DCCC 565/2010

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 565 OF 2010

-----------------

-----------------

-------------------------------

Reasons for Sentence

-------------------------------

Charge & facts

1.  D1-D4 plead guilty to a charge of conspiracy to defraud.  Whilst in Malaysia, D2 was contacted by a male to get people to work out the conspiracy in Hong Kong. False credit cards would be used to buy goods in Hong Kong.  He was in contact with a person in Hong Kong.  That person would receive the goods.  He promised a reward to the defendants if they would join the conspiracy in Hong Kong. They agreed.  He asked them for their names so that their names could be embossed on the false credit cards.  Before shopping in Hong Kong, he had already received the false credit cards from the male in Malaysia.  They would buy goods with the cards.

2.  Between 29 January and 1 February 2010, they arrived in Hong Kong from Malaysia with 64 false credit cards in their own names.  As he was familiar with the shops in Hong Kong, he took the lead.  They used 10 of the false credit cards to successfully defraud a number of hotels and high-end retail shops in Hong Kong on 15 occasions.  D1 was attempting to use a false credit card to buy an Omega watch when he was arrested.  D2-D4 were arrested at the airport when they were about to leave Hong Kong.  After caution, each admitted the offence.  

3.  The actual loss suffered by the hotels, shops or credit card issuing banks, as the case may be, totalled $92,982.60. 

Personal background and mitigation

4.  D1-D4 are all ethnic Chinese residing in Malaysia.  They are of a clear record in Hong Kong.  D1 is 20 years of age.  He had studied up to primary school level. He was a salesman of water filter systems.  He was introduced by D4 to join D2’s conspiracy.  D2 is 27 years of age.  He last worked as a salesman in a furniture shop.  He had studied up to F.5 level.  D3 is 28 years of age.  He had studied up to F.1 level.  He last worked as an audio equipment technician. He lived with his girlfriend and their daughter.  He has to provide for them as well as his mother.  D4 is 26 years of age.  She had studied up to college level.  She last worked as a part-time saleslady in a water purifier company. She is married but her husband does not support the family.  Her son is 5 years of age.  She has also to provide for her maiden family.   

Sentencing principles

Factors affecting sentence

5.  In HKSAR v Chan Sui-to [1996] 2 HKCLR 128, 131, the Court of Appeal held that a sentencing judge would need to consider 5 factors before deciding the level of sentence, although Yang CJ went on later to say that this was not intended to be an exhaustive list. Those factors were as follows: 

(1) The size of the operation e.g. whether it involves large sums of money, whether it concerned a large number of persons or forged credit cards;

(2) The planning that has gone into perpetrating the fraud, whether it is elaborate or simple, whether technical skills were used, and to what extent;

(3) Whether there is an international dimension;

(4) Whether the accused played a major role, e.g. running a syndicate, engaging in actual manufacture, organising the use of forged cards, or whether he is a mere ‘cog in the wheel’ as a courier or a custodian or keeper;

(5) Whether there is a plea of guilty.

Sentencing examples

6.  In HKSAR v Hung Ping-wah, CACC 241/1997 & 488/1997, the total sum involved related to goods valued at $7,000.  The appellant pleaded guilty to two charges of using a false instrument and a third charge of possession of forged instruments.  There was no suggestion of an international dimension and no evidence of a syndicated operation.  An overall starting point of 4 years for the 2 charges of using a false instrument was regarded by the Court of Appeal as having been "on the high side", but "not manifestly excessive".  There was, however, the further factor in that case, namely, that following the appellant's arrest, he was found to have had 10 more false credit cards in his possession.

7.  In HKSAR v Yeoh Sooi Hong & Others DCCC 235/2009 dated 25 August 2009, 4 defendants (D2-D5 thereof) pleaded guilty to conspiracy to use false instruments.  Their roles were similar to D1, D3 and D4 in our present case.  Three came from Malaysia and one came from Singapore to use false credit cards to make purchases of high-end consumer goods at the value of $201,650 in total.  All the goods were recovered. There were 41 cards seized but the number of cards used was not given in the judgment.  There was a clear international element.  The court took a starting point of 5 years for each of them.           

Potential for loss

8.  In HKSAR v Yau Wai ChunCACC 417/ 2000 Stuart-Moore VP raised the issue of “potential for losses” as reflecting the degree of culpability.  That case dealt with a medium-sized operation.  He referred to Chan Sui-to (above) and said:

“10. In R v Chan Sui-to and Another [1996] 2 HKCLR 128, where some guidance was given in regard to sentencing in cases involving the fraudulent use of credit cards, the court stated at page 134A:

"Allowing for the different facts and the varying degrees of culpability, it is impossible to formulate a set of principles of sentencing from those decisions. We think however it would be helpful to the courts if they were guided by some criterion. We would therefore suggest that an accused who plays an active but not necessarily a key role in a medium size operation involving between $50,000 and $150,000, with no elaborate planning and equipment, and without an international dimension, should receive a sentence of five to six years after trial. Sentences may be adjusted upwards or downwards according to circumstances.

The sum of money involved is of course only one of the factors to be taken into account. It is not even the most significant factor."”

9.  As only 10 out of 64 false credit cards were used, I am not going to assume that the other 54 cards had any potential for loss.  It is not possible to determine if the 54 credit cards were good enough to put transactions through.  This is an adverse inference which I cannot draw against the defence in the absence of evidence. 

10.  In short, the potential for loss in the present case shall be limited to the 10 false credit cards successfully used in 15 out of 16 occasions, the highest spending being $34,960.  Counsel for D1 submits that the potential for loss would be minimal because a false card bearing a cardholder’s name which was inconsistent with the card number or bank’s name could be revealed without difficulty by joint effort of the shopkeeper and the card centre.  The non-vigilance or the weakness of the verification procedure was a reason to cause loss.  I tend to disagree.  The conspiracy had come to be successfully implemented because it was exploiting the verification procedure.  Looking at the success rate and spending limit, the potential for loss based on the 10 false credit cards can be quite high. 

Sentencing D1 – D 4

11.  D2 was the leader of a group who came to Hong Kong to implement the conspiracy for a reward.  There was thorough planning from getting false credit cards made in the participants’ own names.  They were led by D2 who knew the shops well.  He was also to deal with the subsequent handler of the goods.  The goods in our present case could not be recovered.  As they were staying in Hong Kong only for a few days, it would be immensely difficult for the police to track down their identities, let alone arresting them before they left Hong Kong. 

12.  There is a strong international dimension.  There were 4 people taking a trip to Hong Kong from Malaysia to carry out aconspiracy no doubt engineered by co-conspirators at a higher level.  They carried 64 false credit cards.  As shown in a Schedule supplied by the prosecution setting out the Bank Identification Number (“BIN”) for the 64 cards and the name of the bank to which each BIN belongs, banks in 17 countries were involved, namely Ukraine, U.S.A., Dubai, Australia, India, Japan, U.K., New Zealand, Sri Lanka, Russia, Germany, Thailand, Maldives, United Arab Emirates, South Africa, Saudi Arabia and Canada.  This shows how extensive the syndicate’s network of data is.   

13.  Even without the international element, our present case is at the upper range of a medium size operation which shall attract at least 5 to 6 years according to Chan Sui-to (above).  In the case of D2, I take 5½ years as the starting point to reflect his leading role.  In other cases, I take 4½ years.  There are no other mitigating factors except the pleas of guilty.  They can have one-third discount.  D2’s sentence is 3 years and 8 months.  Each other defendant’s sentence is 3 years.