DCCC416/2010

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 416 OF 2010

----------------------

----------------------

---------------------

Reasons for Sentence

---------------------

1.  Defendants, each of you pleaded guilty to a single separate offence of dealing with property known or reasonably believed to represent the proceeds of an indictable offence, contrary to section 25(1) and (3) of the Organised and Serious Crimes Ordinance, Cap. 455. Each of your admit the brief facts and you were convicted. The facts were as follows:-

Charge 1 against D1

2.  D1, you described yourself as unemployed when you opened an account with the Hang Seng Bank which is count number 1. This was on 31 December 2003 and was closed on 1 March 2008. You claimed your normal occupation to be that of waiter. On 1 January 2007, the balance was $260.06. The account became active after 16 June 2007. The deposits and withdrawals were as follows: $4,891,696.38 and $4,981,956.44.

3.  The respective funds were mainly deposited and transferred by cash or bank transfer. Transactions were shown in tabular form in the brief facts. During 16 June 2007 to 1 March 2008 the amount of deposits varied from $1,000 to $50,000, there were 10 cash deposits, 169 ATM deposits and 83 transfer deposits. The total cash deposits were $1,231,200 and bank transfers $3,655,800. The funds were mainly transferred from the bank account of Tang Yin‑ping, who is still at large, known as WP, D3 and D4 in the total amount of $2,613,600 (53 transactions), $674,000 (14 transactions) and 94,000 two transactions respectively.

4.  In respect of the withdrawals, the majority were by cash withdrawals and bank transfers being 142 and 83 transactions respectively. The cash withdrawals totalled $2,528,100 and transfers of $2,313,100. The transfers were mainly to the account of Cheng Sze-wai, Chan Yuk-king and Wong See-bing.

5.  D1, you had no property in Hong Kong and have not filed a tax return since 2002. On arrest and caution you remained silent.

Charge 2, D2

6.  Account 2 is a savings account with the Hongkong & Shanghai Bank. D2 filed tax returns between 2002 and 2008 in the total sum of $844,295, her average salary being $11,726 per month. She opened the account on 1 September 2000. On 1 January 2007 the balance was $66.17. From the middle of 2008 to September, frequent deposits and withdrawals were found. The total deposits and withdrawals were $3,455,011.88 and $3,300,628.45 respectively. Funds were mainly received and withdrawn in cash and transfers. The transactions were shown in the brief facts.

7.  The deposits and withdrawals varied from $100 to $50,000. There were 256 deposits by ATM and 84 by bank transfer in the sum of $2,153,450 and $1,240,518.84 respectively. The transfers came from the savings account of D3 with the Hang Seng Bank and the savings account of D4 with the Hongkong & Shanghai Bank being $17,820.89 (3 transactions) and $212,473 (15 transactions) respectively. In respect of the withdrawals, the majority were made by cash withdrawals and bank transfers, 55 and 116 respectively. The cash withdrawn was $1,641,700, the bank transfer from Account 2 to Account 4 in D4’s name and Account 3 in D3’s name were $706,878.85 by 36 transactions and $20,000 by one transaction respectively. Upon receipt of funds, cash was withdrawn or transferred out of Account 2 within a couple of days.

8.  D2 owned no property in Hong Kong. On arrest she remained silent.

Charge 3 against D3

9.  D3 who has not filed a tax return since 2002 opened a savings account on 22 February 2002 which was closed on 19 January 2008 with the Hang Seng Bank. She claimed to be a housewife. The balance of Account 3 on 1 January 2008 was $8,058.59.

10.  Since mid-June 2007 the account became active with frequent transactions of substantial amounts. The total deposits and withdrawals in Account 3 were $4,146,833.25 and $4,154,889.84 respectively. Funds were mainly deposited and withdrawn in cash or by bank transfer. The facts contain a table of the transactions. During the period, the amount of deposit and withdrawals varied from $200 to $80,000. There were nine cash deposits, 415 ATM deposits and 86 bank transfers with a total of cash deposit of $3,379,350 and $761,332.01 by transfers and the funds were mainly transferred from Account 2 of D2, Account 4 of D4 and an account of the wanted person with a total of $235,500 (8 transactions), $133,000 (9 transactions) and $20,000 being one transaction respectively.

11.  In respect of the withdrawals, the majority were made by cash withdrawals at ATMs (86 transactions) and bank transfers (127 transactions). The cash withdrawn was $856,000 and $3,107,095.84 respectively. The deposits were mainly transferred to the account of D1 in the sum of $2,613,600 by 53 transactions.

Charge 4 against D4

12.  D4 opened a Hongkong & Shanghai Bank savings account on 8 September 1999. In early 2007 it was only used occasionally but since July 2007 the deposits and withdrawals became frequent and significant in amount. The funds were mainly deposited and withdrawn by cash and transfer. The total deposit and withdrawals were $1,846,134.58 and $1,864,965.70 respectively. There’s a full breakdown of transactions shown in the brief facts.

13.  During the period, the amount of deposits and withdrawals varied from $100 to $50,000. There were a total of 16 cash deposits, 88 ATM deposits and 83 bank transfer deposits in the total of cash $667,045 and $973,198.85 by transfers. A sum of $686,878.85 was transferred from Account 1 to Account 4 and $101,500 was transferred from a savings account of the wanted person to Account 4. The majority of withdrawals were of cash and ATM transfer being 94 and 78 transactions respectively. $600,400 was withdrawn by cash and $939,201 by transfer.

14.  Regarding the transferred out funds, $212,473 was transferred to Account 2 in the name of D2, $235,500 was transferred to Account 3 in the name of D3 and $94,000 to the account of D1. After receiving the funds, cash would be withdrawn or transferred within a couple of days, sometimes the funds would be withdrawn or transferred soon after the deposit. In the six years prior to 2008, D4 filed no tax return.

15.  D4, D3 and the wanted person had transferred a large sum of money from their savings accounts to Account 1 of D1 on 16 June 2007 onwards:-

1) D3 transferred $2.16 million from the Hang Seng Bank account between 12 July 2007 and 26 November 2007 by 53 transactions, the average being $50,000.

2) The wanted person transferred $674,000 from a savings account the Hang Seng Bank to Account 1 between 31 July and 13 November 2007 by 14 transactions, the average being $50,000.

3) D4 transferred $94,000 from her account with the Hongkong & Shanghai Bank to Account 1 by two transactions on 28 July and 27 November 2007.

16.  Money was regularly transferred between the account of D2, D3 and D4 and the wanted person, however no money was transferred from D1’s account to the accounts of D4, D2 and the wanted person. D2, D3 and D4 are sisters and the wanted person was their niece. Money deposited into the accounts of D1 to D4 was withdrawn soon after deposit. The balance of the accounts on closure was nil. Most withdrawals and deposits were by cash to avoid the source of funds being traced.

The amount involved

17.  D1, between 16 June 2007 and 1 March 2008 you dealt with $4,891,956.44.

D2, between 1 July 2007 and 22 September 2008, $3,287,128.50.

D3, 12 July 2007 to 19 January 2008, $3,807,833.44,

and

D4, 28 July 2007 to 27 August 2008, $1,607,294.50.

18.  D1 admitted eight previous convictions on seven previous occasions with none being similar. Indeed D1 is now serving a sentence of 15 years and 4 months’ imprisonment for trafficking in dangerous drugs imposed last year. I am told his earliest date of release is May 2019.

19.  D2 and D3 are of clear record and D4 admitted to two previous convictions for theft committed some 21 years ago in 1989.

20.  On behalf of D1 Mr Kwong entered mitigation. He told me he as 45 years of age, separated and living alone. As is apparent from his record, he had since 1990 spent most of his time in prison and was in fact serving a sentence to which I have already referred. Turning to the offence itself, Mr Kwong said he was released from jail in 2007 and could not find employment. A man offered him money for the use of his bank account for his business and D1 agreed. This led to his arrest in 2008.

21.  Realistically, Mr Kwong accepts that this is a serious offence and prison is inevitable. He referred me to the well‑known authority of Secretary for Justice v Herzberg App for Review No.8 2008 Court of Appeal with a special reference to the factors affecting culpability laid down by the Court of Appeal. He submitted in this case there is no international dimension, the scheme was extremely unsophisticated, lasted 8½ months and involved $4.9 million. He told me that D1 received only a small sum by way of remuneration for turning a blind eye to the use of his account. He also mentioned the authority which Mr Khosa would refer to later. Mr Kwong on behalf of D1 asked for leniency and to apply the principle of totality in order to either order the whole of the sentence to run concurrently with the existing sentence or at least partially concurrent. He reminded me that D1 had entered a timely plea of guilty thus saving a lot of court time.

22.  Mr Khosa then entered mitigation on behalf of D2, D3 and D4. As we know from the facts, these defendants are in fact sisters. D2 is 44, Hong Kong born and twice divorced. She is now single and resides in a Public Housing unit with her brother. She is of clear record.

23.  D3 is 47, Hong Kong born and married with a daughter of 18, a Form 7 student. Her husband is an insurance agent and he referred to her clear record.

24.  D4 is 40, divorced and Hong Kong born. She has a daughter of 19, a son of 17, both in employment. He referred to two previous convictions but reminded me that they were in 1989 when she was only 19 years of age.

25.  Turning to the facts, Mr Khosa said that Tang Yin‑ping, the wanted person, is the niece of D2 to D4. Her initial approach was to D3 and she told her that her and her boyfriend had a business of importing apparelled goods, Gucci, Prada, etc., then re-exporting them for good profits to Japan and South Korea. D3 was persuaded to invest $100,000 in the business. Also the niece persuaded her to allow her to use the bank account and she had many clients and it was better to have separate business accounts. Foolishly D3 agreed to this and allowed her to use a Hang Seng Bank account and even gave her the withdrawal card.

26.  D2 was also approached and she too invested $100,000 and allowed the niece to use her account knowing D3 had already done so. D4 was somewhat different, she simply allowed the wanted person, that is her niece, to use the account as her niece said that she had many clients and needed separate accounts.

27.  Mr Khosa said that in January 2008, D3 was told by the Hang Seng Bank it was closing her account but would give no reason. The account was actually closed on 19 January 2008. D3 discussed this with D2 and they confronted the niece who assured them that she was doing nothing illegal. However, very foolishly D2 and D3 still believed that she was up to no good but decided to turn a blind eye in order to recoup their investment. They informed D4 but she too was persuaded to do nothing so as not to rock the boat. Ultimately all three were arrested and the wanted person disappeared. She is still at large. D2 to D3 and D4 made efforts to find her but this was fruitless. By this time they had reason to believe that the wanted person was involved with forged trademarks.

28.  Mr Khosa said that D2, D3 and D4 were not a part of the original crime and simply did not know what was going on. However, by January of 2008 they were aware something was wrong. Mr Khosa realistically accepted that each knew they were facing immediate custodial sentence. He reminded that D2 and D3 are both first offenders. All three defendants have pleaded guilty and were remorseful and he reminded me of the saving of court time.

29.  Mr Khosa also referred to the authority of Secretary For Justice v Herzberg. He too submitted that there was no international dimension, the scheme was not sophisticated and the time was not lengthy. He reminded me of the amounts involved: D2, 3.2 million; D3, 3.8 million and D4, 1.6 million. By way of reward, D2 got $50,000 and D3 $70,000, having invested $100,000 they each had lost money. He said D4 derived no benefit whatsoever from the scheme. Also he said that all three defendants had been under stress as this has been hanging over them for two years.

30.  Mr Khosa then referred to the authority of HKSAR v Siu Yu Yi Cr App 159 of 2009. He referred me to paragraph 14 of that case where 12 sentences were referred to. However, he submitted that the majority had an international dimension. He also referred me to paragraph 15 in which reference was made to this case involving cross-border actions which were well‑organised crime and involved a total of over $25 million, however, the amount dealt with by the defendant himself was 2.5 million. The starting point in that case was 3½ years with one month knocked off for reasons which I will not go into.

31.  Mr Khosa for reasons already given submitted that D2, D3 and D4 should have a much less starting point. Referring again to D2 and D3, these were ladies of clear record who had been deceived by their own niece and there was nothing to show they had participated in the master scheme. D4’s part had been even less and was rather silly, she had derived no benefit at all. He asked me to treat D4 as being of clear record as the two previous convictions were some 21 years old when D4 had been only 19 years of age.

32.  I turn now to the sentences. I accept fully that in none of these cases there is an international dimension that affects Hong Kong’s reputation. I fully accept that the manner and the commission of the offence is naïve in the extreme and very unsophisticated with little benefit accruing to D1, no benefit to D4 and D2 and D3 actually suffering a loss. Prison is inevitable. The sums involved are as follows:-

D1, approximately 4.9 million over 9 months;

D2, approximately 3.3 million over 14 months;

D3, 3.8 million over 6 months;

D4, 1.6 million over 13 months.

33.  D1 is a man with a very poor record with nothing similar in the past. The offence was committed out of financial need but however does not excuse it. D2, D3 and D4 were each duped by their own niece. I do feel some sympathy.

The sentences themselves

34.  D1, in your case I take as a starting point 3½ years’ imprisonment reduced to 28 months for your plea of guilty. You are serving a lengthy sentence, it will be a considerable time before you are released from that sentence. Whilst I accept this is a totally separate matter, I do apply the principle of totality and extend the hand of mercy to this extent. The 28 months will be served in this way: 12 months will be consecutive to that sentence, 16 month will be served concurrent to that sentence.

35.  D2, I take as a starting point in your case 30 months’ imprisonment. That is reduced to 20 months for your plea of guilty.

36.  D3, I take the same starting point of 30 months reduced to 20 months for your plea of guilty.

37.  D4, I find that your part in it was somewhat less. I therefore take a starting point of 27 months reduced to 18 months for your plea of guilty.

38.  Finally, I would like to thank counsel for their assistance in this case.