HKSAR v. XIE SIMING

DCCC 290/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 290 OF 2012

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REASONS FOR SENTENCE

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1. The defendant has pleaded guilty before me and was convicted of one charge of “Dealing with property known or reasonably believed to represent proceeds of an indictable offence” (commonly known as “money laundering”) (Charge 1), contrary to s25 (1) and 25(3) of the Organized and Serious Crimes Ordinance (Cap 455) and another charge of “Conspiracy to deal with property known or reasonably believed to represent proceeds of an indictable offence” (Charge 2), contrary to s 25(1) and 25(3) of the Organized and Serious Crimes Ordinance (Cap 455) and ss 159A and 159C of the Crimes Ordinance (Cap.200).

Facts of the case

2. Both charges took place on 6 and 8 February 2012 respectively with the same modus operandi.  The victims of the two cases, V1 and V2 were all elderly female aged 78 and 63 respectively and in each occasion, they received phone call at home from a male who pretended to be her son and falsely represented to the victim that he was being beaten up by a loanshark as he was in debt of money.  The phone was then passed to an unknown caller who demanded money from the victim to repay the debts as a condition of the release of her son.  Both victims were also instructed to deliver the money to designated locations for collection.  The money demanded of in Charge 1 and Charge 2 was $30,000 and $200,000 respectively.

3. In Charge 1, V1 went along with the instructions and withdrew $30,000 from her bank account and dropped the cash on the roadside outside Tai Po Hospital.  The money was picked up by the defendant who later remitted the money to a bank account in the mainland.  It transpired that the son of the victim was not indebted to any loanshark or detained at all.

4. In Charge 2, V2 was suspicious of the claim as she did not have a son but only a son-in-law.  After her husband had been able to confirm the safety of her son-in-law, they realized that this was a telephone deception and reported the matter to the police.  The police then assigned a police officer who disguised as V2’s husband and negotiated with the unknown caller in the phone.  As a result, the police officer was instructed to deliver cash of $200,000 to Kowloon Tsai Park and place the money into a rubbish bin therein.  The police followed the instructions but they only put used papers into a brown bag instead.  As the defendant approached the rubbish bin and picked up the brown bag, he was arrested by the police.

5.  During subsequent interviews with the police, the defendant admitted under caution that he was recruited to come to Hong Kong to collect money and he was promised a reward of 10% of the amount collected.  The defendant was suspicious about the source of the money and believed the money to be proceeds arising from deception.  He admitted picking up the pile of money dropped by an old woman near Tai Po Hospital in Charge 1 and remitted the money to a designated account in China as instructed but he was yet to receive the reward. In Charge 2, he also admitted going to collect money at Kowloon Tsai Park from a rubbish bin as instructed before he was arrested.

Defendant’s Background and Mitigation

6. The defendant is only 19 years old and he is coming from a farming family in a village in Guangdong province.  He has a clear record in Hong Kong.  According to the background report, he only received junior secondary education up to Form two level in the mainland.  He then followed his cousins and worked in towns.  He started working firstly as a casual kitchen worker in a restaurant at Dongguan earning RMB 800 each month and later a factory worker in Shenzhen earning RMB 1,800 per month.  He contributed regularly to his parents when he was gainfully employed.  In early November 2011, the defendant quitted the job and returned home to help his parent’s faming work before he was lured to earn quick money and came to Hong Kong both in December 2011 and in February 2012 to collect money.

7. He claimed that he had committed the present offences as he was deceived by the other party who said the money was profits gained from the realty estate.  He revealed that he was introduced to contact a person called “Ah Wai” in Guangzhou who instigated him to earn some easy money by collecting money for him in Hong Kong.  He said he had come to Hong Kong for three times between December 2011 and February 2012.  He was given $2,000 for each trip to spend on food, travelling and accommodation for a few days.

8. He claimed that he was aware that the money he was instructed to collect was improper when he collected it from an old lady who dropped the money on a roadside.  He did not want to involve further but he was just afraid that he would be demanded by “Ah Wai” to repay him a few thousand dollars which he spent when he came to Hong Kong.  He was hard pressed to continue with the job as “Ah Wai” attitude became more hostile and aggressive.

9. The defendant said he had learnt a bitter lesson but he still received support from his family members in the mainland so he asked the court to be as lenient as possible so that he could be discharged earlier to unite with his parents and siblings.

Sentencing considerations

10. The present two money laundering cases were clearly but a side show of the more serious and underlying telephone deception cases.  The defendant should in fact consider himself fortunate as he was not charged and convicted of the conspiracy to defraud involving telephone deceptions.  According to a Chinese judgment HKSAR v Hung Yung Chun [2011] 2 HKLRD 174, the Court of Appeal had held that telephone deception cases were more serious than street deception cases and higher starting point should be adopted for deterrence.  The general starting point for this type of cases should be 4 years’ imprisonment.  A one-third enhancement was appropriate, but should telephone deception cases become more prevalent, the court should increase the rate of enhancement (see paras 21-24, 30).

11. Later, in another more recent Chinese judgment HKSAR v Wu Jianbing [2012] 1 HKLRD 781, the Court of Appeal was called upon to decide an appeal of sentence from the District Court involving a resident of mainland China who pleaded guilty to “money laundering” charges with underlying telephone deception offences.  There were altogether four charges (including also conspiracy to “money laundering”) and the amounts involved were HK$200,000, HK$20,000, HK$30,000 and HK$60,000 respectively.  The applicant was described as a “legman” who came to Hong Kong to collect the money.  I pause here to observe that the facts of the case in Wu Jianbing were almost identical with our present case.  If anything, the present case involves only half of the charges and the amounts involved is HK$80,000 less.  The sentencing Judge had adopted a starting point of 4 years’ imprisonment on each charge but was considered by the Court of Appeal as manifestly excessive.  The Court of Appeal held:-

“(1) Money laundering was a serious offence. Generally, the sentence should mainly reflect the amount of "black money" laundered and not the benefit obtained by the defendant or others. Other factors relevant to sentencing included the number of offences, the duration, the degree to which the defendant participated in the offence involving "black money"(p 782) and whether or not it was an organised and sophisticated crime (Secretary for Justice v Wan Kwok Keung [2012] 1 HKLRD 201 applied). (See para.10).

(2) Here, the total amount involved was $310,000, and the four charges took place within a very short period of time. D did not participate directly in the offences in connection with the "black money", nor was there evidence to prove the benefit he obtained. In such circumstances, the starting point adopted of 4 years' imprisonment on each charge was manifestly excessive, and 3 years should be adopted instead. D could be given one- third discount for his plea of guilty, thereby reducing the sentence to 24 months' imprisonment. However, the sentence on each charge should be enhanced by one-third, ie 8 months, pursuant to the Organized and Serious Crimes Ordinance (Cap 455). Consequently, the sentence on each charge was 32 months' imprisonment. Given that the four charges involved four different kinds of crimes, and in light of the totality principle, 6 months of the sentence imposed on Charge 4 should be served consecutively to that on Charge 3. The total sentence imposed on D was therefore 38 months' imprisonment. (See paras 13-14).”

In our case, the total amount involved was HK$230,000 and the two charges took place within a short span of only two days. The defendant was clearly also a “legman” who was instructed to come to Hong Kong to collect the “black money” from the victims of telephone deception cases. Apart from collecting or even remitting the “black money”, there is no evidence that the defendant participated directly in the telephone scams. The $30,000 belonging to V1 in Charge 1 represented almost of all what she had in her bank account and the money was not recovered. If V2 was not alerted as she was, she too would have suffered enormous loss in this case. On the other hand, the defendant is only 19 and has a clear record. He was coming from a farming village in the mainland China. Obviously he was manipulated by people like “Ah Wai” and he was still young and immature when he committed the offences. Apart from the $2,000 he received as his expenses for coming to Hong Kong, he did not receive any reward as promised. Mr. Hemmings, counsel for the defendant, relied on HKSAR v WU Dongwan DCCC 42/2010 and submitted that the starting point in each charge should not be more than 12 months. I disagree. That case concerns only one money laundering charge with the amount of $50,000 only. The decision only took into account another District Court case and a Magistracy Appeal case (see para 17). That was also decided one year before WU Jianbing by the Court of Appeal. Mr. Hemmings also referred to HKSAR v A male known as BOMA AMSSCO, CACC/2010 and emphasized the fact that the defendant was not involved in the underlying offence and did not know the exact nature of the deception offences. However, in Wu Jianbing, when holding that the proper starting point of the sentence for each charge should be 3 years’ imprisonment, the Court of Appealhad already taken into account that“there was no evidence to show that the appellant participated directly in the offences in connection with the “black money”...” (see para 13) and all along one of the grounds of appeal advance by the appellant in that case was also “he did not know the source of the money collected nor was there evidence in the case to show that he was aware of it” (see para 9). Looking at all these factors in the round, and following WU Jiangbing, I would adopt a lower starting point of 2 years and 3 months for each charge.

Application for enhancement of the sentence

12. By a notice to the defendant dated 16 April 2012 (“the notice”), the prosecution notified the defendant that they intended to furnish information to the court pursuant to s 27 of the OSCO for the purpose of the application to enhance the sentence following a conviction.  In support, it relies on the evidence of a witness statement of CIP CHAN Che-man dated 3 May 2012 which was adduced to the court after the defendant had pleaded guilty to the charges without any objection by the defence.  The statement by CIP CHAN had provided statistical data and analysis of the crime trend of telephone deception cases in the territory adopting the modus operandi of “Drop-off” (ie handover of cash in person).

13. The defence objected to the application on the ground that the prosecution was seeking to introduce evidence of the prevalence of telephone deception cases of which the defendant was not being charged or convicted.  Mr. Hemmings pointed out that the notice served by the prosecution specifically referred to s 27(2)(c) only, namely, “the prevalence of these specified offences.”  Since the defendant was convicted of “money laundering” offences and not telephone deception offences, he argued therefore that the specified offence in this case must be the “money laundering” offence and hence the prosecution can now only furnish information to the court regarding the prevalence of such offence alone which the defendant is convicted of in accordance with the strict letters of the law.  It is further submitted that where a defendant has not participated in the underlying offence and is unaware of the nature of the underlying offence, no regard should be had to the facts relating the underlying offence where the defendant is sentenced.

14. It should be noted that s 27 of the OSCO made a distinction between two classes of conviction: (a) convictions of specified offences, ie those referred to in Schedule 1 of the Ordinance.  The court was empowered to pass an enhanced sentence for a specified offence, whether or not there had been a determination that the offence was an organized crime and (b) those specified offences which were, in fact, determined to be organized crimes, pursuant to s 27(4) of the OSCO.

15. It is my understanding that the entire s 27 of the OSCO only requires the prosecution to serve a notice to the defendant under s 27(5) when they seek to request the court to determine whether the specified offence of which the defendant was convicted was an organized crime. 

16. S 27(2) of the OSCO is as follows:-

“The Prosecution may furnish information to the court regarding any or all of the following (emphasis added):-

(a) the nature and extent of the harm caused, directly or indirectly, to any person by the action in respect of which the person has been so convicted;

(b) the nature and extent of any benefit, whether financial or otherwise, that accrued or was intended to accrue, directly or indirectly, to that or any other person from that act;

(c) the prevalence of the that said specified offence;

(d) the nature and extent of any harm, whether direct or indirect, caused to the community by recent occurrences of that specified offences;

(e) the nature and extent of the local benefit, whether financial or otherwise, accruing directly or indirectly to any person from recent occurrences of that specified offences.

17. As I understand, the supply of any or all of those information under s 27(2)(a) - (e) is not dependent upon the serving of any of notice to the defendant at all.  It is clear therefore that under s 27(2), any or all of information concerning sub-sections (a) to (e) above may be furnished or adduced to the court by the prosecution to consider whether to impose an enhanced sentence under s 27(11).

18. In my view, the prosecution has in this case erroneously served the notice to the defendant pursuant to s 27(2) of the OSCO.  The serving of such a notice is not required by that particular section in the first place and is therefore wholly unnecessary in the circumstances.  The reference to s 27(2)(c) only in the notice by the prosecution is also sloppy and certainly contrary to the entirety of the content of the statement by CIP CHAN.  This morning, Mr Kwok, SPP for the prosecution conceded that in law they are not required to issue the notice but it was thought to be a good practice to notify the defence beforehand only.

19. In my judgment, by operation of the law, the prosecution is at liberty to furnish and rely on any of the above information and they should not be bound by the notice which is defective and which should not be issued to the defendant in the first place.  The defence cannot rely on a defective notice issued by the prosecution to prevent them from furnishing or relying on any or all of the information to the court as provided under s 27(2)(a) - (e).  Mr Hemmings sought to argue that the defence is nevertheless misled.  The only remaining issue is whether the defendant was misled and hence prejudiced by the notice?

20. The entire statement of CIP CHAN was served onto the defence by the prosecution two days before 10 May 2010.  On that day, Mr  Hemmings had asked for an adjournment so that he could have more time to prepare to argue against the application for enhancement and the case was then adjourned for 21 days for this purpose as well as to obtain a background report for the defendant at the same time.  The statement of CIP CHAN was finally adduced as evidence by the prosecution without any objection by the defence.

21. In my analysis, whether the sentence should be enhanced or not is a serious matter for the sentencing court at the end of the day after being satisfied beyond reasonable doubt as to the merit of the information as contained in the statement and certainly not to be resolved by a mere technicality.  I will have to consider the interest of the defendant as well as the public interest represented by the prosecution.  I fail to see how the defendant is prejudiced by the whole content of the information contained in the statement of CIP CHAN which is entirely permissible and also envisaged under s 27(2) of the OSCO.  Mr Hemmings never seeks to question the data mentioned and challenge the conclusion reached according to those data.  He never requires the attendance of CIP CHAN in court for any cross-examination purpose.  If the notice is required by the law, I would have no hesitation to allow an application to amend the notice in the interest of justice.  It is not necessary here as the issue of the notice is simply superfluous.

22. I also fail to understand Mr Hemming’s submission that since his client had said he had not participated in the telephone deception offence and was unaware of the nature of the underlying offence, the court should not consider the facts relating the underlying offence.  In HKSAR v HSU YU YI CACC 159/2009, the Court of Appeal outlined the sentencing principles of “money laundering” offence and said (at para 9(3)):-

“The offence of dealing with the proceeds from an indictable offence does not necessarily have any direct correlation with the indictable offence in question. However if the relevant indictable offence can be identified, the court may take into account the sentence imposed on the indictable offence per se when determining the sentence of the dealing offence.”

23. Based on the information provided in the statement (para 18 to 20), the specific modus operandi of “Drop-off” carried out in the present case was not common until 2008.  According to the police record, there was no “Drop-off” case reported in 2006 and 2007.  Such cases only emerged in 2008 with 38 cases which accounted for 7.9% of the overall telephone deception cases.  It then gradually increased to 18.9% in 2009, 21.2% in 2010 and 27.5% in 2011.  For the first four months of this year, it is already 24.9%.

24. The money misappropriated from the victims in the telephone deception cases with the “Drop-off” modus operandi is significant and there is an obvious tendency to increase.  In 2009, the sum was HK$7.46 millions representing 25.4% of the total loss of all telephone deception cases while in 2010, the sum was HK$10.39 millions representing 40.6% of the total loss.  In 2011, the sum was HK$10.74 millions representing 46.7% of the total loss.  For the first four month in 2012, the sum was already HK$3.49 millions representing 40% of the total loss.

25. In fact, by reason of the data concerning “Drop-off” cases as outlined above, one can readily see that CIP CHAN was seeking no more than to supply to the court information of the specified offence ie “money laundering”.  It is true and it is unfortunate that there is no mentioning of “money laundering” offence at all in his statement.  In substance, however, CIP CHAN has referred to data and statistics of those “Drop-off” cases in his statement which by their very nature were indeed also specific cases of “money laundering”.  On the other hand, according to the objection by the defence, if the prosecution just provide to the court with the data and statistic of all the general “money laundering” cases only, those information will have no bearing at all on its application to enhance the sentence in terms of s 27(2) of the OSCO.

26. According to the summary of facts which was admitted by the defendant, I am satisfied beyond reasonable doubt that by being a “legman” and to collect the cash, the acts by the defendant was directly causing the loss of HK$30,000 to V1 in Charge 1 (s 27(2)(a)).  According to the data as referred to in the statement, I am also satisfied beyond reasonable doubt that the specified offence, namely “money laundering” in the nature of the “Drop-off” cases is prevalent (s 27(2)(c)) since 2008 and is still increasing.  Lastly, I am satisfied beyond reasonable doubt that the monetary loss of the victims in the whole community, often elderly citizens, over these years from 2009 to the present caused by these “Drop-off” or “money laundering” cases was huge and is still increasing (s 27(2)(d)).

27. I am going to enhance the sentence of each charge by 30% as approved by the Court of Appeal in Wu Jianbing.

The Final Sentences

28. In such circumstances, as said, the overall starting point on each charge is 2 years and 3 months’ imprisonment.  After giving the customary discount to the defendant for his plea of guilty, the sentence on each charge is reduced to 18 months' imprisonment.  However, the sentence on each charge should be enhanced by one-third, ie 6 months, pursuant to the OSCO.  Consequently, the sentence on each charge is 24 months' imprisonment.  Given that the two charges involved two different cases committed at different times against two different victims, and in light of the totality principle, in addition, 3 months of the sentence imposed on Charge 2 should be served consecutively to that on Charge 1.  The total sentence imposed on the defendant is therefore 27 months' imprisonment.

29. It remains for me to express my gratitude to both counsels for the efforts and the helpful assistance they have provided to this court by their diligent researches and written submissions.