EXCLUSIVE: He's always claimed innocence, but millionaire granted citizenship despite being wanted for fraud overseas has pleaded guilty to money laundering after mammoth investigation.

Key Points:

  • William Yan pleads guilty to money laundering, name suppression lifted.
  • Will serve sentence in penthouse apartment.
  • NZ to keep $15m of seized $43m.

One of New Zealand's most controversial citizens has been convicted of money laundering.

William Yan - also known as Bill Liu, Yang Liu and Yong Ming Yan - pleaded guilty to the serious criminal charge in March. Name suppression was lifted at the sentencing hearing in the Auckland District Court this morning.

The 45-year-old millionaire businessman will spend the next five months serving home detention in a luxury apartment in downtown Auckland.

Advertisement

To allow Yan to work, Judge Rob Ronayne granted him permission to leave the apartment for meetings during weekdays, for up to five hours a day, but only with the approval of his probation officer.

The judge flatly denied a request for Yan to use the gymnasium in the Auckland hotel complex where he lives.

The admission of guilt is a shock twist in a saga dating to 2001, when Yan came to New Zealand with two Chinese passports.

Since then, he has steadfastly denied any wrongdoing in China, where he was accused of a multimillion-dollar fraud.

Those allegations were politically motivated, Yan maintained.

Yet the sparsely worded summary of facts, to which Yan pleaded guilty, reveals he admitted receiving "significant sums of money" in the 24 months leading to August 2014.

"Those funds were the proceeds of serious offending, namely, a series of frauds," according to the summary, released to the Herald.

"Mr Yan believed those funds were the proceeds of that serious offending.

"Mr Yan subsequently concealed the funds in various ways, including conducting transactions through SkyCity Casino and third-party banking facilities in order to conceal the nature and/or source of the funds."

Unusually, the summary of facts did not contain a specific sum of money, which made it difficult for Judge Ronayne to sentence Yan in comparison to other money laundering cases.

On behalf of Yan, Paul Wicks, QC, said his client was not involved in the fraud in the summary of facts and did not personally gain from it.

Yan insisted the "significant" amount of money laundered did not exceed $30,000 - although this was not in the agreed summary of facts - said Wicks.

Mark Harborow, on behalf of the police, said it was irrelevant if Yan committed the underlying fraud or not, as he had pleaded guilty to laundering the proceeds of a crime.

The police did not seek reparation for the money laundering because of the $42.85 million Yan forfeited in August as a final settlement in a civil case brought by police.

"Although the civil and criminal proceedings are discrete, given the settlement in the civil proceeding, no order for reparation is sought in this proceeding," the caption summary says.

Chinese and New Zealand police worked together closely on the investigation and the Herald can now reveal how the money will be split: China will get about $27m and New Zealand will keep the balance of around $15m.

"This is a good, fair outcome for both countries," said Detective Senior Sergeant Craig Hamilton, explaining New Zealand's share was calculated from the cost of the police work and court hearings.

Now suppression has been lifted, the Herald can report Yan was charged with money laundering in the Auckland District Court last November - two months after forfeiting the $42.85m.

The very next day China's "fifth most wanted man" voluntarily surrendered himself to Chinese authorities and flew to Beijing to face trial on fraud charges.

China was able to hail his return as a great success of Operation SkyNet, a global crackdown on nationals alleged to have stolen money and fled overseas.

Yong Ming Yan returned to China after absconding for 15 years. Photo / Supplied.
Yong Ming Yan returned to China after absconding for 15 years. Photo / Supplied.

"Yan's return, once again, proves there is no safe haven, and the SkyNet will get increasingly tighter," the Central Commission for Discipline Inspection said.

Yan's appearance was widely covered by Chinese state media, but his safe return to New Zealand two months later was not reported.

The businessman pleaded guilty to the New Zealand money laundering charge only after Judge Ronayne indicated Yan would serve his sentence in the comfort of his home, if he admitted the criminal charge.

Yan's Kiwi citizenship and political connections have been at the centre of years of controversy.

He arrived in New Zealand in 2001. He first made headlines for his links to the previous Labour Government's decision to give him a New Zealand passport in 2008, despite having multiple identities and an Interpol alert against his name.

After lobbying from Dover Samuels, a Labour MP at the time, former Labour Party Minister Shane Jones overruled the advice of Department of Internal Affairs officials, who said Yan did not meet the good character test for citizenship.

Jones, who is widely rumoured to be preparing to stand for New Zealand First in the upcoming election, said he granted citizenship because he believed Yan would be executed if sent back to China.

Yan was arrested at the Auckland International Airport and later stood trial in the High Court at Auckland in May 2012 on five charges of making false declarations on immigration and citizenship papers.

He always maintained the two identities he came to New Zealand with, Yong Ming Yan and Yang Liu, were valid because he was fostered out by his birth parents in China.

Yong Ming Yan leaving Auckland Central police station for a bail check in 2009. Photo / Greg Bowker.
Yong Ming Yan leaving Auckland Central police station for a bail check in 2009. Photo / Greg Bowker.
William Yan outside the High Court at Auckland with supporter Dover Samuels. Photo / Brett Phibbs.
William Yan outside the High Court at Auckland with supporter Dover Samuels. Photo / Brett Phibbs.

Justice Timothy Brewer acquitted him despite saying the evidence "proves a situation that is highly suspicious".

Read the judgment

The auditor-general later investigated how Yan came to be granted citizenship and criticised Jones, but found no evidence of wrongdoing.

Two years later, Yan's name resurfaced in Operation Galaxy, an investigation triggered by the millions of dollars gambled at SkyCity by the "puppet master" behind one of New Zealand's largest drug smuggling syndicates.

Police found a piece of paper with a familiar name, handwritten in Chinese, which authorised the purchase of $1.85m worth of shares in a company registered in the British Virgin Islands.

It was signed by Yang Liu.

That caught the attention of detectives, who know him by other names - Bill Liu to his friends, Yong Ming Yan according to Chinese authorities and William Yan on his New Zealand passport.

There is no suggestion Yan is involved in drugs. But his name triggered a fresh look at the dormant allegations of fraud in China and his business dealings in New Zealand, culminating in another police raid on his penthouse in the Metropolis tower in August 2014.

They seized assets included a collection of luxury cars, the Metropolis apartment - five titles joined together on the 35th floor - an 18.8 per cent stake in cloud-storage service Mega, millions in bank accounts, a troubled North Shore property development and a Waikato farm.

Those assets were restrained under the Criminal Proceeds Recovery Act, which essentially forces someone to prove how an asset was paid for.

These cases are determined by the civil level of proof, the "balance of probabilities", rather than the much higher criminal evidential threshold of "beyond reasonable doubt".

Operation Galaxy also uncovered Yan's SkyCity records where he gambled $293m over 12 years, despite being banned twice for two years and losing $23m.

His decision to cut the record-breaking $42.85m deal with police is not the first time Yan has forfeited a small fortune to authorities.

William Yan shortly before his $42.85m deal with police was announced. Photo / Greg Bowker.
William Yan shortly before his $42.85m deal with police was announced. Photo / Greg Bowker.

In 2005, the Australian Federal Police seized two bank accounts in the name of Desant Group, registered in the tax haven of the British Virgin Islands, holding A$6.75m.

The accounts were frozen because Yan was suspected of operating bank accounts in a false name, Yang Liu.

The matter was settled when Yan agreed to the money being forfeited without any admission of liability.

Nearly half the money, A$3.3m, was repatriated to the Chinese government, the balance returned to Yan.

According to court documents obtained by the Herald, Yan said the settlement was motivated by "practical considerations".

"Legal costs would have been substantial and any hearing would have ... taken likely between two to three years to resolve," Yan wrote in an affidavit for the New Zealand forfeiture proceedings.

"My immigration status in New Zealand at that stage was being progressed and I did not want the Australian proceedings to compromise that. The short point however is that there was no admission of liability at all by me as is the case in most civil settlements that occur."

William Yan in Auckland shortly after his return from China for a fraud trial. Photo / Jason Oxenham.
William Yan in Auckland shortly after his return from China for a fraud trial. Photo / Jason Oxenham.

However, Detective Senior Sergeant Hamilton says there is still an active warrant for Yan's arrest in Australia.

"Here's a man who's still wanted in Australia for alleged criminal behaviour there. He's settled earlier with the Australian authorities for some millions of dollars.

"He's lost massive amounts of money in our NZ casinos: $23m. He's settled with the police for just under $43m. And of course now we have him convicted here of money laundering.

"I guess, what this tells us, is his past behaviours are finally catching up with him."

The co-operation between New Zealand and China during the investigation, was the first of its kind - but unlikely to be the last.

Chinese media says there are 11 other SkyNet suspects, or "economic fugitives" wanted by China.

New Zealand does not have an extradition treaty with China, but Hamilton says the Yan case shows the two countries can work together in law enforcement across borders.

"We've been really impressed with the assistance we've got from our Chinese colleagues," said Hamilton. "When we bring it all together, we can see what can be achieved. It's been an excellent outcome.

"It bodes well for future successes and future work together."

William Yan: Timeline of trouble

2001:

Arrives in New Zealand with his Yang Liu passport. Does not declare his second identity, Yong Ming Yan, under which he is wanted by China for alleged fraud.

2002: Is granted permanent residency as Yang Liu, without declaring his second passport.

2005: Applies for citizenship. Makes donations to Labour and National.

2007: Immigration New Zealand move to revoke permanent residency is delayed by Immigration Minister David Cunliffe.

2008: Three MPs write in support of citizenship application. Citizenship approved under ministerial prerogative, against advice of officials. VIP ceremony held at Parliament. Changes name to William Yan.

2009: Is arrested at Auckland Airport and charged with making false declarations on his immigration and citizenship papers.

2012: Found not guilty in High Court at Auckland, despite Justice Timothy Brewer saying the evidence "proves a situation that is highly suspicious".

2013: Auditor-General criticises former Cabinet minister Shane Jones for granting citizenship but said there was no evidence of wrongdoing.

2014: Police raid Yan's penthouse and seize his assets as part of a civil money-laundering inquiry.

2016: Forfeits $42.85 million to police to settle the civil case. Voluntarily returns to China to face trial on fraud charges.

2017: Returns to New Zealand and pleads guilty to money laundering charge. Sentenced to five months' home detention.