Financiers facing multi-million fines in money-laundering case fail in Supreme Court bid

Jiaxin Finance's director Qiang Fu and his mother, Fuqin Che, were prosecuted in the first case of its kind in 2019. Photo / NZME

A mother and son prosecuted over suspicious transactions totalling more than $53 million have failed in a bid to appeal their landmark case to the Supreme Court.

Jiaxin Finance Ltd and its operators Fugin (Lily) Che and Qiang (Michael) Fu were convicted in the High Court of various offences in 2019, the first criminal case of its type to progress through the courts under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009.

The High Court found Jiaxin was a family enterprise in which Fu, the sole director and shareholder, and his mother, Che, acted in concert in a money-laundering racket at the behest of a businessman living in Canada, Xiaohu Ca (Edward) Gong.

Fu and Che were prosecuted by the Department of Internal Affairs.

They were found guilty by Justice Tracey Walker of failing to keep adequate records for and report 311 suspicious transactions totalling about $53 million between April 2015 and May 2016.

The Crown case was that Gong was using used New Zealand to launder proceeds from a huge, illegal Chinese pyramid scheme.

Jiaxin Finance Ltd, which is now in liquidation, was fined $2.25 million. Lily Che was fined $202,000 and Michael Fu $180,000.

They appealed against their convictions and sentence to the Court of Appeal, where their barrister, Ron Mansfield, KC, argued that they had no knowledge that Gong was involved in any unlawful activity.

That appeal was dismissed, but they then sought leave to appeal to the Supreme Court.

The Supreme Court has now declined the application, saying that the criteria for such an appeal has not been met.

Last year, Edward Gong cut a deal with the New Zealand Police under which he surrendered more than $70 million in New Zealand assets, including a $2m Auckland house, rather than have the matter taken through the courts.

Those assets had been restrained under the Criminal Proceeds Recovery Act, through which police can seize assets associated with significant criminal activity, and have them forfeited to the Crown.