Hui Zhang, in the dock at the Auckland High Court, is facing multiple drugs charges in relation to Operation Gem. 16 June 2015 New Zealand Herald Photograph by Brett Phibbs NZH 02Jul15 -
An Auckland man has been convicted of smuggling more pseudoephedrine into New Zealand than anybody else.
Hui Zhang disguised nearly 400kg of the drugs needed to make methamphetamine as "bread crumbs" from China destined for an Auckland restaurant, which he used as a hub to distribute through his network across the city.
At the beginning of the trial in June, the 44-year-old admitted admitted 34 pseudoephedrine supply charges as "simply a link in the chain" but denied the three more serious charges of importation.
But after deliberating for two weeks, the jury found him guilty of smuggling two shipments of Class-B drugs - totalling 392kg - although acquitted him of a third importation of 91kg hidden inside a water cylinder despite his fingerprints being found inside the sealed container.
Zhang now faces a prison sentence likely to be longer than the 13 years and eight months recently given to Van Thanh Tran, who pleaded guilty to smuggling a 250kg shipment after being targeted in Operation Ghost.
READ MORE: Operation Ghost - VIP high-roller jailed
Tran and Zhang were at the top of their respective syndicates dealing pseudoephedrine, once the active ingredient in New Zealanders' favourite cold and flu medicines, but now illegal as an ingredient to cook P.
Despite running their own networks independently, and with no evidence of any contact between them, Zhang and Tran shared the services of a "delivery man" Ziyang Ma who would courier parcels on their instructions.
Pseudoephedrine is extracted from a medicine widely available in China called ContacNT - with 223g of the pink, yellow and red granules from 1000 capsules sold as a "set" for $8000 to $12,000 on the black market.
Fingerprints belonging to Zhang led police to the restaurant in downtown Auckland, which cannot be named, where a covert camera captured drug deals in the carpark behind the building.
Surveillance photographs show Lulu Zhang, who worked at the restaurant, passing a bag holding newspaper-wrapped parcels to Guo Pei Chen sitting inside a silver Lexus.
The Crown case was Lulu Zhang controlled the supply on Hui Zhang's behalf, when he was out of the country, while Chen was a dealer who purchased drugs from the syndicate.
Bugged phone conversations revealed a code, according to the Crown. If Chen called to book a table for 12 people, this meant he was actually asking for 12 sets of pseudoephedrine.
Defence lawyer Rachael Reed, on behalf of Lulu Zhang, told the jury her client handled deliveries at the restaurant but did not know the parcels were drugs.
Her client was acquitted of four supply charges but convicted on six, while Chen was convicted of 13 charges and acquitted on three. The Herald can now reveal the 44-year-old was once banned from the SkyCity high-roller room for loan sharking.
READ MORE: Casino loan shark faces P charges
Another of Zhang's customers Desmond Sharp admitted 13 pseudoephedrine charges, but denied manufacturing methamphetamine along with his brother Desmond Loke.
The brothers were living at Sharp's home in Flatbush where police found methamphetamine and $54,000 cash, as well as other equipment which can be used to cook P.
The jury found both Desmonds guilty of the serious methamphetamine charge. Sharp also supplied 22 sets of pseudoephedrine to Michael Geoffrey Neems, who was found guilty of possession of a Class-B drug for supply.
The jury was shown surveillance videos and photographs, as well as listening to intercepted conversations and a woman arrested in Operation Gem who turned to give evidence for the Crown against the others.
Witness Y, whose identity is suppressed, said she would help organise drug deals between Hui Zhang, as his English was poor, and customers such as Sharp.
She said Zhang always referred to the drugs as "the stuff" and these secretive conversations were held on a cellphone she was only allowed to use for drug deals, not daily life.
On one occasion, Witness Y said Zhang talked about "his stuff arriving in New Zealand".
On another occasion, Zhang said "stuff coming into New Zealand" had been seized by the authorities and he would "lose a lot of money".
She was also shown surveillance photographs taken by the police, which she confirmed showed one of these drug deals taking place in east Auckland.
READ MORE: Operation Gem - Surveillance photos of drug deal released
As well as the covert surveillance, the jury was also shown significant physical evidence in Operation Gem.
Police raided a storage house in Botany Downs in October 2013 where they discovered a locked box, holding 47 sets of pseudoephedrine wrapped in newspaper, as well as empty packets of "chicken breader", or bread crumbs.
This turned out to be an important clue.
Analysis of shipping documents revealed a container holding 142kg of "chicken breader" was delivered to the restaurant five months earlier. The police now believed Hui Zhang was smuggling pseudoephedrine from China inside the bags of bread crumbs.
They listened in to the bugged conversations between Hui Zhang and a woman in China revealed another ship was "on the water" and arrived at the Ports of Auckland 10 days after Zhang was arrested in December 2013.
The shipment was addressed to Zhang's restaurant and there were 10 boxes of chicken breader - inside the packets was a total of 235kg of pseudoephedrine and another 15kg of pure ephedrine.
"A massive sea bound shipment that Zhang needed to breath life into his business," Crown prosecutor Bruce Northwood said in his opening address.
October 2012: Customs discovers 91kg of pseudoephedrine inside a water cylinder. Police allege Hui Zhang's fingerprint was found on a packet. NOT GUILTY
May 2013: 142kg shipment addressed to Auckland restaurant linked to Zhang. Police say pseudoephedrine was hidden inside packets of bread crumbs. GUILTY
December 2013: Shipment of bread crumbs destined for restaurant intercepted by police at the Ports of Auckland. 235kg of pseudoephedrine and 15kg of ephedrine hidden inside packets of bread crumbs. GUILTY
Total: 483kg
• Sold by the "set" (223g), the three alleged importations are worth between $17.2 million and $25.8 million on the black market. At the beginning of the trial, Hui Zhang admitted 34 Class-B drug charges (supply or possession for supply) but denied the three importation charges.
Hui Zhang - Supply pseudoephedrine (pleaded guilty x 34), possession of pseudoephedrine for supply (pleaded guilty x 1, found guilty x 1), import pseudoephedrine (found guilty x 2, not guilty x1)
Desmond Sharp - Supply pseudoephedrine (pleaded guilty x4), possession of pseudoephedrine for supply (pleaded guilty x 9), manufacture methamphetamine (guilty x1) possession of precursor substances/materials/equipment to manufacture methamphetamine (x3)
Desmond Loke - manufacture methamphetamine (guilty x1) possession of precursor substances/materials/equipment to manufacture methamphetamine (x3) possession of methamphetamine for supply (x1)
Lulu Zhang - supply pseudoephedrine (guilty x 6, not guilty x 4)
Guo Pei Chen - supply pseudoephedrine (guilty x 5) possession of pseudoephedrine for supply (guilty x 8, not guilty x 3)
Geoffrey Neems - possession of pseudoephedrine for supply (guilty x 1)