HKSAR v. FUNG KIT CHING BANDIE

 DCCC1120/2009

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 1120 OF 2009

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Reasons for Sentence

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1.  The defendant pleaded guilty to seven charges of theft. The offences spanned the period from 12 November 2001 to November 2005. Each of the offences involved an offence of theft where choses in action were stolen, namely shares owned by Hang Tai Securities Limited on behalf of various clients.

2.  The facts admitted by the defendant disclose that Hang Tai Securities Limited is a member of the Hong Kong Stock Exchange Limited. Its business is trading in shares on the Hong Kong Stock Exchange and each client of the company is allocated a securities account that contains the record of a client’s buying and selling transactions and also the balances of various shares held under that account.

3.  At all the material times the defendant was the licensed representative of the company serving a total of 244 clients. Her duties included buying and selling shares in accordance with the instructions of those given to her by clients.

4.  In January 2006 the company discovered a forged monthly statement of the company relating to the account of one of the defendant’s clients. Following an internal investigation the defendant was dismissed on 9 February 2006.

5.  On 12 February 2006 the defendant confessed to Ng Yuk Penny, the responsible officer of the company, that she had traded in the accounts of her clients and sold their shares without authorisation.

6.  All clients of the defendant were in due course notified of her dismissal. A number of clients, after viewing the transaction records kept by the company, reported to the police that the defendant had sold their shares and traded in their accounts without authorisation.

7.  A police investigation revealed that the defendant had sold the shares of seven clients without authorisation. The total sum involved was just over $3 million - $3,010,952.76. The biggest loser was Mr Chan Hoi-ming, who lost shares valued at $1,070,227.76.

8.  On 15 February 2006 the defendant surrendered herself to the police. Under caution, she admitted that she had sold the shares of her clients without authorisation.

9.  She was interviewed under caution. She explained that she had committed the offences because one of her clients had disappeared after incurring losses of $0.2 million in shares and she paid the money out of her own pocket for that client. In order to earn the money back, she had traded in her brother’s account.

10.  Since she kept incurring losses, she started selling her clients’ shares and trading in their accounts. Sale proceeds had been transferred from one client’s account to another to meet the outstanding payment for the unauthorised purchase of shares.

11.  To cover up her misdeeds, she had not delivered the monthly statements to her clients. She told some of them that the half-yearly statements instead of monthly statements would be delivered to them according to the new company practice. On some occasions she had delivered forged monthly statements to her clients.

12.  The defendant is 43 years of age. She has a clear record. She was born in Hong Kong and completed secondary education. She had worked for her previous employer since leaving school in 1986 until the offences came to light in 2006, and she has worked for a logistics company following her arrest until the present time.

13.  A number of matters have been urged upon the court in mitigation. I was told, in relation to the defendant’s background, that she obtained her broker’s licence and became a stockbroker and was earning $12,000 per month. She helps to support her parents who are 66 and 67, and has a younger sister. She is married and has a daughter who is now 12 years of age.

14.  At the current time she was earning $10,000 per month as an accounts clerk in a logistics company, out of which she paid $4,000 a month to her parents. Her husband earns some $20,000 per month but at the material time earned $10,000 per month. The family and the father-in-law live in a 500-square-foot apartment paying a monthly rental of $7,000.

15.  In mitigation it was urged upon me and documentation was provided to the court to support the fact that the incident came about because of a loss of $170,000 incurred by one of her customers. He had failed to settle the outstanding balance. He told her he would return the sum and signed a loan agreement. He later disappeared.

16.  Instead of seeking assistance from her employer or her husband, she decided to deal with this matter in her own way, and she sold shares from other clients and used the money to cover up the outstanding balance, hoping to earn the money back. Unfortunately the market moved against her and her losses became increasingly large.

17.  It was pointed out that on the few occasions that the defendant had actually made profits, those profits had been put back into clients’ accounts and not used for her own personal circumstances. No money was used for personal enjoyment or to support an extravagant lifestyle. Throughout this period she was leading a humble lifestyle and supporting her family.

18.  The defendant comes from a law-abiding family and most of the family were in court to hear this case. It was said that by involving herself in this offence she has destroyed the image which she had with the family and she is most concerned about the effect of the conviction of the sentence of imprisonment will have on her daughter. Her daughter starts Form 1 this year and this is one of the greatest worries of the defendant, that she will not be able to look after her daughter at her young age.

19.  She has not been able to make restitution because of financial problems and was declared bankrupt in 2006.

20.  I am told that the victims’ loss was all paid off by the insurance company.

21.  It was stressed that in February 2006 the defendant had voluntarily gone to the police and admitted everything. In a long interview she said that, “I knew that I was very wrong. That is why I surrendered myself at the police station today, hoping to salve my conscience.”

22.  Despite having surrendered to the police in February 2006, no charges were brought against her until over 3 years later, in September 2009. It was submitted that this long delay had put the defendant under tremendous suffering. For all the years she had been tampering with her clients’ money, she had been living under her own guilt and suffering from insomnia. She did not tell her husband about the misdeeds until 2005, when she realised there was no way she was able to make up the losses that had been incurred.

23.  I am told that she had suffered from psychological problems and this was confirmed to instructing counsel by the sister of the defendant, who told her that she had some suicidal tendencies at one point.

24.  I am told that since 2003 the defendant started going to church every week and became a devoted Christian and makes contributions of a $1,000 per month to that church.

25.  It was also urged upon the court to consider the question of delay. In the case of Barrick, the Lord Chief Justice suggested a delay of 2 years may be taken into account.

26.  In Chan Yuk Kwan, it was said that there was an exceptional delay on the part of the prosecution to charge the appellant some 2½ years after his initial arrest. He had admitted his guilt when he was arrested. In that judgment, Stock JA said significant delay may well in a particular case go in reduction of a sentence because of the stress occasioned when a case hangs over the head of a person awaiting trial, stress over and above that caused when there is no prolonged delay.

27.  It was also pointed out that the defendant’s actions were extremely foolish. It was inevitable that the theft would be discovered when the clients wanted to sell the shares. It was only a question of time before the matter would come to light.

28.  It was also stressed that there is no likelihood of re-offending.

29.  I am told that in her present employment in a logistics company she is very much appreciated by her boss. She is responsible for handling all financial matters of the company and has proved to be very reliable and trustworthy. She handles cash and personal matters of the boss, and he has written a letter of support.

30.  I have also had other letters placed before me which I have taken into account.

31.  This is a case involving a clear and significant breach of trust involving property worth a substantial amount of money over a considerable period of time. The value of the property exceeds $3 million and the offences were committed over a period of 4 years.

32.  Charge 1 would normally attract a starting point of 18 months’ imprisonment; Charges 2 and 7 to 10 would attract a sentence of 2 years’ starting point; and Charge 4, the usual starting point would be around 3 years’ imprisonment. I would then have to consider the question of totality.

33.  This case is obviously a personal tragedy for the defendant and for the members of her family, and particularly her young daughter.

34.  There are significant mitigating factors. The defendant admitted her wrongdoing right at the outset and has had this matter hanging over her head for many years.

35.  She voluntarily went to the police in February 2006 and confessed her wrongdoing. This matter was investigated by the police and referred to the Legal Department in July 2007.

36.  I am told that thereafter the file was referred back to the police for further investigation and the defendant was not finally charged until September 2009. I am told that the investigation involved over 1,800 exhibits and the exhibit list is some 71 pages long.

37.  I note that investigations and preparation of matters of this type are lengthy and complex but in my view there has been some delay in bringing these proceedings before the court.

38.  The defendant has always indicated her intention to plead guilty. I note that a “not guilty” plea was entered in the plea court but I am told, and it turns out to be right, that that was only because she did not accept her guilt on some of the charges and those charges have in fact not been pursued.

39.  The offences came about, I note, because in 2000 one of her customers bought some shares and suffered a loss which he failed to settle. He promised he would return the sum and signed a loan agreement and he then disappeared. The defendant accepts that she was at fault in this matter as she did not get security from the client for the investment.

40.  She did not mention this matter to her boss or to her husband and decided to settle matters in her own way by selling the shares owned by other clients in an attempt to make up the loss by investing them in margin activities. The market moved against her and the situation spiralled out of control as the amount of money she lost gradually increased.

41.  On the few occasions she managed to make a profit, the profits were put back into clients’ accounts. It is accepted by the prosecution that there is no evidence of any money from trading in her clients’ shares going to the defendant personally.

42.  This was not a case of the defendant stealing money to finance an extravagant lifestyle, personal enjoyment or any gambling activities. The only benefit to the defendant was that she was able to maintain her employment.

43.  The defendant has a clear record and there is positive evidence of good character. She has a loving and supportive family and the defendant will bitterly regret not being able to support her 12-year-old daughter who starts Form 1 in the next academic year.

44.  Since leaving Hang Tai Securities, she has secured employment as an accounts clerk in a logistics company and has received high praise from her employer as a trustworthy and responsible employee. He is prepared to re-employ her when she is released.

45.  Letters of support have been handed to the court by her employer, her husband, herself, her uncle and aunties. The letters from her uncle and aunties are of particular significance because they were also clients of hers who had lost money and these persons have forgiven the defendant for her actions.

46.  I noted in the case that was referred to me, the case of HKSAR v Cheung Mee Kiu, CACC99/2006, which provides a tariff for sentencing in cases such as this, that the female defendant in that case was 61 years of age and a lady of positive good character.

47.  She had been the owner and manager of a jewellery company for 40 years. The company was a family-run company with two shops which employed her husband and son. It was successful for many years but due to the economic downturn across the region and the SARS epidemic, the business quickly went downhill and collapsed. It was in those circumstances that the defendant took the drastic and dishonest measures in a misguided attempt to salvage her business. She pawned jewellery entrusted to her by customers and ordered supplies with post-dated cheques which were dishonoured.

48.  The total value involved was just under $10 million and a starting point of 6½ years was taken and reduced by

one-third to reflect her guilty plea.

49.  I accept in this case that the defendant’s actions were brought about in the manner in which she has told the court.

50.  As I indicated previously, the starting point on Charge 1 would normally be around 18 months; on Charges 2, 7, 8, 9 and 10, it would be about 2 years; and on Charge 4, 3 years.

51.  What I have done in view of the mitigation in this case is to take the following starting points. On Charge 1, the starting point I am going to take is 12 months’ imprisonment; on Charge 2, 15 months; on Charge 4, 2 years; on Charge 7 to 10, 15 months on each of those offences.

52.  The defendant is entitled to a reduction of one-third for her guilty plea. Those charges will be reduced as follows. On Charge 1, 8 months; on Charge 2, 10 months; on Charge 4,

16 months; and on each of the other charges, 10 months.

53.  I have to consider the question of totality. I order that the sentences on Charges 1, 2 and 4 should run concurrently. I order that the sentences on Charges 7 to 10 shall run concurrently, but I order that 2 months of that sentence should run consecutive to the sentences on Charges 1, 2 and 4.

54.  The total sentence will therefore be a sentence of

18 months’ imprisonment.