ANZ tightened its lending controls after falling victim to a mortgage fraud scheme, which the bank says may have made it more difficult for "hard working New Zealanders to obtain lending for their own homes and business".

The bank was one of three financial institutions which Auckland property developer Kang Huang defrauded using friends, family, staff and fake names to get more than $50 million worth of mortgages.

Huang, jailed for four years and seven months by Justice Graham Lang this morning, also bribed a banker - paying him $7000 in return for approving those loans.

ANZ was the only one of the three banks to provide a victim impact statement to the court, in which it said mortgage fraud could hit the entire economy.

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"The bank has had to enhance its lending polices, control environment and detection systems to prevent ongoing offending by this defendant. This can have an effect of making it more difficult for hard working New Zealanders to obtain lending for their own homes and businesses," ANZ said in the statement, read out to the High Court by Justice Lang.

"The impact of this offending extends to our staff," the statement said.

"Bribing staff through inducement damages staff morale and the working environment, impacts their great reputation, trust and confidence and diminishes the pride they take in their work. A number of managers have expressed the emotional and reputational damage this offending has had on them personally and their wider lending teams."

Huang, 49, pleaded guilty to 10 criminal charges in the High Court at Auckland before Christmas.

He is one of a quartet charged in a Serious Fraud Office case, with the remaining defendants due to go to trial later this month.

Justice Lang, when sentencing Huang this morning, described him as the instigator of a "sophisticated and premeditated" scheme that ran over the course of three years.

It involved loans of $52.5m, 57 applications for finance, more than 70 Auckland and Hamilton properties and a $7000 kickback to a banker who approved some loans.

That banker was due to be charged in the case but left the country before any were laid. He is believed to be in China.

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Huang operated a construction business in New Zealand for 20 years that built residential homes.

"The fact that so few loans resulted in a loss is a direct result in my view of all of your activities occurring in a rising market.

These developments relied on outside money and Huang found it was too expensive to fund the operation via finance companies because they charge more for commercial lending than banks do for loans to residential home buyers.

Huang adopted a strategy of getting finance from three banks – ANZ, BNZ and another whose details are suppressed.

To get the banks to lend money he forwarded loan applications in the name of relatives, friends and employees, Justice Lang said.

In some instances he provided fake identities to get finance.

The banks were also given false employment and income details of these borrowers and Huang arranged for his company to pay back the loans in such a way so that the banks wouldn't get suspicious.

All but $394,000 of the $52m has since been repaid and ANZ is believed to be pursuing one of Huang's employees for that money because the loan was in her name.

"The fact that so few loans resulted in a loss is a direct result in my view of all of your activities occurring in a rising market. This meant that properties were almost invariably worth more than what they were purchased for when they were sold," Justice Lang said today.

"This is a fortuitous result that is not attributable in any way to you," the judge told Huang.

"At any stage the housing market could have fallen and that would have exposed all of the borrowers to the potential of claims from lenders."

Justice Lang said that many of the people whose names were on loan applications didn't know they were acquiring property and the mortgage liability associated with it.

While Huang's offending was not motivated by greed in the traditional sense, Justice Lang said it forced the banks to unknowingly become involved in commercial lending without them having the necessary protection of higher interest rates.

The effect of the offending went beyond financial loss.

Justice Lang said banks deal with customers on the basis they are being honest.
When this isn't the case, banks tighten their controls and honest home buyers find it more difficult to get loans, he said.

When commenting on the $7000 kickback that Huang paid, the judge said this conduct could not be tolerated.

It amounted to a form of "bribery and corruption" that this country is largely free from, Lang said.

After taking into account the significance of Huang's offending, and giving him credit for his previous good character, remorse, and guilty plea, he sentenced the 49-year-old to four years, seven months jail.

Huang must serve two years, three months of that sentence before he is eligible for parole.

Huang's co-accused have pleaded not guilty.

The three defending the case include Huang's wife, Yan (Jenny) Zhang.

Zhang, who is also known as Kang Xu, is facing charges for obtaining by deception.
Lawyer Gang (Richard) Chen is also facing charges for obtaining by deception.

The third defendant is former bank worker Zongliang (Charly) Jiang.

Jiang is facing a Secret Commissions Act charge of accepting gifts and charges for obtaining by deception