HKSAR v. LEE KWOK HO, GARY

 DCCC275/2010

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 275 OF 2010

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Reasons for Sentence

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1.  The defendant was convicted upon his guilty pleas of 10 charges of using a false instrument.

2.  In sentencing I have considered the whole circumstances of the case, including its nature and facts, background of the defendant and mitigation put forward on his behalf.

3.  At the material time the defendant was a manager of a car trading company known as Unique Pro Auto Car (Hong Kong) Limited. Between August and October 2007 on 10 occasions the defendant forged the signatures of the authorised signatories on a cheque and withdrew from the company account a total of $863,506.

4.  At the time Unique Pro was incorporated the defendant and the two authorised signatories were the three directors of the company. The defendant resigned from the position on 12 May 2006 but continued to work for the company until it ceased business on 31 January 2008. Originally the defendant was also an authorised signatory of the account but ceased to be so on

17 October 2006.

5.  The offences were discovered in October 2007 and a report was made to the police. The defendant was arrested upon his return from the Mainland on 29 January 2010.

6.  Under caution he admitted to have forged the 10 cheques, and used the money to pay for the company’s business and made no personal gain himself.

7.  The defendant is a first-time offender. He is single. He started to work when he completed Form 3 education in 1990 but he continued his studies by attending night school and completed secondary education in 1996.

8.  Mitigation put forward on the defendant’s behalf may be summarised as follows. He had worked as a kitchen apprentice, air-conditioning repairer, bartender and salesman. In 2001 he began to work as a car salesman.

9.  In 2005 he started with two other men the second-hand car sales business in the company concerned in this case. Each of them contributed $200,000 to the capital of the company. Since the other two shareholders were not familiar with the car dealing business and had their own business to attend to, they left the operation and the management of the company largely to the defendant.

10.  Business was successful in the first 18 months but it eventually ran into a cash flow problem. I was told that the defendant had only drawn salary in the first 6 months and did not draw any afterwards in order to allow for more cash flow.

11.  Around October 2006 he ceased to be a director of the company and signatory of the account for the benefit of the company since he himself had a bad credit record for failing to make repayment for a property mortgage.

12.  Despite the cash flow problem the business was still profitable. A decision was made to expand the business. However, loss resulted. Financial institutions started to reduce the limit of credit facilities granted to the company.

13.  The defendant asked the two shareholders to inject more capital but was refused. The two shareholders also became uncooperative and seldom came to the office. This resulted in the problem of delay in issuing of cheques and further damaged the credit and goodwill of the company. It was also facing the risk of recovery action.

14.  To maintain the ongoing operation of the company and obviate actions of creditors, the defendant falsified the cheques to draw cash for settlement of the debt owed by the company to others.

15.  Defence counsel stressed that the defendant committed the present offences with the sole motive of rescuing the company. He did not have any personal monetary advantage. He also said that the main reason for the defendant leaving Hong Kong afterwards was that since he was the only person in charge of the day-to-day business of the company he was frequently approached and harassed by debt collection agents.

16.  On the first day of mitigation the prosecution indicated that it was not in a position to accept the assertion that the defendant had used the money he obtained by way of the forged cheques to pay outstanding sums owed by the company.

17.  In the circumstances and having HKSAR v Chong Chee-meng, CACC315/2008, in mind, I indicated to the defence that it was for their consideration whether evidence would be adduced to support this assertion in mitigation. The hearing was adjourned for parties to consider and follow-up if necessary.

18.  Today it was confirmed that the prosecution, having made enquires upon receiving information from the defence, was now prepared to accept that at least $700,000 obtained by the illegal means had been used by the defendant to repay outstanding sums owed by the company.

19.  The defence also indicated that the mitigation based on this factor was limited to the extent of $700,000 and the defence would not adduce any further evidence in relation to this matter.

20.  In my judgment, what the defendant did involved a breach of trust since he had been entrusted by his two business partners to run the business largely on his own. However, I also accept that the two business partners had left the defendant alone to deal with the difficulties the company was facing. That said, what the defendant did amounted to a total disregard of the interests of the other shareholders of the company who were also the directors of the company.

21.  The Court of Appeal agreed in R v Ying Lai Chau [1991] 1 HKLR 48 what Lord Lane said in Barrick [1985] 81 Cr App Rep 78 in relation to the matters to which the courts should pay regard in determining what the proper level of sentence should be:

(1)  The quality and degree of trust reposed in the offender including his rank.

(2)  The period over which the fraud or the thefts have been perpetrated.

(3)  The use of which the money or property dishonestly taken was put.

(4)  The effect upon the victim.

(5)  The impact of the offences on the public and public confidence.

(6)  The effect on fellow employees or partners.

(7)  The effect on the offender himself.

(8)  His own history.

(9)  Those matters of mitigation special to himself, such as illness, being placed under great strain by excessive responsibility or the like.

And finally, any help given by him to the police.

22.  As I have just said, the quality and degree of trust reposed on the defendant was high. Over a period of about 2 months he had committed the offence on 10 occasions. As a result, more than $860,000 belonging to the company was appropriated. Bearing in mind the unhealthy financial condition of the company at that time, the effect on the company cannot be said to be insignificant.

23.  That said, it was not disputed that at least $700,000 of the amount appropriated had been used to repay outstanding sums owed by the company. Although the defence was unable to adduce evidence to prove that the rest of the sum had been used for the same purpose, I am prepared in the circumstances to accept that a substantial amount of the sum appropriated had been used for this purpose, and this should be reflected in the sentences in favour of the defendant.

24.  Apart from Charge 9, the defence is unable to specify to which charge the repayment relates since it was made by separate sums of cash. In the circumstances I consider it appropriate to treat each charge in the same manner.

25.  I also take into account the importance of the company to the defendant, he still maintained an interest in the company and that he had made much contribution to the company.

26.  I also bear in mind that it was the first time he committed an offence. I am told that the defendant returned to Hong Kong knowing full well that the police were looking for him and he was prepared to surrender voluntarily. Upon arrival he told the Immigration that he might be a wanted person.

27.  In all the circumstances, whilst I am of the view that an immediate custodial sentence is the only proper and appropriate sentence to be imposed, I will lower the starting points I otherwise consider appropriate by about one-sixth because of the matters I have just mentioned.

28.  I adopt the following starting points. Charge 1, 18 months; Charge 9, 15 months; Charge 4 and Charge 6, 12 months; and for the rest, 9 months.

29.  The defendant pleaded guilty to each charge. He is entitled to a one-third discount for this reason. In all the circumstances, I am of the view that this is the extent of discount he is entitled to.

30.  As a result, the defendant is sentenced as follows. Charge 1, 12 months; Charge 9, 10 months; Charge 4 and Charge 6, each 8 months; Charge 2, Charge 3, Charge 5, Charge 7, Charge 8 and Charge 10, each 6 months.

31.  Having regard to totality, I order the sentences imposed on Charge 2 to Charge 10 to run concurrently but with 6 months of which to run consecutively to that imposed on Charge 1, making a total sentence of 18 months’ imprisonment.