Police have restrained $360,000 in lawyers' fees after a client was revealed to be the apparent ringleader of a $40 million Auckland drug syndicate.
The move is rare in legal circles, despite police having powers to restrain funds from law firms if money is thought to be dirty.
The Heraldon Sunday was granted access to previously sealed court documents last week, revealing what assets the Crown restrained and seized following a covert surveillance operation into the meth ring.
Operation Fireball - an investigation into Ka Kit Yim and his assets - followed Operation Coral by the Organised Crime Agency and New Zealand Customs after the discovery of nearly 40kg of crystal meth hidden in a Chinese shipment of granite tea trays in February last year.
The 40-year-old Hong Kong man, also known as Chris Yim, was arrested on March 2 last year while driving his Mercedes Benz in East Tamaki.
Several raids were conducted on his property and luxury sports cars. A month later police identified further assets which appeared to be tainted, leading to court orders for $360,000 in legal fees to be restrained.
The Herald on Sunday cannot name the lawyers and law firm involved, or the context behind the basis of the restraining orders, due to strict suppressions.
In August last year, Yim and his wife Chien Hui Wu, who describes herself as a currency trader, were allowed $2800 per month from their assets for living expenses.
Last July, in an affidavit supporting the living expenses application, Wu said the $360,000 being held with lawyers "had been set aside to pay for our legal costs".
More than $167,500 was also restrained from two CMC Markets New Zealand Ltd trading accounts under Yim and Wu's names.
In the affidavit Wu, who also goes by the name Tina Wu, said the funds in the accounts were used to invest and trade in foreign currency.
"This is how I derived my income and my means of supporting Chris and I," she wrote.
"Our financial position is creating extreme personal pressures for us as a family."
Funds were also restrained from bank accounts.
According to Inland Revenue records neither Yim nor Wu, who arrived in New Zealand in 1991 and 1994, have ever declared their income nor paid any tax.
As part of the raids on Yim, police also seized 12 luxury sports cars valued at more than $1.3m, including a Ferrari worth more than $500,000 and a Lamborghini Gallardo. More than $1.8m in cash was seized and a further 1kg of methamphetamine found.
Watches, jewellery, electronics, and 48 bottles of vintage French wine valued at about $42,000 were also seized.
Yim's 2015 Ferrari 458 Speciale, valued at more than $500,000. Photo / Supplied
Yim's 2010 Lamborghini Gallardo which also had $932,160 of cash inside. Photo / Supplied
Detective Senior Sergeant Tim Chao, the officer in charge of police's Northern Asset Recovery Unit, told the Herald on Sunday police will seek to restrain funds from lawyers and financial institutions if it is believed to be dirty.
"Any kind of financial-type institution - whether it be a lawyer or anyone else who's holding funds or property on behalf of another - we would look to restrain property from them."
He said $360,000 was "a lot of money by most people's standards", but his unit also restrains homes, which in the Auckland market can easily fetch more than $1m.
"Generally, law firms are aware of their obligations under what was the old Financial Transactions Reporting Act, also the AML CFT (Anti-Money Laundering and Countering Financing of Terrorism Act) and CPRA (Criminal Proceeds Recovery Act).
"Most of them are aware of what can happen and what they should be doing."
Some of the cash recovered by authorities during raids on Yim's properties and cars. Photo / Supplied
Chao said seized funds will go into a "ring-fenced" hypothecated fund.
"Five government agencies are able to apply to that fund for disbursement for items over and above normal expenditure to combat organised crime, drug and alcohol."
Professor Warren Brookbanks of the Auckland University of Technology's law school said lawyers "ought to be very, very diligent to ensure that the money doesn't come from some tainted source".
"I would think that with vast amounts of money it would immediately raise red flags and [lawyers should be] extremely prudent before agreeing to touch it."
He said the vast amounts of money now being traded through the illegal drug market requires laundering and is eventually going to find its way into professional offices.
"That raises other ethical questions about the duty of lawyers, especially to be more vigilant with the money they handle."
The crystal meth found by Customs had a street value of $40 million. Photo / Supplied
The 2015 Mercedes-Benz C-Class Yim was driving when he was arrested. Photo / Supplied
A New Zealand Law Society spokesperson said any funds held in a firm's account on behalf of a client were subject to the client's instructions.
However, the spokesperson said lawyers were subject to obligations under the Financial Transactions Reporting Act regarding reporting suspicious transactions.
Lawyers also have other requirements under the Lawyers and Conveyancers Act (Trust Account) Regulations 2008 and the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008.
Yim was sentenced this month in the High Court at Auckland to 11 and a half years in prison for possession of a class A drug for supply.
During sentencing he was described by Justice Geoffrey Venning as being vital to the drug scheme which imported the equivalent of 30kg of pure methamphetamine with a street value of $40m.
Yim, who came to New Zealand from Hong Kong on a resident visa before gaining citizenship in 1995, has previously been convicted on three unrelated charges.
In July 2006 he was convicted at the Auckland District Court for drink-driving and on a dangerous driving charge, while in April 1997 he was convicted of shoplifting.
