A West Auckland chicken farmer has lost an appeal against his home detention after misrepresenting millions of caged eggs as free range.
Xue (Frank) Chen was sentenced to a year of home detention after pleading guilty to a single representative charge of obtaining by deception, revealed by the Herald in July.
He is serving it at his Henderson Valley Rd poultry farm.
However, Chen challenged the decision last month in the High Court on the basis the starting point, of three years' imprisonment, adopted by Judge Christopher Field was too high. His lawyer, Fletcher Pilditch, also argued home detention was not the least restrictive outcome nor one which best provided for his rehabilitation and reintegration.
But Justice Christine Gordon has now dismissed the appeal.
"Deterrence was the key sentencing principle engaged in the case," she said in her decision this month.
"Eggs could easily be repackaged and consumers misled on the production process. This could easily discredit the entire industry."
Chen's offending, which saw benefit to the tune of $320,000, was simple but sophisticated, Judge Field found.
Chen's prosecution by the Commerce Commission came after a whistleblower accused him of packaging and selling caged eggs as free range. It sparked a covert surveillance operation on his Gold Chick poultry farm and an investigation found his offending spanned from September 2015 to October 2017.
Chen's primary customer for Gold Chick's free-range eggs was Zeagold Limited, New Zealand's largest egg supplier and owned by Mainland Poultry Limited, which has the Farmer Brown brand.
"Efforts were taken to conceal what was happening," Justice Gordon said.
"The offending was premeditated. The judge identified three groups of victims: those companies supplied by Gold Chick, members of the public who purchased caged eggs which they were told were free range, and Mr Chen's employees who were drawn into the offending."
Chen even burned some of the farm's financial records after Zeagold cancelled its contract with him.
When sentencing Chen in the Auckland District Court, Judge Field said he could not identify any mitigating features of the offending, but did grant the farmer discounts for his early guilty plea and a $50,000 donation to the SPCA.
"There was no error," Justice Gordon said, after reviewing the lower court's ruling.
"The judge's decision to impose home detention as the least restrictive sentence, rather than a combination of community detention and community work, reflected the seriousness of the offending," she said.
"The judge did not fail to consider the hierarchy of sentences. He simply found that a lesser sentence would not reflect the seriousness of the offending. He was correct in that regard. The final sentence was not manifestly excessive."
Chen's fraud took advantage of a supply deal Gold Chick had with Zeagold, which saw eggs delivered every week from mid-2015 to October 2017.
But in June 2017, former employee of Chen's tipped off the Commerce and a private investigator was then used to monitor the farm.
Gold Chick, and sometimes Chen personally, were seen using an unmarked rental van to acquire caged eggs from another producer, Albert's Eggs. After bringing the caged eggs back to his farm, Chen told his workers to package them into free-range Farmer Brown cartons for Zeagold.
More than three million caged eggs were repackaged as free range.
When Chen's farm was eventually raided in December 2017, investigators found Albert's Eggs stickers in the ashes of burned cartons. Albert's Eggs invoices were also in his bedroom, which he claimed no knowledge of and blamed his children for leaving there.
After the search was completed, Chen started a witch-hunt to identify which of his employees was an snitch. This led to him being charged with wilfully attempting to pervert the course of justice.
He was found guilty and sentenced last year to two years two months' imprisonment.
He served 45 days before a High Court appeal saw his conviction quashed and sentence set aside. While Chen intended to pervert the course of justice, his actions were not sufficient to prove the charge, Justice Graham Lang ruled.
Prior to becoming aware of Chen's fraud, the Egg Producers Federation moved to implement changes, such as Ministry for Primary Industries audits, to make fraudulent activity easier to detect for regulators.
Chen continues to operate his farm, which now supplies chicken meat to restaurants and wholesalers.