HKSAR v. CHENG KELLY KIT YIN AND OTHERS

DCCC 153/2010

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 153 OF 2010

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REASONS FOR SENTENCE

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Introduction

1. This case concerns 11 charges of “conspiracy to defraud” (Charges 1 to 11) and 2 of “money laundering” (Charges 12 and 13).

2. The charges relate to 11 letters of credit issued by 4 banks on the applications by Wing Fai in favour of Famous Capital (Charges 1 to 10) and King Capital (Charge 11). 

3. Wing Fai was a subsidiary of China Rich Holdings, a listed company in Hong Kong.

4. The defendants concerned, D1 to D3 for Charges 1 to 10, and D4 and D5 for Charge 11 conspired to defraud the issuing bank of the LC concerned by the issue of the LC and the falsification of documents required for the negotiation of the LC and of causing payment to be made to the beneficiary under the LC pursuant to such negotiation when there was no genuine underlying commercial transaction relating to the LC concerned.

5. Charges 12 and 13 concern the dealings with the proceeds of the LC frauds by the defendants involved: D2 and D3 for Charge 12 and D4 and D5 for Charge 13.

The Pleas

6. D1 pleaded guilty to Charges 1 to 11 and admitted the facts pertaining to those charges.

7. The Prosecution offered no evidence against D2, D1’s daughter, in relation to all charges against her; hence Charges 1 to 10 and Charge 12 were dismissed against D2.

8. D4 pleaded guilty to Charge 11 and admitted the facts pertaining to that charge.  The Prosecution offered no evidence against D4 on Charge 13; Charge 13 was dismissed against D4.

9. D3 and D5 pleaded not guilty to all charges laid against them.

10. After a fully contested trial, I convicted D3 of Charges 1 to 10 and Charge 12.

11. I acquitted D5 of Charge 11 but convicted him of Charge13.

12. The facts are set out in the Summary of Facts admitted by D1 and D4 and in the verdict in relation to D3 and D5.

The Modus Operandi of Charges 1 to 11

13. The defendants concerned, during the periods or the dates pleaded, in Hong Kong conspired together to defraud the bank as particularized, by dishonestly:-

(i) Causing and permitting application to be made to the issuing bank concerned for the issue of a LC in favour of the beneficiary company under the LC involved;

(ii) Causing and permitting the falsification of documentation required for the negotiation of the said LC; and

(iii) Causing and permitting payment to be made to the beneficiary company pursuant to the negotiation of the LC;

where there was no underlying commercial transaction relating to the said LC.

14. As said Wing Fai was the applicant for all11 LCs.  Each of the 11 LCs concerned purchase of construction materials by Wing Fai: asphalt (the 1^st to the 6^th LC), concrete mix (the 7^th to the 10^th LC) and steel bars (the 11^th LC).

15. Famous Capital was the seller and beneficiary under the 1^st to the 10^th LC.

16. King Capital was the seller and beneficiary under the 11^th LC.

Knowledge and Culpability

17. D1 and D4, who pleaded guilty, admitted that the underlying transactions for the LCs concerned did not exist.

18. In paragraph 7.22 of D1’s Mitigation, Mr Grounds and Mr Beel, counsel for D1, submit that “ In any event Kelly Cheng maintains that she was not the chief architect of the scheme but she was responsible for not preventing or putting a stop to what happened.” The aforesaid statement, in my judgement, is an understatement. 

19. The Summary of Facts admitted by D1 shows that she was one of the Executive Directors of China Rich Holdings.  She was also its Deputy Chairman and Chief Financial Officer.

20. D1 was also a director of Wing Fai since February 1997 until her resignation in late July 2001.

21. The Accounts Department of Wing Fai was responsible for making applications for LCs, the instructions for which normally came from D1.  For the 11 LCs in question, a different modus operandi was adopted; the handling clerk was given a piece of paper with hand-written details required for the preparation of LCs by D1.  D1 and Kam Shing had signed on all 11 LCs.  On 8 out of the 11 LCs, D1 and Kam Shing had also signed the Trust Receipts to the banks pledging the documents of title of the goods the subject of the LCs (paragraphs 6, 26 and 29 of D1’s Summary of Facts).

22. $9 million of the funds received by Famous Capital went to Fitzroya.  Fitzroya was a wholly owned subsidiary of China Rich Holdings.  D1 was one of its two directors.  She was also an authorized signatory of Fitzroya’s bank account with DBS Kwong On Bank (paragraphs 15 and 33 of D1’s Summary of Facts).

23. $3.8 million of the funds received by Famous Capital went to GreaterChinaherbs.com, a BVI company.  D1 was a director of the company and its authorized representative in Hong Kong.  D1 was also an authorized signatory of the company’s bank account with Standard Chartered Bank.  She was also a director of Greater China Technology Ltd., the company which owned GreaterChinaherbs.com.  Greater China Technology Ltd. was an associated company of China Rich Holdings (paragraphs 17 to 19 and 33 of D1’s Summary of Facts).

24. $490,814 of the funds, mixed with proceeds from 2 uncharged LCs, went to Morgan Stanley to settle monies owed for the purchase of shares of China Rich Holdings by D1 (paragraph 33 of D1’s Admitted Facts and paragraph 5.4 of D1’s Mitigation).

25. $1.9 million of the funds received by Famous Capital, mixed with other deposits, went to Ivy Fund on 2^nd February 2002.  $1.4 million was withdrawn by way of cheque signed by D2 and made payable to Asia Land (paragraph 33 of D1’s Summary of Facts and paragraph 5.5 of D1’s Mitigation).

26. D2, D1’s daughter, was a director of Swift Finance Ltd.  Swift Finance was the sole director of Ivy Fund.  D2 was also the sole authorized signatory of Ivy Fund’s bank account (paragraphs 22 and 23 of D1’s Summary of Facts).

27. D1 was one of the 2 directors of Asia Land and one of its 2 shareholders.  She was also the sole authorized signatory of the bank account of Asia Land (paragraph 21of D1’s Summary of Facts).

28. The funds received by King Capital were transferred by a cheque in the sum of $3.5 million payable to Ivy Fund (paragraph 34 of D1’s Summary of Facts).

29. D2, D1’s daughter, was one of the directors of Famous Capital in the years 2000 – 2002.  D2 was one of the authorized signatories of the bank account of Famous Capital.

30. From the aforesaid facts admitted by D1, I am sure D1 was in the know; not only that she knew that that the underlying transactions were all bogus, she played an active and important role in the 11 LC frauds.  Of the 4 defendants before me, she is the most culpable.

31. D4 admitted that she knew that King Capital, the seller and beneficiary under the 11^th LC, had not carried on business (Tab. 6 of D4’s mitigation bundle)

32. I found it proved against D3 and D5 that the underlying transactions did not exist.  I also found it proved that D3 knew that the underlying transactions in relation to the 1^st to the 10^th LC for D3 did not exist.

Financial Benefit

D1

33. Learned counsel for D1submitted that none of the money referred to in paragraph 33 of D1’s Summary of Facts went to benefit D1 directly (paragraph 5.7 of D1’s mitigation).

34. The monies went to companies closely connected to D1or her daughter.  The proceeds of the 9^th LC, mixed with proceeds of 2 uncharged LCs, were used to settle sum owed to Morgan Stanley for D1’s purchase of shares.

35. Paragraph 5.3 of D1’s mitigation states:-

“The vast majority of the money seems to have been utilized by the China Rich Group itself (see SF para. 30-34):-

Wing Fai HK$17.7 million

Fitzroya HK$9 million

Greaterchinaherbs HK$3.8 million

Total HK$30.5 million”

36. Apart from the sum used to settle what D1 owed to Morgan Stanley, given D1’s relation with China Rich Holdings and that she had a financial interest in the group’s business, D1 must have derived indirect financial benefit from the LC frauds.

D3

37. Some of the proceeds (approximately $260,000) were channeled to the securities accounts of D3.

38. Two cash cheques (approximately $75,000 in total) were deposited into D3’s bank account. 

39. D3 had benefited from the LC frauds (Charges 1 to 10) and the money laundering (Charge 12) in question.

D4 and D5

40. There is no evidence that either D4 or D5 had benefited directly from the crimes they committed, ie Charge 11 against D4 and Charge 13 against D5.  It seems to me “Keeping the job” was the only benefit and that was the reason for D4’s participation in the LC fraud and D5’s involvement in laundering the $3.5 million under complaint.

Health Conditions

D1

41. The medical report of D1 prepared by Dr Ho, Medical Officer of Tai Lam Centre for Women, states that physical examination on admission revealed no abnormality or disability.  The hypertension and attack of acute gastritis are under satisfactory control while D1 was under remand. 

D4

42. Mr Lai, in paragraph 66 of D4’s Mitigation, submitted that D4 has faced much emotional turmoil in the past 10 years as a result of the drawn out investigation and court proceedings.  She is now 42 and well beyond an age suitable for pregnancy.

43. I have sympathy with D4 for her aborted matrimonial and maternity plan but the effect that the criminal investigation and prosecution had on D4’s matrimonial and maternity plan is not something that can be taken as a mitigation factor, let alone an exceptional circumstance, whether viewed in isolation or considered with other matters put forward.

D3 and D5

44. There is nothing about D3 and D5’s health conditions that cause me concern about the appropriateness of a custodial sentence or the length of the sentence for each of the offences they stand convicted of.

Delay

45. All 4 defendants prayed in aid the effect of the delay from the time the liquidator reported the case to the police, ie between 20 Jan 2004 and 28 Mar 2004, to the time the defendants’ plea day appearance before District Court on 26 Feb 2010.

46. The issue of delay had been considered by HH Judge Yau in the stay application.  The issue then was whether the proceedings should be permanently stayed.  Unjustifiable delay was one the grounds put forward for the stay application.

47. Although the defendants failed in the stay applications, they can still rely on the delay in prosecution as a mitigating factor.

48. The Prosecution, at my request, submitted a Chronology of Events.  The Chronology should be read together with the Rulings made by HH Judge Yau on the stay application and re-opened stay application.

49. Judge Yau found against the defence on both the “motives and conduct” ground and “unjustifiable delay” ground.

50. On the “motives and conduct” ground, Judge Yau found, after hearing evidence from the Defence and Prosecution, that “the Police and in particular the Department of Justice has proved that they had maintained their independence, impartiality and objectivity throughout”.

51. On the “unjustifiable delay” ground, Judge Yau has this to say:-

“I further find that the delay is not unjustifiable. There was some delay but it must be on the top of the investigators’ mind that various civil proceedings were being conducted, reaching the highest court in one and it was their decision that there may be some bearing on their investigation. As Mr Marash pointed out, it would appear that the complaint they received was not just on the letters of credit, it does not seem to be the case that the charges were handed to the CCB on a plate. There was much investigative work left to be done.

I accept the Department of Justice’s explanation that because of backlog of cases, there was an 18 months delay in the CCB submitting their file for legal advice and actually giving that advice, between February 2006 and August 2007. I find that it was not an unjustifiable delay in itself.”

52. It should be noted that the LCs complained of in the report to the CCB by the liquidator are not the subjects of any of the charges in the present case.  It was after investigation by the CCB and pursuant to legal advice obtained from the Department of Justice that the present charges were laid against the defendants.

53. I agree with Judge Yau’s ruling on the issue of delay.  There was no unjustifiable delay.

54. I appreciate that the fact defendants had not suffered unjustifiable delay for the purpose of the stay application does not mean that they cannot pray in aid the effect of the delay that nevertheless had on them for the purpose of mitigation.

55. In my judgment, when I consider delay as a mitigating factor for the defendants, I should look also at what happened after the defendants were brought to court.

56. Putting aside the various applications made by D1 between 6 Jun 2010 and 6 Oct 2011, the Chronology shows that D1 on 6 Oct 2011 asked for re-fixing of the trial date to accommodate diary of leading counsel from London for stay application.  The trial date was re-fixed to 21 May 2012, 35 days were reserved, including 10 days for the stay application.  From 21 May to 5 June 2012, Judge Yau heard the stay application made by D1 to D5.  Judge Yau refused the stay application.  Then there were 3 mention hearings in Jun 2012.  On 11, 12 July, 6 and 10 Sept 2012, Judge Yau heard the re-opened stay application launched on D1 to D5’s behalf. On 10 Dec 2012 and 18 Jan 2013, D1 to D3 applied for leave for judicial review on their stay application.  Application refused.  On 3 Sept 2013, D1 to D3’s judicial review appeal was heard by the Court of Appeal.  On 25 Sept 2013 the Court of Appeal handed down its judgement of the judicial review appeal. 

57. As said, Judge Yau heard the evidence and found that the defendants failed on both the “motives and conduct” grounds and the “unjustifiable delay’ ground.  Mr Grounds argued that I should not hold it against D1 that she took part in the stay applications as she had been advised by eminent counsel, both local and overseas.

58. It is apparent from the rulings of Judge Yau that he was not satisfied on the evidence heard that the proceedings should be stayed.

59. On the “unjustifiable delay” ground, it was argued that because of the delay, Kam Shing was suffering from dementia and thus could not be called to testify for the defence.  It was also argued that important bank documents were destroyed to the prejudice of the defendants.

60. These grounds are entirely devoid of merits, when read against the guilty pleas of D1 and D4 and the findings against D3 and D5.  Given the admission/findings that the underlying transactions did not exist and the defendants knew that these transactions were bogus in nature, one cannot see how the defendants could honestly contend that the mental incapacity of Kam Shing and the destruction of bank documents would prejudice the defendants in their trial when they knew for a fact the transactions did not exist. 

61. It was argued in the stay application that the destroyed internal documents of the bank would be useful in showing how the banks probably did not care if there was in fact an underlying transaction behind the LC applications as long as the banks’ financial position was protected should there be default of payment.  In D1 and D4’s Summary of Facts and the Admitted Facts concerning D3 and D5, it is admitted that none of the LC issuing banks would issue LCs if they had known that there were no genuine underlying transactions relating to the LCs.

62. Whatever advice that D1, D3 to D5 had received from their lawyers, ultimately it was the defendants who decided that they would go ahead with the stay applications.  Whatever advice they received from their lawyers, they knew for a fact the mental incapacity of Kam Shing would not affect their case, for the truth is: the underlying transactions for the 11 LCs did not exist and D1, D3 and D4 knew at the time these transactions did not exist.

63. Although D1 pleaded guilty to Charges 1 to 11 and D4 pleaded guilty to Charge 11 before me, they did not plead at the early stage of the proceedings.  They fought the case not on merits of the evidence; they fought it through the stay applications before Judge Yau.  In the case of D1, she sought a judicial review against Judge Yau’s rulings.  She brought the matter to the Court of Appeal after she had failed in the judicial review hearing.

64. D3 and D5 were convicted after trial.  They had shown no remorse throughout.  Both D3 and D5 had taken part in the stay applications before Judge Yau.  D3 also took part in the judicial review proceedings and the subsequent appeal to the Court of Appeal.

65. In my judgement, D1, D3 to D5 had brought much delay to the proceedings through the stay applications, in the case of D1 and D3, they further delayed the proceedings through the judicial review and the appeal to the Court of Appeal.  Whilst it might be said that the defendants had to wait for some years for their appearance in the District Court for pleas after their arrest in May 2008, it should be noted that firstly, that this was not a case where any remorse had been shown at any stage despite the strong evidence against the defendants.  Secondly, the present case was not a straightforward case to investigate and some delay was inevitable.  The apparent delay had to be viewed in the context of the investigation which was being conducted.  In my judgment, the aforesaid delay brought by the defendants greatly diminishes the effect of the delay that they pray in aid in mitigation.

Good Character of the Defendants

66. All 4 defendants before me had a clear record.

67. I have read all the character references placed before me by counsel. 

68. In the case of D1, from the materials before me, ie the character references and the donation receipts and letters of appreciation, I accept that D1 has a positive good character.

Non-economic Loss

69. Given the fact that all the loans under the 11 LCs were repaid on time and the peculiar nature of the construction materials in question, the asphalt and concrete mix had to be used within hours of mixing and asphalt, concrete mix and steel bars, once used, could not be reclaimed by the issuing banks, I would sentence the defendants on the basis that the LC frauds had caused non-economic loss to the banks but not real economic loss or risk of economic loss.

70. That said the 11 charges of conspiracy to defraud were still very serious in nature.  Each calls for a custodial sentence.  Defence counsel did not suggest otherwise, the main thrust of the mitigation is that that exceptional circumstances exist in the present case and the prison term should be suspended. 

71. The English Court of Appeal in Attorney General’s Reference (No 53 of 1998) (Edward Kelly) [1999] 2 Cr App R 36 considered the meaning of exceptional circumstances and commented that “to be exceptional a circumstance need not to be unique, or unprecedented, or very rare; but it cannot be one that is regularly, or routinely or normally encountered.”

72. It was not uncommon in LC fraud cases that the issuing banks suffered no economic loss and all the loans were repaid in full.

73. In R v Chan Kam Chuen [1995] 2 HKCLR 257, cited by Mr Lai, the court stated:-

“the offences involved the circulation of false documents for the purposes of international trade. The system of documentary credits is the means whereby international trade has been conducted for hundreds of years. The system depends entirely upon trust. If false documents are circulated, some of which are in effect title to the goods themselves, the whole system falls apart. Offences of this nature are regarded as being very serious.”

74. In Chan Kar Leung CACC 287/2004, Stock JA (as he then was) stated:-

“The gravamen of culpability, when it comes to letters of credit fraud, is the fundamental damage that is done to this system of trade; a point that has been made time and again by appellate courts. It avails little, therefore, to point to transactions elsewhere unless it be shown that those transactions somehow conferred equal security in the issuing bank’s favour”.

75. I note that the bogus transactions in the present case were all domestic, not international, in nature but the sentiments expressed by the court in Chan Kam Chuen are still applicable to the present case.

76. The Court of Appeal in HKSAR v Dai Chi Wai [2011] 4 HKLRD 534 at paragraphs 3 to 5 reiterated that “the use of false documents to obtain a letter of credit from a bank is a serious offence.  First, it undermines the reputation of Hong Kong as an international financial and banking centre.  Modern commercial activities generally rely on a documentary system for loan and credit facilities.  Under normal circumstances, a bank relies on the truthful documents from both sides as the basis for approving loans, issuing letters of credit as the security for the loan, so as to safeguard the bank form loss.  If the commercial transaction so stated is in fact non-existent, the bank does not have sufficient security and has to bear an extremely high risk.  Even if the bank is, ultimately, able to recover the loan and suffers no real loss, it does not in any way mean that the bank would not face the economic risk arising from an applicant’s use of fraudulent documents to apply for the bank’s letter of credit”.

77. As said, I would sentence the defendants on the basis that the LC frauds had caused the banks non-economic loss as stated in paragraph 115 of the verdict.  I am aware that the loans under the 11 LCs were fully secured by time deposits and guarantees, that said, the 11 LC frauds remain very serious in nature, offences of this nature really undermines the system of documentary trade and the reputation of Hong Kong as an international financial and banking centre.

78. The fact that the loans were fully secured and the banks suffered only non-economic loss call for a lower starting point, they do not constitute exceptional circumstance whether viewed in isolation or together with other matters urged on the defendants’ behalf.

Money Laundering

79. Applying the sentencing considerations as enunciated in Hsu Yu Yi and Boma, I bear in mind that the maximum sentence is 14 years’ imprisonment and deterrence is the paramount consideration as “the criminality in laundering arose from the encouragement and nourishment it gave to crime in general”. 

80. I also take into consideration the fact that over $27 million was involved for Charge 12 against D3; $3.5 million was involved for Charge 13 against D5.

81. The underlying indictable offence could be identified; the monies laundered were proceeds from LC frauds.  Both D3 and D5 participated in the laundering of the criminal proceeds by signing cheques to move the funds from the respective bank accounts of Famous Capital and King Capital.

82. In the case of D3, she had knowledge that the monies she dealt with were proceeds from LC fraud. 

83. In the case of D5, he was convicted on the basis that he had reasonable grounds to believe that the $3.5 million he dealt with was criminal proceeds.

84. I am aware that there was no international dimension in the predicate crimes and the laundering acts.

85. The time span for Charge 12 was under 6 months; as for Charge 13, it concerns only one cheque signed by D5 in late Jan 2002.

86. D3 was convicted of both the predicate offences and the money laundering charge.  The Court of Appeal in HKSAR v Chan Kim Chung Nelson said:-

“17. These considerations lead naturally to the approach which a court should adopt in sentencing an offender who is guilty both of the predicate offence and a connected s.25 offence. The question for the purpose of sentence of the s.25 offence must always be whether its commission adds anything to the culpability disclosed by commission of the predicate offence. If it does, then that extra culpability must be reflected in the overall sentence imposed. If, however, the s.25 offence adds nothing, then an effective additional sentence for the s.25 offence should not be imposed, for doing so would in effect be to punish the offender twice the same conduct.”

87. In the present case, looking at the laundering acts of D3, and the destinations of the funds, I cannot say the fund flow under complaint had created “additional layers” between the crimes and the profits it had generated, as the ones envisaged by the Court of Appeal in paragraph 13 of Chan Kim Chung Nelson.

88. In my judgement, Charge 12 does not call for an additional sentence on top of the penalties for Charges 1 to 10.

No Exceptional Circumstance

89. All the matters put forward by counsel on D1, D3 to D5 behalf, whether considered in isolation or taken as a whole, do not constitute exceptional circumstance.

Sentences for Individual Charges-Charges 1 to 11

90. For Charge 1 to 11, the amounts varied from a little over $1.9 million (Charge 10) to over $3.5 million (Charges 4 to 6 and 11).  As the LC frauds had not caused any economic loss to the banks, coupled with the fact that all the loans were supported by collaterals put up by China Rich Holdings, for the purpose of sentencing, I would sentence D1, D3 and D4 on the basis that the LC frauds had caused non-economic loss to the bank.  That said, Charges 1 to 11 remain very serious crimes; for they offend against the core values of business honesty and strike at the heart of the integrity of documentary trade and the banking system as a whole.

91. I find amongst the co-conspirators D1 was much more culpable than D3 and D4.  She was a senior member of China Rich Holdings.  She was instrumental in procuring the LC applications and she obtained both direct and indirect benefit from the LC frauds.  D1 only pleaded to the offences after she had exhausted all her appeal avenues to stay the proceedings.

92. D3 was involved in 10 LC frauds (Charges 1 to 10), she had also received monetary benefit from the crimes she committed.  D3 has not shown a scintilla of remorse.  For the stay applications, D3 went all the way with D1 and D2 to its end; she took part in the subsequent judicial review and the appeal to the Court of Appeal.  At her trial, she put the Prosecution to strict proof.

93. D4 was only involved in one single fraudulent LC transaction, i.e. the 11^th LC.  There is no evidence that she had received any direct or indirect benefit from the fraud practiced on Standard Chartered Bank.  She co-operated with the police after her arrest. She made some admissions when interviewed under caution.  D4, however, was a party to the 2 stay applications, though she did not associate herself with the judicial review and the subsequent appeal to the Court of Appeal.

94. For Charge 1 to 10, I find D1 more culpable than D3.  In my judgement, a starting point of 3 years is appropriate for all 10 charges.

95. D1 pleaded guilty to the charges; she is entitled to the usual 1/3 reduction for her guilty pleas and her clear criminal record.  That would bring her sentence for each charge down to 2 years’ imprisonment.

96. As I accept D1 has a positive good character, I would allow D1 an additional reduction of 3 months’ imprisonment. That brings her sentence for each charge down to 21 months.

97. On the issue of delay, viewed objectively, D1 had suffered from the delay up to the moment she appeared before the District Court.  But I find that D1 had brought additional delay to the proceedings through the stay application, the re-opened stay application, the judicial review and the appeal to the Court of Appeal.  But for the stay applications and the subsequent appeal proceedings, I would have allowed D1 an additional reduction of 4 months’ imprisonment.  The stay applications and the subsequent appeal proceedings do militate greatly against the delay suffered by D1.  There was no basis for D1 to argue/suggest that if she were able to call Kam Shing as her witness, she would be able to show she had no knowledge about the falsity of the documentations or the bogus nature of the transactions.  In my judgement, the delay that D1 had brought to the proceedings cancelled out the effect that the delay up to D1’s plea day appearance before District Court.

98. In the case of D3, a starting point of 27 months’ imprisonment is appropriate for each charge, bearing in mind her role in the LC frauds. 

99. I would allow D3 a reduction of 3 months for her previous clear record.

100. On the issue of delay, though the police and the prosecution were not at fault, looking at the matter objectively, there was a delay in that since the report by the liquidator in 2004, it had taken some 4 years before D3 was arrested and D3 was only taken to the magistrate court in December 2009, more than 5 ½ years had lapsed since her arrest.  It is fair to say the aforesaid delay must have certain adverse effect on D3.  On the other hand, D3 remained a party to the 2 stay applications throughout.  She was also a party to the judicial review proceedings and the appeal to the Court of Appeal.  In my judgement, D3 had brought additional and unnecessary delay to the proceedings through the stay applications and the subsequent judicial review and appeal proceedings.  Had D3 not taken part in the stay application and the related judicial review and appeal proceedings, I would have allowed an additional reduction of 4 months for the delay up to D3’s plea day appearance before District Court.  However, the delay brought about by D3 completely cancelled out the effect of the delay up to D3’s appearance before District Court.

101. For the reasons given, on Charge 1 to 10, for each charge, I sentence D1 to 21 months’ imprisonment, I sentence D3 to 24 months’ imprisonment.

102. On Charge 11, I find D1 much more culpable than D4.  I take 3 years as the starting point.

103. I allow D1 1/3 reduction for her guilty plea and clear record.  As I accept D1 has a positive good character, I allow her an additional 3 months’ reduction.  The delay brought about by D1 cancelled out the effect of the delay up to her plea day appearance before District Court.

104. On Charge 11, I find D4 much less culpable than D1.  I take 2 years as the starting point.

105. I allow D4 1/3 reduction for her guilty plea and clear record.  That would bring her sentence down to 16 months’ imprisonment.

106. On the issue of delay, an additional discount of 4 months would have been appropriate but for D4’s participation in the 2 stay applications.  I am aware that she did not associate herself with the judicial review and the subsequent appeal proceedings.  To the extent that D3 had delayed the proceedings through the stay applications, I would deduct one month from the 4 months that I would otherwise have given.  I would only give an additional reduction of 3 months, instead of 4, for the delay suffered by D4.

107. For the reasons given, on Charge 11, I sentence D1 to 21 months’ imprisonment; I sentence D4 to 13 months’ imprisonment.

Sentences for Charge 12 and 13

Charge 12 against D3

108. On Charge 12, taking into consideration the sentencing considerations as enunciated in Hsu Yu Yi and Boma as discussed and bearing in mind the role of D3 in the LC frauds, a starting point of 27 months’ imprisonment is appropriate.

109. For D3’s clear record, I would allow her a reduction of 3 months.  That brings her sentence down to 24 months.

110. The delay caused by D3’s stay applications, the related judicial review and the subsequent appeal proceedings cancelled out the effect of the delay prior to D3’s plea day appearance before District Court.

111. For the reasons given, on Charge 12, I sentence D3 to 24 month’s imprisonment.

Charge 13 against D5

112. On Charge 13, taking into consideration the sentencing considerations as enunciated in Hsu Yu Yi and Boma as discussed and bearing in mind D5 was convicted on the basis that he had reasonable grounds to believe the property he dealt with represented the proceeds of an indictable offence, I take a starting point of 24 months’ imprisonment.  

113. I further reduce the sentence by 3 months for D5’clear record.  That brings his sentence down to 21 months.

114. On the question of delay, but for the delay brought about by D5, I would have allowed D5 a reduction of 4 months for the delay up to his plea day appearance before District Court.  D5 had taken part in the stay application and the re-opened stay application.  He did not take part in the judicial review application and the subsequent appeal to the Court of Appeal.  In the circumstances, given the additional delay caused by D5, I would only allow him 3 months’ reduction for the delay up to his plea day appearance before District Court.

115. For the reasons given, on Charge 13, I sentence D5 to 18 months’ imprisonment.

Totality

D1

116. Bearing in mind the totality principle, a concurrent term of imprisonment is appropriate.  I order that D1’s terms of imprisonment for Charge 1 to 11 are to run concurrently with each other.  The total term for D1 is 21 months’ imprisonment. 

D3

117. As said, Charge 12 added very little culpability to Charges 1 to 10.  Bearing in mind the totality principle, a concurrent term of imprisonment is appropriate for Charge 1 to 10 and Charge 12.  I order D3’s terms of imprisonment for Charge 1 to 10 and 12 are to run concurrently with each other.  The total term for D3 is 24 months’ imprisonment.

Immediate/ Suspended Terms

118. I have considered counsel submissions, for the reasons given, I have taken starting points which are entirely different from the usual run of LC cases.  However, I do not agree with counsel submission that there are exceptional circumstances calling for suspension of the sentences for any of the defendants.

119. D1, D3 to D5 have to serve their terms immediately.