Filter
Back

The Soccer Boss Saga: Carson Yeung and Money-laundering (Part II) - How is the Money Laundering Law Applied?

2014-03-01

The trial of Carson Yeung Ka-shing (“Yeung”) (HKSAR v Yeung Ka-sing, Carson, DCCC 860/2011) has finally come to an end.  Yeung was convicted after trial of all 5 charges of “dealing with property believed to represent proceeds of an indictable offence”, contrary to section 25(1) and (3) of the Organized and Serious Crimes Ordinance (Cap.455) (“OSCO”).  Each of the 5 charges concerns money deposited in bank accounts held in Yeung or his father’s name amounting to a total of HK$721 million.

In our previous newsletter The Soccer Boss Saga: Carson Yeung and Money-laundering” in November 2013, we discussed the relevant law of money laundering.  This article discusses the Court’s application of the relevant law in convicting Yeung.


Relevant Law

The movement of funds into and out of the bank accounts were not in dispute.  Hence, it was the interpretation of the movement of the funds and the reason behind the movements that was in issue.  In order to convict Yeung, the Court has to be satisfied beyond reasonable doubt that (1) the movement of funds were known to Yeung, and (2) a right thinking member of the community knowing those circumstances had reasonable grounds to believe that the money being dealt with represented proceeds of an indictable offence.  


Prosecution Case

It was the prosecution’s case that, firstly, deposits could not have been from the sources of income declared by Yeung and his father in their tax documents.  The prosecution then relied on the evidence of their forensic accountant and the following facts to demonstrate that the movements of the funds in the bank accounts bore the hallmarks of money laundering:-

1.        A total of $95 million odd was deposited into the various bank accounts by way of cash transactions;

2.        Various securities firms had deposited about $121 million into the various bank accounts. There was no evidence to show where the shares deposited into Yeung’s securities accounts or the money used to purchase shares originated from;

3.        Cash cheques were issued by Sociedade de Jogos de Macau S.A. ("SJM"), a Macanese casino operator, which were deposited into the subject bank accounts.  There was no apparent connection between the cheques and Yeung;

4.        Deposits from other third parties totalling $265 million odd into the bank accounts and there were no apparent reasons for their deposit.

The prosecution’s case was that given the circumstances of the deposits above (which must be known to Yeung), any right thinking member of the community would, knowing those circumstances, have reasonable grounds to believe that the deposits being dealt with represented proceeds of an indictable offence.


Yeung’s Defence

Yeung put forward various explanations purporting to account for the movement of monies into the bank accounts, but all such explanations were rejected by the Court.  We highlight some of Yeung’s explanations as follows:-

Salon Earnings

Yeung alleged that some deposits were earned through his 5 hair salon businesses.  He gave evidence that the salon businesses collectively generated an annual income of approximately HK$10 million.  However, when the Court compared Yeung’s evidence with the relevant tax returns, the Court found that Yeung exaggerated the income he earned from his salon businesses.

Securities Dealings

In relation to Yeung’s securities dealings, Yeung tried to make out the scenario that because he was operating so many brokerage accounts, he would need to settle the margin calls quickly so as not to incur any losses from forced sale of his shares.  Hence, the quickest way was to deposit cash directly into the brokerage firm’s bank accounts.

However, according to various securities firm employees, a cash deposit would at most be just half a day or a day faster than a bank transfer.  The Court found that there was no good reason for Yeung to use cash to settle the margins.  The Court also found that one of the reasons Yeung chose to use cash to deal with securities companies was that Yeung knew cash transactions are more difficult to be traced.

Winnings from Casino

For the deposits from SJM, the Court observed that there were 10 cash cheques issued to Yeung within a narrow period of time.  While Yeung claimed that he won most of the time, he could not explain why only 10 cheques were issued to him.  If they really represented winnings from gambling, it must have been a memorable win for Yeung.  Yet Yeung claimed he was not able to remember any details of how he requested the money or the circumstances that he had won so much money.  In the end, the Court found that Yeung was lying when he said that the said deposits from SJM were all moneys from his gambling winnings.

Returns of Investment

In relation to the various deposits from third parties, Yeung sought to explain that a large portion of the said deposits were returns from his investments in shares of Gold Wo, Neptune Club and Stock Code 070.

Gold Wo Transactions

Yeung alleged that he was able to secure an off-market purchase of Gold Wo’s shares at a big discount and subsequently sell the shares through a Ms. Yu to various purchasers.  However, there were no documents to even hint at the existence of such an arrangement, which the Court found extremely strange as the sum of money involved was huge by any account.

Stock Code 070

Yeung’s story was that he acquired 20% of the said shares by investing HK$26.4 million with Lin Cheuk Fung and Cheung Chi Tai who were respectively the majority and second largest shareholder.  However, Yeung was not the registered holder of the shares, but merely held the beneficial interest in the shares, and Lin Cheuk Fung continued to appear as the majority shareholder on paper.  Yeung said he was receiving 100% per annum interest from his investment, which Cheung Chi Tai paid into his account.

The Court first found that Yeung’s explanation of how he received 100% per annum interest from his investment ludicrous and that Yeung was making the story up to cover whatever the real reason behind the payment of money by Cheung Chi Tai into his account.  The Court further found that Yeung, someone with extensive experience in dealing with shares, must have known that the behind the scene transactions without disclosure about his interest was inappropriate at least and illegal at worst. 

Neptune Club

The evidence showed a total deposit of approximately HK$5 million to Yeung and his father through various third parties (supposedly on Lin Cheuk Fung’s behalf), which Yeung alleged were returns from his HK$20 million investment in Neptune Club. 

However, the Court held that Yeung was not telling the truth.  The investment was supposed to have been made in “early 2005” yet by April and May Yeung and his father were already being repaid HK$5 million. The transaction did not make sense.  The Court further held that even if Yeung was telling the truth and even if he did not consider there was any problem with the payments being made by third parties on behalf of Lin Cheuk Fung (boss of Neptune Club) instead of by Lin’s company or Lin himself, given that Yeung was dealing with a boss of a casino in Macau, any right thinking member of the community would consider such method of payment to be reasonable ground to believe that those money represented proceeds of an indictable offence.

Further, the deposits were not small amounts: any right thinking person would pause and wonder why the majority shareholder of a listed company would be repaying investment returns in the listed company by way of cheques drawn on third parties’ personal or company account.  The Court found that the same right thinking person would immediately have decided that there were reasonable grounds to believe that the money so deposited into the defendant’s and his father’s bank account represented wholly or in part, directly or indirectly proceeds of an indictable offence.


Verdict and Sentence

The Court was satisfied that the prosecution had proven beyond reasonable doubt that the circumstances concerning the movement of funds into and out of the bank accounts were all known to Yeung and that a right thinking member of the community knowing those circumstances had reasonable grounds to believe that the money being dealt with represented wholly or in part directly or indirectly proceeds of an indictable offence.  Hence Yeung was held as having reasonable grounds to so believe and was convicted of all 5 charges.  Yeung was sentenced to a total of 6 years imprisonment.  On 27 March 2014, Yeung applied for leave to appeal against his conviction and sentence at the Court of Appeal.




For enquiries, please contact our Litigation & Dispute Resolution Department:

E: criminal@onc.hk                                                          T: (852) 2810 1212
W: 
www.onc.hk                                                                F: (852) 2804 6311

14-15th Floor, The Bank of East Asia Building, 10 Des Voeux Road Central, Hong Kong

Important: The law and procedure on this subject are very specialised and complicated. This article is just a very general outline for reference and cannot be relied upon as legal advice in any individual case. If any advice or assistance is needed, please contact our solicitors.

Published by ONC Lawyers © 2014

Our People

Ludwig Ng
Ludwig Ng
Senior Partner
Sherman Yan
Sherman Yan
Managing Partner
Olivia Kung
Olivia Kung
Partner
Ludwig Ng
Ludwig Ng
Senior Partner
Sherman Yan
Sherman Yan
Managing Partner
Olivia Kung
Olivia Kung
Partner
Back to top