HKSAR v. LEE WING LEE AND ANOTHER

DCCC 611/2014

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 611 OF 2014

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REASONS FOR VERDICT

Introduction

1.  The defendants both held bank accounts with the Bank of China and betting accounts with the Hong Kong Jockey Club.  The defendants plead not guilty to separate charges of dealing with monies deposited in these accounts, knowing or having reasonable grounds to believe the monies represented the proceeds of an indictable offence, contrary to section 25(1) and (3) of the Organized and Serious Crimes Ordinance.[1]

Charge 1

2.  On 26 August 2008 D1 opened an account with the Bank of China.  D1 was the sole signatory of the account.  Between 2 January 2010 and 6 January 2012 there was 186 deposits in the total sum of HK$1,216,503.31.  After deducting Comprehensive Social Security Assistance (“CSSA”) payments made between January 2010 and July 2011 the amount deposited was HK$1,179,483.31.  This is the amount particularised in charge 1.

Charge 2

3.  On 27 November 2010 D1 opened a betting account with the Hong Kong Jockey Club. Between 1 February 2011 and 31 January 2012 there was 208 deposits in the total sum of HK$2,027,010.  After deducting HK$9,010, being prizes and dividends from betting, the amount deposited was HK$2,018,000.  This is the amount particularised in charge 2.

Charge 3

4.  On 18 September 2003 D2 opened an account with the Bank of China.  D2 was the sole signatory of the account.  Between 2 January 2010 and 30 December 2011 there was 353 deposits in the total sum of HK$3,101,545.63.  This is the amount particularised in charge 3.

Charge 4

5.  On 7 January 2010 D2 opened a betting account with the Hong Kong Jockey Club.  Between 1 February 2011 and 19 January 2012 there was 119 deposits in the total sum of HK$1,307,465.  After deducting HK$5,765, being prizes and dividends from betting, the amount deposited was HK$1,301,700.  This is the amount particularised in charge 4.

Prosecution case

6.  The prosecution case in summary is that for the period January 2010 to January 2012 the defendants had no income commensurate with the monies deposited in the accounts.  D1 was for most of the time on social welfare and never filed any tax returns.  D2 filed tax returns for the period 2005-2009 but not for 2010-2012.

7.  The prosecution therefore says that the only inference to draw is that the monies passing through the accounts, less CSSA payments and prizes and dividends from betting, were the proceeds of an indictable offence and that the defendants dealt with the monies having reasonable grounds to believe the monies, in whole or in part, directly or indirectly represented the proceeds of an indictable offence.

Defence case

8.  In summary the defence case is that the majority of the monies deposited in the accounts were from monies earned by D1 in assisting Mr Hon Ching Wan (PW2) to buy seafood for his restaurant and winnings of both defendants from playing mahjong. Other deposits included monies given to D1 by friends and relatives; various loans; and D2’s earnings from part time work introducing customers to a nightclub. 

Prosecution evidence

9.  Most of the prosecution case was admitted[2] pursuant to section 65C of the Criminal Procedure Ordinance[3], including D1 was a recipient of CSSA; D1 did not file any tax returns; the filing of tax returns by D2[4]; the arrest of the defendants and the conduct of two video interviews with D1[5].  

10.  Also admitted was the opening of the bank accounts and the betting accounts.  The account opening documents and details of the transactions in the accounts, during the periods particularised in the charges, were admitted by banker’s affirmations of Lau Kwun Shing (exhibits P3 & P4) and the computer certificate of Chu Kam Lun (exhibit P13) pursuant to sections 20 and 22A(5) of the Evidence Ordinance[6].

11.  The prosecution called three witnesses: Mr Hon Ching Wan (PW2); DSPC 52071 (PW3), who prepared tables analysing the deposits and withdrawals from the accounts (exhibit P14)[7]; and Mr Chu Kam Lun (PW5), a Customer Care Supervisor of the Hong Kong Jockey Club.  Two witnesses were tendered for cross-examination: DSPC 2285 (PW1) who conducted the video interviews and Mr Lau Kwun Shing (PW4), a Senior Operation Officer of the Bank of China. 

Defence evidence

12.  Both defendants elected to give evidence.  Facts were also admitted detailing the account holders of various transactions in the accounts of D1 and D2, including Lam Kwok Hung and Wong Chi Ho and that Lam Kwok Hung and Wong Chi Ho were employed by mahjong parlours[8]. The defence called Lam Kwok Hung (DW1), who explained why monies were transferred to him by D1 and D2.  The defence also rely on the evidence of Mr Hon Ching Wan (PW2).

13.  In reaching my verdict I remind myself of the burden and standard of proof and that the burden is on the prosecution throughout.  The defendants have to prove nothing.  I direct myself that I must be sure of the guilt of the defendants on each charge before I can convict, each charge to be considered separately.  On the other hand, if the court thinks that the defence evidence pointing to innocence is true or may be true, it would follow that the defendants have raised sufficient doubt in the prosecution case and are entitled to be acquitted. 

14.  I remind myself that when drawing inferences from the evidence a court may only draw an inference if that inference is the only reasonable inference to draw from the proved facts.  If from the facts proved there is a reasonable inference to draw against a defendant as well as one in his favour, the adverse inference cannot be drawn.  

15.  I have carefully considered all the evidence together with the submissions of Mr Wong and Mr Khosa.

Dealing with property

16.  The actus reus of the offence is dealing with property.  Monies passing through a bank account are clearly property[9].

17.  Dealing in relation to property is defined in section 2(1) of the Ordinance and includes, (a) receiving or acquiring the property; (b) concealing or disguising the property (whether by concealing or disguising its nature, source, location, disposition, movement or ownership or any rights with respect to it or otherwise); and (c) disposing of or converting the property. 

18.  Admitted in evidence is that D1 opened a bank account with the Bank of China; was the sole signatory of that account; opened a betting account with the Hong Kong Jockey Club; and in the first video interview said no one else could use the bank account and that no one else used the betting account [10].  I am satisfied the only inference to draw is that D1 dealt with the monies passing through the accounts.  Furthermore, D1 in evidence admitted dealing with the monies in both accounts. 

19.  Admitted in evidence is that D2 opened a bank account with the Bank of China; was the sole signatory of that account; and opened a betting account with the Hong Kong Jockey Club.  On this evidence an inference may be drawn that D2 dealt with the monies passing through her accounts.  In evidence D2 said that D1 used both accounts and that she was unaware of all the transactions conducted by D1.  If this is true or may be true D2 has not dealt with the monies she is unaware of[11].       

Proceeds of an indictable offence

20.  The prosecution do not have to prove the property represents the proceeds of an indictable offence[12].

Knowing or having reasonable grounds to believe

21.  The mens rea of dealing has two parts “knowing” or “having reasonable grounds to believe”.  The prosecution proceeds on the basis that the defendants had reasonable grounds to believe.   

22.  In HKSAR v Yeung Ka Sing, Carson[13] the Court of Final Appeal confirmed their earlier decision in HKSAR v Pang Hung Fai[14]that the better and less complicated test for determining whether the accused had reasonable grounds to believe was that propounded by the Appeal Committee of the Court of Final Appeal in Seng Yuet Fong v HKSAR,[15] namely that:

“To convict, the jury had to find that the accused had grounds for believing; and there was the additional requirement that the grounds must be reasonable: That is, that anyone looking at those grounds objectively would so believe.”

23.  In deciding whether the defendant had reasonable grounds to believe the applicable standard is would those grounds lead to the belief and not could those grounds lead to the belief and in determining this the defendant’s belief, perception or prejudice are to be considered and given such weight as is warranted.[16] 

24.  Clearly the monies passing through the accounts were not commensurate with the known income of the defendants, D1 receiving CSSA for most of the time and no tax returns having been filed by the defendants for the periods covered by the charges.   In the absence of an explanation these facts may give rise to the inference that the defendants had reasonable grounds to believe the monies passing through their accounts were the proceeds of an indictable offence. 

25.  The defendants have given an explanation for the monies in their accounts.  I therefore turn to consider this explanation.  In considering the explanation due allowance is given to the fact that there are many transactions in the accounts dating back to 2010, over six years ago. 

Defence explanation

26.  In summary D1 testified that most of the monies deposited in the bank account were from Mr Hon Ching Wan (PW2) for buying seafood and winnings from playing mahjong. The monies deposited in the betting account were mostly winnings from playing mahjong. 

Buying seafood

27.  In about January 2010 D1 started helping Hon.  Hon was not in good health and asked D1 for help to go to the market to buy seafood for his restaurant from which Hon would let D1 earn $200-300 from each purchase.

28.  The arrangements were that Hon would deposit the money in the bank account first. After D1 woke up, normally around 12 noon, he would telephone Hon asking what seafood Hon required that day.  D1 would then go to the market to buy the seafood which he would deliver to the restaurant.  

29.  At first Hon deposited the money in the bank account of D2.  This was because D1 was at that time in receipt of CSSA and did not want the Social Welfare to know about this work otherwise they may stop his CSSA. 

30.  At the time D1 and D2 were living together.  D2 agreed for her bank account to be used for this purpose.  At first D2 would withdraw the money and later D1 withdrew the money from D2’s account. 

31.  D1 guessed the deposits in D2’s account on 7 January 2010 in the sums of $3,000, $8,300 and $2,500[17]were deposits made by Hon because he was helping Hon at that time.  In the following two days the sums of $6,000 and $10,000 were withdrawn from D2’s account. 

32.  D1 explained that he usually withdrew $10,000 (the maximum single withdrawal from the account) and that if there was a shortfall he would withdraw money from the Jockey Club account.  In cross-examination D1 explained that sometimes he withdrew a smaller amount than was deposited by Hon or nothing was withdrawn because he already had enough money in his pocket having won at mahjong the night before. 

33.  D2’s bank account was used until March 2011.  Hon said D1 could do the work long term therefore D1 cancelled the CSSA.  D1 identified deposits into his bank account from Hon between 22 March 2011 and 28 April 2011 and the sums he withdrew for buying the seafood.  Again the withdrawal amount was usually $10,000. In April 2011 Hon informed D1 that his health had improved and that he would buy the seafood himself.  After April 2011 D1 did help Hon again but not on a long term basis. 

Playing mahjong

34.  D1 testified that he played mahjong at various mahjong parlours, including Hing Wong and Ho Kwong.  After the mahjong parlours closed D1 would go to Friendship Associations where he would play with his friends.  During the period January 2010 to January 2012 D1 was playing mahjong five times per week.

35.  In the mahjong parlours only cash could be used.  If D1 lost and wanted to carry on playing he could give his ATM card to the staff of the parlour, who would go to the ATM and withdraw money on his behalf.  If the withdrawal limit of the ATM had been reached and no more cash could be withdrawn the staff of the parlour would transfer money from either D1 or D2’s account to the parlour.  Once the transfer was confirmed the parlour would give the cash to D1 to enable him to continue playing. 

36.  D1 identified transfers to Lam Kwok Hung, Szeto Kwok Kwan, Yam Tak Wah and Wong Chi Ho as monies transferred to the parlours to enable him to continue gambling[18]. 

37.  If D1 won at the mahjong parlour, he would usually deposit the winnings in his betting account and not the bank account because by the time he finished playing the banks would be closed and using the ATM to deposit the money was troublesome.   Afterwards D1 would transfer the monies to his bank account for playing mahjong [19].

38.  The Friendship Associations only used chips.  After playing a calculation would be made and if D1 had won his friends would deposit the monies into his betting account or D2’s betting account the next day. 

Other deposits

39.  Apart from monies earned from Mr Hon and mahjong winnings D1 said other deposits in his accounts were monies given by friends or relatives and various loans. Specifically, D1 identified the deposits of $29,500 ($30,000 less $500 tea money) in the betting account being monies he borrowed from a childhood friend; and cash deposits of $13,300, also in the betting account, being monies paid through him as repayment of a loan made by D1’s friend Chiu Pak Wing to Big Head Shing.  

40.  In cross-examination D1 agreed that he was not in financial difficulty when he received the loans of $30,000 and explained the loans started when he was poor and that he did not want to break up the relationship in case he needed to borrow money again.  In answer to the court D1 explained that he did not tell the police about these various loans because he was only able to remember after he read the evidence in the case. 

41.  D1 also used D2’s bank account in connection with a loan of $40,000 he made to a childhood friend Fung Chit Man.  The loan is represented by the withdrawal of $40,000 from D2’s account on 16 June 2010 with one repayment of $15,000 made on 20 June 2010[20].

D2

42.  D2 similarly testified that her accounts were used for depositing her winnings from playing mahjong.  In addition, D2 earned commission working for a nightclub. D2 confirmed that she allowed D1 to use her bank account for the deposit of money by Mr Hon and her betting account for the deposit of D1’s mahjong winnings. 

43.  Due to the long time lapse, over six years, D2 could not remember the details of many transactions in her accounts, including the sum of $80,000 deposited in her bank account on 24 October 2011[21]. In cross-examination D2 said she was first aware of this deposit after she was arrested.  D2 said that it was possible she had deposited the money after accumulating mahjong winnings but because this was so long ago she really could not remember.  

44.  In summary D2 started cohabiting with D1 in 2009 at which time she was earning commission by bringing customers to a nightclub.  D2 would do this 3-4 times per week and earn $1,000-2,000 each night.  D2 would accumulate the earnings before depositing them in her bank account.  In cross-examination D2 said she did not declare this income to the Inland Revenue because this was only part time work. 

Buying seafood

45.  At the end of 2009/beginning of 2010 when D1 obtained work buying seafood D2 agreed to allow her bank account to be used for the deposit of money to enable D1 to buy the seafood.  D2 agreed because she knew D1 was receiving CSSA and was therefore inconvenient to use his account.  This work D2 said lasted for about a year or so. 

46.  D2 identified the deposits she believed were in connection with the buying of seafood.  D2 could not remember who made which withdrawals.  Sometime D1, sometimes D2 and sometimes D1 and D2 went together to withdraw the money.

Playing mahjong

47.  Like D1, D2 also played mahjong 4-5 times per week.  D2 would play at the same mahjong parlours as D1 but not at the Friendship Associations, although she would accompany D1 there.  D2 identified deposits in her bank account she believed were winnings from mahjong.

48.  D2 opened the betting account at the request of D1.  D1 used the account most of the time.  D2 was also aware that friends who D1 played mahjong with also deposited money in her betting account.  Also, just like D1, D2 deposited her winnings from mahjong into the betting account and then transferred the monies to her bank account. 

49.  In cross-examination D2 said she also had the experience of asking the mahjong parlour to transfer money from her account so she could be given cash to continue playing mahjong but could not remember how many times this happened.  D2 said the three transfers to Lam Kwok Hung on 14, 16 and 22 March 2011[22], each in the sum of $50,000, were three such transfers.  D2 only remembered these transfers when she was made aware that Lam Kwok Hung worked in a mahjong parlour.  D2 did not however see D1 making the same arrangement with the mahjong parlour.

Other deposits

50.  D2 specifically referred to the deposit in her bank account of $72,500 on 25 January 2010 followed by a withdrawal the same day of $70,000[23].  D2 said D1’s friend returned renovation money to them.  The money was withdrawn and given to D1. 

51.  Similarly, D1 gave evidence that a friend Choy Ping Leung, with whom he played mahjong, had opened a renovation company.  D2 introduced another friend called Chow to Choy to do some renovation work.  When Choy cancelled the work he refunded the money to Chow by depositing this in D2’s account.  After D2 withdrew the money, less $2,500 being D1’s introduction fee, D1 returned the money to Chow. 

52.  D1 also testified that he supposed that other deposits made by Choy into D2’s bank account were in connection with mahjong.[24]

Discussion

53.  Mr Wong submitted that the evidence of the defendants should be rejected, describing the evidence variously as not plausible; dishonest and ought not to be believed; hardly providing satisfactory explanations; hardly plausible; no plausible reason offered; offered no satisfactory explanation; and highly incredible[25].

54.  Whilst I have reservations about aspects of the defence evidence, for example that D1 worked for Hon, D1 having told the police in the first video interview he did car trading and this was why he cancelled the CSSA payments and not because he was buying seafood[26]; the level of gambling by the defendants; in neither video interview did D1 tell the police about the various loans; and D2 did not disclose her income to the Inland Revenue from introducing customers; there is evidence from Hon Ching Wan that he did ask D1 to help him buy seafood and from Lam Kwok Hung confirming the arrangements made with mahjong parlours.

Hon Ching Wan

55.  In summary Hon testified that he first came to know D1 in 2008 when D1 was a customer in his noodle shop in Amoy Plaza.  A time came when Hon was very sick and asked D1 to help him buy seafood for his restaurant Kam Li Loi Kitchen (Very Good Taste) in Kwun Tong.  Photographs of the restaurant (exhibit D1) were identified by Hon. 

56.  At first Hon recalled this was in 2010 because that was a World Cup year but later said it was in mid-2009 or end 2009.  On average D1 helped Hon a few times each week for one to two years until approximately the end of 2011 when D1 said he was very busy.  D1 would be able to earn $200-300 each time he helped Hon.

57.  The arrangements were that each time Hon would deposit in advance a few thousand dollars; sometimes $7,000; sometimes $8,000 and sometimes $10,000 into an account provided by D1.  Later Hon said on average he deposited $3,000 or $4,000 on each occasion.  Sometimes Hon deposited money more than once on a particular day because the ATM machines rejected some of the money and the balance of the money had to be deposited again. 

58.  Hon deposited the money in the evening between 9-12 when he had free time after dinner.  Each time Hon would throw away the deposit slip because he did not want his wife to find out D1 was helping him.  In cross-examination Hon said he would deposit the money at night time when he was free and that sometimes he would not finish work until 3 or 4 a.m. after customers finished watching football matches. 

59.  D1 gave Hon two account numbers which he wrote down on a piece of paper.  Hon gave the paper to the police (exhibit P12).  Hon said he started depositing money in the second account in mid-2010.  Hon did not question D1 as to why the money needed to be deposited in different accounts. 

Consideration of Hon’s evidence

60.  D1 first told the police about helping Hon in the second video interview[27].  This led to the police interviewing Hon.  The prosecution called Hon with a view to him confirming he had asked D1 to help him but only for the period 2009 to March 2010[28]. 

61.  The evidence of Hon was materially different to what the prosecution expected Hon saying D1 helped him until the end of 2011 thereby covering the period of the charges. 

62.  Mr Wong submits the evidence of Hon is of limited value and that he did not keep the deposit slips because he did not want his wife to know was hardly plausible[29].

63.  The prosecution by calling Hon clearly accepted that D1 had at some time helped Hon but wished to rebut D1’s claim in the second video interview that this was for two years thereby covering the period of the charges[30].  Although at one stage Mr Wong considered turning Hon hostile that application was not proceeded with.  The prosecution may well have been better not calling Hon and waiting to see if the defence called him and then tested his evidence in cross-examination. 

64.  I also have reservations about Hon’s evidence, for example if he was so sick why he was depositing money at night time; that no deposit slips were kept as records of the payments and no other staff of the restaurant could have handled the purchase of the seafood.  Notwithstanding these reservations and that there are some inconsistencies between the evidence of Hon and D1, having carefully considered all the evidence I find the defence evidence that D1 helped Hon and that Hon deposited monies into both bank accounts might be true. 

Lam Kwok Hung

65.  In summary Lam testified that he was working for Hing Wong Mahjong Parlour, where he had worked for eight to nine years.  Lam identified D1 and D2 as customers of the mahjong parlour.  Lam only knew the surnames of D1 and D2. 

66.  Lam gave details about the operation of the mahjong parlour, including the arrangement where customers transfer money to the bank account of staff members of the parlour.  After the transfer was confirmed the parlour would give the cash to the customer to enable the customer to continue playing.  A written record, which was signed by the customer, was kept for one-odd year. 

67.  Lam identified transfers from both the bank accounts of D1 and D2 to an account in his name.  Lam explained this account was opened by him exclusively for transfers to the parlour and these transfers were to enable D1 and D2 to continue playing mahjong.  In answer to the court Lam explained the account of a staff member was used because at that time it was difficult for the parlour to open a bank account.

68.  Lam said that at the time of the transfers D1 and D2 were attending the parlour about four to five times a week and playing mahjong for several hours.  In cross-examination Lam said that for a period they came to the parlour frequently and then did not go anymore.  Lam could not be certain when they last went to the parlour.

Consideration of Lam’s evidence

69.  The evidence of Lam is consistent with the evidence of D1 and D2.  Although in the first video interview D1 said he did not know about the transfers to the account of Lam Kwok Hung and questioned whether there was a mistake and said it was impossible he had transferred this money[31], importantly he did tell the police about this kind of transfer when asked why money was also transferred to the same account by D2[32] and when asked about transfers to the accounts of Yam Tak Wah; Szeto Kwok Kwan, Wong Chi Ho and to account number  01275110306034[33].

70.  In the second video interview D1 specifically told the police that the transfers to Lam were for him to continue playing mahjong[34] and confirmed the transfers to accounts of Yam Tak Wah; Szeto Kwok Kwan, Wong Chi Ho and to account number  01275110306034 were also for him to continue playing mahjong[35].   

71.  Mr Wong submits that the evidence money was transferred to Lam for gambling should be rejected, the level of gambling being way beyond D1’s means and hardly plausible[36]. Clearly if what D1 and D2 were saying is true they were, in relative terms, heavy gamblers. 

72.  There is, however, no evidence before me that mahjong parlours did not offer this service.  I find I cannot reject the evidence of Lam.  In addition, although the court has not heard from Wong Chi Ho, it is admitted he also worked in a mahjong parlour at the time money was transferred to his account. 

73.  Having carefully considered all the evidence I find the defence evidence that the defendants were heavy gamblers and that their accounts were used for gambling including the transfers to Lam, Wong, Szeto, Yam and account number 01275110306034 to enable D1 and D2 to continue playing mahjong may be true. 

Other deposits

74.  Having accepted the defence evidence that a large majority of the deposits may have been in connection with helping Hon buy seafood for his restaurant and for gambling, I am not satisfied there are reasonable grounds to believe the remaining deposits represented the proceeds of an indictable offence.  Notwithstanding there are no documents to support the various loans referred to by D1 and that D2 did not disclose her earnings to the Inland Revenue, this evidence may also be true.

75.  Lending a bank account may well strike others as excessively naïve or gullible or foolish.  Many may well think this is suspicious leading them to believe that the monies passing through the accounts were tainted.  However, considering the relationship between the defendants it is perhaps not surprising D2 trusted D1. I find I cannot reject that D2 was unaware of all the transactions in her accounts.   

76.  Clearly there was a good deal of suspicion, not least the non-disclosure to the Inland Revenue and the Social Welfare Department.  Suspicion is not enough.  For the reasons given I find the prosecution have failed to prove the charges beyond reasonable doubt.   The defendants are given the benefit of the doubt and acquitted of all charges.