Sentences imposed on lawyer Gang Chen and bank employee Zongliang Jiang for their part in a $54 million dollar mortgage fraud were upheld on appeal; minimum periods of imprisonment restricting their rights to parole, were cancelled.
Chen and Jiang participated in a mortgage fraud perpetrated by property developer Kang Huang who used false mortgage applications from ‘dummy purchasers’ to get working capital from major trading banks for his construction business at residential borrowing rates. Chen signed off on mortgage applications knowing they were false; Jiang took kickbacks as a BNZ employee to process applications knowing they were false.
As a conveyancing solicitor, Chen acted as lawyer for many of the fictitious borrowers invented by Huang and also acted as lawyer for banks gulled into providing mortgage finance. He was sentenced to six years’ imprisonment. On appeal, Chen said he could not be convicted of ‘obtaining by deception’ when the deception benefitted Huang, not him. He was guilty of ‘obtaining,’ the Court of Appeal ruled, even where the benefit was enjoyed by someone else. The Court quashed the minimum period of three years’ imprisonment imposed by the trial judge. Chen did not gain any direct monetary benefit from the fraud and otherwise was of good character, the Court said.
A two year four months minimum period of imprisonment imposed on Jiang was also quashed. His prison sentence of four years nine months remains. Jiang received $240,000 in bribes to process false mortgage applications for BNZ loans totalling some $18 million. He surrendered assets valued at $850,000 as benefits accruing from his criminal behaviour. This acknowledgement of wrongdoing should be taken into account, the Court of Appeal said.
High Court evidence identified that the defrauded banks suffered no financial loss on most of the fictitious loans; a rising real estate market ensured they were repaid in full.
Chen v. R. & Jiang v. R. – Court of Appeal (10.07.19)
19.127