Korean doctor Won Joo Hur has been convicted and fined $100,000 for breaching the Overseas Investment Act. Photo / Dean Purcell
A Korean doctor has been convicted and fined $100,000 after he and his lawyer concocted a plan to hoodwink the Overseas Investment Office (OIO) over the purchase of a $3 million Auckland property.
Won Joo Hur and his lawyer Jaeho Choi were accused of forging documents and lying to investigators in an attempt to skirt foreign buyer rules designed to protect sensitive Kiwi land.
The ruse included backdating what prosecutors labelled a fictitious loan document and drafting it by hand to avoid being sprung by a computerised date stamp.
When investigators caught wind of the deception, the pair told further lies and Choi instructed Hur to delete incriminating emails.
Hur refused and later passed the correspondence to investigators, providing them with a treasure trove of evidence.
Hur, a permanent New Zealand resident who lives overseas, pleaded guilty to breaching the Overseas Investment Act (OIA) during sentencing yesterday at Auckland District Court.
Choi has pleaded guilty to the same charge and could face up to a year in jail or a fine of up to $300,000.
A charge of perverting the course of justice against both men was dropped.
The case is the first criminal prosecution ever taken under the OIA.
Hur, a senior oncologist, admitted falsifying a loan document and misleading investigators after he failed to gain OIO consent to buy an 18ha rural property in Helensville in 2016.
The court heard that "despite his better judgment", Hur, along with Choi, devised a plan to skirt the OIO regime in order to hide Hur's identity, as his wife had fallen in love with the property.
A real estate agent who negotiated the sale failed to alert Hur that he was likely to require OIO consent or that he should seek legal advice, urging him to make an unconditional offer, court documents show.
Hur did so, then realised days out from settlement that he risked breaching the act if the sale went through.
His options were limited: cancel the sale, forfeit his $300,000 deposit and risk incurring penalty interest and damages, or urgently find an independent third party purchaser before settlement.
Instead Hur and Choi devised another plan.
They discussed finding someone else to hold the property for a short time until Hur could find a buyer, or until he and his wife became eligible to buy it under OIO rules.
Choi called Hur in Korea and suggested nominating a company called HK Search Limited as purchaser. The company's director was Choi's wife, whose name would appear on property records instead of Hur's.
Hur agreed and paid the remaining settlement funds on October 19, 2016.
"Dr Choi explained they should avoid having Dr Hur's name on the mortgage or caveat because it could make them a target of OIO investigation, which would be damaging to them both," a summary of facts states.
The two men then drafted an agreement stating HK Search Limited was only to act on instructions from Hur "as if Hur is the real legal owner of the property".
The company was to sell the property as soon as possible and transfer all sale proceeds directly to Hur.
But the scheme began to unravel early the following year.
In April 2017 the OIO wrote to Choi seeking an explanation over the purchase, saying it was investigating whether HK Search Limited had acquired the property as " an associate" of Hur in breach of the act.
It issued a compulsory notice requiring Choi's firm to produce relevant documents to investigators.
Hur and Choi then set about a premeditated course of "active deception" designed to obstruct investigators and provide false information, prosecutor John Dixon QC told the court.
They told investigators the transfer to HK Search Limited had occurred at arm's length and funded by a $3m loan from Hur.
They drafted a "fictitious" loan agreement to support the lie, which was backdated to September 2016. Hur transcribed the agreement by hand to avoid leaving a computerised date stamp then sent it to Choi by "express mail".
Hur suggested adding a clause requiring Choi's wife to repay at least 20 per cent of the imaginary loan within three months "to make the loan document more credible 'from the investigator's standpoint'".
During this time, Choi communicated with Hur from his Gmail account in a bid to "avoid OIO scrutiny", rather than using his JC Legal address.
Choi then sent the loan document to investigators along with a covering letter containing more misrepresentations.
The letter denied HK Search was an associate of Hur and claimed the property had settled for the benefit of Choi's wife and that Hur had "no legal rights to the property".
It also claimed the loan document had been signed in September 2016, another falsehood.
Hur eventually came clean, admitting to the lies during interviews.
He had faced up to a year in prison but was given credit for his good character, cooperation and guilty plea.
Dixon described the pair's offending as "relatively hopeless".
They had deliberately fabricated evidence to frustrate investigators in a bid to defeat ownership rules designed to protect sensitive land. An appropriate judicial response was warranted.
Hur's lawyer Fletcher Pilditch said his client accepted he had misled investigators, which he deeply regretted.
But he had been let down badly by the professional advice he'd relied upon. Hur had cooperated with authorities and returned voluntarily to face the music.
Judge David Sharp said Hur had suffered significant personal loss but needed to be held to account.
"It involved a premeditated and planned approach. You did it in conjunction with a lawyer who it could be said should have known better.
"I have to deter people who behave in such a way."
He convicted Hur and fined him $100,000.
A civil enforcement action is now underway involving disposal of the property in which Hur could face a further penalty of up to $300,000.
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The woman was shaken by the incident.