Second death haunts $45m ponzi probe
Widow of director of giant scheme dies before facing questions from investigators, writes Matt Nippert
A probe into a ponzi scheme has been rocked by the death of the mastermind’s widow, following months of unsuccessful attempts by investigators to question her about the fate of $45m missing from investor accounts.
Sandy Tsai, also known as Tui Tai Tsai and Azalea Tsai, is understood to have died in January. She was the widow of Masatomo Ashikaga, also known as Tom Tanaka, whose own death in February 2019 led investors and liquidators to discover his East Wind immigration and investments business was a giant ponzi.
East Wind targeted Japanese pensioners for decades, offering unregulated immigration advice to gain New Zealand residency and associated investment services — including promising financial returns of 8 per cent.
Grant Thornton were appointed as liquidators in May 2019, and their most recent report into the group said 225 creditors — largely investors — were owed a total of $44.7 million.
Grant Thornton partner Tim Downes said the death of Tsai was a “setback” to attempts to trace East Wind proceeds, but the past year had allowed the business to be reconstructed from seven years of bank records.
“Its an out-and-out ponzi scheme. They put money in and they were getting 8 per cent returns — but it wasn’t interest from earnings, it was money paid out of subsequent chunks of money paid out from new investors,” Downes said.
“You’ve got a situation where $45m of investors’ money has gone missing. You’ve got the Japanese language barrier, from an oral and written point of view. You’ve got records that don’t exist.
“We’ve had to start with bank statements and work from there.”
In October he said Tsai had proven “elusive” and had not answered any questions about the business. Downes this week said more recent efforts to prise answers from her about the missing millions had also proved unsuccessful.
“In spite of numerous attempts to interview her, some of which were responded to by a lawyer, she was elusive.
“Then we heard she was ill. Then, sadly, that she had in fact passed away.”
Downes said Tsai had maintained her innocence.
“The word we got through her and her lawyer, by way of email, was she knew nothing about the business. We found that hard to believe.”
Bank records and Companies Office filings indicated she had been involved in the businesses’ operations, after the death of her husband she had closed East Winds’ office and bank accounts and sold off property in Japan. Downes said these lines of inquiry had been pursued.
“We’ve identified a couple of properties there, and believe we are entitled to the proceeds of those sales,” he said.
If needed, Downes said Grant Thornton’s offices in Japan could be utilised to provide further assistance.
Downes’ latest report identified “significant monies” paid into an investment fund, and legal advice was now being sought as to who — whether individual investors or all creditors as a whole — were entitled to them.
Downes said the sums involved with this fund were “in the millions” and one year on, his liquidation was some way from concluding.
“The search continues, but we’re making progress. We’ve now identified tangible assets in the form of cash.
“We know it exists, and we know parties we can bring to account,” he said.
The coroner concluded last year Ashikaga had died of complications of chronic alcoholism.
Downes said there were suspicions by investors over whether Ashikaga had faked his own death, but he had
The word we got through her and her lawyer, by way of email, was she knew nothing about the business. We found that hard to believe.
Tim Downes, partner at liquidator Grant Thornton
dismissed these after hearing from witnesses who had attended the funeral and viewed the body.
Tsai is understood to have been ill for some months before dying in January.
Downes said he was confident she was, in fact, dead. The Office of Births, Deaths and Marriages did not respond to questions whether this fact could be confirmed by publication time.
The East Wind case appears to be the largest ponzi scheme uncovered in New Zealand since David Ross was jailed in 2013 for running a decadelong scheme that sucked in $115m from investors.
Long-running court action over the Ross case, including the making of case law over whether investors are able to keep “investment” proceeds withdrawn shortly before a ponzi scheme’s collapse, is likely to inform the handling of East Wind in the coming years.
In September the Herald revealed a detailed complaint had been made about East Wind to the Serious Fraud Office in 2014, but after a year of “preliminary assessment” it was referred to Immigration New Zealand who in turn had declined to take action citing “other operational priorities”.
Following Herald reporting, SFO Minister Stuart Nash requested a briefing on the matter, and the fraudbusting agency subsequently opened a formal investigation into East Wind in October.
The SFO did not respond to questions yesterday about the current status of the case.
The Weekend Herald understands its investigators had been interviewing investors about East Wind as recently as last week.