US property developer Colin Rath sailed to New Zealand on the luxury yacht Persevere in 2016 before being granted consent to buy a Canterbury vineyard.
US property developer Colin Rath sailed to New Zealand on the luxury yacht Persevere in 2016 before being granted consent to buy a Canterbury vineyard.
A Manhattan property tycoon who sailed to New Zealand on a luxury yacht before being jailed for a $1.3 million tax fraud was forced to sell a South Island vineyard after breaching foreign investment rules and failing to become a resident.
Colin David Rath, 59, gave his wife a hugand asked for a glass of water before being led to the cells to begin a three-year and seven-month stint in prison in March this year.
He had pleaded guilty to 39 charges of using a document for a pecuniary advantage relating to fraudulent GST returns, and two representative charges of forgery - one relating to Inland Revenue Department (IRD) documents and the other involving an Immigration New Zealand (INZ) residency application.
A judge noted that Rath came from a “very privileged” background and said it was unfortunate he had “crossed a line” by engaging in illegal activity.
The former New York high flyer and US citizen once owned a $4.7m luxury Manhattan apartment featuring two internal waterfalls and published a book about how to be a successful property developer.
He sailed to New Zealand with his family aboard the Persevere yacht in 2016 after obtaining an entrepreneur residency visa using falsified documents.
In January 2018, his company Waipara Winds Ltd was granted Overseas Investment Office (OIO) consent to purchase the 28-hectare Fiddler’s Green Vineyard in North Canterbury, which also boasted a restaurant and bistro.
But the operation failed when the Covid-19 pandemic decimated tourism and Rath’s company was liquidated in July this year after amassing up to $4.2m in debt.
The IRD slapped freezing orders on the vineyard company’s assets in 2021 and caveats were lodged on the Canterbury property to prevent it being sold.
However, receivers believe some of the assets were offloaded after the freezing order came into force, with some of the money allegedly paid to related parties’ accounts.
The Fiddler's Green vineyard in Waipara, North Canterbury.
Auditors are also investigating why the company paid a large amount for shipping containers late last year and what was inside them.
Documents obtained by the Herald under the Official Information Act show the OIO consent conditions required Rath to reside in New Zealand for at least 183 days in any given year, submit a residency application by June 2020 and cease to be an overseas person by June 2021.
However, the documents reveal that Rath breached the conditions by failing to lodge his residency application or obtain a residency visa by the deadline.
An OIO assessment report, dated August 2022, noted that Rath was then engaged in two court cases, which were subject to separate OIO investigations.
One had been brought by the IRD and consisted of more than 100 tax fraud charges.
The other was civil action against Rath relating to the Persevere yacht, brought by a US lender “alleging breaches of the loan and security agreement and first preferred ship mortgage”. Further information about the civil case is redacted.
Colin Rath owned the Fiddler's Green winery in North Canterbury. His company is now in liquidation.
The report noted that two caveats had been lodged against the vineyard, both linked to a High Court freezing order.
Enforcement officers reviewed Rath’s file in 2021 to assess his compliance with the consent conditions and sought information from Rath concerning allegations relating to his ownership and sale of the Persevere.
The matter was referred to OIO’s enforcement unit when it became clear Rath was unlikely to meet the June 2021 deadline for obtaining a residency visa.
He blamed the protracted OIO process for delaying the vineyard purchase and the pandemic causing delays in getting necessary residency documents from the US.
Rath also provided the OIO with correspondence in July and August 2021 showing his residency had been held up by INZ which “only had one person doing residency visa work”, and suggesting “they had still not progressed his application due to Covid-19 and lockdown issues”.
Colin Rath was jailed in March this year over a $1.3m tax fraud.
By May 2022, the OIO was aware of “two serious court cases” against Rath, which could impact his residency application.
Rath wrote to the OIO in July 2022 saying his application was now “probably mute [sic]” and confirming the vineyard was on the market but unlikely to sell “until actual tourism returns to New Zealand late next year”.
The report found Rath had breached the requirement to obtain a residence visa and breached a requirement to notify the OIO that he had committed a criminal offence.
“Mr Rath did not inform the OIO of the Inland Revenue charges or court case.”
In September last year, the OIO wrote to Rath, informing him that he’d committed an offence under the Overseas Investment Act. He was now required to dispose of the Waipara property within 12 months as he had “not ceased to be an overseas person”.
If he failed to dispose of the property by September this year, he would be forced to sell it by auction “with no reserve or minimum bid”.
The letter noted that the property was still subject to the caveats and High Court freezing order, which restrained Waipara Winds from selling it.
If the freezing order and caveat remained in place by September 2023, the disposal period would be extended.
A liquidator’s report notes that since the company was in receivership, the mortgagee had taken possession of the vineyard and its assets.
“We understand that the mortgagee is carrying out the sale process. However, we have not received confirmation of a sale. The mortgagee is required to account to the liquidators in regards to the proceeds of sale.”
OIO enforcement manager Simon Pope told the Herald this week that the vineyard had now been sold, “which completes the disposal process”.
In August this year, Rath was back in court, pleading guilty to three new charges linked to the Persevere yacht - two of forgery and one of using a document for pecuniary advantage.
He admitted knowingly using a forged US Coast Guard Deletion Notice, using another forged “satisfaction of mortgage document”, and obtaining $380,000 by deception.
He will be sentenced in November.
Lane Nichols is a senior journalist and deputy head of news based in Auckland. Before joining the Herald in 2012, he spent a decade at Wellington’s Dominion Post and Nelson Mail.
