Creditors struggle to sell house worth a mil, that's had up to $3 mil borrowed against it by associate of notorious slumlord

88 Fairburn Rd. Image from Harcourts promo material.

Creditors appear to be struggling to sell a South Auckland house, trashed by its infamous property manager, Augustine Lau.

Lau is responsible for last year doing earthworks at the Otahuhu property that essentially saw a dangerous landfill created on a steep slope close to a stream and the Tamaki Estuary.

This landed him and the property’s owner - Chen Hong Co Ltd - in the Environment Court, and resulted in them being made to pay Auckland Council $127,500 for the costs it incurred in the saga.

The 88 Fairburn Road property was put on the market in August.

In October, Chen Hong Co Ltd’s creditors - Best Capital Ltd, Hyun Bin Kim and Duk Young Lee - issued a public notice calling for the company to pay $331,947 by November 13 to avoid having the property possessed by them.

Come December, Chen Hong Co Ltd has been put in liquidation, and realtors are advertising the property as a mortgagee sale.

When interest.co.nz wrote about the property in October, it was marketed as being the ideal place for an investor or someone with an “eye for the future potential development”.

Today, Harcourts’ sales pitch is: “Mortgage sale! Hurry!”

It didn’t sell at auction last Thursday and is still on the market.

Creditors could be left millions out of pocket  

Property records show the property has two mortgages on it; one securing up to $1 million in favour of Best Capital, Hyun Bin Kim and Duk Young Lee, and the other securing up to $2 million in favour of a person by the name of Jialing Mao.

The director of Best Capital is also the director of a company that’s written Lau’s other associates short-term mortgages in the past. Lee is the owner of a number of ‘Bruce Lee’ sushi shops around Auckland.

It is not known how much has been drawn down on these mortgages or how much is still outstanding.

While QV data indicates the company bought the property in August last year for $1.68 million, its capital valuation was only $650,000 at the time. It is currently valued at $1.08 million.

Interest.co.nz believes Chen Hong Co Ltd doesn’t own any other properties in New Zealand, but its sole shareholder, Hong Chen, does.

The bigger picture

The situation is interesting as a number of other investors, whose Auckland properties are also managed by Lau, are walking away from their creditors - many of which are banks.

Interest.co.nz has reported on these here, here and here.

In most cases Lau sources properties with development potential, promotes these to overseas investors (mostly in China), and agrees to manage the properties on their behalf.

While Lau says he manages up to 20 properties, interest.co.nz is aware of 10, as they have featured in the Environment Court or have been security for mortgages that have been defaulted on.

Eight of these have been contemporaneously settled, or bought and sold by a number of parties in one day.

Of these, QV data shows most have been on-sold for at least twice as much as they were bought for.

Lau says the price escalation accounts for the subdivision and renovation work that had been agreed to be carried out on the properties. Yet it’s this work - often aimed at cramming more tenants onto the properties - that’s seen Lau and his associates end up in the Environment Court.

In the case of the Fairburn Road property, it was bought in August 2016 by a company Lau was the director of, and then sold to Chen Hong Co Ltd, on the same day.

According to QV it was bought for $858,888 and then on-sold for $1.68 million.

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?

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66 Comments

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27

it makes you wonder under the AML why these transactions are not fully investigated,
are the circumventing the system, why are the lawyers, accountants and banks not raising the red flag?

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20

Oh dear. How was this shenanigans ever allowed to carry on?

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19

The bigger question for me is he can this property be worth $1,000,000? Plainly, it isn’t. This area isn’t exactly blue chip. Want to see a real estate bubble? Here it is, baby.

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26

The NZ private property rights, legal system, and ethical business environment is being abused and exploited by unethical people with no scruples.

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20

Good reporting....However surely these claims are purely xenophobic paranoia as we were told there is no substance to any claims related to Chinese $ laundering and property speculation. Doesnt take a genius to work out its registered nz companies with one nz resident director as the vehicle for Chinese smurfing tactics. Thanks Nats for identifying and getting on top of the issue during your 9 years of service to the people of NZ.

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22

National even got on top of security clearance vetting by having one of their MPs who's a Chinese spy interfere in the outcome of the vetting.

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19

National looking like blind eye and donation party mor and more every day.

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11

Well, wasn't their Number One donor some suspicious as hell $100 shell company with mysterious Chinese principals called the Mongolian Riding Horse Co or something similarly red flag-raising? And why the hell are we allowing political donations from shady foreign entitities anyway?

When the CCP or some organised crime syndicate or a money-laundering fraudster finances you, it's pretty dangerous not to give them what they want.

I can some justification for the Nats turning a blind eye.
It is a source of amusement and doesnt affect most people.
Besides, all the activity makes our GDP look better.

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22

This is what happens at the peak of a boom - goes unchecked during euphoria. Now we are sliding down the other side all the grime is floating to the surface as toxic loans.

This is only a taste of what's to come.

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14

Yep, totally agree

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11

You may see a sale sign by this evening.. TTP has rushed to buy it...prices always go up!!!!

The 88 Fairburn Road property, was bought in August 2016 by a company Augustine Lau was the director of, and then sold to Chen Hong Co Ltd, on the same day.
According to QV it was bought for $858,888 and then on-sold for $1.68 million

Luck of the Draw
Number 88 symbolizes fortune and good luck in Chinese culture, since the word 8 sounds similar to the word fā (发, which implies 发财, or wealth. The number 8 is considered to be the luckiest number in Chinese culture. Prices in Chinese supermarkets often contain many 8s.

Crazy 88's Kill-Bill 1
https://www.youtube.com/watch?v=Upwg6JMtyCg

Where was the Inland Revenue
Will the IRD will ever get its Tax Chop out of the $829,000 profit made in 1 day.
The most obvious example of the "intention" test to make a profit and not hold as an investment
You know the IRD are not going to win in this - Lau will fold his tent - if he hasn't already done so

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22

To be clear, this isn’t profit it’s the proceeds of crime. It looks like a mortgage fraud scheme.

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10

Agreed. How can it be anything but. Music has stopped and Mr Lau has no chair to sit on. Will be the first of many.

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12

Eco Bird, is this the type of property you were alluding to as your primo example dressed up rubbish stock - an Auckland bargain ripe for the picking?

It all looks to be in a state of undress to me.

Different customs, cultures.
Many property cultures have different rules and practices to ours. I know of a ( European) migrant who 'attacked' their house with gusto; completely ignoring any Council Rules etc, because "It's our house. We own it. We can do whatever we want with it."; that's how it is, back 'home'. That causes conflict and unnecessary confusion. Our System of Caveat Emptor needs to be changed, and the onus for correctness placed on the Vendor, not the (often unsuspecting) buyer....

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18

Augustine Lau has taken everyone for a ride while at the same time making a fool out of every government agency he has come up against, The Courts, Environment Protection Agency, Auckland City Council, Central Government, Registrar of Companies, SFO, Money Laundering, Inland Revenue

The residents of Auckland will be paying off this guy's debts for a few years to come

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13

Too true ... the NZ institutions are shown to be be hugely incompetent. There will be a perception from people looking in that NZ is run by gullible halfwits who can be easily manipulated and charmed by telling them how good the rugby team is. (Comment edited for potential libel, Ed).

My apologies.

Genius
Chen Hong Co Ltd is a $100 company
Incorporated 16 May 2016 - Now in Liquidation - Dec 2017
https://opencorporates.com/companies/nz/6002472

Most likely there was a personal guarantee for the loan also given to the creditors by the sole shareholder. This will enable the creditors to go after his personal assets - all the different creditors have to get in line.

thats if he has any assets that are not salted away in a trust

Sharetrader - sorry my mistake. The creditors of this transaction are individuals and not banks. The individuals may not have received any personal guarantees. If so, then the creditors have been left holding the bag where the value of the property is less than the amount they lent ...

Creditors...riding the wave while it lasted. Will they get a wipeout?

"According to QV it was bought for $858,888 in August 2016 by a company Lau was the director of, and then sold to Chen Hong Co Ltd, on the same day for $1.68 million."

See the problem here is that Mr Lau didn't make sure that all the numbers involved were a Lucky 8......

168 are lucky when in combination

Apparently

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15

Smells like a rat's nest of Chinese money laundering.

As to lawyers and accountants triggering an alarm, there are plenty of multilingual "professionals" out there ready to sign up a new client.

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25

You know we have created a rod for our backs allowing wholesale property speculation by foreigners in our back yard .

We have seen a litany of things going on that are enough to make you hair bristle , including :

All manner of sharp practices.
Price ramping
Using onshore residents to front for the foreigners ( so they dont need IRD Numbers )
Sourcing money in HK or Shanghai borrowed at close to zero interest creating a 45 degree sloped playing -field in which we only get to play the uphill .
Greed
Corruption
So many suggestions of money laundering that "the where-there's-smoke -there's fire" idiom comes to mind.

And its all so easy here , with no stamp or transfer duty on property , no tax on gains , an open market with no barriers to entry .

On top of that , a trusting ( some would say naive) population of Kiwis who dont expect this to be done to them .

Just buy it up and gets some renters in. There's money to be made if you listen to me.
Soon everyone in the country will own 5 rentals each and we will all sit at home like me not working. If only people would listen

You have my vote to be the next finance minister.

If everyone in NZ owned five rentals there would be no renters. Of course that is a ludicrous claim by the man but there is a time when we have too many rentals and I do not mean in relation to those FORCED to rent by stupidly high house prices and over the top rents. And we are certainly there! Edit I certainly got sucked in there but my excuse is that it fitted so well with the man 2's propaganda.

Once we get these dreamy lefty idiots out in 2020, there will be renters for all, forever. Those crazy do-somethings are all that is holding us back. Them and the beneficiaries.

The Man 1. Please take this as your first warning for trolling. And you can brush up on our commenting policy here - https://www.interest.co.nz/news/65027/here-are-results-our-commenting-policy-review
Thanks.

Oh give me a break - a warning for this? Have you even read your commenting policy?

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12

Actually I wrote it.

So let me understand this. If a person were to make a knowingly absurd statement for the purpose of satire or humour, that’s trolling. But if another were to make that same absurd statement and genuinely believe it, or be indifferent as to whether it was true or not, that’s NOT trolling, and even if they then repeatedly make that same absurd statement to the annoyance of just about everyone you’re ok with that?

So the smart satirist is a troll and a bad thing, but the fool is a village idiot and....a good thing? I think you’ve got it the wrong way around.

And I think you're putting words in my mouth.

Perhaps our satirist's mistake was to use a name referencing the person he or she is ripping the piss out of. But then, pick a different name and they'd just blend in.

TM2 probably ran to mummy faster than a slumlord on benefit day. (Is that acceptable?)

Please Note - this is TM1 not TM2

Are they both the same person? Can someone hack his account to check ip or email?

Indeed, were TTP, TM2 or Eco Bird to be subject to this experiment it would I suspect be a useful example of poe’s law

https://en.m.wikipedia.org/wiki/Poe%27s_law

Moderating a comments section is a thankless task, lets just be grateful we have a place like this where conversations can actually flow and where the caliber of comments is generally high. If it becomes too much of an inconvenience, comments will either close completely or be made unusable with pre-moderation like Stuff.

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10

boooooo, you're behaving like the security guards bringing down the streaker, it's Christmas Gareth, everyone loves a parody.

Yes, on the whole, trolls are generally harmless and their folksy personas reflect much of how the public thinks.

Remember there was always a place for the court jester in medieval times...it still true.

::runs naked through thread::

While the crowd may cheer you... am absolutely offended by you running naked through this thread... am hoping Interest security will give you a virtual ( had to use virtual or I’d be given a warning by the interest grinch) flying high straight arm tackle...
https://youtu.be/7aHlxv4LP3o
seriously though kakapo bro, that’s too funny...

::runs naked back the other way::

Oh, can't we have a little comedy?

Can you tell me what you are drinking?
I like your style.

Not related in any way but I see the house that delivered its chimney to the house next door was in the hands of a company called 'Quick Earth Moving'
That would be a mission statement...you can guess the rest...

Distinct whiff of foreign cowboy operation.

Aint it all,
But then NZ was corporatised at the time of Wild Bill Hickock, Wyatt Earp and Billy the Kid, not forgetting the Sundance Kid.
Perhaps we are still the wild, wild west.

I apologise, I had forgotten, Butch Cassidy

Not sure I would want to be in Augustine Lau's shoes right now.

Constantly looking over both shoulders and not sleeping too well

Fear is a constant companion and his clients will be thinking Triads and some form of retribution
He will have changed his name and done a runner

Probably seen the last of him in his current guise - except for the mess left behind

Yes, its mafia at their best.

It would be nice to name the mortgage lenders involved so I can rest easy that my deposits are safe.
I wouldn't want to be a customer of a bank or other institution that lends so cavalierly or is so easily
taken in.

Good point. For to be onsold at that markup Id be suprised if a NZ bank was in on this. Even on the summary looks like something transpired.

For the 88 Fairburn Road, Otahuhu property, the mortgage finance was provided by individual investors it seems. No banks or non bank lenders (aka finance companies) appear to be involved.

"Property records show the property has two mortgages on it; one securing up to $1 million in favour of Best Capital, Hyun Bin Kim and Duk Young Lee, and the other securing up to $2 million in favour of a person by the name of Jialing Mao."

Another property was financed by Westpac - https://www.interest.co.nz/sites/default/files/embedded_images/QIUFEN%20...

https://www.interest.co.nz/property/90720/notorious-property-managerdeve...

What money laundering?

Westpac filed the public notices. Westpac approved these dodgy loans.

Ken Chong Wang, Ching Wow Tong and Wing Feng Woo are clearly to blame here.