A A
DCCC591/2010
B B
IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
C CRIMINAL CASE NO. 591 OF 2010 C
D
---------------------- D
HKSAR
E E
v.
F Ma Fa-keung F
G ---------------------- G
Before: H H Judge S. D’Almada Remedios
H Date: 15 November 2010 at 11.22 am H
Present: Mr Beney Wang Wai Chi, SPP, of the Department of
Justice, for HKSAR
I Mr Raymond Chan, instructed by James W L Li & Co., I
assigned by the Director of Legal Aid, for the
J Defendant J
Offence: (1) Fraud (欺詐罪)
K --------------------- K
L
Reasons for Sentence L
---------------------
M M
1. The defendant has pleaded guilty to one charge of
N fraud, contrary to section 16A of the Theft Ordinance. He has N
admitted that between 4 January 2006 and 25 March 2009 in Hong
O Kong by deceit he presented fictitious invoices and bills of O
lading to CITIC Ka Wah Bank Limited and falsely represented to
P P
the bank that goods as stated in the said fictitious invoices
and bills of lading were sold by Chi Wo Fresh Fruit Company with
Q Q
intent to defraud and induced the bank to approve and pay to the
R fruit company invoice loans in the total sum of US$34,499,740 R
which resulted in the benefit to the said Chi Wo Fresh Fruit
S Company and/or or in the prejudice or a substantial risk of S
prejudice to the Bank.
T T
2. In March 2002, the defendant set up a company named
U U
Chi Wo Fresh Fruit Company Limited. It engaged in the business
CRT33/15.11.2010/ES 1 DCCC591/2010/Sentence
V V
A A
of trading fruit. The defendant and his wife, Lau Fung-kuen,
were the only directors and shareholders of Chi Wo. In the name
B B
of Chi Wo a bank account was opened at the CITIC Ka Wah Bank on
C 16 September 2002. The defendant and his wife were the C
authorised bank signatories. Since 2002, credit facilities were
D granted by the bank to Chi Wo and they had been progressively D
increased. In 2005, the credit limit of invoice discounting loan
E E
was increased to HK$13.5 million, eventually to 2007 where the
credit limit was increased to HK$25 million. Since 2002, the
F F
defendant had been applying for invoice discounting loans from
G the bank for trade financing. In order to apply for a invoice G
discounting loan, the defendant had to submit invoices together
H with bills of lading to certify that the goods were sold and H
shipped to overseas buyers. Between January 2006 and March 2009,
I I
on behalf of Chi Wo, the defendant had applied to the bank for a
total of 346 invoice discounting loans and the total amount of
J J
loans to Chi Wo was in a total sum of US$34,499,740 equivalent
K
to HK$268,407,977.20. K
L 3. In respect of the 346 invoice discounting loans, L
invoices were submitted by the defendant to the bank purporting
M to show that Chi Wo had commercial transactions with six M
overseas buyers. In fact the overseas buyers had never entered
N N
into the transactions with Chi Wo and the invoices were
fictitious. The bill of ladings submitted by the defendant to
O O
the bank in support of the 346 invoices discounting loans were
P issued by three different companies. The companies operating the P
relevant liners had confirmed the bill of ladings were false.
Q The shipment in relation to the alleged export transactions in Q
fact did not exist.
R R
4. In May 2009, 35 of the 346 invoice discounting loans
S S
remained outstanding in the total sum of HK$21.5 million. As
T there was no repayment made by the defendant, the bank realised T
the properties of the defendant and his relatives and reduced
U the loan outstanding to an amount of HK$11.49 million as at 17 U
CRT33/15.11.2010/ES 2 DCCC591/2010/Sentence
V V
A A
July 2009. Interest has continued to accrue on that sum and as
of today the total amount outstanding is HK$12.95 million.
B B
C 5. The defendant was arrested on 9 February 2010 and was C
interviewed under caution on three occasions. He admitted that
D he had submitted these false export invoices and false bill of D
ladings. He had copied the information in the false invoices and
E E
bill of ladings from some past transactions between Chi Wo and
overseas buyers. As his fruit packaging business in China had
F F
lost HK$8 to HK$10 million in 2006, he started to falsify export
G invoices and bill of ladings in 2006 in order to support his G
fruit packaging business in China. In March 2009, as he had used
H up the credit limit of HK$25 million and could not make any H
repayment, he could not obtain any further invoice discounting
I I
loans from the bank, he therefore self-petitioned for bankruptcy
and he was declared bankrupt around May or June 2009.
J J
K
6. The police seized a desktop computer from the office K
of the defendant and some false invoices issued by Chi Wo and
L false bill of ladings of various dates between July and December L
2007 which had been submitted by the defendant to the bank were
M retrieved from his computer. M
N N
7. The defendant’s counsel, Mr Raymond Chan, mitigated on
his behalf and I have taken into account all that he has said.
O O
In short, the reasons put forward for him committing the present
P offence was that in 2006 the defendant was too ambitious in his P
business and suffered a huge loss of about HK$10 million and
Q therefore to provide for him financially he applied for these Q
discounting loans to cover that loss. The defendant had a
R R
business in China selling fresh fruit and he continued to trade
at a loss over the three years and that is why he kept having to
S S
borrow these sums. When, however, he was unable to repay the
T loan he endeavoured to do his best he could to pay what he could T
and sold one property in his name, one property in the joint
U name of him and his wife and a property in the name of his U
CRT33/15.11.2010/ES 3 DCCC591/2010/Sentence
V V
A A
sister to repay the bank. After the sale of the property the
loan had been reduced by about HK$10 million to the amount
B B
outstanding of HK$11.49 million.
C C
8. The defendant is aged 58, he is married and has a son
D aged 24. The defendant has education up to Form 5, he has been D
working since he was 15 years of age and gradually after working
E E
as an employee and after some 12 years commenced his own company
which was the Chi Wo Company. The defendant has written me a
F F
letter in mitigation setting out the background of his
G employment and how his business trading suffered such a huge G
loss and why he then committed this offence. It is clear from
H the letter that the defendant is deeply remorseful and he knows H
that he has to face the consequences of what he has done and he
I I
knows that he has let down his wife, his parent and his son. At
his age he suffers from various illnesses, the most serious is
J J
his high blood pressure.
K K
9. Mr Chan, his counsel, has submitted to me the case of
L HKSAR v Cheung King, [2001] 3 HKLRD 68 for the purposes of L
assisting me in the guideline starting point for this offence
M and for the same purposes the prosecution has submitted to me M
three cases: Lam Tze Leung CACC476/2004; Lee Wing Kwan
N N
CACC288/2003 and Chin Kam Chiu CACC179/2004. As in all cases,
each case depends on its own particular facts. The closest case
O O
to this case of all those cases submitted is that of Chin Kam
P Chiu. In that case it was a conspiracy to defraud shareholders P
and creditors of the Sing Wah Bank by letters of credit to the
Q knowledge of the defendants where there were no underlying Q
transactions. In about six months there were 25 letters of
R R
credit which generated sums to the order of some $222 million.
In that case the bank had not suffered any loss and the Judge in
S S
that case took a starting point of 7 years’ imprisonment after
T trial and in effect the Court of Appeal said that that was not T
manifestly excessive but eventually in that case the Court of
U Appeal held that there was an unusual feature and that unusual U
CRT33/15.11.2010/ES 4 DCCC591/2010/Sentence
V V
A A
feature was that the instigation of those offences were emanated
from the staff within the bank and that the applicant in that
B B
case should not have a more severe sentence than the staff of
C the bank and the Court of Appeal reduced the sentence C
appropriately.
D D
10. In this case the defendant defrauded the bank by
E E
applying for 346 discounting loans by submitting false
documentation of invoices and bill of ladings. This was to
F F
certify that there were goods sold and shipped to the overseas
G buyers when in fact there were no such transactions. The 346 G
invoice discounting loans were in the total sum of about
H US$34 million and equivalent to HK268 million over a period of H
about three years from January 2006 to March 2009. This on any
I I
terms can be described as a very large sum of money.
J J
11. In this case, as distinguished from the other case of
K
Chin Kam Chiu, the bank has actually suffered a loss of HK$11.49 K
million as of July 09 and as of today including interest of
L HK$12.95 million. The defendant was the sole applicant and the L
sole beneficiary of the loans, his benefit was that his business
M would not foreclose and he could continue to operate it. This M
scheme was solely orchestrated by him. As recognised by the
N N
defendant himself and his counsel, Mr Chan, this offence is a
very serious offence. As Stock J said in the case of Chin Kam
O O
Chiu at paragraph 7:-
P P
“The gravity of offences within this category lies in
Q the attack which they present to the efficacy and Q
importance of the documentary credit system and the
risk that is created whether or not in the event
R there is a loss.” R
S S
12. Defendant, you have shown a concentrated effort of
abusing the documentary credit system of the bank and defrauding
T T
the bank of the money. You were the sole beneficiary of the
U scheme that was operated by you. The total sum defrauded, as I U
mentioned, was about HK$268 million and the loss to the bank
CRT33/15.11.2010/ES 5 DCCC591/2010/Sentence
V V
A A
approximately $12 million. You are a man of clear record. I
accept that there is a genuine remorse on your part. I also take
B B
into account the effort you have made in repaying the loans and
C particularly by the selling of the properties you own. C
D 13. Taking all these matters into account, had I convicted D
you after trial I would have taken a starting point of 6 years’
E E
imprisonment. Giving you, however, full credit for your plea of
guilty, I reduce that term by one-third and you shall be
F F
sentenced to 4 years’ imprisonment.
G G
H H
I I
J J
(S. D’Almada Remedios)
District Judge
K K
L L
M M
N N
O O
P P
Q Q
R R
S S
T T
U U
CRT33/15.11.2010/ES 6 DCCC591/2010/Sentence
V V
A A
DCCC591/2010
B B
IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
C CRIMINAL CASE NO. 591 OF 2010 C
D
---------------------- D
HKSAR
E E
v.
F Ma Fa-keung F
G ---------------------- G
Before: H H Judge S. D’Almada Remedios
H Date: 15 November 2010 at 11.22 am H
Present: Mr Beney Wang Wai Chi, SPP, of the Department of
Justice, for HKSAR
I Mr Raymond Chan, instructed by James W L Li & Co., I
assigned by the Director of Legal Aid, for the
J Defendant J
Offence: (1) Fraud (欺詐罪)
K --------------------- K
L
Reasons for Sentence L
---------------------
M M
1. The defendant has pleaded guilty to one charge of
N fraud, contrary to section 16A of the Theft Ordinance. He has N
admitted that between 4 January 2006 and 25 March 2009 in Hong
O Kong by deceit he presented fictitious invoices and bills of O
lading to CITIC Ka Wah Bank Limited and falsely represented to
P P
the bank that goods as stated in the said fictitious invoices
and bills of lading were sold by Chi Wo Fresh Fruit Company with
Q Q
intent to defraud and induced the bank to approve and pay to the
R fruit company invoice loans in the total sum of US$34,499,740 R
which resulted in the benefit to the said Chi Wo Fresh Fruit
S Company and/or or in the prejudice or a substantial risk of S
prejudice to the Bank.
T T
2. In March 2002, the defendant set up a company named
U U
Chi Wo Fresh Fruit Company Limited. It engaged in the business
CRT33/15.11.2010/ES 1 DCCC591/2010/Sentence
V V
A A
of trading fruit. The defendant and his wife, Lau Fung-kuen,
were the only directors and shareholders of Chi Wo. In the name
B B
of Chi Wo a bank account was opened at the CITIC Ka Wah Bank on
C 16 September 2002. The defendant and his wife were the C
authorised bank signatories. Since 2002, credit facilities were
D granted by the bank to Chi Wo and they had been progressively D
increased. In 2005, the credit limit of invoice discounting loan
E E
was increased to HK$13.5 million, eventually to 2007 where the
credit limit was increased to HK$25 million. Since 2002, the
F F
defendant had been applying for invoice discounting loans from
G the bank for trade financing. In order to apply for a invoice G
discounting loan, the defendant had to submit invoices together
H with bills of lading to certify that the goods were sold and H
shipped to overseas buyers. Between January 2006 and March 2009,
I I
on behalf of Chi Wo, the defendant had applied to the bank for a
total of 346 invoice discounting loans and the total amount of
J J
loans to Chi Wo was in a total sum of US$34,499,740 equivalent
K
to HK$268,407,977.20. K
L 3. In respect of the 346 invoice discounting loans, L
invoices were submitted by the defendant to the bank purporting
M to show that Chi Wo had commercial transactions with six M
overseas buyers. In fact the overseas buyers had never entered
N N
into the transactions with Chi Wo and the invoices were
fictitious. The bill of ladings submitted by the defendant to
O O
the bank in support of the 346 invoices discounting loans were
P issued by three different companies. The companies operating the P
relevant liners had confirmed the bill of ladings were false.
Q The shipment in relation to the alleged export transactions in Q
fact did not exist.
R R
4. In May 2009, 35 of the 346 invoice discounting loans
S S
remained outstanding in the total sum of HK$21.5 million. As
T there was no repayment made by the defendant, the bank realised T
the properties of the defendant and his relatives and reduced
U the loan outstanding to an amount of HK$11.49 million as at 17 U
CRT33/15.11.2010/ES 2 DCCC591/2010/Sentence
V V
A A
July 2009. Interest has continued to accrue on that sum and as
of today the total amount outstanding is HK$12.95 million.
B B
C 5. The defendant was arrested on 9 February 2010 and was C
interviewed under caution on three occasions. He admitted that
D he had submitted these false export invoices and false bill of D
ladings. He had copied the information in the false invoices and
E E
bill of ladings from some past transactions between Chi Wo and
overseas buyers. As his fruit packaging business in China had
F F
lost HK$8 to HK$10 million in 2006, he started to falsify export
G invoices and bill of ladings in 2006 in order to support his G
fruit packaging business in China. In March 2009, as he had used
H up the credit limit of HK$25 million and could not make any H
repayment, he could not obtain any further invoice discounting
I I
loans from the bank, he therefore self-petitioned for bankruptcy
and he was declared bankrupt around May or June 2009.
J J
K
6. The police seized a desktop computer from the office K
of the defendant and some false invoices issued by Chi Wo and
L false bill of ladings of various dates between July and December L
2007 which had been submitted by the defendant to the bank were
M retrieved from his computer. M
N N
7. The defendant’s counsel, Mr Raymond Chan, mitigated on
his behalf and I have taken into account all that he has said.
O O
In short, the reasons put forward for him committing the present
P offence was that in 2006 the defendant was too ambitious in his P
business and suffered a huge loss of about HK$10 million and
Q therefore to provide for him financially he applied for these Q
discounting loans to cover that loss. The defendant had a
R R
business in China selling fresh fruit and he continued to trade
at a loss over the three years and that is why he kept having to
S S
borrow these sums. When, however, he was unable to repay the
T loan he endeavoured to do his best he could to pay what he could T
and sold one property in his name, one property in the joint
U name of him and his wife and a property in the name of his U
CRT33/15.11.2010/ES 3 DCCC591/2010/Sentence
V V
A A
sister to repay the bank. After the sale of the property the
loan had been reduced by about HK$10 million to the amount
B B
outstanding of HK$11.49 million.
C C
8. The defendant is aged 58, he is married and has a son
D aged 24. The defendant has education up to Form 5, he has been D
working since he was 15 years of age and gradually after working
E E
as an employee and after some 12 years commenced his own company
which was the Chi Wo Company. The defendant has written me a
F F
letter in mitigation setting out the background of his
G employment and how his business trading suffered such a huge G
loss and why he then committed this offence. It is clear from
H the letter that the defendant is deeply remorseful and he knows H
that he has to face the consequences of what he has done and he
I I
knows that he has let down his wife, his parent and his son. At
his age he suffers from various illnesses, the most serious is
J J
his high blood pressure.
K K
9. Mr Chan, his counsel, has submitted to me the case of
L HKSAR v Cheung King, [2001] 3 HKLRD 68 for the purposes of L
assisting me in the guideline starting point for this offence
M and for the same purposes the prosecution has submitted to me M
three cases: Lam Tze Leung CACC476/2004; Lee Wing Kwan
N N
CACC288/2003 and Chin Kam Chiu CACC179/2004. As in all cases,
each case depends on its own particular facts. The closest case
O O
to this case of all those cases submitted is that of Chin Kam
P Chiu. In that case it was a conspiracy to defraud shareholders P
and creditors of the Sing Wah Bank by letters of credit to the
Q knowledge of the defendants where there were no underlying Q
transactions. In about six months there were 25 letters of
R R
credit which generated sums to the order of some $222 million.
In that case the bank had not suffered any loss and the Judge in
S S
that case took a starting point of 7 years’ imprisonment after
T trial and in effect the Court of Appeal said that that was not T
manifestly excessive but eventually in that case the Court of
U Appeal held that there was an unusual feature and that unusual U
CRT33/15.11.2010/ES 4 DCCC591/2010/Sentence
V V
A A
feature was that the instigation of those offences were emanated
from the staff within the bank and that the applicant in that
B B
case should not have a more severe sentence than the staff of
C the bank and the Court of Appeal reduced the sentence C
appropriately.
D D
10. In this case the defendant defrauded the bank by
E E
applying for 346 discounting loans by submitting false
documentation of invoices and bill of ladings. This was to
F F
certify that there were goods sold and shipped to the overseas
G buyers when in fact there were no such transactions. The 346 G
invoice discounting loans were in the total sum of about
H US$34 million and equivalent to HK268 million over a period of H
about three years from January 2006 to March 2009. This on any
I I
terms can be described as a very large sum of money.
J J
11. In this case, as distinguished from the other case of
K
Chin Kam Chiu, the bank has actually suffered a loss of HK$11.49 K
million as of July 09 and as of today including interest of
L HK$12.95 million. The defendant was the sole applicant and the L
sole beneficiary of the loans, his benefit was that his business
M would not foreclose and he could continue to operate it. This M
scheme was solely orchestrated by him. As recognised by the
N N
defendant himself and his counsel, Mr Chan, this offence is a
very serious offence. As Stock J said in the case of Chin Kam
O O
Chiu at paragraph 7:-
P P
“The gravity of offences within this category lies in
Q the attack which they present to the efficacy and Q
importance of the documentary credit system and the
risk that is created whether or not in the event
R there is a loss.” R
S S
12. Defendant, you have shown a concentrated effort of
abusing the documentary credit system of the bank and defrauding
T T
the bank of the money. You were the sole beneficiary of the
U scheme that was operated by you. The total sum defrauded, as I U
mentioned, was about HK$268 million and the loss to the bank
CRT33/15.11.2010/ES 5 DCCC591/2010/Sentence
V V
A A
approximately $12 million. You are a man of clear record. I
accept that there is a genuine remorse on your part. I also take
B B
into account the effort you have made in repaying the loans and
C particularly by the selling of the properties you own. C
D 13. Taking all these matters into account, had I convicted D
you after trial I would have taken a starting point of 6 years’
E E
imprisonment. Giving you, however, full credit for your plea of
guilty, I reduce that term by one-third and you shall be
F F
sentenced to 4 years’ imprisonment.
G G
H H
I I
J J
(S. D’Almada Remedios)
District Judge
K K
L L
M M
N N
O O
P P
Q Q
R R
S S
T T
U U
CRT33/15.11.2010/ES 6 DCCC591/2010/Sentence
V V