HKSAR v. Tung Wai Hong

DCCC 47/2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 47 OF 2015

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Reasons for Sentence

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1.In this case, the defendant, Tung Wai-hong, faced four counts of dealing with property known or believed to represent proceeds of an indictable offence, contrary to Section 25(1) and (3) of the Organised and Serious Crimes Ordinance, Cap 455.

2.He was convicted of all four counts upon his plea and admission of the facts.

3.The prosecution’s case was that during the period between January 2008 and November 2010, money in the amounts disproportionate to the defendant’s state of finance had been paid in and taken out of the four bank accounts related to the defendant (ie Accounts 1 and 2 were in the defendant’s own name and Accounts 3 and 4 in the name of defendant’s Madam Ma, the co-defendant in the charges) against whom the prosecution has decided not to proceed (hereinafter referred to as “Ma”).

4.The prosecution contended that the movement of funds were for the purpose of laundering money.

Facts

5.According to the tax return filed by the defendant’s employer in 2009, the defendant worked as a supervisor in an advertising company during the financial year of 2008/2009.  From June to November 2008, his average monthly income was HK$9,800.  The defendant’s spouse Ma earned a total of HK$2,580 as a promoter for the financial year of 2005. 

6.Neither the defendant nor Ma holds any real property, vessel or vehicle. He does not have any company shares or business registration.  The defendant lives in a public housing unit with Ma and his parents. 

7.After the defendant was arrested on 23 July 2012, under caution he remained silent. 

8.The total amount involved, after discounting the interbank transfers in the four accounts, came up to HK$13.07 million.  None of these monies could be traced.

Charge 1 (Account 1: Total amount involved: HK$5,180,949.46)

9.On 26 March 2007, the defendant opened a savings account with the Bank of China (Account 1).  Between 7 January 2008 and 4 November 2010, a total sum of HK$5,273,378.91 had been paid into Account 1 and HK$5,180,949.46 had been withdrawn therefrom:

(i) Deposits

HK$2.4 million in 259 cash deposits was made through instant deposit machine.

HK$2.7 million was by 111 bank transfers, of which:

· HK$259,374.00 was from selling of securities or insurance;

· HK$37,000.00 was from Ma’s Bank of China account (Account 4).

(ii)Withdrawals

HK$2.8 million was in cash.

HK$2.35 million was by way of transfer, of which:

· HK$1.24 million was transferred to Account 4;

· HK$718,040.00 was made to at least 22 different accounts;

· The rest was made for securities transactions.

Charge 2 (Account 2: Total amount involved: HK$2,426,795.00)

10.On 28 November 2008 the defendant opened a savings account with Hang Seng Bank (Account 2).  Between 28 November 2008 and 1 November 2010, a total sum of HK$2,460,901.75 had been paid into Account 2 and HK$2,426.795.00 had been withdrawn therefrom.

(i) Deposits

HK$1.06 million in 135 cash deposits was made via instant deposit machine.

HK1.4 million was made by 111 bank transfers, of which:

· HK$785,000.00 was made from Ma’s HSBC account (Account 3);

· HK$620,000.00 was made from at least 23 different bank accounts.

The cash deposits correlated roughly with the deposits of similar but larger amounts into Account 3 a few days earlier.

(ii)Withdrawals

HK$2.16 million was made in cash through ATM.

HK$250,000.00 was by way of transfer, of which:

· HK$44,000.00 was transferred to Account 3;

· HK$165,195.00 was made to at least 14 different accounts in 19 transactions.

Monies paid into Account 3 were withdrawn in cash within a very short time.

Charge 3 (Account 3: Total amount involved: HK$6,297,456.28)

11.On 26 August, Ma opened a savings account with HSBC (Account 3).  Between 1 January 2008 and 30 October 2010, a total sum of HK$6,310,157.60 had been paid into Account 3 and HK$6,297,456.28 was withdrawn therefrom.

(i) Deposits

HK$2.97 million was in 365 cash deposits.

HK3.18 million was by 226 bank transfers, of which:

· HK$2.7 million was from 78 different accounts;

· HK$400,000.00 was from other unidentified accounts;

· HK$14,000.00 was from Account 1.

(ii)Withdrawals

HK$2.26 million was in cash in 150 transactions.

HK$3.92 million was by way of transfer, of which:

· HK$785,000.00 was transferred to Account 2;

· HK$1.89 million was transferred to 104 accounts;

· HK$530,000.00 was transferred to other unidentified accounts.

Charge 4 (Account 4: Total amount involved: HK$1,306,650.00)

12.On 26 March 2007, Ma opened a savings account with the Bank of China (Account 4).  Between 2 June 2008 and 2 November 2010, in total HK$1,321,489.17 had been paid into Account 4; HK$1,306,650.00 had been withdrawn therefrom.

(i) Deposits

HK$1.27 million (95 per cent of the deposits) was transferred from Account 1. The cash deposits correlated roughly with the deposits of similar but larger amounts into Account 1 a few days earlier. The rest of the deposits (in Account 1) was withdrawn in cash.

(ii)Withdrawals

HK$1.26 million was in cash in 141 transactions.

There were eight bank transfers, of which:

· HK$37,000.00 was to Account 1;

· HK$11,000.00 was to unidentified accounts.

13.The movement of funds in Accounts 3 and 4 were carried out at the direction of the defendant.

Discussions

14.Each charge is tied to a bank account for the movement of funds within the period.  I find the four charges in effect constitute one continuous offence and I will take a global view of the sentence order accordingly.

Sentencing principle

15.The Court of Appeal has held that money laundering offences are serious offences and the sentencing principle is one of deterrence, since:

“not only does it encourage criminal activities indirectly, but also attempt to legitimise the proceeds of crime[1]”

16.Therefore the sentence must serve to alert the public of the serious nature of such offences, even if the motive was one of helping one’s own family member[2].

Relevant considerations

17.Although the Court of Appeal had repeatedly refrained from setting sentencing guideline for the offence, it did in the cases of Hsu Yu Yi[3] and HKSAR v A MaleKnown as Boma Amaso[4], identify a number of features relevant to determine the gravity of the offence.  They could be summarised thus:

(i) the total amount of money involved (not the amount which the offender benefited from the crime);

(ii)the nature of the predicated offence (ie the “indictable offence” in the charge, if identifiable);

(iii) the state of knowledge of the offender;

(iv) the presence of an international dimension is an aggravating factor;

(v) the sophistication of the offence;

(vi) the involvement of an organised criminal syndicate is an aggravating factor;

(vii) the number of transactions and the length of time over which the offence was committed;

(viii) the role of the offender and the acts performed by him. The further down the chain of command, the less culpability he is.

Findings in the present case

18.The prosecution relied on the fact that the movement of funds in the bank accounts related to the defendant was clearly beyond the defendant’s financial status and means.  It took place in a period of over three years.  The crimes involved at least two persons, four different accounts. 

19.The present case is notable for the absence of aggravating factors:  there was no evidence where the money came from and where it went, nor could it be determined what were the predicated indictable offences. 

20.The extent of the defendant’s knowledge, involvement or benefit, if any, could not be determined, although he did tell the probation officer that he lent his accounts to a friend (who could not be traced) and received $300 for each transaction. 

21.I found such an explanation implausible, but had to accept it in the absence of other evidence to the contrary. 

22.It was not a very sophisticated crime.  The defendant’s culpability is not on the higher end of the spectrum.

23.Yet, I cannot overlook the fact that the total amount involved was a rather sizeable sum of HK$13.07 million.  Funds of dubious origin had been “washed” clean with the help of the defendant.  This is precisely the kind of mischief that the legislation seeks to combat.

Cases of comparable magnitude

24.I bear in mind the following decisions which serve as a gauge in arriving at a proper starting point:

HKSAR v Lee Ka Ki[5]

Transactions in two bank accounts over a period of two years. The defendant admitted that he was a front for illegal gambling activities with monthly salary of $8,000. Total amount involved: HK$17 million. The Court of Appeal allowed the appeal against sentence and considered 3 years appropriate on conviction after trial.

Secretary of Justice v Wan Kwok Keung[6]

Illegal bookmaking case. Defendant used the account of a friend to place bets on an illegal gambling site and used his own account to accept payments from customers. Between 2002 and 2009, there were about 2,000 withdrawals and 1,700 deposits, involving a total of about $14 million. Upon the application for review of sentence, the Court of Appeal ruled that the starting point of 21 months adopted by the sentencing judge manifestly inadequate and considered the appropriate starting point should be not less than 4 years.

HKSAR v Au Yim Chuen[7]

85 transactions (including cash deposits and bank transfers) in one bank account over a period of about three years. Total amount involved: HK$17.2 million. Starting point adopted: 4 years.

HKSAR v Li KangHei[8]

Account-lending case. Various transactions in one account over a year. Total amount involved: HK$2.77 million. Starting point: 3 years.

25.Bearing in mind the sentencing principles and the cases of comparable magnitudes, I consider the appropriate overall starting point in the present case is 3 years’ imprisonment.

Mitigation

26.I have taken into consideration of the mitigating submissions by the defence and the background information compiled by the probation officer.

27.At the time of the conviction, the defendant was aged 32, works in a logistics company making $10,000 per month.  On four occasions he had been convicted of criminal charges, none of which similar to the present offence.  He has a 13-year-old son, but his wife, Ma, the co-defendant in this case, is expecting another child by October this year. 

28.Despite his previous brushes with the law, since 2009 he had been behaving within bounds.  The present offences were committed by reason of his failure to consider the consequences of his act and ignorance of the law.

29.I do not think that these information are valid considerations in view of the overriding sentencing principle being one of the deterrence.

30.In the circumstances, the only valid mitigation is the fact that he pleaded guilty.  He is therefore given the benefit of the usual one-third discount and the sentence of each offence shall be 24 months, all to run concurrently.

[1] See the Court of Appeal judgment in SJ v Wan Kwok Keung [2012] 1 HKLRD 201.

[2] See the judgment of Deputy Judge Chu (as she then was) in HKSAR v Hui Kam [2000] 3 HKLRD 211.

[3] CACC 159/2009

[4] CACC 335/2010

[5] CACC 148/2007

[6] [2012] 1 HKLRD 201

[7] DCCC 396/2014

[8] DCCC 251/2014