HKSAR v. LI SUNG-YUE

CACC 523/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 523 OF 2000

(ON APPEAL FROM DCCC 478/2000)

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J U D G M E N T

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Hon Stock JA (giving the judgment of the Court):

1. On 2 December 2000, the Applicant was convicted with a number of others in the District Court of conspiracy to defraud, following a trial before Deputy Judge Jenkins. He was sentenced on 15 December 2000 to a term of nine months' imprisonment with three months to be served consecutively in respect of his breach of a suspended sentence. He now seeks leave to appeal against his conviction.

The charge

2. The charge against this applicant and six others eventually alleged that they had:

"... between the 11th day of October, 1997 and the 2nd day of March, 1998, in Hong Kong conspired together and with Yu Hung-fu, Ray, Wong Wing-sze, Chan Sun, Chiu Oi-wah, Edna. Yip Kit-sze, Doris and with persons using the names or identifying themselves as 'Deon Lee', 'Ann Wong', 'Suzuki Kwong', 'Teresa Lau' and 'Choi Lei' and with other persons unknown to defraud such persons as might be induced to enter into modelling agency agreements with the Golden Fashion Promotion Company or Dragon International Group (the Companies) and pay money to the Companies or to the Valentine Wedding Service for the making of photo albums or other alleged contract, commission or management fees, by dishonestly:

(1) representing to these persons that the Companies were genuine modelling agencies;

(2) representing to these persons that the Companies would arrange modelling jobs;

(3) representing to these persons that they would be paid money for participating in those jobs knowing that no genuine modelling jobs were to be arranged."

 

The scam

3. The scam described by the charge is one which is not unknown to this court. It relied firstly on persuading members of the public that they had a chance of becoming successful fashion models. When the flattery succeeded, the would-be models were asked to undergo an audition or screen test, told that they had passed, and were next duped into paying large sums in advance, usually by credit card, for photograph albums to be produced, showing them modelling clothes. The albums were supposedly intended, or so the victims of this fraudulent activity were told, to be shown to the advertising clients of Golden Fashion or, later, Dragon International who had recruited the victims. The photographs were taken by Valentine Wedding Service, an outfit with close connections with the companies but, with one exception, no albums were ever produced. In some cases, contracts were signed and charges levied, and in most instances a bogus modelling job or session was arranged.

4. Having reviewed in some detail the evidence of the thirteen "models" who were the victims of this fraud, the judge reached a number of important conclusions. Amongst them were that Golden Fashion and Dragon International were essentially a single bogus model agency and that they had no "advertising clients" who could be shown the photographs taken of the models. He accepted the evidence of all the prosecution witnesses, and that they had paid substantial sums to have promotional photograph albums prepared and in many cases a contract and other fees. PW16 had paid in excess of $100,000 as a modelling contract fee, an agency fee and for photographic albums. She attended supposed job assignments and, when she then had difficulty in contacting the Golden Fashion agent who had dealt with her, she went to their offices in Chung On Street, Tsuen Wan and was told that her contracts could not be honoured. It goes almost without saying that the would-be models never received paid modelling assignments, or photograph albums. One extraordinary feature of the case is that the police raided the premises on 21 January 1998 and arrested some of the culprits, but the scam continued nonetheless in the same premises, this time under the name of Dragon International; although it is not suggested that this applicant continued to participate in the conspiracy after that raid.

The evidence

5. The evidence against the applicant came primarily from the witness who was described as PW24. His evidence was accepted by the trial judge. He first went to the Golden Fashion premises on 31 October to have a screen test, and he there met the applicant who told him that he was looking for a person to do a commercial shooting for mobile phones which engagement he said would be worth between $20,000 and $30,000 and which would take place a month hence, and would last about one month. We pause to comment that this encounter with the applicant was not long after the first incident in time to which the evidence in the case as a whole related, namely, the evidence of PW18 who said that she had been recruited on 13 October.

6. The applicant then asked this model whether he had brought with him his bank passbook because no screen test could be undertaken without production of it, and he said that it was needed to enable the company to transfer the salary payments to PW24. But PW24 said he did not have it with him so the applicant told him to bring it back on 3 November, the following Monday.

7. The witness did so, and there he saw the applicant in the same room into which he had been led previously and in which he had been interviewed by the applicant on the first visit. His passbook was taken and the applicant instructed somebody else to take PW24 to another room for the screen test. The screen test, a bogus screen test, took place and PW24 then returned to the room where the applicant had seen him and, after a while, the applicant re-entered and told him that he had passed the test. He then handed the model a contract to sign, and spoke to him about remuneration and about the advertisements which he said would feature the witness. After the witness signed the contract, which was a contract for one year's engagement, the applicant then told him that a photographic album was required and that 20 albums were needed at a cost of $980 per album. PW24 said he did not have that sort of money. The applicant then left the room and came back saying that he had had a discussion with colleagues and that the company would pay for 13 of the albums and that the witness would pay for 7, so that the witness was required in the first instance to pay $6,800 instead of $19,600, although the money paid by the company would be deducted from payments from modelling assignments. By this stage, the passbook had been updated by the company, and therefore those who had seen the passbook knew full well that all that PW24 had in his account was $7,000.

8. PW24 said that he was not given a copy of the contract. After repeated persuasion by the applicant he nonetheless paid the money for the photograph album; he paid that in cash and to the applicant himself. The applicant gave the witness a receipt, as well as another piece of paper which was an acknowledgement by the witness that he had received the photographs, which of course he had not. When he raised this, the applicant told him that the photographs once taken would be received by the company on his behalf and that that was the point of the acknowledgement. The witness added that the applicant had also given him his name card.

9. The witness then went off to a designated place and had photographs taken. He went home, and his family suggested that he had been cheated. He noticed then that he had no copy of the contract he had signed so, on 4 November, he went back to Golden Fashion and he asked to see the applicant. He was told falsely that the applicant was not in. It was false because the door to the room in which PW24 was standing was not closed and he saw the applicant in the offices, and was then able to speak to him. He wanted to know from the applicant whether there would indeed be job offers and was told by him that there would be; and whether he had to pay the balance suggested the previous day and was told yes, it would be deducted from his salary. He asked then for a copy of the contract but the applicant said that the copy had been sent to head office. The applicant told the witness to wait for a further message; and so the witness left.

10. There never was a further message. There never was any contact with the witness whether by the applicant or anyone else, about the advertisement for which the witness was to model; no copy of the contract was ever sent, and of course no photographs.

11. On 21 January 1998 the witness went to the premises with a police officer who was posing as a relative and asked for the applicant but was again told that the applicant was not in. The applicant was arrested that day outside the building which housed the company's premises.

The judge's findings

12. In his reasons for verdict, the evidence of PW24 was accurately summarised. The judge also had before him a record of interview with the applicant which had taken place in the police station in the small hours of the morning of 22 January 1998. In that interview, this applicant said that he had joined the company in mid-October 1997. His post was that of clerk of the production company. His duty was to take models for shooting jobs according to the company's instructions; and he had earned a monthly salary of $5,000 as well as a 2% commission and attendance bonus. He said that the source of commission "usually" was from the percentage made by the company from advertising projects. He, the applicant, had drawn one term of salary plus commission. He was then asked whether the people who joined the company as models were required to pay the company any expenses and he said that he did not know. Did he ever witness anyone who came for a job paying the company for the expenses of photo taking and job assignment? His answer was: "I seldom return to the company and have never seen any clients pay the company for modelling." All he knew, he said, was that people came for interviews as models. He had no idea how the company made arrangements with them. Given the judge's acceptance of the evidence of the witness PW24, these answers were untrue. The applicant had indeed witnessed the payment of fees. He had himself taken them and, as we see from the evidence of PW24, the applicant knew very well what the arrangements were that the company made with the models.

13. The applicant did not testify nor did he call evidence on his own behalf.

14. The judge's findings in their central part against the applicant ran as follows:

"D2' s first statement is like D6's statement, a mixed statement, in that he admits working for Golden Fashion as from mid-October 1997 until the time of the interview, which is 21 January 1998, upon which I attach full weight. He, however, denies seeing any model pay Golden Fashion for the expenses of photo-taking and job assignments (that is answer 13). So far as that denial is concerned, I place no weight upon it because it is contradicted by the evidence of PW24, who has testified that it was D2 who had recruited him as a model in Golden Fashion on 31 October 1997 initially.

D2 had later taken a sum of $6,840 from him on 3 November 1997 for photographic albums. When seeing him on 3 November 1997, D2 had told PW24 that a lucrative modelling job would be available within approximately one month and that it would last for one month but apart from seeing D2 on 4 November 1997 when he had returned to get the contract and when he had been asked to wait for a further message about the modelling job, he had had no further contact. PW24 had never been contacted further by D2 despite the fact that D2 was still in the employment of Golden Fashion until 21 January 1998.

D2's failure to contact PW24 from 4 November onwards can, in the circumstances I find, only be interpreted in one way, namely, that D2 knew full from the outset of his dealings with PW24 that there was no genuine modelling assignment on offer and yet had persuaded PW24 otherwise, which had prompted PW24 to pay for the photographic albums a few days later. In so doing, I find D2 committed an overt act in the conspiracy to defraud charged and became a party to the conspiracy and is found guilty as charged, the charge being proved beyond reasonable doubt." (Tr. pp. 154-155)

The reference to D2 is a reference to this applicant.

The grounds of appeal

15. It is the comment by the judge about the applicant's failure to act after the 4 November event that forms the first ground of this application. The ground is framed as follows:

"The learned Deputy Judge erred in law in that he held that a failure to act after the 4 November 1997 proved beyond reasonable doubt that the acts of the appellant before that date that is between 31 October and 3 November must have been done by the appellant pursuant to the conspiracy charge";

and the case of Valerie Scott [1979] 68 Cr App R 164 is cited.

16. If this conviction was indeed based solely on the failure to contact PW24 after the 4 November Mr Spicer might have a point but, looking at the judgment as a whole, and the reality of the matter, we do not read the judge as saying that the lack of contact after 4 November proved of itself that the preceding acts were culpable. It seems clear enough to us that what the judge was saying was that the lack of contact after 4 November was, in the context of all the proved facts, explicable in only one way, namely that the applicant knew full well that there was no contract to be shown to the witness PW24; that there was no head office; and that there was to be no modelling job for the witness PW24. Mr Zervos must be right when he contends that what the judge is saying is that the failure to contact PW24 is indicative and illustrative of the applicant's state of mind.

17. Mr Spicer in his skeleton argument makes another complaint, which is that the judge found that the applicant's employment with the company was of a continuous nature; that such a finding was not justified; and that that being so the inferences which the judge drew from those findings were not justified. There was, in other words, as is stated in the second ground of application "insufficient connection between the appellant and the company to establish beyond reasonable doubt that he was a person in authority running the same".

18. We pause to say that there was no finding by the judge that the applicant was a person in authority running the business. There was no need for such proof to enable guilt to be established but, in any event, this particular aspect of the application appears not to be pursued. As for the question of the period during which the applicant was working at the company, we note the point in the interview where the applicant had said that he was there at the company spasmodically, but we note also, as did the judge, that this was an exculpatory part of these statements made; that the statement relied upon by the applicant is part of an answer which, as the judge found, contained a material lie; and we note also that, in the course of cross-examination on the applicant's behalf, it was put that the applicant had been absent "for three weeks during November"; an implicit acceptance, it seems, that the applicant was otherwise there.

19. Mr Spicer emphasized in argument before us the evidence of one particular witness that, in isolation, suggested that the company may have been dormant in November, and that that might explain why the applicant did not call PW24 after the visit of 4 November. Mr Zervos took us to overwhelming evidence that the business was in full swing throughout November. But, even if that were not so, if D2 had been acting honestly it does not explain why PW24 was not contacted. The applicant could have contacted him later. He could well ask somebody else to contact him. He was, it is obvious, still employed after November. The evidence was that the applicant was under a contract of employment at a monthly salary; that he received a salary and commission; that he occupied a specific post; he spoke of the "usual practice" with models; he was as the evidence of the witness PW24 showed fully cognisant with the company's payment policies and contract requirements; and he was there in the premises on several occasions when PW24 visited. Mr Spicer says that there was no evidence as the applicant was employed on or about 21 January. When he was interviewed on 22 January there was no suggestion by the applicant that he was no longer employed by the company. On the contrary, the question put to him related to the present: "What is your post at Golden Fashion Promotion Company?" So too with the question of his duties. We have been told today, and we have already noted, that he was arrested outside the very building of Golden Fashion on the day of the raid. We do not think that in these circumstances the judge can be said to have erred in this particular regard.

20. In so far as it is suggested that the conviction is unsafe and unsatisfactory because the evidence as a whole was not sufficient to immerse the applicant in the conspiracy, we do not agree. We have already rehearsed the key elements of the evidence against the applicant, omitting only the fact that his fingerprints were found on the ledger of payments to the models, a ledger discovered at the premises. The applicant was actively engaged in work with models, as he admitted and as is evident from the testimony of PW24, in a company which did nothing else than dupe models. This is so whether the applicant worked there for six weeks or six months. PW24 was handled by the same employee all the time, a feature of the scam; in other words, the applicant was not just a clerk who happened to be at the desk when, on one of several occasions, PW24 walked in. The applicant handed PW24 a receipt for a photograph album when, as he knew, the album had not been given to PW24. The applicant spoke of a head office when there was none; and even though the applicant remained at the premises as an employee after 4 November he never fulfilled his promise to contact PW24 again; this too being a repeated feature of the scheme of things as they emerged from the evidence as a whole. Furthermore it is established that when the police interviewed the applicant he told lies about material matters, in particular about his role and the handling of monies. The judge found those to be lies and it is difficult to square those lies with any innocent motive. The lies in themselves though not proof of guilt, go to support the adverse inferences which the judge drew. This applicant was an active employee in a company which did nothing else but commit a continuous fraud of a nature and over a period where it would be, in our judgment, almost impossible for any employee who worked there for the duration of the fraud, or even only for some weeks, not to know full well what was going on. Any supposition to the contrary, in the context of these facts, is a supposition that D2 was himself duped - that he innocently offered a job for a one year mobile phone commercial to a model and must therefore have been in a position to answer questions about the commercial when everyone knows there existed no commercial client; that he was duped into believing that passbooks were required, not for the company's benefit but for payments of salary; that he slipped up quite innocently into not giving PW24 a contract; that when PW24 asked for a copy he slipped up quite innocently into forgetting to chase it up; that when he was in the office, other persons deliberately but without his authority told PW24 that the applicant was not in; that he was duped into believing that there was a head office when in fact there was none - all of this when he was surrounded by nothing but a crooked scheme in the midst of which he innocently worked for an extended period without knowing full well what was going on. The proposition defies reality. The finding of the judge in the light of all the evidence was the only common sense finding open to him on the admissible evidence.

Result

21 There is not shown good ground for upsetting the conviction. Accordingly, the application for leave to appeal against conviction is dismissed.