HKSAR v. WU JIONGXUAN

DCCC 102/2016

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 102 OF 2016

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REASONS FOR SENTENCE

The defendant pleaded guilty to an offence of "money laundering". The sum involved is $10,000.

Summary of Facts

2.  About 3:00 p.m. on 24 November 2015, 50-year-old Mr. CHEUNG (PW1) received a phone call made to his home landline.  A male voice pretending to be PW1's son shouted for help claiming that he owed a debt in the sum of $200,000 and was being detained by the creditor.  Since his son was only 11 years old, PW1 believed that it was a scam. Claiming to be a staff member of a finance company, another male voice (WP2) demanded PW1 to pay a total of $230,000 (principal plus interest); or his son would not be released.  At the same time, PW1 heard a male voice crying in the background saying he was being beaten up.

3.  A third male voice (WP3) got on the phone and claimed to be the boss of the finance company.  He asked PW1 where the closest bank to him was.  PW1 replied Hang Seng Bank in Kwun Tong. WP3 also asked PW1 for his mobile phone number, and PW1 provided his wife's number ("the Mobile Number").  WP3 then called the Mobile Number and the caller display showed a U.S. phone number.  Meanwhile, PW1 reported the matter to the Police using his own mobile phone.

4.  PW1 negotiated with WP3 that he could at most obtain $20,000.  After discussion, WP3 instructed PW1 to withdraw money from the ATM near Amoy Garden in Ngau Tau Kok and wait there from someone to collect the money.  He also instructed PW1 to hold a newspaper in his left hand for identification purpose.

5.  About 4:50 p.m. on the same day, PW1 withdrew $10,000 (all in $500 notes) from the ATM of Hang Seng Bank at Amoy Garden and waited in front of the bank.  WP3 called the Mobile Number telling PW1 to cross the road to the bus stop and wait at the nearby flowerbed.

6.  The defendant soon approached PW1 and asked him to hand over the money.  PW1 ignored him and continued to talk to WP3 on the phone.  WP3 told PW1 to pass the money to the person sent by him to collect the money.  The defendant then gave a mobile phone to PW1.

7.  Through the defendant's mobile phone, PW1 heard WP3's voice telling him to hand the money over to the defendant.  The defendant told PW1 to fold the banknotes into a smaller size before handing them over.  PW1 did so.  After taking the money (E1) from PW1, the defendant put E1 into his left jeans pocket and walked towards Ngau Tau Kok Market.  PW1 followed him to an alleyway.

8.  Police officers were laying ambush in the vicinity.  Upon the defendant reaching an alleyway of Ngau Tau Kok Market, DPC 13380 arrested him and E1 was recovered.  Under caution, the defendant admitted that he was only responsible for collecting the money; everything else was done by Ah Fei.

9.  In his video-recorded interview, the defendant admitted that he came to know a male named Ah Fei in the mainland around August 2015.  Ah Fei recruited him to collect money in Hong Kong for a reward of 3% of the sum collected.  The defendant believed that Ah Fei was a fraudster, but did not know the methods Ah Fei used in deceiving people.  The defendant also admitted in details how he committed the offence.

Mitigation & Sentence

10.  The defendant is 27 and has a clear record.  He is single and resides with his parents and younger brother in the mainland.  Defence counsel Mr. LI informed me that the defendant was a sales representative of soft drinks.

11.  In mitigation, Mr. LI submitted that a few months before the offence, the defendant met Ah Fei in a bar in the mainland.  Ah Fei asked the defendant to collect some money for Ah Fei's boss.  The rest of the events just happened in the manner described by the defendant to the Police.  Mr. LI stressed that the defendant played no part in the underlying phone deception.  He fully cooperated with the Police after being arrested.

12.  The prosecution has applied for an enhanced sentence pursuant to section 27(2)(c) and (d) of the Organized and Serious Crimes Ordinance (Cap.455) on the basis of prevalence as well as the nature and extent of harm caused to the community.  Mr. LI did not object to the application.  He, however, submitted that based on the statistics provided by the prosecution, there appears to be a significant drop in 2016 in terms of the number of phone deception cases as well as the quantum of monetary loss[1]. In other words, phone deception may not be as prevalent as before.

13.  I bear in mind the Court of Appeal's decision in HKSAR v XU Mai Qing CACC 464/2005, whereas Yeung JA (as he then was) held "Under section 27(11) of OSCO, what the prosecution has to prove is the prevalence of the offence, not the increase in the number of such offences." [2]

14.  According to the witness statement of DCIP LAM dated 4 May 2016, the number of successful "Drop-off" mode phone deception cases in 2008 was 38.  The numbers gradually increased to 80 cases in 2009; 126 cases in 2010; 175 cases in 2011; 173 cases in 2012; 200 cases in 2013; 183 cases in 2014; and 159 cases in 2015. In 2016, there were 27 successful "Drop-off" mode cases from January to April.  The number of attempted "Drop-off" mode cases from 2011 to 2015 remained in the range of 1,000 each year. 

15.  The amount of monetary loss in successful "Drop-off" mode cases also has a steady increasing trend from 2008 to 2013 (from $3.01 million to $13.75 million).  In 2014 and 2015, the figures dropped slightly to $12.87 million and $11.99 million respectively.  For 2016, the monetary loss was $2.01 million as at April.

16.  The "Drop-off" mode phone deception cases always involve someone picking up the money left behind by the victim at a public place or collecting the money directly from the victim.  Hence, the money collection portion is part and parcel to the "Drop-off" mode phone deception.  Although the "collector" may or may not have knowledge of the underlying phone deception, the circumstances under which he/she picks up or collects the money are usually peculiar and would thus arouse his/her suspicion about the legality of his/her collecting act and/or the nature of the money collected.  That is the reason why the "collector simpliciter" is usually charged with a money laundering offence (instead of deception).  On this basis, the statistics of the "Drop-off" mode cases are directly relevant.

17.  There is clear and cogent evidence before me that the "Drop-off" mode phone deception is still widespread and commonly being practised in Hong Kong today.  The court must send a clear message to the general public that people who play the role of "collector" will receive severe punishment, so that there is a deterrent effect.  When there are fewer or no willing "collectors", the "Drop-off" mode phone deception method would fail.

18.  Although the defendant claimed that he did not take part in or had any knowledge of the underlying phone deception, the scam would have been meaningless without a willing "collector".  Given the role played by the defendant, the amount involved and the overall circumstances, I grant the prosecution's application and will enhance the sentence by 20%.

19.  The Court of Appeal in SJ v WAN Kwok Keung [2012] 1 HKLRD 201 held:

Generally, the sentence for "money laundering" offences should mainly reflect the amount of "black money" laundered and not the benefit obtained by the defendant or others. The reason being that it is very difficult to prove the benefit concerned, and in most "money laundering" cases, there may not be evidence to show from what indictable offence the "black money" are in fact derived. Of course, if there is information to prove that the "black money" is originated from serious crimes, including drug trafficking, kidnap and blackmail, illegal human trafficking, other organized crimes, etc. or the defendant's benefit is huge, then the sentence should be adjusted upward.[3]

20.  In determining the proper starting point, I have reminded myself of the sentencing principles laid down in HKSAR v HSU Yu Yi [2010] 5 HKLRD 545, HKSAR v WU Jianbing [2012] 1 HKLRD 781, HKSAR v Boma Amaso [2012] 2 HKLRD 33 and HKSAR v LIN Zong Yue CACC 141/2014 (unreported Chinese judgment).  I have also borne in mind the amount of money involved, the duration of the offence, the defendant's role in relation to the movements of funds as well as his personal circumstances.

21.  In SJ v LAU Man Ying [2012] 4 HKLRD 435, Yeung V-P held "The defendant’s ignorance of the actual source of the 'illicit money' is not necessarily a mitigating factor." [4]

22.  In the present case, the defendant admitted that he came to Hong Kong to collect money on behalf of Ah Fei, believing that Ah Fei is a fraudster. Although there is insufficient evidence showing that the defendant took part in or had knowledge of the underlying phone deception, he still played a vital part in the overall scam to deceive a desperate father.  For the purpose of sentencing, I accept that the defendant probably had no knowledge of and did not take part in the phone deception against PW1.  To this extent, his culpability is perhaps less than the perpetrator(s) of the underlying phone deception[5].

23.  Since PW1 did not suffer any monetary loss and the sum of cash involved is relatively small, I adopt a starting point of 2.5 years' imprisonment.  A one-third discount is given for the guilty plea, reducing the sentence to 20 months.  Apart from this, I see no other mitigating factors which warrant any further reduction.  With the 20% enhancement, the sentence is therefore 24 months' imprisonment.