China Crime Ties Seen in Money-Laundering Investor’s Fall

Over two decades, Carson Yeung says he transformed himself from an apprentice hairdresser in Hong Kong into a successful stock picker worth millions of dollars.

His love of gambling took him to Macau and private rooms reserved for high-stakes baccarat. It also led him to invest in the Neptune VIP Club, a gambling syndicate in Macau, the only Chinese territory where casinos are legal. That bet paid off. Yeung’s expanding fortune afforded him many Western luxuries: a Maybach car, a London apartment, even an English soccer team.

His luck has since turned. Hong Kong authorities made the gaming investment a centerpiece of a money laundering case against him, winning a conviction on Monday. District Court Judge Douglas Yau is scheduled to sentence Yeung today for as long as seven years in jail for laundering HK$721.3 million ($93 million) from 2001 to 2007, including checks from a Macau casino operator and the Neptune club.

The trial, which began last year after Yeung’s 2011 arrest, provides a rare window into the flow of billions of dollars in and out of China through Hong Kong and Macau.

The hot money undercuts strict capital controls intended to insulate China’s economyfrom currency markets. Global Financial Integrity, a Washington-based watchdog group, estimated that $1 trillion flowed out of China in the decade ended in 2011. Some of that money was handled by the Neptune club, identified in mainland China court cases unrelated to Yeung’s as controlled by people who ran an underground bank that bribed senior Chinese officials.

Source: AP Photo

Carson Yeung, owner of Birmingham City Football Club

Underground Banking

Even after Macau strengthened licensing of middlemen who lend to high rollers, Chinese citizens have found ways to keep the money flowing including faked trade invoices, which were blamed for a discrepancy between Hong Kong and China trade figures in January.

Two of the men Yeung was convicted of laundering funds for have been linked to high-profile underground banking in China, according to judgments from separate court cases on the mainland. One of their associates, once China’s richest man, gambled close to 800 million yuan ($130 million) in Macau’s VIP rooms and was able to convert it easily to Hong Kong dollars, which flowed to investors in the Neptune gambling syndicate, according to court testimony cited in a judgment.

Yeung said he was just a businessman collecting checks from successful ventures. The judge agreed with the prosecution that Yeung had reasonable ground to believe that the checks from the syndicate were the proceeds of crime.

Source: Bloomberg

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