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High Court of New Zealand Decisions |
Last Updated: 5 November 2019
FOR A COURT READY (FEE REQUIRED) VERSION PLEASE FOLLOW THIS LINK
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SUPPRESSION ORDERS MADE IN DISTRICT COURT CONTINUE TO
APPLY. IDENTITY OF “BANK A” SUPPRESSED. IDENTITY OF
GANG CHEN’S FORMER LAW FIRM AND ITS PARTNERS
SUPPRESSED
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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
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CRI-2016-004-009392 [2018] NZHC 1433
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THE QUEEN
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v
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KANG XU GANG CHEN
ZONGLIANG JIANG
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Hearing:
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26, 27, 28 February 2018; 1, 2, 5, 6, 7, 8, 9, 12, 13, 14, 19, 20,
21,
22, 23, 26, 27 and 28 March 2018
9, 20, 11, 12, 17, 18, 19, 20, 23, 24, 26, 27 and 30 April 2018
1, 2, 3, 4, 10, 11, 15, 16, 17 and 18 May 2018
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Counsel:
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T A Simmonds, K J Cooper and S E Cann for Serious Fraud Office
A M Simperingham and W Zhang for Xu
S N B Wimsett, T P Refoy-Butler and S T Patia for Chen J-A Kincade And A
Shendi for Jiang
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Verdicts and Reasons:
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15 June 2018
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VERDICTS AND REASONS OF KATZ J
Solicitors: Serious Fraud Office, Auckland
A Simperingham, Woodward Chrisp, Gisborne W Zhang, Woodward Chrisp, Gisborne Morrison Mallett, Auckland
Counsel: T Simmonds, Barrister, Auckland
S Cann, Barrister, Auckland
S N B Wimsett, Barrister, Auckland
S T Patia, Samuel Wimsett Barrister, Auckland J-A Kincade, Blackstone Chambers, Auckland A Shendi, Barrister, Auckland
R v XU, CHEN & JIANG [2018] NZHC 1433 [15 June 2018]
TABLE OF CONTENTS
Overview of the mortgage fraud scheme [7]
Charges against Ms Xu [16]
Charges against Mr Chen [23]
Charges against Mr Jiang [34]
C. THE LAW / ELEMENTS OF THE OFFENCES [40]
Must the defendant have personally incurred a debt or liability? [45]
Were some lending decisions made by a computer? [60]
Must the debt or liability be legally enforceable? [62]
Burden and standard of proof [89]
Deciding the case on the evidence [90]
Inferring intent/defendant’s state of mind [93]
LV Park’s “refinancing” scheme [101]
Lending policies and processes of the banks [114]
BNZ’s reliance on information provided to it by loan applicants [143] ANZ’s reliance on information provided to it by loan applicants [146] Bank A’s reliance on information provided to it by loan applicants [148] Has the Crown proved the element of inducement/causation? [151]
G. CHARGES AGAINST MS XU [157]
Overview of charges against Ms Xu [157]
Circumstantial evidence relevant across all charges [162]
The nature of circumstantial evidence [162]
Forged loan applications [173]
Key evidence relating to the false bank statements [175]
Key evidence relating to the false salary payments [185]
Key evidence relating to the false employment letters [189]
The false bank statements particulars [194]
The false bank statements [196]
Who created the false bank statements? [199]
Evidence regarding the provision of false bank statements to the banks [244]
Was Ms Xu the person who provided the false bank statements
Did Ms Xu know that the bank statements were false? [339]
Did Ms Xu intend to deceive one or more bank employees? [340]
Were the banks induced to advance loans as a result of the provision
of the false bank statements? [341]
The false salary payments particulars [342]
The false salary payments [344]
Was Ms Xu the person who made the payments? [362]
Falsity of the payments/intention to deceive the bank [373] Were the banks induced to advance loans as a result of the false salary payments? [380]
The false employment letters and deposit slips particulars [381]
The false employment letters [384]
Did Ms Xu create the false employment letters? [393]
Did Ms Xu create the false savings deposit slips? [398]
Did Ms Xu provide the false employment letters and deposit slips
H. OBTAINING BY DECEPTION CHARGES AGAINST MR CHEN [421]
Overview of the charges against Mr Chen [421]
Circumstantial evidence relevant across all charges [422]
Relationship between Mr Jiang and Mr Chen [426]
The use of Lugton’s Limited Real Estate forms [428]
The purchase of 10/175 Queen St by Huazhen Zhang [435]
Kai Wang and Feng Ye loan applications [438]
Deposits into bank accounts of Mr Jiang and Peter Cheng [443]
The charges relating to the Shou Zhang passport [445]
Did Mr Chen provide a false passport in the name of Shou Zhang
Did Mr Chen provide the false Shou Zhang passport to ANZ? [464]
Did Mr Chen intend to deceive BNZ and ANZ by providing the
false Shou Zhang passport to them? [470]
The false salary payment charges [472]
The payments into Ming Li’s bank account [474]
The payments into Lifeng Li’s bank account [488]
Was Mr Chen the person who made the payments? [501] Knowledge of the falsity of the payments/intent to deceive the bank [505] Inducement/causation [506]
The charges alleging an omission to inform the banks that
Mr Huang or LV Park was the true borrower [507]
Overview of charges 3 and 4 [507]
Did Mr Chen omit to disclose to the banks a material particular? [509]
Did Mr Chen owe a duty to the banks to disclose that Mr Huang or
LV Park was the “true borrower”? [513]
Did Mr Chen intend to deceive the banks by his omission? [526]
“Omission” charges where Mr Chen himself was the borrower [529]
“Omission” charges relating to Huazhen Zhang, Kai Wang
The purchase of 10/175 Queen Street on 17 July 2013 [538]
Sale of 1 Geranium Ave, 15 Barwick Place and 77 New Borman Road
on 4 November and 5 December 2013 [548]
Sale of 9 Hampshire Court and 1768 River Road on 4 November 2013 [555]
Did Mr Chen know that the income and employment information provided to the banks regarding Huazhen Zhang, Kai Wang and
Did Mr Chen owe a duty to the banks to disclose that the employment and
income information provided to them was false? [567]
Did Mr Chen intend to deceive the banks by his omission? [569]
I. OBTAINING BY DECEPTION CHARGES AGAINST MR JIANG [571]
Overview of the charges against Mr Jiang [571]
Circumstantial evidence relevant to all charges [577]
Relationship between Mr Jiang and Mr Chen [579]
The Wenlong Wang loan applications [595]
The Ming Li loan applications [604]
The Lifeng Li loan application [607]
Alleged secret commission payments [611]
Volume of LV Park-related transactions processed by Mr Jiang [616]
Analysis of the obtaining by deception charges [617]
Was Mr Jiang aware of the mortgage fraud being perpetrated on
Did Mr Jiang know that the employment, income or passport
information provided was false? [621]
Did Mr Jiang know that the borrowers named in the loan applications
were not the “true borrowers” [722]
Did Mr Jiang process and/or approve loans based on false information? [725]
Did Mr Jiang intend that one or more other bank employees would
Conclusion regarding the obtaining by deception charges [733]
The secret commissions charge against Mr Jiang [735]
The evidence relating to the alleged secret commission payments [736]
Did Mr Jiang accept secret commission payments as inducements or
rewards for processing and/or approving the relevant loan applications? [750]
The secret commissions charge against Mr Chen [766]
The evidence relating to the alleged secret commission payments [767]
Did Mr Chen make the secret commission payments to Mr Jiang and Peter Cheng as inducements or rewards for processing and/or
approving the relevant loan applications? [777]
A. VERDICTS
[1] I have today delivered the following verdicts:
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Verdict No.
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Charge
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Defendant
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Verdict
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1
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Charge 3
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CHEN: Obtained by deception (representative)
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Guilty
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2
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Charge 4
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CHEN: Obtained by deception (representative)
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Guilty
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3
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Charge 5
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CHEN: Obtained by deception (163C Bankwood Road)
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Not Guilty
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4
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Charge 6
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XU: Obtained by deception (8 Hampshire Court)
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Guilty
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5
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Charge 6
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JIANG: Obtained by deception (8 Hampshire Court)
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Guilty
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6
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Charge 7
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XU: Obtained by deception (9 Stanton Place)
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Not Guilty
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7
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Charge 7
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JIANG: Obtained by deception (9 Stanton Place)
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Guilty
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8
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Charge 8
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XU: Obtained by deception (12 Hampshire Court)
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Guilty
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9
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Charge 8
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JIANG: Obtained by deception (12 Hampshire Court)
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Guilty
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10
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Charge 9
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XU: Obtained by deception
(13 Barwick Place, 4 Cascade Place and 163C Bankwood Road)
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Guilty
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11
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Charge 9
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JIANG: Obtained by deception
(13 Barwick Place, 4 Cascade Place and 163C Bankwood Road)
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Guilty
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12
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Charge 10
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XU: Obtained by deception (5 and 9 Hampshire Court)
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Guilty
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13
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Charge 10
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JIANG: Obtained by deception (5 and 9 Hampshire Court)
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Guilty
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14
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Charge 11
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XU: Obtained by deception (12 Ashwick Terrace)
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Guilty
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15
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Charge 11
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JIANG: Obtained by deception (12 Ashwick Terrace)
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Guilty
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16
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Charge 12
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XU: Obtained by deception
(1 Briar Close and 62 Te Huia Drive)
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Guilty
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17
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Charge 12
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JIANG: Obtained by deception
(1 Briar Close and 62 Te Huia Drive)
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Guilty
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18
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Charge 13
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JIANG: Obtained by deception
(4 Trimmer Lane and 60 Te Huia Drive)
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Guilty
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19
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Charge 14
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XU: Obtained by deception
(11 Hawtry Lane and 7 Hampshire Court)
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Guilty
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20
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Charge 14
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JIANG: Obtained by deception
(11 Hawtry Lane and 7 Hampshire Court)
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Guilty
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21
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Charge 15
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CHEN: Obtained by deception
(1768 River Road and 15 Barwick Place)
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Guilty
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22
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Charge 15
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JIANG: Obtained by deception
(1768 River Road and 15 Barwick Place)
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Guilty
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23
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Charge 16
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XU: Obtained by deception (78 and 80 Barrington Drive)
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Guilty
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24
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Charge 17
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XU: Obtained by deception (12 and 25 Barwick Place)
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Not Guilty
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25
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Charge 17
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JIANG: Obtained by deception (12 and 25 Barwick Place)
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Guilty
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26
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Charge 18
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XU: Obtained by deception (408 Ormiston Road)
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Not Guilty
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27
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Charge 18
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JIANG: Obtained by deception (408 Ormiston Road)
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Guilty
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28
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Charge 19
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XU: Obtained by deception (5 Te Ironui Place)
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Not Guilty
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29
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Charge 19
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JIANG: Obtained by deception (5 Te Ironui Place)
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Guilty
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30
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Charge 20
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XU: Obtained by deception
(6 Sutherland Court and 79 New Borman Road)
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Not Guilty
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31
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Charge 20
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JIANG: Obtained by deception
(6 Sutherland Court and 79 New Borman Road)
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Guilty
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32
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Charge 21
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XU: Obtained by deception
(29 Piwakawaka Court and 77 New Borman Road)
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Not Guilty
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33
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Charge 21
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JIANG: Obtained by deception
(29 Piwakawaka Court and 77 New Borman Road)
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Guilty
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34
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Charge 22
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XU: Obtained by deception (107 New Borman Road)
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Not Guilty
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35
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Charge 22
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JIANG: Obtained by deception (107 New Borman Road)
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Guilty
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36
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Charge 23
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XU: Obtained by deception
(29 Te Ironui Place and 7 Barwick Place)
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Not Guilty
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37
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Charge 23
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JIANG: Obtained by deception
(29 Te Ironui Place and 7 Barwick Place)
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Guilty
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38
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Charge 24
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XU: Obtained by deception (18 Te Ironui Place)
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Not Guilty
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39
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Charge 24
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JIANG: Obtained by deception (18 Te Ironui Place)
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Guilty
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40
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Charge 25
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XU: Obtained by deception (410 Ormiston Road)
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Not Guilty
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41
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Charge 25
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JIANG: Obtained by deception (410 Ormiston Road)
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Guilty
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42
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Charge 26
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XU: Obtained by deception (1 Barwick Place)
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Not Guilty
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43
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Charge 26
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JIANG: Obtained by deception (1 Barwick Place)
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Guilty
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44
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Charge 27
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CHEN: Obtained by deception
(40 Hartis Avenue and 3 Sutherland Court)
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Guilty
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45
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Charge 27
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JIANG: Obtained by deception
(40 Hartis Avenue and 3 Sutherland Court)
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Guilty
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46
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Charge 28
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CHEN: Obtained by deception
(24 Waikura Drive, 17 Hartford Terrace, 108 New Borman Road and 5 Barwick
Place)
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Guilty
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47
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Charge 28
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JIANG: Obtained by deception
(24 Waikura Drive, 17 Hartford Terrace, and 108 New Borman Road)
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Guilty
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48
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Charge 29
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XU: Obtained by deception (102 Barrington Drive)
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Guilty
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49
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Charge 29
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JIANG: Obtained by deception (102 Barrington Drive)
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Guilty
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50
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Charge 30
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XU: Obtained by deception (27 Hart Road)
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Guilty
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51
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Charge 30
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JIANG: Obtained by deception (27 Hart Road)
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Guilty
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52
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Charge 31
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XU: Obtained by deception (1 Geranium Avenue)
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Guilty
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53
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Charge 31
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JIANG: Obtained by deception (1 Geranium Avenue)
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Guilty
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54
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Charge 32
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XU: Obtained by deception (64 Magellan Rise)
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Guilty
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55
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Charge 33
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XU: Obtained by deception
(11 and 12 Hemsby Place and 59a Alpers Ridge)
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Guilty
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56
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Charge 34
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CHEN: Obtained by deception (10/175 Queen Street)
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Guilty
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57
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Charge 35
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CHEN: Obtained by deception
(16 Sirius Crescent, 66 and
68 Magellan Rise)
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Guilty
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58
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Charge 36
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XU: Obtained by deception (35 and 37 Pickaberry Avenue)
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Guilty
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59
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Charge 37
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XU: Obtained by deception (33 and 39 Pickaberry Avenue)
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Guilty
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60
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Charge 38
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XU: Obtained by deception
(12 Ashwick Terrace, 12 Hampshire
Court, 27 Hart Road, 3 Sutherland Court, 40 Hartis Avenue, 60 Te Huia Drive
and 8 Hampshire Court)
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Guilty
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61
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Charge 39
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XU: Obtained by deception
(11 Hawtry Lane, 1 Briar Rose Court, 163C Bankwood Road, 4 Cascade Place,
62 Te Huia Drive, 12 Barwick Place, 5 and 7 Hampshire Court)
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Not Guilty
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62
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Charge 40
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XU: Obtained by deception (43 and 49 Pickaberry Avenue)
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Guilty
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63
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Charge 41
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XU: Obtained by deception
(1 Geranium Avenue, 15 Barwick Place, 77 New Borman Road)
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Guilty
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64
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Charge 42
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CHEN: Obtained by deception
(1 Geranium Avenue, 15 Barwick Place, 77 New Borman Road)
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Guilty
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65
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Charge 43
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XU: Obtained by deception
(1768 River Road and 9 Hampshire Court)
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Guilty
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66
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Charge 44
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CHEN: Obtained by deception
(1768 River Road and 9 Hampshire Court)
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Guilty
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67
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Charge 45
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XU: Obtained by deception (41 and 45 Pickaberry Avenue)
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Guilty
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68
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Charge 46
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XU: Obtained by deception (31 Hart Road)
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Guilty
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69
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Charge 47
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XU: Obtained by deception (33 Hart Road)
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Guilty
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70
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Charge 48
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CHEN: Obtained by deception (408 Ormiston Road)
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Not Guilty
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71
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Charge 50
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JIANG: Secret Commissions Act
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Guilty
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72
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Charge 51
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CHEN: Secret Commissions Act
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Guilty
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[2] My reasons for these verdicts are set out below.
B. SUMMARY AND OVERVIEW
[3] I have found each of the defendants, Kang (Jenny) Xu1, Gang (Richard) Chen and Zongliang (Charly) Jiang, guilty of a number of charges relating to a large-scale mortgage fraud that was perpetrated against the Bank of New Zealand (“BNZ”), ANZ Bank New Zealand Limited (“ANZ”) and, in one case, a third bank. Mr Jiang has been found guilty of all 26 of the charges he faced. Ms Xu has been found guilty of 22 of the 34 charges against her, and Mr Chen has been found guilty of 10 of the twelve charges against him.
[4] The fraud involved 57 loan applications, relating to 110 separate property transactions. The total value of the loans in issue was approximately $54 million. Most of the offending occurred between late 2011 and late 2013.
[5] Ms Xu, Mr Chen and Mr Jiang worked together with Ms Xu’s husband, Mr Huang, to perpetrate the fraud. Mr Huang pleaded guilty to the 10 charges he faced relating to his involvement in the fraud, prior to trial.2 He was sentenced for his role in the offending in February. Following Mr Huang’s guilty pleas, 48 of the charges in the Amended Crown Charge Notice remained for determination. Due to the number of joint charges, however, 72 verdicts were required.
[6] The defendants’ trial was a lengthy one, commencing on 26 February 2018 and concluding on 18 May 2018. The notes of evidence run to over 1,500 pages. In addition, there are thousands of pages of documentary exhibits, most of which have been produced in electronic format. The Serious Fraud Office (“SFO”) called evidence from a number of witnesses. Most of those witnesses gave evidence in person, although some witness statements were read, by consent. In addition, Ms Xu
gave evidence. Two other witnesses also gave evidence for the defence, and several defence exhibits were produced.
Overview of the mortgage fraud scheme
[7] The genesis of the offending was that Mr Huang, who operated a property development business trading as LV Park, was keen to reduce LV Park’s financing costs. He devised a sophisticated scheme to deceive the banks. Ms Xu, Mr Chen and Mr Jiang each played a key role in implementing that scheme.
[8] LV Park specialised in building residential homes. Mr Huang was the head of the LV Park Group. To fund its property development activities, LV Park obtained finance from non-bank commercial lenders, who charged relatively high interest rates, reflecting the significant risks associated with funding commercial property development activities. Mr Huang, however, wanted to access lower interest rate personal home loan financing to fund LV Park’s activities. He devised a plan to do so.
[9] Mr Huang was the mastermind and instigator of the scheme. He was assisted by his wife (Ms Xu), his lawyer (Mr Chen), Mr Jiang (then a BNZ employee) and Peter Cheng (then an ANZ employee). Peter Cheng was not charged, however, as he left New Zealand following the commencement of the SFO investigation.
[10] The fraudulent scheme involved a large number of properties owned by entities associated with LV Park being transferred into the names of various relatives, friends or employees of Mr Huang and Ms Xu, including all four of their elderly parents. (I have annexed a relationships chart at Appendix 1). Indeed, in some cases the transferees were entirely fictitious people, created for the sole purpose of the fraudulent scheme. Residential home loan funding was then sought from the ANZ and BNZ, in the names of these various third parties, who were presented to the banks as genuine arm’s length purchasers.
[11] A number of false documents were provided to the banks in support of the various loan applications in order to demonstrate that the relevant applicants met the banks’ lending criteria when, in fact, they did not. The false documents included employment letters and Chinese bank statements showing deposits correlating with
the salaries stated in the employment letters and/or loan applications. These documents were all forgeries.
[12] In addition, deposits, purporting to be salary payments, were paid into New Zealand bank accounts in the names of some of the loan applicants. These deposits correlated with the salaries stated in the loan applications and/or false employment letters for those applicants. The bank statements were then relied on as proof of salary.
[13] The overall purpose of this false employment and income information was to deceive the banks into believing that the applicants’ met their lending criteria, when in reality they did not.
[14] Once the loans were obtained, they were serviced by LV Park rather than the named loan applicant. LV Park also retained control of the properties throughout. The named purchasers either did not exist, knew nothing of the loan application made in their name, or agreed to lend their names to what they were told was essentially a “re-financing” arrangement being undertaken by LV Park.
[15] Ms Xu, Mr Chen and Mr Jiang were each aware of the ongoing deception and were willing participants in the fraud that was perpetrated on the banks. Each of them played their own crucial part in enabling the ongoing course of deception to succeed, and to continue for as long as it did.
Charges against Ms Xu
[16] Although Mr Huang was the mastermind of the scheme, Ms Xu played a key role as his right-hand woman. Ms Xu faced 34 charges, all of them charges of obtaining by deception under s 240 of the Crimes Act.3 The acts of deception alleged by the SFO were that:
3 Charges 6–12, 14, 16–26, 29–33, 36–41, 43, and 45–47.
(a) Ms Xu either solely4 or together with Mr Huang5, provided the banks (usually via Mr Chen) with false Chinese bank statements in the names of a number of loan applicants, knowing that those bank statements were false, or being reckless as to their falsity.
(b) Ms Xu either solely6 or together with Mr Huang7, provided the banks (usually via Mr Chen) with false employment letters (and in two cases, false term deposit slips) in the names of loan applicants, knowing that those documents were false, or being reckless as to their falsity.
(c) Ms Xu either solely8 or together with Mr Huang9 made false salary payments into the bank accounts of loan applicants, with the intention to deceive the relevant bank.
[17] Most (but not all) of the charges against Ms Xu alleged more than one of these types of misrepresentation. However, the Crown was required to only prove one of these forms of misrepresentation in relation to each charge (although I considered all of the particulars alleged).
[18] I found the allegation that Ms Xu provided false bank statements to the banks to be proved in respect of each charge in which that allegation was made. The SFO’s forensic IT evidence pointed overwhelmingly to Ms Xu as the person who had created the false bank statements. Four electronic devices, including Ms Xu’s personal laptop, had copies of an Excel spreadsheet on them that was the source of the false bank statements. All of those devices were found by the SFO in Ms Xu’s office. Her explanations for how those devices came to be there were implausible.
[19] I was also satisfied, based on both circumstantial and direct evidence, that Ms Xu was the person who had sent the false bank statements to the banks, largely through Mr Chen, who acted as “middleman” between Mr Huang and Ms Xu and his
4 Charges 6, 8–12, 14, 16, 32–33, 37, 46–47.
5 Charges 36, 38, 40–41, 43, 45.
6 Charges 6–9, 11, 16, 33, 37, 39, 47.
7 Charge 38, 40–41, 43.
8 Charges 17–26, 29, 30–31.
9 Charges 36.
inside contacts at the BNZ and ANZ (Mr Jiang and Peter Cheng). Ms Xu knew that the bank statements were false, she intended to deceive the banks by providing them with the false bank statements, and the banks were so deceived.
[20] Ms Xu was also alleged to have provided false employment letters and term deposit slips to the banks in support of various loan applications. These were used to verify the false employment and income information stated in loan applications.
[21] I have found that the Crown has failed to prove that Ms Xu was the person who provided the false employment letters to the banks. Ms Xu must have seen many of the employment letters, or known of their contents, as the Chinese bank statements she created were carefully crafted to correlate with the salaries claimed in the employment letters. In my view, there is a real possibility, however, that it was Mr Huang, rather than Ms Xu, who provided the false employment letters to the banks.
[22] Finally, I found the allegation that Ms Xu made false salary payments into the New Zealand bank accounts of loan applicants proved in respect of three charges (charges 29, 30 and 31) but not proved in relation to the remainder of the charges. In respect of those charges, the possibility that the relevant payments were made by Mr Huang could not reasonably be excluded. In respect of charges 29,30 and 31, however, I was satisfied that Ms Xu knowingly made the relevant false payments, with the intention to deceive the bank, and that the bank was deceived accordingly.
Charges against Mr Chen
[23] Mr Chen also played a vital role in the implementation of the mortgage fraud scheme. He had a close business relationship with Mr Huang, to the extent that Mr Huang and his LV Park Group became one of Mr Chen’s key clients. In most cases Mr Chen acted for not only the purchaser and vendor in the property transactions, but also the lending bank. As a result, the risk of the fraud being discovered was minimised.
[24] Mr Chen also had a close relationship with Mr Jiang, dating back to at least 2008. They emailed each other regularly, at various hours of the day and night. They not only communicated through their work email addresses, but also through private
Hotmail email accounts. The tone of their communications indicates that they were very friendly.
[25] Mr Chen faced 12 charges. Eleven of those are charges of obtaining by deception under s 240 of the Crimes Act.10 A further representative charge was laid under the Secret Commissions Act 1910.11
[26] The acts of deception alleged against Mr Chen fall into the following broad categories:
(a) Two charges relating to the provision of a false passport in the name of Shou Zhang, to the BNZ and ANZ respectively (charges 15 and 35).
(b) Two charges alleging that Mr Chen made false salary payments into bank accounts in the names of third party loan applicants (charges 27 and 28).
(c) Two representative charges (charges 3 and 4) alleging that Mr Chen omitted to disclose to the BNZ,12 and ANZ and Bank A,13 that Mr Huang and/or LV Park was the “true borrower” of the loans obtained in the names of various third parties, in circumstances where there was a duty to disclose that information. (These are both representative charges, encompassing all of the third-party loan applications).
(d) Two charges (charges 5 and 48) alleging that Mr Chen omitted to disclose to the BNZ and ANZ respectively that Mr Huang and/or LV Park was the “true borrower” in respect of loans taken out by Mr Chen in his own name to purchase two LV Park properties, in circumstances where there was a duty to disclose that information.
10 Charges 3–5, 15, 27–28, 34–35, 42, 44, 48
11 Charge 51
12 Charge 3.
13 Charge 4.
(e) Three charges (charges 34, 42 and 44) alleging that Mr Chen omitted to disclose to the ANZ that the employment and income information provided as part of loan applications in the names of Huazhen Zhang, Kai Wang and Feng Ye were false, in circumstances where there was a duty to disclose that information.
[27] I found the two charges relating to the provision to the banks of a false passport in the name of Shou Zhang to be proved. Mr Chen obtained a false Chinese passport in the name of Shou Zhang from a person using a Hong Kong email address. He then provided the false Shou Zhang passport to Mr Jiang. Mr Chen was aware that the passport was a forgery. He subsequently submitted two loan applications in the name of Shou Zhang to Mr Jiang. Both of those loan applications were approved.
[28] I was also satisfied that Mr Chen made false “salary” payments into the bank accounts of Ming Li and Lifeng Li, two of the loan applicants. Ming Li and Lifeng Li, if they exist, have never entered New Zealand. It was claimed in their loan applications, however, that they were working for a New Zealand company, Driftmax, on generous salaries. Mr Chen made payments into bank accounts set up in their names that correlated with the salaries stated in their false employment letters. The payments were made from an account in the name of Mr Chen’s aunt, Shufeng Qi, and referenced “SAL”. Mr Jiang had assisted Mr Chen to set up the Shufeng Qi account in 2008, and had provided him with the login details for that account at that time. One of the false salary payments was made from Mr Chen’s own personal bank account. There were no legitimate reasons for any of these payments. They were made to deceive the bank.
[29] Mr Chen did not disclose the true nature of any of the transactions, and who was really behind them, to the banks. In respect of some applications, for example those relating to Shou Zhang, Mr Chen was aware that the loan applicant was fictitious, and did not disclose this to the bank. That was highly material information. Further, in respect of all of the transaction set out in the schedules to charges 3 and 4, Mr Chen was aware that that LV Park and/or Mr Huang was the “true borrower” in the sense I set out more fully later in these Reasons. He did not disclose this to the banks, despite owing them a fiduciary duty to do so in his role as solicitor to the banks on the
transactions. Accordingly, all of the particulars of charges 3 and 4 (as set out in Schedules C and D of the Amended Charge Notice) were proved, save for one transaction where Mr Chen did not act as the bank’s solicitor.
[30] In respect of two charges (charges 5 and 48) Mr Chen took out loans in his own name to purchase two LV Park properties. The Crown failed to prove those charges. I was not satisfied that in those cases, where Mr Chen was not acting for the banks, that he owed them a duty of disclosure. I also note that, unlike with the other loan applications, the employment and income information provided by Mr Chen in support of his own loan applications was true.
[31] The final three obtaining by deception charges against Mr Chen (charges 34, 42 and 44) alleged that he omitted to disclose to the ANZ that the employment and income information provided as part of loan applications in the names of Huazhen Zhang, Kai Wang and Feng Ye were false, in circumstances where there was a duty to disclose that information.
[32] I found that Mr Chen knew that the employment and income information provided to the ANZ in respect of these three applicants was false, and that he had omitted to disclose that to the ANZ. Mr Chen acted for the bank on these three transactions. He accordingly owed it a fiduciary duty to disclose this information. He breached that duty. I therefore found these charges to be proved.
[33] Mr Chen was also charged with one representative charge under the Secret Commissions Act 1910. Mr Chen is alleged to have corruptly paid “kickbacks”, or secret commissions, to both Mr Jiang (as agent for the BNZ) and Peter Cheng (as agent for the ANZ). I found that charge to be proved. There are numerous strands of evidence that, when considered together, point inexorably to the conclusion that Mr Chen was closely involved in making the secret commission payments to both Mr Jiang and Peter Cheng. Of particular note, all of the secret commission payments were paid from either an account in the name of Shufeng Qi (Mr Chen’s aunt) or an account in the name of Amy Chen (Mr Chen’s sister).
Charges against Mr Jiang
[34] Mr Jiang was the BNZ employee who processed and/or approved all of the BNZ loan applications. Between December 2011 and April 2013, Mr Jiang processed at least 26 false loan applications that were linked to LV Park-related entities. Those loans had an approximate value of just over $18 million. Mr Chen was Mr Jiang’s point of contact in respect of all of those transactions.
[35] Mr Jiang was charged with 25 charges of obtaining by deception under s 240 of the Crimes Act.14 He was alleged to have misrepresented to others within the BNZ, by his conduct in processing and approving the various loan applications, that the income and employment information provided in support of those applications was true, when he knew that it was false. Similarly, he is alleged to have represented by his conduct that the “true borrowers” were the named loan applicants, when in reality he knew that the “true borrower” was LV Park and/or Mr Huang. In respect of one charge (charge 15), the particulars also included that Mr Jiang knew that the passport of Shou Zhang, the named borrower, was false.
[36] Mr Jiang was also charged with a representative charge under the Secret Commissions Act 1910.15 Mr Jiang was said to have corruptly received “kickback” payments for processing or approving BNZ loans.
[37] I found all of the charges against Mr Jiang to be proved. Numerous strands of evidence supported the conclusion that Mr Jiang repeatedly processed and/or approved loan applications that he knew were based on false employment and income information. Further, he was aware that the Shou Zhang passport was a forgery, having been provided with copies of the two passports that were used to create the amalgamated Shou Zhang passport. Like Mr Chen, he was aware that the loan applications were, in effect, being made in the name of “sham” borrowers when, in reality, LV Park and/or Mr Huang was behind them all.
14 Charges 6–15, and 17–31.
15 Charges 51 and 50 respectively.
[38] Mr Jiang also received regular “kickbacks” or secret commission payments, shortly after the drawdown of many of the loans that he processed or approved, usually in the sum of about $7,000 per transaction. The funds for these payments were sourced from LV Park, but then funnelled through two or more intermediary bank accounts (including one in the name of either Mr Chen’s aunt, or Mr Chen’s sister) before reaching Mr Jiang.
[39] I set out below full reasons for the verdicts I have delivered today.
C. THE LAW / ELEMENTS OF THE OFFENCES Obtaining by deception
[40] All but two of the charges faced by the defendants are charges of obtaining by deception under section 240(1)(b) of the Act. That section provides that:
240 Obtaining by deception or causing loss by deception
(1) Every one is guilty of obtaining by deception...who, by any deception and without claim of right,—
...
(b) in incurring any debt or liability, obtains credit...
...
[41] The Crimes Amendment Act 2003, which substantially amended and restructured Part 10 of the Crimes Act (crimes against rights of property), significantly expanded the scope of s 240(1)(b) by enacting an extended definition of “obtain” for the purposes of Part 10:16
obtain, in relation to any person, means obtain or retain for himself or herself
or for any other person.
[42] Deception is defined in s 240(2) as follows:
(2) In this section, deception means—
(a) a false representation, whether oral, documentary, or by conduct, where the person making the representation intends to deceive any other person and—
(i) knows that it is false in a material particular; or
(ii) is reckless as to whether it is false in a material particular; or
(b) an omission to disclose a material particular, with intent to deceive any person, in circumstances where there is a duty to disclose it; or
(c) a fraudulent device, trick, or stratagem used with intent to deceive any person.
[43] All of the obtaining by deception charges against Ms Xu and Mr Jiang are founded on allegations that they made specific false representations to the BNZ, ANZ or Bank A (s 240(2)(a)). Most of the obtaining by deception charges against Mr Chen, however, are based on alleged omissions to disclose material particulars to the banks (s 240(2)(b)), although he also faces some charges of making positive misrepresentations under s 240(2)(a).
[44] “Claim of right” is defined in section 2 of the Crimes Act. In essence, the Crown must establish that the defendants used the false and misleading documents, or made the omissions, without a belief that what they were doing was lawful—that is, that the defendants do not have a claim of right for what they were doing.
Must the defendant have personally incurred a debt or liability?
[45] During the course of the trial, each of the defendants sought to be discharged in respect of most of the charges they faced, pursuant to s 147 of the Criminal Procedure Act 2011. One of the grounds advanced was that, correctly interpreted, s 240(1)(b) required the Crown to prove that the relevant defendant personally incurred a debt or liability (even if the associated credit was obtained for a third party).
[46] I rejected that interpretation, for the reasons set out in my s 147 judgment of 23 April 2018, in which I traced the legislative and common law history of the
provision.17 To the extent that the issue was raised again in the defendants’ closing submissions, I again reject the argument, for the same reasons, which I summarise below.
[47] As the Court of Appeal observed in R v Morley, although s 240 was only enacted in 2003, the offences now contained in sections 240(1)(a)–(c) are not new, but rather represent a recasting of previous provisions.18 Those subsections create three similar offences, namely those involving the obtaining of property, credit or the execution of a document. Section 240(1)(d) creates a different, and new, offence — that of causing loss by deception.
[48] Significantly, the 2003 amendments to Part 10 of the Crimes Act included a new and extended definition of “obtain”, which applies to each of the s 240(1)(a)–(c) offences:19
In this Part, unless the context otherwise requires, —
obtain, in relation to any person, means obtain or retain for himself or herself or any other person.
[49] Hence, for the first time, the obtaining by deception offences were expanded to encompass the situation where a defendant obtained credit for a third party, and not simply for themselves.
[50] This new, broader, definition of obtain was recently considered by the Court of Appeal in Li v R. 20 Mr Li was charged under s 240(1)(a) of the Crimes Act with, by deception, obtaining a benefit (an NZQA Diploma) for a third party, Mr Chen. Counsel for Mr Li argued that the Crown needed to prove that the appellant had personally obtained the relevant benefit. In rejecting that submission, the Court stated:
[19] The old pt 10 of the Act, which incorporated s 246, was repealed and replaced with the current pt 10 as from 1 October 2003 by the Crimes Amendment Act 2003. The changes were largely driven by this Court's decision in R v Wilkinson, which exposed the inadequacy of the old provisions in dealing with electronic money transfers. The main aim of the Crimes Amendment Bill (No 6) 1999 was set out in a Supplementary Order Paper:
17 R v Xu [2018] NZHC 779 at [24]–[58].
18 R v Morley [2009] NZCA 618, [2010] 2 NZLR 608 at [14].
19 Crimes Act 1961, s 217.
20 Li v R [2016] NZCA 237 (footnotes omitted).
The main aim of the bill is to update the Act so that it can address current uncertainties in the application of existing offences to computer crime. It does this by:
... and broadening some existing offences.”
[20] The genesis of the new s 240 (s 305U in the Bill) was explained as follows:
New section 305U draws on sections 246, 247 and 270 of the principal Act. It combines obtaining by false pretence, obtaining credit fraudulently, and procuring execution of documents by fraud in the crime of obtaining by deception.”
[21] At its second reading in the House the then Minister of Justice, the Hon Phil Goff, who had chaired the select committee that considered the Bill, described the intended effect of the new section, s 240, in these terms:
The offence of obtaining by deception, or causing loss by deception, replaces the current offence of false pretences. That will cover a broader range of financial benefits than the current offence, and the element of causing loss is also new.
[22] It is apparent from this legislative history that Parliament did not intend to restrict the scope of the existing offences, rather, to broaden them. We consider that the definition of ‘obtain’ in the new interpretation section, s 217, when read with s 240, was intended to cover all offending caught under the predecessor section, s 246, including situations where the property or benefit is delivered to someone other than the offender.
(Emphasis added).
[51] The challenge with interpreting s 240(1)(b) is that the provision remains closely modelled on a statutory provision that was first enacted 150 years ago, in a different age and, indeed, in a different country. Even the New Zealand predecessor to the current provision dates back to at least 1893. This is therefore a case where the principle of “updating construction” must be applied.
[52] It is apparent from the legislative history of the provision that the original intent was to bring within the ambit of the criminal law the obtaining of property or credit by deceptive conduct (then described as “false pretences”). Criminalising such conduct recognised that the harm it causes is not exclusively private in nature, but also damages society as a whole. The predecessor provisions to s 240(1)(b) were enacted
against the backdrop of significant economic developments including the industrial revolution, the expansion of sea trade, developments in banking and credit, rampant stock speculation, and the development of new forms of business organisation. In this context, the protection of property rights, and the promotion of appropriate standards of behaviour in business and commerce, assumed increasing importance for the welfare and economic development of society as a whole.
[53] The 2003 amendments to Part 10 of the Crimes Act, including what is now s 240(1)(b), continue this broad theme. This is particularly reflected in the expanded definition of “obtain” that was introduced at that time. In essence, the law was further developed to attempt to meet modern economic realities, including the increased use of technology and computers (including computerised banking systems).
[54] As the Court of Appeal observed in Li, the 2003 amendments were largely driven by the Court of Appeal decision in R v Wilkinson.21 That case exposed the inadequacy of the “obtaining property by deception” offence in dealing with electronic money transfers. Wilkinson prompted Parliament to modernise Part 10 to address uncertainties in the application of the existing offences to crimes involving the use of computerised systems. As noted above, Parliament intended that the offences of obtaining by deception (replacing the previous offences of obtaining by false pretences) would “cover a broader range of financial benefits than the current offence”. The Court of Appeal noted in Li that it is apparent that Parliament did not intend to restrict the scope of the existing offences, but rather to broaden them.
[55] In my view, this legislative background favours a wide, purposive, interpretation of s 240(1)(b). The harm or mischief to which the section is addressed is not that a fraudster has incurred debt or liability (which in many cases he or she will not intend to repay), but that an innocent third party has provided credit, as a result of the fraudster’s deception. As the authors of Adams on Criminal Law observe, the important element common to every form of s 240(1) offence is that the defendant
21 R v Wilkinson [1999] 1 NZLR 403 (CA). I note, however, the observation of Kevin Dawkins “Criminal Law” (1999) NZLR 415 at 437 that if Mr Wilkinson had been charged with obtaining credit by deception, rather than obtaining property by deception, the difficulties that arose in that case might have been avoided.
must have practised a deception, as defined in s 240(2).22 The harm addressed by the section is the obtaining of credit by deception. Whether it is the defendant or the third party who carries the obligation to repay the associated debt is largely irrelevant when the section is viewed purposively. The harm does not depend on who incurs the debt, but arises out of the deception perpetrated on the creditor by the defendant.
[56] It has to be acknowledged that the wording of s 240(1)(b) lacks clarity, particularly when read together with the 2003 statutory definition of “obtain”. The lack of drafting precision is perhaps not surprising given that the key elements of the offence (and much of its wording) date back 150 years. The 2003 definition of “obtain” has essentially been “bolted on” to the existing section, rather than a comprehensive redrafting exercise being undertaken. This gives rise to some difficulties of interpretation. Nevertheless, it is my view that a purposive construction of the section favours a wide interpretation. I also note that a wide interpretation appears to have found favour with the learned authors of Principles of Criminal Law, who state that:23
The debt or liability must be legally enforceable against [the defendant] (or whomever the credit is obtained) ...
[57] It is hard to see why Parliament, when intending to widen and modernise the law to cope with twenty-first century commercial realities, including the increased use of computer systems and technologies, would elect to extend the “obtaining credit by deception” offence to only a very narrow class of case, generally involving the provision of guarantees (which appears to be the only case involving credit being advanced to a third party that would fall within the section if the defendants’ narrow interpretation were adopted). In my view, Parliament’s intention was broader than that.
[58] In conclusion, the offence of obtaining by deception does not require the Crown to prove that the defendant personally incurred a debt or liability. It is sufficient that the Crown proved that a false representation by the defendant induced the relevant
bank (through one or more of its employees) to advance a loan (credit) in respect of which a corresponding debt was incurred. It is not necessary that the defendant personally incur the relevant debt.
[59] On this interpretation, I am satisfied that in respect of each obtaining by deception charge, if the other elements of the offence are proved, and a loan has been advanced by the relevant bank (in other words credit has been advanced in respect of which a corresponding debt or liability has been incurred) then this element of the offence will have been proved.
Were some lending decisions made by a computer?
[60] A further ground advanced by the defendants in support of their s 147 applications was that many of the lending decisions were made by computers. As it is not legally possible to “deceive” a computer, the defendants submitted that those charges should be struck out. I rejected that argument, for the reasons set out in my s 147 judgment of 23 April 2018.24 This issue was raised again in some of the defendants’ closing submissions. I again reject the argument, for the same reasons as set out in my s 147 decision. In my view, the use of computerised decision tools by the banks cannot be divorced from the various human actors involved.
[61] Data is not simply entered into a computer and then, pursuant to some algorithm, money is automatically credited to an applicant’s account if certain criteria are met. Rather, the banks’ computerised decision tools are used to ensure that a particular application complies with the banks various policies and processes. The decision tools do not operate in isolation, however. Real people are involved throughout the process, including inputting data into the computer system, processing applications using the decision tools, accepting or rejecting the “decisions” provided or referring them to credit managers (as required), verifying information, ensuring that any pre-loan conditions are met and recording that in the system, liaising with applicants and their solicitors, and arranging for drawdown of the loans. Each of these people will be deceived if false information is entered into the decision tool, culminating in a lending approval decision that would not otherwise have been made.
24 R v Xu, above n 17, at [66]–[77].
Must the debt or liability be legally enforceable?
[62] The Crown alleged that several of the transactions involved purchasers/borrowers who were entirely fictitious. Mr Wimsett submitted in closing that, if that is so, any obtaining by deception charges arising out of those transactions are doomed to fail as a matter of law, because the debt or liability must be one that is legally enforceable. Where the named borrower is fictitious, he submitted, the debt or liability will not be legally enforceable. (If correct, this would likely be a complete defence to charges 15, 35, 41, 42, 43, and 44).
[63] The authors of Adams on Criminal law make the following observations on this topic:25
A “debt or liability” must be one that is legally enforceable. The English courts have held that a wagering loss, null and void by statute, is not a “debt or liability” (R v Leon [1945] 1 KB 136, 1 All ER 14 (CCA)) and that the comparable offence was not made out where credit was in regard to a hire purchase transaction which was illegal by statute: R v Garlick (1958) 42 Cr App R 141 (CCA). The position where the transaction is illegal but might be validated under the Illegal Contracts Act 1970 is unclear. The word “liability” may extend the ambit of the offence somewhat; it is appropriate to cover cases where the amount due is not yet quantified (as where the defendant obtains possession of goods whose price is to be ascertained later) and may even extend to liabilities which are contingent on the actions of another (eg a solicitor who has to approve the formal documentation of the transaction).
[64] The learned authors of Garrow and Turkington offer a somewhat different perspective:26
It is immaterial that the promise was to do something illegal: Binley and Walsh [1912] NZGazLawRp 194; (1912) 32 NZLR 159. It is suggested that it is no longer necessary for the credit to be legally enforceable for a deception to occur. For example, any contract that exists is not void but is subject to the Illegal Contracts Act 1970: cf Garlick (1958) 42 Cr App R 141 and Mitchell [1955] 1 WLR 1125; [1955]
[65] There appears to be no New Zealand case law on point. I assume, however, that the reluctance of the English courts to impose criminal sanctions on those who would not be liable at civil law (because, for example, the underlying contract is unlawful) is for reasons of public policy. For example, in the case of an unlawful
25 Simon France (ed), above n 22, at [CA240.09].
gambling debt, if the creditor is not entitled to recover the “debt” from the debtor through civil proceedings (as a matter of public policy) then it would be incongruous for the criminal law to intervene and impose criminal sanctions on the debtor. Essentially, by entering into an unlawful contract, the creditor has taken themselves outside of the protection of the law and has voluntarily assumed the risk of loss.
[66] The present situation, however, is far removed from such a scenario. If Mr Wimsett’s argument is correct, then fraudsters could escape liability under s 240 simply by, instead of obtaining credit for themselves or a third party (who is a real person), obtaining credit in the name of a fictitious person.
[67] I do not accept that this can have been the statutory intent. Interpreted purposively, the term “liability” must, in my view, extend to cover the present scenario. When credit is obtained in the name of a fictitious person, the underlying debt may not be contractually enforceable (although in some cases the person who obtained a loan, albeit using a fictitious name, is arguably the true borrower, and could be sued on the underlying contract). Even if it were not possible to sue in contract, however, the person behind the fictitious persona would clearly be liable in tort to the lender, for example pursuant to the tort of deceit.
[68] Accordingly, even if there were no legally enforceable debt (in contract), there would be a legally enforceable liability (in tort). Section 240 expressly refers to “debt or liability”. Therefore, even if Mr Wimsett is correct that s 240 requires that the debt or liability be legally enforceable (an issue not previously determined in New Zealand) I am satisfied that that requirement would be met in this case in respect of any fictitious “borrowers”.
[69] Some of the obtaining by deception charges have been laid under s 240(2)(a) (making a false representation) and others under s 240(2)(b) (omission to disclose a material particular). In respect of the false representation charges, the key elements the Crown must prove are that:
- (a) The defendant made a materially false representation to the bank (either directly or indirectly) in the context of an application for a home loan in the name of the person specified on the loan application.
(b) The defendant knew that the relevant representation(s) were false, or was reckless as to their falsity.
(c) The defendant intended that one or more bank employees would be deceived by the representation(s).
(d) The false representation(s) induced the bank (through one or more of its employees) to advance a loan (credit), in respect of which a corresponding debt was incurred.
(e) The defendant acted without claim of right.
[70] In respect of the “omission to disclose a material particular” charges (laid against Mr Chen only), the Crown must prove that:
(a) Mr Chen omitted to disclose to the Bank a material particular as part of an application for a loan in the name of another person and/or in his own name.
(b) Mr Chen had a duty to disclose to the bank the material particular.
(c) Mr Chen intended that one or more bank employees would be deceived by the omission.
(d) The omission induced the bank (through one or more of its employees) to advance a loan (credit) in respect of which a corresponding debt was incurred.
(e) Mr Chen acted without claim of right.
[71] There has been no suggestion that the defendants acted, at any stage, with a “claim of right”. Rather, the defence in respect of the various obtaining by deception charges is that they either did not do what the Crown alleges or, if they did, they did not do so with the required intent. I am therefore satisfied, for all charges, that if the other elements of the offence are met, the defendants did not act with “claim of right”.
Secret commissions
[72] Mr Jiang is charged under s 4 of the Secret Commissions Act,27 which relevantly provides:
(1) Every agent is guilty of an offence who corruptly accepts or obtains, or agrees or offers to accept or attempts to obtain, or solicits from any person, for himself or for any other person, any gift or other consideration as an inducement or reward for doing or forbearing to do, or for having done or forborne to do, any act in relation to the principal’s affairs or business (whether such act is within the scope of the agent’s authority or the course of his employment as agent or not), or for showing or having shown favour or disfavour to any person in relation to the principal’s affairs or business.
[73] To prove the Secret Commissions Act charge against Mr Jiang, the Crown must prove the following elements:
(a) that Mr Jiang corruptly accepted or obtained money as an agent of the BNZ; and
(b) that the payment was accepted as an inducement or reward for Mr Jiang doing any act in relation to BNZ’s affairs or business (ie for processing and approving the relevant loan applications).
[74] As Mr Chen is the alleged giver, rather than the receiver, of secret commissions, he has been charged under s 3 of the Secret Commissions Act, which relevantly provides:
27 Charge 50 in the Amended Crown Charge Notice.
(1) Every person is guilty of an offence who corruptly gives, or agrees or offers to give, to any agent any gift or other consideration as an inducement or reward for doing or forbearing to do, or for having done or forborne to do, any act in relation to the principal’s affairs or business (whether such act is within the scope of the agent’s authority or the course of his employment as agent or not), or for showing or having shown favour or disfavour to any person in relation to the principal’s affairs or business.
(2) Any gift or other consideration given or offered or agreed to be given to any parent, husband, wife, civil union partner, de facto partner, or child of any agent, or to his partner, clerk, or servant, or (at the agent’s request or suggestion) to any other person, shall be deemed for the purposes of this section to have been given or offered or agreed to be given to the agent.
[75] To prove the Secret Commissions Act charge against Mr Chen, the Crown must prove the following elements:
(a) that Mr Chen corruptly gave money to Mr Jiang (an agent of the BNZ) and/or Mr Cheng (an agent of the ANZ); and
(b) that the relevant payment was made as an inducement or reward for the agent doing any act in relation to the bank’s affairs or business (ie for processing and approving the relevant loan applications).
[76] “Corruptly” is not defined in the Secret Commissions Act. However, the term has been discussed in the context of Crimes Act corruption and bribery charges. The leading Supreme Court case of Field v R stated that ‘corruption’ requires a defendant to have knowingly engaged in an act that the legislature regards as corrupt.28
[77] It is not in dispute that if Mr Jiang received the alleged kickbacks (ie payments for processing or approving loan applications), or Mr Chen made such payments, they have acted corruptly. Rather, the real dispute is whether the payments were made, or received, for the purposes alleged.
28 Field v R [2011] NZSC 129, [2012] 3 NZLR 1 at [66].
Question trails
[78] Prior to the conclusion of the trial, I provided counsel with six draft “question trails”, each of which was directed to a group of charges falling within the same broad category. Mr Simperingham was the only counsel who took issue with any aspect of the draft. He submitted that it is not sufficient for the Crown to prove that Ms Xu made a materially false representation to the bank (either directly or indirectly). Rather, given the way that the particulars in the Amended Crown Charge Notice are drafted, he submitted that fairness requires that the Crown go further and prove that Ms Xu was the person who sent the allegedly false documents to the banks, from the lakewood18 email address. I rejected that submission. However, in light of the findings I make below, the point appears to be largely academic, in any event.
[79] Copies of the question trails, which have guided my decision-making process in relation to the various charges, are annexed as Appendices 2 to 7.
D. EVIDENTIAL ISSUES
[80] This was a Judge-alone trial. As with a jury trial, however, there are a number of evidential matters that (as the fact-finder) I was required to keep in mind both during the trial and while I was considering my verdicts. I set out the most significant of those matters below, or address them elsewhere in these Reasons.
Burden and standard of proof
[81] The starting point is that each of the defendants are presumed innocent unless proved guilty. The Crown is required to prove that each of the defendants is guilty of the charges against them. The Crown must prove each element of each charge before I may enter a verdict of guilty on that charge.
[82] Ms Xu gave evidence at trial, and also called an expert witness (Ms Morrell) to give evidence on her behalf. She did not have to do so. The fact that she gave (and called) evidence does not change who was required to prove the allegations. It is the prosecution who has that task, and Ms Xu does not have to establish her
innocence. The question remains the same—has the Crown proved Ms Xu’s guilt beyond reasonable doubt?
[83] Ms Xu, however, elected to give evidence and explain her version of events. Her evidence forms part of the overall pool of evidence. She said that she was not aware of the fraud that her husband was perpetrating on the banks, and played no role in willingly assisting him. To the extent that she may have undertaken some specific acts, such as making payments into bank accounts, which assisted her husband to perpetrate his fraudulent scheme, her evidence was that her conduct was entirely innocent. None of her actions were undertaken with any intent to deceive the banks.
[84] If I accept what Ms Xu says, then obviously the proper verdict would be acquittal on all charges, because she will either not have done what the Crown says she did, or she will not have done it with the necessary guilty mind that the law requires. If what Ms Xu says leaves me unsure, then again, the proper verdict is acquittal, because I will have been left with a reasonable doubt. If what she says seems a reasonable possibility, the Crown will not have discharged its task, and I must acquit.
[85] If I disbelieve Ms Xu’s evidence on a particular issue, or in relation to a particular charge, then I must not leap from that assessment to guilt, because to do that would be to forget who has to prove the case. Rather, in that event, I will assess all the evidence that I accept as reliable. I will consider whether that evidence satisfies me of Ms Xu’s guilt to the required standard.
[86] Neither Mr Chen nor Mr Jiang gave evidence, although they both called evidence. Neither of them had any obligation to give evidence. That they did not give evidence does not add to the case against them. It is for the Crown to prove their guilt and they do not have to prove their innocence. Similarly, the fact that they both called evidence does not change who must prove the allegations. It is the prosecution who has that task.
[87] As to the standard of proof, it is of course proof beyond reasonable doubt. That is a very high standard, which the Crown will have met only if I am sure that a defendant is guilty of a particular charge. It is not enough for the Crown to persuade
me that the defendant is probably guilty or even that he or she is very likely guilty. On the other hand, it is virtually impossible to prove anything to an absolute certainty when dealing with the reconstruction of past events, and the Crown does not have to do so.
[88] A reasonable doubt is an honest and reasonable uncertainty left in my mind about the guilt of the defendant after I have given careful and impartial consideration to all of the evidence. In summary, if, after careful and impartial consideration of the evidence, I am sure that Ms Xu, Mr Chen or Mr Jiang is guilty of a particular charge, I must find him or her guilty. On the other hand, if I am not sure that the defendant is guilty, I must find him or her not guilty.
Deciding the case on the evidence
[89] I must come to my verdicts solely upon the evidence that was put before me during the course of the trial. Further, I must reach my decisions uninfluenced by any feelings of prejudice against, or sympathy for, the defendants (or anyone else connected to the case).
Expert evidence
[90] I heard evidence from a number of expert witnesses including Mr Bulloch (an expert in forensic accounting), Mr Boot and Ms Morrell (expert document examiners), and Mr Mannix (a specialist forensic IT investigator). In assessing their evidence and opinions, I have had regard to their qualifications and experience. Ultimately, however, I am the decision-maker, not the experts. I have carefully considered how much weight or importance it is appropriate to give to the expert evidence and the extent to which such evidence should be accepted.
Interpreters
[91] Ms Xu and Mr Jiang were provided with an interpreter to assist them during the course of the trial, if required. Mr Simperingham (for Ms Xu) and Ms Kincade (for Mr Jiang) both informed me at the outset of the trial, however, that their clients spoke good English, and simply required an interpreter in the event that they might
need assistance regarding any particular words or phrases that they did not understand. They did not require full sequential interpretation, but simply wanted access to an interpreter to assist on an ad hoc basis, if and when needed. In reality, they seldom required any assistance from the interpreter(s), although an interpreter was available to assist, as required, throughout the trial.
[92] Ms Xu had an interpreter seated next to the witness box when she gave evidence. Again, however, she seldom required any assistance. Ms Xu’s level of English comprehension appeared to be excellent, consistent with the fact that she has lived and worked in New Zealand for over 20 years. Her spoken English was also good, save for some grammatical issues that are not in any way unusual for persons who speak English as a second language. Nevertheless, when considering Ms Xu’s evidence, and assessing her credibility, I keep in mind that English is not her first language.
Inferring intent/defendant’s state of mind
[93] Both the obtaining by deception charges and the secret commission charges require the Crown to prove the defendant’s state of mind at the time of the alleged offending. This requires the drawing of an inference, based on all of the circumstantial evidence that is relevant to the issue of knowledge or intent. As the Court of Appeal observed in R v Coleman:29
... obviously one cannot see into another's mind. The fact finder must draw inferences as to the accused's state of knowledge from facts proved. The drawing of inferences inevitably involves the application of common sense and of the fact finder's knowledge of the world and of how it works to proved facts.
[94] Randerson J in Burgess v Field, a case concerning s 103 of the Crimes Act (bribery and corruption of a member of Parliament)30 observed that the parties’ intentions in cases such as this are most likely to be established by inference from the facts and surrounding circumstances.31 Obviously, Ms Xu’s own evidence as to her
29 R v Coleman CA180/04, 15 December 2004 at [12].
30 Burgess v Field (No 2) HC Auckland CIV 2007-404-3206, 5 October 2007.
31 At [17].
state of mind or knowledge is one relevant strand of evidence. It is not, however, determinative.
E. BACKGROUND FACTS
[95] Many aspects of the factual background are relevant across multiple charges. Accordingly, before turning to focus on the individual charges (or groups of charges), I set out some of the relevant background facts, as I have found them to be reliably proved.
The LV Park Group
[96] Mr Huang and Ms Xu immigrated to New Zealand from China in 1997. Several years later they embarked on a residential property development business. Their business ran into financial difficulties, however, and ceased trading. On 15 June 2010, both Mr Huang and Ms Xu were bankrupted. They were discharged from bankruptcy just over three years later, on 29 June 2013.
[97] Throughout their bankruptcy Mr Huang and Ms Xu appear to have continued their involvement in property development. Due to their bankruptcy, however, neither of them could be a company director. To circumvent this difficulty, several companies were incorporated with their retired parents as the named directors. In particular:
(a) Rock Construction Limited was acquired, as a shelf company, in early 2010. Huazhen Zhang (Ms Xu’s mother) was the company’s director from 2 February 2010 until 12 February 2013. Wenlong Wang (Mr Huang’s father) then took over as director and remained as a director until June 2017, when Rock Construction was removed from the Companies Register.
(b) On 23 August 2011, Ironman Construction Limited was incorporated. A friend of Mr Huang’s was initially appointed as the director. The current director is Guizhen Zhou (Mr Huang’s mother).
(c) Phaeton Holdings Limited was incorporated on 24 August 2011. Huazhen Zhang was appointed as director and remained in that position until 15 September 2017, when Phaeton went into liquidation.
[98] In addition, by way of deed dated 5 February 2010, Huazhen Zhang created a trust named LV Park Construction Trust. Rock Construction Ltd was named as the trustee. The appointors of the trust are Huazhen Zhang and Wenlong Wang.
[99] Unless the context requires otherwise, I refer to these companies and the associated trust as the “LV Park Group” and the overall property development business by its trading name of “LV Park”.
[100] On 5 February 2010, a Westpac bank account was opened in the name of LV Park Construction Trust. Huazhen Zhang and Wenlong Wang were the initial signatories for that account. Currently, only Wenlong Wang has signing authority. This was the primary bank account used to fund the construction activities of the LV Park Group throughout the period of the alleged offending.
LV Park’s “refinancing” scheme
[101] LV Park’s main source of funding was through Basecorp Finance Limited (“Basecorp”). Basecorp advanced loans to the LV Park Group that were secured over the various properties in its portfolio. Basecorp is a non-bank private lender. Its interest rates are generally higher than those charged by the main trading banks, reflecting its involvement with higher risk lending activities.
[102] Mr Huang was concerned about the high finance costs being paid by the LV Park Group and was keen to reduce those costs. Mr Huang was also keen to retain properties in LV Park’s portfolio for a longer period, with the aim of securing higher sale prices. Mr Huang accordingly set about “refinancing” the various properties in LV Park’s portfolio. His “refinancing” scheme involved arranging purported sales of LV Park properties to third parties. The plan was that LV Park would retain control of the properties but the financing would move from Basecorp to much cheaper residential loans, available from the main trading banks such as ANZ and BNZ.
[103] Residential home loans were applied for in the names of various applicants. Fifty-seven loan applications, relating to 110 separate property purchases, are at issue in this proceeding. Of those:
(a) Mr Chen was the loan applicant in two transactions.
(b) Ms Xu’s China-based brother, Hao Zhang, was the loan applicant in eight transactions.
(c) The parents of Ms Xu and Mr Huang were the loan applicants in 14 transactions.
(d) Zhuwen Wu (a friend of Mr Huang’s, who lives in China) was the loan applicant in four transactions.
(e) Shou Zhang was the loan applicant in three transactions.
(f) Kai Wang was the loan applicant in one transaction.
(g) Ming Li was the loan applicant in four transactions.
(h) Lifeng Li was the loan applicant in five transactions.
(i) Other transactions were completed in the names of Bin Zhu, Feng Ye, Ms Xu, Bo Song and Hsin-Yun Li.
[104] Julia Davidson from Immigration New Zealand gave evidence (which I accept) that Bin Zhu, Bo Song, Feng Ye, Kai Wang, Lifeng Li, Ming Li, Shou Zhang and Zhuwen Wu have never entered New Zealand. Hsin-Yun Li was a young employee of LV Park. Shou Zhang, Kai Wang and Feng Ye were fictitious persons and it is possible that other loan applicants were also fictitious.
[105] Although the various property sales were presented to the banks as genuine arms-length transactions, they were not. The LV Park Group retained control of the properties and also (behind the scenes) paid the mortgages on them. Some of the loan
applications were signed by the named applicants, but on others the applicant’s name was fictitious or forged. Many of the applications were signed by a person holding (or purporting to hold) a power of attorney for the named applicant.
[106] Most of the loan applications were supported by false documents and information, including false Chinese bank statements and/or false employment letters. In some cases, it is not clear precisely how the false documents were provided to the banks. In other cases, however, they were sent by email. A number of false documents were sent to Mr Chen from an email address that I will refer to as the “lakewood18” email address. The evidence at trial was that both Mr Huang and Ms Xu had access to, and used, that email address. There was no credible evidence that that email address was used by anyone else. I am therefore satisfied that the sender of any emails from that account must have been either Mr Huang or Ms Xu. (I consider below whether, based on other evidence, it can be inferred that Ms Xu must have sent the emails that underpin many of the charges).
[107] To add further credibility to the deception being practised on the banks, payments purporting to be salary payments were made into the New Zealand bank accounts of many of the loan applicants. The amount of “salary” paid broadly corresponded with the salary figures stated in the false employment letters.
[108] The 57 loan applications that are in issue in these proceedings resulted in
$54,129,992 being advanced by the banks. After expenses and the existing mortgages were repaid, a surplus of $5,772,886 found its way into bank accounts of companies within the LV Park Group.
Powers of attorney
[109] As I have noted above, many of the applications were signed by a person holding (or purporting to hold) a power of attorney for the named applicant. During all or part of the relevant period:
(a) Mr Huang held powers of attorney for Zhuwen Wu (a friend who lived in China), Guizhen Zhou (his mother), and Wenlong Wang (his father). Alison Manning, from the New Zealand Consulate in Shanghai,
confirmed that she had witnessed and certified the power of attorney in favour of Zhuwen Wu, in 2009.
(b) Ms Xu held powers of attorney for Hao Zhang (her China-based brother), Huazhen Zhang (her mother), and Jiquan Zhang (her father). Hao Zhang was the named purchaser in eight of the loan transactions. Ms Xu signed the sale and purchase agreements on his behalf, although she did not expressly record that she was signing as power of attorney (her evidence was that she was not aware that this was necessary or appropriate).
(c) Wenlong Wang held powers of attorney for Bo Song, Feng Ye, Hongming Zhang, Kai Wang, Lifeng Li, Ming Li, Ming Xu, Shou Zhang and Shui Zhang. The powers of attorney for Bo Song, Feng Ye, Kai Wang, Lifeng Li, Ming Li and Shui Zhang all purported to have been certified by Ms Manning. They had not. Ms Manning’s certification on those documents was a forgery, likely based on her original (and authentic) certification of Zhuwen Wu’s power of attorney in 2009.
[110] Mr Huang’s and Ms Xu’s parents were called as Crown witnesses. They each presented as fairly elderly and, at times, somewhat bewildered and confused. All of them could speak little or no English, and gave evidence through an interpreter. They all came across as fairly unsophisticated. They appeared to have been trusting of their children, and happy to help them out in their property development business. They do not appear to have fully appreciated at the time, however, the full extent of the deception being practised on the banks. Although each of them was aware that LV Park properties were being transferred to third parties (including themselves), they appeared to have had little or no insight into other aspects of the scheme, such as the provision of false employment and income information to the banks.
[111] Wenlong Wang said that he did not recall anybody by the name of Shui Zhang, Shou Zhang, Ming Li or Feng Ye. He said he thought he had heard the names Kai Wang and Ming Xu, but could not recall the circumstances of the power of attorney
documents he held for them. It is of note that somehow Mr Wang appears to have ended up being the attorney for all of the more “high risk” purchasers, most of whom may well have been fictitious, and whose power of attorney documents were fraudulently certified.32 The defendants and Mr Huang, on the other hand, each held powers of attorney on behalf of people or entities that actually existed.
[112] Mr Chen held powers of attorney for Huazhen Zhang, Jiquan Zhang, Guizhen Zhou, Wenlong Wang, Phaeton Holding Ltd and Rock Construction Ltd. I accept the Crown submission that the primary purpose of obtaining most (if not all) of the power of attorney documents was to minimise the risk of the fraud being detected by the banks. The use of the powers of attorney avoided any need for the named purchasers to be contacted by the banks. Any attempts to contact those purchasers clearly ran the risk of the fraud being uncovered, given that they were either fictitious, or too unsophisticated (or unaware) to be able to maintain the fraud. The powers of attorney therefore played a key role in the implementation of the fraud.
[113] In respect of Mr Chen, the use of the powers of attorney enabled him to maintain a significant degree of control over all aspects of the legal process, given that he usually acted for the vendor, the purchaser and the bank.
Lending policies and processes of the banks
[114] The alleged offending involved three lending institutions—ANZ, BNZ and Bank A. The documentation required in support of a loan application was broadly consistent across the three banks. During the period of offending, the supporting documentation generally required for loan applications was:
32 I note that some of the persons Mr Wang held powers of attorney for were not the named purchasers in respect of any of the transactions that are the subject of the current charges (namely Hongming Zhang, Ming Xu and Shui Zhang). However, the powers of attorney relating to them share similar features (including forged certifications by Ms Manning of the New Zealand Consulate in Shanghai) to those in the names of persons who were used as purchasers. In addition, the bank account statements of both Amy Chen (Mr Chen’s sister) and Shufeng Qi (Mr Chen’s aunt) record payments to Shui Zhang and Hongming Zhang, some of which are referenced “SALARY” or “SAL”. Similar payments were made to a number of the named purchasers, as discussed further below.
(a) Proof of identity, proof of employment and income, payslips and bank statements evidencing stated income, and anything else the bank may consider it requires.
(b) A copy of the sale and purchase agreement.
(c) (Usually) proof of deposit. The evidence was that the banks usually confirm that the funds are available (ie a bank statement, term deposit or gifting letter) and the solicitor then confirms that the deposit has been paid through their settlement certificate. Proof of deposit could come from a letter from a relative, or from solicitors acting for the parties.
(d) Property valuation (not always required, depending on the risk).
(e) Market rent assessment (for rental properties).
[115] The key evidence as to the processes and policies of the banks was given by Kelly Harold (Credit Policy Manager at the BNZ), Benjamin Anderson (Head of Credit Delivery and Assurance at ANZ) and Mr B (Compliance Manager at Bank A). The evidence of the bank witnesses was that the financial vetting of an applicant was crucial, especially the documentation and the personal and financial information. The income and outgoings of an applicant are required by the banks to determine their ability to make repayments.
[116] BNZ uses an automated lending decision tool called MyLending, which was implemented in February 2012. Prior to February 2012 a similar decision tool, called Transact, was used. The decision-making algorithms are based on BNZ policy, covering such things as the amount of deposit required, the loan-to-value ratio, the level of income required to service a loan, and so on. The decision tool is based on the inputs that are programmed into it. The decision tool is effectively a computer programme that determines whether a particular loan application meets the bank’s lending criteria and, if not, where it falls short.
[117] When a lender receives an application for a loan, the lender collates the supporting information and enters (and attaches) supporting documentation into the decision tool. Certain criteria can trigger the decision tool to automatically refer the application to another person, such as a manager.
[118] During the MyLending process, if a decision is accepted, it automatically generates a diary note. The lender who started the application process will have their name on the diary note. The diary note captures the decision tool process. If a referral decision is made, the lender must provide reasons as to why BNZ should approve the loan. This information is then sent to a team of credit managers for review to enter a manual decision into the decision tool to approve or decline a loan.
[119] BNZ overview policy also requires higher risk transactions to be overviewed by a credit manager within 10 days of the system approving the loan. A private treaty sale where no real estate agent is involved is deemed to be a higher risk transaction and must be referred to a credit manager for overview. (In this case almost all of the sales were private treaty sales, although they were falsely presented to the banks on the standard agreement for sale and purchase forms of Lugtons Limited, a real estate agency).
[120] Once the loan is approved by the decision tool, a banker with a Delegated Commitment Authority (DCA) can accept the approval decision. The banker must verify in the decision tool that pre-loan conditions have been met, including that all documents have been provided by the applicant and that they have been verified by the banker.
[121] Once the pre-loan conditions are met, the banker generates instructions to the BNZ lending services department for the loan documentation and drawdown. A diary note is generated through the decision tool. The banker inputs the supporting information, pushes a button and the note goes through to the credit manager. The manager then looks at the information contained within the note, inserts their comments, then pushes a button and the note is returned to the lender. When an application is accepted, a diary note is created in the diary note system, so it is a system-generated diary note.
[122] If the decision tool requires an approval from another person, the lender cannot override that requirement. Lending to property developers are dealt with by the property investment division at BNZ and commercial banking policies apply. During the 2012–2013 period, a retail banker was required to refer any customer who purchased their fifth or subsequent property to the property investment division, which was a team of bankers with the skill to assess applications involving multiple securities, which are typically more complex. The retail banking division, on the other hand, had a maximum lending authority to one borrowing group of $4 million, lending above $4 million was required to be dealt with by the Partners Division.
[123] At ANZ, a loan applicant is required to complete an application form detailing their personal and financial circumstances, which can be done through a mortgage broker acting for the applicant or at the bank.
[124] ANZ maintains a list of accredited brokers who are eligible to submit applications to ANZ. To be eligible, the requirements of the accreditation process must be met, and an acceptable level of quality in the applications must also be maintained. A mortgage broker will often act on behalf of an applicant and engage with the bank in order to obtain approval for home lending. The contractual relationship, however, is still between the applicant and the bank. ANZ staff do not receive a payment from the applicant or any broker in return for approving loans.
[125] Bank processes do not allow a blank signed application to be accepted by the lender (as appears to have happened on several occasions in this case). However, on occasion the lender may assist a client in completing the loan application form.
[126] The applicant is required to provide certain documents to support the statements made in their loan application form. The customer is advised by the banker which documents they require. A standard set of documents would include information to verify income and expenses, as well as a statement of position of the applicant(s).
[127] Information from the loan application and supporting documents is entered into the bank’s loan approval system and the applicant’s financial circumstances are assessed by calculating the ability of the applicant to service the mortgage being applied for. This takes into account all the income and outgoings of the applicant, as stated by the applicant.
[128] After the relevant information is entered into the loan approval system, it is either approved by the lender, referred to a more senior Credit Manager or declined. The banker can make the decision subject to their level of discretion and bank policy. The system may approve the lending, and the banker may still decide to decline it. However, if the system declines the lending then the banker has no authority to override this. Such applications must be escalated up the credit chain.
[129] A lender’s Credit Approval Discretion (“CAD”) level refers to the monetary value that the lender is authorised to lend up to. Applications above this limit must be referred to a Credit Manager for approval.
[130] ANZ provides lending to property developers but has a low appetite for such lending in business banking. In general, this type of lending is completed within the commercial and agri-business unit that generally has more detailed credit assessment processes than business banking. Loan applications would generally require details of the property being developed including timeframes and profits to be made, a valuation outlining current and future value (post development) and details of ability to service the debt provided.
[131] ANZ will generally only loan money to developers where the customer has the ability to repay the debt from presales or, in some situations, where the customer can service the debt from their existing cash flow. The customers would generally be expected to put in higher levels of equity, but that may be dependent on the project.
[132] To obtain a home loan from Bank A, an applicant is required to complete an application form detailing their current personal financial circumstances. The
applicant is required to provide supporting documents with the application to verify their income, expenses, assets and liabilities.
[133] The retail manager is required to ensure all relevant information is collected, valid, and compliant with the Bank A’s retail mortgage policy requirements. The retail manager assesses the information provided in the documents to validate whether the applicant qualifies for a retail mortgage loan. The retail manager is responsible for verifying the income and employment information by contacting the employer and noting salary payments in the customer’s bank statement.
[134] Following confirmation of employment and income, the retail manager and the bank teller complete a “credit approval procedure” form, and recommend approval of the application where appropriate to the credit department. The credit department, namely the credit analysts and the credit manager, review the documents provided with the “credit approval procedures” form, and complete the “credit review” section.
[135] If the customer information provided meets Bank A’s credit policy requirements, necessary approvals are obtained based on the Bank A’s management delegated authority from the Bank A Board on loans.
[136] If the information and the documents appear to be inconsistent, or do not meet Bank A’s credit policy requirements, the credit manager will liaise with the general manager/chief executive officer. The credit manager wholly relies on the retail managers to collect, verify and include all relevant information in the application form. The final credit decision is based on this information.
F. INDUCEMENT / CAUSATION
[137] I now turn to consider the issue of inducement/causation, which is a required element of all of the obtaining by deception charges.
[138] Section 240(1)(b) requires that the obtaining of credit be “by” the deception. Hence the Crown is required to prove, for each charge, that the deception alleged in
the relevant charge was causative of credit being obtained.33 The deception must play a material part in inducing the creditor to provide credit, but need not be the sole operative factor.34 The requirement for a causative link is reinforced by the requirement in s 240(2)(a) that any false representation be false in a material particular.
[139] The defendants submitted, in the context of the s 147 applications, that there is insufficient evidence of inducement in relation to any of the obtaining by deception charges because the Crown did not call evidence from the particular bank employee who made each relevant lending decision. As a result, they submitted, there is no evidence that those persons were induced to approve the relevant loan applications by any misrepresentations made by the defendants. Further, no evidence was adduced by the Crown to establish that those employees were unavailable to give evidence, or could no longer recall the individual loan applications, given the passage of time. In essence, defence counsel submitted that where the relevant decision-maker is available, that person must be called by the Crown in order to establish that the false representation was relied upon.
[140] I rejected that submission, for the reasons set out in my s 147 decision. I concluded that:35
... Clearly, as the Crown accepted, there must be evidence (either direct or indirect) from which the Court could conclude that that there was a causal link between the alleged deception and any obtaining of credit. At this stage, however, I must take the Crown case at its highest. Viewed in that way, I accept that while there is no direct evidence of inducement, there is indirect circumstantial evidence, including from bank witnesses, that could (if accepted) support an inference of reliance/inducement. The subsequent question of whether the required inference should be drawn is, of course, an issue for determination at a later stage. At that stage the defendants will, of course, be entitled to rely on the lack of direct evidence as a factor that weighs against the drawing of the necessary inferences.
[141] The key evidence on the issue of whether the banks relied on the employment, income and/or identity information provided to them (allegedly by the defendants) was provided by Ms Harold (BNZ), Mr Anderson (ANZ) and Mr B (Bank A).
33 See Wynyard v R [2015] NZCA 610 at [26] in relation to s 240(1)(d) of the Crimes Act 1961.
34 R v Morley, above n 18, at [34] (the case also relates to s 240(1)(d) of the Crimes Act 1961).
35 R v Xu, above n 17, at [65].
[142] The overall tenor of the evidence of the bank witnesses was that the element of trust between a bank and its client is very important. There is an expectation that loan documentation or information provided to the bank will be true and correct. The bank witnesses emphasised their reliance on a relationship of trust with loan applicants when considering lending applications. Each of the bank witnesses gave evidence to the effect that a loan application would be rejected if the bank was aware that the documentation or information provided during an application had been deliberately falsified.
BNZ’s reliance on information provided to it by loan applicants
[143] Ms Harold’s evidence was that the BNZ relies on all information and documentation provided to be true and correct. She said that any intentional false representation made to the BNZ as part of a loan application would be considered an intention to mislead the bank. It was BNZ policy that if any of the documentation or information provided during the application process has been deliberately falsified, the loan would not be approved. Further, it does not matter if the false representation is material to the loan approval process. “BNZ has a zero-tolerance policy regarding false information or documentation”.
[144] In cross-examination, Ms Harold confirmed that it is standard BNZ policy “that we have no tolerance for fraud and we do not accept documentation that is falsified or fraudulent”. She could not confirm precisely where the policy was written, but thought it was possibly in BNZ’s code of conduct. She said that it was a “well-known policy of the bank’s”. Ms Harold confirmed that her evidence that it did not matter if the false representation was material to the loan, was “absolutely accurate”, although she did not know if those exact words are written in a policy document. Although the issue is in part about debt servicing ability, Ms Harold said that the bank is also concerned with the integrity of the customer. It would therefore be relevant whether the bank was intentionally misled by the customer, or whether the mistake or oversight was innocent.
[145] When pressed further by Mr Wimsett, Ms Harold confirmed that her evidence-in-chief was “absolutely correct” on these issues. Even though she could
not say precisely where such matters were set out in BNZ’s policy documents, she was aware of them “through training, through learning, through practice, through 22 years of experience”. She concluded by reiterating that the bank had a “zero-tolerance policy for false information or documentation” but not necessarily a “zero-tolerance policy for errors”. Intention matters, she said.
ANZ’s reliance on information provided to it by loan applicants
[146] Mr Anderson’s evidence was to similar effect. ANZ relies on the loan application form and supporting documents provided by the applicant, or their broker, when deciding whether to approve a loan. It is ANZ policy that if any of the documentation or information provided during the application process had been deliberately falsified, the loan would not be approved. ANZ relies on all information provided on any documentation to be true and correct. Any intentional false representation made to ANZ as part of the loan application would be considered an intention to mislead the bank. ANZ has a zero-tolerance policy regarding false information or documentation.
[147] Mr Anderson was cross-examined on this evidence by Mr Wimsett. He could not say “off the top of my head” whether this policy was written down, but said it was part of ANZ’s values in terms of the way they operate. “In terms of false information, we choose not to deal with people who provide false information”. Mr Anderson said that if someone had made a mistake, that would not be viewed as fraud. Rather, his comments were directed to people intentionally trying to mislead ANZ.
Bank A’s reliance on information provided to it by loan applicants
[148] Mr B’s evidence was that Bank A relies on the loan application form and supporting documents provided by the applicant when deciding whether to approve a loan. The retail manager is required to ensure all relevant information is collected, valid, and compliant with the Bank A’s retail mortgage policy requirements.
[149] Bank A’s policy is that if the bank believed that any false information was provided with a lending application, the loan would not be approved.
[150] Mr B was not cross-examined on that evidence.
Has the Crown proved the element of inducement/causation?
[151] Mr Wimsett (whose submissions on this issue were supported by the other defendants) noted that all of the obtaining by deception charges require the Crown to prove inducement/causation beyond reasonable doubt. As the Crown did not call evidence from the individual lenders or credit managers who played a role in decision- making in respect of the 57 loan transactions in issue, it must rely upon evidence of other bank representatives to prove the required inducement.
[152] Mr Wimsett noted that paragraphs 23, 24 and 25 of Mr Anderson’s statement and 39, 40 and 41 of Ms Harold’s statement (to the general effect that the ANZ and BNZ will not approve loans where supporting documentation has been deliberated falsified) are almost identical. He submitted that the relevant passages were written by someone from the SFO (which Ms Harold acknowledged, in respect of her evidence). Further, neither witness had referred to written policy documents in support of that aspect of their evidence. Mr Wimsett submitted that I should therefore give this evidence little or no weight.
[153] I reject this submission. It is certainly not ideal that the relevant passages of Ms Harold’s and Mr Anderson’s statements mirror each other and appear to have originally been drafted by someone from the SFO. Both witnesses, however, reviewed and signed their witness statements as being an accurate record of their evidence. I found them both to be impressive and highly knowledgeable witnesses, with extensive experience in their respective banks. They were careful and considered in their evidence and made concessions, or agreed with propositions put to them in cross-examination, as they saw appropriate. When cross-examined on the passages of their evidence that Mr Wimsett now challenges, both of them remained resolute. Ms Harold, in particular, faced a sustained challenge from Mr Wimsett on this aspect of her evidence. As I have outlined above, she remained firm and consistent in her evidence that BNZ had a zero-tolerance policy for deliberately falsified information or documentation, and that the presentation of such documents (if discovered) would
be fatal to a loan application. Mr Anderson also maintained his position on this issue under cross-examination.
[154] Further, such evidence is inherently plausible and accords with common-sense. In this case the false documents alleged to have been provided to the banks did not contain minor errors or innocent mistakes. Rather, they comprise:
(a) false employment letters stating that a particular applicant is employed by a company that is not his or her employer, at a generous salary that greatly exceeds the applicants’ true level of income;
(b) forged overseas bank statements with entries purporting to support the false level of income claimed;
(c) New Zealand bank statements into which regular deposits had been made (labelled as “SAL” or “SALARY”) in order to deceive the banks into believing that the relevant applicant was in receipt of the level of income claimed in their loan application and/or false employment letter, when they were not;
(d) forged term deposit slips in respect of term deposits that do not exist; and
(e) a forged passport.
[155] Based on the evidence of the bank witnesses (as summarised above), I have no hesitation in concluding that if any of the three banks involved had been made aware that a loan application was being supported by forged documents or false information falling within one or more of the categories I have outlined, the loan application would have been declined. That conclusion is so obvious that, in the particular circumstances of this case, it was not necessary to call the particular persons within the banks who approved the relevant loan applications in order to prove the required element of inducement/causation. The evidence of Ms Harold, Mr Anderson, and Mr B was sufficient.
[156] To illustrate the point, I note that when the BNZ discovered that many of the transactions were supported by false sale and purchase agreements in the name of Lugton’s Limited (a real estate agency), despite Lugton’s having had no involvement in the relevant sales, they promptly called up all of those loans. This was despite the fact that the use of false forms, in itself, did not impact on the value of the bank’s security. This reinforces Ms Harold’s evidence that the BNZ has a zero-tolerance policy for deliberately falsified documentation or information.
G. CHARGES AGAINST MS XU Overview of charges against Ms Xu
[157] I now turn to consider the 34 charges against Ms Xu, all of which are charges of obtaining by deception. It is alleged that Ms Xu made a number of false representations to the banks. The factual allegations that underpin the alleged misrepresentations are that:
(a) Ms Xu provided false bank statements to the banks;
(b) Ms Xu made false “salary” payments into the bank accounts of loan applicants; and
(c) Ms Xu provided false employment letters to the banks and (on two occasions) false deposit slips.
[158] Most (but not all) of the charges rely on more than one type of misrepresentation. Obviously, however, the Crown need only prove one form of misrepresentation in order to prove a particular charge. For ease of analysis, and to avoid undue repetition, I will consider the charges against Ms Xu with reference to the three categories of alleged misrepresentations set out above.
Credibility assessment
[159] First, however, I make some general observations regarding Ms Xu’s credibility. Ms Xu gave evidence over several days and was subject to lengthy
cross-examination by Mr Simmonds. She came across as an intelligent and articulate witness. I note that she has a university degree in chemical engineering.
[160] On non-contentious issues, Ms Xu was forthright and I found her evidence to be credible. On contentious issues, however, Ms Xu’s explanations evidence often lacked credibility. When pressed by Mr Simmonds for explanations for some of the more damaging evidence against her, Ms Xu often gave evidence that was far-fetched, implausible and lacked “the ring of truth”. On the key issues, Ms Xu’s evidence was often self-serving and lacking in veracity.
[161] I make specific credibility findings, rejecting aspects of Ms Xu’s evidence as untruthful, at [172], [227], [235], [240], [241], [243], [252], [328], [334](f), [337] and [375]–[378] below. As a general observation, I found it necessary to treat Ms Xu’s evidence with considerable caution. Nevertheless, the fact that I have concluded that Ms Xu told a number of lies in her evidence is obviously not determinative of her guilt. People can lie for reasons other than because they are guilty. I keep in mind that any lies that Ms Xu told in evidence are simply strands of circumstantial evidence that I am entitled to consider, together with all of the other evidence in the case, in deciding if the prosecution has proved one or more of the charges against her.
Circumstantial evidence relevant across all charges
The nature of circumstantial evidence
[162] The Crown case against each defendant turns, to a significant extent, on circumstantial evidence.
[163] In a circumstantial case, the Court must look to the combined effect of a number of independent items of evidence when considering each charge. While each separate piece of evidence must be assessed as part of the inquiry, the ultimate verdict on each charge will turn on an assessment of all items of evidence viewed in combination. The underlying principle is that the probative value of a number of items of evidence is greater in combination than the sum of the parts. The analogy that is often drawn is that of a rope. Any one strand of the rope may not support a particular
weight, but the combined strands are sufficient to do so.36 The logic that underpins a circumstantial case is that the defendant is either guilty or is the victim of an implausible, unlikely series of coincidences.
[164] When assessing the evidence in a circumstantial case, it is not sufficient to evaluate each separate strand of evidence in isolation and then stop. Having considered each strand of evidence separately, it is necessary for the decision-maker to then stand back and assess the cumulative effect of all of the different strands of evidence. Consideration of the onus and standard of proof only occurs at the second stage of the process. The individual strands of evidence do not have to be proved beyond reasonable doubt.37 The onus and standard of proof only comes into play once the combined weight of all of the strands of evidence is being considered.38
[165] I therefore summarise below key aspects of the evidence relating to the charges against Ms Xu. Some of this is general evidence, which provides background to all of the charges. Other evidence is direct evidence that is specifically relevant to a particular charge or group of charges. Because of the circumstantial nature of the case, however, such evidence also forms part of the overall pool of evidence that is relevant to the assessment of all of the charges. It enables Ms Xu’s alleged conduct in relation to any particular charge to be assessed in its wider context.
[166] Ms Xu’s evidence was that her role at LV Park focussed on such things as inspecting properties and the day-to-day management of subcontractors. She said that she had relatively little involvement in financial or management issues, spending most of her time “in the field”. Ms Xu did, however, have her own office at LV Park’s offices on Queen Street, which she used regularly.
[167] Ms Xu acknowledged that she was aware, in broad terms, of her husband’s “refinancing” scheme, and that it involved transferring properties into the names of
36 R v Guo [2009] NZCA 612 at [49]–[50]; R v Hoto (1991) 8 CRNZ 17 (HC) at 21.
37 See Thomas v R [1972] NZLR 34 (CA) at 38–39; R v Puttick (1985) 1 CRNZ 644 (CA) at 647.
38 R v Puttick, above n 37, at 647; applied in Ngarino v R [2011] NZCA 236 at [26].
third parties. She claimed, however, that she was not aware of the fraudulent aspects of the scheme, including that false information was being provided to the banks.
[168] Ms Xu portrayed herself as fairly naïve and unsophisticated when it came to financial matters. She said that she did not care about such things, as they were Mr Huang’s responsibility. Ms Xu did acknowledge in cross-examination, however, that she was aware of discussions with the Inland Revenue Department around whether LV Park had to pay tax on the “re-financing” transactions that it undertook, or whether tax could be deferred until a property was sold to an unrelated third party. She also admitted that she had accompanied her husband to the offices of accountancy firm BDO to discuss this issue.
[169] Peter Mensah, LV Park’s part-time accountant, gave evidence. He impressed me as an independent, honest, and forthright witness. I found his evidence to be credible. He said that the key business decisions were made by Mr Huang, whom he described as “the brains” behind the business. It was apparent from Mr Mensah’s evidence, however, that Ms Xu had a significantly greater role in the business, including in relation to its finances, than she portrayed in her evidence. For example, Mr Mensah prepared financial statements for the business based on data that had been entered into the MYOB (Mind Your Own Business) accounting software. If he had any questions, he would raise them with Mr Huang first. However, if Mr Huang was unavailable, he would raise them with Ms Xu. Most of the time, she could answer his questions. Ms Xu was familiar with the MYOB software, and played a key role in entering information into the system. Indeed, when asked who was the most familiar with the MYOB information, Mr Mensah stated, “Jenny knew more about the information that was put into the financial statements”.
[170] In a similar vein, Crystal Cao, who was employed as an inhouse accountant at LV Park (at a fairly junior level) from 2014 to 2015, stated that Ms Xu was involved in completing the accounting work and taught her how to enter bank transactions into the accounting system.
[171] Mr Mensah also referred to a document that set out details of the various “refinancing” transactions that were undertaken by LV Park. Mr Mensah stated that
Ms Xu had prepared that document at his request, identifying all the dates and sale prices of properties, next to the relevant vendor companies. Mr Mensah identified Ms Xu’s handwritten comments next to a number of the transactions. Mr Mensah relied on this document when preparing financial statements for the LV Park Group.
[172] Overall, it is my view that Ms Xu significantly downplayed her role in the business. I accept that a key aspect of Ms Xu’s role was managing the subcontractors, and that she spent a lot of time at work sites. However, she also played a key role in other aspects of the business. Mr Huang was a big picture person, a “showman”, who worked at a frenetic pace. Ms Xu was more of a detail person, who worked hard behind the scenes both in terms of managing the subcontractors and, when required, managing the paperwork. She played an important support role in the business, as Mr Huang’s second-in-command. I accept that Ms Xu was subservient to her husband within the business. She is also, however, an intelligent and capable woman in her own right. She has significant skills in relation to both the administrative and financial fields of operation, which she applied for LV Park’s benefit.
[173] A strand of circumstantial evidence that is potentially favourable to Ms Xu, relates to the apparent forgery of her signature on four loan applications.
[174] Four loan applications in the name of Ms Xu’s brother, Hao Zhang, have a signature on them that closely resembles that of Ms Xu. Ms Xu held a power of attorney for Hao Zhang, although the documents do not state that the person signing as applicant was signing as attorney for Hao Zhang. Expert handwriting evidence called by the defence was that those four signatures were more likely written by someone other than Ms Xu. Mr Boot, the expert document examination witness for the SFO, agreed that there were material differences between the signatures on those documents and Ms Xu’s authentic signature. The signatures in issue were therefore either made by someone else, or by Ms Xu in circumstances where she intended to create the impression that the person who signed the documents was someone other than her. In my view, it was more likely that it was Mr Huang, rather than Ms Xu, who signed the relevant Hao Zhang loan applications.
Key evidence relating to the false bank statements
[175] Four electronic devices, each containing a copy of an Excel spreadsheet that was clearly the source of the false Chinese bank statements, were found by the SFO in a search of Ms Xu’s office. One of them was on her desk (her laptop computer) and three of them were in her desk drawer (a laptop hard-drive and two thumb drives). No electronic copies of that spreadsheet were found on any of the other 89 electronic devices seized by the SFO during its searches of premises associated with the defendants. The false Chinese bank statements appear to have been originally created on the laptop hard-drive found in Ms Xu’s desk drawer, which was likely the original hard-drive for her laptop. The false bank statements recovered by the SFO from the banks’ own files largely mirror those found on the thumb drive found in Ms Xu’s desk drawer.
[176] A software programme called CutePFD appears to have been used to convert specific worksheets from the Excel spreadsheet into PDF versions of the Chinese bank statements. That programme was found on three devices associated with Ms Xu—her current desktop computer, the laptop hard drive found in her desk drawer, and another computer that is also forensically linked to Ms Xu. That software programme was not found on any of the other 27 devices seized from LV Park’s offices.
[177] Extensive other electronic evidence points to Ms Xu’s close involvement with the false Chinese bank statements, which I discuss further below.
[178] On one occasion when false bank statements were sent from the lakewood18 email address to Mr Chen (charge 8), the relevant email was signed off “Regards Jenny”. Similarly, on another occasion (charge 9), Mr Chen emailed the lakewood18 email address in response to the email previously received from “Jenny” and requested Zhuwen Wu’s Chinese bank accounts. He was promptly provided with them.
[179] In respect of charge 36, on 7 September 2013 Mr Huang sent Ms Xu text messages that read ‘Ming Li Lifeng Li’ and ‘Ming Li 320 Lifeng Li 360’ respectively. Two minutes later, Mr Huang sent a message to Mr Chen: “Ming Li 320 annual salary. Lifeng Li 360. Take the above as being correct”. The next day, Mr Chen sent an email to Peter Cheng at the ANZ with the subject ‘Ming Li’ china account’. The email
attached a false Chinese bank statement, which showed monthly deposits of RMB 266,700, which equate to a yearly salary of RMB 3,200,400. This false bank statement matches the version found by the SFO on a thumb drive in Ms Xu’s desk drawer, under the tab ‘liming’. Although no email sending those bank statements to Mr Chen has been recovered, the necessary inference is that they were sent to him shortly after Mr Huang’s text to Ms Xu, advising her of the salaries that were to be used for Ming Li and Lifeng Li.
[180] The false bank statement that was subsequently provided to the ANZ in respect of Lifeng Li similarly correlates with the salary stated in Mr Huang’s text to Ms Xu. A copy of that statement was also found on the thumb drive in Ms Xu’s desk drawer.
[181] On 27 October 2013, Mr Huang sent a text message to Ms Xu stating: “Bin Zhu’s 6 months’ bank statements”. Two days later, on 29 October 2013, the lakewood18 email address sent an email to Mr Chen with the subject ‘Zhu bin account’. The email attached a Chinese bank statement for Bin Zhu that covered a six-month time period.
[182] On 1 October 2013, Mr Huang sent a text message to Ms Xu, the translated version of which reads:
Kai Wang (and) Feng Ye’s Chinese Bank/Bank of China statement were sent/are to be sent to Gang Chen today
[183] The following day (2 October 2013), an email was sent to Peter Cheng at the ANZ from the fengye1972 email address. The subject of the email is “FWD:FW:Ye and Wang acc.” False Chinese bank statements in the name of Kai Wang and Feng Ye were attached to that email. (For reasons I explain further below, I am satisfied that Kai Wang and Feng Ye are fictitious people).
[184] Charge 45 relates to a loan application made in the name of Bo Song. On 21 November 2013 (the day before the relevant loan was drawn down), Peter Cheng sent Mr Huang a text message that read “Please email me the bank statements”. Four minutes later, Mr Huang sent a text message to Ms Xu that read “Bo Song”. Half an hour later, Mr Huang sent a text message back to Peter Cheng that read “Bo Song bank
statement lunch time email to you, sorry for confusion, too many houses”. Although an email sending the bank statements through to Peter Cheng has not been recovered by the SFO, bank statements for Bo Song were provided (and were found on the ANZ file). The false Chinese bank statements received by ANZ match the version stored on the thumb drive found in Ms Xu’s office under the tab marked ‘song bo’.
Key evidence relating to the false salary payments
[185] There is direct text message evidence relevant to three of the false salary payments charges (charges 29, 30 and 31). To reiterate, it is alleged in these charges that Ms Xu made deposits into the accounts of various loan applicants, disguised as salary payments, in order to deceive the banks into believing that those applicants were in receipt of the salaries claimed in their loan applications, or false employment letters, when they were not.
[186] Two of the relevant applicants are Ming Li and Wenlong Wang. On 7 March 2013, Mr Huang sent a text message to Ms Xu that said “Ming Li account, [account number], $3,058.85”. That same day a payment of $3,058.85 was made to Ming Li from LV Park’s bank account, referenced “sal”. From that day onwards, regular “salary” payments were made into Ming Li’s account from LV Park’s account. Subsequently, on 20 March 2013, at 4.20 am New Zealand time, Mr Huang received a text message from Ms Xu (who was in China at the time) stating:
Too later you pay it GL steel 17652.50 Windsor door 3613.15 kittipong 533.66 suppat 470.13 Wang and li 3058.85 noah building 7000
(Emphasis added)
[187] Mr Huang responded one minute later, stating “You pay again, I text you back quickly”. The same day as this text message exchange, another payment (referenced “sal”) of $3,058.85 was made by LV Park to the Ming Li account. (When this text message exchange is considered in context, it is clear that the reference to “Wang” was to Wenlong Wang, and the reference to “Li” was to Ming Li). Salary
payments of $3,058.85 correlated with the (false) salary information for Ming Li that had been provided to the ANZ
[188] Similarly, a payment of $3,058.85 was made from the LV Park Construction bank account into the bank account of Wenlong Wang (referenced “sal”) following this text exchange, and on the same day. This correlated with Wenlong Wang’s loan application form, which claimed that he was receiving a net salary of $3,059 a week.
Key evidence relating to the false employment letters
[189] There is evidence that some of the false employment letters were sent to Mr Chen from the lakewood18 email address. I have found that both Mr Huang and Ms Xu had access to, and used, that email address.
[190] A copy of a false employment letter in the name of Hao Zhang (Ms Xu’s brother) was found by the SFO in an Eastlight folder in Ms Xu’s office.
[191] All of the evidence I have just summarised is relevant across all of the charges, to the extent that it is relevant to assessing Ms Xu’s overall role and involvement in the offending. In light of the totality of that evidence it is clear that Ms Xu was aware of the fraudulent scheme and had at least some involvement in it.
[192] I have not overlooked the significance that Mr Simperingham placed on the fact that Mr Huang may well have “mimicked” Ms Xu’s signature on four of the Hao Zhang loan applications (if that is what occurred, which is not clear). However, this strand of evidence, puzzling though it is, cannot outweigh the significant quantity of other evidence that squarely points to Ms Xu’s involvement in the fraud.
[193] I now turn to focus in particular on the false bank statements allegations.
The false bank statements particulars
[194] Eighteen of the charges against Ms Xu (charges 6, 8–12, 14, 16, 32-33, 36–38, 40-41, 43, and 45–47) allege that she submitted false overseas (Chinese) bank statements to the banks in support of loan applications in the names of, respectively,
Hao Zhang (her brother), Zhuwen Wu, Wenlong Wang (her father-in-law), Jiquan Zhang (her mother), Lifeng Li, Ming Li, Bin Zhu, Kai Wang, Feng Ye, Bo Song, Hsin-Yun Li (an LV Park employee) and herself. The Question Trail that relates to these charges is annexed as Appendix 2, save that the only relevant particular at this stage is the second bullet point (overseas bank statements).
[195] In respect of about half of these charges, there is at least some direct evidence as to how the false Chinese bank statement(s) reached the relevant bank. In respect of the other charges there is no direct evidence of transmission. The Crown therefore relies on circumstantial evidence in those cases, which Mr Simmonds submitted supports the inference that Ms Xu was the person who had sent the relevant bank statements to the banks (directly or indirectly).
[196] Chinese bank statements were provided to the banks on a number of occasions, in order to substantiate the level of income claimed in the loan applications and/or the false employment letters provided to the banks.
[197] A number of witnesses were asked about these bank statements, including Ms Xu herself, her parents, Mr Huang’s parents and Hsin-Yun Li (an LV Park employee who was one of the loan applicants). These witnesses acknowledged that the bank statements (or at least those that purported to relate to them as borrowers) were false, and that the regular salary deposits shown on the bank statements were a complete fiction. In addition, forensic IT evidence (which I address further below) clearly established that the Chinese bank statements were forgeries.
[198] Mr Simperingham, counsel for Ms Xu, did not suggest otherwise. Rather, the defence case for Ms Xu was that she had no knowledge of the existence of the false bank statements, because she was not aware of the mortgage fraud scheme being perpetrated by Mr Huang. While she was aware that Mr Huang intended to (and did) arrange for the transfer of properties into the names of third parties, Ms Xu said that she did not appreciate that there was anything improper or unlawful about his activities. Her evidence was that she was not involved on the financing side of the
arrangements, and was accordingly not aware that false information, including false bank statements, was being provided to the banks.
Who created the false bank statements?
[199] The critical issue is who provided the false bank statements to the banks. Determining who created the false bank statements may, however, cast some light on that issue.
[200] A comprehensive forensic investigation of various devices seized during SFO searches was undertaken by the SFO’s electronic forensic unit. Mr Mannix, the SFO’s principal electronic forensic investigator, gave evidence at trial. He also produced a copy of the detailed electronic forensic report that he had prepared.
[201] A total of 93 electronic devices were seized from various addresses associated with the defendants. Thirty of those devices were seized from LV Park’s offices at 175 Queen Street, Auckland, during a search that was undertaken at those premises on 16 June 2015.
[202] Ms Xu was present at LV Park’s offices during the search. She confirmed the location of her office to SFO staff (and again in her evidence at trial). A significant quantity of incriminating evidence was found in Ms Xu’s office, including on four devices that were located either on top of Ms Xu’s office desk or sitting inside her desk drawer.
[203] Forensic analysis of those four devices identified versions of an Excel spreadsheet called “Chinese.acc.xls” that contained Chinese bank statements in the names of loan applicants. The Chinese bank statements found on these devices either matched exactly, or were very similar to, the false bank statements that had been submitted to the banks in support of the loan applications. Versions of the chinese.acc.xls spreadsheet were located on the following four devices seized from Ms Xu’s office:
(a) A Sony VAIO laptop computer located sitting on Ms Xu’s desk. Ms Xu acknowledged that this was her laptop (although she said that she
seldom used it). I will refer to this device as “Ms Xu’s laptop”. The registered owner of the Windows operating system on this laptop was “admin”. The user account on the laptop was also “admin”. The user account had a password enabled to access it.
(b) A portable 100Gb hard drive, in a Nexstar case, located in a drawer of Ms Xu’s desk. This hard drive was originally the primary hard drive for a Sony VAIO laptop computer. The computer had two user accounts “jenny” and “owner”. The “jenny” account, however, was only logged into on two occasions. The account for “owner” was the main account used. The operating system was installed on 26 April 2009 and it was shut down for the final time on 2 October 2012. For ease of reference, I will refer to the hard drive as the Nexstar hard drive, and the laptop in which it was used as a hard drive as “the original Sony VAIO laptop”. It appears likely that this hard drive was the predecessor to the hard drive that was in Ms Xu’s Sony VAIO laptop computer when it was seized by the SFO.
(c) A 4Gb thumb drive located in a drawer of Ms Xu’s desk.
(d) A 128Mb thumb drive located in a drawer of Ms Xu’s desk.
[204] The only other device (amongst the 93 electronic devices that were seized by the SFO) that is linked in any way to the false bank statements is an older style tower computer that was found in a common working area of LV Park’s offices, identified as “PC2”. That computer is also closely associated with Ms Xu, through forensic IT evidence.
[205] The chinese.acc.xls spreadsheet contains sixteen worksheet tabs. The names on the tabs correspond with names of loan applicants. Each worksheet is, in essence, set up as a false Chinese bank statement in the name of one of the loan applicants. The false bank statements generally included regular “deposits” that correlated with the false salary details in the employment letters provided to the banks in support of loan applications.
[206] The first version (in terms of chronology) of the spreadsheet was found on the Nexstar hard drive found in Ms Xu’s desk drawer (being the hard drive from the original Sony VAIO laptop). The document was located within the user account for “owner”. The spreadsheet was created on 17 December 2011. The author and contributor of the document are both “Home”, which is consistent with the registered owner of the laptop. The document was last modified on this device on 26 September 2012.
[207] The second version of the spreadsheet was found on the 4Gb thumb drive found in Ms Xu’s desk drawer. The file was saved to that device on 8 June 2012 and was last modified on 27 August 2013. The contributor of the document is “admin”, which means that the most recent changes to the document were made by a user named “admin”. (As noted above, “admin” is the registered owner of the Windows operating system on Ms Xu’s laptop and also the name of the user account on her laptop). The thumb drive had, at various stages, been connected to seven of the computers seized from 175 Queen Street and 408 Ormiston Road39 (including Thomas Huang’s computer and Ms Xu’s daughter’s laptop). However, only one computer had been connected under the user name of “admin”. That device was Ms Xu’s laptop. Hence, the version of the spreadsheet found on the 4Gb thumb drive appears to have originated from Ms Xu’s laptop.
[208] The third version of the spreadsheet was located on Ms Xu’s laptop (which was found on top of her desk). The file was created on 2 December 2012 and was last modified on 2 December 2013. The contributor of the document is again “admin”.
[209] The fourth version of the spreadsheet was found on the 128Mb thumb drive found in Ms Xu’s desk drawer. The file was created on 22 September 2013 and was last modified on 15 December 2013. The contributor of the document is “Jenny” (with a capital “J”) which means that the most recent changes to the document were made by a person using the username Jenny. A forensic examination of a computer found in a common area of the office, identified as “PC2”, revealed that a previous user account on that device (since deleted) was “Jenny”. An analysis of the 128Mb
thumb drive indicated that it had, at various times, been connected to five different devices seized from LV Park’s offices. However, only PC2 had a user account named Jenny.
[210] Mr Mannix’s evidence was that all four versions of the spreadsheet are related. His reasons for this conclusion were that the file names are the same, the creator of each document was “Home” (consistent with the registered owner of the original Sony VAIO laptop), the content created date of 17 December 2011 for all four documents is identical, and a visual inspection of the spreadsheet shows common content and layout. (To put the 17 December 2011 date that the spreadsheet was first created into context, I note that the first false Chinese bank statement was provided to one of the banks (BNZ) on 19 December 2011).
[211] Of the four versions of the “Chinese acc.xls” spreadsheet that were located, the most recent file saved date was 22 September 2013, contained on the 128Mb thumb drive. The contributor of the document had the name “Jenny”, meaning the most recent changes to the spreadsheet were conducted by a person using the username ‘Jenny” (the original username associated with PC2).
[212] There is no evidence of any other versions of the spreadsheet being found on the other 89 devices seized by the SFO during its searches, including those associated with Mr Huang. Three link files, however, were identified by the SFO’s electronic investigators. A link file is a file created by Windows when a user opens a file or document. The link file is a symbolic link which informs Windows where the actual file resides that the user is trying to access. A link file provides information such as the original file path of the file being accessed, metadata about the file and also a timestamp for the link file itself. When a document is deleted from a system, the link file relating to that document can sometimes still exist.
[213] Mr Mannix located three link files to a document named “Chinese.acc.xls”:
(a) Chronologically, the first link was created on the Nexstar hard drive (from the original Sony VAIO laptop) found in Ms Xu’s desk drawer. The link was created on 17 November 2011, which coincides with the
time that the original file was first saved. It was last modified on 26 September 2012, which is when the original file was last located.
(b) The second link was created on Ms Xu’s laptop on 27 March 2012 and last modified on 20 January 2014. (Which was several weeks after the last transaction in respect of which false Chinese bank statements had been provided to a bank). The link was created under the user profile of “admin.” (The registered owner of the Windows operating system on Ms Xu’s laptop and also the name of the user account on her laptop). The link resulted from the chinese.acc.xls spreadsheet being copied from the original Sony VAIO laptop to Ms Xu’s laptop using a Datacom thumb drive. Immediately following the spreadsheet being copied, it was accessed and a TIF image created of one of the worksheets— “zhang update account 001.tif”.
(c) The third link was created on 14 May 2012. On that date, the USB thumb drive was used to transfer a file named “chinese.acc.xls” to PC2. The file that the link points to has a created date of 27 March 2012 which is the same date that a link was created on Ms Xu’s laptop. It appears to only have been accessed on that one day as the link files “last modify” time is the same as the created date. The link was created in the user profile of “jenny”, which indicates that the person who accessed the document used that username.
[214] PC2, on which the third link was found (but on which no actual copies of the spreadsheet were found), is the only device that has any connection to the spreadsheets that was found outside of Ms Xu’s office. The four devices that had actual copies of the spreadsheet on them were all found either on Ms Xu’s desk or in her desk drawers.
[215] PC2 is an older style tower desktop computer that was located by the SFO in June 2015 (three years after the link was created in May 2012) in a common area of LV Park’s offices. The earliest time at which that computer could have been moved to the common area in LV Park’s offices was sometime after 17 July 2013 (towards the end of the period of alleged offending), when those premises were purchased by
LV Park. Prior to that time, LV Park’s business was run from 408 Ormiston Road, which is Mr Huang’s parent’s address. Precisely when PC2 was moved to the common area at 175 Queen Street is not known. All that can be said with certainty is that it had been moved there by June 2015, when the SFO search was undertaken (and 18 months or so after the date that the last false bank statement was provided to the banks).
[216] The registered owner of the Windows operating system on PC2 is “jenny.” The computer name is JENNY-2ADC59369. The user account is now “jenny” (but was originally “Jenny”—it was changed during an update to the computer). The user account had a password enabled to access it. Mr Mannix also recovered a deleted folder named Jenny that was a subfolder within the Documents and Settings folder. There was also a folder named p.mensah, indicating that LV Park’s part-time accountant, Peter Mensah, had also used the computer at some stage.40 The internet history of PC2 indicated that three email accounts associated with Ms Xu had been accessed from that computer, being the lakewood18, Jennyzhang03 and Jennyzhang329 email addresses. The bulk of activity on PC2 had occurred during 2013 and earlier. The forensic IT evidence, in my view, is consistent with PC2 (which is an older style computer) having been used as Ms Xu’s primary work (desktop) computer up until sometime prior to June 2015, when it was replaced by her current desktop computer (which is not forensically linked to the chinese.acc.xls spreadsheet). Sometime between 17 July 2013 (when 175 Queen Street was purchased) and 16 June 2015 (when the SFO search took place), PC2 must have been moved to the LV Park common work area.
[217] On 7 and 29 October 2013, PDF files called “Chinese Acc.PDF” were created. These files were located by the SFO as attachments to emails. Original copies, saved on a computer, have not been located. The author of these PDFs was a person using the username “Jenny”. (As noted above, this was the original username associated with PC2). The properties of the PDF documents show that they were both produced using GPL Ghostscript 8.15 software. GPL Ghostscript software can be used to render documents into PDF format. An example of this would be printing a document from within Microsoft Excel directly to PDF. GPL Ghostscript is utilized by a common
PDF Printing tool called CutePDF, which is free to download. Mr Mannix found CutePDF on three devices seized from LV Park’s offices—Ms Xu’s current desktop computer, the Nexstar hard drive from the original Sony VAIO laptop and PC2. Mr Mannix’s analysis indicated, however, that only one of those devices could have produced documents matching the profile of the PDF documents created in October 2013. That device was PC2 which, as I have noted above, was called JENNY-2ADC59369, had “jenny” as the registered owner of its operating system, and included an original user account named “Jenny” and a subsequent user account (when the computer was updated) named “jenny.” The user account is password enabled (meaning that a password must be entered to use it).
[218] Mr Mannix also looked for any other documents which had the title “Chinese.acc.xls” in the metadata. He found the following documents:
(a) A Chinese bank statement in PDF format in the name of Bo Song on the 128Mb thumb drive found in Ms Xu’s desk drawer (created on 12 November 2013 by user “Jenny”).
(b) A Chinese bank statement in PDF format in the name of Zhuwen Wu on 17 August 2012 by creator “Owner” (the name of the main user account for the original Sony VAIO laptop) and located on the desktop screen file of the Nexstar hard drive (from the original Sony VAIO laptop).
(c) A Chinese bank statement in PDF format in the name of Hao Zhang created on 9 August 2012 by “Owner”, and also located on the desktop of the Nexstar hard drive of the original Sony VAIO laptop.
(d) A Chinese bank statement in PDF format in the name of Wenlong Wang created on 8 August 2012 by “Owner”, and also located on the desktop of the Nexstar hard drive of the original Sony VAIO laptop.
(e) A further Chinese bank statement in PDF format in the name of Wenlong Wang created on 8 August 2012 by “Owner”, and located in
the recycle bin of the Nexstar hard drive of the original Sony VAIO laptop.
[219] All of these PDF documents were created using Ghostscript software which, as I have previously mentioned, can be used to convert Excel spreadsheets into PDF documents. As I have noted above, Ghostcript software was found on three of the devices seized by the SFO, each of which were forensically linked to Ms Xu in some way.
[220] Mr Mannix’s evidence was that the most recent activity on Ms Xu’s laptop was on the morning of 15 June 2015 at 10.11 am. This was the day before the SFO search warrant was executed at LV Park’s offices. That morning Ms Xu’s laptop had been used to log in to her online Chinese bank account. The most recent Wi-fi network Ms Xu’s laptop had been connected to was “LV Park Construction Limited”. The internet history on Ms Xu’s laptop showed that four email accounts associated with Ms Xu had been accessed from that device, namely the lakewood18, jobslvpark, jennyzhang329 and the jennyzhang03 email addresses.
[221] There is further evidence that links Ms Xu to the false bank statements. Specifically, Eastlight folders were located in a wall cabinet of Ms Xu’s office. These folders contained documents relating to a number of the false property transactions and were sorted by property owner. The folders also contained a number of bank statements, including the false bank statements used to support a number of the fraudulent loan applications that give rise to charges. Also included in this material was a copy of the false employment letter that had been used to support a loan application in the name of Ms Xu’s brother, Hao Zhang.
[222] I now turn to consider what Ms Xu had to say about the evidence I have just outlined, and the submissions made by Mr Simperingham on her behalf.
[223] Ms Xu denied all knowledge of the false Chinese bank statements. She said that she did not know how either of the thumb drives or the Nexstar hard drive came to be in her desk drawer, other than to suggest that some unknown person might have
put them there for “storage”. Ms Xu offered the same explanation for the location of the incriminating hard copy material in her office.
[224] Ms Xu said that her role at LV Park primarily related to site management, for which she did not need to use USB thumb drives. Mr Simperingham also noted that Hsin-Yun Li (a junior staff member at LV Park) and Mr Mensah (LV Park’s part time accountant) both gave evidence that Ms Xu spent most of her time out of the office.
[225] I accept that Ms Xu spent most of her time out of the office, doing things such as managing subcontractors and visiting work sites. It is clear, however, that Ms Xu played a significantly greater role in LV Park’s business (including in relation to its finances) than that portrayed in her evidence (as I have set out at [166] to [172] above). Her role in the business was second only to that of Mr Huang.
[226] Throughout her evidence, Ms Xu sought to minimise her technological ability. For example, she claimed that she did not send, and did not even know how to send, emails from her smartphone during the period of the offending. She said that she had only started sending emails from her iPhone more recently. In cross-examination, however, Mr Simmonds referred her to an email that was recorded as having been sent from her iPhone on 3 December 2013, to Peter Cheng. Ms Xu then backtracked and stated that she could not actually remember whether she had sent emails from her smartphone prior to 2015, or precisely when she had started sending emails from her smartphone.
[227] In my view, Ms Xu had not suffered a memory failure, but was deliberately trying to downplay both her technological ability and the extent to which she used the lakewood18 email address, to distance herself from the offending. Despite her denials, it is clear that Ms Xu was competent at using electronic devices. She was also a regular user of the lakewood18 email address. (I note, for example, that Mr Mensah said that this was the email address he communicated with her on).
[228] Ms Xu also made strenuous efforts to distance herself from her laptop and its incriminating contents. She acknowledged using the laptop in 2010 and 2011 when she and Mr Huang had owned a factory in Hamilton. She said that, at that time, she
used the laptop to order materials. After that, however, she said that she had no need to use the laptop unless she went on a trip to China, in which event she would take it with her to check her emails or the stock market. She claimed that when in New Zealand, however, she had no need for the laptop as she had a desktop computer. (This evidence sat somewhat uneasily with her evidence that she was seldom in the office). Further, she denied using her laptop around the time of the SFO search on 16 June 2015, and claimed that some unknown person must have left it on the desk in her office, possibly for “storage”. She claimed repeatedly that other people used her office as a storage room and that must be how the four incriminating electronic devices came to be found there.
[229] Photographs taken by the SFO at the time of their search of LV Park’s offices show Ms Xu’s laptop sitting in the middle of her desk, right in front of her chair. The laptop was on top of documents sitting on the desk, and also partly on top of an iPhone charging cable that is connected to Ms Xu’s desktop computer. A computer mouse was plugged into the laptop. It would have been impossible for Ms Xu to work at her desk without moving the laptop. A jacket (which Ms Xu acknowledged to be hers) was slung over the back of the desk chair. A cup was sitting next to the laptop.
[230] Ms Xu said she did not know who had put the laptop on her desk, or plugged the mouse into it. When asked to explain Mr Mannix’s evidence that the laptop had been used to access her Chinese bank account on 15 June 2015, only 24 hours prior to the SFO search, Ms Xu suggested that one of the office girls must have used the laptop to purchase supplies from Alibaba (a Chinese internet site). She said that she had given them the password to her bank account for that purpose. Ms Xu said that the office girls had to use her laptop to access her Chinese bank account, because her laptop had a special programme on it and a portable security stick that the user could insert into the laptop. Further, her laptop had an ability to input Chinese characters, which was not possible on her desktop computer.
[231] This evidence raised the obvious question as to how Ms Xu herself accessed her Chinese bank account if she did not use her laptop other than when she went on overseas trips. In response to a question from the Court, Ms Xu confirmed that she did indeed use her laptop to access her Chinese bank account.
[232] Ms Xu’s suggestion that on 15 June 2015 it cannot have been her, but must have been one of the office girls, who had used her laptop, was implausible. Ms Xu did not explain the basis for her belief that, on that occasion, it must have been someone else who accessed her bank account, given that she accepted that she also used the laptop for that purpose.
[233] The suggestion that the laptop (and other incriminating evidence) had been placed on (or in) her desk because other people used her office as a storage room was equally implausible. The placement of the laptop on Ms Xu’s desk, which she worked at regularly, was inconsistent with some unknown person simply seeking to store it in Ms Xu’s office. The photographs taken by the SFO at the time of their search show Ms Xu’s office to be well-organised and tidy. It does not, in any way, appear to be a room that was used for storage. Rather, the impression is very much that of a functioning personal work space for Ms Xu.
[234] The other witnesses who worked at LV Park did not suggest that Ms Xu’s office was used by anyone else, apart from Mr Mensah stating that, on one occasion, he saw an Asian male he did not know go into Ms Xu’s office while she was away. Such evidence cannot explain the wealth of incriminating material found on the four devices seized from Ms Xu’s office, and in the hard copy files on her bookshelf.
[235] I find that Ms Xu’s evidence regarding her (lack of) use of the laptop was untruthful, and was simply an attempt by her to distance herself from the incriminating evidence that she knew that the SFO had found on her laptop. The logical explanation for Ms Xu’s laptop being on the desk in her office is that she had simply left it there when she left the office the previous day.
[236] At least one aspect of Ms Xu’s evidence regarding her laptop actually bolsters the Crown case. In particular, she said that she (and others also, she claimed) used her laptop to access her Chinese bank account because her laptop was able to input Chinese characters, whereas her desktop computer did not have that capability. This is consistent with the forensic evidence that indicates that the primary devices used to create and work with the false Chinese bank statements (which include a number of
Chinese characters) were the Nexstar hard drive (which appears to be the original Sony VAIO hard drive) and Ms Xu’s current Sony VAIO laptop.
[237] Mr Simperingham also submitted that the multiple references in Mr Mannix’s evidence to users or devices named “Jenny” or “jenny” was misleading, in light of Ms Xu’s evidence that LV Park’s IT technical support named almost all LV Park devices as “Jenny” or “jenny” as the default name when they set them up.
[238] There was no evidence from any LV Park IT staff to support this assertion, and it was not put to Mr Mannix. A review of his report, however, contradicts it. Appendix E to his report lists the user accounts for each device seized by the SFO and also the name that the operating system was registered to. The user accounts on the seized devices had a wide range of names, including LV Park, Thomas (Mr Huang), Julia (Ms Xu and Mr Huang’s daughter), Jane, admin, owner and user. The username “jenny” is only used twice—once on PC2 (as noted above, the previous username on that device was “Jenny”) and once on the Nexstar hard drive. In addition, Ms Xu’s HP desktop computer, which was seized from the Southern Cross building (the significance of those premises was not explained in evidence) had an account with the username listed as “Zhang (Fullname Zhang Jenny)”. None of the large number of other devices that were seized by the SFO had accounts with the username “jenny” (or similar).
[239] I further note that only one of the operating systems installed in the seized devices was registered to “jenny”. That was the operating system in PC2. In addition, the operating system in Ms Xu’s HP desktop computer that was seized from the Southern Cross building was registered to Ms Xu’s Jennyzhang329 email address. All of the other operating systems were registered to different names, including LV Park, Thomas, Julia and user.
[240] I therefore reject Ms Xu’s evidence that LV Park’s IT staff named almost all LV Park devices as “Jenny” or “jenny” as the default name when they set them up. The evidence is to the contrary. Again, Ms Xu’s evidence on this issue lacked credibility and, in my view, was simply a further attempt to distance herself from the incriminating evidence found on various devices associated with her.
[241] Ms Xu also denied that she had ever used the CutePDF programme, despite the fact that the only copies of it that were found were located on devices that were forensically linked to her. She suggested that maybe “the IT people” had installed the CutePDF programme on her laptop without her knowledge. I also reject this evidence as implausible.
[242] The evidence, including in particular the forensic IT evidence, points overwhelmingly to the conclusion that Ms Xu was the person who was creating, editing and amending the false Chinese bank statements found on the four electronic devices located in her office. This necessarily included ensuring that the false bank statements recorded regular salary payments, and that the level of salary purportedly being received by the various loan applicants matched the salary amounts that were provided to the banks in the loan applications and/or set out in the false employment letters.
[243] It necessarily follows that Ms Xu’s claim that she was entirely unaware of the fraudulent aspects of Mr Huang’s “refinancing” scheme was not true. She was clearly closely involved in the fraudulent scheme by creating and manipulating false Chinese bank statements to provide evidence to the banks that various loan applicants had sufficient income to service the loans being sought in their names when they did not. Ms Xu’s role in creating the false bank statements is determinative of her involvement in the fraud on its own. There are also multiple other strands of circumstantial evidence that point to her involvement. These are addressed throughout the course of these Reasons. I note at this stage, however, that Ms Xu’s cell phone number was recorded on several loan application documents. I accept Mr Simmonds’ submission that if Ms Xu really had no knowledge of the applications, her personal mobile number would not have been recorded on the loan applications. If Ms Xu really had no knowledge of the fraud, Mr Huang could not have risked someone from the bank phoning her to discuss one of the fraudulent loan applications, and uncovering it.
Evidence regarding the provision of false bank statements to the banks
[244] The fact that Ms Xu created the false bank statements, and that in doing so she must have had regard to the false employment letters in order to ensure that the two
documents were consistent, clearly demonstrates that her claim to have had no knowledge of Mr Huang’s fraudulent mortgage scheme was untrue. She was an active participant in the fraud, in a support role to her husband. Her role in creating the false bank statements is a key strand of circumstantial evidence that can be taken into account when considering who provided the false bank statements to the banks. It is not determinative, however. It does not automatically follow from the fact that Ms Xu created the false bank statements, that she was also the person who provided them to the banks. I therefore now turn to consider some of the other evidence that is relevant to determining that issue, on a charge-by-charge basis. In the next section I will consider what conclusions (if any) can be drawn from the totality of the evidence on this issue.
Charge 6 — Sale of 8 Hampshire Court to Hao Zhang on 21 December 2011
[245] Ms Xu’s brother, Hao Zhang, purchased 8 Hampshire Court from Ironman Construction Limited on 21 December 2011. BNZ provided a loan to fund the purchase.
[246] On 19 December 2011 at 10.23 am, an email was sent from Mr Chen’s email address to Mr Jiang at the BNZ with the email header ‘Hao Zhang’s overseas’ income’. The email attached a copy of a Chinese bank statement to support Hao Zhang’s loan application for the property at 8 Hampshire Court. The bank statements attached to that email match the statements held on BNZ’s file.
[247] The body of the email evidences that the attached documents had been scanned and emailed to Mr Chen four minutes before his email was sent. The header on Mr Chen’s email, however, was changed from the scanned details to read ‘Hao Zhang’s overseas’ income’. The attached bank statements for Hao Zhang show deposits of RMB 250,000 a month, which correlates to the purported annual salary of RMB 3 million that was outlined in the false employment letter for Hao Zhang that was also provided to the BNZ.
[248] The Chinese bank statements in the name of Hao Zhang were false. They largely match the statements contained on the first tab of the spreadsheet located on the thumb drive found in Ms Xu’s desk drawer.
Charge 8 — Sale of 12 Hampshire Court from Rock Construction Limited to Hao
Zhang on 17 April 2012
[249] Hao Zhang purchased 12 Hampshire Court from Rock Construction Limited on 21 December 2011. BNZ provided a loan to fund the purchase.
[250] On 29 March 2012 (three weeks before drawdown), the lakewood18 email address sent an email to Mr Chen attaching a false bank statement in the name of Hao Zhang. The lakewood18 email was signed off “Regards Jenny”. The false bank statement attached to this email from “Jenny” matches the version that was received by the BNZ in support the loan application. It also matches the bank statement located by SFO investigators on Ms Xu’s thumb drive (sheet 2).
[251] Ms Xu claimed in evidenced that some unknown person had sent this email— without her knowledge or involvement—and had chosen to sign the email using her name, for unknown reasons. She said that she had “no idea” who may have sent the email in her name “because Thomas, sometimes he tell people “Use this email”, so I don’t know”.
[252] Ms Xu’s evidence on this issue was far-fetched and lacking in credibility. It is implausible that Mr Huang would have told some unknown person to send an email from the lakewood18 email account and sign it “Jenny”. There is no evidence of anyone other than Ms Xu or Mr Huang ever using the lakewood18 email address. Further, if Mr Huang was the sender of the email, there was no logical reason for him to sign it “Jenny.” His practice was to either sign emails “Thomas” or to not sign them at all. As the creator of the false bank statements, and the person who had copies of them on her computer, it was inherently logical for Ms Xu, rather than Mr Huang, to send this email.
[253] I am satisfied that Ms Xu did send this email, and that she sent the false bank statements to Mr Chen with the intention that he provide them to the BNZ. Potentially incriminating emails associated with the fraudulent scheme were rarely signed. This email, however, was sent in the relatively early days of the scheme. It appears that Ms Xu simply slipped up, by including her usual sign off in the email.
Charge 9 — Sale of 4 Cascade Place to Zhuwen Wu on 28 May 2012 and the sale of
163c Bankwood Road on 5 June 2012 and the sale of 13 Barwick Place on 9 July 2012
[254] These properties were sold to Zhuwen Wu, a childhood friend of Mr Huang’s, on 9 July 2012. The BNZ provided loan finance.
[255] On 29 March 2012, Mr Chen emailed the lakewood18 email address in response to the email from “Jenny” of that date (which I have discussed above). The email from Mr Chen stated that he needed “Zhuwen Wu’s Chinese account, otherwise, the bank cannot release the loan document in due course.”
[256] Following Mr Chen’s email to Ms Xu on 29 March 2012, a false bank statement in the name of Zhuwen Wu was provided to the BNZ. That bank statement matches one of the bank statements that was located on Ms Xu’s thumb drive. It is not clear precisely how that bank statement was provided to the BNZ.
Charge 10 — Sale of 5 and 9 Hampshire Court to Wenlong Wang on 26 July 2012
[257] These two property transactions were the subject of a single BNZ loan application made in the name of Mr Huang’s father, Wenlong Wang.
[258] On 8 June 2012, Mr Chen emailed a set of bank statements in the name of Wenlong Wang to Mr Jiang. The subject of that email is ‘Wenlong Wang’s ovrseas’ income’. The body of the email shows that a document was scanned and emailed to Mr Chen a short time before this email was sent to Mr Jiang.
[259] On 9 June 2012, a further set of bank statements were emailed from the work email account of Brianna Wang (Mr Chen’s then girlfriend, who undertook some part-time work for his law firm), to Mr Jiang. The subject of that email was
‘Wenlong Wang’s overseas’ income’. The body of that email shows that a scanned file was emailed to Brianna Wang’s email address one minute before this email was sent to Mr Jiang. Brianna Wang gave evidence that she never sent any emails to banks, especially to a personal banker’s email account.
[260] The format and figures of the Chinese bank statement attached to the email from Mr Chen to Mr Jiang match the format and figures of the bank statement emailed from Brianna Wang’s email account to Mr Jiang. (It is not clear why the documents were sent to Mr Jiang twice). These bank statements also match the statements contained on the spreadsheet located on Ms Xu’s thumb drive, specifically on a tab labelled ‘wang wen long.’ The bank statements emailed to Mr Jiang also largely match the copies of the bank statements held on BNZ’s files, except the dates at the top of the statements are different.
[261] On 19 July 2012 (a week prior to drawdown), Mr Chen emailed Mr Jiang further copies of the overseas bank statements, for reasons that are not clear.
Charge 11 — Sale of 12 Ashwick Place to Hao Zhang on 15 August 2012
[262] On 15 August 2012, BNZ provided a loan to Hao Zhang for the purchase of 12 Ashwick Place from Rock Construction.
[263] BNZ received three false overseas bank statements to support Hao Zhang’s loan application. These statements match the versions found on the spreadsheet located on Ms Xu’s thumb drive, with minor differences such as the dates at the top of the statements.
[264] On 9 August 2012 (six days before drawdown), Mr Chen forwarded to Mr Jiang an email he had received from the lakewood18 email address. The email subject was ‘Zhang H acc’ and attached was an overseas bank statement that matches the version held on the bank’s files.
[265] The bank statements show monthly deposits of RMB 250,000. These deposits equate to a yearly salary of RMB 3,000,000. RMB 3,000,000 is the salary figure shown on the employment letter in the name of Hao Zhang.
Charge 12 — Sale of 1 Briar Rose Court on 23 August 2012 and sale of 62 Te Huia
Drive on 4 September 2012
[266] These two property transactions were the subject of a single BNZ loan application, made in the name of Zhuwen Wu.
[267] On 17 August 2012 (about a week before drawdown), Mr Chen emailed false bank statements to Mr Jiang in support of Zhuwen Wu’s loan application. This email from Mr Chen was a forwarding email of an email received that same day from the lakewood18 email address. Attached to that email were the same bank statements that had been used for Zhuwen Wu’s previous loan application (see charge 9 above).
[268] The false bank statements attached to the lakewood18 email match the bank statements held by BNZ in relation to this transaction. These bank statements also match the statements on the spreadsheet located on Ms Xu’s thumb drive, except for some minor additions appearing on the bank version.
[269] The bank statements show monthly deposits of RMB 250,000. Monthly deposits of 250,000 equate to an annual salary of RMB 3,000,000, which is the amount specified in the employment letter for Zhuwen Wu.
Charge 14 — Sale of 7 Hampshire Court and 11 Hawtry Lane on 21 September 2012
[270] These two property transactions were the subject of a single BNZ loan application, made within three weeks of the previous loan, and once again made in the name of Zhuwen Wu.
[271] On 17 September 2012 (four days before drawdown), Mr Chen emailed false Chinese bank statements to Mr Jiang. These bank statements match the bank statements held by the BNZ to support the loan application. The bank statements that were emailed by Mr Chen to Mr Jiang at the BNZ also match the spreadsheet found
on Ms Xu’s thumb drive, although the version received by Mr Jiang on behalf of the BNZ appears to be an updated version and contains a few extra transactions.
[272] The bank statements show monthly deposits of RMB 250,000. These deposits equate to a yearly salary of RMB 3,000,000 which matches the salary figure shown on the employment letter in the name of Zhuwen Wu.
Charge 16 — Sale of 78 and 80 Barrington Drive on 5 October 2012
[273] These two properties were the subject of a single ANZ loan application in the name of Hao Zhang. Peter Cheng processed and approved this lending application.
[274] The ANZ bank received false Chinese bank statements to support this loan application. Those bank statements do not match the versions found on Ms Xu’s thumb drive, however they do match the bank statements that were emailed from the lakewood18 email address to Mr Chen on 26 September 2012—the only difference being that the emailed bank statements are five pages long whilst the statements held by the bank comprise only two pages. Mr Chen forwarded the email from the lakewood18 email address on to Peter Cheng at the ANZ on 27 September 2012.
[275] The bank statements show monthly deposits of RMB 250,000. These deposits equate to a yearly salary of RMB 3,000,000, this being the salary figure shown on the employment letter in the name of Hao Zhang.
Charge 32 — Refinance of 64 Magellan Rise on 3 May 2013
[276] This charge relates to another loan obtained in the name of Hao Zhang. ANZ does not hold a copy of the loan application on file for this loan.
[277] On 29 April 2013 (five days before drawdown), an email was sent to Mr Chen from the lakewood18 email address, which was then forwarded by Mr Chen to Peter Cheng. The subject line of the email read “zhang hao Chinese acc update” and the email attached the false Chinese bank statements in the name of Hao Zhang.
[278] These statements match the Chinese bank statements on ANZ’s file. They also match the bank statements on Ms Xu’s thumb drive, except for some minor differences.
Charge 33 — Sale of 11 and 12 Hemsby Place on 20 June 2013 and 59a Alpers Ridge
on 26 June 2013
[279] This charge relates to a loan application to the ANZ in the name of Ms Xu’s father, Jiquan Zhang. Peter Cheng processed and approved this lending application
[280] On 13 October 2013, Peter Cheng sent an email to Mr Chen and the jobslvpark email address. The body of the email stated “Last time the bank statements provided is attached. I need an update copy from 01/07/2013 – 01/10/2013”. A Chinese bank statement (covering a three-month period) was attached to the email. That bank statement matches the bank statement held by ANZ in relation to this application.
[281] The bank statement shows monthly deposits of RMB 83,333. These deposits equate to a yearly salary of 1,000,000—this being the salary figure shown on the false employment letter in the name of Jiquan Zhang.
[282] This false Chinese bank statement is very similar to the version located on Ms Xu’s thumb drive under the tab ‘Zhang jiquan’. In particular, the last two transactions on the ANZ copy match the first two transactions on the first statement on Ms Xu’s copy.
Charge 36 — Sale of 35 and 37 Pickaberry Avenue on 12 September 2013
[283] This charge relates to a loan application in the name of Ming Li. The ANZ does not hold the loan application or resulting loan agreement for this loan on their files. However, ANZ witness Mr Anderson confirmed in his evidence that on or about 12 September 2013, a loan of $1,216,000 was drawn down from ANZ to finance Ming Li’s purported purchase of these two properties. Peter Cheng processed and approved this lending application.
[284] On 7 September 2013 (five days before drawdown), Mr Huang sent several text messages. The first and second messages were sent to his wife, Ms Xu. They read ‘Ming Li Lifeng Li’ and ‘Ming Li 320 Lifeng Li 360’ respectively. Two minutes later, Mr Huang sent a message in Chinese to Mr Chen. Translated into English, this text reads:
Ming Li 320 annual salary Lifeng Li 360
Take the above as being correct
[285] The next day, 8 September 2013, Mr Chen sent an email to Peter Cheng at the ANZ with the subject ‘Ming Li’ china account’. The email attached a false Chinese bank statement, which showed monthly deposits of RMB 266,700, which equate to a yearly salary of RMB 3,200,400. This false bank statement matches the version on Ms Xu’s thumb drive, under the tab ‘liming’.
[286] The clear (and overwhelming) inference to be drawn from this evidence is that the text message that Mr Huang sent to Ms Xu stating ‘320’ for Ming Li was an instruction to her to ensure that the false bank statement for Ming Li reflected an annual salary of RMB 3,200,000. Ms Xu obviously implemented that instruction, as the false bank statement was indeed consistent with such a salary.
Charge 37 — Sale of 33 and 39 Pickaberry Avenue on 17 September 2013
[287] These two properties were the subject of an ANZ loan application made in the name of Lifeng Li, the resulting loan being drawn down just five days after the loan giving rise to charge 36.
[288] On 8 September 2013, Mr Chen sent Peter Cheng an email with the subject ‘Lifeng Li’s china account’. Attached to the email was a false Chinese bank statement that matches the statement held on ANZ’s files. It also matches a false bank statement found on Ms Xu’s thumb drive under the tab ‘lilifeng’.
[289] The bank statement shows monthly deposits of RMB 300,000. This equates to an annual total of RMB 3,600,000 which is consistent with the text messages between
Mr Huang to Ms Xu, and between Mr Huang to Mr Chen sent on 7 September 2013 (referred to at [284] above) which stated “Lifeng Li 360”.
Charge 38 — Refinance of 12 Ashwick Place, 8 and 12 Hampshire Court and
60 Te Huia Drive and the sale of 27 Hart Road, 40 Hartis Avenue and 3 Sutherland
Court on 18 October 2013
[290] These seven properties were the subject of a single ANZ loan application made in the name of Ms Xu’s brother, Hao Zhang. The application stated that Hao Zhang was General Manager of York Crown Group in Shanghai, that he had been employed in that role for 10 years with a gross income of NZD $600,000, and had $800,000 invested at a bank, and property in China worth $1,310,000. (None of which was true).
[291] On 7 October 2013, Mr Huang sent a text message to Mr Chen. The translated message read:
Hao Zhang’s bank statement has been sent to you, forward to peter asap
[292] An hour and a half before the above text message was sent by Mr Huang, an email was sent—the subject being ‘Zhang Chinese acc’—by the lakewood18 email address to Mr Chen, attaching a false Chinese bank statement in the name of Hao Zhang.
[293] That same day, Mr Chen forwarded the above email to Peter Cheng at the ANZ, along with the false Chinese bank statement. This bank statement matches the statement held by ANZ in support of this loan application. The bank statement provided to the ANZ also matches a bank statement in the name of Hao Zhang located on Ms Xu’s thumb drive.
[294] The bank statements show monthly deposits of 250,000. These deposits equate to a yearly salary of RMB 3,000,000, which is the salary figure stated in the false employment letter in the name of Hao Zhang that was provided to the ANZ.
Charge 40 — Sale of 43 and 49 Pickaberry Avenue on 1 November 2013
[295] These two properties were the subject of a single ANZ loan application made in the name of Bin Zhu. In support of the loan application, the ANZ received an overseas employment letter for Bin Zhu and supporting Chinese bank statements.
[296] On 27 October 2013, four or five days before drawdown, Mr Huang sent a text message to Ms Xu, the translated version of which reads “Bin Zhu’s 6 months’ bank statements”.
[297] Two days later, on 29 October 2013, the lakewood18 email address sent an email to Mr Chen with the subject ‘Zhu bin account’. The email attached a Chinese bank statement that covered a six-month time period. The clear inference from this is that Ms Xu sent this email, in accordance with her husband’s text message of 27 October 2013.
[298] Mr Chen forwarded the lakewood18 email and attachments to Peter Cheng at the ANZ the same day. The bank statements attached to the email match the bank statements held by ANZ.
[299] The lakewood18 email was sent at 8.29am. Half an hour earlier, at 7.56am, Mr Huang sent a text message to Mr Chen. The translated text message read, “Bin Zhu’s income and savings to be sent to Peter”.
[300] The spreadsheet of Chinese bank accounts located on Ms Xu’s thumb drive contains a worksheet tab named ‘zhubin’. The statements on this tab match the versions that were emailed to Peter Cheng following Mr Huang’s text instruction to Ms Xu and that are now held by ANZ.
[301] Furthermore, the bank statements show monthly deposits of RMB 100,000, which equates to an annual salary of RMB 1.2 million. This figure corresponds to the annual salary of RMB 1,200,000 stated in the false employment letter for Bin Zhu.
Charge 41 — Sale of 1 Geranium Avenue, 15 Barwick Place and 77 New Borman
Road on 4 November and 5 December 2013
[302] These three properties were the subject of a single ANZ loan application made in the name of Kai Wang. Peter Cheng processed and approved this lending application.
[303] On 1 October 2013, Mr Huang sent a text message to Ms Xu, the translated version of which reads:
Kai Wang (and) Feng Ye’s Chinese Bank/Bank of China statement were sent/are to be sent to Gang Chen today
[304] The following day (2 October 2013), an email was sent to Peter Cheng from the fengye1972 email address. The subject of the email is “FWD:FW:Ye and Wang acc.” The body of the email states:
Dear Peter
Enclosed please find my bank statement in China Bank
[305] False Chinese bank statements in the name of Kai Wang and Feng Ye were attached. The Kai Wang bank statement was relied on in support of this loan application. It matches the false banks statements held by ANZ for Kai Wang. It also matches the false bank statement found on Ms Xu’s thumb drive under the tab ‘wang kai’.
[306] There is no evidence that Feng Ye (or Kai Wang) actually exist. In my view they are fictitious persons, who were “created” for the purposes of the mortgage fraud scheme. For example, the passport provided to the ANZ in support of Feng Ye’s loan application (which I consider in the next section) records Feng Ye’s gender as male. The permanent resident visa included in the passport, however, records Feng Ye’s gender as female. It necessarily follows, in my view, that the fengye1972 email account is also fake, and is not the genuine email address of anyone called Feng Ye. Rather, it was created to provide added authenticity to the fraud that was being perpetrated on ANZ.
[307] The Crown case is that, following receipt of the text message from Mr Huang, Ms Xu extracted the bank statements from the spreadsheet located on her thumb drive, and then used the fengye1972 email account to email the false Chinese bank statements to Peter Cheng. An alternative possibility is that Ms Xu emailed the bank statements to Mr Chen, who then forwarded them to Peter Cheng from the fengye1972 account. I note that the fact that the email subject begins “FWD:FW” suggests that the bank statements were likely forwarded at least once, if not twice.
[308] Also on 2 October 2013, Mr Huang sent a text message to Mr Chen, the translated version of which reads:
Kai Wang annual salary 3.48 million Feng Ye annual salary 3.36 million
[309] In reply, Mr Chen sent a text message to Mr Huang that, when translated, read:
[Too] late, Ye 1.1 million, wang 1.2 million, already given to the bank
[310] The Chinese bank statements for Kai Wang that had been forwarded to Peter Cheng show monthly deposits of RMB 290,000, which equates to an annual total of RMB 3.48 million. The employment letter provided to ANZ for Kai Wang, however, states a figure of RMB 1.2 million.
Charge 43 — Sale of 9 Hampshire Court and 1768 River Road on 4 November 2013
[311] These two properties were the subject of a single ANZ loan application made in the name of Feng Ye (who, I have already noted, was almost certainly a fictitious person). Peter Cheng processed this lending application. The evidence I have set out at [303] to [309] above applies equally to this charge.
[312] The bank statements for Feng Ye attached to the fengye1972 email match the bank statements held by ANZ. They also match the bank statements on the ‘yie fen’ tab on the spreadsheet of bank statements located on Ms Xu’s thumb drive.
[313] The text message from Mr Huang to Mr Chen states a salary for Feng Ye of RMB 3.36 million. The false Chinese bank statement received by the ANZ in support
of the loan application shows monthly deposits of RMB 280,000, which equates to an annual total of RMB 3.36 million.
[314] As noted above, Mr Chen replied to Mr Huang’s message stating “[Too] late, Ye 1.1 million, Wang 1.2 million, already given to the bank”. Consistent with this text message, the employment letter held by ANZ for Feng Ye shows a salary figure of RMB 1,100,000.
Charge 45 — Sale of 41 and 45 Pickaberry Avenue on 22 November 2013
[315] These two properties were the subject of a single ANZ loan application made in the name of Bo Song. The evidence from Ms Davidson of Immigration New Zealand was that a person matching the details of Bo Song has never been in New Zealand. A copy of a passport in the name of Bo Song was provided to ANZ, purportedly certified as a true copy by Alison Manning from the New Zealand consulate in Shanghai. Ms Manning confirmed that this certification was false.
[316] On 21 November 2013 (the day before drawdown), Peter Cheng sent Mr Huang a text message that read “Please email me the bank statements”. Four minutes later, Mr Huang sent a text message to Ms Xu that read “Bo Song”. Half an hour later, Mr Huang sent a text message back to Peter Cheng that read “Bo Song bank statement lunch time email to you, sorry for confusion, too many houses”. Peter Cheng sent a reply text that said “No worries, loan approved $1.308m do you want to fix 1 year rate? Insurance already arranged”.
[317] The false Chinese bank statements received by ANZ match the versions stored on Ms Xu’s thumb drive under the tab marked ‘song bo’.
Charge 46 — 31 Hart Road on 4 December 2013
[318] This property was the subject of an ANZ loan application made in the name of Hsin-Yun Li, also known as Kiki Li. Ms Li was, at the time of this application, an employee of LV Park. The application stated that Mr Li had an annual gross income of $230,000 and assets of $100,000 at ANZ and $500,000 in China. Ms Li confirmed
in her evidence that the financial details recorded in the application were false. She also said that this property was transferred into her name because Mr Huang needed money and asked her to do so.
[319] In support of the loan application, ANZ received false Chinese bank statements in the name of Ms Li, which she confirmed were also false.
[320] On 2 December 2013, two days before drawdown, Peter Cheng sent an email to Mr Chen, the lakewood18 email address and the jobslvpark email address. The email starts with “Hi Thomas and Richard’ and the subject is ‘URGENT! Outstanding docs”. The email then lists documents under the heading of Hsin Yun Li. At point ‘5/’ it reads:
Correct China Bank statement with her Chinese name instead of English name printed
[321] The Chinese bank statements that were provided to the ANZ match the version stored on Ms Xu’s thumb drive under the tab “HSINYUNLI”. The only difference between the copy held by ANZ and the copy on the thumb drive is that on the thumb drive copy, Ms Li’s name is in English, which corresponds to the emailed request made by Peter Cheng. Ms Li’s bank statement is the only one on the entire Excel spreadsheet on the thumb drive where the purported account holder’s name is in English characters, rather than in Chinese characters.
[322] The bank statements show monthly deposits of RMB 75,000, which equates to an annual total of RMB 900,000. The (false) employment letter for Ms Li states her annual salary to be RMB 900,000.
Charge 47 — Sale of 33 Hart Road on 19 December 2013
[323] This property was the subject of an ANZ loan application made in the name of Kang Xu. Ms Xu confirmed that she signed the sale and purchase agreement in relation to the purchase of 33 Hart Road, but denied any knowledge of the loan application, which falsely claimed that Ms Xu had been employed as Head of Sales at Shanghai Shuang Lang Trading for 3 years and her gross income was $250,000.
[324] On 11 December 2013, Peter Cheng emailed Mr Chen and the jobslvpark email address, stating that he still needed, amongst other things, Ms Xu’s employer letter, overseas bank statements and deposit proof.
[325] False Chinese bank statements in the name of Ms Xu were subsequently provided to the ANZ. They match the version located on Ms Xu’s thumb drive under the tab “xukang”.
[326] The salary shown on the employment letter of RMB 1.1 million matches the monthly payments of RMB 91,666.67 shown on the false bank statements.
Was Ms Xu the person who provided the false bank statements to the banks?
[327] I have now set out the “false bank statements” evidence specific to each charge. I therefore turn to consider, in light of that evidence and also the other circumstantial evidence available regarding Ms Xu’s overall involvement in the fraud (as summarised at [166]–[190] above), whether the Crown has proved that the person who provided the false bank statements to the banks (in respect of any or all of the charges) was Ms Xu.
[328] The fact that Ms Xu created the false bank statements, and that in doing so she must have had regard to the false employment letters so as to ensure that the two documents were consistent, clearly demonstrates that her claim to have had no knowledge of Mr Huang’s fraudulent mortgage scheme was untrue. She was an active participant in the fraud, in a support role to her husband. Her role in creating the false bank statements is a key strand of circumstantial evidence when considering who sent the false bank statements to the banks. It is not determinative, however.
[329] There is no evidence of any direct email contact between Mr Jiang and Mr Huang or Ms Xu in relation to the false bank statements (or indeed any other matter). Rather, the general pattern revealed by the evidence is that Mr Chen was the “middle man” who received the false bank statements from the lakewood18 email address and then sent them on to Mr Jiang.
[330] Mr Chen appears to have played a similar middleman role in relation to the ANZ, save that there were also several instances where Peter Cheng either communicated with Mr Huang directly or copied him (or at least the jobslvpark or lakewood18 email addresses) in on his emails to Mr Chen.
[331] In all cases where there is a complete picture as to how the bank statements reached the banks, the method of transmission was from the lakewood18 email address to Mr Chen, and then from Mr Chen to the relevant bank. In a number of cases, however, there is an incomplete evidence trail. Either there is evidence of transmission from the lakewood18 email address to Mr Chen, or from Mr Chen to the banks, but not both. (I note that all of those involved appear to have had Hotmail or Gmail accounts, which may well explain the incomplete electronic trail).
[332] In a further category of cases, there is no evidence of how the false bank statements reached the banks. We know, however, that they did, as there are copies of false bank statements on the banks’ files that mirror (or largely mirror) Ms Xu’s Excel spreadsheet.
[333] There is no evidence of any false bank statements being sent to Mr Chen from any email address other than the lakewood18 email address. The evidence at trial (including from Ms Xu) was that both Mr Huang and Ms Xu had access to, and used, that email address. There was no credible evidence that that email address was used by anyone else. Accordingly, in the absence of any other evidence to point to who the sender was on a particular occasion, any emails from the lakewood18 email address could have been sent by either Mr Huang or Ms Xu. The Crown case is that Ms Xu sent the relevant emails. Mr Simperingham, on the other hand, submitted that I cannot reasonably exclude the possibility that Mr Huang was the sender of those emails.
[334] In my view, however, when viewed in totality, the evidence points very clearly to Ms Xu as the person who provided the false bank statements to Mr Chen, with the knowledge and intent that he would then forward them on to the banks. I rely, in particular, on the following evidence:
- (a) Ms Xu was the creator of the false bank statements. She was therefore not only aware of the fraudulent scheme masterminded by her husband, but was willing to (and did) play a key role in implementing it.
(b) There is no forensic IT evidence linking Mr Huang, or his computers or other electronic devices, to the false bank statements. For Mr Huang to have emailed the documents, electronic copies of them would have first had to have been provided to him by Ms Xu (for example by being emailed to him, or by her thumb drive being connected to one of his devices and the documents being downloaded in that way). There is no evidence to suggest that this ever occurred. There was no trace of the chinese.acc.xls spreadsheet, or any PDF bank statements created from that spreadsheet, on any of Mr Huang’s devices.41
(c) There was extensive evidence of the chinese.acc.xls spreadsheet, and PDF bank statements created from those spreadsheets, on devices associated with Ms Xu (her current laptop, a previous hard drive for her laptop, and two thumb drives). Her laptop had a programme installed on it that could input Chinese characters. In addition, the CutePDF programme, which appears to have been used to convert specific worksheets from the Excel spreadsheet into PDF bank statements, was found on three devices associated with Ms Xu—her current desktop computer, the Nexstar hard drive from the original Sony VAIO laptop, and PC2. That programme was not found on any of the other 27 devices seized from LV Park’s offices.
(d) The internet history of both PC2 and Ms Xu’s laptop showed that those devices had been connected to the lakewood18 email account via the internet (and also other Hotmail and Gmail accounts associated with Ms Xu).
41 I note, for completeness, that it is my view that even if Ms Xu’s role had been limited to creating the false bank statements and then providing them to Mr Huang, with the knowledge and intention that he then forward them on the banks, that would have been sufficient to satisfy the actus reus element of the charge. Conceptually there is little or no difference between providing the documents to Mr Chen, with the intent that he provide them to the banks, and providing them to Mr Huang, with the intention that he provide them to the banks.
(e) The false bank statements recovered by the SFO from the banks largely mirror those found on Ms Xu’s thumb drive.
(f) On the second occasion when the lakewood18 email address was used to send false bank statements through to Mr Chen (charge 8), the relevant email was signed off “Regards Jenny”. For the reasons outlined above, I reject Ms Xu’s claim that she did not send this email and that some other person must have.
(g) Similarly, in respect of charge 9, Mr Chen emailed the lakewood18 email address in response to the email previously received from “Jenny” and requested Zhuwen Wu’s Chinese bank accounts. He was promptly provided with them.
(h) In respect of charge 36, the clear inference from the evidence I have set out at [283] to [286] above is that Mr Huang’s text to Ms Xu was an instruction to her to edit Ming Li’s false Chinese bank statement to reflect a salary of RMB 3,200,000, which Ms Xu did before emailing the bank statement through to Mr Chen, who forwarded it to Peter Cheng.
(i) The same inference is available in respect of charge 37 (refer [287] to
[289] above) which relates to the ANZ loan application made in the name of Lifeng Li. The false bank statement for Lifeng Li that was provided to ANZ matches a false bank statement found on Ms Xu’s thumb drive under the tab ‘lilifeng’ and shows monthly deposits that equate to an annual salary of RMB 3,600,000 (consistent with Mr Huang’s text to Ms Xu of 7 September 2013).
(j) In respect of charge 40 (refer [295] to [301] above) on 27 October 2013, Mr Huang sent a text message to Ms Xu stating: “Bin Zhu’s 6 months’ bank statements”. Two days later, on 29 October 2013, the lakewood18 email address sent an email to Mr Chen with the subject ‘Zhu bin account’. The email attached a Chinese bank statement that covered a
six-month time period. The obvious inference is that Ms Xu sent this email, in response to her husband’s text message of 27 October 2013.
(k) In respect of charge 41 (refer [302] to [310] above), Mr Huang’s text message to Ms Xu of 1 October 2013 was clearly an instruction to her to send Kai Wang and Feng Ye’s bank statements through to Mr Chen. The evidence indicates that she must have complied with that request, as the next day the false bank statements were forwarded from the fengye1972 email address (Feng Ye being a fictitious person) to Peter Cheng at the ANZ. It is likely in my view that Mr Chen, in his usual “middleman” role, was behind the fengye1972 email address. While it is possible that Ms Xu used the fengye1972 email address herself to send the documents directly to Peter Cheng, I think that is less likely. On either scenario (and I am satisfied that one of them must apply) she played a key role in transmitting the false bank statements to the ANZ.
(l) In respect of charge 45, which relates to the Bo Song application (refer [315] to [317] above) the necessary inference from the evidence I have summarised above is that following receipt of her husband’s text message on 21 November 2013, Ms Xu sent the false bank statements for Bo Song either to the ANZ either directly or (more likely) via Mr Chen.
[335] Each strand of evidence I have summarised above is relevant not only to any specific charge to which it directly relates, but is also circumstantial evidence in relation to all of the charges in which one of the particulars is the alleged provision of false bank statements. When the evidence is considered as a whole, a fairly clear picture emerges as to how this aspect of the scheme operated. Mr Huang had overall responsibility for the implementation of the scheme. He would communicate with Mr Chen regarding the provision of the bank statements to the banks, as needed. Ms Xu was the “detail” person, adept at using computers, who created the bank statements, including manipulating them to reflect the salary information for particular applicants that was provided to her by Mr Huang. She prepared the bank statements in such a way as to ensure that they were consistent with the salaries stated in the false
employment letters. Mr Huang told Ms Xu when to send the bank statements to Mr Chen and, on occasions, would let Mr Chen know that the bank statements had been sent through to him (or would shortly be sent through to him).
[336] Mr Simperingham noted that that the text message traffic that I have referred to above, relating to bank statements for Ming Li, Lifeng Li, Bin Zhu, Kai Wang and Feng Ye, was entirely one way. Mr Huang sent text messages regarding those persons to Ms Xu, but she did not respond. Her evidence, in broad terms, was that she had no idea what Mr Huang was talking about, so she simply ignored those texts. She said that those names meant nothing to her. As she was very busy, and her relationship with Mr Huang was very poor at the time, she did not follow up with him to ask him what his texts were about. She just ignored them.
[337] I reject that evidence. It is simply not credible. The evidence shows that Ms Xu and Mr Huang were in constant phone contact (both calls and texts) during the timeframe covered by the offending, and by these particular charges. I am satisfied that the reason that Ms Xu did not query the text messages, or even respond to them, was that she had no need to do so. They were self-explanatory. She knew what Mr Huang required of her, and all of the evidence points to the fact that she then did it.
[338] I am satisfied to the requisite standard that, based on all of the evidence I have set out at [200] to [334] above, considered together with totality of the circumstantial evidence against Ms Xu, that she played a key role in submitting the false bank statements to the banks in respect of each of the charges in which this particular is alleged.42 Specifically, I find that:
(a) Where the false bank statements were sent to Mr Chen from the lakewood18 email address, Ms Xu was the sender of the relevant email and she knew and intended that Mr Chen would forward the documents on to the relevant bank.
42 Charges 6, 8–12, 14, 16, 32–33, 36–38, 40–41, 43, and 45–47.
(b) Where there is incomplete (or no) evidence as to precisely how the false bank statements were transmitted to the relevant bank, Ms Xu (the creator of the documents) also played a key role in providing the documents that she had created to the banks, almost certainly through Mr Chen as a middleman. Again, she knew or intended that Mr Chen would forward the documents on to the relevant bank.
Did Ms Xu know that the bank statements were false?
[339] The Crown is required to prove, beyond reasonable doubt, that Ms Xu knew that the bank statements were false. Given that Ms Xu herself created the documents, and manipulated them to be consistent with the false salaries stated in the loan applications and/or false employment letters provided to the banks, there can be no question that she knew they were false. This element of the offence is satisfied.
Did Ms Xu intend to deceive one or more bank employees?
[340] Similarly, it is clear that the false Chinese bank statements were provided to the banks with the intention of deceiving bank staff into believing that the contents of those statements were true.
Were the banks induced to advance loans as a result of the provision of the false bank statements?
[341] For the reasons outlined at [137] to [155] above, I am satisfied that the element of inducement has been proved beyond reasonable doubt. I have no doubt that if bank staff had been aware that the relevant loan applications were supported by false bank statements, containing untrue income information, the relevant loans would not have been advanced.
The false salary payments particulars
[342] In 14 of the obtaining by deception charges (charges 17–26, 29–31 and 36) it is alleged that Ms Xu made false salary payments into accounts in the names of her parents, her parents-in-law, and Ming Li. The payments were allegedly paid into those bank accounts to make it appear that those persons were receiving the salaries stated
in their loan applications and/or the false employment letters provided to the banks, when in fact they were not.
[343] The Question Trail for these charges is annexed as Appendix 4.
[344] In the loan applications relating to Ms Xu’s parents and parents-in-law, they were said to be employees of LV Park, on significant salaries. That was untrue, as confirmed by each of the parents when they gave evidence. As for Ming Li, he was said to be an employee of a company called Driftmax Limited, on a significant salary. Ming Li, however (if he exists), has never entered New Zealand, let alone worked at Driftmax.
[345] New Zealand bank statements were provided to the banks in support of the relevant loan applications, showing regular payments into the applicants’ bank accounts with references such as “sal,” “salary” or “LV Park constru sal”. The amounts paid into the bank accounts of the loan applicants corresponded with the salary amounts claimed in the loan applications and/or referred to in employment letters provided in respect of the applicants.
[346] Ms Xu could not remember making any specific payments to the bank accounts of loan applicants, but accepted that she had probably made at least some of the payments in issue.
[347] Mr Simperingham submitted that the Crown evidence falls short of excluding beyond a reasonable doubt that someone else may have made the relevant payments. He submitted that Mr Huang is the most likely culprit. Mr Simperingham also suggested that others could have been involved, noting the evidence of Mr Mensah, LV Park’s part-time accountant, that on one occasion he saw an unknown Asian male go into Ms Xu’s office. Mr Mensah also saw someone he did not recognise at the garage office at 408 Ormiston Road.
[348] In respect of three of the charges (two relating to Ming Li, and one relating to Wenlong Wang), there is some direct evidence linking Ms Xu to the relevant
payments.43 I will therefore address those charges first, before turning to consider the balance of the charges.
Charge 29 — Sale of 102 Barrington Drive to Ming Li on 8 April 2013
[349] This property was the subject of a BNZ loan application made in the name of Ming Li. The loan application stated that Ming Li was employed by Driftmax Limited (a New Zealand company) with a net weekly income of $3,058.85. Payments that appeared to be salary payments from Driftmax were made into an account that had been opened by Mr Jiang on 12 November 2012, in the name of Ming Li.
[350] Prior to 7 March 2013, the only deposits made into Ming Li’s account were “salary” payments made from an account in the name of Shufeng Qi (Mr Chen’s aunt). However, on 7 March 2013 (a month before drawdown), Mr Huang sent a text message to Ms Xu that said “Ming Li account, [account number], $3,058.85”. That same day a payment of $3,058.85 was made to Ming Li from LV Park’s account. From that day onwards, regular “salary” payments were made into Ming Li’s account from LV Park’s account (rather than the Shufeng Qi account). Mr Jiang’s BNZ diary notes record weekly salary payments coming from “LV Park Constru”.
[351] On 20 March 2013, at 4.20 am NZ time, Mr Huang received a text message from Ms Xu (who was in China at the time) stating:
Too later you pay it GL steel 17652.50 Windsor door 3613.15 kittipong 533.66 suppat 470.13 Wang and li 3058.85 noah building 7000
(Emphasis added)
[352] Mr Huang responded one minute later, stating “You pay again, I text you back quickly”. The same day as this text message exchange, another payment of $3,058.85 was made by LV Park to the Ming Li account. (When this text message exchange is
43 The Crown also put Charge 36, which relates to a subsequent ANZ loan to Ming Li, into this category. In my view, however, this charge does not fall within the same category as charges 29– 31, as the false salary payments of 7 and 20 March 2013 that underpin charges 29 and 30 (for which Ming Li was the named borrower) were not relied on in support of the ANZ loan application in charge 36.
considered in context, it is clear that the reference to “Wang” was to Wenlong Wang, and the reference to “Li” was to Ming Li).
[353] Ms Xu admitted that she had “maybe” made the first payment from LV Park Construction Ltd to Ming Li on 7 March 2018. She said, however, that she did not know Ming Li, and business decisions were for Mr Huang to make, and not for her to question. If she had made the payment, she was not sure why she had put the reference “sal” on it, given her husband had not requested that in his text message. She said that she might have actually meant “sale,” referring to the sale of the property to Ming Li.
[354] In respect of the 20 March 2013 text exchange, Ms Xu’s evidence was that she sent the text to Mr Huang on 20 March 2013, asking him to pay the specified bills (some of which related to subcontractors) because she did not have the internet passcode that she needed to pay them.
Charge 30 — Sale of 27 Hart Road to Ming Li on 26 April 2012
[355] This property was the subject of a further BNZ loan application made in the name of Ming Li. The loan application stated that Ming Li was employed by Driftmax, earning a weekly wage of $3,058.85. The 7 March 2013 and 20 March 2013 “salary” payments from LV Park were also relied on by the bank in relation to this loan application, which was made a month later. Those payments were referred to in the BNZ diary notes completed by Mr Jiang, and recorded as being received from “LV Park Constru”.
Charge 31 — Sale of 1 Geranium Avenue to Wenlong Wang on 26 April 2013
[356] This loan, in the name of Ms Xu’s father-in-law, Wenlong Wang, was drawn down on the same day as the loan giving rise to charge 30. The loan application form stated that Wenlong Wang was the general manager for LV Construction and was receiving a net salary of $3,059 a week. Mr Wang confirmed in his evidence that the information in this loan application is false.
[357] Mr Jiang’s diary notes referred to payments of $3,058.85 paid into Wenlong Wang’s BNZ account by “LV Park Constru”. As with Ming Li’s loan applications for 27 Hart Road and 102 Barrington Drive (discussed above), the BNZ diary notes for Wenlong Wang included a salary payment of $3,058.85 made on 20 March 2013 (the same date as the Ming Li salary payments).
[358] Wenlong Wang’s bank statement shows these payments being received and LV Park’s bank statement shows the payments being made. Mr Wang confirmed in his evidence that he did not know anything about these payments going into his account.
[359] In respect of this transaction, the Crown again relies on the 20 March 2013 text message exchange between Ms Xu and Mr Huang that was referred to in my discussion of charge 29, above. Of note, the text message sent to Ms Xu by her husband on 20 March 2013 included the phrase “Wang and li 3058.85.” As I have previously noted, I accept the Crown submission that “Wang” was a reference to Wenlong Wang.
[360] Following the text message exchange between Ms Xu and Mr Huang, a “salary” payment of $3,058.85 was paid into Mr Wang’s bank account, that same day.
Charges 17–26 and 36
[361] In respect of the remaining “false salary” charges, there is no direct evidence (such as text messages) linking Ms Xu to the particular payments that underpin the charges. Rather, the Crown relies on the direct evidence relating to the payments to Ming Li and Wenlong Wang that I have summarised above, together with other circumstantial evidence, to prove that it was Ms Xu who made the payments.
Was Ms Xu the person who made the payments?
[362] I am satisfied that Ms Xu was the person who made the 7 March 2013 “sal” deposit of $3,058.85 from LV Park’s account into Ming Li’s account. As I have already found, Ms Xu was an active participant in the fraud, as her husband’s right- hand woman. She acknowledged that she usually did as he asked when it came to
business matters. He sent her a text message that can only reasonably be interpreted as a request to pay $3,058.85 into Ming Li’s bank account. His text included Ming Li’s bank account number. A payment was made into Ming Li’s bank account that same day. I am satisfied that Ms Xu was the person who made that payment.
[363] As for the subsequent payment into Ming Li’s account on 20 March 2013, I do not accept Ms Xu’s explanation that she asked Mr Huang to make the payment as she did not have the required banking passcode. The evidence demonstrates that Ms Xu regularly made internet banking payments, including to subcontractors, and obviously had no difficulty in obtaining the required passcode from Mr Huang when she needed one. Nor did either her text, or Mr Huang’s response, suggest that the reason Ms Xu could not make the further payment was the lack of an internet banking passcode. If that was the problem, Ms Xu could have just text messaged or phoned Mr Huang to get one, rather than texting him the list of payments to be made.
[364] Whatever the reason for Ms Xu’s request to Mr Huang to make the payments, he declined it and told her “you pay again”. This is consistent with her having made the previous Ming Li payment on 7 March 2013. When questioned about Mr Huang’s direction to her on 20 March that “you pay again”, Ms Xu responded that “Maybe I paid again. I think so, yeah, I’ll pay it again if he text me back”.
[365] This is consistent with the overall relationship dynamic between Mr Huang and Ms Xu. Although Ms Xu is clearly both intelligent and competent, her role in the business was very much subservient to that of her husband. She described herself at one stage (in the context of talking about relationship issues between the couple) as an “old style traditional Chinese lady.” Mr Huang was the head of the business and while Ms Xu played an important role as his right-hand woman, she appears to have been subservient to him, routinely undertaking tasks as directed by him. A common refrain (and a key plank of Ms Xu’s defence) is that she would just do what Mr Huang asked of her, without querying it. Although their relationship was often difficult, and Mr Huang appears to have treated her poorly at times, she followed his lead and implemented his instructions when it came to the business. In respect of the second payment, I am satisfied that although Ms Xu asked Mr Huang to make it, when he declined to do so, she then made the payment (as she had done previously).
[366] Accordingly, in light of all of the relevant evidence, I am satisfied that it was Ms Xu (not Mr Huang or anyone else) who made the payments referenced “sal” into Ming Li’s account on both 7 March 2013 and 20 March 2013.
[367] I am also satisfied, for the same reasons, that following the 20 March 2013 text message exchange between Ms Xu and Mr Huang (which included a reference to phrase “Wang and li 3058.85”) that it was Ms Xu who made a payment of $3,058.85 into Wenlong Wang’s bank account, that same day.
[368] I am accordingly satisfied that Ms Xu was the person who made each of the payments that underpin charges 29, 30 and 31.
[369] The position is less clear, however, in relation to the remainder of the charges, where there is no direct evidence that points to Ms Xu as the payer. The key strands of circumstantial evidence that potentially support the inference that Ms Xu made the relevant payments include:
(a) The payments were made from LV Park’s bank account, and were often referenced in the banking records (and hence on the relevant bank statements) as “sal”, “LV Park constru salary”, or some variation thereof.
(b) She made the payments to Ming Li and Wenlong Wang I have discussed above (charges 29, 30, and 31).
(c) Ms Xu’s request to Mr Huang on 20 March 2013 to make the Ming Li and Wenlong Wang payments that week suggested that, normally, this was Ms Xu’s responsibility.
(d) A spreadsheet named “Labour invoice” was found on Ms Xu’s thumb drive. It contains many tabs, but the first tab contained a false payslip for Huazhen Zhang that was emailed to Peter Cheng, and which recorded a weekly wage which was the same amount quoted in several loan applications and paid from LV Park’s account. Ms Xu gave
evidence that the purpose of the spreadsheet was to record the time and wage details of LV Park employees. She accepted that she recorded time and wage details on the sheets.
(e) False bank statements were located by the SFO in a folder labelled “BNZ” in the wall cabinet of Ms Xu’s office. That folder contained a BNZ bank statement for Guizhen Zhou showing transactions from 31 October to 22 November 2012. That bank statement included some of the false salary payments made to Guizhen Zhou from the LV Park bank account.
(f) Ms Xu admitted that it is likely that she made at least some of the payments.
(g) Ms Xu was the person who created and sent false Chinese bank statements to the banks (another act aimed at deceiving the banks into believing that loan applicants were in receipt of incomes at the claimed levels).
[370] I have carefully considered all of this evidence. Ultimately, although the finger of suspicion points strongly towards Ms Xu as having made at least some of the payments, I am not satisfied beyond reasonable doubt that she made each of the remaining payments. I cannot exclude the possibility that some of them could have been made by Mr Huang.
[371] The text message exchanges of 7 and 20 March 2013 that I have referred to above indicate that there was, on those occasions, some dialogue between the couple regarding the payments. It is possible that at times Ms Xu made the payments, and at other times Mr Huang made them, for example if Ms Xu had other commitments. The Crown has failed to prove that on each of the remaining occasions Ms Xu was the person who made the relevant payments.
[372] In conclusion, I find that:
(a) the Crown has proved beyond reasonable doubt that Ms Xu made the false salary payments to Ming Li and Wenlong Wang that underpin charges 29, 30 and 31; but
(b) the Crown has not proved beyond reasonable doubt that Ms Xu made the false salary payments that underpin charges 17–26 and 36.
Falsity of the payments/intention to deceive the bank
[373] I now turn to consider whether, in respect of charges 29, 30 and 31, the Crown has proved that Ms Xu knew that the payments she made into the bank accounts in the name of Ming Li and Wenlong Wang were false (or was reckless as to their falsity), but made the payments anyway, in order to deceive the BNZ.
[374] Ms Xu’s evidence was that she did not intend to mislead the banks into believing that the payments were salary payments. She offered various explanations for any payments she might have made, including that she thought the salary payments were interest payments, that the reference “SAL” might have been short for “SALE”, and that she would have simply done whatever Mr Huang asked her to do, without turning her mind to the reasons for the request.
[375] None of these explanations are credible. I have already found that Ms Xu was an active participant in the fraudulent scheme by creating false Chinese bank statements and providing these to the banks. I note that when she did this she included in those false bank statements regular “deposits” that matched the salaries stated in the false employment letters. What was occurring here was a fraud of broadly the same nature, except in respect of loan applicants who were claimed to be employed in New Zealand. It was therefore not possible to produce false overseas bank statements to verify their income. An alternative modus operandi was therefore adopted to prove their incomes. That was to deposit money into their New Zealand bank accounts, to create the impression that they were in receipt of regular salary payments.
[376] Ms Xu’s claim to have been oblivious to the reason for the deposits into Ming Li and Wenlong Wang’s (her father-in-law’s) bank accounts is simply not credible. Her suggestion that “sal” could have been a reference to “sale” is both far-fetched and inconsistent with other evidence she gave, including that she was not aware of the sale to Ming Li until she saw the settlement statement (sometime after these payments were made). Both the 7 March 2013 and 20 March 2013 salary payments were in the same amount, which conveniently coincided with the level of salary claimed in the false employment letter for Ming Li. There is ample evidence to support the inference that Ms Xu intended to deceive the banks when she made the deposits into Ming Li’s bank account, referenced “sal”.
[377] In respect of the payment made by Ms Xu on 20 March 2013 into the bank account of her father-in-law, Wenlong Wang, she referenced the payment “LV Park Constru sal.” Again, this was clearly a deliberate attempt to mislead the bank into believing that Wenlong Wang (who Ms Xu knew was retired) was in receipt of a salary in the amount that had been claimed in his loan application and false employment letter.
[378] Nor is it credible that Ms Xu could have genuinely thought any of the payments were interest payments, given that most of them preceded the purchase of an LV Park property by the particular loan applicant. Further, the suggestion that Ms Xu believed she was making interest payments into the bank accounts of loan applicants (presumably so that they could then meet their mortgage payments to the banks) contradicts her evidence that she was entirely unaware of the financial aspects of the fraud. The fact that the payments were referenced as “SAL” clearly points to their true intent.
[379] Ms Xu clearly intended to mislead the BNZ into believing that the relevant deposits were salary payments in respect of Ming Li and Wenlong Wang, when she knew that they were not.
Were the banks induced to advance loans as a result of the false salary payments?
[380] For the reasons outlined at [137] to [155] above, I am satisfied that the element of inducement has been proved, beyond reasonable doubt. I have no doubt that if the
BNZ had been made aware that the deposits made into Ming Li and Wenlong Wang’s bank accounts were not in fact salary payments, but were payments disguised as such in order to deceive the bank, the loan applications in the names of Wenlong Wang and Ming Li would have been declined.
The false employment letters and deposit slips particulars
[381] Ms Xu faces 14 charges (charges 6–9, 11, 16, 33, 37–41, 43 and 47) where one of the particulars alleged is that she provided false employment letters to the ANZ and BNZ in support of loan applications in the names of, respectively, Hao Zhang (her brother), Zhuwen Wu, Jiquan Zhang (her mother), Lifeng Li, Bin Zhu, Kai Wang, Feng Ye, and in her own name. These letters were used as evidence to support the false employment and income information provided in the relevant loan applications.
[382] Charges 41 and 43 also allege that Ms Xu obtained by deception by providing false term deposit slips to the ANZ in support of loan applications in the name of Kai Wang and Feng Ye. These deposit slips were used to support the loan application by providing evidence of further assets.
[383] The Question Trail for these charges is annexed as Appendix 2.
[384] The borrowers for whom Ms Xu is alleged to have submitted false employment letters are stated in those letters as having high salaried positions in various Chinese companies. That was untrue. By way of example, Hao Zhang had been employed in China working for a pump company for the previous ten years, and did not earn anything approaching $500,000 a year, contrary to what his employment letters suggested. Ms Xu (who had a power of attorney for her brother) acknowledged under cross-examination that her brother’s employment letters were fake. Jiquan Zhang has been retired since 1999, and has not received any income other than his superannuation. Ms Xu was working for LV Park. Some of the letters were written for people who appear to be entirely fictitious. Most of the false Chinese employment letters were signed by a person called Johnston Zhook.
[385] Mr Huang appears to be the person who obtained the employment letters from Mr Zhook. This is evidenced by a text message he sent to a Chinese phone number on 8 July 2013, asking for further help “to issue the income certificates” and requesting that they be the “same format as before”. The phone number that Mr Huang sent his text message to is the same number that is recorded as the contact number for Mr Zhook in each of the employment letters signed by him. This tends to suggest that Mr Zhook (or someone using that name) was the person who initially created and provided the letters. Further, Mr Zhook was presumably prepared to verify the (false) information in the letters if someone phoned the contact numbers recorded on the letters.
[386] I discuss the Johnston Zhook letters in further detail later in these Reasons. I am satisfied that each of those letters is false. The falsity of the letters is apparent with reference to the genesis of the letters, the evidence of the actual employment (or lack of employment) of some of those named in the letters, and an analysis of the letters themselves. The named borrowers whose relevant applications were supported by Johnston Zhook letters were Hao Zhang, Zhuwen Wu and Jiquan Zhang.
[387] The remainder of the employment letters are:
(a) The employment letter for Lifeng Li, which records his employment as the general manager of Shenzhen City Shen Qi Technology Co Ltd with an annual salary of RMB 3,600,00,00. The letter purports to be written by Chen Dasheng, the general manager.44
(b) Bin Zhu’s employment letter provides that he is the general manager of Shenzhen City Shen Ke Technology Co Ltd, and has an annual salary of RMB1,200,00,00. The letter is purportedly written by Chen Tai, who is also recorded as being a general manager.45
(c) Kai Wang’s employment letter, which provides that he is the general manager of Shenzhen City Shen Ke Technology Co Ltd, and has an
44 Charge 37.
45 Charge 40.
annual salary of RMB 1,200,000,00. The letter is purportedly written by Chen Dasheng, who is also recorded as being a general manager.46
(d) Feng Ye’s employment letter, which provides that he is the general manager of Shenzhen City You Qi Technology Co Ltd, and has an annual salary of RMB 1,100,000,00. The letter is purportedly written by Chen Dasheng, who is also recorded as being a general manager.47
(e) Ms Xu’s employment letter records that she is the Chief Inspector of the Shanghai City Shuang Lang Trading Co. Ltd with a salary of RMB 1100,00,00. The letter is purportedly written by Chen Wan Sai, who is recorded as being the general manager.48
[388] While each of Lifeng Li, Bin Zhu, Kai Wang and Feng Ye are said to work for different companies, and Kai Wang’s letter was written by a different individual to the others, the same contact number is provided for each letter. Mr Boot (the expert document examiner who gave evidence for the SFO) gave evidence that Lifeng Li and Bin Zhu’s letters share the same signature. The fact that Bin Zhu appears to be a fictitious person, and a different person is said to have written his and Lifeng Li’s employment letters, is further evidence of the falsity of the letters. As for Feng Ye and Kai Wang, as I have previously noted, they also appear to be fictitious people. Ms Xu was not working for Shanghai City Shuang Lang Trading Co. Ltd in China at the relevant time. She was working for LV Park, in New Zealand.
[389] For the reasons outlined, I am satisfied that all of these employment letters are false. Ms Xu did not suggest otherwise in her evidence. Indeed, I note that the false Chinese bank statements created by Ms Xu were carefully crafted to correlate with the salaries claimed in the false employment letters. Obviously, there would be no need to create false bank statements to verify the levels of income stated in the Chinese employment letters, if those letters were genuine.
46 Charge 41.
47 Charge 43.
48 Charge 47.
[390] On 30 September 2013, two emails from the fengye1972 email address were sent to Peter Cheng. One provided the false employment letter and deposit slip on behalf of Kai Wang, which were used to support the loan application in his name that is the subject of charge 41. The documents attached to this email match those held by ANZ for that loan application.
[391] The second email provided the same documents, a false employment letter and deposit slip, but on behalf of Feng Ye. The documents attached to this email match those held by ANZ in relation to the loan application that is the subject of charge 43.
[392] For both Kai Wang and Feng Ye, the false deposit slips submitted to support the loan applications in their name in relation to charge 41 and 43 were false. They appeared to be deposits with Bank A, but the evidence of Mr B from Bank A is that they were not genuine deposit statements. Despite purporting to be from Bank A, they were not in the format of Bank A term deposit certificates, and had a number of irregularities. Bank A’s online banking systems could not generate online term deposit confirmation slips similar to the false deposit slips provided. I am satisfied that the deposit slips are false.
Did Ms Xu create the false employment letters?
[393] If Ms Xu created the false employment letters, that would be circumstantial evidence that may assist in determining whether she was the person who provided the letters to the banks. In my view, however, there is no evidence that directly links Ms Xu to the creation of the false employment letters.
[394] Mr Boot gave evidence that the many of the letters from Johnston Zhook share identical signatures, stamps, or other information. The employment letters relating to charges 6–8, and 11 all share the same stamp, signature and associated Johnston Zhook information. That is also the case for the letters relating to charges 16 and 38, where those details match one another. Charges 9, 33 and 40 have identical signatures to other employment letters unrelated to these charges. The remaining employment letters in relation to charges 37, 39, 41, 43 and 47 could not be linked to any of the
other employment letters. For those letters that do share identical features, they were clearly involved in a cut and paste exercise. However, there is no evidence that implicates Ms Xu in the creation of the letters.
[395] The Crown refers to the fact that one of Hao Zhang’s employment letters was located in an Eastlight folder in a cabinet in Ms Xu’s office. It matched the employment letter that the relevant bank held for one of the later charges (charge 16). The Crown suggests that the presence of this document implicates Ms Xu in the creation of that fraudulent document. I am not satisfied, however, that this evidence is sufficient to point to Ms Xu as having been involved in the creation of the false documents. Ms Xu must have been provided with copies of the employment letters at some stage (or at least the salary information contained within them) in order to ensure that the false Chinese bank statements matched the salaries claimed in the letters. The presence of the employment letter in the Eastlight folder does not mean that she must have been involved in creating the letters.
[396] I also note that Ms Xu held documents relating to Lifeng Li, Kai Wang and Zhuwen Wu in the folder where the Hao Zhang employment letter was located. There is no evidence, however, that the folders in Ms Xu’s office contained their false employment letters.
[397] The evidence establishes that Mr Zhook (or someone using that name) provided several false employment letters to Mr Huang. Subsequently, some of those letters were further manipulated, by cutting and pasting signatures, adding new dates, and so on. Either Mr Huang or Ms Xu (or even Mr Chen) could have done so. It is not possible to say, with any degree of certainty, who did so on any particular occasion. Indeed, it is possible that Mr Huang had sole responsibility for this aspect of the fraudulent enterprise (obtaining and editing the false employment letters) and that Ms Xu’s role (in relation to the letters) was simply to ensure that the false bank statements correlated with them.
Did Ms Xu create the false savings deposit slips?
[398] There is no evidence connecting Ms Xu to the false deposit slips. For example, there is no evidence that they were on Ms Xu’s electronic devices and there is no
evidence of any hard copies in her office. The evidence only establishes that the deposit slips were provided to, or created by, the user of the fengye1972 email address, who then forwarded them to Peter Cheng. There is no evidence relating specifically to who created the deposit slips. On that basis, it cannot be said that it was Ms Xu.
Did Ms Xu provide the false employment letters and deposit slips to the banks?
[399] For the reasons outlined above, it is my view that the evidence does not point to Ms Xu as the person who created or solicited the false employment letters. Rather, it appears that Mr Huang and Johnston Zhook performed those tasks. The evidence does not prove that Ms Xu created or solicited the false deposit slips either. Proof that Ms Xu was the person who provided the false employment letters and deposit slips to the banks must therefore be founded on other evidence.
[400] I will first consider charges 41 and 43. The Crown alleges in relation to those charges that Ms Xu sent emails attaching the employment letters and deposit slips for Kai Wang (charge 41) and Feng Ye (charge 43) from the fengye1972 email address to Peter Cheng. I will then consider charges 6 and 11, where the Crown alleges that the lakewood18 email address was involved in the transmission of the false employment letters. The remaining charges do not involve any direct evidence of transmission of the relevant employment letters to the banks.
Charge 41 — Sale of 1 Geranium Avenue, 15 Barwick Place and 77 New Borman
Road on 4 November and 5 December 2013
[401] These three properties were the subject of a single ANZ loan application made in the name of Kai Wang. Peter Cheng processed and approved this lending application.
[402] As I recorded above at [390], on 30 September 2013, less than a week before drawdown, an email from the fengye1972 email address was sent to Peter Cheng. The email stated that income documentation for Kai Wang was attached, and a deposit slip and employment letter were attached. These documents match the deposit slip and employment letter held by ANZ in relation to this transaction.
[403] As I have discussed above, the evidence indicates that Feng Ye is a fictitious person. This email account is accordingly not actually associated with anyone called Feng Ye.
Charge 43 — Sale of 9 Hampshire Court and 1768 River Road on 4 November 2013
[404] These two properties were the subject of a single ANZ loan application made in the name of Feng Ye. Peter Cheng processed and approved this lending application.
[405] As I recorded above at [390]-[391], on 30 September 2013, less than a week before drawdown, an email from the fengye1972 email address was sent to Peter Cheng. The email stated that income documentation for Feng Ye was attached, and a deposit slip and employment letter were attached. These documents match the deposit slip and employment letter held by ANZ in relation to this transaction. This email was sent the same day as the email attaching the employment letter in relation to charge 41 above (Kai Wang).
Charge 6 — Sale of 8 Hampshire Court on 21 December 2011
[406] This charge relates to a loan drawn in the name of Ms Xu’s brother, Hao Zhang, on 21 December 2011.
[407] On 1 December 2011, the lakewood18 email account was used to send an email to Mr Chen. There was no text in the body of the email, rather it forwarded an email, dated 30 November 2011, from the yorkcrownz email address (the email address associated with Johnston Zhook). The email had two employment letters attached, one in the name of Hao Zhang and the other in the name of Zhuwen Wu. There is then an email, sent shortly after the email from lakewood18, from Mr Chen to Mr Jiang at BNZ, attaching identical false employment letters to those that were forwarded to Mr Chen from the lakewood18 email address.
Charge 11 — Sale of 12 Ashwick Place on 15 August 2012
[408] This property was the subject of two loans drawn down from the BNZ on 15 August 2012.
[409] On 13 August 2012, an email was sent from the lakewood18 address to Mr Chen. He then forwarded the email to Mr Jiang at BNZ. An employment letter, in the name of Hao Zhang, was attached. The employment letter matches the letter held by BNZ in support of this loan application.
Remaining charges — charges 7–9, 16, 33, 37–40, and 47
[410] In respect of the remaining charges the Crown alleges that Ms Xu provided the false employment letters to either Mr Chen (as middleman) or Peter Cheng, in some manner, possibly by way of an email from the lakewood18 email account that has not been recovered by the SFO. (Copies of all of the letters are held on the files of the relevant bank, but it is not clear precisely how they reached there).
[411] In respect of charge 16 (sale of 78 and 80 Barrington Drive to Hao Zhang on 5 October 2012) the Crown relies, as an additional strand of circumstantial evidence, on the fact that a copy of Hao Zhang’s employment letter, matching that held by the bank in relation to this loan, was found in an Eastlight folder in Ms Xu’s office. A possible explanation for Ms Xu having this letter, however, is as I stated earlier, that she used it to assist her when creating the false bank statements. If Mr Huang was handling this side of the operation he could have been the person who provided copies of the false letters to both Ms Xu and Mr Chen.
[412] In respect of charge 33 (sale of 11 and 12 Hemsby Place to Jiquan Zhang on 20 June 2013 and 59a Alpers Ridge to Jiquan Zhang on 26 June 2013), Peter Cheng emailed Mr Chen and the jobslvpark email address on 13 October 2013, attaching the employment letter he already had for Jiquan Zhang. That employment letter matches the letter held by the ANZ in relation to this application. There is no evidence, however, as to how Peter Cheng originally received that letter. It is also significant, in my view, that it is apparent from the email chain as a whole that Peter Cheng was communicating with Mr Chen and Mr Huang (“Richard and Thomas”) regarding the further documents and information he was seeking, not Ms Xu.
[413] In relation to charge 47 (sale of 33 Hart Road to Ms Xu), Peter Cheng sent an email to Mr Chen and the jobslvpark email address seeking further information in support of Ms Xu’s loan application, including the employment letter for Ms Xu.
[414] Given that, two months previously, Peter Cheng had sent an email to the jobslvpark email address to seek further information from Mr Huang (“Thomas”) regarding Hao Zhang’s loan application, it is a reasonable inference that he was probably also directing his request to Mr Huang on this occasion. There is nothing to suggest that he was directing his request to Ms Xu.
[415] As will be apparent from my summary of the key evidence relating to the false employment letters and deposit slips charges, in almost all cases there is either incomplete evidence as to how the false employment letter or deposit slip reached the bank, or no evidence at all on the issue. In particular:
(a) In respect of two charges there is evidence that the fengye1972 email address was used to send the false employment letters and deposit slips to Peter Cheng at ANZ (but no evidence of how the letters and deposit slips got to the fengye1972 email account).
(b) In respect of two charges there is evidence that the lakewood18 email address was used to send false employment letters to Mr Chen.
(c) In only one case, charge 6, is there a complete picture. On that occasion, the false employment letter was sent from the yorkcrownz email address (Johnston Zhook) to the lakewood18 email address. It was then forwarded from that email address on to Mr Chen. Shortly afterwards it was forwarded by Mr Chen to Mr Jiang at BNZ, attaching identical false employment letters to those that were sent from the lakewood18 address.
(d) There appears to be no evidence at all of how the false employment letters reached the banks in respect of the remaining charges. We know
that they did, however, as there are copies of the false employment letters on the banks’ files.
[416] I note that the method of transmission that was used in relation to charge 6 (lakewood18 to Mr Chen, then Mr Chen to the bank) mirrors the general pattern that was followed in relation to the provision of false Chinese bank statements to the banks, and is consistent with the role that Mr Chen seems to have adopted as middleman between LV Park/Mr Huang/Ms Xu and the banks. However, in contrast to the position regarding the false bank statements, the evidence pointing to Ms Xu as the person who must have been the sender of the relevant documents to Mr Chen (or Peter Cheng) is not strong. Indeed, in my view, the evidence squarely raises the prospect that Mr Huang could have been the person who provided the false employment letters and deposit slips to Mr Chen (or Peter Cheng). In particular:
(a) he was the mastermind of the fraudulent scheme;
(b) he was the person who “commissioned” a number of the false employment letters from Johnston Zhook;
(c) he was a regular user of both the lakewood18 and jobslvpark email addresses; and
(d) Peter Cheng wrote to Mr Chen and Mr Huang (at the jobslvpark email address) seeking supporting documents, including false employment letters.
[417] There is no direct evidence pointing to Ms Xu as the person who provided the false employment letters to the banks. Obviously, she must have known of the content of at least some of the employment letters, because she manipulated the false Chinese bank statements to support the salaries set out in the employment letters. It is possible, however, that Mr Huang provided Ms Xu with copies of the employment letters (or at least information as to the salaries set out in them). Indeed, an example of this is the text that Mr Huang sent Ms Xu on 7 September 2013 stating ‘Ming Li 320 Lifeng Li 360’ (which refers to the claimed salaries for those two loan applicants).
[418] As for the fengye1972 email address, I observed when considering the false bank statements charges that the evidence indicates that that email account could be associated with either Ms Xu or Mr Chen. However, in my view it is more likely that Mr Chen was behind that account rather than Ms Xu, given his role as “middleman” in sending documents to Mr Jiang or Peter Cheng. In other words, Mr Huang or Ms Xu sent the relevant documents to Mr Chen, and he used that account to send them on to Peter Cheng.
[419] Overall, in my view it is a reasonable possibility that Mr Huang, rather than Ms Xu, was the person who sent the false employment letters and deposit slips to the banks (either directly or via Mr Chen). While there is circumstantial evidence implicating Ms Xu in the overall fraud, in the absence of any direct evidence pointing to her as the person who sent the false employment letters or deposit slips to the banks, the Crown has not proved this particular of the relevant charges.49
[420] For that reason, I will not consider the remaining elements of this charge in relation to these two particulars.
H. OBTAINING BY DECEPTION CHARGES AGAINST MR CHEN Overview of the charges against Mr Chen
[421] Mr Chen faces 12 charges. Eleven of those are charges of obtaining by deception, and one charge is laid under the Secret Commissions Act. In this section I address the obtaining by deception charges, which fall into the following broad categories:
(a) Two charges relating to the provision of a false passport in the name of Shou Zhang, to BNZ and ANZ respectively (charges 15 and 35).
49 I note for completeness that in many charges the provision of false employment letters was only one particular relied on. Many of the charges also alleged that Ms Xu had provided false bank statements to the banks. I found those particulars to be proven, for the reasons outlined above.
(b) Two charges alleging that Mr Chen made false salary payments into bank accounts in the names of third party loan applicants (charges 27 and 28).
(c) Two representative charges (charges 3 and 4) alleging that Mr Chen omitted to disclose to the BNZ,50 and ANZ and Bank A,51 that Mr Huang and/or LV Park was the “true borrower” of the loans obtained in the names of various third parties, in circumstances where there was a duty to disclose that information. (These are both representative charges, encompassing all of the third-party loan applications).
(d) Two charges (charges 5 and 48) alleging that Mr Chen omitted to disclose to the BNZ and ANZ respectively that Mr Huang and/or LV Park was the “true borrower” in respect of loans taken out by Mr Chen in his own name to purchase two LV Park properties, in circumstances where there was a duty to disclose that information.
(e) Three charges (charges 34, 42 and 44) alleging that Mr Chen omitted to disclose to the ANZ that the employment and income information provided as part of loan applications in the names of Huazhen Zhang, Kai Wang and Feng Ye were false, in circumstances where there was a duty to disclose that information.
Circumstantial evidence relevant across all charges
[422] I have described the nature and significance of circumstantial evidence in this case at [162] to [165] above. As with Ms Xu, the Crown case against Mr Chen turns, to a significant extent, on circumstantial evidence. To reiterate, in a circumstantial case, the Court must look to the combined effect of a number of independent items of evidence when considering each charge. While each separate piece of evidence must be assessed as part of the inquiry, the ultimate verdict on each charge will turn on an assessment of all items of evidence viewed in combination. The underlying principle
50 Charge 3.
51 Charge 4.
is that the probative value of a number of items of evidence is greater in combination than the sum of the parts.
[423] I therefore commence by summarising key aspects of the evidence relating to Mr Chen. Some of this is general evidence, which provides background to all of the charges against him. Other evidence is direct evidence that is specifically relevant to a particular charge or group of charges. Because of the circumstantial nature of the case, however, such evidence also forms part of the overall pool of evidence that is relevant to the assessment of all of the charges. It enables Mr Chen’s alleged conduct in relation to any particular charge to be assessed in its wider context.
[424] In most of the transactions, Mr Chen was the solicitor for the vendor, the purchaser, and the bank.
[425] The general pattern of communication revealed by the evidence is that Mr Chen was the “middleman” between Mr Huang and Ms Xu on the one hand and Mr Jiang (for the BNZ) and Peter Cheng (for the ANZ), on the other. There is no evidence of any direct communication between Mr Jiang and Mr Huang or Ms Xu. There is limited evidence of Peter Cheng sending emails copied to both Mr Chen and Mr Huang.
Relationship between Mr Jiang and Mr Chen
[426] As I have noted previously, Mr Jiang and Mr Chen had known each other since at least 2008, when Mr Jiang was employed at Westpac. In that year Mr Jiang had assisted Mr Chen to set up a bank account in the name of Mr Chen’s aunt, Shufeng Qi, and provided him with the login details for that account. Mr Jiang and Mr Chen appear to have had a fairly close relationship. They emailed each other regularly, at various hours of the day and night. They not only communicated through their work email addresses, but also through private Hotmail email accounts. The tone of their communications indicates that they were very friendly, for example both of them would address emails as “Hi Bro” on occasion.
[427] Mr Jiang released to Mr Chen confidential bank account numbers and password details for other people on at least two occasions. On the first occasion, he did this in respect of the account that was set up for Shufeng Qi. On the second occasion, it was in respect of an account that Mr Jiang set up for Shou Zhang (whom I have found to be a fictitious person). Mr Jiang also emailed Mr Chen the access number to an account he had opened in the name of another borrower, Ming Li, and commented that Mr Chen already knew the password.
The use of Lugton’s Limited Real Estate forms
[428] The sale and purchase agreements for many of the transactions were on templates created by Lugton’s Limited, a real estate agency. Mr Chen verified a number of the copies of the Lugton’s agreements provided to the banks as being true copies of the originals.
[429] Claire Lugton gave evidence that Lugton’s were not involved in any of the relevant transactions. Mr Chen was the solicitor for the vendor, purchaser, and bank in most of the transactions. If he was genuinely unaware of the fraud, any interaction with Lugton’s (for example in relation to such issues as the payment of deposits or real estate’s commission) would have immediately uncovered the fraud.
[430] A private treaty sale (where no real estate agent is involved) is deemed by the banks to be a higher risk transaction, requiring referral to a credit manager. The use of the Lugton’s agreements therefore avoided the need for what would have otherwise been an automatic referral to a manager.
[431] Many of the agreements for sale and purchase noted the requirement for a deposit. A number of the settlement statements for the transactions prepared by Mr Chen (or under his supervision) falsely recorded that the required deposits had been paid. They had not been. Those settlement statements were issued under Mr Chen’s name and many of them were addressed to the named “client,” care of Mr Chen’s law firm.
[432] As set out at [109] to [113] above, powers of attorney were held by Mr Chen, Mr Huang, Ms Xu and Wenlong Wang (Mr Huang’s father) in respect of many of the named loan applicants.
[433] Mr Chen held powers of attorney for Ms Xu and Mr Huang’s parents (Huazhen Zhang, Jiquan Zhang, Guizhen Zhou, Wenlong Wang), as well as Phaeton Holding Ltd, and Rock Construction Ltd. The evidence of the parents was to the general effect that Mr Chen did not properly explain the power of attorney documents to them (or at all). The use of powers of attorney enabled Mr Chen to maintain a significant degree of control over the various aspects of the legal process in many cases.
[434] As discussed in further detail below, Mr Chen obtained a false passport in the name of Shou Zhang from a person using a Hong Kong email address, which he then provided to Mr Jiang. Two loan applications in the name of the fictitious Shou Zhang were subsequently submitted by Mr Chen to Mr Jiang. They were both approved.
The purchase of 10/175 Queen St by Huazhen Zhang
[435] The property at 10/175 Queen St was purchased in the name of Ms Xu’s mother, Huazhen Zhang, in June 2013. It was the only one of the various properties that was acquired from a genuine third-party vendor. It was acquired for use as LV Park’s offices. ANZ provided a loan for its purchase.
[436] On 11 June 2013, Mr Chen sent Peter Cheng an email attaching an employment letter for Huazhen Zhang, stating that she was the General Manager of LV Park, on a salary of $100,000. Peter Cheng replied to the effect that because Huazhen Zhang’s income was sourced from the seller of the property, the bank required personal tax returns or financial accounts from LV Park to evidence Huazhen Zhang’s employment. The following day Peter Cheng emailed Mr Chen again, suggesting that “as discussed” the client should provide overseas income evidence for Huazhen Zhang, which would have to be sufficient to prove an annual salary of not less than RMB 690,000, with at
least RMB 57,5000 being credited to her China Bank Statement each month. Peter Cheng stated that the last three months of Chinese Bank Statements were required, showing such credits.
[437] ANZ then received a (false) Chinese employment letter for Huazhen Zhang, dated 12 June 2013. It (falsely) stated that Huazhen Zhang was the general manager of Jia Li Lun Information Technology Consultancy (Shanghai) Co Ltd and her salary was RMB 1,000,000,00 per year. The letter was signed by Johnston Zhook. ANZ also received copies of Chinese bank statements that correlated with the salary stated by Mr Zhook.
Kai Wang and Feng Ye loan applications
[438] Loan applications were made in the names of Kai Wang and Feng Ye, both of whom appear to be fictitious persons. While those applications were in train, on 2 October 2013, Mr Huang sent a text message to Mr Chen which reads:
Kai Wang annual salary 3.48 million Feng Ye annual salary 3.36 million
[439] An hour and a half later, Mr Chen replied to Mr Huang “[Too] late, Ye 1.1 million, wang 1.2 million, already given to the bank”.
[440] The employment letter and bank statements held by the bank in relation to the Kai Wang transaction are inconsistent with one another. The employment letter states that Kai Wang’s annual salary was RMB 1,200,000. The false Chinese bank statements, however, are consistent with the revised salary Mr Huang asked Mr Chen to give to the bank—RMB 3.48 million. Similar inconsistencies appear in the documentation for the Feng Ye application.
[441] Mr Chen also emailed through to Peter Cheng blank, but signed, loan application forms for both Kai Wang and Feng Ye.
[442] In July 2008 (when Mr Jiang was employed at Westpac) he assisted Mr Chen to set out a bank account in the name of Mr Chen’s aunt Shufeng Qi, and provided him with the login details for that account. That account features prominently in the evidence. For example:
(a) On 12 November 2012, Mr Jiang emailed Mr Chen asking him to put funds into Ming Li’s account as soon as possible. (Ming Li was one of the loan applicants). The same day a deposit of $3,058.85 was made into Ming Li’s bank account from the Shufeng Qi account, referenced as “SAL.” Subsequent payments, through until 7 March 2013, followed the same pattern. (The Crown alleges that these were false “salary” payments).
(b) The Shufeng Qi account was the account from which) a number of other payments were made to loan applicants, in each case correlating with the salaries claimed in their loan applications and/or false employment letters. The payments were generally referenced “SAL” or, in at least one case “SALARY”. (I also note that one such payment, to Lifeng Li, was made from Mr Chen’s personal bank account).
(c) The Shufeng Qi account was the account from which deposits (the alleged secret commissions) were made into either Mr Jiang’s bank account, or that of his mother (Bufang Mai), shortly after drawdown of a number of the loans advanced by the BNZ. Originally the relevant deposits were made into Mr Jiang’s personal account. However, after Mr Jiang provided Mr Chen with the account details for his mother’s bank account, all deposits from the Shufeng Qi account were paid into that account.
(d) The Shufeng Qi account was also the account from which deposits were made into Peter Cheng’s bank account from 5 October 2012 to 21 June 2013, shortly after drawdown of a number of loans advanced by the ANZ.
Deposits into bank accounts of Mr Jiang and Peter Cheng
[443] Until 21 June 2013, all of the deposits that the Crown alleges were secret commission payments were paid into accounts in the names of Mr Jiang and Peter Cheng (or their family members), from the account in the name of Richard Chen’s aunt, Shufeng Qi.
[444] The Shufeng Qi account ceased being used for such payments after 21 June 2013 and the relevant deposits, from that time forwards, were made from an account in the name of Amy Chen, who is Richard Chen’s sister. Those payments were initially made directly to Peter Cheng’s bank account. On 19 August 2013, however, Peter Cheng sent a text message to Mr Chen telling him that a new bank account had been set up in the name of Peter Cheng’s sister Vivian Cheng, and giving Mr Chen the account number for that bank account. Mr Chen replied saying “thanks”. From that day onwards all of the deposits following the drawdown of loans advanced by ANZ (the alleged secret commission payments) were made from the Amy Chen account to the Vivian Cheng account.
The charges relating to the Shou Zhang passport
[445] The Crown alleges that, in support of loan applications in the name of Shou Zhang, Mr Chen provided a false passport in that name to both the BNZ (charge 15) and the ANZ (charge 35), knowing that the passport was false, or being reckless as to whether it was.
[446] The Question Trail for these charges is annexed at Appendix 2.
Did Mr Chen provide a false passport in the name of Shou Zhang to the BNZ?
[447] It is alleged in charge 15 that Mr Chen provided a false passport in the name of Shou Zhang to the BNZ, in support of a loan application made in the name of Shou Zhang to purchase 1768 River Road, Hamilton, from Rock Construction Limited. That loan was drawn down on 21 September 2012.
[448] The loan application for this transaction was made in the name of Shou Zhang. His residential address was listed as 12 Hampshire Court, Hamilton (one of the
LV Park properties) and his accommodation status was recorded as “living with relatives” in New Zealand. The phone number on the application was that of Mr Huang.
[449] On 24 September 2012, Mr Chen emailed Mr Jiang a sale and purchase agreement for this transaction, dated 24 August 2012. The agreement is on the standard form agreement of Lugton’s Limited (a real estate agency) and specifies that a 10 per cent deposit is payable to Lugton’s. (Claire Lugton gave evidence that Lugton’s did not have any involvement in, or knowledge of, the sale of this property). The vendor was stated to be Rock Construction Limited, and the purchaser was identified as “Wing Chuk Yau or nominee”.
[450] Later that day, Mr Chen received an email from a Hong Kong Yahoo email account that I will refer to as the “yaushing” email account. Attached to that email were three scanned passports. These were sent in response to an earlier email from Mr Chen that said “Re-scan, I need a more clear one”.
[451] The following day, 25 September 2012, Mr Chen forwarded the email from the yaushing account (with the three passports attached) to Mr Jiang. One of the attached passports was in the name of Wing Chuk Yau and another was in the name of Shou Zhang. The third passport was in the name of Ngan Chi Lau. The passport photo of Wing Chuk Yau is of a man significantly older than the young person in the passport photo of Shou Zhang.
[452] Meanwhile, Mr Chen sent a follow-up email to the yaushing account stating:
I need a person between their ages. Best age between 35 and 45.
[453] The yaushing account responded to this email on 25 September 2012, attaching a single new passport in the name of Shou Zhang. This time, however, the passport photo on the Shou Zhang passport was the one of the older man from the Wing Chuk Yau passport that had been attached to the previous day’s email. In addition, the date of birth had been altered from 13 August 1987 to 13 August 1957. Accordingly, the new passport emailed to Mr Chen from the yaushing account was an amalgamation of the previous Shou Zhang and Wing Chuk Yau passports.
[454] The new passport in the name of Shou Zhang that was attached to this email was subsequently provided to Mr Jiang. A copy of it is held on the BNZ file, as part of the documents provided in support of the Shou Zhang loan application.
[455] The next day, 26 September 2012, Mr Jiang emailed a PDF document to Mr Chen. The subject of that email is “Fw: Message from KMBT_C253” and the body of the email stated “Password is: richard1”. The previous email in the chain indicates that the document sent from Mr Jiang to Mr Chen was scanned at BNZ and emailed to Mr Jiang prior to this email being sent. The PDF document attached to the email was a BNZ Customer Details document for Shou Zhang, dated 26 September 2012. This is one day after Mr Chen received the amalgamated (and clearly false) passport from the yaushing email account. Shou Zhang’s address is recorded as 12 Hampshire Court, Hamilton and the phone number on the document is Mr Huang’s. “Access # 174 – 059 – 539” is handwritten onto the document.
[456] This all occurred the same day that Mr Jiang completed an account opening authority for Shou Zhang and allegedly rang Shou Zhang’s employer to confirm his employment (according to Mr Jiang’s diary notes).
[457] Inquiries with the Chinese Consulate General in Auckland confirmed that the original Shou Zhang passport with a birth date of 13 August 1987 (the one that was emailed by Mr Chen, together with two others, to Mr Jiang on 24 September 2012) was issued by Anhui Province in China, but was subsequently reported as lost and therefore declared invalid. The second Shou Zhang passport, with the birth date of 13 August 1957, was never valid, and had not been issued by Anhui Province.
[458] Julia Davidson from Immigration New Zealand confirmed that Shou Zhang has never entered New Zealand.
[459] On 27 September 2012 (about four days before drawdown), Mr Chen emailed Mr Jiang a new sale and purchase agreement for 1768 River Road (also on Lugton’s standard form). This time the buyer was recorded as Shou Zhang, which matched the name of the new false passport that Mr Chen had obtained. This sale and purchase
agreement matches the one that is held on the BNZ file. The bank’s copy of the agreement has been certified as a true copy of the original by Mr Chen.
[460] Mr Chen acted for both vendor and purchaser, as well as for the BNZ on the mortgage. The settlement statement for 1768 River Road (prepared by Mr Chen or under his supervision) records a “Deposit paid” of $206,580.80. No deposit was paid.
[461] The loan was approved and on 1 October 2012 the sum of $479,500 was drawn down.
[462] The sequence of events, therefore, was that Mr Chen obtained a false passport in the name of Shou Zhang and provided this to Mr Jiang, who then opened a bank account in the name of Shou Zhang and provided the access number and password to access that bank account to Mr Chen. This all happened over a period of about 48 hours. The transaction then proceeded in the name of Shou Zhang.
[463] I am satisfied that the Crown has proved to the requisite standard that Mr Chen provided a passport in the name of Shou Zhang to the BNZ in support of the relevant loan application and that he knew that it was false. I note that it would be sufficient, as a matter of law, if he was reckless as to the falsity of the passport. I am satisfied, however, that in light of his email exchange with the yaushing email account, that Mr Chen was aware that the passport was a forgery.
Did Mr Chen provide the false Shou Zhang passport to ANZ?
[464] Charge 35 alleges that Mr Chen provided a copy of the same false Shou Zhang passport to ANZ, in support of a loan application made in the name of Shou Zhang to purchase 16 Sirius Crescent and 66 and 68 Magellan Rise, Hamilton.
[465] These three properties were the subject of a single ANZ loan application made in the name of Shou Zhang. Peter Cheng processed and approved this lending application. Mr Chen acted for the vendor, the purchaser and the bank in relation to each property transaction.
[466] On 23 August 2013, Mr Chen emailed Peter Cheng an employment letter and term deposit document in the name of Shou Zhang. Given that Shou Zhang was fictitious, and Mr Chen clearly knew that, he must also have been aware that these documents were false. The employment letter attached to the email matches the employment letter held by ANZ in relation to this transaction.
[467] On 27 August 2013 Mr Chen emailed a blank, but signed, loan application form to Peter Cheng. That same day, a loan of $1,288,000 was drawn down from ANZ to fund Shou Zhang’s purported purchase of 16 Sirius Crescent from Phaeton Holdings Limited, and 66 and 68 Magellan Rise from Zhuwen Wu.
[468] As part of the loan application, ANZ received a copy of the same false passport that Mr Chen obtained for the previous Shou Zhang BNZ application. Although there is no direct evidence (such as an email) to show how this document was provided to Mr Jiang, it is clear that it must have been provided to him by Mr Chen, who had previously obtained it from his Hong Kong contact (the person behind the yaushing email account), and who had previously provided it to the BNZ for the purposes of a similarly fraudulent application.
[469] I am therefore satisfied that Mr Chen provided the false passport in the name of Shou Zhang to the ANZ (Mr Jiang) in support of this loan application, knowing that it was false.
Did Mr Chen intend to deceive BNZ and ANZ by providing the false Shou Zhang passport to them?
[470] It necessarily follows from the evidence I have outlined above in relation to both charge 15 (BNZ) and charge 35 (ANZ) above that Mr Chen intended to deceive the banks when he provided the false Shou Zhang passport to them. No innocent explanation is available for Mr Chen’s actions.
[471] For the reasons outlined at [137] to [155] above, I am satisfied that the element of inducement has been proved in relation to charge 15 (BNZ) and charge 35 (BNZ)
beyond reasonable doubt. It is clear that if the banks had been aware that Shou Zhang’s passport was a forgery, the relevant loans would not have been approved.
The false salary payment charges
[472] Mr Chen faces two charges of obtaining by deception through making false salary payments into accounts in the names of two loan applicants, Ming Li (charge
27) and Lifeng Li (charge 28). The payments were allegedly paid into their bank accounts to make it appear that they were receiving the salaries stated in their loan applications and/or employment letters, when in fact they were not.
[473] The Question Trail for these charges is annexed at Appendix 4.
The payments into Ming Li’s bank account
[474] Charge 27 relates to a loan application to the BNZ in the name of Ming Li, to purchase 40 Hartis Avenue and 3 Sutherland Court, Hamilton.
[475] The Crown alleges that Mr Chen made regular deposits of $3,058.85 from a Westpac account in the name of Mr Chen’s aunt, Shufeng Qi, to a BNZ account in the name of Ming Li, with the intention of deceiving the BNZ into believing that those were “salary payments”. The Crown says that Mr Chen knew that the salary payments were false, or was reckless as to whether they were.
[476] Ming Li’s loan application form gave his residential address as 12 Hampshire Court, Hamilton, and claimed that he had been the Regional Manager for Driftmax Ltd (a company with premises in Christchurch and Auckland) for three years. His salary was stated as being $3,058 per week (net). An employment letter from Driftmax Limited was supplied to the bank, stating that Ming Li earned a salary of $228,000 per year (which equates to a net salary payment of $3,058 per week).
[477] Julia Davidson, from Immigration New Zealand, gave evidence that Ming Li has never entered New Zealand. Alfred Wong of Driftmax (whose witness statement was read by consent) gave evidence that Ming Li had never worked for Driftmax, and that the purported Driftmax employment letter was not on the company’s letterhead.
[478] Ming Li’s loan application was processed by Mr Jiang. Mr Chen was the solicitor for the purchaser (Ming Li), the vendor (Ironman Construction) and also the BNZ.
[479] The sale and purchase agreements for the two property purchases were on Lugton’s Limited’s standard form real estate agreements, although Lugton’s had no involvement in the transactions. The copies of the agreements provided to the BNZ were certified as true copies by Mr Chen. The agreements stated that a deposit of 20 per cent was payable to the vendor’s solicitor. No such deposit was paid.
[480] On 9 November 2012, Mr Jiang completed a ‘New personal customer details’ document for Ming Li. The same day, Mr Jiang opened a BNZ account in the name of Ming Li. He then emailed the access number for the account to Mr Chen. The email stated that Mr Chen already ‘[knew] the password’.
[481] Three days later, on 12 November 2012, Mr Jiang emailed Mr Chen again saying “Hi Bro, There is NO funds into Li, Ming’s A/C yet. Please credit some funds into A/C ASAP”. That same day a deposit of $3,058.85 was made into Ming Li’s bank account from the bank account of Mr Chen’s aunt, Shufeng Qi. The payment was referenced on Ming Li’s bank statement as “SAL”. Four further payments were made from the Shufeng Qi account to the Ming Li account, in the same amount and with the same description, before LV Park commenced making deposits of $3,058.85 to Ming Li’s account. From that point, the payments from the Shufeng Qi account ceased. (In December 2008, Mr Jiang had assisted Mr Chen to set up the Shufeng Qi account and had emailed log in details for the account to him. Mr Jiang was employed at Westpac at that time).
[482] From 12 November 2012 to 7 March 2013, the only deposits made into the Ming Li account were the weekly deposits of $3,058.85 from the Shufeng Qi account, and one deposit of $5,000, also from the Shufeng Qi account. All payments were referenced “SAL”. These references were clearly made to give the false impression to anyone at the BNZ who might see Ming Li’s bank statements that the regular deposits being paid into his account were salary payments.
[483] On 7 March 2013, the day before drawdown, Mr Jiang completed the BNZ diary notes for Ming Li’s loan application. The diary notes recorded that Ming Li was employed as regional manager for Driftmax Limited earning $227,135 per annum. Details of weekly salary payments of $3058.85 received into his bank account from “Qi S” between 12 November 2012 and 13 December 2012 were recorded. Mr Jiang’s diary notes also recorded that the sale and purchase agreements were via Lugton’s and that the agreements had been certified by a solicitor.
[484] A copy of a passport in the name of Ming Li was provided to the BNZ as evidence of his identification. The passport was purportedly certified as being a true copy by Alison Manning of the New Zealand Consulate-General in Shanghai. The first page of this passport copy is identical to a copy of Ming Li’s passport subsequently found by the SFO at the offices of Mr Chen’s then law firm. In her evidence, Alison Manning confirmed that she did not certify or sign this document and her purported certification of it was a forgery.
[485] On 8 March 2013, $767,000 was drawn down from BNZ for Ming Li’s purported purchases of 40 Hartis Avenue and 3 Sutherland Court from Ironman Construction Limited.
[486] The subsequent loan repayments were paid from Ming Li’s bank account, but were all funded by rent, the purported salary payments from LV Park and deposits from the Shufeng Qi account.
[487] Three days after drawdown, a payment of $16,500 (which the Crown alleges was a secret commission) was transferred from the Shufeng Qi account to the bank account of Mr Jiang’s mother, Bufang Mai. (I consider the secret commission payment charges separately below).
The payments into Lifeng Li’s bank account
[488] Charge 28 relates to loan applications made to the BNZ in the name of Lifeng Li, for the purchase of 24 Waikura Drive, 17 Hartford Terrace, 108 New Borman Road and 5 Barwick Place. The Crown alleges that the same false salary payments were relied on in relation to all four of these loan applications.
[489] The loan applications each recorded Lifeng Li’s residential address as 9 Hampshire Court, Hamilton. Lifeng Li was said to be a marketing manager for Driftmax Limited, with a weekly net salary of $3,066. An employment letter was provided from Driftmax, confirming Lifeng Li’s employment and salary. Lifeng Li has never worked at Driftmax. Further, the evidence of Julia Davidson from Immigration New Zealand was that Lifeng Li has never entered New Zealand.
[490] On 7 November 2012, Mr Jiang completed an Account Opening Authority and a ‘New personal customer details’ document for Lifeng Li. A copy of Lifeng Li’s passport was provided to the BNZ as evidence of his identification. The passport purported to have been certified as a true copy by Alison Manning of the New Zealand Consulate-General in Shanghai, China. Ms Manning gave evidence that she did not sign or certify that document. Her signature and certification on it is a forgery.
[491] The following day (8 November 2012), a payment of $3,075.82 was made into the new Lifeng Li account from the Shufeng Qi account, with the reference “SAL”. Further payments were made from the Shufeng Qi account to the Lifeng Li account (all in the sum of $3,065.82, and referenced “SAL”) at weekly intervals between 15 November 2012 and 21 December 2012. There was then a gap until 7 March 2013 when a payment was made from Mr Chen’s own bank account to the Lifeng Li account, also in the sum of $3,065.82, with the reference “SALE”. The payer then reverted to Shufeng Qi and on 11 March 2013, a further payment of $3,065.82 was made from her bank account with the reference “SALARY”. Further payments from the Shufeng Qi account in the sum of $3,065.82, with the reference “SAL’, were made regularly from 19 March 2013 to 5 April 2014. LV Park Construction then started payments of $3,065.82 into the Lifeng Li account, making payments with the reference “sl” from 18 April 2013 to 11 September 2013. (The payments relied on in support of this charge are those that were made from the accounts of Shufeng Qi and Mr Chen).
[492] The sale and purchase agreements were certified as true copies by Mr Chen. The agreements were on Lugton’s Limited forms and stated that a deposit of 20 per cent was payable to the vendor’s solicitor. No deposits were paid. Lugton’s Limited did not have any involvement in the sale of these properties.
[493] The BNZ diary notes completed by Mr Jiang for each transaction referred to the weekly deposits into Lifeng Li’s BNZ account of $3,065.82.
[494] Loans were drawn down to fund the four property purchases as follows:
(a) $896,000 for 24 Waikura Drive on 27 March 2013;
(b) $660,00 for 17 Hartford Terrace on 12 April 2013;
(c) $680,000 for 108 New Borman Road on 26 April 2013; and
(d) $628,000 for 5 Barwick Place on 3 May 2013.
[495] The following payments from the Shufeng Qi account to the Bufang Mai account (which are each alleged to be secret commissions) were made following the drawdown of these loans:
(a) $7500 the day after drawdown of the loan for 24 Waikura Drive;
(b) $7500 the same day as the drawdown of the loan for 17 Hartford Terrace; and
(c) $33,500 three days after the drawdown of the loan for 108 New Borman Road (two other loan applications had been completed on the same day).
[496] Mr Chen acted for the vendor, the purchaser and the bank in relation to each sale.
[497] Mr Wimsett submitted that there is insufficient evidence that Mr Chen was the person who made the false salary payments from the Shufeng Qi account to the Ming Li account. Amongst other things, he submitted that the login details for the Shufeng Qi account could have changed in the four years between 2008 (when Mr
Chen was initially provided with them by Mr Jiang) and 2012. Further, there was no forensic IT evidence available from the SFO search in 2015 to prove that Mr Chen had logged into Shufeng Qi’s internet banking account in 2012 (or indeed at any other time).
[498] Mr Wimsett also criticised the SFO’s failure to interview Shufeng Qi, or call her as a witness. When questioned about the SFO’s attempts to contact Shufeng Qi, Mr Coleman’s evidence was that attempts were made to locate Ms Qi, as a result of which he was led to believe that she was not in New Zealand. As such, it was not possible to interview her. When asked whether the SFO had the ability to go to China to interview potential witnesses, Mr Coleman stated that that “was never considered” because “in our investigations we have to make decisions based on resource and practicality and that wasn’t part of our plan”. In my view, the SFO’s approach was reasonable in the circumstances. No adverse inference can be drawn from its failure to call Shufeng Qi as a witness.
[499] In his closing address, Mr Wimsett undertook a fairly detailed analysis of various bank statements of LV Park, Amy Chen (Mr Chen’s sister, who lives in China), and Shufeng Qi (Mr Chen’s aunt). This analysis suggested a complex web of inter-relationships between these three accounts. It was also consistent with at least some possible personal use by Amy Chen of her Westpac account. For example, it appeared to have been logged into from China at one stage, when Mr Chen was in New Zealand.
[500] Mr Wimsett submitted that his analysis of the bank statements raised the possibility that Amy Chen was not only using her own bank account, but also using or controlling the bank account of Shufeng Qi. Alternatively, Amy Chen and Shufeng Qi could have been involved in the fraud and conspiring together. Another possibility raised by his analysis of the bank statements, Mr Wimsett submitted, was that someone at LV Park, likely Mr Huang or Ms Xu, was using all three accounts. This, he submitted, raised a reasonable doubt as to whether Mr Chen was the person who had made the “false salary” payments from the Shufeng Qi account to the Ming Li and Lifeng Li accounts.
Was Mr Chen the person who made the payments?
[501] In my view, the cumulative effect of all of the different strands of circumstantial evidence in this case points overwhelmingly to Mr Chen as the person who made the “SAL” payments from the Shufeng Qi account to both the Ming Li and Lifeng Li accounts. I rely in particular on the following:
(a) There are multiple indicators, throughout the evidence (not just in relation to these two charges), that Mr Chen was aware of, and actively participated in, the mortgage fraud scheme that was perpetrated on the banks. A clear-cut example is his involvement in obtaining the false passport for Shou Zhang and providing copies of that false passport to the banks to establish Shou Zhang’s identity, despite knowing that Shou Zhang was entirely fictitious (addressed at [447]–[469] above).
(b) Most of the false salary payments attributed to Mr Chen were made from an account in the name of his aunt, Shufeng Qi. Mr Chen had set up that account in 2008 (with assistance from Mr Jiang) and was provided with the login details to the account at that time.
(c) In relation to charge 27, one of the false salary payments (referenced “SAL”) was made to Ming Li’s account from the Shufeng Qi account, very soon after Mr Jiang sent Mr Chen an email asking him to credit Ming Li’s account. Subsequent false salary payments from the Shufeng Qi account were in the same amount, with the same reference. This points strongly to Mr Chen as the person who made the false salary payments to the Ming Li account. This is also circumstantial evidence in terms of charge 28 (false salary payments to the Lifeng Li account) given that the relevant payments to that account (apart from one) were also made from the Shufeng Qi account.
(d) In relation to charge 28, one of the false salary payments, on 7 March 2013, was actually made from Mr Chen’s own bank account. (This is also circumstantial evidence for charge 27). There is no evidence to suggest that there was any legitimate business reason for
Mr Chen to have made that payment. Rather, it appears that he may have made a rare “slip up” on this occasion and made the transfer from his own bank account, rather than that of Shufeng Qi.
(e) The Shufeng Qi account was also used as a funnel account for many of the alleged secret commission payments to Mr Jiang (which I address further below). Mr Jiang sent Mr Chen an email in July 2012 confirming his mother’s (Bufang Mai’s) bank account details. On the same day that Mr Jiang supplied Mr Chen with his mother’s bank account details, there was a payment from the Shufeng Qi account to the Bufang Mai account. This provides further evidence that Mr Chen was able to, and did, control Shufeng Qi’s bank account.
[502] There is no evidence to suggest that Shufeng Qi has any independent involvement or relationship with LV Park, Mr Huang, Ms Xu, Amy Chen, Ms Jiang, Bufang Mai, Ming Li or Lifeng Li. Her only link to those persons is via transactions made through the bank account that Mr Chen had set up in her name. The suggestion that Shufeng Qi, together with Amy Chen or otherwise, was herself involved in the fraud is untenable. There is no evidential foundation for it.
[503] Similarly, there is no evidence that points to Ms Xu or Mr Huang as the persons who made the false salary payments from the Shufeng Qi account, whereas there is ample evidence that one or both of them made the false salary payments from the LV Park account. Mr Wimsett placed considerable weight on a text Mr Huang sent Ms Xu on 28 February 2013. It said “sufengqi 20400”. Shufeng Qi’s account shows that amount was later paid into the account by LV Park Construction. Mr Wimsett submitted that it cannot be said that Mr Chen controlled the Shufeng Qi account given this information. However, depositing money into an account is obviously an entirely different exercise to arranging for a payment out of it. LV Park made numerous deposits into the Shufeng Qi account. It does not follow, however, that LV Park (Mr Huang or Ms Xu) controlled the flow of funds out of that account. While there was clearly an interconnection between a number of bank accounts, including in particular those of LV Park, Amy Chen, Shufeng Qi and Bufang Mai, there is no
credible evidence, in my view, that either Mr Huang or Ms Xu were controlling the Shufeng Qi account.
[504] I am satisfied that the Crown has proved, beyond reasonable doubt, that the relevant payments to the Ming Li and Lifeng Li accounts from the Shufeng Qi account were made by Mr Chen. In addition, the single payment from Mr Chen’s own account to the Lifeng Li account was also made by him.
Knowledge of the falsity of the payments/intent to deceive the bank
[505] I also have no doubt that Mr Chen intended to deceive the BNZ into believing that the payments were salary payments, despite knowing that they were not. There is no other rational explanation for the payments, or the way in which they were referenced. Mr Chen’s clear intent was to deceive the bank into believing that Ming Li and Lifeng Li were in receipt of the salaries claimed in their loan applications and supporting (false) employment letters from Driftmax. Mr Chen was clearly aware of, and intended, that the false salary information would be used to support the loan applications in the names of Ming Li and Lifeng Li.
[506] For the reasons outlined at [137] to [155] above, I am satisfied that the element of inducement has been proved in relation to charges 27 and 28 beyond reasonable doubt. I further note that in both the loan application forms and the BNZ diary notes, the bank payments that are claimed to be false salary payments were relied on as evidence of the loan applicants’ salaries.
The charges alleging an omission to inform the banks that Mr Huang or LV Park was the true borrower
[507] Charges 3 and 4 are representative charges. They allege that Mr Chen omitted to disclose to the BNZ (charge 3) and ANZ/Bank A (charge 4) that Mr Huang and/or LV Park was the “true borrower” of the loans obtained in the names of various third
parties. The particulars to these charges encompass all of the third-party loan applications (but exclude the transactions where Mr Chen was himself the borrower).
[508] The offence requires the Crown to prove that Mr Chen omitted to disclose a material particular, with intent to deceive any person, in circumstances where there is a duty to disclose it. The question trail for this charge is attached as Appendix 5 (save that the only relevant particular is that set out in the first bullet point).
Did Mr Chen omit to disclose to the banks a material particular?
[509] The material particular that the Crown alleges should have been disclosed to the banks is “that Kang Huang and/or LV Park was the true borrower of the loans set out in the attached Schedule [C for charge 3, or D for charge 4], despite the transfers to the borrower identities set out in Schedule [C or D]”.52
[510] At the time of the s 147 hearing, Mr Wimsett submitted that it was not open to the Crown to argue that Kang Huang and/or LV Park were the “true borrowers” as, pursuant to the loan agreements, the named borrowers were contractually responsible for loan repayments. I rejected that submission, for the reasons outlined in my s 147 decision.53 In essence, I held that it was apparent from the way that the Crown had opened and run its case that it was not using the phrase “true borrower” in a strict contractual sense.
[511] If the interpretation of the phrase “true borrower” were limited to the contractual interpretation of that term, then at least some of the specified loan applicants would likely be considered to be the true borrowers (rather than LV Park or Mr Huang). Others would not be, for example because they are fictitious, or because they did not sign the relevant loan agreement.54 However, it was clear from the way that the Crown ran its case from the outset, that the phrase “true borrower” was effectively shorthand for the Crown’s allegation that the named borrowers were used as part of a “refinancing” scheme by LV Park (Mr Huang) in circumstances where, in
52 Amended Crown Charge Notice.
53 R v Xu, above n 17, at [88].
effect, LV Park would remain the true owner of the properties (despite the legal transfers to the named borrowers) and would service the loans on the properties. In other words, the underlying purpose of the scheme was not to genuinely sell the properties, but to exchange high commercial interest rate loans for lower interest rate loans, while keeping the property within the LV Park portfolio. (This is how LV Park appears to have treated the transactions for tax purposes).
[512] There can be no doubt that Mr Chen did not disclose the true nature of the transactions to the banks, in relation to all of the transactions particularised in charges 3 and 4. In respect of some applications, for example those relating to Shou Zhang, Mr Chen was aware that the loan applicant was fictitious, and did not disclose this to the bank. That was highly material information. Further, in respect of all of the particularised transactions, Mr Chen (through his own involvement in the fraudulent scheme) was aware that that LV Park was the “true borrower” in the sense I have just described. This was highly material information from the banks’ perspective, as it had the potential to significantly impact on the risk profile of the lending.
Did Mr Chen owe a duty to the banks to disclose that Mr Huang or LV Park was the “true borrower”?
[513] Mr Wimsett submitted that Mr Chen was not under a duty to make any disclosures regarding his client or clients to the banks or, at the very least, expert evidence should have been given to determine the scope of any such duty. He submitted that there was no relevant civil law duty on Mr Chen to disclose to the banks LV Park or Mr Huang’s involvement behind the scenes and, therefore, his failure to disclose such information could not constitute a criminal offence.
[514] I am satisfied, however, that a duty to disclose the relevant information did exist, for all of the transactions particularised in charges 3 and 4, except in relation to the sale of 21 Hart Road (one of the particulars of charge 4).
[515] Mr Chen acted for the banks in respect of each of the mortgages, except in relation to 21 Hart Road, where Haiyan Yang was both the purchaser’s solicitor and the bank’s solicitor. In relation to 21 Hart Road, Mr Chen only acted for the vendor.
[516] In the vast majority of cases, Mr Chen was instructed directly as the solicitor for the relevant bank. In a few of the earlier transactions a partner in the law firm Mr Chen was working for was named as the bank’s solicitor. That did not absolve Mr Chen, however, from his duty to disclose to the banks (and indeed the partners in his own law firm) the true nature of the transactions that the banks were being asked to fund.
[517] Mr Chen was in a fiduciary relationship with the banks, which necessarily gave rise to certain duties on his part. As Tipping J observed in Chirnside v Fay:55
[A]ll fiduciary relationships...are marked by the entitlement...of one party to place trust and confidence in the other. That party is entitled to rely on the other party not to act in a way which is contrary to the first party’s interests.
[518] In Aberdeen Railway v Blaikie Brothers, Lord Cranworth LC observed that: 56
... it is a rule of universal application that no one having such duties to discharge shall be allowed to enter into engagements in which he has or can have a personal interest conflicting or which possibly may conflict with the interests of those whom he is bound to protect.
[519] Mr Chen must clearly have had at least some personal interest in the success of the mortgage fraud scheme, although the precise nature and extent of his interest is unclear.
[520] The importance of fiduciary obligations in a lawyer-client context are expressly recognised in s 4 of the Lawyers and Conveyancers Act 2006, which provides as follows:
Every lawyer who provides regulated services must, in the course of his or her practice, comply with the following fundamental obligations:
(a) the obligation to uphold the rule of law and to facilitate the administration of justice in New Zealand:
(b) the obligation to be independent in providing regulated services to his or her clients:
55 Chirnside v Fay [2006] NZSC 68, [2007] 1 NZLR 433 at [80].
56 Aberdeen Railway v Blaikie Brothers (1854) All ER Rep 249 at 252 (emphasis added).
(c) the obligation to act in accordance with all fiduciary duties and duties of care owed by lawyers to their clients:
(d) the obligation to protect, subject to his or her overriding duties as an officer of the High Court and to his or her duties under any enactment, the interests of his or her clients.
[521] Loyalty is the sine qua non of a fiduciary obligation.57 Hence, lawyers must give undivided loyalty to their clients “without being distracted by other interests including personal interests”.58 Because of the overriding obligation of loyalty, a lawyer cannot represent two or more clients with conflicting interests without being in breach of his or her fiduciary duties.59 In such circumstances equity imposes an obligation on a lawyer not to act unless the prior fully informed consent of both parties is obtained.
[522] This particular fiduciary duty is reflected in rr 6.1–6.3 of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008, which provide that:
Conflicting duties
6.1 A lawyer must not act for more than 1 client on a matter in any circumstances where there is a more than negligible risk that the lawyer may be unable to discharge the obligations owed to 1 or more of the clients.
6.1.1 Subject to the above, a lawyer may act for more than 1 party in respect of the same transaction or matter where the prior informed consent of all parties concerned is obtained.
6.1.2 Despite rule 6.1.1, if a lawyer is acting for more than 1 client in respect of a matter and it becomes apparent that the lawyer will no longer be able to discharge the obligations owed to all of the clients for whom the lawyer acts, the lawyer must immediately inform each of the clients of this fact and terminate the retainers with all of the clients.
6.1.3 Despite rule 6.1.2, a lawyer may continue to act for 1 client provided that the other clients concerned, after receiving independent advice, give informed consent to the lawyer continuing to act for the client and no duties to the consenting clients have been or will be breached.
58 R v Neil 2002 SCC 70, [2002] 3 SCR 631 per Binnie J at [24].
59 See, for example, Hilton v Barker Booth & Eastwood [2005] UKHL 8, [2005] 1 All ER 651.
6.2 Rule 6.1 applies with any necessary modifications whenever lawyers who are members of the same practice act for more than 1 party.
6.3 An information barrier within a practice does not affect the application of, nor the obligation to comply with, rule 6.1 or 6.2.
[523] In this case, there was clearly a conflict of interest between the banks and Mr Chen’s other “clients” (whether those clients are considered to be the named loan applicants or LV Park/Mr Huang). Mr Chen accordingly owed the banks a duty of full disclosure. It is no answer to his breach of that obligation to say that giving such disclosure to the banks would have caused him to breach his obligations to his other clients. As Chadwick J observed in Bristol & West Building Society v May & Merrimans (a firm):60
A solicitor who acts for two parties in the same transaction is not released from his obligations to the one by the fact that, in performing those obligations, he may be in breach of his obligations to the other. The solicitor who puts himself in the position in which he cannot advance the interests of one client without failing in his duty to another has only himself to blame.
[524] I am satisfied that Mr Chen did owe the banks a duty to disclose to them that the borrowers they were loaning money to were not the “true borrowers,” but rather were associates of Mr Huang and Ms Xu, and who were simply being used as a means for LV Park to reduce its financing costs. This is a question of law, on which no expert evidence was required.
[525] As Mr Chen did not act for the bank in respect of the 21 Hart Road transaction, however, he did not owe a fiduciary duty to it in respect of that transaction (which is included as one of the particulars to charge 4). Mr Simmonds asserted that Mr Chen owed a general duty of “honesty” in such circumstances, regardless of his role as solicitor. This argument was not further developed, however, and I was not referred to any relevant law on the issue. I am not satisfied that, where Mr Chen was not acting as solicitor to the banks, he owed them a duty to disclose the true nature of the transactions. Mr Chen may well have owed a duty to disclose such information to the partners of his law firm, but that is not sufficient to found this charge.
60 Bristol & West Building Society v May May & Merrimans (a firm) [1996] 2 All ER 801 at 815.
[526] In summary, I find that Mr Chen owed a duty of full disclosure to the banks in respect of all the particulars to charges 3 and 4 (as set out in Schedules C and D of the Amended Charge Notice) save for the transaction involving 21 Hart Road.
Did Mr Chen intend to deceive the banks by his omission?
[527] It is clear that Mr Chen intended to deceive the banks by omitting to disclose to them the true nature of the transactions and who the “true borrower” was. Indeed, that was the whole point of the mortgage fraud scheme.
[528] For the reasons set out at [137] to [155] above, I am satisfied that the element of inducement has been proved in relation to charges 3 and 4, beyond reasonable doubt. If Mr Chen had disclosed to the banks that Mr Huang and/or LV Park were the true borrowers (in the sense outlined above), I have no doubt that they would have declined the loan applications.
“Omission” charges where Mr Chen himself was the borrower
[529] Mr Chen was himself the borrower in respect of two of the charges (charges 5 and 48). Specifically:
(a) on 6 December 2011, Mr Chen purchased 163C Bankwood Road,
Hamilton, from Rock Construction Limited; and
(b) on 13 October 2015, Mr Chen purchased 408 Ormiston Road, Auckland, from the Julia and Kelly Trust (a trust associated with Mr Huang and Ms Xu).
[530] The Question Trail for these charges is annexed at Appendix 5.
[531] These were the first and last transactions that are the subject of the charges before the Court. They are also two of the three transactions in which Mr Chen (or a partner of his firm) was not appointed as solicitor to the relevant bank. Rather, in these two transactions, Haiyan Yang, a solicitor from another law firm, acted for
both Mr Chen (as purchaser) and the bank. Mr Chen (or a partner in his law firm) acted for the vendor.
[532] In respect of these two charges, I am not satisfied that a key element of the offence, namely that Mr Chen had a duty to disclose to the bank that LV Park or Mr Huang was the true borrower, is made out. As Mr Chen did not act for the banks he did not owe them fiduciary duties in respect of these transactions. As I have noted previously, Mr Simmonds characterised the duty that Mr Chen owed to the banks as one of “honesty” but did not develop the argument further.
[533] These two transactions differ from the other transactions before the Court in several respects. One difference is that Mr Chen did not act for the banks. Another is that there is no evidence of false information being provided to the banks, such as false bank statements, false salary payments, or false employment letters. Mr Chen, in his own right, met the bank’s lending criteria and there is no evidence that he deceived the banks about his ability to service the loans.
[534] It may well be that Mr Chen was willing to acquire these properties temporarily to help a key client to obtain cheaper financing. That in itself is highly unusual, but I am not sure that Mr Chen had a duty to disclose this to the banks in circumstances where the information he provided in support of his loan applications appears to have been truthful, and Mr Chen was not acting for the banks (and did not therefore owe them fiduciary duties).
[535] It necessarily follows that the Crown has failed to prove these two charges beyond reasonable doubt.
“Omission” charges relating to Huazhen Zhang, Kai Wang and Feng Ye
[536] Three charges (charges 34, 42, and 44) allege that Mr Chen omitted to disclose to the ANZ that the employment and income information provided as part of loan applications in the names of Huazhen Zhang, Kai Wang and Feng Ye were false, in circumstances where there was a duty to disclose that information.
[537] The Question Trail for these charges is annexed at Appendix 5.
The purchase of 10/175 Queen Street on 17 July 2013
[538] Charge 34 relates to an ANZ loan application made in Huazhen Zhang’s name for the purchase of 10/175 Queen Street on 17 July 2013 (the loan also related to the purchase of 55a Alpers Ridge and 65 Magellan Rise). Mr Chen acted as the purchaser’s solicitor and also the bank’s solicitor, but a third-party lawyer, Wei Zhang, acted as the vendor’s solicitor. That is because 10/175 Queen Street was purchased from a genuine third party, not from an entity associated with the LV Park Group.
[539] On 10 June 2013, Peter Cheng emailed Mr Chen. The subject line of his email was “175 Queen Street.” Peter Cheng requested, amongst other things, a loan application form; an employer letter; and an overseas bank statement of overseas income, or a payslip/employment contract if local income.
[540] On 11 June 2013, Mr Chen emailed Peter Cheng, attaching an employment letter for Huazhen Zhang. The email had been forwarded from the lakewood18 email address. The employment letter stated that Huazhen Zhang was the General Manager of LV Park with a salary of $100,000. That information is false. Huazhen Zhang has had no paid work or employment since she arrived in New Zealand in 1999. Ms Xu confirmed that Huazhen Zhang has never worked for LV Park.
[541] Also on 11 June 2013, Peter Cheng replied to Mr Chen’s email, saying that because Huazhen Zhang’s income was issued by the seller of the property, the bank required personal tax returns or financial accounts for the company that issued the salary to evidence the salary payment.
[542] Mr Chen forwarded another email from the lakewood18 email address to Peter Cheng a few hours later. A payslip for Huazhen Zhang from LV Park was attached.
[543] On 12 June 2013, Peter Cheng emailed Mr Chen again, and stated, inter alia, that:
Hi Richard
As discussed, suggest client to:
1/ ...
2/ ....
3/ provide overseas income evidence for Ms Huazhen ZHANG. We can further pre-approve $1.1m Home loan for Ms Zhang if sufficient overseas income to proof her annual salary
not less than RMB$690k p.a. net (at least RMB $57.5k credited to her China Bank Statement per month)
4/ Last 3 months Chinese Bank Statement to confirms monthly credit of net wages $57.5k
[Emphasis added]
[544] The bank then received a false overseas letter of employment, dated 12 June 2013. It (falsely) stated that Huazhen Zhang was the general manager of Jia Li Lun Information Technology Consultancy (Shanghai) Co Ltd and her salary was RMB 1,000,000,00 per year. The letter was signed by Johnston Zhook. There is no evidence regarding how the bank received this document.
[545] The bank also received Chinese bank statements that supported the salary Huazhen Zhang was stated to be earning in the false overseas employment letter (the statements showed monthly deposits of 83,333, which equates to an annual salary of RMB 1,000,000.00). Obviously, the bank statements were also false.
[546] A signed loan application, dated 18 June 2018, is on ANZ’s files. It states that Huazhen Zhang was the General Manager of the China Business Exchange, and that she had been employed by that company for three years, with a net income of NZD
$200,000 per annum. When giving evidence, Huazhen Zhang denied that the signature on the application form (which was in Chinese characters) was her signature, or that she had any knowledge of the contents of the loan application. I accept her evidence.
Mrs Zhang was very clear as to which documents had been signed by her, and which had not, based on her recognition of her own signature. I found her evidence on this issue to be credible.
[547] The false overseas income evidence, rather than the domestic income evidence, was used to support the loan application.
Sale of 1 Geranium Ave, 15 Barwick Place and 77 New Borman Road on 4 November and 5 December 2013
[548] Charge 42 relates to a single loan application in the name of Kai Wang for three properties. Peter Cheng processed and approved the lending application. Mr Chen acted for the vendor, purchaser and the bank in relation to each property transaction.
[549] On 30 September 2013, Peter Cheng received an email from the fengye1972 email address. The email stated that income documentation was attached, and an employment letter and deposit slip for Kai Wang were attached. The employment letter provided that Kai Wang was the general manager of Shenzhen City Ke Qi Technology Co Ltd, and his annual salary was RMB 1,200,000. This was false.
[550] On 1 October 2013, Mr Huang sent Ms Xu a text message, telling her that the overseas bank statements for Kai Wang and Feng Ye were to be sent to Mr Chen “today”. The following day, 2 October 2013 (at 8.09 am), Mr Huang sent a text message to Mr Chen, the translated version of which reads:
Kai Wang annual salary 3.48 million Feng Ye annual salary 3.36 million
[551] In reply (at 9.42 am the same day), Mr Chen sent a text message to Mr Huang that, when translated, read:
[Too] late, Ye 1.1 million, wang 1.2 million, already given to the bank
[552] At 11.08 am, however, the fengye1972 email address sent Chinese bank statements for Kai Wang (and Feng Ye) to Peter Cheng. The Kai Wang bank statements showed monthly deposits of RMB 290,000, which equates to an annual total of RMB 3.48 million. (I have previously found that Ms Xu created the bank
statements, and that they are false). The bank statements that were emailed from the fengye1972 email address match those held by the bank.
[553] The false employment letter and the false bank statements held by the bank in relation to this transaction are inconsistent with one another. The employment letter states that Kai Wang’s annual salary was RMB 1,200,000. The false Chinese bank statements, however, are consistent with the revised salary Mr Huang asked Mr Chen to give to the bank—RMB 3.48 million.
[554] On 1 November 2013, Mr Chen emailed a blank but signed loan application form to Peter Cheng. The email subject was “broker form for Kai Wang”. The signed application form held by the bank for this loan, dated 22 October 2013, appears to have an identical signature to that on the form that Mr Chen emailed through.
Sale of 9 Hampshire Court and 1768 River Road on 4 November 2013
[555] Charge 44 relates to the sale of 9 Hampshire Court and 1768 River Road on 4 November 2013. These two properties were the subject of a single ANZ loan application made in the name of Feng Ye. Peter Cheng processed and approved this lending application. Mr Chen acted for the vendor, purchaser and the bank in relation to both property transactions.
[556] On 30 September 2013, Peter Cheng received an email attaching a false deposit slip and false employment letter from the fengye1972 email address. This email was sent on the same day as the email attaching the documents relating to Kai Wang.
[557] The employment letter stated that Feng Ye was the general manager of Shenzhen City You Qi Technology Co Ltd, with an annual salary of RMB 1,100,000,00. This letter was false, because Feng Ye is a fictitious person.
[558] On 2 October 2013, the fengye1972 email address sent the Chinese bank statements of Feng Ye to Peter Cheng (this email also attached the Chinese bank statements for Kai Wang, mentioned above in relation to charge 42). The Chinese bank statements for Feng Ye showed monthly deposits of RMB 280,000, which
equates to an annual total of RMB 3.36 million. The bank statements match those held by the bank, as does the employment letter.
[559] The false employment letter and the false bank statements held by the bank in relation to this transaction are inconsistent with one another in relation to Huazhen Zhang’s claimed annual income.
[560] As I noted above in relation to charge 42, at [550] to [551] above, Mr Huang sent Mr Chen a text message, stating higher salaries for Kai Wang and Feng Ye than were recorded in the employment letters sent to the bank on their behalf. Mr Chen replied, when translated, that it was too late, and “Ye 1.1 million, wang 1.2 million, already given to the bank”.
[561] On 1 November 2013, Mr Chen emailed Peter Cheng a blank but signed loan application form. The subject of the email was “broker form for Feng Ye”. The signature on that document appears to match the signature on the completed application held by ANZ, which is dated 16 October 2013.
Did Mr Chen know that the income and employment information provided to the banks regarding Huazhen Zhang, Kai Wang and Feng Ye was false?
[562] The employment and income information provided to the banks for Huazhen Zhang, Kai Wang and Feng Ye, in support of the loan applications relating to charges 32, 42 and 44, was false. This information was clearly material to whether the banks would approve the loan applications.
[563] I am satisfied that Mr Chen knew that this information was false, for the following reasons.
[564] In relation to charge 34, Mr Chen received an email from Peter Cheng (as set out above) that recommended that Huazhen Zhang’s application not proceed based on the evidence of New Zealand income that Mr Chen had provided to Peter Cheng. The difficulty that arose was that her purported income was being paid by LV Park, the seller of the property. In such circumstances, the bank required additional information such as personal tax returns, or financial accounts of the employer company (LV Park).
[565] Peter Cheng therefore recommended that Mr Chen suggest to the client that the application proceed on the basis of evidence of overseas income, rather than New Zealand income. Mr Chen obviously relayed this request to his client (presumably Mr Huang) as evidence of overseas employment and income was then provided (a false employment letter and false bank statements) and the false overseas income was then used to support the loan application, despite Mr Chen having previously emailed Peter Cheng evidence that Huazhen Zhang was employed in New Zealand, by LV Park. In such circumstances Mr Chen can have been under no illusion that the overseas employment letter and supporting Chinese bank statements were false. I further note that Mr Chen had met Huazhen Zhang (Ms Xu’s mother) on more than one occasion, and knew that she lived in New Zealand. He cannot have genuinely believed that she was working in China.
[566] In relation to charges 42 and 44, Mr Chen’s awareness of both the falsity of the information, and the fact that it was sent to the bank and relied on for the application, is shown by his text conversation with Mr Huang. Mr Huang stated high salaries for Kai Wang and Feng Ye, Mr Chen’s reply was that it was too late, and that lower annual salaries had already been given to the bank. The fact that Mr Huang and Mr Chen were having a discussion regarding the amount of Kai Wang and Feng Ye’s salaries can only be explained by Mr Chen knowing that the information regarding their salaries was being concocted by Mr Huang. The fact that Mr Chen sent blank, but signed, loan applications forms to the bank for Kai Wang and Feng Ye is further circumstantial evidence that he was aware that there was something not entirely “above board” about these purchasers.
Did Mr Chen owe a duty to the banks to disclose that the employment and income information provided to them was false?
[567] Mr Chen acted for the ANZ bank for each of the transactions relevant to charges 34, 42, and 44. He also acted for the purchaser, and in the case of charges 42 and 44, he also acted for the vendor. For the reasons as I gave at [513]–[526] above, Mr Chen owed a fiduciary duty to the bank to disclose to it that the employment and income information it had been provided with for Huazhen Zhang, Feng Ye and Kai Wang was false.
[568] This duty is not affected by the fact that Mr Chen did not act for the vendor in relation to charge 34, because he still acted for at least two parties in the transaction, one of whom was the bank. In relation to all charges there was a potential for a conflict of interest and divided loyalty.
Did Mr Chen intend to deceive the banks by his omission?
[569] It is clear that Mr Chen intended to deceive the banks by omitting to disclose to them that the employment and income information provided was false. The fact that Peter Cheng, who was an active participant in the fraud, was not deceived is irrelevant. Clearly others at the bank were deceived, or the loan funds would not have been advanced.
[570] For the reasons outlined at [137] to [155] above, I am satisfied that the element of inducement has been proved in relation to charges 34, 42 and 44, beyond reasonable doubt. If Mr Chen had disclosed to the bank that the employment and income information supplied to it in support of the loan applications relating to these charges was false, it would have declined the loan applications.
I. OBTAINING BY DECEPTION CHARGES AGAINST MR JIANG Overview of the charges against Mr Jiang
[571] Mr Jiang has been charged with 25 charges of obtaining by deception under s 240(1)(b) of the Crimes Act. 61 The Question Trail for these charges is annexed as Appendix 3.
[572] It is alleged that Mr Jiang misrepresented to others within the BNZ, by his conduct in processing and approving various loans, that the income and employment information provided in support of those loans was true and correct, when he knew that was not so. In particular, it is alleged that Mr Jiang processed or approved loans knowing that they were based on false information, namely:
61 Charges 6–15, 17–31.
(a) the employment and/or income information; and/or
(b) the identity of the true borrower;
or was reckless as to the falsity of that information.
[573] In the case of charge 15, the particulars also include that Mr Jiang knew that the passport of Shou Zhang, the named borrower, was false.
[574] Mr Jiang is also alleged to have known that the “true borrower” (in the sense I have described at [511] above) was LV Park and/or Mr Huang, but to have represented otherwise by his conduct in processing and approving the loans in the names of various third parties.
[575] To avoid undue repetition, I note at the outset that I am satisfied, based on evidence that I find reliably proved (and expanded upon elsewhere in these Reasons) that:
(a) all of the employment letters provided in support of the relevant loan applications were false;
(b) all of the Chinese bank statements provided in support of the relevant loan applications were false; and
(c) all of the purported “salary” payments that were paid into the New Zealand bank accounts of the relevant loan applicants, that were paid by LV Park Construction Trust, Shufeng Qi, and Mr Chen, were false.
[576] The key issue that arises in relation to the charges against Mr Jiang is not the objective falsity of the employment and income information, but whether Mr Jiang knew that the information was false. The focus of Ms Kincade’s submissions was therefore squarely on whether the Crown has proved that Mr Jiang knew false information had been submitted to the BNZ in support of the various loan applications, or was reckless as to the falsity of the information provided. Ms Kincade submitted
that there is no (or no sufficient) evidence that Mr Jiang knew that the relevant information was false.
Circumstantial evidence relevant to all charges
[577] I have described the nature and significance of the circumstantial evidence in this case at [162] to [165] above. As with Ms Xu and Mr Chen, the Crown case against Mr Jiang turns, to a significant extent, on circumstantial evidence.
[578] I therefore commence my analysis of the various charges against Mr Jiang by outlining a number of strands of circumstantial evidence that are relevant across all of the charges.
Relationship between Mr Jiang and Mr Chen
[579] As I have set out at [426] to [427] above, Mr Jiang had known each other since at least 2008. In that year Mr Jiang had assisted Mr Chen to set up a bank account in the name of Mr Chen’s aunt, Shufeng Qi, and provided him with the login details for that account. That account features prominently in the evidence relating to the charges against both Mr Chen and Mr Jiang.
[580] The relationship between Mr Jiang and Mr Chen appears to have been a fairly close one. For example, Mr Jiang released to Mr Chen confidential bank account numbers and password details for other people on at least two occasions. On another occasion, Mr Jiang emailed Mr Chen the access number to an account for Ming Li, commenting that Mr Chen already knew the password.
[581] There is no evidence, however, of any communication at all between Mr Jiang and either Mr Huang, or Ms Xu.
[582] Mr Jiang received from Mr Chen a number of Chinese employment letters signed by Johnston Zhook, many (but not all) of which were subsequently used in support of loan applications. The first occasion on which this occurred was 21 November 2011, when Mr Jiang received an email from Mr Chen with the subject
“Salary”. The body of the email stated, “Hey Bro, do you think it is OK”. Attached to the email were Chinese employment letters, including salary details, for both Wenlong Wang and Huazhen Zhang, signed by Johnston Zhook.
[583] Wenlong Wang and Huazhen Zhang were unrelated borrowers. At that time neither of them had yet applied for any loans from the BNZ. The first loan in the name of Wenlong Wang was not drawn down until July 2012 (charge 10). The employment letter from Johnston Zhook that was sent to Mr Jiang on 21 November 2011 was not relied upon in support of that loan, as the loan application proceeded on the basis that he was retired.
[584] The first loan in the name of Huazhen Zhang was not drawn down until 12 December 2012, over a year later (charge 19). Again, the Johnston Zhook employment letter emailed to Mr Jiang on 21 November 2011 was not relied on in support of that loan, rather, Huazhen Zhang was claimed to be an employee of LV Park.
[585] On 1 December 2011, about ten days after the Chinese employment letters for Wenlong Wang and Huazhen Zhang had been sent to Mr Jiang, Mr Chen emailed him two further Chinese employment letters. These were in the names of Hao Zhang and Zhuwen Wu. Again, both letters were signed by Johnston Zhook. Curiously, however, in the employment letter for Hao Zhang, Mr Zhook claimed to be the Managing Director of Shanghai Yue Guan Advertising Co Ltd, whereas in the employment letter for Zhuwen Wu he claimed to be the Managing Director of Jia Yi Lun Information Technology Consultancy (Shanghai) Co Ltd. The same contact information is provided, however, in both letters. The format of the employment letters for these two different companies is identical, although (obviously) the content differs.
[586] Again, Hao Zhang and Zhuwen Wu were unrelated borrowers, neither of whom had applied to the BNZ for a loan at the time these letters were emailed through to Mr Jiang. Hao Zhang did, however, apply for his first loan a couple of weeks later. It was supported by the Johnston Zhook employment letter and also a false Chinese bank statement which included monthly salary payments that matched the salary stated in the Johnston Zhook letter.
[587] Zhuwen Wu’s first home loan application was not drawn down until 1 June 2012. The Johnston Zhook letter was relied on in support of that application, together with false Chinese bank statements that correlated with the salary stated in that letter.
[588] There appears to have been no legitimate business reason for these four Chinese employment letters, relating to unrelated borrowers, to be sent through to Mr Jiang prior to any of the people they related to having yet applied for loans. Indeed, in three cases the letters were provided to Mr Jiang many months in advance of the first loan application by the named “employee”. Only two of the four letters (those for Hao Zhang and Zhuwen Wu) were ultimately relied on in support of loan applications.
[589] In total, Mr Jiang received employment letters signed by Johnston Zhook in respect of five different borrowers (Hao Zhang, Zhuwen Wu, Jiquan Zhang, Huazhen Zhang and Wenlong Wang). Johnston Zhook was represented as the “Managing Director” of two different companies. The letters are all very similar in appearance, and include the same contact information for Mr Zhook, regardless of the company.
[590] Mr Boot analysed a number of the Johnston Zhook employment letters recovered from the banks’ files. His evidence (which I accept) was that the various versions (four dated and two undated) of the Hao Zhang employment letters signed by Mr Zhook could only have been created by some form of cut and paste manipulation of the documents. It was not possible that these linked documents could all be copies of genuinely completed employment letters. In addition, he concluded that the two versions of the Zhuwen Wu letter held by the BNZ (one dated and one undated) are also physically linked in that they both have an identical signature and associated J Zhook information.
[591] It appears that what likely occurred was that the original Hao Zhang and Zhuwen Wu letters received from Johnston Zhook were subsequently manipulated by Mr Chen or Mr Jiang (for example by having a new date put on them) in order to be used for later loan applications by the same borrowers.
[592] Not all of the loan applicants were said to be in the employment of Mr Zhook. Shou Zhang was said to be employed by a Chinese company called EVO (Shenzen Creative Package Co Ltd) and Mr Wei Deng purportedly signed a proof of employment letter for him. (However, as I explain below, Shou Zhang is a fictitious person). The loan applications in respect of Lifeng Li and Ming Li proceeded on the basis of the false employment letters purporting to be on the letterhead of a New Zealand company, Driftmax Limited. Neither of those men (if they exist) were ever employed by Driftmax, or even entered New Zealand.
[593] The remaining four loan applicants were the elderly parents of Ms Xu and Mr Huang. Three of them (Guizhen Zhou, Jiquan Zhang and Huazhen Zhang) were said in their loan applications to be employees of LV Park. Wenlong Wang was said to be retired in his first application, and an employee of LV Park in his second.
[594] Mr Jiang’s BNZ diary notes record that, at various times, he rang and confirmed the employment details of Hao Zhang, Zhuwen Wu, Shou Zhang, Ming Li and Lifeng Li. In a number of cases Mr Jiang also wrote on the relevant employment letter that he had called and confirmed the applicant’s employment.
The Wenlong Wang loan applications
[595] Charges 10 and 31 both relate to property purchases made in the name of Mr Huang’s father, Wenlong Wang.
[596] As noted above, on 1 December 2011 Mr Jiang had received a copy of a Chinese employment letter for Wenlong Wang, signed by Johnston Zhook, stating that Wenlong Wang was employed by a Chinese company at a significant salary. At the same time, he also received a Johnston Zhook employment letter for Huazhen Zhang. Neither of these employment letters was ultimately used in support of a loan application. It is of note, however, that having received these letters, Mr Jiang had no issue with progressing loan applications in the names of both Wenlong Wang and Huazhen Zhang on an entirely different basis.
[597] Charge 10 relates to Wenlong Wang’s purchase of 5 and 9 Hampshire Court on 31 July 2012, which was the subject of a single loan application. Mr Jiang’s diary
notes for this transaction record that Wenlong Wang had been retired for four years, but owned investment properties in both China and New Zealand.
[598] Charge 31 relates to a loan to Wenlong Wang for the purchase of 1 Geranium Avenue, Auckland. That loan that was drawn down on 26 April 2013. On this occasion, the loan application form stated that Wenlong Wang was the general manager for LV Construction and was receiving a net salary of $3,059 a week. He was said to have been in that role for nine months. Mr Jiang’s diary notes referred to salary payments of $3,058.85 paid into Wenlong Wang’s BNZ account by “LV Park Constru”.
[599] The next strand of circumstantial evidence relates to the loan application in the name of Shou Zhang (charge 15), who is a fictitious person. I have set out the evidence regarding Shou Zhang’s passport at [448] to [458] above.
[600] In summary, on 24 September 2012, Mr Chen emailed Mr Jiang a sale and purchase agreement dated 24 August 2012, in which the purchaser was stated to be “Wing Chuk Yau or nominee”. The following day Mr Chen forwarded to Mr Jiang an email he had received from a Hong Kong email address (the yaushing email account), attaching scanned copies of three passports. One of the attached passports was in the name of Wing Chuk Yau and another was in the name of Shou Zhang. The passport photo of Wing Chuk Yau is of a man significantly older than the young person in the passport photo of Shou Zhang.
[601] Meanwhile, Mr Chen sent a follow-up email to the yaushing account, stating, “I need a person between their ages. Best age between 35 and 45”. The yaushing account responded to this email on 25 September 2012, attaching a single new passport in the name of Shou Zhang. This time, however, the passport photo on the Shou Zhang passport was the one of the older man from the Wing Chuk Yau passport that had been attached to the previous day’s email. In addition, the date of birth on the passport had been altered from 13 Aug 1987 to 13 Aug 1957. The new Shou Zhang passport was therefore an amalgamation of the previous Shou Zhang and Wing Chuk Yau passports.
A copy of the new Shou Zhang passport was provided to Mr Jiang and a copy of it is held on BNZ’s file for Shou Zhang.
[602] The next day, 26 September 2012, Mr Jiang opened two accounts in the name of Shou Zhang and emailed the details through to Mr Chen with the message “Password is: richard1”. The account access number is handwritten onto the document. Shou Zhang’s address is recorded as 12 Hampshire Court, Hamilton, and the phone number on the document is Mr Huang’s. The employment letter for Shou Zhang that Mr Chen emailed through to Mr Jiang that same day, however, was in the name of a Chinese company. Mr Jiang recorded in his BNZ diary notes that he had phoned Shou Zhang’s employer and confirmed his employment.
[603] On 27 September 2012 (about four days before drawdown), Mr Chen emailed Mr Jiang a new sale and purchase agreement for 1768 River Road. This time the buyer was recorded as Shou Zhang rather than Wing Chuk Yau or nominee (as had previously been the case). This matched the name of the new false passport that Mr Chen had obtained and provided to Mr Jiang.
[604] Charges 27, 29, and 30 each relate to applications made in the name of Ming Li. Charge 27 relates to a loan application for the purchase 40 Hartis Avenue and 3 Sutherland Court, Hamilton. I have set out the evidence relating to the Ming Li applications previously, when I was considering the charges against Mr Chen. The key aspects of that evidence, for present purposes, are that:
(a) Ming Li’s loan application form gave his residential address as 12 Hampshire Court, Hamilton, and claimed that he had been the Regional Manager for Driftmax Ltd for three years. His salary was stated as being $3,058 per week (net). An employment letter from Driftmax Limited was supplied to the BNZ, stating that Ming Li earned a salary of $228,000 per year (which equates to a net salary payment of
$3,058 per week). Ming Li had never entered New Zealand, and did not work at Driftmax.
(b) On 9 November 2012, Mr Jiang completed a ‘New personal customer details’ document for Ming Li. The same day, Mr Jiang opened a BNZ account in the name of Ming Li. He then emailed the access number for the account to Mr Chen. The email stated that Mr Chen already ‘[knew] the password’.
(c) Three days later, on 12 November 2012, Mr Jiang emailed Mr Chen again saying “Hi Bro, There is NO funds into Li, Ming’s A/C yet. Please credit some funds into A/C ASAP”.
(d) That same day a deposit of $3,058.85 was made into Ming Li’s bank account from the bank account of Mr Chen’s aunt, Shufeng Qi, which (to Mr Jiang’s knowledge) Mr Chen had control over. The payment was referenced on Ming Li’s bank statement as “SAL”.
(e) From 12 November 2012 to 7 March 2013, the only deposits made into the Ming Li account were the weekly deposits of $3,058.85 from the Shufeng Qi account, and one deposit of $5,000, also from the Shufeng Qi account. All payments were referenced “SAL”.
(f) On 7 March 2013, the day before drawdown, Mr Jiang completed the BNZ diary notes for Ming Li’s loan application, recording his employment at Driftmax on a salary of $227,135 per annum. Details of weekly salary payments of $3058.85 received into his bank account from Shufeng Qi between 12 November 2012 and 13 December 2012 were recorded.
[605] In relation to charge 29, false salary payments were initially made into the account Mr Jiang had opened in Ming Li’s name on 12 November 2012 from Shufeng Qi’s account. However, from 7 March 2013 onwards the “salary” payments were made from the bank account of LV Park Construction. Mr Jiang’s BNZ diary notes for this transaction record the weekly salary payments coming from “LV Park Constru.” No salary payments from Driftmax were paid into Ming Li’s account.
[606] In relation to charge 30, the loan application again stated that Ming Li was employed by Driftmax Ltd. The salary payments recorded by Mr Jiang in his diary notes, however, were all made by LV Park Construction. Again, Mr Jiang recorded that Ming Li’s salary was evidenced by a current employer letter (from Driftmax), and that he had phoned and confirmed his employment with that company. Ming Li has never worked at Driftmax.
The Lifeng Li loan application
[607] Charge 28 relates to loan applications made to the BNZ in the name of Lifeng Li, for the purchase of 24 Waikura Drive, 17 Hartford Terrace and 108 New Borman Road as against Mr Jiang.62 The same false salary payments were relied on in relation to all of these loan applications. I have addressed the evidence relating to charge 28 previously. The key aspects of that evidence, for present purposes, are that:
[608] The loan application stated that Lifeng Li was a marketing manager for Driftmax Limited, with a weekly net salary of $3,066. An employment letter was provided from Driftmax, confirming Lifeng Li’s employment and salary. (Lifeng Li has never worked at Driftmax, or entered New Zealand).
[609] On 7 November 2012, Mr Jiang completed an Account Opening Authority and a ‘New personal customer details’ document for Lifeng Li. The following day (8 November 2012) a payment of $3,075.82 was made into the new Lifeng Li account from the Shufeng Qi account, with the reference “SAL”. Further payments were made from the Shufeng Qi account to the Lifeng Li account (all in the sum of $3,065.82, and referenced “SAL”) at weekly intervals between 15 November 2012 and 21 December 2012. There was then a gap until 7 March 2013 when a payment was made from Mr Chen’s personal bank account to the Lifeng Li account, also in the sum of $3,065.82, with the reference “SALE”. The payer then reverted to Shufeng Qi and on 11 March 2013, a further payment of $3,065.82 was made from her bank account with the reference “SALARY”. Further payments from the Shufeng Qi account in the
62 I note that the particulars for this charge, as against Mr Chen, refer to all four Lifeng Li transactions. The particulars in respect of Mr Jiang, however, only refer to the first three of those transactions (excluding 5 Barwick Place). This may be an oversight. However, I will only address the three particularised transactions.
sum of $3,065.82, with the reference “SAL’ were made regularly from 19 March 2013 to 5 April 2014. LV Park Construction then started payments of $3,065.82 into the Lifeng Li account, making payments with the reference “sl” from 18 April 2013 to 11 September 2013.
[610] Mr Jiang’s BNZ diary notes expressly refer to the seven salary payments made between 7 March 2013 and 18 April 2013, and identify the makers of the relevant payments. These include one payment from Mr Chen, five payments from Shufeng Qi and one payment from LV Park Construction. There were no payments from Driftmax.
Alleged secret commission payments
[611] I address the evidence regarding the alleged secret commission payments in detail in section J below, and make findings as to whether the Crown has proved those charges.
[612] The evidence underpinning the secret commission charges is also relevant, however, as one strand of circumstantial evidence in respect of the present charges.
[613] In short, Mr Jiang received significant deposits into his bank account, from the account in the name of Mr Chen’s aunt, Shufeng Qi (which he had helped Mr Chen set up) shortly after a number of the LV Park-related loans that he processed and/or approved were drawn down.
[614] Further, on 13 July 2012, Mr Jiang sent Mr Chen an email containing bank account details for Mr Jiang’s mother, Bufang Mai. It is of note that this email was sent from Mr Jiang’s Hotmail account to Mr Chen’s Hotmail account, although it was sent during normal business hours (3.56 pm). From August 2012 onwards, all of the payments that the Crown alleges were secret commission payments to Mr Jiang went through the Bufang Mai account. Prior to that they had been paid into Mr Jiang’s personal account. The payments were sourced from LV Park Construction, but reached Mr Jiang’s account (or that of his mother) through one or more intermediary accounts. In every case, the final intermediary account (which made the relevant payment to Mr Jiang) was the Shufeng Qi account.
[615] I consider these payments in greater detail below, but simply note at this stage that there is no evidence of any legitimate business reason for these payments, or for the very circuitous manner in which they reached Mr Jiang. Further, the timing of them correlates closely to the drawdown dates of particular loans that Mr Jiang processed and/or approved.
Volume of LV Park-related transactions processed by Mr Jiang
[616] Between December 2011 through to April 2013, Mr Jiang processed at least 26 false loan applications that were linked to LV Park-related entities, those loans having an approximate value of $18,199,600. Mr Chen was his point of contact in respect of all of those transactions.
Analysis of the obtaining by deception charges
[617] Ms Kincade made a number of points in her submissions on behalf of Mr Jiang, including in particular that:
(a) Mr Jiang’s only communications were with Mr Chen (or Mr Chen’s assistant, Brianna Wang). He therefore only ever received documents (now known to be false) from a lawyer, whom he understood to be acting for the relevant loan applicant. He was entitled to place his trust in a lawyer. There is no evidence that he ever communicated with either Mr Huang or Ms Xu, or with any of the named loan applicants.
(b) The bank statements were in PDF (not Excel) format. If Mr Jiang were involved in the fraud, the documents could have been sent to him in Excel format.
(c) Every bank statement sent to Mr Jiang was also checked by another staff member. There were others who verified the statements and were equally deceived by the documents.
(d) Any files could have been the subject of a random internal review at any time, outside of the control of Mr Jiang, and he was aware of that.
(e) Mr Jiang cannot reasonably have been expected to compare one application with another, or employment letters that were provided in support of different loan applications. Although an expert document examiner may have been able to determine that a number of the Johnston Zhook employment letters appeared to have had the signatures on them “cut and pasted”, this is not something that a busy bank employee could reasonably be expected to notice. Nor is the fact that two loan applicants worked for the same company suspicious.
(f) In a number of cases, loan applications were required to be approved by a credit manager (for example, where they relied on overseas income). The relevant credit managers would have had access to the same information that had been provided to Mr Jiang, but did not pick up any issues with the supporting documentation.
(g) There is no evidence that Mr Jiang even opened the email from Mr Chen that attached the Johnston Zhook employment letters from November 2011 relating to Huazhen Zhang and Wenlong Wang. Further, those employment letters were not ultimately used in support of any loan application.
(h) As for the December 2011 email from Mr Chen, attaching the Johnston Zhook employment letters for Hao Zhang and Zhuwen Wu, Hao Zhang’s application was made mid-December and Zhuwen Wu’s later in 2012. There is nothing in that gap, because applications can be commenced, or discussions between professionals commenced, and then not go ahead for a number of reasons.
(i) In respect of the three passports that Mr Chen emailed Mr Jiang on 25 September 2012 (including passports for Shou Zhang and Wing Chuk Yau), there is no evidence that Mr Jiang opened that email.
It could have been overlooked, or sent in error. Further, the false Shou Zhang passport was not relied upon in the Shou Zhang loan applications. (It appears to have been used to open a bank account in the name of Shou Zhang).
Was Mr Jiang aware of the mortgage fraud being perpetrated on the BNZ?
[618] I will first consider whether the circumstantial evidence I have outlined supports the conclusion that Mr Jiang was aware of (and participated in) the mortgage fraud that was being perpetrated on the BNZ. In light of my conclusion on that issue, I will then turn to consider whether, in respect of each particular charge, the Crown has proved that Mr Jiang was aware that the income and employment information provided was false.
[619] I have set out a number of strands of circumstantial evidence relevant to the issue of Mr Jiang’s knowledge of the fraud above. Some of the key aspects of that evidence include that:
(a) Mr Jiang and Mr Chen have a longstanding and close relationship, dating back to at least 2008, when Mr Jiang was employed at Westpac.
(b) In July 2008 (when Mr Jiang was employed at Westpac), he assisted Mr Chen to set out a bank account in the name of Mr Chen’s aunt Shufeng Qi, and provided him with the login details for that account. That account features prominently in the evidence. For example:
(i) On 12 November 2012, Mr Jiang emailed Mr Chen asking him to put funds into Ming Li’s account as soon as possible. The same day a deposit of $3,058.85 was made into Ming Li’s bank account from the Shufeng Qi account, referenced as “SAL.” Subsequent payments, through until 7 March 2013, followed the same pattern. Mr Jiang must have been aware, in such circumstances, that Mr Chen controlled the Shufeng Qi account.
(ii) The Shufeng Qi account was the account from which (to Mr Jiang’s knowledge) a number of other “salary” payments were made to loan applicants, in each case correlating with the salaries claimed in loan applications and/or false employment letters. Mr Jiang must have been aware that payments made from an account in the name of Mr Chen’s aunt were not genuine salary payments to third party borrowers, and yet he recorded them in his diary notes as such.
(iii) The Shufeng Qi account was the account from which a significant number of deposits (the alleged secret commissions) were made into either Mr Jiang’s bank account, or that of his mother (Bufang Mai). Indeed, immediately after Mr Jiang provided Mr Chen with the account details for the Bufang Mai account, deposits (from the Shufeng Qi account) were paid into that account, rather than Mr Jiang’s own account. This was another strong indicator that Mr Chen was controlling the Shufeng Qi account. There is no evidence of any legitimate business reason for these payments, or for the very circuitous manner in which they reached Mr Jiang.
(c) Multiple Johnston Zhook letters were provided to Mr Jiang, relating to five different loan applicants. The first four Johnston Zhook letters were provided to Mr Jiang (within a short time frame of each other) before he had even received any loan applications from the persons named in those letters. The covering email from Mr Chen for the first two (which were never actually used) said “Hey Bro, do you think it is OK?” Two of the first four letters purported to be from different companies, both with Mr Zhook signing as General Manager. The subsequent Johnston Zhook letters are all remarkably similar, on their face, to the earlier ones. The Johnston Zhook letters were highly suspicious and would have alerted an honest bank officer, who was in receipt of all of them, that something was seriously amiss. Only
Mr Jiang had the “full picture” regarding those letters, not any of the credit managers who may have reviewed individual applications.
(d) In November 2011, Mr Jiang received a Johnston Zhook employment letter for Wenlong Wang stating he was working for a Chinese company at a significant salary. However, Wenlong Wang’s first loan application, in July 2012, was advanced on the basis that he had been retired for four years (as recorded in Mr Jiang’s diary notes). It was also noted that he was not a New Zealand permanent resident. A subsequent loan application, in April 2013, proceeded on the basis that Wenlong Wang now lived in New Zealand and was employed by LV Park as its general manager. This contradictory (and rapidly changing) information would have raised questions in the mind of an honest bank officer.
(e) The evidence I have outlined relating to Shou Zhang is particularly incriminating. Mr Jiang received an email from Mr Chen attaching three passports, but then subsequently received a passport in the name of Shou Zhang that was an amalgamation of two of those three passports. Mr Jiang then opened two accounts in the name of Shou Zhang and emailed the customer account details form (including details of the bank accounts) through to Mr Chen on 26 September 2012, with the message “Password is: richard1”. I reject as implausible Ms Kincade’s suggestion that Mr Jiang did not open the email from Mr Chen attaching the three passports.
(f) It would have been readily apparent to Mr Jiang that the Driftmax employment letters were false given that the available salary information or the purported Driftmax employees (Ming Li and Lifeng Li) demonstrated (as Mr Jiang recorded in his diary notes) that their “salaries” were being paid by Shufeng Qi, Mr Chen personally (on one occasion), and LV Park. No salary payments from Driftmax were recorded.
[620] The overwhelming conclusion from this evidence, when it is considered in totality, is that Mr Jiang was aware of, and an active participant in, the mortgage fraud that was being perpetrated on his employer, the BNZ.
Did Mr Jiang know that the employment, income or passport information provided was false?
[621] It does not necessarily follow from the fact that Mr Jiang was aware of, and an active participant in, the LV Park mortgage fraud scheme that he must have known that the employment and income information provided in support of each loan application was false. I will therefore now consider each charge briefly in turn. In undertaking this exercise, however, I keep in mind that all of the circumstantial evidence I have outlined above is relevant to determining Mr Jiang’s state of knowledge in relation to any particular charge, together with any specific evidence relating to that charge. I will also consider the additional particular in relation to charge 15, concerning Shou Zhang’s passport, in this section as well.
Charge 6 — Sale of 8 Hampshire Court
[622] This charge relates to a loan drawn down in the name of Ms Xu’s brother, Hao Zhang, on 21 December 2011, to purchase 8 Hampshire Court from Ironman Construction. This loan was the first of many loans that Mr Jiang approved in favour of LV Park and its related entities.
[623] As noted above, an employment letter for Hao Zhang, signed by Johnston Zhook, was sent to Mr Jiang on 1 December 2011, together with a false employment letter for Zhuwen Wu. Similar employment letters had been sent ten days previously for Wenlong Wang and Huazhen Zhang. There was no logical reason for these four letters to be sent to Mr Jiang at that time (which was prior to any loan applications being made). Further, in the employment letter for Hao Zhang, Mr Zhook claimed to be the Managing Director of Shanghai Yue Guan Advertising Co Ltd, whereas in the employment letter for Zhuwen Wu he claimed to be the Managing Director of Jia Yi Lun Information Technology Consultancy (Shanghai) Co Ltd. The same contact information is provided in all of the Johnston Zhook letters and they are in a virtually identical format.
[624] The Johnston Zhook employment letter stated that Hao Zhang’s salary was RMB 3 million. That salary level corresponds to the monthly deposits of RMB 250,000 included in the Chinese bank statements that were provided to Mr Jiang (by Mr Chen) in support of this application.
[625] A week after the loan for the purchase of 8 Hampshire Court was drawn down, a cash deposit of $7,000 was paid into Mr Jiang’s personal bank account. That figure matches the sum of many later payments to Mr Jiang’s bank account from the account of Shufeng Qi.
[626] I have summarised the evidence relating to the false Johnston Zhook employment letters at [582] to [591] above. That evidence would clearly have alerted Mr Jiang to very serious issues with the authenticity of any employment letters signed by Mr Zhook. In light of that evidence, Mr Jiang could not have credibly relied on any such employment letters. Mr Jiang must therefore have known that the employment letter for Hao Zhang was false. It follows that he must also have appreciated that the Chinese bank statements that were provided to verify the salary claimed in the Johnston Zhook letter (and which were carefully crafted to do so) were also false.
Charge 7 — Sale of 9 Stanton Place
[627] On 25 January 2012, within a month of the charge 6 loan in the name of Hao Zhang being drawn down, a further Hao Zhang loan application was submitted to the BNZ. The Johnston Zhook employment letter submitted in support of this application was identical to the original 2011 Hao Zhang letter, except the date was removed. The application was supported by the same false Chinese bank statements as the previous application.
[628] It necessarily follows from my findings in relation to charge 6 that Mr Jiang was also aware that the employment and income information provided in support of this application was false.
Charge 8 — Sale of 12 Hampshire Court
[629] Three months later, a further loan application in the name of Hao Zhang was submitted to the BNZ. Hao Zhang was said to be purchasing this property from Rock Construction Limited, which was acting as trustee for the LV Park Construction Trust.
[630] The BNZ received a further copy of the false Johnston Zhook employment letter for Hao Zhang in support of this application. It is the same as the letter that was used for the 8 Hampshire Court transaction, although the date has been removed. Again, false Chinese bank statements correlating with the salary stated in the employment letter were provided.
[631] It necessarily follows from my findings in relation to charges 6 and 7 that Mr Jiang was also aware that the employment and income information provided in support of this application was false.
Charge 9 — Sales of 4 Cascade Place, 163c Bankwood and 13 Barwick Place
[632] This charge relates to a loan application in the name of Zhuwen Wu to purchase these three properties. Zhuwen Wu is a friend of Mr Huang’s who lives in China and has never entered New Zealand.
[633] This application was also supported by a Johnston Zhook employment letter stating that Zhuwen Wu was a marketing manager for Jia Yi Lun Information Technology Consultancy (Shanghai) Co Ltd on a salary of RMB 3 million per year. (The same salary Hao Zhang was said to be paid in one of the other Johnston Zhook employment letters).
[634] BNZ also received an overseas bank statement to support the loan application. As with the false Hao Zhang bank statements, it included monthly deposits of RMB 250,000, correlating with the claimed annual salary of RMB 3 million.
[635] In light of my finding at [626] above, and with reference to the totality of the circumstantial evidence I have outlined, as well as the specific evidence relating to
this charge, Mr Jiang must have known that the employment and income information provided in support of this loan application was false.
Charge 10 — Sale of 5 and 9 Hampshire Court
[636] Charge 10 relates to Wenlong Wang’s purchase of 5 and 9 Hampshire Court on 31 July 2012, which was the subject of a single loan application.
[637] Mr Jiang’s BNZ diary notes for this transaction record that Wenlong Wang had been retired for four years, but owned four properties in China. Although he had no personal income (such as wages), he was recorded as receiving rental income from two New Zealand properties and three investment properties in China. Mr Chen provided Mr Jiang with various versions of (false) Chinese bank statements to support the level of overseas income claimed. Copies of some of these bank statements are on the BNZ file (others were retrieved from Mr Jiang’s emails). However, Mr Jiang’s diary notes record that on 27 July 2012 (prior to drawdown), a decision was made to remove overseas income from the application.
[638] As I have previously noted, on 1 December 2011 Mr Jiang had received a copy of a Chinese employment letter for Wenlong Wang, signed by Johnston Zhook, stating that Wenlong Wang was employed by a Chinese company at a significant salary. That letter, however, was not relied upon for this application.
[639] In light of my finding at [626] above, and with reference to the totality of the circumstantial evidence I have outlined, as well as the specific evidence relating to this charge, Mr Jiang must have known that the employment and income information provided, which the Crown relies on as particulars for this charge, was false. The information was not relied on for the application, however, which means that Mr Jiang did not make a misrepresentation to the BNZ based on his processing and approval of that information.
Charge 11 — Sale of 12 Ashwick Place
[640] On 15 August 2012, two loans totalling $400,000 were drawn down from the BNZ. This related to the purported purchase by Hao Zhang of 12 Ashwick Place from Rock Construction Limited.
[641] Again, the application proceeded on the basis of the false Johnston Zhook employment letter for Hao Zhang. The letter on the BNZ file is stamped “Rang and Confirmed” by Mr Jiang, and Mr Jiang’s BNZ diary notes also state that he rang and confirmed Mr Jiang’s employment. Clearly, he did not, as he knew that this letter (and all other Johnston Zhook letters) were false.
[642] In light of my finding at [626] above, and with reference to the totality of the circumstantial evidence I have outlined, as well as the specific evidence relating to this charge, Mr Jiang must have known that the employment and income information provided in support of this loan application was false.
Charge 12 — Sale of 1 Briar Rose Court and 62 Te Huia Drive
[643] These two property transactions were the subject of a single BNZ loan application made in the name of Zhuwen Wu.
[644] On 17 August 2012, Mr Chen emailed false overseas bank statements to Mr Jiang in support of this loan application. They are the same bank statements used for Zhuwen Wu’s previous loan application (charge 9 above).
[645] Mr Jiang also received a false Johnston Zhook employment letter in support of this application, which matches the letter that was originally emailed from the lakewood18 email account to Mr Chen, and then forwarded on to Mr Jiang, on 1 December 2011. The copy of the letter held by the bank is undated. Mr Jiang wrote on the letter that he had rung and confirmed the employment details. Clearly, he had not.
[646] Two days after the final loan drawdown on 4 September 2012, Mr Jiang received a payment into his personal bank account of $21,000. The source of those
funds was LV Park, and the payment was made through the intermediary accounts of Hao Zhang, Shufeng Qi (Mr Chen’s aunt) and Bufang Mai (Mr Jiang’s mother). (The Crown alleges that this was a secret commission payment for three property transactions—12 Ashwick Terrace, 1 Briar Rose Court and 62 Te Huia Drive).
[647] In light of my finding at [626] above, and with reference to the totality of the circumstantial evidence I have outlined, as well as the specific evidence relating to this charge, Mr Jiang must have known that the employment and income information provided in support of this loan application was false.
Charge 13 — Sale of 4 Trimmer Lane and 60 Te Huia Drive
[648] These two property transactions were the subject of a single BNZ loan application made in the name of Hao Zhang. The loan application related to Mr Zhang’s purported purchase of two properties, namely 4 Trimmer Lane and 60 Te Huia Drive in Hamilton.
[649] The loan application was processed by Mr Jiang. As I have noted above, false bank statements and employment letters in the name of Hao Zhang had been provided to Mr Jiang on four earlier occasions over the preceding 10 months. I have found that Mr Jiang was well aware that those documents were false.
[650] Mr Jiang received a Johnston Zhook employment letter on behalf of Hao Zhang. The letter matches that forwarded to Mr Jiang on 1 December 2011. Mr Jiang again recorded (falsely) that he had rung and confirmed Hao Zhang’s employment with Mr Zhook.
[651] Mr Jiang’s BNZ diary notes state that “Client’s income was evidence by current Employer Letter”. Under the heading “Personal Income”, he records that Hao Zhang has an annual wage/salary of $498,891 gross, and $341,093 net (which equates to the amount stated in the false Johnston Zhook letter).
[652] Five days after the loan was drawn down on 11 September 2012, Mr Jiang received a payment of $14,000 into his bank account. Those funds were sourced from
LV Park, and flowed through intermediary bank accounts in the name of Hao Zhang, Shufeng Qi and Bufang Mai.
[653] In light of my finding at [626] above, and with reference to the totality of the circumstantial evidence I have outlined, as well as the specific evidence relating to this charge, Mr Jiang must have known that the employment and income information provided in support of this loan application was false.
Charge 14 — Sale of 7 Hampshire Court and 11 Hawtry Lane
[654] These two property transactions were the subject of a single BNZ loan application, made within three weeks of the previous loan, and once again made in the name of Zhuwen Wu.
[655] On 17 September 2012, Mr Chen emailed false bank statements on behalf of Zhuwen Wu to Mr Jiang. Mr Jiang verified Cheryl Wu’s translation of the statements. A false Johnston Zhook employment letter (in the same format as the previous letters) was also attached to the email. The copy emailed to Mr Jiang matches that held by the bank, except the bank copy is undated (suggesting that the date was subsequently removed by Mr Jiang, after the letter was emailed to him). Mr Jiang again (falsely) recorded that he had rung and confirmed the employment details with Mr Zhook. Mr Jiang also recorded in his diary notes that Zhuwen Wu’s income was evidenced by the employment letter.
[656] Four days after the loan was drawn down, Mr Jiang received a payment into his bank account of $12,000. Again, the funds were sourced from LV Park, and flowed through the intermediary bank accounts of Hao Zhang, Shufeng Qi and Bufang Mai.
[657] In light of my finding at [626] above, and with reference to the totality of the circumstantial evidence I have outlined, as well as the specific evidence relating to this charge, Mr Jiang must have known that the employment and income information provided in support of this loan application was false.
Charge 15 — Sales of 1768 River Road and 15 Barwick Place
[658] The first loan application that this charge relates to was made in the name of Shou Zhang, and was for the purported purchase of 1768 River Road from Rock Construction Limited.
[659] It was supported by an employment letter from EVO (ShenZhen Creative Package Co Ltd) confirming that Shou Zhang was the General Manager of that company and that his salary was (again) RMB 3 million per annum. Mr Jiang recorded in his BNZ diary notes that he had phoned Shou Zhang’s employer (Mr Deng) on 26 September 2012 and confirmed his employment. Mr Jiang’s diary notes also record that Chinese bank statements for the last six months had been provided to support the claimed level of income.
[660] The second loan application that this charge relates to was a couple of months later. It was also made in the name of Shou Zhang, but on this occasion, was for the purchase of 15 Barwick Place. The EVO employment letter was relied upon again, save that the date on the letter had been altered. Mr Jiang’s diary notes record that Shou Zhang was the General Manager by EVO and had been in that role for 15 years and two months. That particular fact was presumably simply made up, as that fact was not stated in the EVO employment letter. Shou Zhang’s gross salary was said to be
$495,449 and his net salary was stated as $338,780.
[661] Mr Jiang recorded that Shou Zhang’s income was evidenced by his current employer letter, and that he had made a confirmation phone call to Mr Deng on 8 November 2012. Mr Deng is reported to have picked up the phone and confirmed that Shou Zhang was working at the company.
[662] I have set out the evidence relating to Shou Zhang’s passport at [599] to [601] above. Based on that evidence, it is clear that the Shou Zhang passport was a forgery, and Mr Jiang knew that. Shou Zhang is a fictitious person, created at the instigation of Mr Chen for the purposes of the mortgage fraud scheme.
[663] Two deposits (of $7,203.13 and $7,000 respectively) were paid into Mr Jiang’s bank account shortly after the drawdown of these two loans, sourced from LV Park and flowing through the usual intermediary bank accounts.
[664] Obviously, given that Mr Jiang was aware that Shou Zhang was a fictitious person, he was also aware that the income and employment information provided in support of these two loan applications in Shou Zhang’s name was false.
[665] For completeness, as Ms Kincade relied on it as evidence that others within the bank were deceived into believing that Shou Zhang was a real person, I note that there is a BNZ file note authored by Kasim Kachwala on 5 April 2013 (a number of months after these two loans were drawn down) recording that:
Talked with Shou Zhang and it was decided to fix the home loan for a period of one year as he wanted the cheapest interest rate gave him a rate lock and explained him the cost of breaking would be $500.
[666] Mr Kachwala, however, did not have the benefit of the “inside information” regarding Shou Zhang’s identity that Mr Jiang had. Mr Huang’s phone number was provided as the contact number for Shou Zhang on his loan application form. It seems probable, therefore, that Mr Kachwala (who the Crown does not suggest was aware of the fraud) spoke to Mr Huang, believing him to be Shou Zhang.
Charge 17 — Sale of 12 and 25 Barwick Place on 27 November 2012
[667] These two properties were the subject of a single BNZ loan application made in the name of Ms Xu’s father, Jiquan Zhang.
[668] Mr Jiang’s BNZ diary notes record that Jiquan Zhang had been employed as the General Manager for LV Park Construction for four years, and refer to weekly salary payments into Jiquan Zhang’s BNZ Bank account. Jiquan Zhang confirmed in his evidence that the income and employment information provided to the bank regarding him (which he said he had no knowledge of) was false.
[669] A payment of $12,700 from LV Park was made into Mr Jiang’s personal bank account (via the intermediary accounts of the Shufeng Qi and Bufang Mai) on 29 November 2012, two days after drawdown of the loan.
[670] Mr Jiang could not have had any confidence at all in the authenticity or integrity of any information emanating from, or linked to, LV Park. The circumstantial evidence, viewed in totality, clearly supports the inference that Mr Jiang must have been aware that the entity behind the mortgage fraud scheme was LV Park. I further note, by way of example, that Mr Jiang was aware that LV Park Construction had made “salary” payments into bank accounts in the names of both Ming Li and Lifeng Li, even though both of those loan applicants were supposedly employed by Driftmax. Mr Jiang must have appreciated that those payments were merely a ruse on the part of LV Park to give the impression that Ming Li and Lifeng Li were receiving salary payments from Driftmax when they were not.
[671] Given Mr Jiang’s knowledge of, and active participation in, the LV Park mortgage fraud scheme, I have no doubt that he must have been aware that this was yet another of the many LV Park-related sham transactions being channelled through him by Mr Chen. In light of the circumstantial evidence I have outlined above, and the specific evidence relating to this charge, Mr Jiang must have been aware that the employment and income information provided in support of this loan application was false.
Charge 18 — Sale of 408 Ormiston Road
[672] This property was the subject of a single BNZ loan application made in the name Guizhen Zhou (Mr Huang’s mother). The loan was for Guizhen Zhou’s purported purchase of the property at 408 Ormiston Road from Rock Construction Limited.
[673] This loan was sought and obtained on the basis that, amongst other things, Guizhen Zhou was employed full-time as a marketing manager for LV Construction and was earning an annual salary of $100,493. As she confirmed in evidence, that was untrue.
[674] The application was supported by BNZ bank statements in the name of Guizhen Zhou in respect of which false salary payments, in the sum of $1,430.42 per week, had been made by LV Park Construction Trust. Mr Jiang’s BNZ diary notes referred to these false salary payments. They also recorded that Guizhen Zhou had been employed full time in the position of marketing manager by LV Construction for four years.
[675] On 6 December 2012, around three days after drawdown, Mr Jiang received a payment of $7,000 into his personal bank account, sourced from LV Park, and funnelled through the Shufeng Qi and Bufang Mai accounts.
[676] Again, for the reasons given in relation to Charge 17 (which also related to a purported LV Park employee), I am satisfied that Mr Jiang knew that the employment and income information provided regarding Guizhen Zhou was false.
Charge 19 — Sale of 5 Te Ironui Place
[677] This loan application was made in the name of Ms Xu’s mother, Huazhen Zhang. The application stated that she was employed as marketing manager for LV Park (despite the fact that only a couple of weeks earlier, Guizhen Zhou’s loan application had proceeded on the basis that she was LV Park’s marketing manager). False salary payments made into Huazhen Zhang’s account by LV Park were again relied on as evidence of income.
[678] As noted above, Mr Jiang had received a false Chinese employment letter for Huazhen Zhang on 21 November 2011, signed by Johnston Zhook, stating that she was the General Manager of a Chinese company and that “her salary is RMB1,000,000.00 (NZ$200,000.00) per year. That employment letter was not, however, relied on in support of this application. Obviously, despite this, the fact that Mr Jiang had received it is further evidence that he cannot have genuinely believed that Huazhen Zhang was employed by LV Park.
[679] On 17 December 2012 (five days after the loan was drawn down), Mr Jiang received $12,000 into his personal bank account. The payment was made from LV Park to Shufeng Qi to Bufang Mai and then to Mr Jiang’s personal account.
[680] Again, for the reasons given in relation to Charge 17 (which also related to a purported LV Park employee), I am satisfied that Mr Jiang knew that the employment and income information provided regarding Huazhen Zhang was false.
Charge 20 — Sale of 79 New Borman Road and 6 Sutherland Court
[681] Guizhen Zhou was again the named borrower in this loan application. The loan application stated that she was employed as a marketing manager for LV Construction. Mr Jiang completed BNZ diary notes which stated that Guizhen Zhou’s income was evidenced by weekly payments into her BNZ account.
[682] The day after the loan was drawn down, a payment of $14,500 was made into the bank account of Mr Jiang’s mother, Bufang Mai. That payment was sourced from LV Park and was paid via the intermediary accounts of Hao Zhang and Shufeng Qi. This is the first of the alleged secret commission payments where (as discussed further below) the payments accumulated in Bufang Mai’s account and then, on 1 November 2013, the accumulated funds were used to reduce Mr Jiang’s mortgage over his property at 74 Schnapper Rock Road.
[683] Again, for the reasons given in relation to Charge 17 (which also related to a purported LV Park employee), I am satisfied that Mr Jiang knew that the employment and income information provided regarding Guizhen Zhou was false.
Charge 21 — Sale of 77 New Borman Road and 29 Piwakawaka Court
[684] This application was made on behalf of Jiquan Zhang. The application again represented that he was employed as a general manager for LV Park Construction. The BNZ Diary notes referred to weekly payments into Jiquan Zhang’s bank account as evidence of his alleged salary.
[685] On 21 December 2012, two days after drawdown, the Bufang Mai account received a payment of $14,500. This was sourced from LV Park, but paid via the intermediary account of Mr Chen’s aunt, Shufeng Qi.
[686] Again, for the reasons given in relation to Charge 17 (which also related to a purported LV Park employee), I am satisfied that Mr Jiang knew that the employment and income information provided regarding Jiquan Zhang was false.
Charge 22 — Sale of 107 New Borman Road
[687] This is a further loan application made in the name of Guizhen Zhou. The application stated that her employment was, again, as the marketing manager for LV Park. Mr Jiang processed the application and his BNZ diary notes refer to the weekly salary payments that were made into Guizhen Zhou’s BNZ account.
[688] The loan was drawn down on 31 January 2013. On 4 and 11 February 2013, the Bufang Mai account received two payments totalling $29,000 from the Shufeng Qi account. The payments originated from LV Park. The Crown alleges that this was a combined secret commission payment for four properties that all settled on 31 January 2013, one of which was the sale of 107 New Borman Road to Guizhen Zhou.
[689] Again, for the reasons given in relation to Charge 17 (which also related to a purported LV Park employee), I am satisfied that Mr Jiang knew that the employment and income information provided regarding Guizhen Zhou was false.
Charge 23 — Sale of 29 Te Ironui place and 7 Barwick Place
[690] This is a further loan application made in the name of Huazhen Zhang. The application again stated that she was employed as a marketing manager for LV Park. Mr Jiang’s BNZ Diary notes refer to weekly payments that were made into Huazhen Zhang’s BNZ bank account by LV Park as evidence of her salary.
[691] The payment of $29,000 into Bufang Mai’s account that I have referred to when discussing charge 22 is also alleged by the Crown to be a secret commission payment for these two transactions.
[692] Again, for the reasons given in relation to Charge 17 (which also related to a purported LV Park employee), I am satisfied that Mr Jiang knew that the employment and income information provided regarding Huazhen Zhang was false.
Charge 24 — Sale of 18 Te Ironui Place
[693] This is a further loan application in the name of Jiquan Zhang, who was said to be employed as the general manager of LV Park Construction Ltd. Mr Jiang noted in the BNZ diary notes the weekly payments made into Jiquan’s BNZ account as evidence of his salary from LV Park.
[694] The payment of $29,000 into Bufang Mai’s account that I have referred to above when discussing charge 22 is also alleged by the Crown to be a secret commission payment for this transaction.
[695] Again, for the reasons given in relation to Charge 17 (which also related to a purported LV Park employee), I am satisfied that Mr Jiang knew that the employment and income information provided regarding Jiquan Zhang was false.
Charge 25 — Sale of 410 Ormiston Road
[696] This is a further loan application in the name of Huazhen Zhang, who was again said to be the marketing manager for LV Park. Mr Jiang referred to the weekly salary payments made into Huazhen Zhang’s BNZ bank account as evidence of her salary.
[697] On 18 February 2013, four days after drawdown of the loan, a payment of
$8,000 was made to the Bufang Mai account. The funds were sourced from LV Park, and paid through the intermediary bank accounts of Hao Zhang and Shufeng Qi.
[698] Again, for the reasons given in relation to Charge 17 (which also related to a purported LV Park employee), I am satisfied that Mr Jiang knew that the employment and income information provided regarding Huazhen Zhang was false.
Charge 26 — Sale of 1 Barwick place
[699] The named borrower in this transaction was again Huazhen Zhang. The application recorded that she was a marketing manager for LV Park Ltd. Mr Jiang’s diary notes refer to the weekly payments that were made into Huazhen’s BNZ account as evidence of her salary.
[700] On 1 March 2013, the day after the loan was drawn down, two deposits were made into the account of Mr Jiang’s mother, Bufang Mai, in the sums of $14,400 and
$1,600 respectively. These were sourced from LV Park, and paid through the intermediary account of Shufeng Qi. The Crown alleges that this was a secret commission payment for this transaction and one other.
[701] Again, for the reasons given in relation to Charge 17 (which also related to a purported LV Park employee), I am satisfied that Mr Jiang knew that the employment and income information provided regarding Huazhen Zhang was false.
Charge 27 — Sale of 40 Hartis Ave and 3 Sutherland Court
[702] This loan application was made in the name of Ming Li. I have summarised key aspects of the evidence relating to this charge at [604] above. In light of that evidence, when considered together with the totality of the circumstantial evidence, it is not possible that Mr Jiang could have genuinely believed that the employment and income information provided in support of this loan application was true.
[703] I further note that, on 11 March 2013, three days after the loan drawdown date, a payment of $16,500 was made from the Shufeng Qi account into the Bufang Mai account. Those funds were sourced from LV Park. The Crown alleges that this was a secret commission payment in respect of these two property transactions.
Charge 28 — Sale of 24 Waikura Drive, 17 Hartford Terrace, and 108 New Borman
Road
[704] This charge relates to three loan applications which were all made in the name of Lifeng Li.63 I have summarised key aspects of the evidence relating to this charge at [607] above.
[705] The loan applications each stated that Lifeng Li was the marketing manager for Driftmax Ltd. They were supported by an employment letter purporting to be from Driftmax Ltd. Mr Jiang recorded on the letter that he had called and confirmed Lifeng Li’s employment. Lifeng Li has never worked at Driftmax, or entered New Zealand.
[706] On 8 November 2012, a payment of $3,075.82 was made into the new Lifeng Li bank account (set up by Mr Jiang) from the Shufeng Qi account, with the reference “SAL”. A number of further payments were made from the Shufeng Qi account to the Lifeng Li account (all in the sum of $3,065.82, and referenced “SAL”). In addition, there was one payment from Mr Chen’s personal bank account for the same amount and referenced “SALE” and then further payments from LV Park Construction. There were no salary payments made in the name of Driftmax, Lifeng Li’s purported employer.
[707] Mr Jiang referred to the weekly false salary payment deposits in his BNZ diary notes, including references to where the payments had come from (Shufeng Qi and LV Park Construction Trust). Mr Jiang was aware that Mr Chen had access to, and control over, the Shufeng Qi account. Mr Jiang would also have been aware that there was no legitimate basis for salary payments to be made by LV Park (I have set out further reasons why Mr Jiang could have no faith in the legitimacy of any information emanating from LV Park in my discussion of charge 17 above).
63 As I noted earlier, the particulars for this charge, as against Mr Chen, refer to all four Lifeng Li transactions. The particulars in respect of Mr Jiang, however, only refer to the first three of those transactions (excluding 5 Barwick Place). This may be an oversight. However, I will only address the three particularised transactions.
[708] The following payments were made following drawdown of these loans:
(a) on 28 March 2013, the day after drawdown of the loan for 24 Waikura Drive, a payment of $7,500 was made to the Bufang Mai account from the Shufeng Qi account (sourced from LV Park);
(b) on 12 April 2013, the same day as the drawdown of the loan for 17 Hartford Terrace, the Bufang Mai account received a payment of
$7,500 from the Shufeng Qi account (sourced from LV Park); and
(c) on 29 April 2013, three days after the drawdown of the loan for 108 New Borman Road, the Bufang Mai account received a payment of $33,500 from the Shufeng Qi account.
[709] The Crown alleges that each of these payments were secret commission payments. In respect of the $33,500 payment on 29 April 2013, I note that two other LV Park-related transactions settled on the same date as 108 New Borman Road (27 Hart Road and 1 Geranium Avenue).
[710] In light of this evidence, and the totality of the circumstantial evidence I have summarised above, I am satisfied that Mr Jiang was aware that the employment and income information provided for Lifeng Li was false.
Charge 29 — Purchase of 102 Barrington Drive
[711] Ming Li was again the named borrower in this loan application, and was again said to be employed by Driftmax Ltd.
[712] The application was supported by the Driftmax employment letter. Mr Jiang’s BNZ diary notes, dated 25 March 2013, refer to the weekly salary payments made into Ming Li’s bank account which, by this time, were being made from the LV Park Construction account rather than the Shufeng Qi account. Mr Jiang’s BNZ diary notes therefore record the weekly salary payments coming from “LV Park Constru”. There are no salary payments from Driftmax, the purported employer.
[713] A payment of $7,000 was made from the Shufeng Qi account to the Bufang Mai account on 10 April 2013, the day after the loan was drawn down. Those funds were sourced from LV Park.
[714] For the reasons given previously I am satisfied that Mr Jiang again knew that the employment and income information regarding Ming Li was false.
Charge 30 — Sale of 27 Hart Road
[715] This is a further loan application made in the name of Ming Li. Again, it stated that Ming Li was employed by Driftmax Ltd. False salary payments were made into an account in the name of Ming Li. They came directly from LV Park bank accounts. The BNZ diary notes record that the income was from “LV Park Constru”, and Mr Jiang directly above that record stated that the client’s income had been evidenced by a current employer letter, which was rung and confirmed by the lender.
[716] The payment into the Bufang Mai account that I have referred to at [713] above is also alleged to relate to this transaction.
[717] Again, I am satisfied that Mr Jiang again knew that the employment and income information regarding Ming Li was false.
Charge 31 — Sale of 1 Geranium Ave
[718] This is a further application made in the name of Wenlong Wang. The application (again) recorded that he was the general manager for LV Construction. Mr Jiang’s BNZ diary notes recorded the false salary payments made into Wenlong Wang’s BNZ account by “LV Park Constru”.
[719] The payment into the Bufang Mai account that I have referred to at [713] above is also alleged to relate to this transaction.
[720] Again, I am satisfied that Mr Jiang knew that the employment and income information regarding Wenlong Wang was false.
[721] In conclusion, in respect of all of the charges other than charge 10, the Crown has proved, beyond reasonable doubt, that Mr Jiang knew that the relevant loan applications were based on false employment and income information.
Did Mr Jiang know that the borrowers named in the loan applications were not the “true borrowers”
[722] The Crown also alleges, as a further particular of the obtaining by deception charges against Mr Jiang, that he processed and/or approved loan applications based on false information as to the identity of the true borrower.
[723] As I have noted at [511] above, the phrase “true borrower”, as used in the Amended Crown Charge Notice, is effectively shorthand for the Crown’s allegation that the named borrowers were used as part of a “refinancing” scheme by LV Park (Mr Huang) in circumstances where, in effect, LV Park would remain the true owner of the properties, and would service the loans on them. In other words, the underlying purpose of the scheme was not to enter into arm’s length sales of the properties, but to exchange high-commercial-interest-rate loans for lower-interest-rate loans, while keeping the various properties within LV Park’s portfolio (which is also how LV Park appears to have treated the transactions for tax purposes).
[724] In light of the totality of the evidence against Mr Jiang that I have outlined, I am satisfied that Mr Jiang did know that LV Park and/or Mr Huang was the “true borrower” in the sense that I have outlined.
Did Mr Jiang process and/or approve loans based on false information?
[725] The Crown case is that, by his conduct in processing and/or approving the relevant loans based on information he knew to be false (income and employment information, and the identity of the true borrower) Mr Jiang made a materially false representation to his employer, the BNZ. In essence, Mr Jiang represented to others within the BNZ that the relevant information was true, when he knew it to be false (or was reckless as to its falsity).
[726] I am satisfied, based on the evidence that I have outlined above, that Mr Jiang did process and/or approve the relevant loan applications, based on false information, namely the false employment information, false income information, false passport information and/or the identity of the true borrower.
[727] Each of the particulars has been proved for each charge against Mr Jiang in relation to this element, except charge 10, where the false employment and salary information that was provided to Mr Jiang regarding Wenlong Wang was ultimately not relied on in support of the relevant loan application. There may well have been other false information included in the application, including false information regarding assets, savings, and local rental income. None of that, however, has been proved. I am accordingly not satisfied that the application that was the subject of charge 10 was ultimately processed and approved by Mr Jiang on the basis of false employment or income information. However, I am satisfied that it was processed and approved on the basis that the true borrower’s identity was not disclosed.
[728] Therefore, in conclusion, in respect of all of the charges, the Crown has proved beyond reasonable doubt that Mr Jiang processed and/or approved, on behalf of BNZ, the relevant loan applications based on false employment and income information, Shou Zhang’s false passport in relation to charge 15, and/or the identity of the true borrower.
Did Mr Jiang intend that one or more other bank employees would be deceived?
[729] Mr Jiang made false representations, by his conduct in processing and approving the relevant loan applications, to others within the bank that the false information was in fact true. For example, Mr Jiang repeatedly entered the false income and employment information into BNZ’s computerised systems, as a result of which that information was factored into the bank’s decision-making tools and was available for viewing by other bank employees involved in the processing of the loan applications, or the payment of funds to loan applicants.
[730] I am satisfied that Mr Jiang did intend to deceive others within the BNZ into believing that the false employment and income information was true,64 that the borrower’s passport and legitimate in charge 15, and that the named borrowers were the true borrowers. That is the only logical conclusion available, given Mr Jiang’s knowledge of the overall fraudulent scheme and his knowledge of the falsity of this information.
[731] For the reasons outlined at [137] to [155] above, I am satisfied that the element of inducement has been proved in relation to charges 6–15 and 17–31, beyond reasonable doubt.
[732] If Mr Jiang had not, by his conduct, represented to the BNZ that the (false) employment and income information for the various borrowers was true, the loans would not have been approved. Similarly, if Mr Jiang had not represented by his conduct that the borrowers were genuine third-party borrowers, but instead disclosed the true identity of the entity (LV Park) behind the various loan applications, the loans would not have been approved. I find the same in relation to the application to which charge 15 relates, where Shou Zhang’s false passport was used to support the application.
Conclusion regarding the obtaining by deception charges
[733] In respect of all of the obtaining by deception charges against Mr Jiang (charges 6- 15, and 17-31), the Crown has proved all of the elements of the charges beyond reasonable doubt. For the reasons outlined above, however, in respect of charge 10 the only particular proved relates to the identity of the true borrower.
J. SECRET COMMISSIONS ACT CHARGES
[734] Mr Chen and Mr Jiang are each charged with one representative charge under the Secret Commissions Act 1910. The Crown alleges that Mr Jiang corruptly accepted “kickback” payments for processing and/or approving loan applications
64 Except for charge 10 in relation to these two particulars.
while he was employed by the BNZ. Mr Chen, on the other hand, is alleged to have corruptly paid kickbacks to both Mr Jiang (as agent for the BNZ) and Peter Cheng (as agent for the ANZ).
The secret commissions charge against Mr Jiang
[735] The Crown case is that Mr Jiang corruptly received consideration as an agent in relation to 20 loan transactions (some of them involving multiple properties) that he was involved in processing and/or approving on behalf of the BNZ. The Question Trail for this charge is annexed as Appendix 6.
The evidence relating to the alleged secret commission payments
[736] The direct evidence relied on in support of this charge is based primarily on a detailed forensic accounting analysis of various bank accounts, undertaken by Mr Bulloch, the SFO’s senior forensic accountant.
[737] Other evidence that is particularly relevant to this charge includes that:
(a) In 2008, Mr Jiang helped Mr Chen to set up a Westpac bank account (where Mr Jiang worked at the time) in the name of Mr Chen’s aunt, Shufeng Qi, and provided him with the password details. As explained below, that account was used as an intermediary account for many of the payments that the Crown alleges were secret commission payments to Mr Jiang.
(b) Mr Jiang sent Mr Chen an email in July 2012 providing him with his (Mr Jiang’s) mother’s bank account details. (Mr Jiang’s mother is Bufang Mai). From the following month (August 2012) onwards, all of the alleged secret commission payments were made through the Bufang Mai account.
[738] Mr Bulloch produced a chart that summarised the results of his investigation. Ms Kincade accepted that Mr Bulloch’s chart accurately lists various deposits and
transfers between bank accounts, but disputed that any of the payments were “kickback” payments to Mr Jiang.
[739] The columns on Mr Bulloch’s chart are divided into three categories:
(a) source bank account — either LV Park Construction Trust or New Zealand New Oak Property Ltd;
(b) intermediary bank accounts — one or more of Hao Zhang, Shufeng Qi and Bufang Mai; and
(c) destination bank account — either Bufang Mai or Mr Jiang.
[740] The alleged secret commission payments are those shown in the chart as being received into the destination bank accounts in the name of either Bufang Mai or Mr Jiang. The Crown does not allege, however, that precisely the same sum has been transferred from the source bank account right through to the destination bank account. Mr Bulloch’s accounting analysis paints a somewhat more complex picture than that. The source of the payment that is alleged to be a secret commission has been traced back to LV Park Construction Ltd through a series of transfers between bank accounts.
[741] The first LV Park-related loan that Mr Jiang was involved with related to the purchase of 8 Hampshire Court by Ms Xu’s brother, Hao Zhang, on 21 December 2011. A week later, on 28 December 2011, Mr Jiang received a cash deposit into his Westpac bank account of $7,000. Many of the alleged “kickback” payments made subsequently were in the same (or similar) amounts. Notwithstanding that this payment was not made from one of the recognised LV Park bank accounts, the Crown submitted that it was the first of many back-handers paid to Mr Jiang for his intentional assistance in the fraudulent scheme.
[742] I think it is likely that this payment emanated from LV Park, as it follows a similar pattern to many later payments, both in terms of quantum, and also in terms of the proximity of the payment to the drawdown date of a loan that Mr Jiang approved. I cannot be sure, however, that this payment came from LV Park. I accordingly find
this particular of the representative charge not proved. I do not propose to consider it further.
[743] All of the subsequent alleged kickback payments reached Mr Jiang’s account (or that of his mother, Bufang Mai) via intermediate bank accounts. In all cases, with one exception, the source bank account was that of the LV Park Construction Trust.
[744] The exception relates to the loan transaction relating to 12 and 25 Barwick Place, which settled on 27 November 2011. The source bank account for a subsequent alleged kickback payment to Mr Jiang, in the sum of $12,700, is a company called New Zealand New Oak Property Ltd (New Oak). The payment from New Oak shares a number of common features with other alleged kickback payments, including that it can be tracked from the source bank account, through intermediate bank accounts (in the name of Shufeng Qi and Bufang Mai), to Mr Jiang’s personal bank account. Mr Bulloch’s evidence, however, was that the SFO’s enquiries had failed to find a relationship between New Oak and LV Park Construction Trust. Ms Xu, when she gave evidence, was not cross-examined on whether she had any knowledge of New Oak. I accordingly find this particular of the representative charge is also not proved. I do not propose to consider it further.
[745] LV Park Construction Trust’s bank account was the source bank account for the remainder of the payments set out in the particulars to this charge. The relevant payments commenced in July 2012 and continued through until April 2013. They fall into two groups. The first group of alleged payments were made during the period 26 July 2012 to 12 December 2012. Funds sourced from LV Park Construction Trust were transferred through a series of intermediary bank accounts to eventually reach Mr Jiang’s personal bank account. The first six payments were transferred, in turn, through the bank accounts of Hao Zhang, Shufeng Qi and Bufang Mai, before reaching Mr Jiang’s account. The payments were all received within a few weeks of the loan drawdown to which the Crown alleged they were linked.65
65 5 and 9 Hampshire Court $6,400 (loan drawn down on 26 July 2012, payment on 16 August 2012); 12 Ashwick Place, 1 Briar Rose Court and 62 Te Huia Drive, $21,000 (loan drawn down on 15 August 2012, 23 August 2012 and 4 September 2012 respectively; payment dated 6 September 2012); 4 Trimmer Lane and 60 Te Huia Drive $14,000 (loan drawn down on 11 September 2012 and payment dated 17 September 2012); 7 Hampshire Court and 11 Hawtry Lane $12,000 (loan drawn down on 21 September 2012, payment dated 25 September 2012);
[746] The final two payments in this group were paid straight into Shufeng Qi’s account (skipping Hao Zhang’s account) and then transferred from there to Bufang Mai’s account, and on to Mr Jiang’s account. These alleged secret commission payments were both made within five days of loan drawdown to which they are said to relate.66
[747] The second group of payments commenced on 17 December 2012 and continued through until 29 April 2013. Two of these payments were transferred from LV Park Construction Trust’s bank account to Hao Zhang’s bank account, then on to the bank accounts of Shufeng Qi and, ultimately, Bufang Mai. The remaining eight payments followed the same route, save that they bypassed Hao Zhang’s account. Unlike the first group of payments, the destination bank account for this second group of payments was not Mr Jiang’s account. Rather, the fund transfers terminated one step earlier, when they reached the account of Mr Jiang’s mother, Bufang Mai. The relevant payments, and the transactions that the Crown alleges they related to, are as follows:
(a) 79 New Borman Road and 6 Sutherland Court — $14,500 (loan drawn down on 17 December and payment made on 18 December 2012);
(b) 77 New Borman Road and 29 Piwakawaka Court — $14,500 (loan drawn down on 19 December 2012 and payment made on 21 December 2012);
(c) 107 New Borman Road, 7 Barwick Place and 29 Te Ironui Place, and 18 Te Ironui Place — $29,000 (loans drawn down on 31 January 2013 and payment made on 4–11 February 2013);
1768 River Road $7,203.13 (loan drawn down on 1 October 2012, payment dated 4 October 2012); and 15 Barwick Place $7,000 (loan drawn down on 12 November 2012, payment made on 22 November 2012).
66 408 Ormiston Road $7,000 (loan drawn down on 3 December 2012 and payment made on 6 December 2012); and 5 Te Ironui Place $12,000 (loan drawn down on 12 December 2012, payment made on 17 December 2012).
(d) 410 Ormiston Road — $8,000 (loan drawn down on 14 February 2013, payment made 18 February 2013);
(e) 1 Barwick Place and 17 Barwick Place — $16,000 (loan drawn down on 28 February 2013, payment made on 1 March 2013);
(f) 40 Hartis Ave, 3 Sutherland Court — $16,500 (loan drawn down on 8 March 2013 and payment made on 11 March 2013);
(g) 24 Waikura Drive — $7,500 (loan drawn down on 27 March 2013 and payment made on 28 March 2013);
(h) 102 Barrington Drive — $7,000 (loan drawn down on dated 8 April 2013 and payment made on 10 April 2013);
(i) 17 Hartford Terrace — $7,500 (loan drawn down on 12 April 2013, and payment made on 12 April 2013);
(j) 108 New Borman Road, 27 Hart Road and 1 Geranium Ave — $33,500 (loan drawn down on 26 April 2013, payment made on 29 April 2013).
[748] Again, each payment followed fairly soon after drawdown of the loan that the Crown alleges the payment is linked to.
[749] This second group of payments accumulated in Bufang Mai’s account. By the time of the final payment on 29 April 2013, a total of $154,000 had accumulated. On 1 November 2013, the accrued sum was paid in reduction of Mr Jiang’s mortgage over a property he owned at 74 Schnapper Rock Road.
Did Mr Jiang accept secret commission payments as inducements or rewards for processing and/or approving the relevant loan applications?
[750] Ms Kincade accepted that Mr Bulloch’s chart showing the deposits into various bank accounts is accurate, so far as it goes. However, she strenuously disputed that any of the deposits into either Mr Jiang’s bank account, or Bufang Mai’s account, have been proved to be kickback payments to Mr Jiang. Ms Kincade submitted that there
is no evidence that Mr Jiang knew that such money originated from LV Park or Mr Huang, or that the payments had anything to do with his work at the BNZ.
[751] One of Ms Kincade’s key criticisms of Mr Bulloch’s evidence was that it was selective and incomplete. Ms Kincade argued that, contrary to Mr Bulloch’s evidence, there is in fact no “pattern” in relation to the payments, from which it can safely be inferred that they must be secret commission payments.
[752] Mr Bulloch determined which payments he considered to be secret commission payments in part on the basis of their proximity to the drawdown dates of the various loans. Ms Kincade submitted, however, that proximity in time is not a sufficiently strong basis to prove that the relevant payments were secret commission payments. Further, there were a number of other funds transfers between the relevant accounts that are not alleged to have been kickbacks. She submitted that no explanation has been provided for those payments, or what they are said to relate to.
[753] Ms Kincade produced a table (by consent) that set out a number of other transactions between the bank accounts of Bufang Mai and Mr Jiang (including, but not limited to, his Westpac account into which the kickbacks were allegedly paid) for the period June 2010 to March 2016. She submitted that when these transactions are viewed in totality, there is no “pattern” of secret commission payments. On the contrary, Ms Kincade submitted, the SFO has simply cherry-picked a selection of transactions between the two bank accounts to make it look like there is a pattern when there is none. Ms Kincade suggested that the overall impression to be gained from the ongoing movement of funds back and forth between the accounts of Mr Jiang and Bufang Mai is that of a mutual borrower/lender relationship between a mother and her son. Their bank accounts were intertwined both before, during, and after, the period of the alleged secret commission payments.
[754] Ms Kincade noted that on the day Mr Jiang supplied Mr Chen with Bufang Mai’s bank account details, there was a payment from the account of Mr Chen’s aunt, Shufeng Qi, to the Bufang Mai account. The Crown did not suggest that payment was a kickback payment. This is further evidence, Ms Kincade submitted, that the Crown has been selective in its approach to the evidence.
[755] Ms Kincade further observed that Mr Jiang was allegedly involved in a number of fraudulent loan transactions in respect of which no alleged secret commission payment has been identified. She submitted that this further undermines the Crown case.
[756] The alleged secret commission payments to Peter Cheng, Ms Kincade observed, followed a very regular pattern, both in terms of quantum and timing. In relation to Mr Jiang, however, there is less consistency in the timing of the payments after drawdown, and the amounts provided varied.
[757] Another anomaly, Ms Kincade submitted, was the fact that some payments out of the Bufang Mai account were greater than the payments that account had received from the Shufeng Qi account. The full amount paid could not therefore be attributed to LV Park as the source. (In fairness, I note that the Crown case is that either LV Park or Mr Chen (or possibly both of them) made the relevant kickback payments. Mr Chen is alleged to have controlled the Shufeng Qi account).
[758] In summary, Ms Kincade submitted that there are no direct payments to Mr Jiang. Payments that were made through various intermediary accounts are open to interpretation and support other inferences (including that Bufang Mai periodically loaned money to her son, which he subsequently repaid). Further, there is no consistent pattern of payments; the quantum of any payments varied; there is no evidence of any direct contact between LV Park, Mr Huang and Mr Jiang; and the SFO has been selective in its analysis, in order to portray a pattern of payments where there is none. Overall, Ms Kincade submitted, the Crown has failed to prove beyond reasonable doubt that the relevant deposits were secret commission payments.
[759] I accept Ms Kincade’s submission that there were other funds transfers between the relevant accounts that have not been identified as secret commission payments. It is not necessary for the Crown to prove, however, that the only payments between the relevant accounts were the secret commission payments. Given that I have found that all three defendants and Mr Huang were working together to implement the fraudulent scheme, there may well have been other payments made between the parties in furtherance of the objectives of the scheme or to meet costs
associated with it, or for purposes unrelated to the charges before the Court. In this context, I note Mr Bulloch’s evidence that the charges before the Court are selective, and do not encompass every transaction that the SFO believes may have been fraudulent. His evidence was that a number of loan transactions that were believed to be fraudulent were not pursued by the SFO.
[760] I also note that there is little difference between the sums paid from Shufeng Qi to Bufang Mai and then on to Mr Jiang. Most of the payments from Bufang Mai’s account to Mr Jiang’s account match exactly the sum that was originally paid into the Bufang Mai account from the Shufeng Qi account.
[761] Ms Kincade’s submission that the Crown has failed to identify secret commission payments for some transactions overlooks the fact that only payments made through bank accounts can be readily identified. That does not mean, however, that that is the only way in which rewards or inducements were made. The fact that the Crown has not been able to identify a specific deposit linked to every transaction does not, in my view, significantly undermine the Crown case.
[762] Ms Kincade’s submissions focussed heavily on the inter-relationship, over a period of many years, between Bufang Mai’s account and Mr Jiang’s. She submitted that the overall payments back and forth between those two accounts was consistent with Bufang Mai lending money to Mr Jiang, which he progressively repaid. Focussing solely on the inter-relationship between the bank accounts of Bufang Mai and Mr Jiang does not take matters very far, however. Bufang Mai lived permanently in the United States, and the evidence established that Mr Jiang was able to access and control her New Zealand account.
[763] The key question that arises from the evidence, in my view, is why Shufeng Qi (Richard Chen’s aunt) would be transferring significant sums of money to Bufang Mai (Mr Jiang’s mother). While a mother (Bufang Mai) giving money to her son (Mr Jiang) may not be unusual, it is unusual that she (or her account) was receiving money from Richard Chen’s aunt, who was receiving it from Ms Xu’s brother, who was in turn receiving it from LV Park. The transactions between Bufang Mai and
Mr Jiang cannot be considered in isolation, but must be considered against this background.
[764] Circumstantial evidence that points to the relevant payments being payments to Mr Jiang from LV Park and Mr Chen, as a reward or inducement for Mr Jiang processing and/or approving loan applications on behalf of the BNZ, includes the following:
(a) Mr Jiang was aware of, and participated in, the fraudulent mortgage scheme from an early stage. Similarly, I have found that Ms Xu and Mr Chen were both aware of, and closely involved in, the implementation of the mortgage fraud scheme. Mr Huang was the mastermind of the scheme. He has previously pleaded guilty to a number of charges relating to the fraudulent scheme.
(b) The payments in issue were made through a succession of bank accounts, each of which was linked in some way to the four participants in the fraud. For example, in a number of cases funds flowed from LV Park, to Hao Zhang (Ms Xu’s brother), to Shufeng Qi (Mr Chen’s aunt), to Bufang Mai (Mr Jiang’s mother), before eventually reaching Mr Jiang’s account. The only common factor between the various bank accounts is that they are each associated in some way with one of the defendants and Mr Huang:
(i) Ms Xu and Mr Huang were both able to access and control LV Park’s bank account;
(ii) Ms Xu held a power of attorney for her brother, Hao Zhang;
(iii) Mr Jiang assisted Mr Chen to set up the bank account for Shufeng Qi in 2008 and provided him with the login details for that account. Mr Chen was therefore able to access and control that account, as needed; and
(iv) Mr Jiang sent Mr Chen an email in July 2012 confirming his mother’s (Bufang Mai’s) bank account details. Mr Jiang was therefore able to access and control that account, as needed. From August 2012 onwards, all of the payments were made through the Bufang Mai account.
(c) There is no evidence of Mr Jiang having any legitimate business or other relationship with LV Park or its associated entities that could explain regular payments sourced from LV Park’s bank account being made to him.
(d) Hao Zhang lives in China. Bufang Mai lives in the United States. The SFO’s inquiries indicate that Shufeng Qi also currently lives in China, although it appears that she may have previously visited New Zealand. It is unusual for persons who reside permanently overseas to have New Zealand bank accounts.
(e) There is no evidence that, independently of Mr Huang and the defendants, Hao Zhang, Shufeng Qi and/or Bufang Mai had any relationship with each other, either business or personal. There appears to be no legitimate reason that Bufang Mai would be receiving funds from Shufeng Qi, or that Shufeng Qi would be receiving money from Hao Zhang.
(f) Similarly, there is no logical explanation for the complex and highly unusual series of funds transfers from bank account to bank account, other than that the structure was adopted to disguise the true source and purpose of the payments.
(g) The payments were each made reasonably close in time, usually within a couple of days or a week, of the relevant loan drawdown dates.
(h) All of the payments in issue can be traced back to LV Park.67
67 As noted above, I was not satisfied, beyond reasonable doubt, that the cash payment and the
(i) Many of the payments were for the same or similar amounts.
[765] Taking all of these matters into account, I am satisfied, beyond reasonable doubt, that:
(a) Mr Jiang accepted or obtained the sums set out in Schedule E to the Amended Crown Charge Notice as an agent of the BNZ;68 and
(b) the relevant payments were knowingly accepted by Mr Jiang as inducements or rewards for Mr Jiang processing and/or approving the loan applications identified in Schedule E, in his capacity as an employee of the BNZ.
The secret commissions charge against Mr Chen
[766] The secret commissions charge against Mr Chen differs from that against Mr Jiang, as Mr Chen is alleged to have given, rather than received, secret commissions. Specifically, he is alleged to have given or facilitated the giving of secret commissions to Mr Jiang (as an agent of the BNZ)69 and Peter Cheng
payment from New Oak can be attributed to LV Park. I therefore found those particulars not proven.
68 With the exception of the cash deposit of $7,000 allegedly paid in respect of the 8 Hampshire Court transaction, and the bank deposit in the sum of $12,700, sourced from New Oak, that was allegedly paid in respect of the transaction relating to 12 and 25 Barwick Place.
69 5 and 9 Hampshire Court $6,400 (loan drawn down on 26 July 2012, payment on 16 August 2012); 12 Ashwick Place, 1 Briar Rose Court and 62 Te Huia Drive, $21,000 (loan drawn down on 15 August 2012, 23 August 2012 and 4 September 2012 respectively; payment dated 6 September 2012); 4 Trimmer Lane and 60 Te Huia Drive $14,000 (loan drawn down on 11 September 2012 and payment dated 17 September 2012); 7 Hampshire Court and 11 Hawtry Lane $12,000 (loan drawn down on 21 September 2012, payment dated 25 September 2012); 1768 River Road $7,203.13 (loan drawn down on 1 October 2012, payment dated 4 October 2012); 15 Barwick Place $7,000 (loan drawn down on 12 November 2012, payment made on 22 November 2012); 12 and 25 Barwick Place $12,700 (loan dated 27 November 2012, payment made on 29 November 2012); 408 Ormiston Road $7,000 (loan drawn down on 3 December 2012 and payment made on 6 December 2012); 5 Te Ironui Place $12,000 (loan drawn down on 12 December 2012, payment made on 17 December 2012); 79 New Borman Road and 6 Sutherland Court $14,500 (loan drawn down on 17 December and payment made on 18 December 2012); 77 New Borman Road and 29 Piwakawaka Court $14,500 (loan drawn down on 19 December 2012 and payment made on 21 December 2012); 107 New Borman Road, 7 Barwick Place and 29 Te Ironui Place, and 18 Te Ironui Place $29,000 (loans drawn down on 31 January 2013 and payment made on 4–11 February 2013); 410 Ormiston Road $8,000 (loan drawn down on 14 February 2013, payment made 18 February 2013); 1 Barwick Place and 17 Barwick Place $16,000 (loan drawn down on 28 February 2013, payment made on 1 March 2013); 40 Hartis Ave, 3 Sutherland Court $16,500 (loan drawn down on 8 March 2013 and payment made on 11 March 2013); 24 Waikura Drive $7,500 (loan drawn down on 27 March 2013 and payment made on 28 March 2013); 102 Barrington Drive $7,000 (loan drawn down on
(as an agent of the ANZ).70 The Question Trail for this charge is annexed as Appendix 7.
The evidence relating to the alleged secret commission payments
[767] I have summarised the Crown evidence regarding the secret commission payments to Mr Jiang at [736] to [749] above. For the reasons outlined above, I have found that Mr Jiang had received all but two of the secret commission payments alleged. The two particulars that I found not to be proved related to a cash deposit into his bank account (allegedly relating to the purchase of 8 Hampshire Court) and a further deposit into his bank account that was sourced from the New Oak bank account (which allegedly related to the purchase of 12 and 25 Barwick Place).
dated 8 April 2013 and payment made on 10 April 2013); 17 Hartford Terrace $7,500 (loan drawn down on 12 April 2013, and payment made on 12 April 2013); 108 New Borman Road, 27 Hart Road and 1 Geranium Ave $33,500 (loan drawn down on 26 April 2013, payment made on 29 April 2013).
70 Sale of 78 and 80 Barrington Drive on 5 October 2012 (payment of $13,000 made on 15–18 October 2012); Sale of 11 Barwick Place and 92 Barrington Drive on 26 October 2012 (payments of $6,500 made on 5 and 21 November 2012); Sale of 7 and 20 Te Ironui Place on 31 October 2012 (payments of $6,500 made on 10 January 2013 and 31 October 2012 respectively); Refinance of 64 Magellan Rise on 3 May 2013 (payment of $7,000 made on 6 May 2013); Sale of 55a Alpers Ridge on 26 June 2013 and sale of 11 Hemsby Place on 20 June 2013 ((payment of $13,000 made on 21 June 2013); Sale of 12 Hembsy Place and 59a Alpers Ridge on 20 June 2013 and 26 June 2013 (payment of $14,000 made on 2 July 2013); Purchase of 10/175 Queen Street on 17 July 2013 (payment of $5,000 made on 23 July 2013); Sale of 65 Magellan Rise on 25 July 2013 (payment of $10,000 made on 25 July 2013); Sale of 2a Ihimaera Terrace and 6 and 8 Pengover Ave on 25 July 2013 (payment of $18,000 made on 5 August 2013); Sale of 17 Alpers Ridge, 20 and 24 Pengover Ave on 19 August 2013 (payment of $21,000 made on 22 August 2013); Sale of 16 Sirius Crescent, 66 and 68 Magellan Rise on 27 August 2013 (payment of $21,000 made on 29 August 2013); Sale of 25 Hart Road on 3 September 2013 (payment of
$7,000 made on 5 September 2013); Sale of 35 and 37 Pickaberry Ave on 12 September 2013 (payment of $28,000 made on 19 September 2013); Sale of 33 and 39 Pickaberry Ave on 17 September 2013 (same payment of $28,000 made on 19 December 2013); Refinance of 11 Hawtry Lane, 163c Bankwood Road, 1 Briar Rose Court, 4 Cascade Place, 7 Hampshire Court and 62 Te Huia Drive on 29 October 2013 (payment of $10,000 made on 31 October 2013; Sale of 43 and 49 Pickaberry Ave on 1 November 2013 (payment of $10,000 made on 4 November 2013); Sale of 1 Geranium Ave, 15 Barwick Place and 77 New Borman Road on 4 November and 5 December 2013 and Sale of 9 Hampshire Court and 1768 River Road on 4 November 2013 (Payment of $20,000 made on 11 November 2013); Sale of 41 and 45 Pickaberry Ave on 22 November 2013 and Sale of 410 Ormiston Rd, 5 Te Ironui Place, 7 Barwick Place and refinance of 29 Piwakawaka Court and 25 Barwick Place on 5 December 2013 (payment of $20,000 made on 5 December 2013); sale of 108 New Borman Road on 13 December 2013 and sale of 24 Waikura Drive and 5 Barwick Place on 13 December 2013 (payment of $10,000 made on 16 December 2013); Sale of 33 Hart Road on 19 December 2013 (payment of $5,000 made on 23 December 2013).
[768] Mr Chen is charged with being involved in the giving of each of the payments that I have found that Mr Jiang received.71
[769] In addition, Mr Chen is charged with having made a number of secret commission payments to Peter Cheng at the ANZ. Mr Bulloch undertook a detailed forensic accounting analysis of various payments made to Peter Cheng, similar to that which he undertook in respect of the payments to Mr Jiang. His findings are recorded in a spreadsheet that he produced in evidence.
[770] Mr Bulloch’s evidence established that the alleged secret commission payments to Peter Cheng followed a broadly similar pattern to those to Mr Jiang. LV Park Construction Trust was the source bank account for all the payments (excluding the New Oak payment that is no longer in issue). The funds flowed through one or more intermediary bank accounts (in the names of Hao Zhang, Shufeng Qi, Amy Chen and/or Vivian Cheng) before reaching the destination bank account (in the names of either Peter Cheng (only) or Peter Cheng and his parents Susanna Sze and Ricky Cheng (jointly)). More specifically, Mr Bulloch’s evidence established that:
(a) The first four payments were sourced from funds paid by LV Park Construction Trust to Hao Zhang, then transferred from Hao Zhang to Shufeng Qi, and finally from Shufeng Qi to Peter Cheng.
(b) The next two payments were sourced from funds paid by LV Park Construction Trust to Shufeng Qi, and then from Shufeng Qi to Peter Cheng.
(c) The next four payments were sourced from funds paid by LV Park Construction Trust to an account in the name of Richard Chen’s sister Amy Chen, and then transferred from her account to Peter Cheng.
71 Mr Chen is not charged in relation to the initial cash deposit into Mr Jiang’s bank account (which I found not to be proved in relation to Mr Jiang, in any event). Mr Chen is charged in relation to the New Oak payment. Given, however, my finding that that particular was not proved against Mr Jiang, it cannot be proved against Mr Chen and I do not propose to consider it further.
(d) The remaining eleven payments (from 19 August 2013 onwards) flowed from LV Park Construction Trust to Amy Chen (Richard Chen’s sister), then on to Vivian Cheng (Peter Cheng’s sister), and from there to a joint account in the name of Peter Cheng and his parents, Susanna Sze and Ricky Cheng.
[771] The 19 August 2013 date is significant because, on that date, Peter Cheng sent a text message to Mr Chen telling him that a new bank account had been set up in the name of his (Peter Cheng’s) sister Vivian Cheng, and giving Mr Chen the account number for that bank account. Mr Chen replied saying “thanks”. As I have noted above, the four payments preceding that date had flowed directly from the account of Mr Chen’s sister, Amy Chen, to that of Peter Cheng. After 19 August 2013, however, the payments flowed from Amy Chen’s account to Vivian Cheng’s account, before then being transferred on to Peter Cheng.
[772] On 4 September 2013, the day after drawdown of a loan to purchase 25 Hart Road (as approved/processed by Peter Cheng), a payment of $14,000 was made from LV Park Construction Trust’s bank account to Amy Chen’s bank account. That same day, Mr Huang sent Mr Chen a text message saying, “be your office 5 min, 14k paid already”. Shortly after the $14,000 deposit was paid into Amy Chen’s bank account,
$7,000 of it was transferred to Vivian Cheng’s account (and then transferred on to the joint account that Peter Cheng held with his parents). Line 17 of Peter Cheng’s reconciliation spreadsheet (referred to below) recorded the $7,000 payment he received in respect of this transaction.
[773] Some months later, on 8 December 2013, Peter Cheng sent a text message to Mr Chen that read:
Hey bro; I need to discuss with u about the fee charge as the current rate is not acceptable due to the increasing risk. Thomas increasingly purchasing lifestyle/luxury properties which is different to previous model with many lower price properties. The default risk increased. The fee charges required to be converted back to previous charge $7k + commission split from Evan for $1m below properties. $10k + Evan commission for $1m+ property.
Evan appears to be a reference to Evan Wu, a mortgage broker whose name appears on some of the loan applications.
[774] The final, and key, piece of evidence relied on by the Crown in relation to this charge is an email sent by Peter Cheng to Mr Chen on 27 December 2013, with the subject line ‘Reconciliation.’ The email attached a spreadsheet. The message body read:
Hi Richard,
Can you please double check and confirms back to me directly. Thanks and regards,
Peter
[775] There is only one possible interpretation of the spreadsheet. It is Peter Cheng’s personal record of the kickback payments he received for processing and approving LV Park-related loan applications, on behalf of ANZ. The first tab of the spreadsheet contains a list of individual names, properties, and figures. The figures match payments that were received into Peter Cheng’s bank account (or his joint bank account with his parents) following the loan transaction that they are recorded next to.
[776] Peter Cheng’s request for an increased level of kickback payments appears to have been superseded by events. Sometime in December, discrepancies in the lending approved by Peter Cheng came to the attention of senior managers at the ANZ. An investigation was launched. Peter Cheng left the ANZ in February 2014 and moved to Bank A. ANZ referred its concerns regarding the lending approved by Peter Cheng to the SFO on 6 March 2014.
Did Mr Chen make the secret commission payments to Mr Jiang and Peter Cheng as inducements or rewards for processing and approving the relevant loan applications?
[777] I am satisfied that Mr Jiang received secret commission payments, for the reasons I have outlined at [750] to [765] above. Further, in light of the evidence I have just referred to regarding Peter Cheng, it is clear that he too received secret commission payments. He has not been charged, however, as he left New Zealand after the SFO investigation had commenced, but prior to charges being laid.
[778] Obviously, it does not necessarily follow from the fact that Mr Jiang and Mr Chen received secret commission payments that Mr Chen was the person
(or one of the persons) who made those payments. I therefore now turn to consider whether the Crown has proved that he was.
[779] Mr Wimsett advanced the following arguments in Mr Chen’s defence to this charge:
(a) There is insufficient evidence that Mr Chen was the person who made the relevant electronic funds transfers from the bank accounts of his aunt, Shufeng Qi, and his sister, Amy Chen.
(b) Peter Cheng’s reconciliation spreadsheet postdates the secret commissions that were paid to Peter Cheng. It was sent on 27 December 2013, whereas the final secret commission was allegedly paid on 23 December 2013. Mr Chen was not in New Zealand on 27 December 2013. He did not reply to Peter Cheng’s email. There is no evidence that he received it, or read it.
(c) The text message sent by Peter Cheng to Mr Chen on 8 December 2013 (seeking to renegotiate the commission rate) postdates most of the alleged commissions. It supports the inference that, by then, Mr Chen was aware of the commissions. It does not support the assertion that he was responsible for paying them.
[780] As I have noted previously, this is a circumstantial case. What is important is the cumulative effect of all of the different strands of evidence. In my view, there are numerous strands of evidence that, when considered together, point inexorably to the conclusion that Mr Chen was closely involved in making the secret commission payments to both Mr Jiang and Peter Cheng.
[781] First, all of the secret commission payments that were paid into the accounts of Peter Cheng or his sister Vivan Cheng (who then transferred them on to Peter Cheng’s sole or joint account) were paid from either the account of Shufeng Qi (Mr Chen’s aunt) or Amy Chen (Mr Chen’s sister). There was no direct interface between Peter Cheng’s account and the LV Park Construction Trust account. All of
the payments to Peter Cheng were made from an account in the name of one of Mr Chen’s relatives (either his aunt or his sister). In turn, those accounts received funds from LV Park Construction Trust in respect of most (but not necessarily all) of the sums that were paid by way of secret commission.
[782] I have previously considered Mr Wimsett’s submission that there is insufficient evidence that Mr Chen had access to or controlled the bank account in Shufeng Qi’s name when I considered the “false salary payments” charges against Mr Chen. For the reasons outlined at [501] to [504] above, I was satisfied that Mr Chen did have control over Shufeng Qi’s bank account. That finding applies equally to these charges.
[783] As for the Amy Chen bank account, Mr Wimsett referred to evidence that indicated that Amy Chen herself had, on occasion, accessed that bank account. For example, there are deposit slips indicating that Ms Chen had made deposits into her Westpac bank account in person, in New Zealand in 2013, producing her passport as identification. Further, there are transactions in the account that appear to be unrelated to LV Park. There was also evidence that in March 2016, someone had logged into Amy Chen’s account from China, at a time when Mr Chen was in New Zealand, and conducted “timeline searches” of that account and reviewed transactions lists (it does not appear, however, that any actual transactions were undertaken). (I note that the SFO investigation was well underway by this time. Ms Xu’s interview with the SFO took place in April 2016).
[784] The fact that Amy Chen may have accessed the bank account in her name, or made deposits into it, does not establish that her use of the account was exclusive, or that Mr Chen did not also access the account during the relevant period (the year 2013). When the totality of the evidence is considered, it is clear, in my view, that Mr Chen was the person who made the relevant bank transfers in 2013. In particular:
(a) As I have found previously, Mr Chen was aware of, and closely involved in, the fraudulent mortgage scheme from an early stage. Similarly, I have found that Ms Xu and Mr Jiang were both aware of, and closely involved in, the implementation of the mortgage fraud scheme. Mr Huang was the mastermind of the scheme.
(b) The payments in issue were made through a succession of bank accounts, each of which was linked in some way to the four participants in the fraud.
(c) There is no evidence of Amy Chen having any legitimate business or other relationship with LV Park or its associated entities that could explain the regular payments made to her by LV Park Construction Trust. Mr Chen, on the other hand, had an extremely close association with LV Park.
(d) There is no evidence of Amy Chen having any legitimate business or other relationship with Peter Cheng or Vivian Cheng that would explain the payments made from her account to their accounts.
(e) There is no logical explanation for the complex and highly unusual series of funds transfers from bank account to bank account, other than that the structure was adopted to disguise the true source and purpose of the payments.
(f) The 19 August 2013 exchange of messages between Peter Cheng and Mr Chen that I have referred to at [771] above points very strongly to Mr Chen as the person who made the payments from the Amy Chen account to the Vivian Cheng account.
(g) The 4 September 2013 text message from Mr Huang to Mr Chen that I have referred to at [772] above points very strongly to Mr Chen as the person who made the subsequent transfer of $7,000 from Amy Chen’s account to Vivian Cheng’s account on that date.
(h) The 8 December 2013 text message from Peter Cheng to Mr Chen (referred to at [773] above), seeking to renegotiate the rate of the kickbacks he was receiving, points strongly to Mr Chen’s involvement in the payment of secret commissions to Peter Cheng. (I note that,
consistent with this text message, the bulk of the kickback payments to Peter Cheng were multiples of either $7,000 or $10,000).
(i) The reconciliation schedule emailed from Peter Cheng to Mr Chen (at his work email address) on 27 December 2013 (referred to at [774] above) demonstrates Mr Chen’s close involvement and oversight of the secret commission payment process. I place no weight on the fact that there is no evidence that Mr Chen responded to this email. It is apparent from the evidence as a whole that Mr Chen never (or almost never) sent incriminating emails from his work email address. Given his obvious intelligence and legal training, that is not surprising.
[785] Taking all of these matters into account, I am satisfied that not only did Mr Chen have the ability to access and control the bank accounts of Shufeng Qi and Amy Chen, but that he did so in relation to all of the secret commission payments that are in issue. Each secret commission was paid to either Mr Jiang or Peter Cheng (or an account associated with them) from either the Shufeng Qi account or the Amy Chen account, which Mr Chen had control over during the relevant period.
[786] It is totally implausible, for the reasons I have outlined, that either Shufeng Qi or Amy Chen made those transfers. Nor is it tenable that Mr Huang was somehow controlling the Shufeng Qi and Amy Chen bank accounts. The totality of the evidence points squarely to Mr Chen. The only reasonably available inference on the evidence is that Mr Chen made those payments as inducements or rewards to Mr Jiang and Peter Cheng for their actions in processing and approving the various loan applications identified in Schedule F of the Amended Crown Charge Notice.
[787] In conclusion, I am satisfied that the Crown has proved beyond reasonable doubt that:
(a) Mr Chen gave consideration (monetary payments) to Mr Jiang and Peter Cheng, as agents for the BNZ and ANZ respectively in relation to all of the particulars set out in Schedule F of the Amended Crown
Charge Notice, except the particular relating to the payment in November 2012 in respect of 12 and 25 Barwick Place.
(b) Mr Chen made the payments as an inducement or reward for Mr Jiang or Peter Cheng processing and approving the various loan applications identified in Schedule F.
K. CONCLUSION
[788] These are the reasons for the verdicts I have delivered today.
Katz J
APPENDIX 1 RELATIONSHIPS CHART
Father
Mother
Father
Mother
Married
Brother
Hao ZHANG
Kang XU
aka: Jenny XU aka: Yan ZHANG
Kan HUANG
aka: Thomas WANG aka: Gang WANG
Huazhen ZHANG
Jiquan ZHANG
Guizhen ZHOU
Wenglong WANG
Aunt
Sister
Amy CHEN
Gang CHEN
aka: Richard CHEN
Shufeng QI
Mother
Zongliang JIANG aka: Charly JIANG
Bufang MAI
Sister
Vivian CHENG
Peter CHENG (Bank Officer – ANZ)
Appendix 2
Obtaining credit by deception (Xu and Chen) – s 240(1)(b) — provision of false documents
Relevant charges:
Ms Xu: 6–12, 14, 16, 32–33, 36–41, 43, 45–47
Note: charge 36 includes both providing a false document (bank statements) and making false salary payments. I have referred to it in the question trails relating to both forms of deception.
Mr Chen: 15 and 35
False representation(s):
Particulars of Ms Xu’s alleged false representation — one or more of the following:
Particulars of Mr Chen’s alleged false representation
Knowledge of falsity of representation(s)
Intent to deceive
Inducement/causation
Claim of right
Appendix 3
Obtaining credit by deception (Jiang) – s 240(1)(b) — processing/approving loans based on false information
Relevant charges:
Mr Jiang: 6–15, 17–31
False representation(s):
Particulars of Mr Jiang’s alleged false representation
Knowledge of falsity of representation(s)
Intent to deceive
Inducement/causation
Claim of right
Appendix 4
Obtaining credit by deception (Xu and Chen) – s 240(1)(b) — making false salary payments
Relevant charges:
Ms Xu: 17–26, 29–31, 36
Note: charge 36 includes both providing a false document (bank statements) and making false salary payments. I have referred to it in the question trails relating to both forms of deception.
Mr Chen: 27–28
False representation(s):
Particulars of alleged false representation:
Knowledge of falsity of representation(s)
Intent to deceive
Inducement/causation
Claim of right
Appendix 5
Obtaining credit by deception (Chen) – s 240(1)(b) — failing to inform the bank of material particulars
Relevant charges:
Mr Chen: 3–5, 34, 42, 44 and 48 (3–4 are representative charges).
Omission
Particulars of alleged omission — one or more of the following
Duty to disclose
Intent to deceive
Inducement/causation
Claim of right
Appendix 6
Corruptly received consideration as an agent as an inducement/reward (Jiang) – Secret Commissions Act s 4
Relevant charges:
Mr Jiang: 50
Acceptance of consideration
Particulars of alleged consideration:
Inducement/reward
Appendix 7
Corruptly gave consideration to an agent as an inducement/reward (Chen) – Secret Commissions Act s 3
Relevant charges:
Mr Chen: 51 (representative charge)
Giving of consideration
Particulars of alleged gifts or other consideration:
Inducement/reward
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