Zhang v R

[2010] NZCA 481

IN THE COURT OF APPEAL OF NEW ZEALAND

CA201/2010
[2010] NZCA 481

BETWEENXIAONAN ZHANG

Appellant

ANDTHE QUEEN

Respondent

Hearing:12 October 2010

Court:Chambers, Ronald Young and Keane JJ

Counsel:R M Mansfield for Appellant

J M Jelas for Respondent

Judgment:22 October 2010 at 10 am

JUDGMENT OF THE COURT

The appeal is dismissed.

REASONS OF THE COURT

(Given by Chambers J)

Laundering money from drug dealing

[1]        Xiaonan Zhang, the appellant, was born in 1983 in China.  She came to New Zealand in about 2000 to further her education.  In about 2006, she met Jianying Ma.  They became romantically involved.  This was unfortunate as Mr Ma was a major drug dealer in New Zealand.  He enticed Ms Zhang into his nefarious web: she became the washerwoman of the profits from his drug deals.  Over an 18 month period, she laundered almost $700,000 through her bank account and an associated credit card account. 

[2]        Not only Mr Ma benefited from these profits; she did too.  $50,000 was used to buy a Volkswagen Touareg, which, while registered in Mr Ma’s name, was used by Ms Zhang and found in her possession when the police swooped.  In addition, she got to live in a house in Glenfield, Auckland, bought from drug money she had laundered.[1]  Using drug money, she undertook significant renovations of the property.  When police executed search warrants, they found in her bedroom a large quantity of designer clothes and accessories.  Her credit card statements evidenced purchases from such swanky shops as Christian Dior, Louis Vuitton and Ermenegildo Zegna.  Indeed, so secure did she become financially, as a result of assisting her boyfriend, that she was able to give up her employment as an accounts assistant in March 2008.  Thereafter she did not need to work. 

[1]     The property was acquired using a bank loan, but the drug money deposit was, of course, the lever for that loan

[3]        Ms Zhang faced four money laundering charges, one representative spanning a period from 2006 to 2008, under s 243 of the Crimes Act 1961.  A jury found her guilty on all of them.  Stevens J, the trial Judge, subsequently sentenced Ms Zhang to a total sentence of four years six months’ imprisonment.[2]

[2]     R v Zhang HC Auckland CRI-2008-004-015194, 16 March 2010 (sentencing notes).

[4]        Ms Zhang now appeals against that sentence on the basis that it was manifestly excessive.  She originally appealed as well against her conviction, but subsequently she abandoned that part of the appeal. 

Issues on the appeal

[5]        There are two issues on this appeal.  The first was the Judge’s starting point of five and a half years’ imprisonment.  Mr Mansfield, who appeared for Ms Zhang at trial and again before us, submitted the starting point should have been no higher than three and a half years to four and a half years.

[6]        Further, or in the alternative, Mr Mansfield submitted the Judge had allowed too little discount for personal mitigating factors. 

Was the starting point too high?

[7]        At sentencing, the prosecutor submitted the starting point should be six years.[3]  We do not know what starting point (if any) Mr Mansfield had advocated, but we note from Stevens J’s sentencing notes that Mr Mansfield had sought a generous discount for personal mitigating factors and had submitted to the Judge that “a final sentence of around four years’ imprisonment was appropriate”.[4]  Implicit in that submission was, we think, a suggestion that a starting point of around five years was appropriate.  The Judge chose a starting point dead in the middle: five and a half years. 

[3] Sentencing notes at [28].

[4] Sentencing notes at [40].

[8]        Of course, defence counsel are not bound on appeal by a submission advanced at sentencing.  But we do note that Mr Mansfield advocated before us a starting point much lower than he had implicitly advocated to Stevens J.  There is no suggestion that counsel had since sentencing unearthed precedent indicating previous submissions were ill-founded.  The same authorities presented to Stevens J were also presented to us.  The change of stance appears to be uncluttered by principle.

[9]        Be that as it may, we have no doubt that Mr Mansfield’s stance at sentencing was much more realistic than his stance before us.  Clearly this was a case warranting a starting point in the five to six year range: the Judge’s midpoint cannot be faulted. 

[10]       First, we note what this Court said in R v Wallace:[5]

We accept the view expressed by the English Court of Criminal Appeal in R v Greenwood[6] that those who launder money for drug dealers are nearly as culpable as those who actually participate in the dealing.  They help the dealers avoid detection and in this way provide assistance in their activity.  Depending upon the circumstances, they may not technically be parties to the principal crimes, and hence the need for a separate offence on the statute book, but they come very close to it.  Sentences for money laundering should therefore bear a relationship to sentences for the particular principal offending and should be approached on a similar basis.  The more serious the principal offending, the more serious the laundering.  Where the criminal activity which is being concealed or otherwise assisted is of a less pernicious kind, the appropriate sentence for money laundering would be at a lesser level than it will be for laundering known by the offender to be related to very serious criminality, such as the present.  In sentencing for drug dealing a primary factor is the deterrence of others who may be minded to do likewise.  The personal circumstances of the particular offender are given comparatively little weight.  So it must be for money laundering associated with drug dealing.

The Court may also draw a distinction between money laundering which involves personal benefit and circumstances, such as in Greenwood, where the misguided intention of the launderer is to help the drug offender without seeking any personal gain. 

[5]     R v Wallace CA415/98, 16 December 1998 at 5-6.

[6]     R v Greenwood (1994) 16 Cr App R(S) 614.

[11]       Mr Mansfield submitted to us that the Crown had not proved beyond reasonable doubt that Ms Zhang knew the money she was laundering was drug profits as opposed to proceeds from other serious offending.  We do not accept that submission.  It may be Mr Ma did not keep his drug stock at the Glenfield home; the operation was too sophisticated for that.  But there was evidence Ms Zhang had accompanied Mr Ma to his Queen Street apartment where drugs were stored.  Mr Mansfield submitted the Crown had not proved Ms Zhang had seen drugs when visiting there with Mr Ma.  Even if that were the case, which we find hard to credit, we consider it inconceivable that Ms Zhang, being romantically involved with Mr Ma for a period of years, did not learn that these large sums of money were coming from drug deals.  There is not a scrap of evidence to suggest Mr Ma was involved in other kinds of serious offending or that Ms Zhang believed he was. 

[12]       Stevens J was fully justified in proceeding on the basis that Ms Zhang knew she was laundering drug money.  He was justified in applying the Wallace dicta.  He was also justified in noting that this was a case where the launderer had derived significant personal benefit from her illegal activities. 

[13]       Mr Mansfield, in making his submissions on starting point, referred us to four cases.  The first was Wallace, to which we have already referred.  Mrs Wallace had laundered “in excess of $150,000 of what she knew to be drug money”.[7]  The sentencing Judge had considered “a sentence of three to four years’ imprisonment would not be untoward” but, having regard to Mrs Wallace’s guilty plea and other factors in mitigation, had in the end imposed a sentence of two years three months’ imprisonment.[8]  This Court dismissed Mrs Wallace’s appeal, holding “a substantial term of imprisonment was inevitable” and that “the sentence imposed was plainly within the range open to the Judge”.[9]  Although this Court did not expressly approve the sentencing Judge’s starting range of three to four years’ imprisonment, implicitly it did.  Mrs Wallace’s offending was much less serious than Ms Zhang’s.  Stevens J’s starting point was fully consistent with Wallace. 

[7]     At 5.

[8]     At 3.

[9]     At 6.

[14]       Mr Mansfield’s next case was McCamish v Police.[10]  Mr McCamish had laundered for a friend about $800,000.  Judge Treston, on sentencing, fixed a starting point of four years.[11]  On appeal, Allan J reduced the starting point to three and a half years’ imprisonment.[12]  We observe in passing that, in our view, such adjustment was not justified.  But, in any event, this was an unusual case in that Mr McCamish “derived no personal benefit whatever from his activities and did not expect to do so”.[13]  He acted “simply out of misguided loyalty to an old friend”.  That was a significant factor, as Allan J recognised.  It was a distinguishing factor, as this Court had recognised in Wallace.[14]  Once that factor, not present in the present case, is put into the mix, Stevens J’s starting point can be seen as not inconsistent with McCamish.

[10]   McCamish v Police HC Auckland CRI-2008-404-389, 18 March 2009.

[11] At [10].

[12] At [20].

[13] At [18].

[14] See the final paragraph quoted above at [10].

[15]       Mr Mansfield’s third case was R v Sorby.[15]  Potter J adopted a starting point of three and a quarter years.  The case is easily distinguishable.  In Sorby, the offending occurred over a short period of time: about a month.  The amounts laundered were substantially lower than in the present case.  Mr Sorby derived comparatively little personal benefit from his activity.  Mr Sorby’s situation was not really comparable to Ms Zhang’s at all. 

[15]   R v Sorby HC Auckland T022561, 30 May 2003. 

[16]       Finally, Mr Mansfield referred to R v Allison.[16]Hugh Williams J sentenced Mr Allison on one representative charge of money laundering in respect of $700,000 (being proceeds from his own drug dealing activities, for which he had already been sentenced to ten years’ imprisonment).  In imposing a cumulative sentence of two years’ imprisonment, Hugh Williams J said at [13]:

If you were being sentencing just for the money laundering, there is some weight in the Crown’s submission that you would be looking at a sentence of perhaps something in the order of 5-5 1/2 years. 

[16]   R v Allison HC Auckland CRI-2003-404-294, 13 December 2004.

[17]       Mr Mansfield accepted that comment supported Stevens J’s starting point.  We agree.  The Allison case is the most comparable of the four cases cited to us.  Hugh Williams J’s suggested starting point, had money laundering stood alone, strongly supports the stance Stevens J took. 

[18]       We reject the first ground of appeal.  We find the starting point the Judge adopted to be appropriate.

Was the discount for personal mitigating factors too small?

[19]       Stevens J awarded what he termed “a generous deduction of 12 months’ imprisonment” for Ms Zhang’s previous good record, remorse, prospects for rehabilitation and efforts made while in prison, and for the special burden she would have serving a prison sentence in New Zealand when her family lived in China.[17]  That represented a discount of 18 per cent.  Mr Mansfield submitted the discount should have been 18 months (27 per cent).  Mr Mansfield did not refer us, however, to any authority to support such a generous discount.  He simply argued the Judge’s reduction was “insufficient...in the circumstances”.  We disagree.  As the Judge correctly observed, the deduction he made was “generous” and, we would add, appropriate. 

Result

[17] Sentencing notes at [57].

[20]       We are satisfied the sentence was not manifestly excessive.  We support the Judge’s reasoning in fixing the sentence.  We dismiss the appeal. 

Solicitors:

Crown Law Office, Wellington, for Respondent