ICAC graft probe cracks $4.6m dummy agents insurance commissions fraud case, leading to four jailed for 12 to 32 months

An ICAC corruption investigation earlier revealed that an assistant manager of an insurance company had recruited dummy agents to defraud the insurer of commissions and payments totalling about $4.6 million, by taking out insurance policies with false particulars, while three downline dummy agents assisted in handling crime proceeds of over $2.3 million. The four defendants were today (June 11) sentenced at the District Court to jail terms from 12 months to 32 months.

Chau Yui-kwan, 35, former assistant unit manager of China Taiping Life Insurance (Hong Kong) Company Limited (Taiping Life (HK)), was sentenced to 32 months’ imprisonment. He earlier pleaded guilty to nine counts of fraud, contrary to section 16A(1) of the Theft Ordinance.

Three downline dummy agents of Chau, namely Choi Pui-ka, Chang Kiu-sum and Sit Siu-hang, aged between 31 and 33, all former business managers of Taiping Life (HK), received jail terms of 12 months, 14 months and 16 months respectively. The trio had each pleaded guilty to one count of dealing with property known or believed to represent proceeds of an indictable offence (commonly known as money laundering), contrary to section 25(1) of the Organised and Serious Crimes Ordinance.

In sentencing, Judge Mr Ernest Lin Kam-hung noted that the defendants, in their capacity as licensed insurance agents, ought to uphold integrity. They had, however, orchestrated a premeditated scheme which lasted a long time and abused the trust placed in them by their employer for personal gains through fraudulent means, constituting a serious breach of trust. The judge took a starting point of imprisonment ranging from 21 months to 48 months, and reduced their jail terms to 12 months to 32 months respectively, having considered their guilty pleas and various mitigating factors.

The court heard that at the material time, Chau was an assistant unit manager of Taiping Life (HK), while his three co-defendants were said to be downline insurance agents of Chau. Taiping Life (HK) required all its agents to explain the terms and conditions of relevant insurance policies to their clients in person when selling an insurance product.

Taiping Life (HK) would issue commissions, bonuses and other payments to the handling agent and the team of his/her upline managers upon the approval of a policy application and receipt of the premium.

The ICAC investigation stemmed from a corruption complaint. Enquiries revealed that between February and December 2021, Chau had falsely represented to Taiping Life (HK) that the three co-defendants and another insurance agent were the handling agents or joint agents of nine insurance policies. Taiping Life (HK) subsequently underwrote and issued those policies, releasing commissions and other payments totalling about $4.6 million.

Enquiries found that Chau had requested the three co-defendants to return to him most of the commissions and other payments released by Taiping Life (HK). The trio then laundered over $2.3 million in crime proceeds in the scheme through three bank accounts.

The ICAC investigation revealed that Chau recruited the three co-defendants and another individual, posing as dummy agents, to submit nine insurance policy applications in the present case to Taiping Life (HK). Some of the policyholders had never signed on the application forms concerned and they had never paid the relevant premiums.

Taiping Life (HK) rendered full assistance to the ICAC during its investigation into the case.

The prosecution was today represented by Senior Public Prosecutor Steven Liu, assisted by ICAC officer Gary Cheung.