HKSAR v. Lung Hon Lam and Another

DCCC 452/2023

[2024] HKDC 2053

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 452 OF 2023

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REASONS FOR SENTENCE

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1.D1 and D2 stand convicted after trial of one charge of conspiracy to deal with property knowing or having reasonable grounds to believe the property represented the proceeds of an indictable offence (Charge 1).

2.The period of the offence is between 1 November 2016 and 13 January 2017 involving dealing with HK$6,376,964.78.

3.D2 also stands convicted after trial of one charge of dealing with property known or believed to represent proceeds of an indictable offence (Charge 3).

4.The period of the offence is between 29 December 2016 and 22 June 2017 involving dealing with HK$12,097,771.87.

5.Full particulars of the offences are set out in my reasons for verdict delivered on 1 November 2024.

Mitigation

D1

6.D1 was born in Hong Kong and he is 33 years old now. He is married with two young children (a son aged 10 and a daughter aged 7). He has a clear criminal record.

7.In mitigation, Mr Chan submitted that in HKSAR v Hsu Yu Yi [2010] 5 HKLRD 545, the court set out a non-exhaustive list of factors which are to be taken into account when determining sentence, and that applying the factors, he submitted the following mitigation for the court to consider:

(i)  the amount of money involved in Charge 1 (HK$ 6,376,964.78)  is much lower than the amount involved in HKSAR v Xu Xia Li [2004] 4 HKC 16 and HKSAR v Lee Ka Ki [2007] HKCA 703;

(ii)  D1’s level of participation is lower than the defendants in the case of Xu Xia Li and Lee Ka Ki for he did not make any cash deposit or any bank transfers or withdrawal (except for one bank transfer in the BOC account to another person upon the termination of the BOC account);

(iii)  no relevant indictable offence could be established in the present case; and

(iv)  the offence did not last for a long period of time, ie slightly more than one year.

8.Mr Chan also submitted the following factors for the court to consider:

(a)  this is a case with no victim;

(b)  D1 had not received any benefit from the practice of money laundering; and

(c)  there is no evidence to suggest that the money laundering scheme is one of sophistication and carefully planned out.

9.Mr Chan therefore submitted that a starting point of imprisonment of no higher than 3 years.

10.Mr Chan further submitted that D1 elected not to give evidence, he did not call any witnesses, nor have any prosecution witnesses cross-examined in trial. D1 had saved the court’s time.

11.Mr Chan asked the court to give a discount of 3 months to D1 for his clear record and saving the court’s time.

D2

12.D2 is 55 years old and has a clear criminal record. In mitigation, Mr Khosa submitted that the clear record has more relevance in the case of D2 because she was gainfully employed and lived a law-abiding life until this conviction for a very long period of time.

13.Mr Khosa stated that D2 has not been convicted of “knowingly dealing” but the lesser offence of “having reasonable belief”, and that she is a first offender who did not play any major role.

14.Mr Khosa submitted that in the case of HKSAR v Boma Amaso (CACC 335/2010), at paragraphs 24-25 Stock VP (as he then was), stated “due to the variety of circumstances money laundering offences are committed and such the widely different roles played by those convicted of these offences, that it is one of those categories of offence in which it is neither realistically possible nor desirable to attempt guidelines.” As such there are no sentencing guidelines for money laundering cases. Each case depends on its own facts and circumstances.

15.Mr Khosa stated that in the present case there is no predicate offence, therefore it is difficult to pinpoint any international element or aggravating features. Most of the factors mentioned in the case of Boma do not apply to the present case.

16.Mr Khosa stressed that it can be seen from the evidence that D2 was not the mastermind nor did she hold any key positions, and it appeared that D2 was used by Michael, Tai B and others. There is also no evidence that she was rewarded with any significant amount of money.

17.Mr Khosa also submitted that there is no reason to believe that she will re-offend, and that the offences took place in 2016-2017 but she was only arrested on 10 March 2021, some 5 years later, and she is being sentenced in 2024 which is almost 8 years after the gold trading business was closed in June 2017. This long delay should also be included in the consideration of sentence as a mitigating factor.

Sentencing considerations

18.Section 25(3)  of the Organized and Serious Crimes Ordinance, Cap 455 provides that the maximum sentence on conviction upon indictment for the offence of dealing with property known or believed to represent proceeds of an indictable offence is that of a fine of $5,000,000 and 14 years’ imprisonment.

19.Money laundering is a serious offence for which deterrent sentences are required.

20.In delivering the judgment of the Court of Appeal in HKSAR v Hsu Yu Yi, CACC 159/2009, [2010] 5 HKLRD 545, Cheung JA said:

“Sentencing Principles

9. There are no sentencing guidelines for the offence of dealing with the proceeds from an indictable offence because the facts vary from case to case. However the following factors are to be taken into account when determining sentence:

(1)  It is the amount of money involved that is a major consideration and not the amount of benefit received by a defendant in the transaction.

(2)  The culpability of the offence lies in the assistance, support and encouragement offered to the commission of an indictable offence. So a defendant’s level of participation and the number of occasions on which he is involved in the ‘money laundering’ activities are relevant factors to be considered.

(3)  The offence of dealing with the proceeds from an indictable offence does not necessarily have any direct correlation with the indictable offence in question. However if the relevant indictable offence can be identified, the court may take into account the sentence imposed on the indictable offence per se when determining the sentence of the dealing offence.

(4)  If the case has an international element involving activities carried out across different regions, the court may impose a more severe sentence. This is to protect Hong Kong’s reputation as an international finance and banking hub from being tarnished.

(5)  The length of time the offence lasted.”

21.In Secretary for Justice v Ngai Fung Sin Apple [2013] 5 HKLRD 104, the Court of Appeal held that in money laundering cases, the sentence passed was primarily to reflect the amount of the illicit money involved and not the benefit obtained by the defendant or others, and that neither the fact that the “illicit/black money” was actually not derived from an indictable offence nor the defendant’s ignorance of the actual source of the “illicit/black money” is necessarily a valid mitigating factor.”

22.In the case of HKSAR v Boma Amaso [2012] 2 HKLRD 33, it was stressed that deterrence is a paramount objective of the sentence and that the amount of money laundered is a significant feature. The sentencer should also take into account features such as the nature of the predicate offence; the state of the offender’s knowledge; whether there is an international dimension; the sophistication of the offence including the degree of planning; whether the offence was committed by or on behalf of an organised criminal syndicate; whether there was one transaction or many and the length of time over which the offence was committed; whether the offender continued to launder after discovering the nature of the funds; and the role of the offender and the acts performed by him.

23.In the present case, in convicting D1 and D2, I concluded that the gold trading business of UGTL and UG was a sham business, and that D1 and D2 were sham investors.

24.The role of D1 and D2 are not minor. The court had repeatedly stressed that the opening of bank accounts for someone else facilitates the laundering of money by disguising the true owner of the money passing through the bank accounts. This makes difficult the detection of crime and at the same time undermines the integrity of the banking system.

D1

25.I have carefully considered everything said on behalf of D1 by Mr Chan.

26.I take into account that D1 has a clear record, and taking into account the following :

(a)  the role of D1 conspired with D2 and other person in setting up UGTL and opening the BOC account and dealing with the money;

(b)  the total amount in and out of BOC account; and

(c)  the money was remitted from overseas thereby adding an international element to the charge, I am satisfied proper sentence after trial is 4 years’ imprisonment for charge 1.

D2

27.I have carefully considered everything said on behalf of D2 by Mr Khosa.

28.I take into account that D2 has a clear record, and taking into account the following :

(a)  the role of D2 conspired with D1 and other person in setting up UGTL and opening the BOC account and dealing with the money;

(b)  the total amount in and out of BOC account; and

(c)  the money was remitted from overseas thereby adding an international element to the charge, I am satisfied proper sentence after trial is 4 years’ imprisonment for charge 1.

29.As to charge 3, I take into account that D2 has a clear record, and taking into account the following :

(a)  the role of D2 in setting up UG and opening the UG account and dealing with the money after knowing that BOC account could no longer be used;

(b)  the total amount in and out of UG account; and

(c)  the money was remitted from overseas thereby adding an international element to the charge, I am satisfied proper sentence after trial is 4 years’ and 6 months imprisonment for charge 3.

Delay of prosecution

30.In relation to delay of prosecution, the Court of Appeal in HKSAR v Chiu Chi Wing, CACC 243/2012, referred to seven non-exhaustive or flexible matters for the sentencing court to consider.

31.In HKSAR v Choy Ki Shun [2003] 2 HKLRD 575 (English translation of headnote at 576), it was stated that mere delay in the processing of a case is not sufficient to be a mitigating factor. The police may need time to gather evidence against the defendant; on the other hand, where the prosecution is in possession of sufficient evidence to prosecute but somehow there was delay (not caused by the defendant)  in prosecution or in the proceedings and the delay has caused him anxiety, such delay may be a reasonable mitigating factor.

32.Both D1 and D2 committed the offence (Charge 1)  during late 2016 and early 2017, and the case was reported on 22 January 2017. D1 was arrested on 13 May 2020 and D2 was arrested on 10 March 2021.

33.D1 was temporarily released on 29 September 2022, and re-arrested on 22 March 2023. D2 was temporarily released on 6 July 2021, and re-arrested on 27 March 2023.

34.D1 and D2 first attended Kwun Tong Magistracy on 13 April 2023. It took the prosecution about 6 years to bring D1 and D2 to court.

35.It is submitted that D1 and D2 be given certain sentencing discount by reason of the prosecution delay.

36.Prosecution submitted “Case Chronology” dated 25 November 2024 giving some details of significant events.

37.In summary, the period between initial arrest and first appearance at court for D1 is about 3 years and for D2, it is about 2 years.

38.Delay in prosecution alone has never been a mitigating factor. What must be present is unreasonable delay not attributable to the defendant coupled with some effect on him/her, such as significant additional stress or disruption in his/her attempt to rehabilitate himself/‌herself in the meantime. It has even been suggested that delay caused by dilatory or neglectful conduct by the prosecution may result in a discount if the court thinks it is an appropriate means of marking its disapproval of that conduct.

39.In the case before me, from the “Case Chronology”, the only period where it can be argued there was an unreasonable delay was between 30 March 2021 and 10 January 2023 (a period of about 2 years for obtaining further legal advice). The few details given about this period was that duplicate file re-submitted to DOJ for obtaining further legal advice.

40.I note the nature of this case with all its related documentary evidence and the potential scope involving multiple suspects. Nevertheless, I would have thought that a reasonable period for rendering legal advice would have been no more than 9 months. As such, there appears to have been an unreasonable delay of at least 1 year.

41.I therefore agree that there has been unreasonable delay of the type which may amount to a valid mitigating factor subject to satisfaction of the other requisite conditions.

42.According to the background report of D1, in around September 2016, he began working for Chak Hoi Finance Limited, initially as a customer officer and later as a credit manager. He remained with the company steadily for 8 years until his current remand. D1 has started a new law-abiding life since his arrest.

43.According to the background report of D2, she mainly took up causal jobs, such as a saleslady of beauty equipment, barista and waitress, with the latest month earning around $6,000 to $7,000. She received private psychiatric consultation for about one month and then stopped receiving treatment. It was only until recent years that D2 began to receive psychiatric treatment at Western Psychiatric Centre with a diagnosis of adjustment disorder and follow-up interval of about 6 to 8 weeks.

44.As regards disruption in attempts to rehabilitate himself/‌herself in the meantime, I note that none of the defendants committed any further offence in the meantime; that D1 was gainfully employed and D2 though doing causal job, both of them went about their normal day-to-day business.

45.I am satisfied that D1 and D2 have attempted to rehabilitate himself/herself in the meantime and it would be unduly harsh if no discount is given to their respective sentences.

46.For this reason, I will give D1 and D2 a discount of 3 months for the sentence.

47.As to D1, I will give him a further discount of 3 months, because of his clear record and saving the court’s time during his trial. Therefore, the total discount given to D1 is 6 months, and after deduction, his sentence is 3 years and 6 months for Charge 1.

48.As to D2, I will give her a further discount of 1 month because of her clear record. Therefore, the total discount given to D2 is 4 months to each charge. After deduction, her sentence is reduced to 3 years and 8 months for Charge 1, and 4 years and 2 months for Charge 3.

Totality of sentence

49.In respect of D2, the money laundering of the 2 offences are not entirely separate and distinct. They are closely related. The sentence of the 2 charges should be partly concurrent and partly consecutive. Therefore, I ordered that 1 year imprisonment of Charge 3 to run consecutively to Charge 1. The total sentence of Charges 1 and 3 is 4 years and 8 months’ imprisonment.