Auckland pair and business charged in relation to $202m pyramid scheme
Tuesday, 26 June 2018
An Auckland finance company and two New Zealand-based employees have been charged in relation to a $202 million pyramid scheme allegedly run by a Chinese millionaire.
The Department of Internal Affairs has brought Anti-Money Laundering and Countering Financing of Terrorism Act charges against the two individuals and the business.
The pair, along with the finance company, appeared at Auckland District Court last month in relation to the charges.
Their identity, along with the company's name, is suppressed.
READ MORE: $70m of assets frozen
Their dealings are linked with businessman Xiao Hua Gong, also known as Edward Gong, who is facing what could become New Zealand's largest ever forfeiture order for operating a $202m pyramid scheme.
Gong is facing major court action in Canada and New Zealand for his alleged dodgy business - something he denies.
A Canadian search warrant obtained by Stuff says police froze and seized about C$63m (NZ$69m) in New Zealand bank accounts, as well as two Auckland properties worth about $3m which belonged to Gong.
According to the police, Gong created a scheme in China which revolved around the sale of health products, along with the gifting of shares in drug and television companies.
'Gong set up the schemes, managed all of its elements, employed others to facilitate the scheme and received a large amount of money in compensation for his efforts,' Canadian police said in court documents.
The Auckland-based pair are accused of failing to conduct due diligence for Gong over the transfer of $53,462,190 Chinese funds.
Gong funnelled more than $75m of alleged profits from the scheme into New Zealand bank accounts over seven years, documents showed.
Gong allegedly made hundreds of individual payments to the Auckland finance firm during that time.
Internal Affairs described the payments to the New Zealand-based finance company by, or on behalf of Gong, as 'complex or unusually large'.
According to court documents, the deposits exceeded the company's maximum remittance transaction limit, were received at short notice and were 'objectively suspicious'.
The funds had no 'visible or lawful purpose', court documents said.
The company also failed to conduct due diligence on Gong for the $53.5m.
Property records show one of those arrested owns a home worth $1.5m. When visited by Stuff, a luxury car was parked in the garage.
He said he would not comment on the charges and referred Stuff to his lawyers.
The company, which was started in 2014, describes itself as a two-way currency exchange service that is 'excellent, fast and safe'.
It has branches in Auckland.