HKSAR v. YAGHI JOSE

DCCC141/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 141 OF 2012

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Reasons for Verdict

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1. The defendant, Mr Jose Yaghi, faces 3 counts of dealing with property known or believed to be proceeds of an indictable offence.  The details of the charges are set out in the charge sheet and the court is not going to repeat them here.  The defendant pleads not guilty to all the charges.

2. Throughout the trial the court bears in mind that the burden of proof rests squarely on the prosecution.  The prosecution is to prove the guilt of the defendant beyond a reasonable doubt before the court can convict him of any of the offences, and the court has to consider each and every one of the charges separately according to evidence.  The court also bears in mind that the defendant has a clear record when the court considers his propensity in committing the present offences and the credibility of what he said to the police and in court.

3. The first prosecution witness is Mr Prakash Parshotam Moolani (“PW1”).  He has been operating the Modest Trading Company Limited (“Modest”) in Zhejiang, China, dealing in textile business since 2004.  In June 2011 Modest bought some textile products from the Zhejiang Dongsheng Dyeing and Printing Company Limited (“Dongsheng”) and on 6 June 2011 he paid US$30,000 to Dongsheng through internet banking.  He, however, received an email purportedly from his employee Ms CAI Lai Cecilia, the 2^nd prosecution witness (“PW2”), from email account caicecilia@live.com, telling him to cancel the remittance and instead transfer the money to account number 015-837297-838 of DEKA Fin Limited (“DEKA”) with the Hong Kong and Shanghai Banking Corporation (“ HSBC”).  PW1 did accordingly.

4. PW1 gave to Linda, an employee of Dongsheng, a copy of the bank’s email confirming the remittance to DEKA (“Exhibit P9), but he was told that Dongsheng had not received the money.  PW2 gives evidence that her email account was in fact caicecilia@163.com and she had not sent the email to PW1.  She does not know the defendant and had never dealt with DEKA.  When PW1 found these out he knew that he had been cheated and he came to Hong Kong to make a report to the police.

5. The 3^rd prosecution witness Mr YU Kun (“PW3”) set up the Haining Frank Furniture Company Limited (“Haining”) in 2009 in Zhejiang, China and one of his customers was Mr Tom Forrester (“Forrester”) of Avanti Furniture Inc (“Avanti”) in North Carolina, USA.  On 8 June 2011 PW3 sold and delivered a large quantity of sofa covers to Forrester.  Allowing for a small part of them which had some problem he expected US120,852.7 to be paid into his account number 19352314040006990.  The goods were received by Avanti on 8 July 2011 but PW3 did not receive any payment.

6. On 3 August 2011, PW3 enquired with Forrester and was told that payment had already been made.  When PW3 still did not receive the money on 8 August 2011 he emailed Forrester who replied by email that there was some problem with the bank and the money would be sent within a week.  In the email Forrester also asked PW3 not to talk to him on “Skype”.

7. About a week later, PW3 called Forrester on “Skype” and was told by the latter that payment had already been made and he had received an email from PW3 acknowledging receipt of the money.  Forrester also said that PW3 had earlier on sent him an email telling him that he had changed his bank account.  PW3 replied that he had not changed his bank account and had not sent the email.  Forrester then forwarded the email to PW3 which is Exhibit P10.  PW3 says in court that he had not sent these emails and the email account, frank_yu123@hotmail.com, from which these emails were sent did not belong to him. 

8. PW3 sent to Forrester the emails purportedly sent to him by Forrester but Forrester said he had not sent those emails.  PW3 says that he has never had any dealings with DEKA and that he knows nothing about the bank account number 57010960101 to which, according to the banker’s affirmation of Standard Chartered Bank (“SCB”) in Exhibit P4 (prosecution bundle page 353) , Avanti paid a sum of US$120,822.8 on 5 August 2011.   PW3 says that he still has not received any payment for the sofa covers up to now.

9. The 4^th prosecution witness, Mr Yousif Khaldoon Mudher (“PW4”), is one of the owners of the Logic General Trading FZ Company (“Logic”) in Dubai, dealing in electrical goods, and Hangzhou Liangliang Electronic Lighting Company Limited (“liangliang”) was one of its suppliers.  The staff member of Liangliang PW4 in contact with was Mr Victor Sheng (“Victor”) whose email account was victorshengy218@gmail.  In August 2011, Logic purchased a large quantity of light bulbs from Liangliang for US$500,000. 

10. PW4 had a series of email correspondence with a person purported to be Victor Sheng of Liangliang of email account victorshengyq218@gmail and it was finally agreed that PW4 should pay the agreed deposit of US$150,000 to account number 57010960071 in the name of JYC Fin Agreement Limited (“JYC”) with the SCB in Hong Kong (Exhibit P11)(prosecution bundle page 33 to 39).  As PW4 had suspicion of the bank account, he paid US$50,000 only and informed this Victor Sheng about the payment (Exhibit P11)(prosecution bundle page 40 to 41).  This Victor Sheng further told PW4 by email to make all future payments to bank account number 817-437593-838 of Rai Co Limited with the HSBC in Hong Kong and PW4 paid US85,000 to the account and informed this Victor Sheng about it by email (Exhibit P11)(prosecution bundle page 42 to 43).

11. On 16 August 2011 Victor called PW4 saying that he had not received any payment for the light bulbs.  Victor also denied to have had those email correspondence with PW4.  After  the second remittance PW4 knew that it was a fraud and he asked the bank to stop the 2 remittances but it was too late to do so.

12. The 5^th prosecution witness Mr CHEUNG Ling Kit Ricky (“PW5”) is a certified public accountant and his company is located at Hollywood Centre, 610 Nathan Road in Hong Kong.  On 3 May 2011, he received an email from a person who named himself as Jose Yaghi saying he would like to set up 2 companies to deal in textiles trade.  PW5 in reply gave him the quotation of prices in setting up the 2 companies.

13. On 11 May 2011, PW5 had a web chat with Jose Yaghi by MSN and they could see each other over the monitors.  The purpose was for the latter to show PW5 his passport, a copy of which had been sent to PW5 by email on 4 May 2011 (Exhibit P12)(prosecution bundle page 61), and his proof of address.  PW5 found that the person and the photograph in the passport looked alike and the passport number correct.  Jose Yaghi said that he wanted to set up 2 companies in Hong Kong which were DEKA and JYC and he would come to Hong Kong at a date to be confirmed.  PW5 proceeded to set up the 2 companies.   

14. There were then correspondence by email between Jose Yaghi and Ms POON Yuen Fai Yuki, the secretary of PW5 who is called as the 6^th prosecution witness (“PW6”).  According to PW6 Jose Yaghi asked her to open bank accounts for the 2 companies with HSBC, DBS Bank (“DBS”), SCB and Bank of China (“BOC”).  After making appointments with the banks PW6 informed Jose Yaghi about it.

15. Jose Yaghi subsequently called at the office of PW5 in Hong Kong on 23 May 2011 and was served by PW6.  There is no dispute in the trial that he was the defendant.  PW6 made a copy of the passport of the defendant (Exhibit P15). She gave the documents of the 2 companies to the defendant to sign and he did accordingly (Exhibit P14)(prosecution bundle page 475 to 485).  She also gave the addresses of the banks to the defendant for him to go to open the bank accounts.

16. On 24 June 2011, PW5 received an email or MSN from Jose Yaghi, telling him to deposit the minimum deposit of HK$20,300 into the DBS account to activate the account.  After the money and service fee were paid into the HSBC account of Rya Management Limited, a company owned by PW5, on 30 June 2011, a cheque payable to DEKA was made out to deposit the money into the DBS account (Exhibit P12)(prosecution bundle page 77).

17. Later, Jose Yaghi asked PW5 to do the same for the bank account of JYC.  On 12 July 2011 PW5 received the money in the amount of HK$20,000 odd which was transferred from the SCB account of a company called Bing Global Contracting Ltd (“Bing Global”).  This company was a client of PW5 set up in April or May 2011 and it had come to the notice of PW5 that one of the banks had closed the account of the company based on administrative reasons.  PW5 found it odd and made a report to the Joint Financial Intelligence Unit (“JFIU”). PW5 says in court that all his correspondence with Jose Yaghi was sent to email account jo.yaghi@hotmail.com. The emails are produced as Exhibit P13 (prosecution bundle page A1 to A15). PW5 confirms that the address he used to set up the 2 companies for Jose Yaghi was the same as the one appeared in Exhibit P12 (prosecution bundle page 60), but he does not remember from what document he actually got the address at that time.

18. The 7^th prosecution witness, Ms LEUNG Pui Man, is a Customer Banking Service Manager of SCB Mongkok Branch. On 23 May 2011 Jose Yaghi called at the bank and she opened bank accounts for his 2 companies, DEKA and JYC. She filled in the necessary forms and documents with the information given by Jose Yaghi who signed the forms (Exhibit P4).  She mistakenly put down the date on the account opening documents of DEKA as 22 May 2011.

19. According to PW7 after all the necessary account opening forms and documents had been completed the bank would conduct checks about the information of the company which would take about 7 to 10 working days.  When there was nothing wrong the customer would be informed by mail that the account had been opened and could be used.  In the case of Jose Yaghi she informed him by email that the 2 accounts were opened about 2 weeks after the forms and documents were completed.  According to PW7, these 2 accounts had internet banking facilities and the relevant documents are Exhibit D21 and D22.   

20. After  that there were a series of emails between PW7 and Jose Yaghi.  (Exhibit P16)(prosecution bundle page 510-516). In one email Jose Yaghi asked PW7 to cancel the passwords of the internet banking facility of the 2 accounts because he had lost the tokens, but then in a subsequent email he asked PW7 to ignore the previous email because the tokens had been found.  There was also an email in which Jose Yaghi asked PW7 to check why the account of JYC had been blocked, allowing no transfer of fund in or out of the account, and to check the status of the account.

21. Around this period of time PW7 also received a telephone call from a person who claimed to be Jose Yaghi and PW7 recognised his voice as the person who had come to the bank to open the 2 accounts.  Jose Yaghi told her that he had arguments with his accountant who was familiar with his business including information about logging into bank accounts, so he wanted to cancel the accounts.  PW7 told Jose Yaghi to email her and she confirms that she received the email which is Exhibit D18 (equivalent to the email in lower portion of Exhibit D22), but she did not take any action because the telephone call took place in mid August 2011 and the bank had already taken internal action to close the 2 accounts.

22. When being shown Exhibit D87, a photograph of a Blackberry telephone showing 3 telephone numbers, PW7 recognised that the number 0085239210398 was her office telephone number while the second number 0085264687806 was her company mobile telephone number.  The 2 calls were made at 9.57 pm and 2.46 pm respectively which if they were UK time would respectively be 5.57 am and 9.46 pm Hong Kong time and she would not be working at those times.  She does not know what the third telephone number is.  PW7 says that she went on leave on 23 December 2011 and she travelled out of Hong Kong, but she does not remember if she emailed Jose Yaghi saying that she was on leave for 2 weeks.

23. The 8^th prosecution witness Mr FOK Shiu Hong Anthony (“PW8”) is an Assistant Manager in the Financial Crime Section of HSBC.  He gives evidence that about the computer record of account number 015-837297-838 (Exhibit P5)(prosecution bundle page 377 to 408), saying that the record was compiled by a person having knowledge of the use of the computer of the bank and there were security measures to prevent unauthorised interference of the computer which was operating properly.  He also explains the meaning of some of the transactions and terms used in the record.   

Admitted Facts

24. The evidence of the prosecution also consists of 5 sets of admitted facts made pursuant to section 65C of the Criminal Procedure Ordinance, Cap 221.  According to Admitted Facts (1):

(a) The defendant was arrested at about 1545 hours on 18 September 2011 at the Hong Kong Airport for the offence of internet fraud when he entered Hong Kong;

(b)The defendant entered Hong Kong at 1420 hours on 22 May 2011 and departed at 1931 hours on 25 May 2011 and entered Hong Kong again at 1619 hours on 18 September 2011, all the arrivals and departure being through Hong Kong Airport;

(c) DEKA and JYC were both incorporated in Hong Kong on 13 May 2011 and the Company Particulars Report are produced;

(d)The 2 video-recorded interviews of the defendant conducted on 19 September 2011 under caution which were voluntary in nature and the transcripts of the interviews which are accurate are produced as Exhibits P1A and P1B and Exhibit P2A and P2B respectively.

25. According to Admitted Facts (2):

(a) The translation of the heading of Exhibit P13 is “Sender/sent date/recipient”;

(b)The translation of the lower headings for the 5 columns in Exhibit P13 is “Date/Time/Sender/Recipient/message”;

(c) The translation of the Chinese characters in Exhibit P13 alongside the entries for 11/5/2011, 1643.10 and 1643.13 is “Jose wants to have a video communication with you. Accept (ALT C) Deny (ALT D) you have already accepted the invitation to accept the video communication. To hang up press (ALT Q)”;

(d)A copy of the report made by PW5 to JFIU (Joint Financial Intelligence Unit) is attached to the admitted facts.

26. According to Admitted Facts (3), in Exhibit P5 (prosecution bundle page 377 to 408), the HSBC Business Internet Banking Transaction Report from 6 May 2011 to 12 October 2011 at the 3^rd column from the left contains 4 different sets of numbers as “Remote I.P.”, namely, 80.89.188.60, 194.126.19.138, 78.40.176.17, and 78.40.176.245.  They represent the remote internet addresses from which the Bank’s computer system was accessed and all these addresses were located in Lebanon at the dates given in the second column of Exhibit P5.

27. According to Admitted Facts (4):

(a) The account number 015 837297 838 of DEKA with HSBC was frozen on 22 August 2011 with a remaining balance of US$30,349.90;

(b)The account number 570 109601 01 of DEKA with SCB was frozen on 3 September 2011 with a remaining balance of US$580.34;

(c) The account number 570 109 60071 of JYC with SCB was frozen on 26 August 2011 with a remaining balance of US$131,380.79.

28. According to Admitted Facts (5) Exhibit D25 is a true and accurate statement of the dates and transactions of the account of DEKA with DBS.

Record of Interviews

29. In the 2 video-recorded interviews under caution conducted on 19 September 2011 and admitted into evidence under Admitted Facts (1) the defendant denied the offences and what he said during the interviews is generally along the line of his evidence in court.  The court will come to them as and when required in the course of this verdict.

Case to Answer

30. After  the prosecution closes its case the defence makes no submission of no case to answer.  Having considered all the evidence the court rules that a prima facie case has been made out in respect of all the charges and there is a case to answer on every one of them.

Evidence of the Defence

31. The defendant elects to give evidence but calls no witnesses.  He says that he was born in Lebanon on 1 April 1969 and his mother tongue is Arab language, but he could speak English.  In 1974 civil war broke out in Lebanon and the schools did not open regularly.  Coupled with the financial problem of the defendant’s family he had received only less than one year of formal education.  He is not able to read and write Arabic and English.

32. He applied for asylum in the UK and was granted and he was also later granted the British citizenship.  He is married with a 10 year old child.  He works as a security guard in the UK providing services to night clubs and properties, earning about £2,500 to £3,000 a month.  He had provided services to an ambassador and religious leaders of Lebanon who visited London.  He has a clear record in both UK and Hong Kong.  His mother, 2 brothers and 7 sisters are still living in Lebanon.

33. In mid 2009 he came to know one Mr Hassan Habib (“Hassan”) through a friend of more than 15 years, Mr Kasab Mohammad (“Kasab”), in London.  The two were also Lebanese.  Hassan was about 37 to 38 years old, speaking good English, French and Arabic.  Kasab introduced Haasan as his cousin, meaning in Arabic culture a trusted friend.  Hassan said that he had a recycling plastic factory in Nigeria and also did all kind of business to make money.  The defendant had an impression that he was a rich person.

34. Around March 2011, Hassan came to London and when they were having fun in a night club, he proposed to partner with the defendant to do business of textile and clothing from China, India, Middle East and other countries.  They would buy clothes from manufacturers and sold them direct to middle men and customers, without the need to store them.  As the defendant had no savings, Hassan said he would put in the capital and take care of all the finance.  The defendant thought that he had been asked by Hassan to join because he held a British passport and was easier to travel than Hassan who held a Lebanonese passport. 

35. The defendant had in fact been thinking about changing job because his job was dangerous and one of his friends got shot and killed around Christmas in 2010.  He told Hassan he would think about the proposal.  After consulting Kasab and other friends he accepted Hassan’s proposal.  The agreement was that Hassan would provide all the money for the business and the defendant would open the companies in his name in Hong Kong.  When the defendant asked why not operate the business in London, Hassan said that Hong Kong was a city all businessmen would visit for business and he did not like doing business in Europe.

36. Hassan told the defendant that he had called his accountant to set up 2 companies in Hong Kong and the defendant had to fly to Hong Kong to sign the documents and open bank accounts for the business.  The defendant says that Labanonese did business mainly on personal trust and did not rely on documents.  Hassan told him that after setting up everything they would sign a contract.  The defendant gave a copy of his passport and his TV licence as proof of address to Hassan for opening companies in Hong Kong.  Hassan opened an email account, jo.yaghi@hotmail.com, for the business and said that it was to be given to the banks, accountant and customers.  Both of them had the password to the account.

37. Hassan went back to Lebanon and about 10 days later in March 2011, he asked the defendant again for proof of address and the defendant gave him a copy of his Barclays Bank statement.  Hassan told him that the accountant would start the steps to set up the companies.  On the instruction of Hassan, he showed his passport and the bank statement to PW5 around May 2011 through the internet.  The defendant did it in an internet café with the assistance of a friend.  After that he informed Hassan about it and the latter told him to go to Hong Kong.

38. He came to Hong Kong on 22 May 2011 and lived at the Marriot Hotel, the flight and accommodation being paid for by Hassan.  Acting on the information given by Hassan he went to see PW5 at his office and was received by a female who gave documents for him to sign.  The arrangements were made by Hassan and he did not take part in it.  He says that the email produced as Exhibit P13 (prosecution bundle page A15) was not sent by him but by Hassan.  He admits that he had the MSN video conference with PW5 on 11 May 2011 reproduced in Exhibit P3 (prosecution bundle page A1 to A3).

39. The female at PW5’s office gave him the documents and seals of the 2 companies, DEKA and JYC, as well as a piece of paper containing information about appointments with 4 banks, namely HSBC, SCB, DBS and BOC.

40. The lady refused to accompany the defendant to go to the banks and he went to them himself.  He opened accounts at HSBC, SCB and DBS, but as he did not have sufficient time he did not open the accounts in BOC with the consent of Hassan.  The bank staff members there filled in the forms and explained them to him.  He also gave his bank statement to the staff members as his proof of address.  The defendant says that it was a mistake of the HSBC to use the office of PW5 as his address, but he was not aware of it at that time.  He left Hong Kong on 25 May 2011.

41. Back in the UK, the defendant sent the 2 envelopes containing the documents and the security devices of the bank accounts of the 2 companies given to him by HSBC together with the 2 company seals to Hassan in Lebanon by courier.  They were received by Hassan.  He from time to time went to internet café or his friends’ places to check the email account of their business, jo.yaghi@hotmail.com.  His friend, Mike Shoumar (“Mike”), explained the contents of the emails to him and he sometimes called Hassan to ask him.  He came to realise that in 1 or 2 emails from HSBC it was said that some money, without stating the amounts,  had been deposited into the account.  He did not have the security devices so he was not able to log into the accounts on-line to find out how much had been deposited.  He telephoned Hassan who told him that he had paid in the money to activate the accounts. 

42. About 2 weeks after he was back in London he received 2 letters from SCB saying that the accounts of the 2 companies had been opened.  He came to know about the contents of the letters after they were explained to him by his friend.  Between the end of June and mid July 2011 Hassan called and asked the defendant if he had received the internet banking passwords from SCB.  The defendant said no and  Hassan said he had talked with the bank who had said that the password had been sent to the defendant’s home.  Hassan said that he would check with the bank.  He called back the defendant in about 40 minutes and gave him the DHL reference number.

43. The defendant called DHL who told him that 2 envelopes had been delivered to his home.  From the name who signed for the envelopes given by DHL he knew that they had been received by a staff member of the estate agency of his home.  After getting the 2 envelopes from the estate agency he forwarded them by courier to Hassan in Lebanon who confirmed receiving them the next day.

44. Around 10 August 2011, the defendant received several transaction letters from SCB (Exhibits D3, D4 and D5).  Mike told him that they were about money being put into the accounts.  He called Hassan and asked him how the business went on.  Hassan spoke generally but did not mention about the money paid into the bank accounts.  The defendant did not like it and called him again but Hassan still did not talk about the money.  The defendant told him about the SCB transaction letters and Hassan said he had paid money into the account because business was coming.

45. The defendant did not like the idea of Hassan not telling him about the money in the first call and he asked him to send him all the documents about the forthcoming business.  Although Hassan agreed to do so he did not receive any documents or satisfactory explanations from him. He tried to call Hassan but he sometimes hung up his call and for many times said that his uncle was in hospital.  There were also many occasions when Hassan said he would call back the defendant but never did so.

46. Around 11 or 13 August 2011, the defendant received further letters from SCB which his friend told him were about money coming into the accounts (Exhibits D6 and D7).  As he did not succeed in talking to Hassan over the telephone he had a bad feeling.  He told Kasab what happened and asked him to call Hassan to send him the documents.  Around 17 August 2011 the defendant received 2 more letters of similar nature from SCB (Exhibits D8 and D9).  The defendant had the feeling that Hassan was doing some deals without letting him know.  He told Kasab to tell Hassan to give him all the information or he would cancel the accounts.  Kasab later told him that Hassan had asked him not to worry and he would send him everything.

47. Around 16 to 18 August 2011 the defendant decided not to continue the business partnership with Hassan, even if information was sent to him because the mutual trust had gone.  On or about 17 August 2011 he received 3 similar letters from SCB (Exhibits D10, D11 and D12).  He tried to call PW7 at the numbers recorded in his Blackberry mobile telephone as shown in Exhibit D23.  He did not know the time difference between Hong Kong and London and he was unable to speak to her but had left a few messages for her.  He had kept no documents or information about the HSBC accounts but he tried to call the bank and the calls were answered by an answering machine.  He was not particularly worried about HSBC accounts because there was nothing to indicate that they had been used.

48. With the help of Mike an email to be sent PW7 was drafted by Mike and sent to the email account of the defendant’s son, ali0261@hotmail.co.uk(Exhibit D13).  The defendant copied it on a piece of paper (Exhibit D14) and then used a computer to send it.  The defendant admits in evidence that Exhibit P16 (prosecution bundle page 511) was the email he sent to PW7.

49. With the assistance of Mike the defendant successfully changed the password of the email account of the business,jo.yaghi@hotmail.com, so as to prevent Hassan from using it to communicate with the bank (Exhibit D15).  He asked for the confirmation of the change to be forwarded to the email account yaghi1@hotmail.co.uk and the replies dated 18 and 19 August 2011 from Microsoft Corporation are Exhibits D16 and D17.

50. After that he received a call from Hassan, saying, “you think you can change the password of the email.  I’m a computer expert and I can change everything in the computer like email.”  After the defendant had hung up he tried to access the business email account and found that his access was refused because the password had been changed.  As a result he was unable to see any of the replies of PW7 sent to him at this email account.

51. The defendant tried to call PW7 but could not get through the first time.  He called again and left a message.  After making a number of calls he managed to speak to PW7 for about 45 minutes at her branch telephone number.  He said he had a problem with a guy managing his accounts and asked her to freeze the bank accounts and cancel the internet banking facilities.  PW7 asked him to confirm it in writing and the defendant did so with the help of Mike.  The defendant confirms in court that the email of 19 August 2011 10:53:03 hours in the lower portion of Exhibit D22 was the email (equivalent to the email in Exhibit D18).

52. The defendant says in court that he did not tell PW7 that he had a problem with his accountant as testified to by PW7. He says that there were difficulties in his communication with PW7 because they spoke English with different accents.

53. The defendant points out that in the email in Exhibit P16 (prosecution bundle page 511) the time of 19 August 2011 00:42:50 is wrong because he only sent this email After  he had sent the email in the lower portion of Exhibit D22.

54. The defendant says in evidence that the email in upper portion of Exhibit D22 beginning with “Dear Jessie, Please ignore my last email……” was not sent by him.  He only sent the email in the lower portion of the Exhibit.  He also says that the emails in Exhibit P16 (prosecution bundle page 510, 512 and upper portion of page 513) were not sent by him.  He confirms that he had received the email of PW7 in Exhibit D26. 

55. The defendant later received 2 letters from SCB (Exhibits D23 and D24) which Mike told him were about the bank being required to return some money from the account to the person who had remitted the money.  The defendant says that he received the letters not before 12 or 13 September 2011.  He decided to come to Hong Kong to close the accounts and make a report to the police.  He arrived in Hong Kong on 19 September 2011 and was arrested.

Evaluation of Evidence

56. The evidence of the prosecution is largely not in dispute.  PW1, PW3 and PW4 were victims of frauds perpetrated on them while PW2 was the employee of PW1.  They do not know the defendant and their evidence concerns only how they were defrauded which is not challenged by the defence.  The court finds them to be honest and reliable witnesses and accept their evidence.

57. PW5 is a certified public accountant while PW6 is his secretary.  They assisted the defendant in forming the 2 companies and opening the bank accounts in the present case.  Their evidence is not controversial and is accepted by the court.

58. PW7 is a staff member of SCB who served the defendant when the defendant opened the bank accounts and she was also the person the defendant in contact with regarding matters relating to the accounts.  Her evidence is simple and straightforward.  PW8 is a staff member of HSBC.  His evidence relates to the operation of the computer of the bank and the production of certain computer bank record and the meaning of the terms used therein.  His evidence is not challenged by the defence.  The court finds that both PW7 and PW8 are honest and reliable witnesses and accepts their evidence.

59. The court has much reservation about the truthfulness of the defendant’s evidence in court.  In the account opening form of the bank account of DEKA with HSBC there are a lot of incorrect information. The annual business turnover of DEKA was described as US$1,500,000 (Exhibit P3)(prosecution bundle page 329).  The defendant explains in court that he told the bank staff that the company might do more or might do less business and the staff suggested this figure.

60. The number of years of business experience of DEKA was put down as 15 in the form (Exhibit P3)(prosecution bundle page 330).  The defendant says that what he said at that time was 5 which was the years of business experience of Hassan and the bank staff mistook it to be 15 years.

61. The defendant claimed in the form that he had previously invested in stocks (Exhibit P3)(prosecution bundle page 333) when he says in court that he had no such experience.  The defendant explains that he was telling the bank staff information about Hassan.  He even ridiculously says that stock to him did not mean shares but something put in storage or godown.  As for the information in the form that DEKA had 1 to 5 years experience in investment the defendant says that he was also talking about Hassan.

62. From the answers given by the defendant in court it is obvious that he is an evasive witness.  He even says that there was communication problem between himself and the bank staff.  When the counsel for the prosecution reminds him that this bank account was with HSBC and had nothing to do with PW7 the defendant changes to say that he is talking generally.

63. Regarding the account of DEKA with SCB there are also fictitious information in the account opening form including the commodities being handled by DEKA was described as furniture and home decoration (Exhibit P4)(prosecution bundle page 358).  The defendant insists that he did not say such thing and he only said that the company might do curtain business in future.  The bank staff misunderstood him and made the mistake.  It is impossible that the bank staff who is PW7 could have made such a mistake.  The defendant is no doubt being evasive again.

64. The defendant says that all the emails in Exhibit P13 (prosecution bundle page A1 to A15) sent to PW5 regarding the formation of DEKA and JYC were not sent by him but by Hassan.  He had accessed the email account 5 or 6 times but he could not read properly so he did not know what Hassan had written.  The defendant repeatedly emphasises in court that he is illiterate, then what was the purpose of accessing the email account for as many as 5 to 6 times if he was not assisted by someone who could read and explain to him what had been written.  What the defendant says does not make sense.

65. The defendant says that after receiving the letters from SCB about money being deposited into the accounts he called Hassan and he did not feel like it when Hassan did not mention about the money.  The purpose of the defendant calling Hassan was obviously to find out what the money was about.  He must be under the impression that the money was business proceeds.  He must be thrilled and at that time there was nothing to take away his trust in Hassan.  Naturally, the first thing he would ask Hassan about would be the money.  It was reasonable that he would have chosen not to raise it.  What the defendant says is simply illogical.

66. The defendant says that he decided to cancel the bank accounts because he suspected that Hassan was doing some deals without letting him know and the mutual trust between them had gone.  In his first email to PW7 (Exhibit P16)(prosecution bundle page 511) he, however, asked PW7 to cancel the passwords and tokens of the accounts because he had lost the tokens.  It does not make sense that the defendant did not tell PW7 what had happened but chose to lie to her about the reasons.

67. Although what the defendant said in the 2 video-recorded interviews are generally in line with what he says in court there are inconsistencies in them.  In the first interview he did not say that he had asked Hassan to provide him with the information about the forthcoming business as he says in court.  Instead he said that Hassan had told him that he was going to close the accounts and he had asked Hassan to provide him with the information of closing the accounts which was not forthcoming.  In the same interview he never said that he suspected Hassan doing deals without letting him know but only said that someone was using the SCB accounts without his permission.

68. In the second interview the defendant said that he had come to Hong Kong to clarify the matter because he had received 3 letters from SCB about the bank’s intention to return some money in the accounts to those who had paid in the money which required him to sign some papers.  Although in the latter part of the interview that he did say that he also wanted to close the accounts he never said that he had come to Hong Kong because of the letters of SCB informing him that money had been deposited into the accounts and that he suspected Hassan doing some deals without letting him know.

69. In view of such unreasonable and illogical instances the court is not sure whether the defendant has told the whole truth in court and in the interviews.

Dealing with the Money

70. The law of money laundering is clear. The prosecution has no need to prove that the money being laundered is actually proceeds of an indictable offence.  This, of course, does not apply in the present case because there is clear evidence that the money laundered in the 3 charges were proceeds of fraud.  As a matter of fact the defence has no dispute about it and has never raised it as an issue.

71. The issue is therefore whether the defendant dealt with the money in the 3 charges knowing or having reasonable grounds to believe that they represented proceeds of an indictable offence.  The defendant opened the bank accounts in question and he was the sole signatory of them.  He was also the sole shareholder of the companies in whose names the accounts were opened.  Money defrauded from the victims were paid into these accounts.  It is of no doubt that the defendant dealt with the money.

Real Possibility of Business Partnership

72. There are, however, matters in the present case which deeply trouble the court.  Although the court has already pointed out that there are discrepancies in what the defendant said in the video-recorded interviews and in court the stories given by the defendant in them are in broad terms consistent with each other.  The interviews took place about one day after the defendant was arrested and he was already able to raise a denial which he sticks to in substance in his evidence in court.  He could have of course made use of the one day interval to think out the story.  He might even have prepared the story well before he was arrested by the police.

73. The matter, however, does not stop here.  If the defendant knew that the money were proceeds of an indictable offence and dealt with them it does not make sense that he still chose to come to Hong Kong. He arrived in Hong Kong on 18 September 2011 which was more than 3 months after PW1, and more than one month after PW3 and PW4, had been defrauded.  These witnesses must have come to realise by that time that they had been defrauded and as the amounts of money involved were not small they must have reported the cases to the police.  According to Admitted Facts (4), the 3 bank accounts in question were frozen before the defendant came to Hong Kong.  The defendant was the sole signatory of the bank accounts involved.  He must know that if he came to Hong Kong he would no doubt be arrested.  Under such circumstances it is impossible that he would still have taken such a blatant risk to come to Hong Kong.

74. The prosecution suggests that the defendant came to Hong Kong to withdraw the money in the accounts.  The money in the accounts had all along been handled through internet banking, so it could be transferred out of the accounts by this method and there was no need for the defendant to come to Hong Kong.

75. The prosecution further suggests that there was a fall out between the defendant and his accomplices and the defendant was unable to operate the accounts on the internet.  The prosecution uses the email of the defendant asking for the issue of new passwords and tokens as support for this argument.  In this connection it is worth looking more closely at this piece of evidence.  The email in question was sent by the defendant to PW7 on 19 August 2011 in which the defendant asked PW7 to issue him with new passwords and tokens for the bank accounts.  The defendant, however, says in his evidence in court that the email was sent pursuant to the telephone conversation he had with PW7.  He told PW7 in the call to freeze the accounts instead of asking her to issue new passwords and tokens and PW7 to email her, hence the email.

76. The evidence of the defendant in this regard is supported by that of PW7 who says that the defendant told her to cancel the accounts in the telephone call.  Although PW7 uses the word “cancel” instead of “freeze” the meanings of the 2 words are close enough to regard their evidence as consistent.  The defendant says in evidence that he told his friend what he had talked to PW7 and his friend wrote the email for him.  There is a possibility that his friend misunderstood him.  The fact that the defendant told PW7 to cancel or freeze the accounts in the telephone call tends to support the defendant’s assertion that Hassan was using the accounts without providing him with information of what the transactions were about. 

77. In any event it is only a speculation on the part of the prosecution that there was a fall out among the defendant and his accomplices and there is no direct evidence to support such a contention.  The court is also of the view that there is insufficient evidence for the court to draw such an inference.  Furthermore, if the defendant was really part of a syndicate and there was a fall out there is still the question, as analysed above, why the defendant would be so stupid as to come to Hong Kong knowing full well that he would be arrested.

78. The significance of all these is that they tend to lend support the evidence of the defendant that he has only ended up in the present predicament because he had been deceived by Hassan on the pretext of forming a partnership with him to do textile and clothing business.  There is a real possibility that he did not know that the money paid into the accounts were proceeds of fraud or any indictable offences.

Reasonable Belief Money Being Proceeds of Indictable Offence

79. The prosecution, of course, has no need to prove that the defendant actually had such knowledge.  It will be sufficient if the persecution can prove beyond a reasonable doubt that he had reasonable grounds to believe that the money were proceeds of an indictable offence.  It is trite law that the test to be employed is partly objective and partly subjective : HKSAR v Shing Siu Ming & Others [1999] 2 HKC 818.  This case was decided under the old legislation but is still applicable to the new one under which the present case is brought.  The objective element requires proof that there were grounds that a commonsense, right thinking member of community would consider sufficient to lead a person to believe that the property in whole or in part represents proceeds of an indictable offence.  The subjective element requires proof that those grounds are known to the defendant.

80. The defendant says that he had known Hassan for some time and Hassan could speak English, French and Arabic.  He had the impression that he was a rich person.  The defendant had the idea that Hassan chose him as a partner in the business and promised to put in all the capital because the defendant held a British passport and could travel freely.

81. As pointed out above the court is of the view that there is a real possibility that the defendant was under the belief that he was having a business partnership with Hassan and had been deceived by him.  The circumstances of the case no doubt are such that no commonsense and right thinking member of the community would consider it sufficient to lead a person to believe that the money in the accounts were proceeds of an indictable offence.

Conclusion

82. Although the court is not sure whether the defendant has told the whole truth in court and in the interviews under caution, the court has, based on the evidence accepted, found that that there is a real possibility that he had really formed a business partnership with Hassan and had been deceived him.  Judging from all the evidence in the case the court must say that the conducts of the defendant are highly suspicious.  However, suspicion is one thing and proof beyond a reasonable doubt is another.  The court must conclude, though not without reluctance, that there is a reasonable doubt in the present case.  The benefits of doubt must be given to the defendant and he is accordingly acquitted of all the 3 charges.