Nearly $70 million in Kiwi assets belonging to an international mogul facing allegations of running a $200m pyramid scheme will soon be part of a record civil forfeiture application.
Xiao Hua Gong, also known as Edward Gong, is an entrepreneur known for building a business empire through a hotel chain and television channels in Toronto.
But he was arrested in Canada in December 2017 over an alleged pyramid scheme involving the alleged fraudulent sale of hundreds of millions of dollars in shares in China.
Nine months before that arrest, however, the High Court granted the New Zealand Commissioner of Police freezing orders for about $70m of Gong's assets here, held in bank accounts and property, as part of a global investigation.
The mogul has denied the charges and allegations that his financial success and influence was gained from an alleged $202m scheme selling medicines in China.
Police here argue Gong was hiding money in New Zealand to distance himself from the alleged fraud.
the case returned to the High Court at Auckland as the police sought an extension of the restraining orders against Gong's assets, which were due to expire on June 23.
The court heard Gong's property will soon be part of a civil forfeiture application by the commissioner.
If successful it will eclipse the current record forfeiture by some margin, which is $42.85m in the William Yan case, one of New Zealand's most controversial citizens.
After a short hearing, Justice Sarah Katz granted the application to extend the restraining orders and also awarded costs to the commissioner.
However, there were concerns raised about the progress of the case.
Gong's Kiwi legal team, which included Philippa Fee, a leading litigation and dispute resolution lawyer, and international human rights lawyer Dr Tony Ellis, were both granted leave by Justice Katz to withdraw from the case.
Fee told the court there had been an inability to gain clear instructions from Gong on his legal matters and also issues about obtaining payment.
Ellis added Gong's NZ legal team has had little response from the businessman's Canadian counsel.
Justice Katz said the commissioner held concerns about Gong losing a third legal team here, which may cause further delay, and also raised an eyebrow about his conduct which appeared to be allegedly "engaging in other delaying tactics".
The threat of a delay may result in the postponement of a hearing due to be held next month after Justice Pheroze Jagose ordered Gong to disclose certain documents relating to the commissioner's case.
Court papers obtained by the Herald show the police want details of all of Gong's and related entities' bank accounts, or over which Gong has any signing authority.
They also seek information of all entities, property, and assets in which he has any interest, and all business, conveyancing, financial, meeting, and tax records, including accounting electronic backups and passwords.
And they are further after details of all business connections, accountants and lawyers and information produced for the purposes of the alleged health supplements scheme, and of the supplier factory.
• Canadian Xiao Hua Gong claims evidence to freeze $70m in NZ 'coerced' in China
• Auckland finance firm fined $2.55m for hiding mogul's $53m, mother and son duo also fined
• Chinese-Canadian mogul Edward Gong used Auckland mother and son's finance firm to hide $53m
• China pyramid-scheme probe: Xiao Hua Gong charged in Canada, NZ police freeze nearly $70m
Gong has applied to appeal Justice Jagose's judgment, the court heard, which is due to be argued at the July hearing.
Justice Katz said Gong will either need to engage new lawyers promptly or appear for himself.
The mogul has claimed the evidence against him was gathered by coercion in China. Several people in China have already been jailed and fined for their part in the alleged pyramid scheme, the New Zealand courts have heard.
Earlier this year, a Kiwi finance firm was fined $2.55m for failing to report $53.4m worth of suspicious transactions belonging to Gong.
The case against Jiaxin Finance, its sole director Qiang Fu and Fu's mother Fuqin Che was revealed by the Herald and the first case of its kind in New Zealand's courts since specific anti-money laundering laws were introduced a decade ago.
The Auckland-based company, Fu and Che were found guilty of failing to report and keep adequate records for 311 suspicious transactions. They also failed to conduct customer due diligence.
Che was further found guilty of structuring a transaction to avoid Anti-Money Laundering and Countering Financing of Terrorism Act (AML/CFT) requirements.
Fu was personally fined $180,000, while Che was hit with a $202,000 penalty.