HKSAR v. KAZUSHI IKEGAYA AND ANOTHER

Case No. DCCC 353/2014

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 353 OF 2014

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Reasons for Sentence

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1.  This is a case of cashier order fraud involving two Japanese defendants, D1- Kazushi Ikegaya and D2- Hisato Maeda.

2.  One day in November 2013, D1 went to a bank alone and presented a forged cashier order successfully depositing 1.9 million US dollars into a company account, Evzen Mobilya Limited, which was the payee of a genuine cashier order, and transferred out of the jurisdiction almost all of the money on the following day.

3.  About two weeks before that, D1 and D2 together set up a company that goes by the same name of the payee company through an accountancy firm and opened up its bank accounts at the Citibank.

4.  D1 faced two charges to which D1 pleaded guilty, one of using false instrument, contrary to section 73 of the Crimes Ordinance (charge 1 – subject matter is the forged cashier order), and a joint charge against D1 and D2 of money laundering, contrary to section 25 of the Organized and Serious Crimes Ordinance (charge 2 – the dealing of the 1.9 million).

5.  D2 faced only one charge of money laundering, which is the joint charge with D1 – charge 2, of which he was convicted after trial.

6.  The facts are simple and straightforward. At the beginning of October 2013, a Madam Chan bought a cashier order from Standard Chartered Bank (SCB) for 1.9 million US dollars, payable to a company called Evzen Mobilya Limited, for the purpose of doing business with an overseas supplier.

7.  Towards the end of October 2013, the defendants came to Hong Kong together, set up a company in the same name as the payee company of the cashier order, i.e. Evzen Mobilya Limited, and opened up bank accounts of the company at Citibank. They left Hong Kong on 1 November 2013.

8.  In mid-November, D1 came back to Hong Kong, presented a forged cashier order to Citibank and successfully deposited a sum of 1.9 million US dollars in the company’s account and on the following day, D1 transferred out of the jurisdiction a substantial part of the deposit, leaving a balance of slightly more than $10,000 US dollars in the account.

9.  At the beginning of December 2013, as Madam Chan’s deal fell through, she went back to SCB intending to cash the cashier order but only to be told that the money had already been paid out. The matter then reported to the police. On their return to Hong Kong about two weeks later, D1 and D2 were arrested on separate days by the police at the airport.  

10.  Both defendants are married men in their 50s and persons of previous good character.

11.  It was submitted that D1 was not only a successful businessman in Japan but a businessman with a big heart too before committing the present offences. He had his own company in the bio-technology field doing many projects, some of which were meaningful in that they were set up for the benefit of the old people in Japan. Now that he was convicted, many of these projects, counsel for D1 said, would have to come to a halt. 

12.  The reason D1 committed the offences was that he was asked by another Japanese, Kinoshita Shunji, to come to Hong Kong to help D2 because D2 did not speak any English. His reward was no more than $30,000 HK dollars plus free trips to Hong Kong.

13.  In his letter to Court, D1 expressed great remorse for what he did, and set out his parents’ current health problems and how much he wanted to go back to take care of them.

14.  First of all, I find it hard to believe that if he was doing well in his chosen career as he said he was, he would want to take to a life of crime just for a sum of $30,000 HK dollars. I think he was not telling me the truth one way or another.

15.  D1 is diabetic. There will be added hardship for D1, counsel said, because he is not going to receive the same kind of medical treatment as he did in Japan. His treatment in Japan comprised two parts- one to do with insulin injection and the other with medication taken orally. It is the medication part that, counsel said, the health care system here fails to provide for him, and this will cause additional hardship to D1 while serving sentence here.

16.  Japan may be very advanced in modern medicine, but I think Hong Kong is in no way in arrear in health care in the world, especially in treating common diseases like diabetes. I am sure D1 will receive the appropriate medical care in our prisons. 

17.  D2, on the other hand, enjoys good health but counsel for D2 submitted that since D2 speaks no English nor Cantonese, he will feel sad and lonely in the local prison.

18.  When D2 decided to commit the offence in a foreign place where no one spoke his language, he should have a pretty good idea what he would have got if caught. Should that eventuality happen, he had no one to blame but himself.  

19.  Counsel for D2 emphasized that the role D2 played in the crime came towards the lower end of the scale. He knew nothing about the cashier order fraud, counsel said, and he was only being used by others in the commission of the offence.

20.  In fact, both counsel said that their client was only a cog in the machine.

21.  It is true to say there are no tariffs as such for the offence of money laundering, in “Boma” CACC 335/2010, the Appellate Court set out various factors for the sentencing court to consider (not meant to be exhaustive):

a) The nature of the predicate offence, if known, and the penalty available for the predicate offence;

b) The state of knowledge of the offender;

c) An international dimension will always be a significant aggravating feature;

d) The sophistication of the offence is always relevant- the degree of planning and whether deceit is practiced to achieve the objective;

e) It is an aggravating fact where the offence is committed by or on behalf of an organized criminal syndicate;

f) 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;

g) The role of the offender and the acts performed by him.

22.  The predicate offence in the instant case is one of fraud. Clearly D1 must have knowledge as to the nature of the predicate offence because he was the one who presented the forged cashier order to the bank.

23.  As far as D2 is concerned, the evidence shows that he was shown a cheque before coming to Hong Kong to set up the company accounts, and was told a number of deposits would be made into the company accounts, and he was to be paid 2.5 % of the money passing through the accounts. Though the court found him to have the reasonable belief, his case was very close to one of so-called blind eye knowledge.

24.  There is an international dimension in that the money was transferred out of Hong Kong to an overseas account in Japan.

25.  It is not clear how many people involved in the scam, but it must have been carefully and well thought out to cheat the bank. At least they must have someone who knew the mechanics of how to forge a cashier order. The defendants’ roles are significant; without them, the fraud could not have been a success. The fraud was successful and at the end of the day someone suffered a loss of 1.9 million US dollars, equivalent to about 15 million Hong Kong dollars. When one comes to think of it, this is a lot of money.

26.  One obvious but not specifically mentioned factor in Boma case is the size of money that the offenders laundered, in Hsu Yu Yi [2010] 5 HKLRD 536, Cheung JA set out the amounts of money involved and the sentences passed in a number of “money laundering” cases. The sentencing starting point is 3 years or so where the “black money” involved is between 1 million and 2 million dollars, 4 years or so where it is between 3 million and 6 million dollars, and could be over 5 years where it is above 10 million dollars (See paragraph 15 of Wan Kwok Keung CAAR 13/2010). Again they are not meant to be tariffs but nothing more than a statistic. 

27.  D1 and D2 clearly joined together in this criminal enterprise for the purpose of laundering money from the proceeds of crime, though on the face of it D1 seemed to have done a little more than D2 (i.e. by presenting the forged cashier order), there was no significant difference between the two in terms of culpability for, in my view, they were simply playing different roles in executing their criminal plan. In a joint enterprise, one is always responsible for the acts of the other.

28.  The “black money” in the instant case originated from a forged cashier order, and all that D1 did was to transfer it out of jurisdiction after the cashier order was cleared. Nothing sophisticated was done to conceal the source of the money. It was like one following the other. In the circumstances, it is right, in my view, to order concurrent sentence for the two offences, i.e. using false instrument and money laundering. 

29.  For the reasons given above, and taking into account all the mitigation put forward, I take 6 years as starting point for each of the offence and for each defendant.

30.  Notwithstanding the fact that both defendants are persons of clean record, it does not carry much weight as a mitigating factor, for they are foreign nationals and their stay in Hong Kong does not seem to be anything longer than a few days.

31.  In the case of D1, after discounting the sentences by 1/3 for his plea, the term for each of the offence is reduced to 4 years and ordered to run concurrently with each other, therefore the total term is one of 4 years imprisonment.

32.  As far as D2 is concerned, I see nothing to justify a reduction of the sentence, so he is sentenced to 6 years imprisonment for the offence of money laundering.