HKSAR v. LUK WA

DCCC17/2011

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 17 OF 2011

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Reasons for Sentence

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1.  The defendant, Mr Luk Wa, pleads guilty to one count of obtaining access to computer with dishonest intent, contrary to section 161(1)(b) of the Crimes Ordinance, Cap. 200.  The particulars of offence are that the defendant, on the 3rd day of June 2005, in Hong Kong, obtained access to a computer with a dishonest intent to deceive, whether on the same occasion as he obtained such access, or on any future occasion.

Facts Admitted

2.  The defendant carried on business in Hong Kong as Hoffmann & Albert (Far East) Toy Company since November 2002. Mr Paul Budnitz was the president of Kidrobot Incorporation (“Kidrobot”) in USA which purchased toys from the defendant’s company. 

3.  On 23 May 2005, the defendant instructed Oriental Sea Transport Service Limited (“Oriental”) to forward two containers of “Gorillaz 12-inches Vinyl Toy Figure Black Box Set” to Kidrobot, departure date being 31 May 2005.  Due to the failure of Mr Budnitz to settle an accrued business debt of US$35,000, the defendant informed Oriental in writing to withhold the two containers and not to ship them, but Oriental refused to comply. 

4.  On 2 June 2005, the defendant made a report to the police against Oriental, and also demanded Mr Budnitz to make payment of an accrued business debt of US$154,000.  Despite correspondence between lawyers of the defendant and Oriental, the latter maintained its stance.

5.  The defendant’s company was a subscriber of the broadband service provided by PCCW. On 3 June 2005, at about 1700 hours, the defendant used a computer at the office of his company and made use of the login name and password of United Prospect Consolidation Limited (“UPCL”), which was also a subscriber of the broadband service of PCCW, to connect the computer to the internet to register an e-mail account maolaomao@yahoo.com.cn.  The defendant did so without the consent of UPCL, and he sent an e-mail with this e-mail account to the e-mail account of containersecurity@dhs.gov, which was received by the US Customs & Border Protection Container Security e-mail system. 

6.  The e-mail was entitled “Alert.  Gorillaz Dirty Bombs Attack Oakland Port!!!!!!!!!!”, and stated to the effect that Pakistani terrorists had hidden “highly plastic explosives” and “highly radioactive materials” inside the toys in the containers which were on their way from Hong Kong to Oakland Port.  Details of the containers and the shipping date were given.  Among them were the two containers the defendant had asked Oriental to withhold.

7.  The defendant claimed in the e-mail to be Mao Laomao of the Anti Terrorist Division from Guangdong Police Station and asked for action to be taken to stop the containers entering the Oakland Port to save USA.

8.  The director of International Container Security Secure Freights Initiative and the United States Customs and Border Protection (“USCBP”) also received a copy of the e-mail.  The e-mail was forwarded to multiple persons of the USCBP, the Immigration & Customs Enforcement and the United States Coast Guard (”USCG”).

9.  For public safety, USCG of the Port of Oakland ordered the terminal of the port to be closed, the vessels at dock to be taken out into the bay and to close the waterway.  USCBP, USCG and the Oakland Police Department Bomb Squad located the two containers and examined them for radioactive materials with nil result.  The doors of the two containers were broken open, and the carton boxes inside were examined.  No explosives were found.  The Port of Oakland was closed for ten hours.

10.  On 10 June 2005, one of the carton boxes were delivered to the Bureau of Alcohol, Tobacco, Firearm & Explosives Forensic Laboratory for examination, but no explosives were found. 

11.  Investigation by the US authorities traced the origin of the e-mail to the protocol address of UPCL.  It was also found out that the place from which the e-mail was sent out was the office of the defendant’s company.

12.  The US authorities notified the Hong Kong Police about the results of the investigation.  The police in Hong Kong arrested the defendant, and a copy of the bomb hoax e-mail was found in the hard disc of a Toshiba computer notebook handed in by the wife of the defendant. 

13.  Under caution, the defendant confessed, inter alia, that because of the dispute of outstanding payment of US$150,000 with Mr Budnitz, he fabricated the contents of the bomb hoax e-mail intending to cause the US Customs to withhold the two containers, and not to release them to Mr Budnitz. 

14.  The prosecution also submits to the court a chronology of events of the present case and the periods of detention of the defendant. 

Criminal Records

15.  The defendant has a clear record. 

Mitigation

16.  The senior counsel representing the defendant also sets out, in mitigation, the chronology of events.  According to the senior counsel, the defendant was arrested on 26 October 2005, but was released unconditionally shortly after pursuant to the legal advice that Hong Kong did not have the jurisdiction to prosecute. 

17.  On 14 July 2010 the defendant was arrested again under the Fugitive Offenders Ordinance, Cap. 503, following a request by USA for the surrender of the defendant for prosecution there.  The defendant was committed to be surrendered on 20 October 2010 by a magistrate and was kept in custody pending a decision by the Chief Executive of HKSAR to surrender the defendant. Following the representation made by the legal representative of the defendant to the DOJ, the defendant is prosecuted in these proceedings.

18.  The senior counsel points out that the defendant is 42 years old, divorced in January 2008, with a son aged 3, operating the Hoffmann & Albert (Far East) Toy Company since 18 November 2002.  The defendant pleads guilty and is deeply remorseful.  He never imagined his act could cause so serious consequences in the USA.  There was no complex planning in the present offence and was more akin to an impulsive, perhaps almost childish act of revenge undertaken by the defendant. 

19.  There was a delay of five years in the present prosecution.  With these proceedings hanging over the defendant’s shoulders for so long, the life of the defendant had been greatly affected. The senior counsel asks the court to take this into consideration in sentencing, citing a number of authorities, including R v Bird (1987) 9 CAR(S)77, and HKSAR v Chan Kit Bing [2001] 1HKLRD 844.

20.  During these five years the defendant had stayed clear from troubles and had simply got on with life.  The defendant is now divorced, and with a son.  He has become more matured and industrious. The senior counsel submits that in the present case there should not be deterrence in  rem, but accepts that deterrence in personam is appropriate to deter the defendant from repeating his unlawful behaviour.

21.  The senior counsel points out that although there are no sentencing guidelines in the present case, an immediate custodial sentence is the norm, citing the authority of HKSAR v Tam Hei Lun & Ors., HCMA385/2000, in which the Court of Appeal said that the losses and damages to the victim were the front and foremost consideration, while the gravity of the offence to the victim, purpose of the access and financial gain of the offender were also factors to be considered.

22.  The senior counsel says that in Tam Hei Lun the 2nd appellant, who was sentenced to 6 months' imprisonment after pleading guilty to 12 charges of offences under section 161, hacked into other people’s computer to obtain their Internet account details and passwords and made use of the information to avoid Internet charges.  He also sold information to other people.

23.  The senior counsel emphasises that no harm was done to UPCL in the present case, and the harm was only done in USA.  He further distinguished the present case from Tam Hei Lun in that the conduct in the authority could hardly be described as impulsive, but was a calculated and sustained effort for personal enrichment.

24.  The senior counsel tenders to court a mitigation letter written by an architect, Mr Bernard Hui JP.  Mr Hui describes the defendant as a filial son and a kind-hearted person who constantly blamed himself for troubling his already mentally-disturbed wife by his foolish act which resulted in tedious police investigations.  The defendant has already suffered collapse of his business and divorce with his wife, and is left on his own to pick up the pieces of his ruined life.  The offence is totally out of the character of the defendant.  Mr Hui asks for mercy of the court for the defendant. 

25.  On the day of sentence, i.e. today, the senior counsel who represented the defendant in the last hearing does not appear in court, and the solicitor representing the defendant makes further mitigation. 

26.  He submits the letter of the father and an ex-employee of the defendant to court.  The father has a very good opinion of the defendant and says that the business of the defendant failed because he mistakenly trusted other people due to lack of experience.  The ex-employee says that the defendant was an industrious employer who treated his employees well.  He was put under the financial strain because he was cheated of $1 million by an American client, and he committed the offence foolishly due to momentary impulse.  Both the father and the ex-employee ask the court to treat the defendant leniently.

27.  The solicitor also submits that the whole family support the defendant, and the mother of the defendant has become very upset and emotional because of the present case.  He asks the court to treat the defendant leniently. 

Sentence

28.  The senior counsel representing the defendant rightly points out that there are no sentencing guidelines for the present offence.  The reason is simple.  The circumstances of the commission of the offences can vary substantially, so do the sentences.  It is, however, accepted by the senior counsel that immediate custodial sentence is the norm.

29.  The use of computer and Internet are an important part of modern daily life.  Virtually all walks of life require the use of computers and Internet for their functioning and smooth running.  It is vital that the integrity in the use of computers and Internet should not be allowed to be compromised.  That is the reason why the courts have always taken the offences relating to the dishonest use of computer very seriously. 

30.  The defendant committed the present offence out of his desire to take revenge on Mr Budnitz who had a dispute with him regarding an outstanding payment of about US$150,000.  The defendant, as an adult and a businessman, should know very well that there were legitimate means to solve the problem.  He, however, chose a method which was not only barbarous, but was also illegal to achieve his own ends.  He succeeded in delaying the delivery of the containers to Mr Budnitz through causing serious disruption to the operation of the Port of Oakland, USA.  This was unquestionably a gain on the part of the defendant, although no financial elements were involved.

31.  The court accepts that the illegal act of the defendant did not call for complex planning.  It must, however, be pointed out that it was a premeditated act on the part of the defendant.  This can be seen by his making use of the login name and password of the Internet account of UPSL to send out the e-mail. 

32.  It is not known how he managed to obtain this information, but no doubt some efforts had to be made before he could get hold of it.  It was obviously a means by the defendant to prevent his own identity from being disclosed.  He clearly had given some thoughts about the matter before embarking on his illegal deed. 

33.  The court is of the view that it could not be an impulsive or childish act of the defendant, as submitted by the senior counsel.  As an adult he must be able to realise that what he stated in the e-mail would cause serious alarm to the US authorities.  The e-mail was sent out in June 2005, which was about four years after the 9/11 attack on the World Trade Centre in New York. 

34.  The defendant must realise that the US authorities could not afford to have yet another terrorist attack on one of its ports, and would, at all costs, prevent its happening.  That also explains why the e-mail was framed by the defendant in such a way as to bring home to the US authorities a message of terrorist attack. 

35.  The disruption to the operation of the Oakland Port was well within the contemplation of the defendant, and was even his intention because that was the only way he could prevent the containers from being delivered to Mr Budnitz.  That also explains why the defendant chose to make use of the Internet account of UPCL to hide his own identity.

36.  UPCL was no doubt a victim of the illegal act of the defendant.  The court must, however, point out that Mr Budnitz and the US authorities were equally victims.  Because of the e-mail of the defendant, there must be a delay of the delivery of the two containers to Mr Budnitz. As the contents of the two containers had undergone examination by the US authorities, damages might have also been occasioned to them.  All these would result in financial losses to Mr Budnitz. 

37.  The one who suffered most in the present case was, no doubt, the US authorities.  Apart from the alarm caused, the disruption in the operation of the Oakland Port and the examination of the contents of the two containers had surely occasioned tremendous financial losses to them.  The court must take all these into account in determining the sentence.

38.  There is admittedly a delay of five years in the prosecution of the defendant in the present case.  The defendant was released unconditionally after the first arrest and, according to the mitigation of the defence, the defendant had simply got on with his life.  It seems that the delay had not subject the defendant to too much anxiety and pressure because it is said, in mitigation, that the defendant, as a layman, would not ask for the reason of non-prosecution and would assume that it was the end of the matter when he was released from the first arrest. The court, nevertheless, considers that the delay occasioned is a factor to be considered in determining the sentence to be imposed.

39.  The court is of the view that it does not call for a deterrent sentence in the present case.  The case is, however, much more serious than the case of Tam Hei Lun.  He did not only unlawfully make use of the login name and password of UPCL, but also contemplated and intended to cause serious consequences which had indeed occurred to achieve his own ends.

40.  Having considered the whole circumstances of the case, the court adopts a starting point of 2½ years' imprisonment.  Giving credit to the guilty plea and the previous good character of the defendant, the delay in the prosecution and the period of about four months he spent in custody for the committal hearing in connection with the request of his surrender by the US authorities, the court sentences the defendant to 1 year imprisonment.