HKSAR v. JHAMAL AZAD

DCCC 1073/2023

[2024] HKDC 1743

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 1073 OF 2023

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REASONS FOR SENTENCE

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1.  The 1^st Defendant (hereinafter referred to as “D1”)  pleaded guilty to 19 charges before me: -

(a)  Charge 1: Obtaining service by deception, contrary to section 18A(1)  of the Theft Ordinance, Cap 210;

(b)  Charge 2: Conspiracy to deal 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 and sections 159A and 159C of the Crimes Ordinance, Cap 200;

(c)  Charge 3: 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;

(d)  Charge 4: Conspiracy to deal with property known or believed to represent proceeds of an indictable offence;

(e)  Charge 5: Knowingly misleading a police officer by giving false information, contrary to section 64(b)  of the Police Force Ordinance, Cap 232;

(f)  Charge 6: Obtaining service by deception;

(g)  Charge 8: Conspiracy to deal with property known or believed to represent proceeds of an indictable offence;

(h)  Charge 9: Fraud, contrary to section 16A of the Theft Ordinance, Cap 210;

(i)  Charge 10: Fraud;

(j)  Charge 11: Theft, contrary to section 9 of the Theft Ordinance, Cap 210;

(k)  Charge 12: Conspiracy to deal with property known or believed to represent proceeds of an indictable offence;

(l)  Charge 13: Obtaining service by deception;

(m)  Charge 14: Knowingly misleading a police officer by giving false information;

(n)  Charge 15: Obtaining service by deception;

(o)  Charge 16: Possession of false instruments, contrary to section 75(1)  of the Crimes Ordinance, Cap 200;

(p)  Charge 17: Using an identity card relating to another person, contrary to section 7A(1A)  of the Registration of Persons Ordinance, Cap 177;

(q)  Charge 18: Driving without a valid driving licence, contrary to section 42(1)  and (4)  of the Road Traffic Ordinance, Cap 374;

(r)  Charge 19: Using a motor vehicle without third party insurance, contrary to section 4(1)  and (2)(a)  of the Motor Vehicles Insurance (Third Party Risks)  Ordinance, Cap 272; and

(s)  Charge 20: Going equipped for stealing, contrary to section 27(1)  of the Theft Ordinance, Cap 210.

Facts of the Case

Charges 1 to 6 and 8 to 15

2.  Charges 1 to 6 and 8 to 15 arose from cryptocurrency sale and item sale scams with similar modus operandi.  Involved in these charges were: -

(a)  3 telephone numbers belonging to 2 cryptocurrency trading companies (hereinafter referred to as the “trading company numbers”), which were linked to their WhatsApp applications;

(b)  3 telephone numbers belonging to 3 other individuals (hereinafter referred to collectively as the “other numbers”);

(c)  4 bank accounts, with 2 of them linked respectively to the other numbers through the FPS system; 1 of them linked to one of the other numbers and also one of the trading company numbers through the FPS system; and 1 of them belonging to D5; and

(d)  2 QR codes for Tap & Go and Alipay accounts.

3.  Out of the 6 telephone numbers involved, D1 reported loss of 2 telephone numbers belonging to the 2 cryptocurrency trading companies and 2 other individuals, either at the telecom shop (Charge 1; Charge 13)  or both at the police station and the telecom shop (Charges 5 and 6; Charges 14 and 15), thereby enabling him to take over the use of the telephone numbers.

4.  In addition, D1 claimed to be a person with the name Mohammad Ali Javed (hereinafter referred to as “Mr Javed”)  when he reported the loss of one of the telephone numbers of the 2^nd cryptocurrency trading company at the police station and the telecom shop.  The lost identity card of the said Mr Javed was later produced by D1 to the police upon enquiries prior to his arrest (Charge 17).  Mr Javed had lost his bag containing his ID card on 9 May 2022, and he did not know that someone had used his ID card to report loss of a telephone number on 27 July 2022 at the police station.

Cryptocurrency Sale Scams

5.  For the cryptocurrency sale scams, D1 waited for the customers of the 2 cryptocurrency trading companies to approach the relevant telephone numbers by WhatsApp, and impersonated the staff, agreeing to transfer cryptocurrencies to the customers in return for payment, and providing the customers with bank accounts, which included the 3 bank accounts that were linked to the 3 telephone numbers in the manner stated hereinabove, and D5’s bank account.  The amounts involved in these frauds were HK$500,000 (Charge 9 fraud)  and HK$8,000 (Charge 10 fraud).

Item Sale Scams

6.  For the item sale scams, 4 buyers had purchased different kinds of items through Facebook including clothing, commemorative banknote and figure, involving purchase price of HK$1,300, HK$1,200, HK$5,800 and HK$600, totaling HK$8,900, being deposited into one of the said bank accounts linked to one of the other numbers.  There are no substantive fraud charges for these scams, but the conspiracy to money launder charge relating to this bank account is Charge 12, which includes the said item sales scams purchase price and other sums, totaling HK$116,853.60.

Money Laundering Charges

7.  The 5 bank accounts relating to the conspiracy to money launder and money launder charges relate to the following: -

(a)  Charge 4: D4’s bank account, involving 10 deposits of HK$259,616.85 and 34 withdrawals of HK$259,746.99 between 6 April and 7 May 2022;

(b)  Charge 2: Account of Lin Hiu-man, involving 15 deposits of HK$216,596 and 17 withdrawals of HK$206,385.71 between 26 March and 17 May 2022 (from which HK$189,922 were transferred from this account into D1’s account on 3 May 2022, the same day when HK$200,000 in relation to Charge 9 was deposited into this account by the victim);

(c)  Charge 12: Account of Lin Hiu-man, involving 49 deposits of HK$116,853.60 and 67 withdrawals of HK$116,853.60 between 12 May and 4 July 2022;

(d)  Charge 8: D5’s bank account, involving 1 deposit of HK$100,000 on 3 May 2022 from the victim of the cryptocurrency scam of Charge 9, and 3 successful withdrawals totaling HK$97,900 were made through FPS; and

(e)  Charge 3: D1’s bank account, involving 240 deposits of HK$850,708.44 and 576 withdrawals of HK$845,791.56 between 26 March and 2 July 2022. The account balance remained at HK$1 from 17 May 2021 to 26 March 2022, i.e. before the relevant deposits.

(f)  The total amount of money dealt with under these charges amounts to HK$1,543,774.89.

D1’s Admission Concerning Charges 1 to 15

8.  D1 was intercepted by the police on 8 August 2022 as he entered a hotel in Mongkok.  Under arrest and caution, D1 admitted that he found one of the cryptocurrency trading companies’ numbers (the number involved in Charges 5, 6, 9 and 10)  and one of the other numbers (the number involved in Charges 1 and 2), from a cryptocurrency trading platform called Binance.  He reported the loss of the said telephone numbers at the police station and the telecom company in order to get a SIM card replacement, so that the customers would seek him out and he could defraud money from them by asking for transfer of money in exchange for cryptocurrency which never materialized.

9.  D1 also admitted that he had purchased D4’s account (involved in Charge 4 Conspiracy to Money Launder)  and another account (involved in Charge 2 Conspiracy to Money Launder)  for HK$1,000 each, and had control over these accounts.  D5’s account (involved in Charge 8 Conspiracy to Money Launder)  was given by a friend and he had sent the account number to the victim in one of the cryptocurrency scam (Charge 9 Fraud).  D1 admitted having withdrawn or spent the money transferred into these 3 accounts, and also transferring some of the money in those accounts into his own bank account.

10.  D1 also admitted having sent the 2 QR codes to the victim in the 2^nd Cryptocurrency Scam.  He had purchased the accounts relating to these 2 QR codes for HK$1,000 each.  He had transferred the HK$8,000 from the victim (Charge 10 Fraud)  into another bank account and withdrawn the cash.

11.  He stated under caution that he was unemployed and had no income, except for some temporary job.  He also stated that his family members were on CSSA.

Charge 16

12.  A raid was conducted on D1’s home, where 3 forged salary statements and 3 forged utility bills were found.  D1 admitted under caution that he had engaged someone online to make the said documents, by altering the name and address, for the purposes of income or address proof to the bank, so that the account’s deposit upper limit can be increased to receive more money.  The said documents were submitted to the bank in digital form, but were not accepted, and hence the plan failed.

Charges 17 to 20

13.  D1 had arrived at the hotel on 8 August 2022 from the driver’s seat of a private car, and asked the hotel valet to park the car for him as he was a guest of the hotel.  D1 produced an identity card belong to Mr Javed to the police officer (Charge 17).  He was then brought to a hotel room for enquiries.  His true identity was revealed.

14.  For Charges 18 and 19, he admitted under caution that he had bought the private car several months ago, and used his friend’s name for registration purposes.  He had no driving licence, and had asked his friends with driving licence to drive for him.  He had driven the car himself on the day of the arrest as he couldn’t find any driver.

15.  At his arrest, 3 mobile phones and 5 SIM card jackets were found on D1. 2 of the SIM card jackets relate to the 2 numbers stated above of one of the cryptocurrency trading companies, and were still active.  The rest of the SIM cards were no longer active.  Charge 20 concerns the 2 SIM cards that were still active.

D1’s Antecedent Statement and Mitigation

16.  D1 is 27 years old and has a long term girlfriend (D2 who was a housewife), a daughter and a son of 8 and 6 years old.  He lived with his family, his parents and younger brothers and younger sister.  He had studied up to Form 3, and his latest employment was food delivery work earning around HK$5,000 a month.  He was also the recipient of CSSA of HK$3,000 per month. The Defence states that D1 was financially responsible for the entire household, and had committed the offences due to financial reasons.

17.  He has 6 conviction records, which includes 4 charges of theft (the last 2 charges on 6 September 2021)  and 1 charge of fraud (on 17 December 2018).  He was sentenced to DATC order for the theft convictions in 2021, but he was wanted from 4 May 2022 (i.e. 3 months before the arrest for the present case)  for breach of supervision order under the DATC order.

18.  The Defence urges the Court to consider D1’s guilty plea, his cooperation with the police, his desire to be a good role model to his children and spend time with them.  Defence also highlights that Charges 1 to 6 and 8 to 15 were committed within around 4 months.  The rest of the charges, i.e. Charges 16 to 20 arose from the arrest of D1 and search upon his premises.

Sentencing Considerations

Charges 1, 6, 13 and 15 – Obtaining Service by Deception

19.  I have considered D1’s plea of guilty concerning Charges 1, 6, 13 and 15, the nature of service involved, the sophistication in which the scheme was devised, D1’s role as mastermind, all mitigation advanced on his behalf, his criminal conviction record which include offences of dishonesty of theft and fraud, and commission of the present offences not long after release from similar convictions.

20.  I shall adopt 6 months’ each as the starting points for Charges 1, 6, 13 and 15.  Taking into account the guilty plea, the sentences are reduced by 1/3, making the sentences for Charges 1, 6, 13 and 15 to be 4 months’ imprisonment each.

Charges 2, 3, 4, 8 and 12 – Money Laundering and Conspiracy to Money Launder Charges

21.  In HKSAR v Boma [2012] 2 HKLRD 33, the Court of Appeal indicated factors which should be taken into account when sentencing money laundering charges: -

(a)  the nature of the predicate offence, if known, and the penalty available for the predicate offence;

(b)  the state of knowledge of the offender: the question of knowledge of the offender as to the nature of the predicate offence is relevant in that the person who knows the nature of the predicate offence is more culpable than the person who does not;

(c)  an international dimension will always be a significant aggravating feature;

(d)  the sophistication of the offence, including the degree of planning and whether deceit is practised to achieve the objective;

(e)  offence is committed by or on behalf of an organized criminal syndicate is an aggravating fact;

(f)  whether there is one transaction or many and the length of time over which the offence was committed;

(g)  it will be an aggravating feature where the offender continues to launder funds after he has discovered that the funds are the proceeds of an offence or after he has discovered the nature of an offence which is serious; and

(h)  the role of the offender and the acts performed by him.

22.  In the present case, D1 is the mastermind of the cryptocurrency scams. As for the Item Sale Scams, there is no evidence as to whether D1 made the relevant posts on the internet.  He agreed that he had received the money from one of the Item Sale Scams in one of the accounts, although there is no information on whether he knew about the predicate offences.

23.  No matter whether he knew of the predicate offences, D1 had a crucial role in devising the deceptive scheme of obtaining some of the telephone numbers by impersonating the owner at the police station or the telecom shop, and linking one of the deceptively obtained cryptocurrency trading company telephone number with a bank account, in order for there to be more credibility to the account to victims.  He had also acquired the bank accounts for the scheme.  The entire scheme including the money laundering part was elaborate and well thought out.

24.  There is no international element, nor is there any evidence of a syndicate behind these charges.  There is also no information on the source and predicate offence for the remainder of the funds in the accounts relating to these charges.  The offences lasted for a few months.

25.  I have considered D1’s plea of guilty concerning Charges 2, 3, 4, 8 and 12, the factors discussed in this section, the amounts involved in each of these charges, the duration of the offence, the number of transactions, all mitigation advanced on his behalf, and his criminal conviction record.

26.  I shall adopt the following as the starting points for Charges 2, 3, 4, 8 and 12:

Charge 2: 21 months

Charge 3: 33 months

Charge 4: 21 months

Charge 8: 18 months

Charge 12: 42 months

27.  Applying the 1/3 discount for guilty plea, the sentences shall be reduced to:

Charge 2: 14 months

Charge 3: 22 months

Charge 4: 14 months

Charge 8: 12 months

Charge 12: 28 months

28.  The Court has been asked by the Prosecution to enhance the sentence of the Defendant under section 27 of the Organized and Serious Crimes Ordinance, Cap 455.  The Prosecution had furnished information to the Court on the following matters under section 27(2)  of the said Ordinance: -

“(c)  the prevalence of that specified offence; and

(d)  the nature and extent of any harm, whether direct or indirect, caused to the community by recent occurrences of that specified offence.”

29.  Notice of intention to furnish information pursuant to section 27(2)  of the said Ordinance had been duly filed and served on 16 August 2024.

30.  I am satisfied that the Prosecution has proved beyond reasonable doubt of the information stated in the witness statement of Chief Inspector Li Yiu-nam dated 7 August 2024.  I will therefore enhance the sentence of Charges 2, 3, 4, 8 and 12 by about 1/3.

31.  The enhanced sentences are:

Charge 2: 18 months

Charge 3: 29 months

Charge 4: 18 months

Charge 8: 16 months

Charge 12: 37 months

32.  As the total amount of money dealt with under these charges amounts to HK$1,543,774.89, I consider that a global starting point of 42 months is appropriate.  Applying 1/3 discount, the global sentence for these charges should be 28 months’ imprisonment.  With enhancement of about 1/3, the global enhanced sentence should be 37 months.  I will therefore order that the sentences of Charges 2, 3, 4 and 8 be served concurrently with the sentence of Charge 12.  The total sentence for these charges shall be 37 months’ imprisonment.

Charges 5 & 14 – Knowingly Misleading a Police Officer by Giving False Information

33.  There is no evidence as to the no. of hours used due to D1’s false reports and impersonation as the true owner of the relevant telephone numbers. It would seem that the bulk of the work would be involved in the report which should be relatively simple.

34.  I shall therefore adopt a starting point of 3 weeks’ imprisonment.  Due to the guilty pleas, the sentences for Charges 5 and 14 will be reduced by 1/3 to 2 weeks each.

Charges 9 and 10 – Fraud Charges

35.  Defence submitted that the case of HKSAR v Li Suet Ying DCCC 980/2023 has similar facts as the present case, involving victims who were cryptocurrency investors, and in that authority, the amount involved is higher than the present charges.

36.  In Li Suet Ying, the victims saw an advertisement on Instagram, and had agreed with the Defendant that an agreed sum would be paid in exchange for their cryptocurrency.  The Court in that case adopted a starting point of 36 months’ imprisonment.

37.  Although Li Suet Ying involved a single transaction with 1 or 2 victims for a short period of time, which are similar to the present case, the Court has noticed certain material differences between the facts of Li Suet Ying and the present case.  In Li Suet Ying, although the sums involved were close to HK$1,000,000, it was said in the Reasons for Sentence that apart from the use of the fake banknotes, the act of deception is fairly simple and of limited sophistication.  The defendant in that case was also not the mastermind.  The transaction was conducted face to face, and the fraud was therefore described as not an internet fraud, as the use of the internet was purely for communication between the parties.

38.  In the present case, however, D1 is the mastermind behind the fraud charges.  He had devised a sophisticated scheme whereby he gained knowledge from a cryptocurrency trading platform of the telephone number of a company used for trading cryptocurrency, and reported loss to the police and the telecom shop, in order to gain control over the company’s telephone number and WhatsApp account.

39.  For Charge 9, D1 instructed the victims to deposit monies into 2 bank accounts linked to 2 other telephone numbers, and a 3^rd bank account which belonged to D5.  For Charge 10, D1 asked the victim to deposit money through 2 QR codes.  D1 had acquired these bank accounts linked to the 2 telephone numbers and QR codes for the purposes of receiving these crime proceeds, with the obvious intention of creating difficulty in tracing the funds and identifying the culprit.  One of the telephone numbers linked to the bank account was also acquired by deceiving the telecom shop into believing that D1 was the owner of that telephone number and that it had been lost.  Part of the monies gained in those accounts had been further transferred into D1’s own account, causing more difficulty with tracing.

40.  The present fraud charges, although they might not be described as internet fraud, do bear some similarities in that the transaction was not performed face to face, and there was the additional element of disguise as the cryptocurrency trading company staff.  This makes identification of the culprit very difficult.  This is also one of the major dissimilarities from Li Suet Ying.

41.  The Defendant in Li Suet Ying had 1 previous conviction of theft for which she was fined.  D1 in the present case has multiple theft convictions and a fraud conviction record.  I am therefore of the view that Li Suet Ying has limited persuasive value in the present case.

42.  I have considered D1’s plea of guilty concerning Charges 9 and 10, the amount involved in the respective charges, the sophistication in which the scheme was devised, D1’s role as mastermind, all mitigation advanced on his behalf, his criminal conviction record which include offences of dishonesty of theft and fraud, and commission of the present offences not long after release from similar convictions.  I shall adopt 42 months and 18 months as the starting points for Charges 9 and 10.  Taking into account the guilty pleas, the sentences are reduced by 1/3.

43.  The sentences for Charge 9 and Charge 10 shall be: -

Charge 9: 28 months’ imprisonment

Charge 10: 12 months’ imprisonment

Charge 11 – Theft

44.  D1 claimed that he had picked up and kept the identity card of another. He had in fact used the identity card in the circumstances of Charge 17 when he was intercepted by the police.  The card was also used by him in reporting the loss of a telephone SIM Card at the police station and telecom shop, in connection with a cryptocurrency fraud.

45.  There is no sentencing guidelines for theft of this type.  I shall adopt 6 months as the starting point for Charge 11, and due to D1’s guilty plea, 1/3 discount will be applied on the sentence.  He is sentenced to 4 months’ imprisonment for Charge 11.

Charge 16 – Possession of False Instruments

46.  Charge 16 involves 6 false instruments relating to D4 and Lin Hiu-man that D1 had asked others to prepare, in order to serve as address and employment proof of D4 and Lin Hiu-man to apply to MOX Bank for increasing the upper limit of deposits of their bank accounts.  Although the attempt did not succeed and the upper limit was not increased, it should be borne in mind that D4 and Lin Hiu-man’s MOX Bank accounts had been used in receiving crime proceeds of this case.  It is obvious that had the bank approved the increase, D1 would have continued or even expanded his illegal scheme.

47.  Considering D1’s guilty plea, the facts of the charge, his previous conviction record, and all mitigation, I shall adopt a starting point of 15 months’ imprisonment.  1/3 discount shall be applied due to his guilty plea. He is sentenced to 10 months’ imprisonment for this charge.

Charge 17 – Using Identity Card Relating to Another Person

48.  D1 had produced the identity card of another person to the police officer making enquiries with him, with the intention of concealing his true identity.  According to the sentencing guidelines of HKSAR v Li Chang Li  HCMA 935/2004, the sentence after plea ought to be 15 months’ imprisonment.

49.  I have considered D1’s guilty plea, the facts of the charge, his previous conviction record, the circumstances under which he had used the identity card, and all mitigation.  I do not find any matters justifying departure from the sentencing guideline.  I shall adopt a starting point of 22.5 months’ imprisonment, and after applying 1/3 discount for the guilty plea, D1 is sentenced to 15 months’ imprisonment for Charge 17.

Charge 18 – Driving Without a Valid Driving Licence

Charge 19 – Using a Motor Vehicle Without Third Party Insurance

50.  I have considered D1’s guilty plea, the facts of the charge, his previous conviction record, and all mitigation.  I do not find any urgent need or mitigation concerning the reason for D1 to drive on the material day.  I bear in mind that there had not been any accident concerning the driving, nor was there any problematic driving manner.

51.  For Charge 18, I shall adopt a starting point of 6 weeks’ imprisonment, and reduce it by 1/3 due to his guilty plea.  D1 is sentenced to 4 weeks’ imprisonment for Charge 18.

52.  For Charge 19, I shall adopt a starting point of 4.5 months’ imprisonment, and reduce it by 1/3 due to his guilty plea.  D1 is sentenced to 3 months’ imprisonment, and a disqualification order of 12 months for Charge 19.

53.  As these 2 charges arise from the same act, I shall order that the Sentences for Charges 18 and 19 shall run concurrently.  The total sentence for these 2 charges shall be 3 months’ imprisonment, with a disqualification order of 12 months.

Charge 20 – Going Equipped for Stealing

54.  This charge concerns 2 SIM cards of 2 telephone numbers that were registered for a cryptocurrency trading company’s business.  These 2 numbers were used in connection with cryptocurrency scam, and the subject matter of charges 14 and 15 of this case.

55.  I shall adopt a starting point of 18 months’ imprisonment.  Applying 1/3 discount for the guilty plea, D1 shall be sentenced to 12 months’ imprisonment for charge 20.

Totality

56.  As Charges 5 & 14 of Knowingly Misleading a Police Officer by Giving False Information relates to the obtaining services by deception charges of Charges 6 and 15 respectively, I shall order that the sentence of Charge 5 shall be served concurrently with the sentence of Charge 6, and that the sentence of Charge 14 shall be served concurrently with the sentence of Charge 15.

57.  As the money laundering charges and fraud charges relate to the same events, I shall order that the sentences of Charges 9 and 10 be served concurrently with the total sentence of 37 months for the money laundering charges of Charges 2, 3, 4, 8, and 12.

58.  As Charges 11 (Theft)  and 17 (Using another’s ID card)  relate to the same series of events, I shall order that the sentence of Charge 11 be served concurrently with Charge 17.

59.  After considering the totality principle, I shall also order the following to be served consecutively to the total sentence of 37 months of Charges 2, 3, 4, 8 and 12: -

1 month of Charge 1

1 month of the total sentence of Charge 5 & Charge 6

1 month of Charge 13

1 month of the total sentence of Charge 14 & Charge 15

2 months of Charge 16

2 months of the total sentence of Charge 11 & Charge 17

1 month of the total sentence of Charges 18 and 19

2 months of Charge 20.

The total sentence for all charges shall be 4 years.