HKSAR v. KAMARULZAMAN BIN ANNUAR

DCCC 1270/2011

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 1270 OF 2011

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Reasons for Verdict

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Introduction

1. The defendant, a Malaysian national, was found in possession of 291 purported American bills of 2 denominations only, namely, $100,000 and $1 million.

2. A total of 8 bills consisting of 7 of the denomination $100,000 and one $1 million were found on his person (in his wallet) when the defendant, who was on his way to Macau, was stopped at the Macau Ferry Terminals on 17^th August 2010, which forms the subject matters of charge 1.

3. Not included in the charge, the police also found on this occasion a USB memory stick containing photographic images of huge pile of the bills (See exhibit P.16).

4. The rest of the bills were discovered at his residence in Kowloon when the police conducted a house search later in the day. Among the bills, the police also found a Certificate of Balance (the Certificate) purportedly issued by HSBC showing a credit balance of US $50 billion in the account under the names of the defendant and another person called Zhou Yu Zhong, which forms the subject matters of charge 2.

5. The $100,000 bill was the largest denomination note ever printed by the US Government. They were only produced at the time of the Great Depression in the 1930s for the sole purpose of bank-to-bank transfers and were never released into general public circulation. Insofar as the 1 million bills are concerned, they never existed.

Charges

6. Since bills of such denomination are not currency notes in the sense that they have never been in general public circulation as legal tender, therefore the defendant is not charged with offences relating to counterfeit American bill but false instrument instead.

7. The defendant was charged with 2 offences (Charges 1 & 2) of possession of instruments with intent contrary to Section 75 (1) of the Crimes Ordinance: The first charge relates to the 8 bills found on him and the second charge concerns with the rest of the bills plus the Certificate which were found at his residence. Firstly, the prosecution alleges that the defendant possessed the bills and the Certificate with the intent to use them to induce somebody to accept them as genuine and by reason of so accepting them to do or not to do some act to his own or any other person's prejudice.

8. Alternatively, the prosecution alleges that the defendant had the bills and the Certificate without lawful authority or reasonable excuse contrary to Section 75(2) of the same Ordinance, therefore the defendant also faces 2 Section 75(2) charges (charges 3 & 4) as alternative to charges 1 and 2.

Issues

9. Basically, the defendant does not dispute possession of the documents- the bills and the Certificate (though he said in evidence he had forgotten about the Certificate- I'll deal with it later); he has taken the stand to explain how he came by those documents and what he wanted to do with them.

10. The falsity of the documents is not in issue either (See admitted facts Exhibit P.24). The defendant said, however, he did not know the bills were false until he heard the testimony of Mr. Quick, the prosecution expert on American bills, in court; as far as the Certificate is concerned, he said he knew it was false at the time he took possession but had since put it away and forgotten about it until the police found it. 

11. What it boils down to at the end of the day is the question – whether the defendant's account is believable? Even if there exists the slightest possibility that he is telling the court the truth, I'll have to acquit him. If the court rejected his story, then the question would be: what is the only reasonable inference to be drawn from the proved facts by the court?

Analysis

12. The prosecution bears the burden of proving each and every charge to the required standard, i.e., beyond all reasonable doubt; being a defendant, he is under no duty to prove anything.

13. The court is aware of the fact that the defendant is a person of clean record, and that helps him in 2 ways: (1) - he is less likely to have committed the offences as alleged by the prosecution; (2) – his words are more likely to be the truth. I will bear this in mind in considering all the evidence of the case.

Defendant's self-proclaimed occupation

14. The defendant runs an investment company called Central Asia Financial Investments Pte Limited (the finance company) which is licensed under the Monetary Authority of Singapore and he is the majority shareholder. The finance company's major business is to do with corporate financing.

15. The defendant also produced a document (See Defence Exhibit D.1) in support of his assertion, which appears to have come from Singapore - the Accounting and Corporate Regulatory Authority, showing that the finance company was established in January 2006 with a paid-up capital amounting to $ 266,000 Singaporean money 61% of which was owned by the defendant.

16. The defendant also claims that he has other companies in other parts of the world, for example in London, Malaysia, Romania, doing a variety of businesses such as property investments, healthcare and timber etc. As far as Hong Kong was concerned, he came here in 2009 with a view to expanding his finance business by setting up a branch of the finance company over here.

17. As regard the above evidence concerning the defendant's business background, I see no reason to doubt its veracity; clearly such evidence points to the fact that the defendant is no layperson or outsider when it comes to financial matters. In the circumstances, the inference the court is in a position to draw is that the defendant has at least some practical knowledge in dealing with foreign currencies, such as American bills, as he has done business before in various parts of the world.

18. With this in mind, I begin my analysis.

Circumstances in which he came by the bills

19. The defendant testified that the bills belonged to an Indonesian old lady, Madam Sitti, who had asked him to verify their genuineness. Initially, he was reluctant to do it, but seeing the old lady getting so excited about it, he ventured into it but made it clear from the outset that his assistance was provided on a friendship basis rather than a business one. For that matter, he asked Madam Sitti to execute, and she did, 4 documents for his own protection, these are Limited Power of Attorney, Letter of Indemnity, Non-solicitation Letter and Authorization to Verify and Authenticate (See defence exhibits D.2 A- D).

20. One day in July 2010 while the defendant was in Hong Kong, a man called Tomo, an employee of the defendant's father-in-law, came to visit and brought him a box (the Walfargo box exhibit P.8) containing the bills. He opened it but did not count the bills, though Tomo had told him the amount in terms of the number of pieces of the bills. He assumed at that time it was around 200 pieces of $1million bills.

21. There was no deadline to meet, the defendant said, because Madam Sitti trusted him very much by reason of his sincerity and honesty and also of the fact that he did it for free.

22. The story he told the court about this Indonesian old lady is not worthy of belief. If the lady was not sure of the genuineness of the bills, that means she must have the thought that the bills might be genuine; if that was the case, common sense tells us that no one in their right mind would ever hand over the whole lot to the defendant, who at best could only be described as her acquaintance, for the very simple reason - the amount involved was just too enormous, speaking of billions of dollars if the bills turned out to be genuine. It is simply not necessary for madam Sitti to have to take such a great risk when she could have just handed over one piece of each denomination to the defendant for verification.

23. The same argument also applies to defendant's case. From the defendant's perspective, it is also unnecessary for him to take the whole lot for the purpose of verification. The risk to the defendant is equally great in the event of losing any part of it- according to the defendant, he did lose some of the 1 million bills. He said that he had the protection covered by the 4 documents executed by Madam Sitti in his favour, but the point is he could still have reduced the risk of substantial losses to Madam Sitti by getting one piece of each denomination.

Madam Sitti

24. The proceedings have been adjourned twice to enable the defendant to call Madam Sitti but in the end the defendant decided to close his case without her evidence because, as the defence submitted, she was too ill to come to give evidence.

25. In the instant case, I think the main point does not lie on the question of how the defendant came by the bills in question, but rather his state of mind vis-a-vis the bills after taking possession of them- whether he knew or believed the bills to be false.

Did the defendant know or believe the falsity of the bills

26. Undisputed is the fact, as testified by Mr. Quick, that the bills in the instant case were printed using ink jet printing method on plain paper, as opposed to the genuine bills which were printed on paper containing fibres, the effect of which is that when one runs one’s finger over the genuine bill, one can feel ridges. In fact, Mr. Quick has produced a genuine dollar bill as an exhibit for test at trial.

27. We all have experience of what paper money and plain paper are like; I think the difference between them is very easy to differentiate. Given the defendant's experience in the business world and the opportunity of having touched the bills in question, I would be surprised if the defendant did not have an answer for himself regarding the bills found in his possession.

28. Adopting a different method, the defendant said that he had tried his best to look for someone to verify; he had approached some people in the antiques trade but they all said they were unable to verify the bills. The reason why he carried some of the bills with him was because he travelled a lot on business, hoping that he might bump into someone who could verify it, and he had met several people as a result but no one could give him a definite answer. Is this true? I don't think so.

29. Even if the self-test mentioned above was not satisfied, I would have thought the easiest way to verify a bill is to take it to one of the local banks, say, to open an account with it, because the bank would only accept genuine thing. Is it not surprising the defendant did not use this method? The only conclusion must be that he knew very well the bills were false.

30. There is other evidence in support of this conclusion-that is the way in which he said he handled the bills. He said he kept the bills at home but without locking them in a secure place like a safe, but variously in bags and cupboards. He even said that he allowed his 9-year-old daughter to use them to play 'Monopoly' with her friends and afterwards his maid would clear them away. It is because, he said, the bills were not important to him for he could not ascertain them and for he had a lot of other business to do. Why is a $1million bill not important to him? The way he treated the bills was just too casual, and that does tell us something- he acted like that because he knew they were worthless fakes.

The 'HSBC' Certificate of Balance

31. The story here is even taller than the one the defendant had told about the bills. The defendant said, through the introduction of a friend, he came to know a couple, Madam Lau and Mr. Zhou Yu Zhong (the other person named in the Certificate) who had expressed interest in doing business with the defendant’s finance company.

32. The couple told him they had a US $50 billion deposit with HSBC which the defendant considered to be ‘off-balance-sheet’ account as opposed to ‘on-balance-sheet’; what that means, according to the defendant, is that he needed to go with the couple to confirm it over the counter at the office of HSBC. They must put his name there and he had to sign on the signatory part at the counter.

33. They met at defendant’s home where the couple showed him the account document (the Certificate); the defendant was taken aback by the fact that his name was on the Certificate. The defendant said this could not be right for he had not yet signed at the counter.  Defendant said to them in these words, “This is false because how can my name be on the account if I don’t go sign in the signature part over the counter?”

34. The couple promised him they would meet again in 3 days’ time to go to the bank to confirm it while the defendant kept the Certificate; this happened in early 2009 or 2010, but the couple never returned and the Certificate was left in the bag until it was discovered by the police. The defendant said he had forgotten about the Certificate and the reason why he kept it in the first place was that he considered it unimportant for he would not talk to the couple anymore, and he would report to the police if it was found out later that his name and the Certificate had been used in connection with any fraud.

35. His story does not make sense at all. First of all, the amount he was talking about is not a small sum of money, but US $50 billion; on the face of it, the account bears the defendant’s name, and that means he co-owns the money with the other man, Mr. Zhou, it beggars belief that anyone in his right mind will allow a stranger like the defendant in the instant case and in the circumstances as he described to share any of his money, let alone such phenomenal sum.

36. The couple came with the money, as the defendant seemed to suggest, intending to engage the defendant’s finance company to invest, the clearest way of showing their interest was simply by giving the defendant the money, it was wholly unnecessary to have to go to the bank to confirm anything. I have no doubt in my mind that this was something made up by the defendant in order to explain away the fact that his name was found on the bogus HSBC Certificate, but obviously there was not a grain of truth in what he said. I therefore reject his account about the circumstances in which he came by the Certificate- i.e., the story about the couple.

37. On the evidence before the court, though the court rejected his evidence in this respect, the bogus Certificate must have been created by somebody; it matters not whether it was the defendant or someone else. It was found at his home, I have no difficulty in drawing the only reasonable inference that he knowingly took possession of it, and at the time he took possession, he must have known it was false for he could not believe otherwise.

38. The defendant had said in his evidence he had forgotten about the certificate but I do not believe it. Looking at the whole of the evidence, such as existence of large number of purported American bills, his claim of doing finance business, he kept instead of ridding himself of the Certificate (he could if he wanted to), he must have a purpose for it.

What he intended to do with the false instruments

The bogus Certificate

39. I start with the bogus HSBC Certificate. As I said before, the defendant must have kept it for a purpose.

40. At all the material times, the defendant claimed he was a businessman doing different kind of business in various parts of the world; he also owned a finance company registered in Singapore doing corporate finance, and he came to Hong Kong with a view to setting up a branch of the finance company here. All these are no small businesses and must involve lots of money. I am sure the defendant would like to show to his potential business clients that his companies’ finances are sound or he has the financial means to do business with them; one way of proving that is by the production of the Certificate, which is a proof of one’s wealth- this is clearly a statement of fact which is false. I have no difficulty in drawing the only inference that he intended to use the Certificate to defraud others by inducing them to accept it as genuine and eventually to cheat them out of their money.

41. With the above conclusion, notwithstanding the inclusion of purported American bills in the particulars of charge 2, insofar as the Certificate is concerned, the offence of Section 75(1) has been made out; in other words, without further proof of the necessary intent in respect of the bills, the defendant will nevertheless be convicted of charge 2, but for good measure I’ll go on to consider the bills in question.

The purported American bills

42. The purported American bills in the instant case are of 2 denominations, i.e., one of $100,000 and the other $1 million. We, in our experience, might have come across some real foreign currency notes of such denomination, but in terms of real value, they might be a few hundred’s worth or a thousand’s at most (Hong Kong dollar).

43. Here the real value of the bills (if genuine) would be enormous; it may be argued that no reasonable government would ever issue bills of such denomination for general public circulation. It is just too risky to carry it on the person and too big a loss if someone loses his wallet, as it happens. The corollary is, so the argument goes, that no one would expect to see this kind of bills in public circulation, and therefore nobody would likely accept it as genuine when they see one. 

44. Now the defendant was found in possession of hundreds of them, it may be argued that the defendant probably knew that he could not possibly fool anyone with these bills, so he could not have the intent to cheat others.

45. It is undeniable that it takes all sorts to make a world and there are always trusting people. The hard facts are that fraud will never stop, and we often learn of instances of people becoming victims of different kinds of deception.  No matter how outlandish the bill, I believe that there are people who swallow it.

46. The court has already found that the defendant intended to defraud others with the Certificate.  The bills were found at the defendant’s home and so was the Certificate, and I have no doubt these two things have something to do with each other.

47. Look at the photographic images stored on the USB memory stick, some show a huge pile of American bills, and there are also some close-ups of bundles of $1 million bill and $100,000 bill. The Certificate, a proof of one’s wealth, is obviously being used to represent that the defendant is a man of means, and the images are to show that the defendant is not short of cash; the two complement each other. 8 of the bills that found in his wallet at the time of arrest were clearly being used as a sample of a much larger quantity as the prosecutor in his closing speech has suggested, which I agree.

48. Given his business background, the business he said he engaged in, for example, corporate finance, I am sure he possessed all these false instruments with one and only one purpose, that is to cheat others out of their money.

Conclusion

49. For the reasons given above, I am satisfied that a Section 75(1) offence has been made out in respect of the false instruments, the purported American bills as well as the Certificate, therefore the defendant is duly convicted of charges 1 and 2.

50. And in view of my findings above, I need not go on to consider charges 3 & 4 for they are the alternatives to charges 1 & 2.