HKSAR v. CHOI CHI MAN

DCCC 734/2023

[2025] HKDC 1920

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 734 OF 2023

________________________

________________________

________________________

REASONS FOR SENTENCE

________________________

The defendant was convicted, after trial, of a charge of "Conspiracy to deal with property known or believed to represent proceeds of an indictable offence". The subject property is $6.4 million odd which went through a bank account held by Madam Zhou Jielian ("Madam Zhou").

Evidence not in dispute

Background

2.  On 2 October 2013, Madam Zhou opened a personal savings account (No.078-530375-292)  with HSBC ("the HSBC Account").

3.  Mr. Leung Ka Man (PW3)  and Madam Zhou are husband and wife.  They married in Hong Kong in 2009.

4.  Citi Gold Finance Advisory Limited[1] ("Citi Gold")  was incorporated in Hong Kong on 1 February 2013.  The defendant was a 70% shareholder of Citi Gold since its incorporation.  He was also the sole director from 1 February 2013 to 14 August 2014.  On 14 March 2013, the address of Citi Gold's registered office became Nos. 5 & 6, 10^th Floor, Boss Commercial Centre, 28 Ferry Street, Kowloon.

5.  City Advisory Company[2] ("CAC")  commenced business on 27 November 2013.  The defendant was its sole proprietor.  CAC's business address was Units 1005-06, Boss Commercial Centre, 28 Ferry Street, Kowloon (same address as Citi Gold's registered office).

The predicate offence

6.  Mr. Chung Kar Keung (PW1)  gave evidence under immunity granted by the prosecution.  Around December 2004, PW1 became a member of a Mandatory Provident Fund ("MPF")  scheme run by Manulife.

7.  In January 2015, PW1 received 2 phone calls promoting loans.  The 2^nd caller suggested that he could help PW1 withdraw his MPF early.  The 2^nd caller then sent PW1 an address via WhatsApp.

8.  On the following day, PW1 went to Citi Gold's office at Ferry Street.  He was received by a Mr. Choi, who suggested PW1 to withdraw his MPF on the ground of permanent departure from Hong Kong.  Mr. Choi also told PW1 that if his withdrawal application was successful, he would charge 30% of the amount of MPF received by PW1 as his fees.  PW1 agreed to let Citi Gold handle the matter on his behalf. As a result, PW1 signed the claim form (in blank).  Before he left Citi Gold's office, PW1 picked up Mr. Choi's business card.

9.  Pursuant to Mr. Choi's instruction, PW1 went to the Home Affairs Department in Mongkok to make a statutory declaration on the same day.  Afterwards, PW1 returned to Citi Gold's office and handed the signed statutory declaration to a staff member since Mr. Choi was not around.

10.  PW1's MPF withdrawal application was approved by Manulife.  A cheque in the sum of $394,854.55 was given to PW1 on 25 February 2015.  PW1 deposited the cheque into his own Hang Seng Bank account.

11.  Respectively on 4, 5 and 6 March 2015, PW1 transferred a total sum of $110,500 into the HSBC Account by ATM as payment of the service fees due to Mr. Choi/Citi Gold[3].  A day or two after the last ATM transfer, Mr. Choi asked PW1 to collect his receipt.  PW1 collected the receipt from Mr. Choi at Citi Gold's office.

12.  PW1 claimed that Mr. Choi had asked him when he would leave Hong Kong and suggested him to go to the mainland.  PW1 went to Shenzhen alone in mid-March 2015 and stayed there for 3 days.  He then returned to Hong Kong and resumed his normal life.

13.  PW1 was not asked to identify Mr. Choi in court.

Money laundering

14.  PW1 admitted having made a false statutory declaration and having withdrawn his MPF by fraud.  In other words, the $110,500 transferred to the HSBC Account by PW1 constituted proceeds of an indictable offence.

15.  Between 11 November 2013 and 31 July 2017, the HSBC Account received a total of 1,062 deposits, which aggregated to a sum of $6,437,963.90.  During the same period, withdrawals which aggregated to the same amount were made from the HSBC Account.

16.  Between 11 November 2013 and 29 January 2015, a total sum of $289,220 was transferred from the HSBC Account to the defendant's 2 personal bank accounts (namely HSBC account 030-9-298875 and Hang Sang Bank account 227-438199-882).

17.  On 4 December 2014, a total sum of $11,200 was transferred from the defendant's 2 personal bank accounts to the HSBC Account (by way of 2 deposits).

18.  Respectively on 28 April and 8 September 2014, two sums of $10,000 and $28,000 were transferred from CAC's Hang Seng Bank account (228-707295-883)  to the HSBC Account.  Between 30 December 2014 and 16 February 2015, a total sum of $198,750 was transferred from the HSBC Account to CAC's Hang Seng Bank account.

PW3's allegations and the defendant's denials

19.  PW3 has pleaded guilty to a charge of "Conspiracy to commit money laundering" in DCCC 735/2022 (which is the same charge in the present case)  and was sentenced to 30 months' imprisonment by me in June 2024.  I was aware that PW3's guilty plea resulted in the prosecution offering no evidence against his wife (Madam Zhou)  and in his receiving a sentencing discount for agreeing to testify against the defendant at this trial.  

20.  PW3 alleged that the defendant had asked to borrow an HSBC account from him.  Out of friendship, PW3 lent the defendant the HSBC Account by giving him the bank card and password.

21. The defendant denied having borrowed the HSBC Account from PW3. He claimed that he wanted to run his own show, so he started CAC on 27 November 2013. He formally resigned as a director of Citi Gold on 14 August 2014 and Mr. Yam Hau Yin was appointed as the sole director of Citi Gold on the same day.

22. The defendant claimed that by January 2015, he was already running his loan referral business as CAC. He did not meet PW1 in early 2015 and was not involved in PW1's MPF withdrawal application in any way. The defendant also claimed that when he left Citi Gold, he did not bother to take his business cards away and did not know what others had done with them. Regarding the payments he made to the HSBC Account from his personal bank accounts and CAC's bank account, the defendant said they were loans to PW3 out of friendship.

Findings of fact

23. The following facts are undeniable :-

(i)   PW1's MPF became proceeds of an indictable offence when he withdrew it by fraud.

(ii)  PW1 deposited a total sum of $110,500 (taken from his MPF)  into the HSBC Account.

(iii)  PW1 and PW3 have no relations. There is no evidence suggesting that they knew each other in early 2015.

(iv)  Citi Gold and CAC shared the same address; their names in Chinese are almost identical, except CAC's does not contain the 2 characters "有限" ("Limited").

(v)  Between 11 November 2013 and 16 February 2015 (a period of about 15 months), a total sum of $487,970 was transferred from the HSBC Account to the defendant's 2 personal bank accounts and CAC's bank account.

24.  PW1 did not know the defendant. The only way which PW1 came to know the number of the HSBC Account was the Mr. Choi who served him at Citi Gold's office. Why would Mr. Choi ask PW1 to deposit the service fees into the HSBC Account? How did Mr. Choi expect to retrieve the $110,500 from PW3 or his wife?

25.  Regarding the total sum of $487,970 which was transferred from the HSBC Account to the defendant's 2 personal bank accounts and CAC's bank account, the defendant claimed that it constituted PW3's repayments on a "revolving loan" which he had extended to PW3. Yet, the defendant has admitted in the witness box that he made no record of such loans; there was no IOUs; and the loans were interest free. As a juror, I did not believe the defendant on this issue. I did not find PW3 having any legitimate financial ability to repay $487,970 within 15 months. The transactions between the HSBC Account and the 3 bank accounts controlled by the defendant clearly established a financial connection between PW3 and the defendant, legitimate or otherwise.

26.  Despite his claim that he had left Citi Gold in November 2013 to run his own business as CAC, the defendant picked a Chinese name for CAC, which was almost identical to Citi Gold's. He did not find a new office for CAC and continued to use Citi Gold's address. He did not resign as a director of Citi Gold until August 2014; and did not sell his shares in Citi Gold to the other shareholder. All of the above lead to one conclusion ‒ the defendant did not cut his ties with Citi Gold.

27.  Based on the undeniable facts mentioned above, I, as a juror, drew the irresistible inference that the defendant had borrowed the HSBC Account from PW3. I also found that the defendant was the Mr. Choi who served PW1. It is too much of a coincidence that there was another Mr. Choi at Citi Gold; PW1 happened to pick up one of the defendant's business cards left behind; Mr. Choi gave the number of the HSBC Account to PW1 for receiving payment of his fees; and Mr. Choi had access to the $110,500 deposited by PW1. Even if I had erred in finding the defendant to be Mr. Choi, the defendant no doubt had knowledge of PW1's fraudulent MPF withdrawal and had conspired with PW3 to deal with its proceeds using the HSBC Account.

Mitigation & Sentence

28.   The defendant is 36 and has a clear record. Defence counsel Mr. Khosa informed me that the defendant is single, but has a son (aged 4)  with his girlfriend. They reside together with the defendant's mother as a family of 4 in a public housing unit in Lam Tin. At present, the defendant is a water filtration system salesman, earning about $20,000 per month.

29. In mitigation, Mr. Khosa submitted that the predicate offence (i.e. the MPF withdrawal fraud)  was not the most serious in nature. The MPF belonged to the members until the funds were fraudulently withdrawn. In the present case, only $110,500 of "black money" went through the HSBC Account. Furthermore, the defendant's mother was declared a person with permanent disability after a traffic accident some years ago. Accompanied by some typical elderly diseases, her mobility is somewhat impaired and requires a carer to escort her to attend regular medical appointments. With the defendant gone, his girlfriend must care for both his elderly mother and young son, preventing her from taking full-time employment. The whole family will no doubt suffer.

30. I accept that the defendant is not a typical criminal. He has worked hard to earn a living to support his family. Friends and family members speak favourably of him[4]. His wrongdoing was devising an unlawful scheme to "assist" clients for fees.

31. Some people may take a different view, but MPF is not intended to be withdrawn prematurely to address a member's immediate financial difficulties, let alone by fraudulent means. The defendant's conduct compromised the integrity of the MPF system and imperilled the long-term financial security of its members such as PW1.

32. Regarding the issue of delay, the present offence lasted a little over 3.5 years and ended in July 2017 (some 8 years ago). Mr. Khosa informed me the defendant was first arrested by the Police in June 2015 in connection with City Gold. He was put on police bail for about 1.5 years. The Police then released him without bail, but told him that enquiries were still going on.
33. Only until after March 2023, when PW3 had finished giving his non-prejudicial statements, the defendant was arrested again. This case first reached the District Court in August 2023. After several mention hearings, in April 2024, the trial date was fixed. The trial proceeded as scheduled in April 2025. Mr. Khosa submitted that this case has been hanging over the defendant's head for over 10 years. I agree, even though I do not see any party at fault.

34. 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.[5]

35. 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 and HKSAR v Boma Amaso [2012] 2 HKLRD 33. 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.

36. In SJ v Ngai Fung Sin Apple [2013] 5 HKLRD 104, Yeung V-P held :-

Neither the fact that the "illicit/black money"was actually not derived from an indictable offence nor the defendant's ignorance of the actual source of the "illicit/black money" is necessarily a valid mitigating factor…[6]

37. I accept there is no evidence showing that other than the $110,500 from PW1, the funds received by the HSBC Account were related to any predicate offence. On the other hand, I cannot overlook the fact that an aggregated sum of about $6.4 million odd went through the HSBC Account in 3 years and 8 months (i.e. $1.7 million odd per year). Neither the defendant's nor PW3's income/earning capacity commensurate with the magnitude of the deposits received by the HSBC Account.

38. In the circumstances, I adopt a starting point of 4 years' imprisonment[7]. Since the defendant was convicted after trial, no guilty plea discount can be given. I would grant him a discount of 4 months for his clear record. For the delay element, I would grant him an additional discount of 4 months. Apart from these 2 aspects, I see no other mitigating factors which warrant any further reduction. I sentence the defendant to 40 months' imprisonment.