HKSAR v. CHIU CHI WING

CACC 243/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 243 OF 2012

(ON APPEAL FROM DCCC 1140 OF 2011)

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J U D G M E N T

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Hon Lunn JA (giving the judgment of the court):

1. The applicant seeks leave to appeal against the sentences imposed on him on 7 June 2012 following his conviction after trial by District Court Judge S. D’Almada Remedios on 1 June 2012. Having been convicted of three charges of dealing with property knowing or having reasonable grounds to believe that it was the proceeds of an indictable offence, contrary to section 25(1) and (3) of the Organized and Serious Crimes Ordinance, Cap. 455, the applicant was sentenced to a total of 4½ years’ imprisonment.

The charges

2. By Charge 1, it was alleged that between 31 December 2008 and 15 June 2010 the applicant had dealt with $6,884,899.19 in an account in his name with the Hongkong and Shanghai Banking Corporation Limited knowing are having reasonable grounds to believe that it was the proceeds of an indictable offence.  Charge 2 concerned $4,991,855.65 dealt with by the applicant in the period 8 July 2009 to 30 June 2010 in an account in his name with the Hang Seng Bank.  Charge 3 concerned $275,600 in cash found by police officers on 12 June 2010 at the applicant’s home at the time of his arrest on that day.

REASONS FOR SENTENCE

3. In her reasons for sentence the judge said that she was satisfied that on the occasion of the police raid on the applicant’s premises, namely 12 June 2010, the premises were set up as “an off-course home betting centre” [1]. She noted that a computer in the premises was logged on to an illegal gambling website depicting Hong Kong horse racing and that the horse racing page of that day’s racing had been colour-coded.  Also, there were notebooks with entries which in the opinion of Sergeant 48882, whose evidence she accepted [2], contained the jargon of bookmakers in respect of bets placed with bookmakers and payments made in consequence.

4. The judge stated that she found that the property with which the applicant dealt in all three charges was the proceeds of bookmaking [3]. Furthermore, she determined that the applicant was the “sole operator of this money laundering offence” [4].

5. The judge observed that there were no sentencing guidelines for the offence of money laundering.  However, she went on to say:

“ Guidance for the appropriate sentence can be adduced from reviewing sentences passed in previous cases and also by the most recent case of HKSAR v Boma Amaso [5].”

6. Then, the judge identified some specific factors that she determined to be relevant to sentencing, namely that [6]:

“ ..the maximum penalty is one of 14 years’ imprisonment; the nature of the predicate offence is one of bookmaking; the maximum penalty for bookmaking is one of 7 years’ imprisonment; that you have full knowledge that the nature of the predicate offence was bookmaking see Boma Amaso.”

7. Applying those considerations to the facts of the case, the judge noted that the total amount of money involved in the commission of the three charges was about $12 million. Further, that the ‘dealing’ involved many transactions over a period of two and a half years [7]. The judge was wrong in that determination; the period concerned was one and a half years.  The judge said that she accepted that there was no “international dimension” involved in the conduct, which she said was not sophisticated, nor was there evidence that the applicant’s conduct was connected to an organised criminal syndicate.

Delay

8. Having stated that in all the circumstances she declined to regard a delay of almost 2 years from the applicant’s arrest to the date of his conviction as constituting a mitigating factor, the judge stipulated 4½ years’ imprisonment as being the appropriate total sentence to be imposed on the applicant.

Sentence

9. Then, the judge sentenced the applicant to 4 years’ imprisonment on each of Charges 1 and 2 and to 1 year’s imprisonment in respect of Charge 3, ordering that 6 months of the sentence of imprisonment imposed in respect of Charge 2 be served consecutively to the sentence of imprisonment imposed in respect of Charge 1.  Accordingly, the total sentence imposed upon the applicant was 4½ years’ imprisonment.

GROUNDS OF APPEAL AGAINST SENTENCE

10. In the grounds of appeal against sentence, Mr Surman submitted first, that the judge had failed to take proper account of the nature and gravity of the predicate offence, namely bookmaking.  Secondly, he contended that the judge was in error to have rejected the delay in bringing the applicant to trial of almost 2 years as a mitigating factor.  Having been arrested for the offence of bookmaking on 12 June 2010 the applicant had been on bail for about one year before he was unconditionally released only to be re-arrested and then, after a delay of 5 months, charged with the offences of ‘money laundering’ for which he stood trial.  Thirdly, Mr Surman said that the judge erred in ordering that 6 months of the sentence of imprisonment imposed in respect of Charge 2 be served consecutively to the sentence of 4 years’ imprisonment imposed in respect of Charge 1.  Since the conduct overlapped in terms of the time period during which the offence was committed to make such an order was wrong in principle.

11. Mr Surman invited the court to note that although the judge had said that the guidance for sentence was to be found by reviewing sentences imposed in previous cases and cited specifically the judgment of this Court in Boma Amaso, she did not identify the other cases.  He submitted that, in imposing sentence for the three charges of money laundering, the judge had failed to have regard to sentences imposed in respect of convictions for bookmaking in determining the appropriate weight to attach to the nature of the predicate offence.  He said that the judge had failed to take into account the judgments of this court in R v Yip Kam Fai & Another[8]and HKSAR v Leung Chi Fai[9](CACC 490/2011; unreported, 8 February 2013).  Mr Surman relies in particular on a statement in the judgment of this court delivered by Barnett J in Yip Kam Fai [10]:

“ the operators of a substantial bookmaking operation can expect to receive a sentence of between two and three years’ imprisonment of trial.”

12. He submitted that the statement had been approved by this Court in its judgment in HKSAR v Oei Hengky Wiryo [11]. There, this court determined that the judge’s imposition of a sentence of 3½ years’ imprisonment, having referred to Yip Kam Fai, for an offence of conspiracy to commit bookmaking over a period of 4 years, in which the monetary turnover was the equivalent of about $200 million, was not manifestly excessive.

13. Mr Surman submitted that this court has recognized that there is a distinction to be drawn in determining the appropriate sentence for an offence of ‘money laundering’ where the predicate offence is bookmaking, rather than more serious offences [see the judgments of this court delivered by Wright J in HKSAR v Cheung Kam Sing [12] and HKSAR v Au Hau Ching [13]].  In particular, Mr Surman relied on a statement by Wright J in Au Hau Ching, in respect of the determination of the appropriate sentence for an offence of money laundering having regard to whether or not the defendant knew the nature of the predicate offence:

“ One trend which is discernible from previous sentences passed is that, for whatever reason, where the predicate offence is established as being illegal bookmaking sentences regularly fall at the lower end of the spectrum.”

A CONSIDERATION OF THE SUBMISSIONS

14. Although it is correct, as Mr Surman has submitted, that because the judge did not identify them it is not known what other authorities were considered by her as relevant to sentence, it is clear that she had firmly in mind the multiple factors relevant to sentence identified by this court in Boma Amaso.  At issue, is whether she gave proper weight to those factors. 

15. As Mr Martin Hui reminded the court, in his written submissions for the respondent, in Boma Amaso [14]this court identified the element of deterrence as being paramount in the factors relevant to sentencing in cases of ‘money laundering’.

16. The judge determined that the applicant had, “full knowledge that the nature of the predicate offence was bookmaking”, that the applicant was the “sole operator of the money-laundering offence” and that in total the applicant dealt with about $12 million in “many transactions”.  Clearly, the judge was satisfied that the applicant was the perpetrator of the predicate offence.  As noted earlier, the judge fell into error in stating that the period during which the applicant had dealt in the property was 2½ years.  It was one and a half years.  Clearly, that was a slip because in the Reasons for Verdict the judge had adverted in terms to the “charge period” being between 31 December 2008 and June 2010 [15]. There is no dispute that the judge was correct in determining there was no international element or the involvement of a criminal syndicate in the applicant’s conduct.

17. The proper approach to attaching weight for purposes of sentence to knowledge in a defendant of the nature of the predicate offence is that articulated in the judgment of this court in Boma Amaso. Clearly, the starting point is the maximum sentence provided for that offence.  Unlawfully trafficking in dangerous drugs attracts a sentence of life imprisonment, whereas the maximum sentence for bookmaking is 7 years’ imprisonment.  No doubt, it was with that in mind, together with the relevance of the seriousness of the offence, that Stock VP said [16]:

“..where the predicate offence is trafficking in dangerous drugs, the offender should expect a sentence significantly greater than where the predicate offence is gambling.”

18. Of the whole gamut of circumstances in which money laundering offences are committed, Stock VP noted earlier in the judgment [17]:

“ They run from cases where a wife hides money for a husband who is a gambler through to those who wash money that represents the proceeds of vice offences, or trafficking in dangerous drugs, or fraud, or human trafficking or other manifestations of organised crime.”

19. Wright J’s observation in Au Hau Ching, namely that “where the predicate offence is established as being illegal bookmaking sentences regularly fall at the lower end of the spectrum”, is to be read in the context of what he said immediately thereafter [18]:

“ ..the nature of the indictable offence from which the property derived is of no major significance unless it can be shown that the accused knew the nature of the crime and that it was of a serious nature, when this would be an aggravating feature.” [Italics added.]

Furthermore, Wright J did not cite any authorities supporting the statement.

20. In HKSAR v Leung Wai Wah [19] this court addressed the same proposition as advanced by Mr Surman, namely whether, in sentencing a defendant for an offence of money-laundering, a more lenient sentence is to be taken if the predicate offence is bookmaking and that is known to the offender.  In that case, the applicant opened a bank account and provided the mastermind, his brother-in-law, access to that bank account to receive, withdraw and transfer monies that were used in bookmaking.  He was paid a monthly salary of between $25,000 and $30,000.  In a period of about 18 months about $38 million was deposited and withdrawn from the account.  Following the applicant’s plea of guilty to a charge of conspiracy to deal in property, knowing or having reasonable grounds to believe it was the proceeds of indictable offence, the judge sentenced the applicant to 4 years’ imprisonment.  Determining that sentence to be manifestly excessive, this court quashed the sentence and in its place imposed a sentence of 3 years and 6 months’ imprisonment.

21. In the judgment of the court, Yeung VP addressed the relevance to sentencing of the fact that the predicate offence was one of bookmaking and said [20]:

“ We did not agree with Mr Hung’s submission that when the underlying offence was bookmaking, the applicant should be given a more lenient sentence.  A “money laundering” offence is committed when the defendant had reasonable grounds to believe that the “money” he had handled was “dirty”.  The offence does not require the establishment by the prosecution that the “money” is actually “dirty”.  The offence would have been proved even if the “money” is in fact not “dirty” as long as the defendant had reasonable grounds to believe that it was.

That being the case, it is not logical to suggest that the sentence for “money laundering” should be more lenient when the underlying offence is not serious.

The Court of Appeal took the view that the nature of the indictable offence from which the “laundered money” derived was a factor which a sentencing court was entitled to take into account although it was not a significant one unless it could be shown that the defendant knew the nature of the crime and that the crime was of a serious nature.  (See the judgment of Woo VP in Xu Xia Li (supra) at p. 22 B-C)  The approach is already a favourable one to a defendant.”

22. Having averted to a number of earlier decisions of this court in respect of charges of money laundering arising from bookmaking and having determined that the sentences imposed in that particular case was manifestly excessive, Yeung VP, said [21]:

“..the court should adopt a more robust attitude towards ‘money-laundering’ offences in view of its prevalence.”

23. Earlier, Yeung JA had given the judgments of this court in HKSAR v Law Chit Man [22] and the Secretary for Justice v Wan Kwok Keung [23].  In the former case, in which the judgment is in Chinese but in respect of which a translation has been provided to the court by the Department of Justice, the court was satisfied that a sentence of 3½ years’ imprisonment imposed by the judge in the District Court after trial for an offence of money-laundering of the proceeds of bookmaking was not manifestly excessive.  The judge imposed a sentence of 1½ years’ imprisonment for the bookmaking conviction, which sentence he ordered to be served concurrently.  The applicant conducted his bookmaking from his home.  The money-laundering offence concerned a period of about two and a half years, beginning in January 2004, during which about $6.5 million had been deposited in a similar amount withdrawn from the applicant’s bank savings account.  Sentence was approached on the basis that about $5 million of that total amount of money was the proceeds of bookmaking.

24. In Wan Kwok Keung the Secretary for Justice applied for a review of a sentence of 14 months’ imprisonment imposed on the respondent on his plea of guilty to an offence of money-laundering of about $14 million committed over a period of 7 years, beginning in September 2002.  There was no dispute that the monies were the proceeds of bookmaking, of which offence the respondent was also convicted.  The respondent conducted the bookmaking from a bedroom of his home and placed bets on an illegal soccer gambling website and did so for four customers.  He accepted that his bank account was used to receive bets from and to make payments to successful punters.  In the 7-year period, 2,222 deposits and 1,696 withdrawals were made to/from the bank account, of which deposits 1,223 were by way of bank transfer.  Noting that the money laundered by the respondent, “was from the bookmaking offence in which he had participated” this court concluded that:

“ ..the appropriate starting point should not be lower than 4 years’ imprisonment even if the respondent is to be dealt with in a way most favourable to him.”

The role of the applicant    

25. Having been arrested on 12 June 2010 for the offence of bookmaking, in September 2011 the applicant was charged with the three offences of money-laundering.  Those offences reflected his separate dealings in the impugned property, namely in bank accounts with Hong Kong and Shanghai Bank and Hang Seng Bank and the cash found at his home.  It is clear from the Reasons for Verdict that, had the applicant been charged with bookmaking the judge’s findings sustained a conviction for that offence.  What then is the relative culpability in the commission of the two offences?

26. Given the breadth of the definition of the word “dealing” [24] in the Organized and Serious Crimes Ordinance, Cap. 455, it is clear that the offence of bookmaking will almost always involve the commission of the offence of money-laundering.  Receipt of monies placed as bets and payments made in return to ‘punters’, knowing or having reasonable grounds to believe the nature of the payments, contravenes the money laundering provisions.  Of course, those payments might be made in cash or by use of the banking system.

27. It is clear from the evidence at trial that the overwhelming majority of the dealings in monies by the applicant were through the banking system.  Having used only the Hong Kong and Shanghai Bank account from December 2008 until July 2009, on 8 July 2009 the applicant opened an account with the Hang Seng Bank.  That account was used soon after to receive multiple deposits of cash and from which multiple withdrawals were made in cash.  Over $2.9 million was deposited in cash in 340 transactions and a like amount withdrawn in cash in 69 transactions.

28. A similar pattern of dealings in cash, which had obtained in the activities conducted in the Hong Kong and Shanghai Bank account earlier, continued alongside the transactions conducted in the Hang Seng Bank.  Over $4.5 million in cash was deposited into the account in no fewer than 626 transactions.  Over $3.8 million was withdrawing cash in 119 transactions.

29. In both accounts, transfers of monies were received from and made to stipulated accounts.  It was an admitted fact [25] that over $2.2 million was transferred from 43 different bank accounts and deposited into the Hong Kong and Shanghai Bank account in the period subject of Charge 1.  Over $3 million was withdrawn by way of transfer to stipulated accounts.  In the period the subject of Charge 2 [26], over $2 million was deposited by way of transfer to other stipulated bank accounts and slightly less than $2 million withdrawn by way of transfer to other bank accounts.

30. Very obviously the use of the banking system greatly facilitated the efficient running of the applicant’s bookmaking business.  Similarly, it was an integral, indeed vital, part of his money-laundering.  Over a period of 18 months it enabled the applicant to conduct and manage his criminal enterprise much more efficiently.  Thereby, the applicant abused and corrupted the banking system to serve his criminal purposes.  The gravity of that conduct lies in the damage it does to the integrity and reputation of Hong Kong’s banking system.  Given the importance to Hong Kong of its role as an international finance centre, that conduct jeopardises a cornerstone of Hong Kong’s economic welfare.

Conclusion

31. Having regard to the role of the applicant in the commission of the three offences, in particular that the money-laundering was of the proceeds of his own bookmaking business, the length of time over which the offences were committed and the amount of money involved, we are satisfied that the appropriate totality of sentence to be imposed on the applicant is four years’ imprisonment.

32. It is not clear why the prosecution chose to bring three charges against the applicant.  Clearly, the conduct supporting each individual charge was part of the applicant’s overall enterprise.

Delay

33. There was no dispute that, having been arrested on 12 June 2010 for the offence of bookmaking, the applicant was not charged with the money-laundering offences for which he stood trial until 22 September 2011.  Thereafter, proceedings were transferred from the Magistracy to the District Court where his trial commenced on 18 April 2012.

34. It was an admitted fact [27] that the applicant had been arrested by police officers of the Organised Crimes and Triad Bureau (“OCTB”) in the course of “..a joint operation against cross-boundary bookmaking syndicate held by Hong Kong Police and Shenzhen Public Security Bureau during the period of World Cup 2010”.  Police officers of the Technology Crime Division examined the applicant’s laptop computer and traced its Internet history [28].

35. Similarly, it was admitted [29] that, on 18 April 2011, the applicant was released by OCTB but re-arrested on the same day by officers of the Financial Investigations Division of the Narcotics Bureau for offences of money-laundering.  Further, that DPC 58934 conducted an analysis of the records of the applicant’s bank accounts, produced into evidence as Banker’s affirmations (exhibits P1 and P2), and collated information as to the movements of monies in and out of those bank accounts, which was adduced into evidence as a witness statement pursuant to section 65C of the Criminal Procedure Ordinance (exhibit P2) [30].  Clearly, it was that analysis that was the foundation of the admitted facts in respect of activities in the bank accounts of the applicant.  As noted earlier, the ambit of those enquiries was extensive.  In the Hong Kong and Shanghai Bank account of the applicant, deposits from/transfers to were made to no less than 43 and 42 different bank accounts respectively.  In the case of the applicant’s Hang Seng Bank account, deposits from/transfers to were made to no less than 22 and 21 different bank accounts respectively.

36. It is apparent that, although the applicant stood trial by himself, the investigation involved consideration of the conduct and possible culpability of many others.  For her part, the judge stated simply that, having regard to the factors identified as being relevant to delay as a mitigating factor for sentence identified by Buss JA in his judgment in the Court of Appeal of Western Australia in Scook v The Queen [31], referred to in Sentencing in Hong Kong [32];she found that none were present.

37. The seven factors identified by Buss JA, which were stated not to be intended to be exhaustive or inflexible, were:

“ First, delay is not, of itself, a mitigating factor.

Secondly, delay will not ordinarily be a mitigating factor if it has been caused by difficulties in detecting, investigating or proving the offences committed by the offender, and the period of the delay is reasonable in the circumstances.

Thirdly, delay will not ordinarily be a mitigating factor if it is caused by the offender’s obstruction or lack of co-operation with the State, prosecuting authorities or investigatory bodies, but the offender’s reliance on his or her legal rights is not obstruction or lack of co-operation for this purpose.

Fourthly, delay will not ordinarily be a mitigating factor if it results from the normal operation of the criminal justice system, including delay as a result of the offender or a co-offender exercising his or her rights; for example, interlocutory appeals and other interlocutory processes.

Fifthly, delay may be conducive to the emergence of mitigating factors; for example, if, during the period of delay, the offender has made progress towards rehabilitation or other circumstances favourable to him or her have emerged.

Sixthly, delay (not being delay of the kind described in the second, third and fourth guiding principles) will ordinarily be a mitigating factor if:

(a) the delay has resulted in significant stress for the offender or left him or her, to a significant degree, in ‘uncertain suspense’; or

(b) during the period of delay the offender has adopted a reasonable expectation that he or she would not be charged, or a pending prosecution would not proceed, and the offender has ordered his or her affairs on the faith of that expectation.

Seventhly, delay caused by dilatory or neglectful conduct by the State, prosecuting authorities or investigatory bodies may result in a discount of the sentence that would otherwise be imposed on the offender, if the court thinks it an appropriate means of marking its disapproval of the conduct in question.”

38. In our judgment, in all the circumstances, the judge was clearly entitled to determine that delay was not a factor of mitigation available to the applicant.

Conclusion

39. As noted earlier, we are satisfied that the appropriate overall starting point for sentence was 4 years’ imprisonment.  Accordingly we grant the application for leave to appeal against sentence and, treating the hearing of the application as the hearing of the appeal, we allow the appeal and we quash the order of the judge that 6 months’ imprisonment of the sentence of imprisonment imposed in respect of Charge 2 be served consecutively to the sentence of imprisonment imposed in respect of Charge 1.  We do not disturb the other orders.  In the result, the total sentence imposed on the applicant is 4 years’ imprisonment.

[1] Reasons for Sentence, paragraph 7.

[2] Reasons for Verdict, paragraph 130; Reasons for Sentence, paragraph 6.

[3] Reasons for Sentence, paragraph 5.

[4] Reasons for Sentence, paragraph 15.

[5] HKSAR v Boma Amaso [2012] 2 HKLRD 33.

[6] Reasons for Sentence, paragraph 14.

[7] Reasons for Sentence, paragraph 15.

[8] R v Yip Kam Fai & Another [1993] 2 HKC 196.

[9] HKSAR v Leung Chi Fai (CACC 490/2011; unreported, 8 February 2013).

[10] R v Yip Kam Fai & Another at page 200 B-C.

[11] HKSAR v Oei Hengky Wiryo (CACC 109/2005; unreported, 24 January 2006 at paragraphs 69-70).

[12] HKSAR v Cheung Kam Sing (CACC 382/2010; unreported, 9 December 2011 at paragraphs 46-7).

[13] HKSAR v Au Hau Ching (CACC 146/2008; unreported, 7 July 2009).

[14] HKSAR v Boma Amaso, paragraph 36.

[15] Reasons for Verdict, paragraph 52.

[16] HKSAR v Boma Amaso, paragraph 40(1).

[17] HKSAR v Boma Amaso, paragraph 25.

[18] HKSAR v Au Hau Ching, paragraph 41.

[19] HKSAR v Leung Wai Wah (CACC 201/2011; unreported, 16 November 2011).

[20] HKSAR v Leung Wai Wah, paragraphs 18-20.

[21] HKSAR v Leung Wai Wah, paragraph 30.

[22] HKSAR v Law Chit Man (CACC 331/2009; unreported, 15 February 2011).

[23] Secretary for Justice v Wan Kwok Keung [2012] 1 HKLRD 201.

[24] Organized and Serious Crimes Ordinance, Cap. 455, section 2(1).

[25] Appeal Bundle, page 18-19, paragraph 7.

[26] Appeal Bundle, page 21.

[27] Appeal Bundle: page 14, paragraph 1.

[28] Appeal Bundle: page 17, paragraph 5A.

[29] Appeal Bundle: page 23, paragraph 8.

[30] Appeal Bundle: pages 17-23, paragraph 7.

[31] Scook v The Queen [2008] 185 A Criminal Review 164 at 176.

[32] Sentencing in Hong Kong, Cross & Cheung (Sixth edition) at page 383.