Consultant guilty of fraud over sale and purchase of business
A consultant of a business brokerage firm, charged by the ICAC, was today (August 31) convicted of deceiving the seller and buyer of a tutorial centre over the transaction price of the sale and purchase of the tutorial centre.
Cheuk Yat-long, 35, business consultant of HKBX Company Limited (HKBX), was found guilty of one count of fraud, contrary to Section 16A(1) of the Theft Ordinance.
Magistrate Miss Veronica Heung Shuk-han adjourned the case to September 17 for sentence, pending a background report. The defendant was remanded in the custody of the Correctional Services Department.
The case arose from a corruption complaint. Subsequent ICAC enquiries revealed the above offence.
The court heard that at the material time, the defendant was a business consultant of HKBX, a business brokerage firm procuring the sale and purchase of business ventures for prospective sellers and buyers. He was responsible for assisting the two parties in the negotiation and discussion regarding the sale and purchase of businesses.
In mid-March 2019, the owner of a tutorial centre in Shenzhen engaged HKBX to look for a buyer for the tutorial centre and the asking price was RMB 200,000. Upon the suggestion of HKBX, the owner agreed to set a higher listed price to RMB 428,000 on its sales platform to leave room for negotiation.
A prospective buyer later indicated interest in purchasing the tutorial centre and instructed the defendant to negotiate with the seller to lower the price. Without consulting the seller, the defendant informed the prospective buyer that the seller agreed to lower the price to RMB 400,000. The prospective buyer accepted the offer. The defendant then arranged both parties to sign a sale and purchase agreement separately.
In addition, the defendant arranged the seller to sign a listing agreement which stated that the latter would only receive RMB 200,000 for selling the tutorial centre. The defendant had never disclosed to the seller that the actual transaction price was RMB 400,000, and he did not disclose that HKBX would pocket the price difference of RMB 200,000 out of the transaction.
The buyer believed that the tutorial centre would be sold at a consideration of RMB 400,000 and paid the same to HKBX. He also paid HK$40,000 as its service fee.
The court heard that the seller eventually only received RMB 200,000 from HKBX. The defendant received over HK$82,000 as commission from HKBX for the sale and purchase concerned.
Had the buyer known that the intended selling price of the tutorial centre was lower than the sum he actually paid, and that HKBX had pocketed the price difference, the buyer would not have entered into the transaction. The seller would not have signed the listing agreement and agreed to receive only RMB 200,000 had he known that the buyer in fact offered to purchase the tutorial centre at RMB 400,000.
The prosecution was today represented by prosecuting counsel Eddie Sean, assisted by ICAC officer Peter Chow.