Trio guilty of $54 million mortgage fraud

AUCKLAND: A banker, a lawyer and the wife of a property developer have all been found guilty over a $54 million mortgage fraud scheme that involved bribes and more than 100 property transactions across Auckland and Hamilton.

After a threemonth trial concluded last month, Justice Sarah Katz delivered her verdicts yesterday morning.

The trial had begun in the High Court at Auckland in February for Kang Xu, also known as Yan (Jenny) Zhang, lawyer Gang (Richard) Chen, and former BNZ banker Zongliang (Charly) Jiang.

The trio were part of a quartet charged by the Serious Fraud Office (SFO) over 76 properties and suspicious mortgages, involving 57 loan applications and 110 transactions.

Jiang was found guilty of all 25 charges he faced, Xu was found guilty of 22 of 34 charges, and Chen guilty of 10 of 12 charges.

The SFO wished to charge former ANZ banker Peter Cheng too, but he fled the country before court action could be taken. He is thought to be in China.

Justice Katz’s verdicts were contained in 210 pages, after she had considered 1500 pages of notes evidence and thousands more pages of documentary evidence.

Xu is the wife of Auckland property developer Kang Huang, who has already been jailed for his part in the fraud.

All but $394,000 of the loaned funds has been repaid, the court heard at Huang’s sentencing, and ANZ was pursuing the outstanding amount.

Justice Katz called Huang the ‘‘mastermind and instigator of the scheme’’, who was the one the others had assisted.

During the trial, Xu’s lawyer Adam Simperingham said Huang was a ‘‘megalomaniac’’ who hid his fraudulent nature and should be solely blamed for the criminal activity.

Xu, Chen and Jiang will be sentenced later this year, but Justice Katz was concerned about them skipping the country, despite their passports being surrendered.

‘‘I’m slightly worried about the access to false passports . . .’’ she said.

Xu lives in New Zealand with her teenage daughter and was not a flight risk, Mr Simperingham argued. He added he would be seeking a sentence of home detention for his client.

Justice Katz granted Xu bail until sentencing. Chen and Jiang were remanded in custody.

She said she was particularly concerned about Chen’s flight risk after he had been able to access false passports as part of the fraud.

Chen’s lawyer Sam Wimsett said his client had not personally benefited from the broader fraud and he would provide the court a cultural report before sentencing, which he said would show the Chinese cultural norms of how Chen responded to the requests and demands of Huang.

In the summary of her verdicts, Justice Katz said Chen acted as the ‘‘middleman’’ between Huang, Xu and his ‘‘inside contacts’’ at BNZ and ANZ, Jiang and Cheng.

The scheme involved loans of more than $54 million, 57 applications for finance, 76 Auckland and Hamilton properties, and bribes of $7000 per transaction to the two bankers who approved the loans. — NZME