Covid wage subsidy fraud, money laundering claims as MSD files charges in biggest prosecution yet

Auckland District Court. Authorities say the Auckland man acquired nearly $1 million in wage subsidies he was not entitled to. Photo / Nick Reed

An Auckland man is accused of defrauding taxpayers of nearly one million dollars and attempting to get another $738,000 in Covid wage subsidies.

The Ministry of Social Development (MSD) has alleged Luke Daniel Rivers fraudulently obtained more than $977,000.

The ministry said Rivers pleaded not guilty to all charges and was remanded in custody.

George Van Ooyen, MSD group general manager client service support, said Rivers faced 23 charges relating to dishonestly using a document and money laundering.

The Business Herald has learned this is MSD’s biggest wage subsidy prosecution.

Rivers is due to have a bail application later this month.

“The wage subsidy scheme provided an unprecedented level of financial assistance to support New Zealand’s economic recovery from Covid-19 and we are committed to identifying and investigating any instances of misuse,” Van Ooyen said.

“Our pipeline of investigations has so far resulted in 36 people being brought before the courts for wage subsidy misuse.”

Van Ooyen said the total amount of public money involved in these cases was about $3m.

And another 12 cases were in the process of having charges filed, he said.

“Eight people have been convicted and sentenced to date, while another six are awaiting sentencing.”

Van Ooyen said the MSD was also undertaking civil recovery action in relation to 31 businesses, with civil court action having started in seven of these cases.

“We expect more court cases to follow as we continue our investigations, which involve a mix of individuals and businesses,” he added.

It’s understood cases involving allegations exceeding $1m generally get assigned to the Serious Fraud Office (SFO).

Van Ooyen said the SFO filed 95 charges against Hun Min Im, who is alleged to have fraudulently claimed more than $2.3m from various Covid-19 relief funds and GST returns.

But Im allegedly received $624,000, less than the amount Rivers is accused of fraudulently receiving.

Fraud investigators accused Im of using applications with false information to acquire the subsidies.

It was not immediately clear how Rivers was accused of gaining the wage subsidy payments and he could not immediately be reached for comment.

The MSD said it had completed more than 15,000 pre-payment and post-payment checks on wage subsidy applications, and resolved 6703 allegations of wage subsidy misuse by the end of March.

Thousands of Kiwis have already made voluntary repayments, Van Ooyen said.

“This has contributed to 24,732 voluntary and requested wage subsidy repayments being made, totalling $819.1 million.”

To receive the wage subsidy, applicants had to sign a declaration stating they operated a business in New Zealand, registered charity, incorporated society, NGO, post settlement governance entity or, in specified circumstances, a commonly-owned group.

John Weekes is online business editor. He has covered politics, crime, courts and consumer affairs. He rejoined the Herald in 2020, previously working at Stuff and News Regional, Australia.