HKSAR v. BERNHARD GOETZMAN

CACC 299/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 299 OF 2013

(ON APPEAL FROM DCCC NO. 306 OF 2013)

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REASONS FOR JUDGMENT

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Hon Kwan JA (giving the Reasons for Judgment of the Court):

1. This is an application for extension of time to apply for leave to appeal against sentence. The applicant was charged with the offence of dealing with property known or believed to represent proceeds of an indictable offence, contrary to sections 25(1) and (3) of the Organised and Serious Crimes Ordinance, Cap 455, commonly known as money laundering. The charge alleged that between 6 March 2010 and 25 May 2010, the applicant dealt in the amounts of US$2,499,939 and €2,098,994 deposited into the relevant account at HSBC. The total amount in Hong Kong dollars was approximately HK$46 million.

2. The trial took place before Her Honour Judge S D’Almada Remedios over seven days in June 2013.  The applicant, who was represented by Mr Oliver Davies of counsel, failed to appear at the adjourned hearing for submissions on 19 July 2013 after the completion of evidence.  A warrant was issued for his arrest and no bail was granted.  He was convicted in his absence on 8 August 2013.  Mr Davies had no further instructions and therefore did not mitigate on his behalf.  On the same day, the judge sentenced him to 6½ years’ imprisonment.

3. On 13 October 2013, the applicant was arrested at the airport when he attempted to leave Hong Kong for Manila.  He was brought back to court on 15 October and was informed of the sentence imposed.  On 22 October, he lodged an application for extension of time to give notice of application for leave to appeal, and applied for leave to appeal against conviction and sentence.  He later filed a notice on 2 May 2014 to abandon his application for leave to appeal against conviction.

4. At the conclusion of the hearing, we refused to grant extension of time to file an application for leave to appeal against sentence pursuant to section 83Q(3) of the Criminal Procedure Ordinance, Cap 221.  These are the reasons for our judgment.

Background

5. The relevant background matters may first be stated as follows.

6. As a result of an investment fraud, moneys were deposited into the relevant account at HSBC.  All of the funds as stated in the charge deposited in the two-month period from March to May 2010 came from overseas.  The account was opened in the name of Triad Global Limited (“Triad Global”), a company incorporated in the British Virgin Islands.  Less than a month before funds started to be deposited into Triad Global’s account, the applicant was added as an authorised signatory.  The other authorised signatory was one Michael Steven Myers (“Myers”), who was the principal shareholder of Triad Global.

7. Two days after the deposit of the first of the funds into Triad Global’s account, the applicant opened his own personal account at HSBC with himself as the sole signatory.  He also changed his signature for Triad Global’s account on the same day.

8. Triad Global had no business or operation in Hong Kong.  No record of investment was kept by Triad Global of the moneys received from investors.

9. Two of the depositors (PW2 and PW3) gave evidence at the trial.  They were told to deposit money into Triad Global’s account and were promised a ten-fold return above the principal within 21 days of their deposit.  The applicant, who was introduced to PW2 as the trader of Triad Global, had explained to PW2 the contents of the investment and that PW2’s money would be kept in a segregate account for investment.  PW2 signed a contract with the applicant’s name and signatures on it and transferred US$200,000 to Triad Global’s account in April 2010.  When the 21 days expired, the applicant continued to have numerous telephone conversations with PW2 to reassure him of the investment of his money, until PW2 lost contact with the applicant in November 2011.

10. PW3 gave similar evidence.  He transferred US$300,000 to Triad Global’s account in March 2010.  The transfer was confirmed by a letter with the applicant’s name, passport number and signature.  In December 2010, the applicant assured PW3 his investment had been cleared for disbursement but nothing was returned to PW3.  He lost contact with the applicant in May 2011.

11. All the sums in Triad Global’s account were withdrawn by either the applicant or Myers.  By 26 June 2010, at the close of the account the balance was reduced to zero.

12. The applicant made 71 withdrawals by way of cashier order or cash withdrawals, transfer to his personal account or the account of a Cayman Islands company Best Synergy Holdings Ltd (of which he was the director and secretary and one of the three authorised signatories of its bank account), and other recipients including for the purpose of renting office premises at the International Commerce Centre (which were never occupied) and residential premises at Harbour View Place (for himself, Myers and others).  The total amount withdrawn by the applicant was HK$18,369,371.52, which was 39% of the withdrawals.

13. Myers made 56 withdrawals.  The total amount was HK$28,692,407, which was 61% of the withdrawals.

The Reasons for Verdict

14. In the Reasons for Verdict, the judge made these material findings against the applicant:

   (1) he knew the moneys deposited to Triad Global’s account were from overseas victims lured into making investments that were not honoured or executed (Reasons for Verdict, §57).  He knew no investments were made at all and the withdrawals were for purposes other than investments (§§58, 66, 73);

   (2) he was involved in the fraud of PW2 and PW3 and was therefore involved in the predicate offence (§69);

   (3) the judge was satisfied beyond reasonable doubt that part of the proceeds relating to the deposits of PW2 and PW3 were proceeds of investment fraud.  The judge drew an irresistible inference that the remainder of the overseas deposits were also the proceeds of investment fraud (§§59, 70);

   (4) the applicant was heavily involved in dealing with the moneys in Triad Global’s account (§72); and

   (5) he was the direct and indirect beneficiary of the money laundered (§72).

The Reasons for Sentence

15. The judge referred to the relevant sentencing considerations considered by the Court of Appeal in HKSAR v Boma [2012] 2 HKLRD 34 at §40, which was not an exhaustive list.

16. In sentencing the applicant to 6½ years imprisonment, the judge had taken these matters into account:

   (1) the applicant was fully aware that the moneys deposited into Triad Global’s account were to be used for investments and he and Myers withdrew the sums deposited for purposes other than for investments (Reasons for Sentence, §7);

   (2) even after the funds had been withdrawn, he reassured and lied to the victims, PW2 and PW3, that they would receive their funds upon the investments made (§§7, 24);

   (3) he was directly involved in the predicate offence being the fraud on the victims and played a large part in defrauding the victims; he was the director of the laundering operation.  This was the most aggravating factor in this case (§§8, 22, 28);

   (4) he was a direct and indirect beneficiary of the money laundered and had intentionally dealt with the proceeds of crime (§§8, 22);

   (5) fraud was committed on investors to the tune of HK$40 million (§20);

   (6) there was an international dimension (§23);

   (7) there was clearly sophistication and a high degree of planning, there were other parties involved such as Myers and a person called Rocco Guarnaccia who was the registered shareholder of Power Avenue Asia Hong Kong, and offices were rented by the applicant at upmarket premises in the name of Power Avenue Asia (§§24, 25, 26); and

   (8) the period of time in which the offence occurred was three months (§27).

Application for extension of time

17. Unlike other cases in which the notice of application for leave to appeal was not filed within time for a variety of reasons, such as post-sentence assistance given to the authorities (HKSAR v W [2004] 3 HKC 376 at §16), or the successful appeal of a co-defendant (R v Wong Kai Kong [1990] 1 HKC 279 at 280I to 281D), or other matters affecting the preparation of the application (R v Ip Chung Hang, CACC 345/1988, 10 August 1988, §§1 to 4; HKSAR v Oh Chun Kit at §§3 and 4; HKSAR v Chow Sui Ngan (鄒瑞顏) and Or Wai Sum (柯慧芯), CACC 61/2012, 13 September 2012, §15), the present case was one in which the applicant jumped bail and absconded at trial.  He never surrendered and was arrested nearly three months later when he attempted to leave Hong Kong.  There was no justification for this behaviour.  It will only be in very rare cases that there could be an acceptable explanation for absconding.

18. The Court of Appeal in HKSAR v Chu Chick Kei & Anr [2013] 5 HKC 21 considered the proper approach to be adopted in considering an application for extension of time in this kind of situation.  Line J giving the judgment of the court stated as follows in §§16 to 19:

“16. Cases where defendants flee during the course of their trial are happily rare. The law has been settled since the case of R v Jones (No 1) [1971] 2 WLR 1485 that the trial may continue in their absence. In R v Jones (No 2) [1972] 1 WLR 887, after the absconding Mr Jones was extradited he sought leave to appeal out of time and leave to put before the court explanations as to why he fled following threats as well as material designed to demonstrate a defence justifying a new trial.

17. Roskill LJ said this:

‘to grant this application at this stage would, in the view of this court, be to put a premium on prisoners jumping bail; it may even have the effect of encouraging others to do so. It might also have as a side‑effect, increasing the reluctance of the court in a very long trial to grant bail lest the applicants conduct be repeated by others. To put a premium on jumping bail is something which this court is not for one moment prepared to countenance. This application is entirely without merit, notwithstanding the skill with which he has been advanced. There is no ground whatsoever for granting this extension of time. The applicant has brought this entirely on his own head, and he must now take the consequences. The application therefore is refused.’ (emphasis supplied).

18. In our judgment, those remarks apply equally to this case. The fact that the 1^st applicant surrendered himself has no impact on the application of the policy that lies behind them. It is to be noted that in Jones the policy shut out material designed to provide a defence. That rationale must apply with even greater force where what is before the court are pleas in mitigation based on blaming an accomplice for crimes which had been denied and based on assertions of good character. We regard the attempt to put the testimonials before us, in the circumstances, as completely hopeless.

19. The 1^st applicant is unable to advance any good reason for the granting of leave in respect of either of his applications.  We do not say that in every case where a defendant absconds, leave will automatically be refused.  We do say that it would take exceptionally strong grounds to justify letting such a defendant back in to the criminal process, a process he had chosen to reject by flight.  We have no hesitation in saying that no such strong grounds exist in the case of the 1^st applicant by reference to the alleged circumstances surrounding his flight or by reference to submissions made concerning the merits of his proposed appeal against sentence. …”

19. Jones (No 1) and Jones (No 2) were considered by the English Court of Appeal in Charles and Tucker [2001] 2 Cr App R 233, in which Hooper J gave the judgment of the court.  The court considered the more recent cases since Jones as well as the jurisprudence of the European Court of Human Rights in light of Article 6(1) of the European Convention on the Protection of Human Rights and Fundamental Freedoms (there is similar provision in Article 14(1) of the International Covenant on Civil and Political Rights).  The court did not follow the view in Jones (No 1) that where a defendant has, by absconding, put it out of his power to give instructions, his solicitors have not been duly authorised to prosecute appeal proceedings on his behalf (at §54).  It noted that in Jones (No 2), the merits were considered notwithstanding the absence of any proper explanation for the delay (at §42).  It took the view there could well be a breach of Article 6(1) of the European Convention if an applicant who has absconded could not succeed with an application for leave to appeal solely because it is treated as ineffective or dismissed for the reason in Jones (No 1) and because any subsequent applications for extension of time to make or renew the application were summarily dismissed because there was no good reason for the delay (at §52).

20. In Chu Chick Kei, whilst holding that “exceptionally strong grounds” are required to justify an extension of time where the delay in filing the notice of application is due to the applicant jumping bail, the court did not take an inflexible approach to dismiss the application for extension of time summarily merely because there was no justification for the delay.  The court made clear in §19 it was not saying that leave would automatically be refused in every case where a defendant absconds, and it did consider the merits of the proposed appeal in refusing the application.

21. We would adopt the same approach.  To justify an extension of time in this situation, the applicant must show exceptionally strong grounds why he should be let back into the criminal process despite his earlier choice to reject the process in jumping bail.  And as the only grounds urged on his behalf were the merits of his intended appeal, we would examine the merits of those grounds before arriving at the conclusion whether extension of time should be refused in this instance.

If the sentence was manifestly excessive

22. Mr Davies advanced two broad arguments in support of his contention that the sentence was manifestly excessive.

23. The first broad argument was in relation to the amount of moneys the applicant had “dealt with”.  Counsel submitted that in sentencing the applicant on the basis that the amount of moneys dealt with was US$2,499,939 and €2,098,994 (equivalent to approximately HK$46 million) as stated in the charge, this was wrong for the following reasons:

   (1)  The prosecution only adduced evidence to show that the amounts deposited by PW2 and PW3 (about HK$3.9 million) were the proceeds of an indictable offence, and this was less than 10% of the moneys deposited into Triad Global’s account.  There was no evidence from any of the other seven depositors set out in §§32 and 33 of the Reasons for Verdict.

   (2)  In addition, Myers had also deposited US$340,000 and €227,000 into Triad Global’s account on 13 April 2010 (see Admitted Facts (2), Chart 1).  As such, it could not be the case that all sums of money deposited were proceeds of investment fraud.

   (3)  Hence, there was no evidence to support the judge’s finding that the remaining sums (i.e. other than the sums deposited by PW2 and PW3) were proceeds of indictable offences.  The judge was wrong to sentence the applicant on the basis he had dealt with the entire sum in the charge, and should have sentenced him on the basis that he only dealt with the sums of about HK$3.9 million deposited by PW2 and PW3.

   (4)  In any event, of the entire sum, the applicant only dealt with HK$18,369,371.52, of which €266,919.67 (equivalent to about HK$2,706,565) was transferred by the applicant after 25 May 2010, being the last date in the charge.  So the actual amount handled by the applicant should only amount to HK$15,662,806.

24. The above submissions are without merit.

25. In section 2 of Cap 455, “dealing” in relation to property referred to in section 25 is defined to include: “(a) receiving or acquiring the property; (b) concealing or disguising the property (whether by concealing or disguising its nature, source, location, disposition, movement or ownership or any rights with respect to it or otherwise); (c) disposing of or converting the property; (d) bringing into or removing from Hong Kong the property; (e) using the property to borrow money, or as security (whether by way of charge, mortgage or pledge or otherwise)”.  The entire amount stated in the charge, being US$2,499,939 and €2,098,994, was received in the account of Triad Global, of which the applicant became an authorised signatory less than a month before the funds started to be deposited.  He was in full and active control of the account at all material times and his act of dealing in the account, which included the full sum deposited, is clearly within the definition of “dealing” in section 2.  That €266,919.67 happened to be withdrawn from the account only after the last date in the charge was irrelevant.

26. It was also irrelevant that Myers deposited US$340,000 and €227,000 into the account, as these moneys did not form part of the amount stated in the charge.

27. Besides, the applicant had abandoned his application for leave to appeal against conviction.  He could not impugn the judge’s finding that an irresistible inference should be drawn that the remainder of the overseas deposits in the charge were also the proceeds of investment fraud.

28. The judge was entirely correct to sentence the applicant on the basis of the full amount deposited into account.

29. The second broad argument advanced by Mr Davies was that the judge made no reference to any authority to determine the period of imprisonment in this instance.  Although counsel accepted there are no specific guidelines for the term to be imposed for money laundering, he contended that 6½ years was manifestly excessive, compared to the four cases he cited, which he submitted were similar to this situation: HKSAR v Hsu Yu Yi [2010] 5 HKLRD 545; Secretary for Justice v Wan Kwok Keung [2012] 1 HKLRD 201; HKSAR v Yip Kim Po & Ors, CACC 353/2010, 7 March 2013; and HKSAR v Tse Ching Ng & Ors, CACC 361/2004, 6 September 2005.

30. It is incorrect that the judge had made no reference to authority in sentencing.  The judge had clearly done so and had referred to HKSAR v Boma, in which the Court of Appeal gave useful guidance on sentencing considerations for money laundering.  It is pertinent to note that of the relevant non-exhaustive considerations which may be regarded as aggravating features mentioned in Boma at §40, they were all found in the present case as set out in the judge’s findings in the Reasons for Sentence that have been summarised in the earlier part of this judgment.  Stock VP also mentioned in Boma at §§35, 36 and 38 that any sentencing exercise must recognise the maximum sentence was 14 years’ imprisonment, that deterrence was paramount as the criminality in laundering arose from the encouragement and nourishment it gave to crime in general, and that the amount of money laundered, though a significant feature, was not the be-all and end-all of a case.  He then identified at §40 some of the significant features which the court should take into account and which, as already mentioned, were all found in the present case.

31. A major emphasis of Mr Davies with the four cases he cited was that the amount laundered in two of them (Hsu Yu Yi and Wan Kwok Keung) was half or less than half of the amount in the present case and yet the court held that the appropriate starting point should be four years’ imprisonment.  But the culpability of the defendants in those cases was much less than the applicant and the cases do not show all of the aggravating features in the present case.  The involvement of those defendants was only that of someone down the chain, unlike the applicant who was found by the judge to have played a large part in defrauding the victims and the laundering operation.

32. As for Yip Kim Po & Ors, although the proceeds of the fraud amounted to HK$136 million, and the 3^rd and 4^th applicants were sentenced to five years’ imprisonment for one of the charges relating to money laundering, the trial judge had remarked that the 1^st applicant, who was tried together with the others, was lucky to have been tried in the District Court instead of the High Court.  As Stock VP had remarked in Boma at §37, the practice of excluding the High Court as a possible forum for money laundering trials brings distortion to justice, so the sentences and overall prison terms of the 3^rd and 4^th applicants in Yip Kim Po & Ors should be viewed in that light.

33. The last case cited by Mr Davies, Tse Ching Ng & Ors, was not a case of money laundering but was conspiracy to defraud a bank of $40 million in a letter of credit fraud.  The offence and the circumstances in which it was committed were entirely different.  We do not consider this case to be of any assistance.

34. Miss Maggie Yang for the respondent cited to us another case of money laundering which we think to be more comparable to the present case.  This is HKSAR v Liu Tjong Slam & Anr, CACC 87/2012, 25 February 2013.  The trial judge was also Judge D’Almada Remedios.  The 1^st defendant in that case was sentenced to 63 months’ imprisonment.  Like the applicant, he was convicted on the basis of the “knowing” limb.  Over HK$10 million being the proceeds which originated from his father’s drug dealings were laundered in three bank accounts for over a year.  The appeal court was of the view that looking at the case from the perspective that the 1^st defendant laundered the monies knowing they were proceeds of drug dealings, the prison term imposed on him was a lenient sentence, and it would have considered increasing his sentence but for the fact that he was helping his father and must have been under his influence (at §§180 to 182).

35. As Stock VP had said in Boma at §25, money laundering is a category of offence in which the sentencing judge is called upon to engage his “feel” for the case and his sentencing experience bearing in mind at all times the mischief at which the legislation is directed.  The judge in this case had plainly considered all the relevant factors and found quite a number of aggravating features as mentioned above.  We do not think the prison term of 6½ years is in any way excessive or wrong in principle.  The applicant has failed to show any strong grounds, let alone exceptionally strong grounds, why he should be given extension of time to file an application for leave to against sentence.

36. For all the above reasons, we dismiss his application.