HKSAR v. XU SHAOFENG

DCCC 676/2019

[2019] HKDC 1650

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 676 OF 2019

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Reasons for Sentence

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1.  The defendant has pleaded guilty to a single charge of dealing with property known or believed to represent proceeds of an indictable offence. He is a 39-year-old man, born in China but holds a Hong Kong identity card. The total amount of money involved in the single charge is US$3.7-million-odd and HK$6.9-million-odd, and the money went through accounts that the defendant was responsible for, between 31st December 2012 and 3rd October 2013. In conversion, the total amount is in the region of HK$36 million.

2.  The offence came to light as a result of payments made by victims of scams.  They were described by the prosecution in the first paragraph as “cyber-love scams”.  Various sums of money were paid by ladies who were deceived by unscrupulous men. 

3.  The account into which monies were paid was traced to a Hengchang Group Trading Company and then money was transferred to a Hongxing Trading Company, and the Hongxing Trade Company account was opened by the defendant.  The money were then further onward transferred to a Bank of China account.  The name is ZTL, Zhongjiang Trading Limited.  That is an account in the name of -- by a Miss Xin Yanli.

4.  The police investigation revealed the defendant had opened the HTC account on 20th October 2011, multi-currency account.  He was the sole authorised signatory of that account.  The company was involved in electronic products and mobile phone accessories, etc; had an address in North Point and a correspondence address in the People’s Republic of China.  There were two sub-accounts - a United States dollar account and a Hong Kong dollar account - and we can see, again from the facts, the payments in and out of those two accounts:  the US dollar and the Hong Kong dollar account.

5.  Between 31st December 2012 and 3rd October 2013, the 3.7-odd million paid into the US dollar account by 57 deposits, withdrawn by 87 withdrawal transactions.

6.  As far as the Hong Kong dollar account, again between the same dates, 6.9-odd million in 29 transaction deposits and then a withdrawal of 7.1-odd million by 36 withdrawal transactions.

7.  The reported income of the company bore no relation to the payments.

8.  The defendant was arrested on 20th January 2017.  In his cautioned statement, he admitted the accounts both belonged to him and it was set up in 2011, as we have set out in the facts.  He was the sole director, did not employ any staff, had been set up to trade business of electronic accessories, ceased to operate by the end of 2012 and early 2013.

9.  The defendant, as we subsequently found out, was enjoying poor health towards the end of the that period.  He has got liver problems.  He returned to the People’s Republic of China for rest and medical treatment, where he met a fellow villager, who suggested that the defendant let him use the account for the use of a person called “Hung”, and the account was borrowed for transfers.  Defendant said he has received a few hundred dollars as a reward and he was able to continue his living standard from those monies. He said the password had been kept by him before he lent, I think is the expression, the HTC account to another person, and then the account was lent to someone else.

10.  In a later statement, he said that Hung would give him $100 for each transfer done via the HTC account.  Defendant had no knowledge of the victims, had no knowledge of the predicate offences by which the monies were obtained which were paid into the account.  He had no knowledge of ZTL or the other wanted person in the case.  He did say he had helped to make two online transfers to the HTC account:  one transfer involving 500,000 and he did not remember the amount in the second transaction.  After that, he had given the password and token to the HTC account to the man he describes as “Hung”, and he says that he did that -- in the interview he says June or July 2013, but the investigation of the offence shows it must have been 2012, not 2013.  He had no control of the account after he had given over the password and token.

11.  Later on, in the second interview, he said he was getting 5 to 6 hundred dollars as a reward in each week for about three to four months, and the defendant admits that he committed the offence of dealing with property known or believed to represent the proceeds of an indictable offence, on the basis that he would have had reasonable grounds to believe that the property was the proceeds of an indictable offence.

12.  Turning to the defendant’s background, clear record, 39 years old, secondary education within China, no drug addiction or mental illness.  He has had a medical problem, verified, with chronic hepatitis B.  He has received oral medication but had stopped taking it for some six months, I am told by the Correctional Services Department.  He is now in Lai Chi Kok and his general health condition is stable but he will receive medical treatment during his detention for this illness.

13.  Turning to the question of the appropriate approach to sentence in this case, there is no tariff for this offence.  The case of HKSAR v Boma [2012] 2 HKLRD, in fact, said that there was no actual tariff, as the amount of factors that can be brought into the sentencing process, it is not possible to create a single, exhaustive tariff for these offences.  The court should look at such items as the nature of the predicate offence, if known, and the penalty available for that offence.  We do know that some of the offences relate to what is called the “cyber-love scam”, but that does not account for all the monies in the account.

14.  Secondly, the state of knowledge of the offender, whether the predicate offence is known to the offender, did he have knowledge of it, and the nature of the predicate offence.  There is no evidence the defendant did.  Did the defendant have knowledge of the fact that the funds were the proceeds of an indictable offence, by having actual knowledge?  In this case, he has pleaded guilty on the basis that he had reasonable grounds to believe, rather than actual knowledge.

15.  Is there an international dimension to the case?  The Court of Appeal considered that the Mainland, as they described it, being the People’s Republic of China, did give that case an international dimension.  I sometimes find that surprising, given where sovereignty lies in respect to Hong Kong, but it is said to be a significant aggravating factor.

16.  Sophistication of the offence, degree of planning, and whether deceit is practised, and is there an organised criminal syndicate, the amount of transactions, the length of time which was taken, and the role of the offender and the acts performed by him.

17.  The role of the defendant in this case is the provision of the account, plus assistance in one or two of the transfers, and the receipt of certain amounts of money.

18.  The defence ask me to look at the period over which it occurred (some, 10 months), the fact that the defendant is not proved to have any knowledge of the predicate offence, the offences themselves that we know of were not sophisticated, and the defendant is remorseful and fully co-operative.

19.  I must, having taken all those factors into consideration, come up with a suitable starting point for sentence and then reduce that by one-third, having regard to the defendant’s timely plea of guilty.

20.  A most significant aggravating factor in terms of sentencing, of course, is the amount of money that has been involved, some 36 million, but I cannot overlook the fact in the mitigating facts that the defendant is simply the lender of an account and that any sentence of this court should not be on the basis that the defendant had any knowledge of the predicate offence.

21.  Taking all these factors into consideration, I consider the appropriate starting point for sentence would be one of 39 months’ imprisonment.

22.  Defendant is entitled to the full one-third discount, so the final sentence would be one of 26 months’ imprisonment.

23.  That will be the sentence of the court.