HKSAR v. LAM YUK AND ANOTHER

DCCC 835/2024

[2025] HKDC 543

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 835 OF 2024

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REASONS FOR SENTENCE

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1.  D1 pleaded guilty to 2 counts[1] of Money Laundering, contrary to section 25(1) and (3) of the Organized and Serious Crimes Ordinance, Cap 455 and one count[2] of Possession of an offensive weapon, contrary to section 17 of the Summary Offences Ordinance, Cap 228. D2 pleaded guilty to one count of Money Laundering[3].

FACTS

2^nd Charge

2. Around noon of 8 June 2023, 71-year-old Lam Pong Cheung (V1) received a call on his landline phone at home from a man claiming himself to be “Lee Kui” and a good friend of V1’s son. “Lee Kui” said over the phone that V1’s son was involved in a fighting incident and was in need of HK$80,000 to settle that incident. Thereupon, V1 went to the bank around 1300 hours and withdrew $80,000.

3.  When V1 was back home from the bank, he received a call around 1500 hours from the same man asking him to go downstairs to pass him the money.  V1 did as he was told and, after waiting for a while, saw a man (later identified as D1) waiting at the iron gate of his building.  When V1 asked D1 if he was “Lee Kui”, D1 replied in the affirmative.  D1 passed a mobile phone to V1 who was instructed by the person on the other end to hand over the money to “Lee Kui”.  V1 then went back up to his home by himself and put $80,000 cash in a plastic bag, which he gave to D1 when they met again downstairs.

4.  In the morning of the next day, upon enquiries with his sons, V1 realized that he had been defrauded.  The matter was reported to the police.

6^th & 7^th Charges

5. On the morning of 3 July 2023, 94-year-old Chan Lan Mei (V2) received a call on her landline phone at home from a man claiming to be her grandson (alleged grandson). Alleged grandson told V2 that he was involved in a fighting incident and he needed to pay HK$40,000 compensation to avoid imprisonment. V2 took $17,000 from the cash she kept at home and borrowed $30,000 from her Mei Lam Estate neighbour. She then bundled up the two sums of cash with a rubber band. V2 received another phone call later from the same man who, after asking about her attire and home address, told her to hand over the money to a “Mr Chan” who would be waiting for her at the entrance of her building Mei Fung House (the House).

6. Around 1230 hours, V2 saw a man (later identified as D2) who fit the description that she had been given standing at the entrance of the House. Upon being told by D2 that he was “Mr Chan”, V2 handed over the bundle of $47,000 cash to D2.

7.  Enquiries with V2’s grandson revealed that he had not been involved in any fights.

8.  D1 and D2, who had been put under police observation, were seen meeting up with each other around 20 minutes before the handover of the money by V2.  The two of them then parted ways outside a park near the House.  D1 wandered in the vicinity and kept an eye on the entrance of the House while D2 approached V2 and took the money from her.  The two defendants regrouped outside the House.  D2 passed the money to D1 who put the same in his bag.  The two then walked quickly towards a bus station in Mei Lam Estate.

9.  Around 1238 hours on the same day, D1 was intercepted near Mei Tsuen House, Tai Wai by the police who found $47,000 cash tied with a rubber band inside his bag.  He was arrested and cautioned for “Fraud”.  Two iPhones were found on him.

10.  Upon a search of his home at Room 3913, Mei Ting House, Mei Tin Estate, the police found a machete with a 35 cm-long blade and a 15 cm-long handle.  D1 was arrested for the offence of “Possession of an offensive weapon”.  Under caution at the scene, D1 claimed that the machete was for self-defence as he was worried about someone taking revenge on him.

11.  D2 was arrested and cautioned near Mei Lam Estate for “Obtaining property by deception”.  The police found two mobile phones on him.

PHONE RECORDS

12.  Preliminary inspection of the defendants’ phones showed that D1 texted D2 at 2316 hours on 2 July 2023 asking D2 to work for him, to which D2 replied “OK” 5 minutes later.  Next day, D1 texted D2 at 1144 hours asking D2 to wake up.  Then at 1146 hours, D1 made a call to V2’s landline phone.

ADMISSIONS

13.  In subsequent cautioned video-recorded interviews, D1 told the police only about the machete by saying that he had bought it in Sham Shui Po for HK$1,000, that he had kept it at home for a few months since the end of 2022, and that he had never used it.  He said he had no grudges with other people.

14.  In a cautioned video-recorded interview, D2 said he went to Mei Lam Estate around 1130 hours on 3 July 2023 to have tea with D1.  He was asked by D1 to help him collect something in Mei Lam Estate from his friend who was a lady in her 80s.  While he was collecting the thing from the old lady, he could see D1 who was about 100 metres away.  The old lady asked him to pass the thing to D1, which he did but he did not know what the thing was.  With regard to the job offer made to him by D1 via WhatsApp texted message, D2 said he was not aware of the nature of the job.

DEFENDANTS’ BACKGROUNDS

15.  D1 has 3 previous convictions in Hong Kong, none of them similar to the present offences.  He was sentenced on 22 September 2017 in Macau to 7 years and 1 month imprisonment and was returned to Hong Kong on 27 June 2019 to serve the remainder of the sentence.  According to official records, he was discharged on 30 April 2022.

16.  He is 41 years old and was educated up to Form 4 level.  He is married and has 2 teenage daughters from a previous marriage.  He was a repair worker with a construction company prior to his arrest.

17.  D2 has 15 previous convictions, 2 of them for money laundering which are his latest convictions, and for which he is still serving sentences of imprisonment.

18.  He is 61 years old and has worked as a porter and a cook.  He got married in 2023 and was living with his wife and a stepdaughter prior to his arrest.

MITIGATION

19.  Counsel for D1 Mr Vincent Kwong said D1 committed the two money laundering offences for financial reasons, having come across on Facebook job offers of collecting things for a reward.

20.  Mr Kwong pointed out that there is no evidence that D1 knew or took part in the underlying telephone deceptions.

21.  With regard to the offensive weapon charge, he was in possession of the machete for self-defence as he was worried about a revenge attack on him arising from his indebtedness.

22.  In his mitigation letter, D1 tendered his apologies to the victims and their families.  He promised not to re-offend and begged for leniency so that he could resume his responsibilities as soon as possible as a father and a son.

23.  Mr Kwong’s submissions on sentencing principles and enhancement of sentence will be dealt with later.

24.  Mr Terry Kan, counsel for D2, admitted that the main mitigating factor was his client’s early guilty plea.  He further told the court that D2 had a stroke while he was in jail.

25.  Mr Kan also pointed out that there is no evidence that D2 had made any direct phone contacts with the victim, or that he knew that the money he collected from her originated from a phone scam.  He was a mere courier collecting money from the victim, who suffered no loss as the money was subsequently recovered by the police.

26.  Similarly, Mr Kan’s submissions on sentencing principles and enhancement of sentence will be dealt with in my sentencing considerations.

SENTENCING CONSIDERATIONS

27.  Money laundering is a serious offence, with a maximum penalty of 14 years’ imprisonment.

28.  There are no sentencing tariffs for this kind of offence, which can be committed in a variety of ways.  However, there are factors which can be taken into consideration in assessing sentence.  Mr Kan referred to HKSAR v Lam Ka Sin [2021] 2 HKLRD 32, paragraph 26 where the Court of Appeal recapitulated the significant sentencing considerations listed by Stock V-P (as he then was) in HKSAR v Boma [2012] 2 HKLRD 33.

STARTING POINTS

29.  Mr Kan referred to HKSAR v Cen Huakuo (岑華擴) [2015] 2 HKLRD 951 and HKSAR v Lin Zong Yue (林宗悅) [2015] 3 HKLRD 196 as authorities for the proposition that for money laundering with telephone deception as the predicate offence, the usual starting point would be 3 years’ imprisonment if the defendant knew the source of the money being laundered was from such deception, and that the starting point should be enhanced by one-third when prevalence of the offence was proved.

30.  Mr Kwong also relied on Cen Huakuo and Lin Zong Yue for the starting point for this kind of money laundering and the extent of enhancement pursuant to OSCO.  However, Mr Kwong pointed out that the 3-year starting point adopted in those two cases must have been meant for defendants who came from the mainland to commit the offence, as the defendants in both of those two cases were mainland Chinese.  Mr Kwong referred to two District Court cases[4] in which a starting point of 2½ years was adopted for defendants who were local residents.

31.  According to Cen Huakuo, the extent of the defendant’s knowledge about the indictable offence should be taken into account when considering the sentence[5].

32.  Mr Kwong submitted that there is no evidence that D1 knew or took part in the underlying telephone deception.

33.  In the 1^st incident involving V1, the facts show that it was a man calling himself “Lee Kui” who called V1 around noontime about his son’s alleged involvement in a fight; the same man called V1 again around 3 pm announcing his arrival. D1, who took the money from V1, confirmed that he was “Lee Kui”.  Whilst it looks highly suspicious that D1 may have been “Lee Kui”, it can also be argued that D1 may have been asked by the one who made the phone calls to claim himself to be “Lee Kui” when he was collecting money from V1.  Giving D1 the benefit of the doubt, I am prepared to accept that there is no solid evidence to show that D1 was indeed the caller, and hence he may have been unaware of the reason why V1 was handing him the money.

34.  Mindful that I am not dealing with a mainlander who came to this jurisdiction to break the law, I would adopt a starting point of 2 years 9 months’ imprisonment for D1’s involvement in the 2^nd charge.

35.  As to D1’s knowledge or belief about the provenance of the money handed over by V2 in the 2^nd incident, the facts show that on the morning of 3 July 2023, V2 received a phone call from a male who claimed himself to be the victim’s grandson.  During this call, the male told V2 that he was involved in a fight and was in need of money for compensation payment.  Later, the same male called again and told V2, among other things, to hand the money over to a “Mr Chan” who would be waiting for her at the entrance of the victim’s building.  Inspection of the defendants’ phones showed that D1 made a call to V2’s landline at 1146 hours on 3 July 2023.

36.  From the fact that V2 had received 2 calls from the same man that morning relating to this incident, and from the contents of those calls, the irresistible inference is that D1 was that caller, that he played a part in the phone deception and hence he must have had a pretty good idea of the origin of the “black money”.

37.  One of the sentencing considerations set out in Boma is the defendant’s knowledge of the predicate offence.  In HKSAR v Hsu Yu Yi (許有益) [2010] 5 HKLRD 545, the Court of Appeal held, inter alia, that where the indictable offence can be identified, the court can take into account the sentence imposed on it per se when determining the sentence for the money laundering offence.

38.  In HKSAR v Hung Yung Chun [2011] 2 HKLRD 174, the Court of Appeal held that for street deception cases, the appropriate starting point is 4 years’ imprisonment.

39.  Given his knowledge of the predicate offence, and the fact that D1 defied the law again by the same means less than a month after committing the 2^nd charge offence, a starting point of 3 years 9 months for the 6^th charge would seem appropriate.

40.  With regard to the 7^th charge which D1 faces alone, an appropriate starting point would be 6 months’ imprisonment.

41.  As for D2, I agree with counsel that there is no evidence to show that D2 either took any part in the phone scam or had any idea that the money he collected from V2 was the proceeds of such a scam.  I intended to adopt a starting point of 2 years 9 months for his involvement in the 6^th charge.  However, this offence was committed while he was on bail for 2 identical offences which were committed on 14 July 2022 and for which he is now serving a total sentence of 3 years.  For this aggravating factor, I would raise the starting point to 3 years’ imprisonment.

MITIGATION

42.  The only effective mitigation for both defendants is their pleas of guilty, for which they will receive a one-third discount in sentence.  After such a discount, D1’s sentence on the 2^nd charge is 22 months, the 6^th charge is 30 months, and the 7^th charge is 4 months.

43.  D2’s sentence on the 6^th charge is 24 months.

ENHANCEMENT UNDER OSCO

44.  The prosecution applies for enhancement of sentence under OSCO, pursuant to section 27(2)(c), (d) and (e).  Neither of the defendants oppose this application.

45.  However, Mr Kwong on behalf of D1 pointed out that given that there is no evidence to show that D1 took part in or had knowledge of the phone scams in question, on the authority of HKSAR v Fong Chi Yam [2020] 2 HKLRD 700[6], an enhancement on the ground of prevalence would be wrong even if phone deception cases are extremely prevalent because “the court should not impose additional punishment on an applicant for offences which he neither had knowledge of nor had taken part in.”

46.  The other point made by Mr Kwong is that the statistics set out in the statement in support of the enhancement application (the statement[7]) show a sharp decrease in the number of “Guess Who” phone deception cases, from 2,237 cases in 2023 to 1,153 cases in 2024, and the number of cases involving the “By Hand” means of collecting the money defrauded dropped from 1,130 cases in 2023 to 328 cases in 2024.  These figures show that this kind of offence is no longer as prevalent as before, which might warrant an enhancement of less than one-third.

47.  Mr Kan on behalf of D2 pointed out that the court has a discretion on whether or not to enhance the sentence even in the absence of opposition by the defence to the enhancement application.

48.  Under the heading “Prevalence of Telephone Deception in Hong Kong”, the statement sets out figures of total telephone deception cases reported and the accumulated monetary loss involved in each year from 2018 to 2024.  Looking just at the figures for 2023 and 2024, one can see that in 2023, there were 3,213 phone deception cases, 2,846 of those cases involved monetary loss totalling HK$ 1,102.80 million, whereas for 2024, the corresponding figures are 9,204 cases, 8,982 of those cases involved monetary loss totalling HK$ 2,911.04 million.

49.  In Cen Huakuo, the Court of Appeal said, “Taking into account all the circumstances of the case and the requirement that a sentence should have deterrent effect in order to prevent mainlanders from taking part in such an abhorrent and despicable offence like ‘phone deception’ in whatever manner, we are of the view that an appropriate starting point is 3 years’ imprisonment, and the sentence should be enhanced by one-third pursuant to the Organized and Serious Crimes Ordinance.” (Emphasis added)

50.  In my view, a decline in a particular means or manner of committing phone deception does not negate prevalence of the offence when there is still a large number of such crimes and the number is still on the rise.  Hence, despite a drop in the number of cases employing the “Guess Who” and/or “By Hand” means of committing the offence, telephone deception in my view is still prevalent and is causing significant harm to the community.

51.  As I have found that there is insufficient evidence to show that D1 took part in or knew about the phone scam relating to the 2^nd charge, following Fong Chi Yam, I will not enhance his sentence for this charge, which will still be 22 months after plea.

52.  Similarly, as I agree with Mr Kan that there is no evidence to show that D2 took part in or knew about the phone scam relating to the 6^th charge, I will not enhance his sentence for this charge, which will still be 24 months after plea.

53.  With regard to D1’s involvement in the 6^th charge, as I indicated earlier, there is enough evidence from which an irresistible inference can be drawn that D1 had a part to play in the phone deception and knew that the money handed over by V2 originated from such a scam.  I will enhance his sentence on this charge by one-third on the grounds of prevalence and the harm caused to the community.  After enhancement, his sentence on the 6^th charge is 40 months.

TOTALITY

54.  A total sentence of 42 months’ imprisonment will be sufficient to reflect D1’s overall culpability for all 3 offences.  To achieve this total, I order that 2 months of his sentence for the 2^nd charge are to run consecutively to his sentence of 40 months for the 6^th charge, whereas his sentence on the 7^th charge is to run concurrently with his sentence on the 6^th charge.

55.  D2 is currently serving a total sentence of 3 years for 2 money laundering offences which, I am told, had also stemmed from phone deceptions.  I think a total sentence of 46 months would reflect the overall seriousness of his involvement in these 3 offences.  To achieve this total, I order that 10 months of his sentence on the 6^th charge should run consecutively to the 3 years’ imprisonment he is now serving in respect of DCCC 1028/2022.