HKSAR v. Hui Chak Yi

DCCC 1155/2024

[2026] HKDC 956

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 1155 OF 2024

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REASONS FOR VERDICT

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1.The defendant is charged with one count of dealing with property known or believed to represent proceeds of an indictable offence, contrary to section 25(1) and (3) of the Organized and Serious Crimes Ordinance, Cap 455.  She pleaded not guilty to the charge.

Background of the case

2.That case relates to a company known as Fortune Hill Wealth Management Ltd (“Fortune Hill”) controlled by the defendant. In a gist, huge sums of money were deposited into a bank account held by Fortune Hill and then within a short period of time, the money were transferred out.

3.Fortune Hill is a limited liability company incorporated in Hong Kong on 7 September 2020. The defendant is and was the sole director and shareholder of Fortune Hill[1], which has a business registration certificate[2].

4.Fortune Hill has a corporate bank account with Dah Sing Bank (“Account”) which was opened on 21 October 2020.  The defendant is and was the sole contact person and signatory of the Account.

5.Fortune Hill has never filed any tax returns with the Inland Revenue Department (“IRD”).

6.According to the movement record, the defendant was in Hong Kong between 21 October 2020 and 1 April 2021[3].

7.The defendant was arrested on 12 June 2023 at her residence. At a video-recorded interview conducted on 12 June 2023, the defendant voluntarily said, inter alia, that she was educated up to Secondary level 3 and that she had been working for just over a week as a secretary assistant for a trading company called Fu Wah International Limited with a monthly salary of around HK$8,000.

Legal Principles

8.I bear in mind all the submissions made by the prosecution and the defence. In particular, I remind myself that at all times, it is for the prosecution to prove their case beyond a reasonable doubt.  The defendant has nothing to prove. In this case, the defendant elected to give evidence in court and I remind myself that if the defendant’s version is true or might be true, I must accept her version.

9.For the legal principle relating to money laundering, it is unnecessary for the Prosecution to prove as an element of the offence under s 25(1) that the proceeds had been dealt with were in fact the proceeds of an indictable offence.  The question was whether the defendant knew or had reasonable grounds to believe (HKSAR v Yeung Ka Sing Carson (2016) 19 HKCFAR 279).

10.In HKSAR v Harjani (2019) 22 HKCFAR 446, the meaning of having reasonable grounds to believe was set out. In particularly relevant to the present case is that when the defendant gave evidence that she did not believe the property was tainted, the court must give due consideration to the evidence given by her as to what she believed and why. It was the facts and circumstances that the defendant asserted led her to a particular belief or perception that were significant rather than the subjective belief or perception itself. The court had to consider two interrelated questions: (a) was the defendant telling the truth when she said that she did not believe that the property was tainted; and (b) could a reasonable person in the defendant's position have failed to believe that the property was tainted?  

Evidence

11.The prosecution called 6 witnesses to testify in court. After an unsuccessful no case submission made by the counsels for the defendant, the defendant elected to give evidence but called no other defence witness.

Prosecution case

PW1

12.Mr Lam, PW1 in this case, described himself as victim of an investment scam. He mentioned that at the introduction of his old colleague, a Ms Wong, he came to know a Mr Wong, who represented to be an agent of Fortune Hill. He was led to a luxurious mansion where there were other people also agreed to invest through Fortune Hill¸ which was described as a “big” company in Hong Kong. He said that he trusted companies in Hong Kong and agreed to invest HK$300,000 for subscription of new shares through transferring money into the bank account of Fortune Hill.  He was also shown a letter purportedly issued by Great Eagle Securities Limited (“Great Eagle”), exhibited as P7, confirming that Fortune Hill had a securities account held with Great Eagle.

13.PW1 gave different version as to the way how he paid the said HK$300,000. During chief examination, he produced a screen shot of an “instruction”[4] to his bank for transferring money to Fortune Hill. Later, when he was asked about the lack of bank statements to substantiate the said transfer under cross examination, he changed his version and said that the original “instruction” was unsuccessful and he was required to ask his mother in Hong Kong to pay for him.

14.Therefore, the case was adjourned pending producing of documents, whichwere ultimately produced on the 2^nd trial date.  In the circumstance, both prosecution and defence were given a copy of those documents during trial[5].  The defence counsel disputed the admissibility of those newly produced documents on the ground of hearsay.  At the end, the prosecution decided to call the mother of the PW1, who became PW6.

15.In any event, PW1 testified that after he transferred the said HK$300,000, he was told that the intended subscription was unsuccessful. He expected a full refund but was only compensated 3 times of RMB ¥10,000 on January, February and March 2021.  Since then, he was not refunded anymore.  At that time, he was simply told that the funds of Fortune Hill were frozen.   His communication with Mr Wong via WeChat was subsequently blocked. He thought that he was victim of a scam.  He reported the case to the police in mainland China but was told that the relevant company was based in Hong Kong and therefore the matter could not be handled in mainland China.  Due to Covid-19 pandemic, the boarder between mainland China and Hong Kong was effectively closed at that time.  At the end, he managed to come to the Hong Kong in 2023.  Upon arrival in Hong Kong, he visited the office of Fortune Hill and found that it was only a small company.  So, he decided to report the matter to the Hong Kong police.

PW2

16.Mr Wong, PW2 in this case, is a banker from Dah Sing bank. He prepared a bankers’ affirmation[6]. He confirmed that the documents exhibited in his affirmationwere derived or generated from the computer system of the bank.  In his affirmation, the bank statements of the Account were produced.

PW3

17.PW3, Mr Li, is the vice president of Great Eagle which is a company carrying out the business of security transaction and asset management.  He confirmed that Exhibit P7, a purported document issued by Great Eagle, was not issued by Great Eagle.

18.Based upon perusal of the records kept by Great Eagle, he said that Fortune Hill had opened 2 accounts with Great Eagle, but those accounts had never been activated. Fortune Hill has never made any transaction through Great Eagle.

PW4

19.DPC 26129, PW4 in this case, was the police officer who arrested the defendant and conducted a video recorded interview with the defendant.  He confirmed that he had asked the defendant to sign on the documents that had been shown to her during the interview. Therefore, the handwritten signature now appears in several exhibits included in the bankers’ affirmation of PW2 were the defendant’s signature[7].

20.He also carried out a fund flow analysis of the accounts of Fortune Hill by putting in information derived from Dah Sing Bank[8].

21.According to his analysis, for the period between October 2020 and April 2021, there were a total of 63 deposits amounting to about HK$42 million.  Also, there were a total of 137 withdrawals amounting to about HK$42 million.  However, he admitted that no obvious mirror pattern as found in other money laundering cases could be found. There was no investigation of the 2^nd or 3^rd layer of the fund flow.  He could only confirm that the Account was operated by a physical person and the daily balance was kept at a low level.

22.He said that he had investigated this case for about 7 months and there was no record that the defendant had ever given any explanation regarding the Account.  He did not know the defendant had alleged that was relating to pooling fund for IPO subscription.

PW5

23.PW5, Ms Chen, is an officer from the IRD. She gave evidence according to her statement[9].

24.She confirmed that Fortune Hill had never filed any tax return. However, in respect of whether or not IRD had issued a tax return, she could only say that she was not aware of a tax return being issued. Still, she also said that according to the usual practice, after incorporation for more than 18 months and if profits were reported, a tax return would be issued.

25.In any event, she could not say for sure if IRD had issued a tax return form for Fortune Hill.

PW6

26.PW6 is Ms Lo, mother of PW1. She testified in court that she had deposited HK$300,000 into the account of Fortune Hill pursuant to the request of his son. She also produced the relevant bank statements substantiating the said deposit [10].

Defence case

27.D testified in court that she used to invest in shares and subscribe IPO and had accumulated some wealth.  At the material time, she invested in IPO subscription and opined that was a good chance for making profit.  To increase the chance of success in subscription of IPO, she established Fortune Hill because she learnt that fewer IPO shares will be allotted to individual.

28.She knew that mainlander was not allowed to subscribe IPO in Hong Kong.  So, she allowed the friends of her boyfriend and other friends from mainland China to subscribe IPO issued in Hong Kong through Fortune Hill.  The money deposited into the Account were either derived from her, her boyfriend, or some other friends, including a Mr Chow Chiu. Chow Chiu would also invite his own friend to invest in IPO through Fortune Hill.  If the IPO subscription fail, she would refund money to Chow Chiu. If the IPO subscription succeed, she would charge a fee.

29.In the circumstance, Fortune Hill became a fund pooling company for investment and had nothing to do with money laundering.

30.She prepared a defence bundle exhibited the bank statements of the relevant period of time of the Account[11].  Besides, there were a number of supporting documents, including monthly statements issued by Shun Hung Kai Investment [12] and TD King Securities[13] to substantiate the IPO subscription in the name of Fortune Hill. She also produced documents relating to money exchange through different companies[14] and said that she used to remit money to mainland China to substantiate her refund to Chow Chiu and others.  Also, she said the she employed a few staffs to work for Fortune Hill and provided documentary proof concerning the MPF payment for those staffs[15] .

31.At the end, the business of Fortune Hill was not good and it closed down. As she did not receive any tax return for Fortune Hill issued by the IRD, no tax return was filed.

32.She also said that she was once arrested in this case but was told by police later on that she was not required to answer bail anymore.  Then, she discarded the financial record of Fortune Hill.  Therefore, when she was arrested by the police for this case again, she did not possess any record concerning Fortune Hill’s customer.

Analysis

Was PW1 victim of a scam?

33.Obviously, there were tens of million dollars deposited into the Account and there was only one complainant, namely PW1.  He said that he was victim of a scam.  If PW1’s evidence is accepted, his actual lost should be HK$300,000 minus RMB ¥30,000.

34.Having considered the documentary proof, I accept the evidence of PW6, who said that she deposited HK$300,000 into the Account pursuant to PW1’s request.  In other words, I accept PW1 had paid HK$300,000 to Fortune Hill through PW6.

35.However, in my view, PW1 is not an honest witness.

36.Taking into account of the evidence of PW1 and PW6 together, PW1 must have asked her mother, PW6, to look for the bank statements proving the deposit of HK$300,000 into the Account shortly before he gave evidence in this trial.  However, during the 1^st day of trial, he still insisted that he paid the HK$300,000 by showing a screen shot of his phone intending to prove he had transferred HK$300,000 to Fortune Hill.  That must be wrong.

37.I do not intend to speculate the reason why PW1 was not frank in explaining how he deposited HK$300,000 into the account of Fortune Hill but that was certainly not due to lapse of time. I find him not an honest witness.

38.In the circumstance, I have hesitation in accepting his evidence as to how he had agreed to invest through Fortune Hill.  I cannot say for sure how PW1 was told by anybody, be it an agent of or an employee from Fortune Hill, regarding the investment through Fortune Hill. Besides, although PW1 said that he was repaid only RMB¥30,000, I also cannot say for sure if PW1 was tell me the truth.

39.I accept the evidence of PW3, who confirmed that Exhibit P7 is a forged document.  However, there is no evidence who prepared it.  It could be made by Chow Chiu or any other person without the knowledge of the defendant and Fortune Hill.

40.In the circumstance, I cannot say for sure if PW1 was victim of any scam. I find that the prosecution was not able to prove Fortune Hill or the defendant was relating to any scam.

Money laundering by the defendant?

41.Evidence of PW2, PW4 and PW5 were not subject to real challenge. I accept their evidence.

42.However, PW2 could only provide the bank statement of Fortune Hill and was not able to tell if the money deposited into the Account were tainted. In fact, the defendant also produced bank statement of the Account.

43.PW4 made a fund flow analysis of the Account. Obviously, he made an inadvertent mistake by counting a bounce cheque[16] of HK$5 million as part of the fund flow.  Still, even discarding that HK$5 million, the Account had a deposit of over HK$37 million.  Still, PW4 frankly admitted that activities of the Account did not possess the usual feature of those account involving money laundering.

44.PW5 confirmed that IRD had no records of tax return having been filed for Fortune Hill.  However, she cannot say for sure if that was because the taxpayer did not file a tax return when required to do so or IRD did not issue the company with a tax return.  There is also no evidence that IRD had taken any follow up action against Fortune Hill for failing to file a tax return.

45.Taking into account of the evidence of PW2, PW4 and PW5, I am sure that Fortune Hill receive huge sums of money at the material time. After close of the prosecution case, the defence made a half-time submission.  After considering the relevant evidence, I ruled there was a prima-facie case on the charge.  Obviously, the substantial number of transactions and large amounts of funds passing through the Accounts are, on the face of it, disproportionate and inconsistent with the absence of any tax return being filed.

46.Therefore, the most important and remaining issue in the case is squarely the credibility and reliability of the evidence of the defendant, bearing in mind at all times it is for the prosecution to prove their case beyond a reasonable doubt.

47.She elected to give evidence.

48.In my view, the defendant gave a detailed explanation about her background and the reason of the incorporation of Fortune Hill. In a gist, Fortune Hill was a company for pooling funds to subscribe for IPO shares.

49.The defendant testified that she started working as waitress or sales after school.  Then, she knew some “boss” and start to speculate in the property market. When she knew her 1^st boyfriend, who was doing finance, she was taught about purchasing shares.  She started buying shares. Later on, she came to know her 2^nd boyfriend and they engaged in shares transaction.  She also mentioned that she had some other business, including a company in mainland China selling high-tech product like ear phone or cosmetics.  In about 2019, her total cash flow exceeded HK$10 million.  She earned about 1 million per year, as stated in her tax return for the financial year 2021/22 and 2022/23[17].

50.She also purchased a company in Hong Kong which hold the license 4 and 9 of the SFC. She employed 2 responsible officers to look for customers.

51.Fortune Hill was incorporated in 2020 for the purpose of increasing the chance of IPO shares subscription.  In the year of about 2019, many companies from mainland China came to Hong Kong for listing. IPO subscription became very “hot”.  Her friends and friends of her boyfriend will pay money to her so that she could subscribe IPO shares on their behalf.  If the subscription turned out to be unsuccessful, she would refund money back to those people (or customer).  If the subscription turned out to be successful, she would keep 15% of the profit as her charges.  At the outset, she engaged in this business in her own capacity.

52.Fortune Hill was established against that background because the agents from the security company told her that there would be a higher chance of success in IPO subscription if it were made through a company, instead of in a personal capacity.

53.The running costs of Fortune Hill, including the rental payment and staffs, were up to HK$100,000 per month. After carrying out that kind of business for a period of time, Fortune Hill closed down because of its poor business and the Covid-19 pandemic.

54.Over the years, Fortune Hill received only 1 complaint in 2023 by PW1.

55.The defendant produced documentary proof of the fund flows of Fortune Hill. Those documents include the bank statement and supporting documents[18], like copy of cheques and remittance documents.

56.After consideration of the defendant’s evidence in court and also taking into account of those documentary proof, I find that her version believable.

57.First of all, even in the words of PW4, the Accounts lacks the usual characteristics pertaining to money laundering account, including  mirror transactions, layering or jurisdictional hopping. The million of dollars going in and out of the Account, in my view, is consistent with the defendant’s explanation, namely to participate in the business of pooling money for IPO subscription.As I do not accept the evidence of PW1, the prosecution cannot prove that the loss of PW1, if any, was relating to any scam. In the circumstance, there is no evidence to suggest that the money deposited into the Account were in fact the proceeds of any indictable offence. Although that is not part of the elements of offence, it is still relevant for assessing the overall circumstance of this case.

58.Second, the monthly statements from different securities company clearly proved that Fortune Hill was actually participating in IPO subscription activities.  One example of the subscription of shares was by the end of November 2020. At first, a HK$5 million cheque was drawn in favour of a security company.  The defendant was told that subscription was unsuccessful.  So, she stopped it and incurred HK$100 charges and at the same time transfer the same $5 million to another security company known as Fulbright.  Another example was in early January 2021 when a cheque of about HK$1.6 million was issued in favour of TD King Securities.  That cheque was bounced as it was deposited too early.  On the next day, the defendant made an electronic transfer of the same amount for shares subscription, which was success[19]. Theseare evidence to demonstrate the business activities of Fortune Hill.

59.The prosecution submitted that the funds dealt with through the Sun Hung Kei and TD King accounts do not represent all the funds deposited into and withdrawn from the Account.  In my view, however, these are clear evidence to substantiate the business nature of Fortune Hill.  Moreover, I accept that the defendant had occasionally mix up the Account with her personal matter.  For example, the Account would be used to collect repayment of loans from her boyfriend[20], to transfer money out of the Account for her cosmetics business[21].  I accept that it was not a proper way of mixing up the defendant’s personal matter with the Account, which is a business account for Fortune Hill. Still, the defendant was obviously the owner of Fortune Hill and I accept that it is not uncommon for the existence of such an improper practice in this business world. In any event, a poor management of a business account is quite a different thing from money laundering.

60.Third, there are documentary proof that Fortune Hill employed a few staffs to carry out the IPO subscription business.The defendant explained that some of the transfer of funds out of the Account were for the payment of salary[22]. The defendant even said that her own salary from Fortune Hill was HK$56,000 per month.

61.However, the prosecution pointed out that Fortune Hill never filed any Employer’s Return of the staffs and there were also only 2 cheques[23], amounting to respectively HK$3,546 and HK$3,570, to support the payment of MPF.

62.I accept that that the documentary records cannot fully support the defendant’s assertion of employing a total of 5 staffs at the material time.  The defendant explained that some of the staffs in Fortune Hill did not wish to disclose their income.  In other words, the defendant had admitted in court that she had failed to comply with her duty.  In my view, it was inappropriate to do so but that cannot change the fact that at least 2 cheques were paid for MPF contribution.  I accept the defendant’s case that Fortune Hill had employed a few staffs at the material time. Regarding the payment of HK$56,000 to the defendant herself, it was described by her as “salary”.  But the defendant was only paid HK$56,000 once.  I accept that it is inappropriate, but not impossible, for an owner of a company to withdraw money in the name of “salary”.  That is not a correct way of treating the company’s business account as a personal account.  However, it is possible for the defendant to withdraw money from the Account in the name of “salary”.  In any event, that does not mean that the Account was used for money laundering.

63.The prosecution commented that Fortune Hill did not file any tax return. Although the usual practice of IRD is to issue a tax return to a company upon 18 months after its incorporation, there is no evidence that IRD had ever issued any tax return to Fortune Hill.  Also, there is no evidence to suggest that IRD had carried out any follow up action against Fortune Hill for its failure to file any tax return.  I cannot say for sure that IRD had in fact issue any tax return to IRD.  Even if Fortune Hill had omitted to file a tax return, that was probably due to Fortune Hill’s poor management and its cessation of business but not necessarily related to money laundering.

64.The prosecution also commented the defendant had discarded Fortune Hill’s financial records sometime between she was not required to report to police after her first arrest in this case and her subsequent arrest.  I accept that the defendant should have appreciated her obligation to keep the financial records for 7 years. However, I accept that her failure to keep those record was not necessarily related to money laundering.  Obviously, Fortune Hill did not make profit.  Apart from PW1, there was no complainant.  At the time when she was told by the police that she was not required to report to police station, it is possible that she thought the case was over and neglected her duty.  In particular, PW1’s allegation of depositing HK$300,000 must be wrong at the outset and it was impossible for the defendant, at least before the commencement of this trial, to realize that the said HK$300,000 was in fact not paid from PW1’s account.

65.The defendant said that the source of money of the Account included her own money and money from those mainlanders who want to invest in IPO.  I accept that due to the capital controls imposed by the mainland government, it was a common practice to use some means other than the bank for transfer money. I also accepted that the defendant only received funds from her boyfriend or other intermediaries whom she trusted instead of anonymous sources.  In fact, even according to the prosecution case, PW1 was obviously a client of Fortune Hill initially through Chow Chiu at the introduction of PW1’s old colleague.  Despite I do not accept the evidence of PW1, I do not find PW1’s money relating to any indictable offence.

66.I bear in mind the burden of proof rests on the prosecution, standard being beyond a reasonable doubt.

67.I accept the evidence of the defendant and find that at the material time, the defendant was merely carrying out a business of fund pooling for IPO subscription.  She not only participated in those subscription but also allowed other mainlanders to join in.  Those mainlanders were her own friends, or at the introduction by her boyfriend or other trusted intermediaries, say Chow Chiu.  It is possible that these intermediaries were people having long-standing relationship with the defendant. In the circumstance, the money going through the Account were derived from her own money, from her boyfriends or through other trusted intermediaries.  The practice was that after pooling, Fortune Hill would utilize the money for IPO subscription.  For successful IPO subscription, Fortune Hill would keep 15% as profit.  For unsuccessful IPO subscription, the money would be returned.  The whole operation had nothing to do with money laundering. 

68.Therefore, I accept that the defendant did not know that the money going through the Account had anything to do with proceeds of any indictable offence.  I also accept that a reasonable person in the defendant's position would not believe that the money going through the Account was tainted.

Finding

69.I have applied the applicable legal principles especially those enunciated in Harjani (supra).  I am of the view that any reasonable person who shared the defendant’s knowledge would not be bound to believe that the property was tainted.

70.For the above reasons, I find the defendant not guilty of the charge.