Former technical representative of Convoy Financial Services, 39-year-old Anthony Fan Ming-kei has been jailed for 20 months.
Lai Kwok-hing, 37, a former technical representative of GET Wealth Management, was given a 14-month prison sentence.
Last month, the District Court in Hong Kong heard that Zurich International had approved four policies for investment-linked insurance schemes (ILAS) and – having thought they were legitimate – paid the brokers $600,000 ($77,400, €69,600, £50,300) in commission.
Higher payments
However, while the policies were taken out through Convoy with Fan as their technical representative, the policies were in fact documented with GET as the intermediary and Lai as the handling technical representative instead.
“It was clearly not a case of jumping the gun as alleged, but a blatant fraud against clients and Zurich"
The defendants had taken the policies out through GET because the commission paid was higher than the commission offered to Convoy.
False representation
Lai had therefore falsely represented the four policyholders and was named as their technical representative, despite none of the policyholders actually having met him.
He told Zurich he had fully explained the contents of the assurance scheme and said he had gone through the Financial Needs Analysis form (FNA) with policyholders, but in fact had not done so.
Blank spaces
Former Convoy adviser Fan had misled his clients to sign various documentation, leaving some blank spaces where false information was filled in. Lai also helped to sign the documents as if he were the adviser.
“The evidence against both was strong and compelling,” Judge Yiu said during sentencing. “[Lai] must have known what he has been doing, and [Fan] also knew full well that these were all false when he signed.”
Jumping the gun
He said: “It was clearly not a case of jumping the gun as alleged, but a blatant fraud against clients and Zurich. It could also not be said merely as any negligence nor reckless act, but in fact, a premeditated and calculated plan.
“With the falsity of information filled in the application form, the validity of the policy would be much questioned. It could not be said that there was no loss to the client.
The judge also said Fan and Lai’s actions had put the integrity of the insurance business at risk.
Flimsy law-abiding
The ex-Convoy representative Fan said he regretted his wrongdoing and his lawyer, Michael Leung instructed by Messrs Robinsons, claimed he was jumping the gun before formally joining GET. Convoy had reported this matter to police.
Lai admitted his wrongdoing due to his “recklessness, negligence and flimsy law-abiding concept”.
Both Fan and Lai were found guilty of four counts of fraud on 16 September.
