& 742/2008 (CONS)

DCCC526 & 742/2008 (CONS)

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 526 & 742 OF 2008 (CONS)

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Reasons for Sentence

1.  Defendant, you have pleaded guilty to two charges of dealing with property known or believed to represent proceeds of an indictable offence, contrary to section 25(1) and (3) of the Organised and Serious Crimes Ordinance.  You have admitted on the 1st charge that between 11 May 2007 and 24 April 2008, in Hong Kong, you knowing or having reasonable grounds to believe that property, namely, the sum of $2,252,995.19 of United States currency (approximately 17,573,362.50 Hong Kong currency) deposited into a bank account with Fubon Bank in the name of First Prime Group Limited, in whole or in part, directly or indirectly represented the proceeds of an indictable offence, dealt with that property.

2.  The 2nd charge is in relation to the same offence between 19 July 2007 and 18 June 2008, this time with a bank account at Cathay Bank in the sum of $2,393,356.19 United States currency and $18,668,178.28 (Hong Kong currency).

3.  In relation to both charges, the total amount of money you laundered was therefore approximately HK$36 million through two bank accounts: the Fubon Bank and the Cathay Bank.  The period of time for these two offences was between 11 May 2007 and 18 June 2008.

4.  Defendant, you had operated these two bank accounts solely at both the Fubon and Cathay banks.  At the Fubon Bank, the account was operated under the name of First Prime Group Limited, a BVI company, which you acquired in Hong Kong.  In respect of the Cathay account, you had operated that account through another BVI-incorporated company, however, this time acquired in Singapore by the name of Pacific Wealth Global Limited.  In respect of Pacific Wealth, you were the sole director and shareholder of that company and were the sole signatory of that bank account.

5.  In the First Prime Group Company, you stated in your account-opening application that you were a director and the ultimate beneficial owner of First Prime Group.  You had operated these companies by using your genuine Singapore passport.

6.  The sums that were transacted through the Fubon account between May 2007 and April 2008 and deposited in the sum of US dollars was approximately US$2.2 million, and the withdrawal during that period was approximately US$1.7 million.

7.  In respect of the Cathay account, the transactions amounted to US$2.3 million between August 2007 and April 2008 as deposits, and the withdrawals amounted to US$2.2 million between those same dates.

8.  The victims of this fraud mainly came from overseas.  It is commonly known as boiler-room frauds.  They were victims of a fraudulent investment scheme, lured by unknown persons claiming to be investment brokers of First Prime Group Limited on the phone into investing in some investment programme in the United States equities.  They were told to deposit moneys into the First Prime Group bank account, and when they eventually sought to withdraw their investments or purported profits, they were unable to do so.

9.  The same facts also applied to the Cathay account.  In this case, the victims, at least the ones mentioned, were an Indian national living in Taiwan, a Slovenian and German nationalities.

10.  Defendant, you are a Singaporean national and you visited Hong Kong from time to time.  On 24 April 2008, you had brought along one Indonesian and one British visitor to open bank accounts at the Fubon Bank in Hong Kong at 38 Des Voeux Road, Central.  When you finished your dealings with the bank, a police undercover was there and you were eventually arrested in relation to this fraudulent scheme and cautioned.  Under caution, you stated:

“I am the director of First Prime Group Limited and the sole signatory of the Fubon bank account.  I am just a tool of the scam, and the scam reward in US dollars is $4,000 a month.  I don’t know what the scam did.”

11.  You were subsequently interviewed on videotape, and in gist, you admitted the following: that you were told to acquire a BVI company which was called First Prime Group Limited for the purposes of opening bank accounts by Peter and Chris whose full names were not known to you.  You were paid US$4,000 a month for acquiring the company and the opening and operating of the bank account.  You acquired First Prime Group Limited, became its sole director and shareholder, and opened a corporate account at Fubon and became its sole signatory.  You handed over all bank statements to Peter and Chris and had also signed a lot of blank telegraphic transfer applications for their use, and whenever Fubon contacted you about any outward transfers from that bank account, you were told to confirm such transfers.  You, however, did not know exactly how the account was operated.

12.  Most of the outward transfers from the Fubon account would be transferred by Peter and Chris to your personal bank account in Singapore and you would thereafter withdraw the moneys in cash and give them to whoever Peter and Chris arranged.  Your financial position was poor and you needed to take this job.

13.  You were aware that it was not a normal job and felt uncomfortable about it and did not know much about the background of the account and its transactions.  You were totally unaware of the nature of the business, the source or use of the funds of First Prime Group Limited.  You had sought guarantee that this company would not be used for serious crimes such as drug trafficking, terrorism and dealing in arms, and you were just a tool for opening these bank accounts in Hong Kong, including the Cathay Bank Hong Kong, to which from that interview, the police then came to know about the 2nd charge.

14.  Your counsel, Mr McGowan in his usual eloquence has put forward very full and thorough detailed mitigation on your behalf.  I have taken into consideration all he had to say to me in mitigation.  You are 35 years of age and have a clear record, whether it be here or in Singapore or elsewhere.  You are married and educated up to the level of university.

15.  I accept that you have pleaded guilty on the basis that you had reasonable grounds to believe the moneys were proceeds of a crime, that you did not have actual knowledge the funds were the proceeds of a crime.  You did not know about the operation or the fraudulent scheme.

16.  Mr McGowan has referred me to a number of cases in mitigation.  I have taken them into account, but as he quite rightly says, as laid down in HKSAR v Xu Xia Li & Another [2004] 4 HKC 16, there are no guidelines for offences of this nature.  It is, however, clear that in that case, the court said that the prohibition of this offence is in order to strike at those who give assistance to criminals to dispose of or retain their ill-gotten gains as if they were derived from legitimate activities.  Without the assistance of money launderers, it would be more difficult for criminals to clothe their illegal proceeds with the same respect as lawful gains, and the chance of law enforcement detection of illegal activities that produce monetary benefit would be enhanced.  Money laundering is therefore treated as a serious offence.

17.  Defendant, you have of course pleaded guilty to these two offences.  That has shown to me your remorse, and the fact that you have saved the court time and that none of the foreign victims have had to travel to Hong Kong to give evidence.  I am informed by Mr Souyave, the prosecutor in this case, that there is some US$671,000 left in the two bank accounts and that there are claimants claiming return of funds, and different solicitor firms are involved, and Mareva injunctions have been in place restraining the movement of the funds, and you through your lawyers have been co-operating and have not challenged the injunction and have in fact agreed to minimise the loss by those who have been swindled.  So there will be no challenge to these funds eventually being returned to the victims of this fraudulent scheme.

18.  What I do take into account in this case is of course the amount of money involved.  The amount in Hong Kong dollars is approximately 36 million over a period of about one year in both charges.  This is not an insubstantial sum.  It is quite a significant sum given the fact that the time period is considered to be comparatively short.

19.  You have stated that you did not know the full names of Chris and Peter.  They, however, must have had great trust in you.  I have been referred to the case of HKSAR v Renato Cemine Tandoc CACC377 of 2002.  In that case, Jackson J stated in Tandoc’s case, as in your case, he was the person who had opened bank accounts of which the moneys had gone through, that Tandoc, as is yourself, a trusted lieutenant of Chris and Peter.  It is said there at paragraph 19:

“Were it otherwise, the applicant would never have been dispatched to Hong Kong, inter alia, to fraudulently set up bank accounts to which he was the sole signatory.  He, the applicant, could at any time have emptied those accounts for his own benefit had he chosen to do that.  Pastrana and others must have been well aware of that and from that awareness sprang the obvious trust.” 

20.  In this case, Pastrana can be substituted with Chris and Peter.  You were therefore obviously left in great trust to take this money out from your bank accounts to which you were sole signatory and hand the significant sums in cash to those that you were directed to by Chris and Peter.

21.  I take into account the principle of totality and sentence you on that basis.  The amount involved here, as I mentioned, is HK$36 million laundered over a period of just about a year, to which you were the person who had set up the bank accounts so that the money could be fraudulently passed through them. 

22.  I consider in this case a starting point of 4 years’ imprisonment to be appropriate on the totality of $36 million, and I will of course give you full credit for your plea of guilty.  Please stand up.  On that basis, I reduce the term of 4 years’ imprisonment to that of 2 years and 8 months’ imprisonment.

23.  There are, however, two charges involved and I shall sentence you on the basis of those two charges separately.  The 1st charge is HK$17-odd million and the 2nd charge is HK$18-odd million.  On that basis, I take a starting point of 3 years on both those charges and reduce the terms to 2 years’ imprisonment after your pleas of guilty, but given the fact that I have said the total term should be 2 years 8 months, I order 8 months of Charge 2 to run consecutive to Charge 1, which will make a total term of 2 years and 8 months’ imprisonment, to which you are so sentenced.