Mother, son appeal $3m fines over suspicious transfers on behalf of businessman

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Qiang Fu and his mother Fuqin Che are appealing their conviction and fine.

David White/Stuff

Qiang Fu and his mother Fuqin Che are appealing their conviction and fine.

A mother and son claim they had no idea a wealthy Chinese-Canadian businessman ran a $202 million pyramid scheme when they transferred money into New Zealand banks for him.

In 2020, Qiang Fu and his mother Fuqin Che became the first people in New Zealand to be sentenced for criminal offending under the Anti-Money Laundering and Countering Financing of Terrorism Act.

They had earlier been found guilty of transferring $53m for Chinese-Canadian businessman Xiao Hua Gong, also known as Edward Gong, in 311 separate payments between April 2015 and May 2016.

Fu was fined $180,000, Che was fined $202,000, and Jiaxin Finance, of which Fu is the sole director and shareholder, was fined $2.55m.

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Earlier this year, Gong was ordered to forfeit more than $70 million for his part in operating a massive pyramid scheme.

Jiaxin Finance Ltd was fined nearly $3 million.

David White/Stuff

Jiaxin Finance Ltd was fined nearly $3 million.

On Thursday, Ron Mansfield QC, acting on behalf of Fu and Che, appealed their conviction and fines at the Court of Appeal.

He said Che and Fu did not know Gong would later be prosecuted for any type of unlawful business activity in Canada.

There was no evidence they made any money from the transfers, only a small commission, he said, and they did not know the funds may have been dishonestly obtained.

Gong and Che had a trusted relationship, he said. Gong would transfer money to Che, who would then deposit the cash at various banks in central Auckland.

Ron Mansfield QC acts for Qiang Fu and Fuqin Che. (File photo)

David White/Stuff

Ron Mansfield QC acts for Qiang Fu and Fuqin Che. (File photo)

The charges the pair and the company were found guilty of included failing to conduct customer due diligence, failing to keep adequate records relating to a suspicious transaction, and failing to report a suspicious transaction.

In addition, Che was found guilty of structuring a transaction to avoid the application of one or more anti-money laundering requirements.

Crown prosecutor David Johnstone said there could only be a single explanation for the deceit.

Jiaxin Finance Limited director Michael Fu aka Qiang Fu, pictured in 2018.

David White/Stuff

Jiaxin Finance Limited director Michael Fu aka Qiang Fu, pictured in 2018.

“Gong was separated from the business, to prevent him coming to the attention of relevant investigating agencies.”

Johnstone also said the obvious motive for the offending was to ensure the money could continue being transferred into New Zealand and deposited into Gong’s accounts without it raising concern.

It was an attempt to lower his visibility, Johnstone said.

Justice Stephen Kós said he found it “baffling” a respected money remitter would be walking around central Auckland with hundreds of thousands in cash, before depositing it at banks.

Justice Kós, Justice David Goddard and Justice Sarah Katz reserved their decision.