HKSAR v. CHOI YUK KWONG

DCCC810 & 1228/2009 (CONS)

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NOS. 810 AND 1228 OF 2009 (CONS)

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Reasons for Sentence

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1.  The defendant was convicted after trial of two charges of dealing with property knowing or having reasonable grounds to believe that what he was dealing with represented proceeds of an indictable offence.

2.  In sentencing, I take into consideration the whole circumstance of the case including its nature and facts, background of the defendant, as well as mitigation put forward on his behalf.

3.  The facts proved reveal that the defendant was at the material time the sole proprietor of two companies named Global Ray and Winslow Trade.

4.  He was also the person who opened a bank account for each of these companies, and was the sole authorised signatory of the accounts.

5.  It was also proved that 11 overseas people who had been lured into making payment for the purpose of investment, had deposited their investment funds into either of the said bank account. No investment had actually being made on behalf of these people. They were deceived. For this reason, US$376,658.91 and AUD209,044.47 were deposited into the Global Ray account, and US$36,552.97 into the Winslow Trade account.

6.  The defendant testified to the effect that though he was the holder of each of the two bank accounts, he did not operate it. He said he had two business partners, Liang and Loke, and he let Liang operate the two accounts online.

7.  I rejected the defendant’s assertion that his partnership with Liang and Loke were running Global Ray and Winslow Trade as genuine and legitimate business. However, I accepted his admission that he let Liang operate the two bank accounts and gave it full weight, though at the same time rejected his exculpatory assertion that it was for the purpose of running of the business of the two companies.

8.  I found that the defendant had surrendered the control of the two accounts for the free use of others without any constraint.

9.  I further found out he had acted in joint enterprise with at least another person to deal with property having reasonable grounds to believe that the property represented wholly or partly, directly or indirectly, proceeds of an indictable offence.

10.  The defendant is 50 years of age. He was educated up to Form 5. He started to work when he was 20 years old, mainly in the logistic field.

11.  He had worked in four transportation companies, and towards the final stage of his employment career, he was a manager for about 10 years.

12.  The fifth company he worked in was K H International. He started to work in that company in 2004. Although he was not one of the owners, he was in full command of its operation.

13.  In 1994, he set up his own company, Gold Mild. The company ran a logistic business. He said, which I accept, around 2006, he earned a reward of share options for introducing to a listed company a coal mine business in the Mainland which resulted in his gaining of $11 million.

14.  He is a first-time offender.

15.  The law provides for a maximum sentence of 14 years and a fine of $5 million for this offence.

16.  There is no tariff for this type of offence. Each case has to be considered on its own merits.

17.  The offence of dealing with proceeds is a serious one. It legitimises proceeds of criminal activities and enables criminals to enjoy the fruit of their criminal activities with relative ease.

18.  As said by the Court of Appeal in HKSAR v Xu Xai Li [2004] HKC 16 at page 23:

“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 chances of law enforcement detection of illegal  activities that produces monetary benefits would be  enhanced.”

19.  In Javid Kamran, CACC400/2004, Yeung JA said:

“Successful deterrents against money laundering could   be effective measures against crime.”

20.  His Lordship identified the following factors to be relevant in determining the culpability of the offender:

“The nature of the offence that generated the laundered  money, the extent to which the offence assisted the   crime or hindered  its detection, the degree of   sophistication of the offence and perhaps the   defendant’s participation, including the length of time  the offence lasted and the benefit he derived from the  offence.”

21.  In SJ v Hertzberg, CAAR 8/2008, Lunn J said:

“Other factors that are relevant are the amount of   money involved, the degree of sophistication of the   operation, the defendant’s knowledge of the nature of  the underlying offence, and whether or not there was an  international element in the commission of the  offence.”

22.  Whilst in the present case there is no evidence that the defendant had taken part in the fraud, and it is accepted that the defendant had no actual knowledge of the money being proceeds of crime, let alone a fraudulent scheme, definitely he was an important cog in the scheme, and was crucial to its successful operation.

23.  Yeung JA said in Chen Zhen Chu [2007] 5 HKC 505, that:

“The gravamen of a money laundering offence is the   amount of money handled, not the amount of profit to  the defendants or the loss to the victims.”

24.  There was a degree of sophistication in the fraud exercised on 11 prosecution witnesses, as well as the money laundering exercise. The witnesses were told to remit money to the bank accounts, which to them were in a foreign country. There was an international element in the case. The amount of money involved was substantial.

25.  The defendant must be aware of the international element and the substantial amount involved. At the least in respect of the Global Ray account, he personally engaged in transaction involving money in US currency and of the amount over US$300,000.

26.  In relation to the Winslow Trade account, he personally handled two transactions which already concerned a total of US$30,500.

27.  Two bank accounts were involved. The operation lasted for about one year. A total of about US$376,000 and AUD209,000 were dealt with through the Global Ray account. A total of about US$36,000 was dealt with through the Winslow Trade account.

28.  In mitigation, it was stressed that the defendant is a person without any previous criminal conviction record, and the basis of a conviction was the limb of reasonable grounds to believe, not actual knowledge.

29.  Learned counsel for the defence urged me to consider a community service order. Having considered the whole circumstances, I am firmly of the view that it is neither appropriate nor adequate.

30.  The offence is a serious one. The defendant did not plead guilty. He put up an exculpatory story which was unbelievable and rejected. There is no indication of any real remorse. He did not commit the offence on a single incident. The offence continued for almost a year.

31.  In all the circumstances, I am of the view that an immediate custodial term is the only appropriate sentence to be imposed.

32.  For Charge 1, I adopt a starting point of 3 years and 9 months; and for Charge 2, 3 years.

33.  Having considered the whole circumstances and everything said on behalf the defendant, and bearing in mind his previous clear record, I do not consider he is entitled to any discount.

34.  I sentence the defendant to 3 years and 9 months’ imprisonment for Charge 1, and 3 years imprisonment for Charge 2.

35.  Having considered totality, I order the two sentences to run concurrently.

36.  Learned counsel for the defence also urged me to consider suspending the sentence. I do not consider there exists any sufficient special circumstances which justify this course of action.

37.  I order the defendant to serve a total imprisonment term of 3 years and 9 months’ imprisonment immediately.