HKSAR v. CHIU WING HUNG

DCCC 630/2021, 38, 39, 99 & 340/2022 (Consolidated)

[2024] HKDC 489

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NOS 630 OF 2021, 38, 39, 99 & 340 OF 2022

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REASONS FOR SENTENCE

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1.  D4 Chiu Wing Hung pleaded guilty before me to 2 charges (Charges 14 and 15)  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, Cap 455; and one charge (Charge 17)  of Failing to surrender to custody without reasonable cause, contrary to section 9L(1)  and (3)  of the Criminal Procedure Ordinance, Cap 221, on an Amended Consolidated Charge Sheet dated 25 August 2023 involving 4 other defendants and 14 other charges not directed against D4.

2.  The other defendants and charges have been dealt with separately before another judge; Reasons for Sentence (in Chinese)  dated 23 June 2023 under the same consolidated case numbers refers.

3.  Particulars of Charge 14 are that D4, between about 11 June 2020 and about 15 June 2020, both dates inclusive, in Hong Kong, knowing or having reasonable grounds to believe that property, namely a total sum of $351,000 Hong Kong currency in the bank account held in the name of D4 with the Hongkong and Shanghai Banking Corporation Limited of account number 661-426783-833, in whole or in part directly or indirectly represented the proceeds of an indicatable offence, dealt with the said property.

4.  Particulars of Charge 15 are that D4, between about 23 June 2020 and about 24 June 2020, both dates inclusive, in Hong Kong, knowing or having reasonable grounds to believe that property, namely a total sum of $320,000 Hong Kong currency in the bank account held in the name of D4 with the Bank of China (Hong Kong)  Limited of account number 012-607-1-015979-4, in whole or in part directly or indirectly represented the proceeds of an indictable offence, dealt with the said property.

5.  Particulars of Charge 17 are that D4, on 29 May 2023, in Hong Kong, being a person admitted to bail, without reasonable cause, failed to surrender to custody as had been appointed by a court.

Facts admitted by D4

6.  One or more loan scam syndicate(s)  recruited D4 as stooge bank account holder.  D4’s two bank accounts at respectively HSBC (Account A - Charge 14 involving $351,000)  and BOC (Account B - Charge 15 involving $320,000)  were used to receive crime proceeds which were then swiftly withdrawn.

7.  Under Charge 14 relating to Account A, the victims of the loan scam were CHUI, NG, LO, CHAN, CHOW and HUNG.

8.  Under Charge 15 relating to Account B, the victims of the loan scam were ZHENG, MA and LEE.

Account A (Charge 14)

9.  Account A was a HKD account opened on 8 June 2020 by D4 in his name.  D4 was the sole signatory.  Account A was closed on 9 November 2020.

10.  Shortly after the account opening date, temporary depository patterns were observed in Account A, as shown below:

Date	Deposit	Withdrawal	Balance	Remarks
11/6/2020	HK$20,000.00		HK$20,000.10	From NG
	HK$10,000.00		HK$30,000.10	From NG
	HK$20,000.00		HK$50,000.10	From CHUI
		HK$20,000.00	HK$30,000.10	ATM Cash Withdrawal
		HK$30,000.00	HK$0.10	Counter Withdrawal by D4
12/6/2020 12/6/2020	HK$100,000.00		HK$100,000.10	From LO
	HK$50,000.00		HK$150,000.10	From CHAN
	HK$30,000.00		HK$180,000.10
	HK$20,000.00		HK$200,000.10	From CHOW
	HK$20,000.00		HK$220,000.10	From CHAN
	HK$50,000.00		HK$270,000.10	From HUNG
	HK$20,000.00		HK$290,000.10
		HK$250,000.00	HK$40,000.10	Counter Withdrawal by D4
		HK$20,000.00	HK$20,000.10	ATM Cash Withdrawal
		HK$20,000.00	HK$0.10	ATM Cash Withdrawal
13/6/2020	HK$10,000.00		HK$10,000.10	From CHAN
15/6/2020	HK$1,000.00		HK$11,000.10
		HK$11,000.00	HK$0.10	Transfer to Account B
Total:	HK$351,000.00	HK$351,000.00

Account B (Charge 15)

11.  Account B was a HKD account opened on 17 June 2010 by D4 in his name.  D4 was the sole signatory.

12.  Temporary depository patterns were observed in Account B, as shown below:

Date	Deposit	Withdrawal	Balance	Remarks
23/6/2020	HK$120,000.00		HK$120,000.00
	HK$40,000.00		HK$160,000.00
		HK$160,000.00	HK$0.00	Counter Withdrawal by D4
24/6/2020 24/6/2020	HK$100,000.00		HK$100,000.00	From MA
	HK$30,000.00		HK$130,000.00	From LEE
	HK$30,000.00		HK$160,000.00	From ZHENG
		HK$160,000.00	HK$0.00	Counter Withdrawal by D4
Total:	HK$320,000.00	HK$320,000.00

13.  The transactions above were significant transactions and were out of the usual activity pattern in the account (where deposits and withdrawals were normally in hundreds and thousands of dollars only, and occasionally tens of thousands, but not hundreds of thousands).

Arrest and Caution

14.  On 20 February 2021, D4 was arrested.  Upon search, one mobile phone was found on his person.  Under caution, D4 admitted the following at video-recorded interviews: 

(a)  He lived in a public rental housing estate; from February to November 2020, he worked at various jobs, earning around HK$7,000 to HK$8,000 per month; he is currently unemployed; he did not have other sources of income;

(b)  He met a male called Sam in March 2020;

(c)  He opened Account A for payroll purposes; in around mid-June 2020, he lent Account A’s ATM card to Sam; Sam wanted to borrow the account because he was bankrupt; afterwards, Sam disappeared; Account A had internet banking; he knew there were transactions in Account A but did not pay attention to them; in around July 2020, he found that Account A was frozen; therefore, he closed Account A; and

(d)  He opened Account B for payroll purposes; in late June 2020, he lent Account B’s ATM card to Sam as Sam had lost his own ATM card; Sam said he would give it back to him; afterwards, Sam disappeared; he did not report the loss of this ATM card; he received bank statements for Account B but he did not look at them and threw them away.

15.  At the material time, D4 did not own any companies, properties, vehicles or vessels in Hong Kong.

16.  D4 had not filed any tax returns since 2015.

Failing to Surrender to Custody (Charge 17)

17.  On 6 September 2022, D4 was granted court bail upon his indication of guilty plea for the present case.  Plea and sentence was fixed for 29 May 2023.

18.  On 29 May 2023, D4 failed to appear in the District Court for plea and sentence.  A warrant of arrest was issued against him.

19.  On 26 July 2023, D4 was re-arrested after a stop and search by PC21476.  D4’s wanted status was unveiled upon enquiry of D4’s identity with the Control Centre.

20.  D4 now admits that, at the material time, he did not have any lawful excuse or reasonable cause for failing to surrender to custody as had been appointed by the court.

Criminal record

21.  D4 has 5 previous convictions, none similar.

Antecedents

22.  D4 is aged almost 37 (33 at the time of the money laundering offences), educated to F3 level, unemployed at the time of arrest.  D4 lived in public housing in Tin Shui Wai.

Mitigation

23.  Mr Henry Ng of counsel assigned by the Director of Legal Aid mitigated on behalf of D4.  The following is a summary of the mitigation submissions.

24.  Under Charge 14 – Account A, it was D4 who on 11 June 2020 who withdrew $20,000 via ATM; it was also D4 who on 12 June 2020 withdrew $20,000 twice via ATM.  It was also D4 who on 15 June 2020 transferred $11,000 to Account B.

25.  D4 became married in 2013.  His wife is 32 years old.  Their daughter is 10 years old.  Wife and daughter are living in Shanghai.  Wife is working as a promoter in a hotel.

26.  D4’s parents are about 60 years old.  He has two young siblings.  His last job was as a casual site worker earning about $15,000 a month.  He was unemployed at the time of the money laundering offences.

27.  D4 indicated his guilty pleas to the money laundering charges as soon as possible before he jumped bail.  Although no one knew if D4 would still plead guilty upon re-arrest, Mr Ng still asked the court to exercise its discretion to give D4 the full 1/3 discount in sentence in light of the fact that only a short period of absconding was involved.

28.  D4 came to know a friend called “Sam” through playing basketball together.  Sam often treated D4 to meals.  D4 helped Sam out by lending to him the two subject bank accounts.  Sam told him that someone would deposit money into the two bank accounts.  Sam then instructed him to withdraw the money and handed it to Sam in full.

29.  Under Charge 14 – Account A, on 11 June 2020, Sam and D4 walked to the bank together.  Sam did not enter.  D4 went in on instructions of Sam.  After withdrawing a total of $50,000, D4 passed the same to Sam outside the bank. Sam gave $1,000 to D4 as reward.  On 12 June 2020, in a similar fashion, Sam passed $290,000 to Sam outside the bank.  Sam again gave $1,000 to D4 as reward.  On 15 June 2020, Sam instructed D4 to go to the bank and transfer $11,000 into D4’s BOC account (Account B).  D4 did so.  Sam did not give any reward to D4 on this occasion.

30.  Under Charge 15 – Account B, on 23 June 2020, Sam and D4 went to the bank together.  Sam did not enter.  D4 withdrew $160,000 and passed the same to Sam outside the bank.  Sam gave $1,000 to D4 as reward.  On 24 June 2020, in a similar fashion, Sam passed $160,000 to Sam outside the bank.  Sam again gave $1,000 to D4 as reward.

31.  D4 did all that for Sam for friendship’s sake rather than for the nominal reward.

32.  Moreover, D4 had no knowledge of the source of money that had been deposited into his bank accounts.  He however had reasonable grounds to believe that the cash was black money.

33.  The maximum penalty for money laundering is a fine of $5M and imprisonment for 14 years.

34.  There are no sentencing guidelines for the offence.  Generally speaking, the main sentencing factor is the amount of black money; but the amount is neither the only nor the most important consideration.

35.  In HKSAR v Hsu Yu Yi [2010] 5 HKLRD 545, the Court of Appeal stressed again the fact-specific nature of the offence regarding sentence. However, the amount of the money being laundered is a major sentencing consideration.  In paragraph 9 thereof, Cheung JA stated:

“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:

(a)  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.

(b)  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.

(c)  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 per se when determining the sentence of the dealing offence.

(d)  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.

(e)  The length of time the offence lasted.”

36.  In Secretary for Justice v Wan Kwok Keung [2012] 1 HKLRD 201, Yeung JA (as Yeung VP then was)  observed that:

“12. “Money laundering” is a serious offence for not only does it encourage criminal activities indirectly, but also attempts to legitimise the proceeds of crime. In order to crack down on serious crimes and to prevent offenders from getting financial gains, it is necessary to deter the commission of “money laundering” offences (see Court of Appeal in HKSAR v Javid Kamran (unrep., CACC 400/2004, [2005] HKEC 80), HKSAR v Xu Xia Li [2004] 4 HKC 16).

13. Generally, the sentence for a “money laundering” offence 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” is in fact derived. Of course if there is information to prove that the “black money” originated from serious crimes, including drug trafficking, kidnap and blackmail, illegal human trafficking and other organised crimes etc, or the defendant’s benefit is huge, then the sentence should be adjusted upward.

14. This Court has, in a number of other similar cases, also listed other factors relevant to the sentence to be imposed including the number of offences, the length of time the offence lasted, the degree to which the defendant participated in the offence involving “black money” and whether or not it was an organised and sophisticated crime etc.

15. In HKSAR v Hsu Yu Yi [2010] 5 HKLRD 545, Cheung JA set out the amounts of money involved and the sentences passed in a number of “money laundering” cases. The sentencing starting point is 3 years or so where the “black money” involved is between $1 million and $2 million; 4 years or so where it is between $3 million and $6 million; and could be over 5 years where it is above $10 million.”

37.  In HKSAR v Boma [2012] 2 HKLRD 33, the Court of Appeal emphasized that “the question of the amount of money laundered is not the be-all and end-all of a case, but is a significant feature”.  The Court went on to elaborate on the other relevant factors to be considered (at paragraph 40 of the judgment):

(1)  The nature of the predicate offence for generating “black money” and the sentence to be imposed;

(2)  Whether the defendant knew what the predicate offence was;

(3)  Whether there is an international element;

(4)  Whether the offence of “money laundering” involves elaborate steps, schemes or fraudulent means;

(5)  Whether there is a criminal syndicate;

(6)  The number of transactions and the length of time during which the offences were committed;

(7)  Whether the defendant continued to launder money after knowing the nature of the predicate offence; and

(8)  The role and remuneration of the defendant.

38.  Mr Ng then referred to the Reasons for Sentence (per Deputy Judge D Cheung)  of the other defendants under the same case numbers with neutral citation number [2023] HKDC 886 (in Chinese).  There, D2 and D5 each pleaded guilty to one charge of money laundering.

39.  D2 was concerned with deposits made between about 29 and 30 June 2020; the total amount involved was $295,000.  D2 had two previous convictions none similar.

40.  D5 was concerned with deposits made between about 23 and 24 June 2020 (6 deposits and 5 withdrawals); the total amount involved was $313,800.  D5 had 11 previous convictions none similar.

41.  Deputy Judge D Cheung was of the view that the appropriate starting point for the charges should be 12 months’ imprisonment.

42.  Back to D4, under Charge 14, the amount was $351,000; the transactions involved only 4 days and occurred within 5 days.  There were 12 deposits and 6 withdrawals.

43.  Under Charge 15, the amount was $320,000; the transactions involved only 2 consecutive days.  There were 5 deposits and 2 withdrawals.

44.  There is no evidence D4 knew the source of the money.  He was naïve and foolish.  He did not commit the offences for a long time.  The modus operandi was not complicated or sophisticated.  He was not a member of the criminal syndicate perpetrating the predicate loan scam.  There was no international dimension.  His role was merely a stooge bank account holder who received and withdrew crime proceeds.  He was a first-time offender of this type of offence.

45.  In light of the above, Mr Ng asked for a starting point of 12-15 months’ imprisonment for each of Charges 14 and 15.  Mr Ng asked the court to apply totality and make part of the sentences run concurrently.

46.  Regarding failure to surrender to custody, D4 was afraid to face punishment for Charges 14 and 15.  He was foolish by absconding.  His only mitigating factor is the plea of guilty.

47.  The maximum sentence is 12 months’ imprisonment.  There are no sentencing guidelines.

48.  In considering the appropriate starting point, the court should have regard to the following factors:

(a)  The underlying offence of the charge to which the defendant was originally facing;

(b)  The length of time the defendant has been absconding; and

(c)  The effect of the defendant’s absconding on the judicial process.

49.  D4 absconded for just under 2 months, which was not a long time.  It is admitted that D4 did not surrender himself but was re-arrested on being intercepted on the street.

50.  It was submitted that the judicial process was not seriously delayed. On 29 May 2023, the court continued to deal with the other defendants either for plea & sentence or for trial.

51.  Mr Ng referred to a District Court sentencing case (in Chinese), namely HKSAR v Ng Kai Shing (transliteration)  (D2)  & Anor, DCCC 337 & 538/2022, at paras 70-75.

52.  Mr Ng asked the court to consider a starting point of 3-6 months’ imprisonment and to order the sentence to run consecutively to the sentences on Charges 14 and 15.

53.  D4’s wife is starting divorce proceedings against D4.  D4 is saddened about this.  He promises to turn over a new leaf.  He hopes to fly over to Shanghai to see his wife and daughter as soon as possible.  A lenient sentence is asked for.

Sentence

54.  Money laundering is a serious offence.  It is the oil that enables the engine of the predicate offence to run smoothly and efficiently.  An immediate term of imprisonment must be imposed to deter would-be offenders.

55.  In sentencing D4, I have borne in mind the level of sentences and the reasons therefor imposed on D2, D3 and D5 under the same case numbers.

56.  On the money laundering charges, I shall take a global approach.  The two charges involved a total sum of $671,000.  On the amount alone, I think it right to adopt as an initial starting point 24 months’ imprisonment.  With the aggravating factors of receiving a reward of $4,000 and the use of more than one bank account, I shall enhance that starting point by 4 months to arrive at a final starting point of 28 months’ imprisonment.

57.  To Charges 14-15, D4 pleaded guilty not at the earliest opportunity.  I cannot give him the full 1/3 discount (see HKSAR v Au Chun Foo, CACC 125/2023).  All things considered, I will give D4 a discount of 25%.

58.  Individually and notionally, on Charge 14, I shall adopt a starting point of 14 months’ imprisonment; and on Charge 15, I shall adopt a starting point of 16 months’ imprisonment.  This has taken into account the aggravating factors aforesaid.

59.  On Charge 17, taking into account all circumstances especially the likely sentences of the offences from which D4 tried to evade, I will adopt a starting point of 4 ½ months’ imprisonment.  D4 has pleaded guilty in good time.  He shall be entitled to the full 1/3 discount.

60.  There are no other mitigating factors of weight to justify any further reduction in sentence.

61.  In principle, the sentence on Charge 17 ought to be served wholly consecutively to the sentences on Charges 14-15.  However, I shall still take into account the principle of totality before determining the final aggregate sentence.

(D4, please stand)

62.  On Charge 14, the sentence is 10 months and 15 days’ imprisonment.

63.  On Charge 15, the sentence is 12 months’ imprisonment.

64.  On Charge 17, the sentence is 3 months’ imprisonment.

65.  I order that 9 months of the sentence on Charge 14, and 2 months of the sentence on Charge 17, are each to run consecutively to the sentence on Charge 15.  The aggregate sentence is therefore 23 months’ imprisonment.