Experienced residential property developer Kang Huang was sentenced to
four years seven months jail for a long-running mortgage fraud using false
documentation to get $48 million in working capital over a four year period
from three trading banks at home-owner mortgage rates rather than more
expensive commercial rates. He was also
convicted of bribery for slipping a bank employee $7000 to process mortgage
applications knowing they were false.
Kang Huang
is also known as Gang Wang and Thomas Wang.
The High Court was told Huang engineered the fraud to save financing
costs for his twenty year old business. Using
nominal buyers as pretend purchasers of houses under construction he gained the
benefit of residential mortgage rates, cutting out the higher interest rates
and roll-over fees charged on commercial loans.
Friends, relatives, associates, employees and in some cases fictitious
individuals were put up as the supposed purchasers of homes under
construction. False employment letters
and statements of financial position were concocted in support. Often this would involve fictitious
employment letters and bank statements from Chinese organisations. This created a paper trail difficult for New
Zealand banks to verify. One bank
employee was suborned with bribes to turn a blind eye to the fraud. He fled the country, avoiding prosecution.
Evidence
was given that all but two of the 57 false residential mortgages have been
repaid by Huang’s business. He is
keeping up mortgage payments on one property, the other was sold in a mortgagee
sale resulting in a $394,000 shortfall.
The named borrower is liable for this shortfall; one of Huang’s
employees. Justice Lang said the fact so
few loans resulted in a loss is a fortuitous result not attributable in any way
to Huang. He was operating in a rising
market. Sales of completed properties
were able to cover the mortgage raised.
Consequences
of the fraud are not restricted to potential financial loss for lenders and the
nominal borrowers, Justice Lang said. There
are wider macro-economic effects. Bank
time and resources are expended in countering fraud, legitimate residential
customers are squeezed out of the mortgage market and there is a threat to New
Zealand’s international commercial reputation if such frauds become
commonplace. As a deterrent, Huang must
serve a minimum term of two years three months before being eligible for parole.
Serious Fraud Office v. Huang – High Court (9.02.18)
18.034