HKSAR v. Mak Wing Cheung and Another

DCCC950/2007

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 950 OF 2007

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Reasons for Sentence

1.I convicted the defendants after trial of a number of charges of money laundering, contrary to section 25(1) and (3) of the Organized and Serious Crimes Ordinance, Cap. 455, of a total of 12 charges on the charge sheet.

2.The defendants are a married couple.  The first six charges were preferred against only the 1st defendant.  They were charges alleged between 1 January 2001 and 3 August 2002 that he dealt with property known or believed to represent the proceeds of an indictable offence.  They referred to various sums going through six different bank accounts.  The sums in respect of the charges were respectively $988,981.50, $501,210.32, $1,034,985, $761,372, $742,822.76 and $2,049,812.97.

3.Charges 7 to 9 were preferred against D2 and represented funds moving through three separate bank accounts operated by her in her sole name during the same period as the first six charges.  The sums involved were respectively $712,247.10, $500,582.34 and $5,332,164.03.

4.The Guam charges, Charges 10 and 11, related to sums received into accounts operated by the defendants’ remittance agent in Guam.  Charge 10 related to 16 remittances received by D1 between April 2001 and April 2002, totalling US$80,300 equivalent to HK$626,340.  Charge 11 related to 6 remittances totalling US$500,000 sent to a remittance agent in Guam between 20 December 2001 and 18 January 2002 into the same HSBC bank account operated by D2 in relation to Charge 9.  Charge 9 related to withdrawals from this account.  Charge 11 related to payments into the account of 6 remittances from Guam.

5.Profit Dragons Trading Limited.  Charge 12 is a joint charge alleging that between 2 January 2002 and 2 August 2002 $534,800 was paid into a Hang Seng Bank Limited account opened in the name of a shelf company called Profit Dragons Trading Limited (“Profit Dragons”) which was acquired by the defendants in 2001.

6.In 2002 the police commenced investigations into the financial positions of the two defendants.  Investigations revealed that D1 had six personal bank accounts in his sole name, D2 had three personal bank accounts in her sole name.  And D1 and D2 acquired in December 2001 a shelf company called Profit Dragons which operated a bank account with Hang Seng Bank Limited in respect of which they were the only authorised signatories.

7.An analysis of the flow of funds in the accounts held by the defendants revealed that between 1 January 2001 and 3 August 2002, a total sum of $6,603,242.05 was deposited into D1’s bank account on 232 occasions whereas $6,536,518.55 were withdrawn from those accounts on 548 occasions - Charges 1 to 6.

8.And during the same period a total sum of $9,003,268.57 was deposited into the three personal accounts of D2 on 160 occasions, and that $9,001,863.47 were withdrawn from those accounts on 650 occasions - Charges 7 to 9.

9.After elimination of matched transactions between the defendants’ accounts, the amount of funds dealt with by the defendants in respect of these accounts was set out in Charges 1 to 9.

10.In relation to the Profit Dragons’ account with Hang Seng Bank between 2 January and 2 August 2002, a total sum of $714,800 was deposited into that account on 15 occasions and $626,413 was withdrawn on 28 occasions.  After discounting a returned cheque for $180,000 originally issued by D1, the total of withdrawals and deposits were $535,800 and $446,413.04 respectively. 

11.Between 1996 and 2002 D1 did not file any tax return to the Inland Revenue Department and tax return filed by D2 disclosed that she was employed as a clerk between 1995 and 2001 with an annual income of below HK$120,000 for each financial year.  In the financial year ending in 2002 she had an income of $108,314 including HK$50,000 as remuneration for being the manager of Profit Dragons.  Between 1 April 2002 and 31 July 2002, she further received a total of HK$140,000 in respect of being the marketing supervisor of Profit Dragons.

12.Prior to 2002, the defendants had no real property in Hong Kong.  Subsequently, the defendants acquired two properties and two motor vehicles.  The two motor vehicles were Mercedes motorcars purchased on consecutive dates, namely 19 and 20 April 2002, both subject to finance.

13.The prosecution submitted that the only reason or conclusion that could be drawn from all the facts was that the defendants dealt with monies referred to in the charges, knowing that they were the proceeds of an indictable offence or having reasonable grounds to believe that the monies were the proceeds of an indictable offence and such grounds were known by the defendants.

14.Both defendants elected to give evidence.  D1 said the monies were from gambling and his operation as a junk dealer in casinos in Macau and Tanian(?) near Guam, and from his earnings and winnings from his Temple Street mahjong school.  D1 said he told D2 this was the source of the money and D2 confirmed that this was what she had been told.  I did not believe the evidence of the 1st defendant. 

15.And as regards the 2nd defendant I was sure there was objective sounds to believe the monies were the proceeds of an indictable offence and such grounds were known by her. 

16.The 1st defendant has matters recorded on his record in 1996 and 2007.  The matters recorded in 1996 included false imprisonment and theft and he was sentenced to a total of 5 years’ imprisonment.  In 2007 after his arrest for this offence, he was convicted of an offence of conspiracy to traffic in dangerous drugs for which he was sentenced to 25 years’ imprisonment, and he is now serving that sentence.  The 2nd defendant has a clear record.

17.As I have mentioned previously, the defendants are a married couple.  They have two children who are aged 4 and 7.  In connection with the 2nd defendant, I accept that she was not the principal offender in this case and she acted together with and under the directions of her husband.  I am sure she was not acting under any undue influence. 

18.Money laundering is clearly a very serious offence.  It is an attempt to legitimise the proceeds from criminal activities.  Serious criminal offences are often motivated by financial gains and those who assist criminals in laundering money indirectly encourage them in their criminal activities.  Successful deterrence against money laundering could be effective measures against crime.  The maximum sentence for money laundering conviction on indictment is a fine of $5 million and 14 years’ imprisonment which is a reflection of how such offence is viewed.

19.The courts have said that it is not feasible to lay down guidelines for sentences in money laundering offences as there is a very wide range of culpability.  The courts have also held that there should be little relevance regarding the mental culpability of the money launderer which was based only on reasonable belief of the source of the money as opposed to the actual basis of the knowledge.

20.I have considered the relationship between the defendants.  The 2nd defendant was an active participant in this money laundering.  They purchased properties together.  They purchased cars on consecutive dates in April 2002. 

21.One matter that has been raised is the question of delaying this case.  I have been given by the prosecution a chronology of the events, and that chronology shows that in June 2002 a team of the Narcotics Bureau started to investigate into the possible money laundering offences against the 1st and 2nd defendant.

22.The 1st defendant was arrested on 3 August 2002.  A house search was conducted and records of 21 bank accounts, 20 covering the period from October 2001 to July 2002 and one from November 1999 to July 2002, held in the names of the 1st and 2nd defendant or the two companies in their names.  Production orders were served on relevant banks and financial institutions at the end of that month and in the beginning of the next month.

23.In October 2002 the Treasury Accountant was requested to prepare a report regarding this case and whilst engaging the Treasury Accountant, the prosecution had to get bank statements of 40 banks covering periods from 1999 to 2002.  In December 2002 the 1st defendant was released on court bail.  In July 2003 the Narcotics Bureau team sent the prosecution file for legal advice.  In September 2003 the 1st defendant was convicted of conspiracy to traffic in dangerous drugs and was sentenced to 25 years.  His appeal against that conviction and sentence was heard in May 2005. 

24.In February 2004 the first legal advice was sought.  The DOJ instructed to conduct the following investigation: take a cautioned statement from the 2nd defendant, ascertain the amount included in the particulars of each offence and prepare a summary of evidence setting out evidence against the 1st defendant for his conspiracy to traffic in dangerous drugs case.

25.In April 2004 the first Treasury Accountant Report was prepared but the police requested amendments.  In May 2004 the 2nd defendant was arrested for money laundering.  In March 2005 the prosecution file was sent for legal advice regarding the money laundering offence.  In May 2005 the conspiracy to traffic in dangerous drugs case was adjourned to July 2005 on the 1st defendant’s application.

26.In June 2005 the second legal advice was given to D1 and D2 with the money laundering offences and the DOJ instructed the conduct of the following matters in preparation for trial: transcripts and certified translations of the video interviewed records, English translations of all documentary exhibits, statement to be taken from the Treasury Accountant, affirmation and computer certificate for the relevant records, English translations of all statements and to check if either defendant was involved in similar offences being investigated in Hong Kong.

27.In July 2005 the appeal against the 1st defendant’s conviction was heard and a retrial was ordered and fixed for November 2006.  In September 2005 the 2nd defendant was released from police bail.  In July 2006 the prosecution file was sent again to the Department of Justice to report the progress of further evidence in accordance with the second legal advice that had been obtained from the department.

28.In November 2006 the 1st defendant was retried and convicted and sentenced to 25 years’ imprisonment.  In November 2006 the Treasury Accountant handed out a draft report as requested by the Department of Justice and started to finalize her report.  In January 2007 the Treasury Accountant handed out the final report showing a total of fund flows in 40 bank accounts covering the period 1999 to 2002 in the name of D1, D2 and two companies held in their name. 

29.At the end of May 2007 final legal advice was given and the defendants were arrested in September.  The trial was originally set down for hearing in January 2008.  The matter was unable to proceed because the 1st defendant appeared in person and was unable to get legal aid.  In order for the defendant to represent himself, translations of all the documentation had to be obtained, so the case was adjourned to September 2008.  The 1st defendant made a number of applications to the High Court to have funds released to finance his legal representations.  Those applications were unsuccessful. 

30.When D1 appeared before the Chief Judge in this court in September 2008, he was still unrepresented and it was set down for trial in January.  And shortly before the matter did proceed to trial, the 1st defendant was able to get legal aid and be represented at this trial.

31.The Treasury Accountant’s report is a complex document consisting of many volumes.  I am told by the prosecution that the time taken to prepare this case is not unusual given the nature of the case and the amount of documentation that had to be examined and the nature of the enquiries that were being made.  I find it difficult to point to any actual incident of undue delay.  However, clearly, the defendants have had to wait a considerable time for this trial.

32.I sentenced the 1st defendant, on the first five charges, to 3 years’ imprisonment.  On Charge 6, I sentenced him to 3½ years’ imprisonment.  On Charge 10, I impose a sentence of 3 years and order that 6 months of that run consecutive to the other sentences.  On Charge 12, I sentenced D1 to 3 years’ imprisonment and ordered that 6 months of that run consecutive to the other sentences.  The total sentence therefore is one of 4½ years’ imprisonment. 

33.I have taken into account the question of delay and I have decided to reduce that sentence by 6 months to one of 4 years’ imprisonment.  I have to consider the question of totality.  He is serving a period of 25 years’ imprisonment, that is a substantial sentence.  I decided, that one year of the sentences would run consecutive to your existing sentence.

34.I sentenced the 2nd defendant, on Charge 7, to 3 years’ imprisonment and also on Charge 8, 3 years’ imprisonment. On Charges 9 and 11, I imposed sentences of 3½ years’ imprisonment, and on Charge 12, 3 years’ imprisonment.  I decided that all those sentences should run concurrently.

35.I took into account the question of delay in the case.  I decided to reduce the sentence by 6 months, so the total sentence was 3 years’ imprisonment.