HKSAR v. Wu Wing Kit and Another
Read the full judgment text of DCCC 1022/2012 on BabelCite. This District Court judgment.
1. D1 and D2 are each convicted after trial of a separate charge of money laundering. The 1 st Charge relates to D1’s acts of money laundering on 11 and 12/3/2010. The 2 nd Charge relates to D2’s acts of money laundering between 12/3/2010 and 26/10/2011. They are each found to have reasonable belief that the monies they dealt with constituted proceeds of an indictable offence.
Cites 6 cases
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DCCC 1022/2012 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CRIMINAL CASE NO. 1022 OF 2012 -----------------------------------
---------------------------- Reasons for Sentence ---------------------------- Charges 1.D1 and D2 are each convicted after trial of a separate charge of money laundering. The 1st Charge relates to D1’s acts of money laundering on 11 and 12/3/2010. The 2nd Charge relates to D2’s acts of money laundering between 12/3/2010 and 26/10/2011. They are each found to have reasonable belief that the monies they dealt with constituted proceeds of an indictable offence. Facts as found relevant to sentencing Case relating to D1 2.On a certain day before 11/3/2010, D1 told his secretary PW3 Flora Tam that Jack Chen would deposit money in the region of US$ 10,000,000 into FKC’s Client Account at the bank. The money would be transferred to D2 the following day. On 11/3/2010, Goldmate, whose controlling director cum shareholder was Jack Chen, deposited a cheque of HK$ 68,950,000 into FKC’s Client Account at the bank. She had to issue an Official Receipt for it. D1 did not mention the purpose of the money but instructed her to put down “Goldmate”, which he knew as a company owned and controlled by Jack Chen, as the name of the Client and classify the money as “Costs and Disbursements on Account”. She instructed PW1 Rachel Fong, the staff member at the accounts department responsible for actually drawing up the Official Receipt, to so state it. He told her the bank account information of D2 to receive the transfer. On 12/3/2010, D1 approved the Payment Voucher prepared by Flora Tam to transfer the HK$ 68,950,000 to D2’s bank account as “costs and disbursements to client” despite the fact that D2 was not his client. 3.At all material times, Practice Direction P of the Hong Kong Law Society governed how solicitors should handle funds provided by client or potential client. A solicitor should made enquiries to obtain information on the nature and intended purpose of the transaction, and the source of funding. There are circumstances which may exonerate a solicitor in a case of non-compliance. If not exonerated by Practice Direction P, depending on the reason for non-compliance with this requirement, there may be disciplinary and/or criminal consequences. D1’s own testimony reveals that he had not made enquiries. He seeks to explain why he had not done so but his reason is disbelieved by me. I regard his breach a breach of the requirements of Practice Direction P without reason, not for error of judgment, negligence or inadvertence. 4.My findings are that first, he knew the amount was unusually large in his professional practice. Secondly, he knew Jack Chen’s instruction was unusual as the money was destined to go from a husband’s company’s bank account to the wife’s account the following day through FKC’s Client Account. Thirdly, he knew Practice Direction P expected a solicitor in his situation of dealing with client’s or potential client’s money to make enquiries to obtain information on the nature and intended purpose of the transaction, and the source of funding. In my judgment, possessed of these facts, he would objectively consider them sufficient to lead a person to believe that the money constituted proceeds of an indictable offence. Case relating to D2 5.There were 17 deposits identified by the prosecution as the money laundered in the 2nd Charge. Near the end of the Reasons for Verdict, I have split up the 17 Deposits into 2 types. The First Type, Items 1, 6, 8 and 15, together with Items 2 – 4, and 9 – 14, was new monies deposited into her HSBC Account. Its total was HK$ 122,350,569.09. The Second Type, Items 5, 7, 16, and 17, was in the nature of “re-deposits” of monies of the same or approximate amount after she had withdrawn them from her HSBC Account for alleged loans or investments, as the case may be. 6.The position can be summarised by the following table, the First Type of Deposit in bold:
7.It is my finding that the money coming into her HSBC Account between 12/3/2010 and 26/10/2011 was only held in her name for someone else and did not belong to her. She was only its custodian. She was the puppet at the front stage. The cloaked master was in control of how the monies moved. She had allowed her master to use her HSBC Account to move monies whose sources and purposes were unknown to her. She was willing to, and did, carry out instructions from her master to receive deposits in her HSBC Account without enquiring of the nature and purpose of the deposits and the source of the funding. In my judgment, possessed of these facts, D2 would objectively consider them sufficient to lead a person to believe that the monies constituted proceeds of an indictable offence. D1’s personal background and mitigation 8.D1 is and was a senior partner in Fred Kan & Co. (“FKC”), a solicitors’ firm. He has specialized in commercial matters, listing companies, joint venture, merger and acquisition for 20 years. He has worked with corporate regulators such as SEHK, the Futures and Securities Commission of Hong Kong. In 2005, a friend introduced D2’s husband, Jack Chen to him. Jack Chen was an investor in China. 9.D1 has a young family from his second marriage. He will surely lose his professional career and social reputation as a result of the conviction. There are a large number of mitigating letters, mostly from the legal profession and some from other walks of life, which Mr. Bruce SC has to select a few to represent a fair sample of how people view him. They say loads of his good deeds. 10.Mr. Bruce SC submits that the offence was committed within a matter of a couple of days. There is no proof that the money was actually dirty money. His culpability was rooted in making no enquiries despite the presence of suspicious circumstances. It is not as serious as active dealing with the money. He was most eager to assist Jack Chen, a long-term client. He did not receive any reward from his commission of the present offence. At the juncture he dealt with the deposit, the money had no international element. 11.He has a long history of voluntary community service in Lok Sin Tong Charity group. D2’s personal background and mitigation 12.She is 43 years of age. She was born in China. She received secondary education. In 2001, she immigrated to New Zealand. Since 2006, she has resettled in Hong Kong. Her husband is Jack Chen. She has 3 children, aged 19, 17, and 14 respectively. One is affected by anorexia whereas another one has attention deficit syndrome. They write to mitigate for her. She is a demonstrably loving and caring mother who pays them the best attention most of her time while their father is often away from home. There are mitigation letters from herself and her father. 13.Mr. Wong SC in mitigation seeks to suggest that from the evidence at trial she can be seen as probably influenced by Jack Chen in the way she managed her HSBC Account. There are precedents on reduction of sentence for a defendant being influenced by a close family member or cohabitant to commit the offence of money laundering (HKSAR v Lai Kam Yee Teresa [2010] 4 HKLRD 165; HKSAR v Chan Wai Yan [2012] 4 HKLRD 195; HKSAR v Chiu Kit and Another CACC 210/2009). I do not find this mitigating factor open to D2. The case as I have found is that while on the evidence at trial Jack Chen himself or through his company Goldmate had made substantial deposits into D2’s HSBC Account, there is no proof at trial or any suggestion in mitigation that Jack Chen had been her instructor in the handling of the money in her HSBC Account. Any mitigation based on the defendant’s relationship with her instructor is thus unavailable to D2. Sentencing considerations 14.The amount of money laundered had been conveniently relied upon as easily the most important factor in sentencing money laundering cases (HKSAR v Hsu Yu Yi 許有益CACC 159/2009; HKSAR v Yeung Kin Chai 楊建齊[2009] 3 HKC 35). However, comparisons between cases had become increasingly difficult when this quantum approach did not always lead to consistent scales of sentences. The difficulty had to be resolved for consistency in sentencing. In HKSAR v. BOMA [2012] 2 HKLRD 33, the Court of Appeal was requested to provide sentencing guidelines to resolve the differences. The Court of Appeal recognized the extensive permutations of money laundering cases and observed expressly that some cases should warrant serious sentences not because of the amount involved. Stock VP (as he then was) identified the following features as also relevant in the sentencing of money launderers:
15.As the weight of a factor might vary between cases, he made it clear as follows (at para 25):
Sentencing D1 16.HK$ 68,950,000 was a substantial amount from any angle. What it wanted was apparent legitimacy, so his act would cloak it up with the reputable facade of a solicitors’ firm’s bank transfer. I am sure that with his ample professional experience, he was well aware that he was in a position to confer this blessing. I accept that he might not have had a number of weeks or days to think about the matter before he dealt with the money. There is no evidence of reward but I find it the irresistible inference that he committed the present offence in order to keep Jack Chen as a client. I do not regard his fall from grace as a mitigating factor as this would have been obvious to him as the inevitable consequence. If he were not a solicitor, I would have taken a starting point of 5 ½ years’ imprisonment. Now I take a starting point of 6 ½ years. I accept the worth of his voluntary community services. I reduce his sentence by 3 months. I give him another 3 months off at the instance of his family for the loss of his financial and physical support. There are no other mitigating factors. His sentence is 6 years. Sentencing D2 17.D2 was engaged in a system of money laundering for 19 ½ months by taking instructions from her master as how to deal with the deposits and withdrawals. The new monies deposited into her HSBC Account came to HK$ 122,350,569.09 in total. This was a very substantial amount. She dealt with deposits and withdrawals made across the Hong Kong-Chinese border. But for the limit of my jurisdiction, I would have taken a starting point of 8 years’ imprisonment. Now I take 7 years. I have sympathy towards her children, whose mitigating letters in grief reflect a tough challenge of their formative years in her absence. She ought to have thought of their predicament before she committed the present offence. Be that as it may, I reduce her sentence by 6 months at their instance. There are no other mitigating factors. Her sentence is 6 years and 6 months.
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Cases cited in this judgment
Further hearings and rulings under DCCC 1022/2012