North Shore property development investigation confirmed

Published

North Shore property development investigation confirmed

The Serious Fraud Office (SFO) has confirmed that an investigation is under way into a residential property development on the North Shore, Auckland. The development companies included Albany Heights Villas Limited and Hunter Gills Road Limited.

The investigation is being conducted under Part I of the Serious Fraud Office Act, meaning the Director has reason to suspect that an investigation into the affairs of any person may disclose serious or complex fraud.

Both companies went into liquidation without the project being completed. The land has now been sold to new developers.

Recent media reports have highlighted investors' angst at how their funds have been dealt with. The investigation involves allegations that these funds were not held in trust as they had believed they would be, as well as allegations of misleading statements by the developers.

Acting Chief Executive of SFO, Simon McArley, confirmed that many of the investors reside outside of New Zealand and the terms of the agreements differ between investors.

"The legal structures of the investments offered are extremely complex. Our first task has been to get to the bottom of the legal implications of those agreements. Whether there is potential for criminal offending to be an issue will depend largely on the outcome of that analysis," he said.

He also suggested that anyone considering payment of a substantial deposit in relation to a property that had not yet been built should take care to confirm the basis on which that money is held, and the use it could be put to pending completion of the development.

"We saw issues relating to the use of deposits in the Blue Chip investigation, and in that case the legal structure provided no limitation on the use of that money, and little or no protection to purchasers when the developments failed to materialise," he said.

Investors wishing to contact the SFO should call on 0800 109 800 or email complaints@sfo.govt.nz

ENDS

For further information

Andrea Linton
Serious Fraud Office
027 705 4550

Note to editors

Update

The investigation into the Affairs of Albany Heights Villas Limited commenced in 2013.

In November 2016 the Director formally closed the investigation. The SFO concluded that there was insufficient evidence to support a prosecution against any individual connected with the proposal development.

Specific details of the SFO investigation remain subject to the strict secrecy provisions set out in the Serious Fraud Office Act 1990 and accordingly, the SFO will not be providing any further information about the investigation.

About the SFO

The Serious Fraud Office (SFO) was established in 1990 under the Serious Fraud Office Act in response to the collapse of financial markets in New Zealand at that time.

SFO's role is the detection, investigation and prosecution of serious or complex financial crime. SFO's focus is on investigating and prosecuting criminal cases that will have a real effect on:

  • business and investor confidence in our financial markets and economy
  • public confidence in our justice system and public service
  • New Zealand's international business reputation.

SFO operates three investigative teams:

  • Evaluation and Intelligence;
  • Financial Markets and Corporate Fraud; and
  • Fraud and Corruption.

SFO operates under two sets of investigative powers.

Part I of the SFO Act provides that it may act where the Director "has reason to suspect that an investigation into the affairs of any person may disclose serious or complex fraud."

Part II of the SFO Act provides the SFO with more extensive powers where: "...the Director has reasonable grounds to believe that an offence involving serious or complex fraud may have been committed..."

SFO's Annual Report 2012 sets out its achievements for the past year, while the Statement of Intent 2013-2016 sets out the SFO's three year strategic goals and performance standards. Both are available online at: www.sfo.govt.nz