HKSAR v. ANG WING FUNG AND ANOTHER

DCCC 1175/2023

[2026] HKDC 521

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 1175 OF 2023

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REASONS FOR SENTENCE

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1.  D1 pleads guilty to Charges 1, 2, 3 & 4 and D2 pleads guilty to Charges 2 and 3, D1 and D2 are convicted upon their respective guilty pleas and acceptance of the 2^nd Re-amended Summary of Facts dated 5 March 2026. On request of Prosecution, Charge 1 against D2 was left on Court file.

Background Facts

2.  W. Falcon Asset Management (Asia) Limited (“Falcon”) was incorporated in Hong Kong on 25 April 2013 and D1 became its sole director cum shareholder on 20 May 2013. D1 later transferred his ownership to a BVI holding company W Falcon Investments International Limited (“Falcon Investments”), which D1 became the sole shareholder cum director since 4 September 2014.

3.  D2 was the Financial Controller of Falcon between April 2014 and November 2016.

4.  Falcon held a bank account at Dah Sing Bank that consisted of Multicurrency account and Current account (collectively “DSB Account”). D1 was at all material times a signatory of the DSB Account.

5.  D1 held 5 personal bank accounts with Shanghai Commercial Bank (“SHCB”), Standard Chartered Bank (“SCB”), Bank of East Asia (“BEA”), Hang Seng Bank (“HSB”) and Bank of Communication.

6.  D1 also held 2 other bank accounts through 2 companies under his control, namely HSBC account held by Put This On Limited and SHCB account held by Castle Step Limited.

Charge 1

7.  On 23 October 2013, Falcon applied to the Securities and Futures Commission (“SFC”) for licenses to carry on Types 1, 4 and 9 regulated activities, namely, dealing in securities, advising on securities and asset management (“SFC licenses”). Falcon was required to demonstrate that it had a minimum paid-up share capital of HK$5 million and liquid capital of HK$3 million.  

8.  When Falcon submitted the application to SFC, its paid-up share capital was only HK$100. D1 personally issued 2 cheques in the amount of HK$990,000 and HK$4,000,000 from his personal account at SHCB to DSB Account on 27 June 2014 and 30 June 2014 respectively. There were insufficient funds in the SHCB account to honour the said 2 cheques.

9.  Falcon submitted further materials, including revised Supplement 7 forms (Financial Resources) as at 13 December 2013 and 30 June 2014, coupled with the 4 million cheque pay-in slip dated 30 June 2014 to demonstrate the increase of paid-up share capital to HK$5 million.

10.  On 14 July 2014, Falcon’s applications for SFC licenses were approved in principle. On 17 July 2014, i.e., 3 days after Falcon falsely demonstrated that it had complied with the paid-up share capital and liquid capital requirements, licenses were granted by SFC to Falcon to carry on Types 1, 4 and 9 regulated activities under the Securities and Futures Ordinance in Hong Kong.

Charge 2

11.  Pursuant to the Securities and Futures (Financial Resources) Rules, Cap. 571N, Falcon is required to maintain a specified minimum amount of liquid capital at HK$ 3 million, to notify SFC as soon as practicable and immediately cease carrying on any regulated activities should there be a failure to maintain the specified minimum amount. 

12.  Falcon was required to submit monthly Financial Return (“FRR”) by online communication system (“e-FRR System”) to SFC for assessing its financial position. FRRs have to be digitally signed by responsible officers (“ROs”) who were granted e-certificate for the said purpose.

13.  Between 31 July 2014 and 31 October 2016, D1 had personally or through his controlled companies issued a total of 28 cheques in favour of Falcon. 18 out of the 28 cheques were issued from 2 accounts which had already been closed and the remaining 10 cheques were issued from accounts with insufficient funds. The amounts of the said 28 cheques were reflected in 23 FRRs prepared by the ROs on behalf of Falcon and submitted to SFC between 21 August 2014 and 18 November 2016 for the purpose of maintaining the SFC licenses.

14.  D2 needed to inform the ROs if the company has insufficient requisite paid-up capital share and liquid capital. ROs confirmed that D2 was responsible for preparing a number of documents including completed FRRs with supporting excel documents, profit & loss accounts and balance sheets for the ROs to verify before they could submit the FRRs to SFC. However, the bank records showing that there were 28 dishonoured cheques were withheld.

15.  When ROs asked D1 and D2 for the actual bank records, D1 assured them that the financial status of the company was sound; D2 said he would look after those matters and ROs only needed to check the completed FRRs based on the materials provided. D1 and D2 also directed staff of accounts department not to show the bank records to other company staff.

16.  PW8, Madam CHAN, a staff member of the accounts department confirmed that D1 and D2 had instructed her not to show any bank information to other staff of the company. D2 has specifically instructed PW8 not to pay attention to the dishonoured cheques and she needed to follow the usual way to prepare the financial statements. On about 6 occasions when PW8 assisted D1 in drafting cheques in favour of Falcon, PW8 asked D1 if sufficient funds were there to honour the cheques and D1 answered in the affirmative. D1 was informed when the cheques were dishonoured.

17.  D2 left the employment with Falcon after 14 November 2016.

Charge 4

18.  PW9 Madam SUNG joined Falcon in May 2017 taking over PW8’s job. PW9 assisted D1 twice in May and June 2017 to issue cheques from D1’s personal accounts to DSB Account. D1 has instructed PW9 not to let other staff member to see the company’s bank account records.

19.  Between 27 January 2017 and 30 June 2017, D1 had personally or through his controlled companies issued 8 cheques in favour of Falcon, the cheques were issued from accounts with insufficient funds and dishonoured. The amounts of these 8 dishonoured cheques were included in 5 FRRs required for accounting purpose for the reporting months from January, February, March, May and June 2017, the said 5 FRRs were submitted to SFC between 20 February 2017 to 19 July 2017 for the purpose of complying with the statutory licensing requirement imposed on Falcon.

20.  D1 has dishonestly, with a view to gain for himself or another or with intent to cause loss to another, produced or made use of the said 5 FRRs, which to his knowledge were or might be misleading, false or deceptive in a material particular.

Charge 3

21.  In around October 2016, Mr. HE (PW11), the founder and CEO of a mainland company with 2 affiliated Hong Kong incorporated companies, namely, Triway International Limited and Triway Investment (HK) Limited (collectively “Triway”) intended to invest in business of financial services. Mr. HE instructed the general manager of Triway (Madam WONG - PW12) to search for companies with SFC licenses and Falcon was selected. The acquisition price for Falcon was agreed at HK$17.8 million.

22.  On 2 December 2016, PW12 on behalf of Triway and D1 on behalf of Falcon Investment as seller, with D1 as guarantor signed a memorandum of understanding (MOU) for acquisition of Falcon, in which Falcon Investment made the warranty that Falcon’s SFC licenses and the status of the Exchange Participant shall be valid according to the current SFC website and not revoked. At the signing of MOU, a deposit in the sum of HK$4.45 million was paid by cheque drawn by Triway International in favour of D1 as requested, as D1 represented that Falcon did not have any bank account and the payment should be made to D1 directly.

23.  Pursuant to the MOU, 3 months due diligence period, which was later extended to 31 March 2017 was granted to Triway to conduct due diligence review. D1 and D2 provided copies of documents relating to the affairs of Falcon, including the management accounts and balance sheets to the accounting firm Cheng & Cheng, which was appointed by Triway to conduct due diligence review.

24.  On 6 and 7 December 2016, during conference call and physical meeting held between D1, D2, PW12 and Cheng & Cheng Team, despite D2 has left the employment with Falcon, D1 introduced D2 as the RO of Falcon to assist in the due diligence review. Emails were sent by Cheng & Cheng to D2 requesting documents for due diligence review. D2 followed up and sent requested documents including the false and misleading management accounts and balance sheets of Falcon.

25.  On 10 January 2017, D1 replied to an email requesting for outstanding documents as requested in the due diligence period by including the misleading balance sheets between April and December 2016.

26.  On review of documents provided by D1 and D2, staff of Cheng & Cheng were led to believe that the figures in the FRRs tallied with the bank statements and included the figures of Falcon’s financial status according to the management account prepared by D2 in their review report.

27.  On 30 March 2017, Triway HK, Falcon Investment and D1 entered into a Sale and Purchase Agreement relating to the entire issued share capital of Falcon. In the agreement, it is stipulated as a condition precedent that all SFC licenses held by Falcon shall remain valid. D1 confirmed in the agreement that the 2016 Audited account shows a true and fair view of the affairs of Falcon, and that the management accounts have been properly and carefully prepared and not misleading. D1 also confirmed that all information provided and representations made to the SFC by Falcon in relation to the enquiries from SFC are true, accurate and not misleading in any material aspects.

28.  The fraudulent scheme was unveiled on 3 July 2017 when Dah Sing Bank reported to Falcon an incident of dishonoured cheque, RO Mr. HUNG (PW7) requested to see the company’s bank record, which then revealed that Falcon has insufficient liquid capital in its account. Mr. HUNG reported to SFC, Falcon confirmed in a subsequent email that a dishonoured cheque of HK$4.3 million was included in the computation of liquid capital position in the relevant FRR, Falcon was immediately required to cease carrying on all regulated activities until the breach is rectified.

29.  SFC then commenced an inspection of Falcon’s business operations and found that Falcon had a practice of window dressing its month-end liquid capital on repeated occasions, i.e., through cheques issued by D1 or company under D1’s control in favour of Falcon at month-end, the cheque amounts were initially shown in the bank records but had to be deducted on the first business day after the month-end date when the cheques were dishonoured. Such window-dressing practice was found to be in place between 2014 to 2017.

30.  A restriction notice was issued by SFC on 7 July 2017 to prohibit Falcon from carrying on all licensed regulated activities and from disposing of or dealing with any property except for return of client money, securities or assets.

31.  Despite D1’s assurances to Triway that the financial problem of Falcon would be rectified soon, the restriction notice was still in force in September 2017, Mr. HE then decided to terminate the acquisition of Falcon and a Deed of Termination was entered into, notwithstanding D1’s promise to refund HK$10,094,634, which amount is inclusive of HK$9.79 million being total sums of deposits plus costs, expenses and interest, D1 never made the refund up till the present moment.

32.  D1 and D2 were arrested on 27 May 2019. D1 remained silent under caution whereas D2 made certain admissions relating to Charges 2 and 3 in cautioned video-recorded interview.

Mitigation and Sentencing Considerations

33.  D1 was born in Hong Kong in 1973 and is currently aged 53, this is his first transgression in law. D1 has an admirable personal, family and education background. He was married to his wife for 24 years and they have 2 sons and 1 daughter who are in their teenage. D1 and his wife met when they received their tertiary education in Australia. In 2001, D1 was first qualified as CPA in Australia, he then obtained the qualification of HKICPA in 2004, company secretary qualification in 2009 and Executive Master of Business Administration in 2010.

34.  D1 began his career as an accountant with Deloitte in 1998. After practicing in the finance industry for 15 years, he agreed with a few friends to embark on a new business by setting up Falcon as an investment platform for regulated activities.

35.  It was submitted on D1’s behalf that his friends all pulled out during the start-up period, leaving D1 to secure the requisite capital. D1 was frustrated and did not want to give up, he committed Charge 1 against those circumstances and he readily accepts that window-dressing practices were adopted throughout the period covered by the Charges because he faced enormous financial pressure. To keep Falcon a sustainable business, he and his wife took out a mortgage on their matrimonial home but the financial strain remained overwhelming.

36.  References were made to D1’s parents who are residing in public housing, the Court was informed that D1’s father aged 76 still works as a cleaner and his mother aged 71 suffers from long term illness. The parents are dependent on D1 and his younger brother, D1 still contributes HK$15,000 per month to his parents before he was remanded, his wife works and helps to repay the mortgage.

37.  Medical reports were submitted to show that D1 was diagnosed to have a brain tumour in March 2024, which was timely removed by surgery on 30April 2024. The Court was informed that D1 suffered from some post-surgery discomfort and his vision might be impaired despite surgery, he was on follow-up medications after the surgery.

38.  As it is now almost 2 years after D1 received the surgery and no updated medical report was submitted, I have inquired with D1’s Counsel about D1’s current health situation and was told that D1 has asked to revoke his bail when he appeared before another Judge on 11 March 2025 when this case was first listed for plea in the District Court, D1 has since been remanded in jail custody and under the care of the Correctional Services Department, there is no complaint of any health problem or deterioration of his conditions whilst he was in jail custody.

39.  I noted from the mitigation materials that D1 worked as an account manager in a listed company making HK$25,000 per month before he was remanded on 11 March 2025, and his Counsel informed this Court that since the matter was unveiled, D1 has diligently ordered his affairs with a view to re-organize his life. From all the mitigation materials placed before me including the medical reports relating to the surgery, I am satisfied that D1 has received appropriate treatment and obtained maximal medical improvement after the surgery in April 2024, that he has returned to work before he was remanded, such that there is no basis for this Court to consider any special reduction in sentence on humanitarian grounds due to sharp deterioration of health conditions.

40.  I have considered the mitigation letters prepared by D1, his wife, his parents-in-law, his friends and his Christian fellows, who spoke the best for him, I accept that D1 has shown genuine remorse by entering guilty pleas to all charges and is determined to mend his way ahead, he has learnt a hard lesson from his misdeeds and has taken all efforts to rehabilitate, he has the blessings of Christian faith and has undertaken voluntary work arranged by his church mates, with the support of his family and friends, the chance of re-offending is slim.

Mitigation – D2

41.  D2 was born in Hong Kong in 1975 and is currently 50 years of age, he has a clear record. He graduated from Napier University with a Bachelor of Arts in Accounting with Second Class (First Division) Honours in 1999, he then became a Certified Public Accountant and has worked in the accounting field for small and medium business enterprises for over 10 years. D2 has worked for a security licensing company for a few years before he became employed by Falcon in June 2014. The Court was told that Falcon was a start-up and D2 had to adopt a steep learning curve.

42.  D2 had continued to pursue his career development, he sought to further upgrade his skills by completing a part-time Master of Administration with the University of Sutherland in 2018, that is after he left Falcon and before he was arrested.

43.  D2 admitted that due to the events that underlie the present charges, which he fully accepts responsibility, D2 resigned from Falcon after having worked there for about 2.5 years. He has fully disclosed all relevant documents and bank statements to Falcon’s next set of auditors.

44.  In December 2019, D2 was sanctioned by the SFC and suspended for 3 years from the financial industry. In March 2022, he proactively reported to Hong Kong Institute of Certified Public Accountants and the Association of Chartered Accountants, resulting in a 3 years removal from their registers. 

45.  Shortly before this case was first listed for plea on 11 March 2025, D2 has offered to provide NPS to assist the authorities concerning the role of D1 and others in Falcon’s application for SFC licenses, details operation of Falcon and information about the Triway acquisition, the case was thus adjourned for D2 to provide NPS and D2 had indeed provided an NPS thereafter, which Prosecution has considered but assessed to be of no practical use, probably because D1 has already indicated his willingness to plead guilty to all charges.

46.  Coming to his family, D2 has an elder sister and a younger brother, his mother is over 80 years old and suffering from breast cancer, D2 is responsible for taking his mother to medical appointments before he asked to revoke his bail on 11 March 2025.

47.  D2 is married with a daughter, I have considered the touching mitigation letters written by his wife and daughter and learnt more of D2 from their perspectives. I am impressed by the sincerity shown by the wife and daughter in their humble words spoken for D2, both of them realised and accepted that D2 has committed very serious mistakes and did not seek to lessen his guilt whilst urging for leniency on his behalf.

48.  I note in particular the deep remorse expressed by D2 in his written mitigation letter, I am convinced that his desire to turn anew can be gleaned from his willingness to confess and cooperate during investigation when the matter first came to light. The fact that D2 has proactively reported to the professional bodies and received the relevant sanctions even before he was charged with the present offences speaks forcefully of his determination to accept responsibility, that he offered to provide and did provide an NPS, though considered and assessed by prosecution to be of no practical use, is nevertheless indicative of his strong sense of remorse.

49.  I accept Mr. TSOI’s mitigation for D2 that the sentencing Judge should properly assess the actual role and criminality of different Defendants who participated in the same conspiracy, the facts clearly show that D2 has a lesser and subservient role to play in Charge 2 and Charge 3, I accept that D2’s involvement in Charge 3 is limited to the initial assistance offered in December 2016, there is no evidence that he has obtained any benefit in the acquisition exercise of Falcon by Triway, which I have taken into account when sentencing.

50.  On the issue of delay, I have considered the chronology of investigations submitted by Prosecution, I note that the statement taking process of some 16 witnesses lasted for a span of about 2.5 years, when it is obvious that most of the PWs are staff of Falcon or SFC. I accept the delay is more apparent in the case of D2 because he has made confessions in video-recorded interview after the arrest in May 2019, even taking into account the number of bank accounts involved, the fact that D1 and D2 were only charged on 31 August 2023, which was more than 6 years after the matter was unveiled in July 2017 is evident of delay.

51.  Having considered the full circumstances of the facts in this case, the mitigation advanced for both D1 and D2, the comprehensive list of authorities relied by Senior Counsel, I accept Mr. LI’s submission that the facts of this case and the nature of the fraud practised on SFC bears certain similarities with the case of HKSAR v. Cheung Chun Yuen Barry, DCCC No. 718 of 2017. I also accept that the amount of money involved, the value of dishonoured cheques and the requisite capital requirements are substantially higher in that case. 

52.  I agree that Charges 1, 2 and 4 can be grouped under the nature of window-dressing practice but I do not consider that Charge 3 is a distinct and separate act on its own. Falcon would not be able to meet the statutory requirements but for the fraud practised on SFC, without the SFC licenses that were obtained by deceit, there would not be the need to practise further fraud to show an inflated amount of liquid capital and to submit false accounting documents for the purpose of complying with the licensing requirements. It is obvious that without the SFC licenses, acquisition of Falcon at the price of HK$17.8 million is out of question, and the loss of over 10 million deposits suffered by Triway which remained unpaid up till the present moment is the natural flow of events designed and calculated by D1 from the outset when Falcon was set up in 2013.   

53.  In the circumstances, I am unable to accept that D1 committed the offences merely because he has the aspiration to sustain the business of Falcon, judging from the amount of paid up capital at the time of Falcon’s inception, the balance in the DSB accounts at all relevant times, the balance in 5 personal bank accounts of D1 and 2 other bank accounts of companies controlled by D1, as reflected in the table annexed to the 2^nd Re-Amended Summary of facts, D1 must have known that he would not be able to meet the licensing requirements with his financial means, Falcon would never sustain but for the fraudulent scheme designed by him since the SFC licenses were applied for in 2013.

54.  For D1, 1 shall adopt a starting point of 18 months imprisonment for Charge 1, 27 months imprisonment for Charge 2, 36 months imprisonment for Charge 3 and 21 months imprisonment for Charge 4, allowing 1/3 discount for his guilty plea and clear record, the sentences of these 4 charges will be reduced to 12 months, 18 months, 24 months and 14 months imprisonment respectively. The sentences of Charge 1, 2 and 4 are to run concurrently, 12 months out of the 24 months imprisonment in Charge 3 is to run consecutively to other 3 charges, making a total term of 30 months imprisonment. I shall allow a further discount of 2 months to reflect delay, D1 is sentenced to 28 months imprisonment.

55.  For D2, considering his subservient role in the conspiracy in Charge 2, his limited participation in Charge 3 and all the matters urged on his behalf in mitigation, I shall adopt a starting point of 21 months imprisonment on Charge 2, allowing 1/3 discount for his guilty plea and clear record, the sentence is reduced to 14 months imprisonment. I shall adopt a starting point of 15 months imprisonment for Charge 3, allowing 1/3 discount for his guilty plea, the sentence is reduced to 10 months imprisonment. I order 4 out of the 10 months imprisonment imposed on Charge 3 to run consecutively to Charge 2, making a total term of 18 months imprisonment, I shall deduct 2 months from the total sentence to reflect delay, D2 is sentenced to 16 months imprisonment.