HKSAR v. Ng Chi Tung

DCCC 857/2017

[2018] HKDC 858

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 857 OF 2017

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REASONS FOR SENTENCE

1.The defendant 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, contrary to section 25(1) and (3) of the Organized and Serious Crimes Ordinance[1] and sections 159A and 159C of the Crimes Ordinance[2].

Introduction

2.Full particulars of the offences are set out in the facts admitted by the defendant on 13 July 2018.  The conspiracies relate to two companies Nation Top Holdings Ltd and HK Kwong Foon Company Ltd.  The two companies had no legitimate business[3].

3.In 2014 Lau Ka Fai became the sole director and shareholder of Nation Top and opened nine bank accounts for Nation Top and Hung Chi Wai became the sole director and shareholder of Kwong Foon and opened six bank accounts for Kwong Foon.  

4.Lau Ka Fai and Hung Chi Wai both pleaded guilty to conspiracy in March 2017[4].  I sentenced Lau Ka Fai and Hung Chi Wai on 5 September 2017[5].

Charge 1

5.Between 9 July and 20 October 2014 $3,976,270.12 was deposited in the accounts of Nation Top, the majority of which was remitted from overseas and obtained by email fraud with the monies withdrawn by cash or cheque within the same day or one to two days after the remittance[6], save for the sum of USD431,631.86 which was the last remittance made to the accounts on 5 August 2014 which sum was recovered by Halliburton[7].

6.Lau Ka Fai (“Lau”) came to know the defendant, who was called Tony, in 2003 while playing mahjong in a mahjong parlour. 

7.In around May and July 2014 Lau lost a lot of money in football gambling   The defendant asked Lau if in return for a reward of around $80,000 - $100,000 he was willing to lend his identity so that the defendant could set up a company and open bank accounts.

8.Lau agreed and subsequently signed the relevant company documents for Nation Top. The defendant assigned Ling Kai Man (“Ling”) to accompany Lau to open the bank accounts of Nation Top[8]. Lau passed all the banking documentation to Ling.  When money was to be withdrawn from the accounts the defendant contacted Lau and arranged for Ling to accompany Lau to withdraw the money. 

9.The defendant had reasonable grounds to believe that the bank accounts were to be used to launder the proceeds of an indictable offence and that the monies passing through the accounts were 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, the majority of which was remitted from overseas and part obtained by email fraud with the monies withdrawn by cash or cheque within the same day or one to two days after the remittance[9], save for the sum of USD20,008.26 which was the last remittance made to the accounts on 8 October 2014 which sum Ms Chan has confirmed was recovered by Five Below Merchandising Inc. in garnishee proceedings.

11.Hung Chi Wai (“Hung”) came to know the defendant, who was called Tony, and a person called Ah Keung in 2013 while playing mahjong. 

12.At the end of 2013 Hung lost money in gambling and borrowed money from Ah Keung.  In June 2014 Hung owed Ah Keung $15,000.  Ah Keung and the defendant asked Hung to sign documents to become the owner of Kwong Foon and then $3,000 would be reduced from the loan.  Hung agreed and signed the documents.   

13.Later the defendant asked Hung to open the bank accounts.  Hung passed all the banking documentation to the defendant.  Hung was also instructed by the defendant to sign some blank cheques.   

14.The defendant had reasonable grounds to believe that the bank accounts were to be used to launder the proceeds of an indictable offence and that the monies passing through the accounts were the proceeds of an indictable offence.

15.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[10]; HKSAR v Hsu Yu Yi[11] and HKSAR v A male known as Boma Amaso)[12].

16.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[13] and HKSAR v Yam Kong-lai)[14]. 

17.Sentence should mainly reflect the amount of the money laundered and not the benefit obtained (see for example HKSAR v Wu Jianbing[15] and Secretary for Justice v Ngai Fung Sin, Apple[16]). In HKSAR v Yeung Kin Chai the Court of Appeal held that a starting point of 30 months’ imprisonment was appropriate for a single transaction of $500,000 involving a simple transfer procedure[17].

18.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.  

Mitigation

19.I have carefully considered everything said on behalf of the defendant by Mr Chan, including that the defendant is married with three young children and is the main breadwinner of the family.   

20.Mr Chan says that the defendant was asked by Ah Keung (referred to in charge 2) if he would act as a middleman to find people who were willing to lend their identity to set up companies and open bank accounts.  Ah Keung promised the defendant $40,000 but never paid the defendant.  The defendant says he did not know the bank accounts would be used for email fraud. 

Starting point

21.When sentencing Lau and Hung I adopted starting points of 3 years and 6 months’ and  2 years and 6 months’ imprisonment respectively[18]. Mr Chan asks that I take the same starting points for the defendant. 

22.In my view in recruiting Lau and Hung the role of the defendant is arguably more serious.   In asking the court to adopt the same starting point Mr Chan fairly accepts that the role of the defendant can be said to be just above that of Lau and Hung.

23.The prosecution however proceeding on the basis the defendant had reasonable grounds to believe and not that he knew the monies were from email fraud I am satisfied I should adopt the same starting points. 

Aggravating features

Commission of offence on bail

24.The defendant was first arrested on 13 August 2014[19]. On that day   the defendant also appeared in Kowloon City Magistracy when he was sentenced to 9 months’ imprisonment suspended for 3 years for an offence of blackmail committed on 20 August 2013[20].

25.Ms Chan confirmed in court that the defendant was arrested for that offence on 22 August 2013 and put on police bail.  The defendant first appeared in court in June 2014 when he was granted court bail.  From the court record the defendant was convicted of the blackmail on 30 July 2014[21]. The conspiracies were therefore committed whilst the defendant was on bail for the blackmail offence.

26.The commission of offences whilst on bail is an aggravating feature of sentence.  I enhance the starting points by 3 months to 3 years and 9 months’ imprisonment and 2 years and 9 months’ imprisonment.

Continuation of the crime after arrest/breach of suspended sentence

27.The dates of the two conspiracies are from July to October 2014.  The last transaction in charge 1, apart from the banks closing the accounts, was on 5 August 2014 before the defendant’s arrest whereas the last transaction in charge 2 was on 8 October 2014 after the defendant was arrested, when as a result of email fraud US$20,008.26 was remitted by Five Below Merchandising Inc.

28.Mr Chan says that after his arrest the defendant did not contact Ah Keung again and played no further role in the conspiracies.  The offence being one of conspiracy Mr Chan submits that the relevant date is July when the agreement was reached and therefore the defendant did not continue his criminal conduct after his arrest or breach the suspended sentence.

29.Ms Chan very fairly informs the court that the prosecution has no evidence that the defendant dealt with the remittance on 8 October or what his actual role was at that time and no evidence that after his arrest he was still actively participating in the conspiracies. 

30.In the circumstances I am not satisfied it has been proved that after his arrest the defendant continued his criminal conduct and breached the suspended sentence.   

31.Giving the defendant full credit for his pleas of guilty reduces the sentence on charge 1 to 2 years and 6 months’ imprisonment and on charge 2 to 1 year and 10 months’ imprisonment.

Delay

32.In sentencing Lau and Hung I reduced their sentence by 1 month by reason of the time taken to bring the case to trial[22]. Mr Chan asks that I give the same reduction to the defendant.

33.Lau was first arrested on 7 August 2014, the defendant on 13 August 2014 and Hung on 7 September 2014.  Lau, Hung and the defendant were all released from police bail in February 2015.

34.Lau and Hung were re-arrested and charged on 12 January 2016.   The trial commenced on 20 March 2017.  The time taken to bring the case to trial was largely attributable to the parties wishing to await the decision in HKSAR v Yeung Ka Sing, Carson[23].

35.Ms Chan confirms that the defendant was not re-arrested until August 2017[24].  The defendant first appeared in Eastern Magistracy on 18 August 2017.  The case was transferred to the District Court on 22 September 2017.  The first hearing in the District Court was on 12 October 2017 when the case was adjourned to 30 November 2017 for the Legal Aid Department to conduct a means assessment. 

36.On 30 November the assessment had not been completed and the case was further adjourned to 28 December 2017.  On that day Mr Chan appearing for the defendant applied for an adjournment pending service of further documentation and to give the defendant legal advice. 

37.The case was further adjourned to 8 February 2018 when Mr Chan applied for a further adjournment to enter into plea negotiations with the prosecution.  On 22 March 2018 the defendant indicated his plea of guilty to charges 1 & 2 which plea was acceptable to the prosecution.  The case was adjourned to 13 July for plea and sentence.

38.I am satisfied there is no delay in the defendant’s case.  The circumstances are different to those of Lau and Hung.  No further reduction in sentence is therefore warranted on account of the time taken to bring the case to trial.

Totality

39.The charges relating to bank accounts of two different companies’ consecutive sentences are therefore appropriate.  I am satisfied a total sentence of 3 years’ imprisonment properly reflects the defendant’s criminality on the two charges. 

Sentence

40.The defendant is convicted and sentenced as follows:

Charge 1 - 2 years and 6 months’ imprisonment; and

Charge 2 - 1 year and 10 months’ imprisonment with 6 months consecutive and 16 months concurrent to charge 1;

The total sentence to be served by the defendant is 3 years’ imprisonment.