Police investigate alleged $2 million MSD fraud and seize money and property

• A restraining order has been issued against land and bank deposits owned by two Auckland men.
• Police allege the couple “mishandled” payments made by Winz to beneficiaries for essential household furniture.
• The men associated with the furniture company allegedly earned $2 million over seven years.

Police have secured a restraining order against property and bank funds belonging to two men allegedly involved in a $2 million fraud against the Department 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 about “theft and deception” allegedly committed by Auckland residents.

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

They alleged the couple operated a scheme “in which they misused payments made by the department to a related company for providing needed household furniture to Social Security beneficiaries,” according to court documents.

The police statement alleged that they illegally obtained at least $2 million between September 2017 and March 2023.

Civil actions to forfeit assets resulting from criminal conduct often occur simultaneously with or subsequent to related criminal prosecutions. However, speaking to NZME, one of the men said he was not currently facing any criminal charges.

Company office records show both men are associated with the Oakland furniture company as current or former directors. The company’s website states that they provide furniture quotes to Work and Income New Zealand (Winz).

Winz, part of MSD, sometimes provides advances to beneficiaries with limited funds who need to buy essentials such as tables, chairs, beds, refrigerators and washing machines.

On October 18, High Court Judge Feroz Jagose issued a restraining order.

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

The law is intended to allow authorities to confiscate property and assets obtained “directly or indirectly” from serious criminal offenses, including organized crime gangs.

Historically, most criminal cases have involved drug crimes, but the law has also been used to confiscate property obtained through fraud or white collar crimes.

In that case, the police statement covered a $3.24 million share of real estate that Judge Jagose said the men shared with their spouses, as well as more than $500,000 in bank funds.

“Given the likely admission of other claims to the land for purposes of forfeiture, I am satisfied that the value of the property subject to seizure is not disproportionate to the scale of the alleged offence,” the judge said.

“I see no reason not to exercise my … residual discretion, precisely in order to preserve the property if (it) were forfeited by the Crown to make restrictions and further orders.”

MSD customer support group general manager George van Ooijen 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 involve cooperating with the police to use suppression and confiscation measures under the Proceeds of Crime (Recovery) Act,” van Ooijen said.

“As this matter is before the court, we are unable to comment further.”

*This story originally appeared in New Zealand Herald.