HKSAR v. ARTURS LUDINS

CACC 363/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO 363 OF 2013

(ON APPEAL FROM DCCC NO 594 OF 2013)

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R E A S O N S  F O R  J U D G M E N T

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Hon Yeung VP (giving the Reasons for Judgment of the Court):

Introduction

1. On 22 February 2013, the applicant (Arturs Ludins), a visitor from Latvia, attempted to purchase a bottle of whisky priced at $2,500 from “Watson’s Wine” at The Times Square by presenting an invalid Citibank American Express credit card in his name.  The matter was reported to the police and the applicant was arrested.  The police found, in a wallet in the pocket of the applicant’s trousers, 4 other counterfeit credit cards, all in his name.

2. In a search of the applicant’s residence, the police found the following items in a black “Samsonite” luggage:

-  30 counterfeit bank cards from the front zipped compartment;

-  an orange-colour Mannings bag containing an encoder machine;

-  27 counterfeit bank cards in a shoulder bag; and

-  6 counterfeit bank cards in a black wallet.

3. The applicant was found to have $3,857.60 cash and he admitted that all the counterfeit bank cards belonged to him.  Some of the counterfeit bank cards had the applicant’s name and he had signed on one of them and others were marked, “One Vanilla”, “Valued Customer” or “A Gift for You”.  One of the cards, purchased from a bank, already had its credits used up and one of the cards had been encoded, and signed by the applicant.

4. Of the 68 forged bank cards found in the applicant’s possession, 7 were forged credit cards and the other 61 were forged debit cards or gift cards.

5. In a video recorded interview, the applicant gave the following story:

“An Indian man called Han invited him to use counterfeit credits cards to buy liquor and computers in return for quick-money, namely 40-50% of the value of the goods purchased. The applicant agreed and Han gave him various bank cards, including some old VISA, MasterCard, and American Express cards with the applicant’s name on them. Han also gave the applicant an encoder for encoding data onto the bank cards and a memory USB which had the instructions on how to use the encoder. Han further told the applicant to encode data onto the bank cards and that if any of the cards did not work, he could re-write another set of data. The applicant admitted that he had used the Citibank American Express credit card to attempt to buy the bottle of whisky on 22 February 2013. He admitted possession of the 4 counterfeit credit cards found from his wallet at the time of his arrest. He also admitted that all the other bank cards found in his residence were his. He said generally that if his signature appeared on the cards, it meant that he had encoded information into them and that he had signed them himself. The applicant further admitted that he had used the forged bank cards to make purchases of liquors and computers 3 to 4 times a week and he would hand over the goods to Ah Han in a Tsimshatsui mall and collect his share of the money. He said some of the bank cards could not be used. He said he could write the data onto the cards and used them to shop, but when tried to use them, they did not work. The applicant further said he and Ah Han had paid US$8,000 for a printer to be shipped to Hong Kong from the USA in order to make more cards and money.”

6. The examination results of the credit bankcards in question indicated positively that 32 of them were forged, 12 were originally genuine, but with inconsistent or no data, 24 contained no data and their genuineness could not be ascertained.

The Charges and the Sentence

7. The applicant was originally charged with conspiracy to make false instruments (68 false bankcards) (charge 1) and uttering a false instrument (charge 2).  Charge 1 was subsequently amended to one of possession of false instrument, alleging that the applicant was in possession of 68 false bank cards with intent to induce others to accept them as genuine.

8. Represented by Mr Maurice Peter Tracy, the applicant pleaded guilty to the amended charge 1 and charge 2 before Judge Dufton in the District Court.

9. Based on the examination results and other prosecution evidence, the judge took the view that all the bank cards in question were forged.

10. The judge, having heard submissions from counsel, was concerned that a concession made by Mr Tracy might not be correct.  The concession was that for the purpose of sentencing the applicant there was minimal difference between the cards in terms of the potential loss they could cause.  The judge, therefore, considered it necessary to find out the nature of the debit cards and gift cards from the relevant websites, but stressed that he would not rely on anything he found unless it was agreed by the parties.

11. The judge took the view that there would be a substantial difference in sentence between a case involving 7 forged credit cards and one involving 68 forged credit cards.  The judge took the view that even if some of the 61 forged bank cards could be used like credit cards, they were still not to be equated with forged credit cards.

12. The judge ultimately concluded that “the proper approach was to regard the 61 forged bank cards as aggravating the possession of the 7 forged credit cards in much the same way that the possession of the encoder was also an aggravating feature”.

13. The judge disagreed with Mr Tracy’s suggestion that this was a small-scale operation as it involved “68 forged bank cards of which 7 were forged American Express credit cards in the applicant’s name, showing his link to a wider organisation that had caused cards to be printed specifically for him.”  The judge emphasized that the applicant was a visitor and that he was in possession of an encoder which he used to encode data onto the bank cards.

14. The judge pointed out that some of the forged bank cards could only be used in the U.S.A. and he took the view that there was an international element to the offence.

15. The judge then referred to a number of similar cases before concluding that the proper starting points for charges 1 and 2 were respectively 5 years and 6 months, and 3 years’ imprisonment.

16. The judge reduced the starting points by one-third on account of the guilty pleas and sentenced the applicant on charges 1 and 2 to 3 years and 8 months, and 2 years’ imprisonment to run concurrently, making a total sentence of 3 years and 8 months’ imprisonment.

The Application and the Grounds

17. The applicant sought leave to appeal against sentence on charge 1 only.

18. Mr Tracy raised many grounds of appeal.  He suggested that the judge was wrong to have, on his own initiative, made enquiries on the internet into the true nature of the 61 forged debit and gift cards.  Mr Tracy argued that the judge’s error constituted an irregularity and suggested that such irregularity justifies, if not positively requires, this Court to quash the sentence on charge 1.

19. Mr Tracy submitted that the 61 forged bank cards were in practice unusable in Hong Kong and if the prosecution disagreed with such a suggestion and if the judge considered that the issue was relevant to the question of sentence, then there ought to be a Newton Enquiry in which the prosecution should lead evidence to disprove the defence contention.

20. Mr Tracy also argued that the judge was wrong to suggest that there was an international element.  He emphasized that the applicant had not used many of “the cards in question”.  Mr Tracy suggested that the applicant was only involved in a small scale credit card fraud.

21. In any event, Mr Tracy submitted that the 3-year and 8-month sentence, representing a starting point of 5 years and 6 months, was manifestly excessive when the case only involved 7 forged credit cards.  He said as there was no evidence to show the nature of the other 61 forged bank cards, it was not possible to ascertain the risks and extent of financial loss resulting from them, or how or to what extent they could damage Hong Kong’s financial system and reputation.

22. He asked this court to sentence the applicant in a way most favourable to him. 

Discussion

23. The mitigation proceeded over a number of days and in the course of it the judge repeatedly asked Mr Tracy if there was any distinction between credit cards, debit cards and gift cards.  Mr Tracy appeared to have accepted that the distinction was not great as there was “an element of greater possible economic loss which to some extent bears comparisons with a credit card” when it was possible for those cards to be recoded and reused.

24. As we have said, the judge did not accept Mr Tracy’s concession and in an attempt to find the answer to his question, which could not be answered by Mr Tracy, he resorted to the internet.

25. Both debit cards and gift cards can be used for payments for goods and services except that debit cards are generally charged directly against a credit account whilst gift cards are pre-paid bank cards. That the judge resorted to the internet to find out their “true nature” rather than insist on assistance from the parties is slightly surprising.  We understand his desire to know whether there was a meaningful difference between the different types of card in terms of the potential loss they could cause, but embarking on his private research was not the way to obtain this information.

26. At the end of the day, the judge concluded that even if the 61 forged bank cards could be used like credit cards, they were not the same as forged credit cards and instead of sentencing the applicant on the basis that he had 68 forged credit cards, he only sentenced him on the basis that he had possession of 7 forged credit cards and that the presence of an additional 61 forged bank cards was just an aggravating factor.  This approach was certainly not unfair to the applicant and, arguably, may have been unduly favourable to him.

27. In all that he did the judge was motivated by a concern that he sentence the applicant on a correct factual basis.  Nevertheless, in conducting his own private research, the judge erred, notwithstanding his declaration that he would not rely on anything he found on the internet unless it was agreed by the parties.  The proper course was for him to indicate he needed further information on the nature of the different cards before sentencing the applicant.

28. In our adversarial system of the administration of justice, the court relies on evidence presented by the parties and not on any extraneous matters obtained by private research.  There is no need for any authority to support this proposition.

29. We also accept that when there are disputes as to facts relevant to or closely bound up with the ingredients of an offence and when such disputes as to facts would have a bearing on sentence, a Newton Enquiry is required before a judge can rely on prejudicial aspects of the disputed facts against the accused.

30. However, the judge’s error had caused no prejudice to the applicant when he only sentenced the applicant on the basis of 7 forged credit cards and that the presence of the other 61 forged bank cards was just an aggravating factor.  The judge’s approach was in fact most favourable to the applicant and he could not have a legitimate complaint.

31. In any event, the only issue that needs to be addressed is whether the total sentence of 3 years and 8 months imposed on the applicant, on the facts of the case, is manifestly excessive.  If it is, then under s 83I of the Criminal Procedure Ordinance, we should quash it and in its place pass an appropriate sentence.  The extensive reference by counsel in their written submissions to the issue of whether the judge was right to refer to the internet was completely unnecessary.

32. The applicant was in possession of 7 forged credit cards.  He used one of them to try to purchase a bottle of expensive whisky from “Watson’s Wine”.

33. The applicant was in possession of another 61 forged bank cards.  Whatever was their exact nature, they were intended to be used to pay for goods and services.  Those forged bank cards could be converted and some of them had been converted so that they could be used as an instrument of fraud.  The presence of the encoder would lead to the irresistible inference that the applicant was ready and able to generate more usable forged bank cards to further perpetrate his crime.

34. The applicant admitted that he had used the forged bank cards to make purchases of liquors and computers 3 to 4 times a week.  Although the exact loss that the applicant had caused to others could not be ascertained, the sheer number of forged bank cards and the presence of the encoder must necessarily mean that the potential loss to others, if the applicant had not be caught, would be significant.

35. The applicant admitted that he, together with his accomplice, had spent US$8,000 to order a printer from the USA in order to make more cards and money.  It is legitimate to conclude that they must expect to be able to make a “profit” many times the price of the printer.

36. As pointed out by Mr David Chan for the respondent, the applicant did not act alone, but was assisted by at least another.

37. On the facts as disclosed, it was likely that the applicant was involved in an international syndicate and the judge was right to find that the applicant was involved in a medium size operation.

38. Mr Tracy’s suggestion that it was a small-scale operation is unrealistic and his complaint that the judge had wrongly concluded that there was an international element is not a valid one.

39. The applicant was a visitor and he lengthened his stay in Hong Kong for the purpose of committing fraud against others.  He had possession of a large number of forged bank cards issued by overseas financial institutions.  The applicant tried to use one of them and admitted to have used others to make purchases of liquors and computers 3 to 4 times a week.

40. The applicant was able to obtain, from an overseas source, equipment used for the perpetration of his crime.  The judge was entitled to take the view that there was an international element and use it as an aggravating factor against the applicant.

41. We have considered carefully the facts of the case and we are of the view that this is a very bad case of the type.  The seriousness of the case lies not only in the number forged bank cards involved, but also in the fact that with the encoder, the applicant could have generated more usable forged bank cards.

42. The starting point adopted by the judge, far from being manifestly excessive, is in our view a lenient one.

43. We were not persuaded at all that the total sentence of 3 years and 8 months for charges 1 and 2, on a plea of guilty, is manifestly excessive.  We therefore dismissed the application for leave to appeal against sentence.