HKSAR v. Lee Sin Man

DCCC619/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 619 OF 2012

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Reasons for Verdict

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1.The defendant, Miss Lee Sin-man (“D”) has a clear record and is a teacher by profession.

2.D faces two counts of ‘Dealing with property known or reasonably believed to represent proceeds of an indictable offence’, contrary to section 25(1) and (3) of the Organized and Serious Crimes Ordinance, Cap. 455.  The offence is commonly known as ‘money laundering’.  She pleads not guilty to the charges.

3.Charge 1 concerns a total sum of HK$3,073,200.00 deposited into a betting account numbered 20595245 held in the name of D with Hong Kong Jockey Club (“Account 1”) between 1^st January 2008 and 30^th April 2009. 

4.Charge 2 concerns a total sum of HK$3,116,832.00 in the Hang Seng Bank Account numbered 359-0-017392 held in the name of D with Hang Seng Bank (“Account 2”) during the aforesaid period.

5.There is no evidence that the monies that passed through Account 1 and Account 2, in whole or in part, were in fact the proceeds of an indictable offence. 

6.D’s case is that she did permit her accounts to be used by her boyfriend, Mr. Yung (“Yung”), during the relevant period, hence she had dealt with the proceeds.  Defence case is that at the material time, because D believed Yung, D did not have reasonable grounds to believe that the monies represent proceeds of an indictable offence.

7.It is not the Prosecution case that D actually knew the monies that passed through the two accounts were proceeds of an indictable offence.  The Prosecution contends that D had reasonable grounds to believe so. 

8.The Prosecution does not accept it was Yung who operated the two accounts during the relevant period, Prosecution contends it was D who actually operated Account 1 and Account 2 at all material times; it is not a case of lending one’s accounts to another person but a case of direct laundering by the account holder.  On this subject, there is no direct evidence that D was the person who operated the accounts during the period,  Prosecution relies on circumstantial evidence for its contention that D was the person who operated Account 1 and Account 2 between 1^st January 2008 and 30^th April 2009.

9.There are two main issues before the court: 

i) Who operated Account 1 and Account 2 during the relevant period?

ii) Whether the defendant had reasonable grounds to believe that the monies represented proceeds of an indictable offence.

10.Most of the Prosecution case is not in dispute,  P13, the Admitted Facts, sets out the facts admitted by the parties.

11.Briefly stated, it is admitted that D was the sole owner of Account 1 held with Hong Kong Jockey Club.  Account 1 was opened on 10^th August 2005.  D was the sole owner of Account 2 held with Hang Seng Bank. Account 2 was opened on 17^th August 1999. 

12.P1 to P3 are the affirmations made by officers of Hang Seng Bank and HSBC.  P4 is the computer certificate prepared by the relevant officer of Hong Kong Jockey Club. 

13.On 14^th October 2011, D was arrested by the police at her Sai Kung residence for money laundering in relation to Account 1 and Account 2.  Under caution, D admitted voluntarily that Account 1 and Account 2 belonged to her. 

14.Upon a house search on the same day, the police found two bank passbooks and one bank card of Account 2 in a cabinet in a room of D’s residence.  They were seized by the police and became Exhibits P5, 6 and 7 respectively.

15.D voluntarily attended a video-recorded interview on the same day.  P8, P8A and P8B are the DVD disc, the certified transcripts and the certified English translation of the transcripts of the said interview. 

16.According to the records of the Inland Revenue Department : -

i) D’s annual income for the year 2007/2008 reported in the two employer’s returns of remuneration was HK$301,965.00.

ii) D’s annual income for the year 2008/2009 reported in the employer’s return of remuneration was HK$389,055.00.

iii)D’s annual income for the year 2009/2010 reported in the employer’s return of remuneration was HK$406,965.00.

The relevant employer’s returns are P9, P9A, P10 and P11.

17.DPC 3694, the only witness called by the Prosecution, prepared a summary of the fund flow relating to Account 1 and Account 2, the summary is in the form of a witness statement.  Mr. Hemmings had no objection to the production of the summary provided that the annexes and charts referred to in the said summary are not produced in the form of evidence.  Mr. Hemmings indicated that he had no argument if the annexes only appear in and form part of the Prosecution’s submissions, but as a matter of principle, he opposed strongly to the annexes and charts appearing in the form of evidence.  The summary, without the annexes and charts, became P12.  The annexes eventually appear in and form the Prosecution’s Closing Submissions. 

18.Paragraphs 4 to 6 of the Prosecution’s Closing Submissions summarize accurately the contents of the computer certificate in relation to Account 1 and the activities of Account 1 during the relevant period.

19.Paragraphs 7 to 11 of the Prosecution’s Closing Submissions summarize accurately the contents of the affirmations, P1 to P3, which revealed the activities of Account 2 during the relevant period.

20.D exercised her right and declined to answer many questions put to her during the video interview.  She was willing to answer some of the questions.  Paragraph 12 of the Prosecution’s Closing Submissions summarizes the answers given by D. 

21.I do not propose to repeat in details the Prosecution evidence.  As said, most of the Prosecution case has been set out in the Admitted Facts (P13).  P12, i.e., the summary prepared by DPC 3694 adds little to what are contained in P1 to P4, i.e., the affirmations and the computer certificate.

22.Paragraph 14 of the Prosecution’s Closing Submission summarizes D’s evidence.  Mr. Hemmings agrees it is an accurate summary of D’s case and her evidence.

23.In gist, D’s case is that both Account 1 and Account 2 were operated by D’s boyfriend, Yung, during the relevant period.  Yung worked at a Chinese roasted meat shop at that time.  He intimated to D that he needed to keep custody of the business takings of the shop after he came off duty everyday and Yung asked D to lend Account 1 and Account 2 to him for his use, so that Yung could deposit the daily business takings into Account 1 after close of business every evening.  Yung would transfer the monies from Account 1 to Account 2 and make withdrawal from Account 2 in order to pay the money back to his employer.  D believed in what Yung told her and did not find anything suspicious in Yung’s request and his subsequent use of Account 1 and Account 2. 

24.During the relevant period, at Yung’s request, D allowed Yung to operate her three accounts, that is, Account 1, Account 2 and D’s Power Vantage Integrated Account held with HSBC (“Account 4”).  Yung could use P7, the bank card of Account 2 to operate Account 1 and Account 2.  Yung could use the ETC card of Account 4 to operate Account 4 and another HSBC saving account of D (“Account 3”).  After D broke up with Yung in April 2009, Yung returned P7 and the aforesaid ETC card to D. 

25.The Prosecution brought the charges against D and hence bears the burden of proving all the elements of the offence for each charge beyond reasonable doubt.  It is not for D to prove that she is innocent of the charges. 

26.D has a clear criminal record, she is less likely to commit the offences under complaint.  She is more likely to tell the truth in her explanations in the cautioned interview.  She is also more likely to tell the truth in her evidence in court.

27.It is trite law that it is not necessary for the Prosecution to prove the underlying offence that gave rise to the proceeds. 

28.The Prosecution only has to prove that D knew or had reasonable grounds to believe that the property represented the proceeds of an indictable offence.  In the present case, Mr. Wong has made it clear that the Prosecution case is not that D knew that the monies she dealt with were proceeds of an indictable offence. 

29.The Prosecution case is one of reasonable grounds to believe.  The Prosecution must prove that there were reasonable grounds for D to believe that the monies were proceeds of an indictable offence.  This state of mind involves both a subjective and objective element.  Objectively, there must be grounds that a common sense, right thinking member of the community would consider sufficient to lead a person to believe that the monies represented, in whole or in part, the proceeds of an indictable offence.  The subjective element requires proof that these reasonable grounds were known to D (HKSAR v Shing Shiu Ming & Others CACC 415/1997).  In Shing, the Court of Appeal stated, as it did in HKSAR v MA Zhujiang & Anor CACC 491/2005, the Prosecution only needs to prove that an accused person knew of reasonable grounds the property represented proceeds of an indictable offence, rather than possessed the actual belief. 

30.In HKSAR v Yam Ho Keung, CACC 555/2001, the Court of Appeal held that where there were reasonable grounds for believing in a range of scenarios which might have given rise to the property being dealt with, the defendant held reasonable grounds for believing in them all, if one of these scenarios is related to an indictable offence, that is sufficient basis to convict.  The most important consideration is whether the defendant was aware of those reasonable grounds, not the nature of the actual belief he had formed on the basis of those grounds. 

31.In HKSAR v Lung Yun Ngan & Anor, CACC482/2010, the Court of Appeal held in paragraphs 52 to 54 of the judgment : -

“52. In the result, it is now well settled that, to prove the actus reus of the offence, what must be proved is no more than the act of ‘dealing’ in the property, that is the subject of the offence. To prove the mens rea of the offence however two things must be proved. First, that on the facts found to be proved, there are grounds that a common sense, right-thinking member of the community would consider sufficient to lead a person to believe that the property in question constitutes the proceeds of an indictable offence and second, the defendant knew of those grounds.

53. On that basis, therefore, the necessary mental element of the offence can exist even if the defendant does not himself believe that the property in question constitutes the proceeds of an indictable offence provided that he knows of the grounds which objectively such belief is reasonably based.

54. The offence is a wide one, purposefully so. It means that a person who is asked to deal in property, invariably money, in circumstances which, on any objective analysis, would give rise to a reasonable belief that it represents the proceeds of serious crime, is obliged to take those circumstances into account and act accordingly. He cannot seek refuge in some alternative belief, even of a plausible one, which happens to suit his purpose better.”

32.In assessing D’s evidence, I reminded myself she is a professional teacher of good character. 

33.I reject D’s evidence that she had allowed Yung to operate Account 1 and Account 2 during the relevant period.  It is clear from D’s evidence that of the various bank accounts held by D with Hang Seng Bank and HSBC (Account 2, 3 and 4), Account 2 was the most important one: D’s salary of about $30,000 was paid into Account 2 and D would spend about $10,000 on daily expenditures. Payments for school fees, rent and utilities were by auto pay through Account 2.  It is inconceivable that D would give P7 to Yung and allow Yung to operate Account 1 and 2 with the bank card P7.  It would cause great inconvenience to D as D could only access Account 2 with her passbook.  She could not use any ATM machines; she could not use the counter services of the bank and the passbook updating machine provided.  Whenever D wanted to use her savings in Account 2, Yung would either have to give the money to D in cash or transfer the money to Account 3 for D to withdraw it from Account 3.  Inconveniences apart, it also defies common sense that D would allow Yung to operate Account 1 and Account 2 in this manner.  As pointed out by Mr. Wong, after the cash deposits into Account 1 and the subsequent transfers to Account 2, the monies would be mixed up with the money of D.

34.Under cross-examination, D has to agree that it is more convenient for Yung to make cash deposits into Account 2 directly instead of first depositing money into Account 1, she has to resort to explain that she now thinks it is more convenient to conduct things as Mr. Wong suggests but during the relevant period she just believed in what Yung told her.  I find D’s evidence in this respect most unconvincing.

35.D did not have the bank statements of Account 2 mailed to her residence during the relevant period, she would update her passbook every now and then.  A closer look of P6, the passbook, shows that the pattern of its use is wholly inconsistent with Yung’s claim that he needed to deposit the business takings of the roasted meat shop into Account 1 after he knocked off duty at night and he needed to keep custody of the money overnight, hence deposits into Account 1 and subsequent transfers into Account 2 and withdrawals from Account 2. 

36.If one looks at P6, the passbook, one can readily see that the “business takings” often stayed in Account 2 for much longer than necessary, often for days, hence inconsistent with the Defence case that reasonably viewed, they were business takings of a roasted meat shop. 

37.For example, if one looks at the entries on 21^st November 2007 at page 627 of the bundle, $50,000 was transferred into Account 2 from Account 1, $10,000 was withdrawn from Account 2 on the same day, the next withdrawals, for $10,000 and $20,000 took place on 23^rd  November.  There were two withdrawals of $400 each on 24^th and 26^th November.  The next transfer from Account 1 was made on 26^th November.  Assuming all the withdrawals were made for the purpose of returning the business takings to the shop and not for D, by 26^th November, there was still $9,200 of the original $50,000 deposit left in Account 2. 

38.21^st November 2007 was outside the offending period of Charge 1 and 2 but the point is: as early as November 2007, D would be aware of the fact that the so called business takings were kept in Account 2 for a time longer than necessary.  The pattern of use as revealed by P6 is inconsistent with what D claims Yung had told her. 

39.If one look at the entries within the period 1^st January 2008 and 30^th April 2009, one can see that the same pattern of usage continued, monies stayed in Account 2 for a longer time than necessary.  On 3^rd April 2008, $50,000 was transferred into Account 2 from Account 1, on 4^th April, there were three withdrawals totally $22,000, on 8^th April there was another withdrawal of $16,000.  The next transfer from Account 1 was made on 8^th April 2008, by that time, of the original $50,000 deposit made on 3^rd April, there was still $12,000 left in Account 2. 

40.If one looks at the entries between 25^th and 27^th November 2008 at page 630, one can see that in between the two $50,000 transfers from Account 1 on 25^th  and 27^th November 2008, only $32,000 was withdrawn from Account 2, there was still a balance of $18,000 from the $50,000 deposit made on 25^th November that ought to be taken back to the roasted meat shop but still left in the account when another $50,000 was deposited into Account 2 on 26^th November 2008. 

41.In my findings, D could not have failed to notice the aforesaid pattern of use when she had her passbook updated from time to time. She must be aware that the pattern of use as revealed by P6 was inconsistent with the reasons given by Yung.  D’s evidence that she saw nothing suspicious when she had her passbook updated from time to time is, in my judgment wholly implausible. 

42.The aforesaid pattern of use as revealed by the passbook entries does not support the claim that Account 1 and Account 2 were used for the purpose of safe keeping of business takings of a roasted meat shop. 

43.The aforesaid pattern of use as revealed by the passbook entries must be known to D when she had the passbook of Account 2 updated from time to time.  D could not have failed to notice the transfers from Account 1 and the amounts of the transfers.  D could not have failed to notice the withdrawals from Account 2. 

44.The fact that bank statements of Account 2 would be sent to D’s mother address and not D’s Sai Kung’s address explains why D needed to have her passbook updated from time to time.  The fact that D had been updating her passbook of Account 2 does not support D’s claim that she had lent the bank card to Yung during the relevant period, in fact, the passbook entries show that D had already been updating her passbook from time to time before July 2007, i.e., before Yung became her boyfriend. 

45.I do not think D’s subsequent offer to provide a NPS to the police and refusal on the part of the police to take a NPS statement from D advances D’s case any further. 

46.I do not think this court should speculate as to why Hang Seng Bank and Hong Kong Jockey Club were not alerted by the abnormalities. 

47.As said, I reject D’s evidence that she would allow Yung to use Account 1 and 2 and have D’s own money mixed up with the business takings of a roasted meat shop.  During the relevant period, Account 2 was used by D for receiving her salary and payment for her daughter’s school fees, rental and utilities; D had made two cash withdrawals of $120,000 and $200,000 from Account 2 on 18^th September 2008 and 6^th January 2009 with her passbook; there were transfers of money from Account 2 to other bank accounts of D and D’s brother;  all the transfer of monies from Account 1 to Account 2 were done through Multi-Betting Terminals with the use of P7; the passbooks and bank card of Account 2, i.e., P5 to P7, were recovered from D’s residence during the house search on 14^th October 2011.  The only irresistible inference I can draw from the evidence is that D was the person who operated Account 1 and Account 2 between 1^st January 2008 and 30^th April 2009. 

48.From P4, with the assistance of annex 1A and B, one can see that during the material period of time, regular cash deposits, ranging from $500 to $20,000 were made to Account 1 in 449 transactions.  The total sum involved was $3,073,200.00.  Regular withdrawals were made from Account 1 and transferred to Account 2 in 63 transactions.  The total sum was $3,116,832.00.  61 of the transactions were in a fixed sum of $50,000.

49.From P1, assisted by Annex 2, one can see that during the period, a total sum of $3,920,542.05 was deposited into Account 2 and a total sum of $3,844,238.43 was withdrawn from it.  Transfer deposits from Account 1 to Account 2 were made involving a total sum of $3,116,832.00. 61 of the transactions were made in a fixed sum of $50,000. 

50.The cash deposits of the total sum of $3,073,200.00 into Account 1 and the transfer deposits of the total sum of $3,116,832.00 far exceeded the income earned by D as a teacher.  Over a long period of time, i.e., between 1^st January 2008 and 30^th April 2009, substantial sums of monies were regularly deposited into Account 1 and then transferred to Account 2, both held by D.  Transfers were made to seven bank accounts owned by people who were strangers to D.  In my findings, D must be aware of the cash deposits into Account 1 and transfers of funds into Account 2 from Account 1.

51.A common sense, right thinking member of the community, looking at the matters, would consider the followings sufficient to lead a person to think that the property pleaded in Charge 1 and 2 represented, in whole or in part, the proceeds of an indictable offence.  The cash deposits into Account 1 and the transfer deposits into Account 2 from Account 1, were most unusual both in terms of the sums involved and the number of transactions.  The monies deposited into Account 1 were not for the purpose of placing bets.  The total sums of cash deposits into Account 1 and transfer deposits into Account 2, far exceeded the income of the account holder.  Obviously Account 1 had been used as a conduit to channel cash into Accounts 2 through transfer deposits.

52.The aforesaid unusual circumstances, in my findings, must be known to D during the relevant period of time. There is no credible explanation for these regular and substantial cash deposits and transfers. 

53.I find that D had reasonable grounds to believe that the cash deposits into Account 1, totalling $3,073,200.00 represented in whole or in part, directly or indirectly, the proceeds of an indictable offence. 

54.For the transfer of deposits into Account 2, totalling $3,116,832.00, originating from Account 1, as D had reasonable grounds to believe the cash deposits into Account 1 might be tainted by criminality, when D transferred the funds from Account 1 to Account 2, D also had reasonable grounds to believe that the monies received represented in whole or in part, directly or indirectly, the proceeds of an indictable offence. 

55.For the reasons given, I find D guilty of both Charge 1 and 2.  

Please refer to CACC504/2012 for the relevant appeal(s) to the Court of Appeal.