A rogue finance company boss bought secret life insurance cover on hundreds of unwitting people - to win a $500,000 jackpot every time one of them died.
The scheme from Guaranteed Finance Limited has been called "the most immoral, atrocious, outrageous deal" inflicted on New Zealand's poor communities.
The Herald on Sunday has obtained documents showing 350 people signed up to the scheme, overseen by sole company director and shareholder Andrea Baker, who also used the surnames Smedley, Buitenhills and Buitenhuis.
Baker has admitted the broad outline of the scheme to the Herald on Sunday. She said the insurance agreement offered $20,000 funeral cover to the families.
"They were signing to say they got $20,000 cover with their loan. The policies were for more than $20,000," Baker said.
She said the policies were worth between $250,000 and $500,000.
When a client died, the policy was structured so that the family got $20,000 and the remaining money would be paid to Guaranteed Finance.
Baker twice refused to say whether her clients knew who stood to profit from their deaths. The Herald on Sunday has spoken to clients who say they had no idea.
The scheme was underwritten by insurance companies including Sovereign and AIA Insurance. They had no idea how it operated though and have since severed connections.
Baker and an insurance broker were paid commission from the insurance companies when they signed clients up for them.
Two company insiders said commission payments of about $200,000 were used to pay premiums on the policies.
Sovereign product and marketing general manager David Drillien said the insurance company took policies from Guaranteed Finance through the relationship with the broker.
Sovereign accepted policies on Guaranteed Finance clients for 10 months ending December 2009. "In October 2009 Sovereign identified irregular patterns in aspects of the life insurance policies written." He said the broker was told it would accept no more policies from January and ended its relationship with him in August.
Drillien said all policies had now lapsed through non-payment of premiums.
Only one claim had been received. "Sovereign discovered substantial non-disclosure of relevant health information ... and will not be paying Guaranteed Finance any benefit." He said Sovereign was pursuing the broker for the commission paid for securing the policies.
"Sovereign will refer any evidence of criminal actions it uncovers to the appropriate authorities for further action."
The Herald on Sunday learned of the scheme after being approached by the owner of a debt-recovery company who was approached by Baker.
He said she wanted to contract a number of private investigators to interview the clients who had life insurance taken out in their names. He was told the cost of premiums had become excessive and Baker wanted to restrict life insurance to those with a higher chance of dying sooner.
Baker initially said she had nothing to do with the company for 18 months.
But she was unable to explain email contact on company business obtained by the Herald on Sunday - or her contact with the debt recovery firm on behalf of Guaranteed Finance.
Baker also had a Guaranteed Finance-registered car parked in the drive of her rented home.
Baker later said she was going to bankrupt herself. "I haven't got anything."
Mangere Budgeting Services Trust chief executive Darryl Evans said it was the "worst deal" he had encountered in nine years.
"That's absolutely immoral. It's atrocious, outrageous. It is incredible. That's like playing Russian roulette with people's lives. This is as bad as it gets.
"You're benefiting from others' misery. These people are trying to do the best for their families after their death."
The forerunner of Guaranteed Finance Ltd was a company also targeting South Auckland - PBC Limited - which sold electrical goods and furniture on finance. It went under owing $1,260,000.
Liquidator McDonald Vague has reported issues with the company to the Companies Office.
Waterstone Insolvency, another liquidation company, estimated losses from six failed Baker companies at $1.7 million.
It raised possible enforcement action in its report on the failure of Studio 19 Ltd, owned by Baker under the name Andrea Smedley.
Other failed companies include Community Security Ltd, which failed owing more than $100,000, Hunters and Protectors Ltd and National Alarms Ltd.
The liquidation report into National Alarms said no funding was available to pursue legal action against Baker for failing to keep proper books and "trading while insolvent".
Baker also operated the company J Moore Ltd under the name Andrea Buitenhuis.
OUTRAGE AS 350 CAUGHT OUT BY OFFER THAT WAS TOO GOOD TO BE TRUE
For Noel Fussell, 50, the discovery that someone stood to profit from his death is an outrage. "That's just wrong. I'm totally f***ing gutted. I don't enjoy knowing that. I was not informed at all."
Fussell's name is among more than 350 people who had life insurance taken out in their name. On death, their beneficiaries would have got just $20,000 - and the remainder of up to $500,000 went to Guaranteed Finance Ltd, run by Andrea Baker.
It was 18 months ago the leaflet from Guaranteed Finance turned up in Fussell's letterbox offering televisions and barbecues for sale - and the promise of a free $20,000 life insurance policy. A phone call later, a Guaranteed Finance rep turned up. "He said this insurance policy is free so you don't need to buy anything."
So Fussell didn't purchase anything - but signed up.
Three months passed and someone else from the company arrived to take photographs and ask questions. "He asked me if I smoke. I said 'mostly when I drink' so he said 'just say no'." Fussell said he was never sent any policy forms.
Papakura's Noelene Kopa, 48, was also attracted by the free life insurance offer. As it turned out, she was declined finance - but still given the life insurance. Like Fussell, she said she was encouraged not to admit to smoking.
Told of the Guaranteed Finance scheme, Kopa said: "They are going to make money from my death? I wouldn't have signed it if I had known that. It's the first I've heard of that one."