HKSAR v. SZE TUNG LAM AND ANOTHER

DCCC 132/2011

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO.132 OF 2011

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Reasons for Sentence

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1. D1 and D2 were convicted after trial of 3 and 2 charges of dealing with proceeds of an indictable offence respectively.

Brief Facts

2. D1, the husband, assisted in the operation of various gambling establishments, accepting money from the gamblers by way of commissions. Those money were proceeds from the indictable offence of assisting in the operation of illegal gambling establishments. D1 then dealt with the money.

3. D2, the wife, received various sums of money over a period of time from D1 and had dealt with the money. She had reasonable grounds to believe that part of the money were proceeds from an indictable offence.

Previous convictions

4. Both D1 and D2 only have minor previous convictions, nothing that would amount to an aggravating factor when sentencing in the present case.

Mitigation

5. Background reports in relation to each of the defendant was prepared. There is nothing much of mitigation significance. The main concern of both the defendants is the welfare of their children. If they are both sentenced to imprisonment, the children may not be properly looked after. The children are aged 9, 11 and 14.

Sentence

6. I find the written submission prepared by Mr. Ching Y. Wong SC, Mr. David Ma and Ms. Fiona Nam most helpful.

D1

7. In relation to D1, his conviction is based mainly on his confession in his video recorded interviews. I had found that he was telling the truth when he said that he had made gross profits of around $7 to 8 million in total when he had assisted in the operation of 2 illegal gambling establishments over a period of about 2 year and 3 months. He made those profits by taking commission from other people’s winnings.

8. It is on the basis of that confession that I found D1 guilty of charges 1, 2 and 5. Given that it is also D1’s confession that each of the 3 accounts in each of the 3 charges had been used in receiving and distributing money related to the illegal gambling establishments, I find that an overall approach should be adopted because it is not possible to segregate which particular sums of money were commissions for D1 and which were winnings and losses of D1’s friends or customers.

9. There are no sentencing tariff cases in relation to money laundering. The maximum sentence is that of 14 years’ imprisonment and a fine of $5 million. Although the amount of money being laundered is a main factor, it is not the only factor to be considered. The court in sentencing will have to consider whether there was an international element to the money laundering, how long the laundering had been going on, what the predicate offence was, whether the defendant had knowledge of that offence, and what role the defendant played in the predicate offence as well as in the money laundering.

10. I have to say that the defendant’s conviction is not the usual type of money laundering that this court deals with. It would appear that the Police is trying to get at the defendant for his role as one of the operators of a tight gambling ring by arguing that the defendant had been laundering the money. As I had mentioned in my Reasons for Verdict, but for D1’s confession, the prosecution would not have succeeded with any of the 3 charges against D1.

11. Even based on D1’s confession, the conviction is rather technical. On the facts that the prosecution was able to prove, what the defendant did cannot be said to be typical money laundering activities. There was no evidence that the defendant’s action was to ‘cleanse’ the money so that the source of the funds could not be traced. The prosecution had failed to prove that the large amount of money going into and then out of the defendant’s accounts were proceeds of an indictable offence because I have accepted that some of the money were in fact deposited by those gambling at the establishments so that they can settle their gambling debts with others. As I had explained in my verdict, illegal gambling is not an indictable offence and those money would not be capable to be proceeds of an indictable offence.

12. The Court of Appeal in the case of HKSAR v Chan Kim Chung Nelson, CACC 432/2010 observed similarly:

“13. What most people understand as money laundering, however, is where the proceeds of crime are dealt with for a specific purpose, namely, to create distance between the crime and the profits it generates so that no link between the two can be detected. This, necessarily, involves acts of dealing with the proceeds of crime but the acts of dealing are directed at a particular end and may involve multiple “dealings” designed to create a number of layers between the crime and the profits it has generated. By a process of transferring the money between accounts, both domestic and international, converting the monetary profits into other forms of property or washing the money through legitimate businesses, a series of layers are created that conceal the origin of the criminal proceeds and that they are in fact the proceeds of crime. This renders detection of the crime and the recovery of its proceeds the more difficult. This we shall refer to as a dealing with the proceeds for a money laundering purpose.”

13. What I have found the defendant to have done that was illegal was dealing with proceeds from the indictable offence of assisting in the operation of an illegal gambling establishment, that is to say, the commission that were proceeds from the operation.

14. In HKSAR v Chan Kim Chung, Nelson, supra, the appellant dealt with proceeds from a blackmail that he had taken part in. When considering whether the sentences for the blackmail and the dealing charges should be made concurrent or consecutive, the Court said this,

“17. These considerations lead naturally to the approach which a court should adopt in sentencing an offender who is guilty both of the predicate offence and a connected s. 25 offence. The question for the purpose of sentence of the s. 25 offence must always be whether its commission adds anything to the culpability disclosed by commission of the predicate offence. If it does, then that extra culpability must be reflected in the overall sentence imposed. If, however, the s. 25 offence adds nothing, then an effective additional sentence for the s. 25 offence should not be imposed, for doing so would in effect be to punish the offender twice the same conduct. ”

15. Suppose D1 is charged with assisting in the operation of illegal gambling establishments in addition to dealing with the proceeds arising out of the operations, what D1 is saying is that D1 should not be punished again for the dealing if it adds nothing to D1’s overall culpability. The defence then suggest that the court should consider what the proper sentence to impose in relation to the predicate offence of assisting in the operation of illegal gambling establishments should be and impose the same in relation to the dealing offence.

16. The defence then refer to a number of sentencing cases in relation to the operation of a gambling establishment. Mr. Wong very fairly conceded that the operation of successive gambling establishments for about 2 and a half years constituted an aggravating factor in respect of D1’s commission of the primary offence of assisting in the operation of a gambling establishment.

17. D1 further conceded that the amount involved is an aggravating factor, accepting that the amount is to be taken as $7 million.

18. It is D1’s submission that the sentence for D1’s commission of the primary offence should be between 12 to 18 months’ imprisonment. D1 argued that based on the principle in Chan Kim Chung Nelson referred to above, D1’s sentence in relation to the 3 charges should also be between 12 to 18 months’ imprisonment.

19. It must be taken into consideration that what D1 was assisting in operating was a gambling establishment catering for people who are from D1’s place of origin, and include people who are doing very well in society apparently. The number of gamblers may be less than in some of the gambling cases referred to between paragraphs 5.2 and 5.4 of Mr. Wong’s skeleton submissions, but the amount of money involved is still substantial.

20. Independent of the case of Chan Kim Chung Nelson, I find that based on the amount of proceeds being dealt with, the circumstances surrounding the dealing and the lack of other aggravating factors, a proper overall starting point would be that of 18 months’ imprisonment.

21. With the assistance of the case of Chan Kim Chung Nelson, I find that the overall proper starting point is indeed 18 months’ imprisonment. Given that this is an overall starting point, I will sentence D1 to 18 months’ imprisonment on each of the 3 charges but order the sentences to be served concurrently.

D2

Charges 3 and 4

22. The prosecution case against D2 is slightly different. It is the prosecution’s case that D2 had reasonable grounds to believe that the money that she had dealt with in her 2 accounts represented proceeds of an indictable offence. Again, the indictable offence the prosecution is complaining about is that of the operation or assisting in the operation of gambling establishments.

23. The gist of my finding against D2 was that a common sense, right-thinking member of community, knowing what D2 knew at that time, would have reasonable grounds to believe that the large amount of money that was deposited into her accounts must have represented at least in part and indirectly the proceeds of an indictable offence.

24. Given my finding in relation to D1, the question then is what is the amount that D2 had dealt with that represented such proceeds, since I have found that some of the money deposited into D1 and D2’s accounts were likely to be winnings and losses between the gamblers and not commissions paid to D1.

25. I find that a fair and correct approach would be to again adopt an overall sentencing approach over the 2 charges.

26. I note that Mr. Wong for D2 at paragraph 6.1.3 of his submission suggested that the amount D2 should be sentenced upon should be $1.259 million. Mr. Wai for the prosecution informed this court that based on the evidence in the case as well as on the eventual findings of the court, he personally finds this figure acceptable.

27. Just as in the case of D1, there is insufficient evidence to say that what D2 did in relation to the proceeds is typical of money laundering activities. The illegality in her action lies in her dealing with the money while having reasonable grounds to believe that they must be proceeds from her husband’s illegal gambling establishment operation. There are no international elements since the money she had dealt with which were proceeds from an indictable offence must, by definition, have come from his husband’s local operation of the illegal gambling establishments.

28. Apart from the money given to her by her husband referred to above and in Mr. Wong’s submission, we cannot be sure whether the rest of the moneys were or were not just winnings and losses being settled between the gamblers. I will therefore sentence D2 on the basis that the amount of money she had dealt with was $1.259 million. This amount in terms of money laundering cases is by no means a big amount.

29. I have taken into consideration the seemingly less significant role of D2 in the dealing of the proceeds from the illegal gambling, since it was always D1 who directed D2 what to do with the deposits, this being the necessity point raised by Mr. Wong at paragraph 6.2.1. of his submission, and the fact that if both the defendants are sent to jail, their children may be left with no one to look after properly, this being the humanitarian ground at paragraph 6.3.1.

30. Given the young age of the children, and they are all at a stage in their lives where the guidance of an adult is most important, to take away both their parents for over a year at the same time would be devastating to the children and will have serious impact on their well being. I find that it would be in the interest of society to leave D2 at liberty to care for their children.

31. Furthermore, with D1 incarcerated, the chance of D2 re-offending in the near future is very low.

32. I will order that in relation to charge 3, D2 be fined $150,000 and be sentenced to 15 months’ imprisonment, suspended for 2 years. I impose exactly the same sentence in relation to charge 4. The terms of imprisonment of the 2 charges to be served concurrently, with the total amount of fine being $300,000.

Payment of fine

33. $50,000 bail money to be deducted and applied towards the fine in charge 3, balance of all fines to be paid within 3 months.

34. Pursuant to s.113A of the Criminal Procedure Ordinance, Cap.221, in relation to each of the charge 3 and 4, D2 will be sentenced to 12 months’ imprisonment if any sum of the fines is not duly paid.