HKSAR v. ADIRANGAM RAHMATHULLAH ASIF AHMAD

DCCC 967/2011

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 967 OF 2011

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REASONS FOR SENTENCE

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1.  The defendant has been convicted after trial of five counts of dealing with property known or believed to represent the proceeds of an indictable offence, contrary to section 25(1) and (3) of the Organized and Serious Crimes Ordinance, Chapter 455.

2.  Full particulars of the offences are set out in my verdict delivered on 29 June, 2012. Briefly, between the 24 September, 2010 and 8 October, 2010, a scam was operated where an Australian named John Higham (PW5) was deceived into remitting a total of US$636,718 on 5 occasions to the defendant through a bank account held in the name of the Smart Trading Company, of which the defendant was the sole proprietor, for investment in the gold futures market through Westcore Capital Ltd. In fact, no investment was made, and the web page of Westcore wherein PW5 could see his investment account was a sham.  The five transfers were deposited into the bank account of Smart Trading Company and these sums were dealt with by the defendant who operated the bank account in question.  The monies were transferred out of the bank account almost immediately after receipt on each occasion.  When first interviewed under caution (Exhibit P5), the defendant said that he had been working as a cashier in a money exchange company for about 2 years earning about HK$10,000 a month.  He had established Smart Trading Company to do trading business of mobile phones and electronics on a part time basis, and had been engaging in the business for about 2 months. He was the sole proprietor of Smart Trading Company.  He said Smart Trading Company had no business connection with any other company.  He denied knowledge of a company called Westcore Capital.  He claimed the company had a turnover of US$1.5 million.  Yet he himself had no dealings with the suppliers or customers.  He had invested no capital in the business.  He had nothing to do with the delivery of the goods ordered, nor did he handle the purchase orders, nor did he have any of the invoices of the business.  All of this was handled by a man named Chan that he contacted only through the internet chat programme Yahoo Messenger – Chan would inform him of remittances that had been made and once he received the remittances, he would deduct 1% as his own commission and transfer the balance to the bank accounts as instructed by Chan.  I found that it was inconceivable that in those circumstances the defendant would consider himself to be engaging in trading business.  By receiving the money as he did and then transferring them out, he was ‘dealing’ with the five sums that were transferred into the bank account of Smart Trading Company.  The only inference to be drawn in the circumstances was that there were reasonable grounds for the defendant to believe that the five sums he dealt with in the bank account represented the proceeds of an indictable offence.  Although there is no direct evidence that the defendant was aware of the exact nature of the criminal offences by which or through which the money was obtained that was transferred to the bank account of Smart Trading Company, Exhibit P14 found in his home bore the words ‘Westcore Capital’.  When interviewed under caution, in Exhibit P5, he was asked if he knew of ‘Westcore Capital’ and he said he did not. Exhibit P14 was a facsimile transmittal sheet dated 16 September, 2010 to ‘Shaun Schulz/Charles Parker’ of the company ‘Westcore Capital’ from ‘David Embrey’.  It was PW5’s evidence that the fraud perpetrated on him involved a company named ‘Westcore Capital’.  In the same file where exhibit P14 was filed were filed Exhibits P11, P11A, P12 and P13, all of which were copies of telegraphic transfer applications, customer copy, from the National Bank Australia Ltd. and were identical to Exhibits P19, P20 and P21 respectively, which were produced by PW5 – PW5 said that these were the customer copies of the telegraphic transfer applications for the three transfers that he had made, the subject matter of counts 1 to 3.  He said he had sent copies of these to Westcore after he had made the transfers. Exhibits P11A, P12 and P13 had some handwritten notations on them.

3.  After hearing counsel in mitigation, I adjourned sentence until 17 July, 2012, calling for a Background Report, which is now before me. Mr Tibbo for the defendant complained that when the defendant was interviewed by the interviewing probation officer, it was with the assistance of a Hindi interpreter rather than a Tamil one.  As the defendant spoke limited Hindi and English, Mr Tibbo felt that this was unfair to the defendant as he was not able to express everything he wanted to the interviewing officer.  Mr Tibbo confirmed he had explained the contents of the Background Report to the defendant and that the defendant understood the contents.  There were some minor inaccuracies such as on page 1 of the report in the paragraph ‘home’ – the defendant and his family had lived at the reported address for 4 ½ years and not 7 years as recorded.  Mr Tibbo said also that the report did not disclose fully the circumstances of the defendant’s son, who is only 12 years only and a sensitive child at an impressionable age.  The absence of his father from the family unit will cause hardship to the child, who as yet is unaware of his father’s incarceration.  The defendant being the sole breadwinner of the family, his incarceration will cause great financial hardship to the family as well.  The wife is also very emotionally upset by what has happened and there are concerns for her emotional state and its impact on the child.  Mr Tibbo informed me that the family will receive some financial assistance from the Social Welfare Department as the child is entitled to financial assistance in Hong Kong. Mr Tibbo has made full and thorough mitigation on behalf of the defendant.  I have taken all that he has had to say into account when deciding what is the most appropriate sentence to pass. I have before me also a letter in mitigation written by the defendant’s father, as well as some documents setting out the medical condition of the defendant’s parents.  After hearing further submissions from Mr Tibbo, I adjourned the matter until today for sentence.  I have carefully considered all that has been urged upon me in mitigation by counsel on behalf of the defendant, as well as the contents of the Background Report and the letter.

4.  In mitigation I am told the defendant is now aged 40 years.  He has a clear record.  He was born in India, and came to Hong Kong when he was 19 years old.  He is married and lives with his wife and 12 year old son in Hong Kong.  His parents live in India.  The defendant is the main breadwinner of the family.  His background is set out in detail in the Background report and I do not intend to rehearse the contents herein. Some specific matters were raised by Mr Tibbo and I have considered these matters and in my view little weight can be attached to these.

5.  Money laundering is a serious offence for which deterrent sentences are required not only to punish the defendants but also to deter others from behaving in this way. It is not wrong in principle to impose an immediate custodial sentence on a first offender (see HKSAR v HUI Kam [2000] 3 HKLRD 211).  There are no guidelines for offences of this nature, the reason for this being that the circumstances of each case may vary almost infinitely.  There is a general recognition that sentences must be custodial and must be substantial to deter others.  The sentences must also reflect public and commercial concerns about the use of bank accounts to launder funds derived from criminal enterprises. The fact that the victims were being asked to pay money into bank accounts adds a veneer of legitimacy to the underlying scam and serves to reassure the victims. Anybody who attaches himself to an international fraudulent scheme must expect to be dealt with severely if he is caught.

6.  As to the seriousness of the offence and the need for deterrence the Court of Appeal in HKSAR v XU Xia-li & another, CACC 395/2003, said,

“The prohibition of the 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 chances of law enforcement detection of illegal activities that produce monetary benefits would be enhanced. Money laundering is therefore treated as a serious offence. If money laundering activities were allowed to be carried out in Hong Kong with impunity or treated lightly with minor penalties it would mar Hong Kong's reputation as a world-class financial and banking centre.”

7.  The Court of Appeal reviewed a number of cases in XU Xia-li, HKSAR v Javid Kamran, CACC 400/2004, and in HKSAR v YEUNG Kin-chai, CACC 341/2008. In Javid Kamran as applied in HKSAR v Jain Nikhil [2007] 2 HKLRD 640 and in HKSAR v LEONG Wai-keong, CACC 476/2007, the court said that it was not possible to lay down guidelines, as there is a very wide range of culpability. The court went on to set out some of the factors relevant in determining the culpability of a defendant including 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. Another factor to be added is the degree to which an offence had an international dimension.

8.  More recently, the Court of Appeal in SJ v WAN Kwok Keung [2012] 1 HKLRD 201 at paras 12 and 13 on pp. 204 and 205, held:

“"Money laundering" is a serious offence for not only does it encourage criminal activities indirectly, but also attempt to legitimize the proceeds of crime. In order to crack down on serious crimes, to prevent offenders from getting financial gains, it is necessary to deter the commission of the "money laundering" offences. Generally, the sentence for "money laundering" offences should mainly reflect the amount of "black money" laundered and not the benefit obtained by the defendant or others. The reason being that it is very difficult to prove the benefit concerned, and in most "money laundering" cases, there may not be evidence to show from what indictable offence the "black money" are in fact derived. Of course, if there is information to prove that the "black money" is originated from serious crimes, including drug trafficking, kidnap and blackmail, illegal human trafficking, other organized crimes, etc. or the defendant's benefit is huge, then the sentence should be adjusted upward.”

9.  Guidance for the appropriate sentence can be adduced from reviewing sentences passed in previous cases and also by the most recent case of HKSAR v Boma Amaso,CACC335/2010.  Stock VP, in giving the judgment of the Court of Appeal, said :

“35. The first factor to which any sentencing court should in this context have regard is the maximum penalty available. It is not possible to identify the worst case possible and difficult to postulate the worst category of case. But it is none the less helpful to bear the maximum in mind.

36. The second matter to which the sentencing court must have regard is the fact that in this category of offence, deterrence is paramount. It is to be remembered that “the criminality in laundering arises from the encouragement and nourishment it gives to crime in general. Without it many crimes would be rendered much less fruitful and perhaps more difficult to perpetrate”; R v. Basra [2002] 2 Cr App R (S) 469 at 472.

38. Then there is the question of the amount of money laundered. This is not the be-all and end-all of a case but is a significant feature.”

10.  Stock VP went on to identify some of the significant features for which the court should look and take into account, set out in paragraph 40 of his judgment, and include the amount of money laundered, the nature of the indictable offence involved and whether the defendant is aware of it, role of the defendant, whether international dimension and organised crime syndicate are involved, duration of the laundering and the degree of planning and sophistication.

11.  In passing sentence I take into account everything said on behalf of the defendant by counsel. I do not accept that the defendant was unaware of the scam operated on the victim.  Whether or not the defendant received a reward and the size of it is insignificant as a sentencing factor for the reality is the offence of money laundering is very serious (see HKSAR v CHEN Szu-ming, CACC 270/2005 at paragraph 23).

12.  In my view this was a carefully planned operation with a very clear international dimension, all the remittances to the bank account having come from overseas –Australia. The opening up of different bank accounts to facilitate the moving of the funds make the detection of the crime all the more difficult. In a short period of time, the defendant had dealt withalmost HK$5 million. There was also a level of sophistication here as well.  A sham web page was set up wherein the victim could see that his transfers had been credited into his trading account, and he could also see ficticious investment transactions wherein he was deceived into believing he had made a lot of profit on his investment.  However, there is no evidence that the offences were committed by the defendant on behalf of an organized criminal syndicate.

13.  There is no direct evidence  that the defendant played a part in the fraudulent scheme itself which harvested the illicit funds but he was an essential cog in the processing of the money. He was the sole proprietor of Smart Trading Company, and he opened the bank account of Smart Trading Company and he was the one who operated the bank account. Almost immediately after receipt, almost the entire sum was transferred to other accounts on each occasion.

14.  The maximum penalty for the present offence is one of 14 years’ imprisonment.  Deterrence is also of paramount importance.  The nature of the predicate offence is one of fraud, for which the maximum sentence is 14 years’ imprisonment.

15.  The defendant has been convicted after trial, and he has shown little remorse.  Taking into account the role played by the defendant and all the circumstances of the offences as well as the personal circumstances of the defendant, the defendant is sentenced as follows:-

Counts 1 & 2 – on each 3 ½ years’ imprisonment

Counts 3 & 5 – on each 4 years’ imprisonment

Count 4 – 2 ½ years’ imprisonment

16.  These are separate and distinct offences warranting consecutive sentences. I accept this was a course of conduct over a period of just over 2 weeks. I also bear in mind the totality principle of sentence.

17.  I order all sentences to be served concurrently. The defendant serves a total sentence of 4 years’ imprisonment, which I am satisfied properly reflects his criminal culpability on the 5 charges.