HKSAR v. SHEK OI MING

HCCC 25/2019

[2019] HKCFI 2035

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CRIMINAL CASE NO 25 OF 2019

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Transcript of the Audio Recording

of the Sentence in the above Case

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COURT:

Introduction

The defendant pleaded guilty to two counts of theft, (Counts 1 and 2), and one count of fraud, (Count 3), at the committal in Eastern Magistracy and the case was committed to the High Court for sentence.

The total sum involved in each charge is $4,614,892.30, $3,015,831 and $2,646,987 respectively.

Facts

According to Summary of the Facts which was submitted by the defendant, the victim companies of the first two counts are Angelita Holdings Limited (“VTC-1”) and Profit Centre Limited (“VTC‑2”). At all material times, VTC-1 managed a restaurant called “Lavilla Restaurant” (“Lavilla”) whilst VTC‑2 operated a mah-jong school under the business name “Trotting Association”.

The victim of Count 3, Yip Wing-hang Jason (“Yip”), was the accounting clerk employed by Lavilla. Yip was responsible for collecting cash received at Lavilla and depositing the same to the bank. The majority shareholder of both companies and Lavilla was one Ng Yiu‑wah (“Ng”), who hired the defendant as the accounting clerk of both VTC-1 and VTC‑2 since 1996 with a monthly salary of $15,000, with year‑end bonuses until 2015.

The defendant kept the chequebooks of VTC-1 and VTC-2 and was responsible for issuing cheques from these companies for expenses on business operation of the two companies for the signature of the relevant authorized signatories. The defendant was also responsible for forwarding bank statements of the bank accounts of the two companies to be recorded and checked. Issuing any cheques of the bank accounts of VTC-1 required verifications and approval from Ng. As VTC-2 also belonged to Ng, the defendant was not authorized to take money of VTC-2 for his own use without the consent of Ng.

On 8 January 2015, it was discovered by the secretary of VTC-1 that the balance in the business account of the company did not match the bank statements the defendant sent to VTC-1 for recording and accounting purposes. The matter was eventually reported to the police.

On 10 January 2015, the defendant was finally arrested and cautioned. Under caution, he confessed that he used the funds of VTC-1 and VTC-2 to cover the business loss in two of his bars.

In a subsequent cautioned recorded interview, the defendant admitted, inter alia, the following:

(a) His own businesses were suffering losses. He needed money to cover those losses and therefore he stole from VTC-1 and VTC-2.

(b) He forged one of the signatures on all the cheques in question.

(c) He forged bank statements each month between October to November 2008 until 2014 for accounting and discarded the forged bank statements.

Subsequent investigation revealed the defendant stole a total sum of $4,614,892.30 from VTC-1 and $3,015,831 from VTC-2 by way of issuing 105 and 158 company cheques for forged signatures respectively and a further $2,646,987 from VTC-2 by way of presenting another 153 cheques of forged signatures to Yip and making false representations to him so that Yip gave amount of the cash from Lavilla equivalent to the sum in the cheques upfront and later deposited those cheques of VTC-2 into a bank account of Lavilla.

On one occasion, Lavilla did not have sufficient cash to cash the forged cheque. Yip therefore gave defendant his own cash but he later cashed the cheque of VTC-2 and reimbursed himself. Those false representations included:

(a) Trotting Association needed cash for operations immediately;

(b) cash could not be obtained as the defendant did not want to queue up at the bank and/or it was already past the business hours of the bank; and

(c) the signatures of the cheques presented to Yip were genuine.

The total amount stolen by defendant from VTC-1 and VTC-2 was therefore in the total sum of $10,277,710.30.

The defendant did not make any repayment to the victim companies so far. By pleading guilty, the defendant now admits and accepts that at the material time he has stolen the choses in action, namely debts in the total sums of $4,614,892.30 from VTC-1 and $3,015,831 from VTC-2 both owed by Hongkong and Shanghai Banking Corporation Limited to VTC‑1 and VTC-2 respectively.

The defendant also admits and accepts that at the material time, he made false representation to Yip with intention to defraud and induced Yip to part with a total sum of $2,646,987 which resulted in a benefit to the defendant.

Criminal Record and Background of the Defendant

The defendant is now aged 48. He was born in Hong Kong and received a higher diploma in accounting. Between 1996 and 2014, he was employed as an accounting clerk at VTC-1 and VTC-2. In 2011, he was convicted of the offence of drink‑driving, which is his only criminal record for which he was fined and disqualified from driving for 9 months.

Defendant was married with a daughter now aged 21. The couple was separated in 2008 when the wife disappeared and abandoned the family. They resumed contact afterwards but remained separated and finally divorced in 2016.

In mitigation, the defendant’s counsel, Mr Leung, emphasized the fact that his client pleaded guilty in the first opportunity at the committal in January this year and was detained since then. Mr Leung explained that the defendant knew Ng before he was invited to join his companies as the person in charge of the accounts. At the same time, the defendant also ran two bars and a restaurant in partnership with his friends. However, due to the financial crisis in 2007 to 2008, he suffered heavy losses in his own business. In order to cover his losses, the defendant began to steal the monies from the company accounts from time to time, initially with the intention of paying back the companies, but as the business showed no sign of improvement, the practice of stealing just continued with a snowball effect.

As defendant was the person who kept the chequebooks and accounts statements, he was able to cover his trail for a long period of time without being discovered. At the same time, the defendant knew full well that his misdeeds were bound to be discovered one day.

As for Count 3, Mr Leung explained that the practice of obtaining cash from Lavilla had indeed been going on for years for genuine business needs. The defendant just took advantage of the practice and deceived Yip to give him cash by presenting to him cheques of VTC-2 with forged signatures.

When the company subsequently discovered his wrongdoings, the defendant never tried to escape, but according to Mr Leung, he was waiting to be arrested at home by the police. He had made a full and frank admission to the police during the investigation. He was unable to make any restitution, however, as he had already declared bankrupt in 2015.

Mr Leung submitted a total of 11 letters of mitigation which were written by the defendant himself, his daughter, a priest, friends and relatives for my consideration. According to Mr Leung, all those letters spoke highly of defendant’s character that he is a loving and responsible father, kind and helpful and good-character person.

The total amount involved for the three counts is over HK$10 million. Mr Leung urged the court to adopt a global approach in sentencing the defendant and to adopt a lower starting point so that the defendant can be released as soon as possible so that he can return to his aged old mother and the daughter whom they worried most.

Sentencing Considerations

The present three counts committed by the defendant represented a prolonged and systematic stealing by an employee from his employer. This is a classic case of blatant breach of trust committed by a company accountant who had abused his trusted and privileged position to steal or deceive others.

In sentencing the defendant, I take into account the English case of R v Barrick [1985] 81 Cr App R 78 which laid down the relevant factors for consideration for sentencing for this type of cases:

(1) the quality and degree of trust reposed in the offender, including his or her rank;

(2) the period over which the fraud or the thefts have been perpetuated;

(3) the use to which the money or property dishonestly taken was put;

(4) the effect upon the victim;

(5) the impact of the offences on the public and the public confidence;

(6) the effect upon fellow employees or partners;

(7) the effect on the offender himself or herself;

(8) the offender’s own history;

(9) those matters of mitigation special to the defendant such as illness, being placed under great strain by excessive responsibility, or any delay between his being confronted with his dishonesty by his professional body or the police at the start of the proceedings; and

(10) any help given to the police.

Now, according to the facts which defendant has admitted, between January 2010 and March 2014, he stole some 4.4 million from VTC-1 and just over 3 million from VTC-2. Almost at the same time as Count 2, he further deceived Yip, the other accounting clerk of Lavilla, into parting cash of some $2.6 million from the daily business revenue of the restaurant.

In essence, the modus operandi of the first two counts were the same, namely, by issuing company cheques with forged signatures to himself whereas in Count 3, the defendant was able to obtain the cash from Yip by presenting to him company cheques from VTC-2 of equivalent amounts so that Lavilla would be reimbursed by VTC-2. In short, what he did was to cover up his misappropriation from the company accounts by altering and forged the monthly bank statements.

In sentencing the defendant, I have taken into account a timely plea and his frank admission to the police. I also had the opportunity of reading the numerous letters of mitigation written by the defendant, his family and his ex‑colleagues.

As said, the total amount stolen by the defendant from the two companies in respect of the three charges was well over 10 million which, according to the tariff laid down by the Court of Appeal in the case of Cheung Mee Kiu [2006] 4 HKLRD 776 as later amended in Ng Kwok Wing [2008] 4 HKLRD 1017, would be in the sentencing range of 5 to 10 years.

Count 1 spread over a period of nearly four years, from 2010 to 2014, while the remaining two counts spread over a period of nearly two years from 2012 to 2014. It is obvious that the period of offence of the latter two counts overlapped with each other and also with Count 1. In the circumstances, the best course to take in sentencing the defendant is to fix the appropriate sentence for each offence on each count and then consider the question of the totality in the end and impose such a sentence as to reflect the overall criminality of all the three counts.

According to the sentencing bracket of 5 to 10 years, for the amount stolen in Counts 1 and 2, the appropriate starting point for each count, in my calculation, should be 5 years and 9 months and 5 years respectively.

As for Count 3, a lower sentencing bracket of 3 to 5 years was applied, and the appropriate starting point according to my calculation to the amount stolen should be 4 years and 9 months.

If we add the three starting points together, the aggregate starting point will be 15 years and 6 months, which of course is highly disproportionate as the starting point for the total amount in respect of the three counts is only about 8 years.

However, the 8-year figure only took into account the amount stolen but in my judgment, there are some aggravating features in this case which merit further enhancement. Firstly, as I have said, the offence in Count 1 spread over nearly four years, which is double the period of the latter two counts. Secondly, in the last count, Count 3, the defendant had resorted to and adopted a more indirect and complicated method to steal the company funds by deceiving his accounting colleague in Lavilla to cash the cheques of VTC-2 which made the detection of the crime more difficult. It involved certainly deceit and misrepresentations. For this reason, I am of the view that the overall starting point for the three counts should be increased by 12 months, namely 6 months for Count 1 and 6 months for Count 3, from 8 years to 9 years.

There is no restitution, so the only effective mitigation is his timely plea for which he is entitled to full one-third reduction.

It is sad that the defendant, with a hitherto good character, has to be sentenced to prison but the court can never accept economic reasons for committing crimes and he must realize by now that he is the author of his own misfortune.

The total sentence of the three counts after reduction should be therefore 6 years.

Order

In order to achieve the resulting sentence of 6 years, individually, I adopt a starting point of 75 months for Count 1, 60 months for Count 2 and 63 months for Count 3. I will reduce one-third of the sentence and order individual sentences to run as follows:

Count 1, 50 months

Count 2, 40 months

Count 3, 42 months,

I order the sentence of Count 2 to be served concurrently to the sentence on Count 1 and 22 months of the sentence on Count 3 to serve consecutively to the sentence of both Count 1 and Count 2, and therefore the resulting sentence is 6 years.