HKSAR v. G Veerappan V Sivabalanravi

DCCC1234/2008

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 1234 OF 2008

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Reasons for Sentence

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1.  The defendant pleaded guilty before me to one count of dealing with property known or believed to represent proceeds of an indictable offence, commonly known as money laundering. The amount of money involved is HK$5,468,446.

2.  What happened was there was an American couple called Richard Roeser and Lorie Roeser. They were living in Maryland in America at the material time. They had two bank accounts with an American bank called Severn Savings Bank, one in the joint name of the couple and the other in the husband’s name.

3.  Someone practised a fraud on the bank, the Severn Savings Bank, deceiving the bank into giving out two loans to the couple, one in the sum of US$316,000 and the other US$400,000. These loans were paid into the couple’s bank account, which then transferred to Hong Kong a sum of US$701,000. The equivalent amount of Hong Kong dollars is $5,468,446.

4.  This money was transferred into your company’s account, your company called Excellent Target Investment Limited, which is a shelf company, it is not doing any business here. It has no office except it has two bank accounts and you were the sole signatory.

5.  You then dissipated the money paid into your company’s account, in other words, you transferred HK$2 million, to an account of a company called Ma’s, and withdrew HK$3,332,000 and gave it to someone. You also remitted HK$73,000 to your friends in Malaysia, claiming it was a commission for them.

6.  You were arrested on your way to Singapore in the Hong Kong Airport. Under caution, you admitted that you were the sole director of the company Excellent Target Investment Limited, which is a secretarial company with no office in Hong Kong. Excellent Target employed no staff and it held two bank accounts to which the defendant was the sole signatory.

7.  You claim to know a US resident named Richard Roeser, who was introduced to you by your friends, Simon and others, in Malaysia. You were an investment consultant by profession and that was the reason why your friends introduced Richard to you.

8.  On 16 June 2008, your friend Simon told you Richard had remitted US$701,000 to your company’s account and two days later, you said you met Richard who told you that the said sum of money was for investment.

9.  Later, upon Richard’s instruction, according to you, you then transferred a sum of HK$2 million to a company account and withdrew HK$3,332,000, you say, for Richard.

10.  On 20 June 2008, you remitted HK$73,000 to your friends in Malaysia, claiming it was a commission for them.

11.  The money you dissipated from your company account was laundered through the Hong Kong moneychangers here.

12.  The Roesers knew nothing about the Excellent Target that received the funds from their accounts.

13.  You are a person of clear record. In mitigation, your counsel stressed that the strongest mitigating factor was your guilty plea. Your counsel said it saved a lot of court’s time by not having to go to America to take evidence from the couple in Maryland.

14.  You were born in Malaysia, educated up to diploma level. You have acquired accounting qualifications. In 1991, you worked as a clerk and in the following year, you changed to work in the merchant bank as an accounting officer and you later became self-employed. In the year 1998, you went into brokerage, writing up paper for customers for investment. You charged about US$1,000 to US$2,000 per contract. You also helped clients to get credit from banks.

15.  The court was told that you became a Christian in prison while you were being detained here. You used to suffer from cancer but now recovered, your current health was okay.

16.  Your counsel asked the court to accept that you had nothing to do with the crime in America.

17.  You claimed you met someone called Richard Roeser - it could be someone else other than the real Richard Roeser - and for doing all this, you were given a reward of 2 per cent of the funds, i.e., in the region of US$14,000.

18.  There are no sentencing guidelines for this type of offence. Money laundering is a serious offence. I would like to echo the comments of the High Court in the case of Javid Kamran CACC400/2004:

“Money laundering is a very serious offence as it is an attempt to legitimise 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.

Successful deterrents against money laundering could be effective measures against crime.”

19.  As I said before, your counsel asked the court to accept that you had nothing to do with the fraud practised on the American bank, but I do not accept it. The facts to which you agree clearly state that the Roesers, the American couple, knew nothing about your company, Excellent Target.

20.  Here before the court is a copy of investment agreement between Lorie Roeser and Richard Roeser and Excellent Target Investment Limited. This is defence exhibit. Clearly this is a false contract and you have this false contract and you now tell me you did not know anything about the fraud in America. I do not believe you. I am sure you have full knowledge about it and you are a willing participant to this fraud. You are not simply someone in the dark just helping others to launder the money.

21.  What I accept is, in this false contract it states that you were given a reward for doing all this, 2 per cent of the fund; in other words, you get about US$14,000, and I am sure that had been given to you because all the money being transferred to your bank account were dissipated, not recovered, not a single penny, and this represents a loss to the American bank, the Severn Savings Bank.

22.  There is an aggravating feature in the present case. It involved an international dimension: fraud practised in America, the money obtained, transferred from there to Hong Kong into your bank account here.

23.  In the case of Mak Shing CACC322/2001,

“A starting point of 4 years was considered to be sufficient to reflect the seriousness of the offences in which there was again an international element. The court commented, ‘Hong Kong has to take a very serious view of such matters if its international reputation is not be sullied’.”

24.  Regarding your mitigation, apart from your guilty plea, I see no other mitigating factor of real substance. On the facts before me, I take 4½ years as a starting point, reduced to 3 to reflect your plea, and I see nothing to reduce the sentence further and you are sentenced to 3 years’ imprisonment.