Police probing alleged $2m MSD fraud seize cash, property

Ric Stevens, Open Justice reporter of

By Ric Stevens, Open Justice reporter of

• A restraining order has been issued over land and bank deposits belonging to two Auckland men.
• Police allege the pair have "misapplied" payments made by Winz to beneficiaries for essential household furniture.
• The men, linked to a furniture company, allegedly benefited by $2 million over seven years.

Police have obtained a restraining order over real estate and bank funds owned by two men allegedly involved in a $2 million fraud against the Ministry of Social Development.

Affidavits were filed in the High Court at Auckland last month by a police officer, a forensic accountant and a Ministry of Social Development (MSD) investigator over "theft and deception" allegedly committed by the Auckland men.

The police then lodged an application to restrain the men's assets.

They alleged the pair operated a scheme "by which they misapplied payments made to a related company by the ministry for the provision of essential household furniture to social welfare beneficiaries", according to court documents.

The police application alleged they unlawfully benefited by at least $2m between September 2017 and March 2023.

Civil actions to seize assets gained through criminal behaviour often run in tandem with, or after, related criminal prosecutions. However, when contacted by NZME, one of the men said he was not facing any criminal charges at this time.

Companies Office records show both men are connected to an Auckland furniture company, as present or former directors. The company website advises that they provide quotes for furniture to Work and Income New Zealand (Winz).

Winz, which is part of the MSD, sometimes provides an advance payment to beneficiaries with limited means who need to buy essential household items such as tables, chairs, beds, fridges and washing machines.

High Court Justice Pheroze Jagose issued the restraining order on 18 October.

It means the assets cannot be disposed of or otherwise dealt with before police have the opportunity to apply for a further order to have them forfeited to the Crown under the Criminal Proceeds (Recovery) Act 2009.

The act is designed to allow authorities to seize property and assets derived "directly or indirectly" from significant criminal offending, including by organised criminal groups.

Most criminal proceeds cases historically have been for drug-related offending but the law is also used to seize property gained by fraud or white-collar crime.

In this case, the police application extended to equity in real estate worth $3.24m, which Justice Jagose said the men shared with their spouses, and bank funds of more than $500,000.

"Given likely recognition of other claims to the land for forfeiture, I am satisfied the value of the property sought to be restrained is not disproportionate to the scale of the alleged offending," the judge said.

"I see no reason not to exercise my ... residual discretion, precisely to preserve property if [it is] to be forfeited to the Crown, to make the restraining and further orders sought."

MSD group general manager of client service support, George van Ooyen, said all allegations of fraud were investigated and prosecuted where it was appropriate to do so.

"We take our responsibilities to the New Zealand taxpayer very seriously," he said.

"In some cases this can include working with police to use the powers of restraint and forfeiture under the Criminal Proceeds (Recovery) Act," van Ooyen said.

"As this matter is before the court, we are unable to comment further."

* This story originally appeared in the New Zealand Herald.