HKSAR v. Li Zhenzan

DCCC 705/2016

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 705 OF 2016

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REASONS FOR SENTENCE

The defendant pleaded guilty to an offence of "Conspiracy to commit money laundering". The sum involved is $10,000.

Summary of Facts

2.About noon on 10 May 2016, Mr. WONG (PW1), aged 82, received a phone call made to his home landline.  A male voice pretending to be his son asked for help.  Another male voice (WP) told PW1 that PW1's son was detained by him.  WP demanded PW1 to pay a sum of $150,000 for the release of his son.  PW1 said he only had $10,000.  WP agreed to accept $10,000 and directed PW1 to withdraw money from the bank at once.

3.Before PW1 left home, he told WP that he had to go to 2 banks located at Belchers Street and Catchick Street respectively.  He also described to WP the clothes he was wearing.  WP told PW1 that someone would collect $10,000 from him at the bank located at Catchick Street.

4.Feeling suspicious, PW1 first confirmed that his sons were safe.  Then he alerted the Police.  Police officers soon arrived and they accompanied PW1 to the bank located at Catchick Street.  They waited there for a while, but no one approached PW1 to collect the money.  PW1 returned home together with the police officers.

5.Soon after PW1 reached home, WP called.  He told PW1 to bring the money to the bank located at Smithfield Road.  Before PW1 left home, the Police gave him an envelope containing dummy banknotes.

6.PW1 waited at Smithfield Road.  The defendant later approached PW1 and asked PW1 to walk with him.  PW1 followed the defendant.  The defendant passed a mobile phone to PW1.  PW1 received the phone and heard the voice of WP, who told him to pass the money to the defendant.  PW1 did so.  The defendant then put the envelope into the bag which he was carrying and left.

7.Police officers who were following PW1 intercepted the defendant.  Upon enquiry, the defendant admitted that the envelope he obtained from PW1 was inside his bag.  The envelope containing dummy banknotes was found in the defendant's bag.  The mobile phone seized from the defendant was examined; no calls were made to PW1's home landline from that phone.

8.Under caution, the defendant admitted that he was instructed by a fellow clansman to come to Hong Kong to collect money.

9.In his video-recorded interviews, the defendant admitted that he came to know someone named Ah Tat in the mainland some months ago.  Ah Tat told him to go to Hong Kong to collect some money.  In return, he would receive RMB3,000 to RMB4,000 as a reward.  The defendant came to Hong Kong on 9 May 2016 and stayed at a motel in Prince Edward.  On 10 May, Ah Tat called and told him to go to the Western District to meet a man.  He admitted in details what Ah Tat had asked him to do upon meeting the man (who turned out to be PW1).  The defendant, however, claimed that he did not know how much money was inside the envelope.

Mitigation & Sentence

10.The defendant is 28 and has a clear record.  He is married with a son (aged 5).  Defence solicitor Mr. LAM informed me that before coming to Hong Kong, the defendant worked as a security guard earning RMB2,000 per month.  He resides with his parents, paternal grandmother, wife and son.  The defendant is the sole income source of his family.

11.In mitigation, Mr. LAM submitted that the defendant was not the mastermind of the underlying phone deception; he was exploited of his greediness to some extent.  There is also no evidence showing that the defendant was aware of the phone deception.  Mr. LAM stressed that PW1 suffered no monetary loss and was apparently not terrified since he was calm enough to verify the safety of his sons first.  Furthermore, the defendant has been cooperative with the Police throughout.  Finally, Mr. LAM submitted that the phone deception was not sophisticated and the defendant's tasks carried no sophistication either.

12.The prosecution has applied for an enhanced sentence pursuant to section 27(2)(c) and (d) of the Organized and Serious Crimes Ordinance (Cap.455) on the basis of prevalence as well as the nature and extent of harm caused to the community.  Mr. LAM did not object to the application.

13.According to the witness statement of DCIP LAM dated 31 August 2016, the number of successful "Drop-off" mode phone deception cases in 2008 was 38.  The numbers gradually increased to 80 cases in 2009; 126 cases in 2010; 175 cases in 2011; 173 cases in 2012; 200 cases in 2013; 183 cases in 2014; and 159 cases in 2015.  In 2016, there were 50 successful "Drop-off" mode cases from January to July.  The number of attempted "Drop-off" mode cases from 2011 to 2015 remained in the range of 1,000 each year. 

14.The amount of monetary loss in successful "Drop-off" mode cases also has a steady increasing trend from 2008 to 2013 (from $3.01 million to $13.75 million).  In 2014 and 2015, the figures dropped slightly to $12.87 million and $11.99 million respectively.  For 2016, the monetary loss was $3.71 million as at July.

15.The "Drop-off" mode phone deception cases always involve someone picking up the money left behind by the victim at a public place or collecting the money directly from the victim.  Hence, the money collection portion is part and parcel to the "Drop-off" mode phone deception.  Although the "collector" may or may not have knowledge of the underlying phone deception, the circumstances under which he/she picks up or collects the money are usually peculiar and would thus arouse his/her suspicion about the legality of his/her collecting act and/or the nature of the money collected.  That is the reason why the "collector simpliciter" is usually charged with a money laundering offence (instead of deception).  On this basis, the statistics of the "Drop-off" mode cases are directly relevant.

16.I bear in mind the Court of Appeal's decision in HKSAR v XU Mai Qing CACC 464/2005, whereas Yeung JA (as he then was) held "Under section 27(11) of OSCO, what the prosecution has to prove is the prevalence of the offence, not the increase in the number of such offences." [1]

17.There is clear and cogent evidence before me that the "Drop-off" mode phone deception is still widespread and commonly being practised in Hong Kong today.  The court must send a clear message to the general public that people who play the role of "collector" will receive severe punishment, so that there is a deterrent effect.  When there are fewer or no willing "collectors", the "Drop-off" mode phone deception method would fail.

18.Although the defendant claimed that he did not take part in or had any knowledge of the underlying phone deception, the scam would have been meaningless without a willing "collector".  Given the role played by the defendant, the amount involved and the overall circumstances, I grant the prosecution's application and will enhance the sentence by 20%.

19.The Court of Appeal in SJ v WAN Kwok Keung [2012] 1 HKLRD 201 held:

Generally, the sentence for "money laundering" offences should mainly reflect the amount of "black money" laundered and not the benefit obtained by the defendant or others. The reason being that it is very difficult to prove the benefit concerned, and in most "money laundering" cases, there may not be evidence to show from what indictable offence the "black money" are in fact derived. Of course, if there is information to prove that the "black money" is originated from serious crimes, including drug trafficking, kidnap and blackmail, illegal human trafficking, other organized crimes, etc. or the defendant's benefit is huge, then the sentence should be adjusted upward.[2]

20.In determining the proper starting point, I have reminded myself of the sentencing principles laid down in HKSAR v HSU Yu Yi [2010] 5 HKLRD 545, HKSAR v WU Jianbing [2012] 1 HKLRD 781, HKSAR v Boma Amaso [2012] 2 HKLRD 33 and HKSAR v LIN Zong Yue CACC 141/2014 (unreported Chinese judgment).  I have also borne in mind the amount of money involved, the duration of the offence, the defendant's role in relation to the movements of funds as well as his personal circumstances.

21.In the present case, the defendant admitted that he came to Hong Kong to collect money on behalf of Ah Tat.  Although there is insufficient evidence showing that the defendant took part in or had knowledge of the underlying phone deception, he still played a vital part in the overall scam to deceive an elderly victim.  For the purpose of sentencing, I accept that the defendant probably had no knowledge of and did not take part in the phone deception against PW1.  To this extent, his culpability is perhaps less than the perpetrator(s) of the underlying phone deception[3].

22.Since PW1 did not suffer any monetary loss and the sum of cash involved is relatively small, I adopt a starting point of 2.5 years' imprisonment.  A one-third discount is given for the guilty plea, reducing the sentence to 20 months.  Apart from this, I see no other mitigating factors which warrant any further reduction.  With the 20% enhancement, the sentence is therefore 24 months' imprisonment.