HKSAR v. CHENG HING CHEUNG, KEVIN

DCCC925/2010

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 925 OF 2010

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Reasons for Sentence

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1.  Defendant, you pleaded guilty to three charges of attempted fraud each contrary to section 16A of the Theft Ordinance, Cap.210 and sections 159G and 159J of the Crimes Ordinance Cap.200 and to four charges of fraud, each contrary to section 16A of the Theft Ordinance, Cap.210. You admitted the facts and I convicted you. Five offences of fraud were ordered to be left on file and not to be proceeded with without leave of this court or the Court of Appeal.

2.  The facts were these.  You were an assistant professor at Lingnan University.  You were responsible for teaching and conducting academic research.  Chan On-fung, PW16, was your research assistant.  All academic staff conducting research projects are entitled to apply for grants.  The Office of Research and Staff Development, known as the ORSD, is the approving authority. 

3.  In applying the project holder, known as the principal investigator, the PI, is required to submit to the ORSD an application.  The PI can retain either freelance, part-time or full time research assistants.  For a freelance the PI can first pay the wages and then obtain reimbursement.  The claim should be accompanied by an acknowledgement of receipt, signed by the researcher.  Alternatively, the PI can ask the university to pay the researcher directly.  In this case, proof of identity and bank account documents of the researcher should be provided.  Under no circumstances should the research assistant receive payment before rendering research services. 

4.  A part-time researcher has to claim by setting out the dates and the number of hours of research carried out.  The claim form should be approved by the PI before submission to the ORSD.  The ORSD would look to see if sufficient details have been set out in the claim forms and if there is enough funding to meet the payment.  If there is any ambiguity in the claim form, the administrative officer, AO, of ORSD would seek clarification from the PI, relying on the PI for the accuracy of the information.  The claim forms would then be submitted to the Office of the Controller, CO. 

5.  Believing the information to be true the staff of the CO would arrange payment to the claimant.  Had the ORSD or CO known the claim forms and supporting documents provided by the PI and research assistants had contained false information the claims would not have been approved.  You were the PI and applied for research grant for three projects; A) “Personality and verbal behaviour a psychological approach.”  B) “Lay concept of environmental perception: An explanatory study on the street market in Central.”  And C) “Trade dispositional biases on performance appraisal accuracy.”

6.  I turn now to charge 1, attempted fraud.  On or about 7 November 2007, you submitted a purchase requisition form which purported to show you had already made payments totalling $9,500 to 17 participants who took part in the research for project A) and sought reimbursement. Some participants confirmed they had either received no money from you or amounts less than stated in the claim.  Some were able to say that the signatures on the receipts were not theirs.  On 22 November 2007, you withdrew the claim so no reimbursement was made.  You, by deceit, with intent to defraud attempted to induce the university to reimburse $9,500. 

7.  Charge 7, attempted fraud.  On 30 October 2008, you submitted a claim form with a receipt bearing PW16’s signature, purporting to show PW16 had received $10,000 for conducting a street survey for project B.  PW1, the head of ORSD, verified the matter with PW16.  In fact PW16 had never received any money from you.  As instructed by you, PW16 had signed an acknowledgement receipt leaving the amount received blank and passed it to you.  PW16 asked you how he should reply to PW1’s queries.  You told him to say he had received money for conducting the survey. 

8.  On 7 November 2008, PW1 asked you by e-mail for a breakdown of the $10,000.  You falsely represented that PW16 had conducted interviews for 125 hours at $80 per hour.  PW1 asked for further explanation and on 1 April 2009 you sought to withdraw the claim.  The $10,000 was never paid. 

9.  Charges 8, 9, 11, 12 and 10.  The first two being actual frauds and the 10th charge being an attempted fraud.  From 19 December 2008 to 11 June of 2009, you submitted five claim forms for direct payments to PW16 for research related to projects B and C.  $7,810 was claimed on each of the forms submitted for charges 8, 9, 10 and 11 while $6,050 was claimed for charge 12. 

10.  PW16 was stated to have provided part-time services for the projects B and C.  All claims except that relating to charge 10 were approved.  That was not because of the lack of a valid contract between PW16 and the university.  The university paid $29,480.  PW16 certified signing all five claim forms on your instructions.  The parts relating to working hours were not filled in by PW16.  PW16 confirmed he had rendered no services for you between September 2008 and January 2009, nor did anything for project C.  The information was thus false.  As a result of the fraud, the university suffered an actual loss of $29,480, charges 8, 9, 11 and 12.  The total of the withdrawn claim was $27,310, charges 1, 7 and 10.  You were arrested by the ICAC on 18 June of 2009.  You made full admissions when interviewed under caution. 

11.  You are a man of hitherto good character.  Mr Chung, on your behalf, presented extensive mitigation.  This was in written form and was extremely helpful indeed and for that I am obliged.  He told me that you are 38 years of age, a single man residing with your parents in a public housing unit.  Your elder sister and younger brother are also in Hong Kong but live apart from the family.  You were born in Hong Kong but at age 11, you emigrated to Australia with your family.  There you obtained a BSC in Psychology from the University of New South Wales, followed by a Masters degree in Forensic Psychology from the University of Western Sydney.  

12.  In 1998 you returned to Hong Kong, joining Hong Kong University as a research assistant.  In 2002, you obtained your PHD in Social Psychology from Hong Kong University.  Since 2003, you have been employed by Lingnan University.  By the time of your arrest you were employed as an assistant professor earning just over $42,000 per month with a housing allowance of $9,000 per month.  You pay 25 per cent of your salary to your parents.

13.  You would have married your girlfriend but the present proceedings.  Also, I am told you have lost your gratuity from the last contract.  You are of clear record.  You have spent most of your life in pursuit of knowledge in the field of psychology.  You have spent a considerable part of your time in consultancy for the disciplined services and this appeared to be unpaid and voluntary.  You are a keen mountain climber and you neither smoke nor drink.

14.  You have, I am told, been very much concerned with the underprivileged for the past 7 years.  You have contributed to the Child Support Scheme for the Po Leung Kuk donating money for two underprivileged children.  Also you have spent time at the Society for Community Organisation, a charitable NGO and you have been the mentor of a 9 year-old underprivileged child since March of 2009.  ORBIS has benefited from your charitable work.  You contributed articles to Psychomag at their invitation and had your fees paid to ORBIS.  You took nothing from the work that you had done.  From the letters produced, it is also clear that you have undertaken voluntary work between September 2009 and October 2010 for the Ebenezer School for the Visually Impaired, transcribing Braille you have committed 78 hours work to this task and this also appears to be related to ORBIS.

The offences

15.  Since your promotion to assistant professor, you found that your research projects involved a lot of administrative work and office politics which you disliked intensely.  

Charge 1

16.  The university had allowed you $98,200 to pursue this research.  Over a 100 students assisted you.  Problems arose towards the end of the project in relation to $9,500 which was to be distributed between 26 students.  Because you were aware of the stringent requirements of the ORSD requiring personal particulars and signature forms from each.  Unfortunately not all students cooperated and this led to you sending over 115 e-mails trying to pursue this matter.  Mr Chung produced some examples.  In frustration at the disruption caused you decided to give up on the application.  When you submitted the claim form, the subject matter of the charge, Mr Chung said you had no intention to generate any personal financial benefit.  All funds were intended for the benefit of the students.

Charge 7

17.  This project involved a grant of $30,000 subject to time limits.  You had only used two-thirds of the funds and as time was running short you decided to submit the claim forms in order to keep the money available so that your assistant, PW16 could continue with the research later. At the same time you applied for an extension which was granted for 3 months. The claim was not pursued.  You again had no intention to generate any personal financial benefit.  The funds were intended presumably for PW16.

Charges 8 to 12

18.  This project involved a grant of $95,500.  PW16 was your main assistant.  Being part-time he could only receive $110 per hour for 71 hours per month.  You found you could not spread the research out so evenly, therefore you submitted the claim form to ensure PW16 received proper remuneration for his work.  You submitted the claim forms on the basis of the above.  The research was due to commence two weeks after your arrest.  The sums of money released by the university as a result of these claims were deposited directly into PW16’s bank account.  In your eyes they were advance payments for work to be done by PW16, a practice not approved of by the university.  Again you had no intention to generate any personal benefit for yourself. 

19.  I turn now to restitution.  Mr Chung has emphasised that you were not trying to obtain personal benefit for yourself. You broke the law by trying to circumvent the tedious and cumbersome administrative procedures imposed.  You - and here this is confirmed by the university - have repaid all monies illegally obtained prior to plea.  That is, $39,480 has been paid in full.

20.  Also Mr Chung produced 11 letters of support and mitigation from various people, colleagues, your students, your girlfriend, charitable organisations and one from your 9 year old mentee.  I have read those and taken those into account.

21.  Mr Chung made special reference to that of Professor William Peter Baehr who opines it was foolishness and sloppiness that led the defendant astray in these for which he is responsible, not malice or greed.  The professor also felt he could have stopped it if he had known about it earlier.  Also the letter from the 9 year old mentee demonstrates your giving of time and support to that child. 

22.  Mr Chung submitted that you had fully cooperated with the ICAC on arrest, confessing in interview and pleading guilty in court at the first available opportunity.  He referred to the devastating effect this will have on your career and the potential damage to your relationship with your girlfriend, Miss Cora Chung. 

23.  Mr Chung then addressed me on sentence.  He accepted this was a breach of trust, the amount being much less than $25,000 namely a total of actual and potential loss of $56,790, so the starting point should, if prison must be imposed, less than two years.  He quoted the authority of HKSAR v Lee Lai-kit, Kitty, [2009] 6 HKC, 265.  He emphasised again the full voluntary restitution to the university, that this was an exceptional case where you only wanted to circumvent the administrative and procedural requirements, not gain personal benefit for yourself.  Therefore community service was suggested as a viable alternative.  Alternatively, a suspended sentence was an option rather than immediate imprisonment. 

24.  In view of this mitigation, the offence nonetheless being serious and one for which an immediate custodial sentence was the normal sentence - I am sure you were advised of that - I remanded you in custody to obtain a Community Service Officer’s report and a Probation Officer’s background report, reserving to myself the right to sentence in any way I found just, no matter what the recommendation might be. 

25.  The reports are before me.  They have been read by me and considered by me.  The reports support the mitigation advanced by Mr Chung and recommend in a positive way, community service.  I understand from Mr Chung that you agree with the contents of those reports.

26.  Mr Chung, on the last occasion, had nothing to add to his comprehensive mitigation save to urge me to follow the recommendation for community service and pointed out the report fully supported the points in mitigation, which I fully accept they do.

27.  I turn now to the sentence.  Defendant, if the situation in which you find yourself was not so serious, it would be almost farcical.  In order to avoid and circumvent the accounting procedures required by your employer, the university, you effectively destroyed your career; you have lost your gratuity; and you have made yourself into a criminal.  You have served two weeks imprisonment on remand for the preparation of reports and I am entirely satisfied that you will never again appear before a court. 

28.  From all that has been said; from the many letters of support; from the extensive support and the effect on your part in doing charitable deeds and from the probation officer’s report, it is clear to me that you are not, by nature, a criminal but a thoroughly decent man who has committed serious criminal acts for self-convenience rather than self benefit. Therefore, even though these crimes are a breach of trust and crimes committed deliberately, you, as I said on Friday, will not go to prison for these but you will pay your debt to society in what I consider to be a more logical and more constructive way.  It is clear to me that this is, as I have said, a wholly exceptional case involving mitigation of the highest order and I shall run through some of the mitigation. 

29.  The frauds were such that you yourself would not benefit financially in any way.  You were seeking to look after those in your employ.  The monies defrauded were capable of being properly obtained, if the correct procedures had been followed, so you were not obtaining something you were not entitled to.  What you did was cutting corners and using illicit means and you knew full well what the university did require and therein lies the fraud. 

30.  The sums involved are relatively modest.  About $56,000 potential loss but the actual loss was less, $39,000 which has been fully repaid.  As I have said, all $39,000 has been voluntarily repaid to the university.  The victim, the university has therefore lost nothing by what you did. 

31.  Also, defendant, and this is extremely important, you are a man of clear record but not only a man of clear record, but a man of positive good character, supporting the less fortunate and needy financially and by the giving of time.  I have referred to the various organisations that you have supported and helped, ORBIS, Po Leung Kuk, The Society for Community Organisation, and you have acted as a mentor for a 9 year old underprivileged child.  That child wrote a letter to the court, that is an elegant testimony to your patience and charitable nature.  Also, the Ebenezer School for whom you have spent 78 hours transcribing Braille.  These are but some of the charitable works you have undertaken and they go to your credit and have to be taken into account.

32.  From the moment of your arrest you were totally honest and cooperative with the ICAC.  This was followed-up by pleas of guilty before the court and the first available opportunity.  It is also right that I should take into account, as part of the punishment, the two weeks that you spent in custody.  That, to a man of clear record, is a severe punishment in itself.  Also, I have made reference to what you have already lost, your career, your good record, and financially from your gratuity, and repaying money which you did not intent to keep yourself. 

33.  In short, having weighed all alternatives open to me, I have come to the conclusion that an immediate custodial sentence would not be just in these circumstances.  It would be manifestly out of proportion to the criminality involved and I will follow the positive recommendation contained within the reports.  Therefore, on each of these charges, you will serve 200 hours community service, that requires you to perform those hours within 12 months under the supervision of the probation service.  You must perform the work in a satisfactory manner.  You must attend when required.  The only absences that will be accepted are those accompanied by a medical certificate and you must commit no further offences.  Are you agreeable to serve Community Service?

DEFENDANT: Yes, your Honour.

COURT: Then I make the order.