HKSAR v. Chan Pau Chi and Others
Read the full judgment text of DCCC 991/2016 on BabelCite. This District Court judgment was delivered on 23 May 2019.
1. This sprawling case arises primarily out of the operation of a website that promoted the services of prostitutes in Hong Kong. Sex141.com (the sex141 conspiracy). This constitutes the conspiracy to live off the earnings of prostitution charged as count 2.
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DCCC 991, 1007-1010/2016 (Consolidated) [2019] HKDC 652 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CRIMINAL CASE NOS 991, 1007-1010 OF 2016 --------------------------
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------------------------------------- REASONS FOR VERDICT ------------------------------------- OVERVIEW SUMMARY OF OVERALL PICTURE 1.This sprawling case arises primarily out of the operation of a website that promoted the services of prostitutes in Hong Kong. Sex141.com (the sex141 conspiracy). This constitutes the conspiracy to live off the earnings of prostitution charged as count 2. 2.The evidence to prove this charge arises out of the raids conducted at the premises of its server and a work space where a large amount of computer related evidence was seized. There was also evidence from prostitutes who paid the website to advertise their services. 3.Although the prosecution never condescended to precisely iterate the respective conspirators roles it appears from the piecemeal introduction of the evidence that D1 was the overall boss. D3 the moneyman. D9 the technical support and editor and D8 – D12 worked together to administer the site from an office space. 4.D3 was charged to dispose of the proceeds he did so by acquiring bank accounts from various people and laundering the proceeds through those accounts. These are charged as conspiracies to deal in the proceeds of indictable offences. I shall refer to these charges by the colloquial expression of ‘money laundering’ charges. 5.These money laundering charges involve D3 and named defendants, D4, D5, D6, D7, D11, D13, D14 and D15. D13 is said to have procured accounts for D3. 6.D3 is also alleged to have used a number of other named individuals accounts. These were charged in one charge separately and known as ‘stooge accounts’. 7.In addition to this D1, D2 and D3 were separately charged in another conspiracy to loan money at an excessive rate. 8.D1 and D2 are married. D3 used to work for D1. 9.It is said they together operated two adjacent companies UT Finance (D2) and Belief (D3) that loaned money to unsuspecting loanees at an illegal interest rate. D2 and D3 owned the companies and D1 had previously owned one of the companies. The companies operated side by side, one loaning the money the other taking a service fee that inflated the interest rate on the loan above that legally permissible. 10.D1, D2 and D3 also faced money laundering charges which I assumed were separate from the sex141 money laundering charges and represented their receipts from this illegal enterprise. 11.All defendants denied the charges. 12.There was little direct evidence, beside admissions in relation to their conspiracies made by D4, D7, D13, D14 and D15. The prosecution relying on inferences to be drawn from the vast amount of documentary and computer evidence introduced. THE DEFENCES 13.D1 gave evidence he said that even if the two conspiracies existed there was insufficient evidence to show he was a party to the agreements. As far as the money laundering charges were concerned they were the proceeds of lawful activities. 14.D2 gave evidence she said the money lending business run by her was legitimate and distanced from the business run by D3 and no agreement existed between them. That her bank accounts only contained monies that were the result of lawful commercial activities. 15.D3 gave evidence. In respect of the money lending conspiracy he agreed with D2’s case, the two companies were entirely separate and the charges levied by them respectively were legitimate. 16.D3 denied any part in the sex141 website and its money laundering activities. He happened to attribute the incriminating evidence introduced by the prosecution to another person a business acquaintance who left incriminating evidence in his business address, home and business computer. 17.D4 gave evidence he said his admissions were involuntary and the monies in his accounts were the proceeds of legitimate cross border trade in milk powder. 18.D5 gave evidence he loaned his account to a person who worked for 141 nightlife.com. The monies in the accounts were the proceeds of legitimate business activity. 19.D6 gave evidence had also loaned six accounts for the purpose of cross border business, the proceeds were the result of legitimate business activities. 20.D7 gave evidence her record of interview was involuntary and she had loaned the accounts to a man she met in a bar who carried out legitimate advertising on the internet for 141 nightlife.com. 21.D8, D9, D10, D11 and D12 were arrested in what was said to be sex141’s server and office. 22.D8, D9, D10 and D12 did not give evidence. They said the prosecution case taken at its highest could not prove they were part of the sex141.com conspiracy charge. 23.D11 gave evidence he said he worked on as part of the 141 website that had no part in the provision of advertising for prostitutes that the monies in his business accounts that he set up with D3 were for the receipt of legitimate business receipts from that endeavor. 24.D13 did not give evidence on the general issue he said the admissions made by him to selling others accounts were made involuntarily. 25.D14 gave evidence she said her admissions were not made voluntarily and that the account was lent to a boyfriend for a legitimate cross border trade in milk powder. 26.D15 gave evidence he had lent his account to another person for the receipt of cross border transport and milk powder business. 27.The monies in the accounts were the proceeds of legitimate business activities. RESOLUTION 28.It was clear on the evidence which was largely unchallenged that sex141.com did operate a business of the promotion of prostitution for commercial gain and was funded by prostitutes advertising fees. 29.The conspiracy alleged in Charge 2 existed. 30.I also found the conspiracy alleged in Charge 1 existed. There was an agreement that the loanees of D2’s business would only be loaned their monies at an excessive interest rate. 31.The operation of the companies run by D2 and D3 ensured that an excessive rate was charged. This could hardly be a coincidence. 32.I found the major issue to be resolved in respect of all the defendants hinged on their credibility. I naturally considered their cases individually yet it was clear to me that each and every defendant had told me a package of lies designed to meet the features of the prosecution case that incriminated them. 33.The defences put forward were inherently incredible and unbelievable. 34.I found that the evidence did show that D1, D3, D9 and D11 were part of the sex141 conspiracy. 35.That D1, D2 and D3 did operate UT Finance and Belief believe as an agreement to lend money at an excessive interest rate that D4, D5, D6, D7, D11, D13, D14 and D15 had entered into agreements with D3 and D7, D14 and D15 with D13 and D3 that their accounts be used for the laundering of the proceeds of crime particularly the proceeds of the conspiracy alleged in Charge 2. That D13 had procured accounts for D3. 36.I found that D1, D2 and D3 had also used their own accounts to deal in the proceeds of their crimes. That D3 had committed all the money laundering conspiracies alleged against him. 37.I found in respect of D2 that it could not be established in respect of one of her accounts that it was used to deal in the proceeds of crime. 38.I found that in respect of D10, D11 and D12 that their presence in the work space where they were arrested was incriminating but that taken overall it was insufficient to establish their involvement in the Charge 2 conspiracy to a criminal standard. 39.I now provide a more detailed exposition of my findings:- INTRODUCTION 40.The Indictment concerns the existence of three main conspiracies and substantive offences that arise out of the operation of a website promoting prostitution called sex141.com, and the operation of a money lending business engaged in lending money at excessive rates. 41.The conspiracies are:-
42.The substantive charges involve various offences and involve dealing in the proceeds of an indictable offence. The involvement of the defendants 43.D1, D3, D8, D9, D10, D11 and D12 are said to be involved in the conspiracy to live on the earnings of prostitution. 44.D1, D2 and D3 are said to be involved in the conspiracy to lend money at an excessive rate of interest which involves the operation of a money lending business by them. 45.D3 is said to have conspired with 15 named individuals to deal in the proceeds of an indictable offence. By the use of their bank accounts. 46.He is also charged with being involved in the same conspiracies with: D4, D5, D6, D11, D7 and D13; D13 and D14; D13 and D15. By the use of their bank accounts. 47.D1, D2 and D3 also face a number of individual money laundering offences in respect of monies in bank accounts under their control totaling some 35.8 million HKD for D1, 129.2 million HKD for D2 and 36.4 million HKD for D3. 48.D4, D5, D6, D7, D13, D14 and D15 are charged in conspiracies to deal in the proceeds of an indictable offence with either D3 or D3 and D13. These charges involving the use of their accounts by D3 and the providing of those bank accounts by D13. 49.It is said these defendants lent their bank accounts for money laundering purposes. All defendants deny the charges 50.The evidence arose from raids on various premises operated as part of the conspiracies together with evidence of prostitutes who used sex141’s services, and clients who borrowed money from the money lending business. 51.All banking evidence was agreed as was a large body of documentary evidence seized by the police. 52.Various of the defendants made Records of Interview that were admitted into evidence following voire dire hearings. 53.The prosecution rely on large amounts of seized documentary evidence. Beside the records of interview there is no other direct evidence. The prosecution rely upon the drawing of inferences from the body of documentary evidence to establish their case. Summary of the Prosecution Case based on the evidence adduced at trial as outlined by the prosecution Charge 2 The Conspiracy to live on the earnings of prostitution 5 January 2018 to 4 December 2018 D1, D3, D8-D12 Sex141.com structure Sex141 54.“sex141.com” was a website consisting of a forum called One Life One Hong Kong with the website address 141hongkong.com and 141club.com (“the Forum”) and a nightlife information spot called Hong Kong Nightlife with the website address nightlife141.com (“Nightlife141”). The contents of the websites sex141.hk and sex141.com (together as “Sex141”) were identical. “sex141.hk” 55.The domain name “sex141.hk” was registered under the name of Bloom International Limited (“Bloom International”). A number of banking items of Bloom International, including a bankbook (P441), an individually signed cheque book (P464), the company steel stamp (P480) and two stamp chops (P512) were found seized from Sum Ho Wah (“D3”)’s home. On 30 November 2012, a Jimmy Lee applied for the domain name “sex141.hk” on behalf of Bloom International. On the same day, Chiu Kai Cheung (“D9”) paid the annual fee for the domain name “sex141.hk”. D9 later admitted he used the name of Jimmy Lee for this purpose. 56.The IP address of the server for Nightlife141 was provided by New World Company Telecommunication Limited (“NWT”) and the server (P188) was situated at the data center of NWT (“NWT Data Center”). It is the evidence of PW17 that the photos of females found in the server P188 bore the “sex141” or “NightLife141” watermarks. 57.March Computer Company (“March Computer”) rented the server (P188) and a counter from NWT between 4 July 2007 and 13 March 2014. D9 had accessed the counter at NWT on three occasions on 29 August 2011, 13 August 2013 and 14 August 2013. 58.D9 was arrested at Shop 80 of South Seas Centre (“South Seas”) on 30 April 2012. He was initially found inside the only room in South Seas where he is said to have provided the password of the computer therein. From that computer the following were found: 1) a monthly statement issued by NWT on 4 November 2013 to “Mr. Jimmy Lee” of march Computer and 2) the layouts of various pages on “Sex141.com” and “141hongkong.com” where different sizes of advertisements would be posted. D9 later admitted under caution that: 1) “Jimmy Lee” was the pseudonym he used; 2) he was the one who installed the server for Sex141; and 3) he received HKD20,000 from a “Brother Pau” on a monthly basis for the server’s rental fee. 59.D9 opened a safe inside South Seas with a key in his possession and dialed the security knob with a passcode. Among other items, HKD592,709.50 in cash and two company chops of March Computer were found from the safe. 60.South Seas is a property owned by the elder sister of Chan Pau Chi (“D1”) since 21 May 2009. “Sex141.com” 61.Softlayer Technologies Inc (“Softlayer”) was a US network supplier that provided server service for sex141.com on 7 April 2012. Between July 2007 and August 2012, D1 paid Softlayer on a monthly basis. March Computer then rented the server for sex141.com from US network supplier Black Lotus Communications from 12 January 2013. 62.D3 registered sex141.com at the Business Registry for the year 2006/2007. This is outside the operative period of the conspiracy. NightLife141 63.It was the evidence of DPC4982(“PW1”) that between October 2012 and December 2013, the domain name “sex141.com” led one directly to Nightlife141. The homepage of Nightlife141 contained various icons for different countries. By clicking on the “Hong Kong” button, one would be led to a warning page where one would confirm that he was 18 or above. The page would then appear for “Females Database” where one could choose girls from various districts in Hong Kong. There were also icons for different choices of services, including water spa, healthy foot massage, upstairs massages, one-woman-brothel, 24-hour escort angels, onsite massages, hotel girls, services provided to persons with disabilities, etc. There are also icons that led to individual pages of the females advertised therein. All contents pages of the individual females shared an identical format: the photo of a female on the left with her nickname, and other information as to services offered. Matching advertisements in Sex141 Magazine 64.Three boxes of Sex141 Magazines [P166] were found inside South Seas Centre. It was PW15’s evidence that D9 claimed to be the editor or typesetter of Sex141 Magazine and that was recorded in his Police Notebook. 65.On 2 December 2013, DPC5019 (“PW2”) entered the website http://sex141.com and captured images of the individual pages of females. PW2 clicked into the 5 districts, namely North Point, Causeway Bay, Wanchai, Tsuen Wan and Tsim Sha Tsui and captured all the pages of females he found. He then compared them with the advertisements placed in the December edition of Sex141 Magazine and made sixty-nine matches. 66.Sex141.com’s role in the provision of sexual services was proved by various police officers who posed as customers of the prostitutes advertised on sex141.com. 67.Contacts were made and sexual services were offered both to police officers and other customers. 68.This evidence the prosecution say shows that sex141.com was proved to be a website for the promotion of prostitution. 69.The prosecution produced evidence that the advertisements present on sex141 were paid for by the prostitutes concerned thereby establishing that sex141.com was supported by the earnings of prostitution. 70.PW78 and PW79 provided evidence of payment by them to enhance their one woman brothel businesses. 71.Money from both payments was found to go to D4’s account. 72.The prosecution said that the operation of sex141 especially the management of the advertisements for sexual services was operated from a premises known as Park Fook Industrial building at a Room 12 in that building at the office of A4 production a company of which D10 was the sole proprietor. D10 also rented the premises. 73.On 4 December 2013 the premises was raided by police. D8, D10, D11 and D12 were found inside at various seating stations which had computers in front of them. 74.PW38 stated in his evidence that he was behind PW37 when he waited for the door of Park Fook to be broken before they rushed inside. Once PW38 entered Park Fook, he ran to the innermost part of the premises to gain control of Chan Ki Yi (“D8”) who was sitting on a chair at the desk that was farthest away from the door towards the right. PW38 identified the position to be Desk 1 in the sketch that was produced as P1343. 75.PW39 gave evidence that when he entered Park Fook, he saw three rows of desks and chairs. He found Yuen Wai Kit (D10) sitting on the second seat from the right in the first row; he identified the position to be Desk 6 in the sketch. D10 was the suspect closest to him not being guarded by anyone and so PW39 went straight to D10. 76.PW40 entered Park Fook and found all suspects already sitting in their respective seats. PW37 directed him to guard D11 who was sitting at the desk in the second row closest to the corridor; PW40 identified this position to be Desk 2 in the sketch. 77.PW41 entered Park Fook and went immediately to whoever was not guarded and went over to Chan Sze Leung (“D12”). PW41 identified the position of the desk where D12 was at to be Desk 7 in the sketch. 78.PW37 declared the arrest on all the seven persons inside Park Fook, including D8, D10, D11 and D12. People were also arrested who had no connection with the sex141.com website. They were later released. Their computers contained no evidence relevant to the operation of the sex141.com website. 79.SGT50308 (“PW8”) was the designated exhibit officer of Park Fook. 80.The prosecution relied upon evidence seized from the various seating stations especially the contents of the computers at the locations where the defendants sat to provide evidence of their involvement in the conspiracy Evidence against D8 (Charge (2) – Conspiracy to live on earnings of prostitution) 81.A number of items were seized by PW8 from Desk 1 where D8 was upon police entry. Among them were:-
82.Under Desk 1 there was a carton box containing another 1,832 Sex141 promotion business cards. 83.On the wall next to Desk 1, underneath Desk 1, there was a switch. It is PW8’s evidence that the switch could switch off all the computers on all the desks inside Park Fook all at once. 84.The hard disk of the computer at Desk 1 was also seized; after examination the Hard Disk showed:-
85.The fingerprint of the left thumb of D8 was found on top of a mobile modem. The fingerprint of his left thumb was found on the card marked with the word “Bau”. D8’s right thumb print was found on the card marked with the word “SA”. The prosecution say the inference can be drawn that D8 was working on this computer on the business of sex141.com. D8 did not give or call any evidence. Evidence against D10 (Charge (2) – Conspiracy to live on earnings of prostitution) 86.D10 was the registered owner of A4 Production at the material time. He was also the tenant of Park Fook. 87.D10 was found at Desk 6 upon police entry and one set of blank advertisement subscription form was seized by PW8 from Desk 6. 88.The hard disk of the computer at Desk 6 was also seized as P68. In it, PW23 found the same Word document about advertisement prices with the file name “Main Page amendment 2013.doc” and document title “Proposal of Main Page Additions and Alteration 2013” [P541] which was found in D8’s computer and an identical file [P585] from the hard disk in Room 2004 [P338]. Under cross-examination, D8’s counsel suggested to PW23 that the files found in individual hard disks were from a server somewhere unknown and not stored in the individual hard disks. PW23 disagreed with the suggestion and pointed out that the file [P541] although having the same file name and contents, was found saved individually in the various computer hard disks seized. For example, it was found saved in hard disk P53; at the same time, it was also saved in another hard disk P63. 89.The fingerprint of D10’s left middle finger was found on the card marked with the word “Bau”. The prosecution say the necessary inferences can be drawn against D10 from his seating at this location. D10 did not give or call evidence. Evidence against D11 (Charge (2) – Conspiracy to live on the earnings of prostitution) 90.D11 was found at Desk 2 upon police entry and PW8 seized the following from Desk 2:-
91.From the computer hard disk seized under Desk 2 [P63], PW23 found:-
92.D11 faces other charges in relation to the operation of various company accounts. He gave evidence in his own defence and called witnesses. Evidence against D12 (Charge (2) – Conspiracy to live on earnings of prostitution) 93.A number of items were seized by PW8 from Desk 7 where D12 was found upon police entry. Among them there were:-
94.The hard disk of the computer at Desk 7 was seized as P68. In it, PW23 found a Word document with the file name “Photo Categories for Year 2012.coc” where instructions on how advertising photos to be posted in various categories are to be taken with specific features. The categories included Hotel reservation, Hotel Low class, One-person Low class, One-person, Upstairs massage, Beauty foot spa/SPA + AV – no sexual, On site massage – no sexual. For example, for One-person, “explicit and sexy photos, photos of seductive poses, nudity, pubic hair, etc.”. The 3rd defendant also is alleged to be part of this conspiracy 95.The prosecution rely upon the document Book 1 within P546. The image file with a list of names and bank account numbers. This is an image file bank [1] HTM. found in the computer at D11’s desk location and sets out bank accounts used by sex141.com to receive payments. 96.It is admitted that between September 2012 and November 2013. D3 approached the bank accounts of these persons whose names and bank account numbers appear on that list in P546 a summary of the fund flow in these accounts and their description was produced by the prosecution and shows D3 has been operating accounts whereby payments from sex services such as one woman brothels and massage parlors were received as follows.
THE SECOND CONSPIRACY CHARGE 1 Money Lending at an excessive interest rate 2002 – 2 December 2013 97.D1 had been the proprietor of Believe Finance Consulting Company (“Believe”) between 15 May 1995 to 1 March 2005. D3 took over this company and changed the name to Belief Consulting Co (“Belief”). D2 became the sole proprietor of UT Finance Co (“UT Finance”) on 16 June 2005. 98.The prosecution say that although UT Finance and Belief were separately owned by D2 and D3 respectively they all along operated as one entity with D1 continuing his involvement and participation in these companies money lending activity after he sold (Believe) to D3. 99.When D3 operated Belief, it did so from Room 2004 of No 9 Yin Chong Street Mongkok and UT Finance operated out of Room 2005 in the same building. UT Finance required all money borrowers to take out a referral service at Belief and the borrowers would be charged an administrative fee. Once the administrative fee was removed from the loan then the effective rate of interest on the loan would exceed 60% per annum. This was established by the evidence of the treasury solicitor. There was also uncontested evidence from a large number of borrowers adduced by way of S65B of Cap 221. 100.In fact D2 in her evidence confirmed that the employees of UT Finance would instruct customers who came to obtain a loan from UT Finance that they should go to Room 2004 of Belief for that company to handle their loan applications and staff at Room 2004 would handle UT Finance’s application procedures. Belief would check the debtors loan history and return the loanee to UT Finance together with a consultation reports. 101.UT Finance would decide if the loan was to be approved and its terms. If approved Belief would send the loanee next door to UT Finance to sign the loan form. The loan would be handed to the debtor in cash. The customer would then return to Belief at Room 2004 to pay the handling fee. 102.The two offices in Rooms 2004 and 2005 were connected by a wire that allowed sharing of files over the internet UT Finance shared its receipt record with Belief. Belief was able to view all UT Finance’s loan records. 103.In Belief’s store room actual files were found that corresponded with the UT Finance’s Receipt record. Belief and UT Finance shared the same filing system. 104.Furthermore some of Belief’s banking instruments were found in UT Finance’s office particularly:-
105.The prosecution say that the separate legal ownership structures of Belief and UT Finance were a sham to disguise the true nature of their operation. 106.The operation was designed so that when the loanee left the two premises the money they actually took away for their own use was effectively loaned at an illegal rate. D1 also was charged with involvement 107.In this conspiracy on the basis that he had assisted the operation as a Mr Ma whose name was found on a file in the computer at D1’s home, and also by his ownership of Believe up to 2005, it alleged that the conspiracy had its genesis in 2002. At that time UT Finance was in different ownership. 108.The Mr Ma file contained a business card in the name of Marco MA. There was also a file for Marco CHAN with a business card of UT Finance. 109.Various loan applicants and debtors described meeting a Mr Ma. 110.However none identified D1 in this capacity. The prosecution however maintain that Mr Ma and D1 are the same person. They argue that from their evidence that an inference be drawn that D1 and Mr Ma are identical. 111.D2 and D3 are involved in the alleged agreement through their respective ownership and operation of Belief and UT Finance. The money laundering charges 112.D1 charges 4, 5 and 6. 113.D1 was the sole account holder of three HSBC accounts. The summary of the accounts and fund flows can be seen in paragraph 58 of the admitted facts. Total deposits and withdrawals in these accounts exceeded 35 million HKD between 26 June 2007 and 2 December 2013. Between 2006 and 2013, D1 never filed any tax return. 114.22% of the deposits were in cash. D2 – Charges 6-14 115.D2 was the sole account holder of 9 bank accounts. The summary of the accounts and fund flow can be seen in paragraph 60 of the admitted facts. 116.Total deposits exceeded 129 million HKD and withdrawals exceeded 125 million HKD during the period of 2007 to 2013. D2 reported total income of 3,305,535 for the six financial years. In relation to income from UT Finance and 6.17 million HKD from the sale of two properties. It is said D2’s reported income bears no relation to the sums of monies in her accounts ie income of 551,000 HKD per annum. 117.19% of the total deposits or 24 million HKD were in cash. The accounts in Charges 8-13 related to the operation of U.T. Finance and personal loans for Charge 11. D3 – Charges 15-17 118.D3 faced 3 offences where he is charged alone. These relate to three accounts that are held with HSBC and two with BOC. Fund flows and summaries of these accounts are shown at paragraph 62 of the admitted facts. 119.Total deposits exceed 36 million HKD and withdrawals exceed 37 million HKD. Between 2006 and 2013, D3 declared no taxable income for salaries tax and an annual income ranging between 200,000 and 220,000 in relation to “Belief”. 120.The cash deposits in these accounts amounted to some 11.64 million HKD or 32% of the total. 121.In charge 18, the prosecution say D3 conspired with the fifteen named conspirators to deal with the monies in the accounts held by persons in those names. 122.The details of the operation of these accounts can be seen in paras 108-134 of the admitted facts where summaries of the transactions in those accounts for the named individuals are details:-
123.The prosecution point to the large amounts of funds. The large numbers of transactions in the accounts. The large amount of cash transactions from ATM transactions and the predominance of transaction of 300,500, 1,000, 1,500, 1,300 or 1,200 and their multiples in the records. Charges 19 - 22 124.D3 had utilized and operated the accounts held in those names. 125.D3 is also jointly charged with D4, D5, D6 and D11 on the basis that these defendants supplied their accounts to D3 for the purposes of collecting advertisement fees for sex141.com for the promotion of prostitution by that website. Charges 23 - 25 126.D13 had also assisted D3 in this by obtaining accounts from D7, D14 and D15, and also the ‘stooge account’ holders listed above. Evidence 127.On arrest numerous bank ATM cards including D11’s were found in D3’s possession. 128.House search at D3’s home recovered various banking instruments belonging to D4, D11, D14 and other companies. The search at Belief led to the discovery of banking documents and instruments relating to D4, D5, D6, D7, D14 and D15. 129.A summary of the items recovered by a search of D3’s home, and Belief was produced by the prosecution and reads as follows.
130.Furthermore, D3 was captured on CCTV footage at various ATM machines operating the bank accounts of Koon Hang-cheong, Ho Chun-pong, Tsang wai-lam, Chu Pui-yi, D5, D7, D11, D14 and D15. 131.A summary of this activity was presented by the prosecution and reads as follows:-
132.The prosecution case was that the defendants were connected in the conspiracies and formed a network. 133.The produced records of the travel movement of D1, D3, D9, D8, D10, D11, D13 and D6 to show they had entered and left Hong Kong together as follows:-
134.This does show D3 and D9 had travelled together on 16 occasions between October 2007 and December 2013. They were also shown in photographs together and along with D1 in a photograph recovered from D9 personal computer at his home. 135.In his evidence D3 would attribute this to coincidence. D9 did not give or call evidence in this issue. THE INDIVIDUAL MONEY LENDING CONSPIRACIES CHARGED WITH D3 AND CHARGE 26 FOR D13 D4 – Charge 19 (with D3) 136.Between 18 September 2008 and 11 November 2013, D4 was the sole account holder and authorised signatory of two bank accounts: 1) Hang Seng 225-1-049238 [banker’s affirmation at P1154]; and 2) BOC 012-55410076947 [banker’s affirmation at P1155]. The total amount of deposits and withdrawals were very similar at the relevant period [see summary of the bank transactions at para 64-67 of Admitted Facts PA]. Totalling deposits and withdrawals of over 11 million HKD. 137.Between 2007 and 2013, D4 reported to the IRD that he was a consultant earning a total of HKD190,500 during the period. D4’s reported income was not consistent with the enormous amount of deposits in the relevant two bank accounts . 138.After the arrest, under caution, D4 stated that “Ah Sir, the document was opened in 2009 and immediately sold to my friend for a few thousand dollars. I did not know how the account was used.” In a further cautioned interview, D4 admitted that:-
139.Details of D4’s account were found in D3’s office, the accounts being referred to as Ghost account one and two document P610 seized from a hard disc found in D3’s office. D5 – Charge 20 (with D3) 140.Between 18 October 2011 and 11 June 2013, D5 was the sole account holder and authorised signatory of two bank accounts: 1) Hang Seng 225-8-043291 [banker’s affirmation at P1139]; and 2) BOC 012-89810222868 [banker’s affirmation at P1140]. The total amount of deposits and withdrawals were very similar at the relevant period [see summary of the bank transactions at para 68-71 of Admitted Facts PA.] Total withdrawals and deposits exceeded 11 million HKD. 141.Between 2006 and 2013, D5 reported to the IRD that he was a logistic worker earning a total of HKD399,621 during the period [P1187]. D5’s reported income is said to be not consistent with the enormous amount of deposits in the relevant two bank accounts. 142.The following documents were found in the hard disk [P336] from D3’s office:-
143.On various occasions during the material period, D5 went out of town, when funds were withdrawn from his two accounts. See summary at para 148 & 149 of the Admitted Facts. 144.On various dates during the material period, D3 operated D5’s Hang Seng account. D6 – Charge 21 (with D3) 145.Between 27 September 2004 and 2 June 2011, D6 was the sole account holder and authorised signatory of eight bank accounts: 1) BOC 012-55410076934 [banker’s affirmation at P1131]; 2) BOC 012-67810083416 [banker’s affirmation at P1132]; 3) BOC 012-75410047431 [banker’s affirmation at P1133]; 4) CBC 039-73810240065 [banker’s affirmation at P1134]; 5) HSBC 017-734385-292 [banker’s affirmation at P1135]; 6) Hang Seng 242-7-046954 [banker’s affirmation at P1136]; 7) Hang Seng 242-7-047788 [banker’s affirmation at P1137]; and 8) Nanyang 043-48210352106 [banker’s affirmation at P1138]. The total amount of deposits and withdrawals were very similar at the relevant period [see summary of the bank transactions at para 72-87 of Admitted Facts]. Total withdrawals and deposits were around 15 million HKD. 146.Between 2004 and 2010, D6 reported to the IRD that he was a consultant earning a total of HKD758,288 during the period. D6’s reported income was not consistent with the enormous amount of deposits in the relevant eight bank accounts. 147.Sex worker PW79 had deposited HKD1,100, HKD1,200 into D5’s BOC 012-55410076934 account [P1131]. PW79 also deposited HKD1,100 to D5’s CBC 039-73810240065 account [P1134]. Those deposits were advertisement fees for her one-woman-brothel business. 148.On various occasions during the material period, D6 went out of town, funds were withdrawn from his accounts. See summary at para150-157 of Admitted Facts. D11 – Charge 22 (with D3) 149.Between 7 June 2012 and 9 December 2013, D11 was the sole account holder and authorised signatory of four bank accounts; 1) HSBC 196-034664-838 under Sheung Shui Tech [banker’s affirmation at P1119]; 2) HSBC 196-034656838 under A4 Design [banker’s affirmation at P1120]; 3) HSBC 561-788712-838 under 141 Info Tech [banker’s affirmation at P1121]; and 4) Hang Seng 789-612520-883 under 141 Info Tech [banker’s affirmation at P1122]. The total amount of deposits and withdrawals were very similar during the relevant period [see summary of the bank transactions at para 90-97 of Admitted Facts]. Total withdrawals and deposits exceeded 5 million HKD. 150.Between 1 April 2007 and 20 May 2007, D11 filed a tax return to the IRD reporting that he was an assistant officer earning HKD11,000 per month during the period. Therefore he did not declare any income to the IRD. D11’s reported financial position was not consistent with the enormous amount of deposits in the relevant four bank accounts. D13 – Charge 23 (with D3 and D7); Charge 24 (with D3 and D14); Charge 25 (with D3 and D15); Charge 26 (D13 charged with Yuen Hoi Kwong and “Sum Chai” alone) 151.D13 was arrested by PW15 at D13’s residence on 21 December 2013 [para 180 of Admitted Facts PA]. 152.Under caution, D13 admitted that: [P1045 & P1053(a)]:-
153.Two bankbooks [P275 & P311] and two ATM cards [P250 & P264], belonging to YUEN Hoi-kwong, one bankbook [P314] belonging to D14 were seized from Room 2004, D3’s business address. E-banking digital devices belonging to YUEN Hoi-kwong and D14 were seized from D3’s home. CCTV footages from various banks show D3 using the bankcards of YUEN Hoi-kwong, D7, D14 and D15 on various dates at various ATM machines. The two accounts of YUEN Hoi-kwong showed total deposits of HKD828,500.08 and withdrawals of HKD797,360.00. D7 – Charge 23 (with D3 and D13) 154.Between 30 October 2012 and 9 October 2013, D7 was the sole account holder and authorised signatory of BOC account 012-807-1-032562-1 [banker’s affirmation at P1141]. The total amount of deposits and withdrawals were very similar at the relevant period [see summary of the bank transactions at para 88 and 89 of Admitted Facts PA]. Total deposits exceeded 3.2 million HKD and withdrawals 3.2 million HKD. 155.Between 2010 and 2013, D7 reported to the IRD that she was a part-time account executive earning a total of HKD7,355 during the period. D7’s reported income was not consistent with the enormous amount of deposits in her relevant bank account. 156.D7 was arrested by DPC53895 (“PW34”) on 11 December 2013 [para 175 of Admitted Facts PA; PW34’s evidence in court]. Under caution, D7 admitted that: [Record of Interview at P897]
157.D7’s name and bank account were mentioned in “bank[1].htm” [P546] found from Park Fook, D11’s computer. The same were mentioned in “Ghost account” [P551], “Ghost account 1” [P552], “Ghost account 2” [P553], “130831 instructions on change of accounts” [P558] and “130819 instructions on change of accounts” [P559] found from the hard disk [P388] in Room 2004, D3’s business address. Her account details with personal data was recorded in P593 also contained in P388 found in room 2004 of D3’s office. 158.D3 had operated her account via ATM machine during the material period. D14 – Charge 24 (with D3 and D13) 159.Between 27 April 2011 and 5 December 2013, D14 was the sole account holder and authorised signatory of: 1) Hang Seng account 255-487464-668 [banker’s affirmation at P1123]; 2) BOC account 012-807-1-029960-5 [banker’s affirmation at P1124]; and 3) HSBC account 179-798269-292 [banker’s affirmation at P1125]. The total amount of deposits and withdrawals were very similar at the relevant period [see summary of the bank transactions at para 98 to 103 of Admitted Facts]. Total deposits and withdrawals exceeded 4.15 million HKD. 160.At the relevant time, D14 had never filed any tax return to the IRD [para 145 of Admitted Facts]. 161.D14 was arrested by PW5 at her residence on 5 December 2013 [para 181 of Admitted Facts PA; PW5’s evidence in court]. Under caution, D14 admitted that: [VRI at P1060 and transcript at P1070a]
162.D14’s BOC bankbook [P314] and Hang Seng ATM card [P260] were seized from Room 2004. Her two e-Banking digital devices [P495 & P505] were seized from D3’s home. 163.D14’s name and bank account were mentioned in “bank[1].htm” [P546] found from Park Fook. The same were mentioned in “Ghost account” [P551], “Ghost account 1” [P552], “Ghost account 2” [P553], “ACC” [P557], “130831 instructions on change of accounts” [P558], “111021 instructions on change of accounts” [P565], “111002 guide to change account” [P566], “End of Season Account” [P569], “the following accounts suspended” [P570] found from the hard disk [P388] in Room 2004. Her account details with personal data was recorded in P590 also contained in P388. 164.D3 had operated her accounts via ATM machine during the material period. D15 – Charge 25 (with D3 and D13) 165.Between 7 December 2010 and 26 June 2013, D15 was the sole account holder and authorised signatory of two bank accounts: 1) BOC 012-807-1-028787-3 [banker’s affirmation at P1126]; and 2) Nanyang 042-495-1-038613-3 [banker’s affirmation at P1127]. The total amount of deposits and withdrawals were very similar at the relevant period [see summary of the bank transactions at para 104-107 of Admitted Facts]. Total deposits and withdrawals amounted to around 5.38 million HKD. D15 never filed a tax return during the relevant period. 166.At the relevant time, D15 had never filed any tax return to the IRD [para 146 of Admitted Facts PA]. 167.Under caution after arrest, D15 stated that: [VRI at P1079; transcript at P1089a]:-
168.D15’s name and bank account were mentioned in “bank[1].htm” [P546] found from Park Fook. The same were mentioned in “Ghost account” [P551], “ACC” [P557], “130620 instructions on change of accounts” [P560], “111002 instructions on change account” [P566], “110725 instructions on change of accounts” [P567], “the following accounts suspended” [P570] found from the hard disk [P388] in Room 2004. His account details with personal data was recorded in P591 also contained in P388. 169.D3 had operated his accounts via ATM machine during the material period [see paragraph 135 above]. 170.D15 gave evidence in court that ex-girlfriend introduced him to a Mainlander, “Fay Chai”. Fay Chai asked to use D15’s two bank accounts for his milk powder business and so D15 lent them to him. After D15 had lost contact with Fay Chai, he cancelled his two bank accounts. 171.Neither Fay Chai nor the ex-girlfriend who D15 claimed to have contact with Fay Chai was called to give evidence on D15’s behalf. THE CASE FOR THE DEFENDANTS Summary of the Evidence of the defendants D1 gave evidence in his defence 172.In 1995, D1 had entered into the credit control business with the company “Believe” finance Control which was eventually sold to D3 in 2005. 173.It was located at Prosperity Commercial Building at Room 2006. The company worked in credit control or chasing debt collection. D3 worked as a Clerk in the business from around 1999/2000 with the business being sold to him. 174.Originally Ms Ko at U.T. Finance had asked for her customers to fill out their application forms at Believe’s offices because she had female staff and there had been incidents with some of the applicants. This started in 1996/97. 175.In return Believe was given the business of collecting the bad debts of UT Finance. 176.From 2005 onwards, D1 would use the conference room in Believe because D3 allowed him to. 177.From the time of the sale of Believe to D3. D1 had become more involved in businesses in the Mainland. 178.One was Top Way International Industrial Limited. This was a goods trading business. 179.In mid 2008, D1 became involved in a 688 taxi App. In the course of setting up that business he was introduced to D9 who helped get the App up and running. 180.688 is a business similar to UBER. 181.By mid 2013, 500 drivers had joined the App. 182.D1 had met his wife D2 in 1991/92. In June 2005, D2 purchased UT Finance with Ms Wu as the Financial Controller. He was not involved in his wife’s business. 183.D1 said he speculated in the stock market and also was involved in property investment. 184.D1 admitted that he did pay Softlayer Technology (“Softlayer”). He was asked by a friend LEUNG Ho-fai who was doing business on the Mainland in respect of internet shopping if he could use his credit card to rent a server. 185.His friend would pay the fee to D1. D1 did not believe that there was anything underhand about Softlayer as it was a big company in the United States. 186.D1 also admitted he had received a password for Sex141.com from D9. He said this password allowed him to access the adult video section of the site. 187.D1 said he had no idea why an identification document for Mr Ma was present on the computer in his home. 188.D1 also gave evidence of business activities and property transactions to account for the monies in his accounts. He denied any of the accounts was used for money laundering. 189.He accounted for the cash found at his home as being necessary for use in his businesses which were all of a cash nature. D1 referred to a number of cash deposits that related to property transactions in his current account ie Lots 846 & 847 in DD114, including also investment in land in Environmental City and also a village house in Kam Tong and at lot DD451. 190.There was an e-transfer of $530,000 relating to the chasing of a debt by one Mou Kwong Ping. There were transfers of foreign currency to Thailand to help pay for the building of a buddah and sums of $400,000 and $2,007,776 in respect of property transactions. There was a payment of $100,000 in respect of money borrowed from D1 for a solar power business, sums of $75,000, $80,000, $25,900 and $250,000 from a Wan Moon Yau in respect of cross border licences. 191.In 2010, a property deal with a Mr Tang leading to a cheque deposit of $500,000, a sum of $775,600 by cheque in respect of a property at Curudo Garden Estate and rental payments from his younger brother. 192.In the integrated account two sums of $1,455,500 were loan transfers to his brother, payments of $424,907 to LAU Siu-man in respect of a trading business and payments of $417,880 to UT Finance for vehicle mortgage. 193.There were travel expenses 14 payments totaling $400,000. 194.Payment of $323,000 to his sister as a loan and a $300,000 loan to one Ma. 195.There were also securities transactions up to $2 million and land lease payments in this account showing rental income. 196.D1 did not specifically deny the existence of the conspiracies set out in the first two charges. He said that there was insufficient evidence to show that he was a party to either agreement. D2 gave evidence in her defence 197.D2 is married to D1 although they are now estranged. 198.D2 originally owned part of UT Finance but in mid 2005 she took it over completely. From June 2005 the business was registered to her, a moneylenders licence was granted to her at the end of October 2005. 199.From 2005 she financed all the loans from her personal bank account. There were no other investors. From 2008 her relationship with her husband became distant. She knew he went to Room 2004 but did not appear to be involved in the business of Belief. UT Finance would tell their customers to handle the application in Room 2004 (Belief). But there were no staff of UT Finance in Room 2004. 200.The staff of Belief would check the credit history of the client and draft a loan report. 201.The papers would be taken to UT Finance where a decision would be made on the loan application. 202.UT Finance would reject applications. If a loan was granted Belief would be informed about the amount of the loan and the number of repayment installments. The loan would be signed at UT Finance offices. 203.D2 knew that a handling fee would be paid to Belief. No part of the handling fee was paid to UT Finance or collected by them. 204.Belief decided the amount of the handling fee based on a number of factors. UT Finance was not informed about the amount of the handling fee. Belief would handle any debt collection. The debt collection fee would be added to the loan repayments and credits as the income of Belief and returned to them. 205.The cash found at the premises was for loans. 206.The bank cards of Belief (3) found in UT Finance were for UT Finance customers to make repayment. This was done for certain customers who had problems with repayment. There were two Belief passbooks which were also used for debt loan repayments. 207.D2 gave extensive evidence in respect of the transactions in her bank accounts. She evidenced that the monies were as a result of various transactions involving loans and purchases of property. D3 208.D3 faces the two conspiracies and a number of money laundering charges arising out of the disposal of the proceeds of the conspiracies. D3 gave evidence 209.He is aged 33 and married with children. 210.In respect of Charge 1 he said he originally worked at Believe for D1 as a Clerk. At that time the company was a debt collector for United Trust Finance (“UTF”). They also helped clients fill in forms for UTF as there had been trouble from the clients towards UTF female employees. D3 became sole proprietor of Belief Finance Consulting in March 2005. The relationship with UTF continues. UTF was taken over by D2 in 2006. 211.The clients of UTF continued to fill out forms at Belief and Belief continued to collect loans for UTF and received a fee for so doing. D3 bought Belief for $20,000. 212.When D3 took over Ms Ko was running UTF and an agreement was signed with her. 213.When D3 took over he broadened Belief’s business to include financial consulting, personal checking and company checks. 214.It was agreed with UTF that Belief would produce an investigation report form for their clients and if the loan was approved then a fee would be charged. The client would take the report to UTF. 215.The charge to the client for the report would depend on the complexity of the investigation. 216.Belief would also continue with debt collection and charge UTF a debt collection fee. 217.D3 confirmed that even though D1 had sold the company. D1 still used the conference room to conduct some of his own business and would sometimes be present at Belief’s offices at Prosper Building but D1 was not involved in the business of Belief. 218.Some clients would deposit their bank books and cards with Belief to ensure that repayments of their loans were made. 219.He confirmed clients would initially come to Belief for the investigation report before going to UTF to make the loan application. 220.D3 entrusted an accountant to compile his tax return. Charge 2 221.Of his alleged fellow conspirators on this charge, D3 only knew D1 and D11. He had no dealings with sex141.com but did have dealings with nightlife141.com through a person called SHAM KWAN. SHAM KWAN ran a milk powder business from the roadside at Sheung Shui. He placed adverts on 141nightlife.com (“nightlife”) in respect of restaurants pubs and foot massage businesses. He employed sales people to do this. The fees collected were put into the personal accounts of the sales people and there was a month end reconciliation. The salespeople gave SHAM KWAN their passbooks and banks cards for the accounts. 222.As SHAM KWAN knew D3 managed accounts he invited D3 to take over running the individual sales persons accounts by updating their bank books and doing the month end settlement and calculate their commissions. 223.D3 made enquiries satisfied himself that the business was genuine and entered into an entrustment agreement with SHAM KWAN. There were totally about twenty sales persons involved. SHAM KWAN kept the accounts bank cards. 224.Later D3 also became involved with D11 in producing adverts for “141nightlife”. D11 was a network writer and known to D3 because he had worked for Belief. It was agreed with SHAM KWAN that a new company would be set up to introduce a new stream of advertising clients for nightlife. 225.D3 set up a company together with D11, it was in D11’s name alone. 226.D3 had a 60% interest and D11 had a 40% interest. The company was 141 Information Technology Ltd. The company had an account that was handled by SHAM KWAN. 227.D3 agreed that SHAM KWAN would receive 40% of the income of the company. 228.Thus the actual division of the company income was 40% for D11, 60% for D3 of which 40% went to SHAM KWAN. 229.He said that D11 knew nothing of SHAM KWAN and that SHAM KWAN knew nothing of D3’s interest in the company. This was to preserve his position as a middleman. 141 Information Technology was a limited company. 230.He also set up A4 design and Sheung Shui Technology as unlimited companies to avoid audit fees. 231.He assisted D11 in finding a rental premises out of which A4 Design operated. 232.In respect of the individual charges the D3 evidenced that:- Charge 15, 16 & 17 233.These were the defendants personal bank account, he said the monies in them were the proceeds of his business drawings and securities trading. 234.He said he cycled money in and out of the accounts in order to improve his credit rating by making frequent deposits and withdrawals. 235.It created the impression of an active account. Charge 18 236.This charge concerned a large number of banking documents and cards and electronic devices found at his home and at Belief’s office. 237.These items were SHAM KWAN and were the banking documents and ATM cards possessed by him from the sales person’s of 141nightlife. SHAM KWAN’s Assistant had a traffic accident and he normally looked after these items for SHAM KWAN. SHAM asked D3 to look after them for a few days. They were still in D3’s possession when the police raid occurred. He had allowed SHAM to use the computer at Belief when he took back some of the things he had left with D3. Charge 19 238.D4’s banking documents were found in D3’s premises. D3 said they had been amongst SHAM’s possessions and he assumed D4 was one of SHAM’s sales persons. Charge 20 239.D5’s banking documents were found on D3’s premises. He recognized D5 as one of SHAM’s salespersons and had been entrusted to him by SHAM KWAN to manage. In fact the CCTV produced by the prosecution showing D3 using an ATM related to his account. 240.SHAM had given D3 the bank ATM card for this account and asked D3 to withdraw money as it was not convenient for SHAM to do it that day. Charge 21 241.D6’s banking document were found in D3’s premises. D3 said he had never met D6 and his name was not familiar. Charge 22 242.Related to D11. He managed and stored the company ATM card at his premises. 243.The ATM card was handed to him by SHAM KWAN. Charge 23 244.He did not know either D7 or D13 but supposed that D7 was a sales person of SHAM and that is why her details were found on a hard disk in Belief’s premises, he had also used D7’s accounts ATM card at the request of SHAM to withdraw cash in the same way that he had used D5’s card. Charge 24 245.He said that he had D14’s passbook as she was one of SHAM’s sales persons he had used D14 ATM card at SHAM’s request to withdraw money. Also her banking records were in an external hard disk at his premises. Charge 25 246.D3 believed D15 was also a sales person of SHAM. He had also used the ATM card given to him by SHAM to withdraw money from this account. D4 gave evidence in his defence 247.D4 faces two charges of “money laundering” relating to activities in his Hang Seng and BOC accounts from 2011 to 2013. 248.D4 made a number of video recorded interviews the prosecution adduced one into evidence. The admissibility was contested. However it was admitted. D4’s subsequent evidence on the general issue is summarized herein. 249.D4 said the BOC account had been opened on 19 March 2009 to handle money earned in a “Milk powder business” which involved exporting milk powder to China by way of couriers carrying it across the Lo Wu border crossing. He conducted the business with his nephew in the Mainland. 250.D4 produced the bank books for the account. 251.The Hang Seng Bank account P1154 was opened on 18 September 2008. It was also for the milk powder business. 252.The operation was that customers would deposit money into the account. D4 would withdraw the money and purchase the milk powder and then arrange for somebody to transport the milk powder over the border. The bank account was also used for his personal business after he had ended the milk powder business. The account would be used for friends repaying money to him. 253.In the account there was a withdrawal of $90,000 this was a rental payment for warehouse facilities and was a deposit of 6 months rent. 254.The withdrawal and payment had been in cash, a copy of the tenancy agreement was produced. 255.D4 also identified certain friend repayments in the accounts. 256.He said the large number of payments of $1,200 in the accounts were deposits for buying milk powder, $1,200 was for five cans of milk powder. 257.He also identified some payments that were wrongly made by customers after he had ceased business, a payment of $1,300 on 10 July 2012 and also payments of $5,000 and $10,000. 258.There were payments of this nature in both accounts. 259.His nephew’s partner in the milk powder business was Fei jai also known as SHAM KWAN. 260.All deposits were multiples of $1,200. At the initial stage there were deposits of $1,100 before a price increase. 261.He charged about $200-$300 for transportation fees. 262.He used one Poon Siu Leung (DW1) as his courier. He began work in 2011. He said he had passed his bank card and bank book to SHAM KWAN for SHAM KWAN to check the accounts. He did this as sometimes he would not be available to withdraw the money to pay for the goods. 263.He did not know D3 he had never entrusted his bank card, bank book or internet banking facilities to him. He could not say why these items were found at D3’s office and premises and why his banking details were on a computer hard disk in D3’s office. He did not know if D3 was the same person as was evidenced by D3. 264.In questioning, D4 confirmed there was no documentary evidence in respect of the milk powder business, he could not say why his name and bank account appeared on a list of “Ghost accounts” in D3’s computer. 265.D4’s witness Mr Poon Siu Lun confirmed he had worked in D4’s milk powder business as a courier in 2011 for about 8 to 9 months traveling frequently to Shenzhen as confirmed by his travel index record. D4 had given him the milk powder to take over the border. He works 4 to 5 days a week. D5 266.D5 gave evidence in respect of his BOC and Hang Seng Bank accounts. 267.At the time of the offences he was employed in a decoration/renovation business. 268.He took up part-time work that was recommended to him by a friend Lau Wai. 269.Lau Wai was hiring persons to make cold calls to gain advertisers to the website 141.Nightlife.com. The target advertisers were restaurants, bars and foot massage centres and similar businesses. 270.The customers would place adverts on the website. 271.The charges would be $1,200, $1,300 and $1,500. 272.For each successful transaction he would be paid $50. 273.He initially gave the numbers of the clients to Lau Wai to arrange payment later. 274.Lau Wai asked for the details of D5’s BOC and Hang Seng Bank accounts so that payments could be made directly into those accounts. Lau Wai would manage the accounts. D5 handed over his bank books and ATM Cards to Lau Wai. 275.Lau Wai showed D5 the Bank books at the beginning of the month when his salary was paid. 276.Some figures were different from the advertiser payments, these were called “Leaving Comment Service” and ranged between $100 - $900. 277.D5 received about $20,000 per month. D6 278.During the relevant period D6 had totally eight bank accounts. 279.The reason for opening so many accounts was that he had loaned them out to the older brother of his girlfriend. 280.In 2006, D6 had invested in a bar in the mainland and met his girlfriend Ah Kuen through this business. She had a brother Wong Keung. 281.In August of 2007, Wong Keung asked D6 if he could help him by lending him a Hong Kong bank account for him to use. 282.Wong Keung was said to be a parallel goods trader who purchased items and transported them over the border. His customers needed an account to pay money into the account. The account needed to be in Hong Kong and as Wong Keung was a mainlander he could not open an account in Hong Kong. 283.He originally had one account he lent to Wong Keung. He later opened two more. Such account accommodated a Contractor with whom Wong Keung did business and the Contractors required accounts to be opened with different banks. 284.There were a number of accounts because when Wong Keung finished working with a Contractor, he would ask D6 to close the account and open another one. This way he did not have to repay monies mistakenly put into the bank account by Customers. 285.Over time eight accounts were opened. At the conclusion of D6’s arrangement with Wong Keung four had been closed and four remained open. 286.In June 2011, D6 stopped the practice of handing accounts, after his girlfriend fell out with Wong Keung. 287.In October, she told D6 not to help her elder brother anymore. Wong Keung asked for time to talk to his Contractors and to arrange other account. 288.In June to July of 2011, Wong Keung returned the bank books, cards and electronic devices on the remaining four accounts to D6. 289.One account listed as No 4 was then used to make payment to his father for his upkeep. The bank card for the account was given to D6’s father. 290.D6 said his father had taken out all the money out of the account after he discovered the Police had been around to his house. D6 had told his father to do this. 291.The defendant had worked as a debt collector between 2006 and 2010. His boss was Mr Koo who had taken him on various trips to Thailand, he did not know any of the other defendants and was not aware if they had travelled out of Hong Kong at the same time as he had. 292.He had no idea why details of his account with password and login were found on a computer hard drive at D3’s office. D7 293.The prosecution produced a record of Interview made by D7. Its admissibility was challenges the interview was admitted into evidence. D7’s evidence on the general issue is herein. 294.The seventh defendant gave evidence at the time she worked as a waitress and lived in public housing in Sheung Shui. 295.She said she did not know D3 or D13 and had not sold her bank account to D13. 296.She had opened the relevant BOC account in December 2011 to save money. She said almost all the transaction in the account arose out of her handing the account to a person she met in a bar in Fanling. The person was called Ah Wai. He asked her to lend his BOC account to him and he would pay her $3,000 per month. 297.He told her the account would be used to handle payment from the Customers of a website 141.Nightlife.com. She looked at the website on her phone before she accepted the offer. 298.He was a mainlander and could not open the account himself in Hong Kong. She gave him the bank card, the password and the E-banking login and password. 299.At the beginning of each month he would pay the salary and give her the bank book to renew the bank book. She saw the deposits for $1,300, she was told this was by Customers placing advertisements on the internet. 300.There was a deposit on 5 October 2013 of $10,000 this represented a loan from a finance company and she had withdrawn that amount. 301.On 9 October, she closed the account as she did not want to assist Ah Wai anymore and wanted no contact with him. 302.She had not authorized D3 to withdraw money from her account. She had no idea how her E-banking login and password were found on a hard disc on D3’s offices. 303.D8 did not give or call any evidence. 304.D9 did not give or call any evidence on the general issue. 305.D10 did not give or call any evidence. D11 306.D11 faces both the Charge 2 conspiracy and Charge 22 money laundering where he is charged with D3. 307.D11 described himself as an internet commentator. He provided, reviews and positive comments on forums, he would provide promotional materials. He did this independently between 2010 – 2012. 308.From 2013 onwards he worked with D3 and set up a company. 309.D3 wanted adverts to be placed on nightlife 141 and to set up a company with the profits split 60% to 40% in D3’s favour 3 companies were formed 141 Information Technology Co, Sheung Shui Technology Co and A4 Design Co. 310.The companies were in D3’s name. Bank accounts were opened with Hang Seng, HSBC and BOC. 311.D3 controlled the companies finances and had all the banking instruments. 312.D11 recruited freelancers to work for the companies. 313.D11 gave evidence of work he had done for various advertisers and he charges. 314.At the peak he operated on more than 100 accounts. 315.He gave examples of various user names and comments that originated from him. 316.He said he knew the website had an adult section but he did not contribute to it and had no authority to do so. 317.D11 had gone to Park Fook Building. He was working there when he was arrested. He had started working there in the summer of 2013, he had rented a place there. D3 had introduced the location to him. He paid D10. 318.D11 did not have a fixed desk, computer or password. He did not save anything on the Park Fook computers. He bought his own memory stick. 319.On the day of his arrest he did not sit at table 2. He was standing up when the police raided by a computer and desk. 320.D11 called 3 witnesses whose companies had purchased his services as a reviewer, promotor and on line commentator. D12 321.D12 faced Charge 2, he did not give evidence but called a witness Mr Cheung. 322.Mr Cheung was present when the police raided Park Fook Building. He knew D12 they were friends. 323.He knew D12 and knew D10 sublet the premises at Park Fook. For $3,000 Mr Cheung was provided with wifi access, a desk and computer and rented a desk for $3,000 per month from July 2013. 324.He was given a key to room 312. In November, he decided to end the arrangement. 325.He went on 4 December to return they key. He went with D12. 326.D12 went to the toilet. Mr Cheung gave him the key which was with bunch with the room key the 312 on it. 327.The police then rushed in the key was still with D12. D13 328.D13 did not give or call any evidence on the general issue. 329.The prosecution produced a record of interview made by D13. Its admissibility was the subject of voice dire proceedings. It was admitted into evidence. D14 330.D14 is a mother of two children married with a clear record. She had a boyfriend before she married to Wong Pui Hong. 331.She met him in 2009 and they co-habited. She had a BOC account and in 2011 her boyfriend asked her to lend the account to him. 332.He didn’t want to use his own account as he was on CSSA. 333.She believed that he used it for a small business, he said it was a milk powder business, later he asked her to open accounts with HSBC and HSB for customers without bank accounts to make deposits and payments for milk powder. 334.She believed him and satisfied herself it was legitimate. 335.They broke up in January 2014 after they quarreled about the accounts and what her boyfriend had done with them. D15 336.In 2010, his girlfriend introduced him to Hung Wan Yi who worked in the milk powder business. 337.He met with Hung and one Fai Chai. He was asked if he would transport goods to the mainland. 338.He would get $30 for every can successfully transported to the mainland. 339.He had to open two bank accounts. D15 then worked in the transportation of milk powder to the mainland, he gave Fai Chai the bank account book at the beginning of every month and they would check the record together. 340.All the money in the account was, therefore money paid for milk powder. It was all paid in cash. LEGAL FRAMEWORK 341.Lending at excessive rate of Interest, section 24 of the Money Lenders Ordinance Cap 163 provides that any person who lends money at an effective rate of interest which exceeds 60% per annum commits an offence. 342.Living on the Earnings of Prostitution, section 137(1) of Cap 200, section 137 makes it an offence to knowingly live wholly or in part on the earnings of a prostitute. Dealing with properly known or believed to represent proceeds of an indictable offence. 343.Section 25(1) of Cap 455 makes it an offence to deal with properly know or believed to be the proceeds of an indictable offence. 344.In the context of this case, monies passing through a bank account are property. 345.The actus reus of the offence is ‘dealing’ with the property as defined in section 2(1). What must be proved is no more than the act of dealing. Lending a bank account to deposit and withdraw monies is an essential part of money laundering and amounts to dealing. 346.The mens rea of the offence is ‘knowing or having reasonable grounds to believe’. 347.The test for determining whether an accused had reasonable grounds to believe is:-
348.Conspiracy to deal with property reasonably believed to represent proceeds of an indictable offence contrary to section 159A, Cap 200 and section 25(1)(3), Cap 455. In proving the conspiracy section 159A(2) does not apply. 349.If two people agree to deal with property and of each of them knows or has reasonable grounds to believe that it represent or will represent the proceeds of an indictable offence that is sufficient to make each of them guilty of a conspiracy to contravene section 25(1). Furthermore, it has been said that bank accounts are valuable personal properties and where such accounts are loaned to others the holders of such accounts in the absence of acceptable evidence to the contrary the only reasonable and irresistible inference must be that the applicants (lenders) knew of the transactions in the accounts and had dealt with the monies in the accounts and would have reasonable grounds to believe that the monies represented the proceeds of an indictable offence. It is an inference that no reasonable person could have failed to draw see: HKSAR v Wong Chor Wo CACC 319/2006. Clearly this inference can be more readily drawn where it is proved the account has been sold as is said to be the case with a number of the defendants. CONSPIRACY TO COMMIT A STATUTORY OFFENCE 350.Section 159A of Cap 221 provides for the Charging of Conspiracies to commit statutory offences. 351.A conspiracy requires proof that the accused agreed with one or more other persons to commit an offence. 352.That a person can form a new agreement or join into an existing agreement. That if an accused decides to resign from the conspiracy, the offence is complete if at any time during the period of the conspiracy the accused becomes a party to it. 353.With regard to D1 and D2, they are married. 354.By section 159B(2)(a), Cap 200, they cannot be convicted of conspiracy with each other alone. CLEAR RECORDS 355.D2, D5, D9, D10 and D14 have clear criminal records, that is relevant in their cases and must be born in mind when considering their propensity to commit the offences alleged against them and the credibility and reliability of any evidence given by them. 356.In this indictment the prosecution rely upon the drawing of inferences of fact, the drawing of such inference must be subject to normal rules of evidence and such inferred facts must be proved beyond all reasonable doubt. 357.They must be the only reasonable conclusion that can be drawn from the circumstantial evidence proved. 358.The prosecution brings the charges the burden of proof remains on them throughout, the charge must be established beyond all reasonable doubt. 359.The defendants are severally charged the case against each defendant must be established individually, where a defendant does not give or call evidence no adverse inference can be drawn from the decision. 360.Where a defendant makes an admission against interest in an out of Court document this does not constitute evidence against any person but himself. Furthermore, any such admission must be proved beyond reasonable doubt to have been given voluntarily, namely not give due to any threat, force inducement or oppression. Even where given voluntarily a court may exclude such a statement in its residual discretion if it is in the interests of justice to do so. COMMON ISSUES Findings 361.All findings were made after consideration of all the evidence in the trial. The existence of Money Lending Conspiracy Charge 1 common to D1 to D3 362.The prosecution requires an inference to be drawn to establish that an agreement to loan money in excess of a 60% rate of interest occurred in the combined operation’s of belief, believe and UT Finance. If that exists then it argues that the owners of those companies must logically have entered into such an agreement with full knowledge of that fact. 363.The prosecution argue that there are a number of indicia of that agreement. They are:-
364.Each company operated independently and provided different services to borrowers. The handling fee charged by belief did not relate to the principal or interest on the loans and represented actual services rendered to the borrowers. 365.The decision on whether to provide the loan and the distribution of the principal in cash was entirely handling by UT. There was no evidence that any part of the handling fee was shared or paid by belief to UT. 366.Belief did conduct work which supported UT’s operation such as compiling risk profiles etc for borrowers and chasing after debtors for loan repayment when necessary. 367.It was said there was no evidence of cross owning of shares in each other companies, there was no subsidiary relationship, there was no sharing of receipts, profits, staff or functions. Their incomes were accounted separately and D3 in fact paid rent to D2 for using room 2003 and 2004 and these rental receipts were recorded in D2’s tax returns. 368.That the sharing of files and the presence of belief’s banking instruments at UT were in consequence of belief loan chasing operations on behalf of UT. RESOLUTION 369.Save for some issues in relation to three specific borrowers, the evidence on this aspect of the case was uncontested, the evidence of the borrowers was admitted by S65B admissions and that their description of the conduct of a loan application was not contested. 370.Some debtors such as PW89, believed they were dealing with two companies. 371.The answer to the question of whether an agreement existed between the operators of belief/believe and UT Finance is a question of fact and degree. THE ISSUES Firstly 372.In respect of the first charge does the evidence support the existence of the particularized conspiracy. 373.It is clear from the evidence that believe, belief and UT Finance operated as a single entity. The work of assessing the borrowing creditworthiness of the applicant for a loan is clearly a function of the business of moneylending it is an essential feature of UT Finance operation. It cannot distance itself from this function in the reality of its operation. To do so, as it allegedly is said to have done in this case is clearly a fiction. 374.There is an attempt to create a legal fiction of separation in the structure of the three companies. However, it is a sham designed to give the appearance of separation when the reality was that the companies operated together to ensure that the fee charged by believe, and belief was claimed back from the loan applicants before they left that building and taken from the loan monies provided by UT Finance. 375.It is the case that in effect each loan was granted in such a way that the actual monies they obtained were loaned at an actual rate that was illegal this cannot be co-incidental. It was a deliberate calculated operation. Clearly any person responsible for its running and operation would have been aware of this. I find that the actual operation of these companies clearly provided evidence of the conspiracy alleged. Secondly 376.In respect of the first charge, does the evidence support the involvement of D1, D2 and D3. I will deal with this issue when I consider their respective cases. COMMON ISSUES The Conspiracy to live on the Earnings of Prostitution 377.The Prosecution say that sex141.com was a website with a Forum and a nightlife information area called nightlife141.com. 378.The website provided information on prostitutes with individual pages for prostitutes to advertise their services and provide information about themselves. A number if police offers evidenced that the prostitutes who advertised were available to provide sexual services. 379.Their evidence was effectively unchallenged, it was clearly evidenced that sex141.com was throughout the period particularized in the charge a website created and used for the purpose of promoting the prostitution of the females who advertised within it. 380.The Prosecution also produced evidence to show that in order to advertise within sex141, prostitutes would pay for an on line advertisement to the sex141 website. See PW5, PW78, PW79, PW85 and PW87, money was paid to a designated account. 381.Thus it was evidenced that the sex141 website received payments from prostitutes to advertise their services. 382.The essence of prostitution is the offer of sexual services for reward control of the prostitutes is not an element of the offence of living on the earnings of a prostitute. 383.The offence of living off the earnings of prostitution includes where payment is made by a prostitute for a service is of nature referable to prostitution and nothing else. No better example of this could be found than payment by a prostitute for advertisement of her readiness to prostitute herself. See Shaw v DPP 1961 2 ACTC 446. 384.Clearly sex141 is a website that promote prostitution and obtains from its advertisements the earnings of the prostitution of others. 385.The agreement to take part in and operate such a website with knowledge that it does operate on that basis would constitute the offence of a conspiracy to live on the earnings of prostitution whether the evidence supports this conclusion against individual defendants will be dealt with in consideration of their individual cases. THE RAID ON PARK FOOK BUILDING D8, D10, D11, D12 - Seating 386.On 4 December, a party of police officers conducted a raid on Park Fook Building, room 13, 3/F. The premises where the raid was conducted was rented by D10 as the office of A4 Production. D10 was the sole proprietor of A4 Production. 387.Originally SDU officers had entered to take immediate control and PW139 had told those present to stay where they were and he said no-one had moved. 388.PW37 had entered immediately after the SDU officers. He demanded that everyone stay when they were and sit down. 389.Seven police officers had been assigned to stay by the seven people located in the premises. 390.Four police officers gave evidence as to the location of their respective defendants. This was :- 391.PW39 with D10 at desk 6. PW40 with D11 at desk 2. PW41 with D12 at desk 7 and PW38 with D8 at desk 1. 392.The capacity and reliability of these officers to locate the respective defendants at these desks was challenged by the defence. It was said the officers particularly PW37 had not entered immediately upon the securing of the room by SDU officers. 393.That he saw some standing and some sitting. That the court could not conclude that any of the defendants could in fact be evidenced as actually sitting at those desks when the SDU officers had effected entry. 394.I noted of significance that PW37 had entered immediately with the SDU officers and that PW38 had entered immediately to secure D8 and that the other officers had all entered and immediately moved to secure the defendants at the desks where they were found to be sitting. 395.I bore in mind the challenges made to this evidence however I was satisfied that I could rely on the evidence of the arresting officers to place D8, D10, D11 and D12at the desks where they were arrested at the time of the police entry into the premises. 396.At such desks and in the subsequent handling of each defendant evidence of significance was discovered, I will deal with those matters when I assess the individual cases of each defendant. The money laundering conspiracies 397.When considering the money laundering conspiracies involving D3 and 13 and D4, D5, D6, D7, D11, D14 and D15 and the stooge accounts in Charge 18, it was necessary to consider the operation of the accounts that were the subjects of those conspiracies. 398.The accounts displayed many common features, I found that in respect of all those accounts. That where no explanation was offered for the dealings in those accounts or an explanation was offered and was rejected that the transactions of those accounts must lend anyone who dealt with the monies in those accounts to have reasonable grounds to believe that the monies represented the proceeds of an indictable offence. It is the only inference that a reasonable person could draw from the way in which the accounts were operated. The Individual Charges against Individual Defendants D1 Charge 1 399.In the First Charge, D1 is said to have conspired with D2 his wife and D3 to lend money at an excessive interest rate. 400.The money lending charge relates to dates between a date in 2002 and 2 December 2013 at rooms 2003, 2004 and 2005, Prosper Commercial Building, Mongkok. 401.D1 ran Believe from room 2004 from May 1993 to March 2005. From March 2005, D3 operated Belief Consulting from that same location. 402.D2 owned room 2004 from December 1996. She also owns room 2003, UT Finance as a moneylender business operated from June 2005 in room 2005. 403.The Prosecution say that D1 masqueraded as a Mr Ma whilst conducting the agreement with D2 and D3 and that details of Mr Ma’s presence with D1’s identity card were kept at his home. This was a matter in issue, D1 denied being Mr Ma. 404.A number of debtors/loan applicants had involvement with Mr Ma during the operative period of the conspiracy. The witnesses who dealt with Mr Ma were:- 405.PW98 borrowed from UT Finance as early as 2004. He went to room 2004 to borrow money was referred to room 2003 to obtain the money. He was given $5,000 and returned to room 2004 to give over $1,500 to Mr Ma. 406.PW100 borrowed $10,000 on 13 December 2005. A Mr Ma only granted him $5,500 and required repayment of the handling fee of $1,700. He collected the sum and gave the handling fee to Mr Ma. Mr Ma had a birthmark on his face. 407.PW104 borrowed money in 2007, he was greeted by Mr Ma who had a birthmark on his face. 408.PW97 borrowed money in 2010, he was handled by Mr Ma who gave him a $5,000 loan but retained 30% as a handling fee. 409.PW103 borrowed money in March 2011, he borrowed $30,000, from a man with a birthmark who charged him $7,000 handling fee. 410.There is no identification of Mr Ma, other than him having a birthmark on his face. 411.However, an image of D1’s HKID card was found in a computer seized from the sitting room of D1’s home under the file name Mr Ma. The photograph shows D1 to have a birthmark on his face. 412.D1’s fingerprints were found in room 2004 and a mobile phone with a number registered to a company owned by D1 was found in room 2004. In room 2004, inside the computer in that room was a further folder headed Mr Ma. In this case Marco Ma which appeared to be a card for Belief Consulting Co. 413.There was a file that showed a business card of UT Finance for a Marco Chan and also a further file with images of D1’s HKID card, HK driving licence and Chinese Re-entry card and driving licence. 414.It is said by the defence that this evidence taken collectively cannot prove this charge, by way of the drawing of an inference. 415.In respect of this charge D1 gave evidence. He said he had divested himself of Believe when he sold the concern to D3. He had used the conference room in room 2004 for some business matters not associated with belief and UT Finance and also used the office as a space to read newspapers. D1 did in fact have an office in Hong Kong according to his evidence at Kiu Kwan Commercial Building. 416.D1 had no explanation for the presence of his ID card in the file named Mr Ma at his home. The computer in question was in a common area where many people could have access. 417.I have already adverted to the fact that D1 gave evidence on each of the charges he faced. 418.I found as an overall finding that D1’s evidence was not reliable and I was not prepared to accept him as a truthful witness. 419.I did not accept his evidence that he only used room 2004 for purposes unassociated with the business conducted there nor did I accept that he had no connection to the Mr Ma documents. 420.The evidence of some of the loan victims was that a Mr Ma worked there during the relevant period, that he assisted and gave information in relation to loan applications this Mr Ma was distinctive in having a birthmark on his face. 421.At D1’s home was a computer file “Mr Ma ID” with D1’s ID card inside. 422.Room 2004 where there was evidence of D1’s presence had a computer file “Ma Card” for Marco Ma with fax and telephone nos which includes D1’s mobile phone no. 423.I find that the prosecution evidence taken together proves that D1 was using Mr Ma as an alias and through that alias was during the relevant period conducting the operation of moneylending in rooms 2003 – 2005. That the moneylending business located at those premises was operated as a conspiracy as alleged in the first charge. I have already found this to be proved thus I find D1 was a party to that conspiracy. It is also proved that D2 and D3 were also parties to that agreement as can be seen when I deal with their cases. I find charge 1 is proved as against D1. Charge 2 424.It is established in evidence that sex141.com provided advertising services to females who provided services of prostitution. 425.It is proved that the IP address of the server used for the domain name sex141.com was provided by the US network supplier Softlayer Technologies Inc. 426.D1 paid Softlayer on a monthly basis from July 2007 to August 2012 via his HSBC credit card. 427.It is also proved that NTW server in Hong Kong was the server of sex141.com. 428.D9 was the authorized person having root access and control of the server, see P1296. 429.D9 and D1 had contact through the Whatsapp messaging service. On 16 October, D9 messaged D1 about the server being out of action for over half a day. On 18 October 2013, D9 again messaged D1 apologizing. D1 then messages D9 telling him not in blame himself. That their “work” was not for themselves but also for the finances of “tens of families”. 430.There is a further exchange of messages on 11 November 2013 where mention is made of two websites sex141.com and 141 tour guide and to the provision of a password. D1 did give evidence in relation to these matters. 431.D1 did give evidence about the payment to Softlayer he said he let a friend one Leung Ho Fai use his credit card to rent a server. This is evidence I reject as being untrue, it is simply not credible to loan a credit card in the circumstances detailed. 432.D1 also explained his discussions with D9 to concern the 688 Taxi App. The exchange of Whatsapp messages in October concerned this App. 433.And the November messages concerning user name and password for sex141.com concerned giving D1 access to the AV movies. 434.I again rejected these explanations as being simply untrue. 435.D1 paid for Softlayer and communicated with D9 who paid for the server and maintained it. I reject D1’s explanation for the payment and the exchanges with D9. 436.I find in the absence of any acceptable explanation that the inference can be drawn that D1 paid Softlayer for sex141.com and D1 communicated with D9 about that site. 437.D1 as proved to be the payee of sex141.com’s essential service it must therefore be inferred was operating the senior management functions of that enterprise and must clearly part of the agreement charged. Thus is the only reasonable and irresistible inference that can be drawn from the proven facts. Charges (4, 5 and 6) 438.D1 operated 3 accounts all with HSBC. The accounts had deposits and withdrawals about of $9.3 million, $20.8 million and $5.5 million between 2006 and 2013, the defendant filed no tax return in Hong Kong. 439.The prosecution say that the large amount of deposits and particularly the large amount of cash deposits that represent 23% of the total do not have any legitimate source. 440.The defendant attributed the monies in these accounts to his business interests in China. 441.Firstly, there was Topway also 688 Taxi App. He said he also speculated in the stock market and property investment. 442.D1 said that the businesses in China were largely in cash, this largely explained the cash deposits in the accounts. 443.D1 divided the 3 accounts as follows:-
444.D1 was able to evidence a number of the transactions in the accounts, there was a land transaction at lots 846, 847 in DD 114. 445.Investment in property of $38.308 and $655,000, $423,750 for DD 451 on small house transaction. 446.There were transfer from debtors for example money payed for $530,000 by E-transfer. 447.There was F/X transfer to Thailand to build a Buddha, other debtors were Wan Moon Yau and Yip Wai Hung, Tang Hung Man, Chow Chung Kei and Chan Sze Hung, the defendants younger brother. 448.There were transfers of almost $1.5 million to him and a further loan of $1 million to Wong Hing Pui. 449.There were payments to Lau Siu Man of $424,907, also further payment that the defendant could not remember. 450.There were payments for travel expenses and payments to his sister by way of loan and a payment to MAJOHN of $300,000 for a loan. 451.The accounts also showed various securities transactions and other property transactions involving rental payments. 452.The prosecution case did not make any close analysis of these transactions. They challenged his evidence that he maintained companies in China that dealt largely in cash they pointed out there was no evidence of their cash flow, or profit and loss accounts nor any evidence of tax payed. In fact there was no evidence about these business at all. 453.They also challenged the personal loans when the payment was in cash and repayments were made in cash. 454.Therefore, the prosecution case focused on the non-evidenced cash transactions in the accounts the deposits attributable to the China business and loan repayments. 455.In total some HK$7.8 million in cash cycled within these accounts. 456.I found D1’s explanation for the cash transactions as arising from his China businesses to be untrue. Given the extent of the amounts and the period of their alleged operations the absence of any supporting evidence is a clear indication that this evidence is untrue. I rejected D1’s evidence about these cash sums being earned in mainland businesses or cash loans. Given that these sums entered all his accounts the intention was to mix this money with other transactions to give an appearance of legitimacy. 457.However, given the large amounts of unaccounted for cash the defendant had at minimum reasonable grounds to believe that the monies in the accounts were the proceeds of indictable offences. 458.I find charges 4, 5 and 6 are proved. D2 The Moneylenders conspiracy Charge 1 459.I have already resolved that the operation within rooms 2003 to 2005. Constituted a Sham designed to reduce the actual loans extended to the customers of UT Finance. The effective result of removing the handling fee was to raise the operational interest rate to exceed 60% in respect of the loans referred to in the evidence of the customers of UT Finance. D2 obviously took a leading role in this operation. She knew its operation and must have known the true operational interest rate on the monies her company loaned. 460.On her own evidence she took over UT Finance in June 2005 and had previously been involved in the management of that business in room 2005 when it was operated in room 2005. D2 advertised the loan business of UT Finance in newspapers and the internet. She would direct customers to room 2004 for processing. She would approve loans. She knew that belief would collect the handling fee. 461.D2 owned the premises occupied by belief. 462.Given that the separation of these businesses was a Sham. D2 must therefore have been part of the agreement to run them as an effective single entity for the purpose of loaning at an excessive interest rate. That is the only available inference that can be drawn from the admitted facts and proved facts. I found that D2’s alleged belief that she operated a legitimate business was untrue. I rejected her evidence in respect of this. Therefore, D2 is convicted of this offence. The Money Laundering Charges 463.Charges 6 to 14. Charges 8. 9, 10, 11, 12 and 13 464.It is not disputed that the Charges 8. 9, 10, 11, 12 and 13 relate to accounts operated for the purpose of UT Finance business. Receiving money from that enterprise. 465.As a fact as UT Finance was operated as part of a conspiracy to loan money at excessive interest rates it is therefore proved that the receipts of that Enterprise were proceeds of crime. Thus dealings in those accounts were dealings in the proceeds of crime. The amounts in those accounts bore no relation to the declared profits from the enterprise. 466.By my conclusion that D2 agreed to enter into a business of loaning money at excessive interest rates and was aware of the nature and illegality of that Enterprise, I must therefore conclude as the only irresistable inference that when dealing with the monies in those six accounts. D2 knew that they were the proceeds of crime. Therefore, convictions will be entered on these accounts. Charges 6 + 7 + 14 467.The period for the offences related to these bank accounts is between 28 October 2006 and 3 December 2013. 468.D2 evidenced that the deposits into these accounts were from her business activities (aside from UT Finance) rental income, monies from her husband and family. D2 gave extensive evidence about these transactions. 469.D2 calculated her assets at the commencement of 2006 as $11,597,315. This was not challenged. This was money not earned as part of UT Finance. 470.D2 indicated that her sources of income aside from UT Finance were not reported in the annual return for tax. 471.D2 provided details of her property transactions in the relevant period see appendix 2 of D2’s final submission. 472.These transactions were unchallenged, details of rental income received were produced at appendix 3 of D2’s final submission, totaling $5,335,500. This was unchallenged, personal loans both secured and unsecured. Secured loans can be seen at appendix 4 of D2’s final submission. 473.They were supported by Land Registry records and were largely unchallenged. 474.The unsecured loans can be seen at appendix 5 of D2’s final submission, the bank entries are identified. The prosecution challenged these on the basis that D2 was unable to produce her personal account book which recorded the transactions. 475.There were funds transferred from D2’s sister-in-law and D2’s father. 476.The deposits with 3 accounts amounted to $88,983,356, $9.7 million of which was received in cash. 477.Analysis of the sums can be seen in the Treasury accountants report submitted into evidence by the defendant. 478.The prosecution produced no forensic accounting of D2’s monies and did not appear to challenge her extensive evidence in this area in relation to these accounts, without such assistance a court cannot reach any reliable conclusions as to D2’s evidence on this matter. 479.However, it is not challenged and can be seen from the Treasury accountants report produced by the defence that D2 did in fact deposit money from UT Finance into the accounts referred to in Charge 6 and Charge 14. 480.For Charge 6, the amount in $4,213,506, for Charge 14 $787,500. The court can be satisfied that these monies are the proceeds of an indictable offence and the D2 knew or ought to have known that. In so far as she dealt with these amounts D2 committed the offences in Charges 6 and 14. Naturally these monies would have become mixed with the other transactions in those accounts. No such conclusion can be reached in respect of Charge 7. Therefore, convictions are entered in respect of charges 6 and 14. Charge 7 is dismissed. 481.D3 faces a number of Charges:
Charge 1 482.The evidence against D3 on Charge 1 arises out of his involvement with belief from 2005 onwards. I have already resolved this issue in favour of the Prosecution. D3 does not deny his involvement in the moneylending operation conducted by belief and UT Finance, he is clearly proved to be a party to the agreement particularised in charge 1. It is the only reasonable inference that can be drawn from his role in the company and the operation of its business. Charge 2 483.The prosecution rely on an inference being drawn as a result of the banking instruments of Bloom International being seized from D3’s home, combined with other documentation that related to the administration of the sex141.com website. Amongst these are:- 484.The domain name of sex.141 was registered under the name of Bloom International. D3 possessed it cheque book, stamp, chops and bank book at his home. 485.From D3’s office at room 2004 stored on the hard disc of the computer was P585-587 documents containing the pricing of advertisement for sex141. 486.D3 had also previously registered sex141.com at the business registry for the year 2006/2007, see P118, a time outside the operative dates of the conspiracy. 487.There were also documents for A4 Design found in D3’s home. Charges 15 - 17 488.In respect of the money laundering charges in respect of D3 accounts held in his sole name, Charges 15-17. The prosecution rely upon the details of monies entering and leaving these accounts together with the disparity of this compared with D3’s actual income for the relevant period, ie 2006 to 2013. Charge 18 489.In respect of Charge 18, the stooge accounts the prosecution rely upon D3’s use and operation of the accounts of the person’s named in the Charge. That it is established by the seizure from a bag in D3’s home of various banking devices and bank books related to these named persons together with ATM customer advice slips also at D3’s office at room 2004, the recovery of ATM cards and bank books of those named bank account holders, reference to the use of those accounts could also be found from the file found in the hard disc of the computer in room 2004, namely bank account details and personal details of those named persons and documents specifying the use of those accounts. 490.The fund flows in the accounts details can be seen in the admitted facts the Prosecution say they support the conclusion that all the accounts were used for money laundering. Furthermore, there is CCTV footage of D3 operating some of those account details of which can been seen earlier at paragraph 131. Charges 19 - 23 491.As to the remaining counts of conspiracy to money launder found in Charges 19-23 involving D4, D5, D6, D7, D11, D13, D14 and D15. 492.These are based on D3’s possession of banking instruments to the accounts and his observed use of those accounts. In particular D4 his possession of bank book and bank card documents containing personal data and bank account details of D4. 493.D5 computer documents containing personal information and bank account details together with observed use of the account on CCTV. 494.D6 computer documents containing bank account details and personal data. 495.D7 computer documents containing bank account details and personal data and observed use of the account by ATM. 496.D11 possession of ATM card in D11’s name for 141 InfoTech and A4 Design also other e-banking and digital device and observed use of 141 InfoTech account at ATM machines. This was together with the certificate of Incorporation of 141 InfoTech. 497.D13 possession of D13’s salary slip for March 2007. 498.D14 D3 possessed a banking digital devices for D14’s accounts together with her bank book and personal and banking information on computer files together with CCTV footage of actual use of the account. 499.D15 the storage hard disc found in D3’s office also contained details of D15’s personal details and bank account. D3 was also seen on CCTV to operate by way of ATM D15’s account. 500.In respect of these matters D3 gave exculpatory evidence, I have already set this out. In outline, it was that in respect of his sole accounts, he said that the accounts submitted for tax purposes did not report the actual income of himself and belief. There was no other evidence to support this. He also said in respect of his personal accounts that he recycled money to give the appearance that the accounts were action. 501.D3 had an explanation for all the prosecution evidence against him. It was he said explained by his involvement with a mainlander boss called Shum Kwan whereby he updated commission’s earned by Shum Kwan’s salespersons, who solicited and posted advertisements on nightlife141.com. He was aware of up to twenty sales persons, he recalled D5, D7, D14 and D15’s names being used in this connection. 502.Shum Kwan was authorized to deal with their bank accounts, usually Shum Kwan kept the bank books and banking instruments. 503.D3 had taken possession of the bag found in room 2004 that contained the banking instruments from Shum Kwan in order to store it for him he also looked after an external hard disc P388 and a bag of ATM cards for Shum Kwan and that is why all these items were found in room 2004. 504.D3 also said Bloom International was a client of Belief and he handled financial matters for them. 505.It is clear from this that D3’s defence case rested on the issue of his credibility. The prosecution evidence clearly being sufficient to establish his guilt on the charges. 506.In respect of that I find most determinedly against the defendant, his evidence on every aspect of the case is implausible and improbable, it would be a gullible tribunal that accepted any part of his evidence. 507.His evidence was in its entirety a transparent fabrication solely designed to try to account for the large content of incriminating evidence found in his possession or in his premises and his actions as recorded by CCTV surveillance. 508.I find it not necessary to deal with his evidence in detail as every part of it is inherently unbelievable and contradicted by the physical evidence. 509.I reject D3’s evidence in its entirety. 510.Therefore, in respect of each charge, the defendant faces the only available evidence for the court to consider is that produced by the Prosecution. 511.On Charge 2, D3 clearly had the banking and company items of Bloom International because he was involved in its operation, sex141 domain name was registered to Bloom International combined with D3’s advertising information for sex141 allows the inference to be drawn in the absence of any other evidence that D3 was party to an agreement to operate this website and must have been aware of its nature and funding. I have rejected D3’s explanation for the possession of these items and documents. 512.I consider that only a person intimately involved in the operation and administration of sex141.com as a commercial concern would be in possession of these items. I find that this is the only available inference to be drawn. This lends to the conclusion that D3 was part of the conspiracy in Charge 2. D3 is also involved in the collection and disposal of the receipts of the conspiracy. To a certain extent this overlaps with the money laundering charges. However this evidence is also probative of involvement in the agreement that forms the second charge. 513.The operation of this conspiracy requires the charging and receipt of monies from the prostitutes to provide the promotion of their business by way of advertisement. 514.The evidence taken together proves D3’s participation in the conspiracy in Charge 2 and I convict him accordingly. 515.As to Charges 15 to 17 they are D3’s sole accounts. It is established that D3 was involved in the conspiracies in Charges 1 and 2. He had no source of legitimate income. Clearly his sources of income can be inferred to be the proceeds of his crimes given their unaccounted and undeclared nature. Furthermore D3 must have known this to be the case. D3 is convicted of those charges. 516.Charge 18 is proved by D3’s possession of and operation of these accounts together with the details of their operation and fund flows. This leads to the irresistible inference that these accounts were solely in place to receive and remove the proceeds of crime. He will be convicted on this charge. 517.Similarly on the other Charges 19 to 25, D3 is seen to operate accounts supposedly owned by D5, D7, 141 Info Tec, D11, D14 and D15. He also has the details of D4’s account and his bankcard and D6’s account details and personal data. The only available reason for D3 to have such information or to use the accounts and have banking instruments would be to dispose of the proceeds of the conspiracies of which he was a party. These individuals conspiracies are proved as against D3. The accounts themselves showing all the indicia of being used to dispose of the proceeds of crime. D3 is convicted on these charges. 518.In respect of the conspiracy charges 23 to 25 involve D13 also:-
D3 is seen to operate all these accounts and has the bank cards for D14 and also their banking information D3 was therefore proved to be part of the conspiracies that existed with all these defendants. I find this is the only available inference to be drawn from the evidence. The defendant is convicted on these charges. I do note D13’s admissions are not evidence against D3 on these charges. Charge 19 D4 PRELIMIARY EVIDENTIAL ISSUE 519.In addition to his evidence on the general issue D4 challenged the admissibility of his video recorded interview and post record. D4 SPECIAL ISSUE 520.The fourth defendant challenged the admissibility of a post record given to Sgt 4029 and a video-recorded interview of 30 April 2012. 521.The relevant police officers and D4 gave evidence on this issue. 522.D4 said he had not been cautioned and had told police the money was from his milk powder business. Sgt 4029 had sworn and said if this was his version then it would take a long time to deal with it and D4 would have to explain every single sum of money in the account. The Sgt had ‘coached’ D4 onto what he should say at the interview. The Sgt also said D4 would be bailed out for some time and not charged. After the interview D4 was taken to the Bank of China to close the account. Thus D4 alleged that the admissions were procured by threats and inducements and procedural unfairness. 523.Sgt 4029 denied the allegations of threat and inducement he did agree he had taken D4 to the Bank of China to close his account. He said this was based on a procedure in the ‘police handbook’. He agreed this was not in his witness statement. 524.An Inspector Tse said he had asked for D4 consent and instructed that such consent should be sought to close the bank account. 525.The case of D4 was that a reasonable doubt existed as to the voluntariness of the admissions made by D4 in the post record and the video recorded interview. 526.It was said that the allegations of coaching were supported by reference to the later video recorded interview of the defendant on 2 August 2012 at Counters 326, 328, 332 where D4 mentioned he had said what the police told him to. 527.Criticism was also made in respect of obtaining D4’s consent to close the bank account on the basis that it was an unusual procedure and Sgt 4029 and Inspector Tse gave different reasons as to why D4’s consent was obtained. 528.My findings of the issue of credibility was that the prosecution witnesses were truthful and reliable and events unfolded in the way they outlined. I found that the inconsistencies between Sgt 4029 and Inspector Tse were simply due to different recollections of events. I saw nothing irregular in obtaining D4’s consent to the closing of the account it was simply a matter of judgment. 529.I found D4 to be not credible. I found his allegation of coaching to be not credible. It is simply not possible for the police to ‘teach’ D4 the information necessary to enable him to conduct and outline the admissions made in the video recorded interview. It is a simply absurd proposition. I noted D4’s references in the later interviews. However, at that stage D4 was using the process to outline his ‘milk powder’ defence and needed to set up a reason as to why he made the earlier admissions. I found D4 to be not credible. I rejected his evidence on this issue in its entirety. 530.Having resolved the factual issue of credibility it was clear that the prosecution had proved that admissibility of the relevant evidence beyond reasonable doubt and no residual grounds exited for their exclusion and I admitted them into evidence. I was prepared to place full weight on the defendant’s admissions. D4 CHARGE 19 with D3 531.D4 was charged in respect of the use of his BOC and Hang Seng accounts between 18 September 2008 and 11 November 2013. D4’s total reported earnings for IRD purposes during that period were HK$190,500. PW79 who ran a one-woman brothel had transferred $1,100 from her account to D4’s account on 31 March 2009 reference to D4’s BOC accounts use between 31 March 2009 and 2 October 2011 was found on a computer hard disc in Belief’s offices as referenced in the ghost accounts. 532.The reference to the ghost account also included a charge to the fee charged for ‘one woman’. This charge is reflected in the increase of amounts from $1,200 to $1,300 paid into the account. Also reference to suspension of D4’s Hang Seng account can be seen in the ghost account. Also details of D4’s accounts and name appear in printouts of P568, P570 and P610 produced by PW34 from the hard disc. D4 also admitted selling the BOC account for a few thousand dollars to Ah Ming on 19 March 2009. 533.I refer to my earlier account of the defendants’ evidence. The defendants has maintained his account of running a milk powder business since his second video-recorded interview the business being run with Fai Chai his nephew and Shum Kwan. 534.D4 said during the currency of the business he was in control of the accounts but afterwards gave the accounts to Shum Kwan for record keeping including the bank card. Mr Poon also testified to helping D4 transport milk powder. 535.I found D4’s evidence about the accounts being used for the receipt of cash payments for milk powder and later on for loan payments were an obvious fabrication. The vast amounts of cash could not be earned by such a business and the evidence shows payments made to the BOC account by a prostitute. I found D4’s evidence to be an obvious falsehood concocted to explain why his bank records ended up in D3’s office and why there were such large amounts of cash in his bank accounts. The amounts of which tallies with payments made by prostitutes. D4 was inherently unbelievable when he said the money in these accounts came from a milk powder business. D4 may have involved himself in such a business and Mr Poon may have helped him but the scale cannot account for these payments especially when one considers that D4’s entire declared earnings for the whole period are less than HK$200,000. D4 admitted the sale of the BOC account to Ah Ming. 536.The conclusion I draw from the evidence is that D4 sold the BOC account as he admitted and I infer that the Hang Seng account was sold for the same purpose. By doing so D4 must be found to have entered into the conspiracy with D3. By selling the account blindly. The seller must contemplate and agree to its eventual use. Here by D3. A person selling an account in such circumstances must have reasonable grounds to believe the account will be used to deal in the proceeds of an indictable offence. 537.The accounts were used by D3 to deal in the proceeds of the sex141 monies received from prostitutes. The offence is clearly evidenced and proved. A conviction is entered. D5 CHARGE 20 CONSPIRACY WITH D3 538.The prosecution case of conspiracy against D5 arises out of 2 banks accounts with Hang Seng and BOC held by D5, details of the accounts can be seen in the admitted facts and cover the period 18 October 2011 to 11 June 2013. During that period D5 declared total earnings for tax purposes of HK$399,621. 539.Beside the cash movements and amounts in the accounts the prosecution rely on the finding of details of both accounts in the hard disk of the computer found in D3’s office. 540.The suspension and activation of the accounts is found under the reference ‘ghost account’. 541.The BOC account received ‘one person’ also reference to the Hang Seng account receiving one person. The total deposits and withdrawals in the accounts exceeded HK$11 million. 542.D5 was absent from Hong Kong on several occasions when money was withdrawn from the account. D3 had operated the Hang Seng account. 543.D5 gave evidence in his defence I refer to my earlier summary of his evidence. His evidence is heavily reliant upon his relationship with Lau Wai and D5’s evidence about working for the nightlife 141 website and his handing over his banking documentation to Lau Wai. D5 had said he trusted Lau Wai but was unable to reach him or call him to support his account. The primary issue on D5’s case was one of credibility (D5 has a clear records) this is clearly relevant when considering this issue. However I found his account to be simply unbelievable and contrived that he would part with his bank accounts in the circumstance he outlines is simply not credible. I disbelieved him. In fact I rejected his evidence in its totality. 544.I was simply left with the prosecution evidence from which to draw the necessary inferences that D5 had disposed of his account for D3 to operate in pursuance of sex141’s business and the accounts were used to receive the earnings of prostitutes. Clearly the evidence is supportive of that conclusion being drawn to a criminal standard and D5 is convicted accordingly. In dealing with his account in this way, and there being no evidence to the contrary. The inference can be drawn that D5 must have had grounds to believe the account was used to deal in the proceeds of an indictable offence. D6 CHARGE 21 CONSPIRACY WITH D3 545.D6 is charged on the basis of the operation of 8 bank accounts with various banks. The operation of those accounts can be found from the admitted facts. 546.The operative period of the accounts was between 27 September 2004 and 2 June 2011. During that period D6 declared earnings for tax purposes of $758,288. Total withdrawals and deposits in the accounts exceed HK$15 million. 547.The prosecution point to a deposit made into D6’s BOC and CBC accounts by a prostitute PW79 for advertisement fees for a one-woman brothel. Furthermore withdrawals were made from the accounts when D6 was not in Hong Kong. D3 also possessed the bank account details and personal data of D6 see P612. 548.The details of the accounts showed substantial amounts flowing through such account in a similar manner with a large number of entries in all accounts mimicking the payments made by sex workers to sex141 for advertising payments. 549.D6 did gave evidence in his defence. The question of whether his evidence was capable of belief was an issue of credibility. He is of clear record so clearly this is relevant. I refer to my earlier summary of D6’s case for the details of his evidence. D6 outlined the supposed serial use of his accounts by Wong Keung for his various contractors in the milk powder business. 550.The accounts were said to be for Wong Keung’s benefit but remained open even after the parties had fallen out. I found that D6’s evidence was unbelievable. It was obviously crafted to try to account for firstly the large amounts of cash in the account, secondly the plurality of accounts opened, thirdly the fact that details of some of the accounts were on D3’s computer and finally that it could be proved that a sex worker had used the account. 551.D6 needed to come up with a story to explain these features. His account did so but at the costs of any inherent or internal credibility. It was an obvious falsehood. I rejected it in its entirely. 552.I was therefore left with the only reasonable inference being that D3 operated the accounts to receive the cash payments from sex workers for advertisements in sex141. This must have been done with at minimum with the connivance of D6. He must therefore have entered into the particularised agreement. The accounts show the indicia of being used to dispose of the proceeds of crime. D6 must have had ground to believe the account were used for this purpose. He is convicted accordingly. D7 CHARGE 23 CONSPIRACY WITH D3 AND D13 D7 SPECIAL ISSUE 553.D7 challenged the admissibility of her cautioned statement taken on 11 December 2013 on the grounds that it was obtained as a result of threats and inducements. 554.In her evidence she said she gave answers 1 to 9 but when asked where her passbook was, said it was at home. Then the interviewing officer DSPC53895 said if she said that then was a search warrant would have to be obtained and this would be trouble for her family. DSPC53895 told her to say she had forgotten where she put it, in answer to question 10. She was also told to say that she had sold the ATM card and password to Tai Chai and the police officer ‘taught’ her the answers to questions 11 to 18. She was told that if she gave these answers then she would not get into trouble and only Tai Chi would get into trouble. The answers 19 to 24 were answered by D7 herself. D7 believed she had no choice but to provide the answers DSPC53895 gave to her. 555.The prosecution witnesses especially the interviewing officer denied all the allegations of inducement and threats. The defence pointed out that DSPC53895 could not remember if he had D7’s address for obtaining a search warrant. It was also the case that officers were aware of D13 named Lee Tai Hing from a briefing given to them before this interview was conducted. Furthermore DPC7012 had said that there had been a set of questions for the interviews. So the allegation of coaching or ‘teaching’ was consistent with this evidence. 556.The resolution of the issue of voluntariness and therefore admissibility resolved solely on the issue of credibility. I found the interviewing officer to be entirely credible in his rejection of the allegations of inducement and threat. 557.I found D7’s allegations to be untrue. There is no reason why the officer would coach D7 in respect of those answers that incriminate her and Lee Tai Hing. She has made this up to provide an explanation from her admissions. I rejected D7’s evidence in respect of this matter and admitted the statement into evidence as it was proved to a criminal standard to have been voluntarily given. I was prepared to accord full weight to the admissions made by her in her statement. D7 CHARGE 23 CONSPIRACY WITH D3 & D13 558.D7 is charged on the basis of her BOC account which she held between 30 October 2012 and 9 October 2013. Some HK$3.2 million going through the account during that period, a large proportion being in cash and of fixed sums of HK$1,100, HK$3,300 and HK$7,700. 559.D7 last revenue submission in 2010 showed an income of $7,355 during 2010. There was no reported income during the relevant period. D7 had told police that in 2012. She sold the account to D13 Lee Tai Hing for $4,000 the sale included the ATM card and password to the account. D7’s name and bank account were found in P546 seized from Park Fook referred to as ghost account also details of D7’s account and personal data. Details were also found from P338 in Room 2004. D3 had operated this account by way of an ATM machine during the relevant period 560.D7 gave evidence in her defence. I refer to my earlier account of her evidence. In essence she says she lent the account to a person she met in a bar. One Ah Wai she was to be paid $3,000 per month and the account was to be used by 141nightlife.com. Her explanation was really a transparently false story designed to explain the payments and as to how D3 ended up using the account via D13. I rejected it in its entirety. Clearly her admission was true and I attached full weight she sold the account as I have earlier ruled disposing of one’s account in such circumstances provides clear evidence of an entering into the agreement particularised in the charge. I convict D7 accordingly. D8 CHARGE 2 561.The prosecution relied upon D8’s presence in Park Fook Building particularly his location at desk 1. The prosecution requires that an inference be drawn that D8 had or was working on the computer located at desk 1 where he had been intercepted by police. 562.On the desk were business cards promoting sex141 blank forms for sex141 advertisement subscriptions, company chops for A4 production and Fat Hung Company 2 mobile phones whose phones numbers appeared on the hard disc of the computer seized from Room 2004. 563.By desk 1 was a switch that could switch off all the computers in the office. Inside the hard disc of the computer P541 was found this was the main page amendment document which was a document proposing was of amending the advertisements for ‘new girls’ a similar document was seized from Room 2004. 564.A document proposing ‘fee adjustments’ for inter alia ‘one person’ again a similar document was found on the hard disc of the computer in Room 2004 also documents setting out online comments for ‘one person girls’. 565.Certain information was captured from the screen by the last user of the computer that contained images from sex141.com and indicated the user was managing the status of “the stuff”. 566.Also that the user was managing the information of an individual female called ‘six pola’. D8’s fingerprints were found on various items on desks and on a mobile modem. It is contended this raises a clear inference that the user was working on the sex141.com website particularly on the advertisements for the girls prostitutes and also had documentary evidence which related to the charges for such services to be levied from the one-woman businesses. In the absence of any explanation I found the inference could be drawn from D8’s seating at this location together with active work on the sex 141 website being conducted from the workstation at that location to clearly prove his involvement in and agreement to the conspiracy particularised in Charge 2. There is no other credible explanation. He is convicted accordingly. D9 SPECIAL ISSUE 567.D9 objected to the admission of an oral admission made on 4 December 2013 to DPC51030 and its later reduction to writing also admissions made in video recorded interviews on 5 December 2013 and 20 August 2014. 568.D9 gave evidence which disclosed that he was threatened to cooperate after his arrest at the South Seas Centre by DPC 51030. He was refused permission to visit the toilet unless he cooperated with the police he was also offered inducements by a police officer surnamed Yuen. He was assaulted and pressed to the floor by other officers. As a result of assaults he agreed to cooperate. 569.D9 agreed to sign the notebook entry as a result of the assaults threats and inducements. He also said that during the video recorded of interview on 4 December 2013 he evinced his unwillingness to answer questions at reference Counter 70 to 73. The defence also said the general account given by the police was unsatisfactory in that there was contradictory evidence as to whether a search warrant was produced. The terms of D9’s alleged oral admission were different. The oral evidence being different from the recorded version. 570.There was also discrepancies as to whether a briefing file existed in the case. There were other criticisms about the method of cautioning and the provision of refreshment breaks. It was also noted that D9 was a person of clear record. 571.Both PW137 Inspector Yuen, PW13 DPC51030 were clear that the allegations of threat inducement assault and oppression were denied. 572.I did not find was a discrepancy between PW15’s oral evidence about D9’s oral admission and the recorded admission. The difference was technical and did not in my view effect admissibility. I considered it should be considered in relation to what weight would eventually be accorded to the oral statement. I found that the presence or absence of a briefing file or the use or not of handcuffs was of peripheral relevance. 573.I did not agree with D9’s submission about when and how D9 should have been recautioned. D9 was in receipt of a clear caution he could have had no doubt as to his rights in this investigation. I saw nothing in D9’s complaint about lack of access to a toilet. PW137 made it clear toilet access would be permitted at any time. 574.D9 had said he asked to contact his sister so she could contact a lawyer. PW15 did not concede this request had been made. In respect of PW13 and PW137 I found they were truthful and reliable and I accepted their denials of the improprieties alleged by D9. 575.D9 gave clearly untrue and exaggerated evidence about the assaults he alleged to have received. 576.His descriptions of beatings and threats were unbelievable and unsupported by his medical report which showed only a small bruise. 577.I found D9 to be untruthful about these matters and rejected his evidence in its entirety. I did note his complaint in the first video recorded interview around Counters 70 to 73. However I found they were not truthful and PW13 was right to ignore it. 578.I found the challenged evidence was obtained voluntarily and there was no basis on which I should exercise my residual discretion to exclude. I admitted the relevant admissions into evidence. D9 GENERAL ISSUE Evidence 579.D9 was implicated with the operations of sex141.com due to his involvement with the domain name through Bloom International and his involvement with the server of sex141 at New World Company. The domain name of sex141.hk was registered under the name of Bloom International Limited. 580.On 30 November 2012 ‘Jimmy Lee’ applied for the domain name sex141.hk on behalf of Bloom International. D9 paid the annual fee for the domain name. D9 admitted he was ‘Jimmy Lee’. The IP address for the server for nighlife141 was provided by New World Company Telecommunication NWT. 581.The server was at New World’s data centre. March Computer Company rented that server between 4 July 2007 and 13 March 2014. The attendance records of NWT show D9 accessing the server on 13 August 2011, 13 August 2013 and 14 August 2013. 582.D9 was arrested at Shop 80 of South Seas Centre. He provided the password to access his computer. The computer contained a statement from NWT to Jimmy Lee as to payments of March Computer. Layouts of various pages of sex141.com and 141hongkong.com. D9 also admitted installing the server for sex141.com and receiving HK$20,000 per month for the servers rental fee. Inside a safe that D9 opened company chops of March Computer were recovered. Furthermore 3 cartons of sex141 magazine were found inside South Seas Center. D9 claimed in answer to caution and in his record of interview that he was the typesetter. The advertisements in the magazine matches those on the sex141.com website. 583.D9 in his record of interview was asked about the advertisements for prostitution on the website. He said they did not control the prostitutes Counter 1416. He was asked if there was assistance he said at Counter 1420. ‘Assistance, not assistance either, that means they, those people need to post advertisements’. He agrees that he knew one woman brothels were included Counter 1428, but was unclear as to how much the prostitutes were charged for the advertising fee Counter 1430 or how the advertising fee was paid Counter 1440. 584.D9’s answers appear to assume as understood that he was aware sex141.com did charge the prostitutes for their advertisements. On the general issue D9 did not give or call evidence. 585.The evidence against D9 on this charge stood unchallenged and established he was the person involved in maintaining the sex141.com website he did so with knowledge of its business of promoting prostitution and providing a paid advertising service for those prostitution. Therefore the evidence proves D9’s guilt on the charge to a criminal standard. He is convicted of the conspiracy in Charge 2. D10 586.D10 was in fact the registered owner of A4 production which was the tenant of the Park Fook. This company rented to D11. D10 was found at desk 6 which contained blank advertisement subscription forms. The hard disc of the computer found on the desk contained P541 identical to that found in D8’s computer and also P585 a file identical to one found in Room 2004. P541 was served individually onto this computer. D10 did not give or call any evidence. However this is all the evidence against D10. There is no evidence of work being performed on the computer contemporaneously with the police entry onto the premises. Therefore no evidence of active work at that terminal being performed by D10. The evidence therefore is not sufficiently compelling to draw the irresistible inference that D10 was performing work for sex141.com at that workstation. Therefore the necessary inference cannot be drawn and D10 will be acquitted of the charge. D11 587.The prosecution case on the 2 charges are based as follows. Charge 2 Conspiracy to live on earnings of prostitution that D11 was arrested by police at Park Fook Centre on their entry. He was found to be sitting at desk 2. From desk 2 various blank advertisement subscription forms were found and an ashtray with D11’s fingerprint. Inside the computer hard disk at the workstation was found P541 the main page amendment document and P542 the meeting matters April 2012 document. Also there was P546 ‘bank’ a list containing names and bank account numbers including D4, D5, D7, D14 and D15 and a ‘stooge account holder’s Chung Sai Wing and Yeung Wing Lam. In evidence D11 confirmed D3 had given him this list. 588.In respect of Charge 22 this charge was based on the fact that D11 was the account holder and signatory of 4 accounts for
589.The 4 accounts had cash flows in excess of HK$6 million with frequent cash deposits by a large number of individuals with a majority of the sums being in excess of $1,500 and most deposits and withdrawals occurring within a short space of time. D11’s income for tax purposes was not commensurate with such large sums of money as he was not liable to pay tax. D3 was also seen to operate the 141 Info Tech account by using the ATM card for this account. 590.D3 also had the Certificate of Incorporation of 141 Info Tech and 2 stamp chops of that company. D3 also had bankbooks and cheque books for 141 Info Tech, Sheung Shui Tech and advice slips for ATM withdrawals from the bank accounts of 141 Info Tech, A4 Design and Sheung Shui Tech. D11’s case 591.D11 gave evidence and called three witnesses. I have already summarized his evidence. In essence D11 said he entered into a business with D3 whereby the 3 companies were set up. 592.D3 handled the finances and banking instruments for the companies. D3 had given him P546. D11 said he rented a shared space at Park Fook to operate his business of writing advertisements reviews and internet comments for nightlife 141. D11 said all computers at Park Fook were used in common and he was not at desk 2 when the police entered. D11 said his activities were confined to the food and beverage activities of the website. The advertisements were charged at $1,500 with a 60/40% split in favour of D3. 593.D11 showed advertisements he produced and called witnesses from 3 businesses that had used his services. They were San Kee Gourmet B and King of Chicken Pot. The defendant’s evidence raised questions of credibility in relation to the defendant and his evidence. I did not find the defendant to be credible overall. However he did call witnesses who had little reason to lie and whose evidence was not substantially challenged by the prosecution. 594.It would appear from the evidence of DW1 to DW3 that he did provide a service of writing advertisements and reviews and comments for restaurants on 141nightlife.com. This does not mean it was his sole activity. D11 was able to point to a number of such activities. D11 could point to 14 such reviews. It was apparent that D3 had a relationship with D3 however I could not place any reliance on what he told me about it. I have also rejected D3’s evidence in its entirety which includes what he said about his relationship with D11. I rejected D11’s evidence about how and why he set up the 3 companies. I also rejected his evidence about what happened at Park Fook and his reasons for being at that location. Charge 2 595.I did find that D11 was located at desk 2. However there was no evidence of any work being conducted at the computer. I did not find the presence of documents in the hard disc of the computer to be sufficient proximate to the defendants presence to be of any probative value. There was therefore no probative evidence against D11 in respect of this charge. He is therefore acquitted of this charge. Charge 22 596.This charge related to the fund flows in the accounts of the four companies. There was evidence that supported D11’s evidence that D3 had effective control over the accounts. The defence contended that D11 believed that the accounts received money from legitimate sources of advertising within the 141 nightlife forum and website. This was his evidence as he said he believed he was not the only contributor also he said P546 was given to him by D3 to show other contributing salespersons. I found this to not be the case the document itself referred to receiving ‘one person’. I did not accept this was why D11 had P546 or that he believed what he said about the document. In fact the accounts show as many as 1904, receipts of $1,500 sums and 570 of $1,300 far in excess of the number of advertisers. D11 could be expected to have worked for. The question to be asked is ought a person in D11’s position have reasonable grounds to believe that the accounts were used to deal in the proceeds of crime. 597.D11 did not dispute he dealt with the accounts. I found the amounts far exceeded what could be the expected income from legitimate sources. The flow of funds use of cash and the amounts would lead a person to have reasonable grounds to believe that the monies in the accounts were the proceeds of an indictable offence. D11 will be convicted of this offence. D12 598.D12 was found at the location of desk 7. Police seized the computer and items found upon the desk. There were mobile phones that contained numbers that were found in an excel file in Room 2004 and blank advertisement forms for sex141.com. The hard disc contained details of how advertising photographs were to be taken in 2012 including photographs for ‘one-person’ establishments. D12 was also found to have a key to the premises. D12 had called a witness Cheung who had been present in the premises. It was Cheung’s evidence that he had worked at Park Fook in the past. He had returned there to return the keys with D12 tagging along. Cheung’s evidence was that D12 had borrowed the keys from him so that he could visit the toilet and that is why D12 was found in possession of the keys by the police. D12 himself did not give evidence. I did not accept D12’s witnesses evidence he was clearly lying his evidence relied on unlikely coincidences, I found him to be unreliable and manipulation. However D12’s mere presence at the desk without proof of work being conducted at the workstation at the time of entry by the police was insufficient to prove he was part of the agreement alleged in Charge 2. He will be acquitted of the charge. D13 599.D13 faces Charge 23 with D3 and D7. Charge 24 with D3 and D14 and Charge 25 with D3 and D15, and Charge 26 with “Sum Chai” and YUEN Hoi-kwong. 600.The charges were based on his admissions of having obtained bank accounts and banking instruments to those account for one ‘Sum Chai’. He admitted selling D14 and D15’s accounts and also the account of one Yuen Hoi Kwong. In support of the admissions were various items seized from D3’s home and office at Room 2004. 601.At D3’s home 2 bankbooks and ATM cards for Yuen Hoi Kwong and D14’s bankbooks were seized from Room 2004. Digital banking devices of Yuen Hoi Kwong and D14 were seized from D3’s home. D3 was also seen on CCTV to use Yuen’s D7 and D15’s bankcards at various ATM machines. D13 challenged the admissibility of his written notebook entry and subsequent VRI during the course of voire dire proceeding. The voluntariness of this evidence was challenged on the basis that D13 had been offered various inducements and also that threats had been uttered to him. The admissions VRI’s 602.The prosecution called 3 witnesses PW8, 15 and 37. The defendant gave evidence in support of his grounds of objection. The defendant said he had not been cautioned by the arresting officer. He was told by the arresting officer that his family members particularly his mother and wife would be arrested if he did not cooperate. He was told others had already admitted selling accounts and he should admit if he did so he would only receive a short term of imprisonment or a fine or binding over order. That sort of the documents he signed such as Pol 1535 were never explained to him. 603.D13 also said that the contents of the VRI were told to him by PW37. He was instructed as to what he was to say and how the interview would progress. If he wished the interview to end he should just make a certain hand gesture. D13 in fact said that PW15 had shown him a written script that he was to use in the VRI which included both names and details of bank accounts. 604.The police witnesses denied the allegations of threat and inducement in their evidence and the defendant supported his allegations by giving evidence. Therefore the issue remained one of credibility. The defendant did also submit that PW15 had wrongly recorded the caution administered to the defendant. It being recorded as containing the words ‘unobliged to say anything’. It was said that it could not be ruled out that the defendant became confused as a result of this error. It was said the court should exercise its residual discretion to exclude the statements on the basis of fairness. It was also said that there was no reference to page 34 when the record was read over. 605.In reviewing the evidence I first dealt with the issue of credibility. It was abundantly clear to me that D13’s evidence was a complete fabrication. It depended on an inherently incredible narrative that the interviewing officer taught him the details of the admissions he was supposed to make. I cannot say more than that this is quite unbelievable and is obviously untrue. D13’s evidence was simply a fabrication. I rejected it in its entirety. On the prosecution witnesses credibility they appeared entirely credible and I accepted their evidence. The errors in the notebook were typographical. I was satisfied D13 was entirely aware of his existing rights as a person under investigation and that there was not basis on which to exclude this obviously voluntary statement. 606.D13 did not give evidence on the general issue, I was required to decide what weight should be accorded to D13’s admission. He admits both providing the bank accounts of D14 and D15 and D7 to D3 and also the account of YUEN Hoi-kwong. He had bought accounts from D14 and D15 these being handed to Sum Chai who gave him money to buy accounts. These admissions evidence the agreement to deal in the accounts the subject of Charges 23, 24, 25 and 26. I find the admissions to which I gave full weight provide direct evidence of the agreements charged in Charges 23 to 26. D13 entered this agreement to provide the bank accounts in the circumstances this must provide grounds to believe that the accounts would be used to deal in the proceeds of Crime. This is the only available inference. He will therefore convicted of Charges 23 to 26. D14 CHARGE 24 CONSPIRACY WITH D3 AND D13 607.D14 faces a single charge of conspiracy to deal in the proceeds of an indictable offence where she is charged with D3 and D13. The prosecution case is that D14 sold her bank account to D13 for it to be used by others and that it was subsequently used by D3 to launder the proceeds of crime. The defendant is proved to have been the sole signatory of 3 bank accounts with MSB, BOC and HSB between April 2011 and December 2013 in which a total of $4,415,000 was deposited. The accounts show frequent cash deposits by a large number of individuals with most of the deposits being withdrawn within a short period of time. Also with a substantial number of deposits being in the amounts of $8,400, $1,200 and $4,800. 608.During the relevant period D14 did not file any tax return. D14’s admissions were simply that she had met a person called Tai Chai or Lee Tai Hung. She sold her 3 bank accounts to him for $2,000 cash. She gave the banking documents and instrument to Tai Chai. 609.In addition D14’s BOC bankbook and HSB ATM card were seized from Room 2004 and two of her e-banking digital devices were seized from D3’s home. D14’s name and bank account were found in a computer that was found at Park Fook and also mentioned as ‘ghost accounts’ in the hard disc of the computer found in Room 2004. D3 had also operated her accounts via ATM machine (see summary of D3’s ATM transactions). The admissibility of the admissions 610.In her defence D14 said that the admissions made by her in the 2 video recorded interviews were obtained by way of inducements held out by her interviewing officer. The prosecution evidence was that 2 separate VRI’s were taken. Firstly by DPC5877 on 5 December 2013 and secondly by DPC34351 on 9 January 2014. Both officers denied offering any improper inducements. 611.D14’s evidence was that prior to the 1st VRI on 5 December 2013 at RCU NTS. DPC58777 had an extensive conversation with D14 during that exchange after D14 had told the officer that her boyfriend had used the accounts. The officer had suggested or taught to her the form that her admissions should take. He would tell her what to say and she was induced to do this on the basis that her boyfriend would not be arrested. 612.Similarly D14 said DPC34351 spoke to her extensively before the 2nd VRI she was referred to a document and directed to identify the full name of D13. She agreed to do so as she was still subject to the earlier inducement. The issue in the voire dire proceedings was entirely one of credibility. The 2 interviewing officers denied the allegations made against them. I found them both truthful and reliable. The defendant’s evidence was quite obviously concocted. 613.It was manifestly untrue that the details rehearsed in the interview could be absorbed and repeated by D14. It is clearly untrue. I rejected her evidence in the special procedure in its entirety. 614.I accordingly found the voluntariness of the admissions proved to a criminal standard and admitted them into evidence. I was prepared to account full weight to D14’s admissons. 615.D14 gave evidence on the general issue. It was that she had lent her bank accounts to her boyfriend with whom she was then cohabiting. He had told her he was running a milk powder business. I refer to my earlier summary of D14’s evidence on the general issue. I found her evidence to be a transparent concoction to provide some explanation as to how her account was used by others and to allow for the details of her accounts being found in D3’s office and home. It was clearly a fabrication designed to try to account for the salient probative aspects of the prosecution case. It was clearly untrue. I rejected it entirely. 616.I was simply left with the evidence in the prosecution case. I noted D14’s submission that in her VRI. D14 told police that she had been told by D13 that the accounts would be used by a bankrupt person. It was said that if D14 honestly believed this. It would prove reasonable grounds for the loaning of the account. I rejected this submission. The account is being sold by D14. In those circumstances, the explanation offered to her must give grounds to a reasonable person that the use of the account was not legitimate and that it would be used for the dealing in of the proceeds of an indictable offence. 617.D14 sold the account to a person she barely knew the only reasonable inference from this fact is that the account would be used for illegitimate purposes. A person in these circumstances clearly ought to know that the account would be used to deal in the proceeds of an indictable offence and D14 must have entered into an agreement to do so. D14 clearly had reasonable grounds to believe she had entered into an agreement whereby the account would be used for the disposal of the proceeds of crime. In convict her accordingly. D15 CHARGE 25 CONSPIRACY WITH D3 AND D13 618.D15 faces a single charge of conspiracy together with D3 and D13. 619.The prosecution case against D15 is that he loaned 2 banks accounts to D13 which were used by D3 to launder the criminal proceeds of his activities. The prosecution provided details of 2 accounts held by D15 with BOC and Nanyang Bank. The 2 bank accounts operated between 7 December 2010 and 26 June 2013 with total deposits and withdrawals of around HK$5.338 million. 620.The accounts showed frequent deposits by a large number of individuals with large amounts in the figures of $1,200 and $1,500 with deposits being withdrawn in a short period of time. Details of D15’s accounts appeared on documents found within the computer in Park Fook as ghost accounts and also in the hard disc of the computer in Room 2004. Furthermore D3 operated the accounts by way of ATMs. D15 never filed any tax return during the relevant period. The VRI’s admissibility 621.D15 conducted 2 VRIs he admitted he was introduced to D13 in 2012 and since 2012 he had loaned the bank accounts 3 to 4 times a week to D13. The cards being taken in the morning and returned the same evening. After D13 failed to return his Nanyang bank card D15 became suspicious and cancelled the 2 bank accounts. D15 challenged the admissibility of the VRIs made by him. It was alleged that police officers had induced and ‘prompted’ the defendant to make the admissions. At Wong Tai Sin Police Station the defendant was said to be sworn at for saying he had no idea about the case. The route by vehicle to Ma On Shan Police Station PC2012 is said to have induced the defendant by saying he had promised the defendant’s grandmother to help him and the defendant should not be liable. The defendant was told to use the name Lee Tai Hing during the interview and shown a list of names in the interview room. He was told to pass the buck to Lee Tai Hing and was shown the transactions in the accounts. 622.The defendant was told he could be released as soon as the interview was concluded. He followed the directions and suggestions of the officers when answering the questions later in the interview. The inducements were still operative during the second VRI. 623.Given that the interviewing officers denied the allegations made by D15 the issue to be resolved was one of credibility. 624.The police witnesses DPC2012 and DPC30 who were implicated in improper behavior gave evidence which was credible and that I found to be reliable. I accepted their evidence when they denied the existence of inducement and prompting. The defendant’s evidence was not credible the VRIs show the defendant to be involved in a free flowing dialogue of an apparently voluntary nature. It certainly did not support the case that the defendant was prompted or informed of his required answers. 625.The defendant’s answers show him to be saying he receives no pecuniary benefit and had no knowledge of the operation of the account and returned the balance to D13. It is not rational to consider those answers were prompted by police. I rejected D15’s evidence of how the VRIs were conducted in its entirety. I was satisfied that the VRIs were given voluntarily and admitted them into evidence. I was prepared to attach full weight to the admissions made by D15. 626.The admitted evidence shows the use to which the 2 accounts were put. Clearly the monies bore no relation to D15’s income and resources. It is also proved that D3 operated the accounts as ghost accounts from his office to receive cash from his unlawful businesses. The accounts themselves show all the indicia of accounts uses to dispose of the proceeds of indictable offences. 627.D15 provided an explanation in court when he gave evidence. He contradicted his explanation in the VRI and said that he had been introduced to a mainlander by his ex-girlfriend. The man was name Fai Chai and he requested to use the 2 accounts for his milk powder business. D15 agreed. Eventually he lost touch with Fei Chai and cancelled the 2 accounts. 628.The veracity of this explanation relied entirely on the defendant. It was simply a cover story and an obvious fabrication. The milk powder business and a mainlander been chosen to embellish the story because they provided an explanation for why that person would want a Hong Kong bank account and only sums of cash would predominate the deposits. It is obviously a manufactured and untruthful explanation without any supporting evidence. I reject it entirely. 629.I am left with the prosecution evidence which the outline shows D15 supplying the accounts to D13 who must then supply them onwards to D3. D15 admits the supply to D13 for money transfers. He says this was a loan for D13 business purposes done following the introduction by his ex-girlfriend. He received no benefit. D15 is giving a partially exculpatory explanation. However, it is not an explanation that is credible. He stated he lent the card to D13 2 or 3 times a week. In 3, 4, and 8 February 2013 D3 used the ATM card 3 times. It would appear that the card was alienated from D15’s possession. Furthermore the record of deposits and receipt show frequent use of the account. 630.I conclude that the account was in fact handed over to D13 I would from this infer that this must have been for reward. It was then used by D3. 631.When the defendant entered this agreement and in such circumstances the defendant would at minimum have reasonable grounds where he would know or ought to have known that the accounts were to be used to deal in the proceeds of an indictable offence. The offence is proved to a criminal standard and the defendant is convicted.
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P312] of CHENG Ka-chun [P258]Further hearings and rulings under DCCC 991/2016