HKSAR v. TO KIT YAN AND ANOTHER

DCCC 1267/2010

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 1267 OF 2010

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REASONS FOR SENTENCE

1.  The defendants plead guilty to one joint charge that between the 1st July 2010 and the 27th September 2010 they conspired together and with persons unknown to deal with property knowing or having reasonable grounds to believe the property represented the proceeds of an indictable offence, contrary to section 25(1) and (3) of the Organized and Serious Crimes Ordinance, Chapter 455 and sections 159A and 159C of the Crimes Ordinance, Chapter 200.

2.  Briefly between the 8th and 12th July 2010 a total sum of HK$1,127,470 was deposited into D1’s bank account held with the Hang Seng Bank. A cheque in the sum of $130,000 and cash in the sum of $140,000 were deposited into the account on the 8th and 9th July respectively. On the 12th July the sums of HK$468,500 and $389,000 were fraudulently transferred by persons unknown to D1’s account by way of Interbank Fund Transfer from the savings account of Mr CHOI Pui-sum held with HSBC.

3.  Between the 8th and 13th July the sum of $476,000 was withdrawn in cash and $20,000 by ATM. The cheque was dishonoured. Miss Yew explained this was because the cheque bore no payee and that the signature was also a forgery of Mr Choi’s signature. A table of the deposits and withdrawals is annexed to the summary of facts.

4.  Mr Choi discovered the fraudulent transfers in July and made a report to the police on the 15th July as a result of which D1’s bank account was frozen, at a time when there was a credit balance of $501,470.

5.  On the 19th July when D1 attempted to withdraw $200,000 from her account at the Tai Po branch of Hang Seng Bank, the bank staff alerted the police. However D1 fled leaving behind her bankcard, acknowledgement of application for an identity card and a signed withdrawal slip.

6.  D1 was arrested on the 2nd September 2010 when she claimed she was introduced by D2 in July to sell her bank account for $3,000. In the following days the defendant became aware of money having been deposited into her account, which monies she withdrew at the request of D2 and handed over to D2. On the 19th July D1 went to the bank to withdraw some money but on seeing the police left.

7.  D2 was arrested on the 27th September 2010 and claimed he was only the “middleman” for a person called “Ah Wor” who asked D2 to find someone who would allow their bank account to be used for a few days. D2 suspecting that the account would be used for illegal purpose introduced D1 for a reward of $1000, which sum he never received. D2 also helped in asking D1 to withdraw the money from the account and went with D1 to the bank on the 12th and 19th July.

8.  Money laundering is a serious offence for which deterrent sentences are required (see HKSAR v XU Xia-li & another [2004] 4 HKC 16 at paragraph 18). In HKSAR v Javid Kamran CACC 400/2004 the court, stressing the need for deterrent sentences, said that it was not possible to lay down guidelines, as there is a very wide range of culpability. The court identified a number of factors relevant in determining the culpability of a defendant, including 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. Also see HKSAR v LEONG Wai-keong CACC 476/2007 cited by Mr Parry

9.  In Secretary for Justice v Jerome Yuval Arnold Herzberg [2010] 1 HKLRD 502 the Court of Appeal said that other relevant factors are the amount of money involved; the degree of sophistication of the operation; the defendant’s knowledge of the underlying offence and whether there was an international element to the commission of the offence.

10.  In HKSAR v HSU Yu-yi [2010] 5 HKLRD 545 the Court of Appeal reviewed a number of cases, includingXU Xia-li and Javid Kamran. The court at paragraph 13 highlighted five factors to be considered in 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 pre 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.

11.  In passing sentence I take into account everything said on behalf of the defendants by Mr Boyton and Mr Parry. Mr Boyton and Mr Parry both submit there is no evidence that the defendants were aware of the source of the money deposited into D1’s account and that they are therefore to be sentenced on the basis only of having reasonable grounds to believe the monies deposited into D1’s account represented the proceeds of an indictable offence. Whilst some of the money was the proceeds of fraud from Mr Choi’s account,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 the money was derived from very serious crimes, it would be an aggravating feature (see XU Xia-li at paragraph 11). This approach has been followed, for example, in HKSAR v CHEN Szu-ming CACC 270/2005 and HKSAR v YAM Kong-lai [2008] 5 HKLRD 384, the courts emphasising that the defendant is to be sentenced on the facts of the money laundering charge only and not on the facts of the underlying offence.

12.  Mr Boyton submits D1’s role was minor. I disagree. The defendants are charged with conspiracy to deal with the monies deposited into D1’s account. Whilst their roles were different in carrying out that agreement I am satisfied no distinction should be drawn between D1 and D2 in passing sentence. D2 agreed to find someone who was willing to allow their bank account to be used for a few days, whilst D1 agreed to sell her account. The selling/lending of a bank account is an essential part of money laundering.

13.  Further D1 did not simply sell her account but assisted in the withdrawing of the money. Whilst D2 does not admit to the role attributed to him by D1 and is to be sentenced only on the facts admitted by him and not what D1 says his role was, D2’s role was not simply limited to introducing D1. D2 was clearly more actively involved as is shown by the fact that on at least two occasions he accompanied D1 to the bank when withdrawing monies from the account.

14.  Both Mr Boyton and Mr Parry submit the defendants have obtained little benefit. Mr Boyton submits D1 only gained $3000. This however overlooks that D1 transferred $20,000 in repayment of a debt (see paragraph 6(d) of the Summary of Facts). D2 was to be paid $1000 for introducing D1 but never received this sum. Mr Parry accepts D2 did receive $30,000 (see paragraph 7(e) of the Summary of Facts).

15.  Whether or not the defendants received a reward is insignificant as a sentencing factor for the reality is the offence of money laundering is very serious (see HKSAR v CHEN Szu-ming at paragraph 23). As seen in the recent cases of HSU Yu-yiand HKSAR v HOU Shun-hsiungCACC 472/2009 the amount of money involved is a major consideration and not the amount of benefit received by a defendant.

16.  The selling/lending of bank accounts to others facilitates money laundering by disguising the true owner of the money and thus making difficult the detection of crime, whilst at the same time undermining the integrity of the banking system by allowing someone other than the true holder of the account to use the account. I am satisfied a deterrent sentence is required.

17.  The cases reviewed in HSU Yu-yi show that a starting point of between 3 and 5 years imprisonment has been applied to amounts ranging between $1 and $15 million. Each case is however to be decided on its own facts and circumstances.

18.  I accept the submission of Mr Parry that the present case is not as serious as that in Javid Kamran, where the Court of Appeal held that a starting point of 3 years was appropriate for dealing with $1,190,264 knowing the money was the proceeds of drug trafficking. In HKSAR v Abayomi Bamidele Fayomi CACC 197/2005 the court upheld a starting point of 3 years and 6 months imprisonment for dealing with $1,243,261.78 which sum was transferred from the United States of America, thereby adding an international dimension to the case.

19.  The amount subject of the charge is HK$1,127,470. Mr Boyton submits the amount of the dishonoured cheque in the sum of $130,000 should not be taken into account as the defendants could never have dealt with this sum of money. The charge being one of conspiracy I am satisfied I can take into account the total amount of monies deposited into the account, whether or not the cheque was dishonoured. In any event as readily accepted by Mr Boyton, even if this sum is not taken into account there will be no difference in sentencing for sums of $1.127 million and $997,000.

20.  Taking into account that the defendants agreed to deal with the money deposited in D1’s account, which deposits over a period of five days in July 2010 totalled HK$1,127,470, I am satisfied a starting point of 2 years and 6 months imprisonment is appropriate. Giving the defendants full credit for their pleas of guilty they are both sentenced to 1 year and 8 months imprisonment.

21.  D1 is currently serving a sentence of 22 months imprisonment imposed on the 17th December 2010 in DCCC 1248/2010 for one offence of using a forged credit card. I note that the defendant has applied for leave to appeal against sentence, which application for leave is listed for hearing on the 19th April.

22.  I have had the opportunity of reading the case file including the amended summary of facts, and the reasons for sentence. Briefly on the 29th May 2010 the defendant used a forged credit card in her name to obtain goods valued just over $50,000. The sentencing judge took a starting point of 3 years imprisonment which was reduced to 2 years for the plea of guilty. The sentence was further reduced by 2 months to 22 months because the defendant surrendered to the police and co-operated with the police during investigation. The defendant knowing she was a wanted person surrendered to the police on the 2nd September 2010 in respect of both cases. This is accepted by the prosecution.

23.  The two offences are entirely separate and distinct for which consecutive sentences are appropriate. I am satisfied had both cases been heard at the same time an overall starting point of 5 years and 6 months imprisonment would have been excessive. I am satisfied a total sentence after trial of 4 years and 9 months imprisonment would have been appropriate, making a total sentence of 3 years and 2 months imprisonment on a plea of guilty. I am further satisfied a total reduction of 4 months imprisonment should be given on account of the defendant surrendering to the police, making a total sentence to be served by D1 of 2 years and 10 months imprisonment.

24.  D1 is sentenced to 1 year and 8 months imprisonment, 12 months consecutive and 8 months concurrent to the sentence she is now serving.

25.  D2 is sentenced to 1 year and 8 months imprisonment.