HKSAR v. Sum Ho Wah Howard

DCCC 991, 1007-1010/2016 (Consolidated)

[2019] HKDC 1193

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 991, 1007, 1008, 1009 & 1010 OF 2016

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Reasons for Sentence

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1.The defendant, Mr Howard Sum, has been convicted on this indictment in respect of the first two conspiracy charges and then a number of charges involving conspiracy to money launder and money laundering substantive offences, and those constitute charges 15 through to I think 25 on this indictment.

2.Mr Sum is currently aged 42 according to the information I have.  He was educated up to Form 3 in Hong Kong.  He was arrested in 2013 in respect of this case.  He is married, lives in Mong Kok and I understand from his wife that they have two children.  The younger son apparently has a heart defect and both sons are said to be at times in ill health.

3.As far as the defendant’s background is concerned, he has a number of employments in the past.  As far as his criminal convictions is concerned, there is a previous conviction in 2018 for money laundering.  From the information I have, that was part and parcel of the facts of this indictment.  It was prosecuted separately in the Magistrates’ Court.

4.The defendant, Mr Sum, was sentenced to a total of 7 months’ imprisonment in respect of that.  It is submitted, and I believe correctly submitted, that that should be taken into account when determining the overall level of sentence both in relation to individual cases and the overall total sentence of the defendant and he should be credited in respect of these charges in respect of the amount of time already served in custody for those charges.

5.It is also argued the defendant should receive a further discount as acknowledgement of the length of time that the charges have been hanging over him from the initiation of investigation.  I will deal with that later.

6.Turning to the charges, I do not propose again to rehearse the facts of the case that are set out in the reasons for verdict but there are three areas of criminality the defendant is involved in.  Firstly is the money lending conspiracy in which he is charged with the 1st and 2nd defendants and that concerns the money lending that was undertaken by the companies operating out of the rooms at Prosper Commercial Building in Mong Kok; secondly there is the conspiracy to live on the earnings of prostitution which concerned the operation of the 141 website; and finally the charges that arise out of the defendant’s dealing with property known or believed to represent the proceeds of those conspiracies - none of those constitute charges where the defendant is charged alone - and finally charged in respect of conspiracies where he deals with other persons, where accounts have been lent or used by him.

7.Turning to the approach to sentence, I will deal firstly with what I call the money lending conspiracy which is the 1st charge. I have been referred to a number of cases - they are of some age now - there is HKSAR v Wan Chi Wai, that is Court of Appeal case 105 of 1999, HKSAR v Wong Kok Choi which is 636 of 1998, Appeal Cases.

8.Of course the offence can be committed in many ways so there is no actual tariff for the offence.  The courts have enumerated a number of factors that are of consideration: does it form part of what is described as an organised business; what is the extent of the business, which would include the length of time it is in operation; the rate of interest that is charged; is there a triad element, what we would call organised crime nowadays; and of course of importance in a case such as this, are there threats or intimidation used to enforce the loans?

9.Naturally this business must have been organised and was organised.  It was quite long-lived.  The highest identifiable rate I believe is 200 per cent.  There is no identification of any triad or organised crime element in this case, nor am I aware of any threats that were issued as part of the collection exercise.  Apart from the way it was organised, it appears to have operated like a normal business.  The two-company device was clearly designed to increase the profitability and remuneration of the operation by a disguise method, thereby enhancing the competitiveness of the operation.  That may have enabled it to operate a wider variety of loans than if they had remained within the law.  I do also take into account, as submitted in mitigation, there were in fact repeat customers of this business.  Weighed against this is its longevity and the defendant’s involvement.

10.The second of the conspiracies involving conspiracy to live on earnings of prostitution.  I have been referred in this to the case of Chan Yuk Bun, CACC 187/2008 which deals with what are called advertising platform cases, which is what this case is about, and the court in that case said that this offence can be a serious offence.  But in these kind of cases, which are the cases where money is received for advertising purposes, the most serious factor that is the intimidation or threat to the prostitutes is not present.  This is a website that, amongst other things, provided advertising for prostitutes.  Part of the approach of the Court of Appeal may well be articulated on the basis that the activity in fact advertised is not an offence in Hong Kong.  The receipt of payment from the prostitutes commits the offence; the receipt of the payment from the prostitutes initiates the existence of the offence.

11.In Chan Yuk Bun, the Court of Appeal in fact quite forcefully argued for sentences that did not include immediate imprisonment for this offence where it is committed in this way.  In this case, again the operation was extensive.  The monies received were large.  I do consider that in respect of this particular conspiracy, sentences of imprisonment are appropriate.

12.I will deal with the approach to what I call the money laundering offences and there are both substantive offences and conspiracy offences, both based on these two predicative conspiracies.  Being referred to the case described as Boma which is a Court of Appeal case that dealt with the appropriate factors to be considered.  These are the natures of the predicate offence, the value of the property laundered, whether the defendant knows of the predicate offence and whether there is any international dimension, which does not seem to be relevant here, the sophistication of the offence and whether the offence is part of a syndicate, the length of time the money laundering activities take place over and the defendant’s role within the money laundering activities.

13.The case makes clear that there are graduations of culpability.  Here, the defendant is very actively involved in the distribution and laundering of the monies from the two predicate conspiracies, actively involved in all the offences.

14.Another matter of significance I must consider is the nature of the predicate offences and their mode of commission, which has been pointed out, I think, in both of the two conspiracies, the predicate conspiracies; they form less serious forms of the offence and do not contain some of the more normal aggravating factors.  They cannot, it is said, be equated with offences such as drug trafficking, fraud or bribery, or even perhaps bookmaking, gambling.

15.The courts have considered the approach in a number of cases besides Boma, most recently in the case of HKSAR v Lam Hing Wan [2018] HKCA 686.  The court finally concludes as follows: there are no sentencing guidelines for the offence of money laundering because of the wide variety of circumstances in which offences are committed and the different roles of those convicted of such offences.  I mean it is not realistically possible or desirable to lay down such guidelines.  The court did make reference to a previous case which dealt with the amounts of money involved in a large number of previous money laundering cases and that is HKSAR v Hsu Yu Yi [2010] 5 HKLRD 545, and referring to that case the Court of Appeal observed that that case suggests over 5 years’ imprisonment for amounts over $10 million.  But again, that is not a sentencing guideline for other courts.

16.As far as the final argument that I have had to deal with, the question of delay, of course these cases, with the number of defendants and the numbers of counts that are being charged, these cases take a long time to prepare and prosecute, and the expression the Americans use is simply it is baked into the cake.  Here there is of course a delay from the initiation of proceedings to the final outcome.  The prosecution points out quite rightly they have moved as quickly as they believe they could. Considerable time has been spent waiting for Final Court of Appeal judgments in respect of money laundering cases.  With the benefit of hindsight, it is clear that the trial was also substantially underestimated in terms of its length. This leads to adjournments which are difficult to accommodate due to diary issues of both the court and the parties in the case.  The case was actually prosecuted with economy by the prosecution and also by the defence, the defence was conducted in an economical way, large amounts of evidence were agreed.  I cannot place any fault on either of the parties before me in respect of this matter.  The period is considerable and has placed onerous burdens on all.

17.The defendants have had to wait a long time and have had the matter hanging over them for a considerable period, and I believe that this should be reflected to some extent and they should receive some benefit for the delay in the application of justice and finality of justice to them.  I do in fact tend to reduce the overall sentence by 2 months to reflect that fact and the defendant of course is also entitled to a further 7 months for his, so it will be a total of 9 months’ deduction from the overall total of this defendant’s sentence.

18.Now turning to what the sentence should be.  The normal approach is to indicate a sentence for each charge the defendant faces and then to adjust that to reflect the correct overall total sentence that the defendant should serve.  Of course where a defendant faces a number of charges as large as this, that is somewhat an artificial exercise.  The court really has to articulate, having regard to all the factors I have already said, what the overall total for all this should be and then, once that total is reached, reduce the total by the mitigating factors already set out, which are in this case the deduction for delay and the deduction for previous sentencing.

19.I in this case will take into account the nature of the predicate offences - I think it is important here - and the amount of monies involved.

20.When turning to the amount of monies involved of course, there are other considerations there.  In the money lending offences the defendant’s company did not indicate any profits made in the period.  His personal accounts do show sums of money, however.  The accounts of the 3rd defendant show a profit of some $3 million during the period.  There is a large amount of money that flows through the accounts of the 3rd defendant but that is again money that could be seen as being the overall turnover of the company rather than profit, it is gross receipts.

21.Finally, we can also look at the accounts that were used, the amount of money that flowed through those accounts.  Again, the overall total is only going to show you the turnover rather than the actual money, profit received.  I have considered that in terms of the overall total that I am going to take as what we will say is the cut-off point for this series offences is one of 60 months’ imprisonment.  After deduction for the defendant’s mitigating factors, that would lead to an overall sentence of 51 months’ imprisonment.

22.I propose to achieve that by imposing the following sentences for the offences:-

23.On Charge 1, a conspiracy to lend money at an excessive interest rate, given the defendant’s involvement in this, I am going to take a starting point of 30 months’ imprisonment.  I will reduce that by 2 months to 28 months’ imprisonment for the delay.

24.In respect of the 2nd charge, which is the conspiracy to live on earnings of prostitution, I will take the starting point of 9 months’ imprisonment and reduce that to 7 months’ imprisonment for the delay.

25.In respect of Charges 15 through to 25 - I believe those are the relevant charges - I will impose, as these involve dealing with property known or believed to represent the proceeds of indictable offences, I will deduct the full 9 months from the starting points.  I shall give the figures after deduction and the starting points for each of them will be 9 months more.  These are largely based on the amounts of money flowing through the accounts.

26.On Charge 15, 45 months’ imprisonment; Charge 16, 48 months’ imprisonment; Charge 17, 45 months’ imprisonment; Charge 18, 33 months’ imprisonment; Charge 19, 45 months’ imprisonment; Charge 20, 45 months’ imprisonment; Charge 21, 48 months’ imprisonment; Charge 22, 27 months’ imprisonment; Charge 23, 21 months’ imprisonment; Charge 24, 24 months’ imprisonment; and Charge 25, 24 months’ imprisonment. As far as achieving the overall total, I am going to order that all the offences from 15 through to 25 be served concurrently. I am going to order as follows: Charges 1 and 2, that 3 months of those sentences be served consecutively to 15 to 25, giving a total overall sentence of 51 months’ imprisonment.