DCCC1367/2024

DCCC 577/2022 & DCCC 1367/2024 (Consolidated)

[2025] HKDC 1265

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 577 OF 2022 & 1367 OF 2024

---------------------

	HKSAR
	v
	KOTHARI CHIRAG (D)

---------------------

Before:

Her Honour Judge Ada Yim in Court

Date:

19 August 2025

Present:	Mr. Anthony James Sherry, Counsel on Fiat, for HKSAR
	Mr. David Khosa and Ms. Christine Yeung, instructed by Messrs Wong & Co., for the defendant

Offence:	[1-3] Evasion of liability by deception
	(以欺騙手段逃避法律責任)
	[4-5] Attempted fraud (企圖欺詐罪)

--------------------------------------

REASONS FOR VERDICT

--------------------------------------

1.  This is the consolidated trial of DCCC 577/2022 and DCCC 1367/2024.  The defendant (D) is charged with 3 counts of “Evasion of liability by deception” , contrary to section 18B(1)(b) of the Theft Ordinance, Cap.210 (Charge 1 to 3), and 2 counts of “Attempted fraud”, contrary to section 16A of the Theft Ordinance, Cap.210 and sections 159G and 159J of the Crimes Ordinance Cap.200 (Charge 4 to 5).

Prosecution case

2.  D was at all material times the sole director of CSK Diamonds (H.K.) Limited, a diamond trader. The victims in the two cases: Legend Bright Trading Limited (Charge 1 to 3) and NYD HK Limited (Charge 4 to 5) were also diamond traders who have each been defrauded of a valuable diamond by the defendant’s scheme of fraud from December 2017 to March 2018. 

3.  D used a similar modus operandi, after posing as a legitimate diamond merchant, he persuaded the victims to entrust him with their diamonds without payment and then repeatedly and fraudulently induced them to believe that he had or would pay for the diamonds.   Ultimately, the defendant made no payment and the victims reported their losses to the police.

Defence case

4.  D had no intention to default the payments.  He honestly believed there would be fund to meet the payments when he entered the contract to buy the diamonds, and when he arranged for the payments of the diamonds. 

Background

5.  RapNet is an internet communication platform for diamond, gems and jewellery dealers and exclusive to the members only.  CSK Diamonds (H.K.) Limited (CSK), Legend Bright Trading Limited (Legend Bright) and NYD HK Limited (NYD) were registered members of RapNet.

6.  D was a self-employed diamond trader.  He conducted his business through CSK.  At all material times, he was the sole director, the sole shareholder and the de facto sole bank account signatory of CSK for all bank accounts of CSK.  D was also one of the directors and shareholders of Express State Limited (Express State).

7.  Dina Soloveva (PW1) was the sales manager of Legend Bright and Noam Yosef (PW4) was the owner of NYD.  PW1 and PW4 knew the D before they dealt with him in December 2017. They knew CSK was D’s company and a member of RapNet.  

8.  Potential buyer needs time to consider whether a diamond is suitable.   It is a general practice in diamond trading between dealers to let the other to keep their diamonds for viewing with bipartite memo, which will specify the “length of the period” and no transfer of ownership until full payment made, and depending on the circumstances with or without collateral.

9.  Around December 2017, Legend Bright posted a 25.03 carat, fancy yellow, cushion shape diamond at US$575,690 (Diamond A) on RapNet.  On 1 December 2017, D called PW1 and asked for Diamond A, PW1 agreed to let D take Diamond A on a memo basis.  PW1 was responsible for all dealings with D regarding the sale of Diamond A.

10.  Following the discussion between PW1 and D, on 4 December 2017 Evgeny Orelkin (PW2) of Legend Bright brought Diamond A and memo (Exhibit P7) to CSK’s office.  D kept the diamond, D and PW2 signed to acknowledge acceptance of the terms on the memo.  D was allowed to keep the diamond from 4 December to 18 December 2017, there was no transfer of ownership unless full payment made.

11.  Time being on 11 December 2017, D also bought a diamond (worth US$ 91,989.40) from Tzvika Fetman of ELS Group Limited (his defence witness), an invoice (Exhibit D21) was issued and the payment was due on 10 January 2018.  No payment has ever been made by D.

12.  On 19 December 2017, D indicated that he had a potential buyer and needed more time with Diamond A, PW1 extended the terms of the memo until 8 January 2018 by another memo (Exhibit P8). 

13.  D did not return Diamond A to Legend Bright after 8 January 2018. 

14.  On 19 January 2018, D called and told PW4 that he had a client for Diamond B (a 3.24 carat, F colour diamond at US$ 81,518.40) which PW4 posted on RapNet.  PW4 let D had the diamond on memo basis (Exhibit P34), no specific length of time was stated but stated clearly the goods were delivered for examination and inspection only and was to be returned on demand.

15.  On 22 January 2018, at 12:41pm, PW1 asked D to return Diamond A.  Between 22 January and 26 January 2018, PW1 and D engaged in price negotiation.  On 26 January, D offered US$510,000, money in one week, and accepted by PW1.

16.  At the same time, D and PW4 also engaged in price negotiation on Diamond B. 

17.  On 26 January 2018, Legend Bright issued an invoice to CSK (Exhibit P9).  The term of payment being “on or before 6 February 2018”, and there was no transfer of ownership of Diamond A until the payment was made in full.

18.  On 28 February 2018, D told PW4 he would make payment for Diamond B in two weeks (i.e. 14 March 2018).  In February 2018, D also borrowed a diamond (worth US$ 33,482) from Sianna Lai of Natural Diamond Limited (his defence witness), a memo was issued for it.

19.  Legend Bright did not receive any payment from D.  The price of Diamond A went up to US$ 520,126 and a new invoice dated 8 March (Exhibit P15) was issued to CSK, payment to be made on or before 13 March 2018.

20.  At all material times, CSK had four company bank accounts for CSK: HSBC, DBS, Standard Chartered and Dah Sing.  D admitted he was the sole owner of the HSBC, DBS and Dah Sing company bank account during his video-recorded interview but he did not mention the Standard Chartered bank account during the interview.

21.  D was in Hong Kong between 12 June 2017 and 4 April 2018. He had arranged two fund transfer applications and drawn one cheque for the payment of Diamond A but Legend Bright has never received any money.  He had arranged two fund transfer applications for the payment of Diamond B but NYD also has never received any money.   

22.  Legend Bright and NYD reported the matter to Police in April 2018 and May 2018 respectively.  D was arrested in relation to Charges 1 to 3 on 24 April 2018 and Charges 4 and 5 on 13 July 2018.

23.  Around April 2018, Sianna contacted D and found out that D could not return the diamond to her.  Instead, D gave Sianna a personal guarantee for the payment of the diamond (Exhibit D20).  Between July 2018 and January 2019, Sianna received four instalments, a total of HK$50,962 (equivalent to about US$6,500).

24.  Around October 2018, D instructed lawyer to handle his outstanding financial obligations.  In the letter to Legend Bright, D denied obtaining the diamond by fraud and offered to make payment by instalments.  Similar letters were sent to all CSK and D’s creditors. 

25.  D tried to repay some of his creditors (including Sianna) by instalments until a bankruptcy order was made against him on 18 February 2019. 

26.  Legend Bright, NYD and Mr Fetman, however, have never received any payment from D.

Issues in dispute

27.  D agrees most of the prosecution case, being the sole director and shareholder of CSK he is liable to pay for Diamond A and Diamond B, except that he has never been dishonest.  Thus the only issue is whether D was acting dishonestly at the material time:

1) Was he aware there was no sufficient fund in CSK’s HSBC account (808-684021-838) to meet the on-line fund transfer application made on 5 February 2018?

2) When D issued the cheque on 12 March 2018, did he know it was drawn on HSBC account (817-319676-201), which was closed in 2016?

3) Did he know there was no available fund in CSK’s HSBC account (808-684021-838) to meet the fund transfer application he made on 15 March 2018?

4) Did he know there was no fund in his DBS account to meet the on-line fund transfer application he made it on 15 March 2018?

5) Did he cancel the Express State fund transfer application made on 20 March 2018?

Findings

28.  I have reminded myself of the burden and standard of proof. It is for the prosecution to prove D’s guilt on each and every element of the charges beyond all reasonable doubt.  D has no burden of proof whatsoever.  D has a clear record and the court has received positive evidence of his good character, it is less likely that he would commit a crime and more likely that he is telling the truth in his evidence. 

29.  The parties have prepared detail summary of the evidence and made thorough analysis of the issues in their written submissions.   I have considered all the evidence in light of the defence case and the defence submission and each charge is to be considered separately.   I have reminded myself the relevant principle in relation to the drawing of irresistible inference.   Where there is any reasonable doubt, the benefit should go to the defendant. 

30.  D has had a strong diamond trading background. He set up an office (D.A. Jhaveri (HK) Limited) in Hong Kong for his then employer D.A. Jhaveri in 2009 September/October, the initial inventory was around US$2 million.  The Hong Kong office officially started business in early 2010, and in 2014 D bought and took over the business and changed the company’s name to CSK. 

31.  D has established a good reputation in diamond trading.  D called two of his creditors, Ms Sianna Lai and Mr Tzvika Fetman, to be his character witnesses.  Sianna said had she known that D had outstanding debts of about US$600,000 for diamonds, she probably would not have released her diamond to D without some security or collateral.  Mr Fetman agrees it is bad form in their business for traders not to pay for diamonds they have taken on trust from other traders.  Nevertheless, the two defence witnesses gave positive comments on D’s character and believed he did not delay the payments with any criminal intent. 

32.  D accepted payment in cash and bank transfer from his clients.  It was D’s normal practice to ask for reference and did background checking before he dealt with new faces.  Yet D had experienced loss of diamond lending on memo basis and non-payment of invoices on a few occasions.  

33.  According to D, since year 2017/2018 it has become more and more difficult for diamond traders to open bank accounts in Hong Kong, he believed the risk of money laundering was one of the major reasons.  In 2017, he had multiple transactions held up by the bank, and a few times the bank sent the money back (to his clients).  To find out what had happened, he traced the remittance fund transfer via MT103, and learned that the fund remitted still held in the clients’ accounts and later the bank returned the fund back to the clients.  The outward payment he made would be stuck for weeks and local transfer would take a week to 10 days before the money would reach the other party.   And this affected the cash flow of his business.

34.  According to D, to facilitate the process of the remittance transaction, the bank would ask for invoices, relationships with clients and history of the business.  Sometimes the banks would not clear the payment.  To illustrate the matter, D submitted certain emails from HSBC, in which HSBC asked for information about transactions already shown on D’s statement. 

35.  For example, in an email (Exhibit D5) and in a follow up email (Exhibit D6), HSBC was asking in September 2017 for supporting information about an Inward Telegraphic Transfer deposited into D’s account on 2 June 2017, of which D had already withdrawn on 5 June 2017 by 3 withdrawals. In another email dated 23 November 2017 (Exhibit D8) HSBC was asking about a HK$700,000 cash deposit transaction happened on 3 November 2017, of which HK$642,000 was withdrawn by two transfers on the same day. 

36.  It appears that despite queries from HSBC, the HSBC account was operating properly and D could have access to the funds deposited into his account without any problem.   D agreed CSK HSBC account was not frozen at all material times.

• Defaulting on financial obligations since January 2018

37.  D took Diamond A (worth at least US$510,000) on memo basis from Legend Bright on 4 December 2018, and purchased a diamond (worth US$91,989.40) from Mr Fetman on 11 December 2018. 

38.  D failed to meet the payment of Mr Fetman’s invoice when it became due on 10 January 2018 and Mr Fetman has never received any money from D.  On 19 January 2018, D took Diamond B (worth US$81,518.40) from PW4 on memo basis. Towards the end of January 2018, D engaged in price negotiation with PW1 and PW4.

39.  On 26 January 2018, Legend Bright issued an invoice in the sum of US$510,000 for Diamond A, amount to be paid on or before 6 February 2018.  Legend Bright has never received any money from D. 

40.  On 14 February 2018, D took a diamond (worth US$33,482) from Sianna on memo basis, but never returned it to Sianna.

41.  On 28 February 2018, D told PW4 he would make payment for Diamond B by 14 March 2018 but NYD has never received any money from D. 

42.  Time being the price of Diamond A went up to US$520,126, a new invoice was issued, full payment by 13 March 2018 but Legend Bright has never received any money from D.

43.  D only made partial payment to Sianna, equivalent to about US$6,500, by four instalments between July 2018 and January 2019.  Thereafter, abankruptcy order was made against D on 18 February 2019. 

Evasion of liability by deception

22. The offence is under Section 18B of the Theft Ordinance, which provides that:

“18B. Evasion of liability by deception

(1) Subject to subsection (2), where a person by any deception (whether or not such deception was the sole or main inducement)—

(a) dishonestly secures the remission of the whole or part of any existing liability to make a payment, whether his own liability or another’s;

(b) with intent to make default (whether the default is permanent or otherwise) in whole or in part on any existing liability to make a payment, or with intent to let another do so, dishonestly induces the creditor or any person claiming payment on behalf of the creditor to wait for payment (whether or not the due date for payment is deferred) or to forgo payment; or

(c) dishonestly obtains any exemption from or abatement of liability to make a payment,

he shall be guilty of an offence and shall be liable on conviction upon indictment to imprisonment for 10 years.

(2) For the purposes of this section liability (法律責任) means legally enforceable liability; and subsection (1) shall not apply in relation to a liability that has not been accepted or established to pay compensation for a wrongful act or omission.

(3) For the purposes of subsection (1)(b) a person induced to take in payment a cheque or other security for money by way of conditional satisfaction of a pre-existing liability is to be treated not as being paid but as being induced to wait for payment.

(4) For the purposes of subsection (1)(c) obtains (取得) includes obtaining for another or enabling another to obtain.

(5) For the purposes of this section, deception (欺騙手段) has the same meaning as in section 17.

44.  At all material times, D was the sole director and sole shareholder of CSK.  D carried out his diamond trading business via CSK.  There is no dispute that D has taken Diamond A in the name of CSK and was under a legal duty to pay Legend Bright for the diamond.

45.  D gave evidence that he had a client in China, Mr Lau, whom he had dealt with over the years, a lot of times.  In the beginning, he required a cash collateral equivalent to the value of the goods before letting Mr Lau to take his goods on consignment and later the cash collateral reduced to 50% of the goods value.  From mid-2016 he no longer required collateral when Mr Lau sent his staff to take goods from him on memo basis.  The transactions with Mr Lau went on extremely smoothly.

46.  D gave evidence that Mr Lau or his representative came over to view Diamond A, and decided to take it together with some of D’s stone on consignment.  He let them have Diamond A and his stones on consignment basis and after some time they started to negotiate on the price.  He had price negotiation with Mr Lau on one hand and PW1 on another hand simultaneously.

47.  D gave evidence that he confirmed the deal with Mr Lau towards the end of January 2018 and issued the hand written invoice dated 2 February 2018 (Exhibit D10) with “Terms of Payment: 50% cash and Due Date: 50% 9 March 2018” though Mr Lau did not sign, or put any company chop on it to acknowledge the sale.  There was no hard deadline stated for the initial 50% cash (i.e. US$394,851) and he expected it to come in within the week and the balance on 9 March 2018.  Together with his daily cash flow, he believed he would have enough fund to make full payment to Legend Bright by 9 February 2018. 

48.  On 26 January 2018, after PW1 and D agreed on the price, Legend Bright issued an invoice to D on the same day, and expected D to make payment in a week.  On 5 February 2018, D told PW1 he has made the transfer and later on 8 February 2018 D send PW1 a picture of an online banking transaction (Exhbit P10).  The picture shows an online transfer application of US$510,000 from CSK’s HSBC bank account to Legend Bright’s DBS bank account.  The transaction status was “Pending Execute”, and the value date was 8 February 2018.

49.  D gave evidence that contrary to his anticipation he did not receive any money from Mr Lau.  In the beginning he thought Mr Lau was only away for the Chinese New Year, but when Mr Lau did not reply their calls around 9 March 2018, he tried to look for Mr Lau and approached debt collectors for assistance to locate Mr Lau but failed.  His problem with Mr Lau together with the lack of fund flow due to the banks delay/reject payments, created immense problems to his business liquidity.

50.  US$ 510,000 was not a small amount to the D.  The alleged payments clearance problem was not new to D.  According to D, he relied on the 50% cash from the sale to Mr Lau (Exhibit D10) to settle the deal with Legend Bright he made on 26 January 2018.   Should this be the case, I fail to see how would he miss out the payment date of the initial 50% cash when he issued the invoice, where no cash was received at the time he handed over Diamond A to Mr Lau or his representative as he alleged.

• Charge 1

51.  D is charged that between 5 February 2018 and 6 March 2018, with intent to make default in whole or in part on an existing liability by himself to make payment of US$510,000 to Legend Bright, dishonestly induced the said Legend Bright to wait for payment by deception, namely by falsely representing that the account (808-684021-838) held in the name of CSK would be or had been debited pursuant to the instructions of D gave on 5 February 2018.

52.  The question is whether between 5 February and 6 March 2018, D intended to make default (whether the default is permanent or otherwise)the payment of US$510,000 he liable to Legend Bright dishonestly.

53.  D was supposed to make payment by 6 February 2018.  There was no available fund shown in CSK HSBC account, and according to his evidence he relied on the “50% cash” from Mr Lau to meet the payment.  That being the case he should be aware that he had no available fund to settle the payment of Diamond A by 5 February 2018.  However, the WhatsApp record between PW1 and D shows that D kept misleading PW1 that he had available funds to meet the transfer (Exhibit P4):

• On 5 February, when PW1 asked D about the payment, D told PW1 that he was doing it now from his HSBC bank account.

• On 6 February, he via WhatsApp told PW1 the money would debit into their account tomorrow or day after.

• On 7 February, PW1 asked for proof of the transfer.

• On 8 February, D send over Exhibit P10 via WhatsApp and told PW1 “I think due to amount its taking little longer but they value date tomorrow”.

• On 9 February (Friday), PW1 asked for copy of the bank slip and D said he was not around and would send to her on Monday morning.

54.  A transfer application would only be processed when there is fund in the bank account.  According to D’s evidence, he was aware of this on-line application, either him or his assistant made the application.  In order to check the updated situation, D went to the bank to make enquiry and was told at the counter that coming in funds were yet to be cleared to the account and the payment was not executed.  D said he believed he had incoming fund to be cleared in due course, and he was not acting dishonest at the material time.

55.  D’s evidence suggested that the teller could see from the computer screen there was uncleared transaction in CSK account otherwise the teller would not be able to tell him the information.  Yet no such transaction was shown in the bank statement.  D explained fund returned to the sender by HSBC was not shown on bank statement.  However, it is noted that the return of bounced cheques were shown on HSBC bank statement.  D said HSBC had a different treatment for remittance returned to sender by HSBC.

56.  Any suggestion that HSBC did not show all the banking transactions handled by the bank on the bank statement is only a bare allegation from D.  In any event, D alleged he experienced on a number of occasions funds to be cleared rejected by HSBC.   Should that be the case, D should have known that he could only be sure of the availability of the fund after it was cleared by HSBC. 

57.  D agreed he did not have sufficient financial resource to pay Legend Bright in February 2018.  Therefore, it is plain that D knew there was no available funds in CSK HSBC account between 5 February and 6 March 2018 and according to his own evidence, he could not be sure, when “the funds” would be available, before it was cleared by the bank.

58.  I consider and find starting from 5 February 2018, D by WhatsApp repeatedly represented to PW1 that he had given instruction to HSBC on 5 February to transfer US$510,000 from CSK’s account (808-684021-838) with an intention to misled PW1 to believe the money would be transferred to Legend Bright in due course.  In supporting his allegation, D provided Exhibit P10 to PW1.  However, no such transaction appeared on the bank statement. 

59.  According to PW1, having received Exhibit P10 on 8 February 2018, she believed D has made the transfer to her company.  She expected to receive the money on the company bank account but did not.  She chased D for payment everyday via WhatsApp and telephone; she received many promises and excuses but not the money. 

60.  It should be clear to D that Legend Bright would not agree to defer the payment.   According to D’s evidence, Mr Lau disappeared and he did not receive any money from Mr Lau and any alleged incoming funds yet to be cleared, therefore he was not in a position to make payment to Legend Bright.  However, D continued to induce Legend Bright to wait for payment by false representations. 

61.  On 12 February (Monday), D told PW1 (at 10:20am)  “my relationship manager told me it can take 2 to 3 days for dbs (DBS) to clear and give you due to amount.  It left me Friday (9 February) already”.  PW1 repeatedly requested for a copy of the bank slip, but D said he was not able to send her the bank slip because he was not in the office, because he was sick, and his accountant was back in India. 

62.  On 13 February, D asked PW1 whether she received the money and proposed to draw a cheque for the amount.  In believing D has made the transfer, PW1 considered to deposit a cheque would make thing more complicated.  D told PW1 “the money definitely left me” and asked PW1 whether the bank account details provided by her was accurate. 

63.  On 14 February, D sent a message to PW1, asserting that to be an email from HSBC to show the transfer of US$510,000 from CSK’s HSBC account to Legend Bright bank account (Exhibit P11).  PW1 upon received Exhibit P11 believed the transfer was completed and waited for the money for another week, but no money was received. As mentioned above, no such transaction appeared on the bank statement.

64.  D said the screenshot (Exhibit P11) was sent to him by his secretary and he forwarded to PW1. He only made one transfer of US$510,000 at that time but according to his evidence, he knew he did not have available funds to meet the transfer at the material time. 

65.  On 21 February, PW1 told D her company did not receive any money and requested D to enquire with HSBC.  Still believing D has made the transfer, thinking it might be some delay with the bank to release the payment, PW1 offered to prepare a letter to clarify the transaction of Diamond A and to go to the bank with D.  PW1 continued to chase for payment but no money was received. 

66.  On 6 March, D told PW1 “it has been 3 weeks since money left me” and said he believe the money left his HSBC account on 9 or 10 February. PW1 asked for mt103 and banker contact to make direct enquiry with the bank and D said he was in Guangzhou factory and would call her back.   PW1 continued to ask D for mt103 on the next day (7 March) without success. 

67.  Any representation from D that he was out of Hong Kong was untrue, according to his movement record (Exhibit P16) he was in Hong Kong at all material times.  D said he needed more time to figure out the matter, and considered the misrepresentations he made about his whereabouts were only white lies.

68.  The CSK HSBC account (808-684021-838) was only operated by D at the material time.  The maximum US$ balance of this account on 5 February 2018 was US$43,700 and there were 2 withdrawals on that day (US$7.05 and US$43,605), leaving a balance of US$ 87.95. The on-line transfer application status was “Pending Execute” (Exhibit P10).  When D made the withdrawals on 5 February, he should have been aware that he did not have sufficient fund to meet the transfer of US$510,000 to Legend Bright.  D further withdrew the remaining US$87.95 out of the account on 7 February.  The balance of US$ remained zero till 28 February 2018 (Trial Bundle pg. 141).  

69.  The evidence suggests that D knew he did not have available fund to meet the transfer.  D had no reason to believe US$510,000 has been deducted from the CSK’s account when he told PW1 money has left his account pursuant to the transfer he made. D was simply lying to PW1 when he said he believed the money left his HSBC account on 9 or 10 February.

70.  PW1 repeatedly asked for bank slip and mt103 enabling her company to make direct enquiry with the bank, she turned down D’s suggestion to pay by cheque only because she believed transfer has been effected and did not want to complicate the matter.   Whoever was the author of Exhibit P11, the only irresistible inference is that D knew no transfer of fund has ever been effected, he knew Exhibit P11 did not reflect the truth, and he was not in a position to provide any mt103 of a transfer never processed.

71.  The only irresistible inference is that when D made withdrawal on 7 February 2018, he knew he has withdrawn all the US$ from this account.  No US$ went into this account up to 28 February 2018.  D knew he had no available US$ balance in the account 808-684021-838 to meet the transfer he purportedly made on 5 February 2018.  All that D told PW1 via WhatsApp between 5 February and 6 March 2018 was untrue. 

72.  I have applied the Gosh Test in determining whether D was acting dishonestly.   D knew Legend Bright would not agree to defer the payment, to avoid Legend Bright to take any  action for the recovery, he continued to deceive PW1 into believing that transfer was completed and money has left his account by 10 February 2018, induced Legend Bright to wait for payment.  

73.  What D did was obviously dishonest by ordinary standards.  I consider and find the only irresistible inference is that D knew he was acting dishonestly and tried to exonerate himself by referring to his misrepresentations as to his whereabouts as white lies and attempted to justify his misrepresentations as to the status of the transfer by the alleged “incoming fund rejected by HSBC”.

• Charge 2

74.  D is charged that between 12 March 2018 and 14 March 2018, with intent to make default in whole or in part on an existing liability by himself to make payment of US$520,126 to Legend Bright, dishonestly induced the said Legend Bright to wait for payment by deception, namely by falsely representing that a cheque dated 13 March 2018, drawn on the account of CSK with HSBC would be a good and valid order for the payment if presented for payment on or after the date thereon.

75.  PW1 gave evidence that her company did not receive any payment from D. She contacted D on 8 March 2018, told him that the price for the diamond has increased, and the new price would be US$520,126.  A new invoice was issued to CSK (Exhibit P15), payment to be made on or before 13 March 2018.  D promised to give a cheque to pay this invoice but no cheque was received by 9 March 2018.  D said he left for Guangzhou for some business.

76.  According to D he relied on Mr Lau payment to meet the clearance of the cheque, he has lost contact with Mr Lau, and he had no idea of Mr Lau’s whereabouts.  He agreed he lied to PW1 because he needed some time to figure out things with Mr Lau.  He considered these to be white lies.  However, US$520,126 was not small amount to Legend Bright, D knew PW1 has been chasing him for payment since 5 February 2018.   

77.  Any representation from D that he was out of Hong Kong was untrue.  The WhatsApp record between PW1 and D shows that PW1 repeatedly asked for the cheque and D tried to procrastinate the matter (Exhibit P4):

• On 9 March around 10:20am, D said he was on way to his factory in Guangzhou, would pass PW1 the cheque today. He has cancelled the (transfer) transaction and would close his HSBC account after the cheque cleared.

• On 9 March afternoon, D said he was still in Guangzhou and not sure if could be back in time. He did not realize the factory problem would take so much time

• On 10 March (Saturday), D said he was on his way. PW1 said they were not working that day and arranged to meet D on Monday.

78.  On 12 March, D again tried to procrastinate the matter further.  PW1 asked him around 9am what time he would come with the cheque.  D said he would come at 2:30pm.  Yet at 4:14pm, D told PW1 he had a meeting and would be finished by 4pm, PW1 offered to come over to collect the cheque and said she wanted to deposit it today. PW1 asked for a photo of the cheque, that was sent over via WhatsApp. D said his staff would bring the cheque to her soon.  At around 4:15pm, D suggested to let his staff to deposit the cheque instead of coming over to PW1’s office. PW1 disagreed to this arrangement.  Eventually, it was arranged that they met at D’s office at around 5pm for the collection of the cheque (Exhibit P4).    At last, D handed over the cheque on 12 March after office hours.

79.  D gave evidence that he did not have fund in the HSBC account and when he handed over the cheque, the understanding was that it was not to be cashed immediately and he would tell her when she could cash it.  He had told PW1 to hold on to it.  When this was put to PW1 by the defence, she disagreed and said that was never done.  I consider and accept PW1’s evidence and find that D had never told PW1 there was no fund to meet the cheque.

80.  PW1 gave evidence that she went to D’s office on 12 March 2018, and D gave her a cheque dated 13 March 2018 (Exhibit P18). As the term of payment was on or before 13 March, PW1 took the cheque and deposited it on the next day.  Even with available fund in the account, the cheque would only be cleared on the next business day upon presentation.  By pushing back the collection of the cheque from 9 March to 12 March, D caused Legend Bright continued to wait for payment beyond the due date of the second invoice.

81.  On 14 March 2018, PW1 checked the online banking of her company and found the cheque deposit transaction was cancelled.  Later they received from the bank the bounced cheque with a stamp “ACCOUNT CLOSED” on it (Trial Bundle pg.172 – 174).  

82.  PW1 gave evidence that upon receiving the bounced cheque, she immediately contacted D to ask what has happened and demanded the return of Diamond A.  As transpired in the WhatsApp record of 14 March 2018, D reacted as if he was taken by surprise.  At around 4pm, D said he was at HSBC and offered to show PW1 the balance of his account (Exhibit P23, Trial Bundle pg.176).

83.  The bounced cheque was drawn on another CSK HSBC account (817-319676-201) which was closed on 26 April 2016.  The cheque number of this cheque book runs from 247481 to 247530, and the cheque issued to PW1 bearing the number 247490.  This cheque book was shown to D during his VRI (Exhibit P41 Counter 295).  D gave evidence that this was a cheque book with cheque stub on the left hand side, that being the case, the date or the particulars shown on the cheque stub of the cheque(s) issued previously should be obvious to him.  Yet the D said he did not realize he got the wrong cheque book.

84.  D said he meant to draw a cheque from account (808-684021-838) yet this account has no US$ between 3 March and 13 March 2018, the period of which he promised to draw a cheque for the payment of Diamond A (Trial Bundle pg.145).  

85.  Further, knowing that PW1 wanted to take and deposit the cheque on 12 March 2018, D still post-dated the cheque, deliberately put 13 March 2018 on it, and on 14 March 2018 deposited US$896,777 into this HSBC account by a cheque drawn on another CSK Standard Chartered Bank account.  According to D’s evidence, he knew there was no fund in the HSBC account (808-684021-838) but there were funds coming into the Standard Chartered account.  That being the case, should D intend to settle the payment of Diamond A, he could have simply drawn a cheque on the Standard Chartered account for direct payment. 

86.  A number of cheques were deposited into the HSBC account (808-684021-838) in March 2018, those between 14 March and 22 March were withdrawn on the next day.  D said some of the cheques bounced but none recorded as such on the statement.  The only bounced cheque shown on the statement is on 26 March in the sum of US$57,512 (Trial Bundle pg.145).  D said he was the only person operating the HSBC account in March 2018 and he used the funds towards payments but apparently he did not applied these to pay Legend Bright or NYD.   

87.  On many days in March 2018, the balance of the account (808-684021-838) was over US$520,126.  D had no control of the deposit of the cheque he issued to Legend Bright though it would be more likely that PW1 would deposit it on 13 March 2018.  In any event, if the cheque only bounced for unavailable fund, PW1 could have deposited it again after she knew there was fund in the account and have the cheque cashed.   However, with a bounced cheque drawn on a closed account, Legend Bright could not re-deposit it even there was available balance in another CSK HSBC account (808-684021-838).

88.  If the cheque was meant to be drawn on the account (808-684021-838) as alleged by D, when it returned as bounced cheque for insufficient funds, PW1 could have deposited it again once she was informed by D there was fund in the account.  Should the cheque of US$896,777 bounced as alleged by D, when PW1 re-deposited the bounced cheque, it would bounce again and PW1 would discover D was lying to her about his intention to pay Legend Bright.

89.  D was inside a HSBC branch when he had the balance of his account printed out and send to PW1 on 14 March 2018.  After he sent the account balance to PW1, he was still complaining HSBC closed his account in the WhatsApp.  If he had any doubt about the clearance of the cheque he gave to PW1, he could have simply clarified with the teller of the branch and then he would find out the cheque was not drawn from the account he intended.   Apparently, he has not done so, and this suggested he knew the cheque was bound to return unpaid.

90.  According to the banker affirmation, the bank statement and the copy of the cheque enclosed, the balance of US$ 896,777 shown on Exhibit P23 became available fund on 15 March 2018.  However, D withdrew the amount on 15 March and did not apply this to pay Legend Bright.  Should D have only made an inadvertent mistake as alleged why did he withdraw the balance from the account before the clearance of the cheque?  All this shown D had no intention to make payment to Legend Bright at the material time.  I have reservation that D did not notice the cheque he issued was from an account closed in 2016. 

91.  Further, should D have available fund in the CSK Standard Chartered account and any intention to settle the payment of Diamond A, he could have simply drawn a cheque from the CSK Standard Chartered account to settle the payment directly, instead of issuing a cheque to CSK or arranging another fund transfer application on 15 March 2018.  

92.  D knew Legend Bright would not agree to defer the payment.  I consider and find the only irresistible inference is that D had no intention to honour any cheque he gave PW1 on 12 March 2018 for the payment of Diamond A, and he knew the cheque he handed over to PW1 was drawn on a closed account, only to induce Legend Bright to wait for the payment .

93.  I have applied the Gosh Test in determining whether D was acting dishonestly.   What D did was obviously dishonest by ordinary standards.  I consider and find the only irresistible inference is that D knew he was acting dishonestly and tried to exonerate himself by referring it as an inadvertent mistake.   I consider and find that any representation from D to PW1 that the cheque he handed over would be a good and valid order for payment upon presentation was untrue and made by him dishonestly. 

• Charge 3

94.  D is charged that between 15 March 2018 and 21 March 2018, with intent to make default in whole or in part on an existing liability by himself to make payment of US$520,216 to Legend Bright, dishonestly induced the said Legend Bright to wait for payment by deception, namely by falsely representing that the account (808-684021-838) held in the name of CSK would be or had been debited pursuant to the instruction of D gave on 15 March 2018.

95.  PW1 gave evidence that by then she started to have doubt on D’s words because D had put forwarded different excuses, she could not tell if D was trying to pay or just cheating them.  D offered to make a bank transfer in front of them, so she and the director of the company Olga Kubasova (PW3) met D at a branch of HSBC on 15 March 2018.  She was expecting to have the matter finalized at the branch.  PW3 gave similar evidence as PW1.

96.  The WhatsApp record shows that PW1, PW3 and D met each other around 11:41am on 15 March 2018 and by 12:49pm they have left the bank.  According to the time printed on the application (Exhibit P26), the application for fund transfer from CSK HSBC account (808-684021-838) to Legend Bright DBS account was made on 15 March 2018 at 12:07pm.

97.  PW1 gave evidence that when D discussed with the bank officer, she and PW3 were a short from them and she only able to hear the beginning of their conversation and not everything they said.  D made a transfer to Legend Bright.   The bank officer refused to answer their enquiry about D’s company account.  At the end, D asked the officer to provide a copy of the transfer application to her company.  She expected the transfer was done and they only needed to wait for the money. However, no money was received.

98.  The WhatsApp record between PW1 and D shows that PW1 repeatedly asked for the progress of the transfer and D tried to procrastinate the matter (Exhibit P4):

• On 16 Mar (Friday), PW1 asked D for the progress of the transfer, D said he called the bank and was told money has left his account. PW1 asked for swift message, D said the bank would only email advice confirmation. PW1 repeatedly requested for confirmation advice. At 22:24:23 hours, D said money was not deducted yet but it shown approved.

• On 19 March (Monday), D told PW1 money has left his account. PW1 asked for confirmation but D said he was in Shenzhen not able to send her the confirmation and his staff did not have authorization to assess his company account.

• On 20 March, D said he would back to office at 12:30pm. PW1 told D still not received the money and requested D to arrange payment in cash. At 12:05:04 hours D said he was at the bank.

99.  PW1 and the D continued to discuss on the arrangements of payment by cash for the rest of 20 March 2018.  During which PW1 asked D for confirmation of money being withdrawn from his account as alleged.  D said he was not able to make a print out as he was in Guangzhou since afternoon.  Again, D was lying, he was in Hong Kong on 20 March 2018.

100.  The discussion continued on 21 March 2018, D told PW1 he would send her some screenshot by 12 noon and by Friday (23 March) part of the amount in cash would be ready for collection and deposit into her company bank account.  A photo of a redacted ledger (Exhibit P29) was sent to PW1 via WhatsApp by D, purporting to show that US$520,126 was deducted from the account on 21 March 2018.  However, no money was ever received by Legend Bright.

101.  It was stated on the application form (Exhibit P26) that the account (808-684021-838) was to be debited, of the amount US$520,126, on 15 March 2018.  Whereas the US$520,126 shown on Exhibit P29 came from a cheque drawn from the CSK Standard Chartered account and deposited into the HSBC account on 20 March 2018.  The very fact that D made use of a cheque drawn by him and deposited on 20 March 2018 to induce PW1 to believe the fund transfer made on 15 March 2018 has been processed shown that D knew there was no available fund for the transfer and no money would have remitted into Legend Bright DBS account.

102.  Indeed all the debit entries of the HSBC account between 14 March and 21 March 2018 came from cheques issued by D and drawn on the CSK Standard Chartered account or the CSK Dah Shing Bank account.  Should D had available fund and intended to make payment for Diamond A, he could have made use of his funds in Standard Chartered or Dah Shing Bank (Trial Bundle pg.145, 165-169).

103.  I consider all these inter-bank funds transfer between various CSK bank accounts were just to inflate the HSBC account balance and to induce PW1 to believe D had available fund to meet the fund transfer / the cheque he issued for the payment and fund had been deducted from CSK account.

104.  I have applied the Gosh Test in determining whether D was acting dishonestly.   D knew Legend Bright would not agree to defer the payment, to avoid Legend Bright to take any  action for the recovery, he continued to deceive PW1 into believing that transfer was completed and money had left his account on 21 March 2018, induced Legend Bright to wait for payment.  What D did was obviously dishonest by ordinary standards.  I consider and find the only irresistible inference is that D knew he was acting dishonestly and tried to exonerate himself by referring the lies he made as white lies.

Attempted fraud

The offence of Fraud

105. Section 16A(1) of the Theft Ordinance, Cap. 210, provides:

“(1) If any person by any deceit (whether or not the deceit is the sole or main inducement) and with intent to defraud induces another person to commit an act or make an omission, which results either –

(a) in benefit to any person other than the second-mentioned person; or

(b)in prejudice or a substantial risk of prejudice to any person other than the first-mentioned person,

the first-mentioned person commits the offence of fraud. …

(2)For the purposes of subsection (1), a person shall be treated as having an intent to defraud if, at the time when he practises the deceit, he intends that he will by the deceit (whether or not the deceit is the sole or main inducement) induce another person to commit an act or make an omission, which will result in either or both of the consequences referred to in paragraphs (a) and (b) of that subsection.”

106.  The offence of fraud does not incorporate an element of dishonest as part of the offence.  And there is no dispute that D was liable to pay NYD.  In the context of “deceit”, to deceive is to induce a man to believe that a thing is true which is false, and which the person practising the deceit knows or believes to be false.

107.  The defence submits that the facts related to Charge 4 and 5 are not very different from those of Charge 1 or 3.  Yet the prosecution charged the defendant with “evasion” for Charge 1 and with “attempted fraud” for Charges 4 and 5. Furthermore the charge is for “attempt”, not the full offence.  Importantly money was not “remitted” by the application, on both occasions, there were only an application to remit. 

108.  It is for the prosecution to decide which offence to be laid against D.  It is the prosecution’s stance that D was charged with attempted fraud because the intended outcome was not achieved, and the overall conducts of the D and his conversation with PW4 represented to PW4 that money had been remitted into NYD’s bank account.

109.  D gave evidence that he has taken Diamond B and sold it to Mr Bee together with a few other jewellery pieces and diamonds.  He received some money from Mr Bee but he used the money to pay other invoices.  He made the on-line transfer in the presence of PW4 on 15 March 2016, the account did not have sufficient available fund then but there was a ledger balance in the account.  They just waited for the balance shown to be cleared and the money transferred to PW4.  D said he was not dishonest at the time.

110.  CSK had four bank accounts, all operated by D.  D drew a cheque in the sum of US$ 896,777 and another cheque in the sum of US$310,810 on the CSK Standard Chartered account and deposited it into the CSK HSBC account on 14 March and 15 March 2018 respectively.  These were shown on the bank statement (Trial Bundle pg.145).  Thus, there were available funds in the CSK HSBC account and the CSK Standard Chartered account to meet the payment of NYD on 15 March but the existence of other CSK bank accounts was not mentioned to PW4.  

111.  PW4 gave evidence that Diamond B was entrusted to him by the owner.  D borrowed the diamond on memo basis (Exhibit 34), he prepared to let D to have it for few days and no discussion on how many days D could have it.  It is noted from the WhatsApp messages between D and PW4 (Exhibit P35), on 19 January 2018 (Friday) at 12:38pm, D sent a message to PW4 “I need memo till Tuesday” of which PW4 replied “OK”.  However, D requested to keep for few more days on 22 January and again on 29 January 2018.  On 29 January 2018 (Monday), PW4 by WhatsApp told D that D could have the diamond until Wednesday (31 January 2018).

112.  On 30 January 2018, D via WhatsApp asked PW4 if he could wait until Friday for the return of the diamond.  PW4 said he would be leaving HK Thursday (1 February 2018). Around this time, D started to negotiate the price of Diamond B with PW4, but PW4 did not cut the price.  On 14 February 2018, D asked PW4 to take Diamond B off the RapNet. 

113.  Subsequently on 28 February 2018, D via WhatsApp told PW4 he had finished with the diamond and would make payment in 2 weeks, payment before 15 March 2018.  PW4 accepted but required payment by bank transfer or cheque.  On 8 March 2018, D via WhatsApp asked PW4 for his details for the deposit, PW4 repeated he required payment by cheque, D confirmed to PW4 cheque would be deposited. 

114.  On 12 March 2018 (Monday), PW4 asked D if he had deposited the cheque; PW4 also asked for the bank slip and said he would bring the invoice to D.  D replied he had some urgent travel, would be back tomorrow and the cheque would be dropped in tomorrow.  D was in fact in Hong Kong.  However, PW4 accepted D explanation, waited and asked again on 13 March if he had deposited the cheque.  D replied at 6:06pm that his staff had dropped the cheque in the cheque box.  PW4 said he would check the payment tomorrow morning.

• Charge 4

115.  D is charged that on or about 15 March 2018, by deceit, falsely represented to PW4 that D had, in purported repayment of a sum liable to NYD, remitted a sum of US$81,513 into NYD bank account; and with intent to defraud, attempted to induce NYD not to take any action or delay in taking any action for the recovery of the outstanding sum from D, which resulted in benefit to D and/or in prejudice or a substantial risk to NYD.

116.  PW4 expected to receive the payment by 14 March 2018 but NYD bank account did not receive any cheque from D.  On 14 March 2018 at 9:33am PW4 via WhatsApp asked D for the paper of the deposit.  D replied at 11:43am on the same day that the cheque was dropped in cheque deposit box in Citibank and because the cut off time was 3:30pm, it would show in the account tomorrow.  Apparently D was persuading PW4 to wait, he was representing to PW4 that “the cheque” issued to NYD would be a good and valid order for the said payment upon presentation. 

117.  Discussion on the payment by cheque continued after 2pm on 15 March 2018.  On 15 March 2018, D via WhatsApp said he was in his bank tracing the cheque, the bank was seeing what has gone wrong.  PW4 asked for another cheque and D agreed.  I consider and find D was representing to PW4 that he had available fund in his bank account to meet “the cheque” and cheque issued by him for the payment of Diamond B would be honoured.

118.  PW4 gave evidence that on 15 March 2018, he went to D’s office a few times but no one there answered the door.  Finally he met the D, initially he went to collect another cheque but at the end he told D to transfer the fund on-line to NYD bank account.  D made the transfer and he took a picture of that (Exhibit P36).  He expected to receive the payment in the same day.  Since D held out to PW4 that he had fund to meet the payment of “the cheque” that had gone missing somewhere, it was reasonable for PW4 to expect the on-line transfer made on 15 March 2018 would be effected a few hours later on the same day.

119.  However, NYD did not receive the money by 16 March 2018.  PW4 gave evidence that he searched on RapNet and found Diamond B was with Bee’s Diamonds, he knew this company did not pay high price for diamond and he thought something wrong with that and push D to go to the bank to make enquiry.  The purpose of going to DBS was to make another fund transfer or to see what was going on with the internet banking. 

120.  According to PW4, D only had a brief conversation, lasted for about one minute, with the bank manager.  He overheard that the DBS account was frozen/blocked and no further information was provided.  D said the bank closed his account, he could not do anything and he would try to solve the problem.   However, CSK DBS account was not closed until 30 April 2018.  Someone deposited a cheque no. 557529 in the sum of US$380,000 into this account, the deposit was not rejected by the bank. The cheque was only returned on 19 March 2018.

121.  D said he had no recollection if the cheque no.557529 was deposited and / or issued by him. This cheque was in sequence with the cheques he drew on the CSK Standard Chartered account in March 2018, and it was the only cheque deposited into the DBS account in March 2018.  Further, this cheque was deposited on 16 March, the day he made enquiry at the counter.  I have reservation as to D’s evidence that he had no recollection of this cheque.  I consider and find the only irresistible inference is that D used this cheque to inflate the balance of the DBS account in order to induce PW4 to wait for the payment while D knew this cheque would be bounced in due course.     

122.  D gave evidence that PW4 was with him at the counter when he made the enquiry at the counter. The teller said the funds in the account are frozen and could not be accessed and would not go through at the moment.  The teller had no idea why the funds were frozen.   D admitted during VRI (Exhibit P41) that he received notice from DBS that they would close this account at the end of April 2018.

123.  In any event, the cheque deposited on 16 March 2018 was yet to be cleared therefore it was unavailable fund and could not be applied to effect the fund transfer application made on-line on 15 March 2018.  Thus when PW4 and D went to DBS to make enquiry there was no available fund in the account to meet the on-line transfer made on the 15 March.  I consider the cheque was deposited only to induce PW4 to believe the bank for some reasons held up the fund of which D used to meet the on-line transfer.

124.  D said there was fund to be cleared in the DBS account when he made the on-line transfer on 15 March 2018 but this were subsequently returned and not shown on his account.  If there were any ledger balance as alleged, why would D have needed to deposit a cheque drawn on another CSK bank account on 16 March to inflate the balance?  Again, this is D’s bare allegation.  In any event, any alleged ledger balance shown on DBS account was unavailable fund.  

125.  D, however, had funds in HSBC account on 15 March 2018 to meet an on-line transfer of US$81,513.  Should D had any intention to meet the payment of Diamond B, he could have applied the funds in CSK HSBC account towards the payment.  Instead, he took PW4 to DBS bank to make enquiry with an account that did not have any available fund and never mentioned the other CSK bank accounts to PW4.

126.  Moreover, should D had arranged fund to meet the clearance of “the cheque” dropped in the cheque deposit box earlier on 13 March 2018, he did not need to rely on the said unavailable ledger balance to meet the on-line transfer.  I consider and find the only irresistible inference is that D knowingly made false representation to PW4 that since 12 March 2018 he had arranged fund to meet the payment of Diamond B, and D knew there was no available fund in DBS account to meet the on-line transfer when he made it on 15 March 2018.  

127.  Anyone who has on-line banking experience would have taken that an on-line transfer application made was equivalent to a remittance of fund into the designated account in the normal course of business.

128.  I consider and find the only irresistible inference is that D deceived PW4 into believing that a sum of US$81,513 would have been remitted into NYD account via on-line transfer by 16 March 2018, with an intent to induce NYD not to take any action or delay in taking any action for the recovery of the sum liable by D.

129.  Though PW4 believed on 15 March 2018 the on-line transfer would go through by 16 March 2018, the fraud could not be proceeded further on 16 March 2018 after the teller confirmed in the presence of PW4 that the bank would not process the on-line transfer.   PW4 continued to demand payment and via WhatsApp requested D to withdraw cash from his bank account, thus D’s intended outcome was not achieved.

• Charge 5

130.  D is charged on or about 20 March 2018, by deceit, falsely represented to PW4, that a sum of US$130,112 had been remitted into the account of NYD;  and with intent to defraud, attempted to induce NYD (i) not to take any action or delay in taking any action for the recovery of US$81,518.4 liable by D and (ii) to part with an additional sum of US$48,593.6 to D, with result in benefit to D and/or in prejudice or a substantial risk to NYD.

131.  PW4 gave evidence that nothing he could do but continued to wait for the payment. D said he would pay but nothing happened.  Then at some point D mentioned that he was to receive a payment from a client and proposed to transfer the funds directly to him because D could not receive payment into his bank account.  PW4 taken D was referring to his DBS account.  They also discussed this matter via WhatsApp:

• On 19 March 2018, D told PW4 via WhatsApp that he had a client would pay him cash but he had problem with his bank account, PW4 asked for cash and told D to take cash from his client.

• On 20 March 2018, around 12:30pm, D told PW4 his bank rejected payment and he was calling his client for cash. PW4 asked D for cash today after lunch. Later at 2:17pm, D said the client’s flight delayed but the client’s friend had HSBC account, if PW4 wanted it urgently could make HSBC transfer otherwise cash would be given tomorrow at 12 in Hung Hom.

132.  PW4 had experience with Citibank before where the bank gave one month notice to close his account unless he purchased products (e.g. insurance product) form them.  Apparently, with this experience, PW4 did not have any doubt when D said he could not receive payment into his bank account.  However, D had misled PW4 that he did not have an operative bank account.  Apart from the DBS account, CSK had account with HSBC, Standard Chartered and Dah Sing Bank, and all these bank accounts were operating at the material times. 

133.  PW4 gave evidence that he was made to understand D needed to receive payment from another client and this client would pay him all that amount and he was to give him back the difference.  The money came from Express State Limited, D told him this company belonged to his client, D was supposed to receive payment from his client, but D could not receive payment into his bank account, his client would transfer the money into NYD bank account and after deducting the payment for Diamond B, the difference returned to D. 

134.  It transpired from the WhatsApp messages, the above arrangement was discussed and concluded on 20 March 2018 between 4:26 pm and 4:30pm: 

• D told PW4 the payment will come from a company called Express State Limited, and the client said because it was the first time, he (the client) could not be sure for today but by tomorrow PW4 sure could get, the total US$130,112.

• PW4 agreed to take wire transfer at 2:26pm

• D then at around 3:14pm told PW4 the client would do the transfer in around 30 minutes, at 3:42pm D said the client was waiting in the bank and because the cut off time is 3:30pm, it would be processed tomorrow only. At 4:10pm D said the client sent him the paper and forwarded the paper to PW4 at 4:13pm.

• At around 4:30pm D and PW4 confirmed all correct

135.  According to PW4’s evidence, he was offered cash and bank transfer from D’s client, that being the case, D was representing to PW4 that the client had available fund in hand to make the payment of US$130,112.  D by repeatedly emphasizing via WhatsApp on 20 March 2018 that PW4 would receive the money tomorrow, he was representing to PW4 that the sum of US$130,112 would have been remitted into NYD bank account by 21 March 2018.

136.  PW4 said throughout the time, he believed D would pay him; he waited and gave D more time.  He believed what D said on 20 March 2018 and after he found no money came in on 21 March 2018, he told D at 10:12am via WhatsApp that he did not see the money in the account.

137.  D gave evidence that his friend Nader Mourad wanted to have an office in Hong Kong and asked him to open Express State.  He and Nader were directors and shareholders of the company.  They used the company to do property investment and Nader used it for diamond dealings in Hong Kong.  He also had diamond business with Nader.  Nader was added as a signatory to Express State HSBC account in 2014. 

138.  CSK and Express State both had an account with HSBC.  To facilitate the operation of the bank account, the bank would need to have full record of the specimen signature of all the signatories of the bank account.  I see no reason for HSBC to treat the specimen signatures of CSK account and Express State account differently. 

139.  According to the “Personal Account Opening Form” enclosed in the banker affirmation (Exhibit P13), D opened a HSBC account for D.A. Jhaveri (HK) Limited on 22 September 2009, D was the sole signatory at that time.  The name of the account holder later changed to CSK, and from 20 August 2014 this account had two signatories D and Wong Man Lai.  However, D said he was the only person operated the CSK HSBC account at the material time.

140.  D alleged that his friend Nader was the second signatory of Express State HSBC account at the material time.  However, according to the opening documents of Express State HSBC account enclosed in the banker affirmation dated 28 February 2025 (Exhibit P39), all along D was the sole account holder and signatory.  I consider and reject D’s allegation that Nader was another signatory of Express State account, I consider this is only D’s bare allegation and not supported by the bank record.  

141.  D gave evidence that Nader came to Hong Kong in March 2018.  He had spoken with Nader about his liquidity problem and Nader offered to help.  The transfer application for US$ 130,112 was done by Nader, US$ 81,518.40 was the amount owed to PW4 and the balance was his personal loan from Nader.  However, after Nader spoke with a few people he changed his mind. 

142.  Anyone has a bank account would have taken that a transfer application done at the counter equivalent to a remittance of fund into the designated account in the normal course of business.  D gave evidence that he sent the paper of the remittance of US$130,122 (Exhibit P38) to PW4 on 20 March 2018 because he believed it was a payment.  However, Nader cancelled the transaction afterwards, therefore no remittance was made.

143.  According to D, Nader was also a diamond trader.  It appears that local diamond traders all aware of the routine banking enquiry on their transactions.  Express State had no dealing with NYD.  Should Nader want to help D out, he could have simply transferred the money to D’s bank account directly and avoided any unnecessary enquiry from the bank.  

144.  According to D, Nader offered to assist him to settle the payment to NYD and provide him a personal loan, making a total of US$130,112.  That US$130,112 was supposed to come from Express State HSBC account.  Should this be the case, D being an authorized signatory of the account he could have instructed the bank to transfer the fund to CSK HSBC account, and Nader was not required to apply the transfer in person.  In any event, as mentioned above, Nader could have transferred the money into D’s personal account, and Express State was not required to be involved in any transaction with third party.  I consider and find D’s evidence about his arrangement with Nader is inherently improbable.

145.  At the material time, D had available funds in CSK HSBC account; he did not need to rely on loan from Nader to pay PW4.  Further, CSK had another three operative bank accounts, the cheques drawn on CSK Standard Chartered and Dah Sing Bank deposited by D all processed by HSBC accordingly.  Yet D misled PW4 he only had one inoperative DBS account to induce PW4 to lend out his bank account not only to receive the sum owed to him but also to receive a larger sum and to return the balance to D.

146.  I consider and find D had misled PW4 about the status of his bank accounts and his relationship with Express State in persuading D to accept a transfer of a bigger sum from a third party and to return the difference to D.  D denied he had misled PW4 by referring Nader as a client, but the sum of US$130,122 was not a payment from a client but a loan from a friend. 

147.  I consider and reject D’s evidence that the transfer transaction was applied by Nader.  I consider and find the only irresistible inference is that the transfer application of the US$ 130,122 was arranged and cancelled by the D.  However, at no time did D mention to PW4 that the transfer application had been cancelled.

148.  The bank statement of Express State shown that there were four deposits between 14 March 2018 and 27 March 2018. A sum of US$296,122 was deposited on 20 March 2018 and withdrew on 21 March 2018 (Trial Bundle pg.271).  Should the transfer transaction applied on 20 March 2018 not cancelled, it might have gone through on 21 March 2018.

149.  I consider and find the only irresistible inference is that when D sent the transfer application to PW4 on 20 March 2018, he had already decided to cancel the application, if he had not done so, and he knew the transfer would not be effected.  On 20 March 2018, D knowingly made a false representation to PW4 that the transfer would be effected. 

150.  According to PW4, the understanding between him and D was that he would pay D the difference only after he received the amount.  Since he did not receive the money, he did not pay the difference to the D.  The WhatsApp record on 21 & 22 March 2018 shows that the two continued to discuss on the payment, D kept misleading PW4 that the transfer would go through, if not, his client could arrange cash up to UD$50,000, but no money has ever been paid to NYD. 

151.  PW4 said his diamonds had insurance coverage for infidelity.  He notified the insurance company of the matter and was advised to report the matter to the Police if he wanted to receive payment from the insurance.  He made a police report on 23 May 2018 in order to make an insurance claim and he did so not because he felt D was dishonest or D was cheating him.  However, PW4 did not consider he was cheated by D would not cast any doubt on the Prosecution case.

152.  I consider and find the only irresistible inference is that D made use of Express State bank account to deceive PW4 into believing that a sum of US$130,112 would have been remitted into NYD account by 21 March 2018, with an intent to induce NYD not to take any action or delay in taking any action for the recovery of the sum liable by D and to part with an additional sum of US$48,593.60 to D.

153.  Though PW4 believed on 20 March 2018 the transfer would go through by 21 March 2018, the fraud could not be proceeded further and the intended outcome not achieved after PW4 found out no money came into NYD bank account.  PW4 continued to demand payment.  On 23 March 2018 (Friday) PW4 via WhatsApp demanded the return of the diamond by Tuesday and told D the owner of the diamond has asked him to report the matter to Police.

Conclusion

154.  I consider and find the only irresistible inference is that whatever the reasons behind, D knew he did not have sufficient funds to meet all his payments since January 2018.  D applied his limited funds to settle some of his outstanding invoices but chose not to pay that he owed Legend Bright and NYD.  D repeatedly by false representation induced Legend Bright and NYD to believe that he had made funds available for the payment of their diamonds.

155.  For the reasons mentioned above, I find the only irresistible inference is that D knew from the start no fund would be remitted into Legend Bright or NYD bank account as per the fund transfer applications he made.  D knowingly made false representation to PW1, PW3 and PW4 that there would be available funds to meet the fund transfer applications when he applied the transfer on-line and/or at the counter respectively.

• Charge 1 to 3

156.  I consider and find D with intent to make default his existing liability to pay Legend Bright, dishonestly induced Legend Bright to wait for payment by deception, namely by falsely representing that CSK HSBC account would be or had been debited pursuant to D’s instruction on 5 February 2018 and 15 March 2018 respectively.

157.  For the reasons mentioned above, I find the only irresistible inference is that D knowingly drew a cheque on a closed account for the payment of US$520,126 to Legend Bright.  I consider and reject D’s evidence that was an inadvertent mistake. 

158.  I consider and find D with intent to make default his existing liability to pay Legend Bright, dishonestly induced Legend Bright to wait for payment by deception, namely by falsely representing the cheque dated 13 March 2018 would be a good and valid order for the payment upon presentation.

• Charge 4 to 5

159.  Where one has had sufficient funds in one’s bank account, once submitted a transfer application, the bank would have processed the fund transfer application and deducted the funds in the account to effect the transfer unless the account holder cancel the application.  D in making representation to PW4 that he/ “his client” had available fund in the bank account for the fund transfer application and not mention any cancellation of application, D was indeed falsely represented to PW4 that he had made the remittance and fund would have been remitted into NYD bank account at the latest by the next working day.

160.  I consider and find D by deceit, falsely represented to PW4 that he had remitted a sum of US$ 815,513 into NYD bank account, and with intent to defraud and attempted to induce NYD not to take action or delay in taking any action for the recovery of the outstanding sum.

161.  I consider and find D by deceit, falsely represented to PW4 that a sum of US$ 130,112 had been remitted into NYD bank account for the payment of US$81,518.4, and with intent to defraud and attempted to induce (i) NYD not to take action or delay in taking any action for the recovery of the sum liable by D and (ii) to part with the balance to D.

162.  Should D succeed in inducing NYD to continue to wait for payment beyond the due date by false representation, this is clearly a benefit to D.  On the other hand, this would amount to a substantial risk to NYD, as he would be refrained from taking recovery action in the earliest opportunity. 

163.  Further, in the case of Charge 5, should D succeed in inducing NYD to part with an additional sum of US$ 48,593.60 to him, this is clearly a benefit to D and, on the other hand, amounts to a substantial risk to NYD.

164.  I consider and find the Prosecution has proved all the charges beyond all reasonable doubt.  D is convicted on all the charges accordingly.