HKSAR v. LAM YING LUN AND ANOTHER

DCCC 1001/2023

[2025] HKDC 1538

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 1001 OF 2023

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Reasons for Verdict

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A. Background

1.   Originally, there were 3 defendants in this charge sheet, each of whom was charged with one count of money laundering.  D3 originally indicated his guilty plea to his charge, but he changed his mind on Day 1 of this trial.  D3 discharged his own legal team.  As such, D3’s case was severed from the original charge sheet, and approval was granted to amend the charge sheet to cover the remaining 2 defendants.  The trial against D1 and D2 proceeded as scheduled.  

B. Brief Facts

2.  The incident arose from a phone scam operation whereby various victims were lured to buy mooncake coupons purportedly issued by the Peninsula Hotel at a discount before the Mid-Autumn festival (falls on 27 September 2015)  in 2015.  The victims were asked by the conman to deposit or transfer various sums of money into the bank account of Wealth Create Trading (HK)  Limited (Wealth Create)  with the Hang Seng Bank opened by D1 relating to Charge 1, and that of Leader Trading Company (Leader Trading)  with the HSBC opened by D2 relating to Charge 2. 

C. Defence

3.  In gist, D1’s version is that D1 had no idea about the scam, and he trusted his elder brother (originally D3 in the present case)  to run the company.  D1 was asked by his brother to act as the sole director and shareholder of Wealth Create, and the sole signatory of the company bank account.  

4.  D2’s defence is that he trusted his friend, surnamed Chan, who asked D2 to open the company, Leader Trading, in Hong Kong.  Chan was the one responsible for the actual running of the company business, including the finance side.  Chan asked D2 to pre-sign blank cheques.  D2 went to meet Chan in China.  D2 had no idea about the activities of the bank account. He had no role to play.  

D. Evidence and Prosecution Witnesses tendered by the Prosecution

D.1 Exhibits P35, P35A, and P35B are the Admitted Facts pursuant to section 65C of CPO, and the following facts, inter alia, are agreed:-

(1)  There was an account named “minimooncakehk” on Instagram (IG), in which there were posts offering the Peninsula Hotel (PH)  mooncake coupons for sale. Those interested to buy these mooncake coupons were asked to make payments to certain bank accounts, including one Hang Seng Bank account in the name of Wealth Create, with the number 390-607992-883 (A/C 1), and one HSBC Bank account in the name of Leader Trading, with the number 023-386022-838 (A/C 2).

(2)  Lee Sheung-yu (Lee), Leung Tik-ching (Leung), Li Ching-yin (Li), Cheung On-ni (Cheung), Chow Siu-ying (Chow)  and/or Kong Yi-fung (Kong)  made payments to A/C 1 and A/C 2, respectively.

(3)  Lee made a total of 3 deposits, with one deposit of $29,900, was made to A/C 1 on 20 July 2015.

(4)  Leung effected a total of 11 deposits, either by herself or together with or via Li Ching-yin and/or Kong Yi-fung. The details of 10 deposits out of the said 11 are as follows:-

(a)  deposit of $33,100 into A/C 1 on 20 July 2015;

(b)  deposit of $50,000 into A/C 2 on 23 July 2015;

(c)  deposit of $50,000 into A/C 1 on 24 July 2015 (joint purchase with Li Ching-yin);

(d)  deposit of $15,000 into A/C 2 on 27 July 2015;

(e)  deposit of $19,500 into A/C 2 on 27 July 2015;

(f)  deposit of $500 into A/C 2 on 27 July 2015;

(g)  deposit of $50,000 into A/C 2 on 29 July 2015;

(h)  deposit of $30,000 into A/C 2 on 29 July 2015;

(i)  deposit of $50,000 into A/C 2 on 30 July 2015;

(j)  deposit of $25,000 into A/C 1 on 3 August 2015.

(5)  Cheung made 2 deposits, one of which was a deposit of $8,040 into A/C 2 on 25 July 2015.

(6)  Chow made a deposit of $40,000 into A/C 1 on 22 July 2015. On 23 July 2015, she asked for a refund and the user of the said IG arranged a person known as “Che” to refund $24,000 and $16,000, totalling $40,000 to Chow.

D1 - Lam Ying-lun, Wealth Create and A/C 1

(7)  D1 was born in January 1980. The banker’s affirmation in respect of A/C 1 is marked as exhibit P1.

(8)  D1’s movement record is marked is exhibit P33.

(9)  D1 was employed as a foreman by Swan Hygiene Services Limited between February 2017 and March 2017 with a reported income of $13,477. D1’s employer’s return for 2016/2017 is exhibit P7. There was no tax record for D1 between 2014/2015 and 2015/2016.

(10)  Wealth Create was incorporated on 30 March 2015 with the registered office at Flat D, 11/F, Tai Wah House, 90-94 Prince Edward Road West. Various company documents of Wealth Create are produced as exhibits P4A to P4J with the de-registration of the company dated 4 October 2019.

(11)  There was no company record in respect of Wealth Create filed with the Companies Registry, other than exhibits P4A to P4J.

(12)  There was no tax return in respect of Wealth Create filed with the Inland Revenue Department (IRD).

(13)  The Business Registration Certificate of Wealth Create is exhibit P5.

(14)  D1 had a gambling conviction record on 24 August 2012 for which he was fined $500. Other than that, D1 had no other criminal record.

D2 - Lee Yun-shek, Leader Trading and A/C 2

(15)  D2 was born in October 1965. D2 opened A/C 2 in the name of Leader Trading. He was the sole signatory of A/C 2. Exhibit P2 is the banker’s affirmation relating to A/C 2.

(16)  On 24 August 2016, D2 voluntarily went to the HSBC branch in Metroplaza, Kwai Chung, with police officers and withdrew $109,654.79 from the account. He handed over the cash to the police.

(17)  D2’s movement record is exhibit P34.

(18)  D2 was employed as a technician by Brilliant Giant Trading Limited (Brilliant Giant)  between 2014 and 2017, with an annual income of $134,927, $182,629 and $134,541 respectively. The relevant tax records are produced as exhibits P8 to P15A.

(19)  On 10 April 2015, D2 applied to register the business of Leader Trading, which stated that the company would commence business on the same day. The nature of business was trading, and the address of D2 was Flat 1115, Block 5, Lei Muk Shue Estate, Kwai Chung. Leader Trading ceased to do business on 30 September 2017. The business registration records of Leader Trading is exhibit P6.

(20)  There was no tax return of Leader Trading with the IRD.

Lam Ying-kit (D3)  and his bank account with the Hang Seng Bank (A/C 3)

(21)  D1 is D3’s younger brother.

(22)  The banker’s affirmation in respect of A/C 3 is exhibit P3.

Records of Chung Sing Currency Exchange (Chung Sing)

(23)  At all material time, Lam Siu-kuen Andy was the owner of Chung Sing, which was a licensed money service operator using account numbered 255-761710-883, in the name of Silver Star Trading Company (Silver Star). The business registration records of Silver Star and the approval letter from Customs and Excise Department relating to the money service operator licence of Chung Sing are exhibited as P18 and P19.

(24)  The said Lam Siu-kuen Andy provided the relevant records to the police. On 27 February 2015, a man called Tsoi Yuk-chi opened an account with Chung Sing with the opening form exhibited as P17. He subsequently made 11 deposits in Hong Kong dollars into Silver Star’s bank account between 20 July 2015 and 31 July 2015. The relevant deposit records are exhibited as P20 to P30, with the certified and/or agreed English translation as P20A to P30A.

Arrest of D1

(25)  D1 was arrested on 26 August 2015. Under caution, D1 made voluntary statements to SGT 6799. The post-recorded statement in the notebook of SGT 6799 is produced as exhibit P31, with certified English translation as exhibit P31A.

Arrest of D2

(26)  D2 was arrested on 31 August 2015.

(27)  On 4 March 2021, a video-recorded interview (VRI)  was conducted with D2’s voluntariness thereof not challenged. The disc of the VRI is exhibit P32 with its transcript as exhibit P32B and English translation as exhibit P32C.

(28)  Lam Ying-kit (D3)  was arrested on 8 September 2015.

(29)  The chain of evidence relating to the abovesaid exhibits are not challenged.

(30)  Lee Sheung-yu provided certain WhatsApp records to the police, which are exhibited as P37. Lee Sheung-yu used the username “Sheung Yu”.

(31)  Leung Tik-ching provided certain WhatsApp records, which are exhibited as P38. Leung’s username was “Cherryb Leung”.

(32)  Cheung On-ni provided certain WhatsApp records in the form of screen captures and are exhibited as P39.

(33)  Chow Siu-ying provided certain WhatsApp records, which are exhibited as P40. Chow’s username was “Canky”.

(34)  The above WhatsApp records are proper and accurate records and its chain is not challenged.

(35)  Lam Ying-kit, D3’s movement record is exhibited as P41.

D.2 Evidence of the Prosecution Witnesses

PW1 - Lee Sheung-yu

5.  In July 2015, PW1 noticed certain posts on Instagram (IG)  by an account, minimooncakehk, which offered mooncake coupons from the Peninsula Hotel for sale.  Ryan was the seller and asked PW1 to use WhatsApp for further communication.  The selling price of one box of mooncake was about $388 to $348.  PW1 bought mooncake coupons for $260 for the first batch and $258 for the other batches.  She agreed to buy 500 coupons and would buy them in 3 batches.  She made 3 deposits.  PW1 also told her friend, Leung (PW2)  to buy too. 

6.  PW1 transferred $29,900 to the bank account of Wealth Create by means of ATM.  She did not know the company but thought it would be trustworthy.  She sent Ryan the bank slip.  The other 2 deposits were made to an account under the name Lam Ying-kit.  PW1 trusted Ryan.  

7.  In the end, PW1 did not get any mooncake coupons.  She made a report to the police on 15 August 2015.  She could not reach Ryan since then.  

PW2 - Leung Tik-ching

8.  In 2015, PW1 told PW2 about the abovementioned mooncake posts on IG.  She contacted the IG account and talked to Ryan, who said he was one of the staff of the Peninsula Hotel.  Through WhatsApp, Ryan provided PW2 with the account information for making deposits.  The selling price of one box of mooncake was about $340 to $349 in the market, while she could get one at a discount from Ryan at about $258.  PW2 could resell the mooncake to make a profit of about $40.  At that time, the demand for the Peninsula mooncakes was strong.  

9.  PW2 told Ryan that she would buy 250 coupons.  Ryan asked her to deposit a down payment of $20,000 into the HSBC account in the name of Lam Ying-kit.  PW2 then told her friend Kong Yi-fung (Kong) to credit the said sum into Lam’s account.  PW2 understood that the coupons could be given to her on 17 August 2015 in the Peninsula Hotel as Ryan said he would be on duty that day. 

10.  PW2 placed another sum of $33,100 as down payment and credited the money into the account of Wealth Create on 20 July 2015.  On 21 July 2015, Ryan told PW2 that there were 50 boxes of mooncakes available and no deposit was required.  PW2 did not find it suspicious.  On 23 July 2015, Ryan told her that he had 800 coupons more and told PW2 to deposit $90,000.  PW2 credited $50,000 into Leader Trading’s account (A/C 2)  and $40,000 to a customer, Chow Siu-ying (PW4).  

11.  On 24 July 2015, PW2 credited $50,000 into the account of Wealth Create.  It was a joint purchase with her friend Li Ching-yin.  

12.  Another 3 deposits totalling $35,000, which were credited into the account of Leader Trading on 27 July 2015, were related to one purchase order.  PW2 still had confidence in Ryan even though she received no coupons.  Ryan even provided his salary slip purportedly to represent that he was a staff of the hotel when Ryan claimed that his staff card was not with him at the time.  

13.  On 3 August 2015, PW1 told her that Ryan could not be contacted.  PW2 made an enquiry with PW4 who told PW2 that she found it strange that PW2 paid her $40,000. 

14.  PW2 did not know Lam Ying-kit.  She had nothing to do with Wealth Create and/or Leader Trading.

15.  PW2 confirmed that her phone number at the time was 6171 0370.  She credited 2 sums of money, viz $24,000 and $16,000 respectively into PW4’s account.  She did that because Ryan told her to do so.  She even sent the deposit slips to Ryan. 

PW3 - Cheung On-ni

16.  In July 2015, she noticed the mooncake sale posts on IG.  Through WhatsApp, she contacted the IG account user.  PW3 then made 2 deposits of $8,040 into the account of Leader Trading on 25 July 2015 and $12,000 into the account of Lam Ying-kit (A/C 3 numbered 785-251070-882)  on 27 July 2015. The first deposit related to a full payment of 30 coupons.  The second deposit related to the deposit of 100 coupons.  PW3 had been given the number of A/C 1, but she was told the account was not correct.

17.  PW3 did not get any coupons.  In fact, she never thought that she would encounter any internet scam. 

PW4 - Chow Siu-ying

18.  In July or August 2015, PW4 noticed the mooncake posts on IG.  PW4 made a deposit of $40,000 into the account of Wealth Create on or around 22 July 2015 as down payment.  She intended to buy 800 coupons worth $265 each, and was told the coupons would be delivered in late August.  The market price of one box of the Peninsula mooncake was about $338.  

19.  PW4 was given a phone number and she asked the man who called himself Wong Long-ki to provide a copy of his ID card as she felt suspicious.  The man claimed that he was a staff member of the Peninsula Hotel.  The man even showed PW4 a copy of his salary slip.  The man provided 2 company accounts, viz Wealth Create (A/C 1)  and Leader Trading (A/C 2)  for PW4 to make deposits.  She deposited $40,000 into the account of Wealth Create on 22 July 2015. 

20.  On 23 July 2015, PW4 found the ID card provided by the man suspicious.  She asked for a refund at the pretext that her account was running out of money.  The man said he had another client who could deposit $40,000 directly into PW4’s account.  That man even opened a WhatsApp group chat with PW4 and the other client who eventually posted a receipt of the deposit.  PW4 received monies in the sum of $24,000 and $16,000.  As PW4 did not have any loss, she did not make a report to the police.  Instead, she was approached by the police at a later stage.  

21.  PW4 confirmed that the man used 5138 0326 to communicate with her.  

PW5 - Lam Siu-kuen, Andy

22.  He established Chung Sing, a money service operator, in late 2014 or early 2015.  The business ceased in August 2015.  Chung Sing had a currency exchange shop in Sheung Shui with 2 part-time staff members.  PW5 was the applicant for the licence issued by the Customs and Excise Department (C&E).  He was required to open a bank account, which was to be used solely for the currency exchange business.  PW5 used the bank account of Silver Star Trading Company. 

23.  Exhibit P17 was a standard form used by Chung Sing.  He claimed that the account opening form was not handled by him.  He did not know any person called Tsoi Yuk-chi (Tsoi). Normally, PW5’s staff needed to ask the client to provide proof of his ID and address.  He understood that there was no need to open an account with the company if the amount did not exceed $8,000.  

24.  PW5 also confirmed that he registered for the business of Silver Star, which had no other activity except for Chung Sing. Originally, PW5 intended to do carpet business, but later changed to currency exchange service.  

25.  When being shown the remittance receipts, exhibits P20 to P30, relating to Tsoi, PW5 said that he did not handle these transactions.  Normally, only cash cheques would be accepted.

26.   PW5 said he did not attend any training sessions arranged by C&E.  He was not the one handling Tsoi.  As the owner, he was responsible for all the business records.

27.  PW5 claimed that he had invested around $500,000 to $600,000 in Chung Sing and later sold the business for roughly the same price.  He did not keep the employment records of Chung Sing.  He worked in the transportation industry after closing Chung Sing.  

D.3 D1’s notebook entry, exhibit P31, with English translation, exhibit P31A:-

28.  D1 was cautioned regarding a deception case involving a company called Jumbo Rich Trading Company.  D1 said he had no idea what happened, and the company bank account was his.  

D.4 D2’s video-recorded interview (VRI)  on 4 March 2021, exhibit P32, and transcript as exhibit P32B, with the English translation as exhibit P32C:-

Entry 46 and 48 - Phone number 6216 6093.

Entry 65 - I used it for engineering works.

Entry 367 - (Leader Trading’s business)  Refrigeration.

Entry 377 - (Whether Tommy Lee was your signature)  Yes.

Entry 395 - (Any idea if anyone used your account 023-386022-838)  Don’t know.

Entry 450 - After I got the (business)  licence, I started to do business.

Most of the remaining answers are “can’t remember” or “nothing to say”.

29.  There was no half-time submission.  I ruled that there is a prima facie case against both D1 and D2.  Both defendants elected to give evidence. 

E. Defence’s case

D1 Lam Ying-lun

30.  D1 is now aged 45.  He was married.  His education level was up to Form 4 level.  His elder brother is Lam Ying-kit (Lam), and they have a good relationship.  It was Lam’s idea to incorporate Wealth Create so that D1 could learn how to run a company.  D1 never opened a company before.  D1 was the director and shareholder of Wealth Create.  D1 trusted Lam and did not ask about his role in the company.  He would be responsible for transportation and Lam would handle the finance side. D1 considered Lam smarter.  D1 thought the idea was okay, as Lam would assist him. D1 was of the view that one can earn more money by opening a company.  

31.  Lam told D1 to go to an office to sign certain documents.  Lam did not accompany him as Lam was busy.  Lam would assign delivery jobs to D1.  The delivery van was registered under D1’s friend but D1 paid the instalments.  It was Lam who got the money from clients. Back in 2015, D1 had bank accounts with HSBC and BOC.  He did not have any current account.  He cannot remember if he had any credit cards in 2015.  Lam did not accompany D1 to go to the bank to open A/C 1.  The cheque books and ATM card would be sent to Lam’s address.  Lam told him to bring along proof of address to the bank when the account was opened. 

32.  D1 would sign the whole cheque book blank in one go and pass it to Lam.  D1 could not remember where he signed the cheques.  D1 said Lam would inform him when certain cheques were issued, even though D1 did not require Lam to do so.  D1 had no idea why Lam informed him of the details when cheques were issued.  

33.  When asked why the bank account was not under joint signatory, D1 said it would be more convenient to have a single signatory as Wealth Create was under his name.  D1 had no recollection of how much deposit was made when the account was opened.  

34.  D1 did not receive any bank statements.  He did not suspect illicit monies were deposited into A/C 1.  Lam was the one overseeing the bank account.  D1 understands that the company paid money to people in mainland China.  

35.  Under cross-examination, D1 agreed that Wealth Create was a business jointly run by him and Lam.  Lam paid D1 about $40,000 to $50,000 in cash per month.  His job was to assist the delivery of goods.  When D1 signed blank cheques, he did not know the details of the cheques so issued.  D1 agreed that he did not file any tax return, nor did Wealth Create file any tax return. D1 did not live in Lam’s residence.  D1 agreed that he provided information to the bank staff to fill in the opening form.  Upon D1’s request, the cheque book would be delivered by ordinary post.  D1 collected the bank cards from the Wong Tai Sin branch of the bank.  D1 believed that it was Lam who did the money transfer either by using the ATM or phone banking.  D1 passed the PIN of the e-banking service and ATM to Lam.  

36.  Later in April 2016, the bank staff called D1, informing him that the account was closed.  He told Lam about it.  Lam only said, “What?  Really serious”. The bank account had no activity after April 2016.  D1 forgot for how long did Lam give D1 the remunerations.  D1 was arrested in August 2015, well before the account was closed.  

D2 Lee Yun-shek

37.  D2 is aged 59 with the education level up to Form 3.  He worked as an air-conditioning technician responsible for assembling components and maintenance.  

38.  In 2010, he met a man called “Hung Kor”, who was a boss of a company engaging in refrigerating business.  They worked together 3 to 4 times. In April 2011, D2 changed to another company called Chevalier Cold Storage and Logistics Company and earned a salary of $8,000.  In May or June 2011, D2 met Hung Kor again. He asked if D2 was interested in doing some part-time work when on leave. 

39.  In June or July 2011, D2 went to mainland China to work for Hung Kor in an air-con installation job that lasted for 2 days.  There, D2 met another man called Chan Wing-fook (Chan), a mainlander through Hung Kor.  Chan was in charge of that job.  D2 was paid RMB$2,500 plus RMB$200 red packet money by Chan.  D2 kept in contact with Chan through WeChat.  Thereafter, they met 2 to 3 times per month in Shenzhen.  Hung Kor was not with them.  

40.  In November or December 2011, Chan contacted D2 again as he wanted to arrange a job for D2 to do in China.  D2 told Hung Kor about this job.  D2 completed the job and got a reward of RMB$10,000.  In May or June 2012, D2 did a similar job for Chan in China.  This time, D2 got cash RMB$15,000 as a reward.  As such, D2 trusted Chan.  

41.  In May 2014, D2 changed to Brilliant Cold Storage. D2 told Chan.  Chan asked D2 to continue his part-time job with him.  This time, Chan suggested opening a small-scale engineering company jointly.  D2 would be responsible for the work in Hong Kong while Chan for the other works in China. 

42.  As a result, D2 opened a company called Leader Trading in Hong Kong. D2 rented a storage place in Tsuen Wan as the company address. The rental was less than $2,000.  D2 lived in Lei Muk Shue Estate.  The Business Registration Certificate recorded the address of the storage place in Oxford Factory Building in Tsuen Wan.  

43.  It was Chan who set the email address because it was Chan who was responsible for all the financing side of the company.  D2 was responsible for hiring workers in Hong Kong, the storage place and the bank account.  Each one was to contribute RMB$100,000 as capital.  D2 said he paid the sum in cash to Chan by 5 to 6 instalments in China. 

44.  On 17 June 2015, D2 went to HSBC to open an account.  Chan made the deposit of $10,000 by cheque.  D2 had no idea under what capacity did Chan issue the cheque. 

45.  According to exhibit P2, the banker’s affirmation, the company’s principal source of wealth was from business income and profit, with the annual business turnover of $7.2 million.  The expected monthly inflows was $600,000 and that of outflows at $300,000.  D2 used the storage place at Oxford Factory Building in Tsuen Wan as the registered office address.  The business email was <leadertdco@yahoo.com.hk>. D2 was the sole proprietor and beneficial owner of Leader Trading.  Business internet banking was applied for.  D2 signed his name as Tommy Lee. The bank staff recorded a narrative under ”Bank Use Section” at (AE-2)246 (or exhibit P2 at HSBC-22), which reads:- 

“Mr Lee Yun-shek has been working in this industry (repairing air-conditioners)  for 15 years. As his wife is working in a trading company which trade those air-conditioners materials, can provide Mr Lee a cheaper cost. So he decided to set up his own business.”

On this issue, D2 claimed that he did not tell the bank staff anything about his wife. There was an issue of misidentity.

46.  Chan had a key to the mailbox of the storage place, but not the storage place.  D2 went to the storage place to collect the cheque books.  D2 signed blank cheques and passed the same to Chan when they met in Shenzhen.  Between June and August 2015, D2 met Chan once every 7 to 10 days.  Chan asked him to give him a few signed blank cheques, about 5 to 6 cheques.  However, D2 did not ask Chan why he needed to sign blank cheques.  Also, Chan did not ask D2 to pre-sign the whole cheque book in one go, but just a few cheques each time. 

47.  On 24 August 2016, D2 went with the police officers to go to the bank and withdrew the remaining balance of $109,654.79 from the account.  D2 failed to reach Chan thereafter.  

48.  D2 agreed that he did not mention Chan in the VRI.  D2 passed the ATM card or other bank cards of the account to Chan.  Back in 2015, D2 had accounts with BOC and the Hang Seng Bank.  He did not use internet banking.  D2 claimed that apart from the cheque books, he did not receive anything from the bank.  D2 got a total of 2 cheque books only.  

F. Analysis of Evidence

49.  All along, it is the duty of the Prosecution to prove the case against the defendants.  The defendants do not have any duty to prove anything.  D1 and D2 elected to give evidence and their evidence in court would apply to each other. 

50.  Legally speaking, a defendant who has a clear record would be a person of good character.  That means, his evidence has a higher credit-worthiness, and his propensity to commit crime is lower.  D1 has a minor conviction back in 2012 as disclosed by defence counsel.  In this regard, I would still regard D1 as a man of good character. 

51.  Before the commencement of the trial, D1 applied to stay the proceedings permanently on 21 January 2025 on the grounds of delay and impossibility of a fair trial.  

52.  I gave the ruling on 7 February 2025 and rejected the application.  The trial commenced on 11 March 2025. 

53.  The gist of D1’s evidence is that because his brother, Lam (originally D3 in the charge sheet), wanted D1 to learn how to do business.  Hence, the company called Wealth Create was created.  It was registered in D1’s name and D1 was the sole director and shareholder of the company.  D1 all along had a good relationship with Lam.  He trusted and relied on Lam.  D1 claimed that he never suspected Lam would use the company to do illegal business. 

54.  Despite D1 was the director, shareholder and sole signatory of the company bank account, D1 said he trusted his elder brother Lam in handling all the financial matters of Wealth Create.  As such, D1 had no knowledge of the bank transactions of Wealth Create.  Lam also asked D1 to pre-sign cheques and D1 did not know the purpose, the amount and payees of these cheques. 

55.  D1 allowed Lam to oversee all the business activities of Wealth Create.  D1 understood that Wealth Create conducted the business of transport of construction materials and small-scale decoration works.  There were transportations of construction materials across the border.  D1 was responsible for actual transportation of the construction materials.  Lam was in charge of the financial side and also responsible for sourcing for business partners.  

56.  D1 was told by Lam that the business of Wealth Create involved paying and receiving monies from people or entities in China.  As such, Wealth Create had to do currency exchange between RMB and HKD.  However, D1 did not know nor was he involved in any money exchange business.  D1 said the registered address of Wealth Create was the residential address of Lam.  The cheque book, ATM card and bank statements of A/C 1 were all mailed to Lam’s address.  D1 did not receive any bank statement and had no idea about the activities of the bank account.  Lam asked D1 to be the sole signatory of the bank account as it would be more convenient.  D1 was also asked to pre-sign company cheques.  Lam would only briefly tell D1 the rough amount and/or purpose of the cheques so issued.  

57.  It is obvious that D1 shifted all the blame to his elder brother Lam who allegedly asked D1 to learn to do business.  Yet, D1 had no experience in money exchange service and/or transportation of construction materials business. Nor was D1 involved in the actual running of business of Wealth Create.  D1 used Lam’s address as the correspondence address of Wealth Create.  D1 claimed that he had no knowledge of how the business was run. 

58.  In the cautioned interview, D1 said nothing about his brother and how Wealth Create was run.  He just denied any responsibility or claimed that he knew nothing about the bank account and the company.  D1 just claimed that all the bank statements and ATM card were sent to Lam’s address.  Of course, it is the right of D1 to remain silent under caution, and he has no duty to say anything under caution.  

59.  The problem is, why Lam wan not named as one of the directors and/or shareholders of the company?  Why Lam could not be one of the signatories of the bank account?  Why D1 did not use e-banking on the internet to check the company account?  Why D1 did not enquire about the purpose of pre-signing all the company cheques in blank?  D1 did not even check if there was sufficient credit balance in the bank account.  D1 just washed his hands at the pretext that he trusted his brother who handled all the financial matters.  But what about the original purpose of setting up a company?  D1 learnt nothing at all. If D1 had no knowledge of the financial side of Wealth Create and the entries in A/C 1, how come D1 was so sure that those account entries related to people in the mainland?  How could he be certain that these entries related to money exchange?  D1 said Lam would be the one doing the currency exchange but D1 has no idea of the money exchange provider.  

60.  D1 got paid in the sum of $40,000 to $50,000 from Lam, and yet he forgot for how long did he get the reward.  D1 did not even bother to check the bank account through e-banking.  D1 did not say Lam prohibited D1 from using the e-banking service.  D1 pre-signed cheques and yet did not bother to check the credit balance and/or to ask for the details of the cheques so issued.  

61.  I find the version put forward by D1 not credible and D1 is not an honest witness.  An adult person cannot exonerate his liability by saying that he had total trust on another person, even if that one is his elder brother.  

62.  A defendant does not have to prove anything.  However, for a charge of money laundering, a defendant has to convince the Court that he had no reasonable grounds to believe that the monies in A/C 1 were not in whole or in part, directly or indirectly represented proceeds of an indictable offence.  As the account holder of A/C 1, it is no doubt that D1 did deal with the proceeds, even though it was allegedly also done by Lam.  

63.  In the circumstances, I have to consider the evidence tendered by the Prosecution, even though D1’s version is not credible.  In this regard, the Court has to consider the bank account of Wealth Create.  The victims of the mooncake scam were not material to prove whether D1 was guilty or not.  It only shows that some of the monies deposited into the account of Wealth Create originated from the fraud.  Wealth Create was incorporated on 30 March 2015.  There was no tax return filed by Wealth Create.  The company was de-registered in October 2019.

64.  The bank account A/C 1 was opened on 8 April 2015.  According to the opening form as exhibited in the banker’s affirmation (exhibit P1), D1 said Wealth Create was involved in the trading of construction materials, not money exchange.  The source of monies in this account would be from director’s savings and business income.  D1 claimed himself a merchant by profession.  

65.  Looking at the transactions shown in the account between 2 June 2015 and 24 August 2015, there were 1,392 deposits by means of bank transfer and cash deposits, totalling $4,024,580. During the same period, there were a total of 37 withdrawals by means of transfer and cash, totalling $4,043,430. The time gap between deposits and withdrawals ranged from the same day to about one week.  I accept that given the commonality of depositors and recipients of funds as shown in the table at page 8 of the Prosecution’s closing submission, it shows the salient features of money laundering with temporary repository of funds. 

66.  Given the absence of business records of Wealth Create and there was no tax return filed, the only irresistible and reasonable inference is that Wealth Create was not conducting any genuine business.

67.  D1 cannot say because of the unavailability of company documents and records, he cannot prepare his defence properly. That is, putting the cart before the horse. D1 was arrested in August 2015 and later was temporarily released in 2016.  The police did not tell D1 that the case was closed, and D1 should not be under the perception that the matter was resolved.  D1 should have started to “protect” himself by keeping all the records and/or evidence, including bank records, that are favourable to him.  

68.  D1 did not just pass the company account for Lam’s use.  He actually pre-signed all the cheques to facilitate the withdrawals of funds.  He did not even bother to ask.  D1 just allegedly let Lam to run the company and yet he could get about $40,000 per month.  By taking all these factors into consideration, the cumulative effect of these evidence point to one direction only, that is, D1 should have reasonable grounds to believe that his company account was used to launder “black” money even though he may not know the predicate offence. 

69.  Judging from D1’s testimony in court and his answers in the VRI, I do not accept that D1 is “neither intelligent nor vigilant”.  I also do not accept that D1 “might have also been fallen as a puppet of YK Lam” (paragraph 23.5 of D1’s closing submission).  D1 gave evasive answers to avoid incriminating himself. 

70.  As regards Chung Sing and Silver Star, it is clear that PW5 is not an honest witness.  His operating of the currency exchange service was dubious.  I do not accept the submission of the defence that, “P (the Prosecution)  could not dispel a real likelihood that (even if D1’s evidence was completely refused/rejected), Wealth Create, in fact, fell victim (like PW1 to PW4), in a money exchange scam (with tainted money wrongly deposited therein)  which, applying both judicial notice and daily life common sense, is not extraordinary” (paragraph 7.3 of D1’s closing submission). 

71.  To conclude, I find the Prosecution proves its case against D1 beyond reasonable doubt.  I convict D1 of Charge 1.  

72.  D2 put forward another story to show that he had no reasonable belief that the account of Leader Trading was used to launder “black” money. 

73.  D2 met and worked for Chan on a few occasions.  Chan suggested D2 to open a company called Leader Trading in Hong Kong.  Each of them would contribute RMB$100,000.  D2 said he paid his contribution in cash by means of a few instalments.  D2 was asked to open a bank account in Hong Kong.  D2 rented a storage place in Tsuen Wan and used the address as the company address.  Chan reimbursed the rental of $1,700 to D2.  D2 registered as the sole proprietor of the company.  D2 passed the ATM card to Chan.  Chan also prepared a name card (exhibit P2, at (AE-2)259)  of D2 with the company name, Leader Trading, and the address of the storage place, email address and telephone number.  D2 did not create the email address.  D2 maintained that all business correspondence and monetary matters fall under Chan’s responsibility.  D2 trusted Chan and believed that he was engaging in air-conditioning business with Chan.  D2 had applied for internet banking but did not use it.  D2 did not get any banking correspondence, apart from those cheque books. 

74.  D2 was first arrested in August 2015.  After his arrest, D2 could not contact Chan.  D2 said he even went to China to look for Chan but to no avail.  As suggested by the police, D2 eventually went to the bank to withdraw the money from the current account ($41,600)  and the savings account ($68,054.79).  

75.  D2 had no experience in running a business. Yet, D2 trusted Chan who did not come to Hong Kong.  As suggested by Chan, D2 opened a company, Leader Trading.  Chan was not one of the shareholders despite his contribution.  It seems that the name of company was not D2’s decision.  Chan prepared D2’s name card after D2 rented a storage place in Tsuen Wan.  Chan also created the email address of Leader Trading at <yahoo.com>. D2 said he did not use internet banking and yet he did apply for one.  He forgot whether he got the PIN to the e-banking.  D2 had no idea who paid $1,000 as the business integrated account application fee (see exhibit P2 at (AE-2)244).  D2 was not the one who made the first deposit of $10,000 which was effected by means of cheque deposit machine on 8 May 2015 (see exhibit P2 at (AE-2)265). 

76.  D2 received 2 cheque books.  He signed a few blank cheques and brought them to China when seeing Chan.  He did not ask why.  He did not check his account.  He had no idea what was going on with the business, except his trust on Chan.  The narrative of source of wealth put down by the bank staff (exhibit P2 at (AE-2)246)  was confirmed by D2 in substance except the misidentity issue (paragraph 32 of D2’s closing submission).  But it still supports the saying that D2 did not actually mention the existence of a particular person, Chan himself.  

77.  D2 may not know the actual activities in the bank account.  He may have no role to play relating to the deposits in the account.  

78.  Between May 2015 and August 2015, there were a total of 1,608 deposits by means of bank transfer, cash deposit and cheque deposit, totalling $4,990,563.  During the same period, there were 38 withdrawals, all by means of transfer to current account, totalling $5,065,000.  That means most of the monies were siphoned off by means of cheques.  It is because when D2, accompanied by the police officers, went to the bank to close the account, the remaining balance was $109,654.79 on 24 August 2016.  By signing blank cheques, D2 was facilitating the movement of monies.  D2 did not ask nor did he make any record of these cheques.  He did not check if there was sufficient balance in the account as cheques can bounce.  It is just too easy for D2 to say he trusted Chan, but did nothing when both Leader Trading and the bank account was registered in D2’s name, even though the defence claimed Chan was just a shadow partner.  

79.  Defence counsel submitted that despite the fact that D2 signed the blank cheques, D2 genuinely believed that these cheques represented legitimate business expenses for Leader Trading (paragraph 80 of D2’s closing submission).  I  do not accept that this was another form of division of labour (paragraph 81(3))  as the bank would allow 2 or even more people to be the signatory to the account jointly or severally. These submissions, in my view, defy common business sense and proper prudence.  

80.  All these factors show that a reasonable man would not incline to believe that the setting up of Leader Trading and the opening of a company account would involve legitimate business transactions.  I do not find D2 an honest and credible witness and his version of events is rejected.  Based on the evidence put forward by the Prosecution, I find that the only reasonable and irresistible inference is that D2 did play a role in dealing with the proceeds of an indictable offence, even though Chan could be taken as the main culprit.  

81.  The fact that the payee of some of the cheques was Silver Star cannot be said Leader Trading was doing currency exchange business, as the circumstances surrounding the running of Silver Star or Chung Sing were sinister and suspicious. 

82.  To conclude, I do not accept the submission that “D2, or any reasonable person in D2’s position would not be bound to believe that the property was tainted” (paragraph 127(1)  of D2’s closing submission).  I rule that D2 should have reasonable grounds to believe that the monies in his company bank account with the HSBC, in whole or in part, directly or indirectly, represented proceeds of an indictable offence.  I convict D2 of Charge 2.