HKSAR v. HO WAI TIM

DCCC 707/2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 707 OF 2015

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REASONS FOR SENTENCE

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INTRODUCTION

1.  Upon arraignment at the commencement of his trial on 26 January 2016, the defendant pleaded guilty to the sole charge preferred against him, namely, conspiracy to deal with property known or believed to represent proceeds of an indictable offence, contrary to section 25(1) and (3) of the Organized and Serious Crimes Ordinance, Cap 455 (“the Ordinance”) and sections 159A and 159C of the Crimes Ordinance, Cap 200.

FACTS

2.  On the morning of 16 December 2013, a 73-year old lady Madam Yeung received at her residence a phone call from a male person pretending to be her son, asking whether she had any money at home; Madam Yeung revealed she had $10,000 with her.  The man asked to be given the money and obtained the mobile phone number of Madam Yeung’s maid.  Madam Yeung and her maid went to the ground floor to wait for him.  A little later, the maid received a call from the man telling her to have the money deposited into an account at Bank of China (Hong Kong) Limited, which turned out to be the defendant’s.  Shortly afterwards, the defendant was captured by a CCTV when he withdrew at an ATM machine the $10,000 from his account.

3.  On 23 April 2015, the defendant was arrested.  Under caution, he admitted having allowed his friend Ah Keung to use his bank account and that he knew it was wrong to do so.  In a subsequent cautioned interview, he said he had chanced upon Ah Keung on the street, Ah Keung asked for the use of his account for the purpose of receiving $10,000 and offered to give him $2,000 as a reward.

MITIGATION

4.  The defendant was born in October 1961 and is now 55 years of age.  He has received education to primary level, and he works as a decoration and factory worker.  He has a total of 34 conviction records, involving 46 charges, none of which are similar to the present offence. 

5.  In his plea in mitigation, Mr Sammy Hui appearing for the defendant submits that the defendant is a drug addict and has committed the subject offence due to his desperate financial situation at the time, he was not the mastermind in the crime, there is no evidence showing that he has taken part in the telephone deception, and since April 2014, he has been gainfully employed as a cleaner making some $3,000 a month, and his employer is satisfied with the defendant’s work performance.

6.  Mr Hui accepts, fairly, that the sentencing tariff for telephone deception cases is four years’ imprisonment (see HKSAR v Hung Yung Chun[1]) but submits that the defendant should not be sentenced as if he had committed the telephone deception on Madam Yeung.  In this regard, Mr Hui refers to the case of HKSAR v Xu Xia Li and anor[2] (which was followed on this point by HKSAR v Chen Szu Ming[3]), in which the Court of Appeal said:

“… By the nature of the offence itself, in our judgment, the nature of the indictable offence from which the money was derived should be of no particular significance in sentencing, save that if the defendant knew that the money was derived from very serious crimes, it would be an aggravating feature to be taken into account in sentencing.”

7.  In addition, Mr Hui relies on the case of HKSAR v Yam Kong Lai[4].  In that case, having cited the case of HKSAR v Xu Xia Li and anor[5], the Court of Appeal said:

“24. It would be quite wrong as a general principle to sentence a defendant on the basis of an offence with which he or she was not charged, though as was pointed out in HKSAR v Xu Xia Li & Anor where the underlying offence is of a particularly serious nature, a defendant’s dealing with the profits of such an offence may well be an aggravating factor. In those circumstances, an enhanced sentence may be required as a matter of policy and general deterrence.

25. The present case, though not in that category, was somewhat unusual in that the applicant was found to have known that the funds she received represented the proceeds of an indictable offence for the purposes of section 25(1), for the simple reason that she had stolen them. Was the judge entitled then to take into account her involvement in that theft as a sentencing factor?

26. We do not think so. The applicant was charged with a section 25(1) offence, and should have been sentenced solely on the basis of her role in dealing with the proceeds of the theft, rather than for her role in the theft itself. A number of the factors the judge properly took into account were directly relevant to the nature of the applicant’s dealings with the funds. Her use of forged documentation, her knowledge of the sophistication of the methods used to disguise the origin of the funds before their transfer to her personal account and her subsequent use of the funds for her own benefit and that of her family were matters the judge was entitled to regard as relevant to sentence.”

In particular, Mr Hui relies on the rulings of the Court of Appeal in paragraph 26 of that judgment.

8.  That said, Mr Hui brings the court’s attention to the case of HKSAR v Leung Wai Wah[6], in which the Court of Appeal held:

“24. From various cases cited to this court [HKSAR v Hsu Yu Yi [2010] 5 HKLRD 545, Secretary for Justice v Herzberg [2010] 1 HKLRD 502, HKSAR v Javid Kamran (supra)], it appears that the following factors are relevant to sentence in “money laundering” cases:

1. The amount of money laundered, which was described as the major consideration.

2. The nature of the offence that generated the “laundered money”.

3. The extent to which the offence assisted the underlying crime or hindered its detection.

4. The degree of sophistication of the offence.

5. The defendant’s participation, both in the underlying offence and in the “money laundering” activities.

6. The length of time that the offence lasted.

7. The benefit that the defendant had derived from the offence.

8. Whether there was an international element in the commission of the offence.”

INFORMATION FURNISHED PURSUANT TO SECTION 27(2) OF THE ORDINANCE

9.  Pursuant to a Notice of Intention to Furnish Information Pursuant to Section 27(2) of the Organized and Serious Crimes Ordinance, Cap 455, served upon the defendant on 14 September 2015, the prosecution place before the court the witness statement of DCIP Lam Cheuk-ho dated 11 January 2016 in support of their application for enhancement of sentence on grounds of prevalence of the specified offence  under section 27(2)(c) and of the harm caused to the community by recent occurrences of the specified offence under section 27(2)(d).  Mr Hui indicates to the court that while DCIP Lam’s evidence is unchallenged, the defence position is that the evidence is not such as would allow the court to find the two grounds established beyond all reasonable doubt.

10.  In essence, DCIP Lam’s evidence shows the following:-

(i) The usual modus operandi by which telephone deception is committed involves a culprit (a) making a phone call to a victim, (b) pretending to be the victim’s friend or family member, and (c) asking for money to deal with an emergency or threatening the victim that the life or well-being of the friend or family member is in danger for which payment of a ransom is required. The culprit would guide the victim to deposit the money into a bank account, and the money would be withdrawn at an ATM machine.

(ii) The police have taken strong enforcement action to curb the use of local bank accounts by the culprits to launder the funds obtained from victims of telephone deception.

(iii) Between 2008 and 2014, the number of reported cases of telephone deception varied between about 1,430 and 2,300 a year, but the figure in 2015 has risen to 2,880.

(iv) Between 2008 and 2014, in cases where the culprits succeeded in their criminal designs, victims of telephone deception have, in aggregate, suffered a yearly loss ranging between $23m and $45.7m; but in 2015, the yearly loss has reached $318m.

(v) Between 2008 and 2014, the yearly loss suffered by victims in telephone deception cases involving the use of a bank account ranged between $12m to $32.9m; but in 2015 alone, that figure has risen to $306m.

(vi) Between 2008 and 2015, the proportion of cases in which the culprits in telephone deception have successfully cheated their victims of their money ranged between 28.3% and 35.6%, but of all those successful cases, between 72.5% and 84% involved the use of a bank account.

(vii) In the fourth quarter of 2015 alone, there have been a total of 261 victims of telephone deception cases, almost all of whom were Hong Kong residents, most of them students, housewives, or retirees.

CONSIDERATION OF ENHANCEMENT OF SENTENCE

11.  The offence of “dealing with property known or believed to represent proceeds of an indictment offence” is included in Schedule 1 to the Ordinance[7]; and a specified offence includes a conspiracy to commit a Schedule 1 offence[8].  The conspiracy offence of which the defendant stands convicted is therefore a specified offence. 

12.  Section 27(2) of the Ordinance provides:-

“(2) The prosecution may furnish information to the court regarding any or all of the following–

(a) the nature and extent of any harm caused, directly or indirectly, to any person by the act in respect of which the person has been so convicted;

…

(c) the prevalence of that specified offence;

(d) the nature and extent of any harm, whether direct or indirect, caused to the community by recent occurrences of that specified offence; …”

13.  Section 27(11) provides:-

“(11) Subject to subsections (12) and (13), where a court is satisfied beyond reasonable doubt–

…

(b) as to any information furnished under subsection (2) … ,

or where any such matter is agreed by the person convicted, the court shall have regard to such matter when it passes a sentence on the person for the relevant specified offence and may, if it thinks fit, pass a sentence on the person for that offence that is more severe than the sentence it would, in the absence of such matter, have passed.”

14.  The prosecution rely on DCIP Lam’s evidence for the purpose of establishing the matters referred to in section 27(2)(c) and (d), namely, prevalence of the specified offence and the harm occasioned to the community by the recent occurrences of the specified offence.

(1) Relevance of telephone deception under section 27(2)(c) and (d)

(1)(A) Section 27(2)(d)

(i) Section 27(2)(d) and the harm referred to in section 27(2)(a)

15.  When assessing the nature and extent of the harm to the community under section 27(2)(d), it goes without saying that the court must take into account the harm to the individual referred to in section 27(2)(a): the individual is a member of the community. Any contrary interpretation can be dismissed immediately as being so plainly absurd that the legislature could never have intended it.

16.  It is essential, therefore, in the examination of section 27(2)(d), to ascertain the scope of section 27(2)(a) in the first place.

(ii) The expression “act in respect of which” in section 27(2)(a)

17.  When considering the harm to the individual under section 27(2)(a), the court is to have regard to “the act in respect of which the person has been so convicted.”  The focus is, it seems clear, on the relevant act or conduct, rather than the offender’s guilty mind, or the lack of it, for that matter. 

18.  The expression “the act in respect of which the person has been so convicted” imports a wider consideration than “the act of which the person has been so convicted,” or “the act constituting the specified offence of which the person has been so convicted.”  It is the view of this court that the harm occasioned to an individual, directly or indirectly, by an accepted aggravating feature inherent in the specified offence must be taken into consideration. 

19.  In the case of a conspiracy to commit money laundering, the nature and seriousness of the predicate offence, if and when known, are important considerations in sentencing[9] and can amount to significant aggravation.  In HKSAR v Yam Kong Lai [10], the Court of Appeal said:

“24. … where the underlying offence is of a particularly serious nature, a defendant’s dealing with the profits of such an offence may well be an aggravating factor. In those circumstances, an enhanced sentence may be required as a matter of policy and general deterrence.” (emphasis supplied)

20.  There are no plausible reasons, therefore, why the predicate offence (ie., telephone deception involving the use of a bank account) must be ignored when the court considers “the act in respect of which the person has been so convicted” under section 27(2)(a).  That subsection requires the court to have regard to harm caused directly or indirectly by the criminal act of the money launderer.   If the underlying criminal conduct is to be so ignored, the legislative intent in providing for enhancement of sentence in money laundering cases by reason of the harm to “any person” would be substantially frustrated.  In this regard, it should be noted that a money launderer may or may not have dealt with the crime proceeds first-hand.  It is the court’s view that the harm suffered by the primary victims in telephone deception cases must be included in the court’s assessment under section 27(2)(a).

(iii) The “harm” referred to in section 27(2)(d)

21.  In view of the above discussion, when ascertaining the harm caused to the community – which necessarily includes the harm occasioned to the individual concerned under section 27(2)(a) – by reference to the recent occurrences of an offence of money laundering under section 27(2)(d), the underlying or predicate criminal act must be taken into account. 

22.  The wording of section 27(2)(d) itself points strongly in favour of including the predicate offence in the court’s consideration of the direct and indirect harm caused to the community.  Rather than simply “the harm caused to the community by the specified offence”, section 27(2)(d) requires an examination and assessment of the harm caused by “the recent occurrences” of the specified offence.  In cases of telephone deception involving the use of a bank account, the act of depositing the victim’s money into the designated account is but an integral and essential part of the criminal enterprise.  Money laundering committed in this modus operandi must necessarily involve an antecedent telephone deception having been practised on the victim.  The phrase “the recent occurrences of the specified offence” as it appears in section 27(2)(d) is apt to include the underlying telephone deception with the use of a bank account to which the money laundering relates.

23.  Finally, a money launderer’s interests are better served if in its assessment of the harm caused to the community, the court is restricted specifically to the type of underlying conduct (telephone deception using a bank account) from which the crime proceeds originate rather than to the harm occasioned by all money laundering offences, regardless of the various types of predicate offences to which a given money laundering charge may relate.

(iv) Information on telephone deception with the use of a bank account

24.  In light of the foregoing discussion, the court can and should take into account information supplied by the prosecution concerning money laundering cases arising from telephone deception with the use of a bank account, when assessing the nature and extent of the harm, direct and indirect, “caused to the community by recent occurrences of that specified offence” under section 27(2)(d).

25.  In view of DCIP Lam’s evidence, which is uncontested, telephone deception committed with the use of a bank account must necessarily involve an act of money laundering.  The money which the culprit withdraws from the ATM machine belongs not to the victim but the bank; it represents the proceeds of the telephone deception practised on the victim.  So long as the prosecution have chosen a specified offence with which to prosecute the offender, that the cases can be prosecuted as money laundering, conspiracy to commit money laundering, fraud, conspiracy to defraud, obtaining property by deception, or any other offending is neither here nor there.  These available offences are brought together under the same umbrella by reason of the modus operandi in which the criminal act is committed; and evidence in the nature of DCIP Lam’s is equally relevant and applicable to all of them.  The most important consideration is – emphasizes the court, at the risk of repetition – the modus operandi of the criminal act in respect of which the defendant is convicted, as that phrase is interpreted above. 

26.  Mr Hui is entirely correct in saying that DCIP Lam has not, in his witness statement, provided the court with any information on the number or proportion of telephone deception committed with the use of a bank account – in particular, a borrowed account – having been prosecuted with the offence of money laundering or of conspiracy to commit money laundering.  In consequence, there is little or insufficient information before the court, says Mr Hui, concerning the matters referred to in section 27(2)(d). 

27.  In the court’s view, a plain reading of section 27(2) in its entirety does not admit of such a hair-splitting distinction.  According to the court’s analysis above, in assessing the harm to the individual concerned and to the community at large under both subsections 27(2)(a) and (d), the court must take into account information on the occurrences of the underlying, predicate criminal conduct but must, in the present case, restrict itself to cases of telephone deception involving the use of a bank account.  Mr Hui’s submission in this regard is dismissed.

28.  Mr Hui argues further that DCIP Lam has supplied the court with no information on cases in which the money launderer has had no knowledge of the nature and seriousness of the predicate offence.  As discussed above, section 27(2)(a) focusses on the act in respect of which the offender is convicted of the specified offence; it is not confined to cases where the offender has had full knowledge of the underlying criminal conduct.  It would be absurd, in the court’s view, to restrict the operation of section 27(2)(d) to cases where the offender has had such knowledge.  Mr Hui’s argument must be rejected.

(1)(B) Section 27(2)(c)

Prevalence of the specified offence

29.  Mr Hui repeats his submissions on the lack of particularity in DCIP Lam’s evidence and argues that there is little or insufficient evidence to establish to the criminal standard of proof prevalence of money laundering offences committed with a borrowed bank account and in situation where the launderer has had no knowledge of the predicate offence. 

30.  As discussed above, depriving the victim of his money with the use of a bank account is an integral part of the criminal design in telephone deception cases committed in this mode.  The criminal plot would be incomplete or rendered futile if the culprit fails to collect the money from the bank.  It is the court’s view that in this circumstance, there can be no objection for the court to take into account information in respect of the underlying telephone deception when considering the issue of prevalence of money laundering offences or conspiracies to launder proceeds of crime committed in this manner.  

31.  In summary, it is the court’s view that, first, the focus of the examination on the harm to the individual and to the community is on the modus operandi of the commission of the criminal act, not on the identity of the person to whom the bank account happens to belong.  Secondly, knowledge of the underlying or predicate conduct is irrelevant to the court’s consideration under section 27(2)(a) and (d), so there is no reason whatsoever why that knowledge must be required in the court’s determination of the issue of prevalence under section 27(2)(c).  Mr Hui’s argument must be rejected.

32.  Mr Hui submits that in considering the defendant’s case, the court should limit itself to the statistics prior to or around the date of the commission of the offence by the defendant, namely, December 2013.  There is no substance in this argument.  In HKSAR v Chung Chi King[11],the Court of Appeal said:

24. Furthermore, as a matter of statutory construction, the prevalence of the offence must be considered at the time of the sentence since the purpose of an enhanced sentence is to impose a deterrence on potential wrong doers. Hence the time of the commission of the crime is irrelevant. Again what this Court had said in Wong Fung Ming was merely to give effect to this construction.

(2) Ruling on the application for enhancement of sentence

33.  The court attaches full weight to the undisputed evidence of DCIP Lam.  In view of the above discussion, the court finds established beyond all reasonable doubt, first, the specified offence in the charge is prevalent within the meaning of section 27(2)(c) and secondly, the nature and extent of the harm caused to the community under section 27(2)(d) are such that an enhancement of sentence pursuant to section 27(11) is called for.  The prosecution’s application for enhancement of sentence is allowed on both grounds.

REASONS FOR SENTENCE

34.  Deterrence is the paramount sentencing consideration in money laundering cases.[12]  Other sentencing considerations that should be taken into account include the maximum penalty; the amount involved; the nature and extent of the defendant’s participation; the nature and seriousness of the predicate offence (if known); the defendant’s state of knowledge of the predicate offence; the degree of sophistication of the offence; international element, if any; and the duration of the offence.[13] 

35.  The maximum sentence for the offence of money laundering is one of 14 years’ imprisonment[14]; a conspiracy to commit money laundering carries the same statutory maximum[15].  

36.  In HKSAR v Cen Huakuo[16], an old lady received a telephone call saying that her son was in custody for offences of indecency.  To secure her son’s release, she had to hand over $50,000 at a certain park.  She discovered, however, that her son had never been held captive; a report was then made to the police.  She co-operated with the police in their investigation and went to the park.  The defendant approached her and confirmed – falsely, of course – that her son had been detained.  He gave her a mobile phone, and a male caller kept asking her on the phone why she had not had the money with her.  The police took action and arrested the defendant.  In allowing the appeal against sentence, the Court of Appeal said:-

“18. The applicant did not take part in the deception, he told Madam Chan that her son was being detained, but that only shows his sketchy understanding about the relevant indictable offence and does not mean that he knew the details. When considering the applicant’s knowledge about the relevant indictable offence, the trial judge should not have interpreted the facts in the most unfavorable way against the applicant. …

…

25. 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 the appropriate starting point is 3 years’ imprisonment, and the sentence should be enhanced by one-third pursuant to the Organized and Serious Crimes Ordinance.”[17]

37.  In HKSAR v Chen Jianchao[18], the Court of Appeal said:

“21. Not surprisingly, given the applicant’s acceptance of the ‘Summary of Facts’ as the factual basis on which the applicant pleaded guilty to the two charges, no issue was taken with the judge’s findings that the applicant knew the predicate offence in the two charges, in particular that they were deceptions practised on elderly ladies. Beyond, that the judge found only that the applicant knew the amount of monies involved, namely $230,000 and $17,700. He knew of the former because he accepted in the Summary of Facts that he had asked the victim if she had that money available to give him. He knew of the latter because he remitted the monies to a stipulated account. The judge did not make any finding that the applicant was aware of the details of the deception practice in respect of Charge 1.

…

35. … The judge was entitled to take into account, as he did, that the applicant was recruited to come to Hong Kong from the Mainland to commit the offences. That was a factor in aggravation in the commission of the offence. Similarly, he was entitled to find that the offences were “pre-planned”. Clearly, there was a degree of organization in the operation, in which the applicant’s role was to collect the money whilst others played other parts: Chan King Fung recruited the applicant and gave him general instructions; the unknown man gave him detailed instructions by telephone about the collection of the monies on both occasions and in respect of the remittance of the monies the subject of Charge 2. …

…

36. Having regard to all the circumstances of the commission of the offence, we are satisfied that, although the sentence was at the top end of the appropriate range of sentence, having regard to the particular circumstances of the instant case the judge was entitled to take a starting point for sentence for Charge 1 of 4 years’ imprisonment. … ”

38.  In the instant case, the offence was committed locally without any international element in it.  The defendant has taken no part in the deception practised on Madam Yeung.  There was no evidence showing that he was aware of the details of the deceit.  Madam Yeung did not appear to have suffered a significant degree of fear or distress.  The amount involved was $10,000.  The offence did not appear to have involved a marked degree of planning or organization, nor has there been a great deal of sophistication inherent in its commission. 

39.  The defendant has had a number of previous criminal records before his present conviction, but none of them are similar to the offence in this case.  The court cannot sentence him for his past offending; however, the defendant cannot be treated as if he were a person of previous good character.

40.  The Court of Appeal in the case of HKSAR v Boma[19] said:-

“39. We were at one stage of our deliberations minded to provide a suggested starting point for a specified relatively low sum involved in an offence, leaving the courts to use that as a base for other sentences but we at once could conjure a myriad of factual variations which might render even that single starting point unwise with the further risk that it might encourage a rigid mathematical approach and progression without proper regard to other individual relevant factors.”

41.  In view of the above considerations, the proper starting point in respect of the present offence is one of 30 months’ imprisonment.  Little in the defendant’s background amounts to valid or strong mitigation.  He is nevertheless entitled to the usual one-third discount for his guilty plea; the sentence is reduced to 20 months’ imprisonment.

42.  In relation to the extent of enhancement of sentence under section 27(11) of the Ordinance, Mr Hui argues that since a more stringent sentencing regime has been adopted for this type of offences on account of their prevalence, enhancement based upon prevalence of offences would amount to double-counting. 

43.  That argument is untenable, in the court’s view. None of the authorities cited to the court appear to have included prevalence as a reason for adopting a severe starting point for this kind of offences; the preponderance of the authorities suggests that the starting point has been adopted, primarily, on account of the severity of the offence.  In any event, the legislative scheme of enhancement of sentence under section 27(2) allows extraneous matters, even, to be taken into account, eg., the nature and extent of harm caused not only by the offence in question, but also by the recent occurrences of the specified offence.  Mr Hui’s submission on this point is dismissed.

44.  There is no justification not to impose a one-third enhancement of the defendant’s sentence pursuant to section 27(11) of the Ordinance(see HKSAR v Wu Jianbing[20]and HKSAR v Cen Huakuo[21]); the sentence is, accordingly, enhanced by six months.   

CONCLUSION

45.  For the offence of which he stands convicted, the defendant is sentenced to a term of imprisonment of two years and two months.