HKSAR v. LI SHING FAI

DCCC 152/2017

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 152 OF 2017

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REASONS FOR SENTENCE

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1.  The defendant pleaded guilty to seven charges 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. 

Summary of facts

2.  This is a money-laundering case originated from a rental/investment fraud involving a total sum of around $89.98 million.

3.  At the material time, Tan Puay San (“Tan”) was a property agent.  Between 2007 to 2011, Tan falsely represented to :-

(a) Various tenants that they would receive substantial discount of rent if they paid the rent in advance. 12 tenants then deposited around $34.91 million into Tan’s designated accounts.

(b) Various potential investors that Ling Fung Investment Company Limited would acquire old buildings for redevelopment purposes. 12 investors were deceived to deposit around $49.95 million to Tan’s designated bank accounts.

4.  As admitted by the defendant, paragraph 4 of the Summary of Facts showed : -

(a) Charge 1:- a joint account of defendant and Tan in HSBC, $1,024,000 cash being withdrawals were made by the defendant;

(b) Charge 2:- a joint account with Tan also in HSBC, being $2,327,800 of cash withdrawal and payment made by the defendant;

(c) Charge 3:- an account held by the defendant alone and with a total deposit of $58,486,083.24;

(d) Charge 4:- also an account held by the defendant alone, a total deposit of $6,070,740.16;

(e) Charge 5:- a joint account of defendant and Tan, a total of deposit $11,733,344.85;

(f) Charge 6:- a joint account of the defendant and Tan in Standard Chartered Bank, a total of $5,867,318.99;

(g) Charge 7:- a joint account for the defendant, his mother and sister, being the total deposit of $4,468,884.92.

The total amount is $89,978.172.06.

5.  All the bank transactions of the seven bank accounts took place in Hong Kong.  The defendant did not file any tax return between 2006 and 2011 while Tan reported annual income between 2006 to 2009 in the range of $262,398 and $498,608.

6.  In a record of interview, under caution, on 15 December 2011, the defendant said that he earned about $16,000 per month as a tour guide.  At the request of Tan, he issued cheques and pre-signed cheques.  He knew Tan earned about $30,000 as a property agent.  He dealt with the money in account 5 (Charge 5) while Tan controlled account 6 (Charge 6) and account 1 and 2, (Charge 2 and 5).  He refused to answer most of the questions in relation to the transactions in the bank accounts.

7.  Paragraph 5 of the Summary of Facts shows the fund‑flow analysis that those crime proceeds, once deposited into the subject bank account, had been wired out or cashed out within a short period of time.  There were many occasions that cash being withdrawn from one account had been deposited into another account on the next few days.  The total cash deposit was about $139.76 million while cash withdrawal was about $139.67 million. 

8.  In account 5, the total withdrawals were $11.77 million. $3.74 millions were used to settle defendant’s four credit-card accounts’ payment. 

9.  Paragraph 5 of the Summary of Facts will be annexed in the reasons of sentence.

Previous conviction

10.  Defendant has a clear record.

Mitigation

11.  Defendant is 51, single, worked as a local tour guide and earned about sixteen to twenty thousand dollars per month.  He lived in a flat owned by his late father.  He and Tan had been cohabited for a long period of time since 1996.  They intended to get married, but due to the death of his father, brother and uncle, their plan has been postponed.  He had deep trust in Tan and regarded her as part of his family.  He pre‑signed those cheques at the request of Tan.  Because of their relationship, he turned a blind eye to her activities.

12.  In 2011, Tan disappeared and left him with a goodbye letter. In a gist, she apologised to him that she had taken away all the money from various accounts, she had no means to pay the huge debts.  At around November 2011, he made a report to the police as a victim regarding her stealing of the money from him and his family members. 

13.  In 2011, he suffered from depression due to the present incident, and he was arrested in December 2011. 

14.  In 2013, he was released as he was no longer required to report to the police.  He believed that his life was back to normal.  He was re-arrested in January 2017 and has been remanded since then. In February 2017, he decided to donate his organs after his death. 

15.  The defence urged this court to take into account that there was no international element nor it was a case involving syndicate operation.  The defendant had no knowledge of the predicate offence.

16.  The defendant’s mother, sister, sister-in-law all mitigated on his behalf and asked for lenient sentence.  The defendant in his mitigating letter also asked for leniency so that he could be released earlier to look after his old-age mother and be with his family member again.  

Sentence

17.  It has always been regarded by the court that money laundering is very serious offence of its kind.  An immediate custodial sentence is necessary to inform the public that the courts do not treat this kind of criminal activity leniently even for the first offender.

18.  The maximum sentence is one of 14 years. When passing sentence, I have regard to all the mitigating factors before me. The prosecution accepted that according to the immigration record, Tan had left Hong Kong in September 2011 and did not return to Hong Kong.  She is still at large. 

19.  The offence for Charge 3 to 7 covered a period of about 5 years, namely, from 2007 to 2011.  The total sum was about $86.6 million while Charge 1 and 2, they covered a period of about 18 months, the total sum was about $3.35 million.  The total sum of the seven charges was substantial.  It was about $90 million.

20.  During mitigation by the defence, this court asked the defence whether the defence would advance its mitigation on the ground of “relationship factor” in order to reduce the starting point.  Having referred to HKSAR v Lau Man Ying CAAR 6/2011 and HKSAR v Xu Xia Li & Other [2004] 4 HKC 16, the defence did not wish to advance on this point any further.

21.  Even if the defence did, I would not take the relationship factor into account because the defendant knew Tan was a property agent with a monthly earning of about $30,000.  Any reasonable man with common sense would ask why so much fund would go into seven personal accounts, not company accounts.  His so-called blind-eye activities last for about five years, involving seven accounts.

22.  I accept that there was no evidence from the Summary of Facts to indicate that the defendant had actual knowledge of the nature of the predicate offence.  However, without his participation, it would be difficult for Tan to manipulate all these black moneys.

23.  On this note, I have regard to the case of Boma Amaso CACC 335/2010 at paragraph 40(2)(a) as commented by Stock VP:-

“In such a case, it must be recognised that he is nevertheless assisting in the original crime, whether with knowledge or blind-eye knowledge of it: R v Basra at page 472. The scheme and the purposes 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 R v Farrow [2007] 1 Cr App R (S) 558 paragraph 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 question is barely less culpable than the person who asks or who is told.”

24.  In Boma, the court went on to say that deterrence was paramount as the criminality in laundering arose from the encouragement and nourishment it gave to crime in general.  The amount of money laundered was not the be-all and end-all of a case but it was a significant feature.

25.  In passing sentence, the court should take into account of the following features (at paragraph 40):-

(a) the nature of predicate offence;

(b) the state of the offender’s knowledge;

(c) whether the operation involved an international dimension. This will be a significant aggravating feature.

(d) sophistication of the offence, including the degree of planning;

(e) where the offence was committed by or on behalf of an organised criminal syndicate would be an aggravating feature;

(f) whether there was one transaction or many in the length of time over which the offence was committed;

(g) whether the offender continued to launder funds after he had discovered the nature of the funds where proceeds of an offence or a serious offence was involved; and

(h) the role of the offender and the acts performed by him. The list was said to be non-exhaustive.

26.  In Secretary for Justice v Lau Man Ying CAAR 6/2011, paragraph 30:-

“The sentence of a money laundering should reflect the amount of money involved and the length of time the offence lasts.”

27.  In HKSAR v Hsu Yu Yi [2010] 5 HKLRD 545, Cheung JA set out the amounts of money involved and the sentences passed in a number of money-laundering cases.  The sentencing starting point is 3 years or so where the black money involved is between $1 million and $2 million, 4 years or so where it is between $3 million and $6 million, and could be over 5 years where it is above $10 million. 

28.  The total black money being laundered in Charge 1 to Charge 7 was approximately $90 million.  By reference to the case of Hsu Yu Yi, sentence will be over 5 years.  In the present case, the predicate offences were rental/investment fraud.  There was no international element involved.  It was not an organised criminal syndicate.  Numerous transactions took place over a period of five years involving seven accounts.  The defendant claimed that he had no knowledge of the predicate offence. 

29.  There is information from the prosecution that there was a cheque in the sum of 1.8 million from account 1, a current account, being issued to an investor who was also a victim on 21 September 2011. That was after Tan left Hong Kong on 15 September 2011.  In any event, the prosecution does not seek to include this cheque into Charge 1 and therefore has no bearing on the sentence of Charge 1 which sum involved was about $1 million.

30.  Having considered the above authorities and applying the relevant factors into consideration, I come to the conclusion that the overall proper starting point should be one of 6 years.  I will not take into account that the defendant had made a report to the police when he discovered Tan disappeared with the money in those accounts.  When he reported Tan to the police, he held himself out as a victim.  It was not a case he surrendered himself to the police as an accused.  I further take no notice of  his donation of organs after his death.

31.  He pleaded guilty to all the charges, for which he is entitled to usual one-third discount.  He was released unconditionally in 2013 by the police.  He was re-arrested in January 2017.  As stated in Secretary for Justice v Choi Sui Hey [2008] 6 HKC 166, when the defendant was released unconditionally, the subsequent “dashing of expectations” were factored in, a 6 months’ discount was appropriate.  For this reason, I will reduce the overall sentence by 6 months.

32.  As the defendant is now facing a total of seven charges, I shall impose an individual sentence on each charge to reflect the amount and the length of time involved in each charge rather than just an overall global sentence.  To achieve this result, I fix the starting point according to the sum of money involved: 

(a) Charge 1: 3 years;

(b) Charge 2: 3 years;

(c) Charge 3, 6 years;

(d) Charge 4: 4 years;

(e) Charge 5: 5 years;

(f) Charge 6: 4 years;

(g) Charge 7: 4 years.

33.  After one-third discount:

(a) Charge 1: 2 years;

(b) Charge 2: 2 years;

(c) Charge 3: 4 years;

(d) Charge 4: 2 years and 8 months;

(e) Charge 5: 3 years and 4 months;

(f) Charge 6: 2 years and 8 months;

(g) Charge 7: 2 years and 8 months.

All sentences to run concurrently.

34.  I further allow 6 months’ deduction for his “dash-expectation” factor.  It arrived at a total sentence of 42 months.

Annex