HKSAR v. Stuart Sidney Williamson

DCCC 450/2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 450 OF 2013

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Reasons for Sentence

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1.Defendant, you have pleaded guilty to four charges before this court. Those charges are 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”.

2.The four charges deal with separate bank accounts to which you were the sole signatory of those bank accounts held in the name of a company by the name either of “Lightman International Limited” or “Ridgeway Hong Kong Limited”.

3.The 1st charge deals with an amount of US$982,498.77 in the name of the company “Lightman” between the dates of 30 March 2011 and 13 January 2012 in a Standard Chartered Bank account.

4.The 2nd charge deals with an amount of £314,239.79 in a Standard Chartered Bank account, again in the name of “Lightman” company, between the dates of 30 March 2011 and 9 January 2012.

5.The 3rd charge deals with Lightman’s bank account at the Hong Kong and Shanghai Bank in the amounts of HK$373,665.06 and £518,756.92 between 3 March 2011 and 8 November 2011.

6.The 4th charge deals with an amount of HK$151,967.12 and of £141,023.52 in a Hang Seng Bank account in the name of “Ridgeway” between the dates of 3 March 2011 and 30 July 2011.

7.The total amount of monies laundered in the four charges when converted into Hong Kong dollars, as admitted by you, is the amount of $19,866,946.89.

8.The prosecution know of the predicate offence, which is a fraud which arose out of an investment scam conducted by telephone calls.  The principal victim was a 74-year-old male retiree living in the United Kingdom (the victim).  He was a minor shareholder of 8,000 shares of one penny each in a British company called “Pathfinder Minerals PLC” (“Pathfinder”).

9.In May 2011 the victim retiree received a telephone call from a female who claimed to be a staff member of a consultancy company in New York.  She claimed her company was acting as agent for an interested buyer to embark on a takeover bid for Pathfinder.  She offered to purchase the victim’s shares of Pathfinder for £10.50 each, that is, totalling £84,000. 

10.He agreed and from then on he transmitted money from his joint account held with his wife in the United Kingdom to three of the bank accounts opened by you in Hong Kong.  Those remittances were purportedly to be paid for an indemnity bond subscribing for warrants, tax payments to the US Internal Revenue (“IRS”) and for commissions to his transfer agent called “Ridgeway Offshore Limited”.

11.Eventually he suffered a total loss of £1,068,687, including bank charges, which converted amounts to approximately HK$10 to 11 million.

12.The police conducted an account analysis of these bank accounts held in your name and eventually, as elicited in the summary of facts admitted by you, there were other remittances from third parties from the United Kingdom, Australia, the Philippines and Northern Ireland, of which the prosecution say that the transfers, more particularly from overseas or from the third parties in the UK or Ireland, were also victims of telephone scam frauds.

13.According to the Inland Revenue Department of Hong Kong, you were not identified from their tax records.

14.The two companies which you had set up in Hong Kong had records only about their business registration applications in March 2011. Those two companies you set up in Hong Kong had never filed any tax return with the Inland Revenue Department since their incorporation in March 2011.  The companies had sent letters to the victim in England, whom I failed to mention, was Thomas Richard Otley.  Those letters were sent from Ridgeway and Lightman and those letterheads, which the police checked for their address and contact information, had been found to be residential premises.

15.As to your involvement in these bank accounts, it is seen that you had flown into Hong Kong on two separate occasions for approximately two to three days on each occasion.  The sole purpose of you coming to Hong Kong was to set up these companies and to open bank accounts for these companies.

16.The first time you arrived was on 2 March 2011. You arrived in the afternoon. 

17.The following day you set up Lightman and Ridgeway and opened bank accounts for those companies at HSBC and Hang Seng Bank. 

18.You then departed the following day.

19.Approximately a week later, you returned again and arrived in Hong Kong on 13 March 2011 in the evening and the following day opened up a bank account at the Standard Chartered Bank and left again the following day.

20.You returned to Hong Kong on 14 December 2012 and upon your arrival at Chek Lap Kok Airport, you were immediately arrested for the offence of money laundering and remained silent.

21.When you had gone to the bank to set up the bank accounts, you had made false declarations in signing documents by giving telephone numbers and e-mail addresses which were incorrect.

22.Mr Andrew Powner of Haldanes, your solicitor, has in his eloquent manner mitigated fully and thoroughly on your behalf.  He has said all that he can possibly say to assist you in mitigation.

23.As to your background, you are 64 years of age and are an American born in the United States of America.  You have a clear record, both here and in America.  You have received undergraduate education in marketing and then went on to do a postgraduate education in law in America.

24.After those studies, you completed your bar exam and went on to practise law for a year and a half, then you gave up the law and since then you have been involved in several businesses, including that of manufacturing pre-paid phone cards, buying and selling real estate and car leasing.

25.In 2001 you worked as a Correctional Services officer in America and retired in 2006.

26.After your retirement you went to Beijing and taught marketing in universities.  You later became an International English Level Testing System examiner working for the British Council.

27.You left Beijing in 2010 and went to the Philippines where you worked as a part-time examiner for IDP Education prior to your arrest.  From then on you had in fact been domiciled in the Philippines. 

28.You are divorced and your partner who is a Filipina resides with you in the Philippines.  You have two sons aged 38 and 34.

29.I have read through the bundle in the file submitted to me by Mr Powner. It puts forward all the various mitigating factors for me to consider.  There are many letters from your family - that is, your ex-wife, your present partner, your two sons and your sister who is a nun and friends in the Philippines as well as a friend who is a lawyer in Freshfields. 

30.I shall not reiterate what is said in those letters but I have noted what is said therein.  In summary, the people who have written these letters have expressed some shock and disbelief on your commission of this offence and that, in general, you are an honest man placing great trust in people, which perhaps led to your commission of this offence.

31.I turn then to the principal mitigation advanced on your behalf by Mr Powner.  Of course, the strongest mitigating factor in this case, I shall say at the outset, is your plea of guilty and your plea of guilty at the very earliest opportunity.

32.Mr Powner has referred me on numerous occasions to a non-prejudicial statement that you gave to the police.  It is his submissions that you have tried your very best to assist the police to investigate the matter further but unfortunately this  has led to no further arrests or convictions and, as he rightly concedes, the courts in Hong Kong have said that unless there is some useful assistance these matters are not taken into account towards any discount on sentence.

33.As to your commission of this offence, Mr Powner has submitted that it was your naïve and trusting nature that led you to commit this offence.  You have enormous regret for your naivety and your stupidity in not checking the documents or checking more thoroughly what you had been asked to do.  You had, in fact, let your guard down as you were living a relaxing retirement life in the Philippines. 

34.The reasons for you committing this offence, I am informed, is that you had met a man where you lived in the Philippines.  He had asked you to assist him in setting up these two companies and bank accounts in Hong Kong.  You live on an island called Davis in Bohol.  It is a small island where foreigners like you live and meet each other around the island at bars and restaurants.

35.You had met this man called “Mr Gregory” through a mutual friend.  He also lived on the island.  After knowing him for a while and finding him a likeable person, after about nine months he approached you and asked if you would be interested in earning some money.  This was suggested to you face to face at a bar. 

36.He told you he was working for two men and was recruiting people to help set up shell companies.  He told you he had already set up two companies in Hong Kong.  These companies had virtual offices and an accounting firm in Hong Kong.  He explained to you that these newly set up shell companies would establish credit with the bank over time.  Then, the shell company could be sold at a profit. 

37.He told you that the two individuals did not do the job themselves as it was difficult for companies to set up new bank accounts in Hong Kong and that individuals were only allowed to set up two companies up initially.  Still, many companies wanted to set up businesses in Hong Kong due to the available international banking facilities. 

38.You were also told that and believed there was a business in lighting based in England.  You were told that he was to recruit people to travel to the countries where the shell company and bank account were to be opened.  You were remunerated with an amount of US$1,500 to open these bank accounts and set up the companies.

39.You did some research on the Internet at home and thought what you were doing was perfectly legal.  You did not consult anyone as you thought it was simple and straightforward.  You also believed that Mr Gregory gave you a legitimate answer when you asked why those people could not do it themselves. 

40.You then were given details and met a lady in Cebu at a hotel.  She gave you a briefcase to bring to Hong Kong.  In the briefcase she showed you documents.  They were brochures; business cards; plane tickets; cash for your hotel room, meals, taxi fares and other expenses.  Your name was printed on the business card but you say you do not remember the company name or what the name was under. 

41.She gave you the hotel address you would be staying at in Hong Kong, the address of the company you had to go to to open up the shell company, as well as the address of the banks.  She also gave you a phone card to use in Hong Kong so you could reach Mr Gregory if you had any problems.

42.You say everything in your trip from Cebu to Hong Kong was pre-arranged, except for your ferry trip to Cebu, and you believed that these were arranged by either Stephanie or the other individuals.

43.You arrived in Hong Kong and you did what you had to do.  You met the lady at the Korchina TNC Limited, which was the company which took you to set up the bank accounts and the shell company.  She took you to the banks.  You just followed the usual procedures at the banks to set up the companies.  You then flew back to the Philippines.

44.A couple of weeks later, you flew back to Hong Kong to set up another bank account but you do not remember much about your second trip.

45.Mr Powner has time and time again reiterated that you believed that this was a legitimate setting up of a company and it was your blind trust in Mr Gregory that this was legitimate. 

46.As I have expressed during the mitigation, I do not accept that it is your blind trust in coming to Hong Kong to set up these companies in the manner you have informed me.

47.You are a very well-educated man.  You have passed your bar exams.  You had been a lawyer.  You were a CSD officer.  You have graduated in undergraduate and postgraduate studies. 

48.What Mr Powner is mitigating on is that not only were you blind, but it appears you were blind, deaf and dumb to all the light bulbs that should have lit on each and every one of these occasions.  You did this, you say, for a sum of US$1,500, which is money you did not need.  Why? Because you wanted to come to Hong Kong for a holiday? 

49.As I have said to Mr Powner, this is extremely difficult to swallow, given your education and intellect, that somebody like yourself in a position could come to Hong Kong with a briefcase full of documents; not knowing what was on the documents or on the name cards; be led blindly, you say, to banks, filling in forms which were in fact false declarations, with e-mails which were not yours, telephone numbers which were not yours; bank accounts set up which you would then, you say, go back to the Philippines and give the away the dongle, which was the Internet access, back over to Stephanie - and for you to think nothing strange of this.  I do not and cannot accept.

50.This was not as though which is the typical type of case of setting up accounts or money laundering as I have mentioned to Mr Powner, where drug addicts, say, lend their bank accounts to people to use for a sum. 

51.Each and every step in this case was well planned.  You went from your Davis island to Cebu, was paid, given cash, given a briefcase full of documents to come to Hong Kong more or less for one working day and flew out of Hong Kong and gave all requisite documents to somebody else when you returned to Cebu.

52.I accept that, on the basis of your plea, that it is not that you knew of the predicate offence, but that you had reasonable cause to believe. 

53.However, in sentencing for these offences, as Mr Powner rightly referred me to, the factors to which the court pays regard is set out in the case of HKSAR v Aboma Amaso, CACC 335/2010. 

54.In this case, the predicate offence is, of course, known to the court.  It was a telephone fraud, at least on Mr Otley, to the tune of some HK$10 million.

55.I accept there is no evidence in this case that you knew of the predicate offence. 

56.In this case, however, it can be seen that you had turned a blind eye to whatever you were doing; that is, coming to Hong Kong, setting up this company and these bank accounts, and turning over those documents to somebody else.  You turned a blind eye to any operations of these bank accounts and/or of these companies.  You did so at your own risk.

57.In this case, there was clearly an international dimension.  As I mentioned, you came from the Philippines to Hong Kong and set up these companies and these bank accounts.  The money was transferred fraudulently or by telephone fraud from overseas companies such as UK and Ireland.  It came into Hong Kong and went out to the Philippines.  Money was transferred from the Philippines at one stage back to Hong Kong.  This was an attempt to make these bank accounts and businesses look legitimate, although, as clearly one can see, it was not.

58.This was a very sophisticated operation, where company accounts in Hong Kong had similar names as that as set up in the Philippines.  Overseas people were targeted as victims in this fraud.  You yourself, not being resident in Hong Kong, came to Hong Kong to open these accounts where this deceit was practised and it was there to achieve the objective of a telephone fraud.

59.There was, in my view, a very high degree of planning, although I accept there is no evidence that you were involved in that planning.  This offence was obviously committed by and on behalf of an organised criminal syndicate operating in the Philippines and using Hong Kong as a conduit. 

60.There were many transactions.  The length of time to which these particular offences were committed was approximately over a period of seven months.

61.As to your role and acts performed by you, you were not listed as any directors of the companies in the Philippines.  There is no evidence that you were involved in the transfers of the sums of monies.  These were all done by Internet or telephone banking.

62.Obviously, the sum of money laundered is a factor to which this court takes into account and, as I mentioned earlier on in my reasons, this sum amounted to some HK$19 million.

63.These are all factors to which the courts take into account.

64.The period of money laundering for the four charges was from 3 March 2011 to 9 January 2012, which is a period of 10 months.

65.Defendant, taking all these matters into account, in sentencing you and considering the principle of totality for these four offences had I convicted you after trial I would have taken a starting point of 5 years’ imprisonment.

66.However, you have pleaded guilty and that warrants a one-third discount to that term, which would make your sentence one of 3 years and 4 months’ imprisonment or 40 months’ imprisonment.  That will be the total term you shall be sentenced to.

67.However, you have four separate charges to which I must now sentence you individually for.

68.On Charge 1, the amount involved was about HK$7.5 million. I would have taken a starting point of 4 years’ imprisonment and reduced that term to 2 years 8 months’ imprisonment.

69.On Charge 2, the sum involved was about HK$3.7 million and I would have taken a starting point of 2 years and reduced that term to 1 year and 4 months’ imprisonment.

70.On Charge 3, the amount there was HK$6.6 million.  I would have taken a starting point of 4 years and reduced that term to 2 years 8 months.

71.On Charge 4, the amount involved was about HK$1.8 million. I would have taken a starting point of 2 years and reduced that term to 1 year 4 months’ imprisonment.

72.To reflect the total period of imprisonment, Defendant, I order 8 months of Charge 2 to run consecutive to Charge 1, and all remaining charges are to run concurrent to each other and that will make a total term of 40 months’ imprisonment, to which you are so sentenced.