The first-home dreams shattered by failed promises and finger-pointing

Thursday, 14 April 2022

Serious allegations are being levelled around a housing development that's badly behind schedule.

Auckland 30-year-old Wei Hu saved for a deposit for her first house eight years, not taking holidays, being frugal with her expenses.

Hu was desperate, and believed getting into a house would make all those sacrifices worthwhile.

Then a company came along with the perfect pitch.

Reed Myers promised new three- or four-bedroom standalone houses less than 30 minutes’ drive from central Auckland if traffic was light.

First-home buyers in a development planned at Red Hills in Massey say they have seen little progress to date.

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The Red Hills Road development was originally slated to open in March, but it still sits largely undeveloped.

But the best thing about the Reed Myers development? The price, $699,999.

That was $1 below the $700,000 cap to qualify for the $10,000 KiwiSaver First Home Grant if you were buying a newly built house in Auckland.

08042022 News photo supplied from Facebook. property developer Peter Chevin has been declared bankrupt several times and he is allegedly involved with property developer Reed Myers.

The site Hu bought into, at Red Hills Rd, was one of several developments being pitched by Auckland-based Reed Myers on its website at the time, along with Triangle Rd in Massey, and Portman Rd in Mt Wellington.

Red Hills Rd was originally slated to open in March. But Hu and all the other would-be buyers are still waiting.

It has emerged the development doesn’t even have resource consent, and while some site work has started, the Auckland Council has intervened to shut it down, saying it is in breach of planning laws and rules.

And as time has gone on, Reed Myers has emerged as a company that is generating more questions than answers.

One of the biggest is exactly what the role is of Auckland-based property developer Peter Chevin. The company’s spokesman say he is a consultant, but others who have been involved suspect he is closely involved in running it.

Chevin has faced several bankruptcy proceedings going back to 1991, and has been barred from running a company since 2016 – the latest prosecution by the Ministry for Business Innovation and Employment was last year and means he is now banned from running a company until October 2026.

One of those people who suggests Chevin is closely involved is the original leaker of the infamous “winebox” documents during the 1990s, Stephen Lunn, a former director of Reed Myers.

He says Chevin “is not just a serial bankrupt, but a serial con man”. A former Reed Myers investor, Axel Henriksen, backs him up with similar allegations of dishonesty.

What work that has started on the Red Hills Rd site has been shut down by Auckland Council, which says consents are not in place.

Chevin was convicted of nine charges related to the theft of public funds in 2016, which saw him serve a nine-month sentence of community detention.

Chevin has fired his own shots back, accusing Lunn of lying and calling him a “very negative person with a very large chip on his shoulders”.

Back at Red Hills, Auckland Council team leader compliance Grant Schmidt says the work on the Reed Myers site is being done in breach of Resource Management Act rules, and the council’s planning code.

He says the council has issued abatement notices to the property owner and the developer of 11 Red Hills Road, requiring all earthworks there to stop immediately.

Schmidt says the council has not received an application for a resource consent at Red Hills, let alone issued one.

Wei Hu says she is not sure what to do now because house prices have risen so much since she handed over her deposit for her home at Red Hills.

Meanwhile, after waiting so long for her new home to be built, Wei Hu has been watching house prices rise to the extent that she will struggle to buy elsewhere.

“I really don’t know what to do,” she says.

Looking for a buyer

Four years ago, Massey Archery Club president Andrew Fong could see the writing on the wall for his club.

It is on Red Hills Rd in the north-west of Auckland, with tall trees and two waterways running through it, a

kennel and cattery next door.

The land is part of the Red Hills precinct, an area Auckland Council has mapped out as a potential hub for residential development.

Houses are going up all around the club, and Fong had worried there would be growing pressure for it to make way for housing, too.

So the club started looking for a buyer, and in 2020 Bridge Projects emerged. The archery club understood Bridge be a subsidiary of property development firm Reed Myers.

It was the first offer it got, and the club signed on the dotted line in August that year.

“We were very naive when we signed this. We’re a local archery club, mate, we’re not a business,” Fong says.

Soon the club started getting calls from first-home buyers who had already bought into the development and now wanted to visit.

Some in the archery club started raising alarm bells after they noticed Peter Chevin was involved.

“We had people phoning us going ‘we want to see where our house is going to be’.

'It’s like, 'yeah well you better not because we’re currently still shooting arrows on that land’,” Fong recalls.

But when the settlement date arrived last August,

The Columbard Building was pitched as a high-rise corporate crashpad when it opened in 2004.

Bridge Projects didn’t settle, and instead put a caveat on the land, effectively preventing the club from selling it to someone else.

The club could challenge the caveat in court, but this would be impractical for a small organisation like theirs, Fong says.

The street frontage of the Columbard a few years after it was built.

As well, club officials noticed the name Peter Chevin starting to appear in emails from Reed Myers. They googled him and started to get worried.

“[Earlier] we did due diligence on Bridge [Projects] and went ‘yup, we’re happy with who they are’,” Fong says.

An artist render of the Wellington Columbard that never took off.

“But as we were going through the unconditional process we suddenly realised that Peter Chevin was involved in this Bridge deal.

“And that’s when we started to get the heebie jeebies.”

‘That is your corporate crash pad’

If you walk down Auckland’s Queen St and peel off on to Wyndham, then make the steep climb up past Chemist Warehouse and the now-shuttered Misters Cafe, you will pass the front entrance of the development Chevin is most known for.

The Columbard is now an Ibis budget hotel, but is noteworthy for being 19 storeys high and only 7 metres wide, making it the narrowest high-rise in Auckland when it was built.

At launch, in 2004, it had 144 apartments, some as small as 16 square metres.

Reed Myers drew up plans for its Red Hills Rd development to show home buyers, and some bought off the plans but have been left waiting since.

In its heyday, the Columbard was pitched as a place office workers working or partying late in central Auckland could stay instead of taking a taxi back to the suburbs – a “corporate crash pad” as an old website for the Columbard put it.

The dream of Columbard would eventually come crashing down under its debts. According to news reports at the time Chevin blamed its failure on the uneconomic number of units in the building.

A similar project he pursued in Wellington under the Columbard name didn’t get off the ground.

The Red Hills development was plagued by an extended saga to settle the purchase of the land.

Then came the 2008 global financial crisis, which led to the collapse of finance company Mutual Finance, with which Chevin was involved – although not as a director as he was bankrupt. Its millions of dollars in losses were guaranteed by the Crown.

The aftermath triggered a large Serious Fraud Office case that ran into 2019. The Crown alleged money invested with Mutual Finance and another fund had been used to prop up unrelated, and failing, businesses.

The court later ruled Chevin’s involvement was secondary. He wasn’t a director, but he had been “wilfully blind” to what was going on. He was sentenced to nine months’ home detention in 2017.

However, two years later, when the remaining defendants tried to argue for sentences similar to Chevin’s, Justice Christopher Toogood made the comment: “it is clear that the sentence handed to Mr Chevin does not reflect his true criminality”.

“I am inclined to think Woolford J [the judge in Chevin’s case] might have taken a different view of Mr Chevin’s involvement if he had heard the evidence given at the trial before me.”

The pitch

Axel Henriksen is a longtime property investor, who coaches others on how to get rich as “the Wizard of Wealth”.

Stephen Lunn was concerned at the way some Reed Myers developments were being promoted to investors.

Henriksen says he met Chevin a number of years ago, and had been about to invest in a project with him, but the opportunity fell through. Still, he says he felt he knew Chevin based on their previous dealings.

So when Chevin suggested he invest in his new business venture, Henriksen didn’t see any reason why he shouldn’t.

During two meetings at Glenfield Mall in 2020, Chevin started outlining his grand vision for housing developments at several locations around Auckland.

To Henriksen everything seemed to line up, especially when it came to a planned development in Portman Rd, Mt Wellington.

Reed Myers was running an effective online advertising campaign for it, the development was in a great location, plus the building plans had already been drawn up and looked good too.

An old archery target on the Red Hills Rd land, which shows no sign of the houses that were promised and sold there.

So Henriksen transferred the money to Reed Myers to invest in Portman Rd.

Henriksen says that Chevin then suggested Henriksen could probably help sell some of those houses to new buyers too.

However, Henriksen recalls that when he made his sales pitch on Facebook he got an alarming message back.

“Somebody came and said to me ‘hey, you know that guy [Chevin] is a fraudster’, I said ‘eh? I don’t know about that’.

Trash litters the Red Hills Rd site that was supposed to be developed by Reed Myers into a residential subdivision.

“Next thing I know, the director of the company [Reed Myers] is ringing me and saying ‘let’s have a chat’.”

The winebox

The director who called Henriksen up was Stephen Lunn, a businessman who is probably most famous for his association with the Winebox affair of the 1990s – a notoriously complicated and long-running political and financial scandal.

It was Lunn who used a Montana cabernet sauvignon box to hold financial records that were at the centre of it all, and who handed those documents over to the Serious Fraud Office.

Lunn says he met Chevin and accountant Nigel Smith, the director of Parnell accounting firm Covisory, at a cafe near his office.

Lunn says he did not realise it at the time, but later became convinced that Chevin actually controlled the company.

The rest can be read in the pages of a High Court judgment handed down in February last year.

Lunn began to get nervous about the way Reed Myers was portraying the Portman Rd project to investors like Henriksen.

For starters, Reed Myers did not own the land and was short of funds to pay the deposit on it.

Investors were being told the project had sold out, but several sales contracts were conditional.

The development did not have resource consent, but was being advertised in November 2020 as if it was on-track to be completed by May 2021.

And he believed advertising to attract new investors into the business was misleading.

After Lunn raised concerns about these issues, he was removed as a director and replaced with Alex Constable.

Constable signed an investor’s agreement with Henriksen in November 2020 on behalf of Portman Projects (the investment vehicle for the Portman Rd development).

Henriksen says Lunn warned him his money was not safe, and advised Henriksen to sue Portman Projects to get his money back.

Justice Ailsa Duffy subsequently agreed there was a good case Henriksen’s funds were in danger of being lost, and she put a lot of weight on Lunn’s affidavit about what had happened.

Justice Duffy noted, “Mr Chevin has a history of not paying his debts”, and that there was “evidence that monies paid to the defendant [Portman] have been used to pay the personal expenses of Mr Chevin and his family”.

However, the judge’s larger concern was that Portman Project Limited was a “single purpose company” with no assets or savings of its own and “it has provided no sound evidence of its financial worth”.

She also said Lunn had been improperly replaced by Constable, and Portman Projects would likely have never accepted Henriksen’s money had Lunn not been replaced.

Chevin says he has never withdrawn investor money, could never do so, and has no access to any financial information regarding any of the companies he works at.

Reed Myers says Chevin doesn’t run things

Licensed real estate agent Peter Egden, who is listed as a director of Reed Myers, replied through a lawyer to questions about Chevin, reiterating he was a property and Resource Management Act consultant for the company.

“At times there is cross-over with this role in supporting the sales and marketing functions of the companies.”

Another director at the company, Alex Constable, asserts that Chevin is so removed from it all that he doesn’t even visit the construction sites.

As for the sale and purchase of the Red Hills Rd site, after a long tussle the Massey Archery Club finally settled its deal, but not with Bridge Projects.

Instead the sale was settled by a company owned by Auckland businessman Tim Egden, who has had dealings with Chevin in the past, and also recently obtained a court judgment against him.

So where does that leave Hu? She is about to turn 32 years old, and is left hoping her own story serves as a lesson for others.

“There were 119 lots for sale, and I was thinking, ‘oh there are another 119 people with me, it’s a big development. What else could go wrong?’.”