R v Xu

Case [2018] NZHC 1971 3 August 2018

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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CRI-2016-004-009392

[2018] NZHC 1971

THE QUEEN

v

KANG XU GANG CHEN

ZONGLIAN JIANG

Hearing: 3 August 2018

Counsel:

T A Simmonds, K J Cooper and S E Cann for Serious Fraud Office

A M Simperingham and W Zhang for Xu S N B Wimsett and S T Patia for Chen

J-A Kincade and A Shendi for Jiang

Judgment:

3 August 2018

SENTENCING NOTES OF KATZ J

Solicitors: Serious Fraud Office, Auckland
A Simperingham, Woodward Chrisp, Gisborne W Zhang, Woodward Chrisp, Gisborne

Counsel:T Simmonds, Barrister, Auckland S Cann, Barrister, Auckland
S N B Wimsett, Barrister, Auckland
S T Patia, Samuel Wimsett Barrister, Auckland J-A Kincade, Blackstone Chambers, Auckland A Shendi, Barrister, Auckland

R v XU, CHEN & JIANG [2018] NZHC 1971 [3 August 2018]

Introduction

[1] Ms Xu, Mr Chen and Mr Jiang, you appear for sentence today, having been found guilty of various charges relating to your involvement in a large-scale mortgage fraud scheme that was perpetrated on the Bank of New Zealand (“BNZ”), ANZ Bank New Zealand Limited (“ANZ”) and, on one occasion, a third bank. The overall scheme involved 57 loan applications, 110 separate property transactions, and loans of approximately $54 million. Most of the offending occurred from late 2011 to late 2013.

[2] Ms Xu, you were convicted of 22 charges of obtaining credit by deception, under the Crimes Act 1961.1 Mr Jiang, you were convicted of 25 charges of obtaining credit by deception and also one charge of corruptly receiving secret commissions.2 Mr Chen, you were found guilty of nine charges of obtaining credit by deception, two of them representative, and one charge of corruptly paying secret commissions.3

[3] The maximum penalty for the Crimes Act charges is seven years’ imprisonment. The maximum penalty for the Secret Commissions Act charges is two years’ imprisonment.

The offending

[4] The factual background to your offending is set out in considerable detail in my Reasons for Verdicts.4 I will therefore only briefly summarise some key aspects of my findings this morning.

Overview of the mortgage fraud scheme

[5] The genesis of the offending was that Kang Huang, who operated a property development business trading as LV Park, was keen to reduce LV Park’s financing costs. In order to do so, he devised a sophisticated scheme to deceive the banks. Each of you played a key role in implementing that scheme.

1      Crimes Act 1961, s 240(1)(b).
2      Crimes Act 1961, s 240(1)(b) and Secret Commissions Act 1910, s 4.
3      Crimes Act 1961, s 240(1)(b) and Secret Commissions Act 1910, s 3.
4      R v Xu [2018] NZHC 1433 at [7]–[38].

[6] LV Park specialised in building residential homes. Mr Huang was the head of the LV Park Group. To fund its property development activities, LV Park obtained finance from non-bank commercial lenders, who charged relatively high interest rates, reflecting the significant risks associated with funding commercial property development activities. Mr…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading R v Xu

Details

AGLC: R v Xu [2018] NZHC 1971
Case: [2018] NZHC 1971
Decision Date: 3 August 2018

CaseChat Overview and Summary

Kang Xu, Gang Chen and Jiang Zonglian were found guilty of various charges relating to their involvement in a large-scale mortgage fraud scheme that was perpetrated on the Bank of New Zealand and ANZ Bank New Zealand Limited. The scheme involved 57 loan applications, 110 separate property transactions, and loans of approximately $54 million. The offending occurred from late 2011 to late 2013. Ms Xu was convicted of 22 charges of obtaining credit by deception, Mr Jiang was convicted of 25 charges of obtaining credit by deception and one charge of corruptly receiving secret commissions, and Mr Chen was found guilty of nine charges of obtaining credit by deception, two of them representative, and one charge of corruptly paying secret commissions. The court was required to determine an appropriate sentence for each offender, taking into account the principles and purposes set out in the Sentencing Act 2002. The court considered the nature of the offending, its magnitude and sophistication, the motivation for the offending, the amounts involved, the losses, the period over which the offending occurred, the seriousness of breaches of trust involved, and the impact on victims. The court also considered various mitigating factors, such as the offender's personal circumstances and remorse. The court determined the appropriate starting point for each offender based on their individual culpability and involvement in the offending. Ms Xu was sentenced to home detention for a period of 12 months in respect of each of the obtaining by deception charges, Mr Chen was sentenced to 6 years’ imprisonment in respect of each of the obtaining by deception charges, and Mr Jiang was sentenced to four years and nine months’ imprisonment in respect of the obtaining by deception charges. In addition, the court imposed a minimum period of imprisonment for each offender to ensure that the sentencing principles of deterrence, denunciation, and accountability are properly met.

Orders