An Auckland businessman has been granted mercy after blaming financial desperation and cultural issues for having attempted to smuggle over 2.6 million black-market cigarettes into New Zealand – and illegally export thousands of vapes into Australia.
Authorities executed search warrants at Wei Xu’s Coatesville home and his Rosedale business in October 2024, after Customs intercepted three suspicious freight shipments from overseas.
Had the schemes gone to plan, they would have resulted in nearly $4 million in revenue evasion.
Customs asked for a prison term last week as Xu, 42, appeared in North Shore District Court for sentencing. The scale of the offending, the significant premeditation and the cross-border criminality necessitated a deterrent sentence, Crown prosecutor Renee Zhang argued.
But Judge Paul Murray ultimately agreed with defence lawyer Graeme Newell that home detention was the most fitting outcome given Xu’s background and other factors.
The defendant was lured by the prospect of easy money amid financial setbacks that had started during the Covid-19 pandemic, Newell said, explaining that his client was desperate to support his wife and children while trying to hold down leases for properties he could no longer afford.
“You experienced poverty as a child – that shaped you as an adult,” the judge later added, noting that Xu’s parents had been poor labourers in China. “You always felt pressure to achieve and a sense of inferiority given your humble beginnings.”
He ordered the first-time offender to serve 11 months’ home detention.
Xu, who has lived in New Zealand for 18 years, established RMPS International Limited in 2016. The company did legitimate business that included freight transportation, warehouse storage and Customs clearance.
But authorities started noticing irregularities in 2024.
The first was a shipment of 24,000 vapes concealed among flooring panels that had been sent from New Zealand to Australia in September that year.
Although there is no customs duty on vapes in New Zealand, there is one in Australia, prompting authorities there to reject and return the shipment.
Later that month, the first of three shipments with concealed cigarettes arrived in New Zealand via Xu’s business. It was listed as containing “household effects” but also hidden inside were 596,000 cigarettes and 187kg of loose tobacco.
About one month later, a shipment from China listed as containing cat litter and face towels was found to have 560,000 undeclared cigarettes. Days later, a shipment from Cambodia that was supposed to contain various cosmetic products was found to contain 1.5 million undeclared cigarettes.
Search warrants were obtained a short time later.
Customs has arrested an Auckland businessman after 2 million cigarettes were smuggled into the country this week. The illicit tobacco was seized following information from overseas border partners about two sea freight containers headed for NZ. Read more: https://t.co/uItO2Fflh6 pic.twitter.com/f6Zf5BzjVz
— New Zealand Customs Service (@NZ_Customs) November 1, 2024
When interviewed by authorities on the day of the search warrant, Xu claimed ignorance that the shipments had contained contraband. He suggested he had been duped by a person named “Andy”, whom he claimed to have met in China a year earlier.
But evidence obtained during the search suggested he knew about the cigarettes, and he later pleaded guilty to all charges.
Xu could have faced up to five years’ imprisonment and fines of up to $20,000 for three counts of defrauding Customs of revenue. He also faced sentences of up to six months for multiple counts of importing prohibited goods and knowingly making an erroneous entry for an import or export.
His lawyer noted that his risk of re-offending has been assessed as low as long as he continues to receive psychological help.
He’s expressed remorse for his actions and put his money where his mouth is by making a $5000 donation to charity, Newell said.
“There have been significant consequences to him, and they will be ongoing,” he added, noting that his client already spent a month in jail between the time of his arrest and when bail was granted.
But even if the judge was to determine a sentence of two years or less – at which point alternative non-custodial options can be considered – a prison sentence would be most fitting because denunciation and deterrence were needed, the Crown argued.
“This was sophisticated offending,” Zhang said, noting that Xu made around $150,000 in ATM cash deposits around the time of the imports. “This was offending in which clearly Mr Xu sought profit.”
After factoring in reductions for Xu’s guilty pleas, remorse, prior good character, his background and the impact a sentence of imprisonment would have on his children, the judge reached a provisional sentence of exactly two years.
In deciding to convert it to 11 months’ home detention, followed by six months of post-detention conditions, he noted that Xu remained the primary caregiver and income earner for his family.
“Your family situation is really what makes the difference,” Judge Murray explained, adding that prison “would be punishing them for what you did”.
Craig Kapitan is an Auckland-based journalist covering courts and justice. He joined the Herald in 2021 and has reported on courts since 2002 in three newsrooms in the US and New Zealand.
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