Secretary For Justice v Jerome Yuval Arnold Herzberg

CourtCourt of Appeal (Hong Kong)
Judgment Date14 Dec 2009
Citation[2010] 1 HKLRD 502
Judgement NumberCAAR8/2008
SubjectApplication for Review
CAAR000008/2008 SECRETARY FOR JUSTICE v. JEROME YUVAL ARNOLD HERZBERG

CAAR8/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

APPLICATION FOR REVIEW NO. 8 OF 2008

(ON APPEAL FROM DCCC NO. 3 OF 2008)

---------------------------

BETWEEN

SECRETARY FOR JUSTICE Applicant
and
JEROME YUVAL ARNOLD HERZBERG Respondent

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Before : Hon Ma CJHC, McMahon and Lunn JJ in Court

Date of Hearing : 9 December 2009

Date of Handing Down Judgment : 14 December 2009

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J U D G M E N T

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

INTRODUCTION

1. Pursuant to leave granted by the Chief Judge, Ma CJHC, counsel for the Secretary for Justice applied, pursuant to section 81A of the Criminal Procedure Ordinance, Cap. 221 for review of the overall sentence of three years and four months’ imprisonment imposed on the respondent by HHJ Joseph Yau in the District Court, following his pleas of guilty to five charges of dealing with property known or reasonably believed to represent the proceeds of an indictable offence, contrary to section 25(1) of the Organized and Serious Crimes Ordinance, Cap. 455 (“OSCO”). The judge imposed sentences of three years and four months’ imprisonment on the respondent in respect of each charge, which sentence was ordered to be served concurrently. It was submitted on behalf of the Secretary for Justice that the overall sentence imposed on the respondent was “manifestly inadequate and/or wrong in principle”.

THE CHARGES

2. Four of the charges (Charges 1, 2, 8 and 10) related to monies received into four bank accounts opened and operated by the respondent in Hong Kong in the names of three companies registered in the British Virgin Islands (“BVI”) : Global Trade Services Limited (“GTS”), Global Clearing Services Limited (“GCS”) and Evergreen Equity Limited (“Evergreen”). The respondent was the director of each of the companies and a sole signatory of the respective bank accounts, save for one of the two accounts opened in the name of GCS of which he was one of the two signatories, the other being a secretarial company he had engaged whose signature was permitted by chop impression. The time period stipulated in each of those four charges reflected the date upon which the respective bank accounts were opened and closed and, overall, encompassed the period 7 June 2005 to 14 March 2007. The amount of money alleged to have been dealt with in each of the bank account stipulated in the charges was :

(1) Charge 1 : $349,386,105.65, on and between 7 June 2005 and 4 August 2006, in an account in the name of GTS with DBS (Hong Kong) Limited;

(2) Charge 2 : $199,341,751.29, on and between 20 September 2005 and 10 February 2007, in an account in the name of Evergreen with the Bank of East Asia Limited;

(3) Charge 8 : $94,656,420.27, on and between 1 December 2005 and 27 December 2006, in an account in the name of GCS with Standard and Chartered Bank (Hong Kong) Limited; and

(4) Charge 9 : $39,673,530.27, on and between 23 September 2006 and 14 March 2007, in an account in the name of GCS with Hang Seng Bank Limited.

3. The 5th charge, Charge 11, related to monies received into a bank account opened in the name of the respondent with the Hong Kong and Shanghai Banking Corporation into which $24,950,421.28 was transferred on and between 25 August 2005 and 30 January 2007, having been received first by one of the bank accounts operated in the name of one or other of the BVI companies.

4. The ‘Particulars of Offence’ of each of the five charges alleged that the respondent had dealt with the stipulated amounts of money received into the respective bank accounts in the stated time period :

“…knowing or having reasonable grounds to believe that the property… in whole or in part directly or indirectly represented the proceeds of an indictable offence.”

THE FACTS

5. The respondent accepted as the factual basis of the court accepting his pleas of guilty a Summary of Facts in which the monies received into the four bank accounts in the name of the three BVI companies and the bank account in the name of the respondent was described as (paragraph 3) :

“…. (having) emanated from share trading in the United Kingdom in breach of United Kingdom laws because none of the companies selling their shares in England were registered with the Financial Services Authority to market or sell shares in the United Kingdom. Investors in such shares, who were based in England, were induced to transfer monies to the four bank accounts in Hong Kong.”

6. The total amount of monies received into the four bank accounts in the respective periods stipulated in the Particulars of Offence was $683,057,807.66. Investors identified and contacted by the prosecuting authorities in Hong Kong identified the corporate entity, whose staff had induced them to purchase such shares and transfer monies into the bank accounts in Hong Kong, as being ‘the Pricestone Group’, ‘Pricestone’ or ‘Price Stone’. The shares which they purchased were shares in companies in the United States of America but, unknown to the investors, subject to significant restrictions in respect of resale, none of which they were able to sell.

7. On 12 July 2006, DBS Bank having suspended the operation of a bank account opened in the name of GTS, following a complaint made by a customer, the respondent was informed by Mr John Ward, a senior member of the staff of DBS Bank, that (paragraph 12) :

“…there have been claims of fraud made against Pricestone and that an investor alert had been issued by the FSA in the UK and the SFC in Hong Kong.”

In consequence, the respondent agreed to make repayment of monies paid into the account by that complainant who had contacted DBS bank and to close the account. Nevertheless, the respondent was permitted to remit over $3.6 million from the account before its closure on 4 August 2006.

8. Notwithstanding those circumstances, not only did the respondent continue to operate the two existing bank accounts in the names of Evergreen and GCS but also he opened a new account in the name of GCS with Hang Seng Bank on 23 September 2006. The total amount of monies received into those three accounts from 12 July 2006 until their respective closures was $228,465,578.77, made up of remittances of (paragraph 13) :

(i) the equivalent of $162,379,004.61 in the account of Evergreen at the Bank of East Asia;

(ii) $26,413,323.67 in the account of GCS at Standard Chartered Bank; and

(iii) $39,673,530.27 in the account of GCS at Hang Seng Bank.

Remittances from the four bank accounts to accounts in the name of ‘Euronet Escrow Services’

9. On the instructions of the respondent, remittances were made from the four bank accounts to two bank accounts in the name of ‘Euronet Escrow Services’, one in Zagreb and the other in Amsterdam, to a total of 600,047,540.70 :

(i) in the period between August 2005 to August 2006, $304,904,459.49 from the account of GTS;

(ii) in the period between October 2005 to February 2007, $181,297,800 from the account of Evergreen; and

(iii) in the period between December 2006 to March 2007, $130,845,281.21 from the two GCS accounts.

10. It was accepted in mitigation advanced on behalf of the respondent that, having joined Pricestone as an ‘IT’ consultant in 2004 and having gone on to become its company secretary, on the instructions of the owners of Pricestone the respondent came to Hong Kong and opened up the various bank accounts to receive monies from investors purchasing shares through Pricestone. Also, part of his duties was to effect delivery of the related share certificates to the respective purchasers.

REASONS FOR SENTENCE

11. In his reasons for sentence the judge noted that, given the variety of circumstances in which commission of the offence was possible, there was no ‘sentencing tariff’. Whilst the judge observed that the prosecution accepted the admission made on behalf of the respondent that, having been told by Mr John Ward on 12 July 2006 of complaints of fraud by Pricestone, only after that date did the respondent actually have a “reasonable belief” that the monies with which he was dealing in the various accounts were the proceeds of crime, the judge went on to determine (paragraph 23) :

“Judging from the facts admitted by the defendant the court is of no doubt that even before that date there were strong reasonable grounds to support the belief that the monies represented the proceeds of crime.”

In consequence, he stated that he took into account the whole of the amounts of monies remitted into the accounts for the purpose of determining the appropriate sentence.

The respondent’s role

12. Of the respondent’s role, the judge determined that he (paragraph 24) :

“… played an active and dominant role in the laundering process in Hong Kong both before and after 12.7.2006.”

Furthermore, he determined that (paragraph 25) :

“... there was a degree of sophistication in the present case because the investors were to told remit money to different bank accounts in a foreign country and some of the monies were then transferred to a bank account in yet another country and the personal account of the defendant.”

Finally, having stated...

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