HKSAR v. Cheung Sze Wah and Others

DCCC 1029/2008

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 1029 OF 2008

____________________

BETWEEN

Reasons for sentence (D1, D2, D5-D9)

1.D1 was convicted after trial of three counts of managing a vice establishment in relation to Prince Silver Spring Sauna (S1), Prince Sauna (S2), Prince City Sauna (S3) and six counts of dealing with proceeds of an indictable offence.

2.D2 was convicted after trial of one count of assisting in the management of a vice establishment in relation to Prince Silver Spring Sauna (S1).

3.D5, D6 and D7 were each convicted after trial of one count of assisting in the management of a vice establishment in relation to Prince Sauna (S2).

4.D8 and D9 were each convicted after trial of one count of assisting in the management of a vice establishment in relation to Prince City Sauna (S3).

Factual basis for sentencing of charges 1 and 10

5.According to the facts found during the trial, D1 was the boss of S1. He was in control of the routine operation of S1 and also controlled its accounts.[1] In S1, the sexual services included hand job (set A), oral sex, body massage (set B) and sexual intercourse (set C). The charges were $496, $596 and $796 respectively. The cashier systematically collected payments. Evidence revealed that there were about 30 masseuses on duty offering sexual services. The payments collected would be split between S1 and the masseuses. There were 800 condoms found in the rest room of the masseuses.

6.D2 was the licensee of S1 at the material time. He was one of the three assistant managers. He briefed the undercover police officer on the first day of work and arranged the officer to sign an employment contract.

Factual basis for sentencing of charges 2, 13, 14 and 15

7.Evidence revealed in the trial proved that S2 was a vice establishment providing sexual services included hand job (set A), oral sex, body massage (set B) and sexual intercourse (set C). The charges were $496, $596 and $796 respectively. These charges were collected at the cashier counter.

8.D1 chaired monthly meetings of S2. During those meetings, D1 directed the staff to refer any enquiry on sexual services to the managers. He also warned the staff not to have any affair with colleagues. Personal items of D1 were found in a safe in the manager’s room. D1 also had control over the accounts of S2. He was one of the signatories of the Merchant Agreement with Hang Seng Bank which provided credit card facilities for S2. D1 was also one of the 4 signatories of the savings and current accounts of S2.

9.D5, D6 and D7 were manager/assistant managers of S2. Evidence revealed that D5 had a supervisory role in relation to D6, D7 and other supervisors. D5 also knew about new masseuses joining S2 and gave direction to other staff in relation to work. However, that is not a sufficient reason to increase his penalty.

10.D6 was the licensee of S2. He was responsible for introducing appropriate masseuses to customers for sexual services. He also interviewed the undercover police officer and introduced the latter to others on the first day of work. He was also concerned with the working attitude of individual masseuse.

11.D7 supervised and assigned duties to the undercover police officer She also distributed tips to the officer regularly. She was also responsible for introducing sexual services to customers.

12.There were 276 condoms found in S2.

Factual basis for sentencing of charges 3, 16 and 17

13.Similarly, evidence revealed in the trial proved that S3 was a vice establishment providing sexual services included hand job (set A), oral sex, body massage (set B) and sexual intercourse (set C). The charges were also $496, $596 and $796 respectively. These charges were collected at the cashier counter routinely.

14.Personal items of D1 were found in a safe in the manager’s room and the cashier counter. These items included his personal cheques, insurance policy and deposit slips. There were letters signed by D1 on behalf of S3.

15.D1 also had control over the accounts of S3. He was one of the signatories of the Merchant Agreement with Hang Seng Bank which provided credit card facilities for S3. D1 was also one of the 4 signatories of the savings and current accounts of S3.

16.D8 was the manager of S3. He greeted customers and introduced sexual services to them.

17.D9 was the manager of S3. He was also responsible for introducing sexual services to customers.

18.There were 1242 condoms found in S3.

Personal background of the defendants

19.D1 is 51, married with 2 daughters and a son. The children are all adults. D1 has 4 previous convictions. The last conviction was in 2006 for possession of Part I poison and he was fined. Counsel pointed out that S1 started as a licensed massage establishment. Due to the economic down turn during SARS, D1 had to resort to provision of sexual services to keep up the business turnover. I note that D1 is suffering from Obstructive Sleep Apnoea Syndrome. However, the report submitted today revealed no particulars of treatment nor did it comment on how this condition would affect the life expectancy of D1. I do not think this condition warrant additional reduction of sentence.

20.D2 is 27. He has a clear record. He is single living with his parents. His father suffered from a psychiatric condition and his mother needs medical care for hypertension and diabetes. Her parents were living on CSSA. Counsel pointed out that the evidence against D2 was not strong and D2 was away on sick leave for a substantial period.

21.D5 is 52. D5 was last convicted about 25 years ago. He is married with an adult son. His wife suffers from asthma. Counsel pointed out that D5 had disability at his left hand which limited his choice of job. I have considered the letters submitted today.

22.D6 is of clear record. He attained Form 4 standard. He was the licensee of S2 since 2000. He derived no additional benefit from the provision of sexual services. He has been doing voluntary work for aged homes.

23.D7 is 47. She has 3 previous convictions. The last one is over 20 years ago. She is married with three adult children. She was not in control of S2. She was just an employee. There was no evidence of exploitation.

24.D8 is 30, single, F.5 standard. He joined S3 6 years ago. He was only an employee. D8 has a clear record.

25.D9 is 44. He is separated from his wife. His son is eleven. He had worked in S3 for about 9 years.

26.Counsel for D8 and D9 pointed out that because of the economic down turn due to SARS, S3 resorted to providing sexual services. They have no choice or would lose their jobs.

The sentence of managing or assisting in the management of a vice establishment

27.While sentencing of this offence may vary from case to case, evidence showed that the operation of S1, S2 and S3 was very organized. I appreciate that there was no evidence of exploitation. There was no evidence that D2, D5-D9 had any additional gain arising out of the sexual services apart from a monthly salary. While some of them have previous convictions, the record is long time ago. I do not take it against anyone of them. Having considered all the circumstances and the particular facts of this case, I consider immediate custodial sentence is warranted.

28.For D1, he is convicted of 3 counts of managing a vice establishment. I take a global view of the 3 offences. I take 30 months as the starting point, I sentence D1 to 30 months imprisonment for each of the 1^st, 2^nd and the 3^rd charge. I order that the sentences to run concurrently. I deduct one month for the delay in bringing the charges to court. D1 has to serve a total of 29 months for these three charges.

29.For D2, I take 12 months as the starting point. I deduct one month for the delay, I sentence D2 to 11 months imprisonment for the 10^th charge.

30.Having reviewed the evidence, the criminality of the other defendants is similar to D2 albeit related to different saunas. For the same reasons above, I sentence D5 to D9 each to 11 months imprisonment for the 13^th to 17^th charges.

The sentence of dealing with proceeds of an indictable offence

31.D1 was also convicted of 6 counts of dealing with proceeds of an indictable offence. For the 4^th and 5^th charges in relation to the accounts of S1, the total sum is about $8.8 and $5.7 million respectively. I appreciate that S1was a licensed massage establishment. There bound to be customers who went to S1 for regular massage. On the other hand, I am aware of the evidence during the trial that the managers or supervisors invariably offered sexual services to the decoy police officers. There is no way to calculate the proportion of the total proceeds which represent proceeds derived from the sexual services. Counsel cannot propose any basis documentary or otherwise for the estimation of the proportion. Further, evidence revealed that there were 3 sections in S1[2]. The business turnover of the other 2 sections should not be counted in sentencing. There has to be certain degree of arbitrariness one-way or the other. Having considered the above, I take 40% as a reasonable discount and sentence D1 on that basis for the accounts of S1. I also take a discount of 30% for the accounts of S2 and S3.

32.In considering the starting point, I have considered the sentencing principles set out in HKSAR v Leong Wai Keong, CACC 476/2007 and HKSAR v Fan Shek Hung, CACC 393/2006. I bear in mind that D1 was the person in control of the business of the three saunas. He was fully aware of the sexual services provided by the masseuses. I take all these as aggravating factors.

33.For the 4^th charge, I adopt a discount of 40%. I sentence D1 to 3.5 years imprisonment for the revised total proceeds of $ 5.3 million.

34.Likewise for the 5^th charge, I sentence D1 to 3 years imprisonment for a revised total proceed of $3.4 million.

35.I order that the sentence of the 4^th and 5^th charges to run concurrently. A total of 3.5 years imprisonment for the 4^th and 5^th charges.

36.For the reasons above, I take a discount of 30% in the 6^th and 7^th charges, I sentence D1 to 3 years imprisonment for the 6^th charge for a revised total proceeds of $3.5 million in relation to S2.

37.Likewise, I sentence D1 to 2 years imprisonment for the 7^th charge for a revised total proceeds of $1.8 million.

38.I order that the sentence of the 6^th and 7^th charges be concurrent. A total sentence of 3 years for the 6^th and the 7^th charges.

39.For similar reasons above, I sentence D1 to 3.5 years imprisonment for the 8^th charge for a revised total proceeds of $4.8 million in relation to S3.

40.Likewise, I sentence D1 to 2 years imprisonment for the 9^th charge for a revised total proceeds of $1.4 million.

41.I order that the sentence of the 8^th and 9^th charges be concurrent. A total sentence of 3.5 years for the 8^th and the 9^th charges.

42.I order that one year of the total sentence of the 6^th and 7^th charges to run consecutive to the total sentence of the 4^th and 5^th charges. I also order one year of the total sentence of the 8^th to 9^th charges to run consecutive to that of the 4^th and 5^th charges.

43.For 4^th to 9^th charges, the total sentence is 5.5 years imprisonment.

44.In view of the totality principle, I order that one year of the total sentence of 1^st to 3^rd charges to run consecutive to the total sentence of the 4^th to 9^th charges. D1 has to serve a total of 6.5 years imprisonment.

Please refer to CACC301/2009 for the relevant appeal(s) to the Court of Appeal.