HKSAR v. Li Kang Hei

DCCC 251/2014

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 251 OF 2014

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Reasons for Sentence
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1.The defendant pleaded guilty to one charge of Dealing with property known or believed to represent proceeds of an indictable offence, contrary to s.25(1) and (3) of the Organized and Serious Crimes Ordinance, Cap.455. Particulars of the charge are that the defendant between 13 October 2009 and 12 October 2010 dealt with $2,782,818.99 in his account 457-768067-292 with HSBC, which represented proceeds of an indictable offence.

Summary of facts

2.The defendant opened the charge bank account on 13 October 2009 with an initial deposit of $5,043.31 as the sole signatory of the account. Between the opening date and 12 October 2010, a total sum of $2,782,818.99 was deposited and $2,777,808.43 was withdrawn from the account. As at 12 October 2010, the balance of the account was at $5,010.56.

3.Inland Revenue Department records show that between 2005 and 2007, the defendant earned a total salary of $78,942, working as a warehouseman, delivery man, mortgage broker and a cook. The defendant does not hold any company nor have any business registration.

4.The defendant was arrested on 18 July 2012. In the subsequent video recorded interview, the defendant claimed that he had lent his bank account to a friend by the name of ‘Tung Wai’ who asked to borrow the account for transfer of money. Tung gave the reason that he was not in Hong Kong often because of his business. Tung asked the defendant to withdraw money from the account and gave the cash to Tung’s driver, ‘Ah Chi’. Tung told the defendant that Ah Chi would leave his employment soon and the defendant would then be offered his job.

5.Various sums of money were then transferred into the account and Tung told the defendant to withdraw the money in cash and passed them to Ah Chi. The defendant was later charged with the present offence.

Previous convictions

6.The defendant is of previously clear record.

Mitigation

7.Mr. Ma pointed out that the defendant is convicted on the having reasonable grounds to believe limb of the offence. There is no evidence of what the predicate offence was, nor that the defendant knew what the predicate offence was, nor that the defendant had actually believed that the account was being used for money laundering. The defendant accepted that a right thinking member of the community, knowing the facts that the defendant knew, would have reasonable grounds to believe that the money in the account that were being dealt with represented proceeds of an indictable offence. It is Mr. Ma’s submission that the defendant’s culpability is at the lower end of the spectrum.

8.Mr. Ma submitted that this is a classic case of lending one’s bank account for another to use and that this is becoming a more common way of committing the offence of money laundering.

9.The bank account was not opened for the specific purpose of money laundering. The defendant had another previous account which was closed by HSBC possible for administrative reasons, and the initial deposit mentioned above in the new account was in fact brought forward from the old account.

10.The Tung who asked to borrow the defendant’s bank account was arrested one week after the defendant’s arrest. Tung is currently still under investigation. There is no evidence to suggest that the defendant drew any commission out of the transactions through the bank account. The defendant agreed to allow his account to be used because Tung was someone he met while playing basketball together. Tung said he was a busy business person who was not in Hong Kong all the time and so asked to use the defendant’s account. The defendant was also impressed by the seemingly expensive Elphard brand 7-seater and the fact that Tung was able to hire a driver. In the end, it was on the strength of the promise by Tung that the defendant would be offered the driver’s job upon his departing that the defendant agreed to lend his account to Tung.

11.When the defendant saw the $400,000 check deposit and the $195,585.75 remittance, he became worried abut the higher amount and suspected there was perhaps money laundering going on and so the defendant told Tung he wanted to stop. Tung however insisted and continued to deposit money into the account or ask friends of his to deposit money into the defendant’s account. The defendant became very worried and stopped using his own mobile phone and changed his number. After a couple of weeks, when Tung could no longer communicate with the defendant, the deposits had stopped. The defendant therefore stopped on his own initiative and it was some 2 years after the dealing stopped that he was arrested.

Personal background

12.The defendant is 27 years old. He was born in mainland China and came to Hong Kong with his mother when he was about 6 year old in order to look after his ailing father. His father passed away about a year later and the defendant stayed in Hong Kong with his mother, who managed to find a job as an assistant in a primary school. The defendant’s mother was diagnosed to be suffering from liver disease and problems with her facial nervous system. She had to be put on medication and could not work for long hours. She stopped working completely after a few years and lives on CSSA.

13.The defendant managed to study up to F.5 level in Hong Kong but stopped his studies afterwards. He then took up jobs of casual labour, warehouseman, estate agent and cook. However, most of the time he was unemployed.

14.To improve himself, after the money laundering activities had stopped, the defendant enrolled in a learning course with City University and graduated in December 2011, giving him qualifications equivalent to passing his F.5 school certificate examinations. The defendant then managed to obtain a license to work as a caretaker, making around $12,000 to $14,000 per month at the time of the defendant’s arrest. When the defendant was released on bail for the present case, he was let go and had not maintained a stable job since.

15.Mr. Ma finally conceded that money laundering is a serious offence and that the total amount of money involved in the present case is not a small amount, with the laundering lasting over a period of 1 year.

Sentencing authorities

16.Although there are no sentencing guidelines in money laundering cases, the Court of Appeal in the case of HKSAR v a male known as Boma Amaso, CACC 335/2010 identified some significant features for the court to consider when sentencing:

“40. Less helpful though this may be than we had hoped, the best we can therefore do is to identify some of the significant features for which the court should look and take into account, though it is not possible to produce an exhaustive list: we can do no better than echo obvious factors that have been referred to by the cases:

(1) The nature of the predicate offence, if known, and the penalty available for the predicate offence: see R v Karen Monfries [2004] 2 Cr App R (S) 9....; although it is suggested that there must be a difference between the offender who knows what the predicate offence is and the offender who does not: R v Gonzalez [2003] 2 Cr App R (S) 35 at [13].

(2) This brings us to the question of the state of knowledge of the offender. This divides itself in two – knowledge of the nature of the predicate offence, where the predicate offence is known to the court; and knowledge of the fact that the funds are the proceeds of an indictable offence:

(a) Where the predicate offence is known to the court, the question of knowledge of the offender as to the nature of the predicate offence is relevant in that the person who knows the nature of the predicate offence is more culpable than the person who does not: see Gonzales above at [13] and Monfries above at [11]. But this is a question to be approached with considerable caution, since many offenders will assert ignorance of the origin of the proceeds in question, particularly where the offender has deliberately turned a blind eye thereby choosing not to know. In such a case it must be recognised that he is nonetheless “assisting in the original crime, whether with knowledge or blind eye knowledge of it”: R v Basra above at [472]. The scheme and purpose of the legislation is to ensure care and honesty in the handling of other people’s money and those who are prepared to handle money on other people’s behalf and turn a blind eye to the source of that money do so at their own risk: see Attorney General’s Reference No. 48 of 2006 [2007] 1 Cr App R (S) 558 at [24]. So the person who is aware of the fact that he is dealing with proceeds of an indictable offence but deliberately chooses not to ask questions is barely less culpable than the person who asks or who is told.

(b) As to the second question, there seems to me to be unassailable logic in the scheme of the Australian legislation which draws a distinction in culpability between the person who intentionally deals with the proceeds of crime, meaning the person who knows or believes that the funds in question are the proceeds of crime; the person who is reckless as to that question; and the person who is negligent about it. The legislation makes it a criminal offence to deal with proceeds of an indictable offence where there are grounds to believe that that is the origin of the funds and the offender knows of the grounds, even where the offender does not positively know that the funds originate from the commission of such an offence, so care must be taken in the last category not thereby to dilute sentencing so as to defeat the object of the legislation; but the person who is reckless is more culpable and the person who knows or believes is more culpable still.

(3) An international dimension will always be a significant aggravating feature; and by international dimension we include money laundered from, or for those operating in, the Mainland.

(4) The sophistication of the offence is always relevant. This will include the degree of planning and whether deceit is practised to achieve the objective.

(5) Where the offence is committed by or on behalf of an organized criminal syndicate, that is an aggravating fact.

(6) It is relevant to take into account whether there is one transaction or many and the length of time over which the offence was committed.

(7) As in the case of Herzberg, it will be an aggravating feature where the offender continues to launder funds after he has discovered as a fact that the funds are the proceeds of an offence or after he has discovered the nature of an offence which is serious.

(8) The sentencing court should have regard to the role of the offender and the acts performed by him. In this regard, the director of a laundering operation or scheme should attract a greater sentence than a person engaged by him although sentences should be sufficient to deter those who might be prevailed upon by directing minds. In the case of a person down the chain, the court will wish to have regard to whether a benefit has been received and if so the nature and size of the benefit. But within the category of persons down the chain there will gradations of culpability. So for example the drug addict or petty crook who is paid a small sum to open an account and hand over its operation to another with no more participation and no more knowledge than that it is going to be used for some sort of crime is much less culpable than an offender of a different sort not “used” in that way.”

Sentence

17.The maximum sentence under s.25(3)(a) on conviction upon indictment is a fine of $5,000,000 and imprisonment for 14 years.

18.In relation to the factors identified in HKSAR v Boma Amaso, I make the following findings.

19.In our present case, there is no evidence to suggest the nature of the predicate offence(s). There is also no evidence to suggest that the defendant either knew of the nature of the predicate offence or that he knew that the funds were the proceeds of an indictable offence.

20.There is no evidence to suggest that the defendant was aware of the fact that he was dealing with proceeds of an indictable offence. In our present case, what is put forward in mitigation and not directly contradicted by available evidence is that the defendant was negligent as to whether his account was being used for the purpose of dealing with proceeds of an indictable offence.

21.In relation to international dimension, according to the summary of facts at paragraph 2, there were 2 remittances totalling $195,585.75 from Macau into the bank account. Save for these 2 remittances, there is no evidence to suggest that the other withdrawals and deposits had an international dimension.

22.The part of money laundering that the defendant was involved in was not sophisticated. Money was deposited into his account and then he would make cash withdrawals and then pass the money onto another person. There is no evidence to suggest that the defendant or Tung or Ah Chi was part of an organized criminal syndicate.

23.The charge period lasted one year, comprising of 263 cash deposits of $1.48 million; 63 bank transfers of $700,000; one check deposit of $400,000; and 2 remittances from Macau of $195,585.75. There were therefore many transactions over a period of 12 month, which was not a short period. The overall total amount being laundered is about $2.78 million.

24.There is no evidence to suggest that the defendant had continued to launder money after discovering as a fact that the funds were the proceeds of an offence. It is the defendant’s case in mitigation that once he saw the large amount of money that was deposited later on, he wanted to get out of the arrangement and had changed his mobile phone number to avoid being contacted by Tung. The transactions had stopped in October 2010 and the defendant was not arrested until July 2012, some 21 months afterwards.

25.I find the defendant’s role in the money laundering scheme a minor one. He did however do slightly more than the account holder who merely handed over use of his bank account, in that the defendant had actually made withdrawals for Tung and then handed over the cash to Tung’s accomplice Ah Chi.

26.I am not entirely convinced that the defendant was simply being lured by the prospect of the job as Tung’s driver into agreeing to let his account be used by Tung. The usage of the account lasted 1 year and the defendant was never actually offered the job. Any reasonable person would have realized that it was not going to happen and yet the defendant chose to carry on helping Tung to make withdrawals and passing the money on to Ah Chi. There is however no evidence to suggest that the defendant had received any direct benefit from the arrangement and I am bound to sentence him on this basis. Under the circumstances, I find the defendant at the lower end of the spectrum of culpability.

27.As Mr. Ma for the defendant had suggested in mitigation, this sort of cases of allowing one’s bank account to be used by others without questions asked is becoming a more common way of committing the offence of money laundering.

28.Furthermore, through recent reports in the news and cases dealt with by this court, it is obvious that money laundering is still prevalent in the Special Administrative Region. The need for deterrence remains and I do take that into consideration when sentencing the defendant.

29.I do not find the personal circumstances of the defendant being mitigating factors. The defendant should have been less negligent in agreeing to allowing his account to be used for money laundering. He had brought the matter upon himself.

30.Bearing in mind all the circumstances of the case and the various factors mentioned above, I find that a proper starting point in the present case is that of 3 years’ imprisonment. The defendant is granted the full one third discount for his guilty plea and sentenced to 2 years’ imprisonment.