HKSAR v. Bernhard Goetzmann and Another

DCCC 306/2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 306 OF 2013

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Reasons for Sentence

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1.I shall now turn to deal with sentence. D1 has absconded. He was absent at the time I gave my verdict and he is not present today for sentence after delivery of my verdict. His counsel, Mr Oliver Davies, is present in court today and was here to hear the verdict but has no further instructions and has therefore not mitigated on behalf of the 1st defendant. Upon my conviction of D1, despite his absence I will nevertheless proceed to sentence him.

2.The 2nd defendant is represented by counsel Mr Ching Wan-fung.  I have heard and taken into consideration the mitigation on his behalf before me today.

3.I convicted the 1st and 2nd defendant after trial of an offence each of dealing with property known or reasonably believed to represent proceeds of an indictable offence, contrary to Section 25(1) and (3) of the Organised and Serious Crimes Ordinance, Cap.455.  This offence is commonly known as “money laundering”.

4.I convicted D1 on the first charge of dealing with the funds in a company bank account by the name of Triad Global between 6 March 2010 and 25 May 2010, knowingly that the sums of US$2,499,939 and €2,098,994 were in whole or in part directly or indirectly representing the proceeds of an indictable offence.  The total sum in Hong Kong dollars amounted to approximately 40 million.

5.I convicted the 2nd defendant of the 2^nd charge of dealing with a sum of US$147,000 (approximately HK$1.1 million) between 8 March 2010 and 6 May 2010, of him reasonably believing that those funds were in whole or in part directly or indirectly represented the proceeds of an indictable offence.

6.The monies were derived from was an investment fraud.  People were persuaded to invest monies and deposit them into an account of which monies were then not used for investment.

7.D1 himself was a party to the contract of investment.  He was fully aware that the monies that were deposited into the account were to be used for investments.  He and another withdrew the sums deposited into the account for other purposes other than for investments.  He was in contact with two of the investors, PW2 and PW3 at this trial.  D1 never told them that their money was not invested, that their funds had been withdrawn without their consent.  Even after the funds had been withdrawn, he lied and reassured the victims that they would receive their funds upon the investments made.  He made up excuses why the funds were not returned.  In fact, D1 and another had withdrawn these funds for their own or others’ benefit.

8.I was satisfied on the evidence that D1 was directly involved in the fraud on the victims.  He dealt with the money.  He was a direct beneficiary and an indirect beneficiary of the money laundered and he played a large part in defrauding the victims.  He knew the funds that he was dealing with were funds from victims of a fraud.

9.As for D2, the funds were transferred to his bank account by D1 using the funds defrauded from the investors. 

10.There was no evidence that D2 knew that those funds were fraudulent funds from investment scams. 

11.What I did find in the trial, however, was that D1 and D2 were good friends as well as business associates. This connection was in regard to companies called “PowerAvenue Macau”, of which the defendant was one of the shareholders, and “PowerAvenue Asia”, of which the 1st defendant was linked to.

12.I found that D2 would have reasonably believed that the funds were in whole or in part crime proceeds, as I rejected his explanation that the funds deposited into his account were reimbursements of expenses advanced by him in relation to business connected to the companies PowerAvenue Macau and Asia.

13.D2 was a man with no means and no income.  He lived largely on loans.  All of a sudden, he was in receipt of these sums amounting to about a HK$1 million dollars within one month. 

14.As I mentioned, his connections with this company, PowerAvenue Macau, had connections with D1’s PowerAvenue Asia.  D1 had used the monies deposited by the investors to pay for many expenses of the company of PowerAvenue Asia. 

15.There is clearly a strong link between D1 and D2.  I have said that I am unable to say precisely what this link is.  However, whatever link it is, it does not seem to be for any legitimate purpose.

16.Money laundering is a very serious offence.  The Court of Appeal has said this offence calls for a deterrent sentence.  There is no tariff for this offence.  The maximum sentence for this offence is one of 14 years’ imprisonment. 

17.I have borne in mind that, in sentencing the defendants, that D1 is of clear record. 

18.D2 is now aged 59.  He has three previous convictions, none are similar. He is married with four children.  His youngest are 12 and 15 to his present wife and his other two children are daughters, 31 and 34, with his previous girlfriend.

19.The Court of Appeal in Aboma Amaso CACC335 of 2010 have laid down factors of which the sentencing court should have regard when sentencing in money laundering cases.  Those factors are not an exhaustive list.  One of the factors is the nature of the predicate offence.

20.In this case, the offence was one of fraud. This was a fraud committed on genuine investors to the tune of some HK$40 million.

21.I turn then to the state of knowledge of the offender.

22.D1, as I found, was involved in the fraud, the predicate offence.  He had knowledge of the nature of that offence.  He is certainly much more culpable than D2, who had no knowledge.  D1 had intentionally dealt with those proceeds of crime. 

23.There was an international dimension.  Overseas investors had deposited money into a Hong Kong account.  The money was moved out from the Hong Kong account to other accounts in Hong Kong or in cash. 

24.There was clearly sophistication and a high degree of planning.  The scam was to target investors and have them deposit monies into the accounts.  Despite the non-investment of money, D1 lied and cheated and gave excuses for the non-return of funds. 

25.There were at least other parties involved, such as D1 and Myers and a person called Rocco, who was a shareholder of PowerAvenue Asia.  These three people were living together in Hong Kong at HarbourView Residences, paying huge amounts of rent.  The rent for these residences were paid by those investor deposits.  

26.Offices were rented at expensive, upmarket premises at International Commerce Centre, of which millions of dollars were paid for rent.  The rent again was paid by investor deposits.  The rental was paid through solicitor firms.  This was made to look as though the money was clean.  The rental of those expensive office premises was just a façade.  There was no business in Hong Kong.  There were numerous transactions of deposits. 

27.The period of time to which the offence occurred was over a period of three months for D1 and one month for D2.

28.The most aggravating factor in this case was that D1 knowingly dealt with crime proceeds.  He played a significant and major role.  He was the director of the laundering operation or scheme. 

29.His sentence would, of course, be far above that of D2, who appears, as I said in my verdict, to be a second-layer recipient. The amount of money D2 was found to have laundered was about $1.1 million. 

30.The amounts and the factors I have mentioned are matters I have taken into consideration when deciding on what is the appropriate sentence.

31.For D1, I convicted him after trial and I sentence him to 6½ years’ imprisonment.

32.For D2, taking into account all the matters I have said and your mitigation, I sentence you to 2 years’ imprisonment.