Police are investigating an alleged $2 million fraud by MSD to obtain a restraining order against funds and property

The police then filed an application to secure the men’s property.

Court documents say the two ran a scheme “in which they wrongly used payments made by the ministry to a related company for the supply of basic household furniture to welfare recipients.”

The police application accused them of unlawfully obtaining at least $2 million between September 2017 and March 2023.

Civil lawsuits seeking the seizure of property obtained through criminal conduct often proceed concurrently with or subsequent to related criminal proceedings. However, when NZME contacted one of the men, he said no criminal charges were currently laid against him.

Companies Office records show both men are associated with the Auckland furniture company, as current or former directors. The company’s website says it provides furniture estimates for Jobs and income New Zealand (Winz).

Winz, part of MSD, sometimes provides an advance payment to beneficiaries with limited means who need to buy basic household items such as tables, chairs, beds, refrigerators and washing machines.

Supreme Court Justice Pheroze Jagose issued the restraining order on October 18.

This means that the assets cannot be disposed of or otherwise dealt with before the police have the opportunity to apply for a further forfeiture order to the Crown under s. Proceeds of Crime (Recovery) Act 2009.

The bill is intended to enable authorities to confiscate property and assets derived “directly or indirectly” from serious crimes, including from organized criminal groups.

In the past, most criminal proceeds cases involved drug-related crimes, but the law is also used to confiscate property obtained through fraud or white-collar crime.

In this case, police filed a claim for a share of properties worth $3.24 million, which Judge Jagose said the men shared with their spouses, and bank funds worth more than $500,000.

“Taking into account the likely recognition of other forfeiture claims over the land, I am satisfied that the value of the property to which the freezing application relates is not disproportionate to the scale of the alleged offence,” the judge said.

“I see no reason not to exercise my… residual discretion, precisely to preserve the property in the event that it were to be confiscated for the Crown to apply restrictions and make further orders.”

MSD Group General Manager Customer Service George van Ooyen said all allegations of fraud were investigated and, where appropriate, criminal proceedings were initiated.

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

“In some cases, this may include cooperating with the police to use arrest and forfeiture powers under the Proceeds of Crime (Recovery) Act,” van Ooyen said.

“As the matter is ongoing, we are unable to comment further.”

Ric Stevens worked for the former New Zealand Press Association news agency for many years, including as a political reporter in Parliament, before taking up senior positions at various daily newspapers. He joined NZME’s Open Justice team in 2022 and is based in Hawke’s Bay. His writing on crime and justice is based on four years of experience on the front lines as a probation officer.