HKSAR v. Lam Kit Wai and Others

DCCC 873/2018 & 757/2019

(Consolidated)

[2021] HKDC 641

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NOS 873 OF 2018 AND 757 OF 2019 (CONS)

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Reasons for Sentence

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1.I am now required to sentence the 1st, 2nd, 4th and 6th through to 10th defendants. All defendants save the 4th defendant were convicted after trial of various offences of dealing or conspiring to deal with the proceeds of indictable offences.

2.Briefly stated, they allowed their bank or Hong Kong Jockey Club accounts to be used for the purposes of directing vast sums of money into betting operations in Jockey Club races in Hong Kong.  In total, some HK$2.4 billion flowed through the various defendants’ bank accounts and Jockey Club accounts.  All the defendants have been convicted on the basis that they had reasonable grounds to believe that the sums entering into their accounts were the proceeds of an indictable offence.  The offences ranged over a period between 2009 and 2012.  The defendants did not face any charges until 2018. 

3.I note at this stage the trial was completed well within the estimated hearing time.  This was undoubtedly due to the economical approach by all parties which enabled the agreeing of vast amounts of evidence and closely focused the courts’ time onto issues in a clear and delineated manner.

4.However, due to the extreme length of time taken to actually bring this matter to a hearing, it is clear that individual defendants have aged and in some cases such as the 5th defendant, who is not here today, become subject to severe illnesses.  I will consider these factors when dealing with individual defendants’ cases.

5.A brief look at the relevant sentencing principles.  The case of HKSAR v Boma [2012] 2 HKLRD 33 sets out the general approach and principles relevant to sentence in money laundering cases.  Firstly, there are no set guidelines.  However, I do note in Secretary for Justice v Wan Kwok Keung [2012] 1 HKLRD 201, the court referred to a review of money laundering cases in HKSAR v Hsu Yu Yi - that is [2010] 5 HKLRD 545 - where in cases involving sums over $10 million, starting points of 5 years were adopted.  This can also be contrasted with another case, Secretary for Justice v Lau Man Ying [2014] 4 HKLRD 435, where the Court of Appeal said for laundering $530 million that a starting point should not be less than 5 years’ imprisonment.  So there is a very, very broad range from the Court of Appeal in respect of the question of the nature of the amount of money involved in these money laundering cases.

6.As far as the Boma case is concerned, principles elucidated were that the money laundered is a significant consideration.  It is not, however, the be all and end all of sentencing. There is a non-exhaustive list of other factors given, such as the nature of the predicate offence; the state of the offender’s knowledge; any international dimension, involvement of an organised crime syndicate; sophistication and planning; the number of transactions; the length of time over which the offences occurred; and the role of the offender; whether the activity occurred after the defendant became aware of the nature of the funds. 

7.Some general observations that I will make are that, given that the nature of the predicate offence has never been fully articulated, save for the inference that illegal bookmaking is involved, it must be therefore the case that none of the defendants could have dealt with the money with the knowledge of the predicate offence.

8.Similarly, there is no evidence of the involvement of an organised crime syndicate. 

9.There is no great deal of sophistication in the defendants’ activities.  They largely used existing bank accounts and Jockey Club accounts and the money transactions were all clearly defined and evidenced.

10.The monies appeared to have originated, from evidence, inside the People’s Republic of China.  This means there is what I think one could describe an element of cross-border transaction.  However, this is by definition cannot be an international transaction or crime, given there is only one nation involved.

11.The roles of the defendants are similar.  The 1st defendant, the 2nd defendant, the 8th and 9th defendant, all were either salaried or working for relatives such as the father or the elder brother.  The 7th defendant on his evidence or evidence put forward by him made some profit of the foreign exchange aspect of the transfers and, as far as the 4th, the 5th defendant and the 6th defendant were concerned, they provided their Hong Kong Jockey Club accounts for a small reward.

The investigation

12.As far as the factors common to all the defendants, the one clear factor save the 10th defendant is one of delay.  The investigation by the police commenced some time in 2010.  Defendants in Hong Kong were arrested in 2012 and charged in 2018.  The investigative aspect of this case took at least six years.  Obviously, this is a complex financial scenario involving a large number of bank accounts, Hong Kong Jockey Club accounts, and money transfers.  The documentation is extraordinarily vast and at first sight chaotic.

13.In HKSAR v Chan Yuk Kwan, CACC 26/2001, a delay of 2.5 years was described as exceptional.  The court observed that significant delay may well go to a reduction in sentence, and in HKSAR v Chu On Chi [2007] HKCLRT 463, the Court of Appeal said the court must take delay into account where the defendant is rehabilitated, has resumed work, and repaid the debts.

14.Delays have led to deductions of starting points in individual cases of up to 50 per cent.  The delay in this case was never effectively explained.  It is egregious.  Its facts are different for each defendant.  However, I consider it should lead to a minimum reduction for each defendant of at least 10 months from the starting point for sentence.

15.There is also in this case involvement in the offence by certain of the defendants at the behest of a close relative or partner.  This involves the 1st defendant, who is the son of the man who appears to have co-ordinated most of this; the 2nd defendant, working for his brother; the 8th defendant working for the 7th defendant; the 9th defendant working for her relatives.

16.In HKSAR v Chan Wai Yan [2012] 4 HKLRD 195, an additional discount had been given where a person is used by a close relative or partner to commit the offence.  See also HKSAR v Chiu Kit, CACC 210/2009.

17.Finally, all defendants will be entitled to a further discount, having regard to the economical manner in which the case was presented to the court.  The materials produced by the prosecution were, as I have already said, vast and somewhat chaotic.  The trial was considerably short as a result of agreements and the way in which the defence cases were conducted.

18.I must now turn to my individual approach to sentencing of the defendants.

19.On the initial approach to the amounts involved in this case, they are of course very large, which would, on the face of it, attract a sentence which would be in excess of the jurisdiction of this court. However, clearly, a decision was made to place it into this court for sentencing and I must have regard at least to the maximum jurisdiction of this court. 

20.It is true, of course, that cases with larger amounts of money have been heard in this court.  Nevertheless, it would appear that the sums are so large in virtually all the defendants’ cases that a minimum starting point of 5 years must be taken.  However, I do not consider, having regard to the fact of the defendants’ involvements, that it would be appropriate for me to approach this by taking the maximum jurisdictional limit as my starting point for sentence, in any case.

21.I now turn to the 1st defendant.  The 1st defendant is a person of hitherto clear character.  He is 48 years old, married with a 15-year-old son.  He is being convicted in all of six charges:  the 1st through to 5 and 25, the charges’ amounts varying between 29 million and 329 million-odd, the total monies passing through accounts being some $598,790,972.76. Also in Charge 25 with the 9th defendant, a charge involving $89,523,441-odd.  This would suggest a starting point close to the jurisdictional limit.

22.The salient fact of the 1st defendant’s mitigation is he was convicted on the basis of having reasonable grounds to believe that he was no more than a cog in his father’s money laundering scheme and that the delay of this case is no fault of the defendant’s.  There seems to be no argument taken with those propositions put forward by the defence. 

23.As to the personal factors, the defendant’s mother is 75, suffers from various illnesses pursuant to old age.  She needs the 1st defendant’s assistance.  The evidence showed that the 1st defendant’s traditional family background required obedience and compliance to parental authority.  There was evidence that the 1st defendant had a simple-minded and somewhat childish character.

24.I have borne in mind these factors.  I will articulate an overall figure that must be arrived at after sentencing, then pass individual sentence related to the individual charges.

25.I consider that an overall starting point, having regard to the factors put forward, the nature of the defendants’ involvement, and the time involved and the money involved should be 72 months’ imprisonment.  From this, I will deduct a full 12 months’ imprisonment to reflect the delay involved and the defendants’ clear record and the way in which the case was conducted.  This would lead to a final sentence of 60 months’ imprisonment.  I shall achieve that simply by passing that sentence on all the charges the defendant faces and all of them to be served concurrently to a total of 60 months’ imprisonment.

26.The 2nd defendant is in somewhat of a similar position to the 1st defendant, in that vast sums of money were involved in his accounts.  He has mitigating factors.  He is aged 42.  He is married, has children.  No similar convictions, and one conviction of some antiquity but I shall treat him for the purposes of sentencing as a person of clear record.  He is subject to the undue delay of all the other defendants.  His role is one of effectively a family employee and there is no solid evidence of financial gain to him. 

27.And so he faces charges from 6th to 13th and 27th and 28th with sums involved in his accounts ranging from 5 million on the 11th charge up to 131 million on the 8th charge.  All of them involve substantial sums of money:  98 million on the 6th charge and 121 million on the 7th charge.

28.In respect of this defendant, I shall take the same approach.  I shall take a starting point for sentence, an overall

starting point, 72 months, reduce that for the same factors down to 60 months’ imprisonment. I will impose that sentence on all charges save the 11th charge, where only $5 million was involved, where I will impose a sentence of 48 months’ imprisonment. All sentences will be served concurrently to a total of 60 months.

29.The 4th defendant faces three offences.  He is not a man of clear record but again his offences are historic, dating back to 1990 and were minor offences for which he was fined.  Again, he should be treated as a person of clear record.

30.As far as the three charges that he is involved in, they involve sums in the region of 15th charge, 32 million; 16th charge, 20 million; and the 17th charge, 11 million.  A total of HK$63 million over 1.2 years went through his account.

31.He was not a mastermind.  He was simply providing a home or what has been described in this case as a conduit for the money.  He is aged 65.  He has had a hardworking life.  He had been a small businessman with three adult children.  He is suffering from the diseases consequent upon his age.  From the starting point, he will be required to be given a one-third discount for his plea of guilty.

32.Again, I take an overall starting point of 60 months’ imprisonment, reduce that by 12 months for the factors of delay and the approach to the case, leading to a starting point of 48 months.  I will reduce that to 32 months, having regard to the defendant’s pleas of guilty.  On the 15th, 16th and 17th charges, the defendant will be sentenced to 32 months’ imprisonment.

33.The 5th defendant will be dealt with later.

34.The 6th defendant, a man of clear record, convicted after trial of a single charge of conspiracy to deal with property known or believed to represent proceeds of an

indictable offence. Total amount involving about 48,100,000. The defendant is aged 62 and of clear record. He had been a person who worked hard throughout his life, working in grocery shops and medicine shops and the like. He has lived with his wife in the New Territories but I understand from his mitigation that is no longer namely the position.

35.The 6th defendant, as I said, would have been a minor player.  It appears that his role simply is to have provided his account for a small reward.  The 6th defendant, in the course of the investigation, was co-operative and has agreed with the prosecution case against him.

36.For him, I am going to take a reduced starting point of 57 months’ imprisonment and reduce it by 12 months, which leads to a final sentence of 45 months’ imprisonment for the 6th defendant.

37.The 7th defendant has been convicted on three charges involving Charge 20 (78 million), Charge 21 (44 million), Charge 22 related to his Hong Kong Jockey Club account.  The 7th defendant is 71 years old.  He came to Hong Kong in 1974, has worked here ever since, has a clear record.  He was involved with the 1st defendant’s father indirectly in the Hong Kong Jockey Club funding. 

38.He of course has been affected by the delay and is a person of clear record and has conducted his case with economy and care. The 7th defendant would of course be entitled to a discount for this.  As far as the profit that would have been derived from this activity, it would appear from the evidence to have involved the use of the foreign exchange commissions rather than any other form of financing.

39.For him, I will simply take a starting point again at 60 months’ imprisonment, reduce that by 12 months to 48 months’ imprisonment, on each charge, to be served concurrently.  Total of 48 months’ imprisonment.

40.For the 8th defendant, she has been convicted on Charges 23 and 24, both charges involving over 66 million.  She has a clear record.  She operated as an employee of the 7th defendant, working at his direction for a salary, so she is also convicted on the basis of having reasonable grounds to believe.  She is younger, age 34 from the People’s Republic of China.  She is the sole support for her elderly father.  She is a person again down the chain with little evidence of benefit to herself.

41.As far as she is concerned, I will take a starting point in respect of her charges at 57 months, reduce that by 12 months for the factors already elucidated, leading to final sentences of 45 months’ imprisonment on each charge, to be served concurrently.

42.The 9th defendant has a somewhat more difficult sentence exercise.  She again is involved in the offence by way of the family, involving herself in what was then a former family business.  She is currently aged 65, born in Mainland China, of course a clear record, only educated to high school level, and effectively, aside from working for her relatives, she was a housewife.  She has been living with her husband.  She has those illnesses one would associate with her age.  In particular, she appears to have suffered from severe depression as a result of these proceedings.

43.However, when one approaches her involvement, one can see on Charge 25 that she was involved in laundering a total of $89 million and on Charge 26 the sum of $896 million, almost a billion dollars on Charge 26, so that is a vast sum of money and her sentencing must of course, to a certain extent, reflect that although her involvement is as a family member and she clearly would not have brought any great organisational skills or

abilities to this money laundering exercise. She could be described, as the 1st defendant could be described, as a cog in the machine simply doing what she was told.

44.I have decided for the 9th defendant to take an overall starting point for sentence at 66 months’ imprisonment and reduce that by 12 months’ imprisonment for the factors I have already elucidated.  That would lead to a sentence of 54 months’ imprisonment on each of the charges she faces, to be served concurrently.

45.I turn now to the 10th defendant.  He faces two charges:  Charge 27 involving some HK$54 million and Charge 28 involving some HK$28 million-odd.  He is jointly charged for these charges with his brother. 

46.Mitigating factors are he is a Mainland resident involved substantially in Chiu Chow groups, an active member of many Chiu Chow groups and a leading mover in some of their organisations.  He is a businessman.  He is a married man with a child of 12 years; now aged 46.  He has a clear record in Hong Kong.  He of course only came into the trial at a late stage but he is entitled to a discount for the conduct of the trial.

47.As far as the 10th defendant is concerned, given the amount of money involved in his accounts, I shall take a starting point again at 60 months’ imprisonment for him and reduce that by 3 months for the factors relating to his conduct of the case and his clear record, leading to a final sentence of 57 months’ imprisonment on each charge, to be served concurrently.

48.Those are the sentences.