A Remuera finance company director on trial for money laundering in connection with an $800,000 investment scam denies receiving stolen money, claiming the victim “orchestrated” the payment and then made a false allegation about being defrauded.
Omega Finance boss Michael Sperry, 63, received the Auckland victim’s cash deposit into his business account in April 2023 before transmitting proceeds offshore.
Sperry, whose trial played out in the Auckland District Court this week, claims his company had just signed a “custodian agreement” with a US crypto exchange to receive investors’ money “on trust”.
He earned 3% commission and communicated with his paymasters via the encrypted Signal app, telling investigators he was an “honourable man” and had no interest in criminal activity.
However, the Crown said he was complicit, alleging he changed his story to cover his tracks after the scam was detected and that he must have known the money transfer was fraudulent.
“Your intention was to conceal the fact those funds were the proceeds of crime,” prosecutor Nastassia Pearce-Bernie put to him.
“No,” Sperry replied. “We were following instructions.”
Sperry was arrested in July 2023 after the victim, whose name is suppressed, realised he’d been duped and alerted his bank and police.
Omega’s ANZ account was frozen. But by then, Sperry had made six mostly international transfers totalling about $126,000, including to recipients in Australia and Britain.
Most of the victim’s money was eventually recovered, with only about $30,000 still unaccounted for.
Prosecutors say Sperry later claimed the victim “orchestrated” the $800,000 payment and then made a “false complaint” in a bid to retain his life savings.
The judge-alone trial heard the victim had been searching online for investment options and was later contacted by a man calling himself Simon David, who claimed to be a Citibank portfolio manager.
The victim was convinced to invest $500,000 in a fake term deposit and another $300,000 to buy bogus Commonwealth Bank bonds.
The retiree was made to send documents to verify his identity as part of so-called anti-money laundering (AML) checks, before being sent payment instructions for Sperry’s Omega Finance account.
He made the transfer on April 20, 2023, sending the money from his ASB account to ANZ.
The victim was sent login details to a client portal that appeared to show his investment had already jumped in value on the back of immediate interest payments.
He smelled a rat. The client portal login was then disabled and David stopped answering calls.
“I realised we’d been scammed.”
The victim told the court he had run a building company for 30 years and was looking for somewhere to put his money after the stock market had “taken a dip”.
The scammer was eloquent, “incredibly convincing” and knowledgeable about financial markets.
Under cross-examination by defence lawyer David Stevens, the victim admitted there were errors in the documentation he was sent and warning signs it was a scam.
He agreed it was unusual that Citibank investment funds were going to an ANZ account, which he said he’d queried with ASB staff.
But the portfolio manager appeared to be completely legitimate, the victim said.
“He gave me that impression. Obviously, I was wrong.”
The court then heard a series of recorded phone calls between Sperry and ANZ staff.
In the first, on May 3, 2023, Sperry asked whether he could increase his daily transfer limit to $100,000 to make an international wire transfer to “pay invoice costs”.
The next call is the bank checking on “unusual” account activity. Sperry confirmed he made a series of wire transactions that day, describing them as “client bill payments”.
“Thank you for your concern but everything is in order,” he said.
The next recording on May 9 that year is ANZ informing Sperry the $800,000 is believed to be scam proceeds.
Sperry assured the bank worker his company was a registered financial service provider and its dealings were above board.
“I’m a banker.”
He said the funds came from a “New Zealand gentleman” residing in Auckland. Omega had also received the man’s “KYC” (know your client) information to verify his identity.
“We have entered into an agreement where we get paid 3% for our custodial-related services and take instructions to wire out those funds to banks.”
He questioned why ANZ believed the April transaction was fraudulent, saying the money was cleared by ASB, which should have conducted its own AML checks.
“As far as we’re concerned that’s the end of the story.”
Sperry said that under the custodian agreement, his 3% fee amounted to $24,000.
He repeatedly mentioned a US business associate called Robert Vashisth, who he said owned “Sparco Bank” and was also the person sending Sperry payment instructions.
Asked what the purpose of the payments was, Sperry replied: “The instructions are just, ‘Please send the funds to the individuals’. We’re not asking those questions because it’s none of our business.
“We’re just acting as custodians of those funds.”
ANZ then warned Sperry he might be contacted by police.
Sperry replied he was “extremely disappointed” that ASB had apparently allowed scam proceeds to enter his account.
“I’m telling you we received those funds as honourable people. It’s their problem, not my problem. We’re an honourable operation.
“ASB now have to do their mop-up because they haven’t done their homework properly and they shouldn’t have sent those funds out.”
Sperry promised to co-operate fully, saying he didn’t need “dirty laundry”.
In a final recording on May 12 that year, ANZ told Sperry that $670,000 frozen in his company account was being returned to the victim’s bank.
The ANZ worker asked whether Sperry had done due diligence on Sparco Bank, saying it looked suspicious.
“Our concern is that Sparco Bank may not be a legitimate entity. We believe you yourself have been caught up in a scam.”
Sperry hit back, saying he had “zero visibility”.
“I’ve been very clear. Don’t tell me what I’ve been involved in.” He then said, “Let me finish”, when the employee tried to speak.
Sperry continued that he relied on ASB “doing their homework”.
“The buck stops with ASB.”
Growing frustrated, the worker said ANZ suspected Sperry may have been “tricked into facilitating” criminal activity.
“I would caution you to really question the information you are relying on because it has all the hallmarks of a scam.”
Sperry voluntarily visited the Auckland police station in July 2023, where he spoke to Detective Sergeant Ilona Walton.
He was told he was being arrested and read his rights.
Walton told the court Sperry said he needed to speak to his business partner and that he had “nothing to hide”.
She also claimed Sperry said the victim had “orchestrated” the payment and, “I don’t believe he was a victim”.
Asked about the use of the Signal app by Sperry and his associates, Walton said the communication platform was encrypted.
“It’s commonly used by drug dealers and criminals.”
Under cross-examination by Stevens, Walton was repeatedly asked if she had gone into the investigation with an open mind.
Stevens pointed to various associates, who Sperry said had been part of the scheme but who she had not tried to contact to verify his version of events.
The lawyer suggested police believed the associates named by Sperry were “fictional people or ghosts”.
Stevens then asked Walton whether drug dealers also used text messages and ordinary phones. She agreed they did.
“Signal in itself is not an indication of criminal activity, is it?”
“No,” Walton replied.
Sperry, a married father of two adopted children, then took the stand in his own defence.
He outlined his qualifications and business credentials, which included stints setting up international bungy jump operations and working as a commercial real estate agent.
He said he and Omega Finance co-director Lance Rapana had been involved in developing social housing for Māoridom before Covid struck.
Then in 2023 he was introduced during a video call to “Bob” Vashisth, who claimed to be Sparco Bank principal and co-founder of MiloX crypto exchange.
Vashisth wanted to expand into New Zealand and that’s where Omega Finance came in, Sperry said.
“It would make it easier for interested parties to open accounts on the MiloX exchange platform if they had accounts here in New Zealand.”
Omega’s role was to “onboard funds” then await instructions from Vashisth.
Sperry said he never met the victim but understood he wanted to open a MiloX account and a custodian bank account was needed to receive his $800,000 investment.
After the money landed, it sat untouched for 13 days while KYC verification checks were carried out, Sperry said.
When verification was confirmed, Sperry received instructions via Vashisth to send $100,000 to a man named Yeoryios Kyriakos Markos in Australia in three separate payments on May 3.
Several other smaller payments were sent to other recipients, including Sperry, over the next two days.
Under cross-examination by Pearce-Bernie, Sperry was accused of changing his story to cover his tracks after fraud was detected.
She suggested he knew the money he was transferring overseas was the proceeds of criminal activity, and that it was far-fetched that he’d receive $24,000 for making a few online payments.
Documents Sperry produced to back up his claims about the custodian agreement weren’t time-stamped and could have been drafted after his arrest, Pearce-Bernie said.
She also questioned why a man with Sperry’s business experience would conduct commercial affairs via Signal.
“Did you not think it was strange that Robert was asking you to receive $800,000 on his behalf without anything in writing?
“You must be alive to the fact that these funds were the proceeds of crime.”
But Sperry denied any knowledge of criminal wrongdoing.
He insisted it was normal to conduct business via Signal and said he had been told to expect the victim’s $800,000 payment by his associates.
“We were just following instructions.”
The trial also heard from two of Sperry’s business partners, Art Sao and Omega Finance co-director Lance Rapana.
Both gave evidence in support of Sperry, describing him as a diligent and trustworthy businessman.
Sao said he introduced Sperry to Vashisth, who was looking to expand his crypto exchange enterprise into the Asia-Pacific region and needed a New Zealand bank account to receive investor funds.
Sao, based in Australia, helped “facilitate” the pair’s relationship and acted as a “middle man”.
Asked by prosecutor Ruby van Boheemen whether AML “alarm bells” were going off over the $800,000 payment, Sao maintained he did not know the money was the proceeds of crime.
“You’re not telling the truth,” van Boheemen said.
“It’s cleared cash funds,” Sao replied. “It went through two banks.”
Rapana said he had been aware of the custodian arrangement with MiloX and endorsed it.
While he agreed $800,000 was a significant sum, he maintained the deposit was a legitimate business deal.
Neither he nor Sperry were “foolish enough or desperate enough” to engage in criminal activity, and Rapana did not believe the victim had lost his money in a scam.
“There’s every possibility that this individual got cold feet and the only way to get his money back was to raise an allegation. To be frank, that’s what I think happened.”
However, neither he nor Sao could explain why Omega Finance’s bank account details appeared on a Citibank payment instruction form sent to the victim by scammers.
“You haven’t been honest with us about what you know about MiloX,” van Boheemen said.
“That’s a very big story,” Rapana replied. “I completely refute it.”
Judge Paul Murray reserved his decision.
Lane Nichols is Auckland desk editor for the New Zealand Herald with more than 20 years’ experience in the industry.
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