Police investigate suspected $2 million MSD fraud and seize cash and property

• A restraining order has been made over land and bank deposits belonging to two Auckland men.
• Police allege the pair “misapplied” Winz’s payments to beneficiaries for essential household furnishings.
• The men, connected to a furniture company, are said to have profited $2 million in seven years.

Police have obtained a restraining order against real estate and bank funds owned by two men allegedly involved in a $2 million fraud against the Ministry of Social Development.

Last month, affidavits were filed in the Auckland High Court by a police officer, a forensic accountant and a Ministry of Social Development (MSD) investigator alleging “theft and deceit” allegedly committed by the Auckland men.

The police subsequently filed a request to seize the men’s belongings.

They alleged the pair carried out a scheme “whereby they misapplied payments made by the ministry to a related company for the provision of essential household furnishings to benefit recipients,” according to court documents.

The police filing alleged that they unlawfully benefited at least $2 million between September 2017 and March 2023.

Civil actions to seize assets obtained through criminal conduct often run parallel to or subsequent to related criminal charges. However, when contacted by NZME, one of the men said he was not facing any criminal charges at this time.

Records from the companies office show both men are connected to an Auckland furniture company, as current or former directors. The company’s website indicates that they offer furniture quotes to Work and Income New Zealand (Winz).

Winz, part of the MSD, sometimes provides an advance to beneficiaries with limited resources who need to purchase essential household items such as tables, chairs, beds, refrigerators and washing machines.

High Court Judge Pheroze Jagose issued the restraining order on October 18.

It means that the assets cannot be disposed of or otherwise dealt with before the police have the opportunity to apply for a new order to have them forfeited to the Crown under the Criminal Proceeds (Recovery) Act 2009.

The law is intended to allow authorities to seize property and assets resulting “directly or indirectly” from significant criminal offences, including by organized crime groups.

Historically, most proceeds of crime cases have been committed for drug-related crimes, but the law has also been used to seize property obtained through fraud or white-collar crime.

In this case, the police application extended to shares in real estate worth $3.24 million, which Judge Jagose said the men shared with their husbands, and bank funds worth more than $500,000.

“Given the likely recognition of other claims to the land for forfeiture, I am satisfied that the value of the property to be seized is not disproportionate to the magnitude of the offense alleged,” the judge said.

“I see no reason not to exercise my… remaining discretionary power precisely to preserve property if forfeited to the Crown, to carry out the requested restrictive measures and further orders.”

George van Ooyen, MSD group general manager of customer service, said all allegations of fraud were investigated and prosecuted where appropriate.

“We take our responsibilities to New Zealand taxpayers very seriously,” he said.

“In some cases this may include working with police to use the powers of coercion and forfeiture under the Criminal Proceeds (Recovery) Act,” Van Ooyen said.

“As this matter is before the courts, we cannot comment further.”

*This story originally appeared in the New Zealand herald.