HKSAR v. WOO YUET SIM AND ANOTHER

DCCC 1088/2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL ACTION NO 1088 OF 2015

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REASONS FOR SENTENCE

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INTRODUCTION

1.  D1 and D2 are convicted after trial of one joint charge of conspiracy to deal with property known or believed to represent proceeds of an indictable offence, contrary to s 25(1) and (3) of the Organized and Serious Crimes Ordinance, Cap 455 (“OSCO”) and ss 159A and 159C of the Crimes Ordinance, Cap 200, commonly known as “money laundering”.  (Charge 12)

2.  Besides, D2 is also convicted after trial of 10 charges of lending money at an effective rate of interest which exceeds 60% per annum, contrary to s 24(1) and (4) of the Money Lenders Ordinance, Cap 163, commonly known as “loan sharking”.  (Charges 1 to 10)

3.  The facts and the evidence are as stated in the Reasons for Verdict and I am not going to repeat those.  Shortly stated:-

(i) as regards the loan sharking charges, between August 2005 and August 2009, D2 lent money to various persons named in those charges at effective interest rates in excess of 60% per annum. The loan amounts ranged from $300 (Charge 2) to $20,000 (Charge 10), totalling $74,300. The interest rates he charged varied from 120% to 368.72%, with many of them at 240%. The total amount of interest he received was about $15,130; and

(ii) as regards the money laundering charge, during the conspiracy period between 4 May 2009 and 14 May 2011, D1 at D2’s request agreed to let him have the use of her HSBC bank account. D1 had reasonable grounds to believe that her bank account would be used by D2 to deal with proceeds of his indictable offence. She admitted that she agreed to do that in return for a deduction of $3,000 from the debt she owed him. In D2’s case, he had the requisite knowledge as the proceeds concerned belonged to him. Subsequently, monies which were D2’s proceeds of loan sharking were deposited into D1’s aforesaid bank account.

D1’s antecedent

4.  D1 is now aged 74.  She had two previous court appearances giving rise to a total of 6 convictions, including one for obtaining property by deception (1998) and five for using a false instrument (all in 2000).  She is a housewife.

D2’s antecedent

5.  D2 is now aged 59.  He had one conviction of attempted robbery back in 1981.  He has hepatitis since 1995 and had a liver transplant in 2006.  He is also said to have been suffering from a lung disease. 

Loan sharking - sentencing considerations and starting points

6.  The offence on indictment carries a maximum penalty of a fine of $5 million and an imprisonment term of 10 years.  There is no sentencing tariff. However, in R v LUI Sau-cheong [1993] 2 HKCLR 298, Bokhary JA (as he then was) had the following to say:-

"Such operations are unfortunately all too frequent nowadays. In case after case coming before the criminal courts, one sees a procession of offenders to a large extent driven to the offences - whether involving dangerous drugs, forgery, fraud, theft, robbery, burglary, or any other number of offences - to escape the clutches of loan sharks with whom they had the misfortune to deal. The courts have in recent years seen enough of the evils and ills of loan-sharking to become fixed with a duty to combat the same by penalties heavier than those generally imposed in the past."

7.  In HKSAR v Cheung Wing Lam (CACC 32/2004), Stock JA (as he then was), giving the judgment of the Court of Appeal, said,

“All cases of loan sharking will to one degree or another be different and there are a number of factors that will affect sentence, including the modus operandi of the loan shark, whether threats or violence are used or are implicit, the circumstances of the loans, the relationship between the lender and borrower, the extent and time span of the activity, the interest charged, the size and scale of the operation, the number of persons involved, whether there is a triad connection, whether there are other persons engaged in the operation or behind it, and so on: all matters of that kind.”

In the aforesaid case, the applicant was convicted after trial of 20 charges and was sentenced to 27 months’ imprisonment. The charges spanned about 2 years and 5 months. The amounts lent on each occasion ranged from $3,000 to $10,000. The effective rates of interest ranged from between 360% per annum (one charge only) to 520%; 547%; 563%; and 685% (the rest). The applicant had imposed terms on the borrowers in each case that repayments be made on a daily basis of several hundred dollars per day. It is common ground that the amount of interest in fact received by the applicant in respect of those charges was $35,000 and the loans totalled $142,000. On appeal, the sentence was reduced to 18 months’ imprisonment.

8.  Returning to the present case, Charges 1 to 10 spanned a period of 4 years.  It is obvious that D2 was running a money lending business.  Similarly to the case of Cheung Wing Lam, there is no evidence that D2 had used any threats or violence.  There was also no evidence of any triad involvment.  Yet, as the Court commented in Cheung Wing Lam that the absence of such threats must be looked at cautiously and realistically for one needs to acknowledge that loan sharking has characteristics which are inherent to the activity itself, and that the loan shark is not in the event of failure to recoup the loans likely to issue a letter before action.  On the other hand, I accept that the present case is less serious than Cheung Wing Lam’s case in terms of interest rates, loan amounts and interest payments.

9.  Looking at everything in the round including the circumstances of the present offences, I adopt the following as the individual starting points:-

Charge	Starting point
1	5 months
2	4 months
3	7 months
4	7 months
5	9 months
6	8½ months
7	9 months
8	9 months
9	8 months
10	10 months

The issue of totality will be dealt with after consideration of mitigation.

Money laundering - sentencing considerations and starting points

10.  The offence carries a maximum penalty of a fine of $5 million and an imprisonment term of 14 years on indictment.  In HKSAR v Boma [2012] 2 HKLRD 33, the Court pointed out that given the highly variable circumstances in which the offence might be committed, it was difficult and undesirable to offer guidelines.  However, the Court provided a non-exhaustive list of the relevant sentencing factors as follows:-

(a) the nature of the predicate offence;

(b) the state of the offender’s knowledge;

(c) where the operation involved an international dimension, that would be a significant aggravating feature;

(d) the sophistication of the offence, including the degree of planning;

(e) where the offence was committed by or on behalf of an organised criminal syndicate, that would be an aggravating feature;

(f) whether there was one transaction or many and the length of time over which the offence was committed;

(g) whether the offender continued to launder funds after he had discovered the nature of the funds were proceeds of an offence or a serious offence was involved; and

(h) the role of the offender and the acts performed by him.

11.  In HKSAR v Hsu Yu Yi [2010] 5 HKLRD 545, the Court again stressed that fact-specific nature of the offence regarding sentence.  However, it was also pointed out that the amount of the money involved, rather than the amount of benefit received by a defendant, is the major sentencing consideration.  The same point was reiterated in Secretary for Justice v Ngai Fung Sin Apple [2013] 5 HKLRD 104 where it also said, at §44 of that judgment, that if there is evidence which can prove from what serious crimes the “illicit/black money” was derived and if the defendant was aware of the origin of the “illicit/black money”, that would be an aggravating factor. 

12.  In Secretary for Justice v Wan Kwok Keung [2012] 1 HKLRD 201, a case decided before Boma, Yeung JA (as he then was), referred to HKSAR v Hsu Yu Yi, ante, where Cheung JA set out the amounts of money involved and the sentences passed in a number of previous similar cases.  It was noted that a sentencing starting point of 4 years or so had been adopted in cases where the amount of money involved is between $3 million and $6 million.  One example is HKSAR v Yam Kong Lai [2008] 5 HKLRD 384 where the appellant was found to have known that the funds were proceeds of an indictable offence for the simple reason that she had stolen them. However, the Court emphasised that the appellant was charged with money laundering and should have been sentenced solely for her role in dealing with the proceeds of the theft, rather than for her role in the theft itself. 

13.  On the other hand, in HKSAR v Chiu Chi Wing (CACC 243/2012), a case decided after Boma, the Court of Appeal, differently constituted, considered that 4 years’ imprisonment was the appropriate totality of sentence for the appellant who, over a period of one and a half year laundered a total of $12 million which was his proceeds of bookmaking. It is pertinent to note, however, that the Court reiterated that the proper approach to attaching weight for purposes of sentence to knowledge in a defendant of the nature of the predicate offence is that articulated in Boma. Furthermore, the Court emphasised that the gravity of the offence lies in the damage it does to the integrity and reputation of Hong Kong’s banking system. Given the importance to Hong Kong of its role as an international finance centre, that conduct jeopardises a cornerstone of Hong Kong’s economic welfare.

14.  In the present case, the conspiracy period lasted for a total of about 2 years.  The predicate offence was that of loan sharking.  On the other hand, there was no criminal syndicate behind the offence and no international element.  Nor was there any sophisticated planning involved.

15.  In D1’s case, her role was limited to lending her bank account to D2 for his use in return for a deduction of $3,000 from her loan.  Her conviction was based on “having reasonable grounds to believe”.  She did not have the control of her bank account during the currency of the conspiracy and she did not know how much would eventually be laundered through her bank account.  The use of that bank account by D2 came to a halt at around the time when she asked D2 not to use it anymore.  In my assessment, the appropriate starting point for her is one of 12 months’ imprisonment.

16.  In D2’s case, the money laundered through the bank account actually belonged to him and this, coupled with the fact that the proceeds related to his loan sharking activities, makes him much more culpable than D1.  The bank records show that during the charge period there were deposits in the total amount of $4,336,000.01.  About 76% of that total amount was made by way of cash deposits and there were 1,257 times of such deposits.  Almost all money was withdrawn in cash through ATM.  I appreciate that apart from the about $20,000 from PW7, there is no direct evidence as to how much of the other deposits actually came from D2’s loan sharking activities.  I engaged Mr Davies on this issue during mitigation.  Mr Davies submitted that all the prosecution could prove was the $20,000 from PW7 and the other monies related to D2’s parallel goods business.  I bear in mind that the burden of proof is on the prosecution.  However, based on the evidence available at the trial including:-

(a) the evidence that D2 had been doing money lending business for at least part of the conspiracy period;

(b) my rejection of D2’s evidence that he had conducted parallel goods business in his own name and what he said about “Ah Shing”;

(c) the huge difference between D2’s income reported to the Inland Revenue Department and the vast amount of wealth that D2 managed to accumulate during the relevant period;

(d) the fact that he had used his own Hang Seng Bank account for the parallel goods business of New Oceanic;

(e) the fact that New Oceanic also had its own bank account; and

(f) the pattern of deposits and withdrawals,

I am satisfied beyond reasonable doubt that a significant proportion of the deposits paid into D1’s bank account during the currency of the conspiracy were D2’s proceeds of loan sharking. As such, I do not accept Mr Davies’ submission that only a small amount of money in D1’s bank account related to D2’s loan sharking activities.

17.  Bearing in mind the relevant sentencing principles and the circumstances of the present case and having regard to the level of sentence imposed in previous cases (only as examples and not as guidelines), in my view the appropriate starting point for D2 for Charge 12 should not be less than 30 months’ imprisonment. 

Delay

18.  A chronology of events was prepared by the prosecution.  I note that the police investigation was about 3 suspects including D1, D2 and a third party and a total of 57 bank accounts had been examined.  I note also that the Police first received information about the involvement of D1 back in October 2010 and as a result D2 was also identified in February 2011.  Having looked into some of the bank accounts of D2, the Police took about 11 months to identify the debtors and after that an additional 10 months for further investigation.  I note also that the Police had taken about 34 months between February 2012 and December 2014 to make “Further enquiry – including background check of D1, D2 and [the third party]” and that covered application for production orders, obtaining IRD records, unveiling four further bank accounts of D2 and obtaining transaction records of those accounts.  Then, the Police took 3 months between January and early March 2015 to complete the analysis of D2’s outstanding bank accounts.  Eventually, D1 and D2 were arrested in mid March 2015 and between March and April 2015 identification parades were arranged.  The OC case then took 3 months to assess the evidence and prepare report for legal advice.  On 8 October 2015 legal advice was given and the case proceeded to court.  Trial dates were originally fixed in late April 2016 but later the trial was moved to September 2016 (through no fault of the parties) and then the trial took its normal course, with verdict given on 11 November 2016. 

19.  From the chronology, I find that there had been a steady progress in the investigation throughout.  However, there is no escaping the fact that it had taken the police almost 4 years and a half to complete the whole investigation.  I note also that by March 2013, all statements had been taken from the debtors concerned and therefore the Police should have been in possession of some bank records for the purpose of taking statements.  This is because it was revealed during the trial that during the statement taking process debtors had been shown their bank records with the relevant entries highlighted for them.  Besides, from the exchange with Mr Lee for the prosecution in court, I understood that the investigation pertaining to the third party should not have contributed significantly to the total time taken for the investigation.  I note also that the statement taking exercise was finished in March 2013.  There was therefore a two year gap before the defendants’ arrest in March 2015.  In the circumstances, it seems that the police had taken more time than what would be reasonable before they arrested the defendants.  This is not to say that there had been a delay of two years.  One would appreciate that there were some follow-ups to attend to after the statement taking.  Moreover, the evidence obtained had to be analysis and summarised before the case could be presented for legal advice.  Based on the court’s experience with similar cases, it is estimated that the pre-arrest delay in the present case would be in the region of 9 months to one year.  There is no suggestion from the defence of any post-arrest delay.

20.  Turning to the law, it is well-established that delay is not, of itself, a mitigating factor, in particular when it was caused by difficulties in investigation, obstruction or lack of co-operation by the offender; and normal operation of the criminal justice system.  On the other hand, it is noted that delay may be conducive to the emergence of mitigating factors; for example, if, during the period of delay, the offender has made progress towards rehabilitation or other circumstances favourable to him or her have emerged.  It may also afford the defendant a reduction of sentence if the delay has resulted in significant stress for the offender or left him or her, to a significant degree, in ‘uncertain suspense’; or that during the period of delay the offender has adopted a reasonable expectation that he or she would not be charged, or a pending prosecution would not proceed, and the offender has ordered his or her affairs on the faith of that expectation.  Lastly, delay caused by dilatory or neglectful conduct by the prosecuting authorities or investigatory bodies may result in a discount of the sentence that would otherwise be imposed on the offender, if the court thinks it an appropriate means of marking its disapproval of the conduct in question.  See HKSAR v Chiu Chi Wing, ante, citing with approval the judgment of Buss JA in Scook v the Queen (2008) 185 A Crim R 164, at 176; and the relevant commentary in Sentencing in Hong Kong byCross & Cheung, 7^th edition, at pp 350-353. 

21.  In the present case, I find that there had been inordinate delay in the investigation prior to but not after the arrest of the defendants.  The defendants did not have an inkling of them being investigated prior to the arrest.  As such, this is not a situation where the defendants had been left in ‘uncertain suspense’ to any significant degree.  This is also not a case where the defendants had made progress towards rehabilitation or other circumstances favourable to him or her have emerged. However, in my view to mark the court’s disapproval of the dilatory conduct of the investigatory body a small discount should be given to the defendants.  In my view, the appropriate discount is one month. 

Sentence

D1

22.  For D1, I adopt 12 months’ imprisonment as the starting point of her sentence for Charge 12 which is reduced to 11 months for the delay as discussed above. 

23.  I have taken into account the mitigation put forward by Ms Tso including D1’s age, the cataract in one of her eyes, the removal of her gall bladder shortly after the arrest and the fact that she had successfully raised four children as a widow.  I have also read the mitigation letters written by one of D1’s sons and her friend. 

24.  It is well-established that ill-health will seldom, if ever, be a basis for reducing the sentence of crimes of gravity: Yip Kai Foon v HKSAR (2000) 3 HKCFAR 31.  Moreover, D1’s present health condition is not of such a nature and extent that could exercise the court to reduce her sentence.  I trust also that the Correctional Services Department would be also to provide and arrange appropriate medical care to her if need be.  However, in view of D1’s age and other mitigating factors I exercise my discretion to give her a further deduction of one month. 

25.  D1 is sentenced to 10 months’ imprisonment on Charge 12. 

D2

26.  For the sake of convenience, I set out again the respective starting points of D2’s charges as below:-

Charge	Starting point
1	5 months
2	4 months
3	7 months
4	7 months
5	9 months
6	8½ months
7	9 months
8	9 months
9	8 months
10	10 months
12	30 months

When fixing the above starting points, I have already taken into account what Mr Davies said about the circumstances of the offences.

27.  As discussed above, there should be a one-month deduction for delay from each of the above starting points.

28.  As regards D2’s personal circumstances, I have also considered his health condition and illness.  Similar to the case of D1, I am of the view that D2’s health condition is not such as to afford him a deduction in sentence.  I trust also that the Correctional Services Department would be able to arrange appropriate medical care to D2 if and when necessary. 

29.  However, there are other matters put forward by Mr Davies, which in my view merit further deduction. After D2 had his liver transplant in 2006, his outlook of life has changed and he has since then consistently engaged in charitable works including providing free Chinese medicine and treatment to others.  Moreover, D2 has over the years donated over $2 million to various charities.  Despite his substantial wealth, he has led a modest life.  I have read the mitigation letters written by his wife, his step-son and his son and daughter, all of them praise D2 highly as a hardworking but loving and caring father.  In the circumstances, I give him a further deduction of 2 months to reflect the positive aspect of his character. 

30.  The individual sentences, after adjustment for mitigation, become as follows:-

Charge	Starting point
1	2 months
2	1 month
3	4 months
4	4 months
5	6 months
6	5½ months
7	6 months
8	6 months
9	5 months
10	7 months
12	27 months

31.  Finally, there remains the issue of totality for D2.  When assessing the starting point for D2 on Charge 12, I have already taken into account the fact that the proceeds related to his loan sharking activities.  As such double counting should be avoided.  On the other hand, of all the loan sharking charges, only Charge 8 and Charge 10 fall within the conspiracy period of Charge 12 and the others were committed prior to the conspiracy.  Moreover, many of the loans had already been settled before the conspiracy.  Therefore, in my view a partly consecutive and partly concurrent sentence between two groups of offences is called for and a wholly concurrent sentence would not be appropriate. 

32.  In my view, a total sentence of 30 months’ imprisonment (after mitigation) would be appropriate for the case of D2.  To achieve this, I make the following orders:-

(i) sentences on Charges 1 to 10 are to run currently with each other; and

(ii) 3 months of the combined sentence of Charges 1 to 10 are to run consecutively to the 27 months’ imprisonment on Charge 12.

D2 is sentenced accordingly to a total of 30 months imprisonment.