HKSAR v. Cheung Yip Shing

DCCC 998/2017

[2018] HKDC 528

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 998 OF 2017

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REASONS FOR SENTENCE

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1.The defendant pleaded guilty to one charge of dealing with property known or believed to represent proceeds of an indictable offence, contrary to section 25(1) and (3) of the Organized and Serious Crimes Ordinance, Chapter 455, Laws of Hong Kong.

Facts

2.This offence came to light when a Taiwanese businessman Mr. Peng made a report to the police that he was deceived into paying a sum of US$63,000 into an account held in the name of the defendant in Heng Sang Bank Limited (“the Account”). 

3.Mr. Peng operated a printing machines manufacturing factory in Taiwan.  On 5 December 2015, he received a call from a person called Michael Chow (“Chow”) who claimed to the manager of a Hong Kong company named Ming Shun Industrial Group Ltd. Chow said that his company would like to buy products from Mr. Peng.  He asked Mr. Peng for quotations and visited Mr. Peng’s factory in Taiwan a few days later. During the visit, he invited Mr. Peng to go to Hong Kong to meet his boss and offered to pay for Mr. Peng’s hotel and food expenses.  Mr. Peng agreed. 

4.On 29 December 2015, Mr. Peng came to Hong Kong alone.  Chow received him and took him to a hotel in Mongkok.  Chow paid for the hotel expenses.  They agreed that Mr. Peng would meet the boss of Chow the following day.

5.About 10 a.m. on 30 December 2015, Chow picked up Mr. Peng from the hotel and brought him to a VIP room of an unknown Chinese restaurant in Kowloon.  Mr. Peng met 3 males who claimed to be the boss and the colleagues of Chow.  The 3 males and Chow then invited Mr. Peng to play poker games.  Mr. Peng agreed.  He lost HK$10,000 in cash and US$63,000 on credit to them.

6.At the conclusion of the meeting, Chow told Mr. Peng that he would buy printing machines worth HK$2.7 million from Mr. Peng.  He also said he would visit Mr. Peng’s factory again.  He arranged a taxi to send Mr. Peng to the airport to go back to Taiwan. 

7.On 31 December 2015, Mr. Peng received a call from the male who claimed to be the boss of Chow.  He asked Mr. Peng to transfer US$63,000 into the Account. Since Mr. Peng expected to have a long-term business relationship with this person, he remitted US$63,000 into the Account on the same day.  Mr. Peng however could not contact Chow or any of the other males since then.  He made a report to the police.

8.A subsequent check into the records of the Companies Registry revealed that no company in Hong Kong was registered in the name of Ming Shun Industrial Group Ltd.

9.The Account was opened by the defendant on 5 September 2007 with the Heng Sang Bank Limited. He was a self-employed decoration worker.  He used the Account to settle insurance payment for his wife and daughter, and for transactions of his petrol card.  He also used the Account to pay for decoration materials he purchased for his work.  He was not the person who claimed to be Michael Chow.  Nor was he one of the three other males who claimed to be the boss or the colleagues of Chow. 

10.Between 22 December 2014 and 6 March 2017, 63 transactions of money in the total sum of HK$12,434,121.84 had been deposited into the Account.  These transactions comprised 17 cash deposits (for the total sum of HK$440,100), 36 transfer deposits (for the total sum of HK$11,704,121.84), and 10 cheque deposits (for the total sum of HK$289,900).  The amount of each deposit ranged from HK$1,500 to HK$1,598,072.   Amongst these deposits, 49 of them were over HK$10,000, 5 of them were between HK$5,000 and HK$10,000, and the remaining 9 deposits were less than HK$5,000. 

11.Within the same period of time, 424 transactions of money in the total sum of HK$12,283,095.87 had been withdrawn from the Account.  These transactions comprised 181 cash withdrawals (for the total sum of HK$11,870,159.49), 222 transfer withdrawals (for the total sum of HK$386,472.88), and 21 payments (for the total sum of HK$26,463.50).  The amount of each withdrawal ranged from HK$20 to HK$1,500,000.  Amongst these withdrawal, 73 of them were over HK$10,000, 93 of them were between HK$5,000 and HK$10,000, and the remaining 258 deposits were less than HK$5,000.

12.As a self-employed decoration worker, the defendant’s monthly income was around HK$30,000.  Between 2010 and 2016, he had submitted only 3 tax returns in 2011, 2012 and 2015 in which he declared that his respective annual incomes were HK$101,400, HK$67,000, and HK$114,975.  Enquiries with the person employing the defendant revealed that the defendant earned only HK$1,000 or less as his daily wages.

13.On 6 March 2017, the defendant was arrested.  The Heng Sang Bank card and passbooks of the Account were seized.  Under caution, the defendant admitted that he had lent the Account to a casual friend called Ah Wing, and that he often withdrew money in cash from the Account for Ah Wing and received a reward of HK$5,000 on each occasion.  He further stated in subsequent video-recorded interviews that Ah Wing had been his casual friend for a few years, and Ah Wing introduced him to another person called Sai Keung in September 2015.  Ah Wing and Sai Keung told him that they would win money from gambling, but Sai Keung resided in Mainland China and had no bank account in Hong Kong.  They therefore asked to deposit the gambling proceeds into the Account, and wanted him to withdraw the proceeds from the Account in cash and gave them the cash in person.  He agreed to do so for a reward of HK$5,000 to HK$10,000 on each occasion when money was withdrawn. 

14.The defendant admitted that the transactions stated in Annex II of the Summary of Facts were gambling proceeds deposited into the Account and that he had withdrawn the money in cash and gave them to Ah Wing and Sai Keung subsequently.  He admitted that he had withdrawn the money deposited into the Account by Mr. Peng in December 2015 (equivalent to HK$487,240), but denied knowing Mr. Peng and the other persons, or playing any part in the gambling with Mr. Peng.  On that occasion, Sai Keung told him in advance that money would be deposited into the Account.  He then withdrew HK$400,000 in cash and gave the money to Sai Keung. He also admitted that a sum of HK$1,164,820 was deposited into the Account on 27 February 2017, and he withdrew HK$10,000 in cash on the same day, and another HK$1,050,000 in cash on the following day, and that he handed over the cash to Ah Wing, and received HK$10,000 as a reward on this occasion. 

15.The defendant further admitted that between 22 December 2014 and 20 December 2016, the large amount of transactions in the Account were mainly the gambling proceeds belonged to Sai Keung and he would withdraw the money immediately or a day after and handed over the money to Sai Keung in cash.  He had no idea what gambling activities Ah Wing and Sai Keung were engaged in.

16.At the time when the defendant pleaded guilty, he admitted that at the material times, he knew or had reasonable ground to believe that the money deposited into the Account in the total sum of HK$12,434,121.84, in whole or in part directly or indirectly represented the proceeds of an indictable offence, and that he dealt with the property.

Criminal record

17.The defendant has two previous criminal convictions involving a total of 4 charges.  The sentences were imposed in 2000 for offences not similar to the present one. 

Personal and family circumstances

18.The defendant is now 45 years old.  He was born in Hong Kong.  He received education up to Form 3.  He is a decoration worker by occupation, and earned about HK$30,000 a month.  He is married.  He is living with his parents, wife and daughter.  His father is over 80 years old and his mother is in her 70s.  Both of them have retired.  His wife is a housewife looking after their daughter aged one.  The defendant contributes HK$5,000 to HK$10,000 a month to his parents, and spends all his remaining income to maintain his wife and daughter.

Mitigation

19.Learned counsel for the defendant revealed that the defendant committed this offence because his income as a decoration worker was unsteady, and that he was short of money at the time of the offence.  Counsel accepted that a term of imprisonment was inevitable, and he pleaded for leniency.  Counsel acknowledged that the amount of money involved was not small, but he submitted that the defendant did not gain much from the offence. Although counsel was unable to say how much money the defendant had received as his rewards because the defendant had not kept a record, he accepted that the reward was at least HK$100,000 since the defendant received HK$5,000 to HK$10,000 each time and there were 19 transactions set out in Annex II of the Summary of Facts.  Counsel stressed that the defendant had no knowledge of the underlying crime and was not involved in the fraud against Mr. Peng, and that the defendant was just foolish to lend his bank account for the use of the others and became the only person who was traced.  Counsel pointed out that the defendant was fully co-operative with police because he admitted everything to the police at the outset, and that he also pleaded guilty in Court.  Counsel argued that since the defendant did not know what the underlying crime was and merely had the reasonable belief that the money was proceeds of an indictable offence, that made his offence less serious.  Counsel pointed out that the defendant had no previous similar conviction.  He also pointed out that the defendant did not open the bank account for illegal purposes, and that the defendant had held and used the Account for many years before he committed the offence.  Counsel referred to the case of HKSAR v Hsu Yu Yi[1] and the cases stated in the judgment to assist this Court to arrive at the proper quantum of the prison term.

Reasons for sentence

20.The offence committed by the defendant is commonly referred to as “money laundering”.  Even if the offender is not involved in the underlying criminal activities that generate the illegal gains, he has assisted the criminals to dispose of or to retain the proceeds of their crimes, and hindered the investigation of the authorities to bring the true criminals to justice.  For these reasons, money laundering has always been regarded as a serious offence for which deterrent sentences are required.  Hence, imposing a term of immediate imprisonment is the usual sentencing option even for a defendant who has pleaded guilty and has a clear record. 

21.In the present case, the defendant has pleaded guilty.  He has previous criminal convictions but I ignore them for the purpose of sentencing since they were for offences of a dissimilar nature and committed by the defendant many years ago. Nevertheless, it is clear from the mitigation that there are no exceptional circumstances in this case that justify the imposition of a non-custodial sentence.  In fact, learned counsel for the defendant accepts at the outset that a term of imprisonment is inevitable.  The only issue is the quantum of the term of imprisonment.

22.There is no tariff sentence that this Court can rely upon.  The Court of Appeal has found it inappropriate to lay down any tariff sentence for the offence of money laundering since offences of this kind can be committed in very different circumstances.  The Court of Appeal has however identified a number of significant factors that the sentencing court should consider in assessing the culpability of the offender.  These factors include 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 the underlying offence or had 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: Secretary for Justice v Jerome Yuval Arnold Herzberg[2], Hsu Yu Yi, and HKSAR v A male known as Boma Amaso[3].

23.The Court of Appeal has also emphasized 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 HKSAR v Chen Szu Ming[4], HKSAR v Yam Kong Lai[5], and HKSAR v Cen Huakuo[6]. In addition, the sentence should mainly reflect the amount of the money laundered: see Secretary for Justice v Ngai Fung Sin, Apple[7].

24.In the present case, the money laundered by the defendant was about HK$12.4 million which is undoubtedly a very large amount of money.  There is no evidence as to the source of the money except the US$63,000 (or the equivalent of HK$487,240) paid into the Account by Mr. Peng.  I noted that while Mr. Peng paid the money into the Account because he had lost in gambling, the only reasonable and irresistible inference from the facts of the case was that Mr. Peng was cheated of this sum of money.  Michael Chow and his boss and colleagues were never genuine buyer intending to buy products from Mr. Peng since the so-called Ming Shun Industrial Group Ltd. never existed in Hong Kong, and all of them disappeared after Mr. Peng remitted the money into the Account.  It is clear that Mr. Peng was merely coaxed to come to Hong Kong to fall into the trap of a gambling session in which he was made to lose large sum of money.  I am sure that the money paid into the Account by Mr. Peng was the proceeds of a deception offence.  It appears to me that learned counsel for the defendant will not argue otherwise since he entered his plea in mitigation on the basis that the defendant was not a party to the fraud.  While the predicate offence behind this sum of money was deception, it must however be said at once that there is no evidence that the defendant was a party to this deception offence or that he was aware that the money remitted into the Account by Mr. Peng was the proceeds of the deception offence.

25.I also note that the defendant committed the offence within a period of slightly over 2 years which was not a short period of time.  There were at least 19 deposits of significant sums of money into the Account (as identified in Annex II), and the defendant withdrew the money in cash either on the same day of the deposits or within a very short time thereafter.  It is clear that he had allowed the Account to be used as a temporary depository for substantial sums of money, and he took the proactive step to withdraw the money in cash and handed over the cash to Ah Wing and Sai Keung in person. 

26.There is also in my view an international element in the offence.  According to the defendant’s admission, Sai Keung was a mainlander who had no bank account in Hong Kong. The offence committed by the defendant clearly allowed a person outside Hong Kong to receive the proceeds of the crime.  In addition, Mr. Peng, a Taiwanese, was also deceived into remitting money from Taiwan into the Account in Hong Kong.

27.On the other hand, I accept that the defendant did not engage in sophisticated scheme of money laundering.  He opened the Account for legitimate purposes, but for the sake of making easy money, he was persuaded by Ah Wing and Sai Keung to allow his bank account to be used to receive “dirty” money and withdraw the money for the benefit of Ah Wing and Sai Keung.  I also accept that there is no evidence that the defendant continued with the money laundering activities after his arrest.  I cannot however ignore the fact that the defendant had received rewards of not less than HK$100,000 which was a substantial sum of money.

28.Learned counsel for the defendant referred to the case of HKSAR v Xu Xia Li[8] which was cited in paragraph 10 of the judgment in Hsu Yu Yi.  Counsel submitted that in Xu Xia Li, the money laundered was HK$11 million and the original sentence of 3 years’ imprisonment was reduced to 2 years and 9 months by the Court of Appeal.

29.I note that the facts in Xu Xia Li were totally different from the facts in the presents case.  I also note that there are other cases that might suggest a higher sentence for laundering similar amount of money.  In Secretary for Justice and Wan Kwok Keung[9], the Court of Appeal had remarked that if the money laundered was HK$10 million or above, a sentence of over 5 years’ imprisonment might be appropriate.

30.In the present case, part of the money laundered by the defendant originated from a deception offence.  In HKSAR v Muhammad Nadeem Bhutta[10], the appellant was convicted of 3 charges of money laundering and one charge of attempted money laundering.  The money involved was €966,256.  This sum of money was paid by the victim company in Spain into the accounts controlled solely by the appellant in Hong Kong as a result of a telephone scam.  Within a day or two of the deposits, the appellant siphoned off and attempted to siphon off almost the whole lot of the money (i.e. around €963,449) from his bank account either by way of cash withdrawals or telegraphic transfers to an overseas account in Cyprus.  The appellant was convicted after trial.  In sentencing, the trial judge referred to the amount of money which was the equivalent of almost HK$10 million, the predicate offence which was a telephone scam, the essential role played by the appellant as a conduit for the money, his knowledge that the money represented the proceeds of serious crime, and the international element in which the fund came from Spain and was dispersed to Cyprus, and sentenced the appellant to an overall term of 5 years’ imprisonment.  The sentencing judge made it clear that but for the appellant’s clear record, he would have sentenced him to an overall term of imprisonment for 5 years and 2 months.  The appellant’s application for leave to appeal against sentence was dismissed by Macrae JA (as he then was).

31.In the present case, the defendant was told by Ah Wing and Sai Keung that the sums of money deposited into the Account were gambling proceeds.  Other than the sum of money paid by Mr. Peng, there is no evidence as to the predicate offence for the other sums of money.  In addition, unlike the appellant in Muhammad Nadeem Bhutta, there is no evidence that the defendant knew of the deception practiced on Mr. Peng.  It therefore appears to me that the defendant’s sentence should not be as high as 5 years’ imprisonment as Wan Kwok Keung might have suggested.

32.In Wan Kwok Keung, the offender laundered money on thousands of occasions for as long as 7 years and the total amount involved was as high as HK$14 million which were in fact the proceeds of bookmaking offences in which he had participated. The Court of Appeal took the view that the appropriate starting point of the term of imprisonment should not be lower than 4 years.

33.In the present case, the amount of money laundered by the defendant was HK$12.4 million which was less than that in Wan Kwok Keung.  On the other hand, the HK$487,240 remitted by Mr. Peng into the Account was the proceeds of a deception offence which appeared to me to be an offence more serious than bookmaking. As to the remaining sums of money, the predicate offence was unknown, but the defendant must have at least believed that these were gambling proceeds as he had been told by Ah Wing and Sai Keung.

34.Having considered the amount of money laundered, the role played by the defendant in these money laundering exercises, the length of time during which the offence had been perpetrated, and the rewards received by the defendant, I am satisfied that the proper sentence after trial is a term of imprisonment for 3 years and 9 months.

35.As I have already said, I ignore the defendant’s criminal record for the purpose of sentencing.  I find no aggravating feature that operates to increase the sentence.

36.As far as mitigation is concerned, I note the defendant is the sole breadwinner of his family.  His elderly parents, wife and very young daughter all rely on him for a living.  However, for an offence as serious as money laundering, the hardship suffered by his family cannot be regarded as a factor that operates to reduce his sentence.  There is no mitigating factor other than his guilty plea.  Since the defendant pleaded guilty at the first available opportunity, he is entitled to the full one-third discount.

37.For these reasons, the defendant is sentenced to serve a term of 30 months’ imprisonment.