HKSAR v. Pan Ming Chiu

DCCC1048/2009

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO.1048 OF 2009

REASONS FOR SENTENCE

1.The defendant faces one charge of “Dealing with property known or believed to represent proceeds of indictable offence, contrary to s.25(1) and (3) of the Organized and Serious Crimes Ordinance, Cap.455.

2.It is alleged that the defendant between 20^th April and 26^th May 2009 knew of or had reasonable grounds to believe that 2 sums of Hong Kong dollars, namely $389,346 and $224,217.22, being choses in action owed to the defendant by the HSBC and the Bank of China respectively, in whole or in part, directly or indirectly represented the proceeds of any indictable offence, dealt with the said property.

3.The defendant pleaded guilty to the charge, admitted to the summary of facts and was duly convicted.

Summary of Facts

4.The defendant opened and operated 2 bank accounts, respectively with HSBC and the Bank of China, for others for a reward.

5.PW1 Ms. Tan lives in Singapore. In around March 2009, she was told on the phone that she had been selected to take part in a lucky draw in Sentosa. On 6^th May 2009, she was told over the phone that she had won HK$950,000 in the lucky draw. She was then asked to deposit funds on 4 occasions into 4 different bank accounts, one of which is the defendant’s HSBC account mentioned above. Pw1 remitted Singaporean dollars 71,250 on 22^nd May 2009 to the defendant’s HSBC account as payment for a “proof certificate” so that she could receive her prize money.

6.PW2 Ms. Kok also lives in Singapore. Just like Pw1, she received a phone call in mid-May 2009 and was told that she had been selected to take part in a lucky draw to be held in Hong Kong. A few days later, she got another phone call telling her that she had won Singaporean dollar 197,000 in the said lucky draw. Pw2 was then asked to deposit funds on 2 occasions into 2 different accounts, one of which was the defendant’s Bank of China account. Pw2 remitted Singaporean Dollars 7,000 to this account on 25^th May 2009. When pw2 was asked to make a third deposit, she became suspicious and demanded the return of her earlier deposits, which however were never given back to her.

7.The defendant came to Hong Kong as a visitor for the first time on 19^th April 2009 and left on 23^rd April 2009, 3 days after he opened his HSBC and Bank of China accounts on 20^th April. Bank records show that various deposits and withdrawals had been made.

8.The defendant visited Hong Kong again on 21^st May 2009. He withdrew HK$5,000 and HK$190,000 in cash on 25^th May 2009 from his Bank of China account. In the morning of 26^th May, the defendant visited the Nathan Road branch of HSBC and made enquiries about transfers into his account. Upon being advised of a incoming transfer of SGD71,250, the defendant asked the sum to be converted into Hong Kong currency. During the process, the defendant was arrested.

9.In 2 video recorded cautioned interviews, the defendant stated that he had no knowledge about the lucky draw scam concerning pw1 and pw2. He came to know a person “Lam Chai” via online chat room and agreed to come to Hong Kong to withdraw money for a reward. He was to receive New Taiwanese Dollar 40,000 (approximately HK$9,500) as his reward for withdrawal of HK$2 million. “Lam Chai” was the person who bought the air ticket for him and asked him to come to Hong Kong on 20^th April 2009. The defendant was given HK$3,500 for the trip and $500 per day while here. When in Hong Kong, the defendant was met by a “Chun Gor” who showed him how to withdraw money and took him to open the bank accounts in Central. The initial deposits were given by “Chun Gor” for opening accounts with Hang Seng Bank, Standard Chartered Bank, HSBC and Bank of China. “Lam Chai” told him that someone will deposit money into the bank accounts but did not elaborate nor explain the source of the money.

10.On 21^st May 2009, “Lam Chai” asked the defendant to come to Hong Kong to withdraw money. He met “Chun Gor” and was brought to room 505 of Southern Hotel. “Chun Gor” asked him to withdraw $5,000 from Bank of China in Jordan. The defendant used his bankbook to withdraw the money and gave it to “Chun Gor” when they were back at the hotel.

11.On 26^th May 2009, “Chun Gor” told him to check if there is a sum of money remitted from Singapore into the defendant’s HSBC account and if so, the defendant was to exchange the money into Hong Kong currency.

12.The defendant felt suspicious about the money to be withdrawn but chose to do as he was asked as he needed the reward money.

Previous convictions

13.The defendant has a clear record in Hong Kong, bearing in mind of course that he only came to Hong Kong for the very first time on 19^th April 2009, a mere 37 days before he was arrested on 26^th May 2009 for the present offence.

Mitigation

14.The defendant is 28 years old, a Taiwanese national. He was educated up to F3 in Taipei, had worked as an iron worker, factory worker, gardening worker and earned about NTD$15,000 per month. The defendant has been unemployed since 2006. He is single and living with his younger brother and sister in Taiwan. His parents had passed away.

15.It is submitted in mitigation that the role played by the defendant is secondary. The scam was controlled by “Lam Chai” and “Chun Gor” who instructed the defendant to do what he did in Hong Kong. The defendant first came to Hong Kong to open bank accounts, as instructed by “Chun Gor”, and then the second time to come to withdraw money. From the confession made by the defendant in his video recorded interview as set out in the summary of facts, the defendant had felt suspicious about the money but went on nonetheless since he needed the money. When the defendant came to Hong Kong the second time, he understood that the money was unlawful money and he expressed his reluctance to cooperate with “Lam Chai”, but since he knew “Lam Chai” had triad linkage in Taiwan, since “Lam Chai” delivered the ticket to the residential home and so knew exactly where the defendant lived, he was afraid that if he did not cooperate then they may do something harmful to his younger brother and sister. Although it was out of greediness that it all started, it was out of fear for the safety of his siblings that the defendant had carried on. It was simply too late for the defendant to back out because once the account had been opened, he had to be there to conduct the withdrawal.

16.A letter written by the defendant was submitted by counsel in mitigation. The defendant was in some financially difficulties and that was why he committed the present offence.

Cases on sentencing

17.In HKSAR v Mak Shing, CACC 322/2001, the Court of Appeal said that for cases involving money laundering, “There are no guidelines for offences of this nature. The reason for this being that the circumstances of each case may vary almost infinitely.”

18.In the case of HKSAR v Xu Xia Li and another [2004] 4 HKC 16, on the relevance and effect of the nature of the offence behind the proceeds on sentencing, the Court of Appeal said this,

“By the nature of the offence itself, in our judgment, the nature of the indictable offence from which the money was derived should be of no particular significance in sentencing, save that if the defendant knew that the money was derived from very serious crimes, it would be an aggravating feature to be taken into account in sentencing.”

In our present case, this aggravating factor does not exist.

19.On the purpose of the legislation and the seriousness of the offence, Woo VP said (at page 23E-H, paragraph 18):

“The prohibition of the offence is in order to strike at those who give assistance to criminals to dispose of or retain their ill-gotten gains as if they were derived from legitimate activities.  Without the assistance of money launderers, it would be more difficult for criminals to clothe their illegal proceeds with the same respect as lawful gains and the chances of law enforcement detection of illegal activities that produce monetary benefits would be enhanced.  Money laundering is therefore treated as a serious offence.  If money laundering activities were allowed to be carried out in Hong Kong with impunity or treated lightly with minor penalties it would mar Hong Kong’s reputation as a world-class financial and banking centre.”

20.In HKSAR v Jain Nikhil and another [2007] 2 HKC 205, the applicants were the perpetrators of a variation of the well known “Nigerian money transfer fraud”. “The two victims of the conspiracy, the subject of Charge 1, were contacted in the period December 2005 to March 2006 by strangers, who told them that they were the beneficiaries of huge inheritances, but that they required the assistance of the victims to provide monies, so that various fees could be paid to enable them to obtain the inheritances.” The inducement presented to the victims may be different, but the carrying out of the scams are very much the same in both cases. The money laundered was however 10 times more than the $613,563.22 in our present case at $6.6 million. The concurrent sentence for the 2 money laundering charges of 3 years and 4 months after plea was upheld. The Court of Appeal recognized that in money laundering cases, “a factor relevant to sentence, but only one of such factors, is the amount of money that was ‘laundered’ in the accounts.” (per Lunn J, at paragraph 38).

21.Defence counsel submitted 3 recent District Court cases where people from Taiwan were recruited and brought to Hong Kong to commit offences similar to that of our present case. In HKSAR v Wang Wei Ling, DCCC260/2009, Deputy Judge M. Chow adopted starting points of 2 and 2.5 years for laundering of about HK$964,513. In HKSAR v Chen Lung Chen, DCCC1001/2009, 3 years’ imprisonment starting point was adopted by Deputy Judge Casewell for laundering of about HK$1,115,494. In HKSAR v Liu Yo Ming, DCCC294/2009, Judge S. Remedios adopted a starting point of 30 months for the laundering of about HK$904,654. It is noted that in all 3 cases the amount of money laundered were more than the amount involved in our present case.

Sentence

22.The maximum sentence for the charge on conviction upon indictment is a fine of $5M and imprisonment for 14 years.

23.The total sum laundered was HK$613,563.22.

24.The defendant came to Hong Kong specifically to commit the present offence. He came here for a monetary reward, his trip was paid for and he was provided with a daily allowance. It is obviously an elaborately organized scam with cross-borders involvements. The defendant is the one who faces the highest risk of being caught in the whole scheme, yet he is likely to be the one who stood to gain the least should the scam be successfully carried out. The whole point of getting someone like the defendant to open the bank accounts in Hong Kong is to isolate the masterminds behind the scene. Nonetheless, the defendant is an integral part of the scam.

25.The sum laundered is $613,563.22, not a small sum but also not a very large sum in comparison to similar cases. I find that it is an aggravating factor that the defendant had come to Hong Kong specifically to first open the accounts and then later again to make withdrawals on behalf of those behind the scam. There is however no evidence that the defendant had any idea how the fraud was going to be perpetrated or that it would involve overseas victims.

26.I find that the words of Woo VP as cited above in the case of HKSAR v Xu Xia Li and another concerning the protection of the reputation of Hong Kong still most relevant. It is also noted that in the 3 District Court cases submitted, the offences took place over a steady period of time with no signs of the recruitment of frontline account holders like the defendant receding. 2 of the cases had offences taking place in the same month of December 2008, just days from each other. The other case was in March 2009 and now we have our present case offence of which was committed in May 2009, just 2 months after the previous case. These are of course the cases that were successfully intercepted and brought to be prosecuted in the District Court, there is no knowing as to how many had slipped through the net of investigation. If a deterrent sentence is not imposed to deter those who might be tempted by the masterminds of these kinds of scams to be recruited as the intended scapegoat, Hong Kong’s reputation as an international banking and finance centre will be tarnished.

27.Bearing in mind all the circumstances, including the possibility that the defendant was actually somewhat reluctant to continue with the operation once he began to suspect the source of the funds, I will adopt a starting point of 33 months' imprisonment, giving the defendant the full 1/3 discount for his guilty plea, I will sentence him to 22 months' imprisonment.