Hua v The King
[2025] NZCA 280
•27 June 2025 at 11 am
| IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA |
| CA715/2023 |
| BETWEEN | YE HUA |
| AND | THE KING |
| Hearing: | 25 March 2025 |
Court: | Woolford, Muir and Isac JJ |
Counsel: | N P Chisnall KC and Y Y Mortimer‑Wang for Appellant |
Judgment: | 27 June 2025 at 11 am |
JUDGMENT OF THE COURT
AThe application to adduce further evidence is declined.
BThe appeal against conviction is dismissed.
CThe appeal against sentence is allowed and the sentences are set aside. Concurrent sentences of six years’ imprisonment on all charges are substituted.
REASONS OF THE COURT
(Given by Woolford J)
The appellant, Ye Hua, was found guilty by a jury of 15 charges of money laundering involving at least $18 million. She was sentenced to seven and a half years’ imprisonment.[1] She now appeals against conviction and sentence.
Charges
[1]R v Hua [2023] NZDC 25795 [sentencing notes].
The appellant faced 19 charges at trial, all laid under s 243(2) of the Crimes Act 1961. Each charge alleged that she engaged in a money laundering transaction in respect of property that was the proceeds of an offence, knowing that, or being reckless as to whether, all or part of the property was the proceeds of an offence. Some charges related to single transactions and some were representative covering a number of transactions. The property was particularised as specific amounts of cash ranging from a single cash transaction of $38,000 (charge 11) to 57 cash transactions totalling $11,048,350 (charge six). The Crown alleged that, in each case, the cash was the proceeds of drug dealing.
There are four groups of charges relating to cash sums received from, or originating with, four men who have each been convicted of drug dealing offences, Xavier Valent (formerly known as Harry Whitehead), Jeffrey Alleyne, Jed Dengelo and Koru Montgomery. An example is charge three, in which the Crown alleged that between 8 March 2018 and 3 May 2018, the appellant communicated on Threema with Mr Valent using the username “Cyprus”.[2] The appellant and Mr Valent discussed the delivery of large sums of cash to the appellant’s business premises. An associate of Mr Valent thereafter delivered cash totalling at least $2,054,430 to the appellant on 14 occasions in exchange for Bitcoin or for money paid into an overseas bank account.
[2]Threema is an encrypted instant messaging application.
The appellant was discharged on charge 11 by the Judge at the end of the Crown case. The appellant was found guilty of 15 charges and acquitted of three charges by the jury. The Judge sentenced the appellant on the basis that she was reckless as to whether the cash she received was the proceeds of an offence rather than having actual knowledge.[3]
Factual background
[3]Sentencing notes, above n 1, at [11]–[13].
Qian DuoDuo Ltd (QDD) was a registered financial service provider on the Financial Services Provider Register for the purposes of “changing foreign currency” and “operating a money or value transfer service”.[4] Its business may broadly be described as a money remitter. It operated out of small retail premises in Newmarket, Auckland. The appellant was its sole director and majority shareholder. Because it undertook those activities QDD was a financial institution and a reporting entity for the purpose on the Anti‑Money Laundering and Countering Financing of Terrorism Act 2009 (the AML Act).[5]
[4]See Financial Service Providers (Registration and Dispute Resolution) Act 2008, s 5.
[5]Anti‑Money Laundering and Countering Financing of Terrorism Act 2009, s 5(1) definitions of “financial institution” and “reporting entity”.
As a financial institution under the AML Act, QDD was required to undertake a wide range of anti‑money laundering and countering financing of terrorism (AML/CFT) compliance activities. These included appointing a compliance officer,[6] undertaking and regularly reviewing risk assessments,[7] conducting consumer due diligence (CDD) or enhanced customer due diligence (ECDD) as required,[8] and maintaining records so that transactions can be readily reconstructed for a period of at least five years after completion.[9]
[6]Section 56.
[7]Sections 58–59.
[8]Sections 11, 22–24 and 27–28.
[9]Section 49.
Although QDD appointed the appellant as its compliance officer, and there was no dispute that at least three risk assessments were completed, an investigation carried out by the Department of Internal Affairs (DIA) from early 2015 established that QDD had breached its obligations under the AML Act in the following respects:[10]
[10]See Department of Internal Affairs v Qian DuoDuo Ltd [2018] NZHC 1887 [2018 civil judgment] at [3].
(a)Failures in respect of risk assessments: The risk assessments carried out by QDD did not accurately record the nature of QDD’s money remittance business, including its business relationships and in particular its relationship with six money remitters, and thereby failed to accurately identify the type of risks involved in QDD’s money remittance operations.
(b)Failure to undertake ECDD: QDD did not carry out ECDD, notwithstanding that between 9 September 2014 and 12 May 2015 it carried out 796 large or complex transactions with a total value of $120,701,467.59 and 1,088 wire transfers with a total value of $94,763,399.40, which required ECDD.[11]
[11]See Anti‑Money Laundering and Countering Financing of Terrorism Act, s 22.
(c)Failure to undertake ongoing CDD and account monitoring: QDD did not undertake ongoing CDD and account monitoring during the relevant period, such that:
(i)1,327 transactions totalling $136,172,825.78 were not subjected to adequate scrutiny by account monitoring or ongoing CDD;
(ii)QDD did not develop any reliable information relating to the business and risk profile of each of the six money remitters; and
(iii)QDD did not act in such a way as would have enabled it to identify any grounds for reporting suspicious transactions conducted by the six money remitters.[12]
(d)Failure to keep adequate records: QDD did not keep adequate records in respect of the “bulk” of the 1,327 transactions during the relevant period and the records that were kept:
(i)failed to reflect the parties to the transaction;
(ii)failed to reflect the nature of the transaction; and
(iii)failed to identify the person on whose behalf the transaction was made, or any beneficiary to the transaction.
[12]See s 31(2)(b).
As a result of the investigation the DIA brought civil proceedings against QDD in which it sought a “civil pecuniary penalty” in respect of each of the four breaches of QDD’s duties under the AML Act identified above with each of the causes of actions constituting a “civil liability act” in terms of s 78 of the AML Act.
Following negotiations between the parties, QDD admitted the causes of action pleaded by the DIA in an amended statement of claim. The details as to what had been agreed were set out in a detailed and comprehensive statement of facts which relevantly acknowledged that while the conduct of QDD had resulted in widespread breaches of the AML Act:
(a)No money laundering or financing of terrorism had been shown or alleged to have actually occurred through QDD.
(b)QDD did not deliberately intend to breach the AML Act.
(c)QDD misunderstood the definition of a wire transfer, and accordingly its obligations under the AML Act.[13]
[13]2018 civil judgment, above n 10, at [6].
There was then a hearing before Powell J in the High Court at Auckland on 9 and 10 April 2018 in order to determine the appropriate penalty for the civil liability acts committed by QDD. In a judgment delivered on 27 July 2018 Powell J ordered QDD to pay a pecuniary penalty to the DIA in the sum of $356,000 together with costs (the 2018 civil judgment).[14]
Appeal against conviction
[14]At [167]–[168].
This Court must allow a conviction appeal if satisfied that a miscarriage of justice has occurred for any reason.[15] A miscarriage of justice is defined as any error, irregularity or occurrence in, or in relation to or affecting, the trial that created either a real risk that the outcome of the trial was affected, or resulted in an unfair trial or a trial that was a nullity.[16]
Grounds of appeal
[15]Criminal Procedure Act 2011, s 232(2)(c).
[16]Section 232(4).
The appellant submits that there was a miscarriage of justice for four reasons:
(a)Evidence of the 2018 civil judgment was wrongly lead at trial. The judgment was inadmissible in terms of s 50 of the Evidence Act 2006. Furthermore, the jury was not properly directed on its use, leading to a risk of impermissible propensity reasoning.
(b)The Judge (and the prosecutor) misdescribed the standard of proof in the context of recklessness by directing and suggesting that it was sufficient if the appellant recognised that there was a “reasonable possibility” that the cash was the proceeds of an offence when the correct test was a “real possibility”. The Judge failed to explain the meaning of “reasonable possibility” in that context.
(c)The Judge erred by not directing the jury to consider the level of risk involved and the counterbalancing social utility of money remittance in the context of whether the appellant acted recklessly.
(d)There is further evidence which rebuts the Crown’s evidence of higher than normal profit margins for certain transactions said to reflect the risk to the appellant. Trial counsel, Mr David Jones KC, erred in deciding only the appellant could rebut the Crown’s evidence on the level of commissions and not calling an expert witness.
First ground of appeal — use of the 2018 civil judgment
The 2018 civil judgment was not produced as an exhibit. Rather, evidence of it was adduced early in the Crown’s case from its first witness, a DIA employee, Robert Milnes, in the form of leading questions from the prosecutor. The Crown had advised trial counsel Mr Jones prior to the trial that it intended to lead evidence of the judgment; not for the truth of its contents but rather to show that the appellant had been put on notice of compliance issues at an earlier date.
Mr Jones knew that the lack of proper recording and reporting by the appellant was an important aspect of the Crown case. However, he considered evidence of the 2018 civil judgment to be relevant and admissible to show that the appellant was well aware of reporting requirements. He therefore did not challenge the prosecutor’s use of the 2018 civil judgment.
Mr Jones cross‑examined Mr Milnes about the complexity of the compliance regime. He confirmed with Mr Milnes that the DIA had initiated civil rather than criminal proceedings against QDD, notwithstanding the existence of criminal offence provisions. He also elicited the fact that QDD had the assistance of a compliance consultant during the period covered by the charges.
The appellant was later cross‑examined by the prosecutor, who took her through the breaches of the anti‑money laundering legislation that were referred to in the 2018 civil judgment. The appellant acknowledged the breaches and the pecuniary penalty QDD had been ordered to pay.
In addressing the jury the prosecutor emphasised the importance of compliance with any anti‑money laundering rules because of the degree of risk involved in money remittance. The prosecutor referred to the pecuniary penalty when he said that when you are running the risk of losing that much money for non‑compliance “you’d think you’d be a bit more careful than just ignoring it”. He also referred to the 2018 civil judgment as a reason why the appellant was not telling the truth when she said she did not appreciate the risk that her customers were using QDD to launder money.
The gravamen of the defence case was that the appellant was “very kind, she’s trusting, she’s naïve, she’s someone who can be misled”. She did not have knowledge of the origin of the cash, nor was she reckless as to its origin. A key theme in the defence case was that the Crown’s case was built entirely on records kept by QDD and each of the transactions was clearly shown in the records. Mr Jones referred briefly to the 2018 civil judgment saying the Judge in that case found there was no suggestion that QDD had done anything other than comply with its expert’s opinions: “They had recommended things and they were wrong”.[17]
[17]See 2018 civil judgment, above n 10, at [127].
The Judge dealt with the 2018 civil judgment in three places in his summing up. In the context of addressing the competing submissions of the parties on the topic of recklessness, the Judge reminded the jury that the Crown placed emphasis on the importance of compliance with the AML Act; the risks associated with non‑compliance by money remitters; and QDD’s previous failure to adhere to the requirements designed to prevent money laundering. Having described how the 2018 civil judgment fitted in with the Crown’s case the Judge then provided the following specific direction about the evidential status of the 2018 civil judgment:
[22] You also heard about the civil judgment of the High Court against Qian DuoDuo Limited. While you are entitled to know about this, civil law has a different standard of proof. If something is more likely than not a civil action may be established, it should not be taken as proof to the standard the Crown must reach in this trial. Civil law involves different duties and was about different things, it was about regulation compliance. A civil ruling is part of the circumstances here but it is not something that you could rely upon by itself.
The Judge returned to the 2018 civil judgment when summarising the Crown’s submissions and the defence case.
Counsel for the appellant submits that two errors were made in relation to the 2018 civil judgment. First, counsel submits it was inadmissible because it contravened s 50 of the Evidence Act 2006. On the other hand, the Crown says s 50 was not engaged because the judgment was not offered as evidence of any fact in issue. It was a piece of circumstantial evidence relevant to the issues in dispute.
Section 50(1) provides:
50 Civil judgment as evidence in civil or criminal proceedings
(1)Evidence of a judgment or a finding of fact in a civil proceeding is not admissible in a criminal proceeding or another civil proceeding to prove the existence of a fact that was in issue in the proceeding in which the judgment was given.
We do not consider s 50 meant the 2018 civil judgment was inadmissible. It was not adduced to prove any fact that was in issue in the civil proceedings. The facts in issue in those proceedings broadly concerned QDD’s compliance with the AML Act. The impugned conduct and transactions in the civil proceedings were different to those in the criminal proceedings. The 2018 civil judgment refers in particular to six money remitters who were not the four men involved in the criminal proceedings. QDD accepted in the civil proceedings it did not develop any reliable information relating to the business and risk profile of each of those six money remitters.[18] Nor did it keep adequate records. It was also specifically agreed that no money laundering had been shown or alleged to have actually occurred through QDD.[19] Had the criminal charges concerned the same conduct as the civil proceedings, s 50 would have applied insofar as there were common facts at issue.
[18]2018 civil judgment, above n 10, at [3].
[19]At [6(a)].
The Crown did not seek to rely on any finding of fact in the 2018 civil judgment as evidence to directly prove the elements of each offence. It nonetheless relied on the 2018 civil judgment as evidence of the circumstances leading up to Ms Hua’s offending and therefore relevant to her decision‑making. That leads on to the appellant’s second criticism, that there was a risk that the jury employed illegitimate propensity reasoning based on the 2018 civil judgment.
Counsel for the appellant submits that the Judge erred in not giving a direction to the jury about how they could use the 2018 civil judgment in order to mitigate the risk of the jury adopting impermissible propensity reasoning. The Crown says the 2018 civil judgment was not propensity evidence but instead “a piece of primary circumstantial evidence relevant to the issues in dispute”. It further says that even if it falls within the definition of propensity evidence, a specific direction was not required because the 2018 civil judgment was not led primarily in reliance on coincidence or probability reasoning or Ms Hua’s character more generally.
Section 40(1) of the Evidence Act defines propensity evidence as:
… evidence that tends to show a person’s propensity to act in a particular way or to have a particular state of mind …
We think the Crown has misapplied the definition in this case. A piece of evidence can be circumstantial and also demonstrate a propensity. In our view the 2018 civil judgment falls within the broad definition of propensity as it imbued the appellant with a tendency to act in particular way — failing to adhere to the rules designed to defeat money laundering, in particular, by ensuring that she secured identification information. Counsel for the appellant submits that the 2018 civil judgment also imbued her with a particular state of mind — naivety. Naivety is, however, a lack of experience, wisdom or judgment and it cannot be said the 2018 civil judgment tended to show the appellant lacked experience of the AML requirements, given the comprehensive nature of those civil proceedings. The appellant’s lack of wisdom or judgment is also not a state of mind intended to be covered by the propensity definition because it does not have the necessary level of specificity.
The parties seem to agree that, at minimum, the 2018 civil judgment was led by the prosecution as evidence of the appellant being on notice of the potential risks and therefore more vigilant. The Supreme Court took a broad approach to the definition of propensity in Mahomed v R but in so doing made it clear that a specific direction may not be required. The minority stated:[20]
[92] On the other hand, and as the corollary of what we have just said, where the evidence in question, although still falling within the Act’s “propensity evidence” definition, is not led primarily in reliance on coincidence or probability reasoning, a specific direction may well not be required.
[20]Mahomed v R [2011] NZSC 52, [2011] 3 NZLR 145.
The Crown did not adduce the 2018 civil judgment primarily in reliance on coincidence or probability reasoning. A specific propensity direction was therefore not required. In our view the direction given by the Judge was sufficient.[21]
[21]See above at [19].
It was clear to the jury that the 2018 civil judgment did not concern criminal offending. The Judge made it plain that the jury was not able to rely upon the 2018 civil judgment “by itself”. It was part of the circumstances of the case. The 2018 civil judgment involved “different duties and was about different things, it was about regulation compliance”.
In any event, as we address further below, there is no miscarriage of justice because of the ample evidence to prove recklessness on the part of the appellant.
Second ground of appeal — parties’ submissions on recklessness and the Judge’s directions on the burden and standard of proof
Recklessness was a key issue in the trial. The jury were advised both in a memorandum of preliminary directions and in the question trail that “reckless” meant that the appellant recognised that it was a real possibility that the cash was the proceeds of an offence and that having regard to that possibility, the appellant’s actions were unreasonable. The jury were further advised in the question trail that “unreasonable” actions are actions that a reasonable and prudent person would not have taken and the actions of a reasonable and prudent person are those of a law‑abiding person doing their best to comply with the law.
There are a number of strands to this ground of appeal. First, the appellant submits that the prosecutor misstated the meaning of recklessness in his closing address. He said:
So let’s do that. What does the Crown evidence say and can you still be sure if you put her evidence to one side that she suspected or knew that the money that she was dealing with was the proceeds of a crime?
And again just to come back to that test of recklessness, that it’s a suspicion plus acting unreasonably when you run the risk of the suspicion that you appreciated.
The reference to “suspicion” sufficing was repeated later in the Crown’s closing address. This was after having referred to “real possibility” several times including in the context of the question trail.
Here we agree with the Crown submissions. The prosecutor’s subsequent use of the word “suspect” or “suspicion” was simply an attempt (albeit an imprecise one) to distil, in plain terms, the need for an appreciation of risk. It was technically an error, but a minor one that did not affect the outcome.
The second strand to this ground is a submission that the Judge erred on three occasions during the summing up by referring to recklessness as requiring recognition by the appellant that there was a “reasonable” rather than a “real” possibility that the money was the proceeds of an offence. The Judge inadvertently said “reasonable” rather than “real” three times across the summing up but correctly said “real possibility” five times elsewhere in his summing up. The written material provided to the jury in the form of the memorandum of preliminary directions and the question trail correctly referred to a “real possibility”. Again, this was technically an error in the Judge’s oral remarks but it does not amount to a miscarriage of justice.
The third strand to this ground of appeal is a submission that the prosecutor’s loose language by telling the jury that mere suspicion sufficed means it was necessary to explain to the jury the meaning of the term “reasonable possibility”. The written memorandum of preliminary directions and the questions trail reflected the guidance of the Supreme Court in Cameron v R,[22] and the Criminal Jury Trials Bench Book.[23] We agree with the Crown that what amounts to a “real possibility” is readily apparent on the face of language used. No further gloss is necessary to understand it. There was no error.
Third ground of appeal — jury direction on unreasonableness requirement for recklessness
[22]Cameron v R [2017] NZSC 89, [2018] 1 NZLR 161 at [73].
[23]Te Kura Kaiwhakawā | Institute of Judicial Studies Criminal Jury Trials Bench Book (updated March 2025) at [5.9.10.3].
After the Crown closed, Mr Jones raised a concern regarding the Judge’s proposed draft question trail and how he intended to direct the jury on the unreasonable element of the recklessness test. Mr Jones submitted that it was unfair to the appellant to include a prudent person in the test of unreasonableness as it would risk the jury conflating a prudent person with a prudent financial manager who could reasonably be expected to comply with all appropriate legislation. He said the reference to a prudent person may impose a higher standard of proof. After discussion with counsel, the Judge said he intended to add the words “as a law‑abiding person doing their best to comply with the law” to the question trail.
The Judge subsequently provided this direction to the jury. He said:
[156] Firstly, in recklessness she has to see that there is a real possibility, important to get a real possib[ility] that the transactions were the proceeds of an offence. Mr Jones directed considerable argument to that appreciation of that factor. Having got beyond that, if the Crown do get beyond that, is the question about whether the actions she took are unreasonable. On that you apply the reasonable and prudent person [test], that being a law‑abiding person doing their best to comply with the law. You apply your 12 collective ideas of what a law‑abiding person, reasonably acting, to comply with the law would do. That is how you deal with them, and I’m going to summarise the arguments in a moment.
The appellant submits that there are two material errors in this direction. First, the Judge’s reference to the prudent person being “law‑abiding” risked the jury adopting propensity reasoning given the 2018 civil judgment outlined the ways in which QDD and the appellant by proxy had previously contravened the requirements of the AML Act. This submission overlaps with the first ground of appeal, which has been addressed earlier and on which no more need be said. It was made clear to the jury that the 2018 civil judgment was a separate matter. The inclusion of “law‑abiding” was not prejudicial in light of the breaches found in the 2018 civil judgment because the Judge’s direction was clear that the 2018 civil judgment concerned different facts and different legal standards.
The second material error is said to be that the Judge did not squarely address what the Supreme Court in Cameron v R said counterbalanced risk, which is the “utility” of the activity involved. In Cameron v R the Supreme Court stated:[24]
[74] There is comparatively little discussion in the cases or in the literature about the unreasonableness element of recklessness. Often enough, no question of reasonableness will arise. Thus if the actions of the offender have no social utility (for instance as involving personal violence with a risk of serious injury or death) the running of any appreciated risk is necessarily unreasonable and thus reckless. So in a murder trial where s 167(b) is in play, the judge may tell the jury that the defendant was relevantly reckless if he or she assaulted the victim despite recognising that death was likely to result. In contradistinction, where there was some social utility to the actions of the defendant, a more nuanced approach will be necessary. In such a case, the issue will be whether a reasonable and prudent person would have taken the risk. This may require consideration of the level of the risk involved counterbalanced by the utility of the actions of the defendant. …
[24]Cameron v R, above n 22 (footnotes omitted).
The appellant submits that the Judge at various places in the summing up expressly addressed the first aspect of the Cameron v R test — the level of risk associated with the informal money remittance business. The appellant’s concern is the Judge did not squarely address what the Court in Cameron v R said counterbalances risk, which is the utility of the activity concerned. There was no attempt by the Judge to explicitly describe the social benefits of the informal money remittance business. However, the Supreme Court did not impose a requirement for a direction be given. The Judge’s direction that the jury consider what a “reasonable and prudent person” would have done was sufficient. It was open to the jury to consider the social utility of the business but Cameron v R does not require that, or a direction to that effect. Notably, the Judge’s direction closely mirrored how the Supreme Court summarised the overall approach to unreasonableness: “whether the defendants’ actions were unreasonable came down to whether the defendants had acted as a reasonable and prudent person — that is, as a law‑abiding person doing their best to comply with the law — would have done”.[25]
Fourth ground of appeal — evidence about profitability heard at trial
[25]At [97(d)].
The appellant submits that she was deprived of her right to offer an effective defence for two interlinked reasons. First, trial counsel Mr Jones, decided that only the appellant could explain the commission rates or margins on the impugned transactions and that a defence expert need not be briefed or called. Secondly, while Mr Jones challenged the prosecution experts in cross‑examination, the appellant was required to resist evidence that — based on the concessions made at trial and on appeal — should not have been heard by the jury at all.
When an appellant raises trial counsel error as a ground of appeal, affidavits responding to that ground do not require leave.[26] The affidavits of the appellant and Mr Jones (to which we have referred to already) are admitted on this basis.
[26]Court of Appeal (Criminal) Rules 2001, r 12A; and Mohamed v R [2023] NZCA 143 at [38].
Two further affidavits have been filed for the appellant covering evidence she says should have been heard at trial if not for trial counsel error. The appellant wishes to adduce fresh evidence on appeal in order to demonstrate the unreliability of the Crown’s margin evidence at trial. Affidavits have been sworn by Mr Jae Jun Kim (relating to Mr Montgomery’s travel movements) and Ms Karen Greenwood (relating to margins charged by the appellant to members of the syndicate compared to ordinary customers). This Court’s approach is to treat such evidence as fresh if persuaded that counsel error explains its absence from the trial.[27] An appeal may succeed however even though counsel’s conduct is found to be reasonable or the new evidence is not fresh. The focus is on whether the verdict is unsafe.[28]
[27]At [38], citing Loffley v R [2013] NZCA 579 at [58], and S (CA88/2014) v R [2014] NZCA 583 at [15].
[28]Sungsuwan v R [2005] NZSC 57, [2006] 1 NZLR 730 at [69]–[70].
The Crown has also filed affidavits in reply to Ms Greenwood’s evidence.
The evidence about profitability at trial
Evidence about profitability was heard at trial from Koru Montgomery, a member of the drug syndicate led by Mr Valent, from the officer in charge Detective Sergeant Henson, from a police forensic accountant Andrew Yoon and from the appellant herself.
Mr Montgomery said he went to QDD’s premises at least 100 times to drop money off for Mr Valent. Mr Montgomery also said he asked the appellant in March 2021 what her margin would be and she said 12 per cent. He speculated that she had put the rate up from nine per cent to 12 per cent because she thought she might have been being watched. Although he was not trading Bitcoin elsewhere at the time, Mr Montgomery thought the margin on Bitcoin was normally four per cent to six per cent.
Detective Sergeant Henson dealt expressly with the margin on Bitcoin. She said she simply compared the price of Bitcoin that the appellant quoted for Mr Valent with the market price of Bitcoin on that particular day. She said the margin ranged from 0.3 per cent to 11.8 per cent in relation to Mr Valent. In cross‑examination, Detective Sergeant Henson conceded she had not taken into account any wholesaler’s margin and that her estimated profit was “way too high”.
The forensic accountant Mr Yoon was asked to address the difference in foreign exchange rates offered to different types of customers. He said he determined the rate given to ordinary customers by comparing QDD’s buy and sell rates for foreign currencies. Mr Yoon confirmed there were fluctuations over time which he accounted for by averaging the rates. He was however of the opinion that the percentage of commission increased when QDD dealt with the syndicate. Under cross‑examination, he conceded that he did not know the actual commission that QDD received or whether QDD had been required to pay another money remitter part of its margin. He agreed that the amounts and percentage differences may not be correct when all the possible variations were taken into account.
In giving evidence the appellant described the general way that she dealt in Bitcoin and calculated the profit. She said her gross profit was one to two per cent, taking into account the cash‑handling fee of other remitters. The appellant accepted that she charged Mr Valent a “worse rate” than other customers but clarified that it was only a one per cent difference, which reflected that “it was a larger cash and it is a risk”.
Further evidence
Mr Kim is a barrister employed by counsel for the appellant. He has compared the international travel records of Mr Montgomery with the dates of transactions recorded in a ledger prepared by the Crown to see how many of the “Money In” entries on the ledger correlate to the dates Mr Montgomery was recorded as being in New Zealand. Whereas Mr Montgomery asserted he had dropped cash off to QDD “at least 100 times”, Mr Kim’s evidence is that the records disclose that there were only 78 transactions conducted while he was in New Zealand.
Ms Greenwood is a forensic accountant. She reviewed the evidence given by Detective Sergeant Henson and Mr Yoon. Ms Greenwood says Detective Sergeant Henson’s calculation of the Bitcoin margins (actual and as percentages) are mathematically correct. However, they are a calculation of the difference between the sale price to the syndicate and the average market price based on three websites. Her calculation included any margin paid by the appellant to the wholesaler from which Bitcoin was purchased. Ms Greenwood also says Detective Sergeant Henson’s calculations do not provide support for Mr Montgomery’s evidence. The margins reported on her schedule do not show a rate of around nine per cent prior to March 2021. In fact, the rates range from 2.1 per cent to 18.1 per cent with an average margin of 5.3 per cent. While accepting there was an increase in the margin charged after March 2021, Ms Greenwood states that the nine per cent rate described by Mr Montgomery was not supported. While not able to say what the net margin was, Ms Greenwood states “the actual margins earned would have been lower and variable across different transactions”.
As to Mr Yoon’s evidence, Ms Greenwood states that it is fundamentally flawed because he used average rates and not weighted average rates. He has also ignored that syndicate transactions were settled using funds purchased from wholesalers (at higher rates) and also via a third currency, often Renminbi.
Ms Greenwood calculated the profits derived from syndicate transactions. She opines that Mr Yoon overstated this figure by $190,128.60 and the appellant profited by $433,548.58 rather than $623,677.18, as calculated by Mr Yoon.
Ms Hua explains the briefing process with Mr Jones, which was conducted in English, and her concerns about the jury’s ability to understand her explanations about margins. She points to an exchange she had with Mr Jones during trial to illustrate her concerns. The appellant explained to junior counsel in Mandarin the way in which profit margins on cash remittances in Bitcoin were determined. She states that the nine per cent rate referred to by Mr Montgomery was far higher than the actual profitability margin. She says there was no discussion as to the potential use of an expert for the defence.
Detective Sergeant Henson and Mr Yoon have each filed a short affidavit in reply. The appellant submits that neither directly disputes the accuracy of Ms Greenwood’s evidence nor attempts to challenge her conclusions. Detective Sergeant Henson emphasises the complexity of the investigation and reiterates that she acknowledged in her trial evidence that her calculations were imprecise averages based on the information she had available to her.
Mr Yoon also refers to trial evidence he gave that the commission percentage difference calculations that he undertook may not accurately calculate QDD’s actual commission or margin for any particular transaction. He remains of the view, however, that QDD charged higher margins to syndicate customers than it did to QDD’s normal customers.
In response to the appellant’s evidence that she did not have a discussion with Mr Jones about the potential use of an expert for the defence, Mr Jones states in an affidavit sworn on 29 August 2024 that it was his belief and understanding that the appellant was the person best placed to calculate her profit margins. He did not raise the possibility of instructing expert accounting evidence because he did not consider it was necessary. The person who knew how the margins were calculated was the appellant. Mr Jones says:
It was plain that she had a very firm grasp of what was involved in transactions and what margins were being applied when looking at the hundreds of transactions which made up the various charges.
The relevance of Mr Kim’s evidence is that it undermines Mr Montgomery’s evidence that he dropped cash at QDD “at least 100 times”.
Mr Kim’s evidence is not fresh and we do not consider there was any error by Mr Jones which would make it fresh. Evidence of Mr Montgomery’s travel movements is unlikely to have resulted in a different outcome if it had been before the jury. At trial, Mr Montgomery said the exact number of “drop offs” was hard to keep track of as there were so many transactions going through QDD. Furthermore, Mr Kim’s analysis suggests that Mr Montgomery was in New Zealand and able to drop cash off to QDD on 78 occasions rather than at least 100. The numbers are not so dissimilar as to make Mr Montgomery’s evidence unreliable. The Crown also submits that the appellant’s analysis does not allow for the possibility that Mr Montgomery dropped cash off at QDD on the day he left New Zealand. If it were to allow for this possibility, the number of cash drops that Mr Montgomery could have undertaken would rise to 95.
As far as Ms Greenwood’s evidence is concerned, the margins charged by the appellant had been an issue which was known to the appellant from an early stage. She was able to prepare her own calculations regarding the margins charged by her to QDD customers including the four men convicted of drug dealing. That evidence was adduced at trial in a defence exhibit booklet. It supported the proposition that the Crown’s margin calculations were too high.
Mr Jones also cross‑examined Detective Sergeant Henson and Mr Yoon quite effectively and a number of important concessions were made by them. These were highlighted in the Judge’s summing up when he summarised the Crown evidence and the defence address. The Judge discounted the Crown’s evidence altogether when he stated in his sentencing notes:[29]
[47] You made personal gains from the transactions in terms of commission. The Crown’s attempts to show greater fees than was usual or prima facie legitimate was not successful and it cannot be said that you made personal gains above the ordinary for money transactions however these were large scale transactions and you did benefit financially.
[29]Sentencing notes, above n 1.
This assessment by the trial judge means that Mr Jones’ decision not to instruct a forensic accountant expert cannot be impugned. Even if Ms Greenwood had given evidence at trial, it is unlikely there would have been a different outcome. The limitations of the Crown evidence had clearly been established in the cross‑examination of Detective Sergeant Henson and Mr Yoon. Ms Greenwood’s evidence would have added little to the mix. There was no error by Mr Jones and we are not satisfied Ms Greenwood’s evidence should be considered fresh.
The application to adduce fresh evidence in the form of affidavits by Mr Kim and Ms Greenwood is declined. It is therefore unnecessary to admit the Crown evidence in reply.
There was no miscarriage of justice. Quite apart from the uncertain profit made by the appellant on the impugned transactions, there was ample evidence of the appellant’s recklessness in dealing with the four men who have been convicted of drug dealing offences.
For example, the appellant never met Mr Valent face‑to‑face, never obtained his identity information and never undertook any CDD on him. At one stage, the appellant told Mr Valent that she could not replicate the NZD to EUR exchange rate “because NZD is large cash and no prove of ID”. On another occasion the appellant did ask Mr Valent for a passport or driver’s licence and he sent her a photograph of a person holding up a passport in the name of Cole, William Jeffrey. However the appellant did not verify this identification. Instead, the appellant gave him advice of how to avoid reporting thresholds and how to structure payments to avoid AML scrutiny. At one stage, she asked Mr Valent not to bring any cash on “next Monday Tuesday and Wednesday” as they had an on‑site AML inspection by the DIA.
At other times, she messaged Mr Valent:
(a)“money is very dirty, and sticky, covered with white powder … I am scared of drug money”;
(b)“it is fully no air bag, when opened, all money wet … usually it [has] been washed related wi[th] drugs … my place ban any drug money”;
(c)“our staff sick of counting wet money … are you sure not drug money?”;
(d)“[I] think money is problem … drug related”.
On another occasion a vacuum‑packed white powder was left at QDD by a person who dropped off cash. The appellant took a photograph and sent it to Mr Valent who said it was lithium, to which the appellant stated “as long as not drug”. Another person who delivered cash on behalf of Mr Valent was thought by the appellant to be on drugs.
The appellant told Mr Valent “if [I] got drug money, police will come and search our premise” and “if [I] got dirty money, police come, they will take all of us money, not just 200k”. The latter could be a reference to the 2018 civil judgment. In the end, the appellant tried to ensure against the risk that Mr Valent’s cash was from drug‑related offending by asking for a $100,000 deposit:
If drug money, I don’t count … I really want to return to you … or you can leave me 100,000 NZD as deposit … as insure it is not drug … always I keep 100,000 NZD … until finish business … I can pay you back”
Despite Mr Valent not agreeing to leaving a “deposit”, the appellant went ahead with the transaction anyway.
Appeal against sentence
Sentencing decision
At the outset of the sentencing, the Judge commented that he saw the case as one in which the appellant did not have actual knowledge that the cash was the proceeds of an offence but rather that she had been reckless as to its origin.[30] The Judge also found that the 15 charges of money laundering, of which the appellant was convicted, involved the sum of at least $18 million.[31]
[30]At [11]–[12].
[31]At [18].
The Judge recognised that this was a case that called for general deterrence, but the need for specific deterrence was less as the appellant had been assessed as of low risk of reoffending.[32] He also referred to the sentencing principles of denunciation and accountability.[33] The Judge commented that it was important to preserve standards for banking and financial institutions.[34] The Judge then referred to the harm caused to the community by drug offending, while noting the appellant’s prospects of rehabilitation and reintegration.[35]
[32]At [20].
[33]At [23]–[24].
[34]At [26].
[35]At [26]–[28].
As to a starting point, the Judge referred to a number of cases provided by the Crown and the appellant.[36] The Judge assessed the appellant’s role as significant, if not pivotal, and the offending itself to be sophisticated.[37] The appellant had made personal financial gains, but it could not be said that those gains were greater than ordinary legitimate transactions, notwithstanding the Crown’s attempt to show greater fees than was usual.[38] Taking all factors into account, the Judge saw a 10 year starting point as one which met the purposes and principles of sentencing.[39]
[36]At [29]–[40], citing R v Brown HC Auckland CRI‑2008‑004‑20453, 3 February 2011, R v Karpavicius [2013] NZHC 3095, R v Wallace CA415/98, 16 December 1998, R v Le [2018] NZHC 2199, R v Chase [2018] NZHC 1022, R v Daniels [2020] NZHC 275, R v Wilson [2022] NZHC 1901 and Zhang v R [2010] NZCA 481.
[37]Sentencing notes, above n 1, at [45]–[46].
[38]At [47].
[39]At [48].
The Judge viewed the mitigating factors as the appellant’s previous good character, her personal circumstances, her family obligations and her background as described in a cultural report. The combination of factors reduced the sentence of imprisonment by two years and six months’ imprisonment.[40] The total sentence was therefore one of seven years and six months’ imprisonment. On charges three to eight inclusive, she was sentenced to six years’ imprisonment. On charges 10 to 19 inclusive, noting she was acquitted on charge nine, the appellant was sentenced to one year and six months’ imprisonment which was cumulative upon the sentence in relation to charges three to eight.[41]
Was the starting point too high?
[40]At [55].
[41]At [56].
The sentence appeal is advanced on the basis that the starting point adopted by the Judge was too high and should not have exceeded the maximum penalty for money laundering of seven years’ imprisonment.[42] Counsel for the appellant submits that a starting point of between four to five years’ imprisonment is appropriate.
[42]Crimes Act 1961, s 243(2).
This Court must allow a sentence appeal if satisfied that for any reason there was an error in the sentence imposed and a different sentence should be imposed.[43] The focus is on whether the end sentence is manifestly excessive, rather than the process by which it was reached. The Court will not interfere with a sentence that is within the range justified by accepted sentencing principles.[44]
[43]Criminal Procedure Act, s 250(2).
[44]Tutakangahau v R [2014] NZCA 279, [2014] 3 NZLR 482 at [26]–[36].
Given the multiplicity of charges and the principle of totality, the Judge was not confined by the maximum penalty. It is useful to note the guidance on sentencing for multiple offending given by this Court in R v Xie:[45]
[17] … In [R v Barker], this Court … reiterated the key principles when sentencing for multiple offending:
(a)With multiple offences the sentence must reflect the totality of the offending.
(b)In respect of multiple offences, this Court will not insist that the total sentence be arrived at in any particular way.
(c)The total sentence must represent the overall criminality of the offending and the offender.
[18] Those principles survive the enactment of the Sentencing Act and, indeed, are endorsed by it. Having endorsed it, Parliament then goes on in ss 84 and 85 to describe when concurrent sentences and cumulative sentences “are generally appropriate”. The guidelines do not have the effect of trumping the central principle of sentencing for multiple offending, namely that the total sentence must represent the overall criminality of the offending and the offender.
[45]R v Xie [2007] 2 NZLR 240 (CA), citing R v Barker CA57/01, 30 July 2001 at [10].
The offending in Xie was a series of drug importations. Section 84 of the Sentencing Act contemplates that concurrent sentences are “generally appropriate” for multiple offending of a similar kind forming a connected series of offences. This Court in Xie noted that concurrent sentences would have been appropriate provided it could lead to an appropriate total sentence. However, it was necessary to sentence on a cumulative basis because the sentence appropriate for the totality of the offending exceeded the maximum penalty for any one of the offences charged.[46] Section 84 does not prevent cumulative sentencing in such circumstances. The correct approach is to determine the appropriate sentence and then assess whether it is appropriate to impose it on a cumulative basis.
[46]At [19].
Counsel agree that there are no factually comparable cases to help establish the starting point. The Judge did not consider himself bound by the maximum penalty in setting the starting point because:[47]
On any appreciation this is an extreme case of money laundering. I do not see the seven‑year maximum penalty as to be a limiting factor because of the duration of the offending and the fact that there are some 15 incidences, some of which have very significant transactions involving large sums.
[47]Sentencing notes, above n 1, at [42].
Other factors taken into account by the Judge in setting the starting point of 10 years’ imprisonment were:
(a)The Judge’s specific finding that the appellant did not have actual knowledge that the cash she received was the proceeds of drug dealing but rather she was reckless as to its origin.[48]
(b)The Crown’s attempts to show that the appellant charged the syndicate higher commissions than was normal were not successful and it could not be said that she made personal gains above the ordinary for such transactions. However, they were large‑scale transactions and she did benefit financially.[49]
[48]At [11]–[12].
[49]At [47].
The appellant was acquitted of charges 1 and 2, which alleged offences between 3 July 2017 and 20 December 2017. The charges on which the appellant was convicted range from 8 March 2018 to 10 March 2021, a three‑year period. The sum found by the Judge to have been laundered over that period was at least $18 million.[50] Although $18 million is a substantial amount of money, evidence was led at trial that the gross value of QDD’s transactions between 2017 and 2020 was $357.94 million, of which nearly $70 million comprised cash transactions. The amount of money laundered was therefore a small percentage of the overall money remittance transactions undertaken by the appellant’s business.
[50]At [18].
While we agree that the period of the offending and the amount of money laundered are serious aggravating factors, the lack of actual knowledge of the source of the cash and the lack of any unusual profits temper the gravity of the offending. Another factor tempering the gravity of the offending is the lack of any involvement in the crimes committed by those utilising the appellant’s money remittance business.
We therefore do not consider that a starting point of 10 years is within range. We consider a starting point of eight years is appropriate. The sentencing Judge gave a 25 per cent discount for factors personal to the appellant. We will do the same, which brings the final sentence to six years’ imprisonment. It is therefore unnecessary to consider whether the sentences should be imposed on a cumulative basis as the appropriate sentence can be imposed on a concurrent basis.
Result
The application to adduce further evidence is declined.
The appeal against conviction is dismissed.
The appeal against sentence is allowed and the sentences are set aside. Concurrent sentences of six years’ imprisonment on all charges are substituted.
Solicitors:
Zhang Law, Auckland for Appellant
Crown Solicitor, Auckland for Respondent
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