HKSAR v. LEE SHUN FAT

CACC 49/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 49 OF 2012

(ON APPEAL FROM DCCC NO. 858 OF 2011)

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BETWEEN

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REASONS FOR JUDGMENT

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Hon Yeung VP (giving the Reasons for Judgment of the Court):

Introduction

1.  The applicant (Lee Shun-fat) pleaded guilty to 4 charges (the 1^st, the 3^rd, the 4^th and the 5^th charges) of “money laundering” before Judge Geiser (the judge) in the District Court and was sentenced to a total term of 40 months’ imprisonment.

2.  Represented by Mr Patrick KY Tam, the applicant sought leave to appeal against sentence out of time.  The explanation for the delay was that the applicant was in financial difficulties and had wasted time in seeking legal assistance.

3.  At the end of the hearing, we granted leave to the applicant to appeal against sentence out of time.  Treating the application as the appeal proper, we allowed the appeal and reduced his total sentence to 36 months’ imprisonment.  We indicated that we would hand down our reasons and this we now do.

The Facts

4.  The applicant was the sole signatory of four accounts in four different banks in Hong Kong (Accounts 1, 2, 3 and 4).  Between 7 May and 9 September 2009, $2,147,902.23 was deposited into Account 1; between 16 March and 29 June 2009, $464,023.40 was deposited into Account 2; between 16 March 2009 and 2 January 2010, $328,681.74 was deposited into Account 3; and between 16 March and 20 October 2009, $1,069,522.43 was deposited into Account 4.

5.  The deposits into Accounts 1 to 4 were proceeds of a fraud committed against unsuspecting investors who were residents of Japan, USA, Singapore and Australia.  The victims were told of investment opportunities with the use of insider information and were duped into making deposits into Accounts 1 to 4 for the purpose of investment.

6.  The applicant withdrew the moneys from Accounts 1 to 4 in cash on the day after or the second day after the deposits had been made, and then passed the moneys over to the perpetrators of the fraud.  The applicant claimed to have received about $500 for each transaction and his total reward was just about $15,000.

7.  The victims were later told that their investments had been successful, but in order to obtain the profits, they had to pay further handling charges.  Feeling suspicious, the victims attempted to contact or locate the culprits, but failed.  They then discovered that “the investments” were non-existent and reports were made to the police, leading to the arrest of the applicant.

The Applicant’s Background

8.  The applicant, aged 54, was divorced with three adult children.  He was a construction site worker with two previous convictions, one for criminal damage and one for aiding and abetting breach of condition of stay for which the applicant was fined small sums of money.

The Judge’s Approach 

9.  The judge accepted that the applicant was not instrumental in the frauds, but took the view that he played an important role. The judge emphasized that the applicant’s offences were serious as they were attempts to legitimise the proceeds of criminal offences.

10.  The judge emphasized the international element and the considerable loss of $4 million to the victims.  The judge also pointed out that the offences had spanned over a period of over one year during which the applicant had made over 31 withdrawals.

11.  On the 1^st charge involving over $2 million, the judge adopted a starting point of 4 years; on the 3^rd and 4^th charges involving about $460,000 and $330,000, the judge adopted a starting point of 18 months and on the 5^th charge involving just over $1 million, the judge adopted a starting point of 2 years.  The judge reduced the starting points by one-third on account of the guilty pleas to 32 months, 12 months and 16 months respectively.

12.  The judge ordered the sentences on the 1^st, the 3^rd and the 4^th charges to run concurrently.  The judge ordered 8 months of the 16-month sentence on the 5^th charge to run consecutively to the 32-month sentence on the 1^st, the 3^rd and the 4^th charges, making a total sentence of 40 months.

13.  The judge expressly stated that the overall starting point that he had adopted was 5 years, which was an enhanced sentence by one year, to reflect the aggravating features that he had identified.

Ground of Appeal

14.  Mr Tam emphasized that the applicant was not instrumental in the frauds and that his role was limited to opening the accounts, withdrawing the moneys and passing them to others.  Mr Tam also emphasized that the applicant received a reward of $500 for each transaction and that his total reward was only about $15,000.

15.  Mr Tam referred to S for J v Wan Kwok Keung (unreported CAAR 13/2010) which suggests that in a “money laundering” case involving 3 to 6 million, the starting point should only be 4 years.  Mr Tam argued that the 5-year starting point adopted by the judge was therefore manifestly excessive.

Discussion

16.  We wish to repeat the sentiment expressed in HKSAR v Javid Kamran (unreported CACC 400/2004) and HKSAR v Xu Xia Li & Anor [2004] 4 HKC 16 that:

“Money laundering is a very serious offence as it is an attempt to legitimize proceeds from criminal activities.

Serious criminal offences are very often motivated by financial gains and those who assist criminals in laundering money, indirectly encourage them in their criminal activities…”, and

“The prohibition of the offence is in order to strike at those who give assistance to criminals to dispose of or retain their ill-gotten gains as if they were derived from legitimate activities.  Without the assistance of money launderers, it would be more difficult for criminals to clothe their illegal proceeds with the same respect as lawful gains and the chances of law enforcement detection of illegal activities that produce monetary benefits would be enhanced.  Money laundering is therefore treated as a serious offence. If money laundering activities were allowed to be carried out in Hong Kong with impunity or treated lightly with minor penalties it would mar Hong Kong’s reputation as a world-class financial and banking centre.”

17.  We accepted the submissions of Mr Andrew Cheng, for the respondent, that guideline sentence is undesirable as the circumstances in which the offence may be committed are highly variable, but that a deterrence sentence is called for. (See HKSAR v Boma [2012] 2 HKLRD 33) We also accepted that there were aggravating features in the case.

18.  By providing accounts so that the victims could, on the instructions of the fraudsters, deposit moneys into those accounts, the applicant was actively assisting those fraudsters, leading to serious financial losses to the victims.

19.  Not only did the applicant allow his four bank accounts to be used to deal with what he must have known to be illicit moneys, he did it repeatedly in over one year by withdrawing moneys from his accounts shortly after the deposits were made and then passing over the moneys to the perpetrators of the fraud.

20.  On his own admission, the applicant was paid about $500 for every transaction he handled.  The applicant involved himself in an illegal scheme for his own and others’ benefit, with no regard to the victims’ losses.  The victims would never be able to recoup their losses.

21.  Mr Tam referred us to HKSAR v Hsu Yu Yi [2010] 5 HKLRD 545 and we had also considered the judgment in SJ v Jerome Yudal Arnold Herzberg [2010] 1 HKLRD 502 and in Boma (supra).  The following factors are relevant to sentence in “money laundering” cases:

“1. The amount of money laundered, which was considered to be the major consideration.

2. The nature of the offence that generated the “laundered money”.

3. The extent to which the offence assisted the underlying crime or hindered its detection.

4. The degree of sophistication of the offence.

5. The defendant’s participation, both in the underlying offence and in the “money laundering” activities.

6. The length of time that the offence lasted.

7. The benefit that the defendant had derived from the offence.

8. Whether there was an international element in the commission of the offence.”

22.  Applying those factors, this was quite a bad case of the type.  The judge took the view that a 4-year starting point was appropriate, but decided to increase it by one year on account of the aggravating factors that he had identified.

23.  In our view, apart from the international element and the fact that the applicant had actively participated in dealing with moneys in his accounts, there was no other factor that justified a significantly increased sentence.

24.  We were persuaded that the significant increase of one year which was over 20% was too harsh, and that a more modest increase of 6 months would have been sufficient.

25.  We therefore granted leave to the applicant to appeal against sentence out of time.  Treating his application as the appeal proper, we allowed the appeal.  We did not alter the individual sentences, but ordered that only 4 months of the 16-month sentence on the 5^th charge to run consecutively to the 32-month concurrent sentence on the 1^st, the 3^rd and the 4^th charges.

26.  The total sentence on the four charges was reduced from 40 months to 36 months.