HKSAR v. LI CHENG LANG JYE

DCCC 564/2020

[2021] HKDC 145

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 564 OF 2020

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Reasons for Sentence

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1.  The defendant has pleaded guilty to one count of dealing with property known or believed to represent proceeds of indictable offence, contrary to section 25(1) and (3) of the Organized and Serious Crimes Ordinance, Cap 455.

2.  The particulars are that the defendant, between 21 May 2014 and 16 June 2014, knowing or having reasonable grounds to believe that property, namely a total sum of US$298,546.19, held by Panalpina International Trading Company in a Hang Seng Bank account, in whole or in part, directly or indirectly represented any person’s proceeds of indictable offence.  He dealt with the said property. 

Background and Facts

3.  This is a case where the defendant opened a Hang Seng Bank account in Hong Kong at the spurious request of an alleged friend who then used this account to deposit proceeds of indictable offences. In short, the defendant opened an account for another to use for illegal purposes:  to have funds from criminal activity transferred into and then withdrawn almost immediately. 

4.  As for a predicate offence or indictable offence, a textiles company in Indonesia, which often did business with a Hong Kong supplier, called Winnitex Limited, had a contract dated 10 April 2014 for Winnitex to supply 6,000 yards of fabric to this Indonesian company for US$20,340. 

5.  On 25 May 2014, the shipping clerk in the Indonesian company received an e-mail from her counterpart at Winnitex Hong Kong.  Her counterpart requested payment of the US$20,068.79 to be transferred for payment of that contract to a Hang Seng Bank account.  This request was made by a Winnitex e-mail and the remittance was made by the Indonesian company three days later.  This request had not come from Winnitex and the e-mail received by the shipping clerk in Indonesia was almost exactly the same as an authentic Winnitex e-mail address except for a missing “i”.  It was a scam e-mail from an address that, at a glance, appeared to be genuine. 

6.  When it was discovered that Winnitex had not made the request nor received the money, a police report was made. 

7.  The police investigation into the recipient Hang Seng Bank account revealed the defendant as the sole signatory.  The defendant had opened that bank account in the name of “Panalpina International Trading Company” on 24 March 2014.  The first transaction was made six days later. 

8.  The defendant was arrested on 18 June 2014 at a branch of Hang Seng Bank when he entered to attempt to close that account. Upon investigation of the account, in summary, it had a total deposit of HK$5,270,421.24. The deposits were made in Hong Kong dollars and US dollars.  There were withdrawals in the equivalent amount.  A full account fund flow was attached to the Summary of Facts at Annex 1. 

9.  The amount of the charge was the total of four remittances deposited.  All deposits were remittances from overseas.  There was a total of HK$2,958,771.91 not part of the charge, which comprised of inter-account transfers within the same account. 

10.  On the same day the defendant was arrested, the police did go to the registered address of Panalpina International Trading Company but found it occupied by another company unrelated to it.  There was no record of this company according to the Companies Registry. 

11.  There was a business registration record with a registered business on Des Voeux Road Central.  It ceased business on the same day of the defendant’s arrest.  The defendant was the sole owner of this business. 

12.  The defendant, under caution, did give a statement and told the police that he opened the account at Hang Seng Bank to trade in baby products.  He was the registered owner of the company and had set it up in early February 2014.  He said the products were sourced from Panyu in the mainland.

13.  He was referred to his bank account withdrawals, in particular one transaction of $500,000 transferred to another Hang Seng Bank account in the name of “Mohammad Nazaket” on 21 May 2014.  He told the police he had no knowledge of that bank account nor that person. 

14.  When asked about the deposit made by the Indonesian textiles company, he said he did not remember such a deposit but it should have been for payment of baby products.  He had no knowledge of Winnitex or its company e-mails or the Indonesian company.  His company had no e-mail address nor a computer. 

15.  He remained silent in a second interview under caution. 

Mitigation

16.  The defendant was born in Brazil in September 1993 and came to Hong Kong with his mother to join his father when he was 1 years old.  At the time of the offence, he was nearly 21 years old.  He is now 27 years old.  He is single and lives with his parents.  He is, because of the COVID-19 pandemic, the only breadwinner of the family. 

17.  He is a man with a clear record and when he was arrested, he was working in a well-known retail store and had been since 2013. In fact, he has worked there almost continuously until now.  He now earns $18,000 and is seen by his supervisors as diligent, responsible and trustworthy.  He has won numerous awards for being top salesman and was promoted in 2018 to be the second in charge in a large shop in Tsim Sha Tsui. 

18.  I have letters from his district manager and direct supervisor.  The letters from his previous supervisors in the same company say the same thing and that is he is trustworthy, shows leadership and responsibility.  He does not shirk his workload and displays discipline.  His personal sales performance is outstanding and has won accolades as a salesman.

19.  I have a letter from his father who stresses the defendant was only 20 when he met a fraudster who tricked him into committing the offence.  He has been waiting for nearly seven years to be sentenced. During that time, he continued to work hard despite this hanging over his head. 

20.  His father says he and the defendant’s mother are very worried for him.  They often give free musical performances in elderly homes and when the defendant is available, he helps them travel to and set up these free concerts.  Because of the pandemic and because they are in the music business, they have had no income since January 2020.  The defendant is now the family’s only breadwinner.  Sadly, the defendant’s mother was diagnosed with breast cancer late last year and has had surgery. 

21.  The family have suffered much recently and hopes the court will show the defendant mercy. 

22.  There are also letters from the defendant’s school basketball teacher, who testify the defendant was a team player and a true sportsman.  He showed leadership skills within the team and in games.  He is respectful, polite and worthy of mercy and leniency. 

23.  There is a letter from the director of the Hong Kong Fencing Association who knows the defendant and finds him to be a kind, diligent, polite and trustworthy person.  He says the defendant is remorseful and will never break the law again.

24.  Lastly, there is a letter from a social worker employed by the Hong Kong Federation of Youth Groups.  He knows the defendant as a volunteer at their activities and functions.  He has found the defendant well respected, cheerful, helpful, diligent and polite.  He is sure the defendant’s remorse is genuine and asks for leniency. 

Reasons for Sentence

25.  The defendant’s best mitigation is his plea of guilty. 

Mr Kwan has said all he can say on behalf of the defendant and his written submissions are full and succinct. He does explain how the defendant met a man called “David Chan” in 2014. The man told the defendant he was a bankrupt and could not open his own bank account. He explained he wanted to buy baby products from the mainland and asked the defendant to open a company and a bank account for him. He promised to share 10 per cent of his business profits with the defendant. The defendant had to give him all company documents and bank account details.

26.  The defendant admits that he did find this arrangement suspicious but he was tempted by the possible financial rewards. He even withdrew cash from the account when instructed by David Chan, allegedly to settle payments to suppliers.  He had no idea of the deposits or withdrawals or transactions relating to this bank account.

27.  He did see, however, the bank statements before passing them to David Chan and he thought the large amounts of money that went in and out looked suspicious.  This made him decide that he did not want to be a part of this arrangement any more.  In fact, he went to a branch of Hang Seng Bank on 18 June 2014 with the intention of closing the account when he was arrested.  This intention is referred to in the Summary of Facts. 

28.  He did not tell the police about David Chan at the very beginning because he did not wish to hurt someone he thought was his friend.  Only after, when reality set in and the legal consequences became clear, did he tell the police about David Chan.  By then, David Chan had disappeared and was out of contact. 

29.  Mr Kwan does stress that the equivalent amount in the charge of HK$2.328 million was large, but not huge.  Other factors relevant to sentence would be the low level of the defendant’s personal participation in the predicate offences.  The account was only opened for a couple of months.  It operated for a very short period of time. 

30.  There were four suspicious transactions of which one was from overseas, the Indonesian company.  There appears to be an international element, which is relevant, but he had no knowledge of the e-mail scam.  It was not a sophisticated scam nor was there any evidence of a criminal syndicate. 

31.  Mr Kwan has referred me to HKSAR v Hsu Yu Yi [2010] 5 HKLRD 545, paragraph 9.  There, the Court of Appeal reiterates that there are no sentencing guidelines for the offence of money laundering because the facts vary from case to case but does state factors to be taken into account when determining a sentence.  The Court of Appeal, for example, in HKSAR v Boma [2012] 2 HKLRD 33, has stressed that deterrence is a paramount objective of the sentence and that the amount of money laundered is a significant feature. 

32.  Other factors relevant to sentence include the nature of the predicate offence, the state of the offender’s knowledge, the sophistication of the offence including the degree of planning, whether the offence was committed by or on behalf of an organised criminal syndicate, whether there was one transaction or many and the length of time over which the offence was committed and the role of the defendant and the acts performed by him. 

33.  The last factor Mr Kwan has submitted is relevant is the delay in prosecuting the defendant.  He was not yet 21 when he committed these offences and was arrested for the first time on 18 June 2014. He was interviewed and cautioned on the same day.  On 19 November 2015, he was released.  He was then further interviewed on 28 January 2016 and 22 February 2018 but was not rearrested.  Not until 27 May 2020 was he rearrested for this offence, almost six years after the date of his arrest. 

34.  The prosecution provided a chronology of the investigation to the defence.  The file was first submitted to the Department of Justice on 6 February 2015, with legal advice received on 28 May 2015.  The second time the file was submitted was on 25 January 2017, with legal advice received on 4 May 2017.  The third time the file was submitted was on 15 June 2018, with legal advice received on 28 June 2018.  The fourth time the file was submitted was on 21 December 2018, with legal advice received on 18 January 2019.  The last submission was on 4 December 2019, with legal advice received on 14 January 2020.  This last legal advice was over four months before he was rearrested. 

35.  During mitigation, by way of explanation, Ms Lee for the prosecution informed me that the delay was because advising counsel, and there was more than one over the six-year period, would give instructions for the police to carry out further investigations.  There was an exercise to follow the fund flow, make enquiries with banks and pursue other suspects. 

36.  The defence submit that this case was not complex and could reasonably have been brought to court earlier than it was.  I therefore should take this factor into account and give it much weight. 

37.  The delay in prosecuting the defendant was in no way the fault of the defendant himself.  The prosecution admits this and agrees it was to the detriment of the defendant. 

38.  What is clear is that in the six years since his arrest he has worked hard, been promoted and become responsible for his entire family.  He has not committed any further crimes.  Despite this hanging over his head, he has not let it affect his livelihood or life. 

39.  Mr Kwan submits he has fully rehabilitated himself.  He has referred me to the Secretary for Justice v Chan Kit Bing, CAAR 8/2000, and Secretary for Justice v Hui Siu Man [1999] 2 HKLRD 236.  Both of these authorities are failed reviews by the Secretary for Justice on the ground that it was wrong in principle to suspend sentences for these offences.  In both cases, it was stressed in mitigation that there was a significant delay in prosecuting the offender who had, in the meantime, rehabilitated himself or turned over a new leaf or obtained steady employment or made restitution. 

40.  Mr Kwan has submitted that the good mitigation of the defendant with the extraordinary delay here constitutes exceptional circumstances and, in the interests of justice, he urges me to consider a suspended sentence. 

41.  Money laundering is a serious offence for which deterrent sentences are required.  The courts have emphasised that a defendant is to be sentenced on the facts of the money-laundering charge and not on the facts of the underlying offence or predicate offence.  Sentence should mainly reflect the amount of money laundered.  An immediate custodial sentence is the norm.  Offences of this nature affect Hong Kong’s international reputation as a financial hub. 

42.  I have taken into account all the mitigation put forward, the defendant’s clear record, the facts, the amount involved, and the international element involving at least one of the four transactions identified in his bank account.  I have also considered the defendant’s role was to facilitate illegal activity by opening and allowing another to use his bank account.  I am satisfied his level of participation was limited and he was not directly involved in the e-mail scam uncovered.  There is no suggestion from the prosecution that he was involved or had knowledge. 

43.  Additionally, the money-laundering scheme was not on a large scale nor does it appear to have been sophisticated.  There were four transactions, which does not indicate evidence of a syndicate.  Lastly, the account was only opened for a couple of months before the defendant realised what he had done or was involved in before he himself went to the bank to close the account.  The Summary of Facts state he was arrested when he attempted to close the bank account at a bank branch on 18 June 2014.

44.  The amount of money laundered is most relevant and I find a starting point of 2 years and 6 months appropriate. 

45.  The defendant has pleaded guilty at the earliest opportunity and is entitled to a one-third discount, a discount of 10 months. This would result in a sentence of 1 year and 8 months’ imprisonment. 

46.  I will reduce that sentence by a further 2 months to 1 year and 6 months’ imprisonment to reflect the fact that the defendant took active steps to close the account he opened being used in furtherance of crime. 

47.  Lastly, there is the mitigating factor of a 6-year delay before prosecution, which I agree is an important and very relevant factor to consider. 

48.  The defendant is now 27 years old and was only 20 when he committed the offence.  The case should have involved a straightforward investigation of the funds and the facts, which were not complicated.  There was one account with very few transactions.  The defendant did not mislead the police.  He did not hide anything from the police and told the police what he knew.  In fact, the Summary of Facts is based on what the police were told and knew in 2014.  This delay should not be ignored and no good reason has been advanced for it.  This makes the delay an exceptional circumstance. 

49.  The defendant has worked hard, participated in voluntary work in the society to rehabilitate himself and led an exemplary life since his first arrest.  The long delay is a most powerful circumstance I will take into account. 

50.  Where the norm for an offence of this nature should be a deterrent immediate term of imprisonment, in this case and in the interests of justice, I find the suspension of the sentence an exceptional but appropriate method of disposal on the special facts here. 

51.  Therefore, I sentence the defendant to 1 year and 6 months’ imprisonment, which I will suspend for a period of 3 years.  This mean, listen carefully, if you commit an offence punishable by imprisonment in the next three years, then it is almost inevitable that you will be ordered to serve this sentence of 1 years and 6 months in addition to any further punishment for the further offence.