An architectural designer has been sentenced for money laundering but still cannot be named. Photo / Cameron Pitney
An architectural designer who helped scammers steal $235,000 from two investors has been sentenced for his role in the ruse but still cannot be named after filing an 11th-hour appeal with the High Court.
The man is serving 12 months’ home detention after admitting to two money laundering charges in connection with offending in early 2023.
He was sentenced two weeks ago and lost suppression, but today filed an appeal arguing the judge had “erred” in terms of the defendant’s culpability and in finding the consequences of naming the man would not amount to extreme hardship.
Victim impact statements spoke of the devastating consequences of the man’s offending.
One woman who lost $135,000 said the money had been saved by her and her late husband through years of hard work. It was meant to secure their son’s financial future.
Her world “collapsed” after learning she had been conned and her money lost.
She suffered panic attacks so severe she couldn’t breathe and was still too ashamed to tell her son what happened to her savings.
“She describes living with unbelievable shame,” Judge Stephen Bonnar, KC, told the Auckland District Court.
“She no longer trusts people, fears the internet and has been prescribed anti-depressants. Her confidence is shattered and she must work longer than she ever planned because of the loss of her life savings.”
North Shore real estate agent Carla O’Neil lost $100,000 in the same term deposit scam days later in February 2023.
She also described feelings of intense shame after realising she had been duped.
“She has to look her child in the eyes and carry the weight of shame and uncertainty,” the judge said.
O’Neil had suffered severe stress, sleepless nights and trauma-related health issues linked to the scam.
“The crime has forever changed her life and the ripple effects will be felt by her and her family for years to come.”
The court heard the architectural designer played the role of a “money mule” in the complex investment scam targeting Kiwi victims.
Judge Bonnar said the man was not a fraudster, was not aware of the nature of the international scam, and ultimately did not benefit financially.
However, he allowed his ASB account to be used to receive the victims’ funds then transmitted most of the money to Singapore. The man had therefore played a pivotal role and was instrumental in the victims losing their money.
“You turned your mind to the possibility that the funds received were the proceeds of crime, nevertheless you continued to deal with those funds.
“Without you there would not have been a bank account into which deposits could be made, and without you the funds would not have made their way offshore.”
The judge read from an affidavit the man submitted to the court.
It detailed how he’d built a drafting company through hard work and word of mouth.
The company struggled after the Covid pandemic and he had looked for other business interests to help financially.
The man travelled to several countries, met an associate called Raffi and the pair discussed business ventures, the court heard.
It was agreed Raffi would source building materials such as marble and slate to import into New Zealand.
The defendant’s job was to find funds to pay for the imported products but he was rejected by banks.
Raffi then claimed he had found New Zealand investors and made logistical arrangements, the court heard.
“You say the $235,000 appeared in your bank account from the two victims,” Judge Bonnar said. “Raffi directed you to send that money to Singapore.”
The defendant wanted to wait a week before sending the money, because the large transactions could attract attention, the court heard.
In all, he sent $167,000 overseas in four transfers, while $67,000 remaining in his business account was frozen by the bank.
Judge Bonnar said the man had been “relieved to have got the money from somewhere after being rejected by the banks”.
He now agreed he’d put “too much trust in Raffi” and accepted he should have asked more questions and done due diligence.
The man’s lawyer Charle Megala said his client was remorseful, had no previous convictions and did not realise the venture was a scam.
He had begun paying $250 a week in reparation to the victims towards their losses.
Megala argued the man should be granted a discharge without conviction and permanent name suppression. A conviction might prevent him from being a director of his company and publication of his name in connection with the offending could ruin his business.
The judge dismissed the applications, saying he must denounce the offending and deter others from using their bank accounts to receive stolen money.
There had been a “significant increase” in financial scams targeting the public that often had devastating impacts for victims.
Any negative impacts on the man’s employment or professional reputation were the “ordinary consequence” of criminal offending, the judge said.
Judge Bonnar sentenced him to six months’ home detention on each charge and ordered reparation of $60,000 for the first victim and $7800 for O’Neil.
He declined a further suppression order, saying the public had the right to know the man’s identity, but granted a two-week window to file an appeal.
An appeal was filed this afternoon, hours before the deadline, questioning aspects of the judge’s ruling. It means the man still cannot be named more than two years after his arrest.
The matter will now be set down for a High Court hearing.
The court heard the scammers set up a fake investment website. After leaving their details on the website, both victims were approached by scammers pretending to be investment advisers for international banks.
They were convinced to invest and told to deposit their money into the man’s “custodial account”.
O’Neil was one of the first investment scam victims to go public with her story after a wave of fraud cases in late 2022 and early 2023.
She helped spearhead a victims’ group that has highlighted failures in the banking system, calling for compensation and better safeguards to protect customers.
Last year, the Banking Ombudsman ordered O’Neil’s bank, BNZ, to reimburse nearly $300,000 to her and another victim, Borja Ares.
The Ombudsman ruled that BNZ missed crucial “red flags” concerning the scam and failed to act with reasonable skill and care.
Lane Nichols is Auckland Desk Editor and a senior journalist for the New Zealand Herald with more than 20 years’ experience in the industry.
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