HKSAR v. NI HANBIN AND ANOTHER

 DCCC904/2009

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 904 OF 2009

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Reasons for Sentence

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1.  The two defendants are each convicted, after trial, of a charge of dealing with property known or believed to represent proceeds of an indictable offence.  D1 was found guilty of Charge 1 and D2 was found guilty of Charge 2.

2.  In sentencing I have taken into account the whole circumstances of the case, including its nature and facts, background of each defendant and mitigation put forward for each of them.

3.  The facts, which I have found proved beyond reasonable doubt, may be summarised as follows.  In March 2009, Fubon Bank granted a mortgage loan which had been obtained by fraud.  The loan was initially paid to the solicitor firm engaged and, in turn, having deducted the necessary fees and expenses, the net amount of the loan $8,591,000 were deposited into a bank account of the applicant.  From that account, a cheque of $2.3 million payable to D1 was issued.  The cheque was on 2 March deposited into an account D1 opened in HSBC.  D1 then issued a cheque of $2,361,000 payable to D2.  This cheque was, on 3 March, deposited into an account D2 opened in HSBC. 

4.  I found the two defendants guilty not on the basis that they knew that what they were dealing with represented proceeds of an indictable offence.  The basis of conviction was that each of them, when they were dealing with the money, has a reasonable ground to believe that it was property representing in whole or in part, directly or indirectly, proceeds of an indictable offence.

5.  Both defendants are first time offenders. 

6.  D1 is 29 years of age and a PRC citizen living in the Mainland.  He has two children.  Upon completion of secondary education in 2000, he started work as a supervisor of the family business in fashion.  In 2003, he began to work in a trading company selling computer products earning a monthly salary of more than 3,000 Renminbi. 

7.  He got married in 2005.  The couple together ran a company, which sells new computer products. At the same time he was operating a fashion business and also engaged in trading of used computer products.  

8.  D2 is 58 years of age.  She is a PRC citizen living in the Mainland with her family.  She is divorced with no children.  She had received tertiary education and graduated in accounting.  Between 2001 to 2006, she owned more than three restaurants with her mother in Guangzhou.  From September 2001 until now, she has been selling Amway products.  Between April 2002 and 2005 she sold insurance life policy and was able to obtain an annual turnover of over 1 million Renminbi.  She earned a commission of 40 percent of the annual turnover.  She had also worked as a bookkeeper on a part-time basis.  Since June 1999 she has been investing in the stock market in the Mainland.  She also started to invest in the Hong Kong Stock Market in July 2007. 

9.  Learned leading counsel acting for her stressed that it was a case of a well-off lady with good background now fallen from grace. 

10.  The law provides for a maximum sentence of 14 years and a fine of $5,000,000.  As the circumstances of each case may very infinitely there is no sentencing guideline for offence of this nature.

11.  The offence is a serious one.  It legitimises proceeds  of criminal activities and enables criminals to enjoy the fruit of their criminal activities with relative ease.  As said by the Court of Appeal in the case of Xu Xia Li [2004] HKC16;

“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.” 

12.  It was said in HKSAR v Javid Kamran CACC400/2004 that:

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

13.  Madam Justice Beeson said in HKSAR v Yeung Kin Chai, CACC341/2008 that:

“As a matter of general principle in a money-laundering offence the amount of money laundered is highly relevant on sentence.”

The money laundered by each defendant in this case was in the region of $2.3 million. 

14.  The origin of the proceeds was mortgage fraud.  While the mortgage fraud itself might have involved some sophisticated planning and execution, there’s no evidence that the two defendants were involved in the fraud itself and knew the personalities involved.  It has been established that the nature of the indictable offence from which the property derived is of no major significance unless the defendant knew the nature of the crime.  It is not the case here.

15.  The basis of the conviction for both defendants is that when each of them dealt with the money, the defendant had reasonable belief that the money represented the proceeds of an indictable offence.  In HKSAR v Xu Xia Li CACC395/2003, the Court of Appeal observed that:

“There should be little relevance regarding the mental culpability of the money-launderer which was based only on reasonable belief of the source of the money as opposed to that based on actual knowledge.”

16.  The case involved only one transaction on the part of each defendant.  There is no evidence that the defendants did what each of them had done for a reward.  Both defendants are PRC citizens living in the Mainland.  They each held a bank account in Hong Kong and made use of it to commit the offence, which facilitated those who had committed a serious crime to legitimise the proceeds of it.  On the other hand, the account each defendant held was not opened for the purpose of money laundering.  The accounts have been used for legitimate purpose for a long time. 

17.  Having considered the whole circumstances very carefully, I am of the view that a custodial sentence is appropriate for both defendants.  In my judgment a starting point of 2 years and 9 months is appropriate for the charge each for the defendants face.  I do not see any factors so important that may distinguish materially between the culpability of each of them. 

18.  This is the first conviction of D1, despite he did not plead guilty during the trial, he did not challenge any part of the prosecution case.  Through his counsel he offered to make a restitution of $63,000.  Subsequent to exchange amongst counsel this was recognised to be impossible since D2 had already made an offer of full restitution to Fubon Bank.  It was consensus of the parties that the bank was not entitled to accept compensation in excess of the amount which had been laundered by D1.  Whilst this remained an offer to compensate and, indeed, D1 could not be in a position though not the fault on his part, to make any compensation, I accept that this is an indication of remorse. 

19.  Taking into account everything said on his behalf, in particular the stance he took at the trial, his previous clear record and the offer to compensation, I am of the view that D1 is entitled to have a discount of 3 months.  I therefore sentence D1 to 2½ years’ imprisonment for Charge 1. 

20.  As regards to D2, she is also a first time offender.  The stance she took at the trial was also the same as D1.

21.  She offered to make voluntary restitution of the full amount laundered through D1, that is, $2.3 million.  Although a court order in this matter has been made, it was just ordered on the suggestion of counsel to give effect to the voluntary restitution, since without an order, D2 was not able to utilize her funds in her HSBC account which had been frozen.  The court was informed that the account was frozen only as an administrative measure and not under any court order.  The prosecution confirmed that there were sufficient funds in D2’s account.  The terms of the order was agreed upon the parties’ consent, including D2.  Leading counsel representing Fubon Bank was content that it was sufficient to ensure Fubon Bank to get the funds.  I treat that D2 as having made full restitution to compensate Fubon Bank of the money laundered through D1 and eventually by her. 

22.  The court recognises that voluntary restitution is something which must be encouraged, and that this can only be done if real weight is given to it as a mitigation factor.  In SJ v Lin Min Ying, [2002] 3HKC415, Stuart-Moore VP said that:

“Of course it is much stronger mitigation for counsel to be able to show that a defendant has immediately faced up to his or her responsibilities and made effort from an early stage to repay any dishonest gains to the victim.  However, even when restitution or compensation is paid much later in time, whatever the defendant’s motives for making reparation, the mitigation that dishonest gains have been repaid is nonetheless a material factor in mitigation.”

23.  Leading counsel for D2 asked me to consider suspending the sentence, stressing in particular, matters such as the personal circumstances of the defendant; that this was her first conviction; health conditions of D2 as revealed in a medical report, which I have to say, was not very serious; the circumstances surrounding the commission of the offence; that D2 had not involved in the original mortgage fraud; from the whole proceeds of $8 million, only $2.3 million went to her; and the voluntary full restitution. 

24.  In SJ v Hui Siu Man [1999] 2 HKLRD 237, Power VP said:

“There is no encouragement to make restitution if the offender knows that it will have little effect on sentence.  We are satisfied that full restitution, particularly in commercial crimes, must be encouraged and that this can only be done if real weight is given to it as a factor mitigating sentence.  We repeat, however, that of itself, is not a ‘very exceptional circumstance’ which would warrant a suspension of sentence.”

25.  I also have to take into account the circumstances in which restitution was offered by D2.  It was made upon completion of mitigation and when learned leading counsel, acting for Fubon Bank, raised his desire to apply for a restitution or compensation order.

26.  Restitution, of course, was not the only matter learned defence counsel asked me to take into account. 

27.  The offence which D2 committed was a serious one.  Having considered very carefully the whole circumstances of the case, I do not consider there exists sufficient special circumstances to justify ordering the sentence to be suspended.  The defendant is, however, entitled to have extra discount for her previous good record and her full restitution.  In my judgment she is entitled to have a discount of 15 months.  Accordingly, I sentence D2 to 18 months’ imprisonment for Charge 2.