Author: Nyman Gibson Miralis
Subject: Money Laundering
Keywords: casino based money laundering, Australian Federal Police (AFP)
What were the facts in the case Ma V Commissioner of the Australian Federal Police  VSC 553?
Jin is a dual Australian / Chinese citizen who married Hongjie Ma, who resides in China, in July 2010. In 2012 the US IRS and the Australian Federal Police (AFP) began to suspect that Jin is likely involved in large scale illegal casino based money laundering activity in Australia, the US, Macau and Singapore.
In October 2013 the Commissioner of the AFP served notice of an application pursuant to s 19 of the Proceeds of Crime Act 2002 (Cth) for the restraint of a California property (and a number of other properties linked to Jin). Neither Hongjie Ma nor Jin had been charged with a criminal offence, which remains the case.
On 1 November 2013, Emerton J made an ex parte interim restraining order and on 22 November 2013, Sloss J made a restraining order until further order. Both judges were satisfied that the authorised AFP Agent, Georgia Prior, held, on reasonable grounds, a suspicion that four properties, one of which was the California property, were each the proceeds of an indictable offence and that each was an instrument of a ‘serious offence’.
After that order, Hongjie Ma and Jin each filed affidavits challenging the basis for Federal Agent Prior’s suspicions.
An Austrac Threshold Transaction Report dated 21 September 2009 evidenced an international funds transfer of AU$1,320,000 from Jin at Crown Casino in Melbourne to a Bank of America account jointly held by himself and Hongjie Ma. IRS enquiries confirmed that these funds contributed to the purchase of the California property free of encumbrances for US$1,700,000. The AFP contended that the Bank of America funds applied to purchase the California property were proceeds of crime, derived from Jin’s suspect gambling activities.
Almost immediately after the purchase, Hongjie Ma became the sole proprietor of the property under an agreement with Jin in which the property was transferred into her sole name on the condition she borrowed money on mortgage security that she on-lent to Jin to support his gambling. Inter-spousal transfer took place on 23 September 2009 and HSBC Mortgage Corporation (USA) advanced a mortgage loan of US$1,000,000 in February 2010. Hongjie Ma then transferred US$800,000 to her husband.
The applicant, Hongjie Ma, applied pursuant to s 42 of the Proceeds of Crime Act 2002 (Cth) (the ‘Act’) to revoke the restraining order made under s 19 of the Act over the California Property.
Hongjie Ma challenged Federal Agent Prior’s assertion that the funds used to purchase the California property were suspected of being the proceeds of crime. She submitted that there was:
- no evidentiary basis disclosed in Federal Agent Prior’s affidavits to reasonably suspect that the funds used to purchase the California property were the proceeds of crime either under the Act or the Criminal Code Act 1995 (Cth) (the ‘Code’); and
- no allegation or suspicion of a predicate offence, such as fraud or drug trafficking, as required pursuant to s 400.9 of the Criminal Code Act 1995 (Cth), that caused the funds used to purchase the California property to be proceeds of crime.
Hongjie Ma submitted that:
- the only reference to any activity that could provide any basis for the required suspicion under s 19 was to unspecified ‘intelligence’ obtained from the US Internal Revenue Service to the effect that Jin was likely to be involved in large scale casino-based money laundering activity;
- that Federal Agent Prior gave no detail as to how Jin was involved in actually laundering money, nor suggested any possible predicate offence tainting the money transferred to Bank of America as proceeds of crime;
- that a suspicion based upon a suspicion is not a suspicion held on reasonable grounds. Absent the IRS suspicion, all the information relied on by Federal Agent Prior relating to Jin’s activities was consistent with him simply being a serious, long term and high profile gambler; and
- that Re Director of Public Prosecutions (Cth); Section 19 of the Proceeds of Crime Act 2002 (Cth); Re Sunshine World Holdings Ltd and South East Group Ltd and DPP (Cth) v Tan demonstrated that an applicant for a restraining order must by some positive assertion of fact in the affidavits show the nexus between a defendant’s prior wrongdoing and the suspected property.
Dixon J dismissed Hongjie Ma’s application for the following reasons:
He agreed with Shaw J in DPP (Cth) v Tan  NSWSC 717 who stated, “This is a tough test for the applicant to meet. It seems to me to mean there must be literally no grounds for the foundation of the order for it to be revoked.” The evidence of Federal Agent Prior explained the basis of her reasonable suspicions, which the AFP submitted arose reasonably from the following matters:
- The magnitude of apparent discrepancies between the large sums of money evidently involved in Jin’s gambling and his known income sources.
- Jin’s gambling appeared to be astronomical. One Ms Fielding, the Crown Casino Compliance Manager, deposed that his total turnover at that casino between 2005 and 2013, which includes the relevant period, was approximately $850 million;
- The fact that Jin, who is a dual Australian / Chinese citizen, has had, and has used, multiple identity documents, including six Australian passports.
- Jin has never filed an Australian tax return.
- On one occasion Jin failed to declare the correct amount of money he was carrying in transit through Melbourne Airport.
- Although originally the source of Federal Agent Prior’s suspicions around Jin’s gambling activities was the initial referral based on US intelligence, a referral from another agency coupled with an understanding of the other agency’s methods is a reasonable starting point for a suspicion. Investigations, and subsequently the affidavits filed for Hongjie Ma’s application, show that Jin gambles huge sums of money that cannot be reconciled with his known legally obtained income. He has held multiple identity documents and those matters can support a suspicion that Jin uses funds supplied by others to gamble and the multiple passports can mask who is controlling the funds that he gambles with.
- The California property was purchased with funds transferred from Crown Casino and thus linked to Jin’s suspect gambling activities.
How can Nyman Gibson Miralis assist you?
Nyman Gibson Miralis has expertise in providing strategic legal advice to persons the subject of unexplained wealth orders. Unexplained wealth orders is an evolving area of law and so you require the careful management of your case from the very early stages of the proceedings. One of the orders that are often made at the time of the filing of the Summons seeking an unexplained wealth order, is for your examination before the NSW Supreme Court into your financial affairs, including the source of your assets.
Additionally, the Supreme Court can order that you provide the Crime Commissions with a list of your assets and your interest in property both locally and internationally. In some instances information concerning the restraining of your property may be communicated to foreign states so that assets held overseas can be subjected to restraining orders and ultimately forfeiture..
Nyman Gibson Miralis will comprehensively prepare your case providing you with the highest level of legal service Our key points of difference include our vast experience in dealing with the Crime Commissions, our proven success in achieving favourable outcomes and our unique strategic approach to advising and representing your best interests in this complex area of law.