HKSAR v. CHEN SZU MING

CACC270/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 270 OF 2005

(ON APPEAL FROM DCCC NO. 1335 OF 2004)

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J U D G M E N T

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Hon McMahon J (giving the judgment of the Court) :

1. The applicant seeks leave to appeal sentences imposed upon him after his plea of guilty in the District Court before Deputy Judge Andrew Chan to three offences of dealing with property representing proceeds of an indictable offence contrary to section 25(1) of the Organized and Serious Crimes Ordinance, Cap.455 (the money laundering offences).  He was sentenced to 40 months’ imprisonment in respect of each offence.  All sentences were ordered to be served concurrently.  That resulted in a totality of 40 months’ imprisonment.

2. The facts of the case were that a Mr Chen Szu Ming, the victim in this case, owned a commercial property in Kowloon.  On 30 May 2004 a property agent in Kowloon received a phone call from a person claiming to be a Mr Chan.  Chan said his boss, a Mr Chen, was the owner of the Kowloon property and wished to sell it.  A complicating factor, according to Chan was that Chen was divorcing his wife who worked in the premises and so no prospective buyers could inspect the property otherwise the wife would find out about the matter and any sale would be prevented.

3. The agent checked a property database and found the premises were in fact owned by a Chen Szu Ming.  On that basis, the agent apparently accepted his somewhat odd instructions and found a purchaser for the property.  The agent then spoke to Chan again who said that Chen was in the Mainland but would return to Hong Kong to sign and complete all the conveyancing documents.  For that purpose Chan told the agent to send the documents to a solicitors firm acting for Chen and the agent did so.

4. Subsequently an unknown person posing as Chen Szu Ming (by producing a Taiwanese passport to that effect) went to the solicitors firm and signed the conveyancing documents.  He also later collected the settlement cheques.

5. Meanwhile the applicant whose original name was Ho On had gone to another solicitors firm and had changed his name to Chen Szu Ming, i.e. the same name as the victim.  He then approached and obtained from the Immigration Department a new identity card in the name of Chen Szu Ming and then opened a bank account at the Bank of East Asia in that name.

6. Settlement cheques from the sale of the Kowloon property were then paid into that bank account.  There were two deposits; namely $545,000 on 11 June 2004 and $15,560,000 on 2 August 2004.  Within a few days of each deposit the applicant transferred the money to another account as directed by other persons involved in the fraud.

7. Quite surprisingly the victim, that is the real Chen Szu Ming, who ran his business from the Kowloon property did not realise the premises had been sold from under him until 21 September 2004.  He then reported the matter to the police who arrested the applicant on 30 September.

8. Under caution, the applicant told the police he agreed to change his name to Chen Szu Ming as he had been asked to do so by a person called “Ah Wai” who said the purpose was to impersonate a person entitled to a legacy under a will.  The legacy was to be paid into the bank account opened by the applicant.  The applicant was to get $10,000 for his role in that fraud.

9. Mr Boyton for the applicant has provided us with various Amended Perfected Grounds of Appeal against the sentences imposed.  They are that the judge :

(a)      had sentenced the applicant on the basis that he had participated in the conspiracy to defraud (the indictable offence), rather than the offences he was charged with; and/or

(b)     had placed too much weight on the “sophisticated deception scheme” (the indictable offence) in assessing the appropriate sentence; and/or

(c)     had sentenced the applicant (erroneously) on the basis of the sophistication of the deception scheme (indictable offence), rather than the “sophistication or nature” of the money laundering scheme; and/or

(d)     had, because of (c), specifically failed to consider that the applicant’s role in the money laundering scheme, that is, he is merely “cog in the machinery” rather than “the money laundering machinery”; and/or

(e)      had specifically rejected as relevant to the length of the sentence, the fact that the applicant’s personal financial benefit in respect of the money laundering scheme, was small.

10. We will deal with ground (e) in due course.  But grounds (a) to (d) can be conveniently paraphrased as a complaint that the applicant, rather than being sentenced on the facts and circumstances of his role in the money laundering simpliciter was sentenced on the facts of the underlying scheme of deception i.e. for the indictable offence.  Mr Boyton says that to do so was wrong in principle and that error led to the imposition of sentences which were manifestly excessive.

11. In giving his reasons for sentence the judge said this :

“Under caution, the defendant admitted that he had been asked to impersonate another person to open one bank account.  He further admitted that the purpose of doing that was to get a share of properties in one legacy dispute.  Therefore, the defendant knew that he was going to participate in a sophisticated deception scheme, albeit the scheme he was told was a different one.

       Well, in any event, he agreed to participate in one deception scheme for his own financial gain. …”

and later :

“… He performed a vital part in the deception scheme.  As a result of his participation, we know 17 million have been deceived from the victim.”

and later :

“… Although the defendant was convicted of three charges, these three charges relate to one deception scheme. …”

12. It seems quite plain from the comments of the judge that he took very much into account in sentencing the applicant the sophistication of the indictable offence i.e. the underlying scheme of fraud, albeit the applicant, he seemed to accept, had been told the scheme of fraud he was participating in was one different in nature to the actual scheme of fraud. 

13. Mr Boyton argues that regardless of what scheme the applicant may have thought he was a participant in he was charged with offences of money laundering, and his sentence should have been arrived at from a consideration of the circumstances of those offences only.

14. In HKSAR v. Xu Xia Li and Anor, CACC395/2003, the two applicants sought to appeal against sentences of three years’ imprisonment imposed upon them after trial for offences of laundering $11 million and $3 million respectively.  The judge at trial had found they had not been aware of the exact nature of the underlying indictable offence.  They argued that circumstance should have been a mitigating factor.

15. Woo JA in rejecting that argument and in delivering the judgment of the court said :

“… 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.”

16. We re-affirm those comments.  When sentencing a defendant in respect of a particular charged offence it is that offence for which he is sentenced.  In doing so a court should generally take account of surrounding circumstances only so far as they affect the defendant’s culpability for that offence.

17. In many cases where offenders are sentenced for money laundering offences they will have only a general or vague understanding of the nature of the underlying offence.  In other cases they, although not participants in the indictable offence, will have a detailed knowledge of it and appreciate the significance of their role as money launderers in contributing to whatever social evil the indictable offence creates.  That seems to us to be a factor which can be taken into account by a sentencing court as it goes to the state of mind of the offender and his understanding of the full ramifications of his offence.  What should not be done however is to effectively sentence the offender for the underlying indictable offence itself.

18. In the present case the judge took into account in considerable detail the circumstances and sophistication of the indictable offence.  From his reasons for sentence as set out above he gave the circumstances of that offence primary importance in arriving at his sentence.

19. In our view he was wrong to do so.  That is because the emphasis in this case the judge placed on the circumstances of the indictable offence gives rise to the very real concern that it was upon the facts of that offence that the applicant was sentenced rather than the facts of the money laundering offence itself.  Secondly, the judge had apparently also accepted that the applicant in fact believed the nature of the underlying fraud to be different in kind to the actual fraud.  That being so the details of the actual fraud were unknown to the applicant and were irrelevant to any assessment of his culpability so far as the money laundering offences were concerned.  All that could be said was that the applicant knew that the funds deposited into his account came from a fraud of some sort.

20. For that reason we think the judge’s approach to sentence was wrong in principle.

21. Having said that however and in approaching sentence afresh we are of the view that a total starting point of sentence of five years’ imprisonment, as taken by the judge is appropriate.  The judge has approached sentence by the wrong path but the sentence he has imposed is correct.

22. This was a sophisticated money laundering scheme.  The applicant’s preparation and actions took some months to complete and were elaborate.  The amount of money involved was very large.  And on whatever view one takes of the applicant’s knowledge of the underlying indictable offence he was aware that this large sum of money represented the proceeds of a plan of fraud which would cause great loss to the victim or victims.

23. We might add that, so far as Mr Boyton’s final complaint is concerned, as contained in ground (e), we do not think the fact that the applicant said in his cautioned statement he was promised only $10,000 is a mitigating factor.  Whatever sum the applicant was promised or hoped to receive, the reality is the offence of money laundering to which he was central was very serious.  The amount of any reward he was to receive was insignificant as a sentencing factor.

24. We do not see any reason to distinguish in terms of sentence between the offences.  The offences, as the judge remarked formed part of a single scheme.  Accordingly we affirm the sentences imposed by the judge.

25. Having regard to our reasons for revisiting the judge’s sentences we grant leave to appeal, treat the hearing as the appeal and the appeal is dismissed.