HKSAR v. WONG KING LEUNG

DCCC 362/2018

[2018] HKDC 1390

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 362 OF 2018

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REASONS FOR SENTENCE

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1.  The defendant has pleaded guilty to four counts of what is commonly known as “Money Laundering” offence.

The facts

2.  At the material times, the defendant operated two companies, namely, Ming Kee and Emex and 4 bank accounts under the name of these companies.  These accounts are what we call Accounts A & B with China CITIC Bank International; Account C with Nanyang Commercial Bank; and Account D with Dah Sing Bank in the present case.  The defendant dealt with the funds in these accounts between January 2015 and July 2015 and the total amount was around HK$3.5m.

3.  The underlying sources of this sum of money were fraudulent payment transfers resulting from bogus emails sent to the victimized suppliers of goods in these charges which had successfully induced the purchasers to make payment into a designated account in each case which turned out to be Accounts A to D of the defendant.  After that, the money did not go back to the victimized companies.

4.  For Charge 1, the victim was a company called Angel Star HK Ltd which was in the business of diamond trading.  In gist, the company had engaged in the delivery of a batch of diamonds from the supplier in India to the buyer in USA.  The purchase should be settled by direct payment from the buyer to the supplier.  It was overdue however.  Upon enquiry, it was revealed that the email system of the supplier had been hacked and the buyer had received emails purported to be sent by the supplier which directed the buyer to make payment for the diamonds.  As a matter of fact, the supplier had never sent out these emails and did not receive the money.  On the other hand, following the instructions in these emails, the buyer had made payments for the diamonds.  A payment of USD120,120 was made by way of remittance into Account A.

5.  For Charge 2, the victim was a HK company making advertisement boards. Similarly, this company expected to receive payment from a buyer in USA. However, as a result of a bogus email, the buyer was misled and caused to make the payment, in the sum of US$17,745, into Account B. 

6.  For Charge 3, a HK company making jewelry accessories had a deal with an Australian company.  Upon receiving some bogus emails, the payment was made by the Australian company into Account C.  The sum of money involved was US$35,000.

7.  For Charge 4, it involved a company called “Senli” in Guangzhou trading in motorcycle items.  Senli had a business relationship with Tima Trading Co which was based in Dubai.  Some goods amounted to US$230,000 were shipped to Tima and Tima had made payment into Account D as result of receiving a bogus email.

8.  Shortly after the payments were transferred into the Accounts of the defendant, the monies were taken out in cash in Hong Kong currency.

9.  Travel Index Check records confirmed that the defendant was in Hong Kong on the dates when:-

(1) Accounts A-D were opened;

(2) Accounts A-D were closed; and

(3) Cash withdrawals of the deposits in relation to Charges 1-4 were made.

10.  Since 2014, the Inland Revenue Department had no tax record of the defendant, Emex and Ming Kee. On the other hand, the Social Welfare Department has confirmed that the defendant had applied for CSSA between October and December 2013 and between August and October 2016.

11.  The defendant admits that, at all material times, he dealt with the payments, namely, HK$931,241.21 for Charge 1, HK$525,568.53 for Charge 2, HK$272,850.69 for Charge 3, and HK$1,780,808.93 for Charge 4, knowing or having reasonable grounds to believe that these amounts of money in whole or in part directly or indirectly represented proceeds of an indictable offence.

Mitigation

12.  The defendant is 34 years old.  He has some previous convictions but none of them is related to money laundering offence. 

13.  The defendant has been remanded in jail custody since March 2018. Before that, he was living with his aged parents.  The defendant had received education up to Form 2 level and he had experience in working as a delivery worker, waiter and cleaning worker.  He had made monthly financial contribution to his family when he was able to have a job.

14.  In mitigation, Mr Lee for the defendant says that the defendant was persuaded by his friend to help open the companies and bank accounts.  The defendant did not receive any reward but a promise of an offer of a stable job which did not materialize.  Mr Lee stressed that the defendant was not involved in the email frauds and all he had done was the dealings with the bank accounts and once he had taken cash from them, he had passed the money to someone else.

15.  Mr Lee accepts that this case involves certain international element.  Mr Lee also acknowledges that the guilty plea of the defendant is essentially his main mitigation.

16.  Mr Lee has helpfully referred this court to the case of HKSAR v Harjani Haresh & another CACC352/2015, unreported dated 30 March 2017 in which the application for leave to appeal against conviction was granted but the leave for appeal against sentence was refused.  The applicant in that case did not continue with the appeal against sentence.  For completeness sake, the Appeal Committee of the Court of Final Appeal had granted leave to appeal on the question of law concerning the notion of “willful blindness” and the appeal proper was set to be heard on 18 October 2018.  Mr Lee accepts that the defendant is guilty of the four charges in the present case and the development of the notion of “willful blindness” would not affect the position of the defendant.

17.  Back to the sentencing approach in Harjani, McWalters JA referred to the case of Secretary for Justice v Wan Kwok Keung [2012] 1 HKLRD 201, in which the Court of Appeal were of the view that for money laundering case involving HK$3-6 million, the starting point should be “4 years or so”. The trial Judge in Harjani accepted, suffice it to say, that the accused was not part of the fraudsters and he did not know about the fraud.  The trial Judge took a starting point of 4 years and reduced it by 3 months for the previous clear record and the manner the accused conducted the trial. McWalters JA did not disturb the sentence and refused the application for leave.    

Consideration of sentence

18.  Time and again, it is said that money launderingis a serious offence for which a deterrent sentence is required. 

19.  The courts have emphasized that an accused is to be sentenced on the facts of the money laundering charge and not on the facts of the underlying offence (see HKSAR v Yam Kong-lai [2008] 5 HKLRD 384). The sentence should mainly reflect the amount of the money laundered (see Secretary for Justice v Ngai Fung Sin, Apple[2013] 5 HKLRD 104)

20.  That said, although there is no sentencing tariff, imposing a term of immediate imprisonment is, as we can see from the relevant case authorities, the usual sentencing option even for an accused who has pleaded guilty and has a clear record. 

21.  Apart from the case referred to by Mr Lee, I have also considered the case of HKSAR v Hsu Yu Yi [2010] HKC 486 and HKSAR v Boma [2012] HKCA 52, where the court set out a number of significant features that would affect the sentence. 

22.  In BOMA, the Court of Appeal identified the features relevant in the sentencing of money launderers.  Stock VP regarded as relevant, apart from the amount of money laundered, the following factors:-

(1) The nature and penalty of the predicate offence;

(2) The nature of knowledge or belief of the predicate offence on the part of the money launderer;

(3) The international element;

(4) The sophistication of the money laundering offence, including the degree of planning or whether deceit is practiced to achieve the money laundering;

(5) The instance of a criminal syndicate;

(6) The number of transactions and the length of time in the money laundering process;

(7) Subsequent knowledge of the predicate offence evolved from a case of reasonable belief; and

(8) The role and acts of the money launderer, including his position and reward.

23.  In the present case, I accept that the defendant was not involved in the email scams which involved certain international element and organization or planning.  The defendant had allowed the fraudsters or people connected to them to use his accounts and the defendant also helped them taking out the money personally from the accounts on a number of occasions. The offences lasted for a few months.  They involved a number of accounts and companies.  And needless to say, the sum of laundered money was substantial. The HK$3.5m squarely falls within the range of sentence that gives rise to a starting point of “4 years or so”.

24.  Having carefully considered all the circumstances and the mitigations, I shall adopt an overall starting point of 4 years and 3 months ie 51 months.  I shall give 1/3 discount to reflect the guilty plea and the overall sentence is reduced to 34 months.  I see no further reduction appropriate.

25.  This overall sentence is achieved by the followings:-

For Charge 1, the starting point is 33 months reduced to 22 months;

For Charge 2, the starting point is 24 months reduced to 16 months;

For Charge 3, the starting point is 18 months reduced to 12 months;

For Charge 4, the starting point is 42 months reduced to 28 months.

26.  I shall order that 2 months of Charges 1, 2 and 3 to be served consecutively to each other and to the 28 months of Charge 4 (i.e. 2+2+2+28) making it a total of 34 months.