HKSAR v. HSU YU YI

[English translation – 英譯本]
CACC159/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 159 OF 2009

(ON APPEAL FROM DCCC NO. 1144 OF 2008)

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REASONS FOR JUDGMENT

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Hon Cheung JA (giving the judgment of the Court):

Appeal against sentence

1.  The Applicant is the second defendant (D2) in the case. He and three other co-defendants were charged with various counts of “Conspiracy to deal with property known or believed to represent the proceeds of an indictable offence”, contrary to sections 159A and 159C of the Crimes Ordinance, Cap. 200 and sections 25(1) and (3) of the Organized and Serious Crimes Ordinance, Cap. 455. Those charges are commonly known as “money laundering” charges.

2.  D2 was found guilty of the second charge after trial by Deputy District Court Judge Johnny Chan and was sentenced to 3 years and 9 months' imprisonment. He made an application for leave to appeal against sentence. After hearing, this Court allows his application for leave to appeal against sentence, and treating the application as the formal appeal, we vary the sentence to one of 3 years and 5 months' imprisonment. The reasons for the decision are set out below.

The charge

3.  The particulars of the charge are that from 4 June 2008 to 16 August 2008 in Hong Kong, D2, D3, and D4 knowing or having reasonable grounds to believe that a property, namely the deposit of HK$ 2,585,564.74 in an account with the Standard Chartered Bank (Hong Kong) Ltd (Account number 959-2-0693009-9), in whole or in part, directly or indirectly represents the proceeds of an indictable offence, conspired with each other and with a person called ‘Lo Chiu' and some other unknown persons, to deal with the property.

The facts

4.  The facts of the case are that a Singaporean woman received notification from a company that she had won a sizeable lottery in Singaporean currency. But before she could claim the lottery payment, she had to pay processing fees. Between 2 May and 16 July 2008, she accordingly deposited money on thirteen occasions into a bank account in Singapore and remitted money into nine bank accounts in Hong Kong, the total amount being Singaporean dollars 990,000. However she never received any lottery payment. The remittances into those nine bank accounts in Hong Kong included one deposit into D1's account with the Standard Chartered Bank (‘Charge 1'), three deposits into D2's account with the Standard Chartered Bank (‘Charge 2'), and one deposit into D3's account with the Standard Chartered Bank (‘Charge 3'). The woman then reported the fraud to the Singapore police.

5.  D2 came to Hong Kong from Taiwan with D3 on 4 June 2008. On the next day, they went to the Standard Chartered Bank, each setting up a wealth management account with $9,000. They claimed to the bank staff that they were wholesalers working for a company called ‘山珍海味' (which literally means delicacies from land and sea). D1 and D4 came to Hong Kong from Taiwan on 21 June 2008. They later set up their respective accounts with another bank. They claimed to the bank staff that they were wholesalers working for a business establishment called ‘山珍海味' (which literally means delicacies from land and sea). All four defendants are Taiwanese residents and since their arrival in Hong Kong, they often travelled together between Hong Kong and the Mainland.

6.  On 14 August 2008, D2 was intercepted by an immigration officer at the Lo Wu Immigration Building when he was on his way to the Mainland. He was later arrested by a police officer for the offence of ‘money laundering'. D2 said under caution that ‘I am a tourist here and the account is for my friends in Singapore to remit money here for use'. A while later D2 said, also under caution, that ‘I was merely directed by someone else. The person who directed me to launder black money is called ‘Lo Chiu'. I know he lives on the 5^th floor in Fa Yuen Street Building. I don't remember the address but I can take you there.' Later D2 took the police officer to Fa Yuen Street and pointed at one of the flats to be the residence of ‘Lo Chiu'. He then took the officer to a flat in Shanghai Street. The officer opened the door to the flat with a key provided by D2 and entered the premises where D3 and D4 were found. The officer arrested D3 and D4 for the same offence. The officer found inside the flat the bank passbooks, notebooks and name cards belonging to D2, D3 and D4.

7.  Under caution, D2 said in a video-recorded interview that:

‘1. He saw a recruitment advertisement in the newspaper in Taiwan which says that staff are needed to work in Hong Kong and the monthly pay will be several hundred thousand Taiwanese dollars. He thought the job was well paid so he contacted the employer over the phone to arrange an interview in Taichung.

2.         He did not know the nature of the job but only that he would know after arrival in Hong Kong.

3.         He used to be a bus driver in Taiwan and had various other jobs including working in a car cleaning company and selling slippers in beaches.

4.         When he arrived in Hong Kong, his employer took his passport away and said that it would be returned to him after he had worked for two months. He was told that his wages would be paid to him at that time.

5.         As his employer did not pay him any wages, he resigned from the job and intended to return to Taiwan. But when he was returning to Taiwan, he had to visit his friends in the Mainland and was then arrested by the police.

6.         Although he had doubts about the job, he accepted it because he was in need of money.

7.         When he was in Hong Kong, he was received by a Lo Chiu who lived in Fa Yuen Street. Lo Chiu took him to open various accounts with the Standard Chartered Bank, HSBC and the Bank of China.

8.         He acted upon instructions to withdraw large sums of money from the accounts, involving a total amount of HK$1,000,000 from three different branches of the Standard Chartered Bank on three separate occasions on 13 July 2008.

9.         On 16 and 17 July, he withdrew altogether HK$800,000 and HK$150,000 respectively. He handed all the money to Lo Chiu.

10.       He had asked Lo Chiu why so much cash was required to purchase sea delicacies, but Lo Chiu answered that the money was used to buy property.'

Sentencing by Deputy Judge Chan

 8.               Deputy Judge Chan took 4 years imprisonment as the sentencing starting point and reduced it by 2 months because D2 was a first offender. A further reduction of 1 month was granted to D2 on account of his admission of the prosecution case at the trial which saved the court's time. That resulted in a total sentence of 45 months' (i.e. 3 years and 9 months') imprisonment.

Sentencing principles

9.              There are no sentencing guidelines for the offence of dealing with the proceeds from an indictable offence because the facts vary from case to case. However the following factors are to be taken into account when determining sentence:

(1)                                     It is the amount of money involved that is a major consideration and not the amount of benefit received by a defendant in the transaction.

(2)               The culpability of the offence lies in the assistance, support and encouragement offered to the commission of an indictable offence. So a defendant's level of participation and the number of occasions on which he is involved in the ‘money laundering' activities are relevant factors to be considered.

(3)               The offence of dealing with the proceeds from an indictable offence does not necessarily have any direct correlation with the indictable offence in question. However if the relevant indictable offence can be identified, the court may take into account the sentence imposed on the indictable offence pre se when determining the sentence of the dealing offence.

(4)               If the case has an international element involving activities carried out across different regions, the court may impose a more severe sentence. This is to protect Hong Kong's reputation as an international finance and banking hub from being tarnished.

(5)               The length of time the offence lasted.

Precedents adduced by D2

10. D2 was represented by Counsel Mr. Wong Hay Yiu who adduced a number of authorities to argue that the sentence imposed in the present case was excessive:

(1) In HKSAR v. Xu Xia Li & Another (CACC 109/2005), one of the defendants in the case was convicted of an offence of dealing with that property, namely $11,000,000.00, which represented the proceeds of an indictable offence. The original sentence of 3 years' imprisonment was reduced to 2 years and 9 months by the Court of Appeal.

(2) In HKSAR v. Javid Kamran (CACC 400/2004), the defendant pleaded guilty to two counts of trafficking in dangerous drugs and one count of money laundering. He admitted that he used his bank accounts to launder the proceeds from drug trafficking activities for a period as long as 18 months, involving an amount of over HK$1,000,000. The Court of Appeal considered that the starting point of 4 years' imprisonment adopted by the trial judge was manifestly excessive and reduced it to 3 years. The sentence finally imposed was 2 years' imprisonment.

(3) In HKSAR v. Chow Ying Ki (CACC 378/2004), the appellant was convicted after trial of one count of money laundering. The amount involved was about HK$3,000,000 and the crime lasted for 9 months. The Court of Appeal was of the view that although the starting point of 4 years' imprisonment was on the high side, it was not manifestly excessive. The sentence finally imposed was 4 years' imprisonment.

(4) In HKSAR v. Yam Kong Lai [2008] 5 HKLRD 384, the appellant was convicted after trial of one count of money laundering. As an investment consultant, he knew that a client had an inactive fixed deposit account with US$520,000 (approximately HK$4,000,000) in it and that the client had disappeared. In the course of the offence, he forged the signature of the client and withdrew money from the client's account via a circuitous route. He first transferred the money from the fixed deposit account to the bank account of a law firm in Singapore before he transferred the same to the bank account of a trading company in Hong Kong. He then transferred the money from the trading company's bank account to his personal bank account and then withdrew the money. The Court of Appeal reduced the sentence of 5 years' imprisonment to 4 years.

(5) In HKSAR v. Zhan Jian Fu (CACC 258/2007), a Taiwanese woman was defrauded of approximately $2,000,000 by the appellant. The appellant pleaded guilty to two counts of ‘money laundering' which involved a total sum of HK$2,000,000. He was a mainlander who came to Hong Kong in November 2005 and set up accounts with two banks. Between February and April 2006, a sum of HK$2,000,000 was remitted into the defendant's accounts from Taiwan. The Appellant withdrew money from the accounts from time to time. He claimed that he was persuaded by someone to set up the abovementioned accounts and acted upon someone's directions to withdraw money from the accounts from time to time. The Court of Appeal held that it was appropriate to adopt 3 years' imprisonment as the respective starting points of the charges. Having considered the totality of sentence, the Court of Appeal held that 8 months of the first charge and 2 years of the second charge should be served consecutively, so the sentence was 32 months' imprisonment.

(6) In HKSAR v. Lee Ka Ki (CACC 148/2007), the appellant was convicted after trial of two counts of money laundering, and was sentenced respectively to 4 years' and 5 years' imprisonment, to be served concurrently. In 2003 and 2004, the appellant opened a number of accounts with two banks in Hong Kong. Between 27 August 2003 and 26 February 2005, a number of deposits, totaling HK$570,000, were made into one of the accounts. And between 8 October 2004 and 3 June 2005, some other deposits in the total amount of HK$11,000,000 were made into another bank account. But shortly afterwards, that sum of money was withdrawn or transferred into other bank accounts. The appellant claimed that he set up those accounts in order to receive illegal bets on behalf of others, and that he would be paid $8,000 per month as remuneration. The Court of Appeal held that the overall sentence of 5 years' imprisonment was manifestly excessive, and the appropriate term should be one of 3 years' imprisonment.

(7) In HKSAR v. Chen Szu Ming (CACC 270/2005), the appellant pleaded guilty to three counts of money laundering. That case involved what the Court of Appeal described as ‘a sophisticated money laundering scheme' which took months of elaborate planning and preparation. The amount involved was HK$17,000,000. The starting point was 5 years and the appellant was sentenced to 40 months' imprisonment, to be served concurrently.

(8) In HKSAR v. Fan Shek Hung (CACC 393/2006), the appellant was convicted after trial of one count of money laundering and a sentence of 6 and a half years was imposed on him. The case involved defrauding the purchaser in a property transaction of the deposit in the sum of $31,000,000. Although the appellant was only involved in the fraud of $15,000,000, the Court of Appeal came to the view that it was an orchestrated fraudulent scheme and the appellant should therefore be sentenced for money laundering, rather than for the indictable offence underlying the money laundering activities. The Court of Appeal held that the starting point of imprisonment for 6 and a half years was manifestly excessive and reduced it to 5 years and 8 months.

(9) In HKSAR v. Wang Yu Hsin (CACC 173/2009), international and cross-regional scams were perpetuated by an international fraud syndicate on victims who were mostly mainlanders studying and living overseas. The modus operandi of the syndicate was that it phoned the victims in the names of different companies, misinforming them that they had won a sizeable lottery at the lucky draw held by the companies. The victims had to pay various advance fees, such as administrative fees and tax, before they could receive the lottery payment. The victims acted upon the instructions and made deposits into bank accounts in Hong Kong. They later found out that they had been cheated. Between February and July 2008, members of the syndicate lured people in many countries to remit money into the designated bank accounts in Hong Kong, and the total amount involved was HK$11,600,000. There were ten defendants in the case and a total of 58 charges, all being money laundering charges except one theft charge, were laid respectively against them. The three appellants were D7, D8 and D9 in the original trial. D7 was the wife of the key figure of the fraud syndicate. She was sentenced to 5 years and 6 months' imprisonment on Charge 47, which was a money laundering charge with no specific amount stated. D1 and D2 were co-defendants of the same charge and as they had pleaded guilty to other charges, Charge 47 was kept in the court's file. In respect of Charge 1 that D1 and D2 were convicted of, the facts were that D1 set up eight bank accounts within half a month since March 2008 and made use of six of them to deal with HK$5,000,000 in proceeds of crime. D2 set up ten bank accounts between February and April 2008 and made use of six of them to deal with HK$6,500,000 in proceeds of crime. The starting point for D1 and D2 was 4 years' imprisonment. The Court of Appeal took the view that the sentence passed on D7 should not be higher than that, so the term of 5 years and a half was reduced to 4 years. As for D8, he pleaded guilty to five counts of money laundering involving a sum of HK$600,000. D9 pleaded guilty to one count of money laundering involving HK$900,000. Regarding the sentences on the two of them, the Court of Appeal was of the view that a starting point of 3 years' imprisonment, as adopted by the court, was sufficient to reflect the full range of factors such as that the case involved an international syndicate, the charges were perpetrated by the defendants over a wide geographical region and the amount of money laundered.

Position of the Respondent

11.  Mr. Robert Lee, Senior Public Prosecutor, submitted on behalf of the Respondent that there were aggravating factors in the present case because it involved money laundering activities perpetrated by an international fraud syndicate after elaborate planning, and that D2 was a member of the syndicate.

12.  Further, Mr. Lee submitted that the starting point of 4 years' imprisonment adopted by Deputy Judge Chan had been adopted in Chow Ying Kai and Wang Yu Hsin, as well as in HKSAR v. Mak Shing (CACC 322/2001). In the latter case, the appellant was convicted after trial of three counts of money laundering and was sentenced to 4 years' imprisonment in respect of each count, to be served concurrently. The amount involved was $15,000,000 which represented monies from thefts in the Mainland China. The Court of Appeal was of the view that the term of 4 years was an appropriate one, but in view of the legal arguments involved at the time of trial, the sentence was reduced by 1 year.

13.  Mr. Lee also adduced the following two cases:

(1) In HKSAR v. Abayomi Bamidele Fayomi (CACC 159/2009), the appellant was charged with three counts of money laundering. An amount of HK$1,243,261.78 was involved and it represented the proceeds of a deception case. The Court of Appeal agreed that the starting point of 3 years and 6 months' imprisonment was appropriate.

(2) In HKSAR v. Jain Nikhil & Anor (CACC 405/2006), two appellants were charged with two counts of conspiracy to money launder and one count of using forged passports, and the amount involved was HK$3,900,000. The Court of Appeal held that a starting point of 5 years' imprisonment was appropriate for the money laundering charges.

List of authorities

14.  The amounts involved and the sentence of the various cases adduced by the Counsel on behalf of both parties are listed as follows:

	Amounts of money laundered	Sentencing starting points
1) Xu Xia Li & Another	$11,000,000 (Not guilty plea)	2 years and 9 months
2) Javid Kamran	$1,000,000 (Guilty plea)	3 years
3) Chow Ying Ki	$3,000,000 (Not guilty plea)	4 years
4) Yam Kong Lai	$4,000,000 (Not guilty plea)	4 years
5) Zhan Jian Fu	$2,000,000 (Guilty plea)	Two counts, each sentenced to 3 years
6) Lee Ka Ki	$11,570,000 (Not guilty plea)	3 years
7) Chen Szu Ming	$17,000,000 (Guilty plea)	5 years
8) Fan Shek Hung	$15,000,000 (Not guilty plea)	5 years and 8 months
9) Wang Yu Hsin	D1 – $5,000,000 (Guilty plea) D2 - $6,500,000 (Guilty plea) D7 – (Guilty plea) D8 – $600,000 (Guilty plea) D9 – $600,000 (Guilty plea)	4 years 4 years 4 years (final sentence) 3 years 3 years
10) Mak Shing	$15,000,000	4 years
11) Abayomi Bamidele Fayomi	$1,243,000	3 years and 6 months
12) Jain Nikhil	$3,900,000	5 years

The view of this Court

15.  We agree that in the circumstances of the present case, a more severe sentence should be imposed.

(1) This case involved cross border criminal activities. The Appellant is a Taiwan resident who came to Hong Kong to set up local bank accounts with the view to receive overseas deposits from fraud cases. As remarked in the precedents, such acts of the offenders will tarnish the reputation of Hong Kong as an international finance and banking hub.

(2) The case involved well-organized illegal activities with elaborate planning. To a certain extent, D2 had knowledge of the involvement of criminal activities in the case and the source of the monies. D2 was arranged to come to Hong Kong from Taiwan with other defendants. While in Hong Kong, D2 and other defendants were arranged to stay in a rented apartment and were received by a man called ‘Lo Chiu'. D2 opened three bank accounts in Hong Kong and falsely claimed to the bank staff that he was a wholesaler. When the police searched the apartment rented by D2 and another person, they found inside it the name cards of the Applicant, on which the words of ‘山珍海味食物公司' （which literally mean a food company of delicacies from land and sea） and its address were printed. The money involved in this case amounted to $25,800,000 and the money laundering activities were carried out over a period of two months.

(3) According to the Admitted Facts, D2 told the police under caution that his accounts were set up to receive remittances from a Singaporean friend. He also said that a person called ‘Lo Chiu' directed him to launder the money.

16.  However, this Court must also take into account the amount involved. D2 personally dealt with approximately $2,500,000 in proceeds of crime. In accordance with the above authorities, admittedly the courts have adopted the same starting point of only 4 years as in the present case, and some courts have even adopted one that is less than 4 years, despite the involvement of greater amounts in many of those cases. This Court is of the view that the appropriate sentencing starting point should be one of 3 years and 6 months, and reducing it by 1 month on account of D2's admission of the facts, the final sentence imposed is one of 3 years and 5 months' imprisonment.