A former police inspector jailed after trying to sell US$200 million in fake 1930s notes could be freed because the police let a vital witness disappear. Lau Yuk-wan, 46, was arrested after being lured into a trap by a mysterious informant working for the US secret services, the Court of Appeal heard. Lau says the man, Hans Schade, can back up his claim he believed the notes were part of a genuine Kuomintang haul from the civil war. Mr Schade was allowed to return to America the day after Lau's arrest without any statement being taken from him, the court heard. Clive Grossman QC, for Lau, said: 'It is a question of fairness. The accused person says there is someone who can assist him. But the authorities have let him go.' Mr Justice Simon Mayo said Mr Schade may have been 'a rascal' who conned Lau by assuring him the notes were genuine, and then led him into the arms of the Commercial Crime Bureau. The judge said the American authorities probably knew where Mr Schade was but had not done much to help locate him. He accused them of closing ranks once they had a conviction. Lau was jailed for 4.5 years at the District Court in June after being convicted of possessing 435 fake US$100 notes. He had offered to sell US$200 million of them. Kevin Zervos, for the Crown, accepted a statement should have been taken from the informer but said his evidence would probably have supported the prosecution. Acting Chief Justice Noel Power said there was 'tonnes of evidence' against Lau but the court must consider the witness issue. Judgment will be given later.