HKSAR v. LEE WAI TUNG

DCCC 363/2014

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 363 OF 2014

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REASONS FOR VERDICT

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Introduction

1. The defendant originally faced three charges, namely engaging in bookmaking, contrary to s 7(1)(a) of the Gambling Ordinance, Cap 148 (Charge 1); wilfully obstructing a police officer in the due execution of his duty, contrary to s 36(b) of the Offences Against the Person Ordinance, Cap 213 (Charge 2); and dealing with property known or believed to represent proceeds of an indictable offence, contrary to s 25(1) and (3) of the Organized and Serious Crimes Ordinance, Cap 455 (Charge 3).  He pleaded not guilty to all charges. 

2. Shortly stated, the prosecution’s case against the defendant is that he operated a centre for placing and receiving illegal bets on horse racing in Hong Kong from a flat in an industrial building in Ngau Tau Kok, Kowloon between 9 June 2010 and 27 June 2010.  (Charge 1)  On 27 June 2010, a police party laid ambush in the vicinity of the premises intending to carry out a raid.  First of all, they caused power to the floor on which the flat was situated to be cut off.  Then, one of them (PW2) disguised as a staff member of the management office and asked that he be let in for an inspection.  After the defendant had come out of the wooden door and whilst he was opening the metal grille, PW2 revealed his police identity.  There and then, the defendant sought to prevent PW2’s entry by shutting the metal grille and he engaged in a struggle with the latter during which both of them suffered some minor injuries.  Eventually, the defendant was subdued and the premises were searched. (Charge 2)  After a prolonged investigation, it was found that in the defendant’s bank account there were a number of unexplained deposits in the total amount of about 4 million dollars over a period of about 6 years between June 2004 and June 2010, during which the defendant did not have any income reported to the Inland Revenue Department.  (Charge 3)

The application to amend Charge 3

3. As regards Charge 3, the prosecution’s case was originally put on the basis of the total amount of deposits made to the defendant’s bank account.  After Mr Ryan prosecuting on fiat had closed his case and when Mr Chandler acting for the defence was making a no-case submission, this court brought to the attention of counsel the recent judgment of the Court of Appeal in HKSAR v Salim (CACC 184/2013) given on 14 November 2014.  As a result, Mr Ryan applied to amend Charge 3 pursuant to s 23 of the Criminal Procedure Ordinance, Cap 221.  The prosecution said they would rely on the same evidence as before and did not seek to adduce any additional evidence for the proposed amendments.  The application was opposed by the defence. 

4. After hearing submissions from counsel, this court ruled that Charge 3 was defective but that there was no injustice to the defence which could not be remedied by appropriate measures in case of an amendment as proposed by the prosecution.  In the event, leave was granted to the prosecution to amend Charge 3 in the following ways:-

(a) by changing the total amount pleaded in the particulars of that charge from the sum of the deposits ($3,949,222.90) to the sum of the withdrawals ($3,939,498.52) over the same charge period; and

(b) by adding 12 alternative charges (Charges 4 to 15) to the new Charge 3, each of which was based on a single withdrawal from the bank account ranging from $10,000 to $130,000.

Reasons for the ruling have been given and I will not repeat them here.

The issues

5. The major factual issues in this case include the following:-

(i) as regards Charge 1, whether anyone was receiving bets by way of trade or business during the charge period[1]; if so, whether the defendant was concerned in it;

(ii) as regards Charge 2, whether the defendant knew or at least was reckless whether PW2 was a police officer, or whether he was under any mistake about PW2’s identity[2]; if the former, whether the defendant had tried to shut the metal grille; and if so, whether that act had made it more difficult for PW2 to carry out his duty[3]; and

(iii) as regards Charge 3 (and its alternative charges), whether the defendant had grounds to believe that the monies in his bank account were proceeds of an indictable offence and if so, whether those grounds are reasonable[4].

6. The prosecution evidence on Charge 1 consists mainly of the observation of the police party (PWs 1-3 & 8) about the setting of the premises when they entered and the items found therein, as well as the opinion of the gambling expert (PW6).  A photo album showing the condition of the premises and the items seized was also produced by way of admitted facts.

7. As regards Charge 2, the prosecution relies mainly on the evidence of PW2 which, they say, is supported by the evidence of PW1 and PW3. 

8. As regards Charge 3, the prosecution relies on the interference which they says can be irresistibly drawn from the activities in the defendant’s bank account which was held in his sole name and of which he was its sole authorized signatory.  There is also the opinion of the treasury accountant (PW15) who conducted an analysis of the bank transactions.

9. The defendant elected not to give or call any evidence.  The defence relies on the assertions contained in the defendant’s video-recorded interview that he had engaged in the trading of second hand mobile phones[5]. There are also two sets of chronology of events, both of which are admitted by agreed facts, showing the history of the case from arrest to charge.

Relevant legal principles

10. I remind myself that the burden of proof is on the prosecution and the standard of proof is beyond reasonable doubt.  The defendant has to prove nothing.  The defendant did not give or call any evidence.  This is his right. No adverse inference would be drawn against him because of that.  Moreover, if the court is to draw any inferences adverse to the defendant, such inferences have to be the only reasonable inferences to be drawn from the evidence.

11. That said, the court is entitled, in determining whether or not to draw an inference adverse to the defendant, to have regard to the absence of any other evidence, “to indicate or suggest otherwise.”  Mortimer JA (as he was then) in the judgment of the Court of Appeal in R v Chong Kin Cheong[6] observed of the absence of evidence called by the Applicant:-

“…This does not advance the case against him but compelling inferences may remain unanswered and it is not the judge’s task when considering the facts put before him to imagine possible defences of which there is no evidence. …”

In Li Defan & Another v HKSAR[7],Lord Hoffmann cited with approval a passage from the joint judgment of Mason CJ, Deane and Dawson JJ in the High Court of Australia in Wiessensteiner v The Queen:-[8]

“There is a distinction, no doubt a fine one, between drawing an inference of guilt merely from silence and drawing an inference otherwise available more safely simply because the accused has not supported any hypothesis which is consistent with innocence from facts which the jury perceives to be within his or her knowledge.”

See also HKSAR v Tang Yi Hang[9].

12. Furthermore, in relation to drawing of inference from circumstantial evidence, as McHugh J explained in Shepherd v R[10], if an inference of guilt is open on the evidence, the question for the jury is whether the inference has been proved beyond reasonable doubt - not whether any particular act has been proved beyond reasonable doubt.  The cogency of the inference of guilt is derived from the cumulative weight of circumstances, not the quality of proof of each circumstance.  In a particular case, an inference of guilt beyond reasonable doubt may not be able to be drawn unless each fact relied on to found the inference is established beyond reasonable doubt.  This is likely to be the case where the incriminating facts relied on to establish the inference are few in number.  But the more facts that are relied on to found the inference of guilt, the less likely it is that each or any fact will have to be proved beyond reasonable doubt to establish guilt beyond reasonable doubt.  Consequently, even when guilt beyond reasonable doubt cannot be inferred unless certain facts are proved, it may still be open to infer guilt beyond reasonable doubt even though each fact is not proved to that standard.  See also HKSAR v Au Hau Chung[11].

13. The defendant made statements under caution (P1 & P2), respectively on 27 June 2010 and 28 June 2010, and also gave a video-recorded interview under caution (P10) on 10 September 2012, all of the above were admitted by way of admitted facts[12]. The answers given in the aforesaid statements and interview of the defendant were mixed statements”: see HKSAR v Yuen Man Tung[13]. Therefore, both the inculpatory and exculpatory parts of those statements are evidence for the purpose of determining where the truth lies.  It is trite law, however, that the court, as the tribunal of fact, is entitled to attach different weight to different parts of the defendant’s statements: see generally Criminal Evidence in Hong Kong, by Bruce & McCoy, at V[1203].

As to (i): bookmaking

Evidence

14. It is an admitted fact that the defendant was the tenant of the premises at Flat 904, Block A of Hoplite Industrial Centre in Ngau Tau Kok.  He signed the tenancy agreement (P6) on 18 September 2009 for a term of 2 years at a monthly rental of $4,500.  According to the tenancy agreement, possession of the premises was delivered to the defendant, although the tenure of the lease did not formally commence until 1 October 2009.

15. The premises at Flat 904 had the following features:-

(a) The 9^th floor could not be reached by the lifts. There was, however, a staircase on the 8^th floor leading to the 9^th floor. Furthermore, between October 2009 and 27 June 2010, a closed circuit television system was installed on the 8^th and 9^th floors of Block A with cameras capturing the view of the lobbies of the 8^th and 9^th floors. Such cameras were connected to a television monitor in Flat 904. See Photograph Nos 10, 12, 14 and 17.

(b) The windows were at the far end of the flat as one looks into it. At the time of the police raid, the windows were covered with a dark cloth which served as a curtain, leaving two openings just for the air-conditioners. The cloth did not only block the outside view completely, but also made it impossible for one to observe what was going on inside through the windows: see Photograph No 73.

(c) Mounted on the wall on the right were 13 display screens or monitors arranged in three rows. Underneath the screens or monitors was a desk. To the left of the desk were a big screen television set and a computer. To the right of the desk was a computer with a monitor on top of it: see Photograph Nos 74 and 79. To the further right of the desk, there was a paper shredder: see Photograph No 75. On top of the desk, there were sundry items including a keyboard, two computer mouses, a calculator, horse-racing pages of a newspaper, pens of different colours, writing pads and paper and several mobile phones: see Photograph No 82.

(d) On the left side of the room, there were two desks placed adjacent to each other facing the wall: see Photograph No 73. On top of one of the desk, there were a pile of newspapers, 3 calculators, a monitor, a keyboard and a printer. To the right of that desk, there was a computer which was apparently connected to the monitor, keyboard and printer: see Photograph No 97. To the left of the two desks, there were several monitors placed on the floor: see Photograph No 105.

(e) The premises had hardly any decoration and did not have much furniture. On the other hand, there were packed and apparently unused items stuffed at one side of the flat: see Photograph No 103. The premises certainly do not appear to have been used for domestic purposes. Nor does its setting look like an ordinary office in that there were not file cabinets, no shelves and no reception for meeting guests.

16. DSgt 47486 (PW8) was asked to attend the premises as a gambling expert after the raid.  He also gave expert evidence in court and his expertise was not challenged.  PW8 said that nowadays it is very common for bookmakers to receive bets through the internet and to settle gambling debts by bank transfers, although some might choose to settle by handing cash.  PW8 said that punters would place bet with bookmakers rather than the Jockey Club because bookmakers would offer them a discount and that they were not required to pay immediately.  

17. After looking at the premises, PW8 formed the preliminary opinion that it was used as an illegal centre for placing and receiving bets.  He based this preliminary opinion on the presence of the following items which he said were commonly seen in bookmaking:-

(i) display screens which could be used to show the bets placed by clients, for there may be many clients;

(ii) TV set which could show horse racing events;

(iii) horse-racing pages of newspaper;

(iv) calculators;

(v) pens in red and black ink, for it is traditional for bookmakers to record in red for his losing and in black for his winning;

(vi) notebooks which could be used to record the wins and losses of clients;

(vii) phones which could be used for immediate communication with clients and agents;

(viii) shredder which could be used for destroying evidence in case of a police raid;

(ix) a computer which stored gambling websites; and

(x) CCTV system which could be used for detecting police arrival.

18. PW8 also spent some time in the premises looking at what was shown on the display screens.  He said that some of the display screens were showing records of receiving bets: see Photograph Nos 20 – 72.  He noted in particular that one of the screens showed the login page of AAStar which was a website for illegal betting: see Photograph No 24. 

19. Subsequent to the raid, the police retrieved and printed a total of 81 files (P7 and P8) from two of the computers found in the premises.  P8 appears to be the records pertaining to a common gambling website citibet.net regarding a user “tu1”.  I note that it is an admitted fact that between 9 June and 27 June 2010, the defendant held an account with an internet website at citibet.net and that his username was “tu1”.  It is also an admitted fact that the defendant can access this account using a password.

20. PW8 was given by the Police P7 and P8 for comments.  He gave the following comments:-

(i) P8 related to “tu1” and it showed that tu1 had both placed and received bets via the website citibet.net. The reasons why PW8 said that “tu1” had received bets was that on the face of the documents relating to 9 June 2010[14], 12 June 2010[15], 16 June 2010[16], 20 June 2010[17], “tu1” had offered discounts to people for bets relating to horse-racing. He had checked the odds as recorded and found that they were the same as those announced by the Hong Kong Jockey Club. He came to the conclusion, therefore, that the entries marked as “Withheld” under the “Mode” column in the above documents represented bets received by “tu1” from punters and those entries marked as “Bets” represented bets placed by “tu1”;

(ii) there was another document in P8 relating to 27 June 2010 in which the phrase “Bets Withheld” was used in contrast to “Bets Placed ” [18]. PW8 inferred that “Bets Withheld” there referred to bets received;

(iii) another document in P8 was the user data of “tu1” of citibet.net[19]. PW8 said that the word “downline” in that document referred to clients recruited by “tu1” and the word “upline” referred to the person who recruited “tu1” as agent.

(iv) Based on P8, PW8 calculated that during the period between 9 June 2010 and 27 June 2010, “tu1” had placed bets to the total amount of $32,950.39 and that he had received bets to the total amount of $78,186.98. P14[20] is a document prepared by PW8 which shows how he arrived at the two figures. P15[21] is a table showing PW8’s “Analysis of Computer Website Records” of P7[22] and P8[23].

21. In cross-examination, PW8 agreed that during his presence at the scene, there were no phone calls made to the premises.  He agreed that P8 did not show who placed the bets with “tu1” and when those bets were placed.  He agreed that anyone who had access to the website using the username could have received the bets.  He further agreed that he had not been given the defendant’s bank records for comments. 

22. As regards the defendant’s statements under caution, the defendant said at the scene that he was a mere punter placing bets at the premises.  Then, in his first cautioned statement taken in the police station between 2200 hours and 2330 hours on 27 June 2010 (P1), he said further that he was at the premises placing bets with off-course bookmakers on horse racing online only, that the website he used was citibet.net, that he used the username “tu1” with a password to access that website and that he would settle the gambling money through his bank account held with the Bank of China.  The defendant admitted that he was the tenant of the premises.  He also admitted that the equipment found in the premises such as computer and television set were his and that they had nothing to do with his friend Au who was also inside the premises when the police arrived.

23. In the defendant’s second cautioned statement taken between 1735 hours and 1850 hours on 28 June 2010 (P2), he admitted that the server which was found inside the premises was lent to him by his friend and he (the defendant) was responsible for paying the monthly subscription fee for the server at $360. 

24. It is an admitted fact that 27 June 2010 was a horse racing day in Hong Kong.  It is not in dispute that when the police party gained entry to the premises at around 3:25 pm, there was another male inside the flat whose surnamed was Au.

Consideration

25. As regards the printouts from the computers found inside the premises, P7 and P8, they were not evidence of the truth of their contents.  However, I accept the evidence of PW8 regarding these two documents to the extent that the forms and contents of P7 and P8 were such that they look like someone’s records of placing and receiving bets on horse-racing in Hong Kong.  Having regard to their forms and contents (without assuming the truth of their contents), coupled with the setting of the premises and the equipment found therein, I am satisfied beyond reasonable doubt that they were records of someone receiving bets using the username “tu1”: see Oei Hengky Wiryo v HKSAR (No 2) [24]. Even if I were wrong on this, at least they were the types of records kept by someone taking bets: see HKSAR v Or Suen Hong[25].

26. I also accept the opinion of PW8, which he formed after his inspection of the premises, his observation of the equipment found therein and what was displayed on the monitors and display screens, that the premises were a centre for placing and receiving bets.  I am satisfied beyond reasonable doubt that the premises at Flat 904 had been used as a centre for placing and receiving bets on horse-racing in Hong Kong.  I find also that PW8’s opinion about the usage of the premises is further strengthened by the presence of the files pertaining to P7 and P8 stored in the computers found in the premises.

27. I accept the defendant’s admissions made under caution against his self-interest, namely that the equipment such as computer and television found in the premises was all his, that he had used citibet.net to place bets and that he had paid for the use of the server found in the premises. 

28. Based on the fact that the defendant was the tenant of the premises, that he was inside the premises on the day of his arrest which was a horse-racing day, his admission that the equipment found in the premises was all his, the presence of the files pertaining to P7 and P8 in the computers and his admissions that he had used the citibet.net account by means of the username “tu1” and a password, I am satisfied beyond any reasonable doubt that the defendant was receiving bets from punters during the period covered by Charge 1.

29. Lastly, I am also satisfied beyond reasonable doubt that the defendant had received bets by way of trade or business.  This is based on the renting of the premises, the array of the monitors and display screens mounted on the wall, the installation of the CCTV system, the use of a dark cloth to cover the windows and the inferences drawn from P7 and P8.  As regards the presence of the files pertaining to P7 and P8 found in the computers, even without relying on the truth of their contents, it would always be probative of the fact that someone was in business of a particular kind to show that he kept records, and that they were the type of records kept by a businessman of that category. Here, the production of P7 and P8, as in the case of Or Suen Hong, is to show that the defendant was in possession of the paraphernalia of betting and was in the business of bookmaking.  However, even without the two documents, the evidence against the defendant was overwhelming and that the only reasonable inference that could properly be drawn is that he was engaged in bookmaking.

30. In arriving at the above findings, I have not ignored the fact that the defendant had said that he was just a punter.  However, as those exculpatory remarks were not made under oath and not tested by cross-examination, I attach no weight to them.  Also, I find the defendant’s assertion that he was just a punter inherently improbable.  I do not accept that the defendant would have taken all the trouble of renting a place and setting it up in the way it was just for his own entertainment, if he were not also carrying on a trade or business of receiving bets there. 

31. Nor have I lost sight of the fact that there was another person, Au, present in the premises at the time when the police arrived.  I would not speculate what the other male Au was doing there.  Whether or not Au was involved in bookmaking, I am satisfied that the inference against the defendant is just as strong in view of the cumulative weight of the evidence against him including but not limited to his tenancy and his aforesaid admissions. Furthermore, given the nature of the account of tu1 with citibet.net, I find it inherently improbable that the defendant would have shared the use of it with other people unless they were also parties to the bookmaking. 

32. I have also taken into account the defendant’s assertion that he had traded in second hand mobile phones.  I note also that there 8 mobile phones (4 with pre-paid SIM cards) seized at the premises at the time of his arrest. However, from the causal way in which the mobile phones were placed on desk top and the fact that some of them had pre-paid SIM cards, I find as a fact that they were not trading stock of the defendant but his equipment for the purpose of bookmaking. 

33. I have also taken into account the fact that the record of the defendant’s bank held with the Bank of China does not support the prosecution’s case that he had received bets as suggested in P7 or P8.  However, this does not mean that the defendant had not engaged in bookmaking through means other than using his own bank account.  I consider this piece of evidence as neutral in that it certainly does not undermine the prosecution’s case or advance the defence case. 

34. In view of the strong inference arising from all the evidence considered as a whole, I find that the prosecution has proven Charge 1 beyond reasonable doubt.

As to (ii): obstructing

Evidence

35. It is not in dispute that members of the police party were in plainclothes.  It is not in dispute that before the police party gained entry to the premises, they had caused electricity to be cut off so that the lights inside and outside of the premises were out.  It is not in dispute that PW2 initially told the defendant falsely that he was from the management office and that he wanted to conduct a checking inside the premises.  It is also not in dispute that DSSgt Leung (PW1), the officer leading the police party, did not take out the gambling authorization (P3) which was with him until after the defendant had been subdued. 

36. The photographs show that there was a gap of some distance between the wooden door and the metal grille of the premises: see Photograph No 19.

37. Although PW2, the person named in Charge 2 as the police officer who is said to have been obstructed, was unable to identify the defendant in court, there can be little dispute that the one who answered the door was the defendant. The evidence for this comes from PW1 and the arresting officer DPC 58598 (PW3). 

38. The major evidence on this charge comes from PW2.  According to him, he posed as a staff member of the management office, went up to Flat 904 and knocked on the metal grille, pretending to make enquiry of the people inside about the power failure.  After a while, the defendant opened the wooden door, went out and opened the metal grille.  PW2 then revealed his police identity by saying “Police!”  However, the defendant responded by trying to shut the metal grille which was prevented by PW2 forcefully pushing it open.  Then, the defendant immediately went towards the wooden door.  At that moment, PW2 got hold of the defendant’s right arm and said “Police! Don’t move!”  However, the defendant still dashed towards the wooden door.  As a result, both the defendant and PW2 lost balance and fell inside the premises, with PW2 lying on top of the defendant.  PW2 warned the defendant not to move any further.  Then, the other police officers came up and assisted PW2. 

Consideration

39. Having observed PW2 giving evidence, I find him to be an honest and credible witness who does not the tendency to exaggerate things.  He was honest enough to say that he could not identify the person with whom he had struggled, even thought there was only the defendant in the dock.  I accept PW2’s evidence as to what had happened between he and the defendant.  Although PW2 had once read his police notebook without permission during break, that occurred after he had already given his evidence in chief.  It is apparent that PW2 did that in order to help him recollect the name of the defendant whom he had failed to identify.  PW2 disclosed to the court without being asked that he had read his notebook during the break.  I find that PW2 broke the rule about memory refreshing out of ignorance rather than dishonesty.

40. There is also the evidence of PW1 and PW3 who said they saw what had happened between the defendant and PW2 at some distance.  However, I am unable to attach much weight to what they said had happened during the course of the struggle.  First, their evidence about the struggle was vague.  Secondly, whilst I accept that the corridor was not pitch dark at the time, I am not satisfied that there was sufficient light to enable them to see clearly the action of the defendant and PW2.  PW2 said, wrongly that the metal grille opened by sliding sideway.  That was contradicted by what was shown in the photographs.  I am not sure about PW3’s evidence that PW2 had produced his warrant card when revealing his police identity to the defendant.  It is not because I doubt PW3’s credibility but because that was not mentioned by PW2.  On the other hand, I accept PW3’s evidence, and there is no evidence to the contrary, that the whole incident of the defendant being subdued occurred within a very short time, which PW3 put as 8 to 10 seconds. 

41. Whether a particular conduct amounts to wilful obstruction of an officer in the due execution of his duty is always a matter of fact and degree.  Having considered the evidence, I am sure that PW2 was in the due execution of his duty as a police officer at the material time.  I am sure that when the defendant was opening the metal grille for PW2, the latter revealed his identity by saying “Police!”  I am sure that the defendant at that stage became aware that PW2 was a police officer in disguise.  I am sure that the defendant tried to close the metal grille and he did that with a view to prevent PW2 from entering the premises.  I find as a fact that the defendant dashed back to the wooden door when PW2 had asked him not to move.  I find that the defendant’s act had caused both he and PW2 to lose balance and fall, as a result of which both of them suffered some minor injuries.  PW2’s left forearm was scratched and he also sprained his right little finger and neck.  I find that the defendant’s course of conduct had for a short time made it more difficult for PW2 to carry out his duty as a police officer, even though PW2 and the other members of the police party eventually were able to gain entry to the premises.  I am satisfied that the defendant’s course of conduct went beyond causing mere inconvenience to PW2 or requiring PW2 to expend only trifling additional effort.  In short, I find that the prosecution has proven Charge 2 to the requisite standard.

Issue (3): reasonable grounds to believe

Evidence

42. The prosecution’s case on the money laundering charges, as Charges 3 to 15 commonly so called, is based on two pieces of evidence: (i) the nature and number of the activities in the defendant’s bank account as shown in the banker affirmation (P17); and (ii) the fact that the defendant had no reported source of income during the material period which may explain the transactions in his bank account.

43. As regards (i), the treasury accountant PW15 has prepared a report analysing the relevant bank transactions.  PW15 identified a number of features of the transactions which include the following:-

(i) during the 6-year-and-1-month period from 1 June 2004 to 30 June 2010, there were a total of 170 deposits into the defendant’s bank account in the sum of $3,945,222.90. There were also a total of 490 withdrawals in the sum of $3,939,498.52 which roughly equals the amount deposited;

(ii) the majority of the deposits were coming from ATM Transfer Deposit of $1,548,500 (39.2%), Cash Deposit of $933,490 (23.7%) and Cheque Deposit of $763,860 (19.4%);

(iii) the majority of the withdrawals were in the form of ATM Cash Withdrawal of $1,354,600 (34.4.%), Cash Withdrawal of $1,220,500 (31%), Phonebanking Transfer Withdrawal of $626,037 (15.9%) and ATM Transfer Withdrawal of $477,277 (12.1%); and

(iv) a review of the transactions indicated that transfer and cash deposits to the account were usually withdrawn in a week or two, with regular withdrawals by PPS for settlement of credit card payments.

44. Taking into account the fact that the defendant’s alleged trading in used mobile phones was not supported by any documentary proof, PW15 came to the following “conclusions”:-

(i) the total amount of deposits to the bank account during the period in question was not commensurate with the defendant’s reported income; and

(ii) a significant part of the transactions in the account was in cash, namely $1.2 million in cash deposits and $2.6 million in cash withdrawals. Nevertheless, no adequate explanation was available to justify the use of cash by a legitimate business or apparent cause.

45. Furthermore, PW15 was of the view that the defendant’s bank account exhibited some features of money laundering in that:-

(i) unusually large cash deposits made by an individual whose ostensible business activities would normally be generated by cheques and other instruments;

(ii) substantial cash deposits without apparent cause, especially if such deposits are subsequently transferred within a short period out of the account; and

(iii) large number of individuals making payments into the same account without an adequate explanation.

Consideration

46. The prosecution does not put its case on the basis that the monies in the bank account were proceeds of the defendant’s bookmaking activities.  With respect, they are right not to do so, as the evidence simply does not support such a conclusion:-

(i) there is no evidence that the defendant engaged in bookmaking before June 2010. On the other hand, the bank transactions in question span a period of about 6 years from June 2004;

(ii) the vast majority of the deposits and withdrawals were in round figures and were thus unlikely to be settlement sums of gambling debts;

(iii) the deposits and withdrawals occurred throughout the year and did not stop during summer when there would be no horse racing meetings in Hong Kong; and

(iv) for reasons unknown, the gambling expert PW8 had never been asked to comment on the activities in the defendant’s bank account and there were no discernible patterns about those transactions to suggest that they related to any illegal gambling.

47. In view of the fact that the defendant was the sole authorized signatory of his bank account and in the absence of evidence to the contrary, it is not disputable that the defendant had dealt with the monies in his bank account by way of withdrawals.  Furthermore, it is trite law that for a charge under s 25 of the Organised and Serious Crimes Ordinance, it is not an element of the offence that the property was in fact proceeds of an indictable offence.  The status of the property was only an element of the mens rea of the offence: see Oei Hengky Wiryo v HKSAR (No 2) [26]; and HKSAR v Tsang Wai Lun Wayland[27]. It follows that the issue relating to the money laundering charges really boils down to whether the defendant had any grounds to believe that the monies in his bank account represented proceeds of an indictable offence and, if so, whether those grounds are reasonable.  That requires the Court to take a closer look at the transactions.

48. In this regard, it is pertinent to note the following:-

(i) the 170 deposits were made over a period of about 6 years. That means that there were on average less than 3 deposits a month;

(ii) of these 170 deposits, 12 of which related to “Interest Received”, 4 related to “Cheque Deposit (to be returned)” (which presumably is a reference to dishonoured cheques) and 96 related to “Other Counterparties”. This means that the majority of the deposits had known or traceable sources;

(iii) in relation to the deposits related to “Other Counterparties”, 94.6% of the monies so received were from 8 companies/individuals/accounts as shown at §24.2.1 of PW15’s report. As stated in the chronology of events, the defendant had been arrested for bookmaking since 27.6.2010 and for money laundering since 10.9.2012. Therefore, one would expect that the Police had checked those 8 sources and that if there was anything untoward about them, it would have been discovered. However, there is no such evidence before the court and it would, in my view, be speculative to say that those deposits were to the defendant’s belief proceeds of an indictable offence;

(iv) there were only 57 cash deposits and 1 deposit from an unknown party. As such, there were only 58 deposits which came from unidentifiable sources involving a total of $1,185,190 ($1,155,190 + $30,000). Therefore, there was on average less than $200,000 a year or about $16,500 a month. In fact, the majority of the cash deposits were less than $20,000, a figure which cannot said to be unusually large;

(v) similarly, in relation to the 490 withdrawals that were made over the period of about 6 years, there were on average less than 7 withdrawals a month. It cannot be said therefore that there were a large number of withdrawals;

(vi) about half of the withdrawal were made in favour of “Other Counterparties”, being payments by way of PPS or EPS or transfers to identified person or bank accounts, the total amount involved in relation to that comes up to $1,103,764;

(vii) furthermore, regarding those withdrawals made to “Other Counterparties”, 94.4% of the money was paid to 8 companies/individuals/accounts as shown at §24.2.2 of PW15’s report. Again, there is no evidence of anything untoward about those 8 receivers of money from the defendant’s account; and

(viii) only 243 withdrawals were made in cash involving a total of $2,575,100, which means on average a little bit less than $430,000 a year or about $35,800 a month. In fact, the majority of the cash withdrawals were less than $20,000, a sum which cannot be said to be of great significance given the present-day living standard.

49. As regard the defendant’s assertion under caution that he was engaged in trading in used mobile phones, I do not accept it as it was neither supported by documents nor evidence on oath.  I also have taken into account the fact that the defendant had not filed any tax returns during the material period of time.  I note that the defendant had said in the video-recorded interview that he was unemployed.  However, that was a description of his situation at the time of the video-recorded interview in September 2012 which was more than two years after the arrest[28]. The effect of all of the above is that that there is no evidence to explain the source of the defendant’s monies in his bank account.  However, the burden is still on the prosecution, not the defendant, to show that he had grounds to believe that the monies were proceeds of an indictable offence.  The fact that the defendant had no reported income may indicate, but does not necessarily means, that he had no legitimate income during the relevant period of time.

50. I am suspicious of what the defendant had done with his bank account. Nevertheless, in all the circumstances of the present case, in particular (i) the long period of about 6 years covered by Charge 3; (ii) the relatively small number of questionable transactions and small amounts involved; (iii) the fact that the bank transactions are not indicative of any illegal gambling; and (iv) the absence of any evidence to suggest that the traceable transactions were suspicious, I am not able to draw any irresistible inference adverse to the defendant as to his belief.  At least not beyond reasonable doubt.  This is so even in the absence of any evidence from the defence to explain the transactions.  The fact that the defendant had chosen not to disclose his sources of income to the authorities is insufficient, in my view, as a makeweight to tip the balance against him.  If no adverse inference can be drawn in relation to the total amount, even less can be said about the individual withdrawals which are the subject matters of the alternative charges.  As the prosecution is unable to discharge its heavy burden to prove that the defendant had grounds to believe that any of the monies in his bank account were proceeds of an indictable offence, it follows that they are also not able to prove Charge 3 or any of its alternatives. 

Conclusion

51. The defendant is convicted of Charges 1 and 2, but acquitted of all the other charges.