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Not guilty plea over HK$10.9m loan scam

A lawyer appeared in court yesterday accused of conspiring to deceive the Industrial and Commercial Bank of China in a mortgage scam in which two loans totalling more than HK$10.9 million were obtained.

Kevin Kong Hon-yui, sole proprietor of Kong and Associates, pleaded not guilty to charges of conspiracy to launder money and conspiracy to defraud.

He also denied three alternative fraud charges.

In his opening submission, prosecutor Neil Mitchell told the District Court that the scam involved mortgage loans for two flats in Le Sommet, North Point, procured between June 1, 2005, and July 31, 2006.

Mitchell said the bank had paid out a total of HK$10,978,500 as a result of the scam. After it was exposed, the bank received an insurance settlement of HK$9,459,442 from its reinsurer.

The court heard that Kong, 37, legal representative of the Add Magic Investment company, appointed a man named Ng Tse-wai to act as a director of the company. The money from the loans was transferred into the company's account and later withdrawn by Ng.

Mitchell said two women had impersonated flat purchasers and applied for mortgage loans.

One of the women, Liu Wai-chun, was jailed for 44 months in November 2006 after pleading guilty to counts of conspiracy to defraud and attempting to procure an entry in a record by deception.

Ng was jailed for 42 months in July 2007.

Mitchell said the scam started in February 2006, when Kong contacted an assistant manager at DBS Bank and claimed to represent a flat purchaser in a mortgage application. However, the real flat owner had no knowledge of the application.

DBS rejected the application after staff noted a discrepancy in documents submitted.

Later the same month, another mortgage application for the same flat was filed to ICBC, with Kong again claiming to act on behalf of the flat purchaser. On February 15, Mitchell said, the bank staff received purported documents that included a forged Hong Kong identity card, bank statements and a tax-return form.

A week later, an unknown woman impersonating the flat purchaser had an interview at the bank. Kong and another man who posed as the purchaser's brother also attended the interview. Mitchell said Kong had told the lawyer acting for the bank that he had collected the title deeds. A purchase and sales agreement was also submitted. A loan of HK$5.5 million was granted on February 22.

Another mortgage application was made in relation to a second flat in April 2006. Liu impersonated the flat purchaser, purported documents were submitted and a loan of HK$5.5 million was subsequently approved, the court heard.

The case came to light when they applied for a HK$6 million mortgage for a third flat.

The hearing continues today before Deputy Judge Timothy Casewell.

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