HKSAR v. Kong Yik Fai and Another

DCCC102/2011

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 102 OF 2011

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Reasons for Sentence

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1.D1 and D2 plead guilty to one charge of dealing with property, knowing or believing the property represented the proceeds of indictable offence, contrary to section 25(1) and (3) of the Organised and Serious Crimes Ordinance, Cap.455.

2.The victim is a lady from the Mainland and emigrated to Toronto, Canada in January 2008.  She was the victim of an Internet scam.

3.She searched the Internet one day in March 2010 and came across a person via one of the friend-finding platforms.  That person claimed to be a Mr Lau Ah-chun (hereinafter called “Lau”).  He also claimed to be the manager of an international company for VIP investment in NASDAQ Index. He told the victim to visit the webpage of his company.

4.He assured the victim that she would have very good return, i.e., in the region of 30 to 50 times of her investment per week, because the investment involved insider trading.

5.The victim was persuaded and joined in the investment.  Lau told her that he would trade on her behalf by using other VIP’s account because she was not a VIP member.

6.The victim then deposited or asked her family members to deposit funds into the bank accounts designated by Lau.  The victim, either by herself or her family, deposited a total of about HK$5.9 million. One of the accounts designated by Lau was a savings account with Bank of China (hereinafter called “BOC”), held in the name of D1.

7.In late June 2010, the victim wanted to withdraw profits.  Lau told her to come to Hong Kong to make the arrangement.

8.The victim arrived at Hong Kong on 3 July 2010. She visited all known addresses of Lau and Lau’s company, but to no avail.  She failed to contact Lau as well.

9.She, therefore, made a report to the police on 4 July 2010.

10.The BOC account in the name of D1, into which the victim or her family members had deposited money, was opened on 18 May 2010 and D1 was the sole signatory.

11.Between 20 May and 4 June 2010, a total sum of HK$1,790,595.55 was deposited into this account by PW1 and her family members.

12.This account was closed on 22 June 2010.

13.Between 24 May 2010 and 22 June 2010, a total sum of HK$1,850,745.10 was withdrawn from this account.

14.On five occasions, D1 withdrew the money from different BOC branches.

15.On 2 June 2010, just eight minutes after D1 had withdrawn HK$220,000 from the BOC Tsuen Wan branch, D2 used the ATM machine to withdraw HK$10,000.  CCTV captured the images of D1 and D2 when they made the respective withdrawals.

16.D1 was arrested by police on 10 August 2010.

17.Under caution, D1 said he had a total of seven bank accounts.  Other than one of those accounts, the other six accounts - including the BOC account, to which the victim or her families had deposited money - were opened by him for his friend D2 for tax evasion in companies.

18.On 24 May 2010, he went to BOC’s Shatin branch with D2 and withdrew HK$623,000.  He gave the money to D2 and received HK$10,000 from D2 as reward.

19.Between 2 June and 4 June 2010, D1 went to BOC branches a few times in Mei Foo Sun Chuen and Shatin, and withdrew a total of HK$1.2 million.  He gave all the money to D2, and D2 gave him in return a total of HK$12,000 as reward.

20.In mid-June 2010, D1, upon instruction from D2, closed the BOC account and gave the remaining balance to D2.

21.D2 was arrested on 10 November 2010.  When he pleaded guilty today, he admitted that what D1 had said under caution is the truth.

22.D1 is 25 years old, single, living with his parents and one elder sister.  He is a decoration worker.  He has one previous conviction for two charges of possession of Part I poison, for which he was fined and sentenced to DATC.

23.I understand that he is now still serving his sentence in DATC.

24.Mr Szeto, solicitor for D1, told me that D1 committed this offence due to financial pressure.  Prior to the offence, he had been unemployed for nearly one year and he needed money, not only for his living, but also for satisfying his drug addiction.

25.Mr Szeto told me that D1 realised that what he had done was wrong and he promised not to commit the offence again.  He pleaded for leniency on behalf of D1.

26.D2 is 27 years old, single, living with his parents.  D2 is a decoration worker.  He has a clear criminal record.

27.Mr Lai, solicitor for D2, told me that the defendant has stopped working due to injuries.  Because he was out of work, he went to Shenzhen, where his friend told him to collect some money and promised to reward him with $100 for every $10,000 collected by him.  Since he is unable to work, and out of greed, he was persuaded by his friend and committed this offence.

28.Mr Lai told me that D2 gained only HK$18,000 from the offence.

29.Mr Lai submitted a letter from D2’s parents, who, in short, told me that D2 was a filial son and he is trying his best to take care of them.

30.Mr Lai also produced a bank receipt, showing that D2 had donated HK$300 to a charity organisation in August 2009.

31.Mr Lai urges me to give D2 discount in sentence for his clear record.

32.Money laundering is a very serious offence, because it is an attempt to legitimise proceeds from criminal activities.

33.More often than not, serious criminal offences are motivated by financial gains and those who assisted criminals in laundering money indirectly encourage commissions of those serious offences.  The money launderers also hinder the process of investigation and may even enable criminals of serious offences to escape the long arm of justice.

34.Sentences for this type of offence shall, therefore, aim at punishment and deterrence.

35.The sentence must punish and deter the specific offender before the court.

36.In addition, it must also send out a message to the public at large, particularly to would-be money launderers, that this type of offence will not be tolerated.

37.To achieve this purpose, the usual sentencing option is one of imprisonment.

38.While imprisonment is the usual sentencing option, there is, however, no sentencing guideline on the length of the prison term.

39.The Court of Appeal has made clear that it is not feasible to lay down a guideline, because facts vary from case to case, with a very wide range of culpability.

40.The Court of Appeal has, however, given some guidance on the factors that need to be taken into account in the determination of the length of the sentence.

(1) First, the amount of money involved, rather than the amount of benefit received by a defendant in the transaction;

(2) the relevant indictable offence, if it can be identified;

(3) the defendant’s culpability, i.e., the level of his participation, the length of time in which or the number of occasions on which he is involved in the money laundering activities, whether he knew that the money he was dealing with derived from a very serious crime, the degree of sophistication of the operation, the extent to which he had assisted in the indictable offence or hindered its detection, and the benefit he has received;

(4) fourth, the presence of an international element.

41.Having considered the mitigation entered on behalf of both defendants, I find no special circumstances in this case that justifies the imposition of a non-custodial sentence on any one of them.  To achieve the sentencing purpose of punishment, as well as deterrence, both in its general and specific senses, I hold that imprisonment is the only appropriate sentencing option.

42.As to the length of the prison term, I note that the amount of money involved in the offence was nearly

43.As far as the indictable offence itself, the Internet scam in question was a serious one, because the victim had lost a total of about HK$5.9 million.

44.On the other hand, I have to say that the operation of this Internet scam was not particularly sophisticated, although there was certain degree of planning.

45.The planning involved the perpetrator setting up a webpage of a so-called investment company, so as to lure the victim into believing that she was actually taking part in a genuine investment that yielded profits exceptionally high and fast, but the major tools employed by the perpetrator to deceive the victim were simply his smooth talk and the victim’s greedy mind.

46.There is also no evidence that D1 or D2 took part in this Internet scam.

47.As to the operation of the money laundering offence itself, again, it did not involve a high degree of sophistication, because D1 just set up a bank account to receive the money in his own name. There is no evidence that D1 had used any means to conceal his true identity and personal particulars when he set up the account.  There was no further channelling of the money into other bank accounts.

48.Having said that, two points must, however, be recognised.

49.Firstly, the offence committed by D1 and D2 played a very important role in the operation of the Internet scam in question, because nearly one-third of the money cheated out of the victim was deposited into the account just set up by D1.

50.While there is evidence that a sum of about $60,000 had been withdrawn from this account, with the source of this sum of money unknown, it is quite clear that the account in question was set up mainly for the purpose of receiving proceeds of the Internet scam practised on the victim.

51.This inference is irresistible from the very short lifespan of this account.  It was a fact that this account was opened on 18 May 2010 and was closed on 22 June 2010.  Apart from receiving money from the victim and taking away the money, this account served little other purpose before its closure.

52.Secondly, this offence committed by D1 and D2 had clearly hindered the apprehension of the perpetrator of this Internet scam, i.e.,  Lau.  Over HK$1.7 million are now in the hands of the perpetrator of the scam and he was able to receive his illegal gains without leaving any clue to trace him.

53.The last factor this court must take into account in sentencing must be the international dimension of the offence.  The victim is a Canadian Chinese being cheated in the cyberspace and she was deceived into paying money from Canada into a Hong Kong bank account.  The international reputation of Hong Kong as a banking and financial hub has been tarnished.

54.What I have just said are common factors that I will take into account in sentencing both D1 and D2.

55.I shall now deal with the particular role played by each of the defendants.

56.As to the role played by D1, obviously, he was the frontline man in setting up the account and withdrawing the money.

57.There is, however, no evidence that he was aware of the deception practised by Lau on the victim at the time when he set up the bank account or at any other stage before his arrest, nor is there any evidence to show that D1 knew that the money he had been instructed by D2 to withdraw came from this or any other Internet scam before his arrest.  He had on five occasions withdrawn money and the offence lasted for about one month.  His personal gain was a total sum of $20,000.

58.The position of D2 is different.

59.While it may also be said that there was no evidence to show that he was aware of the Internet scam practised on the victim and that he may also be regarded as a frontline man to collect the proceeds of crime, he was the one who instructed D1 to open the bank account and withdraw the money.  He was the leader of D1.  He had also used D1 to hide his identity.

60.Under these circumstances, I am of the view that the sentence to be imposed on D1 and D2 shall reflect these differences.

61.I bear in mind the previous sentencing cases and particularly the sentences imposed in HKSAR v Javid Kamran, CACC400/2004; HKSAR v Abayomi Bamidele Fayomi, CACC197/2005; HKSAR v Zhan Jianfu, CACC258/2007; and HKSAR v Hsu Yu Yi [2010] 5 HKLRD 545; and distinguishing the role played by D1 and D2, I adopt 33 months’ imprisonment as a starting point for D1 and 36 months’ imprisonment as a starting point for D2.

62.As far as mitigation is concerned, both defendants committed the offence out of financial pressure.  Financial pressure can only explain why the defendants committed the offence and can never be regarded as mitigation.  Likewise, D1 needs money to satisfy his drug needs is also not a mitigation.

63.I note D1’s criminal record but I place no weight on it.

64.He is entitled to the usual one-third discount to reflect his guilty plea.

65.He is, therefore, sentenced to a term of 22 months’ imprisonment.  This sentence will have the effect of revoking his existing DATC order.

66.In the case of D2, he has pleaded guilty and is, therefore, entitled to the usual one-third discount.

67.Mr Lai pleads for the reduction in sentence in light of his clear record.

68.However, in Secretary for Justice v Ko Wai Kit [2001] 3 HKLRD 751, at page 757 Stock JA said that the lack of previous convictions will often be subsumed in the credit given for a plea of guilty.

69.Hence, no further reduction can be given on account of his clear record.

70.However, I am of the view that but for D2’s admission that what D1 has said under caution is true, the prosecution may not be able to prove the charge against him.

71.On this particular basis, I am prepared to give him more discount of the sentence on top of the usual one-third discount.

72.I also note the donation he had made to charity in 2009.

73.All in all, D2 is given 40 per cent of discount of the sentence.

74.He is, therefore, sentenced to a term of imprisonment for 21 months and 18 days.