IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
CRIMINAL CASE NO. 598 OF 2013
1. The defendant faced three charges of fraud. He pleaded guilty to charges 1 and 2 but not guilty to charge 3. At the request of theprosecution, charge 3 is kept on file and not to be proceeded with against the defendant without the leave of the court.
Summary of Facts
2. The defendant was a Senior Accounting Clerk of the company Simple Symbol Limited (“Simple Symbol”). He also engaged in the operationof a sister company Dollar Connection Limited (“DCL”). Over a period of around 3 years, he exploited his position by alteringcomputer records and forging documents to defraud the two companies. The result of his illicit activities was to cause the staffof the two companies to believe that certain invoices had not been settled and that payments were due to suppliers. The defendantforged authorization letters to direct those payments to be made to a company which he had set up, Treasure Island Trading Limited(“Treasure Island”), with himself as the sole director and shareholder. 99.5% of those payments were eventually transferred intothe defendant’s personal bank account.
3. In order to try to cover up the double payment, the defendant altered the computer records by inflating the contract prices of othergenuine contracts, hoping to offset the extra payments that the companies had made. The defendant’s scam was unearthed during SimpleSymbol’s annual audit check in 2012.
4. In all, 11 supplier contracts under DCL and 32 supplier contracts under Simple Symbol had been manipulated by the defendant to defraudthe companies, resulting in respective payments of US$328,473.12 (HKD$2,547,605) and US$827,397.42 (HKD$6,426,684) to Treasure Island,forming the subject matter of charge 1 and charge 2.
5. The defendant is of previously clear record.
6. Mr. Lai prepared a very detailed and helpful written submission in mitigation. I will not repeat its contents here. In gist, Mr.Lai pointed out that the defendant had cooperated with Police investigation from the beginning, that the defendant first startedto defraud the companies when his own wine trading business was in trouble and needed the money to help out with his financial situation,that it was a case of an uncharacteristic first fall from grace and then losing his self-control resulting in the frauds spiralingout of control.
7. Both parties agree that this is a breach of trust case and the sentencing guidelines in the case of HKSAR v Cheung Mee Kiu, CACC 99/2006 apply. At a total of $8,974,289, the amount involved falls within the ‘$3 million to $15 million’ and should attracta sentence of between 5 to 10 years (as refined in the case of HKSAR v Ng Kwok Wing, CACC 398/2007).
8. While the amount of money involved is not the only factor to be considered in sentencing a breach of trust case, it is neverthelessan important factor.
9. The defendant committed the 2 offences over a period of about 3 years. Despite what Mr. Lai’s submission of lack of sophistication,the commission of the frauds did require careful planning and computer know how and were meticulously carried out. There were a totalof 43 contracts that the defendant had exploited. The defendant used the embezzled money for tenancy payment for his residence, carpark rental, car purchase, household expenditure for his wife, mother and brother, payments for his wine trading business and personalentertainment. Even if we accept that he first started the frauds in order to pay off losses incurred in his wine trading business,it was not a good enough reason to continue to commit the subsequent frauds.
10. The victim company suffered a loss of just under $9 million. The defendant is not able to repay any of the money. I am told thatthe victim company Simple Symbol Holdings Limited managed to absorb the losses and is still in operation.
11. I would agree with Mr. Lai’s approach of taking the total amount of $8,974,289 when deciding on the appropriate starting point,given that the offences were committed by the defendant in the same manner except with 2 different companies.
12. I find that there are in fact no mitigating factors in the defendant’s situation. Although he had helped the Police with investigation,as Mr. Lai had said in mitigation, his frauds were in the end quite transparent and easy to detect, there was nothing else to dobut for him to grant the Police his full assistance.
13. Bearing in mind all the circumstances, in particular the length of time the frauds had been going on, the manner that the fraudshad been carried out and the amount of money involved, I find that an appropriate overall starting point for the 2 charges combinedis that of 90 months imprisonment, which is discounted to that of 60 months’ imprisonment upon the defendant’s guilty plea.
14. In order to come up with the proper sentence, I will sentence the defendant as follows. In relation to charge 1, I adopt a startingpoint of 54 months’ imprisonment, discounted to 36 months’ imprisonment upon the defendant’s guilty plea. In relation to charge2, I adopt a starting point of 75 months’ imprisonment, discounted to 50 months’ imprisonment.
15. I will order 10 months of charge 1 to be served consecutively to the sentence in charge 2, the balance concurrently.
16. The defendant is therefore sentenced to a total of 60 months’ imprisonment.