A former banker, lawyer, and wife of a property developer have been jailed and sentenced to home detention for their involvement in a $54 million mortgage fraud scheme in Auckland and Hamilton.

Lawyer Gang (Richard) Chen, Kang Xu, also known as Yan (Jenny) Zhang, and former BNZ banker Zongliang (Charly) Jiang appeared for sentencing today in the High Court at Auckland before Justice Sarah Katz.

After a three-month trial, which began in February, Justice Katz delivered her verdicts in June.

The judge's verdicts were contained in more than 200 pages, released to the Herald, after she considered 1500 pages of notes evidence and thousands more pages of documentary evidence from the trial.

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Today, Justice Katz sentenced Chen to a total of six years' imprisonment, Jiang to four years and nine months' behind bars, and Xu to 12 months' home detention for their "premeditated and prolonged" fraud.

Justice Katz also imposed a minimum period of imprisonment of 50 per cent for Chen and Jiang.

The trio were part of a quartet charged by the Serious Fraud Office (SFO) over 76 Auckland and Hamilton properties and suspicious mortgages, involving 57 loan applications and 110 transactions.

The scheme involved loans of more than $54m and bribes of $7000 per transaction to the two bankers, Jiang and former ANZ banker Peter Cheng, who approved the loans.

Jiang processed and approved about $18 million in loan applications in exchange for cash bribes.

Justice Katz said Jiang was motivated by greed.

The SFO wanted to charge Cheng but he fled the country before court action could be taken. The Herald believes he is now in China.

Justice Katz found Jiang guilty of all 26 charges he faced, including one representative charge for accepting bribes, Xu of 22 of 34 charges, and Chen guilty of 10 of 12 charges, including one representative charge for paying bribes.

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The charges were for obtaining by deception and breaching the Secret Commissions Act.

SFO prosecutor Todd Simmonds told the court the group's offending was "massive" with a high degree of sophistication and lasted nearly two years, from December 2011 to October 2015.

"It didn't happen by mistake, it didn't happen at the drop of a hat, it was a scheme, and I submit it was deliberately and carefully planned by them."

Kang Huang, pictured during his sentencing in February. Photo / Michael Craig
Kang Huang, pictured during his sentencing in February. Photo / Michael Craig

Xu is the wife of Auckland property developer Kang Huang, whose property construction company LV Park was used to facilitate the fraud.

He plead guilty to 10 charges late last year and was sentenced to four years and seven months' imprisonment earlier this year by Justice Graham Lang.

Simmonds said Xu's collaboration was significant and vital for the fraudulent scheme but her husband was, without a doubt, the instigator and mastermind.

When delivering her verdicts, Justice Katz had also called Huang the "mastermind and instigator of the scheme".

During the trial, Xu's lawyer Adam Simperingham tried to shift any blame from her client to Huang, whom was labelled as a "megalomaniac" hiding his fraudulent nature.

Today, Simperingham said his client was also "subservient and obedient" to her husband, who was also described by Xu as a "showman and a risk-taker".

Simperingham told the Herald after the hearing the SFO had failed to "prove particulars that had been alleged" for the charges Xu was acquitted of.

"All of Mrs Xu's offending occurred under intense pressure from her husband in a family and cultural context in which it was difficult for her to say no," the lawyer said.

"Mrs Xu's role in the business was primarily lawful," he said of her management of the homes' constructions, adding the tradespeople were properly paid.

All but $394,000 of the loaned funds have been repaid, the court heard at Huang's sentencing, and ANZ pursued the outstanding amount.

The court heard today, however, the loses from the scheme have totalled $427,000.

But Simmonds said the minimal loses when compared to the amount fraudulently obtained was a result of "good luck".

In the bank's victim impact statement, it said mortgage fraud offending has a negative impact on hard-working Kiwis as a result of stricter lending conditions and the wider economy.

Bribing bankers also damages staff morale, the statement said, while several managers expressed a reputational damage the offending had on them and their lending teams.

In the summary of her verdicts, Justice Katz found Chen had acted as the "middleman" between Huang and his wife and bribed his "inside contacts" at BNZ and ANZ.

A third overseas bank was also used but its name is suppressed.

Simmonds said Chen's role, while a solicitor of the court, was a "gross breach of trust".

He said Chen had made 39 corrupt payments to facilitate the scheme, totalling nearly half-a-million dollars.

Serious Fraud Office director Julie Read. Photo / Greg Bowker
Serious Fraud Office director Julie Read. Photo / Greg Bowker

LV Park, which Huang operated in New Zealand for 20 years, obtained cheap finance and retained control of properties to dramatically increase the size of its portfolio.

However, properties owned by entities associated with LV Park were being transferred into the names of various relatives, friends and employees of Huang and Xu, including all four of their elderly parents, court documents released to the Herald read.

Some of the transferees were entirely fictitious people with fake passports, created for the sole purpose of the scheme.

The SFO said Huang's motivation was because it was cheaper to fund the operation with home loans from banks rather than via finance companies, due to the higher costs associated with commercial lending.

SFO director Julie Read said after the verdicts: "These crimes, which relied on a high level of calculation and collaboration, undermine lenders' confidence in borrowers in the mortgage market.

"The banks were misled in a number of respects including the financial position of the purported borrowers and the level of associated risk."