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Cars, motorcycles, boats and machinery are just some of the items that the Asset Recovery Units have seized during their investigations.

Spotlight on the Asset Recovery Unit: A blow to the hip pocket of drug dealers and fraudsters is proving to be one of the most potent crime-fighting tools. By Ellen Brook

Five years after the Criminal Proceeds Recovery Act came into force, giving wide-ranging powers to Police to seize assets derived from crime, the dollar value is well into the multimillions.

That means there are now quite a few indignant crims in New Zealand who have been reminded of the age-old saying that crime doesn’t pay – especially not when the Asset Recovery Unit (ARU) is on your tail.

As Detective Senior Sergeant Brent Murray, officer in charge of the Central Asset Recovery Unit in Wellington, notes, there are few things that annoy “hard-working” crooks more than losing their ill-gotten gains. And, as they tend to go for fast cars, boats, big properties, jewellery and wads of cash, that can amount to quite a lot.

Since 2009, an estimated $318 million worth of assets has been scrutinised by the ARUs. Of that, an estimated $151 million worth is the subject of restraining orders and an estimated $36.3m worth of assets has been forfeited to the Crown.

The units, based in Auckland, Hamilton, Wellington and Christchurch, employ 29 investigators and eight accountants and analysts. Their focus is on criminal activity that carries a jail term of five or more years or where there is an accumulation of $30,000 or more.

Even if a person has escaped criminal charges, for example, because of insufficient evidence, he or she can still be convicted in the civil court where the standard of proof is on the balance of probability. The result – a person might not go to jail, but their assets can still be taken by the Crown.

Detective Inspector Paul Hampton, who manages the units within the Financial Crime Group at Police National Headquarters, calls the lure of money the “invisible sixth driver of crime” and says it can often be overlooked in the course of regular investigations.

Following the money trail is the bread and butter of the ARUs’ work. The biggest earners in the criminal community are drug dealers and fraudsters and 82 per cent of the units’ work is drug related. That’s where big profits are made and turned into the sort of excessive lifestyles that are likely to get a chap noticed, such as the case of Stephen John Gray, a seemingly mild-mannered car salesman from Hamilton.

After being convicted in 2012 of manufacturing and supplying methamphetamine, cultivating and supplying cannabis and supplying LSD and ecstasy, Gray was last year ordered to surrender cash and property worth $5.1 million. It was the largest judgment made against one person since the act came into force and included two vehicles (worth $45,000 each), his house ($900,000) and a farm ($3 million), as well as cash.

By following the money, the ARU can prove which assets or cash are the proceeds of crime. And there is no point in trying to salt money away in family trusts. They are not immune to the long arm of the Criminal Proceeds Recovery Act.

The ARUs also have the legal power to compel people to give information on how they acquired their assets, although this cannot usually happen until any criminal proceedings are completed.

A big case for the Central unit last year was Operation Foxy, which nabbed long-time Wellington drug dealer Sandra McMahon. The 69-year-old had been selling cannabis for 20 years, initially with her husband. When he died, she carried on the trade with her two sons and proved to be an astute businesswoman, building up a client base of 150 customers, and a waiting list.

McMahon was very careful with her drug money, depositing it in several different bank accounts. However, by 2012 police had enough evidence to prosecute and to show just what had been accrued through the proceeds of crime. At the moment, $3.4 million worth of her assets is under “restraint”. Through a process of consensual forfeiture (a negotiated settlement), McMahon will lose cash, motor vehicles, six houses and two sections.

Mr Murray and Mr Hampton say the benefits of the act go beyond punishment. It also works as a deterrent – crooks don’t like the idea of being asset-stripped – and as a prevention tool – offenders who have been deprived of their wealth take longer to re-establish themselves because they no longer have a financial base.

By law, the investigators can go back seven years into someone’s finances to show they have profited from crime.

Even if an asset was not bought directly with the proceeds of crime, it can be considered an “instrument of crime” if it was used in the commission of an offence.

As such, a house used for the sale and supply of drugs, a car used in a robbery, or a computer used to groom children, for example, can be considered “tainted” and be subject to forfeiture.

If profits from illegal activity are going into an existing asset, that is also considered to be tainted and can be forfeited.

In a recent case, Pam Green of Paraparaumu was convicted of drug dealing. She sold morphine sulphate to addicts and used the profits to fund her lifestyle and amass $1.1m in assets, which was placed under restraint by the ARU. The restraint included the family home because although it had not been bought with the proceeds of crime, up to $100,000 of drug money had been spent on renovations, rendering the home “tainted”.

Forfeiture orders are made through the High Court and the forfeited assets are managed by the Ministry of Business, Innovation and Employment. When money is recovered, either through cash or the sale of recovered assets, it goes into the “hypothecated fund” where it is redistributed to institutions that target the drivers of drug and organised crime. Since 2009, more than $7m has gone into the fund. Applications can be made for the money by several government agencies and are approved by the Cabinet.

Mr Hampton says that in terms of prevention, the work of the ARUs should be measured not just by the value of the assets restrained and forfeited, but, more importantly, by the removal of those funds from the criminal community.

There is no research being done in New Zealand on the downstream effect of asset recovery on the crime figures, so Police can’t say for certain what impact the ARUs’ work is having long term. However, recent research by the University of Queensland into the effect of asset recovery regimes on drug trafficking suggests that every dollar taken out of the hands of drug offenders results in prevention of crime worth $3.50. This means that the restraints currently held over the assets of drug offenders in New Zealand could be preventing crime worth more than $433m.

One thing that is clear, however, is that the demand for asset recovery investigations is increasing, especially from other government departments, such as the Ministry for Primary Industries, Customs, the Serious Fraud Office and ACC, as awareness of the units’ work grows.

Unfortunately, the crooks are also becoming aware of the act and are taking steps to disguise their assets.

Let them try. As Mr Murray says, if people try to accrue large sums of money and a large asset base through illegal means, the chances are that, sooner or later, it will all get taken away and they will be left with nothing.


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