HKSAR v. MEREDITH GERALD SYDNEY

DCCC 885/2018

[2021] HKDC 346

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 885 OF 2018

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REASONS FOR SENTENCE

1.  The defendant stands convicted after trial of two charges of dealing with property known or believed to represent proceeds of an indictable offence, contrary to section 25(1) and (3) of the Organized and Serious Crimes Ordinance[1].

2.  Full particulars of the offences are set out in my verdict handed down on 19 February 2021.  The charges arise from email fraud whereby monies were diverted to Hong Kong and remitted to bank accounts of which the defendant was the sole signatory.

Charge 1

3.  In summary in 2015 the defendant was contacted either by phone or email by a person he did not know called Razaq Awang who asked him to be the representative of a Hong Kong company to receive payments from his customers.  The defendant was asked to set the company up. 

4.  Before the company was set up and a bank account opened the defendant was told by Razaq Awang that some customers needed to make urgent payments and that he needed a bank account.  The defendant agreed to lend his company (Jade Décor) bank account held with the Bank of China.   

5.  Between 28 January 2016 and 2 March 2016 three remittances, two from New Foundation and one from Zeean Corporation, were diverted to the Bank of China account in the total sum of HK$3,348,613.17.  The defendant distributed the monies according to the instructions of Razaq Awang, including cash payments via Western Union to persons whom the defendant was told did not have bank accounts and to various overseas bank accounts including to Razaq Awang’s own company.    

6.  No business was transacted in Hong Kong only the receipt of the funds and the disbursement of those funds.  The defendant was to receive two to three per cent commission. 

Charge 2

7.  The Bank of China closed the Jade Décor account on 29 March 2016. 

8.  In April 2016 the defendant opened an account for the new company Jade Group with the China Citic Bank. 

9.  Before any monies were remitted to the China Citic account the defendant was arrested on 17 July 2016 for money laundering in connection with the three remittances into the Jade Décor Bank of China account.  The defendant was placed on police bail. 

10.  Between the 22 August 2016 and 29 August 2016 three remittances from Aruba Networks were diverted to the China Citic account in the total sum of US$5,333,151.15.  The defendant distributed the monies according to the instructions of Razaq Awang, again including cash payments via Western Union and to various overseas bank accounts including to Razaq Awang’s own company.  US$3,184,108.57 was withdrawn by the defendant.

11.  Again no business was transacted in Hong Kong only the receipt of the funds and the disbursement of those funds. The defendant was to receive five per cent commission. 

12.  The defendant was arrested again on 27 September 2016.

13.  I was satisfied that the defendant had reasonable grounds to believe that the monies remitted to the Bank of China account and the China Citic account and disbursed by him, in whole or in part directly or indirectly represented any person’s proceeds of an indictable offence.

Mitigation

14.  I have carefully considered everything said on behalf of the defendant by Mr Sherry, including that the defendant enjoys a reputation as a reliable building contractor, a reputation he has built over the twenty- five years he has worked in Hong Kong[2]. I take into account that the defendant has a clear record. 

15.  I take into account that the defendant was not party to the email fraud and had no knowledge of the email fraud[3].

Guidelines

16.  Money laundering is a serious offence for which deterrent sentences are required[4].  In HKSAR v Javid Kamran the court, stressing the need for deterrent sentences, said that it was not possible to lay down guidelines, as there is a very wide range of culpability[5].

17.  A number of significant factors have however been identified as relevant in determining the culpability of a defendant, including the nature of the predicate offence that generated the laundered money; the extent to which the offence assisted the crime or hindered its detection; whether the defendant had knowledge of that underlying offence or has turned a blind eye to the source of the money; the amount of money involved; whether there was an international element to the commission of the offence; the degree of sophistication of the offence and the level of the defendant's participation, including the length of time the offence lasted; whether the offender continues to launder money after he has discovered that the funds are the proceeds of an offence or the nature of the offence and the benefit he derived from the offence[6].

18.  The courts have emphasised that a defendant is to be sentenced on the facts of the money laundering charge and not on the facts of the underlying offence[7]. 

19.  Sentence should mainly reflect the amount of the money laundered and not the benefit obtained[8].

20.  The opening of bank accounts for someone else facilitates the laundering of money by disguising the true owner of the money passing through the bank accounts. This makes difficult the detection of crime and at the same time undermines the integrity of the banking system.  

International element

21.  Mr Sherry submits that because the defendant did not come to Hong Kong to commit offences and did not instruct anyone outside of Hong Kong to make payments to his accounts here, the international element does not come into play[9]. 

22.  With respect this submission completely overlooks the facts of the case.  The defendant acted for someone he believed was overseas; he knew the payments into the bank accounts were from overseas and he remitted cash payments via Western Union to places like maybe Nigeria, because the customers never had bank accounts and remitted monies to various overseas bank accounts.

Restitution

23.  Mr Chau informs the court that Aruba obtained a High Court injunction over the balance in the China Citic account.  The sums frozen by the injunction were USD 2,808,960.60; HKD 77,729.61 and HKD 73,906.5[10].

24.  The loss to Aruba however remains substantial, over USD 2,500,000.  No monies were recovered from the payments made by New Foundation or Zeean Corporation.

Compensation

25.  Mr Chau informs the court that on 29 September 2016 the police sent a letter of no consent to the Bank of Communications to freeze the new Jade Décor bank account.  The sums frozen were HKD 110,003.70 and HKD 60,882[11].  

26.  Due to the small sums involved Aruba elected not to take legal action over these monies as the legal costs would be greater than the monies recovered. 

27.  In May 2018 the defendant agreed that these sums of money could be seized by the police as exhibits whereby the police did not have to issue restraint proceedings[12].

28.  The prosecution applies for the monies to be divided pro-rata between the victim companies[13]. The defendant agrees to this money being paid as compensation[14].    

Sentence

Charge 1

29.  Taking into account:

(a)  the role of the defendant;

(b)  the total sum of HK$3,348,613.17 was remitted to the account all of which was withdrawn;

(c)  no monies were recovered by either New Foundation or Zeean Corporation;

(d)  the defendant’s commission being two to three percent was between $66,972.26 and $100,458.40; and

(e) the international element, the monies having been remitted from overseas and distributed overseas by the defendant,

I am satisfied the proper sentence after trial is 3 years and 6 months’ imprisonment.

Charge 2

30.  Taking into account:

(a)  the role of the defendant;

(b)  the total sum of USD5,333,151.15 was remitted to the account;

(c)  USD3,184,108.57 was withdrawn by the defendant before the bank account was frozen;

(d)  the loss to Aruba is over USD 2,500,000

(e)  the defendant’s commission on the full amount being five per cent would have been USD266,657.56;

(f)  the international element, the monies having been remitted from overseas and distributed overseas by the defendant; and

(g)  the defendant continued to launder funds after he had been arrested for money laundering in connection with the three remittances to the Jade Décor Bank of China account,

I am satisfied the proper sentence after trial is 5 years and 6 months’ imprisonment.

Agreement of the prosecution case.

31.  Although the trial lasted ten days, the defence agreed most of the prosecution evidence.  The only witness called by the prosecution was DPC 12613 to produce the flow charts.  Two other witnesses were tendered for cross-examination.  

32.  The agreement of the prosecution case clearly saved court time.  In the circumstances I reduce the sentence on each charge by 1 month to 3 years and 5 months’ imprisonment on charge 1 and to 5 years and 5 months’ imprisonment on charge 2[15].

Compensation

33.  Albeit the sums paid in compensation are small compared to the amounts laundered through the bank accounts, I am satisfied the defendant should be given credit for agreeing that the sums HKD 110,003.70 and HKD 60,882 be paid by way of compensation.

34.  In the circumstances I further reduce the sentence on each charge by 1 month to 3 years and 4 months’ imprisonment on charge 1 and to 5 years and 4 months’ imprisonment on charge 2.

Delay

35.  All the circumstances must be looked at including whether the offender has acknowledged guilt; where the delay has given the offender the opportunity to rehabilitate himself; whether restitution has been made; the size of the investigation and whether the time taken to bring the case to court was longer than necessary[16].

36.  The defendant was first arrested on 17 July 2016 and again on 27 September 2016. The defendant was charged on 10 September 2018 almost two years after he had been arrested for the second time.

37.  Mr Chau explains that the file was first sent for legal advice in September 2017 after the police had conducted investigation, including overseas enquiries and forensic examination of the defendant’s computers.  Legal advice included conducting more detailed forensic examination.   The file was submitted for further legal advice in June 2018.  That advice was received in August 2018. 

38.  On the information supplied to court today two years does seem a long time to investigate the case.

39.  The case was transferred to the District Court on 4 October 2018.  After various adjournments for the defendant to apply for legal aid and obtain legal advice, the case was set down for trial on 13 June 2019 to commence on 9 March 2020. The trial was however adjourned due to the general adjournment of court proceedings because of the pandemic.  The trial was re-fixed to commence on 23 November 2020 on which day the trial started. 

40.  Nearly four and a half years have elapsed since the defendant’s second arrest.  In the circumstances I reduce the sentence on each charge by a further 2 months to 3 years and 2 months’ imprisonment on charge 1 and to 5 years and 2 months’ imprisonment on charge 2.

Totality

41.  Taking into account the total sum remitted to the two accounts, I am satisfied a total sentence of 5 years and 6 months’ imprisonment properly reflects the defendant’s criminality on the two charges and takes into account the defendant’s personal circumstances and the seriousness of the offences[17].

Sentence

42.  The defendant is sentenced as follows:

Charge 1 – 3 years and 2 months’ imprisonment; and

Charge 2 – 5 years and 2 months’ imprisonment;

I order 4 months of the sentence on charge 1 to be served consecutive to charge 2 and 2 years and 10 months concurrent. The total sentence to be served by the defendant is 5 years and 6 months’ imprisonment.