The three defendants in a Serious Fraud Office (SFO) trial who worked together to illegally obtain home loans have been convicted. The SFO says the scheme, which involved 110 separate property transactions in Auckland and Hamilton, was designed to obtain cheaper lending for a commercial property development.
The decision in R v Xu  NZHC 1433 was delivered by Justice Katz.
Suspended lawyer Gang (Richard) Chen, property developer Kang Xu, who is also known as Yan (Jenny) Zhang, and former bank employee Zongliang (Charly) Jiang were convicted for their respective roles in the fraudulent scheme that obtained about $54 million worth of residential home loans. Another bank employee was also involved in the scheme but left the country in 2015.
Mr Chen was convicted of nine charges of ‘Obtaining by deception’, two of which were representative charges. Mr Chen was also convicted of one representative charge of ‘corruptly giving consideration to an agent’ under the Secret Commissions Act. This charge relates to secret commission payments made to the bank employees.
Mr Chen was suspended for two years from 24 March 2017 by the New Zealand Lawyers and Conveyancers Disciplinary Tribunal.
He admitted having been convicted of five criminal offences, four of which were punishable by imprisonment and tended to bring his profession into disrepute. The convictions included two for driving with excess breach alcohol, two for driving while disqualified, and one for careless driving.
Ms Xu was convicted of 22 charges of ‘Obtaining by deception’ under the Crimes Act. Her husband, property developer Kang (Thomas) Huang, pleaded guilty to his part in the scheme prior to the trial. Contrary to Ms Xu’s defence during the three-month trial, the Court found she was aware of and actively involved in the criminal offending.
Mr Jiang was convicted of 25 charges of ‘Obtaining by deception’ and one representative charge of ‘Acceptance of gifts by agent’ under the Secret Commissions Act in relation to the kickbacks. Mr Jiang received secret commission payments for his role in the scheme.
Mr Huang, who masterminded the offending, was sentenced to four years and seven months of imprisonment in February. Also known as Gang Wang, he pleaded guilty to all 10 charges he faced in December - eight of ‘Obtaining by deception’, one charge of ‘Corruptly giving consideration to an agent’, and one charge of ‘Dishonest use of a document’.
“These crimes, which relied on a high level of calculation and collaboration, undermine lenders’ confidence in borrowers in the mortgage market, says SFO Director, Julie Read.
“The banks were misled in a number of respects including the financial position of the purported borrowers and the level of associated risk.”
Mr Chen and Mr Jiang have been remanded in custody while Ms Xu has been remanded on bail, until their sentencing later this year.