HKSAR v. WU TIN LONG, MIKE

DCCC 44/2023

[2023] HKDC 1217

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 44 OF 2023

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REASONS FOR SENTENCE

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1.  Mr Wu pleaded guilty before me to one charge of Fraud, contrary to section 16A of the Theft Ordinance, Cap 210.  Particulars are that he, on or about 5 July 2022, in Hong Kong, together with persons known as “Ben” and “Sam”, by deceit, namely by falsely representing to Cheong Ka Fai that cash in the sum of $1,577,000 Hong Kong currency would be paid to the said Cheong Ka Fai, and with intent to defraud, induced the said Cheong Ka Fai to commit an act or a series of acts, namely to part with 200,000 USDT (equivalent to about $1,567,560 Hong Kong currency), resulting in benefit to Mr Wu himself or others, or in prejudice or a substantial risk of prejudice to the said Cheong Ka Fai.

Facts admitted by Mr Wu

2.  On 1 July 2022, PW1 Cheong Ka Fai saw a post on Facebook which advertised that UCity Hong Kong Cryptocurrency Exchange Centre offered to purchase cryptocurrency “USDT” with cash by way of face-to-face transaction. The advert provided a contact number and an office address in Hung Hom (“the Office”).  Interested in selling, PW1 sent a WhatsApp message to the contact number via WhatsApp.  On the same day, a person known as “Sam” negotiated with PW1 via WhatsApp regarding the intended sale and purchase.

3.  On 5 July 2022, PW1 and Sam reached an agreement via WhatsApp for PW1 to sell 200,000 USDT (equivalent to HK$1,567,560)  at the exchange rate of 7.885 for HK$1,577,000.  Thereafter, Sam instructed PW1 to visit the Office on the same day to complete the transaction.

4.  About 1845 hours the same day, PW1 and his friend PW2 attended the Office.  They were received by Mr Wu who led them into one of the rooms in the Office (“the Room”).  Mr Wu told the duo that he worked for his boss who would call PW1 for discussion.  PW1 then received a phone call from Sam who instructed PW1 to transfer his USDT to an e-wallet (“the Designated E-wallet”).  PW1 did accordingly.

5.  Then Mr Wu placed two stacks of banknotes (“the Banknotes”)  on a table in front of PW1-2.  Mr Wu informed the duo that his boss instructed him to fetch a banknote counter.  Mr Wu then left the Office.  After about 10 minutes, PW1-2 noticed that Mr Wu did not return to the Office.  PW1 found that there was only one genuine HK$1,000 banknote at the top of each stack whilst the remainder of the Banknotes had the words “practise Kung coupon” in Chinese printed thereon.  Case was reported.

6.  CCTV footage shows that on 5 July 2022, Mr Wu attended the Office at about 1840 hours and fled at about 1901 hours.

7.  At all material times, a plastic plaque which read “UCity CRYPTO HK” was installed at the entrance of the Office.  The Banknotes comprised (a)  two genuine HK$1,000 banknotes issued by the Bank of China (Hong Kong)  Limited and (b)  2,000 pieces of counterfeit banknotes bearing serial number DR385116.

8.  Mr Wu was arrested on 16 August 2022.  He admitted under caution that: -

(a)  His friend “Kwun Ho” introduced a person known as “Ben” to him; in around mid-June 2022, Ben instructed him to attend the Office to tidy up the office and to familiarize himself with the office environment. He knew by that time that he was responsible for tidying up the Office and to meet with clients. He had attended the Office three times since mid-June 2022. His third visit to the Office was on 5 July 2022;

(b)  A digital lock was installed on the door of the Office. He was provided with the relevant door code so that he could gain access to the Office. There were computers, computer desks, CCTV camera and a safe (“the Safe”)  inside the Office. The Safe contained a total of 6 stacks of fake banknotes;

(c)  In his first visit to the Office, he stayed for around 45 minutes to familiarize himself with the environment. He also practiced unlocking the locks in the Office, including the lock of the Safe;

(d)  In his second visit to the Office, he stayed for around 1 hour. He practiced using the banknote counter with the fake banknotes stored inside the Safe;

(e)  On 5 July 2022, at about 1715 hours, Ben and a person known as “Sam” instructed Mr Wu over the phone to attend the Office before 1900 hours the same day to receive two clients for transacting cryptocurrency using fake banknotes with a face value of HK$1,577,000;

(f)  Upon his arrival at the Office the same day, Ben and Sam instructed Mr Wu over the phone to take two stacks of fake banknotes from the Safe and place them so that the genuine HK$1,000 banknote at the top of the stacks would face towards the clients; Ben and Sam said once the target transferral of cryptocurrency was completed, they would send him a WhatsApp text message to alert him upon which he should make up an excuse to flee from the Office;

(g)  When the two clients arrived at the Office on 5 July 2022, he asked them to be seated in the Room. He took out the Banknotes with a face value of HK$2,000,000 from the Safe and placed them on top of the Safe in a such a way that the genuine HK$1,000 banknote at the top of the stacks faced towards the clients. Sam then instructed the clients over the phone to effect the transfer;

(h)  After the transfer of the cryptocurrency, Ben sent a text message to the WhatsApp group comprising Ben, Sam and himself. He then informed the clients that he needed to take a banknote counter and immediately fled; and

(i)  He participated in the scam for monetary reward of HK$20,000. He received the said sum in cash from Kwun Ho three days after the incident.

Criminal record

9.  Mr Wu has a clear record.

Antecedents statement

10.  Mr Wu is aged 25 (24 at the time of the offence), educated to F5 level, was a transportation worker.  Mr Wu is married and was living with his wife and son in Tai Po.

Mitigation

11.  Mr Dick Wong of counsel mitigated on behalf of Mr Wu.  The following is a summary of the mitigation submissions.

12.  Mr Wu’s wife is a housewife.  She is starting divorce action against Mr Wu.  Their son is 2 years old.  Mr Wu worked as a lorry driver earning monthly income of about HK$20,000.  He has a clear record.  All of Mr Wu’s relatives are in court to give their support.

13.  Due to increasing living expenses after marriage and financial mismanagement, Mr Wu has accumulated personal loans and debts of approximately HK$600,000 to 700,000 over a few years’ time.

14.  To maximize his income, after work and over weekends, he worked part-time at barbeque site and as coolie at a moving company.  After exhausting all legitimate means, he still bore a debt of approximately HK$200,000.  Mr Wu encountered frequent harassments from debt collectors causing significant distress and disruption to his and his family’s livelihood.

15.  It was under such frustrating circumstances, with a devilish invitation from a “friend”, that Mr Wu foolishly agreed to participate in the present fraud for quick money, a reward in the sum of HK$20,000.

16.  It is submitted, in light of the mitigation letters (see below), the present offence was one-off committed out of his character; that at all material times, he was in stable and gainful employment; that his employer is willing to re-employ him in the near future.

17.  Mr Wu is utterly remorseful and upset for his greediness.  The failure to be the role model that his child could look up to put him in overwhelming shame and guilt.

18.  The fact that Mr Wu fully cooperated with the police and pleaded guilty in a timely fashion showed his remorse.  Mr Wu’s chance of re-offending is trivial, if any at all.

19.  In HKSAR v Ho Ka Keung (No 2) [2009] 1 HKC 88, CACC 196/2007, the Court of Appeal explained the relevant factors in determining the sentence for commercial fraud cases: -

“11. ... It is well established that commercial frauds will attract, other than in exceptional circumstances, an immediate custodial sentence, even for a first offender. Obviously the length of that sentence will be determined by reference to factors such as, but not exclusively, the nature of the fraud itself; the duration of the fraud; its sophistication; the role played by the convicted person; the effect it may have on the marketplace; whether there are cross-border or international implications; and the nature and extent of the risk to the victim’s proprietary interests, as well as, albeit to a minimal extent, the extent of any loss actually sustained.”

20.  In addition, as noted in HKSAR v Tsoi Shu, CACC 461/2003, at para 41, the Court of Appeal emphasized the flexibility in sentencing for fraud and stated that factors including role of defendant in the hierarchy of the fraud operation (eg whether he is a mastermind of the fraud scheme, and whether he plays multiple role in the scheme), his degree of involvement, the duration of the fraud, and the amount of loss suffered by the victims are all relevant.

21.  It is submitted that the present case distinguishes itself from the usual commercial fraud, involving banks or insurance company (sic).

22.  The present case was committed by Mr Wu and two other individuals.  It involved a single transaction with one victim which lasted for 4 days at most (yet, the victim only agreed to trade with Sam on 5 July 2022 and transferred the USDT on the same day).  However, it was acknowledged Mr Wu started preparing for the fraud beginning mid-June 2022.

23.  Apart from the use of apparent fake banknotes, the deceiving act was simple, straightforward, and of limited sophistication.  The fraud was simply committed by not giving the victim the promised payment, a situation akin to “dishonoured cheque fraud”.

24.  There is no evidence of international or cross-border feature.

25.  Mr Wu was not shown to have been involved in the compilation of the post on Facebook or negotiation with the victim.

26.  It is submitted that Mr Wu was certainly not the mastermind, but was a dispensable puppet playing a minor role in the scheme.

27.  The victim suffered a loss of 200,000 USDT, valued at approximately HK$1,567,560.

28.  It is submitted that the court may first consider the guidelines in HKSAR v Ng Kwok Wing [2008] 4 HKLRD 1017, which stated, in theft cases involving the serious aggravating feature of “breach of trust”, where there is a financial loss between HK$1M and HK$3M, the sentence should be 3 – 5 years’ imprisonment.  In HKSAR v Leung Chun Hei, CACC 222/2021, at para 15, after examining a number of previous authorities, the Court of Appeal acknowledged that irrespective of whether the charge was one of theft, fraud, or conspiracy to defraud, the said guidelines were invariably referred to when a defendant was shown to be in a position of trust.

29.  As “breach of trust” is absent in the present case, the court is invited to impose a term of imprisonment less than the suggested band in Ng Kwok Wing.

30.  Mr Wong referred to a number of previous sentencing cases on fraud-related offences involving different facts but with a similar amount of loss to the victim(s): -

(a)  Secretary for Justice v Chan Kit Bing [2001] 1 HKLRD 844, paras 14, 20–21;

(b)  HKSAR v Cheung Kit Ying (transliteration), DCCC 281/2021 (in Chinese), para 36;

(c)  HKSAR v Lee Chun Wai (transliteration), DCCC 200/2010 (in Chinese), para 11;

(d)  HKSAR v Wong Ngai (transliteration), DCCC 786/2021 (in Chinese), para 34; and

(e)  HKSAR v Yuen Chi Shing (transliteration), DCCC 744/2014 (in Chinese), paras 9–12.

31.  In conclusion, Mr Wong invited the court to adopt a starting point of 27 months warranting an immediate release.

32.  Mr Wong submitted on behalf of Mr Wu a total of 9 mitigation letters in Chinese (with English translation)  written respectively by Mr Wu himself, his work supervisor, a friend, father, mother, wife, younger sister, an aunt, and grandmother.  The contents generally are that Mr Wu is regretful and apologizes to the victim; that Mr Wu is hard-working, an aspiring father who loves and is the economic pillar to his family; he is hard-working, helpful to friends and colleagues and is a responsible person; he will be employed upon release.  The writers asked for a lenient sentence for Mr Wu so he may re-unite with his family earlier.

33.  Upon enquiry by the court, Mr Wong submitted that the company at which Mr Wu worked was actually owned by his father as to 1/3 of the shareholdings. Mr Wong also acknowledged that the presence of joint enterprise is an aggravating feature.

Sentence

34.  Prosecution submitted a photo album consisting of 17 photographs of, among other things, the Facebook post, the scene of crime, and the Banknotes.

35.  Prosecution referred me to two other cases which have not been cited by Mr Wong.  They are cases dealing with “Internet fraud”: -

(a)  Secretary for Justice v Kong Chi Kiu [2023] 1 HKLRD 72; and

(b)  Secretary for Justice v Chung Pui Kit Billy [2023] 2 HKLRD 825.

36.  Having compared the facts of those two cases and those of the present case, I am not satisfied that this case belongs to the category of “Internet fraud”.  The only feature in the present case which can be said to relate to the internet is the posting of the original advert on Facebook.  A distinctive feature of the present case which steers me away from finding it as an “internet fraud” is that, by design, the scam will blow upon the loss by one victim only.

37.  The maximum sentence for an offence of fraud is 14 years’ imprisonment.

38.  In a case of the present type, an immediate term of imprisonment is the norm.

39.  An aggravating feature of the present case is there is a joint enterprise involving three persons including Mr Wu.  I am satisfied on the facts presented to me that Mr Wu is not the mastermind and therefore his sentence will not be further increased on this score.

40.  I have considered the various factors that a sentencing court should consider in a case of this kind, including: -

(a)  this is a joint enterprise;

(b)  the fraud itself lasted about 5 days;

(c)  it has sophistication in that it uses an office and counterfeit banknotes;

(d)  the role played by Mr Wu ie he was the on-stage actor who had made some prior preparation including the tidying up of the office and rehearsing his role; and

(e)  loss by one victim of about HK$1.5M.

41.  All things considered, and acknowledging that there is no breach of trust, in the case of Mr Wu, I adopt a starting point of 3 years and 3 months’ imprisonment.

42.  Mr Wu pleaded guilty in good time for which he shall be entitled to the customary 1/3 discount in sentence.  For his previous clear record, I shall deduct one month off the sentence after the 1/3 discount.  There are no other mitigating factors of weight to justify any further reduction.

(Mr Wu, please stand)

43.  The sentence for Mr Wu is 25 months’ imprisonment.