HKSAR v. Lau Ka Fai and Others

DCCC 157/2016

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 157 OF 2016

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REASONS FOR SENTENCE

1.D1 pleads guilty to one charge of conspiracy to deal with property having reasonable grounds to believe the property represented the proceeds of an indictable offence, contrary to section 25(1) and (3) of the Organized and Serious Crimes Ordinance[1] (charge 1).

2.D2 stands convicted after trial of one charge of conspiracy to deal with property having reasonable grounds to believe the property represented the proceeds of an indictable offence (charge 2). 

3.D3 pleads guilty to two charges of conspiracy to deal with property having reasonable grounds to believe the property represented the proceeds of an indictable offence (charges 3 & 4). 

4.D4 stands convicted after trial of one charge of conspiracy to deal with property having reasonable grounds to believe the property represented the proceeds of an indictable offence (charge 5). 

5.Full particulars of the offences are set out in the facts admitted by D1 and D3 on 27 March 2017 and in my reasons for verdict delivered on 2 May 2017. 

6.In summary bank accounts of three companies Nation Top Holdings Ltd; Kwong Foon Company Ltd and Good Plus Trading Ltd were opened for the sole purpose of receiving monies obtained by email fraud, with most of the monies obtained from overseas[2]. The three companies had no legitimate business.

7.In return for reward D1 allowed his name and identity to be used as the sole director and shareholder of Nation Top and to open bank accounts for Nation Top.  Similarly, D3 allowed his name and identity to be used as the sole director and shareholder of Kwong Foon and to open bank accounts for Kwong Foon; and D4 allowed his name and identity to be used as the sole director and shareholder of Good Plus and to open bank accounts for Good Plus. 

8.D1, D3 and D4 handed over all documentation relating to the bank accounts, including internet banking passwords and signed blank cheques.  D1, D3 and D4 each had reasonable grounds to believe the bank accounts were to be used to launder the proceeds of an indictable offence. 

9.Between 9 July and 5 August 2014 $3,976,270.12 was deposited in the accounts of Nation Top (charge 1).  On 4 August 2014 D2 withdrew the sum of $200,000 from the account of Nation Top having reasonable grounds to believe the money was the proceeds of an indictable offence (charge 2).

10.Between 2 July and 8 October 2014 $658,388.09 was deposited in the accounts of Kwong Foon (charge 3).

11.Between 3 July and 26 August 2014 $5,511,178.52 was deposited in the accounts of Good Plus (charge 5).  On 24 July 2014 D3 withdrew the sum of $2,000,000 from the account of Good Plus having reasonable grounds to believe the money was the proceeds of an indictable offence (charge 4).  On 12 August 2014 D4 withdrew from the account the sum of $309,795 having reasonable grounds to believe the money was the proceeds of an indictable offence[3].

12.Money laundering is a serious offence for which deterrent sentences are required.  A number of significant factors have been identified as relevant in determining the culpability of a defendant, including the nature of the predicate offence that generated the laundered money; the extent to which the offence assisted the crime or hindered its detection; whether the defendant had knowledge of that underlying offence or has turned a blind eye to the source of the money; the amount of money involved; whether there was an international element to the commission of the offence; the degree of sophistication of the offence and the level of the defendant's participation, including the length of time the offence lasted and the benefit he derived from the offence (see for example Secretary for Justice v Jerome Yuval Arnold Herzberg[4]; HKSAR v Hsu Yu Yi[5] and HKSAR v A male known as Boma Amaso)[6].

13.The courts have emphasised that a defendant is to be sentenced on the facts of the money laundering charge and not on the facts of the underlying offence(see for example HKSAR v Chen Szu-ming[7] and HKSAR v Yam Kong-lai)[8].  Further, sentence should mainly reflect the amount of the money laundered (see for example Secretary for Justice v Ngai Fung Sin, Apple)[9].

14.The opening of bank accounts for someone else facilitates the laundering of money by disguising the true owner of the money passing through the bank accounts. This makes difficult the detection of crime and at the same time undermines the integrity of the banking system.  

The arrest of Tony

15.Initially sentence was adjourned pending the arrest of Tony, a co-conspirator, the prosecution having indicated that they will call D1 and D3 to give evidence should Tony be arrested.  Although the prosecution said they would not call D2 and D4, all defendants requested sentence to be adjourned. 

16.Notwithstanding the court has been informed that Tony has now been arrested (see letter from Mr Ryan dated 28 August 2017) all defendants ask that they be sentenced today and not wait until the conclusion of the trial of Tony. 

17.D1 and D3 confirm they are willing to give evidence against Tony as do D2 and D4. This is not however a matter to take into account in passing sentence.  Should D1 and D3 give evidence this can be considered later, as appropriate, whether on appeal or by the executive. 

Mitigation

D1

18.I have carefully considered everything said on behalf of D1 by Mr Davies together with the mitigation letters written by the defendant and his wife.  I take into account D1 pleaded guilty, co-operated with the police and was last before the court in 1990, some 27 years ago.

19.In his mitigation later the defendant refers to giving his consent to the money still remaining in the bank account being returned to the victim.  This would appear to be the sum of US$431,657.29 which Halliburton Energy Services Inc were deceived into remitting to Nation Top’s account with the Nanyang Commercial Bank on 5 August 2014 [10], the bank where the defendant was arrested on 7 August 2014 together with D2[11].  

20.Although I have not been given full details I am told today that an injunction was taken out to prevent the money being withdrawn and that solicitors representing Halliburton attended the police station on 7 August 2014 when they asked the defendant to sign the consent form.  I am further told that the money was returned to Halliburton in January 2015.  

21.Taking into account:

(a) the amount involved was $3,976,270.12, a substantial part of which was recovered by one of the victims Halliburton;

(b) the majority of the money in the accounts was remitted from overseas as a result of email fraud thereby adding an international element to the charge; and

(c) the role of D1 in opening the bank accounts to offset his gambling debts and receiving a reward of $2,000;

I am satisfied the proper starting point after trial is 3 years and 6 months’ imprisonment.

22.On 15 September 2016 when D1 confirmed his plea of not guilty to the charge the case was set down for trial to commence on 20 March 2017.  By letter dated 13 January 2017 D1 indicated his plea of guilty.  Applying the sentencing principles for late pleas of guilty as set down by the Court of Appeal in HKSAR v Ngo Van Nam[12], I am satisfied D1 is entitled to a 25% discount. 

23.In addition to pleading guilty D1 gave evidence for the prosecution, evidence which the court accepted.  In the circumstances I am satisfied a discount of 42% should be given to D1[13], which reduces the sentence to 2 years imprisonment (which is just over 42% discount).   

D2

24.I have carefully considered everything said on behalf of D2 by Mr Wu.  I take into account that D2 was last before the court in 2003.  However, he received a sentence of 16 years and 8 months’ imprisonment from which he was released in October 2013, around 9 months before committing the present offence[14].    

25.Mr Wu places particular emphasis on the amount of the money being only $200,000. Whilst sentence should mainly reflect the amount of the money laundered it is not to be overlooked that D2’s role was not limited to simply withdrawing the money.  D2 was an integral part to the scheme to use D1’s name and identity, accompanying D1 to open the bank accounts and later to the bank to ensure the bank did not discover D1 was not the real holder of the account[15]. 

26.Taking into account the amount involved was $200,000 and the role of D2, I am satisfied the proper sentence after trial is 2 yearsimprisonment[16]. 

D3

27.I have carefully considered everything said on behalf of D3 by Mr Davies together with the mitigation letter written by the defendant.  I take into account that D3 has pleaded guilty and has not been in trouble for over 10 years.   

28.Taking into account:

(a) the amounts involved were $658,388.09 and $2,000,000;

(b) the majority of the money in the accounts was remitted from overseas as a result of email fraud thereby adding an international element to the charges; and

(c) the role of D3 in opening the bank accounts of Kwong Foon and withdrawing money from Good Plus to offset his gambling debts;

I am satisfied the proper starting point after trial for charge 3 is 2 years and 6 months’ imprisonment and for charge 4 is 3 years’ imprisonment.

29.D3’s pleas were not timely pleas of guilty.  D3, like D1, also confirmed his pleas of not guilty to the charges on 15 September 2016 when the case was set down for trial to commence on 20 March 2017 and only indicated his pleas of guilty by letter dated 13 January 2017.  Having considered the mitigation of D3 I am satisfied a sentence of 1 year and 8 months’ imprisonment is appropriate for charge 3 and 2 years’ imprisonment for charge 4. 

Totality

30.The charges relating to two different company bank accounts consecutive sentences are appropriate.  I am satisfied a total sentence of 2 years and 2 months’ imprisonment properly reflects D3’s criminality on the two charges. 

D4

31.I have carefully considered everything said on behalf of D4 by Mr Davies, together with the mitigation letters written by the defendant, his mother and father; his sister and his friend.  I take into account the defendant has a clear record.

32.Taking into account:

(a) the amount involved was $5,511,178.52;

(b) the majority of the money in the accounts was remitted from overseas as a result of email fraud thereby adding an international element to the charges;

(c) for reward D4 opened the bank accounts and withdrew some of the money; and

(d) that D4 has a clear record;

I am satisfied the proper sentence after trial is 3 years and 9 months’ imprisonment.

Delay

33.Delay in bringing an offender to justice is a mitigating factor which may be taken into account in sentence.  All the circumstances must be looked at including whether the offender has acknowledged guilt; where the delay has given the offender the opportunity to rehabilitate himself; whether restitution has been made; whether there was a legitimate expectation the matter will not be further pursued; the size of the investigation and whether the time taken to bring the case to court was longer than necessary[17].

34.Mr Ryan has provided to court a chronology of events.  D1 and D2 were arrested on 7 August 2014; D3 on 7 September 2014 and D4 on 15 June 2015.  The investigation took just over one year after which the police sought legal advice on 14 September 2015.  In the interim D1, D2 & D3 were released from police bail in February 2015. 

35.No details have been provided why the investigation took over one year.  Clearly the police needed time to investigate the different companies.  In my view the time taken to investigate the matter is not open to criticism.    

36.Legal advice was given in December 2015.  D1, D2 & D3 were then re-arrested with all defendants charged on 12 January 2016.  The defendants first appeared in Eastern Magistracy on 14 January 2016.  The case was transferred to the District Court on 25 February 2016. 

37.The first hearing in the District Court was on 15 March 2016 when the defendants indicated pleas of not guilty.  Proceedings were adjourned to 16 June 2016 for a pre-trial review and pending the decision of the Court of Final Appeal in HKSAR v Yeung Ka Sing, Carson[18].

38.At the pre-trial review the parties asked that the trial be further adjourned awaiting the decision of the Court of Final Appeal.  The case was adjourned to 15 September 2016 at which time the defendants confirmed their pleas of not guilty and the trial was fixed for 20 March 2017. 

39.The trial commenced on 20 March 2017 over 2½ years after D1, D2 & D3 were first arrested and almost 2 years after D4 was arrested.  No fault being attached to either the prosecution or the defence for the time taken to bring the case to trial I am satisfied some credit should be given in sentence for the time taken to bring the case to trial [19]. In the circumstances I further reduce the individual sentences by 1 month and the overall sentence of D3 by 1 month.   

Sentence

40.The defendants are convicted and sentenced as follows:

D1

Charge 1 - 1 year and 11 months’ imprisonment;

D2

Charge 2 – 1 year and 11 months’ imprisonment;

D3

Charge 3 - 1 year and 7 months’ imprisonment; and

Charge 4 - 1 year and 11 months’ imprisonment with 6 months consecutive and 17 months concurrent to charge 3;

Total sentence to be served by D3 is 2 years and 1 month imprisonment.

D4

Charge 5 – 3 years and 8 months’ imprisonment.