HKSAR v. LUO JUNCHENG

HCCC 159/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CRIMINAL CASE NO 159 OF 2012

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Transcript of the Audio Recording
of the Sentence in the above Case

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COURT: The defendant has been convicted after trial by a jury of one count of dealing with property known or reasonably believed to represent proceeds of an indictable offence, contrary to section 25(1) and (3) of the Organised and Serious Crimes Ordinance, Cap.455.

The Particulars of the Offence is that between the 14th day of August, 2009 and 13th day of April, 2010, both dates inclusive, in Hong Kong, knowing or having reasonable grounds to believe that property, namely the sum of $13,122,510,812.36 Hong Kong currency, in whole or in part, directly or indirectly, represented the proceeds of an indictable offence, dealt with the said property.

The maximum sentence allowed under the law is 14 years’ imprisonment and $5 million fine.

In considering sentence, I have had the benefit of the case heard by the Court of Appeal in HKSAR v a male known as Boma Amaso [2012] 1 HKC 504. The Court of Appeal in that case recognised that guidelines were inappropriate due to a variety of circumstances which prevails in money-laundering cases. However, the Court of Appeal recognised that there were some factors which would assist a sentencing court when considering sentence in money-laundering cases.

The Court of Appeal said that apart from considering the maximum sentence allowed under the law, the second factor to consider is that deterrence was paramount in this type of cases.

The third factor to consider is the amount of money, although it is a significant factor, it is not the be all and end all.

The Court of Appeal also said if the defendant knew of the predicate offence that would make him more culpable than if he did not, and in this case I accept that there is no evidence the defendant knew what the predicate offence was.

The Court of Appeal also considered the Australian legislation in this type of offence and recognised that, and I quote,

“There was unassailable logic in the scheme of the Australian legislation which drew a distinction in culpability between the person who intentionally dealt with the proceeds of crime, meaning the person who knew or believed that the funds in question were the proceeds of crime, the person who was reckless as to that question and the person who was negligent about it.”

Then the Court of Appeal stressed that the sixth matter a sentencing court should consider was whether there was an international dimension because that would be a significant aggravating feature and this would include money laundered from, and I quote, “or for those operating in the Mainland.”

In this case, of course, there is evidence that the account of Ace Creation, even according to the evidence of the defendant, had originated from the Mainland, the instructions were from the Mainland, and even in the senior treasury accountant’s report he said that the transactions of Ace Creation’s account some were involving overseas accounts.

In this case there was also evidence from the senior treasury accountant that there was one deposit made at the counter of $1 million by a person holding a Macau identity card and the source of that $1 million was said to be a casino. So in this case there is an international dimension which is an aggravating feature.

The next factor the Court of Appeal said a sentencing court should consider was whether this scheme was highly sophisticated and that would include the degree of planning and whether deceit was practised to achieve its objective.

Mr Tse submitted that this was not a sophisticated scheme because they used the person of the defendant with his background, a 19-year-old, to open the account.

I do not agree because the fact that the defendant was used to open the account of the company was perhaps to throw the Chiyu banking staff off the scent, because as can be noted, the Ace Creation account was opened without any money and subsequently $1,000 cash was put in in order to start the account on 14 August.

There was certainly a degree of planning because the company was opened through a secretarial company. The defendant signed the documents for the opening of the company in Shenzhen, he says, and it was only after opening the Ace Creation company that he then came down armed with all the company documents to open the bank account of Ace Creation.

The next factor the Court of Appeal suggested a sentencing court to consider was whether this was an offence committed by or on behalf of an organised criminal syndicate. There is no evidence in this case of such.

Then it is also relevant, the Court of Appeal said, to take into account whether there was one transaction or many and the length of time over which the offence was committed.

In this case, the offence took place over a period of 8 months and there were 4,875 deposits totalling $13,122,360,812 paid into the account and 3,521 withdrawals totalling $13,117,579,257 paid out of the account, so the average daily deposit was a little over $54 million and the average daily withdrawal was over $53 million.

Finally, the Court of Appeal then says the sentencing court should have regard to the role of the offender and the Court of Appeal said, and I quote,

“The director of a laundering operation or scheme should attract a greater sentence than a person engaged by him although sentences should be sufficient to deter those who might be prevailed upon by directing minds.

In the case of a person down the chain, the court should have regard to whether a benefit had been received, and if so, the nature and size of the benefit, but within the category of persons down the chain, there were gradations of culpability, so for example, the drug addict or petty crook who was paid a small sum to open an account and hand over its operation to another with no more participation and no more knowledge than it was going to be used for some sort of crime was much less culpable than an offender of a different sort not used in that way.”

And I conclude my reference to this Court of Appeal case with the words of Stock VP in Boma’s case at paragraph 31 where his Lordship said,

“Given the number of cases that have come before the courts, given the huge sums involved in quite a few of them, given that laundering the proceeds of offences, often very serious offences indeed, it is designed by its very nature to enable criminals to avoid detection, and given the signalled importance of preserving Hong Kong’s reputation as an international financial centre of integrity and given the further vital importance of international co-operation in the fight against money-laundering and therefore against crime which is thereby encouraged, the question whether the maximum sentence available to the courts of this jurisdiction is one that is adequate is a matter upon which we have not deliberated but it may merit some debate and consideration by policy makers.”

I cannot find a case in Hong Kong for this type of offence which is anywhere near the amount of money involved in this case before me and therefore the words of Stock VP are even more urgent in view of the fact that it seems that larger and larger sums are being converted in money-laundering.

Also particularly in this case it seems that a large number of registered remittance agents were used and I would suggest that the authorities look into this question of registered remittance agents’ role in money-laundering cases as well.

Now, in this case I also do consider the personal background of the defendant, that he was aged 19 when he first opened the Ace Creation account, and that he has a clear record in Hong Kong. I accept that he is not the mastermind as I do accept what Mr Tse had said in the trial, that there were clearly some transactions - I think about 20 transactions - which were done online at times when the defendant was away from a computer and in Hong Kong, so clearly there were others who were manipulating the Ace Creation account.

Taking into consideration the facts in this case, I would consider that a sentence of 10 to 12 years’ starting point would be appropriate.

Although I accept that the defendant is far down in the food chain but his role is slightly more than a person who opens an account and lends it to someone else to use because clearly during that 8 months he had opportunity and means to find out what was happening in the bank account. He participated at least on one occasion in physically taking money, some $2.6 million, from his personal bank account and depositing it into the Ace Creation account.

I do not consider it appropriate, however, to set the starting point at 14 years because that is the maximum and I must consider that there may be other cases which may be more serious than the present one, although this is the most serious I have seen of this type of offence in a court in Hong Kong.

The only mitigation in this type of offence for a person like the defendant is to co-operate with the authorities to bring those responsible, the mastermind, to court.

So having considered the facts in this case and also the personal particulars of the defendant, I consider that an appropriate sentence would be 10½ years’ imprisonment.

The defendant goes to prison for 10½ years.