet household expenses.  His imprisonment will greatly affect his family both emotionally and financially. 

43.  The conspiracies involve the use of fictitious addresses, personal particulars, reportedly lost credit cards in the names of the defendant and other sales persons.  Prepaid mobile phone SIM cards were used.  Premises were rented to carryout the fraud.  The conspiracies covered a period of 16 months.  Having becoming involved in a fraud at one company, the defendant later became involved in a similar, more elaborate fraud, at a second. 

44.  The defendant has a previous conviction but that was for a dissimilar offence some 7 years ago.  I accepted that the defendant was a relatively minor participant in these conspiracies.  I accepted that they were not his idea and that he was led into them by others.  I accepted that, at the outset, the defendant was motivated more by a desire to maintain and retain his employment rather than the intention of defrauding his employers. 

45.  The defendant was frank with the ICAC right at the outset and has pleaded guilty at the first opportunity.  The amounts of money involved in these offences were relatively small. 

46.  Taking into account all these factors in relation to this defendant and his personal particulars, I have decided that his criminality in respect to the 1st charge could adequately be reflected by a sentence started at 18 months’ imprisonment and he will get the usual discount in respect of his guilty plea.  With respect to the 3rd charge, I take a starting point of 2 years’ imprisonment and reduce that again by one-third to reflect the guilty plea. 

47.  I have considered the question of totality.  Having looked at all the features of this case, I have decided that the sentences should run concurrently.  The defendant will serve concurrent sentences of imprisonment of 12 months on charge 1 and 16 months on charge 3.