HKSAR v. LIANG YONGXIANG

DCCC 514/2016

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 514 OF 2016

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Reasons for Sentence

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1.  The defendant pleaded guilty to 4 counts of Dealing with property known or believed to represent proceeds of an indictable offence[1] (counts 1 to 4) and 1 count of Conspiracy to deal with property known or believed to represent proceeds of an indictable offence (count 5).

Summary of facts

2.  All 5 counts involved situations where the victims received phone calls and being told, falsely, that a family member was detained and a ransom was demanded.

3.  The defendant was responsible for the collection of the ransom in all 5 counts. He did in fact collect the money in counts 1 to 4 and had remitted most of the money to a man in mainland China after keeping some for himself as agreed.

4.  The victim in count 5 managed to confirm her son’s safety while she was at the bank and told HSBC staff about the situation. Police was called and a dummy money bag was arranged for the defendant’s collection. The defendant was arrested when he showed up to collect it.

5.  During subsequent investigation, the defendant admitted to having remitted the money he had collected in counts 1 to 4 to a man ‘Ah Hing’ in mainland China.

6.  Police conducted investigation at the remittance agency and found the defendant’s name, passport number, address and signature on remittance receipts related to remittances made on the first 3 offence dates. Closed circuit television captured the defendant remitting money on 22^nd March 2016, the offence date for count 4. All 4 remittances were for a male called Wu Yuanjing (伍遠京) in mainland China.

7.  The defendant admitted under caution that while they were in mainland China, he and ‘Ah Hing’ had agreed via the communication application ‘WeChat’ that the defendant will help ‘Ah Hing’ to collect money in Hong Kong.

8.  ‘Ah Hing’ gave the defendant RMB1,600 for expenses and the defendant took the cross-border coach to Hong Kong.

9.  The defendant bought a pre-paid SIM card upon arriving in Hong Kong and gave the number to ‘Ah Hing’ who used it to communicate with the defendant and to direct him to collect money.

10.  The defendant deleted the conversation records with ‘Ah Hing’ from time to time as instructed.

11.  The defendant admitted under caution that he was aware that the money he was going to collect originated from unlawful dealings.

12.  The following table is for ease of reference:

Previous convictions

13.  The defendant is of previously clear record in Hong Kong.

Mitigation

14.  The defendant is about two weeks shy of 27 and a mainland Chinese citizen. He lives with his parents, who are farmers in their 60s, in Jiangmen. The defendant and his wife have two young children one being 2 years old with the youngest being 11 months old.

15.  The defendant used to be in the People’s Liberation Army. After his discharge, he became a self-employed phone salesman and would come to Hong Kong from time to time to stock up.

16.  The defendant committed the present offences in order to repay his debts. He had borrowed around RMB40,000 for his daughter’s finger amputation surgery and his father’s bulging sacrum operation.

Application to enhance sentence

17.  The prosecution applied under section 27(2) of the Organized and Serious Crimes Ordinance for an enhancement of the sentence on the grounds that the present offences are prevalent and that the nature and extent of the harm caused to the community by recent occurrences of the present offences do so warrant.

18.  The defendant opposes the application, disputing prevalence. Counsel for the defendant Mr Wong also submitted that if the application to enhance is successful, the enhancement should be less than one-third, since there is an obvious reduction of reported cases of similar nature.

Authorities with similar factual background

19.  In the case of HKSAR v Cen Huakuo (岑華擴), the 78 year old victim received a phone call from an unknown male who falsely claimed that her son was detained for committing offences of indecency. $250,000 was demanded for his safe return. There was negotiation and it was agreed that the victim would hand over $50,000 at a park. The appellant showed up to make the collection. He asked the victim if she had brought the money and had told her that her son was being detained. He knew the name of the victim’s son and had handed over a mobile phone for the victim to talk to another person, who kept pressing her for the money. The appellant was arrested when he was leaving, by Police officers who laid ambush in the vicinity. The appellant was 18 and a mainlander of clear record.

20.  The Court of Appeal found that the appellant did not take part in the deception and had only a sketchy understanding about the relevant indictable offence. It was very likely that he was just instructed to collect money from the victim.

21.  The Court, however, found that the fact that the appellant came from the mainland to commit the crime in Hong Kong an aggravating factor. The Court also found that the fact that the appellant knew that the money being laundered was derived from phone deception an aggravating factor.

22.  Taking into account all the circumstances of the case and the requirement that the sentence should have a deterrent effect in order to prevent mainlanders from taking part in such an abhorrent and despicable offence like ‘phone deception’ in whatever manner, the Court was of the view that the appropriate starting point is that of 3 years’ imprisonment.

23.  The Court also found that there should be a one-third enhancement pursuant to the Organized and Serious Crimes Ordinance, resulting in a final sentence of 4 years’ imprisonment.

24.  In the case of HKSAR v Lin Zong Yue (林宗悅), the appellant pleaded guilty to three counts of dealing with property known or believed to represent proceeds of an indictable offence. The 3 offences took place on 5^th and 6^th September and 28^th October 2013 and they all arose out of phone scams similar to our present case.

25.  In relation to the first charge, the 76 year old victim was told falsely over the phone by an unknown man that her son was being held captive and demanded a ransom of $200,000 for his safe release, or else the son’s limbs will be ‘chopped off’. The victim managed to borrow some money and took cash of $39,500 to where she was told to hand over the money.

26.  The appellant approached the victim and she handed the money over. The victim asked the appellant if he knew her son’s name and he replied that it was ‘Man Chai’ and then left.

27.  In relation to charge 2, the 81 year old victim received a call at his home, asking for full repayment of $200,000 that his son allegedly owed. The victim said he only had $30,000. The man on the phone asked for his address and then someone showed up 10 minutes later to collect the money.

28.  In relation to charge 3, the 80 year old victim received a phone call at home. She heard someone cried out ‘mom’ as soon as she picked up the phone. The victim immediately asked if it was Ah Tong, her son. The person, falsely, said he was Ah Tong and was being held captive. Another man took over the phone and demanded $400,000 for Ah Tong’s release, with someone shouting ‘Don’t hit me! Mom save me!’ in the background. The victim believed that it was her son who was in danger and agreed to pay $75,000 for his release.

29.  The victim brought the money and walked to the nearby market where the appellant approached her and handed her a phone, saying ‘this is Ah Tong’. The appellant then took the money from the victim.

30.  As it so happened, the appellant had been under Police surveillance since he entered Hong Kong from mainland China earlier that day and he was intercepted and arrested shortly after taking the money.

31.  In relation to charge 1, the appellant claimed that he had agreed to come to Hong Kong to collect money for an Ah Ming because he owed Ah Ming money. The appellant collected $39,500 and had remitted the money to a Jiangmen account. Ah Ming gave him $3,900 after the appellant returned to Jiangmen.

32.  In relation to charge 2, it was Ah Ming who phoned and instructed the appellant to collect the money. The appellant went to Mongkok to remit the $30,000 he collected. He then returned to Jiangmen and Ah Ming gave him $3,000 as agreed.

33.  In relation to charge 3, the appellant claimed under caution that he owed Ah Ming money and so had agreed to come to Hong Kong to collect money as instructed. He was to receive 10% of the collected money as reward.

34.  The Court of Appeal considered the above case of Cen Huakuo and found that “The situation of the applicant falls squarely within that referred to in Cen Huakuo, namely that he had no more than some sketchy idea about the predicate offence.”

35.  Regarding whether there should be an enhancement of the sentence, the Court also adopted the observation made in Cen Huakuo and found that the Court,

“may ... take into account the overall circumstances of the case in so far as they are related to the defendant’s culpability”. This means that the applicant’s acts were after all an important part of the phone scams, and at the material time phone deception was indeed rampant and caused great harm to the community. Therefore, it is appropriate to enhance the sentence in the present case pursuant the Organized and Serious Crimes Ordinance, as was the case in Cen Hua Kuo.”

36.  The Court found that a starting point of 3 years’ imprisonment should be adopted for charges 1 and 2 which took place on two consecutive days. Since charge 3 was committed just 53 days later, a higher starting point of 3 years and 3 months’ imprisonment was adopted. A full one-third discount for the appellant’s guilty pleas was given.

37.  The sentences were then enhanced by one-third pursuant to OSCO to that of 32 months, 32 months and 34 months’ imprisonment.

38.  The Court considered that the total sentence should be 46 months in order to reflect the overall seriousness of the case. The sentences in charge 1 and 2 were made wholly concurrent, with 12 months of this term to run consecutively to the sentence for charge 3, making the total of 46 months’ imprisonment.

Enhancement or not in our present case

39.  Counsel for the defendant did not contend the nature and extent of harm basis of the prosecution’s application to enhance. The only issue is whether this type of offence is prevalent.

40.  In deciding whether the prosecution had made out a case of prevalence, I sought guidance in the case of HKSAR v Chung Chi-king, CACC 504/2001 (date of judgment 4^th March 2003).

41.  In Chung Chi-king, the Court of Appeal had to consider whether the trial judge had wrongly enhanced the sentence on the basis that the type of fraud (Loco-London gold and silver fraud) was prevalent[2]. There the sentence was imposed on 30^th October 2001. The Court at paragraphs 19 and 20 made the following findings:

“19. The judge enhanced the sentence because he considered that this type of fraud was prevalent. The evidence produced by the prosecution under section 27(2) showed the statistics of this type of fraud from 1997 to 2001. The number of victims in 1997 was 129. The amount involved was $35,640,000.00. The offence peaked in 1999. Then the number of victims declined drastically from 710 in 1999 with money involving HK$158,000,000.00 to 41 victims up to August 2001 with money involving HK$14,600,000.00. There was clearly a substantial reduction in the number of victims and also in the amount lost by victims by August 2001. It cannot be said that an offence of this type was so prevalent at the time of the sentence in October 2001 that it would require the Court to enhance the sentence as a means of deterrence.

20. The judge was wrong to enhance the sentence on the basis of prevalence.”

42.  The decrease of victims was some 94% while the decrease in money involved was some 90%.

43.  The Court also held at paragraph 24 that the prevalence of the offence must be considered at the time of the sentence. The reason being that the purpose of an enhanced sentence is to impose a deterrence on potential wrongdoers.

The statistics in our present case

44.  Based on the table at Annex A of the information furnished by the prosecution in support of their application to enhance, it is possible that we are looking at a marked decrease in ‘drop-off’ telephone deception cases.

45.  In relation to all telephone deception cases received, for the 9-month period from January to September 2016, there are 732 cases. The total number for 2015 was 2880, being a monthly average of 240 cases. Even if there are 250 new cases in October, November and December 2016, the total for this year will still only be 1482 cases, representing a decrease of 1398 cases (or 48.5%).

46.  This trend appears to hold when considering the total number of ‘drop-off’ reports received. The 2015 total was 1117, being a monthly average of 93 cases. The 2016 figure as it stands is 222. Even if there are to be 95 cases per month from October onwards, the year-end total will still only be 507 cases, representing a decrease of 610 cases (or 54.6%).

47.  In relation to the number of attempted ‘drop-off’ telephone deception reports received, the 2015 total was 958 (itself down from 1012 in 2014), being a monthly average of 80 cases. The 2016 figure as it stands is 150. Even if there are to be 80 cases per month from October onwards, the year-end total will still only be 390, representing a decrease of 568 cases (or 59%).

48.  In relation to successful ‘drop-off’ reports received, the 2015 total was 159 (itself down from 183 in 2014), being a monthly average of 13 cases. The 2016 figure as it stands is 72. Even if there are to be 15 cases per month from October onwards, the year-end total will still only be 117, representing a decrease of 42 cases (or 26.4%).

49.  In relation to ‘drop-off’ cases resulting in the conviction of money laundering, the 2015 total was 63, being a monthly average of 5 cases. The 2016 figure as it stands is 5. Even if we double the monthly average and there are to be 10 cases per month for the next 3 months, the year-end total will still only be 35. This represents a decrease of 28 cases (or 44.4%).

50.  In relation to the amount of monetary loss in telephone deception cases, the total loss of all successful telephone deception reports in 2015 was $317,945,274, being a monthly average of $26,495,439.50.

51.  The amount as it stands in September 2016 is $155 million. Even if there is to be a loss of $27 million per month for the next 3 months, the year-end total would still only be around  $181 million, representing a decrease of some $136 million (or 42.9%).

52.  In relation to the amount of monetary loss of successful ‘drop-off’ telephone deception cases, the 2015 total is around $12 million, being a monthly average of $1 million.

53.  The amount as it stands in September 2016 is around $5.55 million. Even if there is to be a loss of $1 million per month for the next 3 months, the year-end total would still only be around $8.55 million, representing a decrease of around $3.45 million (or 28.75%).

54.  I find that based on the information furnished, there is a real likelihood that this particular type of deception cases had peaked in 2015, and that there is a real likelihood that it can no longer be regarded as prevalent. There must be a doubt as to whether the sentence should be enhanced on this basis.

55.  Furthermore, I am mindful of the following dicta of McWalters J in HKSAR v Li Kin-keung [2012] 4 HKC 303, at 310:

“...Use of the enhancement power can only be justified where the information furnished to the court establishes a need for a sentence containing a greater level of general deterrence. It is an exceptional power provided to the courts to be used sparingly and only when a court encounters exceptional circumstances that warrant its deployment.” (my emphasis)

56.  I am not sure that such ‘exceptional circumstances’ exist in our present case, at our present time, with the present statistics.

57.  As such, I find that the prosecution has not made out a case of prevalence and I refuse their application to enhance.

Sentence

58.  With the assistance of the authorities referred to above, I will impose the following sentences.

59.  In relation to counts 1 and 2, I adopt a starting point of 3 years’ imprisonment each.

60.  In relation to counts 3, 4 and 5, given that they were committed not long after the commission of the earlier two offences, I adopt a starting point of 3 years and 3 months’ imprisonment each.

61.  The above starting points had already taken into account the aggravating factor of the defendant being a mainlander who came to Hong Kong to commit the offences.

62.  The defendant is granted a one-third discount for his timely guilty pleas, resulting in 24 months’ imprisonment for each of counts 1 and 2; and 26 months’ imprisonment for each of counts 3, 4 and 5.

Totality

63.  Given the fact that the defendant had committed the 5 offences on 5 different occasions against 5 different victims, the offences cannot be said to be of a single transaction. Wholly consecutive sentences would, however, be crushing for the defendant.

64.  Having taken a step back, I find that a final sentence of 4 years after plea for all 5 counts is appropriate bearing in mind the continuous need for general deterrence against this type of phone deception related money laundering offences.

65.  I, therefore, order as follows. The 24 months sentences for counts 1 and 2 to run concurrently. The 26 months sentences for counts 3, 4 and 5 to run concurrently, with 24 months of this sentence to run consecutively to the sentences of counts 1 and 2, the balance to run concurrently.

66.  The total final sentence for all 5 counts is therefore that of 48 months’ imprisonment.