Businessman jailed for his part in NZ’s largest cigarette smuggling case
A businessman has been jailed for his role in the country’s largest cigarette smuggling case.
The man and his company have interim name suppression and appeared at the Auckland District Court on Thursday after earlier admitting charges of defrauding customs, making erroneous entries in customs documents and selling goods without paying duties.
The operation involved the smuggling of over 19 million cigarettes into Auckland, hidden inside office cabinets imported from China. The smuggling avoided excise customs duties of over $18 million.
Judge Tony Fitzgerald sentenced the man to five years and three months in prison and his company to fines.
He described the offending as being on a “massive scale” that was complicated, went on for nearly three and-a-half years and was motivated by greed.
The judge said there had never been offending of this type and on this scale.
The businessman’s lawyer David Jones QC said his client’s parents were both in their 80s and had serious health conditions.
He asked for a discount to recognize the difficulty his client will experience as he sits in prison with the health of his parents on his mind and not being able to see them.
Jones said his client had delayed pleading guilty because he disputed the number of cigarettes and amount of cash involved.
Following argument, Judge Fitzgerald did find Customs had over estimated the number of cigarettes.
However, Customs prosecutor Dennis Dow said any discount for having ill parents would set a dangerous precedent.
Dow said while he conceded the businessman was now sorry for what he had done, he had many chances to stop his offending but continued until he was caught by Customs.
He described the case as unprecedented.
Judge Fitzgerald took time off the businessman’s sentence for his early guilty plea, remorse, his ill and elderly parents in China and a limited amount for his previous good character.
Over an 18-month period, Customs estimated the man sold $6.4 million worth of cigarettes to four major buyers.
According to court documents released to Stuff, Customs launched Operation Whitehorn after being tipped off by an anonymous caller to Crimestoppers.
That one phone call began the largest cigarette-related investigation run by New Zealand Customs to date.
The caller identified a Chinese man who had a large amount of cigarettes for sale.
Customs investigators tracked the man and set up a surveillance operation.
Eventually they followed him to a suburban street in Auckland where he was seen picking up boxes of cigarettes from his supplier, the businessman.
Investigators learned the businessman had rented storage facilities at Kennards in Three Kings and Safestore in Onehunga, Auckland.
Armed with a search warrant, customs officers searched the Kennards storage unit. Inside they found steel office cupboards. Some were full of cigarettes and others were partially full.
When investigators pulled the CCTV footage from the storage facility, they found the supplier had removed over 330 boxes of cigarettes over a four month period in 2018.
Customs records show that the man’s company, the name of which is also suppressed, imported 133 shipping containers since August 2015. They claimed the containers contained office furniture. None of the customs consignment documents mentioned cigarettes.
THE NET CLOSES
In November 2018, the supplier imported a 12m long shipping container. But Customs officers were waiting.
Inside they found office furniture, as declared on the customs declaration but at the back of the container were 12 large boxes.
The boxes contained steel cabinets but inside the cabinets were cartons of cigarettes – 340,000 cigarettes in total.
Days later Customs investigators executed search warrants at the businessman’s house in the leafy suburb of Epsom with a council valuation of over $4.6 million.
A forensic examination of his phone revealed chat messages between the businessman and his supplier, discussing orders, pricing and packaging dating back to December, 2017. The phone also revealed chat messages with the four major buyers.
Inside they found over $55,000 in cash and thousands of cigarettes.
The storage units in Three Kings held $841,000 in cash and about 1.5 million cigarettes.
Storage containers at Onehunga contained over $3.2m in cash.
The businessman was arrested and charged.
In the meantime, two more containers were on their way to New Zealand from China.
When they arrived the following month, Customs officers searched the containers and found they contained a total of over 700,000 cigarettes.
MULTI-MILLION DOLLAR EMPIRE UP IN SMOKE
Customs records show the businessman’s company imported 133 containers between August 2015 and December 2018.
The documentation declared the containers held office furniture but Customs officers believe they also contained cigarettes.
Handwritten notes found in the search warrants indicated brands and quantities of cigarettes that the businessman wanted from his suppliers in China.
A spokeswoman for Customs has said the cash has been forfeited to the Crown and the cigarettes have been destroyed.
A woman, who has name suppression, is still before the courts.