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Note: In 2003, Su Bao-sheng (Su), the managing director of Zhong Nan, a Chinese stateowned company, sought to raise capital for the company through Fong Meiji (Defendant) who claimed to work for a company called Madison Global (Madison). On Defendant's advice, Su created a company titled Lighton Capital Ltd. (Lighton) which entered into a service agreement with Madison in which Madison undertook to provide a finance report that would aid in securing the capital Su sought. Lighton was to pay a total of US$500,000 and an initial payment of US$200,000 had been made when Defendant told Su that the "investment pool [was] closed." To reimburse Su, Defendant allegedly proposed to obtain a standby LC in the amount of US$50,000,000 which Su could then sell to recover the payment and perhaps a profit. As the court noted, "[q]uite how it would work is not clear." After Su received a copy of the purported LC, Su claimed that he was no longer able to contact Defendant and Su discovered that the company Madison did not exist.

Defendant was eventually apprehended and convicted in 2005 on a criminal charge of using a copy of a false instrument (the putative LC) to induce Su to accept it and "to do some act to his own or any other person's prejudice." The trial judge reached the verdict after deciding that Su was "an honest and reliable witness." On an application for leave to appeal the conviction, the Hong Kong Court of Appeals, Stuart Moore, V.P., Stock JA, and Hartmann JA, in an opinion by Stock, JA, granted leave to appeal and set aside the conviction.

In reversing the conviction and examining the trial court record, the appellate court noted two main concerns, finding the evidence against Defendant to be "riddled with dishonesty." First, from the crossexamination of Su, the court found that there was actually no outstanding debt between the parties. This was supported by a liability disclaimer which Su signed acknowledging that no refunds or compensation was due to Lighton. The appellate court noted that if no debt was actually owed, the basis for the prosecution would fall away because "it was the prosecution case that the forged instrument was presented by the [Defendant] because [Defendant] knew US$200,000 was owing and that [Defendant] dishonestly led Su to believe that use of the document which is the subject of the charge would discharge the debt." Second, the appellate court found nothing in the record to support the trial court's finding that Defendant had "essentially disappeared and was deliberately avoiding Su."

[JEB/plc]

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