HKSAR v. MA FUSHAN

DCCC 1143/2023

[2024] HKDC 1413

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 1143 OF 2023

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REASONS FOR SENTENCE

The defendant pleaded guilty to a charge of "Conspiracy to deal with property known or believed to represent proceeds of an indictable offence". In short, he gave his bank account to someone.

Summary of Facts

2.  On 26 September 2016, Dong Chen Trading Company Limited ("Dong Chen")  opened a bank account (No.47-0653590)  with DBS Bank (Hong Kong)  Limited ("the Account").  The sole signatory of the Account was the defendant.  He was the contact person for the Account as well.  The mailing address for the monthly statements of the Account was a location in Yuexiu District, Guangzhou.

Deposits and withdrawals

3.  Between 26 September 2016 and 10 January 2017, the Account received a total of 35 deposits which aggregated to a sum of US$3,695,884.18.  A total sum of US$3,656,854.64 was withdrawn from the Account within the same period by 56 withdrawals.  The transaction records showed a typical mirror pattern, in which multiple sums were deposited into the Account and the same aggregated amount was swiftly transferred out of the Account by multiple sums on the same day or within the next few days.

Background and tax information of Dong Chen

4.  The defendant was the sole shareholder and director of Dong Chen.  Dong Chen's business address was at an industrial building in San Po Kong, Kowloon, which was a secretarial company.  Investigation revealed that Dong Chen operated no business at that address.

5.  For the tax year 2016/17, Dong Chen reported no gross income in its Profit Tax Return. The Employer's Return of Remuneration and Pensions of Dong Chen filed by the defendant was also a nil return.  In other words, Dong Chen had no employee in that tax year.

6.  Immigration records showed that the defendant came to Hong Kong from time to time between 2016 and 2019.  On the day when the application for opening the Account was submitted (i.e. 26 September 2016), there was no record showing that he was in Hong Kong.

Arrest and admissions

7.  In the afternoon on 11 May 2023, the defendant attempted to withdraw the balance of the Account at DBS Bank in Central.  He also applied to close the Account by submitting a form.  Mr. Wong (PW1), a staff member of DBS Bank, handed the form to his manager for approval.  PW1 then received notification that the application was problematic and that the Police would arrive shortly.  The defendant was soon arrested.  He remained silent under caution.

8.  In his video recorded interviews, the defendant claimed that he has retired on medical grounds.  Around 2016, he met someone surnamed Ma, who proposed to start a foreign business with him.  The defendant was not required to contribute any investment capital.  He was asked to open an account.  Ma promised to give the defendant a share of the company.  In 2016, Ma arranged for an unknown female to escort the defendant to Hong Kong to open an account.  He followed the unknown female's instructions and gave his identity documents to her.  Later on, she brought the defendant to DBS Bank to open an account.  The defendant claimed that he did not know the Account was opened in Dong Chen's name.  After completing the formalities, the defendant put the bank card and passbook in a green box, which was eventually taken by Ma.  The defendant claimed having no knowledge of the company's business and that he did not participate in its operation. As far as he knew, Ma operated the company solely.  The defendant last contacted Ma in 2018/19 telling Ma that he would like to withdraw the capital invested by him.  The defendant believed that he was entitled to the money in the Account since it was opened in his name.  Ma told the defendant that he could withdraw the balance of the Account even though he did not invest any money when the business started.  Owing to his health and later on the pandemic, the defendant came to Hong Kong in 2023 to withdraw the balance.

9.  The defendant now admits that during the offence period, he had conspired with other person(s)  unknown to deal with the total sum of US$3,695,884.18 held in the Account, knowing or having reasonable grounds to believe that the said sum, in whole or in part, directly or indirectly, represented any person's proceeds of an indictable offence.

Mitigation & Sentence

10. The defendant is 49 and has a clear record. He is a mainland resident from Gansu Province. Defence counsel Mr. Leung informed me that the defendant suffers from diabetes and cerebral infarction; whereas his wife, cervical cancer (with hysterectomy performed in October 2018); his father, stomach cancer and liver cirrhosis; and his mother, intracranial hematoma, high blood pressure and diabetes.

11. In mitigation, Mr. Leung submitted that the defendant used to be a healthy and active person. His cerebral infarction caused him mobility issues and made his thinking slow, both of which were strong blows to him. Mr. Leung further submitted that the duration of the offence was slightly over 3 months. There is no evidence showing that the funds deposited into the Account came from any predicate offence. The defendant's role was merely being a signatory and account holder. Letters written by the defendant's father, wife and son were placed before me; their contents are duly noted.

12. This is a typical case of money laundering by way of a stooge bank account. The defendant claimed complete ignorance of any transaction of the Account or Dong Chen's operation; however, any scam involved behind would have been meaningless without the Account. What true criminals need are gullible scapegoats like the defendant who would take the blame for them when the law enforcement takes action. The court must deter people from playing the role of "scapegoat" by imposing on them a severe punishment. When there are fewer or no willing "scapegoats", the "stooge account" method of money laundering would fail.

13. The Court of Appeal in SJ v Wan Kwok Keung [2012] 1 HKLRD 201 held :-

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.[1]

14. In determining the proper starting point, I have reminded myself of the sentencing principles laid down in HKSAR v Hsu Yu Yi [2010] 5 HKLRD 545 and HKSAR v Boma Amaso [2012] 2 HKLRD 33. I have also borne in mind the amount of money involved, the duration of the offence, the defendant's role in relation to the movements of funds as well as his personal circumstances.

15. In SJ v Ngai Fung Sin Apple [2013] 5 HKLRD 104, Yeung V-P held :-

Generally speaking, the sentence passed in a "money laundering" case is primarily to reflect the amount of the "illicit/black money" involved. Neither the fact that the "illicit/black money"was actually not derived from an indictable offence nor the defendant's ignorance of the actual source of the "illicit/black money" is necessarily a valid mitigating factor…[2]

16. I accept there is no evidence in the present case showing that: (i)  the funds received by the Account were related to any predicate offence; and (ii)  either the defendant was involved in or had any knowledge of any predicate offence. On the other hand, as the sole owner of the Account, the defendant should have retained its ultimate control and should have paid attention to its transactions on a regular basis. These were his duties and he has neglected them. I also accept that the defendant did no more than parting with his bank account and that he probably did not deal with the funds which went through the Account.

17. On the other hand, I cannot overlook the fact that almost US$3.7 million (roughly HK$28.8 million)  went through the Account within a period of 3 months. By giving his bank account to someone (even a so-called business partner)  and thus allowing funds of unknown origins to pass through the Account, the defendant played a pivotal role in helping the mastermind(s)  of criminal activities to access their illegal funds without revealing their identities.

18. In the circumstances, I adopt a starting point of 5 years' imprisonment[3]. With the timely guilty plea, the sentence becomes 40 months. I would grant an additional discount of 4 months since there is no evidence of any predicate offence and for the defendant's health conditions, reducing the sentence to 36 months. Apart from this, I see no other mitigating factors which warrant any further reduction. I sentence the defendant to 36 months' imprisonment.