HKSAR v. LAM KIT WAI AND OTHERS

DCCC 873/2018 &

DCCC 757/2019

(Consolidated)

[2021] HKDC 278

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NOS 873 OF 2018 & 757 OF 2019

________________________

________________________

________________________

REASONS FOR VERDICT

________________________

1.  All the remaining 8 defendants face money laundering charges on the basis of various Bank accounts and Jockey Club betting accounts operated by them, during a period from January 2009 to August 2012. It is said the large sums transacted in those accounts bear no relation to the actual resources of any of the defendants. With the exception of D10 it is not disputed that the sums in their accounts which were dispersed through their bank accounts and HKJC (Hong Kong Jockey Club) accounts, were not funded from the actual resources of those defendants.

2.  Save for D10 the defendants maintain that their sums were used to fund betting on behalf of others at the HKJC.  That accordingly no irresistible inference can be drawn that they had grounds to believe in a criminal origin for those monies.

3.  D10 maintains that the monies in his accounts were obtained through lawful and legitimate business.

Background

4.  On 24 January 2012, Police conducted an operation at a premises on the 7^th floor of Si Toi Commercial Building at 62-63 Connaught Road West Hong Kong.  At the time of the said raid D1, D7 and D8 were present.  Accounting books and payment records relating to D1, D2, D3, D5, D6, D7, D8 and D9 were seized.

5.  Furthermore, there were written records of Jockey Club fixtures and the betting account numbers of D1, D2, D3, D5 and D6 and bank account numbers of D1, D7 and D9.

6.  Altogether 298 HKJC betting account deposit slips with a face value of HK$115,160,100 were seized.  They had been deposited by D1, D4 and D9 into the HKJC betting accounts of D2, D3, D5, D6 and D7.

7.  The premises was the business address of Fong Teng (HK) Company Limited.  D1 held a 33% share along with his father.  A company solely owned by D1, Kar Fong Trading Company had signed the tenancy agreement for the premises.

The prosecution case and evidence

8.  The prosecution primary relied upon the activities in the defendants Bank accounts and Jockey Club accounts to establish their case.  They called Mr Cosimo Borrelli as an expert forensic Accountant to provide analysis of these accounts and to create details of funds flowing between the various accounts.

9.  He concluded that a number of common features existed in the defendants accounts that was illustrative of money laundering.  These means were:-

(i)  a large disproportion between the known resources of the defendants and the sums of money in their accounts;

(ii)  the fact that a large proportion of the transactions were in cash;

(iii)  funds were paid by remittance agents which conceal the original source of the funds;

(iv)  layering of transactions;

(v)  use of HKJC accounts belonging to other parties by defendants who maintained their own accounts;

(vi)  large amounts of betting transactions in defendants’ HKJC accounts that bear no relation to their known means;

(vii)  large transactions and infusions of money before the commencement of a horse racing season; and

(viii)  large transactions before the start of individual horse racing meetings.

10.  Save for (iv) for all but D10 these indicia are not disputed but are explained by the ‘betting business’ conducted by them.

The defendants - their individual Charge and the relevant bank account and HKJC accounts

D1 - faces Charges 1 – 5 and Charge 25

11.  Charges 1 – 4 cover individual bank accounts in D1’s name.  Charge 5 is in respect of D1’s HKJC account.  Charge 25 is in respect of a bank account in D9’s name over which D1 was granted a power of Attorney.

12.  Brief details of the accounts are as follows:-

Charge 1	BOC Saving Account No 376
	Opened year 2000 by D1
	Period: 11 March 2011 to 6 May 2011
	Total deposits during period HK$29,343,799.33
	Reduced to zero by 6 May 2011
Charge 2	Hong Kong Bank Account No 860
	Opened June 2005
	Period: 1 August 2010 to 19 March 2012
	Total deposits during period HK$329,046,173.39
	On 19 March 2012, the account balance was reduced to zero
Charge 3	Hang Seng Bank Account No 198513
	Opened 15 December 2003
	Period: 14 August 2010 to 20 March 2012
	Total deposits during period HK$61,674,352
	The account was reduced to zero on 19 March 2012
Charge 4	Nanyang Commercial Bank Account No 893
	Account opened by D1 on 15 March 2009
	Period covered 1 April 2009 to 6 May 2011
	Total deposits during the period amounted to HK$15,002,813.73
	With zero balance on 6 May 2011
Charge 5	relates to D1’s HKJC account between 5 September 2010 to 1 July 2011
	Totally 2903 bets were placed totaling HK$232,168,000 with an average betting rate per month of HK$23,216,860
	9 deposits were placed in the account for HK$74 million, the amount in the Charge.

13.  D1 also faces Charge 25, a joint Charge with D9 this is dealt with later.

14.  During this period, D1 was employed by Sunny Time Limited in 2007/2008 with an annual salary of HK$300,000.

15.  From 2008 to 2012, D1 was not employed.

16.  In 2012/2013, D1 was employed by Fong Teng with an annual salary of HK$220,000 per year.

17.  Apart from his shareholding in Fong Teng and his ownership of Kar Fong Trading Company, D1 also held a 50% shareholding in Fortune Rank International Limited.  The reported business activity of Fong Teng and Fortune Rank was said to be property investment.  The assessable profits in HK$ for the two companies for tax purposes was as follows:-

18.  D1, directly or through his companies, owned or had an interest in 6 properties one of which was sold during the investigation period by Fortune Rank with a gross profit of approximately HK$4.08 million.  In so far as information was available, the properties were however let, the annual rental income bonus between HK$90,000 (lowest) and HK$264,000 (highest.)

19.  For the tax years 2007-2013 D1’s total possible income ranged between nil (2009/2010) and HK$2,634,924.  The average monthly income was HK$51,786.

20.  At the commencement of the investigation period D1’s cash balances in the bank and HKJC accounts were approximately HK$4 million and the annual income generated from D1’s employment and his, direct or indirect, ownership of property was less than HK$220,000 per year.

21.  During the investigation period D1’s highest cash balance in the bank and HKJC accounts ranged between HK$6 million and HK$21 million, however the average annual income generated from employment and ownership of property totaled less than HK$825,000 per year.

22.  The conclusion reached by the expert was that the cash balances in D1’s accounts were not compatible with his known means and resources D1’s bank accounts had an average monthly deposit and withdrawal of HK$10,133,955 for deposits and HK$10,161,300 for withdrawals.

23.  The expert concluded that the accounts were conduits for the flow of funds with 21% of the withdrawals being made in cash or cashiers orders.

24.  Some HK$61,800,000 was paid into the HKJC betting account of D2, D3, D6, D10, Yang Guibin and D1’s father despite D1 having his own HKJC betting account.

25.  HK$5 million was paid to D1’s own HKJC betting account.

26.  HK$83,209,262 was paid to other accounts held by D1 or withdrawn in cash with over HK$276 million to unidentified persons or companies or companies with no relation to D1.

27.  In D1’s HKJC betting account there was an annual monthly betting amount of HK$31,989,574 and deposits of HK$45 million from D7, D9 and D10 who had their own HKJC accounts.

D2

28.  D2 faces the following charges 6, 7, 8, 9, 10, 11, 12 and 13.

29.  Charges 6-12 are based on individual bank accounts of D2 and his company King Tat Holding Limited.  The thirteenth charge is based on D2’s HKJC account.

30.  D2 also faces joint charges in Charges 27 and 28 with D10 his elder brother.  The bank accounts are as follows:-

Charge 6	Hang Seng Bank Account 747
	opened by D2 on 6 February 1995 as sole signatory
	Period covered in 16 charge: 7 July 2010 to 31 May 2012
	Total deposits into the account during the period were HK$98,205,212.91.
Charge 7	This charge is based on the Hang Seng Bank account 366
	Account opened on 17 July 2006. Period covered 16 August 2010 to 12 June 2012.
	Total deposits into the account during the period were HK$121,203,563.88.
Charge 8	This charge is based on Bank of China account 982.
	Opened on 4 January 2006, D2 was the sole signatory
	Period covered 5 January 2010 to 27 January 2011. Total deposits were HK$131,941,074.69 during the relevant period.
Charge 9	Bank of East Asia Account No 639
	D2 opened the account as sole signatory on 9 December 2011
	Period covered from 9 December 2011 to 11 June 2012
	Deposits into the account in the relevant period amounted to HK$13,304,983.49.
Charge 10	Bank of Communications Account No 293, the relevant period being 5 January 2012 to 31 May 2012
	The account was opened on 5 January 2012 and D2 was the sole signatory
	Total deposits to the account during the relevant period were HK$64,605,285.80.
Charge 11	This charge concerns HSBC Account No 202 from 13 March 2012 to 5 June 2012
	The account being opened on 13 March 2012 by D2 as sole signatory
	During the relevant period a total of HK$5,734,406.58 passed through the account.
Charge 12	Concerns Hang Seng Bank Account No 367 from 30 October 2010 to 31 May 2012
	The account is held by King Tat Holdings Limited a company 100% owned by D2. D2 is the sole signatory to the account.
	During the relevant period deposits and interest in the account amounted to HK$22,654,312.71.
Charge 13	Relates to D2’s HKJC betting account from the period 2 September 2010 to 18 June 2012.
	In the 2010 to 2011 racing season, there were totally 20 deposits of HK$27.5 million. There was an average monthly betting rate of HK$3,955,500.
	In the 2011 to 2012 racing season, there were 17 deposits totaling HK$56,610,000 with an average monthly betting rate of HK$25,863,889.

31.  D2 also faces Charges 27 and 28 with D10.

32.  D2 was arrested at his residential address on the 24 June 2012 for the offence of money laundering.  Found in his possession and/or at the premises were banking documents relating to accounts in the name of D10 including Bank of China cheque books, some of the cheques being pre- signed, a monthly bank statement and a local interbank transfer application form.  The pre-signed cheques and banking documents form part of the facts pertaining to the 27^th and 28^th charges.  Some of the items seized at the premises at Si Toi Commercial Building also related to D2.

33.  The King Tat Food Centre had assessable profits of HK$672,491 for the tax year 2007/08 and HK$192,373 for 2008/09 with gross profits of HK$2.284 million and HK$3.020 million respectively.

34.  King Tat Holding Limited (which operated the King Tat Food Centre from the tax year 2009/10 onwards) had the following assessable profits:-

2009/2010	2010/2011	2011/2012	2012/2013
HK$202,184	HK$200,869	HK$360,047	HK$94,674

The maximum gross profit for any given year was HK$3.97 million.

35.  D2 was employed as a director of King Tat Holdings.  King Tat did not own any property in Hong Kong.

36.  At the commencement of the investigation period D2’s cash balances in his accounts averaged HK$400,000 and his annual income totaled less than HK$450,000.

37.  During the investigation period the highest cash balances ranged between HK$7.9 million and HK$22 million.

38.  D2’s monthly declared income averaged HK$260,810 per year or HK$21,734 per month however, his average monthly deposits into and withdrawals from his bank accounts totaled respectively HK$11,461.851 and HK$11,349,510 which is 527 times and 522 times his average monthly income such that the magnitude of the transactions in the accounts is not commensurate with his financial position.

39.  The fact that the average deposits and withdrawals are virtually the same illustrate the accounts were merely used as temporary repositories/conduits for the flow of funds rather than for savings purposes.

40.  41.2% of the withdrawals of the HK$488,028,911 were made by cash or cashier orders.  This represented 10.6% of the total withdrawals which was an unusually large amount of cash for an individual to transact.

41.  The transactions and/or fund flows from (a) remittance agents; (b) other defendants; (c) persons or companies related to D2; (d) persons or companies which do not appear to be related to D2 and/or (e) persons or companies which could not be identified from the documents totaled HK$492,859,577.

42.  From the deposits HK$368,412,335 was paid (directly or indirectly):-

(i)  HK$137,670,500 into HKJC betting accounts belonging to other persons (including but not limited to D3, D4, D5, D6, Chen Xiadong, Yang Guibin, WP and D1’s father) notwithstanding D2 held his own HKJC betting account.

(ii)  HK$66.73 million to D2’s own betting account.

(iii)  HK$25,471,324 to other accounts held by D2 or withdrawn by way of cash.

(iv)  HK$7,921,999 to persons or companies related to other defendants.

(v)  HK$23,614,154 to persons or companies which do not appear to have any relationship with D2.

(vi)  HK$107,004,358 to persons or companies which could not be identified from the documents.

43.  A detailed and collective review of flow charts in respect of D2 and of other defendants indicate the receipts and payments exhibit a pattern of layering - the said charts are part of the expert's report.

44.  D2’s HKJC betting account recorded the following transactions:-

(i)  9 deposits totaling HK$33.5 million from D1, D9, Chen Xiadong, Yang Guibin and Lin Xigeng when those persons also held HKJC betting accounts in their own names.

(ii)  There was an average monthly betting amount of HK$ 14,188,295.

(iii)  3 deposits totaling HK$3 million were made either on the first day of the racing season or within 1-3 days before the first day from himself.

(iv)  34 deposits totaling HK$76,110 million were made either on a racing fixture or within 1- 4 days of the next fixture.

45.  Mr Borrelli concluded the transactions/fund flow through D2’s accounts exhibited the following money laundering and bookmaking hallmarks.  The reasons for this conclusion being the following:-

(i)  Disproportionate income and transactions.

(ii)  Existence of material cash transactions.

(iii)  Concealed sources of funding.

(iv)  Unnecessary layering of transactions.

(v)  Substantial use of betting accounts belonging to other persons.

(vi)  Substantial (disproportionate) monthly betting amounts.

(vii)  Substantial transactions shortly before the commencement of a horse racing season.

(viii)  Substantial transactions shortly before a horse racing fixture.

D5 – Charge 18

46.  D5 faces a single charge of conspiracy with persons unknown to deal with the proceeds of an indictable offence.

47.  The charge concerns the activities in D5’s HKJC account which amounted to HK$161,401.00 which was opened on 24 September 2009.  The analysis of the account showed:-

(i)  In the racing seasons 2009/2010 there were at least 15 deposits from unknown sources totaling HK$79,001,000. Nearly 4,000 bets placed with an average monthly betting amount of over HK$30 million.

(ii)  From 3 September 2010 to 1 July 2011 (first racing season) there were 5 deposits into the account totaling HK$31.4 million and no withdrawal. 2,462 bets were placed totaling HK$198,196,300 which makes an average betting rate per month over the 10 month period of HK$19,819,630.

(iii)  From 21 September 2011 to 17 June 2012 (second racing season) there were 14 deposits into the account totaling HK$51 million and no withdrawals. 3,589 bets were placed totaling HK$235,469,000 which makes an average betting rate over the 9 month period of HK$26,163,222.

(iv)  The majority of the deposits were made before a race meeting.

48.  D5 was arrested on the 24 June 2012 at his residential address (ground floor, No 3 Min Street, Yau Ma Tei, Kowloon) for the offence of money laundering.  A house search was conducted and, inter alia, a Wing Hang Bank passbook for account number 129679100 was seized as exhibit.

49.  D5 does not appear to have received any income during the investigation period and his bank account did not have any material transactions and those transactions which did take place did not display any meaningful patterns.

50.  D5 operated by way of sole proprietorship the Wo Fat Bakery but the Inland Revenue records available state the Wo Fat Bakery did not pay any profits tax.

51.  D5 did not directly or indirectly own any property in Hong Kong.

52.  D5’s HKJC betting account however did record significant transactions and the following factors were identified:-

(a)  15 deposits totaling HK$67.4 million from D2, D4, D9 and Yang Guibin and Lin Xigeng all of whom maintained betting accounts in their own names.

(b)  There was an average monthly betting amount of HK$25,572,459.

(c)  There was one deposit of HK$3 million 2 days before the commencement of a racing season.

(d)  18 deposits totaling HK$79.4 million were made either on fixture days or within 2 days before the next fixture. All the deposits came from the persons referred to above or unknown persons. Some of the examples identified are as follows:-

(i)  On the 25 September 2010 a deposit of HK$7 million from D2 and the cashier order was deposited by D2.

(ii)  On the 8 October 2010 a deposit of HK$I0 million from D9. The cashier order was deposited by D9.

(iii)  On the 28 January 2011 a deposit of HK$6.4 million from D9. The cashier order was deposited by D9.

53.  A similar pattern continues with large cashier orders (amounts ranging from HK$400,000 to HK$10 million) being deposited into the account.  The amounts originated from the persons stated in 56(a) above or unknown persons and where the depositor could be identified the cashier orders being deposited by either D1, D2, D4 or D9.

54.  The expert concluded the following money laundering and bookmaking hallmarks were apparent from the account:-

(i)  Disproportionate income and transactions.

(ii)  Existence of material cash transactions.

(iii)  Substantial use of HKJC accounts belonging to other parties.

(iv)  Substantial (disproportionate) monthly betting amounts.

(v)  A substantial transaction shortly before the commencement of a racing season.

(vi)  Substantial transactions shortly before a racing fixture.

D6 - Charge 19

55.  D6 also faces a single charge of Conspiracy to deal in the proceeds of an indictable offence, based on the operation of his HKJC account.

56.  The amount deposited into the account was HK$48.1 million.

57.  The details of D6’s account are as follows:-

Amended 19^th Charge

58.  The amended Charge 19 relates to D6’s HKJC betting account number 24406480.

59.  The account was opened on the 14 August 2010.

60.  The period covered is from 14 August 2010 and 20 June 2012.

61.  During the first racing season 2010/2011 the account remained relatively dormant with a carried forward balance of HK$100,000 from a source unknown.  There were two bets placed totaling HK$110,000.  (When the account was opened the balance was zero.  Subsequently HK100,000 was deposited from a source unknown.  The 10% rebate from the HKJC increased the overall total to HK$110,000).

62.  From 21 September 2011 to 20 June 2012 (second racing season) there were 20 deposits into the account totaling HK$48 million and no withdrawals. 2,297 bets were placed totaling HK$172,775,000 which makes an average betting rate over the 9 month period of HK$19,197,222.

63.  The majority of the 20 deposits were made either on or shortly before a racing fixture.

64.  Some examples of the identified depositors have been provided above, including D1, D2, D4, D9, Yang Guibin and Lin Xigeng.

65.  Although cashier orders were from one defendant often the deposit was made by another defendant and where the source was a third party the deposits were often made by either D1 or D2.

6^th Defendant NGAN Chi-hon

66.  D6 was arrested at his residential address (Room 1112, Lei Wah House, Lei On Estate, Ma On Shan, New Territories) for the offence of money laundering.  D6 said he opened the HKJC account at D4’s request.  He received no reward.  D4 had the Account No and password.

67.  D6 was the sole proprietor operating the Yat Fat Provision Store.

68.  Set out below is the Yat Fat's gross profit and the salary paid in HK$ to D6 and his wife for the tax years as stated:-

	2007/08.	2008/09.	2009/10.	2010/11.	2011/12.	2012/13
Gross profit	791,615.	682,128.	734,420	No info.	No info.	No info.
D6 salary	120,000.	120,000.	120,000.	No info.	No info.	No info.
Wife salary	72,000.	72,000.	72,000.	No info.	No info.	No info.

The summary shows that D6’s annual income (together with his wife’s) totaled HK$192,000 for the tax years 2007/2008 inclusive, making an average of HK$16,000 per month. D6’s bank account did not have any material transactions and such transactions as there were did not display any meaningful patterns.

69.  D6 did not directly or indirectly own any property in Hong Kong.

70.  D6’s HKJC betting account however did record significant transactions and the following were identified:-

(a)  16 deposits totaling HK$33.9 million from D1, D2, D4, D9, Yang Guibin and Lin Xigeng all of whom maintained betting accounts in their own names.

(b)  There was an average monthly betting amount of HK$17,288,500.

(c)  20 deposits totaling HK$48 million were made either on fixture days or within 1-4 days before the next fixture. All the deposits came from the persons referred to in (l) above or unknown persons such that it would appear D6 was making his account available for others to use.

Some of the examples identified are as follows:-

(i)  On the 21 September 2011 D6 received HK$3 million from Yang Guibin. The cashier order was deposited by D2.

(ii)  On the 28 September 2011 D6 received HK$3 million from Yang Guibin by way of cashier order. The cashier order was deposited by D2.

(iii)  On the 30 September 2011 D6 received HK$2 million from D8, however, the cashier order was deposited by D9.

(iv)  On the 6 October 2011 D6 received HK$2 million from Lin Xigeng however the cashier order was deposited by D2.

71.  A similar pattern continues with large cashier orders (amounts ranging from HK$510,000 to HK$5 million) being deposited into the account.  The amounts originated from the persons stated in (i) above or unknown persons but the cashier orders being deposited by the either D1, D2, D4 or D9.

72.  The expert concluded the following money laundering and bookmaking hallmarks were apparent from the account:-

(i)  Disproportionate income and transactions.

(ii)  Existence of material cash transactions.

(iii)  Substantial use of HKJC accounts belonging to other parties.

(iv)  Substantial (disproportionate) monthly betting amounts.

(v)  Substantial transactions shortly before a racing fixture.

D7 – Charges 20, 21 and 22

73.  Charges 20 and 21 are based on D7 Chong Hing and Hang Seng Bank Accounts.  Charge 22 is based on the operation of D7’s HKJC account.

Charge 20	The Chong Hing Bank Account No 296 was opened on 3 August 2009 with D7 as sole signatory. The relevant period is 3 August 2009 to 1 August 2012 during which totally HK$78,299,970.00 was deposited into the account.
Charge 21	involves the Hang Seng Bank Account No 221 which was opened on 13 March 1984 with D7 as sole signatory
	The relevant period of the Charge is 1st January 2009 to 29 May 2012 during which HK$44,075,94 was deposited into the account.
Charge 22	the HKJC account covers a period from 4 September 2010 to 19 May 2012
	In racing seasons 2010 to 2011 and 2011 to 2012, then with respectively HK$5,020,000 and HK$10,360,100 wagered with average monthly betting of.HK$502,000 and HK$156,028.

74.  D7 was arrested together with D1 and D8 at the premises in the Si Toi Commercial Building.

75.  D7 does not appear to have been employed nor received any salary or income and had not filed any tax return, made payment to nor entered into any correspondence with the IRD from 2005 to 2012.

76.  D7 did not directly or indirectly own any property in Hong Kong.

77.  The expert’s review found the average monthly deposits to and withdrawals from the bank accounts totaled HK$2,845,949 and HK$2,845,892 respectively.  The fact that the average deposits and withdrawals are virtually the same illustrate the accounts were merely used as temporary conduits for the flow of funds rather than for savings purposes.

78.  11.4% of the withdrawals totaling HK$122,272,370 were made by cash or cashier orders.  The cash or cashier orders were HK$7 million per transaction which is an unusually large amount per transaction to be conducted in this fashion.

79.  The transactions and/or fund flows in D7’s bank accounts involved fund flows from one of a combination of persons or companies which do not appear to be related to D7 and persons or companies which could not be identified totaling HK$122,375,805.  From these deposits HK$121,288,376 were subsequently (directly or indirectly) paid to:-

(i)  HKJC betting accounts belonging to other persons (including D1 and Yang Guibin) totaling HK$14 million notwithstanding D7 maintained his own betting account.

(ii)  HK$9.7 million was transferred to a company which does not appear to have any relationship with D7. D1 also received HK$600,000.

(iii)  HK$4.73 million was paid to other defendants.

(iv)  HK$47,999,970 was paid to persons or companies which do not appear to have any relationship with D7.

(v)  A further HK42,058,406 was paid to persons or companies which cannot be identified.

80.  A review of the flow of funds through the accounts and those of the other defendants indicated the payments and receipts exhibited a pattern of layering.

81.  An examination of D7’s betting account with HKJC revealed the following:-

(i)  3 deposits totaling HK$17,260,100 from D9 where D9 also maintained a betting account in her own name.

(ii)  An average monthly betting amount of HK$5,682,696.

(iii)  One deposit of HK$4.5 million made one day before the commencement of a racing season.

(iv)  6 deposits totaling HK$13,560,100 either on a racing fixture or within 1 to 3 days of a fixture.

82.  In the circumstances the expert concluded the following the transactions/fund flow through D7’s accounts exhibited the following money laundering and bookmaking hallmarks:-

(i)  Disproportionate income and transactions.

(ii)  Existence of material cash transactions.

(iii)  Concealed sources of funding.

(iv)  Unnecessary layering of transactions.

(v)  Substantial use of betting accounts belonging to other persons.

(vi)  Substantial (disproportionate) monthly betting amounts.

(vii)  A substantial transaction shortly before the commencement of a horse racing season.

(viii)  Substantial transactions shortly before a horse racing fixture.

D8

83.  D8 faces Charges 23 and 24 based on accounts in her sole name with Chong Hing Bank and the Bank of China.

Charge 23	concerns the Chong Hing Bank Account No 709 opened on 6 September 2010 with D8 as sole signatory, the period covered is 6 September 2010 to 6 July 2012
	The total deposits during the relevant period are HK$66,140,343.40.
Charge 24	concerns Bank of China Account No 469
	Opened on 7 March 2011 with D8 as sole signatory
	The relevant period is 7 March 2011 to 7 August 2012 with total deposits of HK$66,720,041.11.

84.  D8 was arrested together with D1 and D7 at the premises in the Si Toi Commercial Building.

85.  D8 does not appear to have been employed nor receive any salary or income and the Inland Revenue Department did not have any records concerning D8 during the investigation period.

86.  D8 did not directly or indirectly own any property in Hong Kong.

87.  The expert’s review found the average monthly deposits to and withdrawals from the bank accounts totaled HK$3,089,772 and HK$3,089,762 respectively.  The fact that the average deposits and withdrawals are virtually the same illustrate the accounts were merely used as temporary conduits for the flow of funds rather than for savings purposes.

88.  36.3% of the withdrawals totaling HK$132,859,784 were made by cash or cashier orders which is an unusually large amount per transaction to be conducted in this fashion.

89.  The transactions or fund flows in D8’s bank accounts involved fund flows from one of a combination of (a) remittance agents; (b) D7; (c) persons or companies which do not appear related to D8 and/or (d) persons or companies which could not be identified totaling HK$132,860,202.  From these deposits HK$132,793,145 were subsequently (directly or indirectly) paid to:-

(i)  HKJC betting accounts belonging to other persons (including D1, D5, D6 and others) totaling HK$37 million.

(ii)  HK$33,279,654 was paid by way of cash and some of these funds (HK$29,829,200) were subsequently transferred to persons or companies which do not appear to have any relationship with D8.

(iii)  HK$2.6 million was transferred to D10.

(iv)  HK$30,692,344 was transferred to persons or companies which does not appear to have any relationship with D8.

(vi)  A further HK29,221,147 was paid to persons/companies which cannot be identified.

90.  A review of the flow of funds through the accounts and those of the other defendants indicated the payments and receipts exhibited a pattern of layering.

91.  In the circumstances, the expert concluded the following the transactions or fund flow through D8’s accounts exhibited the following money laundering and bookmaking hallmarks:-

(i)  Disproportionate income and transactions.

(ii)  Existence of material cash transactions.

(iii)  Concealed sources of funding.

(iv)  Unnecessary layering of transactions.

(v)  Substantial use of betting accounts belonging to other persons.

D9

92.  D9 faces Charges 25 and 26.

93.  Charge 25 is a joint charge with D1 in respect of an account in D9’s name with Wing Hang Bank to which D1 and D9 were signatories.

94.  Charge 26 relates to an account in D9’s sole name with the Bank of China.

Charge 25	The account was opened on 20 October 2009, the relevant period of the Charge is 4 October 2009 to 26 March 2012
	During the relevant period total deposits into the account amounted to HK$89,523,411.45.
Charge 26	concerns Bank of China Account No 040, the relevant charge period is 4February 2009 to 23 March 2011.
	The account was opened on 11 July 2007 and D9 is the sole signatory.
	During the relevant period total deposits into the account amounted to HK$933,313,610.63.

95.  D9 was arrested at her residential address (Room A1, 6^th Floor, Block A King’s Tower, North Point, Hong Kong) for the offence of money laundering.

96.  D9 does not appear to have been employed nor receive any salary or income and the Inland Revenue Department did not have any records for D9 save and except a tax return submitted for the year 2005/2006 which declared that D9 received an income of HK$35,150 during the year.

97.  D9 did not directly or indirectly own any property in Hong Kong.

98.  The expert’s review found the average monthly deposits to and withdrawals from the bank accounts totaled HK$24,227,478 and HK$24,291,253 respectively.

99.  The fact that the average deposits and withdrawals are virtually the same illustrate the accounts were merely used as temporary conduits for the flow of funds rather than for savings purposes.

100.  24.2% of the withdrawals totaling HK$1,044,523,895 were made by cash or cashier orders which is an unusually large amount per transaction to be conducted in this fashion.

101.  The transactions or fund flows in D9’s bank accounts involved fund flows from one of a combination of (a) remittance agents; (b) D7; (c) persons or companies which do not appear related to D9 and/or (d) persons or companies which could not be identified totaling HK$1,041,781,554.  From these deposits HK$1,018,598,390 was subsequently (directly or indirectly) paid to:-

(i)  HKJC betting accounts belonging to other persons (including D1, D2, D5, D6, D7, Yang Guibin and D1’s father) totaling HK$233,860,135 million notwithstanding D9 maintained her own HKJC betting account.

(ii)  D9 withdrew HK$4,509,720 by way of cash.

(iii)  HK$5,020 million was paid to D1.

(iv)  HK$41,762,529 was paid to D1’s father.

(v)  HK$92,787,888 was paid to persons or companies which do not appear to have any relationship with D9.

(vi)  A further HK$641,658,118 was paid to persons or companies which cannot be identified.

102.  A review of the flow of funds through the accounts and those of the other defendants indicated the payments and receipts exhibited a pattern of layering.

103.  In the circumstances, the expert concluded the following the transactions/fund flow through D9’s accounts exhibited the following money laundering and bookmaking hallmarks:-

(i)  Disproportionate income and transactions.

(ii)  Existence of material cash transactions.

(iii)  Concealed sources of funding.

(iv)  Unnecessary layering of transactions.

(v)  Substantial use of betting accounts belonging to other persons.

D10

104.  D10 is D2’s brother, he faces Charges 27 and 28 in relation to Bank of China accounts together with D2.  D10 operated a BOC Savings Account 138 and a BOC Current Account 910.

Charge 27 The period covered by 16 charges for the Current Account 318 is 13 July 2011 to 31 May 2012, the account being opened on13 July 2011.

Total deposits during the relevant period amounted to HK$54,310,316.85.

Charge 28 concerns BOC Saving Account 910. The period covered is 13 July 2011 to 31 May 2012. The account being opened on 13 July 2011, total deposits into the account during the relevant period amounted to HK$28,741,010.34.

105.  D10 was sole signatory to both accounts although the correspondence address for both accounts was D2’s residential address.

106.  The correspondence address provided with the bank as per the account opening mandate was D2’s residential address.

107.  As stated above when D2 was arrested, pre-signed cheques for the current account and other banking documents relating to the accounts were found.  The cheques were together with cheque books relating to D2’s personal bank accounts.

108.  Part of the statement of account for May 2012 was found in an already opened letter at D2’s premises.

109.  The movement record for D10 shows that except for one occasion in April 2011 he was not in Hong Kong when cheques drawn on his account were presented to the bank to make withdrawals.

110.  D10 had not filed any tax returns, made payments nor entered into any correspondence with the Inland Revenue Department from 2005 to 28 February 2012.

111.  From the records it would appear D10 did not own directly or indirectly any property or company in Hong Kong between 2005 and 2011.

112.  D10 is an “R” code Hong Kong identity card holder and was arrested at Lok Ma Chau Control Point on the 22 March 2019 for the offence of money laundering.  Under caution he remained silent.

113.  D10 was re-arrested on the 2 September 2019 and again under caution remained silent.

114.  The expert has also looked into the fund flow/transactions on the two accounts and prepared a separate report setting out his findings.

115.  The highest account balance on the saving account between 13 July 2011 and 31 December 2011 was HK$1,910,000 and for the same period the current account HK$1,401,000.

116.  The highest account balance on the saving account between 1 January 2012 and 7 August 2012 (note there were no statements available after 31 May 2012) was HK$35,008,988 and for the same period the current account HK$13,505,604.

117.  There were 2 deposits by way of cash and 8 deposits by way of transfers or cheques into the savings account and 15 deposits by way of transfer or cheques into the savings account.

118.  There were 5 withdrawals by way of cash and 17 withdrawals by way of transfer or cheques from the savings account and 18 by way of transfer or cheques from the current account.

119.  The total deposits into the two accounts totaled HK$83,950,988 and total withdrawals HK$80,132,280.

120.  The average monthly deposits to and withdrawals from the accounts totaled HK$1,952,349 and HK$l,863,541 such that the magnitude of the deposits does appear commensurate with his financial position.

121.  The average cash withdrawal totaled HK$4,160,000 which is a large amount of cash for an individual to transact.

122.  The fund flow indicates that between 9 November 2011 and 5 April 2012 inclusive the savings account received the following payments totaling HK$54,249,988:-

(i)  On the 9 December 2011 HK$1.9 million was received from Yang Guibin which in turn was sourced from a payment of HK$10 million from Zhou Yaobo, a remittance agent.

(ii)  HK$ 10.9 million was received by way of three transactions from Chen Xiaodong on 14 December 2011, 14 March 2012 and 5 April 2012.

(iii)  HK$2,701,000 was received from King Tat Holding Limited which being 100% owned by D2 does not appear to have any relationship with D10.

(iv)  HK$2,204,000 and HK$1,544,988 was received from D2 on 9 January 2012 and 10 January 2012 respectively.

(v)  HK$35 million from Huang Xiangmo a remittance agent on the 5 March 2012.

123.  Payments totaling HK$48,434,780 were made as follows:-

(i)  HK$29,089,988 was transferred to the current account by way of 14 transactions.

(ii)  On the 12 March 2012 HK$3.1 million was paid into D6’s HKJC betting account (19^th charge).

(iii)  On the 12 March 2012 was paid to Zheng Kaixian's HKJC betting account.

(iv)  On the 5 April 2012 HK$4 million was paid to D2’s HKJC betting account (13^th charge.)

(v)  HK$10,191,012 was withdrawn by way of cash between 9 March 2012 and 12 March 2012 (note according to the travel index record D10 was not in Hong Kong during this period.)

124.  From the HK$29,089,988 transferred to the current account the following payments were made:-

(i)  Between 12 December 2011 and 31 May 2012 by way of 12 transactions a total of HK$9,693,780 to D2.

(ii)  On the 11 April 2012 HK$3 million to D2’s HKJC betting account (13^th charge.)

(iii)  11 April 2012 HK$4 million to D6 HKJC betting account (19^th charge.)

(iv)  11 April 2012 HK$5 million to Lam Ching-tak’s HKJC betting account.

(v)  11 January 2012 HK$6,449,988 to Chen Zhanhui's BOC account.

125.  From the above, HK$7 million had been paid to D2’s HKJC betting account, HK$7.  1 million to D6’s HKJC betting account and HK$5 million to Lam Ching-tak's (D1’'s father) HKJC betting account.

126.  Layering was also a feature of the accounts as is illustrated from the three charts (taken from the report.)

127.  Of particular note D2 and King Tat Holding Ltd participated in the layering transactions.

128.  The transactions/fund flow in D10’s bank accounts involved fund flows from one or a combination of (i) other persons also arrested but not currently charged (Chen Xiaodong and Yang Guibin), (ii) D2, and (iii) persons or companies which do not appear to be related to Yang totaling HK$83,950,988 out of which nearly HK$51 million was paid either directly or indirectly to:-

(i)  HKJC betting accounts belong to other persons (including D2, D6, D1’s father and another person) totaling HK$22.1 million.

(ii)  HK$10.2 million was withdrawn by way of cash at a time when D10 was not in Hong Kong.

(iii)  HK$9,694,780 was paid to D2.

(iv)  HK$8 million was paid to persons or companies which do not appear to have any relationship with D10.

(v)  HK$996,500 was paid to persons who could not be identified.

129.  As illustrated by the fund flow charts the sources and destination of some transactions in D10’s accounts can be traced to bank and betting accounts in the names of D2, D3 and D6.

130.  In the circumstances, the expert concluded the following the transactions/fund flow through Yang’s accounts exhibited the following money laundering and bookmaking hallmarks:-

(i)  Disproportionate income and transactions.

(ii)  Existence of material cash transactions.

(iii)  Concealed sources of funding.

(vi)  Unnecessary layering of transactions.

(v)  Substantial use of betting accounts belonging to other persons.

131.  In summary, the prosecution points to the magnitude of the amounts deposited into the defendants’ accounts when compared with the relative paucity of their incomes and other means and the lack of any documented legitimate commercial transactions to explain those deposits.  Mr Borrelli concluded in brief that nothing in all the financial evidence seen by him presented the appearance of a legitimate enterprise.

132.  The amounts totaled in the charges the defendants face for the relevant period are as follows:-

D1  HK$598,790,972.76

This amount includes the over HK$89 million the subject of the 25^th charge which is the account in the sole name of D9 over which D1 held a power of attorney.

D2  HK$619,810,167.25

This amount includes the over HK$83 million the subject of the joint charges with D10.

D5  HK$82,800,000.00

D6  HK$48,000,000.00

D7  HK$140,435,955.94

D8  HK$132,860,384.51

D9  HK$1,022,837,052.08

D10  HK$83,051,327.19

This amount includes the over HK$83 million the subject of the joint charges with D2.

Defence case

133.  The 1^st defendant did not give evidence, he is of clear record, the sole witness to his case was Lam Kit Yu, she is his elder sister.  Lam Ching Tak is their father.  D7 and D9 are their uncle and aunt.  Her father who was also of course D1’s father was a Doctor in Shantou, the city when they originated as a family.

134.  Lam Ching Tak the father was employed at Shantou Central Hospital as a doctor in the neurosurgery department from 1975 to 1979.

135.  He came to Hong Kong with D1 in 1979 where he took up work as a Chinese medicine practitioner.  The witness considered Lam Ching Tak to be the centre of the family which was a patriarchy run by him.  He made all the decisions and gave all the instructions.

136.  D1 was a disappointment as he was slow in learning and academic process.  She described D1 as simple weak lacking in self expression and comprehension.  He is kind and obedient. 

137.  Lam Ching Tak and D7 entered into a number of businesses together mainly out of Causeway Bay.

138.  There was a business specializing in embroidery in Causeway Bay, a Chinese medicine business, an electrical water heater business and also two restaurants in Causeway Bay.  The businesses were successful enabling the purchase of a number of properties in Hong Kong, Shenzhen and Shanghai.

139.  D7 purchased a property in Repulse Bay.  D1, D7 and Choi Mun Ching (another aunt) owned a racehorse in Macau.

140.  D1 was employed in the family business and had a directorship in one business.

141.  The witness was involved in one of the father’s projects in Shanghai. The Newland Plaza.  A substantial commercial development in Pudong Shanghai.

142.  The Plaza was managed by Newland Development, the witness became the legal representative and General Manager on her father’s instruction.  She had no role in the day to day operations of the company and was simply required to sign documents when needed.  Her name and signature can be seen on their loan from the Bank of Shanghai for loans of 250,000 and 150 million reminbi between 2008 and 2010 taken out by Newland Development.  She signed the documents on her father’s instruction.

The second defendant

143.  The 2^nd defendant gave evidence.  In essence he did not dispute the payments that went through his Bank accounts and into the Jockey Club accounts.

144.  He said he allowed and facilitated these fund flows at his elder brothers (D10) instruction.  The payments being money from bettors in the mainland who wished to bet on horses at the HKJC races.

145.  D2 had come to Hong Kong in the 1980s with his mother and lived in temporary housing and public housing.  He left school and started work for money. Eventually with D10’s assistance he was able to establish a number of restaurant, which are run under the rubric of King Tat Holdings.  The provided a modest income throughout the relevant period.

146.  D10 remained in the mainland.  It was D2’s contention that D10 had considerably prosperity in the mainland and had become very wealthy.

147.  D2 gave evidence of the business that he said D10 established.  He gave anecdotal evidence of the prosperity he witnesses.  There were no profit or loss statements, books of account or shareholding documents produced or referred to in respect of these businesses which D10 is said to have controlled.

148.  D2 said that D10 provided both himself and his father with money when needed.

149.  Cash was withdrawn from his account and kept at D2’s home either for his own needs, his business needs, his father or D10’s gambling requirements for when D10 went to Macau.

150.  Property in Hong Kong was purchased in Tuen Mun.

151.  D2 established restaurant and catering business through King Tat Holdings.

152.  D2 permitted D10 to operate his HKJC betting account.  He did not find the millions of dollars put in his account surprising given D10’s means.

153.  He said D10 assisted him in starting a restaurant business from 2005 onwards.  King Tat Food Centre and King Tat Holdings held accounts through which the restaurant business operated another company.  King Tat holdings was also set up for this purpose.  Also another company Cheung Chun Holdings held a bank account for the businesses.

154.  D2 said all the accounts were opened to service the restaurant. Choosing banks that were not busy and located near to the restaurants locations.

155.  D10 had used these accounts for receiving remittances for his businesses from 2006 onwards.  The funds were transferred through money changers and remittance agents.

156.  D10 was given the log in name and password of the bank accounts.  He told D2 of the remittances by SMS and telephone.  The SMS would tell D2 to whom the money should be transferred and the account numbers.  D2 would go to the bank to effect the transfer.

157.  D2 lent D10 his telebetting account.  Initially D10 used the internet banking of D2’s BOC account to inject funds into D2’s HKJC account from 2010.  D2 helped with these deposit using cashier cheques to make the transfer.  From 2010 deposits would be made to other HKJC’s accounts besides D2’s.  D10 explained he was helping his rich friends.

158.  Cashier cheques were used to facilitate fast transfer.

159.  D2 said he did not believe that the sums related to anything illegal because the money came from D10 who ran a large company on the mainland.  He did not think in relation to the transfers of money that D10 would ask him to be involved in anything illegal.

The fifth and sixth Defendants

160.  D5 and D6 did not gave evidence.  In D6’s case a video recorded interview was admitted.

The seventh Defendant

161.  D7 did not give evidence, he called 3 witnesses.  The first witness was a Madam Hui.

162.  She had also participated for a time in the Newland Mall property in Shanghai through her younger brother who was in business with D7.  At one stage, she had 12% of her younger brother’s 26% shares.

163.  D7 had become short of money as a result of the need to renovate Newland and also some major tenants had left.  The witness provided funds to D7 by way of a loan of 193,563,552 renminbi secured on the Newland property.  Eventually all principal and interest was repaid after the sale of the property.

164.  The second witness was Mr Chiu Chuk Hei.  He was a majority shareholder and boss of Hung Sing Securities.  He was a friend of D7.  He explained the operation of D7’s security margin trading account.  D7 appeared to have use of the account to borrow money.  Mr Chiu had loaned money to D7 from a company of his called Red Line.  Also loans were extended through Winstate a company run by his younger brother.

165.  D7 and Mr Chiu also participated in a chit fund run out of a sauna in Shenzhen.  300,000 was paid in every month by 30 people.  The sum was auctioned each month.

166.  D9 and a person called Lo Siu Kit had also participated.

167.  The third witness was Mr Raymond Cheng, a second cousin of D7 whom he called Uncle.

168.  Mr Cheng had for a time worked for D7 at the Newland Plaza development in Shanghai in 2010 to 2011.

169.  He had also loaned D7 HK$1 million to help fund the renovations to the mall.  Eventually both capital and interest had been fully repaid.

The eighth Defendant

170.  The 8^th defendant elected to give evidence.

171.  She is a citizen of the People’s Republic of China.

172.  She met D7 whilst working as the captain of a restaurant in Shenzhen.

173.  She eventually assisted D7 in his work.  Originally she worked with a Ms Zheng who handled accounting work for D7.

174.  In 2008, D8 took over this work when Ms Zheng left.  She also did driving and entertaining for D7.

175.  D8 was aware that D7 had cash flow problems.

176.  D7 sold two apartments in Shenzhen in 2008/2009.

177.  D7 took out a number of loans.

178.  D8 kept a record of these loans.

179.  D8 recorded the loans set out when interest should be repaid and the deadlines for repayment of the principal.  She would provide D7 with this information so that he could make the payments.

180.  The loans were to pay for the business of Newland Plaza in Shanghai particularly to pay for renovations.  Loans were also needed for cash flow when tenants moved out between 2008 to 2010.  D7 took out loans to support the mall.

181.  Besides this business D7 also took part in a chit fund.  D8 would help him administer the chit fund.  She attended meetings in the sauna.  Each member of the fund provided HK$300,000 per month, there were about 30 members the monthly pot being about HK$9 million.  D7 was head of the fund.

182.  The members could bid for the total sum each month at an auction.  The total sum being paid to the winner.

183.  D7 was also a horse race gambler.  He owned horses raced out of Macau. He also had a HKJC account when he would bet.  He bet with Lam Ching Tak, D1’s father and husband of D7’s sister.

184.  When Lam Ching Tak and D7 needed to send or receive money from the mainland, they would do it through remittance agents as it was faster and simpler.

185.  D8 was aware of fax and telephone messages given by Lam Ching Tak to D7 to gamble on certain horses.

186.  She was aware others also placed bets with D1.  Bets were also placed for ‘friends’ in the mainland by D1, D7 and Lam Ching Tak.

187.  When she took such calls she was told where to find the money in the bank accounts and she was responsible to pay the Jockey Club.  The money would arrive through remittance agents and she would get a cashier order from the bank to pay the HKJC so that the money would be credited to the account immediately.

188.  Some of the money came into her own account.  She had no HKJC account.

189.  She was aware of the monies coming into hers and D1’s accounts.  She paid cashier orders into D1’s account.  She was aware that Lam Ching Tak and D7 could make money on the money transfers from the mainland by using a margin on the exchange rate from different remittance agents.

190.  The profit obtained being between 1.5% to 1% or HK$5,000 to HK$10,000 on a HK$ million transfer.

191.  D8 described the manner in which betting on horses was conducted by the individual ‘friends’ in the mainland.  The bets being placed through various HKJC accounts so as not to draw the JC’s attention to the volume of the bets placed.  This was known as spreading the bets.

192.  This operation was normally done in Repulse Bay at D7’s house.  On the day of D8’s arrest, it was conducted at Si Toi Building.

193.  She was aware the office was secured.  This was to so as to not attract attention as they were violating Jockey Club regulations.

194.  On race days she would look, make and place bets by phone.

195.  She would take the bets from the friends, put them on a piece of paper which she handed to D7 who would normally place the bets with HKJC.

196.  D8 also operated a securities account with Hung Sing Securities.

197.  The money placed into the account was D7’s.  Securities were purchased and used to collateralize loans from Hung Sing which had a lower rate of interest than bank loans.

198.  D8 was aware of D7’s finance as the bank books were kept in the office.

199.  She was aware D9 was responsible for keeping D7’s books which covered the ‘family pool’ of monies.

200.  The money was pooled in D9’s accounts and then distributed.  D9 kept a record.

201.  D8 was aware that D7 sold his interest in Newland Shanghai and used the money to pay off all his creditors.

The ninth and tenth Defendants

202.  Both D9 and D10 elected not to give evidence.

203.  D10 called two witnesses; firstly a Mr Leung Sing Hon who knew D10.

204.  He considered D10 to be a wealthy person based on his observations of his lifestyle and business.

205.  He was present when D10 was involved in horse race gambling.  The bets were placed by phone and won up to HK$300,000 to HK$400,000.

206.  The second witness for D10 was Li Kin Tat, who evidenced D10’s involvement in a proposed development on Lamma Island ‘The Baroque’.  D10 initially provided 10 million dollars in cash in 2005.

207.  D10 was later paid 6 million dollars but remained an investor.

Relevant legal principles applicable generally

208.  The prosecution bring the case.  They must prove the case beyond reasonable doubt, where the defendants are of clear record.  In this case D1, D5, D6, D7, D8, D9 and D10 are of clear record.  This is relevant to their propensity to commit an offence of this nature.  Where they have given evidence, it is necessary to consider this when determining the credibility of their evidence.

OSCO - S 25(1)

209.  The defendants face charges of money laundering or conspiracy to commit that offence.

210.  The substantive offence is defined by S 25(1) as subject to S  25A - a person commits an offence if knowing or having reasonable grounds to believe that any property in whole or in part directly or indirectly represents any persons proceeds of an indictable offence he deals with the property.

211.  The actus reus of the offence is committed by the act of dealing with certain property which has specified characteristics.  It must be property which a person knows or has reasonable grounds to believe … represents any person’s proceeds of an indictable offence.

212.  The quality of the property being such proceeds is therefore an element of the mens rea but not the actus reus.  See: HKSAR v Li Kwok Cheung George [2014] 17 HKCFAR 319.

213.  Proceeds of an indictable offence is defined in S 2(6)(a) of OSCO.  It does not cover monies used simply to facilitate, the commission of an offence but only those monies that are derived from the commission of an offence.

214.  For the mental element of the offence the prosecution must prove that the defendant either (1) knew or (2) had reasonable grounds to believe that the whole or part of the property concerned represents proceeds of crime.

215.  In this case the prosecution relies upon the second limb of the definition.  It asks the court to infer the existence of the proceeds of crime by way of inference.

216.  In Seng Yuet Fong v HKSAR [1999] 2 HKC 833, it was said in relation to the question of proving belief that:-

“To convict the jury had to find the accused had grounds for believing and there was the additional requirement that the grounds must be reasonable. That is that anyone looking at those grounds objectively would so believe.”

217.  In HKSAR v Yeung Ka Sing Carson [2016] 19 HKCFAR 279, it was added that personal beliefs, perceptions or prejudices of the defendant should nonetheless be taken into account while determining the facts and circumstances known to him.

218.  That text was also considered in HKSAR v Harjani Haresh Murlidhar [2019] 22 HKCFAR 446 and defined as:-

(i)  what facts or circumstances including those personal to the defendant were known to the defendant that may have affected his belief as to whether the property was the proceeds of crime (tainted);

(ii)  would any reasonable person who shared the defendant’s knowledge be bound to believe that the property was tainted.

219.  The court also added that the first issue that the judge must address is, what matters the defendant know of that might have affected his belief as to whether the property was clean or tainted.  Where the defendant gives evidence of facts and matters that affected his belief about the nature of the property the court has to decide whether he is or may be telling the truth about the existence of those matters.

220.  The second issue is whether any reasonable person who shared the defendant’s knowledge would have been bound to believe that the property was tainted.  Furthermore, where the defendant does not give or adduce evidence, the court has first to find what relevant facts or circumstances would have led any reasonable person to believe that the property in question was tainted.

221.  Where a conspiracy to commit the offence is charged.

222.  The matters that need to be proved are:-

(1)  an agreement between two or more persons;

(2)  the future course of conduct agreed under that agreement to be pursued;

(3)  the intentions of the parties under the agreement; and

(4)  that if the agreement is carried out in accordance with the parties intentions this will necessarily amount to or involve the commission of an offence by one or more of the parties to the agreement or would do so but for the existence of facts which render the commission of the relevant offence impossible.

223.  In respect of both the substantive and inchoate offences, in order to establish the mens rea element and for the defendant to have the requisite belief there will be evidence direct or circumstantial that the property represents the proceeds of an indictable offence.  Where an inference is required to be drawn as to this fact from circumstantial evidence, then such inference must be grounded on clear findings of primary fact.  It must be the logical consequence of those facts and it must also be the only inference that can be reasonably drawn on the basis of those facts.

224.  In a criminal case the circumstances must exclude any reasonable hypothesis consistent with innocence.

225.  Each defendant’s case must be considered separately.  Where a defendant did not give or call evidence no adverse inference can be drawn from that decision.

The Betting Business

226.  This prosecution originates out of an investigation conducted between 1 January 2009 to 7 August 2012.  It was premised originally on suspicion of illegal gambling or bookmaking activities were taking place at 21/F, Si Toi Commercial Building in Connaught Road West.  Police raided those premises on 24 June 2012, a Sunday, a “Race day”. 

227.  Police arrived around 11:30 am.  The shutter of the premises was rolled down.  No one answered the door bell.  Entry was forced, a sofa was placed against the front door and was tied to the door handle by a rope.  This was clearly to delay entry to the premises.

228.  D1, D7 and D8 were found inside the premises.  Betting was obviously going on as TV screens were turned to Betting Channels.  Betting information was shown on computers.  Payment records were found relating to D1, D2, D3, D5, D6 and D7.  Bank account numbers for D1, D7 and D9.  Betting account numbers for D1, D2, D3, D5, D6 and D7.  298 betting account vouchers with a face value of HKD115,160,000 deposited by D1, D4 and D9 into various betting accounts including those of D2, D3, D5, D6 and D7.

229.  Eventually the bank accounts of the defendants were examined.  It was found that the vast majority of the monies paid into the accounts originated from remittance agents and money changers.  Those funds were transferred to the HKJC betting accounts of the defendants and third parties (save for D8, D9 and D10).

230.  The funds were then bet on horserace betting.

231.  The individual bets were invariably placed on a single horse with a single type of bet.  Numerous bets exactly the same were placed.

232.  The betting almost inexorably led to losses the horses being unfavoured. There were some exceptions but they were sufficiently exceptional to warrant to be seen as random.

233.  In total some HK$2.4 billion was wagered and lost by this operation.  It is common ground that the defendants’ accounts were simply used as conduits through which these vast amounts of money flowed.

234.  It was the case of the defendants that what can be seen from these money flows is a betting business.  That money was transferred by mainland partners (who could not bet in the mainland) by was of remittance agents to the designated Hong Kong bank accounts.  Then the defendants particularly D1, D7 and D8 placed bets for these partners using a number of HKJC accounts.  Numerous accounts being used to make it more difficult for the HKJC to identify them as the HKJC would not allow a HKJC account holder to place bets for third parties.

235.  The mechanics of the business were set out in the evidence of D2 and D8.  In summary it was as follows.

236.  D7 and Lam Ching Tak (D1’s father) were avid horse racing enthusiasts and horse owners at the Macau Jockey Club.  Initially D8 said Lam Ching Tak and D7 gambled on horses when they were in the mainland using their own HKJC accounts.  They were asked to place bets by other ‘friends’ in the mainland who could not open HKJC accounts in their own names.  D8’s evidence was that mainlanders would transfer monies to Hong Kong through remittance agents recommended by Lam Ching Tak.  By selecting the agents a margin spread could be earned from the exchange rates of about 0.5 – 1% of the transmitted sum.  D8 calculated this figure.

237.  The money was deposited into bank accounts. Then cashier orders would be used to deposit sums into HKJC accounts designated by Lam Ching Tak for the placing of bets.

238.  D8 said instructions as to betting were received via faxes and D7 and D1 placed bets on the phone.

239.  D8 would sometimes answer the phone call and note the bets placed.

240.  A number of HKJC accounts were used to spread the betting so as to avoid detection by the Jockey Club. 

241.  In fact, the prosecution evidence showed 3693 payments were made into HKJC accounts totaling HKD2.48 billion of which HKD2.4 billion was lost.

242.  The defence also concurred that the vast majority of the funds paid into the respective bank accounts were then transferred to HKJC betting accounts then to be lost.  The expert, Mr Borrelli when asked to comment on this peculiar arrangement as it affected his conclusion that money laundering was taking place in the respective bank and HKJC accounts was of the view that this did not present the entire picture of what was taking place.

243.  The prosecution in submission indicated that the focus of their case was on the receipt of money into the bank accounts in the first phase.  What was done with the money simply provided further circumstantial evidence as to that monies’ tainted status.

244.  In any event the prosecution has never charged any person concerned with bookmaking.

245.  Mr Borrelli pointed that the defendants’ betting operation may have been part of a wider betting operation, however, on the evidence presented it is a speculative conclusion.

246.  Nevertheless, there were some factual issues to be resolved in respect of the betting business.  The flow of funds and betting pattern and losses are not disputed.  However, the prosecution did dispute D8’s evidence.  D8 provided evidence of how that betting was conducted and funding used, that the source of the betting monies were individual bettors in the mainland, the ‘friends’ that she referred to.

247.  D8’s credibility and truthfulness on this issue was challenged. Firstly, D8 when arrested at the Si Toi Building said “I do not carry out bookmaking and I do not know what is going on.”  The first part of the statement may well be correct but the second part is belied by the extensive explanations she gave in evidence.

248.  D8’s statement that, when she said that the blocking of the entrance was to prevent casual passersby hearing what was going on was clearly untrue.

249.  Furthermore, the pattern of betting appears completely at odds with how she understood the betting business worked.

250.  The bets show that invariably the same bet was placed on the same horse in a race by a large number of individual bets.  Common sense would demand that this is not the betting pattern or behaviour of a number of different partners or ‘friends’ in the mainland.

251.  Furthermore, any winnings are not repatriated but wagered until exhaustion.

252.  I find the betting itself is at odds with D8’s evidence.  This is not betting by ‘friends’.  It is structured and purposeful.  The fact that the monies are lost is incidental to that purpose.  It does not render the betting bookmaking but it does reveal D8’s explanation as being untrue.

253.  D8 gave evidence to present a particular picture.  I rejected her explanation.

254.  Furthermore, despite HK$2.4 billion of this money being deposited and wagered no evidence was received from a single ‘friend’ from the mainland.  I was therefore simply left with the fund receipts into the bank accounts, the spreading of the monies into the HKJC to conduct a structured and a purposeful betting operation which was conducted in secret.  This clearly is evidence that is relevant to the belief a person involved in this operation would have in relation to monies received to fund this operation.  I will deal with this matter further when I examine the defendants’ cases individually.

255.  All the defendants face actual and inchoate charges under S 25(1). These cases are all based on infraction of the second limb of that offence, the “having reasonable grounds to believe” limb.

256.  It is common ground that the prosecution does not have to prove that the source of the monies is criminal for the offence to be established.  However, it is still necessary that the irresistible inference can be drawn that the defendant had reasonable grounds to believe that the proceeds were criminal.

257.  There must be evidence that proves beyond reasonable doubt that such an inference can be drawn.  Whether the funds received by the defendants into the HKJC or bank accounts can be evidentially shown to raise this inference is at the centre of this case.  Without such an inference being capable of being drawn then the whole case must fail.

258.  The prosecution expert, Mr Borrelli, was called to support the proposition that the monies in the respective bank accounts and HKJC accounts of the defendants was criminal proceeds.  He did this by use of the following propositions.  Firstly, that there were significant deposits and withdrawals of cash into and from the accounts, bank transfers between the various accounts and cashier orders and remittance agents were used for transfers which hid the source of the funds.

259.  Secondly, that the deposits into the accounts far exceeded the apparently modest means of the accounts’ holders and there was no evidence of any cash generating business for any of the defendants which might explain the deposit.

260.  Cash transactions were used.  The transactions concealed the true nature of the transactions and the persons involved in them.

261.  Mr Borrelli did a similar exercise for identifying the offence of bookmaking in relation to the monies. 

262.  However, it could not be established that the activities in any of the defendants accounts ever pointed to anything beside the placing of bets.  No bookmaking offence could be disclosed.  Mr Borrelli speculated the known betting activities could be part of a larger picture.  However, he could not divine what that picture was.

263.  Therefore, without expert evidence the purpose and pattern of the defendants’ betting patterns is opaque, other than that they wagered huge sums of money on unfavoured horses and lost almost all the monies bet.

264.  It may be speculated that such betting activities may be adjusting the relative odds in a race, however, this is not evidenced and in any event does not evidence a criminal purpose.

265.  The defendants all advanced the proposition that they indulged in a lawful activity in placing bets through the HKJC.  But, that their means of doing so was designed to obfuscate the size and nature of this activity to prevent the HKJC from detecting the fact that the accounts were being used in such a way as would breach the HKJC’s own rules as to how these accounts should operate money - that only the account holder could bet within the account.

266.  Secondly, they said that the use of cash, cashier orders and remittance agents for the transfer of funds was designed in part to provide anonymity to the bettors.  The proposition put forward by the defence was that the sums coming into the accounts represented the funds received from bettors on the mainland who could not lawfully bet on the mainland and who could only bet through proxies at the HKJC.  To enable the proxies to bet they had to be put in funds in Hong Kong.

267.  This process was accomplished by the use of cashier orders and remittance agents.  The reason for this being that, firstly, FX controls in China made the transfer of money to Hong Kong difficult for mainlanders.

268.  Secondly, “betting” was not lawful on the mainland so such activities had to be occult to the Authorities.  The use of remittance agents and cashier orders was capable of providing some anonymity in that transfer of funds by the bettors to the accounts in Hong Kong.

269.  Cashier orders were used in Hong Kong to provide a speedy transfer of money in Hong Kong to the HKJC betting accounts.

270.  The defendants all acknowledged, save for D10, that their own resources could not explain the sums in their accounts as the sums were placed there by others as part of the betting business.

271.  The prosecution mainly rely upon the huge transfers of money to the defendants’ accounts in such a way as to protect the anonymity of the depositors of the money.  They then add that, the inter account transfers and transfer by cashier order and other instruments, and use of multiple betting accounts also support their position that the monies were moved in an unnecessarily complicated manner to make tracing and identification of the funds more difficult.  This leads to the irresistible inference that such monies were tainted.

Resolution – Findings in respect of the betting monies

272.  Although I rejected D8’s account of the operation of the betting business, it was still the case that the parameters of this operation could be discerned from the uncontested evidence.

273.  The operation was run by D1’s father and D7.  The financing of the operation came from outside Hong Kong.  The money entered Hong Kong through largely remittance agents, and was placed into the bank accounts of D1, D2, D7, D8 and D9.  It went from there to the HKJC accounts of various defendants and others. 

274.  Thereafter, the uncontested evidence is that it is all gambled on losing horses in HKJC races.  This is not disputed.

275.  It is fair to say that no witness or even any form of speculation was able to see any other purpose in the exercise than the losing of money in this way and this presents an unusual form of ‘money laundering’.

276.  In this exercise, I am determining whether this is sufficient for an irresistible inference to be drawn that, in these circumstances a reasonable person would say of this.  That the money funding the operation must as the only reasonable explanation be that those monies are from a criminal enterprise.

277.  The argument in favour is that those monies enter the bank accounts in Hong Kong in a surreptitious manner, obscuring the original source of the monies in an operation known as ‘underground banking’.

278.  Once in Hong Kong some rather complicated transactions take place with the ultimate objective of betting on horses on a spread of HKJC accounts.

279.  I do not consider that the betting on horses provides any assistance in drawing an inference as to a reasonable belief in the criminal origin of the monies used for that betting.  I have already noted the absence of any evidence from any one of the mainland ‘friends’ who were said to have funded this vast industrial scale transfer of monies.

280.  I consider that the evidence shows that the manner of the ‘underground’ transfers into the bank and HKJC accounts is capable of raising an irresistible inference that the defendants would have had a reasonable belief in a criminal origin of those monies.  Whether such an irresistible inference will be drawn is to be determined after considering the individual and personal ground that exist for each defendant.

281.  I will outline these considerations when looking at each defendant’s case individually.

The Newland Project

282.  A large amount of the defence evidence from D1, D7, D8 and D9 was directed towards this project as explaining some of the entries in the defendants’ bank accounts which were associated with expenses on this project and loans made to continue its operation.

283.  It does not appear that any notable income was ever generated in such a way as to benefit any of the defendants.  It cannot be used to pose an alternative stream of income which would explain the deposits into the accounts.  It is said some of the loans taken out for this project were processed through D9’s account as were the expenses.  D1’s sister gave evidence as she had been the legal representative of the shopping centre in Shanghai. She was a guarantor of a RMB loan of 210 million.  There were in all three loan agreements, two for which she was the personal guarantor.  She had no experience for the role, took no part in the operation of the mall and had no means by which to support her role as guarantor for the loan.

284.  D7 called Madam Hui who lent RMB 193 million outside the charge period in relation to the Shanghai property.  Also Raymond Cheng Wai Man gave evidence of making a loan to D7 of HKD1 million in relations to the Shanghai business.

285.  Another witness in respect of the loans was Chiu Chuk Hay.

286.  He made loans available and also let his company Hung Sing extend loans to D8 which were secured on securities accounts with that company.

287.  Finally, D8 gave evidence of D7 taking out loans to finance the Shanghai project.  The evidence taken as a whole was indicative of the fact that D7 and D1’s father had an interest in the Shanghai Newland project.  What that interest was, was never definitively evidenced.  No company documents, accounts profit and loss statements, the normal documentation that would be associated with such an enterprise was ever produced.

288.  The Newland project was not evidenced to have generated any significant income.  It had been used in an undefined way to persuade people to loan money to D7.

289.  The loans generated from Hung Sing were made on the securities account where the securities acted as the guarantor.  However, the origin of the initial deposits into this account were opaque and not accounted for.

290.  The fact of the existence of the project was relevant to consider in relation to D1, D7, D8 and D9’s case as to their respective belief about the nature of the funds in their bank account and Jockey Club accounts.

Mr Borrelli

291.  There was an attack on the expertise and nature of his conclusions on the evidence.  I was referred to the comments of Judges in other cases where Mr Borrelli had been a witness.  In this case the underlying financial information was not disputed.  Mr Borrelli’s conclusions are supported by voluminous evidence none of which can be challenged.  I found Mr Borrelli’s conclusions in his reports to be obvious.  I saw nothing to challenge this from the other cases in which Mr Borrelli had given evidence.  Mr Borrelli’s overall conclusion was that the activities in all the accounts he analyzed simply bore no resemblance to the operation of a legitimate business, that the conclusion that the money receipted into those accounts was unexplained and unexplainable by any legitimate commercial operation and that the only conclusion that can be drawn was that all the monies were tainted.

292.  In fact, this conclusion appeared to me to be obvious and facile.  Mr Borrelli’s opinion was not needed to reach that conclusion.  However, I did see him as a truthful and reliable witness whose expressions of opinion were reliable and upon which I was prepared to rely.

D1’s case

293.  The case for D1 was put in a very straight forward manner.

294.  D1 firstly admits all the transactions in all the accounts in all the charges he faces.  All the accounts are in his name and easily traceable to him.  He maintains in submission that all the activities in those accounts were done on the instructions and directions of others, specifically his father, of whom he had no reason to suspect of criminal wrongdoing or that he would implicate him in money laundering.  The evidence of D1’s sister was that the father was dominant and unforgiving and that D1 was passive and somewhat simple.

295.  Secondly, that the father had been a medical doctor and then successfully involved in a number of businesses in Hong Kong, culminating in the Newland project in Shanghai for which sizable loans in excess of 100 million renminbi were required and obtained from the Bank of Shanghai.

296.  This wider picture should be borne in mind when considering D1’s belief.

297.  The family business was extensive and involved large sums of money.  It was also necessary to bear in mind that all the money bet with the HKJC was lost.

298.  Thirdly, that the expert Mr Borrelli saw no evidence of layering or unnecessary complexity in the operation of D1’s account.

299.  The 1^st defendant did not give evidence.  The evidence in his case came from his elder sister Lam Kit Yu and also reliance upon evidence called by other defendants in the cases, of D7 and D8.  She evidenced that D1 was unsophisticated with poor skills.  This was also seen by a police officer when D1 was arrested who thought him unsophisticated and childish.  His father was successful.

300.  It was the father Lam Ching Tak who had an interest in horse racing and gambling.  He together with D7 purchased horses for racing.

301.  Evidence was led of both the Hong Kong and Shanghai businesses and the huge loans obtained by the Shanghai business.  The betting business arose between D1 and D7.  This originated with D1 when he was in the mainland transferring money to Hong Kong for betting through HKJC accounts.

302.  This was later extended by D1 and D7 to their mainland friends.  Money was sent by money changers and remittance agents because it was simpler and cheaper.  Commission was taken from the money changers by actively finding the best rate of exchange.

303.  Cashier orders were used to place money in the HKJC accounts.

304.  The 1^st defendant said that on the evidence, there was no evidence of any predicate offence committed in relations to the funds admitted into the accounts and later lost in gambling.  Particularly, there is no evidence of illegal bookmaking.  Furthermore, there is no evidence that those monies received from the mainland resulted from the commission of any indictable offence.  As far as D1’s belief was concerned, there was no evidence from which D1 could have identified the source of the monies as having originated from any indictable offence.

305.  That D1’s accounts were used on the directions of his own father for whom D1 carried out routine administrative tasks.  There was no disguising any of the transactions in the accounts.

306.  They were in fact documented in ledgers kept by D9.

307.  D1 gained no benefit from the transactions.  The deposit and transfer of funds could also be believed to be part of the family’s extensive business operations.

D1 Conclusion

308.  D1 faces 6 Charges with amounts varying between HK$29,543,299 to HK$329,046,173.39. The total monies that passed through the accounts being HK$598,790,972.76 together with Charge 25 a joint Charge with D9.

309.  D1’s reply on arrest that he was eating and doing dishes at the Si Toi premises was a lie.  He also said he did not know what they were doing, which was also untrue.  D1 was the tenant of the premises and had control over them.

310.  It must be noted that D1 was the sole signatory to all the bank accounts and HKJC account in his name that form the substance of Charges 1 to 5.  He also had signing rights on the joint account with D9 in Charge 25.

311.  Nothing in D1’s working history or assets can begin to explain the vast accounts of monies in his accounts that are a subject of the Charges.

312.  The analysis of the accounts shown that in the first Charge from 11 March 2011 to 6 May 2015 was deposited mainly from remittance agents the monies being there for a brief period before being transferred out.  In total HK$1,500,000 found its way to D2’s HKJC account.

313.  The second Charge involved inflows and outflows of HK$529,046,173.39 from various remittance agents.  A total of HK$22,300,000 was deposited into 7 HKJC account including into also these of D2 and D6.

314.  The third Charge involves deposits of over HK$61 million of which HK$45,587,400 is traced to various HKJC accounts including those of D2, D3 and D6.

315.  In respect of the fourth Charge totally around HK$15 million enters the account with a deposit of HK$5 million dollars coming from Billion Sina International and being directly transferred to D1’s HKJC account.

316.  The fifth Charge concerns the HK$74 million directly entering D1’s HKJC account.  This was mainly sourced from the accounts of D7 – D9 and other unknown accounts.  The sixth Charge details the monies in the HKJC account.

317.  The Prosecution explanation was clear that all the accounts showed clear indicia of money laundering, namely disproportionate resources, the use of cash and remittance agents, the interchange ability and use of betting accounts.

318.  D8’s evidence in respect of the syndicate does fail in D1’s case however, I have rejected the reliability of her evidence when considering her case and it cannot be used to explain D1’s involvement in the storage and dispersal of these vast sums of money.

319.  It is clearly evidenced that the D1 must have been aware of and involved in the receipt and transfer of the large sums of money contained in the accounts that are the subject of the charges.  There is no evidence as to their having been any legitimate and documented source for these monies.

320.  I can only reach the conclusion in D1’s case that a reasonable person who shared D1’s knowledge would have been bound to believe that the property was tainted.  I found nothing in from the defendant’s case which would cause me to have any doubt as to this conclusion.

321.  The evidence of D1’s timidity and submission to parental authority cannot displace the inference that must be drawn in his case.

322.  I find that the only reasonable inference that can be drawn in respect of D1 is one of guilt to all the charges he faces.

323.  D1 is convicted on Charges 1-5.  The same reasoning applies to D1’s control of the account detailed in Charge 25 with D9.  He is convicted upon that charge.

D2’s case

324.  There is no dispute as to the bank records or the activities in the HKJC accounts of D2 and also D10 to whom his case is related.  Both dealt with the monies in the respective accounts.

325.  In respect of D2, the issue is simply put as did he know or have reasonable grounds to believe that the sums he dealt with represented the proceeds of indictable offence.

326.  D2’s case is premised on his evidence that the money came from his elder brother D10 through remittance agents into his bank accounts, that he knew and trusted D10 and also knew that D10 was successful in his business in the mainland and very rich.

327.  These provided grounds for D2 to believe the money was not tainted or D2 never had any grounds to believe the monies were tainted by criminal activity.

328.  D2 faces two joint charges with D10 based on the finding of cheques for these accounts at his home.  It is said the finding of these materials cannot evidence the act at issue of the offence.  If this is not the case, that D2 also would have no grounds to believe that the money in D10’s accounts was tainted.

329.  The defence case was largely outlined by D2 in his evidence.  There were also two witnesses called by D10 who evidenced D10’s gambling and his access to wealth (the Lamma Island project).

330.  D2’s evidence was that the whole family was reliant upon D10’s wealth. D2 said he gave D10 the password to his HKJC account so there was no evidence that D2 conducted gambling with the account.

331.  D2’s evidence was that D10 gave large cash gifts to his mother and father and he also supported D2’s modest catering businesses.

332.  The prosecution had raised with D2 in cross-examination the fact that his cross-border movement records coincided with other defendants, suggesting that they travelled together over the border.

333.  D2 did say he collected people at the border for his brother but did not necessary know their identity.

334.  There were coincidences in travel records with D4, D8 and D9, but as they were all frequent travelers to Shenzhen, it was said no adverse inference could be drawn from this.

335.  In cross-examination D2 had replied that he could not remember the purpose of a large number of the large transactions in his accounts.

336.  The evidence showed over 30 transactions in D2’s banks accounts that amounted to over HK$1 million individually.

337.  It is said that given the time lapse of 8 years and the large number of those transactions it would be usual for D2 to be able to recall the details of these transactions.

D2 Conclusion

338.  D2 faces a total of 10 Charges involving HK$619,816,167.23 of transactions in those accounts.

339.  On D2’s arrest, banking documentation for D10 was found at his premises.  The amounts vary from HK$13,304,983.49 to HK$131,941,074.69.  the total figures for monies handled by the defendants’ accounts amounts to HK$619,810,167.25.

340.  The Prosecution established that D2’s accounts were involved in funding other defendants’ HKJC accounts.  Evidence of deposits into D1, D5 and D6’s accounts were proved.  D2’s own betting account was also funded by other defendants such as D9, D1 and D10.

341.  Common remittance agents and third parties were also used.

342.  There were also common travel movements shown in the travel index record which common sense would say could not be coincidental.  Such coincidental travel involves D7, D4 and a wanted person in the case.

343.  D2 has restaurants under the King Tat group whose income this Prosecution expert assessed to have an average income of HK$260,000 per annum. D2 explanation that the accounts were opened for the convenience by his restaurant business does not pass master.  There is no rational need for such a multiplicity of accounts.

344.  The Prosecution expert also evidenced ‘layering’ in the defendants’ accounts.  Examples are given in his report.

345.  The extent of the flows into D2’s account and through to the HKJC accounts was very huge.  The Charge 6 account had a total of HK$54,783,600 withdrawn to fund various HKJC accounts.  The incoming deposits coming from a number of remittance agents and also D10.

346.  Extensive deposits were made to D5’s HKJC account.  From the Charge 7 account a total of HK$64,370,250 flowed into various HKJC accounts again including D5 and D4.  Deposit being incoming from other accounts of D2.

347.  From the Charge 8 account a total of HK$70,192,805 was dispersed to various HKJC accounts including that of D5.  The deposits largely originating from remittance agents.

348.  From the Charge 9 account a total of HK$8,960,000 was dispersed to D3 and D2’s own HKJC accounts.

349.  The Charge 10 account involved the dispersal of HK$50,640,000 to D6, D5 and D2’ own and other HKJC accounts.  The bulk of the monies being sourced from remittance agents and D2’other account.

350.  The Charge 11 account involved HK$4.2 million distributed to D6 and another HKJC account.

351.  The Charge 12 account involved HK$11 million of monies dispersed to HKJC accounts originating in D2’ accounts, those routed through King Tat holdings and on to the HKJC accounts.

352.  The overall picture is solely consistent with a money laundering operation in that it had the usual indicia of money laundering.  The use of remittance agents such as cash equivalents and the employment of multiple betting accounts belonging to others.  And also there is a huge disconnect between D2’s actual resources and the huge flows of money into his account. D2’s explanation that he was simply doing the bidding of his wealthy brother without reflecting on the origin of these monies is not believable.  It may be that D10 did assist in the transfer of these monies but the explanation that they originated from his and his friends’ business interests is not believable and I reject that explanation.

353.  Furthermore, as far as D2’s evidence is concerned there is simply no independent documentary evidence that supports his testimony about his brother’s resources.  Funds flows of such as huge nature must have some means of independent verifiability of they are to come from a legitimate source.  If such evidence is missing then surely any reasonable person must suspect that such monies must have a criminal origin.  I found that D2’s evidence was unbelievable.  I rejected it.  It was simply an attempt to explain the undeniable presence of the monies in his accounts and their unverifiable origin.

354.  My overall finding is that in respect of each count D2 faces, had a clear basis on which to conclude that the monies flowing into his accounts had were tainted is that accordingly any reasonable person possessed of this defendants knowledge must have reached the same conclusion.

355.  Furthermore, the defendants’ evidence itself provides by way of his admission against inference that he was closely involved in his brother’s affairs, involving money transfers and distribution.  The item particularly, the pre-signed cheques discovered for those accounts, provide clear evidence that those accounts were also operated and controlled by D2 along with D10.

356.  Finally for all the charges namely Charges 6-13 and 27 and 28, I am satisfied for these reasons that the Prosecution has proved the charges beyond reasonable doubt and I convict the D2 accordingly.

D5’s case

357.  D5 faces a single charge of conspiracy to money launder based on him providing his HKJC account to an unknown person.  Totally over HKD161 million went through the account.

358.  The defendant admitted that he lent his HKJC account to another person for their betting purposes.  The reason advanced by that person was that the other person had no HKJC account and could not open a HKJC account.

359.  D5 did not give or call any evidence.  To an extent he relied upon the explanation given in his caution statement.

360.  It was submitted that the admission provides no evidence that D5 knew what the unknown person had done with the HKJC account.  It was the evidence of PW7 that no monthly statement was issued on the account.

361.  It is said that by simply lending the account for another to use is a dealing in the monies in the account.

362.  That the explanation offered by the unknown person gave D5 no reasonable grounds to believe that the account would be used for tainted monies.  That there were no other event or acts proved nor is there any evidence to show that the origin of the monies sent to the account were tainted.

D5 Conclusion

363.  D5 simply faces 1 charge - Charge 18, a conspiracy to deal with a total of HK$161,401,000 in his HKJC account.

364.  D5’s explanation given at the time of arrest was that he provided the betting account for someone who did not have a HKID and his reward was to be treated to ‘Yum Cha’ once.

365.  D5’s business interest in a bakery appeared to provide no taxable profits.

366.  The money into the accounts largely came from D2, D4, D9 Yang Guibin and Lin Xiyeng.  The monies were largely deposited before a race meeting.

367.  The Prosecution argue that the HKJC account should be seen an analogous to a bank account which is a valuable personal property and that in the absence of any acceptable evidence to the contrary the only reasonable and irresistible inference must be that the account holder knows of the transaction in the account and dealt with the monies in the accounts.

368.  Clearly the transaction record of D5’s account is not representative of the operation of a legitimate HKJC account.  D5’s account of letting another use the account for the consideration of a cup of tea is also highly unbelievable. The reasonable and irresistible inference is that D5 must have known and facilitated the operations of his HKJC account which shows clear hallmark of being operated as means of disposing of monies within a gambling syndicate, where the sums were so huge as to have no reasonable lawful explanation and that D5 entered into an agreement to do this.

369.  There is no evidence to the contrary.  The Court must draw this inference that D5 has reasonable grounds to believe that the monies deposited into his HKJC account represented the proceeds of an indictable offence.

370.  D5 is therefore convicted of being a party to the agreement to do so, set out in Charge 18.

D6’s case

371.  D6 faces a single charge of conspiracy to money launder involving over HKD48 million.

372.  The prosecution evidence concerned monies paid into D6’s HKJC account for betting purposes.

373.  A VRI (video recorded interview) of D6 was admitted as part of the prosecution case.  D6 admitted therein that he opened the HKJC account at D4’s request in August 2016 as D4 was bankrupt at the time.  D6 gave D4 this account number and password.  D6 received no benefit for this and did not know about the activities in the account.

374.  D6 had known D4 since the 1980’s.  They were both Chiu Chow and were good friends.

375.  There was evidence that D6 took out a loan at a time when HKD100,000 was deposited into the HKJC account which it is said showed D6 was unaware of the transactions in the account.

376.  D6 also relied upon the evidence of D2 and D8 which showed D6 had no involvement in the betting activities in the account or the depositing of monies into the account.  No money was ever transferred from the HKJC account to D6’s bank account.  PW7 confirmed no statement of the account was given to D6.

377.  The account is not a bank account and ordinary people may not realise that it could be used for money laundering purposes.

378.  Furthermore, D6 could not be said to have been willfully blind to the activities in the account.

D6 Conclusion

379.  D6 faces a single charge (Charge 19) of a conspiracy to deal with the proceeds of an indictable offence.  The total sum recorded as passing through D6’s HKJC account is HK$48,100,000.

380.  D6 was the sole proprietor of a provisions store.

381.  D6 set out his account of his dealings with his HKJC account in an interview with Police.  There is no dispute as to its contents.

382.  D6 had known D4 since the 1980’s they had worked together.

383.  They had worked together in 1995.  In 2011, D4 asked D6 to open a HKJC account.  D6 had given the account details to D4 along with the password.  He had never used the account himself.  He did not know D4 had his own HKJC account.  He did not know why D4 had asked him, he had thought about it, he did not think D4 would ‘entrap’ him.  D6 had the HKJC card in his wallet when arrested.  D6 did not give or call any evidence.  He relies on the contents of his interview.  During the period of the operation of the HKJC account D6 received no income.  His means from 2007 – 2013 were limited.  In any event D6 does not state that any of the monies or bets placed in his HKJC account were his.

384.  D6’s case is he was completely alienated from the running of the account which he had given to D4.

385.  Various other defendant such as D1, D2 and D4 placed monies into D6’s HKJC account.

386.  Obviously the funding of the account could not have come out of D6’s means.  D6, despite what he says about D4, still retained possession of the HKJC account.  He had the card in his pocket it can be inferred to a criminal standard that D6 still maintained awareness and control of that account, albeit, in conjunction with D4.

387.  The operation of the account bears clear hallmarks of being used for money laundering activities.

388.  The only inference that can be drawn is that D6 conspired with D4 to permit D4 to operate the account for this purpose.  D6 is convicted on Charge 19.

D7’s case

389.  D7’s case was that he together with D1’s father were involved in operating the Newland Mall in Shanghai.  He seeks support in the evidence of Lam Kit Yu, Raymond Cheung, Ms Hui, Chiu Chuk Hay and D8.

390.  The business experienced major problems due to loss of tenants and the need for renovations.  There was a need for extensive funding.  Money was borrowed by any means possible often using loans to repay other loans taken from friends and relatives and against securities.

391.  D7 also operated as foreman of a chit fund which offered short term credit, around this time the ‘betting business’ of placing bets for mainlanders at the HKJC commenced, profit being made by seeking money changers with favourable exchange rates.

392.  The funds were arranged through remittance agents as this facilitated the flow of funds due to the daily limit of funds being transferred out of China.

393.  The use of several HKJC accounts was used to disguise the bets.

394.  D8 evidenced that D7 used Hung Sing Securities to take out loans against the securities in the account there, allowing for loans to be taken out at short notice.

395.  In respect of the Shanghai property, DW1 Ms Hui gave evidence of a loan she gave to D7 in respect of this property.  The evidence, however, adverted to a period outside that charge but it was used to illustrate the fact that D7 could get access to this kind of financing.

396.  She had an interest in the mall through her younger brother.

397.  Chiu Chuk Hay, DW5 was the proprietor of Hung Sing Securities.  He loaned money to D7 through Redline Development Ltd and Winstate Development Ltd.  DW5 also evidenced that he contributed to the chit fund of which D7 was the foreman.

398.  D6 Raymond Cheung, a cousin of D7 gave evidence of loaning D7 HKD 1 million.

399.  In respect of the ‘betting business’ D8 evidenced its operation D7 relied upon her evidence in respect of this.

400.  D7’s case was that monies from Redline, Hung Sing and Winstate, Chiu Chuk Hay, Yip Yin Ling were in fact Newland loan monies.  However, these accounts also sourced monies for the HKJC accounts which were part of the betting business.  It was submitted these monies which were already in Hong Kong were used in lieu of monies already deposited in China by the partners. It was more efficient to use these monies than transfer the sums to Hong Kong.

401.  It is conceded that the majority of the monies were used in the ‘betting business’ and that the majority of the funding appear as loans.

D7 Conclusion

402.  D7 is involved in three Charges.

403.  Charge 20 involving HK$78,299,970 of which HK$14,000,000 went to the HKJC accounts of YANG Guibin and D1.

404.  Charge 21 involving HK$44,075,885.94 which involved a transfer of monies from one of D7’s accounts to another and Charge 22 involves monies in D7 HKJC account totally HK$18,060,100.00

405.  D7 did not give evidence.  He is of clear record.

406.  D7’s defence was largely advanced by D8 whom I found scripted and unreliable.  As with other defendants no profit or loss account, or other evidence such as banking records was ever produced to show that D7 engaged in any lawful activity from which the monies in his accounts were generated.

407.  D7 did not apparently receive any income for tax purposes in Hong Kong during the relevant period.  In respect of D7’s HKJC account there were a total of 7 deposits including cashier orders from D9.

408.  D7 was, of course, arrested in the Si Toi premises where the enterprise was conducted behind locked and barricaded doors.  Clearly this activity is highly questionable giving a picture of illegality.

409.  I found that there was no objective evidence to support D7’s case as to his wider business activities.  The evidence called was largely anecdotal.  It may be the case that D7’s activities involved extensive margin finance and also that he had responsibilities such as managing the chit fund.  However, none of this can begin to explain the large sums passing through his accounts whatever D7 actually did it did not involve the necessity of filing any Hong Kong tax returns.  There is no evidence of profit and loss accounts of any business activity that might have existed outside of Hong Kong.

410.  In respect of the 20^th Charge the Chong Hing Bank withdrawals occurred soon after deposits.  Withdrawals are made to other person HKJC accounts such as D1 and Yang Guibin.  In the 21^st Charge the Hang Seng Bank account money came from winnings in D7’s HKJC account which was then returned for betting.  In respect of the HKJC account 3 deposits are from D9, four are from Unknown Sources.

411.  D7 and his accounts are placed within the structure of the betting syndicates money flow activities whereby huge amounts of money flow from outside Hong Kong, largely, via remittance agents to Hong Kong banks accounts including D7’s where they flow onwards to various HKJC accounts.  Other than being ‘friends’ or partners on the mainland, no other explanation or documentation explains the origins of these funds.

412.  The money is placed in the same races, on the same horses or horses and largely by Quinellas.  The activity was industrialised betting.  D7 was an important operative log in that machine.

413.  Mr Borrelli’s had explained in his evidence that he was aware of the payments and loan repayment found in the account books seized at Si Toi Building.  It was his opinion that nothing in those recorded entries altered his opinion that the defendants were involved in an operation to launder monies through their bank accounts and HKJC accounts.  I concur with his observation. The prosecution have proved Charges 20, 21 and 22 against D7 on the basis that D7 had reasonable grounds to believe that those monies were the proceeds of an indictable offence.  D7 is convicted accordingly.

D8’s case

414.  D8 worked for D7.  She told the court about her beliefs as to her tasks and employment.

415.  D8 gave evidence.  She said she started working for D7 in 2008 taking over from a Madam Cheung.  She sold D7’s flat in Shenzhen for RMB 9 million.

416.  The proceeds were used to pay off the mortgage and other loans.

417.  D8 kept a record of D7’s loans.  She informed him of the schedule of repayments, D8 pointed to records of payment she said were made by D9 and which were seized by police.  D8 and D9 worked together at times to record and manage the loans and finances of the members of the Tsoi family.  Sometimes funds were paid in China and applied in Hong Kong and sometimes vice versa.

418.  D8 kept her own notebook.  The notebook does not appear to have been seized.  In any event D8 tried to complete a list of the items dealt with in the notebook to show the loans taken out by D7.  The notebook contained records of D7’s loans with the Cheungs and Chiu Chuk Hay.

419.  D8 testified about D7 being foreman of a chit fund operating out of a sauna fund in Shenzhen with the monthly receipts and payment of the chit fund going through D7’s accounts.

420.  D8 also evidenced the problems of the Newland Plaza with renovations needed and tenants moving out, resulting in the need for D7 to obtain financing by way of loans to stay in business.

421.  D8 said that D7 and herself had several accounts with Hung Sing Securities, loans were taken and against the stock.

422.  D8 evidenced that D7 and Lam Ching Tak would use remittance agents when they needed to transfer money due to the efficiency speed and economy.

423.  D8 also evidenced the operation of the betting business particularly how the money received from the ‘friends’ was applied to betting in the HKJC accounts.

424.  It is said D8 had no reason to believe that the monies were received as part of the ‘betting business; were tainted funds, nor could she believe that loan remittance from Chiu Chuk Hay, Yip Yin Long, Winstate, Hung Sing and Winstate were in any way tainted funds, even when these were used in the ‘betting business’ rather than the Newland project.

D8 Conclusion

425.  D8 faces two charges, they are No 23 and 24.  In total some HK$66 million flowed into each of these account of which in Charge 23 10 million went to D1’s (HK$7,000,000) HKJC account and HK$3,000,000 to another person’s HKJC accounts.

426.  In the Charge 24, HK$27 million went to other HKJC accounts which included D5 and D6.  On her arrest, D8 said ‘she did not carry out bookmarking and I do not know what is going on’.

427.  D8 later in evidence gave extensive evidence of the operation’s of D7 business and the gambling system so she was quite obviously either lying to the police or lying to the Court or perhaps lying to both.  Whatever conclusion is reached it obviously has a major effect when conclusions have to be reached about her veracity.

428.  I do note D8’s clear criminal record when reaching conclusions about her.  However, she did appear in her evidence to be anxious to give explanations not only for herself but also for D1, D7 and D9.  Her evidence had a rehearsed quality as if she were playing a role, delivering a script.  I found her accounts of what she herself and these three other defendants did was not believable.

429.  D8’ bank accounts and her explanations also showed a form of funding relating to the Hung Sing Securities account.

430.  A pattern was illustrated that showed that a number of the deposits into the accounts came as a result of loans taken out from which securities were purchased which were then used to increase the available loans.  These sums also found the end point destination as the HKJC accounts.  All this shows a form of margin financing.

431.  It appears the HKJC accounts were not just funded from monies imported by remittance agents but also by way of margin trading on equity accounts in security trading company.  However, there is no credible evidence or independent documentary evidence as to the original source of those monies.

432.  D8’s accounts in Charges 23 and 24 show the familiar pattern of large input from remittance agents which are conduited into the HKJC accounts of others.

433.  The accounts themselves show the hallmarks of money laundering set out in Mr Borrelli’s report.

434.  There is no legitimate explanation for these large financial transaction.

435.  I have already explained my reasons for approaching D8’s evidence with trepidation.  I consider her evidence about the operation of the betting syndicate to be a story crafted to explain the essential and undeniable features of the activity.  Her evidence of the type and nature of the funding is completely unbelievable and unreliable as is her evidence about the roles of other defendants.  It does appear that margin financing of the inputs to the HKJC accounts was observable from the Hung Sing accounts, that D7 did take out, and loans to finance payment to the HKJC accounts, and that D7 participated in a chit fund.

436.  However, as Mr Borrelli’s pointed out none of this goes any way towards explaining the amounts of money flowing into and out of D8’s accounts.  There is clear evidence of the crediting of D8’s accounts with unaccounted monies on an industrial scale.

437.  I find it proved beyond reasonable doubt that D8 had reasonable grounds to believe that monies in the accounts were the proceeds of an indictable offence.  She will be convicted of Charges 23 and 24.

D9’s Case

438.  The 9^th defendant faces two charges.  She did not give evidence.

439.  The issue identified in D9’s case is whether taking into account the specific facts and circumstances known to her and particularly her conduct, can the court draw as the only irresistible inference the inference of guilt namely that D9 had ‘reasonable grounds’ to believe that the property was tainted?

440.  It is said D9’s unique role and the facts and circumstances found in her family, upbringing, relationships with siblings and role of errand person in the family together with the records she made and the use of her account for the ‘family business’ make the drawing of this inference not possible especially when this is considered together with her conduct before and after the offences and her lack of moral blame.

441.  In respect of her background the defence pointed to the following strands of evidence.

442.  That D9 was the 8^th child of the Tsoi family.  She was not well educated only studying up to primary 3 on the mainland.

443.  She had worked for D7 her brother since the 1980’s.  She carried out errands and took care of family expenses.  D9 took over from her elder sister the tasks of recording the families expenses.

444.  D9 was in a position to know about the Newland Mall in Shanghai.

445.  That D9 kept the family ledgers.  According to D8 that the ledgers recorded legitimate expenditure in relation to the family business and expenditure including the payment of loans.  D9 worked in an office where others, including D8, were employed there.

446.  D9 was not involved in horse race betting activities.

447.  D7 was a gambler and part owner of horses.  Money was paid to the Macau Jockey Club.

448.  D9’s HKJC betting account was not used.  D9 did obtain cashier orders and deposited cashier orders into other HKJC accounts.  This was done as errands for her elder brother.

449.  That D9 had done this for Lam Ching Tak since at least 2006.

450.  Furthermore, all the cashier orders were traceable back to her.

451.  D9 made contemporaneous records in the ledgers which would be illogical for a person involved in crime.  They illustrate the errands she partook in and that her belief would have been that the activities in the accounts formed part of the legitimate family business.

452.  D9 continued to do this even after she was arrested for the offences.

453.  D9 did not open the accounts and business but simply took over a role that had been previously performed by her elder sister.

454.  D9 would have seen that the monies in the ledgers were used for family expenses including lawyers and accountants fees, monies for gambling, horse purchases and business registration fees, that loans were obtained and paid and chit fund payments and repayments were made and repaid and entered into the ledgers.

455.  That these transactions were funded through remittance agents and cashier order were used.

456.  D9’s case prepared a set of various transactions in the ledger which correspond to bank account entries.

457.  There are tables  

A 1-10	596 entries related to loans
B 11-21	chit fund payments 69 entries
C 22-31	business entries 1036 entries.

458.  The tables were reproduced herein as defence exhibits.

D9 Conclusion

459.  D9 faces two charges, Charge 25 jointly with D1 and Charge 26 solely.

460.  Charge 25 involves HK$89,523,441.45 of which HK$54,760,000 was withdrawn to by cashier orders to fund HKJC accounts including those held by D6, D5, D7, D2 and others.

461.  Charge 26 involves HK$896,592,585.63 of which HK$178,596,700 was withdrawn by cashier orders to fund HKJC accounts including those held by D5, D1, D2 D7 and others.

462.  D9’s defence was largely evidenced by D8 who portrayed her as a bookkeeping clerk, involved in noting and tracking the input and output of funds from the accounts, the accounts been seen as a ‘family pool’ of monies which were allocated to various businesses loan and expenses.

463.  It is common ground that D9’s resources could not begin to explain even a part of the flows of these vast sums of money.  She did not own any property nor did she have any declarable income for tax purposes during the period of the charges.  D8’s evidence of D9’s involvement is not reliable.  The accounts book produced by D9 to explain some of the movements of money into the accounts particularly the payment of loan interest was seen by Mr Borrelli. 

464.  He was of the view that taken together all these flows of money did not alter his conclusion that both these accounts showed clear hallmarks of money laundering, that there was no evidence which was consistent with a legitimate operation of a business account, simply put the accounts of a lawful business would not appear like these accounts.  In so far as there was a suggestion of loans or the operation of a chit fund there was no evidence of any legitimate origin for these funds.

465.  In Charge 25 there is evidence of payments from Hung Sing Securities. These loans were said to be to help the Shanghai development.  Yet the monies do not appear to do this.  Some of the monies go to other remittance agents, some circulate back to the account, some in cash withdrawn to D1 and D9.

466.  The account shows the pattern of money sourced from remittance agents being then sent to HKJC accounts, the account of D9 simply being used as a conduit for this operation.  The Charge 26 account shows the same modus operardi.

467.  In total almost HK$1 billion has flowed through these accounts.  There is no evidence of a legitimate commercial origin for any of these funds.  A large amount simply flows into other HKJC accounts.  The accounts show larger cash transactions, the use of cashier orders and remittance agents which conceal the source of the funding.

468.  D9 does not deny the existence of these funds in her accounts.  She is aware of these transactions.  The explanation proffered on D9’s behalf that she was a simple clerk just recording family business who would have no grounds to believe that any of the monies were tainted is just not sustainable.

469.  Anyone who was aware of the vast sums of monies in these transactions in their accounts without a legitimate explanation would immediately have the reasonable belief that the same would have a criminal origin.

470.  I take note of all the matters submitted on D9’s behalf, that outline the particular facts and circumstances unique and peculiar to her.  Yet none of these matters can displace or cause a reasonable doubt to enter into the conclusion that D9 had reasonable grounds to reach the inescapable conclusion that the monies in the two accounts were tainted.  D9 is accordingly convicted of Charges 25 and 26.

D10’s case

471.  D10 does not dispute the entries in his bank records.  He admits he dealt with those monies.

472.  D10’s case as to the joint charges he faces with D2 is that he was at the material time conducting legitimate business in mainland China and the monies entering and leaving the accounts were entirely legitimate.  He had no ground to believe that the persons depositing monies into his account had conducted any criminal activities.  D10 relies upon the evidence of D2 and also the two witnesses he called.

473.  D2’s evidence was that D10 traded in Shenzhen from 1990 onwards in electronics and property.  He was prosperous, operating a commercial group with hundreds of employees.  From mid 2000’s D10 started a pawn business.  D10 needed to transfer large sum of money to Hong Kong and used D2’s accounts for this purpose.  D10 also supported D2’s catering business and his mother and father.

474.  D10 accepted D2’s evidence that he instructed D2 to inject funds into different HKJC accounts in order to help D10’s mainland friends to place horse racing bets with the HKJC.

475.  D10’s case was that he is a legitimate businessman and the transfers to Hong Kong were sourced from his own funds in China or from his business associates.

476.  This, it is said, is supported by the witnesses called by D10.

477.  Mr Lee detailed D10’s involvement in the Lamma Island project. Initially D10 injected HKD10 million into the project showing him to be a man of multi-million dollar means.

478.  The other witness Mr Leung Sing Hoi shared first hand experience of gambling with D10 and his associates in D10’s office in Shenzhen.

479.  Furthermore, evidence was presented about the largest cash injection into D10’s bank accounts which was a cheque of HKD35 million from a Mr Huang Xiang Mo on 5 March 2012.

480.  Mr Huang evidence was that underlying this transaction there had been a genuine sale of goods.

D10 Conclusion

481.  D10 is charged in Counts 27 and 28.

482.  In respect of Charge 27 totally HK$54,310,316.85 flowed through the account with HK$22,610,000 being directed to HKJC accounts by way of cashier order and transfers including transfers to the HKJC accounts of D2 and D6.

483.  In respect of Charge 28, HK$28,741,010.34 flowed into the account with HK$12,510,000 being transferred to HKJC accounts including those of D2 and D6.

484.  D10 is a mainland resident and has not filed any Hong Kong tax returns.

485.  D2 spoke of D10’s wealth.  However there is no evidence of profits or income from any of D10’s business in the form of Bank Statements or profit and loss account.  There is no evidence as to the source of origin of the funds in either account.  What is known is that large sums were eventually transferred to the HKJC accounts of others.

486.  The accounts involve the movement of large sums of money with no known documented source of the funds.  The disposal of the funds in itself raises a belief in the criminal nature of the funds.

487.  The accounts also show significant cross deposits including those from his brother D2.

488.  D10 has a clear criminal record.  He was not arrested until 22 March 2019.  He is a mainland resident.  There is no evidence of D10’s tax status in the mainland.  There is no evidence of any taxes payed by him on any business ventures or personal earnings in the mainland.

489.  D10 has not filed any tax returns in Hong Kong between 2005 and 2012.

490.  Evidence was led of a large deposit from one Hyang Xiangmo.  This is in respect of the 27^th Charge and shows a deposit of HK$35 million said to be part of a business deal for the sale of an item of jade.

491.  However, of those monies the prosecution point out that HK$6.1 million went to the HKJC betting accounts of D6 and one Zheng and HK$10 million is withdrawn in cash.

492.  I noted the evidence of the two witnesses.  Leung Sing Hei was a gambling friend whose evidence contains anecdotes about their gambling activities together.  It did not begin to explain D10’s means or sources of income, it just showed that D10 gambles.

493.  The evidence of Lee Kin Keung about the Lamma project simply showed that D10 could find funding to invest in that product.  The evidence was simply silent as to the source of that funding.

494.  In essence there was no reliable explanation given as to any legitimate source for the $54 million and $28 million HKD sums found in D10’s accounts. The pattern of deposits and dispersal is much the same as the pattern for the other defendants whose accounts were used by the betting syndicate.

495.  I find that given the large sums involved together with the lack of a legitimate explanation that D10 did have reasonable grounds to believe that the sums in his accounts would represent the proceeds of crime.

496.  D10 will be convicted on Charges 27 and 28.