HKSAR v. KONG HON YUI, KEVIN

CACC 473/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 473 OF 2009

(ON APPEAL FROM DCCC 84 OF 2008)

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BETWEEN

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J U D G M E N T

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

Introduction

1.  The applicant (Kong Hon Yui, Kevin), a solicitor practicing in the name of Kong & Associates from Unit 608, 6^th Floor, Tower 2, Lippo Centre, (“the applicant’s office”), was involved in the fraudulent mortgages of three properties in Le Sommet, Fortress Hill Road in North Point to ICBC Bank; namely Flat 40D in Block 2 (“Property 1”) in February/March 2006 for $5.5 million, Flat 41D in Block 2 (“Property 2”) in April/May 2006 for $5.5 million, and Flat 48B in Block 1 (“Property 3”) in June/July 2006 for $6 million. The mortgage of the 3^rd Property was aborted because of the intervention by the police.

2.  Prior to the aforesaid three mortgages, the applicant, claiming to be acting for the registered owner, had in early February 2006, requested DBS Bank to process a mortgage application of Property 1 for $6.3 million. Forged documents were faxed to DBS Bank from the applicant’s office, including a forged mortgage loan application form, a copy of a forged identity card and other forged documents. DBS Bank did not approve the application because it was unable to contact the mortgagor. The owner of Property 1 had not authorized the application and knew nothing about it.

3.  The mortgages of the three properties to ICBC Bank were also not authorized by their owners and it was not disputed that the mortgages were frauds on ICBC Bank. The registered owners, Ting Lee (“Madam Ting”) of Property 1, Madam Ng Lai Wan, Louisa (“Madam Ng”) of Property 2 and Mr Chang Kin Kwok Joseph (“Mr Chang”) knew nothing about the mortgages of their properties and they had never visited the applicant’s office. In fact, Madam Ting and Madam Ng were impersonated in the transactions with the use of forged identity cards.

4.  ICBC Banks was defrauded of about $11 million in the fraudulent mortgages of Property 1 and Property 2. The money was paid into a Hang Seng Bank Integrated Business Solutions Account (“the Hang Seng Bank Account”) of Add Magic Investment Ltd (“Add Magic”), which was incorporated on 10 June 2005. Its subscriber was Success Nominee Secretarial Limited (“Success Nominee”) and its company secretary was Success Corporate Services Ltd (“Success”). Success resigned as the secretary on 15 December 2005 and Ng Tsz-wai, Jeans (“Jeans Ng”) was appointed a director and the authorized person of Add Magic on 16 December 2005, and he also became its only shareholder.

5.  The Hang Seng Bank Account was opened on 20 December 2005, with Jeans Ng as its only authorized signatory. The account opening documents included the identity card of Jeans Ng, a copy of the Business Registration (“BR”) Certificate and a copy of the Certificate of Incorporation of Add Magic, both of which were certified by the applicant as true copies on 20 December 2005.

6.  On 19 December 2005, Jeans Ng purported to appoint a “Ting Lee” as the secretary and a director of Add Magic. On 27 February 2006, Jeans Ng and “Ting Lee” became the only shareholders of Add Magic, holding respectively 54 and 45 shares.  In fact Madam Ting was not related to Add Magic at all and her purported signatures on the company documents were all forged.

7.  In many of the documents submitted to the Companies Registry, Glory Consultants Limited (“Glory”) was named as the Presentor’s Reference and its address was Units 608, 6^th Floor, Tower 2, Lippo Centre, the same as the applicant’s address. It was admitted that Glory was a consultant company under the sole control of the applicant since early 2004. On 27 January 2006, a purported meeting of the Board of Directors of Add Magic was held at the applicant’s office.

8.  The applicant was also involved in the preparation of the shareholders agreement dated 17^th March 2006 relating to Add Magic allegedly between Jeans Ng and “Ting Lee”. The applicant’s firm prepared the agreement and the applicant witnessed the signatures of the parties to the agreement. The instruction to prepare the shareholders agreement appeared to have come from “Ting Lee” on 12 December 2005 and the applicant was stated to be the handling solicitor.

9.  Jeans Ng withdrew almost the entire $11 million fraudulently obtained from ICBC Bank in cash from the Hang Seng Bank Account, $5.35 million between 10 and 13 March 2006 and $5.382 million between 12 and 17 May 2006. Jeans Ng was accompanied on each of the four occasions when he withdrew large sums in cash.

10.  The attempt to mortgage Property 3 was unsuccessful as Madam Ng, having found suspicious documents, alerted ICBC Bank, leading to the arrest of the applicant and some of his alleged co-conspirators.

11.  In the fraudulent mortgages, an unknown female (“Ting Lee”) impersonated Madam Ting and Liu Wai-chun (“Liu”) impersonated Madam Ng.

12.  The prosecution alleged that the applicant was a party to the fraud and charged him with the 1^st charge of “conspiracy to launder money” and the 2^nd to 5^th charges of conspiracy to defraud with the 3^rd to 5^th charges as alternative charges to the 2^nd charge. Jeans Ng and Cheung Chi-fai were named as co-conspirators in the 1^st charge, whereas Liu, Jeans Ng, Chan Shiu-hung, Chan Kwok-wah and Cheung Chi-fai were named as co-conspirators in the 2^nd charge.

13.  The applicant pleaded not guilty to the charges and appeared before Deputy District Court Judge Casewell for trial. On 8 December 2009, the judge convicted the applicant of the 1^st charge of conspiracy to “launder money” and the 2^nd charge of conspiracy to defraud without returning any verdict on the 3^rd to 5^th charges. The judge sentenced the applicant to a total term of 6 years’ imprisonment (5 years and 6 months on the 1^st charge and 5 years on the 2^nd charge with 6 months to run consecutively).

14.  Represented by Mr John Hemmings, the applicant sought leave to appeal against both conviction and sentence.

The Facts

15.  As the existence of the fraud was not disputed, the facts can be set out briefly.

16.  As from 6 May 2005, the applicant practiced under the name of Kevin Kong & Associates at his office in Lippo Centre.

17.  On or about 14 February 2006, the applicant introduced “Ting Lee”, the impersonator of Madam Ting, as the owner of Property 1, to Mr Sau, the Head of the Mortgage and Loans Department of ICBC Bank for a mortgage loan and forwarded to him the relevant documents which were all forged. The applicant arranged a meeting at his office between Mr Sau and “Ting Lee” who appeared with her companions, including Philip Ting, said to be her brother. “Ting Lee” produced a forged identity card in the name of Madam Ting and other forged documents before executing the necessary documents as required by ICBC Bank.

18.  When Mr Sau told the applicant that his firm was too small to handle the mortgage transaction, the applicant introduced Mr Chen Kwok Wang, Kester (“Mr Chen”) of Messrs DS Cheung and Co to handle the matter. Mr Chen then received from the applicant’s office a forged Sale and Purchase Agreement and a forged Assignment in respect of Property 1.

19.  The applicant’s firm instructed Mr Chen to deposit the mortgage loan, less the expenses, into the Hang Seng Bank Account of Add Magic. The applicant also arranged another meeting between Mr Chen and “Ting Lee” who appeared with “Philip Ting”. “Ting Lee” produced a forged identity card in the name of Madam Ting and verbally agreed to the release of the loan. Mr Chen subsequently received from the applicant’s office a written confirmation bearing the signature of “Ting Lee” for the payment of the loan to Add Magic.

20.  Messrs DS Cheung & Co, having received $.5.5 million from ICBC Bank, being the mortgage loan of Property 1, issued a cheque for $5.483 million in favour of Add Magic, which was deposited into Hang Seng Bank Account on or about 10 March 2006.

21.  Another similar fraudulent transaction took place in April 2006. Liu, as an impersonator of Madam Ng purported to mortgage Property 2 for $5.5 million as the mortgagor and “Ting Lee” as the co-borrower. Forged documents, including identity cards, Sale and Purchase Agreement, Assignment and other bank documents were used to support the loan application. The applicant’s office again gave Mr Chen instruction to deposit the net mortgage loan into Add Magic’s account. The instruction contained a written confirmation by “Madam Ng” and “Ting Lee” for the deposit of the loan into the Hang Seng Bank Account.

22.  The applicant arranged a meeting between Mr Chen, “Ting Lee” and Liu in his office when “Ting Lee” and Liu produced forged identity cards and confirmed the instruction for the payment of the loan to Add Magic. Messrs DS Cheung, having received the loan from ICBC Bank for the mortgage of Property 2, deposited the net balance of $5.495 million into the Hang Seng Bank Account on or about 12 May 2006.

23.  There was an attempt to mortgage Property 3 when Liu, impersonating Madam Ng, indicated to Mr Sau that she had purchased Property 3 and asked for a mortgage loan of $9.8 million. There was communication between Mr Sau and the co-conspirators when forged documents were supplied. The applicant also told Mr Chen that Madam Ng had purchased Property 3 and that she wanted Mr Chen to represent her whereas the applicant would represent the vendor.

24.  ICBC Bank, in reliance on the forged documents, was prepared to grant a mortgage loan of $6 million and the applicant arranged a meeting at his officer between Mr Sau and Liu. Chan Shiu-hung took part in the meeting as Liu’s assistance. Liu again presented a forged identity card and Chan Shiu-hung presented other forged documents in respect of the sale and purchase of Property 3 to support the loan application. The applicant was present in his office, but took no part in the interview.

25.  By then the police had been informed of the fraud because Madam Ng had noticed some unusual correspondence and notified ICBC Banks who in turned reported the matter to the police.

26.  Liu and Chan Shiu Hung were arrested on the spot and the applicant was arrested shortly thereafter.

27.  The search of the applicant’s office resulted in various files related to the mortgages in question, including files under the names of “Ting Lee”, “Add Magic”, “Ting Lee and Ng Lai Wan Louisa”, “Chang Kin Kwok Joseph” and correspondence with Messrs DS Cheung.

28.  Apart from the applicant’s involvement in the loan applications, documents relating to the financial position of the applicant and his firm for a 22-month period from November 2004 to August 2006 were presented as admitted facts. Those documents were examined by a Treasury Accountant, Li Ching Yee and it is suffice to set out the judge’s findings in relation to her evidence.

“46. This witness analyzed the financial dealings of the defendant for a 22-month period from November 2004 to August 2006. She concluded that the defendant was in a state of indebtedness throughout 2005 and 2006 or early 2006. The witness concluded that throughout the period 2004 to April 2006, the liabilities of the defendant in loan and credit cards exceeded his total bank balances. That situation was reversed from May 2006 until August 2006 when the defendant returned to deficit again.

47. The improvement in the defendant’s financial position was as a result of large-than-usual cash deposits during the period from March to August 2006. During March to August 2006, net cash deposited to the defendant’s bank account amounted to $2,108,000, of which $600,000 was deposited into the defendant’s Bank of East Asia account between mid-March and April of 2006. Furthermore, on 13 March 2006, a total of $325,500 worth of credit card bills were settled in cash.

48. The improvement in the financial position of the defendant since March 2006 was as a result of the cash payments in amounts larger than those usually deposited into his accounts. This witness also observed that a large proportion of the money received into the defendant’s bank accounts was in the form of cash.”

Other Incriminating Evidence against the Applicant

29.  Two of the accomplices, Jeans Ng and Liu gave evidence for the prosecution against the applicant.

30.  Jeans Ng, a drug addict with criminal record of dishonesty, had pleaded guilty and had been sentenced to 42 months’ imprisonment in relation to his role in the conspiracy. He gave evidence on how he was recruited to be the front man for Add Magic as its director and how he withdrew the proceeds of the mortgage fraud from its account.

31.  Jeans Ng said that he was introduced to Peter, a wanted person by Cheung Chi-fai, his brother in law, and Peter asked him to act as the fictitious director of Add Magic in December 2005.  He was promised a reward of $50,000.

32.  On the instruction of Cheung Chi-fai and Peter, and accompanied by Peter, Jeans Ng opened the Hang Seng Bank Account in December 2005. Jeans Ng also said he was asked by Cheung Chi-fai and Peter to go to the International Trade and Exhibition Centre in Kowloon Bay to wait for “Kevin” and when he met the applicant there in January 2006, the applicant asked him if he had been sent by Peter. After Jean Ng answered affirmatively, the applicant asked him to sign about 10 times on a pile of unidentified documents.

33.  According to Jeans Ng, he went to Hang Seng Bank in Central on10 March 2006, accompanied by two accomplices (Alan and Sarm Gor) and was given a cheque to withdraw cash of $2.5 million from the Hang Seng Bank Account. He said that when the bank officers questioned him why he had to withdraw such a large sum in cash, Sarm Gor called the applicant and when the applicant arrived, he introduced himself as a lawyer to the bank officer and gave out a name card.

34.  One of the bank officers confirmed that Jeans Ng was accompanied by another male, who was about 5’5” and of fat build. In his statement, the bank officer’s description of the lawyer who came to the bank, being 5 feet 5 inches tall and slightly plump, did not match the appearance of the applicant, who is at least 6 feet tall and strongly built.

35.  Jeans Ng confirmed that he had withdrawn cash totaling over $10.7 million from the Hang Seng Bank Account in March and May 2006 and was subsequently paid about $50,000 as a reward.

36.  Liu was another accomplice who gave evidence against the applicant. Liu, a career criminal, having pleaded guilty, had been sentenced to 44 months’ imprisonment for her role in the conspiracy. She said she was recruited in April 2006 by Chan Kwok-wah to impersonate Madam Ng and was promised a reward of $10,000 to $50,000. At a subsequent meeting with Chan Kwok-wah and a Peter in a restaurant, she was told that there would be a lawyer representing her and that the lawyer had received money from them and would work for them.

37.  Liu subsequently was told that she had been selected and she was instructed to practice forging Madam Ng’s signature. Her forged signature on a piece of paper was passed to Peter for his retention. Liu then met Chan Kwok-wah and another accomplice, Philip at a restaurant in Wanchai, and was accompanied by them to buy some clothes.

38.  Peter then took Liu’s identity card and told her that she would be given Madam Ng’s identity card later. The group was then joined by “Ting Lee”, and Liu was told to pretend to be Madam Ng and that “Ting Lee” would be her cousin. She was also told that she would be represented by a lawyer and should anything go wrong, that person will try to smooth it out for her. According to Liu, the applicant appeared and approached Peter and he was introduced to her as “Lawyer Kong”, her legal representative. The applicant then left first.

39.  The party then went up to the applicant’s office to sign some documents. On the way, Liu told Peter that he had not yet given her a forged identity card. Peter simply said that Lawyer Kong would give it to her after she arrived there. Liu said it was on 27 April 2006 when she went with Philip and “Ting Lee” to the applicant’s office where the applicant took out two forged identity cards from a cabinet, giving one in Madam Ng’s name but bearing her photograph to her and the other to “Ting Lee”.

40.  Liu also said that she was then taken to another room to meet Mr Sau. Liu said she and “Ting Lee” gave the two forged identity cards to Mr Sau and she was told to sign various documents. She said the two forged identity cards were returned to Eric afterwards. Mr Sau then left first after completing the formalities.

41.  According to Liu, the applicant had said to her before taking her to see Mr Sau, “I will say to you too. I will have something to talk to you, so you should remain. It’s just an excuse so Mr Sau would leave first”. Liu then also left the applicant’s office with Philip and “Ting Lee” to meet Chan Kwok Wah and Peter.

42.  Liu was shown a letter bearing her forged signature of Madam Ng and that of “Ting Lee”, giving instruction for the mortgage loan to be paid into the Hang Seng Bank Account. Liu said the content of the letter was not explained to nor discussed with her.

43.  The applicant then made an appointment for Liu and “Ting Lee” to meet Mr Chen at his office and the applicant was present together with Philip and Chan Kwok Wah. According to Liu, before being taken to Mr Chen’s office, she met the applicant, Peter, Philip and “Ting Lee” at the Fairwood Fast-food Restaurant where she was given the forged identity card in the name of Madam Ng, but bearing her photograph. Liu said Chan Kwok-wah later paid her $50,000.

44.  Liu also gave evidence relating to the mortgage application of Property 3 in July 2006 when Peter, one of the accomplices, contacted her directly.  Liu, on the instruction by Peter, called Mr Sau, expressing her interest to buy Property 3 for $12 million and therefore she needed a mortgage loan of $9 million.

45.  On 10 July 2006, Liu met Peter at Fairwood Fast-food Restaurant where she was introduced to Chan Shui-hung who was to be her assistant. She then went up to the applicant’s office with Chan Shiu-hung and in the lift she was given a smart identity card in the name of Madam Ng, but bearing her photograph. Upon arrival, the applicant took her to a room to see Mr Sau. Liu and Chan Shiu-hung were later arrested by the police.

46.  Apparently Liu also gave evidence in the trials of two other accomplices, Chan Kwok-wah and Chan Shiu-hung and her evidence was not accepted, at least in the case against Chan Kwok-wah, resulting in acquittals in both cases.

The Defence Case and Evidence

47.  The defence did not dispute the applicant’s involvement in the mortgage transactions, but claimed that the applicant was acting as a solicitor and knew nothing about the fraud. The suggestion was that just as Mr Sau and Mr Chen, the applicant was himself a victim of the fraud.

48.  The applicant’s meeting with Jeans Ng at the International Trade and Exhibition Centre in Kowloon Bay was admitted, but the defence suggested that it had nothing to do with the mortgages of properties. The suggestion was that Jeans Ng was investigated in a hire purchase fraud, and that he signed the documents in relation to that case.

49.  The defence case was that the applicant was not the “lawyer” who went to the bank on 10 March 2006 when Jeans Ng tried to withdraw $2.5 million in cash. It was also the defence case that the applicant did not give Liu a forged identity card on 27 April 2006 as she alleged. The suggestion was that every time Liu went up to the applicant’s office, she had a forged identity card with her.

50.  The defence emphasized that Jeans Ng and Liu were unreliable witnesses and in so far as they gave any incriminating evidence against the applicant, their evidence should be ignored.

51.  The applicant did not give evidence, but called a number of witnesses relating to the setting up of his firm, his financial position and that of his firm. The suggestion was that he had sources of fund outside the alleged conspiracies, which explained the cash deposits into his accounts during the relevant period.

52.  Rudy Chan was the applicant’s employee who described how the applicant took over the firm and named it Kong & Associates after another partner disappeared. The witness said Glory, part of the applicant’s business, was a company set up to assist in the formulation of companies.

53.  A defence witness from the Mainland said that the applicant had instructed him to draft documents in December 2005 relating to the board resolution of Shanghai Zhonghui Real Estate Development Company and a contract appointing the applicant as the Vice Chairman and legal consultant. He was referred to a draft receipt apparently issued by the applicant on 15 February 2006 for RMB2.8 million.

54.  The applicant also called his own financial expert to demonstrate that the applicant had sources of fund by reference to cash deposits into his accounts of about $1.6 million between January and June 2005 and about $1.3 million between March and August 2006. 

55.  It was suggested that the foreign exchange control of China could be the reason why the RMB2.8 million said to have been obtained by the applicant in February 2006 was exchanged into cash and brought to Hong Kong as cash payments into the applicant’s bank accounts.

The Judge’s Findings

56.  Despite the shortcomings in the evidence of Jeans Ng and Liu, the judge accepted their evidence. In particular, the judge accepted that the applicant was the person who claimed to be a lawyer during the withdrawal of $2.5 million cash from the Hang Seng Bank Account on 10 March 2006. The judge also found that when Jeans Ng first met the applicant in January 2006, the applicant had asked him if Peter had sent him.

57.  The judge accepted Liu’s evidence that the applicant took two forged identity cards from a cabinet and gave one to her and the other to “Ting Lee” in his office on 27 April 2006 before they were taken to meet Mr Sau. The judge was unable to say what exactly the applicant said to Liu and “Ting Lee” as to why they should remain after meeting Mr Sau, except that they were told to remain.

58.  The judge did not place any weight on the applicant’s witness from the Mainland in relation to the documents that allegedly came from Shanghai Zhonghui. The judge rejected the suggestion that the applicant had received any payment in the Mainland and had it remitted to Hong Kong in cash and paid into his accounts.

59.  The judge emphasized that the applicant’s net worth was in deficit in February 2006 and in March and May, there were surplus of over $780,000 and over $1.4 million respectively.

60.  The judge, pointing out the undisputed conspiracy to defraud ICBC Bank, concluded that the $11 million paid into and then withdrawn from the Hang Seng Bank Account of Add Magic were proceeds of an indictable offence and that there had been a conspiracy to deal with it.

61.  The judge, having reviewed all the evidence, concluded that the applicant was part of the conspiracy to “launder” the sum of about $11 million when he knew or had reasonable grounds to believe that the moneys would be proceeds of an indictable offence and that he was acting dishonestly. The judge also concluded that the evidence led to the only reasonable inference that the applicant was a party to the fraud on ICBC Bank.

62.  The judge therefore convicted the applicant of both the 1^st and the 2^nd charge.

63.  In his reasons for verdict, the judge emphasized that Add Magic was brought into existence in December 2005 for the sole purpose of receiving and clearing money obtained from the fraud.

64.  The judge emphasized that “The defendant set up Add Magic and witnessed the signatures of PW 31 (Jeans Ng) and the person impersonating Ting Lee in the shareholders’ agreement.” The judge mentioned that “PW 31 (Jeans Ng) was introduced by Cheung Chi-fai to Peter. Peter asked him to act for Add Magic, a company incorporated through Glory consultants, a company established by the defendant to handle this kind of incorporation work. He supposedly signed a shareholder agreement together with Ting Lee in the presence of the defendant.” The judge also referred to the evidence of Rudy Chan that “Glory Consultant was a company set up to assist in the formulation of companies and was a part of the defendant’s business”.

Grounds of Appeal

65.  Mr J Hemmings suggested that the judge erred in his conclusion that the applicant was involved in incorporation/creation/setting up of Add Magic. He said what the applicant did in relation to the mortgages and/or Add Magic was works within the ordinary course of the applicant’s business as a solicitor.

66.  Mr Hemmings suggested that neither Jeans Ng nor Liu was a reliable witness and that the judge was wrong to have accepted their evidence to convict the applicant. He pointed out the shortcomings of their evidence and argued that they had motives to lie and must have lied against the applicant.

67.  Mr Hemming stressed that Liu’s evidence had been rejected in the prosecution against Chan Kwok Wah when Liu was shown to have lied on certain matters, yet the judge had not given sufficient reason as to why he accepted her evidence.

68.  Mr Hemmings criticized the judge’s finding that the applicant was the “lawyer” who went to the Hang Seng Bank on 10 March 2006 to assist Jeans Ng when he encountered difficulty in trying to withdraw $2.5 million cash.  Mr Hemmings pointed out the disparities in the description of the “lawyer” by the bank officer and the appearance of the applicant.

69.  Mr Hemmings suggested that the judge had failed to take into account matters of common sense. He said it was inconceivable that if the applicant had been involved in the conspiracy, he would have visited the Hang Seng Bank and left his business card with the bank officer. Mr Hemmings pointed out that the applicant had no connection with Add Magic and had no authority to make any representation about the Hang Seng Bank Account.

70.  The suggestion was that the applicant’s appearance at Hang Seng Bank on 10 March 2006 would not have served any purpose as it would not have influenced the bank officer to facilitate the cash withdrawal of $2.5 million by Jeans Ng. Mr Hemmings pointed out the bank officer’s evidence that “the approval of the cashing the cheque has no relationship with the arrival of the lawyer. Actually at that time we had entered the last stage of the procedure, that is, the paying stage”. 

71.  Mr Hemmings emphasized that the fraud in question was bound to be exposed at some stage and it was therefore improbable that the applicant would have engaged himself in the conspiracy without concealing his identity. The suggestion was that the applicant, with a relatively modest debt, would not have found it worthwhile to take part in a serious fraud.

72.  Mr Hemmings also complained about the judge relying on a letter dated 8 May 2006 (“P22B”), which was an instruction purportedly from Liu and “Ting Lee” to Mr Chen for the release of the mortgage loan to Add Magic. He suggested that the judge’s findings that the document could have been blank when it was given to her or when she signed it at the applicant’s or Mr Chen’s office were not supported by any evidence when Liu herself said she had not signed any documents in blank and that she had only practiced forged signature of Madam Ng on a Chinese document, probably a restaurant bill. Mr Hemmings emphasized that according to the admitted facts, Liu and “Ting Lee” had confirmed the instructions for the deposit of the mortgage loans into the Hang Seng Bank Account.

Discussion

73.  It is true, as Mr Hemmings kept repeating, that there was no evidence showing that the applicant was involved in the creation/incorporation/setting up of Add Magic as Add Magic was incorporated on 10 June 2005 and the subscriber was Success Nominee with Success as its secretary.

74.  However, it was not disputed that as early as 12 December 2005, the applicant was said to be the handling solicitor in connection with the shareholders agreement of Add Magic and that the client was “Ting Lee”. From the inception of Add Magic until the “conspiracy” took it over by the appointment of Jeans Ng as its director, authorized person, secretary and the only shareholder in December 2005, Add Magic had not commenced nor engaged in any business. Jeans Ng, one of the important players in the conspiracy, was made a director and the sole shareholder of Add Magic on 16 December 2005, and was elected as the Chairman at a meeting on 15 December 2005.

75.  Add Magic’s first “business activity” was the opening of the Hang Seng Bank Account on 20 December 2005 with Jeans Ng as its only authorized signatory. The applicant was involved in that very first step when he, on 20 December 2005, certified the Certificate of Incorporation and the BR Certificate of Add Magic in connection with its opening of the Hang Seng Bank Account.

76.  From December 2005 and throughout the active period of the conspiracy (December 2005 to July 2006), the applicant and/or his company – Glory were closely connected with the activities of the corporate structure of Add Magic. The Notification of Change of Situation of Registered Office, the Change of Particulars of Secretary/Director, the Return of Allotments, and the Consent to Act as a Director/Alternative Director of Add Magic were all presented to the Companies Registry by Glory. The only board meeting of Add Magic during the relevant period took place at the applicant’s office on 27 January 2006.

77.  The applicant executed a Shareholder Agreement relating to Add Magic between the two main players in the conspiracy Jeans Ng and “Ting Lee” on 17^th March 2006 and purported to have witnessed their signatures on the Agreement. There was a suggestion in the bill of costs issued by the applicant’s firm that the applicant had had meeting with “Ting Lee” and Mr Philip Ting in connection with the Shareholder Agreement and IPO.

78.  When the judge said “the defendant set up Add Magic”, “Add Magic, a company incorporated through Glory”, and “Glory was a company set up to assist in the formulation of companies”, the judge was just emphasizing the applicant’s close relationship with Add Magic during the active period of the conspiracy in question.

79.  Technically, the judge was wrong to describe the applicant as having anything to do with the incorporation/creation/setting up of Add Magic as it was incorporated by Success Nominee in June 2005 and its only share was transferred to Jeans Ng by Success Nominee on 15 December 2005, such technical error, in our view, had no significance at all when it was not and could not be disputed that the applicant, directly and through Glory had close connection with Add Magic. We find no merit in the complaint relating to the judge’s error that the applicant was involved in the incorporation/setting up of Add Magic.

80.  The judge was clearly entitled to conclude as he did that Add Magic was brought into existence for the sole purpose of receiving and clearing money obtained from the fraud.  The judge was right to emphasize the close relationship that the applicant had with Add Magic throughout the active period of the conspiracy in question in deliberating if the applicant was or was not a party to the conspiracy.

81.  The judge was aware of Jeans Ng’s status as an accomplice, and he had emphasized, under the heading of The Accomplices, that “His role was to occupy the formal role of a director of the company, to be the person to provide the necessary company signatures and to remove the moneys obtained from the mortgage frauds by making cash withdrawals”. The judge had reminded himself in the following terms:

“In deciding, if any, reliance should be placed on the evidence of (Jeans Ng), it is of course necessary to pay attention to the fact that he was a full and willing participant in the conspiracy. He is a career criminal and was undoubtedly evasive and lacked frankness about his ongoing addiction to drugs. His evidence must be considered with great caution.”

82.  As the judge had rightly pointed out, Jeans Ng, on his evidence, had only very minor contact with the applicant, meeting him only on two occasions, one of which was not disputed, with a minimal amount of communication. If Jeans Ng had wanted to fabricate a story against the applicant, he could have said a lot more.

83.  The meeting at the Hang Seng Bank on 10 March 2006 was the 2^nd meeting that Jeans Ng had with the applicant and that judge had, in our view, rightly excluded the possibility of a mistaken identity. The question is “Did Jeans Ng deliberately lie against the applicant?”

84.  We cannot ignore the fact that Jeans Ng’s evidence of the applicant’s arrival as a “lawyer” after Sarm Gor had asked for his assistance was supported by the bank officer who confirmed the arrival of someone who claimed to be a lawyer and had produced a business card to that effect.

85.  Jeans Ng could not have lied about the arrival of a lawyer and there could not, in our view, have been another lawyer.

86.  The bank officer’s description of the lawyer in his statement did not match the appearance of the applicant. In answering questions from defence counsel, Mr Lam, the bank officer agreed that in his statement, he described three people in the transaction as:

“The first one is Ng Tsz-wai, aged 30-something, thin build, black and short hair, about 5 foot 10, dressed in a black blazer and trousers, neatly dressed, speaking punti. And the next one is the man who came with him, who was again about 30, fat build, short black hair, about 5 foot 5. You don’t remember what he was wearing. And the last one is the person who claimed to be a solicitor, who was aged 30-something, slightly plump with black short hair and again about 5 foot 5, dressed in a shirt and trousers.”

87.  Just as duration of time and distance, witnesses can be notoriously inaccurate in their description of a person’s appearance and build. Mr Lam’s encounter with the “lawyer” was brief and they had not met before. As Ms Olivia Tsang, Senior Public Prosecutor for the respondent, pointed out, the evidence of Mr Lam was that when the lawyer arrived at the bank, (Jeans Ng) and she “had entered the last stage of the procedure, that is, the paying stage.”

88.  The brief encounter that Mr Lam had with the applicant, in the circumstances as he had described, could have resulted in an inaccurate visual perception and therefore an incorrect description in his statement.

89.  The judge was entitled to conclude that Mr Lam’s description of the lawyer had not caused any doubt on Jeans Ng’s evidence that the applicant was present when he tried to withdraw $2.5 million in cash from the Hang Seng Bank Account.

90.  We do not find it necessary comment on the suggestion that the applicant would not be so foolish as to leave his business card with the bank officer if he was indeed involved in the conspiracy or that it was improbable for the applicant not to conceal his identity when the fraud was bound to be exposed.

91.  In both his written and oral submissions, Mr Hemmings emphasized strongly that Liu had given different versions of what had happened, to the police after her arrest, at the trials of Chan Kwok-wah and Chan Shiu-hung, and against the applicant in relation to the following matters; (1) whether Chan Kwok-wah was “Peter” or “Eric”; (2) whether she had mentioned the presence of her sworn daughter (Fei Mee) in the meeting with Chan Kwok-wah and others; and (3) contrary to the admitted facts that she had given the instructions for the deposit of the mortgage loan into the Hang Seng Bank Account, she nevertheless claimed in her evidence that she had not spoken to anyone about it.

92.  Mr Hemmings emphasized that her evidence relating to the bogus marriage in Chan Kwok-wah’s trial was unsatisfactory and highly doubtful.

93.  Ms Tsang, in her helpful written submission, extensively dealt with the matter of how Liu was cross-examined in relation to the evidence she gave in the trials of Chan Shiu-hung and Chan Kwok-wah. She pointed out that the transcripts of the reasons for verdicts in the cases of Chan Shiu-hung and Chan Kwok-wah were not put before the court when Liu was being cross-examined and the judge had made no formal ruling whether Liu could be cross-examined on those matters.

94.  Ms Tsang submitted that the cross-examination of Liu with regard to her evidence given in the trials of Chan Shiu-hung and Chan Kwok-wah did not adhere to the procedural requirement as laid down by the Court of Final Appeal in HKSAR v Wong Sau Ming (2003) 6 HKCFAR 135. She said, with hindsight, that the cross-examination of Liu as to her credibility with reference to Chan Shiu-hung’s acquittal should not have been permitted because Chan Shiu-hung was acquitted mainly because of the role played by him and not because of the credibility of Liu.

95.  We do not find it necessary to deal with the issue of whether Liu’s cross-examination in relation to the evidence she gave in the trials of Chan Shiu-hung and Chan Kwok-wah was regular or otherwise. It was not Mr Hemmings’ suggestion that there had been irregularity and he was certainly not saying that there had been an unfair trial. Liu’s cross examination in relation to her evidence against Chan Kwok-wah and Chan Shiu-hung was a matter to the advantage of the applicant.

96.  Mr Hemming only argued that in the light of the evidence Liu gave at the trial of Chan Shiu-hung and Chan Kwok-wah, and the adverse views of the trial judges in those cases against her evidence, resulting in the acquittals of both Chan Shiu-hung and Chan Kwok-wah, it is unsafe and unsatisfactory to rely on Liu’s evidence to prove the applicant’s guilt.

97.  Liu was closely and carefully cross-examined on the few matters emphasized by Mr Hemmings with reference to the evidence she gave at the trials of Chan Kwok-wah and Chan Shiu-hung. Liu said she used the name “Eric” rather than “Peter” shortly after her arrest because she “was frightened of saying the real name” and she “felt that the name just represented a certain person. It was not that important.” Liu confirmed that the mastermind was called “Peter”.

98.  Liu also confirmed that she initially did not want to mention her sworn daughter, Fei Mee and only did so when asked in the trial of Chan Kwok-wah.

99.  In evaluating Liu’s evidence, the judge had those matters firmly in mind as well as the fact that Liu was an accomplice and it was therefore dangerous to accept her evidence. The judge nevertheless came to the conclusion that:

“…(Liu) had undoubtedly been untruthful about certain things. She was keen to protect Fei Mee and to divert police attention from other criminal activities of hers like involvement in false marriages. She has not been truthful about (what) she told the police in relation to Fei Mee. This was apparent to the other judges in these matters as it was to me.

Nevertheless, I have a different case and a different corpus of evidence to consider. To dismiss (Liu's) evidence on this alone would be throwing the good out with the bad.”

100.  It must be remembered that the roles allegedly played by Chan Kwok-wah and Chan Shiu-hung in the conspiracy were completely different from that of the applicant. Chan Shiu-hung only accompanied Liu to go to the applicant’s office on 10 July 2006 in connection with the mortgage of Property 3.

101.  Judge Yung, in acquitting Chan Shiu-hung, pointed out that he was just playing the role of an assistant to Liu, which was not a necessity in the fraud, and he did not need to know the detail, and that, if Chan Shiu-hung did give a forged identity card to Liu in the lift, there was no evidence to show that he knew that it was forged and would be used to deceive the bank. Judge Yung had not made any adverse finding against Liu on her credibility as such.

102.  Deputy Judge J Lam rejected Liu’s evidence against Chan Kwok-wah principally because Liu had failed to mention, in her statements, the presence of Fei Mee in some of the meetings and her discussions of bogus marriage with Chan Kwok-wah. Apparently Fei Mee was introduced to Chan Kwok-wah in order for him to try to arrange a false marriage.

103.  It appeared that Liu had also mixed up the number of times she had met Chan Kwok-wah in the course of the conspiracy. She said she did not recall the incident clearly and she was confused. Liu also admitted to have discussed with Chan Kwok-wah about a conspiracy of handling bogus marriages. Such evidence was of course crucial in the case against Chan Kwok-wah as, according to Liu, it was at those meeting that the conspiracy to defraud the bank was discussed. It appeared that Liu’s relationship with Chan Kwok-wah was far deeper than what she was prepared to admit. It also appeared that Liu had tried to conceal the true identity of Chan Kwok-wah at some stage.

104.  On the other hand, the nature of Liu’s evidence against the applicant was different, and much of it was undisputed. The applicant was introduced to Liu as “Lawyer Kong” and she went up to the applicant’s office on a number of occasions in connection with the mortgages of Property 2 and Property 3. The only real contentious evidence was whether the applicant gave Liu and “Ting Lee” the forged identity cards when she first went up to the applicant’s office on 27 April 2006.

105.  The rejection of Liu’s evidence against Chan Kwok-wah and Chan Shiu-hung in their earlier trials did not mean that her allegation against the applicant had to be rejected automatically.

106.  In our view, the judge had sufficiently and properly evaluated the evidence of Liu, also with reference to her evidence in the trials against Chan Kwok-wah and Chan Shiu-hung. The judge had pointed out that Liu was prepared to concede that part of her evidence had been incorrect, but was adamant that it was the applicant who gave her the forged identity card.

107.  The judge was entitled to accept Liu’s evidence against the applicant that it was the applicant who gave her the forged identity card of Madam Ng in his office on 27 April 2006.

108.  We do not find it necessary to deal with the points in connection with P22B, a letter faxed to Mr Chen from the applicant’s office with the forged signatures of Madam Ng and Madam Ting, instructing Mr Chen to pay the mortgage loan into the Hang Seng Bank Account of Add Magic . Paragraph 77 of the Admitted Facts suggested that Liu and “Ting Lee” had confirmed with Mr Chen the instruction to deposit the mortgage loan into the Hang Seng Bank Account, but Liu, in cross-examination said no one had spoken to her about the disbursement of the mortgage funds and that no one had spoken to her about the contents and instructions of P22B. Liu suggested that the signature on P22B did not look like her handwriting.

109.  Liu was not involved in the preparation of the Admitted Facts and therefore any discrepancy between her evidence and the Admitted Facts was no indication that Liu had lied.

110.  In any event, on the facts of the case, Liu was clearly just a dummy. She would sign on any documents that she was given. The discrepancy could have been the result of mistake or lapse of memory. There was hardly any need for her to deliberately lie on the matter.

111.  The judge was entitled to take the view that some of the documents “could have been blank when given to her or been signed at the defendant’s or (Mr Chen’s) office. This is possible. (Liu) could not be specific, but I did not find that (Liu) was lying about it”.

112.  In any event, we are firmly of the view that, in the context of the present case, it is not a matter of any significance.

113.  The fraud on ICBC Bank could not have been successful without the assistance of a lawyer whom ICBC Bank and Mr Chen trusted.

114.  The applicant was closely connected with Add Magic, a main vehicle in the perpetration of the conspiracy to defraud ICBC Bank, either directly or through Glory.

115.  The applicant introduced impersonators of property owners as mortgagors to ICBC Bank and supplied both to ICBC Bank and Mr Chen large number of forged documents.

116.  The undisputed evidence showed that the applicant met one of the impersonators at the International Trade and Exhibition Centre in Kowloon Bay and asked him to sign a large number of unidentified documents. He also met Liu and other co-conspirators in unusual circumstances before seeing them in his office.

117.  The applicant did not do it once, but four times involving the same group of people whom he had close association over a period of not less than 6 months. He even called Mr Chen in July 2006 saying that he would represent Mr Chang, the registered owner of Property 3 and had, in his office, a file relating to Mr Chang. The applicant’s office sent various documents to Mr Chen, including a provisional Sale and Purchase Agreement purportedly executed by Madam Ng as the purchaser and Mr Chang as the vendor when in fact the applicant could not have any instruction from Mr Chang and had in fact never met him.

118.  Between 13 and 20 March 2006, almost $1 million in cash was deposited into the applicant’s bank accounts, and between 15 and 23 May 2006, another $450,000 in cash, was deposited into his bank accounts.

119.  The applicant’s financial position changed from deficit in February to April 2006 to a surplus of over $1.3 million in May 2006 and in the mean time, he was able to discharge credit card debts of $325,000 in cash. The financial position of the applicant returned to deficit again in August 2006.

120.  The aforesaid matters alone, clearly called for explanation, but none was offered. The suggestion that the applicant himself was a victim of the fraud was simply unsupported by any evidence.

121.  There was the evidence of Jeans Ng and Liu that the judge accepted, that the applicant was summoned by a co-conspirator when he encountered difficulty in withdrawing $2.5 million on 10 March 2006 and that he gave Liu and “Ting Lee” forged identity cards in his office on 27 April 2006. The combined evidence against the applicant was overwhelming.

122.  On such evidence, the judge was perfectly entitled to infer that the applicant was a party to the conspiracy to defraud ICBC Bank and therefore also a party to the conspiracy to lauder the proceeds of the fraud, particularly when the applicant did not give evidence to explain, challenge or undermine the prosecution evidence against him.

123.  We do not find the convictions of the applicant in any way unsafe or unsatisfactory. The application for leave to appeal against conviction is dismissed.

Sentence

124.  Mr Hemmings complained that the 5 years and 6 months’ sentence on the “money laundering” charge was manifestly excessive because of the judge’s finding that the applicant only received $1.6 million. He also suggested that the “fraud” charge should not have attracted any additional sentence when the two charges arose from the same transaction. He argued that the total sentence of 6 years’ imprisonment was manifestly excessive.

125.  The Court of Appeal have repeatedly said that money laundering is a very serious offence “as it is an attempt to legitimize proceeds from criminal activities”, and must be deterred because “serious criminal offences are very often motivated by financial gains and those who assist criminals in laundering money, indirectly encourage them in their criminal activities….Successful deterrents against money laundering could be effective measures against crime.” [See HKSAR v Javid Kamran (unreported CACC 400/2004), S for J v Arnold Herzberg[2010]1 HKLRD 502].

126.  Mr Hemmings emphasized the judge’s finding that the applicant only received $1.6 million and he relied on HKSAR v Chen Zhen Chu (unreported CACC 433/2006), a case involving a sum of $73 million, without identifying the underlying offence.

127.  But as the Court of Appeal have emphasized in Chen Zhen Chu (supra), “…the gravamen of a money laundering offence is the amount of money handled, not the amount of profit to the defendants or the loss to the victims”.

128.  The Court of Appeal, in HKSAR v Chan Peter (unreported CACC 102/2004), a case of conspiracy to defraud involving a solicitor, commented:

“However in a case such as this, where the applicant had been in the forefront of the conspiracy, directed as one group of people, to be achieved by one misrepresentation, so that the pie could then be divided between the conspirators, its seems to us that to proceed on the basis that the scale of the conspiracy, so far as he is concerned, should be limited to the amount of his individual benefit, is to ignore his true criminality”, and

“Into the guidelines produced by Barrick and Clerk is built-in the fact that they apply very often to professional persons and there is more than a strong hint in these cases that persons in the position of this applicant, namely that of a professional legal adviser, must expect sentences which are certainly as heavy, if not heavier, than others.”

129.  Those comments apply with equal force to the present case.

130.  Further, apart from the amount involved, other relevant factors on sentence in a money laundering case include “the nature of the offence that generated the laundered money, the extent to which the offence assisted the crime or hindered its detection, the degree of sophistication of the offence and perhaps the defendant’s participation, including the length of time the offence lasted and the benefit he derived from the offence”. [See Javid Kamran at paragraph 35]

131.  The applicant was a practicing solicitor and because of that position, he was trusted by ICBC Bank and his colleagues in the legal profession to handle mortgage transactions involving millions of dollars. He had blatantly abused that position of trust. He conspired with criminals to defraud ICBC Bank of over $10 million, and brought disrepute to the noble profession of which he was a member. Without the applicant’s full co-operation, the fraud could not have been successfully carried out.

132.  Within a period of five months, the applicant and his group, executed or attempted to execute four fraudulently mortgage transactions and they probably would have continued with such fraud, but for the intervention of the police. It was a carefully planned and elaborately carried out offence with the use of forged identity cards and the deployment of vulnerable participants such as Jeans Ng and Liu, who, because of their backgrounds, were easily preyed upon, and whose participation rendered it difficult for the law enforcement agencies to arrest the masterminds.

133.  The present case is more serious than Chan Peter (supra), which attracted a sentence of 5 years when the amount involved in the fraud was $5 million. We should also point out that in a breach of trust case involving the theft of $3 to $15 million the starting point is 5 to 9 years (see HKSAR v Cheung Mee Kiu (unreported, CACC 99/2006). The money was not and is not likely to be recovered.

134.  Whilst it might not have been necessary for the judge to impose separate sentences on the two charges, the individual sentences (5½ years for the 1^st charge and 5 years for the 2^nd charge), and the total sentence of 6 years, in the light of the background of the case, far from being manifestly excessive are, in our view, lenient sentences. There is no room for any reduction.

135.  The application for leave to appeal against sentence is also dismissed.