HKSAR v. CHANG HSIAO HUI AND OTHERS

DCCC 1255, 1256/2008 & 295/2009
(Consolidated)

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 1255, 1256/2008 & 295/2009 (Consolidated)

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Reasons for Sentence

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Charges

1.  D1 pleads guilty to a charge of money laundering of monies in various currencies in the total equivalent value of about HK$2.5 mil. (2^nd Charge)

2.  D2 pleads guilty to a charge of money laundering of monies in various currencies in the total equivalent value of about HK$1.9 mil. (3^rd Charge)

3.  D3 pleads guilty to a charge of money laundering of HK$295,560 (4^th Charge).

4.  D4 pleads guilty to a charge of money laundering of monies in various currencies in the total equivalent value of about HK$2.3 mil. (5^th Charge).

5.  D5 pleads guilty to a charge of money laundering of monies in various currencies in the total equivalent value of about HK$1.5 mil. (6^th Charge).

Facts

Nature of scam

6.  D1 C D5 were holders of Taiwan passports. Between 1 June and 14 December 2008, each made several short trips to Hong Kong.

7.  During the months of September and October 2008, victims in different countries were contacted by unknown persons. Thos victims were of Chinese origin. They were advised that they had won a lottery prize which had been organized by a company situated in Hong Kong. In order to collect the prize they were requested to pay certain fees in advance. They were given bank account numbers or were told to remit the monies to those accounts or sent them via Western Union for collection by named persons. The accounts subscribers and the named persons were the 5 Defendants. The victims were given passport numbers of those to whom they were speaking to lend support to the claims of their having won the lottery prize. The passport numbers included those of the 5 Defendants. In some instances, after sending the initial fees, the victims were asked to provide further fees with varying reasons.

8.  The total sum of monies cheated out of the victims was HK$8,340,951 between 1 June and 18 December 2008.

Arrest and caution

9.  On 15 October 2008, D1 was arrested at the Bank of China when she attempted to withdraw HK$390,000 from her account. She first told the police that she was staying at a nearby hotel. When the police found some keys on her, she said she was staying in a residential premises with D3.

10.  On the same date, the police went to the said premises for a search. D2 and D3 were playing video games together. They were arrested.

11.  Inside D1 s room, a notebook was found to have a record D1 s bank transactions. Inside D2 s room, a notepad was found to have a record of D2 s bank transactions. Inside D3 s room, a bag was found to have a total of HK$295,560 in the denomination of HK$500 and HK$1,000 banknotes.

12.  On 25 October 2008, D4 was arrested.

13.  On 17 December 2008, D5 was arrested.

14.  Under caution, D1 said the bank accounts were opened to receive monies from her friends for her to purchase goods in Hong Kong. The monies she received from Western Union were also sent by her friends. She had spent all the monies on entertainment. In September, she started to pay D3 HK$6,000 per month for the use of the premises. She met D2 in the premises in October 2008.

15.  Under caution, D2 refused to answer questions.

16.  Under caution, D3 said he was asked to look after the premises for HK$10,000 per month.

17.  Under caution, D4 said he came to Hong Kong for sightseeing. The monies he received from Western Union were sent by his mother to pay for his expenses in Hong Kong. The bank accounts were opened to facilitate the receipt of monies sent by his mother.

18.  Under caution, D5 said that he was in the family business of importing frozen food in Taiwan. His father owned the company. The company would use his (D5 s) bank accounts for the operation of the company. He arrived in Hong Kong on 3 December 2008. He opened 6 bank accounts in Hong Kong. An accounting staff member in the company would inform him when clients deposited monies into the bank accounts. He could not provide any further details to identify that person in the company. He would withdraw the monies. He came to know a man in a fast food shop in Tsimshatsui. He withdrew HK$700,000 to HK$800,000 from one of his bank accounts so that the man could start a fashion business. He refused to give further information of the man. He had lost HK$10,000 in the casino in Macau on 14 December 2008. Between 4 and 17 December 2008, he had withdrawn about HK$1 mil. from his bank accounts. Apart from investing in the said fashion business, he had spent all the monies on entertainment and shopping. He had recorded the transactions in his notebook for self-reference.

Quantum laundered

19.  D1 received monies in various currencies, namely Hong Kong, Euro, Canadian, Australian, and British, deposited into her 4 bank accounts or in cash via Western Union in the total equivalent value of about HK$2.5 mil. She opened the 4 said accounts in June 2008.

20.  D2 received monies in various currencies, namely Hong Kong, Euro, Australian, and Swedish, deposited into her 5 bank accounts or in cash via Western Union in the total equivalent value of about HK$1.9 mil. She opened the 5 said accounts in June 2008.

21.  D3 received monies in the total value of HK$295,560.

22.  D4 received monies in various currencies, namely Hong Kong, Euro, Canadian, Australian, British, Singaporean, and American, deposited into his 3 bank accounts or in cash via Western Union in the total equivalent value of about HK$2.3 mil. He opened the 3 said accounts on 8 October 2008.

23.  D5 received monies in various currencies, namely Hong Kong, Euro, Canadian, Australian, Singaporean, and American, deposited into his 6 bank accounts or in cash via Western Union in the total equivalent value of about HK$1.5 mil. He opened the 6 said accounts in December 2008.

Mitigation put forward

24.  D1 is now 25 years of age. She was born and lived in Taiwan. She completed junior high school education. She worked as a technician in an electronic company. She has a clear record. She received the equivalent of HK$20,000 inclusive of expenditure and reward for the role in the present offence. Her mitigation letter reveals that she used to live with her working parents and her two younger brothers. Her mother has been suffering uterine fibroid and needs long-term medical treatment. Her mother is soon to have a serious medical operation on the uterus.

25.  D2 is now 26 years of age. She was born and lived in Taiwan. She completed high school education. She worked as a technician in an electronic company. She was married but separated from her husband. Her two sons were in the charge of her mother. She has a clear record. She received the equivalent of HK$10,000 inclusive of expenditure and reward.

26.  D3 is now 20 years of age. He was born and lived in Taiwan. He completed high school education. He worked as tattoo trainee. He used to live with his mother and grandfather. He has a clear record. He received the equivalent of HK$10,000 inclusive of expenditure and reward.

27.  D4 is now 25 years of age. He was born and lived in Taiwan. He completed high school education. He worked as an aluminum window worker and then a deliveryman in a metal ware company. He used to live with his mother, younger brother and younger sister. He has a clear record. He received the equivalent of HK$20,000 inclusive of expenditure and reward.

28.  D5 is now 24 years of age. He was born and lived in Taiwan. He completed high school education. He worked in his father s food business. He used to live with his parents and younger brother. He has a clear record. He was promised a reward of the equivalent of HK$25,000. He did not get it.

Sentencing principles

Approachin sentencing money launderers

29.  In HKSAR v Javid Kamran CACC400/2004, Yeung JA outlined the approach for sentencing money launderers:

30.  Money laundering is a very serious offence as it is an attempt to legitimize proceeds from criminal activities.

31.  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. This is even more so when the laundered money is the proceeds from drug trafficking activities as it is often commented: Those who launder money from drugs are nearly as bad as those who actually deal in them. It is merely one step along the line.

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

33.  The maximum sentence for a money laundering conviction on indictment is a fine of $5 million and 14 years imprisonment, which is perhaps a reflection of how such an offence is viewed.

34.  On the other hand, it is not feasible to lay down guidelines for sentence of money laundering offence, as there is a very wide range of culpability.

35.  Other factors include the nature of the offence that generated the laundered money, the extent to which the offence assisted the crime or hindered its detection, the degree of sophistication of the offence and perhaps the defendant s participation, including the length of time the offence lasted and the benefit he derived from the offence.

30.  In HKSAR v Lee Wai-yiu CACC 100/2006 where Wright J regarded that:

64.  A review of other cases in which sentences have been considered demonstrates that the quantum of the moneys laundered is a factor which may properly be considered for the purposes of the sentence.

Relevance of knowledge of underlying crime

31.  Counsel in mitigation submits that the Defendants sentences should be at the lower end because they were foot soldiers who had no knowledge of the underlying crime. I think this is a valid submission if it means there is no aggravating factor based on knowledge of the underlying crime. In HKSAR v. Xu Xia Li & Another [2004] 4 HKC 16, the two applicants sought to appeal against a 3-year imprisonment imposed after trial for offences of laundering HK$11 mil. and HK$3 mil. respectively. The judge at trial had found they had not been aware of the exact nature of the underlying indictable offence. They argued that such circumstance should have been a mitigating factor. In rejecting that argument Woo JA said

15.  [I]n our judgment, the nature of the indictable offence from which the money was derived should be of no particular significance in sentencing, save that if the defendant knew that the money was derived from very serious crimes, it would be an aggravating feature to be taken into account in sentencing.

32.  Such observations were reaffirmed in HKSAR v Chen Szu Ming [2005] HKEC 2085 and HKSAR v Fan Shek Hung [2008] 4 HKLRD 465.

Examples of sentences passed

33.  In HKSAR v Shing Siu-ming and others [1999] 2 HKC 818, there was a major drug trafficking conspiracy case over a lengthy period with an international element. The 1st and the 2nd applicants rendered considerable assistance to the drug trafficker and took an active part in sharing the proceeds of over HK$2.6 mil. and over HK$1.5 mil. respectively. A starting point of 7 years imprisonment was considered appropriate.

34.  In HKSAR v Mak Shing CACC 322 of 2001, amajor theft in China involved about HK$15 mil. Theappellant handled in his 3 bank accounts about HK$2.5 mil. A starting point of 4 years was considered to be apposite to reflect the seriousness of the offences in which there was an international element. The Court commented that Hong Kong had to take a very serious view of such matters if its international reputation was not to be sullied.

35.  HKSAR v Jain Nikhil & Another CACC 405/2006 was a case of the infamous Nigerian money transfer fraud . The two appellants were charged with conspiracy. Victims were beguiled into putting forth fees to assist the appellants to get a huge inheritance. The appellants were of Indian nationality. They came to Hong Kong specifically to perpetrate the crime. This was regarded an aggravating factor. One of the charges involved over HK$6 mil. A starting point of 5 years imprisonment was upheld by the Court of Appeal.

36.  HKSAR v Zhan Jian Fu CACC 258/2007 presented facts resembling our present case. The appellant in that case was a Mainlander. Over a period of 4 months, he had received HK$2 mil. in his bank accounts from Taiwan where a scam took place. Victims were told that they had won a lottery prize. They were asked to remit fees into the appellant s bank account to get the prize. It was common ground that he did not know of the scam. A starting point of 3 years was upheld by the Court of Appeal.

37.  In HKSAR v LEONG Wai Keong CACC 476/2007, the appellant set up 3 BVI companies with corresponding bank accounts in Taiwan to receive monies in the sums of HK$11 mil., HK$14 mil., and HK$4.6 mil. respectively pertaining to each of the three charges. A starting point of 6 years imprisonment, to be reduced by 1 year for delay in prosecution, was approved by the Court of Appeal.

38.  In HKSAR v Yam Kong Lai [2008] 5 HKLRD 384, the appellant was at the receiving end of a series of international transfers for a dormant deposit of the equivalent of about HK$4 mil. stolen by acts of forgery. The Court of Appeal reduced the starting point from 5 years to 4 years on the ground that the underlying offence of theft was not of a nature so serious as to amount to an aggravating factor.

Relevance of reward

39.  Counsel in mitigation submits that in committing the present offence the Defendants were only given or promised meagre rewards. In HKSAR v Chen Szu Ming [2005] HKEC 2085, McMahon J, in delivering the judgment of the Court of Appeal, dealt with this aspect of mitigation:

23. We might add that we do not think the fact that the applicant said in his cautioned statement he was promised only $10,000 is a mitigating factor. Whatever sum the applicant was promised or hoped to receive, the reality is the offence of money laundering to which he was central was very serious. The amount of any reward he was to receive was insignificant as a sentencing factor.

Reduction of sentence due to delay in prosecuting

40.  Counsel in mitigation submits that the consolidation of D4 s case (DCCC 1256/2008) and D5 s case (DCCC 295/2009) with D1 C D3 s case (DCCC 1255/2008) has caused delay in prosecuting. D1 C D3 have indicated a guilty plea at the earliest opportunity. Although D1 C D3 had not objected to the consolidation of D4 s case in January 2009, they had objected to the consolidation of D5 s case in April 2009. Counsel argues that there was a delay of 2 months, namely from April to June 2009.

41.  In R v Barrick (1985) 81 Cr App R 78, the Lord Chief Justice suggested that a delay of two years may be taken into account.

42.  The obvious complaint due to delay seems to be the stress suffered by the accused. In HKSAR v Chan Yuk Kwan [2001] HKEC 769, there was an unexplained delay on the part of the prosecution to charge the appellant two and a half years after arrest. He had admitted his guilt when he was arrested. Stock JA, in delivering the judgment of the Court of Appeal, recognized it as a mitigating factor:

21. Significant delay may well in a particular case go in reduction of sentence, because of the stress occasioned when a case hangs over the head of a person awaiting trial, stress over and above that caused where there is no prolonged delay.

43.  Further, the accused may have met with a fundamental change in personal circumstances. This was accepted by Power VP in SJ v Hui Siu-man [1999] 2 HKLRD 236. He said at 241:

Here, it was nearly one year but when one considers that the defendant was originally allowed to think that the matter was ended with his dismissal [from employment of the victimized bank], I think that the delay may properly be taken into consideration.

I also, of course, must take into consideration the fact that the defendant has lost a job of long standing with the bank and he is probably not going to be able to get a decent job in any kind of accounting business or position ever again. He is reduced to working as an accounts clerk in a karaoke nightclub which is no doubt a position of trust but it is hardly the same as working for a bank.

44.  There is so far no evidence of either any stress caused to the Defendants or any change in personal circumstances as a result of the 2 months delay.

The sentence I pass

45.  D1, D2, D4, and D5 were all active players, though they did not know of the underlying scam. The sum involved was substantial, though not of the hugest sum. There was an international element. Their relatively meagre rewards are not a mitigating factor. Nor is the alleged 2-month delay in prosecuting. I take 3 years imprisonment as the starting point. I give one-third discount for their pleas of guilty and clear record. There are no other mitigating factors. Each is sentenced to 2 years.

46.  D3 s role was similar to the others except that his role was less serious. He kept HK$0.3 mil. cash but did not operate any bank accounts. I take 15 months imprisonment as the starting point. I give one-third discount for his plea of guilty and clear record. There are no other mitigating factors. The sentence is 10 months.