HKSAR v. Iftikhar Umer

DCCC 83/2018

[2020] HKDC 1128

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 83 OF 2018

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REASONS FOR VERDICT

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1.The defendant faces a single count of dealing with property known or believed to represent the proceeds of an indicatable offence.

2.The charge concerns monies in a HSBC Account dealt with between 7 January 2011 to 24 June 2011 (The Coins account).

Summary of the prosecution case and evidence

3.The Coins account was a multi-currency bank account with 5 sub accounts, namely:-

USD savings

HKD savings

HKD current

GBP savings

CHF savings

4.The Coins account was opened by the defendant on 8 December 2010. The defendant was the sole signatory.  The account was closed by HSBC on 24 June 2011.

5.In total sum HKD62 million passed through the account.

6.During the period 1 April 2010 to 31 March 2012.  IRD tax records showed the defendant was employed as a manager at Holy Star earning around HKD120,000 per year.  For the relevant tax years the defendant paid HKD300 and HKD275 respectively.

7.Coins purported to be an unlimited trading business trading as sole proprietary company.  Trading in mobile phones and MP4’s.  No tax return was filed for Coins during the relevant period.  Gross income turnover and assessable profit for the company during the relevant period were nil.

8.It was not disputed that the proceeds of a mortgage fraud in the UK were paid into the Coins account.

9.This occurred as follows:-

-  In February 2010 a fraudster impersonated a Mr Matthew Weighill. He entered into negotiations to purchase a property in New Castle in the United Kingdom. The purchase was to be funded by obtaining a mortgage from Santander Bank in the sum of GBP495,215.

-  Eventually GBP463,297.20 was transferred to the account of ACS Associates (a bogus firm).

-  The proceeds were remitted by ACS to two bank accounts in Hong Kong. One was Sonic dragon (Sonic), the other was to Coins International (Coins).

10.Agreed Evidence showed that totally GBP168,991 was received into the Coins account on 29 April 2011.  On the same day, it was converted into USD280,122.

11.From the USD280,122 the defendant made the following withdrawals and transfers:-

	USD
(1)  Sun Huang Electronics Ltd	200,000
(2)  Mass Business Link	64,000
(3)  Sonic Dragon International	16,000

12.The transfer to San Huang Electronics was effected by two bank counter withdrawals which could only be done by the defendant.  Furthermore 16,000 was returned to Sonic Dragon which had received the balance of the mortgage fraud funds.

13.During the investigation the transaction patterns of the Coins account were subject to analysis.  Evidence was heard from the Treasury Accountant.

14.It was observed that the account was a conduit in that money came into and then left the account.

15.A total of HKD62.7 million passed through the Coins bank account with average monthly deposits of 9,296,142 by way of a total of 114 deposits and 189 withdrawals on the same day or shortly after the deposits were made.

16.95.71% of the deposits and withdrawals occurred in the USD savings account, most transactions occurred through internet banking amounting to HKD50.74 million in deposits and HKD43.52 million in withdrawals.  The defendant appeared to sign all bank vouchers relating to transfers or withdrawals made at the counter.

17.When police raided the registered address of Coins at Mirador Mansions there was no evidence obtained to show that any business was conducted from that premises.

Summary of defence case and evidence

18.The defence case was advanced by the defendant in evidence.

19.The defendant is a person of clear record.  He was from Pakistan and came to Hong Kong in 2008.

20.In Hong Kong he was befriended by Faisel Fareedi, a family friend from Pakistan.  The defendant was employed by Fareedi to work selling mobile phones from a business in Chung King Mansions.

21.In 2016, he was introduced to work for Imran in a company called Holy Star also selling mobile phones.

22.Around that time Fareedi suggested he should start their own company called Coins International.  A company called Coins was opened by the defendant with a bank account in Coins name.

23.The defendant said the business registration was not in his handwriting.

24.That he opened the bank account for Coins with a man called Abdul.

25.That the contact number for the account was Fareedi’s as was the E-mail.

26.Fareedi retained the device for E-banking.  The defendant was aware of some transactions in the account that related to mobile phones.  That Fareedi handled the other transactions and the defendant had no reason to believe that any of the other transactions related to the proceeds of crime.

27.The defendant was aware of the deposit of GBP168,900 that was the proceeds of the UK mortgage fraud.

28.He said he was told that it related to Fareedi’s business in other countries.  He was not aware of the fraud and did not convert the monies in USD or make the subsequent transactions which distributed the monies.

29.He said that his signature did appear on the counter transfers.  But he did not fill out the details.  He would leave signed vouchers in the office. This was because the defendant said he went to China daily and Fareedi asked him to sign vouchers so that the banking operations could be done in the defendant’s absence.

30.The internet transfers were not done by the defendant including the transfers to Mass and Sonic.

31.The defendant called a witness Mr Imran he was the managing director of Holy Star.  He said the defendant worked in his company after introduction by Mr Fareedi.

32.He said the defendant and Fareedi were very close like father and son.

33.That Fareedi had started companies and the defendant had followed him.

The legal requirements

34.The defendant faces a single count of dealing with the proceeds of an indictable offence.

35.The prosecution must establish its case beyond reasonable doubt.

36.In this case the defendant did not dispute that by opening the account and allowing monies to be deposited and transferred out of the account that he could be said to have dealt with those monies.

37.In addition to dealing with the property the defendant must also be shown to have known or have reasonable grounds to believe that the monies dealt with were the proceeds of an indictable offence.  Where the prosecution rely on the defendant having reasonable grounds to believe.

38.The test to be adopted being that the defendant had grounds for believing and there is the additional requirement that the grounds must be reasonable that is that anyone looking at those grounds objectively would so believe.  Thus in this case can the irresistible inference be drawn that the defendant had reasonable grounds to believe that all or part of the monies in the Coins account had a criminal origin.

39.In this case the defendant gave evidence he is of clear record it is therefore necessary to consider the defendant’s clear record when considering the credibility of his evidence and the likely hood that he would commit an offence of this nature.  Where an inference is to be drawn it must be an irresistible inference and must be proved beyond reasonable doubt.

Issues and their resolution

40.The defendant’s case was that he was basically ignorant as to the way that Fareedi operated the Coins bank account.

41.On the defendant’s version Fareedi was a highly trusted family friend a successful businessman.  He would have no reason to question how Fareedi operated the account.

42.That the defendant despite being the account holder and despite his signature being on the counter transactions had permitted Fareedi to operate the on-line E-transactions on the bank account.

43.By his defence the defendant did not dispute that he dealt with monies in the account.  He maintained that he had no grounds to believe that the monies were the proceeds of criminal offences and that the grounds he believed were reasonable.

44.However, I had to assess the reliability and credibility of the defendant’s evidence in the light of all the evidence, including his clear record.

45.The Coins account was opened by the defendant.

46.The defendant’s signature appears on some counter transfer forms. Signed transfer slips were found in the office of the company.  In fact the evidence showed that the defendant was in Hong Kong when the signed counter transfer documents were submitted, in contradiction to his evidence in court where he said he travelled to China.

47.From the defendant’s evidence it also appears the defendant did not contribute to the costs of setting up Coins International.

48.That he signed the tax forms for Coins that in the IRD documents he acknowledged that Coins had no business.

49.That a signature Umer appeared on 28 transfer documents of the Coins account to other accounts.  In evidence the defendant alleged these were forgeries.

50.I found that the defendant’s explanation as to his lack of involvement in the Coins account to be unbelievable and an outright fabrication.

51.Clearly the defendant set up both Coins International and its banking operation and was available to sign necessary banking and taxation documents for the company.  It may be that Fareedi was the operating intelligence of the company, however the defendant was available to assist in the administrative fiction of Coins International being an operating trading company.

52.Clearly Coins was a facade to provide a conduit for monies to be placed in and withdrawn from its accounts.  There is simply no evidence of Coins actually carrying out any trading business during the relevant period.

53.In conclusion I rejected the defendant’s evidence in its entirety.

54.I was therefore left with the unchallenged elements of the prosecution case and the inferences that could be drawn from that.  Namely that the defendant set up a company together with a bank account.  The company did no trading or business during the operative period.  During the operative period the defendant was employed on a low wage.

55.The defendant was definitely involved in a number of counter banking transactions with the Coins account during the operation period.

56.The accounts of the company dealt with large sums of money entirely unrelated to the non-existent business of the company.  Including the proceeds of a fraudulent transaction in the United Kingdom.  The Coins account exhibited a classic pattern of a money laundering account of large deposits of money placed and dissipated in a short period of time after their initial deposit with no apparent legitimate business transactions to support them.  In summary the defendant clearly dealt with the proceeds of an indictable offence as particularized in the charge.

57.In respect of his knowledge and belief, he must at minimum have had reasonable grounds to believe that those monies were the proceeds of an indictable offence and on that basis I convict him on the charge.

58.Furthermore on 14 January 2020 the defendant was absent from the continuation of the trial.  This was after he had given evidence and called a witness.

59.On the adjourned date of 29 January 2020 the defendant was still absent.  A warrant of arrest issued on 14 January 2020 could not be executed. No contact could be made with the defendant.

60.It was clear that the defendant had decided to voluntarily absent himself from the continuation of the trial.  In those circumstances I decided to proceed in his absence.