HKSAR v. MONDESIR JOHNNY

DCCC 434/2019

[2020] HKDC 218

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 434 OF 2019

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REASONS FOR VERDICT

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Introduction

1.  The defendant faces two charges, contrary to section 25(1) and (3) of the Organized and Serious Crimes Ordinance.  He pleaded not guilty to both charges.

The Charges

1st Charge

Statement of Offence

Dealing with property known or believed to represent proceeds of an indictable offence, contrary to section 25(1) and (3) of the Organized and Serious Crimes Ordinance, Cap 455.

Particulars of Offence

MONDESIR Johnny, between the 28th day of July, 2016 and the 1st day of August, 2016, both dates inclusive, in Hong Kong or elsewhere, knowing or having reasonable grounds to believe that property, namely a sum of $827,265.23 Canadian currency in the account numbered 474-790623-833 held in the name of the said MONDESIR Johnny with The Hong Kong and Shanghai Banking Corporation Limited, in whole or in part directly or indirectly represented the proceeds of an indictable offence, dealt with the said property.

2nd Charge

Statement of Offence

Dealing with property known or believed to represent proceeds of an indictable offence, contrary to section 25(1) and (3) of the Organized and Serious Crimes Ordinance, Cap 445.

Particulars of Offence

MONDESIR Johnny, between the 29th day of July, 2016 and the 15th day of October, 2016, both dates inclusive, in Hong Kong or elsewhere, knowing or having reasonable grounds to believe that property, namely a sum of $66,989.93 Canadian currency in the account numbered 863-530-01125-6 and a sum of $399,990 Hong Kong currency in the account numbered 863-520-02882-2 both held in the name of the said MONDESIR Johnny with Industrial and Commercial Bank of China (Asia) Limited, in whole or in part directly or indirectly represented the proceeds of an indictable offence, dealt with the said property.

2.  The offence alleged in both charges is commonly known as “money laundering”.  Put simply, the first charge relates to the receipt of Canadian dollars (CAD)$827,265.23 in the defendant’s bank account with The Hong Kong and Shanghai Banking Corporation (“HSBC account”) and then dealing with the money between 28 July and 1 August 2016.  The second charge relates to his dealing with the deposits of CAD$66,989.93 and HK$399,990 respectively in two separate accounts of the defendant kept with the Industrial and Commercial Bank of China (Asia) Limited (“ICBC account”) between 29 July and 15 October 2016.

The issue

3.  There is no dispute that the monies in question in relation to both charges were actually the proceeds of an indictable offence.  Nor is there any dispute that the defendant dealt with the monies.

4.  The only issue is whether or not the defendant knew or had reasonable grounds to believe that the monies in question were the proceeds of an indictable offence.

5.  The defence is quite simple.  In a nutshell, the defendant said he had sold a piece of land.  He received and dealt with the money with the belief that it was the purchase payment of the land he sold.  If what the defendant said is true or might be true, he must be acquitted of the charges.  And this is the crux of the case.

The prosecution case

6.  The prosecution case is primarily unchallenged.  Only two live witnesses were called to give evidence from a place outside Hong Kong by live television link under s 79I of the Criminal Procedure Ordinance.  There was basically no challenge of their evidence in cross examination. The banking evidence is also undisputed.

7.  The prosecution’s written closing submission in relation to the defendant’s bank records and transactions are unchallenged.  The “Fund Flow Diagram” (MFI-1) helpfully provided by the prosecution succinctly demonstrates the main movements of the monies in question. I will only give a brief summary of the evidence.

8.  The defendant opened an Integrated Account 474-790623-833 at HSBC on 5 April 2013.  He was the sole account holder and the sole signatory to the account.  On 1 August 2016, the account was upgraded from HSBC “Advance” account to HSBC “Premier” account. Since the opening of the account, it was not quite active. 

9.  On 28 July 2016, there was a deposit of CAD$827,265.23 into the defendant’s HSBC account.  The deposit was made via the Toronto- Dominion Bank (“TD Bank”) by deducting from the account of Agriteam Canada Consulting Ltd (“Agriteam”), the victim of a phishing email scam in Canada.  The Chief Financial Officer of Agriteam (PW2) had been conned to enter the company’s bank account detail and password to give the false instruction of wiring.  As a result, the said deposit (“the Agriteam’s deposit”) was withdrawn from the victim’s account kept with TD Bank and transferred to the defendant’s HSBC account.  There is no dispute that the defendant had no dealings with Agriteam whatsoever.

10.  From 29 July 2016 to 1 August 2016, there was a quick dissipation of the bulk of the Agriteam’s deposit.  Monies were withdrawn from his HSBC account either by the defendant personally in cash, or transferred from his HSBC account to other bank accounts via internet banking.  In particular, there were transfers of CAD$67,000 and HK$400,000 from his HSBC account to his ICBC account, and further transfers of CAD$100,000 and HK$1million to the account of a company known as Marquisa Limited (“Marquisa”) kept with HSBC. Significantly, on 1 August 2016, the defendant personally withdrew cash either at counters or through ATM machines on 7 separate occasions amounting to a total of about HK$1.33 million.

11.  Subsequently the defendant withdrew a total of CAD$76,000 from his ICBC account to transfer into bank accounts in Canada held by his sister (Suzie Mondesir) and his late mother under the name of “Succession Marie Gerta Fanor”.  He also made cash withdrawals on various occasions from his ICBC account for a total of more than HK$768,000.

12.  The defendant is the husband of Pryce Chevenese, who opened a personal account with ICBC, claiming to be a manager/controller of a company known as “Aeptis” with its registered address in Hong Kong. 

13.  It is admitted that Marquisa Limited was incorporated in Hong Kong on 26 June 2015 and at all material times, Pryce Chevenese was its sole director and shareholder.  Marquisa Limited opened an account with HSBC in Hong Kong on 30 June 2015.  The sole signatory and contact person was also Pryce Chevenese.

14.  There are no tax records with the Hong Kong Inland Revenue Department in respect of the defendant, his wife and Marquisa Limited.

15.  As mentioned, the defendant had transferred CAD$100,000 and HK$1 million to Marquisa’s HSBC account on 29 and 30 July 2016 respectively.  Significantly, on 1 August 2016, HK$1.433 million was transferred from Marquisa’s HSBC account to the defendant’s wife’s personal account with ICBC.  Subsequently, HK$426,600 was transferred from her personal account to an account kept by Aeptis Hong Kong Ltd with Dah Sing Bank.  A total of almost HK$1 million was also withdrawn from her account in cash on many separate occasions.

16.  It is to be noted that, by the close of 4 August 2016 and until 4 April 2019 when the defendant was arrested upon his arrival in Hong Kong International Airport, there was still a total balance of about HK$1.17 million left in the defendant’s HSBC account. 

The phishing email

17.  Miss Geeta Tucker (PW2), the Chief Financial Officer of Agriteam, testified in Winnipeg of Canada that on 27 July 2016 at 0932 hrs she received an email purporting to be from TD Bank.  The email contained a link which was purportedly from TD Bank asking her to key in Agriteam’s account detail and password.  She did accordingly and only then realized something was suspicious. She immediately reported to the relationship manager of TD Bank about the suspicious email.  Later, another manager of TD Bank confirmed to PW2 that it should be considered as a fraud attempt which would be forwarded to the fraud investigation team of the bank.  Yet, Agriteam only found out on 3 August 2016 that there had been an unauthorized withdrawal via wire transfer of CAD$827,276.28 from the company’s bank account.  She immediately informed TD Bank.

18.  Mr Dennis Parker (PW1) is the representative of TD Bank.  He confirmed in his evidence, given in Toronto, that the said email was a fraudulent one.  The email address of TD Bank is not the real email address of TD Bank which would not ask a customer to provide its password.  The bank already received the fake email from PW2 on 27 July 2016.  However, owing to the omission of some staff of the bank, the fraudulent wire transfer was not stopped.  The error was only found out on 3 August 2016 when Agriteam informed the bank about it.

19.  During cross-examination, PW1 accepted that, under the requirement of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act in Canada, there is a reporting requirement of banks to report to the authority (FINTRAC) of any international transfer of money of and above CAD$10,000.

20.  The prosecution asserts, on the evidence of the receipt and disposal of the monies by the defendant, he knew or had reasonable grounds to believe that those monies in whole or in part directly or indirectly represented the proceeds of an indictable offence.

The defence case

21.  The defence case is simple.  As said, the defendant sold a piece of land.  He dealt with the Agriteam’s deposit with the belief that it was a genuine payment of the price of the land he sold.

22.  The 41-year-old defendant testified in French that he has a clear record in Hong Kong.  Born in Haiti, he moved with her mother to live in Canada at the age of 4.  Growing up in Quebec, while he understands English, his mother tongue is French.  He is married with 2 children.  He has 5 sisters, 3 of them are living in Canada. The defendant received university education with a degree in IT science.  He had previously worked as IT developer for 5 years before he started his concurrent employment with GDS in Canada and Aeptis in Shanghai.  He also owns a share in GDS. For the business of GDS and Aeptis, he travelled a lot to China and around the world.

23.  The defendant said her mother was very successful in business.  She owned 3 shops in textile trade in Haiti and a restaurant in Canada.  She died in 2011 with a Will leaving all her properties to the defendant as the sole beneficiary.  The estate included 7 pieces of land in Haiti and 5 properties in Canada.  He already sold out 5 pieces of land in Haiti and 3 houses in Canada.  He emphasized that he was aware of the FINTRAC policy in Canada.

24.  In July 2016, on a flight from Haiti to Montreal, the defendant met a man claiming himself to be Robert Francis (“RF”) who gave him a business card purporting his position as the President and CEO of Agriteam.  After the two of them returned to Canada, they continued their negotiation on the sale of one particular piece of land that the defendant had inherited from his late mother.  Eventually, they reached an agreement for the sale of the land located at Croix-des-Bouquets.  Before the agreement was reached, the defendant had contacted a notary public of Haiti, Jacques Emmanuel Victor, who had been engaged by the defendant since around 2012/13 to handle the estate matter of his late mother. The notary public gave advice to him and prepared for him the sale agreement of the land.  He also engaged a land surveyor for the preparation of land survey report for the defendant.  The defendant gave the notary public the telephone number of RF for their direct contact. The defendant sent the sale agreement of the land and survey report (with a plan) to RF using social media platforms via internet known as Wicker and WhatsApp.  The notary public was not involved in the signing of the sale agreement.  The defendant said he was guided by the procedures explained in a guide, known as “A How-To Guide for the Legal Sale of Property in Haiti” (“the Guide”) that he downloaded from internet about the procedures in a sale of land (Exhibit D 17).

25.  The price of the land was reached at US$925,000 (equivalent to CAD$1.2 million).  Agreement was also made that the price would be paid by two separate payments: the first payment (30% of the price) was to be paid into the defendant’s bank account in Haiti; and the remaining balance (70% of the price) was to be paid into the defendant’s HSBC account.  The 30% initial payment was the idea of RF as he was not comfortable with the whole payment being paid into a bank account in Hong Kong.  He preferred to send a portion of the purchase money to the defendant’s bank account in Haiti.  About two months later, on 1 October 2016, having received the full payment, the defendant signed the “Land Transfer Document” (exhibit D 10) with RF in the office of the notary public. He was given a copy of the document that day.

26.  Looking at the website of Agriteam in court, the defendant accepted that the picture of Robert Francis in the website was not the same person he had met on the plane.

27.  The defendant further elaborated in his evidence that he transferred part of the purchase money received to his wife and his sister as they were entitled to a share in his mother’s estate.  The money he transferred to his mother’s “succession account” was to pay the expenses in the management of her estate.  However, he had no idea why his wife asked him to deposit the money into the account of Marquisa Limited and why that company subsequently transferred back the money to her, which was then transferred to Aeptis Hong Kong Ltd.

28.  In explaining why there are no original documents or official records in support of his claim of the sale of land, the defendant asserted that as he is remanded in custody for this case, he could only rely on the assistance of his wife and sisters to locate the relevant documents and evidence for him.  With further assistance from his employer, Richard Sully, only the documents he produced were retrieved from his office in Quebec and received by the defendant through his lawyers. 

29.  The defendant said he and his family lived in Vietnam in 2016. He reached the sale agreement of land when he was in Vietnam. Although the family moved back to Canada later, he still kept his residence in Vietnam.  The formal sale agreement, the defendant reiterated, is still at his home in Vietnam.  He had asked his sister, Marie, to help to locate the document, but she did not have time to go to Vietnam. 

30.  When challenged in cross-examination why he could not produce the title record or any official proof that he owned lands in Haiti, the defendant asserted that he had asked his brother-in-law to go to Haiti to find the documents.  However, Haiti is now a dangerous place as there are widespread civil unrests and protests.  The Canadian Government has issued a warning not to travel to Haiti unless for essential travelling.

The law

31.  The legal principles in relation to money laundering offences are quite settled [1] and indeed undisputed in the present case.

32.  It is not necessary for the prosecution to prove, as an element of the offence under s.25(1) of the Organized and Serious Crimes Ordinance that the proceeds being dealt with were in fact the proceeds of an indictable offence.

33.  In relation to the second limb (having reasonable grounds to believe) of the offence, the Seng Yuet Fong test correctly represents the law.  The test, as the Court of Final Appeal reformulated in Harjani Haresh Murlidhar, is: -

(1) What facts or circumstances, including those personal to the defendant, were known to the defendant that may have affected his belief as to whether the property was the proceeds of crime (“tainted”)?

(2) Would any reasonable person who shared the defendant’s knowledge be bound to believe that the property was tainted?

(3) If the answer to question (2) is “yes” the defendant is guilty. If it is “no” the defendant is not guilty. [2]

34.  The first question is subjective only in as much as it requires the tribunal to make findings as to the knowledge of the defendant at the time of the relevant transaction.  Where the defendant gives evidence of facts and matters that affected his belief about the nature of the property, the court has to decide whether he is, or may be, telling the truth about the existence of these facts and matters.[3]

35.  The second question is objective.  Where the court finds that the defendant was, or may have been, telling the truth about the existence of facts and matters that he claims affected his belief, the court must take those facts and matters into account when answering the second question.[4]

If the evidence provided by the defendant as to what he perceived and believed is accepted as true or as evidence which may be true; and if true would be inconsistent with him having reasonable grounds to believe that the property in question represents the proceeds of crime, an acquittal is called for since an essential mens rea element cannot be established against the defendant.[5]

36.  Where the defendant provides no evidence at all of his beliefs and perceptions etc, the Court is left to draw whatever inferences may be proper based on the prosecution’s evidence.[6]

37.  If the defendant does testify or call evidence as to his state of mind but is entirely disbelieved, the court finds itself essentially in the position described in the preceding paragraph.[7]

Analysis of the evidence

38.  The prosecution case is primarily unchallenged.  While two witnesses were called to give evidence from a place outside Hong Kong by live television link under s 79I of the Criminal Procedure Ordinance, there was no challenge of their evidence in cross examination.  I accept that both PW1 and PW2 are credible witnesses.

39.  There is no issue that the monies in question in relation to both charges were actually the proceeds of an indictable offence (“tainted money”). It is not disputed that the defendant dealt with the monies.

40.  The only issue in the case is whether the defendant knew or had reasonable grounds to believe that the monies he dealt with were “tainted” (being proceeds of an indictable offence).

41.  In a nutshell, the defendant said he was deceived by a person purporting himself to be “Robert Francis” into selling a piece of land in Haiti to the latter.  The defendant believed that the Agriteam’s deposit in his HSBC account was the remaining balance of the payment for the sale of his land.  He in fact sold his land to RF, the impersonator.  He only found out the fraud after he was arrested in April 2019.

42.  It was emphatically stressed by defence counsel, Mr Beel, that the defendant’s behavior was inconsistent with a person who was engaged in money laundering: the defendant continued entering Hong Kong on numerous occasions after the tainted money had been transferred into his HSBC account until he was arrested in April 2019; there was also a balance of more than HK$1.1 million in the defendant’s HSBC account.  Moreover, the defendant did not use shell company or fake identities.

43.  I have carefully considered the defendant’s exculpatory evidence as to his personal beliefs, perceptions and prejudices.  He asserted fact and matters that affected his belief about the nature of the Agriteam’s deposit in his HSBC account.  If believed, such evidence would have constituted a basis for holding his innocent belief and that he did not have reasonable grounds to believe that the monies he dealt with represented the proceeds of an indictable offence.  If the defendant was, or may have been, telling the truth, then he must be acquitted.

44.  I directed myself that the prosecution must prove its case beyond reasonable doubt.  There is no burden on the defendant to prove anything.  I also bear in mind the predicament of the defendant being remanded in custody for this matter and the difficulty to directly collect evidence arising from his situation. Moreover, when he gave evidence at trial more than 3 years after the events, his memory might have failed him.

The defendant’s evidence of beliefs and perception etc

45.  The defendant adduced exculpatory evidence on his beliefs and perceptions.  The major plank of his defence is that he sold a piece of land to the imposter.  In support of his defence, the defendant produced as exhibits various documents including his e-mails with RF, his late mother’s Will and the “Land Transfer Document” purportedly prepared by a notary public of Haiti. However, all these documents are photocopies only, not originals.  They were said to have been retrieved from the defendant’s office in Canada and given to the defendant’s lawyers through the assistance of his wife, his sisters and his business partner who allowed them access to the defendant’s office and computer in Canada.  

46.  I have considered the predicament of the defendant being in custody.  In my judgment, the defendant’s explanations as to his difficulty in collecting evidence as a result of his incarceration for this case cannot be substantiated.  While he has been remanded in custody, he is able to instruct his lawyers and seek assistance from his family members.

47.  If the defendant, as he maintained, had inherited from his late mother 5 houses in Canada (3 already sold by him) and 7 pieces of land in Haiti (5 of which sold), there is no question that he is financially able to instruct lawyers or other professionals to obtain the evidence necessary for the trial.  Admittedly, he had indeed engaged lawyers to get the documents from Canada.  He is now represented by solicitor and counsel at the trial.  I find that the capability of the defendant to defend himself has not been prejudiced by his being remanded in custody.

48.  The defendant produced defence exhibit D17, which appears to be a manual for land transaction in Haiti.  It shows that the Office of Land Registry (“DGI”) is the responsible authority for the registration of transfer of real property and payment of tax for the transfer.  Official documents from Haitian authorities in relation to the defendant’s ownership of the land in question, the registration of transfer of title and the ownership of the land by RF are expected to be accessible by representatives of the defendant.  It is inconceivable that professionals could not have been employed by the defendant for this purpose.  Indeed, there is no evidence in the case that the defendant was in any difficulty to do so.

49.  According to the defendant, before the defendant reached an agreement for the sale of the land, he had approached the notary public who prepared the sale agreement for him and engaged a land surveyor on his behalf.  It is difficult to understand why he should be unable to retrieve even a copy of these documents from the notary public or the surveyor.

50.  Apparently, the steps taken in the purported transaction of the sale of land were entirely unserious.  It defies logic and is an affront to commonsense and reality.  The defendant is a Canadian living in Quebec.  The buyer was also known to be a Canadian.  The agreed price of the land was US$925,000 (the defendant alleged it was equivalent to CAD $1.2 M).  There is no evidence of good reasons why the price had to be paid into different accounts kept with different banks in different locations of the world, and in different currencies. 

51.  It is also difficult to understand why the initial payment (being 30% of the purchase price) deposited into the defendant’s bank account in Haiti was US$299,460 (30% of 925,000 equals 277,500).  The second payment by the Agriteam’s deposit is also inconsistent with 70% of CAD$1.2 million.  The point was raised with Mr Beel during his oral closing submission[8]. His assistance, I am afraid, cannot resolve the difficulty.

52.  It is just commonsense that selling a piece of land is not a trivial thing and likely to be a technical and complicated matter.  And the defendant also acknowledged that, having read the Guide (exhibit D17) he downloaded from internet, he found the law in Haiti governing the sale of land difficult to understand.  Being an educated and well experienced business man, he should also appreciate that title to land in a country like Haiti can be problematic.  When the defendant and the buyer had been in contact with the notary public nominated by the defendant, there was simply no good reason for the parties to proceed with the signing of the sale agreement and handling of the payment money themselves directly without involving the notary public.  This is also against the advised procedures demonstrated in the Guide produced by the defendant.

53.  When the price of the land was directly paid to the defendant, there could be no safeguard to the buyer that the defendant would eventually keep his promise to transfer the land after the payment.  It is beyond any reasonable imagination that, for the benefits of both parties, the defendant should suggest, and the buyer would agree, for the transaction to proceed without involving a lawyer as a stakeholder.

54.  The content of the Land Transfer Document (Exhibit D 10) is also suspicious on its face.  It describes the defendant received the land “under the distribution of the succession of his late mother jointly with his co-heirs, namely: Marie Camille Mondesir and Suzie Mondesir, his sisters, as the sole heirs.”  This is on its face contrary to his mother’s Will which bequeathed all her assets to the defendant as the sole beneficiary.  The Will also did not refer to any lands in Haiti as the mother’s assets.  The Will shows an apparent mistake of date (sixth of March Nineteen and Four Eleven) and the middle name of the defendant’s mother was wrongly spelt as Gertha (which should be Gerta).  Such obvious mistakes are not reasonably expected in a serious legal document in relation to transfer of ownership of land.

55.  Furthermore, in my observation, the defendant was an evasive witness. He often gave vague answers and did not answer directly, in particular, when he was asked why there were no original documents of his exhibits and why the purchase price was paid in different currencies and through different accounts in different parts of the world.  Moreover, he initially said exhibit D10 (a copy of the Land Transfer document) was given to him on 1 October 2016 after it was signed.  When alerted that the document had a reference to a future date (22 March 2017), he changed to say that it was not the document he received on 1 October 2016, but a certified true copy that he subsequently obtained to give to her sister for reason that he could not remember.

56.  The prosecution relied on a previous inconsistent statement made by the defendant’s lawyer in his bail application on 6 April 2019 (transcript of which was agreed by parties as exhibit P17). In the proceedings for bail, the defendant’s solicitor told the presiding magistrate, without any prompting of anyone, that the purchaser had paid CAD$800,000 and the defendant was still chasing the purchaser in Haiti through his lawyer there for CAD$400,000, the balance of the price.  The defendant contended that it was only a misunderstanding of his solicitor whose English was not good enough.

57.  While misunderstanding of instruction by lawyers do happen, what the defendant says now and what his previous lawyer told the magistrate are materially and significantly different.  The different versions did not seem to be the result of misunderstanding.  When cross-examined, the defendant agreed that his English ability is “very good” and of “rather high level”.  If his lawyer presented his case wrongly in court, it is improbable that he did not correct the mistake.  That said, I am still giving the defendant the benefit of doubt and will not draw any adverse inference against him on the point taken by the prosecution.

58.  There is a further flaw in the logic of the defence: the alleged first payment of the price (US$299,460) was said to have been paid and deposited into the defendant’s account with a bank in Haiti on 26 July 2016.  That was one day earlier than the date when the phishing email was received by PW2.  Moreover, an email dated 25 July 2016 produced by the defendant purportedly the email (exhibit D7) from RF also said that the first payment had been paid into the defendant’s account, ie 2 days before PW2 received the phishing email.

59.  Obviously the scam in the present case only succeeded by sheer luck. Phishing e-mail is nothing new.  The chance of the victims receiving such kind of fraudulent mails being conned to enter their bank account detail and password was indeed very slim.  Furthermore, the scam only succeeded with a mere coincidence that the bank took no action, through a quite unusual omission of its staff, to stop the fraudulent transaction.  The success was entirely coincidental and unexpected.  The fraudster was only too lucky to succeed.  In my view, it is implausible that a scammer would have first given out a huge sum of money to a victim, as in this case giving US$299,460 to the defendant, with a fanciful hope that another victim would then be gullible enough to be conned.

60.  Mr Beel, counsel for the defendant emphasized again in his oral supplemental closing submission that: the defendant used his real name and personal accounts; he continued to use Hong Kong as a transit port and came to Hong Kong after he received the letter from HSBC; and he did not withdraw all the money but left more than HK$1.1M in his HSBC account.  All these facts, counsel reiterated, were incongruous to the actions of a money launderer.

61.  It is not unknown that some criminals do use their real names in the commission of crime.  The fact that the defendant used his personal account is neither here nor there.  Again, running the risk of being arrested to come to Hong Kong repeatedly is not indicia by itself of innocence.  But these are matters that this court must take and has taken into account.

62.  Defence counsel placed particular emphasis on the undisputed evidence that the defendant’s HSBC account still had a balance of more than HK$1.1 M when he was arrested.  He submitted that a money launderer would not have left such a huge amount of tainted money undisposed of. 

63.  The submission is based on the premise that the defendant was able to dispose of the money in the HSBC account freely after 4 August 2016.  The defendant testified that he had experienced no problem in this account before his arrest.  Exhibit D12, a letter dated 14 February 2019 from the HSBC, was produced in support of the claim.  The letter, referring to a High Court Action No 2577 of 2017, stated that “In the light of the Order (Garnishee Order to Show Cause dated 1 February 2019), we have frozen the (defendant’s accounts)”.

64.  There is no evidence adduced by the prosecution to prove that the defendant’s HSBC account had been frozen before HSBC received the Garnishee Order.  Mr Marray, counsel for the prosecution, told the court that he did not have evidence about it. However, the letter of HSBC cannot prove that the defendant’s HSBC account was only frozen since the date of the letter.  He pointed out that the balance of the defendant’s HSBC account remained basically the same from 4 August 2016 to 14 February 2019.

65.  For reasons unknown to this court, no bank officers were called by either party to testify on this.  But I bear in mind that the burden of proof is on the prosecution, not on the defence.

66.  The defendant testified that he had not seen any problem of his HSBC account before he received the letter from HSBC in February 2019.  The prosecution submitted, what the defendant said was inconsistent with what his solicitor stated in the bail application hearing.  According to the transcript of proceedings in the defendant’s application for bail, his lawyer told the court that the defendant was told by the bank he could not transfer the money.  When he continued asking the bank why he could not transfer the money in and out of the account, the bank officer could not give an answer.  He travelled to Hong Kong more than 30 times to ask the bank to provide him a reason, yet there was no reason given by the bank.

67.  In my judgment, it should be most improbable that the defendant would be left free to dispose of the money in his HSBC account after TD Bank discovered the fraud on 3 August 2016.  Furthermore, both parties admitted by the Second Admitted Facts that the Canadian police authorities already referred the present case to Hong Kong Police on 14 October 2016 providing the details of the defendant’s HSBC account.  Moreover, the Action number referred to in the HSBC letter (High Court Action No 2577 of 2017) appears to suggest that the garnishee action was already taken out by HSBC in 2017.  It is most unlikely that the money in the account could still be withdrawn after police and legal action had been taken. 

68.  In any event even if the account had not been frozen, looking at the evidence in the round, I do not think it has any material importance in the case.  There might be many reasons why money had not been withdrawn from the HSBC account since 4 August 2016.  For examples: the defendant was unable to do so for some reasons, the account was to be kept to facilitate the commission of further offences, or the money is to be relied upon as exculpatory evidence to support a defence and so on.  Admittedly, the defendant kept a 1-million balance to keep the account status as a Premier account in order to be given more favourable facilities. 

69.  However, in the absence of any positive evidence, I am not going to make any findings based on speculation.  It suffices for me to say that the defence submission has been considered fully and carefully, but I find that whether the account had been frozen would not affect my decision in this case.

The defendant’s evidence is untrue and rejected

70.  Having considered all the evidence, I come to the conclusion that the defence is too far-fetched that it is entirely unbelievable and I reject it accordingly.  I find that the defendant is not a credible witness, that the emails and the Land Transfer Document he produced are false, and that his whole story about selling a piece of land is fake.  His belief that the tainted money he received was the payment of the price of the land is untrue.  I also disbelieve that the dissipation of the tainted money by transfer to the accounts of his wife, sister and late mother was to distribute and manage his mother’s estate.

71.  However, the rejection of the defendant’s evidence does not automatically mean that he must be convicted.  It remains for this court to be satisfied that the case against him is proved beyond reasonable doubt.  When a defendant’s evidence as to his state of mind is entirely disbelieved, he is in the same position as if he provides no evidence at all of his beliefs and perception.  The court is left to draw whatever inferences may be proper based on the prosecution’s evidence.

72.  I remind myself that when drawing inferences from the evidence, the inference must be 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. The burden of proof is on the prosecution throughout.  The defendant has nothing to prove.  I must be sure of the guilt of the defendant before I can convict. If the defence evidence pointing to innocence is true or might be true, the defendant must be acquitted. The charges must also be considered separately.

The monies were proceeds of indictable offence

73.  It is undisputed and I find it has been proved that the monies in the 2 charges were the proceeds of an indictable offence.  

The defendant dealt with the monies

74.  There is no dispute that the defendant did deal with the tainted monies. I do find it proved.

Whether the defendant knew or had reasonable grounds to believe?

75.  The prosecution proceeded on both limbs of the offence. There is no evidence that the defendant was involved in the email fraud.  Nor is there direct evidence that he knew the monies were tainted.  The prosecution case relies on circumstantial evidence.

76.  There is no dispute that the defendant knowingly received the Agriteam’s deposit in his HSBC account on 28 July 2016.  It was a huge sum of money and no monies of this magnitude had been transacted before in the account. He agreed that he had no relation or business with Agriteam.  

77.  The withdrawals from the Agriteam’s deposit by the defendant are also admitted.  Between 29 July and 1 August 2016, the defendant admittedly withdrew the bulk of the deposit.  In particular, on 1 August 2016, monies were withdrawn from his HSBC account on 7 different occasions either by him personally at branches of HSBC or via automatic teller machines (a total of about HKD$1.3M).  Undisputed immigration records prove that he arrived and departed Hong Kong on the same day.  There is no evidence of logical reasons for the defendant to withdraw cash in this manner.  Apparently, his entry to Hong Kong was for the purpose of withdrawing cash from the account.

78.  He also transferred very significant sums from his HSBC account to other accounts via internet banking (to his ICBC account and the account of Marquisa Limited).  Between 26 August and 15 October 2016, he withdrew almost all money in his ICBC account that he had transferred from his HSBC account.  There is no acceptable evidence nor logical reason to explain why he had to withdraw the monies in this bizarre and indirect manner.

79.  Admittedly, the defendant had at least 8 bank accounts in Canada, 6 in China (not including Hong Kong) and 3 accounts in Vietnam.  However, he had no family or business in Hong Kong. He was not a resident here. There is no logical reason why he should use a bank account in Hong Kong to receive a huge amount of money and dispose of it quickly.

80.  His evidence, that the tainted money was the payment of the land he sold to RF, being rejected means that there is no evidence of his belief as to the source or nature of the huge deposit. There is also no acceptable evidence to explain why he dissipated the bulk of the deposit in a circuitous manner.

81.  In my view, the money flow in the defendant’s HSBC and ICBC accounts has demonstrated an intention to cover up the source and origin of the monies making the look that the deposits and withdrawals had legitimate purposes.

82.  I remind myself that an inference unfavourable to a defendant can only be drawn if it is the only reasonable inference to draw from the proved facts.  On the totality of the cogent circumstantial evidence, I am satisfied that the only reasonable and irresistible inference to be drawn, and this court finds as a fact, is that the defendant knew the Agriteam’s deposit he received in his HSBC account was proceeds of an indictable offence.  He must also know that the monies referred to in the second charge that he withdrew, being monies emanated from Agriteam’s deposit, were tainted.

83.  Objectively, on the relevant facts and circumstances known to the defendant (in particular the knowing receipt and disposal of monies), and in the absence of acceptable evidence of his beliefs of the nature and source of the monies, any reasonable person would have been bound to believe and conclude that the monies in the two charges that the defendant dealt with were proceeds of crime.

84.  I have carefully considered the submissions of defence counsel, his submissions cast no doubt in my mind of the findings that I have made.

Verdict

85.  I am satisfied beyond all reasonable doubt that the defendant is guilty of both charges.  He is therefore convicted accordingly of the two charges.