HKSAR v. Zhang Jinhuo

DCCC 239/2014

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 239 OF 2014

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Reasons for Sentence

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1.The defendant pleads guilty to one charge of dealing with property known or believed to represent the proceeds of an indictable offence, commonly known as money laundering, contrary to section 25(1) and (3) of the Organized and Serious Crimes Ordinance, Cap 455.

2.The charge alleges that the defendant laundered a total amount of US$816,355.08 in a bank account.  The facts can be summarised as follows.

3.The case stemmed from an investment fraud.  In March and April 2013, an Australian residing in Saudi Arabia was lured to make investment in an investment company.  For that purpose he deposited a total of US$69,924.50 into a local Bank of China account No 012-59392133841 (“the BOC account”) in the name of Hong Kuang Company Limited (“Hong Kuang”).  He later found out that he was deceived and reported the matter to the Hong Kong Police.

4.The defendant was the sole signatory of the BOC account.  Hong Kuang was incorporated in Hong Kong on 18 October 2012, and the defendant was the sole director and shareholder.  The registered address of Hong Kuang was occupied by a service company which provided the address to clients for business registration.

5.The BOC account was opened on 24 October 2012. Apart from the initial deposit, the first transaction took place on 7 March 2013.  Between 7 March 2013 and 21 November 2013 there were a total of 113 transactions involving deposits totalling US$816,355.08 and withdrawals totalling US$815,350.

6.The deposits ranged from US$1,000 to over US$56,000 in odd figures.  The funds were remitted into the BOC account from different bank accounts from various places including the United Kingdom, United States, Amsterdam, Singapore, Japan and Mongolia.

7.Withdrawals in round figures ranging from US$10,020 to over US$57,000 were made after several deposits in smaller amount were made, usually within a few days.  Withdrawals were mainly made via online banking to three different bank accounts in Manila.  The BOC account was closed by the bank on 6 January 2014. 

8.The defendant is a resident in the mainland.  He was arrested when he entered Hong Kong on 6 December 2013.

9.At the subsequent video-recorded interview the defendant stated, inter alia, that he first visited Hong Kong in October 2012 to help a Mr Ng to open the BOC account.  He came across Mr Ng at a casino in Macau in around September 2012.  Mr Ng asked him to come to Hong Kong to open a bank account and offered to pay him HK$2,000.  Mr Ng did not explain to him the purpose of the bank account.  The defendant found Mr Ng’s offer suspicious. However, he accepted the offer because he was out of job.

10.He had received a total of HK$5,000 from Mr Ng as remuneration including $500 for giving some copies of his own identification documents to Mr Ng in Macau, $2,000 for opening the BOC account, $2,000 for the setting up of Hong Kuang and $500 for signing some documents.  Mr Ng told him that Hong Kuang would engage in the business relating to building materials. He knew nothing about the transactions in the BOC account. 

11.The defendant is a 54-year-old mainland resident.  He has a clear record in Hong Kong.  He came to Hong Kong on the strength of a two-way permit. 

12.In mitigation, Mr Tso, the defendant’s solicitor, tells the court that the defendant lives in the mainland with his family including his 76-year-old mother who suffered from stroke in 2011.  The defendant’s 24-year-old son having been injured in a traffic accident has to live under the care of his parents.  The defendant’s wife having to take care of the mother-in-law and the son is unemployed. 

13.In drawing my attention to two often cited cases, HKSAR v Hsu Yu Yi and HKSAR v Boma Amazo, Mr Tso makes reference to the relevant sentencing factors identified in the two cases.  He stresses that the defendant’s participation in the offence is low.  He has no actual knowledge of the fraud.  What he did was only a once and for all transaction, ie opening of the bank account.  He was not involved in the withdrawal of the monies out of the account.  His reward was also very small. The defendant is now very remorseful. 

14.In drawing analogy with the case of D2 in HKSAR v Wang Yu Shin CACC173/2009, it is submitted that the proper starting point in the present case should be between 3 years and 3½ years. 

15.Money laundering is a serious offence for which deterrent sentences are required.  As there is a wide range of culpability, no sentencing guideline has been laid down.  However, the Court of Appeal has identified a number of factors in determining the culpability of a defendant including the amount of money laundered which was described as the major consideration, the nature of the offence that generated the black money, the extent to which the offence assisted the underlying crime or hindered its detection, the degree of sophistication of the offence, the defendant’s participation both in the underlying offence and in the money laundering activities, the length of time that the offence lasted, the benefit the defendant derived from the offence and whether there was an international element.  See HKSAR v Hsu Yu Yi [2010] 5 HKLRD 525, HKSAR v Boma Amazo [2012] 2 HKLRD 33, ie the two cases cited by Mr Tso, SJ v Wan Kwok Keung [2012] 1 HKLRD 201 and HKSAR v Leung Wai Wah CACC201/2011. 

16.While Mr Tso rightly pointed out some relevant sentencing matters, I cannot agree with him that the starting point should not be more than 3½ years.

17.In the present case, the BOC account laundered a total amount equivalent to HK$6.3 million, out of which about US$70,000 equivalent to about HK$540,000 was proceeds of deception.  I would accept that the defendant had no actual knowledge of the deception case.  There is also no evidence to prove that he has done anything more than establishing a company and opening a bank account for the company.  His participation in the offence should not be regarded as very high.  The reward he received was not much.

18.On the other hand, there are aggravating features in the case.  I note that the BOC account was opened in October 2012. The money laundering transactions only started in March 2013 until November 2013.  Even disregarding the dormant period, the active money laundering activities lasted for more than 8 months.  Moreover, the amount of money laundered in this case is substantial.  This is a significant factor in the case.

19.There is also an international element in the offence.  Funds were laundered from many different countries.  The withdrawals were made via online banking to bank accounts in Manila.  And the defendant was recruited in Macau to come to Hong Kong for commission of the offence. 

20.A comparison with the sentence of D2 in Wang Yu Shin by Mr Tso is not of much assistance to this court as the sentence was passed on the very special facts of the case and background of D2. Moreover, D2’s sentence not being a subject matter of the appeal was not discussed in the judgment. 

21.Having considered all the circumstances, I find that the appropriate starting point should be 4 years.

22.In the mitigation letter written by the defendant he said his mother suffered stroke again during his detention in Hong Kong and he was the sole breadwinner of the family.  While the court has sympathy for his mother, family hardship and financial difficulty cannot be mitigating factors in this kind of serious offence.  The only effective mitigation is the defendant’s plea of guilty for which he will have one-third reduction of sentence. The defendant will go to prison for 2 years and 8 months.