HKSAR v. SHEN ZHUOTAO

CACC 320/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 320 OF 2014

(ON APPEAL FROM HCCC NO. 246 OF 2014)

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JUDGMENT
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Introduction

1. The applicant pleaded guilty in the Magistrates’ Court to one count of Dealing with property known or reasonably believed to represent the proceeds of an indictable offence, involving a sum of HK$567,336,660.17, contrary to section 25(1) and (3) of the Organized and Serious Crimes Ordinance, Cap 455, as a result of which he duly appeared before V Bokhary J for sentence.  On 11 September 2014, the applicant, who was legally represented, was sentenced to 6 years’ imprisonment.  By Notice of application for leave to appeal (Form XI) dated 22 September 2014, the applicant applied for leave to appeal against sentence.

The facts admitted by the applicant

2. The applicant, who was a two way permit holder from the mainland and 20 years of age at the time of the offence, was the sole director and shareholder of a company called Fortune Millennium Limited (“FML”), which had been incorporated on 28 May 2010, as well as the sole signatory of the company bank account, which had been opened on 18 June 2010 and closed on 21 June 2012.  A total of $567,336,660.17 was laundered through the account by depositing numerous sums of money into, and withdrawing them from, the said account during the period of operation of the account.

3. Evidence revealed that there was no genuine business operated at the registered address of FML, nor did the company tax returns reveal that it did any business.  Immigration records also showed that the Applicant was not in Hong Kong when FML was incorporated by another person.  He only entered Hong Kong from the mainland on the day when the bank account was opened.  Since then, the applicant had visited Hong Kong regularly, where he was found working in a money exchange shop in Sham Shui Po and residing in a cubicle in the area.

4. The activities of the bank account bore the following indicia of money laundering:

i) the total turnover was more than $567 million over two years, which was obviously a significant sum;

ii) Nearly all transactions were made via e-banking and ATM transfers;

iii) There were multiple transactions (around 6 to 8) per day and about 135 transactions per month;

iv) The amount involved in each transaction was around $180,000, which was a large sum;

v) On average, the turnover each month was around $800,000;

vi) Large withdrawals were made immediately after deposits of the same amount, on the same day;

vii) There were multiple deposits of small amounts, followed by a large withdrawal of the sum of those small deposits, made on the same day;

viii) Most of the transactions were in round numbers.

5. Fund flow analysis of the bank account revealed that three substantial contributors to the account were connected with the money exchange shop where the applicant, who was not a licensed money service operator, worked.  These sources accounted for approximately 23% of the total deposits into the account.[1]

6. Under caution, the Applicant claimed that he came to Hong Kong to visit relatives and that he made his living by selling mobile telephones through FML. He stayed at his wife’s address in Sham Shui Po when in Hong Kong.[2]

Mitigation

7. In mitigation by his counsel at trial, it was said that FML had initially been set up by someone other than the applicant, that he was not the person in charge of the company, although he knowingly assisted in operating the bank account.  It was also suggested that the e-banking and ATM transfers could have been done by anyone and not necessarily the applicant and that his role in the offences was less.  It was further submitted that the underlying offence was consistent with “money exchange without informing the Customs and Excise”, which was less serious than bookmaking, theft or major fraud.[3]

Reasons for Sentence

8. In her brief reasons for sentence, the judge said she was not prepared to accept the assertions of trial counsel (who was not Mr Grounds) and considered that, whatever the predicate offence was, the amounts involved indicated that it was a very serious, prolonged and substantial offence, and one in which the applicant was very actively involved.[4]  Adopting a starting point of 9 years’ imprisonment, she discounted the sentence by one-third, resulting in a sentence of 6 years’ imprisonment.

Grounds of appeal against sentence

9. In his perfected grounds of appeal filed on the applicant’s behalf by Mr Grounds, it is complained that:

(i) The judge erred in her adoption of a starting point of 9 years’ imprisonment, which was manifestly excessive and/or wrong in principle without proper regard to or consideration of several matters, which have been identified by the authorities, namely:

(a) the amount laundered;

(b) the nature of and penalty for the predicate offence;

(c) knowledge on the part of the applicant of the predicate offence;

(d) any cross-border or international element in the offence;

(e) the sophistication and planning involved in the offence;

(f) the involvement of a criminal syndicate in the offence;

(g) the period over which the offence was committed; and

(h) the applicant’s role and personal circumstances.

(ii) The Judge erred in refusing to accept the mitigation advanced on behalf of the applicant in relation to the predicate offence and in finding that such offence “must have been very serious and substantial”, when there was no proper evidential basis for such a conclusion.

Respondent’s submissions

10. It is accepted by Ms Lam for the respondent that the starting point of 9 years’ imprisonment adopted by the judge was on the high side, when compared with other sentences in similar cases.  She also concedes that this application for leave to appeal against sentence is reasonably arguable.  On this basis, Ms Lam does not oppose this application for leave.

Consideration

11. Ms Lam’s entirely proper concession does not of course bind this Court, which must come to its own conclusion as to whether there are reasonably arguable grounds of appeal justifying the granting of leave to appeal.  Without going into the merits of the appeal further, it is in my judgment at least reasonable arguable that the judge did not give full and proper regard to the various factors which are said to determine sentence in these cases; and that, on the basis of relevant comparable authorities, the judge’s starting point was manifestly excessive.  Accordingly, it is reasonably arguable that the resulting sentence after plea was likewise manifestly excessive.

12. For those reasons, I shall grant the applicant leave to appeal against sentence.

[1] Appeal Bundle: page 20, paragraph 15

[2] Appeal Bundle: page 20, paragraphs 13 to 14

[3] Appeal Bundle: pages 2R-3U

[4] Appeal Bundle: pages 15Q-16I