HKSAR v. LAU KA YIU

HCCC 96/2023

[2024] HKCFI 1002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CRIMINAL CASE NO 96 OF 2023

________________________

________________________

________________________

REASONS FOR SENTENCE

________________________

1.  The defendant pleaded guilty to two counts of theft before Magistrate Mr. Lam Tsz Kan on 17^th April 2023, admitted to the summary of facts, and was committed to the Court of First Instance for sentence. He has since been remanded in jail custody.

PARTICULARS

Count 1

2.  The defendant, between 14 October and 30 December 2016, stole a debt in the sum of $2,946,369.26 owed by HSBC to Maidan Limited under account numbered 848-425344-838, being the property of that company.

Count 2

3.  The defendant, between 3 January and 27 November 2017, stole a debt in the sum of $25,886,000 owed by HSBC to Maidan Limited under the same account, being the property of the same company.

SUMMARY OF FACTS

4.  Maidan Limited (“Maidan”)  is a subsidiary company of Foodpanda Group, and is the holder of the HSBC account in the particulars of the two counts.

5.  In April 2015, the defendant was an accounting manager of Rocket Food Limited, another subsidiary company of Foodpanda Group.  He was promoted to Chief Financial Officer (“CFO”)  on 1 December 2015.  The defendant’s salary was paid into his personal account held with Bank of China.  As at 1 January 2017, the defendant’s monthly salary was $47,000.

6.  As the CFO of Rocket, the defendant was entrusted with the passwords and security tokens of the bank accounts of Rocket as well as Maidan, monitoring the accounts via online banking.

7.  On 10 October 2017, the defendant tendered his resignation to Rocket.

8.  On 4 January 2018, a few days before the resignation was to take effect, he confessed to the Managing Director of Rocket that he had dishonestly misappropriated an estimated total amount of $17,995,000 from Rocket and Maidan’s bank accounts between April and December 2017, and that he had spent most of the stolen money on gambling.  The defendant surrendered to the Police on the same day and was arrested.

9.  The defendant said under caution that he had used the security tokens of the two companies’ bank accounts to transfer the stolen money into his Bank of China account on 98 occasions.

10.  In the subsequent cautioned video recorded interview, the defendant disclosed how he transferred the money online from Rocket’s account to Maidan’s account and then to his personal account so as to avoid suspicion.  He had his personal account linked to his Jockey Club account to allow online transfers between them.  The stolen money was used for gambling with Hong Kong Jockey Club.  He had been to Macau and had gambled away about $1 million there.

11.  He did remit money from his personal account back into Maidan’s account 16 times, since he wanted to return some of the stolen money.

12.  Investigations revealed that the defendant had transferred a total of $2,946,369.26 from the Maidan account into his personal account by way of 27 transfers made between 14 October and 30 December 2016 (count 1).

13.  The defendant had also transferred a total of $25,886,000 from the Maidan account to his personal account between 3 January and 27 November 2017 by way of 144 transfers (count 2).

14.  The total amount transferred from the Maidan account to the defendant’s personal account is, therefore, $28,832,369.26.

15.  Between 29 November 2016 and 3 January 2018, the defendant did transfer a total of $5,989,540 from his personal account back to the Maidan account by way of 16 transfers.

16.  The combined net amount stolen by the defendant in the 2 counts is $22,842,829.26.  Mr. Kong for the prosecution very fairly accepts that this should be the amount considered when applying the sentencing guidelines referred to below.

17.  He was charged with the present offences on 29 April 2022.

PREVIOUS CONVICTION RECORD

18.  The defendant is of previously clear record. 

BACKGROUND AND MITIGATION

19.  The defendant is 41 years old.  He was born and educated up to Form 7 in Hong Kong and emigrated to the United States with his family in 2000.  He graduated from Michigan State University in 2006 with a degree in accounting, while working part time in restaurants to support himself.

20.  The defendant returned to Hong Kong upon graduation and joined KPMG as an accountant.  He was promoted to Assistant Accounting Manager in 2009.  He left in 2010 and opened a restaurant, which closed down in June 2018 due to poor management.

21.  During the operation of the restaurant and in 2015, the defendant was at the same time employed by Rocket as their Financial Manager.  He was promoted to CFO of Rocket in 2016 with a monthly salary of $45,500.  He was eventually dismissed in 2018 for the thefts in this case.

22.  The defendant found employment with Sharetea (a beverage store)  and worked as their clerk at $15,000 per month from March 2018 to March 2019.  He was then transferred to another restaurant of the group and worked as a chef at $16,000 per month.

23.  The defendant was promoted to the administrative staff of the restaurant in October 2021 and has since been working at the Sai Wan Ho branch at $23,000 per month until now.

24.  The defendant is in poor mental and physical health.  He was diagnosed in July 2014 to be suffering from psychosis and severe depression and was referred to the psychiatric department of Queen Mary Hospital for follow-up treatment since December 2014, with visits every 3 to 4 months and has been prescribed daily medication to control his condition.

25.  The defendant was also diagnosed with sleep apnea in 2016, again requiring prescribed daily medication.

26.  The defendant lives with his wife and 11-year old son.  His wife is the Deputy Director of the Internal Audit Department of a bank, earning $90,000 per month.  Their son is in primary school.

27.  The defendant’s father passed away in 2010.  The defendant’s mother and brother reside in the United States where the family had emigrated.  The brother runs a local restaurant there while the mother is retired.

28.  Mr. Ho for the defendant emphasized that the defendant is not suggesting that there had been delay in prosecution, but pointed out that in the 4 years and 3 month period between his arrest and being charged, the defendant was under tremendous emotional stress, exacerbating his depression.

29.  Mr. Ho told the court that the defendant believed he had devised a secret winning formula for soccer betting, which appeared to work at first, flaming his gambling habit.  Over time, the formula stopped working, causing the defendant to steal to try to recover his losses through more gambling.  Mr. Ho even suggested that the defendant “might be a pathological gambler” or “was so heavily addicted to gambling to an extent that his situation called for professional help”.  The defendant, however, did not disclose his gambling to his psychiatrist back in 2014 when he was diagnosed with psychosis and depression because he “wanted to keep the secret winning formula to himself”.

30.  Mitigation letters written by the defendant, his wife, son, elder brother, relative, long-time friends, former employers and colleagues paint the picture of the defendant being someone who is talented, caring, ready to help and an all-around good person who has fallen from grace due to his gambling habit.

SENTENCE

31.  The maximum sentence on conviction upon indictment for the offence of theft is that of imprisonment for 10 years.

32.  The defendant was an employee of Rocket when he stole the money of Maidan, a sister company of Rocket with both being subsidiary company of Foodpanda Group.  The defendant was able to divert the funds in the accounts as a result of his being entrusted with the control of the bank accounts of both Rocket and Maidan, and his position as the CFO of Rocket.

33.  It is not disputed by the defendant that his commission of the offences involved a serious breach of the trust reposed in him by his employer, and the sentencing guidelines laid down by the Court of Appeal in HKSAR v Cheung Mee Kiu [1](as revised in HKSAR v Ng Kwok Wing [2008] 4 HKLRD 1017)  are applicable.

34.  The revised guidelines are as follows:

“(a)  involving $15 million or more: 10 years or above;

(b)  involving $3 million to $15 million: 5 to 10 years;

(c)  involving $1 million to $3 million: 3 to 5 years;

(d)  involving $250,000 to $1 million: 2 to 3 years; and

(e)  involving $250,000 or less: below 2 years.”

35.  The prosecution referred me to the following two cases.

36.  In the case of HKSAR v Annells Deborah[2], a total of $31.29 million was stolen by the defendant in her capacity as a professional financial advisor to 4 of her clients.  She pleaded guilty to 45 counts of theft, one count of possession of a false instrument and one count of fraud. 

37.  The offences were committed over a period of 3 years and 10 months. One set of the offences took place after her arrest and released on Police bail pending investigation of other similar offences.

38.  Zervos J (as he then was)  described the defendant’s commission of the offences as “blatant and repeated acts of dishonesty and deceit” where she systematically stole from her clients over a protracted period “through a web of lies and deceit”.  He found the defendant’s conduct constituted a serious breach of trust and a gross abuse of her professional duties and responsibilities towards her clients who suffered “extreme hardship and despair”.  The defendant “acted without any degree of regret or tinge of concern for the people who trusted and relied on her, both personally and professionally”.

39.  In arriving at the sentences for the thefts, Zervos J adopted the approach the court took in the case of R v John Barrick (1985)  81 Cr App R 78 and took into account the following matters:

“84. The seminal case on sentencing for breach of trust cases is R v John Barrick (1985)  81 Cr App R 78. The Court examined the approach to sentencing of cases that involve a person in a position of trust who had used that privileged and trusted position to steal or defraud others. It stated that in determining sentence in breach of trust cases, the Court should have regard to the following matters: (i)  the quality and degree of trust reposed in the offender including his rank; (ii)  the period over which the fraud or the thefts have been perpetrated; (iii)  the use to which the money or property dishonestly taken was put; (iv)  the effect upon the victim; (v)  the impact of the offences on the public and public confidence; (vi)  the effect upon fellow-employees or partners; (vii)  the effect on the offender himself; (viii)  his own history; (ix)  those matters of mitigation special to himself such as illness; being placed under great strain by excessive responsibility or the like; where, as happens, there has been a long delay, say over two years, between his being confronted with his dishonesty by his professional body or the police and the start of his trial; finally, any help given by him to the police.

The Court added that in these cases in general a term of immediate imprisonment is inevitable, save in very exceptional circumstances or where the amount of money obtained is small.”

40.  On a global approach to the offences, Zervos J bore in mind that there were 45 theft offences and two offences involving the creation and use of false documents which occurred over a period of nearly 4 years; that 24 of the thefts and the use of false documents occurred while the defendant was on police bail; that the total sum involved was over $31 million of which some were recovered by two of the victims but only after taking legal action; and that the theft offences involved serious and gross breach of trust.

41.  A global starting point of 13 years and 6 months’ imprisonment was adopted for the theft offences, which included an enhancement of 1 year and 6 months for the commission of 24 of the thefts while on Police bail.  A full one-third discount was granted, leading to a sentence of 9 years’ imprisonment.  The sentences for the false instrument and fraud were ordered to run concurrently to the theft sentences.

42.  In the case of HKSAR v Cheung Curtis Ka Kim[3], the applicant pleaded guilty to 13 counts of theft, and 3 counts of procuring the making of an entry in certain records by deception.  There were 6 victims, all pilots of a local airline, who were scammed out of a total of $25 million by the applicant who claimed falsely that he was an international private money manager.  A total sentence of 8 years and 6 months was imposed by the learned trial judge.  Leave to appeal against sentence was refused.

43.  In April 1997, the applicant persuaded a pilot to hand over money for investment purpose, who later received repayments with a sizeable profit.  The 6 victims were then introduced to the applicant, some through the first pilot, and they each entered into a written “investment trust agreement” and handed over all the stolen money on various dates.

44.  The applicant provided the occasional trading records to reassure the victims, when in fact no investments had ever been made. The funds were dissipated by way of transfers to the applicant’s personal account; cash withdrawals; investment in securities companies; and payment to various unrelated third parties.

45.  When the victims became concerned about their investments and asked for their funds, the applicant left Hong Kong in November 1998.  He was extradited in February 2014 after being detained in the United States following his arrest in March 2012.  He pleaded guilty on 7 April 2017.

46.  The Court of Appeal found that the case involved a serious breach of trust on the applicant’s part and the overall starting point of 13 years’ imprisonment was proper.  They found the applicant’s conduct “an egregious example of selfishness and greed”, ruining at least two victim’s lives when they lost their live savings and retirement pension.  Almost twenty years have passed since the scams and “not a single cent has been repaid”, nor had the applicant explained where the money had gone or what happened to it.  The applicant had disappeared from Hong Kong for many years, resisted extradition, and only pleaded guilty after 3 years here pending trial.  The Court saw no evidence of remorse, and found the final sentence “not a day too long”.

THE PRESENT CASE

47.  In the present case, the trust reposed in the defendant was considerable, with the defendant as the CFO having full control over the bank accounts of both Rocket and Maidan, which allowed him to make the necessary transfers from Rocket to Maidan and then to his personal account.  The fact that he was the person who oversaw the monitoring of the accounts made covering up his thefts much easier.

48.  The thefts took place over a period of about 13 months, involving a total of 171 transfers of money from the Maidan account into his personal bank account.

49.  Total amount stolen was $28,832,369.26.  The stolen money were used by the defendant to feed his gambling habit.

50.  The defendant did return $5,989,540 of the stolen money in 16 transfers. The transfers from his personal bank account back into the Maidan account started one month after the particularized first date of theft in count 1.  The last was made on 3 January 2018, one day before his confession to his superior and his surrender to the Police, in the amount of $399,985.  The net stolen amount was $22,842,829.26.  The returned money would not have been enough to cover up his theft, but I would accept that as an indication of a certain degree of remorse on the defendant’s part.

51.  The defendant was not charged until 4 years and 3 months after his confession and arrest.

52.  The defendant, on his own initiative, confessed to the thefts and surrendered to the Police on the same day of his disclosures, accompanied by his colleague with Rocket.

53.  Mr. Ho rightly pointed out that the defendant had committed the offences on his own; that the thefts were simple and straightforward without any international elements, and much less sophisticated and serious than those in the cases of HKSAR v Annells Deborah and HKSAR v Cheung Curtis Ka Kim referred to above.

54.  Taking into consideration all the circumstances, including the defendant’s health condition, the fact that he had surrendered himself after his confession, the fact that he was not charged until 4 years and 3 months after his arrest, but also the fact that he had gambled the stolen money away, in relation to Count 1, I adopt a starting point of 4 years 9 months imprisonment. For the defendant’s return of part of the stolen money, I will reduce the sentence to 4 years 3 months.  For the defendant’s positive conduct pending sentence, I will reduce the sentence by another 3 months to that of 4 years, leading to a sentence of 32 months after granting him the full one-third discount for his timely guilty plea.

55.  In relation to Count 2, I adopt a starting point of 11 years’ imprisonment, lowering it for the defendant’s return of part of the money and his positive conduct pending sentence to 10 years and 3 months.  The sentence after plea is 82 months’ imprisonment.

TOTALITY

56.  Taking into consideration the relatively unsophisticated thefts, and the fact that the thefts had had minimal impact on the victim companies as confirmed by Mr. Kong, I would adopted a 11 years 9 months (141 months)  starting point for the net stolen amount of $22,842,829.26, resulting in a global starting point of 141 months.

57.  For the return of $5,989,540 by the defendant in the 13-month period from November 2016 to January 2018, indicating a certain degree of remorse even during his commission of the offences, I would reduce his sentence by 6 months, taking it down to 11 years and 3 months (135 months).

58.  For the defendant’s conduct after his surrender and pending trial, his continuing to engage in gainful employment, I reduce his sentence by a further 3 months to that of 11 years (132 months).

59.  I am particularly impressed by the letter written by Mr. Chan, the Managing Director of Wamido, telling the court how the defendant had frankly admitted to his wrongdoings before joining their company in 2020, and how he has used his accounting knowledge to help the company’s two branches to run smoothly.  Mr. Chan tells the court that the company await the defendant’s return after serving his sentence because he is someone worth making the arrangement for.

60.  The global sentence after plea would, therefore, be 7 years and 4 months (88 months).

61.  To achieve this global sentence, I will order 6 months of the sentence of count 1 be served consecutively to the 82 months sentence in count 2, the balance to be served concurrently, leading to a total sentence of 7 years and 4 months’ imprisonment for the 2 counts.