Fraud: Americhip v. Dean

Dobbed in by his former wife, Jason Charles Dean has been ordered to pay $US15.7 million following thefts from his employer Americhip Inc.

Alerted in early 2013 that Mr Dean was skimming money from the company, Americhip senior management launched an investigation into their Hong Kong based employee.  He had stolen more than $US ten million from Americhip buying properties in China, Hong Kong and New Zealand according to his former wife, angry that her husband had fathered a child with Americhip staffmember Juan Chen.

Americhip designs and sells promotional products.  Americhip staff confronted Mr Dean and Ms Chen at his property in Mairangi Bay on Auckland’s North Shore with evidence he had defrauded the company by submitting inflated invoices for work done, claiming expenses not incurred, directing payments to dummy companies set up with names similar to Americhip suppliers and using Americhip staff to complete manufacturing work “off the books”.  They confessed and promised to reimburse the company, then fled.  Americhip has been unable to trace the two.

In the High Court at Auckland, Americhip gave formal proof of the frauds committed by Mr Dean and Ms Chen.  Judgment was entered for $US15.7 million: US$12.9 million for money proved to be stolen plus interest.  They were held liable for deceit and breach of fiduciary duty as employees.  Americhip was awarded possession of Mr Dean’s Mairangi Bay home, purchased in April 2013 for $1.95 million.    

Americhip v. Dean – High Court (11.08.16)

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Company: Zhou v. Lu

The High Court stepped in authorising a temporary modus operandi while owners of an Auckland fruit and vegetable store with annual turnover of $5.6 million sort out their differences.

Jun Zhou and Xiaowen Lu jointly own Song Kee Fruit & Vegetable operating out of Newmarket, Auckland.  They have fallen out.  Each accuses the other of acting in an aggressive fashion.  Police have been called twice to the business premises.  Ms Lu accuses Mr Zhou of missappropriation and financial mismanagement.  He alleges she is mismanaging the business by failing to make required payments to Inland Revenue, suppliers and staff.  Each wants to buy out the other, but no price can be agreed.  A complicating factor is that Ms Lu has New Zealand residence whilst Mr Zhao’s immigration status is tied to the business.

Mr Zhou obtained an urgent High Court order after a priority one hour hearing to set out interim rules for running their business.  Ms Lu is required to action all business invoices within 48 hours of receipt.  Neither she nor an alternate director she appointed is to interfere in day-to-day management of the shop.  All company decisions are to be made jointly by Mr Zhou and Ms Lu.  Neither can make corporate decisions alone. 

Zhou v. Lu – High Court (11.08.16)

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Privatisation: Serco v. Corrections

Complaints by Serco about Corrections investigation into organised fight clubs within Mt Eden prison were dismissed by the High Court as unfounded and inaccurate.  Serco’s court action was more in the nature of a fishing expedition to find out who was narking, ruled Justice Clark.  

Serco, private operator of Mt Eden prison since 2011, was in the public eye when YouTube footage surfaced in July 2015 of organised fighting between prisoners.  Corrections Department immediately resumed temporary control of the prison and set up an inquiry.  Before the investigation was complete Serco sued, stalling release of any final Corrections report and demanding access to interview notes compiled during the investigation.  Serco said any failure to share evidence given to the investigator was a breach of natural justice.  The High Court was told Serco conducted its own parallel inquiry but refused to provide Corrections with its evidence and its report.  Corrections provided sections of its report to Serco for comment and review as the investigation proceeded.  Serco demanded access to notes written up after interviews with prisoners and Serco staff.  Anonymity was promised at interviews.  Prisoners were unwilling to co-operate without a promise of anonymity for fear of reprisals from both Serco and fellow prisoners.  Many Serco staff were also unwilling to be interviewed without similar promises of anonymity.

Natural justice does not require disclosure to Serco of interview notes, Justice Clark said.  She was critical of Serco describing Corrections final report as “wilfully portray[ing] Serco in the worst possible light” and using language that was “deliberately controversial, sensational and prejudicially selective”.  The Report is measured and temperate and Serco’s description is wholly unwarranted, she said.  Release of the 92-page report was ordered.      

Serco v. Corrections – High Court (11.08.16)

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Insolvency: Official Assignee v. Sharma

With Sushil Kumar Sharma’s meat supply company forced into liquidation by Inland Revenue for unpaid taxes and Mr Sharma now bankrupt personally, the Official Assignee took pre-emptive action against his family to freeze assets suspected of being hidden from creditors.

The Official Assignee alleges Mr Sharma unloaded personal assets prior to bankruptcy including $150,000 in gold bars, two motor vehicles and a property at Richardson Road in the Auckland suburb of Mt Roskill.  There was evidence of these assets being transferred in suspicious circustances to his wife Paula Sharma and to trustees of a family trust.  The Official Assignee told the High Court these asset transfers would be challenged as gifts made whilst insolvent.  A freezing order was imposed to prevent Mrs Sharma and the family trust disposing of all assets they currently hold.

Official Assignee v. Sharma & Family Trustee Ltd – High Court (10.08.16)

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Land: Vincent v. Lakes International

Residents of Lakes Resort at Pauanui on the Coromandel coast successfully challenged developers plans to turn their resort golf course into a stand-alone money spinner.

Advertising for Lakes Resort  offered residents private use of a 70 hectare golf course.  Sections were sold with a tag requiring owners pay annual levies to “an incorporated society to provide for playing rights on the [resort] golf course”.  No incorporated society was ever set up.  Developers said this would be a serious constraint; incorporated societies cannot run as a business, raising capital and paying a dividend to members.  Control of Lakes Resort changed after a 2002 mortgagee sale and a later 2009 liquidation of a number of Lakes companies.  A golf course has operated at the resort since 2004.  Current owner Lakes International Golf Course Ltd has big designs for the course.  Villas were established for rent.  A restaurant was set up.  Playing rights were licensed to commercial operators.

Neighbouring residents are refusing to pay compulsory annual golf club levies, saying current arrangements do not match those promised when the resort was first developed.

Resident Hartley Vincent went to the Court of Appeal challenging Lakes International demands he pay golf club levies for 2011, 2012 and 2013.  The Court ruled he is not liable to pay.  A covenant registered with his Lakes Property requires payment to an incorporated society running the resort golf club.  He can ignore demands from any organisation other than an incorporated society.  Lakes International says the golf course is not viable if run as an incorporated society.  

Vincent v. Lakes International – Court of Appeal (9.08.16)

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