HKSAR v. SHAM KWOK KEE

DCCC 762/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 762 OF 2012

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Reasons for Sentence

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1. The defendant was charged with offences of bookmaking and money laundering. The 2nd charge averred that he dealt with $38,667,986.51 knowing or having reasonable grounds to believe that it represented in whole or in part the proceeds of an indictable offence.

2. The defendant initially pleaded not guilty to both charges and an application to stay the proceedings was rejected by the court.  The defendant challenged the admissibility of a record of interview, Exhibit 258, but after the close of the prosecution case on the voir dire the court was invited to put the charges to the defendant again and he changed his plea to guilty on both charges.

3. In respect of the money laundering charge, the defendant entered his plea on the basis that he dealt with only a small part of the sum, namely $168,748.89 having reasonable grounds to believe that it indirectly represented the proceeds of an indictable offence.  The defendant claimed that most of the moneys were concerned with his activities as a public light bus agent.  This was not accepted by the prosecution and a Newton Inquiry was held.  At the conclusion of the Newton Inquiry I was satisfied beyond reasonable doubt that the defendant dealt with the whole sum as alleged by the prosecution.

4. The facts admitted by the defendant disclosed that at 2340 hours on 20 November 2004, police officers of the Organised Crime and Triad Bureau executed a gambling authorisation issued under section 23 of the Gambling Ordinance, Cap. 148, at a residential flat at Room 3118, Sui Lok House, Siu Sai Wan Estate, Chai Wan, Hong Kong.  The defendant was found together with his wife and daughter inside the premises.  Immediately upon entering, the police officers noticed that a soccer match, Liverpool against Middlesbrough in the English Premier League was showing on the TV and there was a computer logged onto a website, “Singbet3.com”, giving the odds of soccer games.  They also saw some papers on the table in the living room that appeared to be soccer betting slips.

5. After discovering the soccer betting slips, DPC970 asked the defendant what they were, however, he did not answer.  The officer declared arrest and cautioned the defendant.  In reply to the caution, the defendant said in Cantonese, “Ah Sir, I just receive bets on soccer games for fun from those drivers who also run the same public light bus route as me. The bets are very small and I’ve only received 20 to $30,000”.  The officer wrote down the caution and the defendant added that it had nothing to do with his wife and daughter and signed to acknowledge the record.  An officer then searched the flat and seized amongst other things three betting slips with a face value of $41,500 on a folding table in front of the TV set in the living room and 37 betting slips with a face value of $1,126,600 inside the drawer of the TV cabinet in the living room.  The officer further seized a number of other items consistent with bookmaking and normally found together with betting slips, including a calculator, different colour pens, a list of names, phone numbers and bank accounts.

6. In the first two video interview records conducted by the defendant, the defendant essentially confirmed what he said previously.  He identified himself as the maker of the betting slips.  He said that the slips recorded bets on soccer games received from someone and passed on to someone else that was not the Jockey Club.  He said that he laid bets for fun and that he also helped his friends by taking their bets and placing them with others.  He said he passed the bets to a person called Ah Sing who was not connected to the Jockey Club.  He explained the meaning of the entries on the betting slips identifying the soccer teams the bets were laid on, the amount of the bets, the odds, the handicap, the name of the punter, the name of the bookmaker, if any, and whether the bet had been settled and he said that some of the betting slips referred to the bets he took on the day of the raid and some previous occasions when he took bets on soccer matches.

7. A gambling expert examined the betting slips seized from the raided premises and confirmed that they were indeed betting slips which recorded illegal soccer bookmaking.  He was able to deduce that the person who made the betting slips acted both as a bookmaker and as a bookmaker’s agent, “teng chai”.  In other words, the person who made the betting slips accepted some of the bets himself as banker and passed some of the bets on to other bookmakers.  It was found that the total amounts of betting activity recorded on the 40 betting slips seized at the raided premises were as follows:-

The total value of the bets received by the betting slip maker was $1,168,100.

The total value of bets accepted by the betting slip maker as a bookmaker was $568,400, that is 49 per cent of the bets placed.

The total value of bets passed on to other bookmakers by someone acting as a bookmaker’s agent is recorded as recorded by the betting slip maker was $599,700.

Charge 2

Banking Records

8. The defendant was found to have the following sole signatory bank accounts.  He had three accounts with the Hang Seng Bank, a current account, a savings account and a bank‑in-one-account and he had a current account with the Bank of China.  The account records in these bank accounts were examined by police and it was found that between 29 November 1999 and 20 June 2004 over a period of just over 4½ years, a total of $38,667,986.51 passed through the defendant’s bank accounts.

9. On 8 April 2005, the defendant produced, pursuant to a production order, a large number of original business documents including books containing records of accounts that appeared to be records relating to the operation of public light buses from 2001 to 2004 as well as notebooks containing records apparently relating to the operation of public light buses from 1999 to 2004.

The Business Records

10. Examination and analysis of the business records produced by the defendant reveal that they appear to represent the expenses side of running some kind of business.  They appear to show payments that have been made in connection with running a minibus business as there were entries for payments for such things as fuel, oil, tyres, repairs to items such as air‑conditioners and engine parts. 

11. The police entered the transactions recorded in the defendant’s payment records between November 99 and June 2004 into a computerised spreadsheet.  The total payment recorded in the payments over 4½ years was $18,247,262.

The Bank Accounts

12. The defendant’s bank accounts were analysed over the same period that the payment records he produced in response to the production order covered, namely from November 1999 to June 2004.  The defendant’s bank accounts were found to have a significant amount of intra-account transactions, that is money moved between the various accounts.  The police entered the transactions recorded in the defendant’s bank accounts between November 1999 and June 2004 into a computerised spreadsheet.  The spreadsheet was designed to work out the total withdrawals made by the defendant’s account and paid to a third party, i.e. any destination other than to any of his own accounts including cash, that is to say payments made out by one of the defendant’s accounts which were then deposited into another of his accounts were not counted as part of the total payments out of his account.  The total withdrawals recorded in the defendant’s bank accounts over these 4½ years was $38,667,986.51.

Comparison - Business Records and Bank Records

13. A comparison between the business records produced by the defendant which appear to record payments made in connection with the running of his alleged business, withdrawals and payments to third parties, not intra-account transfers, from his bank accounts over the same time frame, i.e. 29 November 1999 to June 2004, shows the following results:-

Legitimate Income

14. As a result of the production order served on the Inland Revenue Department, it was confirmed that neither the defendant nor his wife had filed any tax returns with nor made any tax payments to the Inland Revenue Department between April 1999 and March 2004.

Legitimate Business

15. A check of the Companies Registry and the Inland Revenue Business Registration office found that the defendant had no companies registered in his name.  His wife, Wong Oi-mei, Macy, have no companies registered in her name either. 

Ownership of Vehicles

16. It was discovered that the defendant did own some vehicles but they were of very little value.

Real Property

17. Neither the defendant nor his wife, Wong Oi-mei, Macy, had never had any real property registered in their names.

Public Housing

18. The defendant identified his home address as the raided premises, that is Room 3118, Sui Lok House, Siu Sai Wan Estte, Chai Wan, Eastern, Hong Kong.  This is a Public Housing estate unit and the defendant is the registered tenant.

19. The defendant is aged 50 and has a clear record.  He is married and has two grown-up children.  His education ceased during Form 1.  The defendant obtained his driving licence when aged 20 and originally drove and owned lorries.  He became involved in the PLB business in 1990 and said that his earnings from that was $10,000 per month.  I am told that the defendant is very hardworking.  A number of letters of support from his family and persons involved in the PLB business were submitted for the court’s consideration.

20. In considering the appropriate sentence, I took into account that the offences were committed more than nine years ago and that the defendant was not charged until 2012.  The police enquiries into the defendant’s money laundering activities started in 2005 and involved a prolonged and detailed investigation.  There was no criticism of the prosecution for the delay in the commencement of the proceedings. 

21. I took into account that after the court refused to stay the proceedings on grounds of unfairness, the defendant entered not guilty pleas to both charges.  He changed his pleas after the close of the prosecution case in respect of the voir dire concerning the admissibility of a cautioned statement for the 1st charge.  As I mentioned earlier, the defendant disputed the amount of money he was alleged to have laundered in relation to the 2nd charge and this was resolved after a Newton Inquiry at which the defendant gave evidence which I rejected.

22. In respect of the 1st charge, I took into account that the total value of bets received by the betting slip maker was $1,168,100 of which 49 per cent were accepted as banker, the rest being passed on to other bookmakers.  He was not the owner of the internet account which was used and he accepted bets on behalf of friends.  Obviously there has been a significant lapse of time since the date of the offence.  I took a starting point of 4 months’ imprisonment and reduced that to 3 months in view of the late guilty plea and other mitigating factors.

23. In relation to charge 2, again I take into account the delay between the commission of the offence and sentence.  I also take into account that at the time the offences were committed the sentencing policies with regards to offences of money laundering were not as robust as it is today.  The amount involved, however, is substantial.  The offence was committed over a period of almost five years and the defendant was centrally and intricately involved in its commission.  There were over 8,000 transactions going through his four bank accounts. 

24. I take a starting point of 4 years and 6 months for this offence and reduce that by 6 months to reflect the admission of many of the facts which were made by the defendant and the delay in the case coming before the court.

25. I order that both sentences should run concurrently.  The defendant will therefore go to prison for 4 years.