Six arrests made in fake ad scam

The Serious Fraud Office alleges six people sold advertising in magazines that did not exist or had "grossly exaggerated" circulation figures. Photo / NZH

Six people have been arrested over a $1.6 million invoice scam which involved the sale of advertising in magazines that did not exist or were not as widely circulated as claimed.

The arrests follow a five-month operation involving more than 60 staff from multiple agencies - the first of its kind to crack down on invoice scams in New Zealand.

Police arrested six people in Auckland, Port Waikato and Picton after search warrants were executed at more than 25 locations throughout the country.

All are facing charges of participating in an organised criminal group, while five are also facing fraud charges.

The Serious Fraud Office (SFO) alleges the group sold advertising in magazines that did not exist or had "grossly exaggerated" circulation figures.

The magazines had general titles that suggested links with worthy causes like road safety, parenting or drug addiction.

The SFO alleges the invoice scam generated up to $1.6m since 2008.

The arrests come at the conclusion of Operation Edit, which involved staff from police, the SFO, the Organised and Financial Crime Agency, Customs, Inland Revenue and the Commerce Commission.

The operation involved covert investigations, detailed analysis of banking records and numerous victim interviews.

Acting SFO chief executive Simon McArley said high-volume, low-value fraud was particularly difficult to address.

But the operation was completed in a relatively short timeframe because of the multi-agency approach.

"The agencies were able to each contribute specialist skills and achieve a result that none working alone would have been able to," Mr McArley said.

"Invoicing scams cost New Zealand businesses hundreds of thousands of dollars a year and small businesses and charities are often the target.

"While the dollar amount of alleged offending is not huge, taking action in relation to high-volume, low-value fraud is important. Overall there can be a significant impact on the economy."

The SFO will take the lead responsibility in prosecuting the case.