HKSAR v. LO HOI LUEN

 DCCC1372/2009

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 1372 OF 2009

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Reasons for Sentence

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1.  The defendant pleaded guilty to 30 charges of "Forgery", contrary to section 71 of the Crimes Ordinance, Cap.200.

2.  At all material times, the defendant was employed by American Express Bank Limited ("AE Bank"), which merged with Standard Chartered Bank in July 2008.

3.  PW1 Madam CHEN Xuequn is a mainlander residing in Guangzhou. She began banking with AE Bank in 2001. During the offence period, the defendant was the Relationship Manager for PW1's accounts with AE Bank.

4.  In June 2006, the defendant began recommending PW1 to invest in various types of securities including Callable Accrual Notes (the "Notes"). Since the Notes were "non-principal protected", AE Bank required its customers to sign, inter alia, a "Product Offer Acknowledgement Letter" (the "Letter") to confirm (i) their instructions to the bank to buy such Notes; and (ii) their understanding of the terms and risks involved. On 7 June and 4 July 2006 respectively, the defendant faxed a Letter to PW1 in the mainland. On both occasions, PW1 signed and faxed the Letter to the defendant on the same day. Upon receipt, the defendant submitted the 2 Letters to AE Bank. As a result, 2 Notes in the sums of US$100,000 and US$235,000 respectively were purchased for PW1.

5.  In August 2008, the defendant was about to switch her employment from AE Bank to BNP Paribas Private Bank Hong Kong. She, therefore, invited PW1 to move her accounts with AE Bank to the latter, to which PW1 agreed. In this connection, the defendant prepared and presented to PW1 a list of assets held in PW1's accounts so that PW1 could apply to AE Bank to move her accounts. After receiving the list, PW1 discovered that some Notes were purchased without her approval. She then raised the matter with Standard Chartered Bank (which had already merged with AE Bank at that time).

6.  Investigation revealed that AE Bank had purchased 51 Notes on PW1's account, and the documents submitted by the defendant in connection with such purchases (including the 30 Letters as particularized in Charges 1 to 30) were forged by the defendant.

7.  According to PW1, she received many bank documents including the monthly account statements at her designated Hong Kong address. However, she only collected them once in a while and did not read them carefully since the overall balance looked fine to her. She did not know about the unauthorized purchase of the 51 Notes until the defendant asked her to move her accounts to a new bank.

8.  Out of the 51 Notes, 43 were redeemed before the matter was reported to the Police. About the redemption, Ms. LAU for the Prosecution explained to me in court that once the profit target was reached, the Notes were automatically redeemed (even before their maturity dates) and the profits would be deposited directly into PW1's accounts. For those 43 redeemed Notes, PW1 gained a profit of about HK$3 million.

9.  For the remaining 8 Notes, 6 have also been redeemed; PW1 suffered a loss of about HK$10.6 million. Ms. LAU explained that if the profit target were not reached, the Notes would not be redeemed until their maturity dates. As at 1 February 2010 (3 days before plea), the total book value of the 2 unredeemed Notes was about HK$4.5 million; PW1 was suffering a loss of about HK$1.8 million on the books.

10.  The Police arrested the defendant on 5 January 2009. Under caution, she admitted forging PW1's signatures on the 30 Letters as particularized in Charges 1 to 30. She claimed that although she purchased the Notes without PW1's prior approval, PW1 should be aware of those investments. The defendant also admitted that she forged PW1's signatures because she wanted to maintain her own performance. She said she would gain a 0.12% commission on the investment amount. Ms. LAU confirmed that according AE Bank, the defendant earned about HK$100,000 in commission from the purchase of the 51 Notes.

11.  The defendant is now 40 years old. She is single and has a clear record. The defendant started working in the banking field since completion of F.5. She joined AE Bank in 1992 as a teller and was promoted to Customer Manager in 2003. She left AE Bank to join BNP in September 2008. She resigned from BNP in June 2009.

12.  Her parents and younger brother are very supportive of the defendant. They have written letters to mitigate on her behalf. Defence counsel Mr. McGowan pointed out that all along, the defendant made no attempt to conceal from PW1 the purchase of the 51 Notes. Monthly account statements were sent to PW1 and she could have easily discovered the purchases if she wanted to do so. Furthermore, it was the defendant who, on her own volition, prepared the list of assets for PW1.

13.  Mr. McGowan submitted that the defendant should be sentenced primarily on the basis of the commission she gained, something which she would not have been entitled to but for her forgery acts. He then referred to the tariff laid down in HKSAR v CHEUNG Mee-kiu [2006] 4 HKLRD 776. Regarding the profit gained and loss suffered by PW1, Mr. McGowan argued that the defendant had no control over the price of the Notes and she certainly did not intend to cause PW1 to suffer any loss.

14.  What the defendant did is no doubt serious. Her criminal acts involve a 2-way breach of trust (the bank which was her employer and PW1 who was her client). An immediate custodial sentence is most certainly required. In the course of his mitigation, I asked McGowan whether he has instructions regarding the reason(s) for committing the present offences. He informed me that the defendant did it for the commission as well as meeting her sales quota. In my view, such reasons would not attract much sympathy from the court.

15.  Ms. LAU has confirmed that the Notes are not related to the Lehman Brothers "minibonds". Be that as it may, the defendant had caused devastating results to PW1's investment and assets. Not counting the 2 unredeemed Notes, PW1 suffered a net loss of about HK$7.6 million. But for the defendant's forgery acts, all those profits and losses could have been avoided and PW1's position, as far as her investment in the Notes is concerned, could have remained as neutral. I will not sentence the defendant on the basis of the monetary loss she caused to PW1, but such a substantial negative figure cannot be overlooked and will constitute an aggravating factor in this case. To say the least, the defendant is directly responsible for the loss she caused to PW1.

16.  Mr. McGowan also submitted that all 30 charges in fact constitute a single fraudulent plan by the defendant. She should be sentenced based on the overall impact of her plan rather than each individual forgery act. In other words, the sentences for all 30 charges should run concurrently. This I agree.

17.  In determining of the appropriate sentence, I have taken into consideration of the manners of forgery, the nature of the documents involved, the length of the offence period (from August 2006 to May 2008) and the figure of the commission the defendant had unlawfully obtained. Based on all these factors, I adopt a starting point of 2 years imprisonment for each charge. I add another 6 months to reflect the substantial loss suffered by PW1, which brings the starting point up to 30 months. The usual one-third discount is given for her guilty pleas, which reduces the sentence to 20 months. With only F.5 education, the defendant has worked her way up from teller to customer manager. I accept that that she is a hardworking and conscientious person. I can give her some credit for this but not too much. As such, I give a further reduction of 2 months, bringing the sentence down to 18 months.

18.  The final sentence for each charge is therefore 18 months. Having considered the totality principle, I order that the sentences for all 30 charges to run concurrently.