HKSAR v. MUHAMMAD NADEEM BHUTTA

DCCC 147/2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 147 OF 2015

----------------------

----------------------

---------------------

Reasons for Sentence

---------------------

1.  The defendant was convicted after trial of four counts of money laundering. Charges 1 to 3 are substantive offences, while Charge 4 is an attempt to do the same.

2.  The money involved is €966,256.

3.  The event leading up to the money laundering in the present case is a telephone scam.  The victimised company is a Spanish company located in Madrid, Spain.  On 6 March 2013, the company’s financial controller, Madam Barrios, received a phone call from a man disguising himself as the company’s CEO, Mr Bay, who instructed her to transfer money elsewhere, saying that it was for investment.  Madam Barrios also received an email purporting to come from Mr Bay confirming the instructions, together with a copy of invoice with the defendant’s company’s name printed as its heading.

4.  Not doubting the identity of Mr Bay, Madam Barrios followed the instructions and made the remittance to the defendant’s company’s bank account as provided in the invoice.  As a result, a sum of €966,256 was deposited into the defendant’s company’s bank account here in Hong Kong on 7 March 2013.

5.  Soon afterwards it was discovered that the whole thing was a fraud because the real Mr Bay had been contacted, who confirmed that he had not given any instruction to invest. 

6.  The matter was then reported to the police in Hong Kong as well as in Spain.

7.  Within a day or two of its deposit, the defendant siphoned off the money, almost the whole lot, from his bank account, either by way of cash withdrawals or telegraphic transfers to an overseas bank account in Cyprus.

8.  The defendant, aged 45, is a man of previous good character.  He was a university graduate in Pakistan.  He came to Hong Kong in 1997, married a local girl, and now they have three young children aged from 5 to 9.

9.  At the time of offence, the defendant ran a few shops at Chungking Mansions, mainly selling mobile phones, iPads and their accessories.  Defence counsel said that the defendant was a successful businessman.

10.  A letter written by his wife pleading leniency was submitted to the court.

11.  Defence counsel submitted a case, Xu Xia Li and Anor CACC 395/2003 for the court’s consideration.  The applicants were each convicted after trial of one kind of conspiracy to launder money.  The money laundered was 11 million, and they were each sentenced to 3 years’ imprisonment.  The appellate court said the starting point of 3 years after trial was not out of line with similar cases, but it did reduce the sentence by 3 months on other grounds.

12.  Defence counsel asked this court to adopt a similar approach to sentencing, ie 3 years; taking into account the defendant’s clear record, and reduce that by 3 months to 2 years and 9 months.  My response to that is that the two cases are not on all fours in terms of facts as well as the court’s findings.  The Appellate Court often said they refused to set down guidelines for this type of offence simply because the facts of each case may vary widely from case to case, and each case turns on its own facts.

13.  Now I come to the sentencing.  It is true to say there is no tariff as such for this type of offence.  In Boma Amaso CACC 335/2010, however, the appellate court said that they would refuse to set down sentencing guidelines for the same reason as I have mentioned before, but did identify certain significant factors for the lower court to consider when sentencing.  The list was not meant to be exhaustive.  They include the following:

(i) the nature of the predicate offence, if known, and the penalty for the predicate offence;

(ii) the state of knowledge of the offender, and this divides itself into 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;

(iii) an international dimension will always be a significant aggravating feature;

(iv) the sophistication of the offence is always relevant;

(v) where the offence is committed by or on behalf of an organised criminal syndicate, that is an aggravating fact;

(vi) 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;

(vii) 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;

(viii) the role of the offender and the acts performed by him.

14.  The appellate court in Boma also mentioned that the amount of money laundered is not the be-all and end-all of a case, but is a significant feature.

15.  In some Chinese judgments of the Court of Appeal, for example, Hsu Yu Yi CACC 159/2009 and Wan Kwok Keung CAAR 13/2010, the appellate court did provide some ideas on how significant the amount of money laundered in determining the length of sentence.  In Wan Kwok Keung the Court of Appeal said that:

“Where the money laundered is between 1 million to 2 million, the term for consideration is one of 3 years; between 3 million and 6 million, 4 years; and anything above 10 million, that the term can be over 5 years.”

16.  In the present case, clearly a fraud was practised on a foreign company, and in this scam, the defendant’s company’s bank account was used to receive the proceeds of crime.  The con men certainly would need the co‑operation of the defendant to help getting the money out of his bank account the sooner the better.  It would not be in their interest to keep the defendant in the dark.

17.  Although the court did not go so far as to find the defendant to be a knowing party to the telephone scam, the fact that his company’s bank account was used did tell us something about his knowledge of the money that came into his account on the day in question.  Coupled with the fact that the defendant siphoned off almost 95 per cent of the money within a short period of time, ie 24 hours, obviously the defendant knew that the money represented proceeds of serious crime.

18.  The defendant played a significant role in the matter.  Not only did he provide his bank account to channel the funds, but he also proactively took part in removing the funds from his bank account within a short time.  Without him, the scam could hardly be a success.  Now the con men could get away with a large chunk of the proceeds, over €940,000.

19.  There is also an international element involved in the present case.  The money originally came from Spain, deposited in Hong Kong; some of it went to Cyprus; and the rest was taken out in cash, leaving a small sum sitting in the bank account.

20.  The amount of money the defendant laundered is almost equivalent to HK$10 million.  This is certainly not a small sum of money.

21.  As far as banking transactions were concerned in the present case, they were not complex nor lengthy at all.  It only involved the deposit of the money and the dissipation of it within 24 hours. Everything was on record.  I do not think it would take the prosecution much time in proving it.

22.  As far as the defendant’s clear record is concerned, he came to Hong Kong in 1997.  He has been here for almost 18 years, and for that, I would give him a 2 months’ discount and it will be reflected in the totality of the sentence.

23.  Taking into account everything put forward by way of mitigation, the facts of the present case, and the amount of money the defendant laundered, the sentences are:

Charge 1, 3 years’ imprisonment;

Charge 2, 4 years’ imprisonment;

Charge 3, 3 years;

Charge 4, 2 years.

24.  Taking into account the totality principle, I order that Charge 2 should run consecutively to 4 months of each other charge.  The rest are to run concurrently with one another.

25.  The total term is one of 5 years’ imprisonment.

26.  Had it not been for the defendant’s clear record, the final sentence would have been one of 5 years 2 months.