HKSAR v. Shen Zhuotao
Read the full judgment text of CACC 320/2014 on BabelCite. This Court of Appeal judgment was delivered on 26 February 2016 before Lunn VP and Pang JA.
Criminal law – sentencing – money laundering – dealing with property knowing or having reasonable grounds to believe it represents proceeds of an indictable offence – Organized and Serious Crimes Ordinance (Cap 455) s.25(1) and (3) – sentence appeal – whether starting point manifestly excessive – whether judge erred in finding predicate offence was 'very serious and substantial' based solely on the amount of money – facts: appellant was sole director, shareholder and signatory of FML's bank account, which received over HK$567 million in deposits over two years, exhibiting patterns of money laundering, with about 23% of funds connected to a money exchange business where appellant worked – whether starting point of 9 years' imprisonment was manifestly excessive: yes, starting point should have been 7.5 years, as judge failed to compendiously examine the Boma factors and was handicapped by paucity of detail in Summary of Facts regarding appellant's role – whether judge erred in concluding predicate offence 'must have been very serious and substantial' without evidential basis: yes, amount of money per se did not establish character of predicate offence, which was a 'significant feature' but not determinative – sentence of 6 years' imprisonment imposed by Court of First Instance quashed and replaced with 5 years' imprisonment (starting point 7.5 years less one-third discount for guilty plea).
Legal issues: Whether the starting point of 9 years' imprisonment was manifestly excessive · Whether the judge erred in concluding the predicate offence was very serious and substantial based solely on the amount of money involved
Outcome: Appeal against sentence allowed. The 6-year sentence was quashed and replaced with 5 years' imprisonment.
Cited by 5 cases · Cites 10 cases
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CACC 320/2014 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CRIMINAL APPEAL NO. 320 OF 2014 (ON APPEAL FROM HCCC NO. 246/2014) ____________ BETWEEN
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________________________ REASONS FOR JUDGMENT Hon Lunn VP (giving the Reasons for Judgment of the Court) : 1.The appellant appealed, with the leave of Macrae JA granted on 29 October 2015, against the sentence of 6 years’ imprisonment imposed on him by Bokhary J on 11 September 2014 on his plea of guilty to a charge of dealing with property, between 18 June 2010 and 21 June 2012, namely $567,336,660.17, knowing or having reasonable grounds to believe that those monies represented the proceeds of an indictable offence, contrary to section 25(1) and (3) of the Organized and Serious Crimes Ordinance, Cap 455. That sum of money was the total of the monies deposited into a bank account of Fortune Millennium Limited (“FML”), whose registered address was at premises in the Bank of America Tower, Central. Having pleaded guilty to the charge on 30 May 2014 at Eastern Magistrate’s Court the appellant had been committed to the Court of First Instance for sentence. We allowed the appeal, quashed the sentence imposed on the appellant and in its place imposed a sentence of 5 years’ imprisonment. We said that we would give our reasons for doing so in due course. That, we do now. The facts 2.In pleading guilty to the charge, the appellant accepted the factual basis of the commission of the offence set out in the ‘Summary of Facts’. The appellant, who was aged 20 in 2010, is a Mainland resident who visited Hong Kong regularly on a two-way permit during the period the subject of the charge and resided in premises in Sham Shui Po when in Hong Kong. 3.On 12 June 2010 the appellant became the sole director and shareholder of FML. He became the sole signatory of the FML’s bank account, which was opened with the Bank of China (Hong Kong) Limited of 18 June 2010. 4.In the tax return of FML for the year ending 31 March 2011, it was stated that the company had “no business activity for this year”, declaring no income and no profit. In the following year’s tax return, no trade or business was reported by FML. 5.The activities of FML’s bank account bore a number of features which corresponded to patterns of money laundering:
6.On 20 June 2013, the appellant had been observed by police officers to be working in Hing Lung, a money exchange shop in Tai Po Road, Sham Shui Po, although he was not a licensed money service operator. A fund flow analysis of FML’s bank account showed that about 23% of the funds deposited into its bank account were from accounts connected with Hing Lung, one of its owners and another similarly named money exchange business, owned by one of the owners of Hing Lung. 7.Having been arrested and cautioned by the police officers on 3 October 2013, the appellant claimed that he used FML to trade mobile telephones. He said that he had come to Hong Kong to visit relatives and would stay with his wife in Sham Shui Po. Earlier, on 10 April 2013, police officers had found the offices at FML at Bank of America Tower to be about 70 feet in size and essentially empty. Mitigation 8.In mitigation advanced on behalf of the appellant, Mr Boyton asked the court to note that the appellant had a clear criminal record. It was submitted that he was not the person in charge of FML, although it was conceded that he did knowingly assist in the operation of its bank account, for which he was paid $2,000 per month. It was contended that the movement of monies in FML’s bank account was consistent with the operation of a money exchange business. It was submitted that there had been e-banking transactions from the Mainland to the account on many occasions on which the appellant was in Hong Kong. Mr Boyton accepted that, as a result, there was an international dimension to the deposits of some of the monies. Mr Boyton contended that the “underlying offence” was the operation of an unlicensed money exchange business. That offence was less serious than bookmaking, theft or major fraud. 9.Mr Boyton referred the judge at some length to the judgments of the Court in HKSAR v Boma [1], HKSAR v Lam Mei Ling [2] and the reasons given for sentence in HKSAR v Yip Chi Keung.[3] Reasons for Sentence 10.In sentencing the appellant, having said that she took “into account everything said on your behalf ”, the judge rejected the submission made on behalf of the appellant as to his role and the benefits he gained. Having referred to the reasons for sentence given by Deputy Judge Anthea Pang, as Pang J was then, in HKSAR v Yip Chi Keung, and, having noted that the judge, “seemed to have accepted what was said by the defence about the role which the defendant…have played and what he gained from his offence…and felt they will to rely on certain things which (the defendant) said to the police under caution following his arrest”, the judge said:[4]
12.Having stipulated a starting point for sentence, and having afforded the applicant a discount of one-third from the starting point taken for sentence for his plea of guilty, the judge imposed sentence of 6 years’ imprisonment. Grounds of appeal against sentence 13.Mr Grounds, on behalf of the appellant, advanced two grounds of appeal against sentence, namely:
14.In his written submissions, Mr Grounds referred to a number of judgments of this Court and to some reasons given by judges of the Court of First Instance in sentencing for the same offence.[6] He submitted that the starting point should not have been greater than 7½ years. Complaint was made that the judge did not “compendiously examine the factors listed out in Boma ”. 15.Further, it was submitted that where the predicate offence was unknown, the judge should not have concluded that the offence was “very serious and substantial.” [7] Respondent’s submissions 16.Ms Parwani acknowledged that the starting point of 9 years’ imprisonment stipulated by the judge was “on the high side”, although she contended that it was not manifestly excessive. She invited the court to note that that there is no tariff sentence for money laundering offences, but that deterrence is the paramount sentencing consideration. She submitted that, although the judge did not refer specifically to the judgment of this Court in Boma in sentencing, given that she had been referred to the factors relevant to sentencing adumbrated in that judgment, the judge was to be taken to have had them in mind in imposing sentence. She suggested that the amount of impugned monies dealt with in the bank account of FML, the period over which the conduct occurred and the appellant’s status as a visitor to Hong Kong were factors relevant to a consideration of the appropriate sentence. Nevertheless, she submitted that little assistance can be derived by detailed consideration of different cases. 17.On the other hand, she suggested that the judgments of this Court in the Secretary for Justice v. Lau Man Ying [8] and the Secretary for Justice v. Herzberg [9], established as appropriate a broad range of sentence of 6 to 9 years for offences the commission of which involved dealing in hundreds of million dollars which the defendant knew or had reasonable grounds to believe were the proceeds of the indictable offence. 18.Finally, Ms Parwani submitted that the judge’s statement that whatever the predicate offence might have been, “the amount shows that it must have been serious and substantial” was justified, as the only reasonable inference to be drawn from the facts admitted by the appellant. A consideration of the submissions 19.In the judgment of this Court in HKSAR v Boma, Stock VP said that the first factor to which the court should have regard in sentencing for this offence was the maximum penalty for the offence, namely 14 years’ imprisonment; the second matter was that deterrence was paramount, and then there was, “the question of the amount of money laundered” which was a “significant feature”, albeit that it was not the “be-all and end-all of a case”.[10] In identifying other factors which the court should consider, Stock VP said:[11]
20.Regrettably, although in his submissions Mr Boyton had taken the judge through those factors seriatim, in giving her reasons for sentence the judge did not condescend to identify which, if any, other factors applied to the appellant, other than determining that the predicate offence was “serious and substantial” and the commission of the offence was “prolonged”. It is apparent from her exchange with counsel that, although she did not say so, in imposing sentence the judge was satisfied that there was an international dimension to the commission of the offence. Clearly, that was so. Again, although the judge found that the appellant played an “active role” in the commission of the offence, she did not stipulate what she found that be. 21.In part, in addressing the role of the appellant the judge was handicapped by the paucity of detail in the Summary of Facts. Although there was no dispute that the appellant was the sole director, shareholder and signatory of the bank account of FML, which received over $567 million in deposits, there was no evidence, as Ms Pawani conceded in her oral argument, as to the total amount of withdrawals from the bank account, the ratio of e-banking transfers to ATM transfers and the correlation between those transfers and the appellant’s presence in Hong Kong. There was no evidence of the mechanics by which those transfers could be effected. That was relevant, given the mitigation advanced on behalf the appellant that he was present in Hong Kong when e-banking transfers were made from the Mainland to Hong Kong and the suggestion that dealings in the bank account could have been controlled by others, particularly since he was an employee of a money exchange business which, together with persons connected with their business, made 23% of the deposits into the bank account. 22.The judge made no reference to the “sophistication of the offence and the degree of planning”, or to the issue of whether a “criminal syndicate was involved”, factors identified in Boma. In respect of the last of those factors, Mr Boyton had submitted that was not an applicable factor in this case. 23.With respect to the judge, she fell into error in determining of the predicate offence that, because of the amount of money with which the appellant dealt, it must have been, “very serious and substantial.” The amount of money involved, per se, did not establish that factor. On the other hand, as noted earlier the judge was entitled to regard it as a “significant feature”. Having rejected the mitigation advanced on behalf of the appellant that the culpability of the appellant was merely that the bank account of FML was operated as a money exchange business, which operated without a licence and without making declarations to the authorities of those remittances, there was no evidential basis on which the judge could determine properly the nature of the predicate offence(s). 24.Of course, if established to be known to a defendant, the nature of the predicate offence was highly relevant to the determination of the appropriate sentence. As noted earlier, in Boma Stock VP said, in addressing the different levels of sentence it would be appropriate to impose having regard to the nature of the predicate offence, for example, “..where the predicate offence is trafficking in dangerous drugs, the offender should expect a sentence significantly greater than where the predicate offence is gambling.” [12] 25.The judgment of this Court in HKSAR v Lam Mei Ling, delivered by Pang J, as Pang JA was then, to which Mr Boyton drew the attention of the judge affords an illustration of the range of sentence appropriate for the different circumstances that may obtain in the commission of this offence. There, this Court dismissed an application for leave to appeal against a sentence of 10 years’ imprisonment imposed on the appellant after trial, in circumstances in which he had dealt with deposits of over $6.8 billion into multiple bank accounts from which there were equivalent withdrawals over a period of 3 years and 7 months. All the transactions occurred within Hong Kong. 26.By contrast, in the reasons for sentence articulated by Deputy High Court Judge Anthea Pang in HKSAR v Yip Chi Keung [13], to which Mr Boyton referred the judge, the judge sentenced the defendant, a 51-year-old man with no previous convictions in Hong Kong, on his plea of guilty, to a single count of dealing with the proceeds of an indictable offence, to 5 years’ imprisonment. The defendant, a Mainlander, was not only the sole shareholder and director of a company but also the sole signatory of its bank account. The company had been incorporated in Hong Kong on 7 September 2010 and the bank account opened on 14 September 2010. In the period, between 15 November 2010 and 23 May 2011, the bank account received 842 deposits, by means of remittance or bank transfer, from at least 162 different bank accounts in 9 countries or regions in foreign currencies to a total of $883,284,156. Withdrawals in foreign currencies to a total of $859,592,413 were made in 867 transactions. In that period the appellant entered and exited Hong Kong 18 times. 27.The judge noted that in his out-of-court statements the defendant had claimed that he had established the company and opened a bank account at the request of a friend on the Mainland to handle remittances. He did as instructed. He claimed that the total benefit that he had received was $70,000. 28.In sentencing the defendant, the judge said that she found aggravating features in the commission of the offence, namely that:
29.The judge stipulated a starting point for sentence of 7½ years’ imprisonment. Having afforded him a discount of one-third for his plea of guilty, she imposed a sentence of 5 years’ imprisonment. Conclusion 30.For the reasons set out above, we were satisfied that the sentence imposed on the appellant was manifestly excessive. Approaching the task of sentencing the appellant afresh we were satisfied that the appropriate starting point to be taken sentence was 7½ years’ imprisonment. Affording the appellant a one-third discount for his plea of guilty, the sentence to be imposed on the appellant is 5 years’ imprisonment. Accordingly, we allowed the appeal, quashed the sentence imposed by the judge and in its place imposed a sentence of 5 years’ imprisonment.
MsAudrey Parwani, PP of the Department of Justice, for the respondent Mr Christopher Grounds, assigned by Director of Legal Aid, for the appellant [1] HKSAR v Boma [2012] 2 HKLRD 33. [2] HKSAR v Lam Mei Ling (CACC 103/2013; unreported, 11 October 2013). [3] HKSAR v Yip Chi Keung (HCCC 250/2012; unreported, 10 June 2013). [4] Appeal Bundle, page 16 A-C. [5] Appeal Bundle, page 16 E-F. [6] HKSAR v. Kam Susanto (CACC 542/2003; unreported, 13 May 2005); Secretary for Justice v. Lau Man Ying [2012] 4 HKLRD 435; Secretary for Justice v. Herzberg [2010] 1 HKLRD 502; HKSAR v. Yip Chi Keung (HCCC 250/2012; unreported, 10 June 2013); HKSAR v. Yu Tak Kin (CACC 446/2010; unreported, 7 August 2013); HKSAR v. Wong Lan Chun and anor (HCCC 14/2014; unreported, 14 November 2014); HKSAR v. Lam Mei Ling (CACC 103/2013; unreported, 23 October 2013); HKSAR v. Luo Juncheng (HCCC 159/2012; unreported, 23 January 2013); HKSAR v. Yeung Ka Sing, Carson (CACC 101/2014; unreported, 13 and 15 May 2015). [7] HKSAR v. Lau Man Ying [2012] 4 HKLRD 435. [8] Secretary for Justice v. Lau Man Ying [2012] 4 HKLRD 435. [9] Secretary for Justice v. Herzberg [2010] 1 HKLRD 502. [10] HKSAR v Boma; page 42, paragraphs 35-8. [11] HKSAR v Boma; pages 40-44, paragraph 40. [12] HKSAR v Boma; page 42, paragraph 40(1). [13] HKSAR v Yip Chi Keung - which judgment was delivered in Chinese, an English translation of which was provided to the Court. |
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