HKSAR v. CHENG KING LUNG

CACC 67/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 67 OF 2002

(ON APPEAL FROM DCCC NO. 743 OF 2001)

____________________________________

_______________________________

________________

J U D G M E N T

________________

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

Introduction

1 This is an application for leave to appeal against sentence.

2 The applicant pleaded guilty in the District Court on 22 January 2002 before Deputy Judge Wyeth to 13 charges, and was sentenced to a total term of six years' imprisonment.

The charges and the facts

3 Charges 1 to 3 were related. In January 2001 the applicant used a forged identity card in the name of a Mr Choy to open a bank count at Citibank, and he was then issued with an ATM card to use in connection with that account. The following day, the sum of $370,000 was transferred to this new account from the account of one Alan Poon. That transfer was also fraudulently made, in that someone - no doubt another of the conspirators engaged in the ongoing scam which the facts of the case as a whole reveal - used a forged card in Poon's name to secure the transfer of monies from Mr Poon's account. Immediately after that transfer, $10,000 was withdrawn from the Choy account through the ATM system; which withdrawal was the basis of the first charge, that of dealing with property knowing or having reasonable grounds to believe that the $10,000 represented the proceeds of theft, contrary to section 25(1) of the Organized and Serious Crimes Ordinance, Cap 455. Then the applicant submitted a withdrawal slip at the bank to draw $350,000, and he was given the money in cash, the teller's colleague recognizing him as the man who had opened the account. The following day, a further $10,000 was withdrawn from the account through the ATM system. These further two withdrawals formed the basis of the second and third charges of dealing with property known to have been stolen.

4 Charges 4 to 6 form the next group of charges. A man named Ngai Si Hoi held two accounts with the Hong Kong & Shanghai Banking Corporation ("HSBC") in Tai Kok Tsui. The applicant used a forged identity card and, forging Ngai's signature, made two withdrawals of $7,000 and $20,000 respectively, from those accounts on 5 March 2001. On the following day, 6 March, he tried again, this time seeking to withdraw $40,000, but he failed when the bank staff became suspicious, and he just left the bank. These three charges charged theft and attempted theft.

5 Less than a fortnight later the applicant was at it again. On 15 March, he submitted a fund transfer application form purportedly from a company called Top Enterprises, whose forged chop, as well as a forged signature, was endorsed on the form, requesting transfer of $698,950 from its HSBC account to an account at the Kincheng Banking Corporation in the name of a Mr Sun, whose account had been opened with a forged identity card. To hinder such contact between HSBC and the company as might be made for verification purposes, those engaged upon the fraudulent scheme ensured that telephone cables to the company's premises were cut. The transfer was effected and, that very day, $670,000 was withdrawn from the account of Sun, and the following day the balance of the sums transferred was also withdrawn. Charge 7 therefore was a charge of theft of a chose in action in the sum of $698,950.

6 Charge 8 was directed at events along the same lines as Charge 7. This offence took place on 19 March, and involved the fraudulent transfer of funds from a company holding an account at HSBC to an account opened by the applicant with the use of yet another forged identity card. Telephone cables were again cut. The application was for transfer of $498,630, but on this occasion, no money was transferred because the bank managed to contact the company in time. So Charge 8 was a charge of attempted theft.

7 Charge 9 was along exactly the same lines as Charge 8 and as Charge 7, though again the attempt was not successful; so the charge was attempted theft. The amount involved was $2,736,500, and, again, we see the use of a forged identity card, the fraudulent use of a transfer application form, and the cutting of cables. The date of this offence was 30 March 2001.

8 Charges 10 and 11 were charges of using a false instrument contrary to section 73 of the Crimes Ordinance, Cap 200 with the intention that the recipient accept it as genuine and acts accordingly to his prejudice. What happened was that on 9 April the applicant submitted a balance inquiry form supposedly, but not in fact, executed by a company, seeking the balance of that company's account with HSBC. He did the same thing on 23 April 2001 in respect of the same company, but was arrested. On his person was found a forged identity card used in relation to offences 10 and 11. This use was the subject of the 12th charge, namely, use of a forged identity card.

9 On his arrest, he was carrying three balance inquiry forms in the name of three different companies; and his possession of these false instruments founded the 13th charge, that of possession of false instruments.

10 It follows that the sum of $1,105,950 was obtained by the applicant in the course of this criminal escapade; and a further $3,275,130 was the subject of unsuccessful attempts: a total of $4.381m. None of the stolen property has been returned, nor has the applicant given any information to the authorities about the others who took part in these offences, or where the proceeds might be found or traced.

11 At the date of these offences, the applicant was aged 33 years. He had previous convictions in 1986 and 1989, the first for inviting another to be a member of a triad society, and the second for criminal damage. His antecedents show him to have worked in a series of manual and clerical capacities.

The judge's approach

12 The judge approached sentence in this way. He took a starting point of three years' imprisonment for each of the offences represented by Charges 1 to 6 inclusive; and reduced each to a term of two years' imprisonment by reason of the applicant's plea of guilty. In respect of each he enhanced the sentence by 50% pursuant to his powers to do so under section 27(11) of the Organized and Serious Crimes Ordinance, resulting then, for these six charges, in concurrent sentences of three years.

13 In respect of Charges 7 to 9, the frauds which were accompanied by cutting of telephone cables, he took a starting point for each offence of six years' imprisonment; reduced that to one of four years by reason of the pleas, and then enhanced those sentences by 50% in each case to arrive at six years under section 27(11); and ordered the sentences to run concurrently, a total for those three separate offences of six years' imprisonment.

14 For Charges 10, 11 and 13, the balance inquiry form cases, he took a starting point of three years' imprisonment, reduced that to two for the pleas, and enhanced each to three years, to run concurrently: a total for that group of three years.

15 Finally, in the case of Charge 12, the forged identity card charge, which was not the subject of a section 27 application, he took a starting point of three years, and reduced that to two for the plea.

16 All these sentences were ordered to run concurrently, so that the total term imposed was one of six years' imprisonment.

Section 27

17 By notice dated 17 September 2001, the Secretary for Justice, with an eye upon the provisions of section 27(2) of the Organized and Serious Crimes Ordinance, notified the applicant that in the event of conviction in respect of, or plea of guilty to, the charges, save for Charge 12, the prosecution intended to furnish information to the Court about those matters which are listed in section 27(2), as far as they were relevant to these offences, namely, the nature and extent of the harm caused, of the benefit accrued to the applicant or others, and of the prevalence of these offences; and the nature of the harm caused to the community by recent occurrences of offences of this kind.

18 That information was supplied in the form of a statement dated 22 January 2002 by a Chief Inspector of the Commercial Crimes Bureau. That statement revealed that in the year 1999 there were twelve cases reported to the police in Hong Kong of bank frauds and telegraphic transfers in which forged identity cards were used; thirteen in the year 2000; and sixteen in the year 2001. The total amounts involved were, to use round figures, $17m; $26m; and $13m respectively. The Chief Inspector described the method of operation in these scams by which "swindlers", as she called them, acquire information about individuals and about companies, and then recruit "stooges" (her description) to provide photographs and then pose as the customer, and secure the transfer of monies. She described also the more sophisticated method, which we see in this case as well, by which the objective of the crime is furthered by the cutting of telephone cables. She concluded by saying that it was very difficult to apprehend the main culprits, for they use mobile telephones to give instructions to the underlings who usually know little about those who are giving the instructions.

19 What the judge said in relation to the section 27 application was this:

"The information supplied by the prosecution, by agreement with the accused's legal representation, that is to say Chief Inspector Yu's statement as to the harm caused, financial benefit which accrued or was intended to accrue, the prevalence of the specified offending and the other relevant factors, are such that I consider the statutory requirements have been met and I intend passing enhanced sentences."

20 True it is that later in the judgment, he referred to the apparent concession by defence counsel that the case bore "the blueprint of organized crime", but it seems clear enough to us that the judge enhanced sentence on the basis of the specific factors to which he had earlier referred.

21 In so far as may be relevant to the offences in this case, an organized crime is defined by section 2 of the Ordinance as a scheduled offence that is "... related to the activities of 2 or more persons associated together solely or partly for the purpose of committing 2 or more acts each of which is a Schedule 1 offence and involved substantial planning and organization."

22 All the offences with which the applicant was charged, save Charge 12, were scheduled offences. That these offences were related to the activities of two or more persons associated for the purpose of committing two or more acts; and acts, also, which involved considerable planning and organization, cannot be doubted.

23 That being so, we are puzzled by the approach adopted by the prosecutor in not serving a notice under section 27(4) of the Ordinance, by which notice is given that the prosecutor intends to seek a determination of the court whether the matters shown to the court's satisfaction demonstrate that the offences were organized crimes. Whilst there is nothing to preclude the furnishing of section 27(2) information as well as showing that the offences are organized crimes, the failure to serve a section 27(4) notice precluded the court below from enhancing sentence on the basis that the offences were organized crimes - that is one of the two bases upon which, by reason of the provisions of section 27(11), a court may enhance sentence. So it was that in this case the court below was restricted to consideration of the section 27(2) factors in deciding whether the sentence should be enhanced and, if so, by how much.

24 It is against this background that it falls for us to consider the sentences imposed in this case.

Analysis

25 We can dispose at the outset with that aspect of this appeal by which Mr McGowan complains that a total of six years' imprisonment gives insufficient recognition to the plea, in the light of the District Court's maximum sentencing jurisdiction of seven years' imprisonment. His argument is that the maximum in this case, after plea, should have been two-thirds of seven years. The point is, with respect, not a good one. See HKSAR v Li Yan [1998] 4 HKC 12, 15.

26 Mr McGowan then asserts that the six-year starting point for some of the offences (or as an overall starting point if that is what the judge took) was too high. He cites a number of cases in which greater sums were involved where similar or lower starting points were adopted. We note those cases, but we say in response that the sum involved is not the be-all and end-all of sentence. The sophistication of these offences, the very considerable planning which they involved, planning by numbers of players, the ongoing nature of the scam, the number of offences, the boldness and craftiness, embracing as some did the cutting of cables to particular offices; these are the distinguishing features of these offences, to which weight is to be given.

27 In so far as Mr McGowan prays in aid a suggestion that the applicant was not the mastermind but a mere underling, we say that if he was a underling, he was a very active one, engaged not just in one incident but many, and ready to be engaged in yet more as the documentation and notes on him upon his arrest demonstrate.

28 We start, as the judge had to start, by looking at the individual offences and the appropriate terms for them, without regard to the terms of the Organized and Serious Crimes Ordinance. We think that in relation to some of the individual charges, it may well be said that the sentences were too high; but, conversely, we are satisfied that the totality at which the judge arrived before the enhancement factor was significantly too low. We do not propose in the event to amend individual sentences.

29 In principle, many of the offences required consecutive sentences. Charges 4, 5 and 6 represented an episode quite different from that represented by the first three charges. Charges 7, 8 and 9 were wholly separate from each other, and from the other charges; and so, too, were the remaining charges. Given the sophistication of these offences, and the planning and their multiplicity, we take the view that a resulting sentence of five years' imprisonment after plea, before enhancement for the section 27(2) factors, was the minimum totality justifiable.

30 What then were the factors which went properly towards enhancement of sentence on the basis upon which the Organized and Serious Crimes Ordinance considerations were put to the court by the prosecutor? Amongst the matters to which the Court is entitled to have regard by virtue of section 27(2) and section 27(11)(b) is the nature of the harm caused by the offence; the prevalence of the offence; and the nature and extent of the harm caused to the community by recent occurrence of the offence.

31 These were sophisticated offences, particularly those revealed by Charges 7, 8 and 9, targeting different banks, a systematic course of conduct by which information about account holders and balances in accounts were obtained or to be obtained; forgeries performed, using identity card details and account details. In HKSAR v LEE Sai Wing [1998] 4 HKC 280, it was suggested that where the criminal act is an organized crime, a 50% enhancement would be justified to punish the organization and to deter those working with such an organization. Where there was evidence showing that an offence had the tendency of increasing rapidly to the extent of becoming prevalent a deterrent sentence was required, but that where the offence was becoming progressively prevalent, a 50% enhancement was probably not justified without some forewarning by the courts. "The extent of enhancement for these kinds of offences would be decided by their gravity, prevalence, and effect upon the community." See also HKSAR v MA Suet Chun & Others CACC 1 of 2001, unreported. Mr McGowan suggests that in the circumstances of these offences and upon the basis of the evidence placed before the judge in the court below, a 50% increase was not warranted.

32 It is difficult to say from the evidence produced to the judge that there is a rapidly increasing trend in offences of this kind. That said, one would not expect an offence with the hallmarks of these offences to be great in number, and the trend of offences of the types revealed in Charges 7, 8 and 9 in particular is disturbing, and of that we take note. Given the nature of these offences, especially the extent of planning and sophistication involved, the numbers are large enough to suggest that deterrence is required, and the evidence of the Chief Inspector demonstrates how difficult it is to detect these offences and the people who are the main organizers. Offences of this kind inevitably detract from the ability of banks safely to act upon instructions, and the scheme by which telephone cables are cut is a serious attack on the ability of businesses to conduct their affairs; and we think it proper to conclude that the offences are sufficiently grave in their broad impact, aside from the impact on particular banks in specific cases, to warrant enhancement of sentence. Given, however, the degree to which repetition of offences and sophistication has already been taken into account by us in the assessment of pre-enhancement sentence levels in this particular case, and the facts and figures in the statement provided by the Chief Inspector, we think that a 50% enhancement was too high. One would not complain of a 25% or 30% enhancement but, in the event, an overall enhancement of one year, in this case, from the resulting totality to which we have referred, of five years' imprisonment, would represent 20%; and although that may well be said to be low, we do not propose to interfere with the overall sentence, which was six years' imprisonment. Nor could we properly in this particular case do so, given the maximum sentencing jurisdiction of the District Court and the fact that some meaningful discount from that maximum should be given for plea. Accordingly, we proceed on the basis of a pre-enhancement totality of five years, and an enhancement factor of 20%.

Conclusion

33 All this being so, we are of the view that the final result of six years' imprisonment is not impeachable and, accordingly, we dismiss this application for leave to appeal against sentence.