Director of Public Prosecutions v Xu

[2019] VCC 8

IN THE COUNTY COURT OF VICTORIA Revised
Not Restricted
Suitable for Publication

AT MELBOURNE
CRIMINAL JURISDICTION

CR 18-01367

DIRECTOR OF PUBLIC PROSECUTIONS

v

CONG XU

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JUDGE:	HIS HONOUR JUDGE GUCCIARDO
WHERE HELD:	Melbourne
DATE OF HEARING:
DATE OF SENTENCE:	21 January 2019
CASE MAY BE CITED AS:	DPP v Xu
MEDIUM NEUTRAL CITATION:	[2019] VCC 8

REASONS FOR SENTENCE
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Subject:
Catchwords:
Legislation Cited:
Cases Cited:
Sentence:

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APPEARANCES:	Counsel	Solicitors
For the Director of Public Prosecutions	Mr A. Albore	CDPP
For the Accused	Ms S. Condon	Stary Norton Halphen

HIS HONOUR:

1Cong Xu, you have pleaded guilty to a Commonwealth indictment which alleged two charges of dealing with money, being $100,000 or more, reasonably suspected of being proceeds of crime contrary to s.400.9(1) of the Commonwealth Criminal Code.

2The first charge is a rolled up charge which involved two distinct cash deposits where the value was $837,240 made between 15 May 2017 and 18 May 2017 in Sydney, New South Wales, and the second a single deposit of $499,580 made on 23 May 2017 in Sydney, New South Wales.

3Between 15 May 2017 and 23 May 2017 you dealt with $1,336,820 in cash reasonably suspected to be the proceeds of crime.  You did so by making three separate deposits at the Star City Casino into a gaming account in your own name.  The maximum penalty for an offence contrary to this section is three years' imprisonment.

4The circumstances of the offences were outlined in a prosecution opening which was tendered to the court and exhibited.  For purposes of the sentence I will summarise salient facts.  On 15 May 2017 you went to the Star City Casino in Sydney.  You attended at a cashier desk and requested monies be deposited into your funds on deposit account.

5A fund on deposit account is a gaming account with the casino, an account used to hold money with the exception that it does not charge any fees or accumulate interest.  You presented $338,350 in various denominations in cash to the cashier.

6The cashier noticed that the cash was physically dirty.  There were tiny insects crawling from the notes.  All cashiers at the Star City Casino are obliged to report transactions over $100,000 or those considered to be of a suspicious nature.  This transaction was reported as the casino deemed it suspicious due to the amount of the cash and the money being dirty.

7On 17 May at 3.30 you attended at the private gaming buying room in a room at the casino.  You asked for $300,000 to be transferred to your funds on deposit for the Star City account of Jenny Zhang at the Gold Coast Star Casino.  You told the cashier Zhang was your sister.  The transfer was subsequently completed.

8On 18 May 2017 at 7.30 pm you went to the Star City Casino Sovereign buying room.  You approached the private gaming room buying in-room and requested half a million dollars be deposited in your funds on deposit account.  The cash was counted and you were advised that it was in fact only $498,890 in cash.

9You then asked the cashier to divide the cash and deposit $298,890 into your funds on deposit account and $200,000 into your safe keeping account.  A safe keeping account has the same functions as a funds on deposit account, however the funds can only be used to purchase gaming chips at the cashiers.

10This particular transaction was reported to the cashier as a suspicious transaction.  At 10.30 am on 19 May 2017 you attended at the cashier at the private gaming room at the Star City Casino where you requested a transfer of $120,000 from your funds on deposit to a Commonwealth Bank account in your own name.

11You then requested $200,000 in cash to be withdrawn.  After withdrawing that money CCTV footage shows you carrying a gold bag containing the $200,000 in cash out of the gaming room.  You returned to your hotel room at the casino and you then walked out of the hotel with a suitcase.

12The suitcase contained $115,000 in cash.  You got into a car carrying that suitcase and then you left the car without the suitcase and returned to the casino.

13Charge 2 relates to a single cash deposit of $499,580.  On 23 May 2017 you deposited that amount in cash into your funds on deposit account at the private gaming room at the Star City Casino.  The cash was presented to a cashier in a carry bag in a mixture of denominations and the transaction was reported as suspicious.

14On 24 May at 5.30 am you attended at the private gaming room cashier and asked to withdraw $640,000 in cash.  You were given that money in bound by paper straps.  You also requested that $186,968 be transferred to your Commonwealth Bank account.

15Footage shown Ling Chong Pan was present when $640,000 in cash was handed over.  You and Pan separated that money into two bags.  You gave Pan one bag and retained possession of the other.  The two of you then departed the casino and boarded a flight to Melbourne at 6.30 am that same morning.

16The prosecution relies on these factors to establish the money was reasonably suspected to be proceeds of crime.  Section 400.9(2)(c) of the Code provides that it is reasonable to suspect the money is the proceeds of crime if the value of the money of all property is grossly out of proportion to the defendant's income and expenditure of a reasonable period in which the conduct occurs.

17You were employed as a manager of a snooker lounge during the period of the offending.  Your last tax return was in 2014 with your annual income being $53,666 and the $1.3 something million that you deposited over an eight day period was significantly disproportionate to your income.

18The cash you deposited on 17 May was covered in dirt with insects crawling from the cash and the cash was bundled up in rubber bands and envelopes.  The cash was in a mixture of denominations.  There were immediate withdrawals from the casino cashier after you had deposited cash and intended to legitimise the cash.

19In addition there were transfers of the money after deposit to Jenny Zhang, all your personal account, and dividing half of the $640,000 with Pan.  On 19 May 2017 you handed $115,000 in cash in a suitcase to an unknown person in a car outside the casino immediately after you withdrew $200,000 in cash, and the immediate flight back to Melbourne on 24 March after withdrawing $640,000.

20There were also a relevant number of telephone intercepts.  Police commenced interception of your phone in June 2017.  Intercept calls between you and Pan in June reveal discussions about "moving cash".  On 21 June Pan asked you to "move $200,000 for him" and you referred to trying to find a way to move $400,000.

21Discussions between you and Heah between 21 June and 7 July 2017 in relation to exchange rates shortage of supply of cash and you organising to provide him with contacts for supply of money.  Further telephone intercepts between you and Heah referring to whether you will continue in the "money remittance business" if there is a lot of supply and if it is secure.

22On 6 December 2017 you were arrested and participated in a record of interview.  You stated that in relation to the $338,350 deposit you had borrowed that money from a friend.  You said it was all through "crazy times from gambling".

23You said that you would fly from Melbourne to Sydney to gamble and if you won you would pay people back by way of bank cheque.  You said Jenny Zhang was a friend of yours and you owed her from $100,000 to $200,000 and you could not remember the $300,000 transfer to her.

24You said Pan was a friend and you were going to start a business together when he realised that you gambled a lot and so that arrangement fell apart.  Pan and Zhang have been charged with s.400.9 offences in relation to this investigation.  I understood at the time of the plea that their matter was listed for committal hearing in November at Melbourne Magistrates' Court.

25I have been told that you have spent five days in custody in relation to this matter. 

26You were arrested in Melbourne on 6 December 2017 and extradited to New South Wales where you were granted bail.  The matter resolved at committal stage in New South Wales and then the proceedings were transferred to Victoria.  In June of 2018 you pleaded guilty.  You were committed by way of a straight hand up brief.

27Detailed prosecution submissions were received by the court in relation to the sentence to be imposed.  These submissions highlighted s.16A(2) list of matters which I have taken into account, although they are clearly not exhaustive.

28The maximum penalty was noted as indicative of the objective seriousness of the offence.  It was increased from penalty for an offence against sub-s.(9)(i) from two to three years in 2010.  I note that increase reflected the serious nature of possessing proceeds of crime worth more than $100,000 as well as the fact that activities such as money laundering play a critical role in facilitating crime, often organised crime.

29I was referred to R v Kim wherein principles are set out for such offence sentencing. The offence sits within Division 400 sections of the Criminal Code and as was explained in R v Jiao the offence under s.400.9 is a very serious offence involving a departure from the common law concept of offending because there is no element of mens rea.

30It is not the case necessarily that an offence under that section falls at the lowest end of the scale of money laundering offences and this argument is elaborated therein at paragraphs 23 and 26 of Jiao.  It is clear from the authorities cited which accompany the prosecution submissions that the court's attention must focus on the circumstances of what the offender – you, in this case - did, including actions which constituted the dealing, the period of time, the amount involved in the offending which is an important factor, the role of the offender and the degree of authority reposed in the offender in carrying it out.

31The court in Kim also set out other general principles outlined in the prosecution submissions at paragraph 9(c) to (g), each of which I have considered and applied as they are in my view correct propositions, particularly the application of general deterrence to be given significant weight in such cases which arises because money laundering of a certain nature and scale is vital to the furthering of crime and organised criminal syndicates and a person who launders money is an important cog in the wheel of such organised crime.

32In this case you used the casino to legitimise money reasonably suspected of being proceeds of crime.  I accept the analysis contained in the opening of the circumstances as to this.  The dealing was on the basis of three separate physical deposits of cash, $300,000 transferred to Zhang on 17 May, $200,000 cash withdrawn and delivered to an unknown person outside the casino on 19 May in a suitcase containing $115,000, and withdrawal and separation of $640,000 into two bags, one given to Pan on 24 May.

33I accept the view that you played an important role in the money laundering enterprise.  The involvement described involves a degree of planning, knowledge of the level of cash in your possession and by inference a significant amount of authority given to you to deal with over $1.3 million in cash to seek to legitimise that cash and deliver it and to travel interstate.

34The money is 13.3 times greater than the minimum threshold for the charge contrary to the section.  The conduct was not isolated to one transaction and the involvement was active, not related to mere possession or mere receipt and deposit.

35All these factors are indicators of the extent to which you were trusted by those with whom you were working.  I do not speculate, I note as to the crime or crimes which might be expected to be the source of the money, regardless of any suspicion arising from the role you played in these offences.

36As a result of these matters it seems to me that these offences fall within the middle of the range of seriousness for crimes such as this.  Although it is true that you used your own account and not a false name account for these transactions in my view this was not unsophisticated dealing, as was submitted by the defence.

37This may have been done for reasons of ease or simplicity or to avoid complications, but I do not need to decide this point.  It is clear that the structuring of the money in its various amounts and divisions into lots, depositing and withdrawing, giving a sense of "washing" through these practices, stratagems as noted in Jiao at paragraph 47 is applicable here.

38Your involvement is not near the lowest end but falls squarely within well recognised practices engaged in for the purposes of money laundering.  I note that it is not alleged that you knew or were reckless or negligent for that matter as to the fact that the money was proceeds of crime and I will sentence as it were as was noted in R v Samarakoon upon "the bare elements of the offences".  See paragraphs 27 and 28 of that decision.

39You told police in the interview conducted that you borrowed the money, deposited it for a friend through gambling activities and that your travel between Melbourne and Sydney was gambling related in terms of a substantial gambling habit.

40It is noted that this is an explanation which has surfaced from time to time in a few cases referred to.  I agree with the proposition that the factual circumstances mean this attempted explanation should be rejected and I do so, but not for that is it an aggravation of the offending.

41The gambling explanation was but fatally raised and reasonably slow on your plea in any event.  I accept that your plea has facilitated the course of justice and was made at the earliest opportunity.  I accept it provides some indicia and has utilitarian value.  From these aspects a reduction in your sentence is warranted which I will express.

42I take your personal circumstances into account.  They provide mitigation based on your prior good character, although no other substantial mitigation is obvious.  You were born in Shanghai in China.  You are 37 years of age.

43You came to Australia in 1991 when you were about nine with your parents.  Your father who ran food shops and restaurants still lives in Melbourne.  Your parents separated when you were aged about 18 and your father remarried.  Your relationship with your stepmother was strained over various religious issues.

44Your younger stepbrother was fatally stabbed.  You are now estranged from both of your parents.  You completed your VCE at Catholic Boys College in St Kilda and your schooling was unremarkable.  You have made a number of attempts at tertiary education over about six years at Monash University in HR management and RMIT in accountancy, at Deakin University in psychology and banking and finance, each of which you did not complete.

45When aged about 19 you began working at Crown Casino as a croupier during which time you received awards and commendations including in 2005 and award for "service dealer of the year".  Thereafter you worked in car sales for two years, you owned and operated a grocery store for about four years.

46You more recently owned and operated a pool hall with your wife.  You married in June 2016 and have no children.  Your wife I understand speaks little English, having arrived from Northern China some four years ago.  She hopes to continue the business during your absence.

47It was said that in 2006 you began to gamble and continued doing so during the relevant times of the offending with the need to access large amounts of money, but you have desisted since your arrest in December 2017.  You have not reoffended since the time or have charges pending.

48Importantly you have no prior convictions and I accept you were before the offences a person of good character.  In my view specific deterrence in your case must be given somewhat less weight, although in such offending it is generally the case as noted in many of the relevant cases referred to that good character also is given less weight than what would otherwise be the case.

49I accept that you were here, that you have reasonable prospects for rehabilitation given your family's support, past and future employment, your admission of guilt and lack of prior history.  Although I accept that your rehabilitation must remain a sentencing consideration which I do take into account in setting a sentence.

50It was appropriately conceded that imprisonment is inevitable in your case.  A number of authorities were referred to and I have read each in order to seek guidance in identifying and applying relevant sentencing principles to the circumstances of this case and to glean discernible sentencing practices in the applicable range.

51Section 16 is the starting point of such an exercise which I have undertaken in relation to the matters herein.  Having surveyed the cases it is notable that appellate decisions on money laundering are small in number and it is with care that I trace the limits of proper sentencing discretion.

52These cases do no more than produce a broad indication of a developing sentencing practice given that the offence and relevant division of the Act encompass such a wide range of criminality.  In my view a small measure of cumulation only is required between the rolled up first count and the second count in recognition of discrete transactions and values involved.

53I take into account that there was some delay of seven months between the offences and the arrest and interview in December 2017.  In that interview you admitted to the dealing with the money the subject of the charges.  The delay is not significant but noted nevertheless and I accept that there was no evidence of enrichment or extravagant living out of the ordinary and much less which could be related to the offending discovered by the investigation and I sentence on the basis that there has not been any allegation that you personally obtained the benefit of the funds or any parts of them.

54I accept that this will be your first experience of reclusion and although general deterrence and denunciation must be primary sentencing purposes, just punishment here requires an appropriate response to the criminality to the offences involving these circumstances and these values.

55I have taken into account the references tendered on your behalf from
Mr Gardiner and Frances Chu, a practising solicitor, and matters referred therein.  Please stand.

56On the rolled up count, Charge 1, you are convicted and sentenced to
16 months' imprisonment.  On the second count, Charge 2, you are convicted and sentenced to 12 months' imprisonment.  I order that two months' imprisonment on Charge 2 be cumulative on Charge 1.  That makes a total effective sentence of 18 months, with a release after 12 months upon entry by you into a recognisance release order to be of good behaviour for two years in the sum of $5000.

57For the purposes of sentence calculation, Charge 2 will commence today 21 January 2019. 2 months after the commencement of Charge 2, on 21 March 2019, the sentence on Charge 1 is to commence, and for a period of 16 months.

58In making such an order I take into account all the matters which I have referred to in imposing the sentence of imprisonment.  I am required by s.16F(2) to explain the purpose and effect of the recognisance order.  Mr Xu, this sentence means that you will serve 12 months in prison and then you will be released on condition that you are of good behaviour for a period of two years.

59If you are not of good behaviour during that period you may be brought before the court for a breach of this sentence and a forfeiture of the money.  You will not only potentially forfeit the amount as stated and receive further punishment for the breach, the recognisance given may be varied or discharged under the Act.

60But for your plea I would have sentenced you to a total effective sentence of
22 months with a recognisance release after 16 months.

61Further, I will note the pre-sentence detention as five days already served and I will have that number noted in the records of the court.

62MR ALBORE:  Your Honour, I have prepared the recognisance release order.

63HIS HONOUR:  Thank you, I will sign it, as must Mr Xu. Thank you, Mr Albore and Ms Condon.  Mr Xu can be removed.

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