Serious Fraud Office sets out case for how former BNZ and ANZ bankers were allegedly paid off to accept 57 fraudulent mortgage applications

Serious Fraud Office sets out case for how former BNZ and ANZ bankers were allegedly paid off to accept 57 fraudulent mortgage applications

A 12-week trial over an allegedly "complex, organised and systematic deception" of banks has started at the Auckland High Court. 

The Serious Fraud Office (SFO) accuses a former BNZ employee, Zongliang (Charly) Jiang, a lawyer, Gang (Richard) Chen and someone involved in property development, Kang (Jenny) Xu, of partaking in a large-scale mortgage fraud scheme.

It says each of the defendants played a crucial part in using fraudulent documents to obtain $54 million of loans to buy more than 70 properties in Auckland and Hamilton.

It alleges that between 2011 and 2015, 29 loans were secured from BNZ, 27 from ANZ, and one from a bank that has name suppression.

The SFO accuses Richard of paying Charly, as well as a banker who worked at ANZ (Peter Cheng) but fled the country before he was arrested, $511,303 in kickbacks for processing the applications.

Instigator already sentenced

Presenting the prosecution’s opening submissions in court on Monday, lawyer Todd Simmonds said a fifth person in the scheme - the owner of the construction business LV Park, Kang (Thomas) Huang - was the instigator.

He explained Thomas and his wife Jenny were declared bankrupt between 2011 and 2013.

LV Park’s primary source of funding was from a private lender, Basecorp Finance. Charging interest of up to 16% p.a., Thomas used the names of his family, friends and employees to secure cheaper mortgages from banks on behalf of LV Park.

Fake IDs, bank statements and employment letters were used to support the fraudulent mortgage applications.

Thomas was sentenced on February 9 to four years and seven months in prison, having admitted to eight charges of ‘obtaining by deception’, one of ‘corruptly giving consideration to an agent’, and one of’ dishonest use of a document’.

The trio on trial

While Simmonds said Thomas co-ordinated the funding, he accused Jenny of actually forging the documents and supplying the banks with these.

She faces 34 Crimes Act charges of ‘obtaining by deception’.

Simmonds said the SFO found templates used to create the documents when it executed a search warrant at LV Park’s Queen Street offices in central Auckland.

He told the court a number of the mortgage applications were also made by the lawyer, Richard.

While initially Richard and Thomas were acquaintances, LV Park soon become Richard’s key client.

Simmonds said Richard was “heavily involved” in the transactions, and even made some of the supposed property purchases himself.

Richard faces 11 charges (including two representative charges) of ‘obtaining by deception’.

He is accused of failing to inform the banks of the fact LV Park was the true borrower behind the mortgage applications.

He also faces a representative Secret Commissions Act charge of ‘corruptly giving consideration to an agent’ for paying off the BNZ and ANZ bankers.

The former BNZ employee, Charly, faces a representative Secret Commissions Act charge of ‘corruptly accepting’ $260,303 in kickbacks.

He also faces 25 charges of ‘obtaining by deception’.

The SFO alleges the former ANZ employee, who is believed to be in China, received $258,000 from Richard.

Prosecution to call 35 witnesses

Simmonds said the prosecution would be calling 35 witnesses to give evidence in the judge-alone trial.

He said SFO forensic accountant, Blair Bulloch, was expected to spend two to three weeks walking the court through a 414-page statement aimed at explaining all the transactions.

The banks, a real estate agency, property valuation company, and former LV Park contractor are also among those expected to give evidence, as well as Thomas and Jenny’s parents.

Simmonds alleges the parents were essentially “puppets”, whose names appeared on records, but had no involvement in the business.

Interest.co.nz will report on the defence’s opening submissions in coming days.

Please note Interest.co.nz has referred to the defendants by their English first names, rather than their surnames, for ease of reading.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

22 Comments

Comment Filter

Highlight new comments in the last hr(s).

If this is all true, then this is going to be an interesting story.
I hope that the perpetrators are not allowed to benefit from this scheme. But in that case, if the bribes are paid back and the properties sold, who should benefit from the capital gain? Hopefully not the perpetrators. The banks should not because they were gullible.

It's just lucky for the banks that this happened during a time of strong capital gains.

This is a key point the judge also made at the sentencing of the property developer - Thomas Huang - earlier this month. You can see those comments here

While we need more people, we do not want this type, they simply give the hardworking immigrants a bad name. Terminate any citizen status, deport to country of origin including anyone who arrived on their status, seize any assets, and terminate any involved parties legal accreditation.

Judge: “Banks will inevitably tighten their controls and take steps to ensure that the customers with whom they deal have provided correct and genuine financial information…

“The end result of all this is that the criteria for honest home buyers will be tighten and they will find it more difficult to obtain loans.”

Fraudsters, doing their bit to slow the market.
But, lucky break for the banks.

Properties taken under the proceeds of crimes act?

As far as I know, many have been sold or are being sold by the mortgagees. Some of the properties in question are located in Hart Road, Tamahere, Hamilton. They are horrendous hostel style buildings.

Hamilton Feb 2015
a boneyard of houses - Wiakato - Hamilton - Tamahere - Star Homes

The company had been trying to sell the completed houses to raise money for construction, "but they are not easy houses to sell because the demand for 9-bedroom 500 sqm houses is a niche market
http://www.stuff.co.nz/waikato-times/business/66776587/ghost-town-projec...

The houses, around 500 square metres each, are being marketed on greengardens.co.nz for between $1.69 million and $1.79m. The Tamahere properties were being marketed in Singapore, Hong Kong, Malaysia, Australia, and New Zealand. Proprietor Gang Wang (AKA Thomas Wang) and Salesperson Troy Hung

So what happened to Greengardens.co.nz the real estate agency that was marketing a number of these properties. Did not realise that my old neighbour was behind the original financing. Living in a different part of Tamahere probably helped.,with no need to drive down Newell rd.

Another one naughty "New Zealander" involved in mortgage fraud. I'm shocked!

Maybe we could take a leaf from their book and balance the trade deficit by harvesting organs.

I recall the letters to the editor of the the local Stuffed paper expressing outrage that some of these hostel like houses were being built in an elite area.How shocking.

I can't speak for New Zealand but the FBI investigated the industry after WaMu and reported that in the US 80% of mortgage fraud is comitted by lenders. Typically banks have these strong incentives to draw down loans but during booms they don't tend to scale compliance and auditing as rapidly as sales. Then when the tide goes out people look at distressed loans rising and realise there was a systematic problem but typically it's already too late to move lending off the book.

15
up

Looks to me like naughty business practices from another part of the world

20
up

I, for one, am grateful that our culture has been so enriched by such innovative business practices.

Sadly it's no the first time that the names of the fraudsters are not very "Kiwi" sounding

What's a Kiwi-sounding name? Wayne Littleproud?

Lol, Fred Dagg? Len Bayliss?

Oops, showing my age there.

I have read just as many cases of fraud (errant property agents / recent case of Ray White estate manager ) WITH "kiwi" or European names. Racist remarks such as these are extremely provocative and dangerous.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=1200...

The $7000 kickback that Huang paid was a form of "bribery and corruption" in a country largely free of such activities, Justice Lang said.

nice to see someone calling a spade a spade.

NZers always picture themselves on some kind of moral high ground.

Even Canada has had to take measures against liar loans and foreign buyers.

Better Dwelling article: Canadian Regulator Confirms It’s Harder To Get A Mortgage With Foreign Income Now
https://betterdwelling.com/canadian-regulator-confirms-its-harder-to-get...

Liar loans. So common it even has a name. Shows that banks lending processes have been poor.