Police prepare record $70m case
Enforcers target international mogul’s NZ assets amid allegations of $200m fraud
Nearly $70 million in Kiwi assets belonging to an international mogul facing allegations of running a $200m pyramid scheme will soon be part of a record civil forfeiture application.
Xiao Hua Gong, also known as Edward Gong, is an entrepreneur known for building a business empire through a hotel chain and television channels in Toronto.
But Gong was arrested in Canada in December 2017 over an alleged pyramid scheme said to involve the fraudulent sale of hundreds of millions of dollars in shares in China.
Nine months before that arrest, however, the High Court granted the New Zealand Commissioner of Police freezing orders for $69.5m of Gong’s assets here, held in bank accounts and property, as part of a global investigation.
The mogul has denied the charges and allegations that his financial success and influence were gained from a $202m scheme selling medicines in China. Police here argue Gong was hiding money in NZ to distance himself from the alleged fraud.
The case returned to the High Court at Auckland yesterday as police sought to extend the restraining orders against Gong’s assets, which were due to expire on June 23.
The court heard Gong’s property will soon be part of a civil forfeiture application by the commissioner.
If successful it will eclipse the current record forfeiture by some margin, which is $42.85m in a case involving William Yan, one of New Zealand’s most controversial citizens.
Justice Sarah Katz said the commissioner held concerns about Gong losing a third legal team here, which may cause further delay, and also raised an eyebrow about his conduct which appeared to be “engaging in other delaying tactics”.
The mogul has claimed the evidence against him was gathered by coercion in China. Several people in China have already been jailed and fined for their part in the alleged pyramid scheme, the New Zealand courts have heard.
Earlier this year, a Kiwi finance firm was fined $2.55m for failing to report $53.4m worth of suspicious transactions belonging to Gong.
The case against Jiaxin Finance, its sole director Qiang Fu and Fu’s mother, Fuqin Che, was revealed by the Herald and was the first case of its kind in New Zealand’s courts since specific anti-money laundering laws were introduced a decade ago.
The Auckland-based company, Fu and Che were found guilty of failing to report and keep adequate records for 311 suspicious transactions.
They also failed to conduct customer due diligence.
Che was further found guilty of structuring a transaction to avoid Anti-Money Laundering and Countering Financing of Terrorism Act (AML/ CFT) requirements. Fu was personally fined $180,000, while Che was hit with a $202,000 penalty.