HKSAR v. NGAN KWOK KWAN

DCCC 881/2011

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO.881 OF 2011

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Reasons for Sentence

1.  The defendant pleaded guilty to one charge of Fraud, contrary to s.16A of the Theft Ordinance, Cap.210.

Facts

2.  On behalf of a company (“Condex”) set up by his mother, the defendant entered into a contract with the victim company (“VTC”) for the purported sale of 10,000 tons of nickel ore. The original agreed method of payment by the VTC was to be by way of letter of credit. At the request of the defendant, VTC agreed to settle payment by remittance on sight of certificate of shipment.

3.  The defendant then transmitted the first forged certificate of shipment (“E1”) to VTC. The certificate was however unsigned and there were things that VTC wished to have amended on the certificate. The defendant therefore transmitted the second forged certificate of shipment (“E2”) to seek to secure payment from VTC.

4.  Upon receiving E2 from the defendant, believing that the nickel had already been shipped, VTC arranged for the remittance of USD574,246.78 into Condex’s Hang Seng Bank account. There in fact was never any nickel shipment and VTC never received any nickel ore shipment from Condex. The money paid to Condex had since been withdrawn from the account.

5.  Under caution, the defendant claimed that he was the victim of fraud himself, claiming that a “Johnny” had asked the defendant to find some buyers for his nickel ore.

6.  The defendant admitted that the company chop applied onto the E2 Certificate was made by someone at his request and that he had forged the signature on the certificate by signing on it himself.

Previous convictions

7.  The defendant has a clear record.

Mitigation

8.  The defendant is 35, educated up to Form 5 level. He is living with his mother and younger sister. The defendant’s mother is nearly 60 years old. She was born without sight in one eye, and her other eye is now slowly failing.

9.  The defendant had been working since 1994. In 2008, he set up a garment company in Hong Kong. As a result of a mistake he made in running his business, the defendant went into bankruptcy in 2009. The defendant resorted to gambling to escape from reality, which landed him into serious debts, borrowing from friends, relatives and loan sharks.

10.  Meanwhile, the defendant tried to venture into other businesses. While in the PRC, the defendant came to learn about the nickel metal business, information like transportation routes and trading patterns. When the opportunity arose for him to pay off his debt once and for all, the defendant succumbed and committed the present offence.

11.  The defendant used most of the money obtained from the fraud to pay off his debts and then gambled the rest away.

Sentencing cases

12.  The maximum sentence under s.16A(1) of the Theft Ordinance is 14 years’ imprisonment. There are no sentencing guidelines for fraud cases.

13.  But for the defendant’s request for VTC to settle payment by remittance, VTC would have included the forged shipment certificate as part of the documents in support of their application for a letter of credit for payment of the goods. This change of payment method meant that the bank was not involved and as such considerations when sentencing in a letter of credit fraud case do not apply. Factors such as the undermining of the reputation of Hong Kong as an international financial and banking centre and the failure of the banks’ reliance on the goods in the underlying transaction as security do not exist in a payment by direct remittance situation.

14.  The fraud perpetrated by the defendant in our present case was a one off incident. It is however clear that the defendant planned the commission of the fraud. There was a chance for the defendant to withdraw from the fraud after E1 was issued to VTC. The defendant pressed on, indicating his determination in finishing the job. The amount of loss suffered by the victim company is about HK$4,476,000. The defendant did not repay any of the money.

15.  The defendant was of previously good character and it would appear he committed the present offence out of desperation towards his debts.

16.  Bearing in mind all the circumstances, especially the amount of money gained by the defendant as a result of the fraud, I find that a starting point of 3 years 9 months’ imprisonment is appropriate. I am however mindful of the fact that the defendant is now 35, had all along been of good character and as I mentioned before, it would appear that this was a last ditch attempt to settle his debt and to get back on his feet. The intention was correct but his method was wrong. Nevertheless, I will reduce this 3 years 9 months starting point by 3 months to 42 months’ imprisonment in recognition of his previous good character. Since the defendant pleaded guilty, I will grant him the full discount and sentence him to 28 months’ imprisonment.