Real estate scam led to $600,000 debt, court told

By Edward Gay

Photo / Herald on Sunday
Photo / Herald on Sunday

A man owes nearly $600,000 after meeting a man accused of being behind a real estate scam.

Greg Nelson met the accused, who has name suppression, and his business partner when all three men were real estate agents for Barfoot and Thompson in 2007.

He told the Auckland District Court yesterday that he had a debt of $595,000 to the ANZ bank after buying a Kohimarama property for $1.27 million in 2007.

The accused is facing two charges that involve deceiving banks into lending money on 10 residential properties during the 2006 and 2007 real-estate boom.

He is alleged to have bought properties which could be subdivided, using the names of acquaintances.

He would then use the finance to fund property developments.

One of those acquaintances was Mr Nelson. He said he was looking to invest $100,000 in residential property and agreed to lend the money to the accused and his business partner, who also has name suppression.

In return he would get 15 per cent interest for eight weeks.

The $100,000 was used as a deposit on a $1.27 million home that was to be subdivided into three properties and although the property would be in Mr Nelson's name, the accused and his business partner would meet the mortgage payments. The accused's business partner was the vendor and salesman on the property.

Mr Nelson said he became worried about the deal but was reassured by the accused.

"[He] said the guarantee is that I will buy you out in eight weeks," Mr Nelson said.

Mr Nelson said he filled out the mortgage application and faxed it to the accused. He later found out that a woman he did not know had been added to the application.

The Crown says the woman's name was added to the application because the ANZ would not accept Mr Nelson could service the loan himself.

Mr Nelson also said that shortly before the deal went through he found that $80,000 had been deposited into his account by the accused man's business for him to add to his deposit.

He said the mortgage eventually went into default and in the end he sold the property for $625,000. He had bought it for $1.27 million and was left with a debt of $595,000.

He told the accused man's lawyer, Peter Kaye, that the deal "sounds naive now" but he had trusted the accused and his business partner.

Former BNZ banker Colin McTaggart handled the accused man's business dealings through his business partner. He said many of the applications that came to him would not have been approved if he had known some had details of debt missing and income details inflated.

He also said the bank would not have granted mortgages to people if bank staff had known that the accused man's business was to service the debt instead of the applicant.

Mr McTaggart said that the bank was "very keen to look after" the accused man's business partner because he was a real estate agent who brought a lot of work in.

- NZ Herald

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