‘Super investor’ faces $400k fine for fixing bids

Property investment advice firm Ronovation, run by Auckland ‘‘super investor’’ Ron Hoy Fong, has agreed to pay a $400,000 fine for price fixing.

Ronovation, trading as Ronovationz, was found to have encouraged buyers to use fake names, work together to drive down prices and target desperate homeowners facing foreclosure.

The Commerce Commission filed High Court proceedings against Ronovation in July this year for illegal bid-rigging in Auckland’s residential real estate market.

Prosecutor John Dixon QC said the company admitted wrongdoing shortly after the commission filed its proceedings.

Dixon said the fine was discounted by

35 per cent from a starting point of

$550,000-$650,000, for Ronovation’s cooperation with the commission’s investigation and its acceptance of wrongdoing.

Ronovationz was set up in April 2009 and conducted business advising members on how to acquire and improve investment properties in Auckland.

By March 2018, Ronovation had more than 400 paid members, paying a fee of up to

$19,500 to be coached by Fong and his tutors. It developed rules in September 2011 to govern the conduct of members, including a guideline that prevented Ronovation members from competing with each other for properties. The rules, which applied between September 2011 and September

2018, amounted to cartel conduct in breach of section 30 of the Commerce Act.

Court documents showed Fong’s company facilitated the bid-rigging by devising a set of ‘‘priority rules’’ for paid members, posted in a private Facebook group, to prevent students bidding against each other and driving up prices.

Ronovation’s members posted selfies of themselves outside houses they were interested in, giving them first dibs to make offers or bids at auctions.

‘‘We are a group, so shouldn’t have to compete against each other because when you do, the vendor is really the only one who wins,’’ one post stated.

This activity carried on for seven years and at least 471 properties were sold through the Facebook group.

Last week in a penalty hearing at the High Court in Auckland, the competition watchdog and the firm agreed to pay a fine of $400,000.

Justice Sarah Katz reserved her decision on the agreed penalty.