HKSAR v. KWOK CHI YIU AND OTHERS

DCCC 216/2023

[2024] HKDC 117

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 216 OF 2023

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REASONS FOR SENTENCE

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1.  The three defendants appeared before me facing a Charge Sheet consisting of three charges one against each defendant.

2.  Charge 1 against D1 is one of Dealing with property known or believed to represent proceeds of an indictable offence, contrary to section 25(1)  and (3)  of the Organized and Serious Crimes Ordinance, Cap 455 (hereinafter “Money Laundering”).  Particulars are that D1, between 20 September 2017 and 10 November 2017, both dates inclusive, in Hong Kong, knowing or having reasonable grounds to believe that property, namely a total sum of $4,933,000 Hong Kong currency held in the account of D1 with Bank of China (Hong Kong)  Limited numbered 012-797-1-017812-7, in whole or in part directly or indirectly represented any person’s proceeds of an indictable offence, dealt with the said property.

3.  Charge 2 against D2 is also one of Money Laundering.  Particulars are that D2, between 4 and 8 of September 2017, both dates inclusive, in Hong Kong, knowing or having reasonable grounds to believe that property, namely a total sum of $2,478,000 Hong Kong currency held in the account of D2 with Bank of China (Hong Kong)  Limited numbered 012-607-1-005376-8, in whole or in part directly or indirectly represented any person’s proceeds of an indictable offence, dealt with the said property.

4.  Charge 3 against D3 is also one of Money Laundering.  Particulars are that D3, between 16 and 20 November 2017, both dates inclusive, in Hong Kong, knowing or having reasonable grounds to believe that property, namely a sum of $224,315 Hong Kong currency held in the account of D3 with Bank of China (Hong Kong)  Limited numbered 012-601-1-027145-0, in whole or in part directly or indirectly represented any person’s proceeds of an indictable offence, dealt with the said property.

Facts admitted by D1, D2 & D3

General modus operandi of the related bank loan (or mortgage insurance)  scam

5.  A purported staff member of a Supreme Prospect Co Ltd (“Supreme”)  would tell the victim that he/she could obtain a loan (or mortgage insurance in the case of PW12)  from or with the assistance of Supreme.  The victim would be told that, in order to obtain the loan (or mortgage insurance), he/she must first provide a lesser but still substantial sum as proof of asset (or as mortgage insurance fee)  which, according to Supreme, would be refunded later.  Whenever the victim said he/she did not have that much money, Supreme would ask him/her to obtain a loan from a moneylender.  Once the victim has the required sum for use as proof of asset (or as mortgage insurance fee), he/she would be asked to hand it over in cash or by cheque (latter payable either to D1 or D2)  or by transfer.  If by cheque, the cheque would be deposited into the corresponding defendant’s BOC bank account and the proceeds withdrawn the next one or two days.  If by transfer, the transfer would be to the corresponding defendant’s BOC bank account and the proceeds withdrawn the same day.

6.  The victim would never receive any loan (or mortgage insurance policy)  nor could he/she further contact the relevant purported staff member of Supreme.

Charge 1 against D1

7.  The victims related to Charge 1 are PW3, PW4, PW7, PW8, PW9, PW10, and PW11.  Altogether, they lost a total of $4,939,500.  Bank records show that within the charge period, D1’s BOC bank account received 7 deposits totaling $4,933,000 from the above PWs; these deposits were withdrawn within a day or two. CCTV shows that D1 withdrew a total of $4,000,000 cash over the counter at the BOC branch in Whampoa.

8.  D1 was arrested on 10 November 2017 soon after he withdrew $800,000 cash at the BOC branch in Whampoa.

Charge 2 against D2

9.  The victims related to Charge 2 are PW1, PW5 and PW6.  Altogether, they lost a total of $2,478,000.  Bank records show that within the charge period, D2’s BOC bank account received 3 deposits totaling $2,478,000 from the above PWs; these deposits were withdrawn within a day.

10.  D2 was arrested on 5 January 2018 at Tin Shui Wai Police Station.

Charge 3 against D3

11.  The victim related to Charge 3 is PW12.  He lost a total of $345,100. Bank records show that on 16 November 2017, D3’s BOC bank account received $224,315 from PW12 by transfer; $224,300 was withdrawn the same day and the remaining $15 was withdrawn on 20 November 2017.

12.  D3 was arrested on 3 March 2018 on the street.

Criminal records

13.  D1 has 7 previous convictions none similar.

14.  D2 has 6 previous convictions none similar.

15.  D3 has a previous clear record.

Antecedents

16.  D1 is aged 39 (33 at the time of the offence), educated to F3 level.  He is a goods vehicle driver earning around $18,000 a month.  He is married with a daughter (aged 2).  The family lives in private housing in Tuen Mun.

17.  D2 is aged 37 (almost 31 at the time of the offence), educated to VTC level.  He is a forklift truck controller earning around $38,000 a month.  He is single and lives with his parents (in their 70s and 60s respectively)  and elder sister in public housing in Tin Shui Wai.

18.  D3 is aged 37 (31 at the time of the offence), educated to F5 level.  He is a chef in a seafood restaurant earning around $25,000 per month.  He is single and he lives alone in private housing in Sai Kung.

Mitigation

D1

19.  D1 is unpresented and mitigated on his own behalf.  The following is a summary of his mitigation submissions.

20.  D1 felt stupid to have committed the offence.  He wishes to be released sooner so that he may take care of his wife and daughter (aged 3).  He is a lorry driver earning $26,000 a month (cf around $18,000 a month as per antecedents statement).  Wife works part-time for 3 days in a week earning about $4,000 to $5,000 a month.  D1 asks for leniency from the court.

D2

21.  Mr Henry Ng of counsel mitigated on behalf of D2.  The following is a summary of his mitigation submissions.

22.  At the material time, D2 was jobless and wanted to make quick money. Through the introduction of a friend, he lent out his bank account upon the instigation of one “B Gor” for use in the commission of the offence.

23.  D2 withdrew cash on three occasions over the counter of BOC branches and handed over the same to B Gor outside the bank in return for a reward of $4,000 each time.  He admitted that at the time of withdrawal he had reasonable grounds to believe that the source of funds was “black money”.

24.  D2 has been a construction site dump-truck driver (same occupation as forklift truck controller)  for about 2½ years earning about $37,000 a month. D2 learned the related skills at Vocational Training Council.

25.  The Court of Appeal has not set down sentencing guidelines for the offence of “money laundering”.  Generally speaking, the main sentencing factor is the amount of “black money”.

26.  In HKSAR v Hsu Yu Yi [2010] 5 HKLRD 545, the Court of Appeal stressed again the fact-specific nature of the offence when considering sentence; that the amount of money laundered is a major sentencing consideration.  In para 9 of the judgment, Cheung JA stated:

“9. There are no sentencing guidelines for the offence of dealing with the proceeds from an indictable offence because the facts vary from case to case. However the following factors are to be taken into account when determining sentence:

(1)  It is the amount of money involved that is a major consideration and not the amount of benefit received by a defendant in the transaction.

(2)  The culpability of the offence lies in the assistance, support and encouragement offered to the commission of an indictable offence. So a defendant’s level of participation and the number of occasions on which he is involved in the ‘money laundering’ activities are relevant factors to be considered.

(3)  The offence of dealing with the proceeds from an indictable offence does not necessarily have any direct correlation with the indictable offence in question. However if the relevant indictable offence can be identified, the court may take into account the sentence imposed on the indictable offence per se when determining the sentence of the dealing offence.

(4)  If the case has an international element involving activities carried out across different regions, the court may impose a more severe sentence. This is to protect Hong Kong’s reputation as an international finance and banking hub from being tarnished.

(5)  The length of time the offence lasted.”

27.  In Secretary for Justice v Wan Kwok Keung [2012] 1 HKLRD 197, Yeung JA observed that:

“12. “Money laundering” is a serious offence for not only does it encourage criminal activities indirectly, but also attempt to legitimize the proceeds of crime. In order to crack down on serious crimes, to prevent offenders from getting financial gains, it is necessary to deter the commission of the “money laundering” offence (see Court of Appeal cases HKSAR v Javid Kamran (CACC 400/2004), HKSAR v Xu Xia Li and another [2004] 4 HKC 16, etc).

13. Generally, the sentence for “money laundering” offence should mainly reflect the amount of “black money” laundered and not the benefit obtained by the defendant or others. The reason being that it is very difficult to prove the benefit concerned, and in most “money laundering” cases, there may not be evidence to show from what indictable offence the “black money” are in fact derived. Of course if there is information to prove that the “black money” is originated from serious crimes, including drug trafficking, kidnap and blackmail, illegal human trafficking, other organized crimes, etc or the defendant’s benefit is huge, then the sentence should be adjusted upward.

14. This Court has, in a number of other similar cases, also listed other factors relevant to the sentence to be imposed including the number of offences, the length of time the offence lasted, the degree to which the defendant participated in the offence involving “black money” and whether or not it was an organized and sophisticated crime, etc.

15. In HKSAR v 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.”

28.  In HKSAR v Boma [2012] 2 HKLRD 33, the Court of Appeal emphasized that “the question of the amount of the money laundered is not the be-all and end-all of a case, but is a significant feature”.  The Court went on to elaborate on the other relevant factors to be considered (at paragraph 40 of the judgment):

(1)  The nature of the predicate offence for generating “black money” and the sentence to be imposed;

(2)  Whether the defendant knew what the predicate offence was;

(3)  Whether there is an international element;

(4)  Whether the offence of “money laundering” involves elaborate steps, schemes or fraudulent means;

(5)  Whether there is a criminal syndicate;

(6)  The number of transactions and the length of time during which the offences were committed;

(7)  Whether the defendant continued to launder money after knowing the nature of the predicate offence;

(8)  The role and remuneration of the defendant.

29.  Here, D2 handed over all of the “black money” in the total sum of $2,478,000 to B Gor for a remuneration of $12,000.

30.  In the present case, there is no evidence that D2 knew the source of the money.  He committed the offence as he was unaware of the seriousness of the charge, being naïve to believe that his friend introduced him a risk-free opportunity to make quick money.  D2 did not commit the offence for a long time (only 5 days)  and the MO was not complicated.

31.  There is no aggravating feature in D2’s case.  D2 was not a member of the criminal syndicate perpetrating the predicate loan scam.  He knew nothing about the nature of the material cheques and money transfer.  His case lacked international dimension and sophistication.  His role was merely one of stooge bank account holders lured into receiving and withdrawing crime proceeds involving in his case 3 transactions only.  He is a first-time offender of such “money laundering” crime.

32.  In the premises, Mr Ng suggests a starting point of around 3 years’ imprisonment for the 2^nd Charge against D2.

33.  D2 is remorseful and pleads guilty at the first opportunity saving the court’s time.  He should be given the usual one-third sentencing discount.

34.  In relation to delay of prosecution, the Court of Appeal in HKSAR v Chiu Chi Wing, CACC 243/2012, referred to seven non-exhaustive or flexible matters for the sentencing court to consider.

35.  Mr Ng cited HKSAR v Choy Ki Shun [2003] 2 HKLRD 575 (English translation of headnote at 576)  and referred to para 13 of the judgment by an unofficial translation.  The gist of it is that mere delay in the processing of a case is not sufficient to be a mitigating factor: the police may need time to gather evidence against the defendant; on the other hand, where the prosecution is in possession of sufficient evidence to prosecute but somehow there was delay (not caused by the defendant)  in prosecution or in the proceedings and the delay has caused him anxiety, such delay may be a reasonable mitigating factor.

36.  D2 committed the offence during early September 2017.  He was not arrested until 5 January 2018.  It was only on 10 February 2023 he first attended Eastern Magistracy.  There was a delay in prosecution of about 5 years.  D2 has started a new law-abiding life since about January 2018 and he has equipped himself with more vocational skills and found more stable and gainful jobs.  He has been a dump-truck driver for 2 ½ years.

37.  It is submitted that D2 be given certain sentencing discount by reason of the prosecution delay.  Mr Ng suggested a general reduction of 10 to 15%.

D3

38.  Mr Emanuel Law of counsel mitigated on behalf of D3.  The following is a summary of his mitigation submissions.

39.  D3’s parents divorced when he was 12 and he lived with his mother and elder brother.  After completion of secondary education, he studied in Chinese Culinary Institute while working as a part-time waiter in order to sponsor his mother’s living expenses.  He is currently a chef of a seafood restaurant in Sai Kung, earning $26,000 per month.  He now lives alone in a flat provided by his employer.  He aspires to establish his own restaurant after acquiring enough experience and saving up sufficient money.

40.  D3 is a caring person.  He had devoted his leisure time to do volunteering work by utilizing his skills – he visited and cooked for the elderly at the elderly home occasionally.

41.  He has no vice habits.  He enjoys playing football.  He formed an amateur football team in around 2013 and practiced football twice a week (more later).

42.  On sentencing principles, Mr Law also referred to the same principles as those relied on by Mr Ng for D2 which were enunciated in the cases of Hsu Yu Yi, Boma, and Wan Kwok Keung.

43.  The primary mitigation of D3 is his timely guilty plea and clear record.

44.  The background to the offence is as follows.  During a training session of the said football team, a member called Ka Lok brought a friend Ah B to the pitch.  Ka Lok introduced Ah B to D3.  Ah B told D3 he was running a money changer business and claimed that one of his clients could not remit an amount of money (later known to be $224,315)  to his account because of some technical reason.  Ah B asked for D3’s favour to receive the same.  Ah B further instructed D3 to withdraw the money in cash and passed it to Ka Lok.  D3 simply helped an acquaintance out and did not ask for details.  He did not receive any benefits.

45.  D3 admits that he had reasonable grounds to believe that the money in whole or in part directly or indirectly represented any person’s proceeds of an indictable offence.

46.  Mr Law asks the court to take note of the following factors:-

(a)  The offence lasted only 5 days; the amount of “black money” is relatively small ie $224,315;

(b)  The offence involved only 2 withdrawals: no evidence to suggest the offence involved sophistication;

(c)  There is no evidence to suggest D3 had knowledge about the nature of the predicate offence or the origin of the “black money”;

(d)  There is no evidence to suggest D3 had taken part in the predicate offence;

(e)  There is no evidence to suggest D3 was part of an organized criminal syndicate;

(f)  There was no international dimension;

(g)  The role of D3 was very limited; and

(h)  D3 did not receive any benefit.

47.  It is submitted that the present offence is not the most serious of its kind.

48.  Relying upon certain dicta in Wan Kwok Keung, Mr Law submitted, by pure arithmetic calculation, laundering of “black money” in the amount of $225,413 calls for around 8 months’ imprisonment.

49.  Mr Law submitted 3 District Court sentencing cases for the court’s reference, namely HKSAR v Wong Kin Wai & Ors, DCCC 58-59 & 632/2017; HKSAR v Lee Wing Hang & Ors [2023] HKDC 886 (in Chinese); and HKSAR v Lam Yan Sang & Ors [2022] HKDC 1302 (in Chinese).

50.  Mr Law urges the court to adopt a starting point of 8 to 12 months’ imprisonment in the case of D3.

51.  Similar to the position of Mr Ng for D2 on the issue of “delay in prosecution”, Mr Law relies on the case of Chiu Chi Wing.

52.  Mr Law submitted that around 6 months after arrest in March 2018, D3’s bail money was returned to him; that D3 was no longer required to report to the police.  It was not until January 2023 that D3 was arrested again for “money laundering”.

53.  Mr Law submitted that there was delay in prosecution, and after the return of bail money, D3 had a reasonable expectation that he would not be charged; that he had made progress towards rehabilitation.  Mr Law submitted that D3 worked very hard to save money in order to establish his own restaurant and he was looking for a low rent premises for use as a restaurant during COVID.

54.  Mr Law reminded the court to give D3 the full 1/3 discount for his guilty plea and asked the court to exercise discretion to give a further discount for the delay in prosecution.

55.  Mr Law submitted on behalf of D3 three mitigation letters in Chinese (with English translation)  written respectively by D3 himself, his good friend Mr Wong (no blood relation), and his elder brother.  The contents generally are that in 2017, D3 helped an acquaintance newly met in his football team by lending his HKID card to this acquaintance who then opened a BOC bank account which received and remitted out money; that D3 is a straightforward and unsuspecting person who seldom hesitates to help his friends without reward. All the writers asked for a lenient sentence for D3 so he may turn over a new leaf and contribute to society in due course.  D3’s good friend Mr Wong is in court to give D3 support.

Sentence

56.  Although the nature of the predicate offence is now known to the court, there is no evidence that it was known to any of the defendants at the relevant time.

57.  Except in the case of D1, the duration of the offence did not last long nor were the occasions of dealing many.

58.  In the case of D1, almost $5M were laundered over a period of almost 2 months.  There were 7 deposits into D1’s bank account and a similar number of withdrawals from the same account 4 of which (amounting to $4M)  were done in person by D1 over the counter.  Out of the proceeds of the predicate offence that were laundered, a sum of $800,000 has been recovered.

59.  Having regard to the sentencing authorities and the circumstances of the offence subject of Charge 1, in the case of D1, I adopt a starting point of 4½ years’ imprisonment.

60.  Next, in the case of D2, almost $2.5M were laundered over a period of 5 days.  There were 3 deposits into D2’s bank account and a similar number of withdrawals from the same account.  D2 took a reward of $12,000 for his money laundering activities.

61.  Having regard to the sentencing authorities and the circumstances of the offence subject of Charge 2, in the case of D2, I adopt a starting point of 3½ years’ imprisonment.

62.  Next, in the case of D3, almost $230,000 were laundered over a period of 5 days.  There was one deposit into and there were two withdrawals from D3’s bank account.

63.  Having regard to the sentencing authorities and the circumstances of the offence subject of Charge 3, in the case of D3, I adopt a starting point of 12 months’ imprisonment.

64.  All defendants pleaded guilty in good time.  They are entitled to 1/3 sentencing discount.  Save in the case of D3 who has a previous clear record, and other than the possible mitigating factor of delay in prosecution (which will be dealt with below), there are no other mitigating factors of weight that can apply to any of the three defendants.

65.  Prosecution submitted a “Case Chronology” dated 2 January 2024 prepared by Detective Inspector Yan Sze Ho giving some details of significant events between 10 November 2017 (date of D1’s initial arrest)  and 20 July 2023.  I should perhaps say that the more significant end-date should be 10 February 2023 which, according to this document, is the date when all three defendants first appeared in the magistrates’ court.

66.  According to this document and the facts admitted before the court, the date of initial arrest of D2 was 5 January 2018; and the date of initial arrest of D3 was 3 March 2018.

67.  In summary, then the period between initial arrest and first appearance at court for D1 is 5 years 3 months; for D2, it is about 5 years one month; and for D3, it is about 4 years 11 months.

68.  On the face of it, there appears to be delay in prosecution.

69.  However, I note that delay in prosecution alone has never been a mitigating factor (see generally Cross & Cheung’s treatment of the topic in Sentencing in Hong Kong, 10^th Ed (2022)  pp 452-455).What must be present is unreasonable delay not attributable to the defendant coupled with some effect on him/her, such as significant additional stress or disruption in his/her attempt to rehabilitate him/herself in the meantime.  It has even been suggested that delay caused by dilatory or neglectful conduct by the State may result in a discount if the court thinks it an appropriate means of marking its disapproval of that conduct.

70.  In the case before me, from the “Case Chronology”, the only period where it can be argued there was an unreasonable delay was between 12 March 2019 and 16 September 2021 (a period of about 2 years 6 months).  The few details that were given about this period was that legal advice was pending from DOJ.

71.  I note the nature of this case involving as its predicate offence the offence of fraud with all its related documentary evidence and the potential scope involving multiple suspects.  I would have thought that a reasonable period for rendering legal advice would have been no more than 9 months.  As such, there appears to have been an unreasonable delay of one year 9 months. However, all who stayed in Hong Kong during that time know what happened between 2019 and 2021: Hong Kong went through a difficult time by having COVID 19 and social unrest leading to significant disruption in the civil process.

72.  Having said that, although the defendants were not the only victims of this disruption and delay, they were not contributors to them either.  I therefore agree that there has been unreasonable delay of the type which may amount to a valid mitigating factor subject to satisfaction of the other requisite conditions.

73.  Has any defendant suffered significant additional stress as a result of the delay over and above the level of stress that would been suffered by anyone who has been arrested and awaits being dealt with one way or the other by the authorities?  None of the defendants has pleaded significant additional stress in their mitigation let alone produced any evidence of the same.  I therefore dismiss this possibility.

74.  As regards disruption in attempts to rehabilitate himself in the meantime, I note that none of the defendants committed any further offence in the meantime; that all were gainfully employed and went about their normal day-to-day business; that D2 might even have taken up additional classes to enable himself to operate a forklift vehicle.

75.  I am satisfied that each of defendants has to one degree or another attempted to rehabilitate himself in the meantime and it would be unduly harsh if no further discount is given to their respective sentences.

76.  For this reason, I will give D1 & D2 an additional discount of 2 months after the customary 1/3 discount for plea.  As regards D3, in proportion to his much lower starting point, I am only able to give him an additional discount of one month after the customary 1/3 discount.

77.  Also for D3, because of his clear record, I initially thought about exercising my discretion to give him a further small reduction in sentence (in terms of days).  However, there is one aspect of D3’s mitigation which pulled me in the opposite direction.  In the mitigation letter written by D3 himself, he stated that the football teammate he newly met (probably Ah B as mitigated)  “asked to borrow [his] HKID card, for [Ah B] to open a bank account…”  From this unequivocal admission, it appears that D3 had done more than what the facts disclosed to enable the relevant bank account to be opened for the purpose of receiving the proceeds of fraud.  For this reason, I decline to give him any further reduction.

(All defendants, please stand)

78.  The sentence for D1[1] is therefore 34 months’ imprisonment.

79.  The sentence for D2[2] is therefore 26 months’ imprisonment.

80.  The sentence for D3[3] is therefore 7 months’ imprisonment.