Convicted of money-laundering, Lily Che and her son Michael Fu charged alleged fraudster Xiao Hua Gong a premium when he remitted $77 million into New Zealand through their money remittance business Jiaxin Finance. They surrendered assets valued at $2.2 million as benefits gained from proceeds of crime.
Recently, Chinese national Xiao Hua (Edward) Gong has faced prosecution in Canada for securities fraud following allegations he master-minded a pyramid investment scheme; a prosecution eventually resolved in a settlement with Canadian regulators. Prior to that, there were allegations of fraudulent pyramid selling schemes orchestrated by Gong in China.
Fraudulent pyramid selling schemes see promoters earning quick returns selling multiple overlapping distributorships in the guise of selling a product or service. For supposed investors, the market is quickly saturated with too many distributors looking to hawk the same product or service.
Back in the southern hemisphere, Internal Affairs in New Zealand successfully prosecuted Fuquin (Lily) Che, Qiang (Michael) Fu and their company Jiaxin Finance Ltd for breaching money-laundering legislation following their involvement remitting Gong profits to New Zealand. Their company was fined $2.55 million; Che $202,000; Fu $180,000.
Police took further action under the Criminal Proceeds (Recovery) Act.
The High Court was told Che and Fu charged a 2.9 per cent commission rate for FX transfers made on Gong’s behalf. This rate was some three times higher than rates charged other customers.
An agreed $2.2 million proceeds of crime settlement was approved by the court, with forfeiture of both cash found at their home and up-market vehicles together with forfeiture and sale of an investment property in Auckland suburb New Windsor.
If proceeds of sale are insufficient to meet the agreed $2.2 million settlement, they are given four months to raise a loan for the balance, or face sale of their family home in adjoining suburb Lynfield.
The Lynfield property is owned by a family trust.
Under terms of the settlement, Che and Fu both deny any wrongdoing.
Commissioner of Police v. Che & Fu – High Court (23.10.24)
25.020