HKSAR v. CHOI CHUN YIN AND ANOTHER

DCCC137B/2011

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 137B OF 2011

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Reasons for Sentence

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1. D1 is facing three charges of offences (Charge 1 to Charge 3), contrary to section 25(1) of the Organised and Serious Crimes Ordinance, Cap.455. The offence is commonly known as money laundering. D1 has pleaded guilty to Charge 1 and Charge 3. Charge 2 is left on the file and cannot be proceeded with without the leave of the court.

2. D2 is facing two charges also for money laundering (Charge 2 and Charge 3).  In both charges, he is jointly charged with D1.  He has pleaded not guilty to both charges and is convicted after trial of both charges.

The Facts Admitted By D1

Charge 1

3. On 5 September 1997, D1 opened a Hong Kong dollar savings account with the Hang Seng Bank.  He was the only signatory on this account and remained so until 31 December 2008. 

4. Between 1 November 2002 and 31 December 2008, a total of $5,793,316 in a total of 631 transactions was deposited into this account.  During the same period, all the money was withdrawn.

5. During the tax years from 2002 to 2009, D1 reported to the Inland Revenue Department that his total income was $919,000.

Charge 3

6. D1 established a company on 5 June 2007 called the Chun Shing Investment Company.  On 27 June 2007, he opened a multi-currency savings account and a Hong Kong dollar savings account with the Bank of China (Hong Kong) Limited.

7. On 1 November 2007, D2 was added as a signatory.  After this date, the account could be operated by the signatures of either of the defendants until 30 April 2009 when both accounts were closed.

8. On 1 November 2007, two transfer deposits totalling HK$8,000,200 were paid into the account.  On the same day, $8 million was remitted from the account to an account with a bank in Shenzhen.

9. On 25 January 2008, three transfer deposits totalling HK$8 million were paid into the account.  On the same day, three sums totalling $8 million were remitted from the account to another account with a bank in Shenzhen.

10. D1 gave evidence as a prosecution witness at the trial of D2.  His evidence concerning his involvement in the deception scheme in relation to Charge 2 and Charge 3, insofar as it is challenged by D2, has not been accepted by this court.  His evidence in relation to Charge 1, which is irrelevant to D2’s trial, is that the moneys were reimbursement of the moneys he paid in advance for his boss and clients.  They were not proceeds of crime.  He only pleaded guilty because he could not find evidence to prove his innocence.

11. I alerted Miss To, counsel for D1 who was present when D1 was giving his evidence in court, of the issue whether the plea of D1 was equivocal.  After the trial of D2, I revisited the issue whether D1’s plea was equivocal and should be set aside.  Miss To informs the court that D1 is no longer relying on his evidence at the trial of D2.  She says D1 fully understands the law of the offences he pleaded guilty to.  D1 maintains his plea of guilty to both Charge 1 and Charge 3.  Miss To also tells the court that she is satisfied that the pleas are unequivocal and proper.  Upon the assurance of D1’s own counsel, I accept the plea of D1.

Facts Found By the Court Against D2

12. The particulars of the two offences are set out in my verdict delivered earlier on 17 May 2012.  In summary, D2 and his associates (one mainlander named Chan Wai-kit) operated a fraudulent scheme to deceive PRC officials. 

13. There was a policy in the mainland that investors from overseas, including Hong Kong, could get a cross-border vehicle permit if they invested HK$8 million or its equivalent in foreign currency in a mainland company.  The policy was designed to attract foreign investment. 

14. D2 and his associates set up bogus companies in Hong Kong and the mainland in order to obtain cross-border vehicle permits for clients.  D2 used the Bank of China accounts opened by D1 to receive moneys from the mainland provided by Chan Wai-kit.  The moneys were then remitted back to a bank account in the mainland on the same day.  After a few days, the money would be returned to Chan Wai-kit when the evidence to prove the incoming foreign investment capital had been fabricated to support the issue of the vehicle permit.  The moneys particularised in Charge 2 and Charge 3 were not for the purpose of genuine investment but only used to facilitate a crime to deceive PRC officials into issuing cross-border vehicle permits.  The offence of conspiracy to defraud was hence committed in Hong Kong.

15. Charge 2 involves one bogus application whereas Charge 3 involves another two such applications.  I find D2 guilty on two bases. 

16. First, the disguised moneys deposited into and transferred out of the Bank of China accounts were used in the commission of an indictable offence.  The payments received by him in connection with the commission of that offence fall within the definition of “proceeds of an offence” under section 2(6) of Cap.455.  D2 therefore knowingly dealt with the proceeds.

17. Secondly, D2 had reasonable grounds to believe that the moneys he received at least partly came from the illicit profits derived from previous fraudulent transactions and the disguised moneys were recycled. 

Background and Mitigation

D1

18. D1 is aged 32.  He had a clear record. Miss To tells the court that D1 has been engaged in voluntary community service work since 2008.  She submits some photographs and a mitigation letter from a pastor of a church.  When mitigation was done on 17 May 2012, Miss To handed up four judgments to the court.  Miss To did not rely on the last case. 

19. I do not find the first case, HKSAR v Kam Susanto CACC542/2003 of much assistance.  It concerns an application for appeal against conviction, not sentence.  The second case is HKSAR v Leung Wai Wah CACC201 of 2011.  Almost $40 million representing proceeds from bookmaking was laundered by the appellant over a two‑year period.  On appeal, the original sentence of 4 years on a plea of guilty was reduced to 3 years and 6 months, starting point of 5 years 3 months being taken by the Court of Appeal.  The third case, HKSAR v Au Hau Ching CACC146 of 2008 involves more than $24 million of black money.  A sentence of 5 years was reduced to 4 years and 10 months when the Court of Appeal allowed 2 months’ reduction for the appellant’s detention in Malaysia.

20. In relation to the basis on which the court should sentence D1, Miss To submits that the facts which D1 admitted upon entering his plea of guilty do not disclose any underlying offences.  She asks the court not to take into consideration the finding of the fraudulent scheme which should be a finding against D2 only.  For Charge 1, she asks the court to take into account the income D1 had reported to the Inland Revenue Department during the period and therefore the money laundered would be less than $5 million. 

21. Miss To indicated on 17 May 2012 that she would not rely on the assistance of D1 to the police as mitigation as his evidence was not accepted by the court.  This morning, she retracts her position and submits HKSAR v X CACC109/2011.  She asks the court to give credit for D1 making a witness statement and giving evidence for the prosecution and what he said in court was up to proof.  Mr Dunn for the prosecution fairly concedes that this is the position. 

22. In HKSAR v X, the appellant X gives evidence against a co-defendant B.  At the end, the jury unanimously acquitted B.  The judge refused to give discount for X’s assistance because the jury by its verdict did not accept X’s evidence.  The Court of Appeal took the view that some discount should have been given to X “if only for the risk in which he placed himself by giving evidence against a co‑defendant.”

D2

23. D2 is now aged 46, married with two children aged 18 and 16 respectively.  He received education up to Form 5.  He has been in his trading and transportation business since 1996.  In mitigation, his counsel, Mr Leung, asks the court to consider the following factors:

(1) his previous good character;

(2) the underlying offence is not particularly serious;

(3) the length of offences is not very long and only three transactions were involved;

(4) on the finding of the court that the money laundered comprised of the illicit profits from previous fraudulent transactions and the disguised money being recycled, the actual black money was only a small sum;

(5) the conviction is based on D2’s full and frank disclosure in court;

(6) D2 only derived a small profit from each transaction;

(7) totality principle.

Reasons for Sentence

24. Money laundering is a serious offence for which deterrent sentence is required.  As there is a wide range of culpability, no sentencing guidelines have been laid down.  Yet, deterrence is paramount.  The Court of Appeal has highlighted factors to be considered in determining sentence (see HKSAR v Hsu Yu Yi CACC159 of 2009; Secretary for Justice v Wan Kwok Keung CAAR13 of 2010; HKSAR v Boma Amaso CACC335 of 2010; Secretary for Justice v Lau Man Ying CAAR6 of 2011).

25. These factors include:

(1) it is the amount of the money involved which is usually the major consideration and not the amount of benefit received by a defendant;

(2) the nature of the underlying offence, if known, and the level of knowledge and participation of a defendant of the crime and his knowledge of the fact that the funds are the proceeds of an indictable offence;

(3) whether the case has an international element;

(4) sophistication of the offence and whether deceit is practised to achieve the objective;

(5) the number of transactions and the length of time the offences lasted.

D1

26. In the case of D1, I agree with Miss To that D1 should be sentenced on the basis of the facts he admitted upon entering his plea of guilty.  The facts do not disclose any underlying offences.  The evidence of D2 about D1’s participation in the scheme was given in the absence of D1.  In fairness to D1, I will sentence D1 only on the facts he admitted and will not rely on D2’s suggestion of D1’s involvement in the fraudulent scheme.

27. I also note that the facts admitted by D1 do not disclose that he received any reward or he actually knew the money involved was proceeds of an indictable offence.  Therefore, the most significant factors for sentencing D1 are the amount of the money involved in the two charges he has pleaded guilty, the number of transactions and the time the offences lasted.

28. Miss To submits that for Charge 1, the amount to be considered by the court should be deducted by the income reported to the Inland Revenue Department by D1.  I understand that to mean $919,000 out of the amount in Charge 1 was in fact not proceeds of an indictable offence.  The prosecution has not taken objection to this suggestion, and I am prepared to take a view most favourable to D1.  I bear in mind that D1 has a previous good character, but I do not accept that D1 has provided community service work to an extent that justifies a reduction of his sentence.

29. Charge 1 was committed over a period of six years involving more than 600 deposits.  I will take 3 years’ imprisonment as the starting point.  Giving him full credit for his plea of guilty, I reduce it to 2 years. 

30. Charge 3 involves about $16 million. However, the amount only involves a few deposits.  I will also take 3 years as the starting point and reduce it to 2 years for his plea of guilty. 

31. On each of the two charges, for what it is worth, I will give him a further reduction of 2 months for his giving evidence as a prosecution witness.  On each of the two charges, he is therefore sentenced to 1 year and 10 months’ imprisonment.

32. The two offences are separate.  However, I believe an overall sentence of 2 years and 10 months, having given credit for all his mitigating factors, would sufficiently reflect D1’s overall culpability.  I therefore order 1 year out of the sentence in Charge 3 to run consecutively to Charge 1, the rest to run concurrently.  The total term of sentence for D1 is 2 years and 10 months’ imprisonment.

D2

33. D2 also had a clear record.  His culpability mainly lies in his knowledge and participation in the fraudulent scheme to deceive the PRC officials.  The moneys he received were tool to deceive.  He also had reasons to believe that the disguised moneys came from illicit profits derived from previous fraudulent transactions and recycling of proceeds. 

34. I accept the submission of Mr Leung that the fraudulent scheme is not a particularly serious offence as in the case of trafficking of dangerous drugs.  However, the international element must not be ignored.  D2 received altogether $110,000 in the three transactions.  I therefore cannot accept that the reward received by D2 was a small one.  But I do accept that as the disguised money must have been recycled in the commission of the offences, the actual proceeds of crime might have been much less than the amount particularised in Charge 2 and Charge 3.  On the other hand, I find that D2 had full knowledge of and played an active role in the fraudulent operation.  His culpability should be reflected accordingly.

35. Charge 2 involves one fraudulent transaction.  I will take 3 years as the starting point.  Charge 3 involves two transactions.  I will take 3 and a half years as the starting point.  I accept the mitigation that the conviction is mainly based on the disclosure of the scheme by D2 in court, for which credit should be given.  I will give him a reduction of 3 months in each charge.  He is therefore sentenced to 2 years and 9 months’ imprisonment on Charge 2 and 3 years and 3 months’ imprisonment on Charge 3.

36. The two offences, though related to the same series of operation, involved three separate fraudulent transactions.  Part of the sentences should therefore run concurrently.  I order 1 year of the sentence in Charge 3 to run consecutively to the sentence in Charge 2.  The rest runs concurrently.  The total term for D2 is therefore 3 years and 9 months’ imprisonment.