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The Serious Fraud Office is investigating claims that real estate agents and developers have been involved in a multi-million dollar mortgage scam.
The scam involved one of Auckland's biggest real estate companies, Barfoot and Thompson.
The company's president Peter Thompson said an internal investigation into alleged misconduct had revealed an industry-wide scam.
Three of its agents had been suspended by the Real Estate Agents Licensing Board. The case also involved a sales assistant and a former salesperson.
Mr Thompson said agents allegedly inflated sales prices on possible development properties in order to borrow money from banks.
Over 20 such transactions and up to 25 other people in the industry could be involved, including developers and valuers, Mr Thompson said.
He said no private vendor had been hurt by the transactions.
A spokeswoman for Building Issues Minister Clayton Cosgrove today said he was pleased the institute had referred the matter to its licensing board.
However he believed the board needed to refer more cases to the board.
In the past three years out of 507 public complaints just nine had been referred to the board.
The alleged fraud was discovered when the banks involved became suspicious and began investigations.
Institute of Valuers president Blue Hancock said banks had made fraud easier because they were giving out too many mortgages without checking the legitimacy of documents.
Real Estate Institute president Murray Cleland said today he wanted to get people committing fraud out of the industry.
He was happy with the immediate action taken by Barfoot and Thompson.
Mr Cleland said the Real Estate Institute was informed straight away.
They went straight to the licensing board to have the licences of the agents involved suspended.
He was not aware of any other investigations taking place, but said it was possible it had occurred elsewhere.
Banks are unwilling to comment on the scam.
- NZPA
