The mortgage fraud scheme, which involved 110 separate property transactions in Auckland and Hamilton and took place between 2011 and 2015, was designed to obtain cheaper lending for a commercial property development.
After a three month trial in the Auckland High Court, which ended last month, Justice Sarah Katz handed down her verdict today.
Ex-BNZ banker Zongliang (Charly) Jiang, lawyer Gang (Richard) Chen, and Yan (Jenny) Zhang (aka Kang Xu), were all convicted for their roles in fraudulently obtaining $54 million worth of residential home loans.
The Serious Fraud Office originally took the three to court, alongside Xu’s husband, property developer Kang (Thomas) Huang, over suspicious mortgages involving 57 loan applications and 110 transactions.
Huang, who was considered the mastermind behind the offending, pleaded guilty to his part in the scheme prior to the trial and was sentenced to four years and seven months in prison in February.
Another banker - former ANZ employee Peter Cheng - was also involved in the scheme but left the country in 2015.
Jiang was convicted of 26 charges, Chen was convicted of 11 charges and Xu of 22 charges. Most of the convictions were for “obtaining by deception” under the Crimes Act.
But Jiang was also convicted on a representative charge of “acceptance of gifts by agent” under the Secret Commissions Act. This was because he received secret commission payments for his role in the scheme.
Chen was also convicted of a representative charge of “corruptly giving consideration to an agent” under the Secret Commissions Act. This was for secret commission payments made to the bank employees.
During the trial, Xu’s defence claimed that she was not aware of what her husband, Huang, was doing in but the judge found she was aware of and actively involved in the criminal offending.
SFO director Julie Read said the crimes, which relied on a high level of calculation and collaboration, undermine lenders’ confidence in borrowers in the mortgage market.
“The banks were misled in a number of respects including the financial position of the purported borrowers and the level of associated risk.
“The SFO is committed to investigating and prosecuting this kind of large-scale offending to maintain the integrity of the financial market place.”
Jiang and Chen have been remanded in custody and Xu has been remanded on bail, until their sentencing later this year.