HAMILTON - Four men accused by the Serious Fraud Office of organising a fraudulent scheme to buy $2.2 million worth of Housing NZ homes have been committed for trial.
Three Hamilton men and one from Te Awamutu, aged from 39 to 61, all face a charge of conspiracy to defraud. Their names have been suppressed.
Community magistrates Mary Symmans and Linda Rangitauira remanded the four on bail after a depositions hearing ended in the Hamilton District Court yesterday.
The Serious Fraud Office alleges that the group devised a scheme to allow a finance company to obtain money from lending institutions, mainly trading banks, to buy 46 Housing NZ homes.
Fraud Office counsel John Billington, QC, said at the start of the hearing that for the company to buy the houses it had to convince Housing NZ that it had enough credit to cover the $2.2 million price tag.
He said the four, who were not creditworthy, set up a scheme to illustrate their ability to pay.
Some of the money came when friends and relatives of the men were approached to buy the houses from Housing NZ on their behalf, or to act as guarantors for third-party mortgages.
Those approached believed that they would get a $3000 to $5000 fee and fulfil the purchase or guarantor roles in name only, with the company being responsible for any purchase or guarantee made.
However, Mr Billington said, all 14 who accepted the company's approach ended up buying a property. One person bought nine.
A second money source was from a $725,000 bridging loan from another finance company at an interest rate of 50.34 per cent, and $33,640 from yet another finance firm, which was under the control of a relative of one of the accused.
The third source was equity loans from homeowners who agreed to take out new mortgages from private lending bodies.
Mr Billington said the homeowners were led to believe that the company would meet all the costs of setting up and maintaining the loans, in exchange for a fee.
As a result of the finance company's activities, many people bought houses or obtained finance they could not afford.
Defence lawyers did not offer evidence at the depositions hearing.
Four accused of house fraud scheme committed for trial
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