HKSAR v. KONG WAI CHUN AND OTHERS

DCCC760/2007

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 760 OF 2007

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Reasons for Sentence

1.   Each defendant was convicted of her/ his respective charge/ charges:-

Charge 1	D1 to 10 except D7	Conspiracy to sell infringing copies of copyrights’ work	16-2-1006 to 14-2-2007	At Shop 138, Shop 134/9Shop 441B
Charge 2	D5 and 6	Exposing to Sell 100 infringing copies of copyright works	14/2/2007	Shop 138
Charge 3	D5 and 6	Exposing to sell 281 infringing copies of copyright works	14/2/2007	Shop 134/9
Charge 4	D3, D4, D7	Exposing to sell 277 infringing copies of copyright works	14/2/2007	Shop 441B
Charge 5	D9	Possession 722 infringing copies of copyright works	14/2/2007	Room B
Charge 6	D8	Possession 6469 infringing discs	14/2/2007	Room 916
Charge 7	D1	Dealing with property	3/6/2002 to 14/2/2007	7.1 million
Charge 8	D2	Dealing with property	3/6/2002 to 14/2/2007	23 million

The Facts

2.   As to charge 1, the prosecution called a lot of surveillance witnesses to show the activities of the defendants at Shop 138, 134/139 and 441B.

3.   In broad terms:-

(1) There were 3 shops or outlets:-

(a) Shop 138,

(b) 134/9

(c) 441B

(2) There were at least 3 storages: -

(a) Room 916, Rainbow Industrial Building

(b) Room B, 6/f, Yue Man Square

(c) GH 5374, a van parked on the 7/f of Kwun Tong Plaza, 6th floor above Shop 138 and 139

4.   As to Shop 138, 134/9, the 3 shops space was all operated as one big shop. There was only one moneybox outside the shop to collect the proceed of sales.

5.   The witnesses had seen D1, 4, 5,6 and 10 outside shop 138/9 to watch the operations of the shops.

6.   D5, D6 and D10 were often seen as a group outside Shop 138/9. Apart from them, there were also other code names persons together with them to watch the business of these 2 shops. Their period of involvement: -

D5	10 months
D6	10 months
D10	7 months

7.   D2 was never seen by any observation witness either at Shop 138/139 or 441B. However, she admitted that she went to Kwun Tong Plaza from time to time to collect rents from shop 102.

8.   D1 and D2 were the shop owners of Shop 102 and 134/139.

9.   As to shop 441 B, it mainly involved D3,4, D8 and D9. While D7 was seen on the day of arrest, that was 14/2/2007.

10.   D3 and D4 were the two main men in control of the running of 441B. Their participation in this scheme was about 5 to 6 months. They were often seen staying outside 441B either at the cloth shop or outside the APM lift hall. When the cloth shop was closed, they would stay outside the cloth shop because it was just adjacent to 441B.

11.   Outside 441B, there was a moneybox to collect the proceed of sales from the shop.

12.   Each day ,a designated 死士 would be responsible for collecting this money, on the day of arrest that was D7.

13.   Money being collected would be passed on to D3 or D4, who would then, counted the money and put it into their “ left trousers pocket”.

14.   Someone, including D1 would then be driving around to Yu Man Square to pick up D3 and D4, they got on the vehicle and were being dropped off very quickly nearby of 441B. The inference was to collect money.

15.   D7’s role was a 死士 as he was responsible for collecting money from the moneybox. That was his only duty; he was not required to do anything else. He could never receive money from any customers. He knew that the money from the moneybox was the proceeds of sales from 441B and the discs were pirated discs. He admitted that he had worked there for 3 days on a daily wages of $400.

16.   D8 was the storeman and delivery man of Room 916 Rainbow Industrial Building.

17.   He pleaded guilty to the 6th charge, which was the possession charge of the infringing dices inside Room 916. He admitted that he knew the discs inside Room 916 was pirated discs. He also admitted that every day he received phone calls to collect discs at about 1 pm either at How Ming Street or Hung To Road. At 4pm, he received phone calls to sort out the discs and to deliver the discs to different places. He received $300 per day as wages. He worked in Room 916 for 2 months already. Surveillance evidence of him started at 10/2006, 4 months prior to the arrest.

18.   D9, his main duty was a storeman of Room B, he was also a deliveryman of the pirated discs to 441B. He received $300 per day. He said that he worked there for a month, while surveillance evidence was that he was seen at 441B, 2 months prior to the arrest. He knew that the discs inside Room B were pirated discs and they were for sell in 441B. The surveillance witnesses also saw D9 inserted discs inside 441B.

19.   After the verdict, I called for background reports of the defendants.

Mitigation and the background reports:-

D1:-

20.   D1 is 33 of age, married with 2 daughters, his wife is currently pregnant. The background report informed me that he dropped out from school and started working with very low income jobs, earned between $4000 to $9000 per month. He learned of dog breeding and training from the pet industry and started his own pet shop; he and his wife each earned $8,000 per month.

21.   He denied knowledge of selling pirated discs in his shops as it was rented to a 3^rdparty.

22.   He was ordered to pay a fine for 2 convictions in 2001. This record is now spent and I treated him as a man of clear record.

D2 :-

23.   She is now married, the couple has a son now is 8 years old. She has a clear record. Since her arrest, the family suffered from financial hardship.

D3:-

24.   He is 24 years of age, single. He left school in 2002 and moved away from home because of poor family relationship due to harsh corporal punishment being adopted by his parents. He made very little income. In order to support himself, he resorted to sell pirated discs in Kwun Tong to earn $400 per day.

25.   Since his arrest in 2007, D3 moved back home to live with his family. It was during this period of time that they seemed to have more understanding towards each other.

26.   D3’s family and his former school teacher all write to this Court to ask for leniency. His parents were both very regretful for adopting the wrong approach to punish him when he was a young boy, albeit their intention was good. They believed that D3 was not wicked in nature; he was just under the bad influence from his undesirable friends.

27.   He had 4 convictions. 2 related to the present offences. That was in 2003. The other 2 convictions were unrelated offences, one is drug related offence.

D4:-

28.   26 years of age, single, lived with his girl friend. His father is in poor health; he had a stroke before and a tumour in his colon, which has been removed last year.

29.   His girl friend and his mother are in Court to support him. He wishes to be released early so that he could take care of his parents and his girl friend.

30.   During the period of this trial, D4 worked as a partime waiter in Oei Shushi Restaurant. The manager of the restaurant writes to this Court and compliments D4 as a hard working man with a very positive working attitude.

31.   D4 has 3 previous convictions, 2 related to the present offences in 2004, one sentence was a fine and one sentence was a CSO order.

D5:-

32.   He is aged 34, single. His girl friend was in Court to support him. They also wish to get marry. He was born in Nigeria and returned to Hong Kong in 1977. Recently, he worked as a security and has been chopped on his hand and on his body during his work. His parents are concerns of his present trial.

33.   He had 7 previous convictions, they were drugs, violence and forged trade marks related offences.

D6:-

34.   Age 32, lives with his girlfriend, they intend to get marry. His uncle and girlfriend are in Court to support him.

35.   Before he started to operate his crystal shop in Shop 138, he had various jobs with income between $6,000 to $10,000 per month. The crystal shop was closed after a year because it generated no profit.

36.   D6 had 4 previous convictions, 1 related to present offences in 2003, 3 convictions of assaulting the C/E officers and was sentenced to a short term of imprisonment.

D7:-

37.   He is 48 years of age. He is now married; his wife and their 2 young children are all live in China. Since his arrest for the present offence, he could not go to China to visit his family because of his bail condition.

38.   At the time of the arrest for this present offence, D7 needed money to send home for the Chinese New Year, he, therefore committed the present offence.

39.   He has 13 convictions; some are theft and drugs offences, 4 related to the present offence.

D8:-

40.   He is 54 years of age. Divorced 15 years ago. He has 2 adult children. He has custody of the youngest son while the eldest son stays with his ex-wife in the States. D8 worked as a cook in Spain and set up his own restaurant between 1979 and 1992. His business failed in 1992 and he returned back to Hong Kong. Since then he becomes a drug addict.

41.   D8 has 15 previous convictions between 1994 to 2005. 6 convictions related to the present offences, all sentences were between 4 to 6 months.

42.   Obviously these short sentences seemed to have no deterrent effect on him.

43.   D8 faced 2 charges, charge 1 and 6. He pleaded guilty to charge 6 on the 1^st day of the trial.

D9:-

44.   He is 42 years old, married. His daughter is 10 years old. Family lives in China. He lives in Hong Kong with his elderly parents. D9 is a drug abuser since his teenage.

45.   As to his criminal record, he had 10 previous convictions, 6 related to the present offences.

D10:-

46.   He is 32, single. He lives with his grandmother as his parents’ separated/divorced when he was young.

47.   In mitigation, I was told that he has rehabilitated himself by working as a decoration worker in early 2007. In 3/2007 he worked as a waiter in the bar of which he was the shareholder. His employer and a District Counsellor also write letters to this Court, which said that he has turned a new leaf.

48.   He had one previous record of similar offence in 2004.

Sentencing authority

49.   This is a case involving selling of pirated discs.

50.   In respect of sentence, the Defence referred me to Choi Sai Lok CAAR 2/1999 of which the Court held that: - “custodial sentence of immediate effect should be imposed for offences under s.118(1)(d) of the Copyright Ordinance, Cap. 528 unless with the exceptional circumstances” as the open flouting of law in this trade required sentence to act as a deterrent to others even for first offender.

51.   For the present trial, Charge 1-6 was contrary to s.118 (1) and penalty section is s.119 (1). The maximum term of imprisonment is 4 years.

52.   In Choi Sai Lok, 1^stRespondent pleaded guilty to a charge of possessing, as courier, of 719 pirated discs.

53.   2^ndRespondent pleaded guilty to 2 charges

(i) one charge of possession, as a courier, of 644 pirated discs.

(ii) Possession of 22,963 pirated discs, key was found to the storage centre.

54.   The Court also held: -

“We have no doubt that a distinction should be drawn between the proprietors of retail outlets and warehouses who commit these offences, and the persons employed by them. The former should receive longer sentences than the latter. The roles played by storemen, packers, delivery men and salesmen may be different, but we do not see much difference in sentences between them will be, for example, the number of infringing copies involved, the length of time in which they had been engaged in the trade and factors personal to them such as pleas of guilty.”

55.   There were no tariff sentences but Keith JA regarded that the correct starting point in the case of the 1^st Respondent would have been 12 months’ imprisonment and in the case of the 2^ndRespondent would have been 18 months’ imprisonment.

The Notices against all defendants for all charges

56.   The Prosecution also filed notice of intention to request for a determination of organized crimes pursuant to s.27(4) and (5) of OSCO, Cap. 455.

57.   S.27 (11) (a) of OSCO Cap 455: -

“...... where a Court is satisfied beyond reasonable doubt:-

(a) that the specified offence was an organized crime

(b) ......

...... , the court shall have regard to such matter when it passes a sentence on the person for the relevant specified offence and may, if it thinks fit, pass a sentence on the person for that offence that is more severe than the sentence it would in the absence of such matter, have passed.

58.   S.27 (13) of OSCO Cap 455 said a sentence passed should not exceed the maximum penalty permitted by law for the offence.

59.   In the present case charge 1 to 6 is a term of maximum 4 years.

60.   S.118(1) of the Copyright Ordinance falls within the definitions of “organized crime” and “specified offence” of Schedule 1 of the Organized and Serious Crimes Ordinance.

61.   The definition of organized crime is defined in s.2 of the OSCO, Cap. 455. Organized crime means a Schedule 1 offence that: -

(b) activities of 2 or more persons associated together solely or partly for the purpose of committing 2 or more acts, each of which is a Schedule 1 offence and involved substantial planning and organization.

62.   Schedule 1 offence also means: -

(a) conspiracy to commit any of those offences.

63.   As to the “activities of 2 or more persons associated together solely or partly for the purpose of committing 2 or more acts”, the Defence did not raise issue except D7 said that he was seen on one occasion 14.2.2007 that he took money from the money tray.

64.   In his admission under caution, D7 said he knew 441B was selling pirated discs, his duty was to collect money from the box, the money was the proceed of sales from the business of 441B selling infringing copyright discs. He also admitted that he has worked there for 3 days. Each day received $400. Therefore, his conduct of collecting money from the moneybox outside 441B was more than one act or one day. On each day when he worked, he was expected to collect money more than once from the money tray. D7’s argument for a single act on 14/2/2007, therefore failed.

65.   All the other defence’s argument was mainly whether it was a “substantial planning and organization” except D7 also included an argument of prevalence.

66.   Prevalence was not the basis of the Prosecution’s application.

67.   I then proceeded to consider whether it was a “substantial planning and organization.” I approach the word substantial” by using the dictionary meaning that it means “significant and/or considerable degree/amount”.

68.   This case involved 3 shops in Kwun Tong Plaza, one van on 7/F in Kwun Tong Plaza as a storage for discs. D5, D6, D10 and others were storekeepers.

69.   While 441B was a smaller shop with a storage at Room B, 6/F nearby in Yue Man Square. D9 was effectively a storeman at Room B. Storekeepers were D3 and D4.

70.   Another storage in Room 916 Rainbow Building contained the largest amount of discs. D8 was the storeman/delivery man at Rainbow Building.

71.   There was also Yan Oi Court which was most likely for storage of discs because of the immediate surrender of the lease right after the arrest.

72.   D8 was the front man to lease Shop 138, Rainbow and Yan Oi Court. Shop 134/138 was in fact co-owned by D1 and D2 because the capital or down payment was actually funded by D2. D8 would never be able to pay the rent for all the premises due to his low income as $300 per day. To lease/buy these premises by itself were all calculated in this planning of selling the infringing discs.

73.   There were a large number of people involved to look after the business of Shop 138/139 and 441B.

74.   The business proceeds of Shop 138/139 and 441B was all in cash.

75.   There was a way to collect money from the customers. This was a self-service business. Each day a 死士 was designed to collect money from the money box outside 441B.

76.   Proper inference would be the same applied in Shop 138/139, as there was a moneybox outside these two shops.

77.   There were large quantity of discs being seized from the storehouse Rainbow, Room B and the van GH 5374, all the discs were given codes and there was a system to order the discs from their storehouses, that was the code lists.

a. exhibit P266 was found from D2’s computer at her home,

b. exhibit P243 code list was found from Room 916 and

c. exhibit P242 was found from Room B.

78.   Further, the van GH 5473’s real ownership could not be found as the chassis of the engine was removed and GH 5473 was not the genuine vehicle number. The van’s compartment was totally covered so that people from outside could not see what was being stored inside.

79.   Finally the relationship between the shops and the money went into the accounts of D1 and D2.

80.   I am satisfied beyond all reasonable doubt that this scale of operation was a substantial planning and organization.

81.   I found that the specified offence was an organized crime within the meaning of the ordinance. Therefore enhancement was called for having regard to the nature of the offences.

82.   I have been referred to the authority of HKSAR v Tam Wai-pio 1998 4 HKC 291 of the 4 stages approach in sentencing and enhancing sentences.

(1) the appropriate sentence for each charge;

(2) taking into account of mitigation and totality;

(3) whether the specified offence was an organized crimewithin the meaning of the ordinance, whether enhancement should be called for;

(4) a percentage to the overall sentence.

83.   In the present case, I adopt 30% for enhancing the sentences having taking into account of the seriousness of the charges and bearing in mind that s.13 of OSCO that the enhance sentence should not exceed the maximum sentence of 4 years for charge 1 to 6.

84.   When I passed sentence on the defendants, I take into account of all the mitigation factors before me and the nature of this case.

85.   I am also aware that D1 and D2 have clear record, as Charge 7 and 8 were committed over a period of 4½ years, I do not consider it appropriate to give credit or to reduce their sentence because of their clear record.

86.   However, I give all defendants a 3 months reduction for their agreements to the admitted facts, which has reduced the prosecution’s length of time in adducing evidence.

87.   As to Charge 7 and 8, they are the money laundering charges :- it covered a period of 4 ½ years from 2002 to 2007.

88.   Charge 7 the amount was 7.1 million, while charge 8, the amount was 23 million.

89.   The prosecution’s evidence was that since D1’s wife and D2 jointly bought the property of Shop 102 in 2002, their respective assets in their accounts have an immediate effect of being inflated to a large amount. D1 in fact used his wife’s name to purchase the property, all the capital in purchasing Shop 102 was funded by D1. D1’ wife seldom transferred any money to D1 except on one occasion. So, the true ownership of shop was D1 and D2. The prosecution’s evidence also showed that there was past seizures from Shop 102 since the day they acquired the property.

90.   As to shop 134/9, which were co owned by D1 and D2’s brother, again, D2’s brother maintained a low amount in his account, all the capital in purchasing these property was from D2. The true ownership of these properties was D1 and D2.

91.   Since these 2 shops were selling discs, on the day of arrest, shop 134/9 were proved to be selling infringing copyright works.

92.   Since their arrest on 14/2/2007, the lease of shop 138 was terminated by D8 as the rental of this lease was $11,150 per month. Shop 134/9 and Shop 102 was also sold in 6/2007 as the purpose of purchasing/leasing of these properties was for selling discs.

93.   The proceed from the sales of these shops was all in cash, D1 and D2 were the owners of these shops, the reasonable inference would be they were entitled to receive the proceed of the sales.

94.   The timing of the purchased of the shops and the proceeds of sales from the business was in cash, past seizures from the shops, there was a reasonable inference of connection/relationship between the money in their respective accounts and the business of selling discs.