Chinese businessman forfeits $70m in criminal proceeds

Credit: Original article can be found here

A Chinese-Canadian businessman will have to forfeit more than $70 million to the New Zealand Police after a money laundering investigation linked to a multi-national pyramid scheme.

In 2017, police froze more than $70 million worth of assets from Xiao Hua Gong, also known as Edward Gong, who was allegedly operating the massive pyramid scheme.

Gong was arrested in Canada in December 2017, accused of running a $202m pyramid scheme.

A mother and son who transferred money for Gong were sentenced for their part in the pyramid scheme.

* Multimillion-dollar Auckland home owned by businessman Edward Gong razed by fire
* Mother, son and their business fined nearly $3m for suspicious transfers on behalf of Chinese businessman Edward Gong
* Finance company, owner and worker to face trial over money laundering charges
* Auckland pair and business charged in relation to $202m pyramid scheme
* Fraud-accused Chinese businessman has $70 million frozen in NZ

Justice Tracey Walker fined Jiaxin Finance $2.55m. Qiang Fu was fined $180,000 and his mother Fuqin Che was fined $202,000.

On Wednesday, Detective Inspector Craig Hamilton said the High Court has now approved a settlement between Police and Gong enabling the forfeiture of more than $70 million, which is New Zealand’s largest every forfeiture under the Criminal Proceeds (Recovery) Act 2009.

Jiaxin Finance Limited was used to launder money.

David White

Jiaxin Finance Limited was used to launder money.

The funds were identified as being profits from the pyramid scheme based in China and Canada.

“This settlement is a fantastic result and we thank both the Chinese and Canadian authorities for their assistance in bringing this matter to a successful conclusion,” Detective Inspector Hamilton said.

The Criminal Proceeds (Recovery) Act 2009 allows Police to restrain and forfeit assets acquired or derived from the proceeds of crime.

The forfeited property in this case includes over $68 million in cash and a property in East Tamaki Heights.

“This is the largest forfeiture of proceeds of crime ever secured in New Zealand and it reflects the expertise of New Zealand Police when investigating complex multi-jurisdictional money laundering at the most serious level,” Hamilton said.

He said police are committed to making New Zealand the hardest place for criminals to do business, and we will not tolerate those who operate in other parts of the world hiding their illicit proceeds here.

“This outcome sends a simple message to criminals around the world – send your dirty money to New Zealand and you will lose it.”

Jiaxin Finance Limited director Michael Fu aka Qiang Fu was fined for his part in the scheme.

David White

Jiaxin Finance Limited director Michael Fu aka Qiang Fu was fined for his part in the scheme.

Edward Gong

A Canadian search warrant obtained by Stuff said the police froze and seized about C$63m (NZ$69m) in New Zealand bank accounts as well as two Auckland properties worth about $3m.

According to the police, Gong created a scheme in China which revolved around the the sale of health products, along with the gifting of shares in drug and television companies.

“Gong set up the schemes, managed all of its elements, employed others to facilitate the scheme and received a large amount of money in compensation for his efforts,” Canadian police said in court documents.

The search warrant says an Ontario Securities Commission investigation of Gong involved the New Zealand Police and China’s Ministry of Public Security, along with international money tracking agencies.

In Canada, Gong has donated C$7000 (NZ$4755) to the Liberal Party in recent years, and was at a 2016 Liberal fundraiser involving Prime Minister Justin Trudeau, according to The Globe and Mail.

The East Tamaki house was razed by fire in October.

Troels Sommerville/Stuff

The East Tamaki house was razed by fire in October.

Suspicions about Gong’s money were raised in New Zealand in 2015 when ANZ alerted police it had concerns about the large sums of money being transferred to his account. The following year, Customs detained Gong when he tried to enter the country with 34 bank cards and more than $10,000 in undeclared money.

He received a formal warning from Customs and a $500 fine. His laptop and phone were seized by Customs and the information on the devices was taken by police.

Six months prior to his assets being frozen, New Zealand police travelled to China.

Gong owns a small chain of hotels, a private high school, and two Chinese language TV channels in Canada, according to The Globe and Mail.

In 2012, he was one of 60 Canadians to receive a Queen’s Diamond Jubilee medal, which recognised community service.

When visited by Stuff in May 2017, Gong’s mother, Shuying Chen, said she was unaware of Gong’s arrest.

All that remained of the mostly timber house in East Tamaki after a huge blaze.

Troels Sommerville/Stuff

All that remained of the mostly timber house in East Tamaki after a huge blaze.

In October, a house listed as being owned by Gong on Point View Drive, East Tamaki was razed to the ground in a fire.

Police encourage the reporting of suspicious financial activities, including information about those acquiring property or living a lifestyle inconsistent with their means.

Anyone with information is urged to contact Police on 105, or Crimestoppers anonymously on 0800 555 111.