Fraudster managed stash from jail

Wayne Patterson planned to stop stealing when he reached $10 million. Photo / Paul Estcourt

The biggest benefit fraudster in New Zealand history manipulated a web of offshore accounts from prison in a bid to hide the $3.4 million he stole from taxpayers.

Wayne Thomas Patterson planned to stop stealing when he had stashed $10 million and use the money to buy a berth on mega cruise liner, The World.

The scam was exposed by the Herald on Sunday in 2006, but new details are revealed in an Inside New Zealand documentary, Catching The King of Benefit Cheats, which screens this week.

It tells the inside story of the hunt for Patterson, who is serving an eight-year prison sentence for using 123 false identities to claim benefits.

The 50-year-old was raking in $54,000 a fortnight in benefits - mainly pensions he gained by disguising himself as an elderly man and fooling benefit staff across the country.

Patterson was convicted of large benefit frauds in Australia and the United States, before returning to New Zealand to carry out his biggest criminal operation.

The Herald on Sunday broke the story in November 2006, revealing how police found more than $1m in cash and gold bars in his home in Massey, Auckland.

We also told how he spent $50,000 creating an elaborate tropical garden behind the rented terraced flat - and buried his loot beneath it.

The documentary team was allowed extensive access to Ministry of Social Development staff, revealing the pressure its most senior civil servants were under to catch Patterson and recover the money.

The fraud was exposed after a KiwiBank staff member noticed a number of accounts held by pensioners were being accessed by the same internet connection.

Once Patterson was arrested, the ministry was left to track his investments through secret bank accounts in Austria, Panama, the Seychelles and Switzerland.

It emerged he had opened the accounts in the name of companies set up with the help of Maritime International, an international banking specialist in Thailand.

The international company specialises in setting up offshore companies, trusts and helping those with new-found wealth deal with their sudden change in fortunes.

Maritime International's wealth management director Loura Mouck confirmed she received emails and phone calls from Patterson during the time he was in prison.

She said she was "disturbed" by the ease with which he could contact her.

The initial contact came in April 2006 - seven months before Patterson was caught - through the company website.

He initially wanted one company, then set up two more with Maritime International named as the company director of each.

Mouck was aware of a fourth company in Panama he had set up separately.

She said the company asked for a copy of his passport and proof of where he lived before setting up the companies.

He was also checked through an international database meant to flag criminals.

In an email to the Herald on Sunday, Mouck said Patterson "deposited funds into the accounts personally, via wire transfers ... from New Zealand bank accounts".

The company was alerted to his arrest in November 2006, prompting Maritime International to resign its directorships.

But between March and May 2007, the company had a stream of contacts from Patterson by email, letter and phone as he tried to rearrange the company structures.

The changes would have allowed another person to take control over the finances the Ministry of Social Development was trying to recover.

"I was very disturbed by this communication," said Mouck. "I could not understand how I was receiving letters, emails and calls if Mr Patterson was ...in prison."

Mouck initially emailed state officials to ask if Patterson had been sentenced, then later contacted the New Zealand investigator handling the case to alert the ministry to his efforts.

Ministry risk manager Marc Warner told Inside New Zealand: "We thought he was safely ensconced in prison but that turned out not to be the case."

Warner said Patterson's status meant getting cellphones and smuggling out letters was easy.

As a major fraudster who still had more than $1m of taxpayers' money, "there wouldn't be any shortage of friends inside prison".

Warner said documents found in Patterson's home showed a plan to stop stealing when he got to $10m.

Patterson confirmed he had four offshore accounts and said he wanted to set up a fifth, with a target of $2m stolen for each.

There was no indication of how Patterson intended to spend his money, other than buying a berth on The World.

"He clearly wanted to be rich," said Warner.

"I think the money was an important part, but also the success. He enjoyed taking on the system."

The Inside New Zealand documentary also reveals that Patterson escaped from prison earlier this year.

Taupo police confirmed he slipped out of a holding cell while officers were occupied with another prisoner.

Patterson was recaptured at a lawn bowls club within minutes.

The Herald on Sunday has established $1.1m of Patterson's money is still to be recovered.

The fraudster invested in gold, Apple shares and other stocks that gained value - making the taxpayer a profit.

The remaining money is still in Austrian bank accounts. If the ministry recovers it, the profit will be about $900,000.

* Patterson's loot

In New Zealand - recovered:

Car and home contents: $13,600
31kg gold - $1.1 million
Cash - $1.1m

In Austria - frozen: $1.1m

In Switzerland - recovered: $1.1m

TOTAL $4.4m

Wayne Patterson stole $3.4 million then invested some of the money in gold and shares. By the time the Ministry of Social Development recovered or froze the funds, they had grown. Investments included shares in Apple before the launch of the iPhone - they went from US$75 a share to US$160 a share. Gold also rose in value - it was worth US$400 an ounce when he bought it and US$600 an ounce when sold.

* Inside New Zealand: Catching The King of Benefit Cheats, Wednesday, 9.30pm, TV3.

- HERALD ON SUNDAY