Warrants fraudster jailed for 25 months
A man who conspired with the 'King of Warrants' in a scheme to manipulate the market was jailed for 25 months yesterday.
Cheung Ching-ho, 38, was jailed for his part in what a judge called a fraudulent and sophisticated scheme that created a false impression of active trading and generated more than HK$100 million for the racket led by mastermind Raymond Ng Chun-to.
District Court Judge Garry Tallentire set the sentence after taking into account 'unusual features' of the case in that Cheung was originally offered immunity by the Independent Commission Against Corruption but eventually refused to testify because three graft-busters had allegedly coached him in what to say.
He pleaded guilty earlier to four counts of conspiracy to defraud.
The District Court heard that Cheung, on the instruction of Ng - dubbed the 'King of Warrants' - recruited people to cross-trade warrants issued by Calyon Financial Products (Guernsey), Citigroup Global Market Holdings and Dresdner Bank and others on the mainland in early 2006. Four offices were set up as a mainland base for the scheme and 54 accounts were used to influence the markets.
The court heard that the false trades caused a liquidation of HK$108 million in the warrant market on one day in 2007, generating an equivalent profit for the fraudsters.
In sentencing, Tallentire said the fraud earned large sums for the group and had affected Hong Kong's image as a financial centre of integrity.
Tallentire said a stay application, brought by Cheung earlier in an attempt to halt the case permanently on the grounds that the officers coached him, was a 'proper' one. But despite the alleged coaching, Cheung should have continued to testify in an open manner so that the court could take his evidence into consideration in Ng's trial.
He noted, however, that the course Cheung chose was the 'second best' thing he could have done.
Cheung was one of five people arrested by the ICAC in May, 2008. Ng was jailed for four years in April 2010, on four counts of conspiracy to defraud. ICAC officers Ben Chan Kai-hung, 36, Kevin Cho Wing-nin, 46, and Au Kim-fung, 42, who are accused of coaching Cheung, have denied perverting the course of justice and misconduct charges and will face a pre-trial hearing in the District Court on June 15.