Inside Citizen Yan’s charmed life
enemy because he is associated with Falun Gong and is pro-democracy.
Political scandal
These multiple identities put the millionaire businessman at the centre of a political storm just before the 2008 election, when it emerged Labour Party Cabinet Minister Shane Jones had granted him citizenship despite an Interpol warning. Unproven allegations of “economic crime” in China led officials to believe Yan did not pass the good character test, but Jones overruled the advice because of his concerns Yan might be killed if forced to return to his homeland. This led to accusations of political bias as Yan had forged links to a number of MPs, particularly in Labour, who lobbied in support of his citizenship bid. The saga took another turn the following year when Yan was arrested at Auckland International Airport as he was about to board a plane, and charged with citizenship and immigration offences relating to his multiple identities. His trademark tracksuits were swapped for business suits at the High Court trial in 2012, where he was acquitted on all counts despite the presiding judge describing the circumstances as “highly suspicious”. But witnesses from China failed to travel to New Zealand for the trial to give evidence about his alleged false identity and fraud. Justice Timothy Brewer acquitted the businessman despite saying the evidence put before him “proves a situation that is highly suspicious”.
Most of the documents were false but were filled out by others on Yan’s behalf.
“In the absence of firm evidence that the accused knew of the falsity . . . there would need to be proof of dishonest intention in using the Liu Yang identity,” the judge said.
“Such proof, of course, would have to come from admissible evidence . . . the Crown has not been able to put such evidence before me.”
During the High Court trial, a Department of Internal Affairs official said Yan was confident of gaining citizenship because of support from MPs such as Labour’s Dover Samuels, who wrote three letters of support.
“He was so anxious that we send the files to the minister,” said Johannes Gambo.
The Auditor-General criticised Shane Jones in a subsequent report but found no evidence of political corruption.
Following his acquittal, Yan kept a low profile. But two years later, he again came to the attention of police when detectives found a note as part of an inquiry focused on a group of VIP high rollers at SkyCity.
Handwritten in Chinese, the note authorised the purchase of $1.85m worth of shares in a company registered in the tax haven of the British Virgin Islands and was signed by Yang Liu.
The record-breaking deal
That caught the attention of Operation Galaxy detectives from the Asset Recovery Unit. They took a fresh look at the dormant allegations of fraud in China and Yan’s business dealings in New Zealand.
In 2014 he had assets seized by police under the Criminal Proceeds Recovery Act, which essentially forces someone to explain their wealth.
In such cases, the police must reach the civil threshold of proof — “the balance of probabilities” — not the “beyond reasonable doubt” level needed for a criminal prosecution.
The investigation also uncovered Yan’s SkyCity records where he gambled $293m over 12 years, despite being banned twice for two years and losing $23m.
The Yan case was the first taken by New Zealand police in which the alleged criminal offending underpinning the civil case happened in a foreign jurisdiction.
Complex and convoluted, the case was heading for a five-month High Court trial this year.
Then, as revealed by the Herald in August, Yan surprisingly cut a recordbreaking deal with the police.
He would pay $42.85m, easily the largest forfeiture of its kind in New Zealand, but without any “admission of criminal or civil liability”.
All the seized assets, including the $3.5m Metropolis apartment, an expensive alcohol collection, millions in bank accounts, a fleet of luxury cars, and the Mega shares were given back to him.
The secret deal with China
However, the wider details of the settlement have been suppressed until now — including Yan’s secret deal with China.
Justice Susan Thomas approved the proposed settlement as a “sensible and pragmatic” outcome instead of an expensive trial.
Yan maintained he was independently wealthy in China, innocent of the fraud allegations and there were legitimate commercial reasons why his New Zealand assets were held in various entities.
Despite his claim of innocence, fighting the case was having a “significant adverse impact” on Yan in terms of time and money, as well as curbing his ability to earn a living.
On the other side, the police, while believing they had a strong case to prove the assets were “tainted property”, conceded there would be challenges given the complexity of the transactions spanning 16 years.
So a settlement to avoid a trial was deemed to be in the interests of justice, according to Justice Thomas
— but still needed to be approved by China.
“The conditions of settlement appropriately recognise that the primary criminal offending underpinning the [Police] Commissioner’s proceedings was perpetrated not in New Zealand, but in China,” wrote Justice Thomas.
“The proposed settlement is contingent on Mr Yan reaching an agreement with the Chinese Government that is satisfactory to those parties.”
After several months of further negotiations, the Chinese government insisted on two notable changes to the original proposal.
Most starkly, Yan would have to return to China to face prosecution for the alleged fraud.
“My understanding from counsel is that he will be on bail during the trial,” Justice Thomas wrote in her subsequent judgment in August 2016.
“Immediately following the trial, irrespective of the sentence imposed, the Chinese authorities will permit him to return to New Zealand.”
Finally, the Chinese also wanted Yan prosecuted for money laundering in New Zealand — despite the settlement being a civil case, not criminal.
And Yan, the “tough bugger” businessman, agreed to the deal.
China’s ‘fifth most wanted man’
Again wearing a tracksuit, Yan appeared in the Auckland District Court in November last year and was quietly charged with laundering a “significant” sum between 2012 and 2014. Everything was suppressed.
The very next day, China’s “fifth most wanted man” voluntarily surrendered himself to Chinese authorities and flew to Beijing to face trial on fraud charges.
China was able to hail his return as a great success of Operation SkyNet; a global crackdown on those alleged to have corruptly stolen money and fled overseas.
Yan’s return was plastered across Chinese media, but the outcome of the trial was not — nor his safe return to New Zealand two months later.
The outcome of the trial is unknown.
But this week, the 45-year-old fulfilled his final part of the deal.
Yan returned to the Auckland District Court to be sentenced.
A police investigation which started in 2007 and collected millions of pages of evidence boiled down to just one page.
The summary of facts was described as “singularly uninformative” by Judge Rob Ronayne, at an earlier hearing, although he was not “fishing for details”.
The judge had been asked to indicate what sentence he might impose on Yan, if he pleaded guilty to the money laundering charge. There was no mention of any specific dollar amount, just that Yan had received “significant sums of money”.
“Those funds were the proceeds of serious offending, namely, a series of frauds. Mr Yan believed those funds were the proceeds of that serious offending,” according to the summary released to the Herald.
“Mr Yan subsequently concealed the funds in various ways, including conducting transactions through SkyCity Casino and third party banking facilities . . . to conceal the nature and/or source of the funds.”
In the end, Judge Ronayne indicated Yan would serve his sentence in the comfort of his home — either five months’ home or community detention — if he pleaded guilty.
He did and this week Judge Ronayne made good on his promise.
Paul Wicks, QC, urged the judge to consider a sentence of community detention so Yan could continue his work developing property.
Yan was not involved in the “series of frauds” referred to in the summary of facts, said Wicks, and did not personally gain from it.
Yan insisted the “significant” amount of money laundered did not exceed $30,000 — although this was not in the agreed summary of facts — said Wicks.
The Queen’s Counsel referred Judge Ronayne to the previously suppressed judgment of the $42.85m civil settlement, and asked him to consider the “unusual” background leading to the prosecution.
“The conditional settlement was approved and then amended,” Wicks said, referring to the Chinese requirement for Yan to return to China, and be charged in New Zealand.
“Your Honour might think it was amended in an unusual way.”
Judge Ronayne then asked Yan to stand.
“Mr Yan, this has been a slightly unusual sentencing exercise for you. I acknowledge quite a lot of water has gone under the bridge before you came before this court on this charge.”
He was sentenced to five months of home detention, to be spent in an apartment at a downtown Auckland hotel.
Special conditions mean Yan can leave the apartment for meetings during weekdays, for up to five hours each day, but only with the approval of his probation officer.
A request to be allowed to use the hotel gymnasium was flatly declined.
On receiving his sentence, Yan bowed and left the dock.
Despite the black mark of a conviction for money laundering, the result was a victory, of sorts, for him.
He has resolved his issues in China without having to spend a day in prison; once his sentence expires, Yan’s free to travel and get back to work.
On leaving the courtroom, he exchanged pleasantries with an official from the Chinese Embassy who had observed the hearing.
The deal was a victory for China. They were able to bring back their “fifth most wanted man” in a show of strength.
Despite New Zealand not having an extradition treaty with China, other “economic fugitives” living here now may want to cut similar deals.
Also watching the sentence was a trio of police officers including Detective Senior Sergeant Craig Hamilton, the officer in charge of the mammoth investigation.
The deal was also a victory for the police. Despite what some would consider to be a light sentence, they finally secured a conviction against Yan and get to keep $15m of the seized money.
“I guess what this tells us is, his past behaviours are finally catching up with him,” Hamilton told the Herald.
Yan shook hands with everyone, then walked from the Auckland District Court for the last time.
For the first time since arriving in New Zealand, he no longer has to look over his shoulder.
‘Simply not credible’
Through nearly a decade of headlines, Yan has always maintained a dignified public silence.
His side of the story has been told only in legal submissions filed by one of his Queen’s Counsel — five at last count — except on one occasion.
A few months after his penthouse was raided in 2014, Yan took the witness stand in the High Court at Auckland during an application for nearly $250,000 in annual living costs to be paid out of the frozen assets.
The gist of his evidence was there were no assets hidden overseas — the police had found everything.
Now the case is closed, suppression orders have fallen away from parts of Justice Geoffrey Venning’s refusal to release the funds.
Yan was cross-examined by Mark Harborow, on behalf of the police, about a number of transactions including two late model Porsches, a planned $20m mansion on the North Shore and the Rolls Royce which Lentino drove home. He denied the luxury assets were for him.
As for the Rolls Royce, Yan said it was a “gift” rather than payment for the Mega shares. Justice Venning wasn’t convinced. In fact, the Chief High Court judge was sure Yan controlled “significant” assets and bank accounts in foreign jurisdictions.
In frank terms, he described Yan’s evidence, variously, as “general”, “unsatisfactory” and “evasive”.
“I did not find Mr Yan to be a credible or reliable witness.”
I guess what this tells us is, his past behaviours are finally catching up with him. Detective Senior Sergeant Craig Hamilton