HKSAR v. Fan Gaochao

DCCC 960/2025

[2026] HKDC 1209

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 960 OF 2025

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REASONS FOR SENTENCE

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Introduction

1.The defendant (“D”) FAN Gaochao pleaded guilty before me to  2 Charges, both being  “Dealing with property known or believed to represent proceeds of an indictable offence” (commonly known as “money laundering”), contrary to section 25(1) and (3) of the Organized and Serious Crimes Ordinance, Cap.455(“OSCO ”).

2.Particulars of Offence for the 1^st Charge stated that between 5 September and 30 November 2022, together with a person known as “Yu”, D , knowing or having reasonable grounds to believe that a total sum of HK$ (same below) 3,003,047.77 in a particular bank account with The Standard Chartered Bank (Hong Kong）Limited (“Account 1”), in whole or in part directly or indirectly represented any person’s proceeds of an indictable offence, dealt with the said sum of money. Particulars of Offence for the 2^nd Charge are in similar terms, relating to a period between 28 September and 5 October 2022, involving $2,004,397.44 in a particular bank account with The Bank of East Asia, Limited (“Account 2”).

Facts of the case

3.According to the Summary of Facts admitted by D, at all times material to the case, he was the sole account holder and signatory of Account 1 and Account 2.

The Predicate Offences

4.Ms Lee Mei Yee May (“Ms Lee”) acquainted a fraudster online through a social media platform.  The fraudster enticed Ms. Lee to make purported investments through a bogus platform.  Upon fraudsters’ instructions, she transferred monies to various accounts, among which, a sum of $40,000 was sent to Account 1 in a single transaction on 30 September 2022.  Ms. Lee later found she could not withdraw her investment and reported the case to police.  She suffered a total loss of $2,713,192.81.

5.Ms Leung Suk Ling (“Ms Leung”) received a message on her phone from a fraudster who enticed her to participate in tasks to earn commissions.  Ms. Leung was required to pay deposits before joining the tasks.  Upon fraudsters’ instructions, she transferred monies to various accounts, among which, a sum of $200,000 was sent to Account 1 in a single transaction on 6 October 2022.  Ms. Leung later found that she could not retrieve her deposits and reported the case to police.  She suffered a total loss of $1,455,817.23.

The Accounts

Account 1

6.On 5 September 2022, D opened Account 1 in his name.

7.Between 5 September and 30 November 2022:-

(a) A total of 61 deposits totalling $3,003,047.77 were deposited into Account 1;

(b) A total of 77 withdrawals totalling $3,002,983 were withdrawn from Account 1;

(c) The account opening balance was nil as at 5 September 2022 and the account closing balance was $64.77 as at 30 November 2022; and

(d) Suspicious transaction patterns were noted in Account 1 including: -

(i) withdrawals were made promptly after monies were deposited into the account with mirroring and layering patterns; and

(ii) sudden dormancy of the account.

8.Between 5 September and 30 November 2022, Account 1 was being used as a temporary repository of funds.

Account 2

9.On 21 May 2019, D opened Account 2 in his name.  Account 2 was closed on 15 December 2022.

10.Between 28 September and 5 October 2022: -

(a) A total of 5 deposits totalling $2,004,397.44 were deposited into Account 2 (small-sum deposits less than $100 are excluded from the sum);

(b) A total of 11 withdrawals totalling $2,004,200 were withdrawn from Account 2; and

(c) Suspicious transaction patterns were noted in Account 2 including:-

(i) withdrawals were made promptly after monies were deposited into the account with layering pattern; and

(ii) sudden dormancy of the account.

11.Between 28 September and 5 October 2022, Account 2 was being used as a temporary repository of funds.

Arrest of D

12.D was arrested on 16 March 2024.  In a video-recorded interview on 17 March 2024 in relation to Account 1, D admitted opening Account 1 for payroll purpose.  On an unknown date in 2022, he met a friend named “Yu” in a game centre and lent him Account 1 by passing to him the e-banking credentials.  D later lost contact with “Yu” and the bank informed him that Account 1 was closed.  D stated he was a construction worker with a daily wage of $1,300.

13.In another video-recorded interview on the same day, he gave similar answers in relation to Account 2. D did not see “Yu” afterwards and the bank later informed him that Account 2 could not be used.  D stated he was a construction worker with a yearly salary of $360,000.

Application for enhancement of sentence

14.The Prosecution applied for an enhancement of sentence pursuant to section 27 of the OSCO on the grounds of prevalence of the offence and harm caused to the community. Pursuant to section 27(2), a statement of Chief Inspector LI Yiu-nam dated 22 June 2026 was submitted in support of the application.

Backgrounds of D and mitigations

15.According to the Background Report prepared by the Probation Officer, D is 46 years old, born in Hainan Province of Mainland China on 22 August 1979. He married a Hong  Kong resident in 2013 and settled in Hong Kong since 2018 on the strength of a One Way Permit. However, he divorced his ex-wife in 2022 as he started a relationship with his current girlfriend in 2016 and gave birth to a son, who is currently a Primary school student, in 2017. Before his detention for the present offences, he resided with them in a flat in Temple Street, Yaumatei. He received education up to Secondary 2 level in the Mainland and worked as a construction worker in Hong Kong until his arrest in 2024. He has a clear criminal record.

16.Mr LI, representing D, submitted in mitigation that “Yu” was a friend from the same village in Hainan. D was simple-minded and naïve, and agreed to lend “Yu” the 2 bank accounts out of kinship with nothing to be gained financially. Further, D had no knowledge of the predicate offences. He has a clear record.

17.Mr LI submitted an undated letter written by D, indicating his remorse. D promised not to re-offend and asked for leniency so that he could return to his family to take care of them as early as possible. However, this account was different from the situation as told by his girlfriend to the Probation Officer. She stated that her relationship with D had ended after she gave birth to their son. She has since married but still allow their son to see D as he is the father. She is financially stable to take care of the son without the support from D.

18.Citing various authorities^[1], Mr. LI submitted that the starting point for the 1^st Charge should be 36 months or less and 30 months or less for the 2^nd Charge. D pleaded guilty at the outset and is entitled to the usual 1/3 discount.

19.On the application for enhancement of sentence by the prosecution, upon my clarification, Mr. LI confirmed that D has no objection to the application and does not dispute the contents of CIP LI’s statement. Mr. LI submitted that after taking a holistic view of the circumstances of this case, the enhancement should be less than 25%. He further submitted that since the 2 offences were committed on the same day, the sentences should be concurrent.

Assessment of sentence

20.In Secretary for Justice v Wan Kwok Keung (雲國強)^[2], Yeung VP stated :

“12. “Money laundering” is a serious offence for not only does it encourage criminal activities indirectly, but also attempt to legitimize the proceeds of crime. In order to crack down on serious crimes, to prevent offenders from getting financial gains, it is necessary to deter the commission of the “money laundering” offence.

…

15. …The sentencing starting point is 3 years or so where the “black money” involved is between 1 million and 2 million dollars, 4 years or so where it is between 3 million and 6 million dollars, and could be over 5 years where it is above 10 million dollars.”

21.In that passage, Yeung VP was not laying down any guideline, it was just an observation of the sentences meted out by the Court in previous similar cases. However, I consider that to be useful indicators to be taken into account when assessing the appropriate sentence.

22.As Stock VP pointed out in HKSAR v Boma^[3], given the highly variable circumstances in which the offence might be committed, it is difficult and undesirable to offer guidelines in money laundering cases. Also, the amount of money laundered is not the “be-all and end-all” of a case but is a significant feature. Other factors that should be taken into account when assessing the appropriate sentence include:

(1) the nature and penalty of the predicate offence;

(2) knowledge of the offender as to the predicate offence;

(3) international dimension;

(4) the sophistication of the offence;

(5) whether organized syndicate is involved;

(6) the length of time and number of transactions involved;

(7) whether the offender continued to launder funds after discovering the tainted nature of the funds; and

(8) the role played by the offender and the benefit received by him.

23.In the present case the tainted money came from internet fraud. However, I accept that there is no evidence to suggest that D was aware of the predicate offences. I am satisfied that on the materials before me, there are no international element and no sophisticated operation involved. D has no criminal conviction prior to the present offences. For the 1^st Charge, the offence covered a period of about 3 months, involving 61 deposits totalling $3,002,983 and 77 withdrawals for similar amount. For the 2^nd Charge, 5 deposits totalling $2,004,397.44 were deposited into Account 2 and 11 withdrawals for similar amount occurred within 1 week.

24.In the course of mitigation, it was suggested that D did this for “Yu” out of simple-mindedness and kinship for on-line game playing purpose without any financial benefit. D was not aware how “Yu” operated the accounts or the modus operandi of the money transactions involved. If this is true or may be true, this would amount to a defence as “actus reus” might not be established^[4].

25.The case was adjourned, inter alia, for the defence to clarify the issue. I was informed by Mr. LI, both in writing and in subsequent oral submissions, that D now withdraws this line of mitigation. I noticed that Account 2 had been opened by D a few years before the offence but Account 1 was engaged in money laundering activities very soon after it was opened. There was no explanation why D needed to open both accounts for payroll purpose as alleged in his cautioned interview. I do not accept this assertion. Under such circumstances, I consider that there is sufficient evidence to infer that D was in joint enterprise with “Yu” in dealing with the money in the 2 accounts and the necessary “mens rea” was present when he lent the use of them to “Yu”.

26.Having taken all relevant matters into consideration, I consider 39 months to be the appropriate starting point for the 1^st Charge, and 36 months for the 2^nd Charge. D pleaded guilty at the outset and is entitled to the customary 1/3 discount, reducing the sentences to 26 months and 24 months respectively.

27.The total amount of money involved in the 2 Charges is $5,007,455.21. Although the periods covered by the 2 Charges overlapped, they relate to different bank accounts and different properties, the sentences should run consecutively. Taking totality principle into account, I consider 42 months to be the appropriate global starting point, reducing to 28 months on the timely guilty plea. There is no other matter warranting further reduction of the sentence.

Enhancement of sentence

28.The Prosecution applied for an enhancement of sentence under section 27 of OSCO. It is submitted that this offence is prevalent and extensive harm is caused to the community.

29.I accept that the power under section 27 of OSCO is an extraordinary power which ought to be used sparingly and only when the Court is satisfied that exceptional circumstances do exist warranting the exercise of such power[5]. Also, it is prevalence and harm at the time of the sentence is imposed which counts, not at the time when the offence arose^[6].

30.The basis of the application by the Prosecution is that D committed the offences by lending his own bank accounts to others, i.e., as a “stooge”. The use of “stooge” account in committing money laundering offence has long been accepted by the Court as the basis for enhancement of sentence[7].

31.The statistics provided by CIP LI covers the period from 2020 to the first 5 months of 2026. It is obvious that deception and money laundering cases involving stooge accounts have been on the rise since 2020, both in terms of the number of cases reported and monetary loss. The number of stooges arrested and the amount of money loss in relation to these cases have slightly dropped from 2024 to 2025, and further easing off in early 2026, but is still very prevalent. The harm caused to the community of money laundering offences involving stooge accounts as stated in the statement speaks for itself.

32.Taking all relevant matters into consideration, I am satisfied that the prosecution has made out a case under section 27 of OSCO. I allow the application for the enhancement of sentence in the present case.

33.As to the quantum of enhancement, although there are signs of easing off in 2025 and early 2026 as compared to 2024, the situation is still highly unsatisfactory. The enhancement must be sufficient to achieve its purpose, i.e., to deter future potential offender in committing the specified offence, viz., committing money laundering offence by acting as a “stooge”. I order that 25% be added to the sentences.

Conclusion

34.For the 2 offences D has pleaded guilty to, he is sentenced as follows:

1^st Charge : 32.5 months

2^nd Charge : 30 months, 2.5 months consecutive to 1^st Charge

Total : 35 months