Chinese-Canadian businessman Xiao Hua Gong signs record $ 70 million deal with New Zealand police over frozen assets
Chinese-Canadian businessman Xiao Hua Gong has struck a record deal with New Zealand police under asset seizure laws. Photo / Supplied
Wealthy Canadian businessman Edward Gong has agreed to pay the New Zealand government millions of dollars in the largest Criminal Proceeds (Recovery) Act settlement ever since the law came into force in 2009.
A wealthy Chinese-Canadian businessman has agreed to lose more than $ 70 million by striking a record deal with New Zealand police.
Xiao Hua Gong’s New Zealand bank accounts were frozen three years ago in a global investigation into his finances.
The businessman had built a business empire in Toronto comprising a chain of hotels and television channels, in addition to attending fundraisers for Prime Minister Justin Trudeau and donating to the Liberal Party in power.
But the entrepreneur, better known as Edward Gong, was later forced to deny his success, and influence was gained through an alleged $ 202 million pyramid scheme selling drugs in China.
He was arrested in Canada and charged with fraud and money laundering in December 2017 as part of the alleged pyramid scheme involving the “fraudulent sale of hundreds of millions of dollars” of stock in China.
The New Zealand Police Asset Recovery Unit has also been implicated in an investigation into $ 77 million – alleged pyramid scheme profits – deposited into Gong’s New Zealand bank accounts for seven years.
Nine months before Gong’s arrest in Canada, a High Court judge granted orders to freeze Gong’s assets in New Zealand, including $ 69.5 million held in bank accounts and an Auckland house valued at $ 2 million.
These assets have been frozen under the Criminal Proceeds Recovery Act, which essentially requires someone to prove how an asset was paid for.
For the asset to be forfeited, the police still need to prove that a criminal offense has been committed, but only on a “balance of probabilities”, the standard of proof needed in civil cases, not the much higher criminal threshold. of “beyond a reasonable doubt”.
Gong previously said the evidence used against him in China was gathered through coercion.
Despite this, Gong struck a deal with the New Zealand police, where he agreed to lose over $ 70 million instead of taking the case to the High Court.
In a statement released today by National Police Headquarters, Detective Inspector Craig Hamilton said the forfeiture was the largest ever recorded under the Proceeds of Crime Act.
He thanked Chinese and Canadian authorities and said the case shows New Zealand’s ability to investigate complex money laundering cases involving multiple jurisdictions.
“We are determined to make our country the most difficult place for criminals to do business, and we will not tolerate those who operate in other parts of the world by hiding their illicit proceeds here,” Hamilton said, the national supervisor of police asset recovery units. .
“This result sends a simple message to criminals around the world: send your dirty money to New Zealand and you will lose it.”
The announcement comes shortly after an international report on money laundering ranked New Zealand police among the best in the world at seizing criminal profits.
Police success in enforcing the criminal revenue collection law has been “impressive”, according to the Paris-based Financial Action Task Force (FATF), as more than $ 1 billion in alleged criminal wealth have been frozen since the powerful law came into effect. a little over a decade ago.
â¢ Bill Liu’s secret $ 43 million deal with China
â¢ Almost $ 20 million linked to Head Hunter boss – police
â¢ Inside New Zealand’s $ 50 Million Designer Drug Network
â¢ Nearly $ 70 million frozen in New Zealand as part of the investigation into the Chinese-Canadian pyramid scheme
The police investigation into Gong also revealed how the mother-son duo who ran an Auckland financial firm failed to report $ 53.4 million in suspicious transactions initiated by Gong.
Fuqin Che and his son Michael Fu were responsible for Jiaxin Finance Limited, a money transfer service, were found guilty of four counts of money laundering and terrorist financing (AML / CFT).
The Asset Recovery Unit also discovered that Gong’s brother, Yu Ping Gong, a plumber in Auckland, reported less than $ 1,000 in income over five years, despite making more than $ 2 million in that time.
As a result, Yu Ping Gong lost nearly $ 5 million in property as part of the settlement with the police, as well as an unpaid tax bill of $ 1.2 million.
The separate settlement with Edward Gong announced today ends nearly three years of legal wrangling.
The $ 70 million confiscation easily overshadows the previous largest forfeiture under the Criminal Proceeds Recovery Act, which was the $ 42.5 million paid in 2016 by one of New Zealand’s most controversial citizens.
William Yan, better known as Bill Liu, also agreed to a settlement without “admission of criminal or civil liability” after his New Zealand assets were frozen in 2014 over allegations of fraud in China.
As part of the unusual civil deal, and despite his continued protest of innocence, Yan also agreed to return to China to stand trial on fraud charges for which he was convicted.
He then returned to New Zealand to plead guilty to a single charge of money laundering – which was also part of the settlement – and served five months of house arrest in his Metropolis penthouse.
He now lives in Hong Kong.
The Gong and Yan settlements are by far the two largest successful confiscations under the asset seizure law to date.
Another case, also involving New Zealand police assisting law enforcement overseas, concerns the withholding of $ 140 million in the bank account of a New Zealand company linked to a Russian “computer genius” .
Alexander Vinnik was arrested while on vacation in Greece in 2017 and extradited to France last year, where he was convicted of laundering millions of euros for cybercriminals.
He was sentenced to five years in prison in France and now faces extradition to the United States on other charges related to BTC-e, where at least $ 4 billion worth of bitcoins have been traded with a “level high anonymity “.
While the bitcoin exchange is completely legitimate, US Department of Justice prosecutors allege that Vinnik created a customer base for BTC-e that was “heavily dependent on criminals” by not forcing users to validate their identity, hide and anonymize transactions and source of funds and had no anti-money laundering process.
If the forfeiture action brought against Vinnik in New Zealand is successful, it means that the three largest cases – $ 250 million combined – under the Criminal Proceeds (Recovery) Act 2009 involve the transfer of wealth from suspected criminals. abroad in New Zealand.
In the past, the law has most often been used to seize the wealth accumulated by gangs and drug traffickers, but has spilled over into new territories in recent years.
There have been a number of cases of suspected tax fraud or evasion, suspected film and cryptocurrency piracy, overseas bribery, and even workplace fatalities.