New Zealander pleads guilty to fraud in US court

A New Zealand man accused of scamming 30 investors out of more than US$16 million ($24 million) pleaded guilty yesterday in a United State federal court to three counts of fraud.

In the US federal court at Central Islip, New York, he admitted the charges in a plea bargain in which he forfeited five properties in the Bahamas valued between US$12 million ($17.5 million) and US$13 million ($19 million). Including this money, he will have to pay more than US$16 million ($23 million) in restitution.

But Derek Turner, who had "investors" in New Zealand and Australia, has cut a deal with American authorities to serve only six or seven years in jail and then to be deported home, Newsday newspaper reports.

Turner - who is being held without bail in the Nassau County Correctional Centre in East Meadow, New York - would normally have faced up to 20 years in prison, said his lawyer, Joseph Conway of Mineola.

Turner was arrested in April after a 17-month undercover operation by Barry Minkow, an ex-convict turned evangelical preacher, and FBI agents found that Turner's Bahamas-based company, Turning International Ltd., was defrauding investors.

At the time Turner, aged in his mid-50s, lived in the Bahamas with his Taiwanese-born wife, three children and three stepchildren.

They had been living there since 2000 after Turner emigrated from New Zealand and amassed enough cash to pay for five properties worth nearly $20 million.

His lawyer said Turner can use the money from the sale of the properties toward restitution, but must pay the remainder upon his release.

He will be sentenced on September 16.

Turner's arrest caught by surprise his brother, former prison officer Brent Turner, of Auckland, and his parents, who live on Queensland's Gold Coast.

Brent Turner said at the time that his brother was innocent of the charges and was a lover of New York, who had proposed a design for the rebuilding of the World Trade Center after the September 11, 2001, terrorist attack.

Derek Turner's plan had been for a 111-storey tower made up of five columns and topped by a pyramid.

Turner, who described himself as a securities trader, was arrested by Federal Bureau of Investigation agents at his office in Long Island, New York, on April 16, and initially pleaded not guilty to operating a phony hedge fund.

Mr Minkow said the sting operation began in December 2003, when a victim of Turner's company contacted his firm, the Fraud Discovery Institute, which he told Newsday had uncovered $1.1 billion in fraud schemes.

Minkow, who posed as an investor during the operation, said Turner's associates visited his 1300-member congregation in San Diego to ensure that he had enough collateral to invest.

Turner promoted the business by telling investors that the company invested in securities in US markets, generated a profit of 37 per cent and controlled US$300 million; however, the company did not invest in securities, never generated a profit and controlled only US$1.5 million, court records showed.

Mr Minkow,said that he was tipped off by a lawyer whose clients had been solicited by Turner, promising returns of 38 per cent a month, and claiming that he had been averaging that for eight years.

Mr Minkow presented Turner's prospectus to the FBI in February last year, and the bureau sent two undercover agents along with Mr Minkow, who posed as an investor with US$2 million to deposit, to meet Turner in the Bahamas.

Mr Minkow said Turner showed him proof of investors from around the world.

Turner was ordered by the New South Wales Supreme Court to shut down a scheme in Australia in 2000 because he did not have a licence to run a securities business, and he moved to the Bahamas soon after.

He and his wife, Mandolin Ing, are the directors of three companies still registered in New Zealand -- Turning Investments NZ Ltd, Turning Technologies NZ Ltd and Moores Corp NZ Ltd -- and are variously shown as living at St Albans in Christchurch and Browns Bay in Auckland.

Mr Minkow, who was himself once convicted of a SUS300 million share fraud and ordered to pay restitution to his victims, said: "The next step for him will be victim repayment.

"There are some people who don't care how much time you serve, they just need their money back," he said.

- NZPA