HKSAR v. LAM CHUNG YIU CHARLES

HCCC 98/2023

[2023] HKCFI 2891

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CRIMINAL CASE NO 98 OF 2023

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REASONS FOR SENTENCE

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1.  The defendant pleaded guilty before Magistrate Mr. Lam Tsz Kan to 2 counts of Theft[1] and 2 counts of Dealing with property known or believed to represent proceeds of an indictable offence[2] (commonly known as money laundering)  and was on 17 April 2023 committed to the Court of First Instance for sentence.

2.  The defendant confirmed his pleas and admission to the summary of facts before me and was duly convicted of the 4 offences.

Particulars of the counts are as follows:

Count 1: Theft

3.  Lam Chun-yiu Charles, between 13 March 2020 and 27 October 2020, in Hong Kong, stole a chose in action, namely a debt in the sum of $837,790.98 United States currency owed by UBS AG Stamford Branch to UBS AG Hong Kong Branch, property belonging to the said UBS AG Hong Kong Branch.

Count 2: Theft

4.  Lam Chun-yiu Charles, between 1 June 2020 and 27 October 2020, in Hong Kong, stole a chose in action, namely a debt in the sum of $1,037,239.66 United States currency owed by UBS AG Stamford Branch to UBS AG Singapore Branch, property belonging to the said UBS AG Singapore Branch.

Count 3: Dealing with property known or believed to represent proceeds of indicatable offence

5.  Lam Chun-yiu Charles, between 28 May 2020 and 31 October 2020, in Hong Kong, knowing or having reasonable grounds to believe that property, namely a total sum of $159,500 Hong Kong currency in account numbered 043-473-1-082402-2 and $314,067.26 United States currency in account numbered 043-473-9-214590-3, accounts held under the name of KOH Pang-an with Nanyang Commercial Bank, in whole or in part directly or indirectly represented any person’s proceeds of an indictable offence, dealt with the said property.

Count 4: Dealing with property known or believed to represent proceeds of indicatable offence

6.  Lam Chun-yiu Charles, between 13 March 2020 and 8 December 2020, in Hong Kong, knowing or having reasonable grounds to believe that property namely a total sum of $5,130,206.87 Hong Kong currency, $7,000 United States currency and $301,630.04 British pounds in account numbered 813-869104-833 held under the name of LAM Chung-yiu Charles with the Hong Kong and Shanghai Banking Corporation Limited, in whole or in part directly or indirectly represented any person’s proceeds of an indictable offence, dealt with the said property.

SUMMARY OF FACTS

Counts 1 and 2

7.  Between December 2019 and 31 October 2020, the defendant was an associate director of UBS bank and the head of a project to compensate clients who had been overcharged by the bank in previous transactions (“the project”).

8.  In November 2020, internal investigation of UBS revealed that, between 13 March and 27 October 2020, the project had made at least 46 payments to third parties who had no apparent association with UBS (“the 46 payments”).

9.  20 of those payments were remitted from UBS Hong Kong branch, totaling US$837,790.98 (count 1), while 26 were from the Singapore branch, totaling US$1,037,239.66 (count 2). Further investigation revealed that it was the defendant who had arranged for the 46 payments to be made and had consequently stolen the money.

Bank accounts under changed names

10.  According to the Registration of Persons’ records, the defendant had on 18 February 2020 changed his name to “YOW Wayne”, and then on 19 March 2020, to “KOH Pang-an”.

11.  On 11 and 21 March 2020, the defendant opened two bank accounts in the name of YOW with 2 different banks (“the YOW accounts”). It would  appear that the defendant had continued to use the identity documents for YOW when he opened the second YOW account 2 days after he had legally changed his name to KOH.

12.  On 28 May 2020, the defendant opened a bank account in the name of KOH with Nanyang Commercial Bank, with him being the sole authorized signatory (“the NCB KOH account”).  

13.  On 21 October 2020, the defendant changed back to his original name.

The thefts

14.  5 of the 46 payments were made to the YOW accounts and the NCB KOH accounts.

15.  41 of the 46 payments were made to different vendors of luxurious watches and handbags. None of them were clients of UBS, nor were they intended recipients under the project. Investigation revealed that the defendant had previously sold 32 luxurious watches to Sun Moon International Limited for a total of HK$8,738,700.

16.  The defendant had exploited his access to UBS’s system in Hong Kong for client details and payments, and altered information of rightful recipients under the project, which allowed him to direct the 46 payments be made to his own accounts or for his own gain.

Count 3

17.  Between 28 May and 23 September 2020, the Hong Kong dollar savings account of the NCB KOH account received a total of HK$159,500 cash deposits from unknown sources.

18.  Between 2 June and 30 October 2020, the US dollars savings account of the NCB KOH account received a total of US$314,067.26 cash deposits from unknown sources, as well as from UBS and Century Trading (Asia)  Limited.

19.  The deposits into the 2 savings accounts were swiftly withdrawn, with a significant amount being remitted to overseas counterparties.

20.  The accounts were closed on 31 October 2020.

Count 4

21.  On 27 August 2015, the defendant opened a multi-currency account at HSBC as the sole authorized signatory (“the HSBC account”).

22.  Between 13 March and 8 December 2020, the HSBC account received 67 cash deposits from unknown sources in Hong Kong dollar, U.S. dollar and Pound Sterling, totaling approximately HK$3.77 million equivalent.

23.  Between March and November 2020, the HSBC account also received 40 deposits from an NCB account held in the name of the defendant’s wife in Hong Kong dollars and Pound Sterling, totaling approximately HK$4.4 million equivalent.

24.  During the same period, the defendant’s wife’s account also received 35 cash deposits from unknown sources, totaling HK$2.27 million.

25.  The said deposits totaled HK$5,130,206.87, US$7,000 and Pound Sterling £301,630.04. A substantial amount of the deposits were transferred out within a short period of time.

26.  The defendant’s monthly salary was HK$77,500 in the period of the dealing of the money in the above accounts and the activities disclosed were incommensurate with the circumstances and income of the defendant.

27.  The defendant was arrested on 3 December 2020 at the Hong Kong International Airport. Inside the backpack he was carrying were documents for moving his dog from Hong Kong to the U.K. and a Transfer of Residence approval letter addressed to the defendant issued by the U.K.’s HM Revenue & Customs.

28.  Inside the red luggage he had with him were 40 Rolex watches serial number tags, 6 of which were related to the watches bought and sold to the dealers who had received compensations under the project. There were also 60 Rolex watches green tags, bank letters in the name of the defendant’s wife, a boarding pass in the defendant’s name for a flight from Hong Kong to London on the day of the arrest, and internet banking security devices of the defendant’s HSBC account and his wife’s bank account.

29.  The defendant was eventually charged with the present offences. It is the prosecution’s position that the money being laundered in counts 3 and 4 were all connected to the defendant’s theft of money from UBS and not otherwise.

PREVIOUS CONVICTION

30.  The defendant was of previously clear record.

MITIGATION

31.  The defendant is 42. He got married in 2016 in the U.S. They do not have any children. The defendant’s father passed away in 2018. His mother had been suffering from depression since his passing, and her condition was aggravated by the defendant’s arrest in the present case. I am told that the defendant’s wife is in the UK. She is not in court because she has to remain in the UK for one year without leaving the country due to immigration requirements.

32.  The defendant was educated up to junior high school level in Hong Kong. He enrolled in a boarding school in the U.S. afterwards and eventually graduated from the University of Michigan Ann Arbor in 2003 with a Bachelor Degree in Business Administration, with an emphasis in Finance and Accounting.

33.  The defendant returned to Hong Kong and began to establish himself in the banking and investment field, working for KPMG (2003-2004), Credit Suisse (2004-2006), Citigroup (2006-2016)  and UBS (2016-2020). I am told by the prosecution, and confirmed by Mr. Ho for the defendant, that the defendant had resigned from UBS before the thefts had been exposed.

34.  The defendant was promoted from a junior to an assisting vice president of Citigroup in the 10 years that he was with the bank. He was a product controller for their Delta 1 trading desk at first, and later promoted to business manager for the Equity Finance Department and later the Risk and Treasury sales and trading desk for Citibank HK.

35.  The defendant suffers from chronic knee pain from injuries he had when he used to play basketball.

36.  Mr. Ho submitted that the defendant has learnt a bitter lesson as he had destroyed his own career and bright future. It will be impossible for him to return to the banking and financial industry.

37.  The defendant wrote about how he had tried to educate fellow inmates on basic financial knowledge, and how he had enrolled and finished a 75-hour university run self-directed learning series course in nutrition while in remand. He has been meeting with Deacon Wong weekly and has encouraged others to attend their monthly bible study class, trying his best to redeem himself for his misdeeds.

38.  Deacon Peter Wong wrote on behalf of the defendant, stating how the defendant has been receptive to his religious directive and appeared remorseful. The defendant’s primary school mate also wrote in support of the defendant, seeking leniency on his behalf.

SENTENCE

39.  The maximum sentence for theft on conviction upon indictment is that of 10 years’ imprisonment. The maximum sentence for dealing in property knowing or believing them to be proceeds of an indictable offence is that of a fine of $5 million and imprisonment for 14 years.

The thefts

40.  It is accepted by the defendant that his commission of the thefts in counts 1 and 2 involved a serious breach of trust he owed towards his then employer, UBS.

41.  Mr. Ho referred to the cases of HKSAR v CHEUNG Mee-kiu [2006] 4 HKLRD 776 and HKSAR v NG Kwok-wing [2008] 4 HKLRD 1017 and accepted that the sentencing guidelines set down in these two cases are applicable, and that for theft of $3 to $15 million involving a breach of trust element, the sentencing range is 5 to 10 years’ imprisonment.

42.  Mr. Ho also accepted that based on the total amount of money stolen in counts 1 and 2 of around HK$14,588,000[3], the starting point would be near the 10 years end of the range.

43.  Counts 1 and 2 are separately charged because the stolen choses in action belonged to two different legal entities. The stealing in count 1 started in March 2020, and took place over a 7-month period. The stealing in count 2 started 3 months later in June 2020. The offences then overlapped until the end on 27 October 2020.

44.  The defendant engaged in the same methodology in both the stealing, exploiting his position as the project head, arranging for the moneys to be diverted to the recipients of his choosing and ultimately benefiting himself.

45.  The thefts were meticulously planned. The defendant had resigned from UBS before the thefts had been exposed. He was intercepted and arrested at the airport with a boarding pass to a flight to London in his backpack. It is obvious that the defendant was ready to escape Hong Kong with a view to enjoying the fruits of his crimes abroad, together with his wife and dog.

46.  The banking system is one of the pillars of the success of Hong Kong and must be protected. The defendant’s thefts involved a serious breach of trust and must be properly punished.

47.  Taking into consideration all the circumstances of the commission of the offences, I find that if the stolen money of the two counts are combined, an appropriate starting point would be 9 years and 9 months’ imprisonment. This sentence would be discounted by one-third in recognition of the defendant’s timely guilty plea, resulting in a sentence of 6 years and 6 months’ imprisonment.

48.  To achieve this sentence, I will adopt a starting point of 78 months’ imprisonment for count 1, leading to a sentence of 52 months after plea. I will adopt a starting point of 84 months’ imprisonment for count 2, leading to a sentence of 56 months’ imprisonment after plea. The above starting points are still based on the Cheung Mee Kiu guidelines.

49.  I will order 26 months of the sentence in count 2 to be served consecutively to the sentence in count 1, the balance concurrently, resulting in a combined sentence of 6 years and 6 months’ imprisonment for counts 1 and 2.

50.  The personal circumstances of the defendant counts for very little towards his mitigation and any reduction in sentence based on his clear record, helping other inmates with basic financial knowledge and completing a course in nutrition while in remand has been subsumed in the one-third discount granted for his guilty pleas.

Count 3 and 4

51.  Mr. Ho referred to the case of HKSAR v A male known as Boma Amaso [2012] 2 HKLRD 33, where the Court of Appeal identified the following significant features that should be taken into account when sentencing money laundering cases:

“40. Less helpful though this may be than we had hoped, the best we can therefore do is to identify some of the significant features for which the court should look and take into account, though it is not possible to produce an exhaustive list: we can do no better than echo obvious factors that have been referred to by the cases:

(1)  The nature of the predicate offence, if known, and the penalty available for the predicate offence…

(2)  This brings us to the question of the state of knowledge of the offender. This divides itself in two – knowledge of the nature of the predicate offence, where the predicate offence is known to the court; and knowledge of the fact that the funds are the proceeds of an indictable offence:

(a)  Where the predicate offence is known to the court, the question of knowledge of the offender as to the nature of the predicate offence is relevant in that the person who knows the nature of the predicate offence is more culpable than the person who does not…

(b)  As to the second question, there seems to me to be unassailable logic in the scheme of the Australian legislation which draws a distinction in culpability between the person who intentionally deals with the proceeds of crime, meaning the person who knows or believes that the funds in question are the proceeds of crime; the person who is reckless as to that question; and the person who is negligent about it…

(3)  An international dimension will always be a significant aggravating feature; and by international dimension we include money laundered from, or for those operating in, the Mainland.

(4)  The sophistication of the offence is always relevant. This will include the degree of planning and whether deceit is practised to achieve the objective.

(5)  Where the offence is committed by or on behalf of an organized criminal syndicate, that is an aggravating fact.

(6)  It is relevant to take into account whether there is one transaction or many and the length of time over which the offence was committed.

(7)  As in the case of Herzberg, it will be an aggravating feature where the offender continues to launder funds after he has discovered as a fact that the funds are the proceeds of an offence or after he has discovered the nature of an offence which is serious.

(8)  The sentencing court should have regard to the role of the offender and the acts performed by him. In this regard, the director of a laundering operation or scheme should attract a greater sentence than a person engaged by him although sentences should be sufficient to deter those who might be prevailed upon by directing minds. In the case of a person down the chain, the court will wish to have regard to whether a benefit has been received and if so the nature and size of the benefit. But within the category of persons down the chain there will gradations of culpability. So for example the drug addict or petty crook who is paid a small sum to open an account and hand over its operation to another with no more participation and no more knowledge than that it is going to be used for some sort of crime is much less culpable than an offender of a different sort not “used” in that way.”

52.  Mr. Ho submitted that the defendant’s dealing with the money did involve an international element, but there was no sophisticated scheme or planning in advance. The defendant committed the offences by himself and there is no evidence of him working as part of a syndicate. Out of the 46 payments by the Hong Kong branch and the 26 by the Singapore branch, the defendant “utilized the system of the compensation project of UBS and either transferred part of the stolen proceeds to his 3 bank accounts or purchased luxury products including watches and handbags in Hong Kong.”

53.  Mr. Ho pointed out that the defendant did not try to flee when he was stopped at the airport. The defendant has shown remorse and he committed the offences out of job insecurity due to the pandemic.

54.  Mr. Ho submitted that the commission of counts 3 and 4 are part and parcel of the thefts in count 1 and 2.  Since the bank accounts were opened and kept as a vehicle to receive and dispose of the proceeds the defendant stole from UBS, the sentences in counts 3 and 4 should run wholly concurrently to those of counts 1 and 2.

55.  The significant features in the defendant’s commission of counts 3 and 4 include the fact that he dealt with money he himself stole. He was the perpetrator of the predicate offences and was fully culpable of the theft of the proceeds. The dealing of the money obviously involved an international element.

56.  According to the summary of facts, the accounts in count 3 and 4 had received cash deposits from unknown sources. There is some sophistication in the defendant’s dealing in the proceeds and some degree of planning must have been involved.

57.  Count 3 was committed over a 5-month period, while count 4 over a 9 month period. Count 3’s dealings continued for 4 more days after the thefts in counts 1 and 2. Count 4’s dealings continued into December 2020 after the thefts in counts 1 and 2 had ended on 27 October 2020.

58.  The defendant laundered the money that he himself had stolen. He was the perpetrator and mastermind of it all.

59.  Lastly, the amount laundered was around HK$2,593,521 and HK$8,186,143 in counts 3 and 4 respectively, totaling HK$10,779,664, by no means a small amount.

60.  The Court of Appeal had stated in HKSAR v Boma that deterrence for the offence of money laundering is a paramount consideration.

61.  In the case of HKSAR v Hsu Yu Yi [2010] 5 HKLRD 545, the Court listed out 12 cases relied on by both parties. Two of those cases involved laundering of $11 million and $11.75 million.

62.  The first case was HKSAR v Xu Xia Li CACC 395/2003. There the 1^st applicant flew back to Hong Kong and opened a bank account to deposit a cheque for $11 million from a co-conspirator, Mr. Kwong. She went back to Canada and stayed with the cohabitant of Mr. Kwong. The 1^st applicant and the cohabitant came to Hong Kong 8 days later, and the 1^st applicant disposed of the $11 million by way of 16 transactions in 5 bank accounts. The Court of Appeal held that “the sentence of 3 years’ imprisonment after trial imposed by the judge cannot be criticised for being too harsh in the circumstances or against principle or in any way manifestly excessive.”

63.  In the second case, HKSAR v Lee Ka Ki CACC 148/2007, the appellant opened a number of bank accounts with two banks in Hong Kong to receive illegal bets on behalf of others for a remuneration of $8,000 per month. The amount laundered were $5.7 million for charge 1 and $11 million for charge 2. Although the total amount of money laundered for the 2 charges was $17 million, the Court of Appeal found that there was no evidence to show that the appellant was directly involved in the receiving of illegal bets, that it was not the most serious case of its kind, and held that the proper starting point should have been 3 years’ imprisonment for each of the two charges, to be served concurrently.

64.  I find that, in the present case, given the circumstances of the commission of the offences especially the role of the defendant, and the combined amount involved, an appropriate combined overall starting point for the two offences should be 3 years and 6 months’ imprisonment. The higher starting point reflects the fact of the defendant’s involvement in the predicate offence and the other aggravating features identified above.

65.  A full one-third discount for his timely guilty pleas would lead to a combined sentence of 2 years 4 months’ imprisonment after plea.

66.  To achieve this combined sentence, I adopt starting points of 2 and 3 years’ imprisonment for counts 3 and 4 respectively, which are then discounted to 16 months and 24 months’ imprisonment after plea.

67.  I will order that 12 months of the sentence in count 4 be served consecutively to the sentence in count 3, the balance concurrently, leading to a combined sentence of 2 years and 4 months’ imprisonment for counts 3 and 4.

68.  Just as with counts 1 and 2, the personal circumstances of the defendant counts for very little towards his mitigation and any reduction in sentence based on his clear record, helping other inmates with basic financial knowledge and completing a course in nutrition while in remand has been subsumed in the one-third discount granted for his guilty pleas.

TOTALITY

69.  I find that a wholly consecutive sentence of 8 years and 10 months’ imprisonment for the 4 counts would have a crushing effect on the defendant and is obviously excessive in the circumstances. I must, therefore, apply the principle of totality in sentencing and arrive at a just and proper sentence.

70.  The thefts and the money laundering were all interconnected. Yet, the money laundering would have allowed the defendant to benefit from the thefts more easily and when he was overseas, given that a significant amount of the money in counts 3 were remitted to overseas counterparties.

71.  The commission of the offences by the defendant was calculated and carefully executed. He went so far as to changing his name by deed poll multiple times in order to open new bank accounts that he could control and would be able to receive and in the case of count 3, to deal with the stolen money stealthily.

72.  Most importantly, the final sentence must include an element of deterrence in order to try to maintain the integrity of our banking system.

73.  Taking a step back, I find that a just and proper sentence would be to order 6 months of the combined sentence for counts 3 and 4 to run consecutively to the combined sentence of counts 1 and 2, the balance to run concurrently, resulting in a total final sentence of 7 years’ imprisonment after plea for the 4 counts.