The defendant, Suen Kin-wing (“D”), pleaded guilty to two counts of dealing with property known or believed to represent proceeds of indictable offences, Counts 3 and 4, and admitted the Summary of Facts dated 25 January 2024. I convicted D on his own pleas and admission for the counts of fraud, 1st count, and theft, 2nd count, being alternative to the 1st count that D pleaded not guilty. I ordered them to be left on the court file.
Count 3 concerned a total sum of HK$50,621,075.91, US$5,149,262.34, and GBP160,963 in the integrated bank account numbered 033-646936-833 (HKD Savings), 033-646936-001 (HKD Current), 033-646936-201 (USD Savings), and 033-646936-202 (GBP Savings) held under the name of D with the Hong Kong and Shanghai Bank Corporation Limited, HSBC. The offence period was between 1 June 2016 and 28 June 2018.
Count 4 concerned a total sum of HK$10,621,778.92, US$1,719,998.09 and GBP1,430,656 in the integrated bank accounts numbered 786-173534-888 (HKD Savings), 786-173534-001 (HKD Current), 786-173534-209 (USD Savings), 786-173534-206 (GBP Savings) held under the name of D with Hang Seng Bank Limited, HSB. The offence period was the same as Count 3.
Before D pleaded to Counts 3 and 4 on 30 January 2024, he had appeared before me at a number of case management hearings. The present legal team represented the defendant for the first time at the last case management hearing, the seventh one on 13 April 2023. At the hearing on 13 April, D still indicated he would contest all four counts on the indictment.
Summary of Facts
The Summary of Facts dated 25 January 2024 reads:
“Background:
1. D was previously employed by HSBC, he joined UBS, Hong Kong Office as an associate director on 9 December 2013.
2. Male Yu Quan-li 于全利 (‘Yu’) and his wife female Lou Xiaojie 樓小洁 (‘Lou’) used to reside and carried on business in Nanjing City, PRC. They moved to Hong Kong in about August 2013 and are holders of Hong Kong identity cards.
3. On 25 March 2014, Yu and Lou opened a joint account numbered 373750 (‘UBS joint account’) at the Hong Kong office of UBS. D was assigned to be their ‘Client Advisor’. Yu and Lou had contacted D by phone and met D on numerous occasions, including official meetings for providing professional financial advice and social gatherings.
4. Between 2014 and October 2016, Yu and Lou received D’s services and made various deposits into and withdrawals from their UBS joint account without any impropriety. On 31 October 2016, their UBS joint account balance was US$8,949,396.96.
5. On a day in October 2016, during a telephone conversation between Yu and D in respect of remittance regulations, Yu remarked that it was troublesome to remit money (Renminbi) from PRC to Hong Kong, which had to be converted into US
dollars or Hong Kong dollars before depositing into their UBS joint account. To simplify the process, Yu agreed to transfer money (Renminbi) from Yu’s PRC bank account to other PRC bank accounts designated by D, D would arrange the money to be remitted to Hong Kong and deposited into the HSBC account held by D’s cousin Chi Xingxin (池幸心‘Chi’), the money would then be transferred into their UBS joint account.
6. Between 22 November 2016 and 2 February 2018, acting in accordance with accounts information provided by D through WeChat messages, Yu instructed his accounting staff to transfer a total of RMB132,400,000 to 29 PRC bank accounts designated by D via 37 bank transfers on 14 different days. Amongst the bank transfers, a sum of RMB5,000,000 was transferred into D’s account with China Merchants Bank numbered 6214-8301-4316-6196 on 12 May 2017.
7. After the aforesaid transfers were made into the PRC accounts designated by D, D provided Yu via WeChat with photographic images showing “Application for Transfer” of equivalent amount of USD or HKD from his cousin Chi’s HSBC account to UBS joint account. D further provided Yu and Lou with purported bank statements of their UBS joint account showing that the monies were timely deposited into their UBS joint account.
8. D resigned from UBS on 8 June 2018, the new ‘Client Advisor’ Miss Carmen Leung (‘Leung’) assigned by UBS provided an updated bank statement of the UBS joint account to Yu and Lou. Upon comparing the updated bank statement with the bank statements previously provided by D, there was a shortfall of about HK$124.9 million, a number of deposit records shown in the bank statements previously provided by D were not reflected in the updated bank statement.
9. On 11 June 2018, Yu called D repeatedly and confronted D with the shortfall and the discrepancies in the deposit records. D first claimed that the shortfall may be a problem of handing over with the new client advisor, D later alleged that there was another bank account in the name of “Empire Seals Limited” opened with UBS to hold the amount of HK$124.9 million for Yu. D promised to follow up the issue with the new client advisor. Subsequent enquiry with UBS confirmed that there was no account in the name of “Empire Seals Limited” with UBS.
10. In the morning of 12 June 2018, Lou visited D at his residence to follow up on the shortfall of money. In the course of conversation, Yu spoke to D on phone and demanded for explanation. D said the money was probably withhold by HSBC and not yet deposited into the UBS joint account. Lou and Yu are not satisfied with the explanation, D then arranged with Lou to go to HSBC for making enquiry in the afternoon. They went to the Harbour City branch of HSBC and were greeted by a staff of HSBC who asked them to fill in an ‘Enquiry Form’, Lou was told to wait for HSBC to investigate and revert. Lou then proceeded with D to UBS Kowloon office at Peking Road, requesting D to clarify the issue with the new client advisor.
11. While Lou and D were waiting for clarification at UBS Kowloon Office, report to police was made by staff of UBS.
12. At 6.28 pm on 12 June 2018, Police Constable 21164 Tang Hon-sing arrived at UBS Kowloon office and arrested D for the offence of fraud, D remained silent under caution.
13. Body search conducted on D upon his arrest found the following bank cards amongst other personal properties in his wallet: one ATM card of HSBC account numbered 004-559-516026-833 in the name of Chi Xingxin; one UnionPay card of China Merchants Bank account numbered 6214-8301-4316-6196.
14. House search on D’s residence was conducted by police officers on 13 June 2018 with the following exhibits found and seized amongst others: Overseas property conveyancing documents in relation to three real properties in United Kingdom and two real properties in Mainland China, total value of the five overseas properties as shown on the conveyancing documents equivalent to HK$29 million; car keys to vehicles including those manufactured by Ferrari, Lamborghini, Porsche, Audi were found, D led police officers to locate and seize those vehicles parked at different locations.
15. Subsequent inquiries with Transport Department confirmed that D and the two companies controlled by him set out below are the registered owners of the following vehicles:
VF3356, Lamborghini, Owner - Suen Kin-wing; UC9367, Ferrari, Owner - Suen Kin-Wing;
VG9616, Porsche, Owner - Mega On Limited;
UJ1246, Audi, Owner - Suen Kin-wing;
SU2627, Land Rover, Owner - Fourwell Inc Limited; AE2019, Honda, Owner - Suen Kin-wing.
Counts 3 and 4, dealing with properties known or believed to represent proceeds of indictable offence
16. D is the sole account holder and authorized signatory of integrated accounts numbered 033-646936-833 (HKD Savings), 036-646936-001 (HKD Current), 033-646936-201 (USD Savings) and 033-646936-202 (GBP Savings) held with the Hong Kong and Shanghai Banking Corporation Limited, collectively referred to as account 1. Account 1 was opened on 5 April 2008. From February 2015 to June 2018, correspondence address provided by D was at Flat 29C, Block 6A, Imperial Cullinan, Tai Kok Tsui, Kowloon (TKT address).
17. D is the sole account holder and authorized signatory of integrated accounts numbered 786-173534-888 (HKD Savings), 786-173534-001 (HKD Current), 786-173534-209 (USD Savings) and 786-173534-206 (GBP Savings) with Hang Seng Bank Limited, collectively referred as account 2. Account 2 was opened on 8 March 2018. Correspondence address provided by D was the TKT address.
18. Chi Xingxin (池幸心‘Chi’) is the sole account holder and authorized signatory of integrated accounts numbered 004-559-516026-833 (HKD Savings), 004-559-516026-001 (HKD Current), 004-559-516026-833 (CNY Savings, GBP Savings, USD Savings) with the Hong Kong and Shanghai Banking Corporation Limited, collectively referred as account 3. Account 3 was opened on 23 May 2016. Chi declared that she was a citizen of Mainland China and worked as customer officer at HK Broadband network with monthly salary in the range of HK$10,000 to HK$14,999. Chi provided a correspondence address at Guangzhou at the time of opening account 3. From 22 November 2017 to 21 July 2018, Chi’s correspondence address was changed to the same TKT address provided by D for correspondence in respect of account 1 and account 2.
19. Assistance from the Forensic Accountant’s Office was sought by the Police to conduct fund flow analyses of account 1, account 2 and account 3 during the period from 1 June 2016 to 28 June 2018. Forensic Accountant Cheng Ka-ngai reported that during the aforesaid period of assessment, there were substantial amount of deposits into and
withdrawals from account 1 and account 2 in currencies of HKD, USD and GBP. Using the average monthly exchange rates quoted from the Hong Kong Monetary Authority to convert the foreign currencies into HKD and excluding inter-bank transfers between D’s own accounts and bank adjustments, the total amount of deposits into account 1 and account 2 during the said period was HKD134,992,204.98.
20. The following table summarizes the deposits into D’s 2 accounts in different currencies. Account 1 (Count 3): HKD Savings, HKD35,858,278.91; HKD Current, HKD14,762,797; USD Savings, USD 5,149,262.34; GBP Savings, GBP160,963. Account 2 (Count 4): HKD Savings, HKD603,778.92; HKD Current, HKD10,017,999.96; USD Savings, USD1,719,998.09; GBP Savings, GBP1,430,656. Total, converted into HKD, HKD134,992,204.98.
21. Amongst the deposits into the said two accounts of D, the following amounts were transferred from Chi’s HSBC integrated accounts numbered 004-559-516026-833 (account 3). Amounts transferred to account 1 from account 3: HKD34,466,800, USD117,136, GBP113,676. Amounts transferred to account 2 from account 3: HKD210,000, USD1,719,998.09, GBP1,223,900. Total in HKD, HKD63,264,192.74.
22. Forensic Accountant reported that there were common counterparties making substantial deposits into account 1, account 2, and account 3. Withdrawals from the said three accounts were made to various counterparties for inter alia, repayment of visa cards spending, securities trading and to overseas recipients relating to property purchases, 24 out of the 266 counterparties were common payees of D and Chi’s account 3.
23. Further enquiries with estate agents revealed that apart from the three properties in United Kingdom shown in the conveyancing documents referred under paragraph 14 hereinbefore, D has purchased other properties situated at 8 Sasson Square, London, consisting of 27 units during the material time covered by the offences.
24. Subsequent enquiry with HSBC confirmed that the photographic images provided by D to Yu purporting to show “Application for Transfers” from Chi’s HSBC account to UBS joint account were false, no such transfer had been made by HSBC.
25. Inland Revenue Record revealed that D’s reported annual income for four years from 2014/2015 to 2017/2018 was in the total sum of HKD4,066,725, as listed out in the following table: 2014/2015, HKD948,542; 2015/2016, HKD1,403,382; 2016/2017, HKD1,102,953; 2017/2018, HKD611,398; Total, HKD4,066,275.
26. Company record revealed that D was the shareholder and sole director of two companies named Mega On Limited and Fourwell Inc Limited at the material time covered by the offences, these two companies did not file any tax return to IRD.
27. Forensic Accountant opines that the significant deposits received and withdrawals made by account 1 and account 2 during the said period were incommensurate with D’s major income source from his employment with UBS.
28. Police investigation against the top ten depositors making substantial deposits into account 1 and account 2 revealed that D had exchanged substantial amounts of RMB into HKD or USD via the service of a money exchange company in Hong Kong named Great Luck Money Exchange Company Limited (‘GLMECL’). Enquiries made with the proprietor of GLMECL revealed that on 27 September 2017, D transferred RMB20,288,460 from his account with China Merchants Bank (Beijing Branch) to agents of GLMECL in China for exchange into USD3,007,926. The sum was then deposited into the savings account numbered 033-646936-833 of D opened with HSBC (account 1). On 2 February 2018, Yu transferred RMB 19,200,000 into four different PRC bank accounts designated by D (that is RMB5,000,000 times 3 plus 4,200,000), the four PRC bank accounts were confirmed to be mainland agents of GLMECL who collected RMB on its behalf, the total sum of RMB19,200,000 were converted into Hong Kong currency and then deposited into Chi’s HSBC account numbered 004-559-516026-833 upon D’s request.
29. D now admits that between the 1st day of June 2016 to 28th day of June 2018, knowing or having reasonable grounds to believe that property in various currencies deposited into account 1 and account 2 as particularized in Counts 3 and 4 respectively, in whole or in part, directly or indirectly represented any person’s proceeds of indictable offence, dealt with the said properties.”
Background
D is 36 years old. He received university education in Hong Kong. He is single. He had a steady girlfriend at the time. D had a clear record at the time of the offences. On 20 December 2023, D was sentenced to 6 months’ imprisonment for two counts of contempt of court in respect of a civil matter related to this case.
He is registered with the Securities and Futures Commission. Because of his conviction in the present case, he will no longer be able to work as a licensed individual as he was before.
Mitigation
I have before me a full written mitigation prepared by Mr Boyton. For the discount to be given for D’s guilty pleas, Mr Boyton submits that given the time of D’s plea, he is entitled to a discount of between 25 per cent and 20 per cent. Mr Boyton asked me to exercise the discretion to give D a higher discount because his guilty pleas was the result of a plea bargain between the parties as a result of which the more serious offences, the fraud and theft charges were no longer pursued by the prosecution.
Mr Boyton draws my attention to the leading case of HKSAR v A male known as Boma Amaso [2012] 2 HKLRD 33. He accepts that deterrence for the offence of money laundering is a paramount consideration and the two offences in the present case involved an international element. He submits that there was little sophistication in the scheme. The period of the offences covered 2 years as particularised in the indictment but the plan seemed to have been effected within 1 month , that is between October and November 2016 as shown in paragraph 5 and 6 of the Summary of Facts.
Mr Boyton said Yu Quan-li and Zhu Lijuan were unable to testify at the trial because they were convicted of running a prostitution ring in Nanjing, China, in 2020 as shown by the internet reports attached to the written mitigation. The defendant asserts that he was not aware of the illegal prostitution operation of Yu and Chu.
D contends that the two money laundering offences had nothing to do with fraud or theft. He was tasked by Yu to purchase the overseas properties as his trustee in order to move his money out of China and Hong Kong so that Yu’s wife would not know.
Mr Boyton submits that the commission of Counts 3 and 4 all derived from the initial transfer of RMB132.4 million from Mainland China, effected by Zhu Lijuan. Mr Boyton accepts
that one can deal with the same proceeds but it is unfair to double count the dealings with the same proceeds twice, otherwise D will be punished twice for depositing and then withdrawing the same amount of proceeds.
He submits the total amount of deposits in the two bank accounts held by D is roughly the same figure, namely HK$134,992,204.98 as shown in paragraph 20 of the Summary of Facts. Mr Boyton submits that the sentences for Counts 3 and 4 should run wholly concurrent to reflect it was the scheme to maintain both bank accounts as a vehicle to receive and dispose of Yu’s RMB132.4 million.
Consideration
The maximum penalty for money laundering is a fine of HK$5 million and 14 years’ imprisonment. For this category of offence, deterrence is paramount. A significant feature for consideration is the amount of money laundered, though it is not the be all and end all of a case.
Deterrent sentences are required for the two charges of money laundering in the present case. Substantial amounts of money were involved. Count 3 concerned HK$50,621,075.91, USD5,149,262.34, and GBP160,963. I am given to understand that the total deposits converted into Hong Kong dollars amounted to HK$107,036,587.30.
Count 4 concerned HK$10,621,778.92, USD1,719,998.09, and GBP1,430,656. I am given to understand that the total deposits converted into Hong Kong dollars amounted to $27,955,617.68.
The total deposits involved for Counts 3 and 4 converted into Hong Kong dollars was staggering. That is HK$134,992,204.98.
Count 3 and 4 spanned over the period of between 1 June 2016 and 28 June 2018. For the information placed before me, I accept that the monies from Yu were very likely originated from organised, illegal prostitution for which Yu pleaded guilty to the related offences and was sentenced to 15 years’ imprisonment by the Mainland court.
However, for the proceeds laundered by the defendant, even if they originated from illegal prostitution perpetuated by Yu, the facts show that there were proceeds of fraud, Count 1, or theft, Count 2, practised against Yu by D, hence D had clear knowledge of the nature of the proceeds as well as the predicate offence, that is fraud, Count 1 or theft, Count 2. I am aware that D is to be sentenced for the two money laundering charges only, not for Count 1 or Count 2.
For D’s claim that he did not have knowledge of the predicate offence at the time, I reject his claim that he thought he was only helping Yu, that is his client, to hide his assets from Lou, that is Yu’s wife. Such claim is contrary to paragraphs 7, 8, 9 and 10 of the Summary of Facts admitted by D.
If D were acting under Yu’s instructions, he would not have to resort to the use of false bank statements to deceive Yu and Lou, paragraphs 7 and 9 of the Summary of Facts and Yu would not have to confront D on the shortfall and discrepancies in the deposit records. And D would not have to falsify the story that there was another UBS bank account in the name of Empire Seals Limited to hold the amount of HKD124.9 million for Yu, paragraph 9.
From the Summary of Facts, it is clear that D benefited financially from Counts 3 and 4. The proceeds were entirely at the disposal of D. He maintained a lavish lifestyle in commensurate with D’s major income from his employment with UBS, as evidenced by the number of expensive cars registered under his name and the two companies controlled by him and the overseas and Mainland properties purchased by him, paragraph 14, 15, and 23 of the Summary of Facts.
Paragraph 19 of the Summary of Facts states clearly that all interbank transfers between D’s own accounts have been excluded by the Forensic Accountant before the total amount of net deposits charged under Count 3 and 4 were arrived at.
Paragraph 19 of the Summary of Facts shows that all interbank transfers between D’s own accounts, including deposits from exchanges of foreign currencies have been excluded. I do not accept there was double counting between the two charges.
Paragraph 20 of the Summary of Facts shows that the amounts charged under Count 3 and 4 are the net deposits made into the two accounts in different currencies whereas accounts of withdrawals have not been included.
I accept that the money laundering scheme for Count 3 and 4 was not sophisticated in nature but the two offences obviously involved some cross-border and international element.
In my judgment, the fact that the guilty pleas to the money laundering charges was the result of plea bargaining between the prosecution and the defence is no good reason for an additional or greater discount.
D should be sentenced on the basis of the charges he pleaded guilty to and the facts he admitted. Appropriate reduction should be given for his guilty pleas, bearing in mind he pleaded guilty at the late stage of the proceedings.
In my judgment, a starting point of 10 years’ imprisonment is appropriate for Charge 3, a starting point of 6 years’ imprisonment is appropriate for Count 4.
The trial date for this case was originally scheduled to run from 10 November to 14 December 2022. The trial was adjourned to 4 March 2024 to enable D to seek legal representation. Numerous case management hearings have been held.
On 29 December 2023, the prosecution has prepared and filed the Admitted Facts and jury bundles of documentary exhibits consisting of 10 box files for each set.
I am given to understand that D’s first written approach for plea bargain was made on 30 August 2023, the prosecution responded on 13 September 2023.
D made up his mind to plead guilty to Counts 3 and 4 on 19 January 2024 after the prosecution has fully prepared the case for trial.
On the other hand, I accept that a great deal of court time and public money is saved by the guilty pleas of the defendant. In my judgment, D should be given 25 per cent reduction for his pleas which were only indicated after the prosecution has fully prepared the case for trial. The 25 per cent reduction has taken into account the hitherto clear record of D.
Having considered all the materials placed before me, I do not think D merits any additional reduction on top of the discount for his guilty plea.
For the reasons given on Count 3, I sentence D to 7½ years’ imprisonment. On Count 4, I sentence D to 4½ years’ imprisonment.
Totality
I do not accept there was double counting between Count 3 and Count 4. The two counts involved distinct and separate acts. Bearing in mind the totality principle, the sentences for Count 3 and Count 4 should be partly consecutive.
In my judgment, a total sentence of 10 years’ imprisonment which represents a notional starting point of 15 years’ imprisonment after trial should adequately reflect the overall criminality of the two offences.
I order 2½ years of the sentence of Count 4 to run consecutively to the sentence of Count 3. The total sentence is therefore 10 years’ imprisonment.