The syndicate purchased a vessel for $180,000 as part of a plan to travel off the coast of Tauranga to pick up 1.5 tonnes of cocaine. Photo / NZ Police
A Rotorua man involved in a plot to smuggle 1.5 tonnes of cocaine into New Zealand, as well as distributing at least 50kg of methamphetamine, will spend just one more year in prison for his crimes.
In normal circumstances, convictions for such staggering amounts of the Class-A drugs would lead to a long stint behind bars.
But Lionel James Ruka McDonald was already serving a sentence of 13 years and 9 months after being caught in possession of 138kg of meth, one of the largest drug seizures ever made in the country.
The complicated background to the case was laid out in the High Court at Auckland after McDonald pleaded guilty to conspiring to import cocaine and supplying methamphetamine.
He had been identified during a long-running police investigation, Operation Van, into planned large-scale importations of drugs into New Zealand.
The alleged leader of the criminal syndicate was Duax Ngakuru, the “international commander” of the Comancheros motorcycle gang, who was living in Turkey,
His cousin Shane Ngakuru, living in Thailand, was second-in-charge and sent encrypted devices for members of the group to communicate with one another securely.
Duax Ngakuru was born in Rotorua and still has family ties in the region. He put another relative, who currently has name suppression, in charge of the drug syndicate in the Bay of Plenty.
This individual was a close friend of Lionel McDonald.
His job was to store and distribute the drugs to buyers around the North Island - but only once another member of the syndicate, known as The Bank, had collected the cash in advance.
While the drugs and cash were never in the same place, as a security measure, a typical transaction would involve hundreds of thousands of dollars exchanged for several kilograms of meth.
In October 2018, Operation Van intercepted conversations in which the syndicate discussed plans to collect 1.5 tonnes of cocaine from a mothership about 320km off the coast of Tauranga.
At the time, the largest amount of cocaine ever discovered in New Zealand was just 46kg.
The syndicate spent $180,000 on a boat, the MV Matariki, and renamed the vessel “Kryptonite”.
Another $100,000 was spent upgrading the boat with extra fuel capacity, a specialised radar and night-vision capabilities to prepare for an offshore voyage in the dark.
McDonald was to be a member of the crew and expected to receive $10,000 for his efforts.
The smugglers’ run on the Kryptonite never took place, however, in any event the 42-year-old was arrested before their plans fell over.
Surveillance by Operation Van showed McDonald supplied methamphetamine at least 12 times between May and August 2019; at least 50kg in total.
They watched as he visited a storage shed in Ngongotahā that McDonald rented in his father’s name, and in July 2019, police executed a covert search warrant. They found household items, a Harley Davidson, and four metal lockers.
Inside the first three lockers were 140 parcels of methamphetamine, each weighing around 1kg, disguised as packages of Chinese tea.
The tea bag concealment is a trademark of one of the world’s largest meth suppliers, a mega syndicate called Sam Gor, which cooks drugs in superlabs hidden in the jungles of south-east Asia.
Police didn’t arrest McDonald right away — they didn’t want to blow their investigation — but their hand was forced a month later when he visited the storage unit and removed numerous tea packages. There was no way they could let so much methamphetamine hit the streets.
They busted McDonald, trying to make it look like a lucky break by Rotorua police so as not to alert the rest of Ngakuru’s network to their surveillance operation. Packed inside a chilly bin and two camouflaged bags in McDonald’s Toyota Hilux they found 62 small bags of meth, weighing 36.5kg. There was another 101kg still in the storage locker.
Together, the 137.5kg the police seized from McDonald that day was the largest amount of Class A drugs ever found inside New Zealand’s border. At the wholesale rate of $140,000 per kilogram at the time, the stash was worth around $20m — although it would have fetched much more when broken down and distributed to users.
McDonald’s arrest led to panicked phone conversations between others allegedly involved in Ngakuru’s New Zealand operation, which the police were able to eavesdrop on because of listening devices planted in their cars.
They were instructed to vacuum-seal any cash they were holding and bury it in a hole, and to destroy any phones they had used. It was a precautionary measure, they said, and business would continue. McDonald’s role in the organisation had already been replaced.
A few months after his arrest, McDonald pleaded guilty to possession of methamphetamine for supply, although there was no mention of Operation Van or Ngakuru in any of the court proceedings. Operation Van stayed below the radar and McDonald was sentenced to 13 years and nine months in prison, which was held up on appeal.
There was one small clue found during the raid on McDonald’s house which would lead to Ngakuru’s network in New Zealand being blown apart, although no one could have known the significance at the time.
One of the five phones seized from his house was a Xiaomi handset loaded with an encryption platform the detectives had never seen before. It was called AN0M.
Another year passed before the FBI let the New Zealand Police in on a big secret: AN0M was a set-up.
The encryption platform had been created by an informant recruited by the FBI during an investigation into Phantom Secure, another impenetrable network used by global crime syndicates, which was shut down in 2018.
With Phantom Secure no longer working, established criminal networks looked to find a new communications platform to trust. The FBI created AN0M to fill the void in the market.
With the informant’s help, it persuaded suspected criminals to start using AN0M to do business. AN0M’s users believed their messages could not be intercepted. In reality, the FBI would be able to read every word courtesy of a “master key” to decrypt every single message sent.
One of those AN0M converts was Duax Ngakuru, who in turn used it to convey orders to his alleged New Zealand network on the devices that his cousin Shane had provided.
Ngakuru’s organisation had been disciplined in their tradecraft, but their faith in AN0M inadvertently handed police an unprecedented insight into the inner workings of their business.
On a Monday evening in June 2021, dozens of people were arrested in Auckland, Waikato, and the Bay of Plenty. It wasn’t until the next morning that the magnitude of what had taken place was made public: the raids in New Zealand were part of a much larger series of strikes against organised crime figures co-ordinated across 16 different countries dubbed the “Sting of the Century”.
In New Zealand, more than 40 defendants were put before the courts to face in excess of 1200 charges. One of them was Lionel McDonald, already serving his sentence for the 137.5kg of “tea bag” meth.
In April, he was sentenced in the High Court at Auckland after admitting the 1.5 tonne cocaine import conspiracy and supplying 50kg of meth.
The background to the hearing was “more complicated than usual”, said Justice Layne Harvey, as McDonald was to be sentenced for crimes he committed before he was sent to prison in 2020.
“This means I have to consider what your sentence would have been if all of this offending had been assessed at the same time,” the judge said.
At his original sentencing, the starting point was 23 years in prison.
With the additional supply of meth to be taken into account, when compared with similar cases commercial drug dealers - including his co-offender The Bank - Justice Harvey lifted this to 25 years.
This was increased by another year because of McDonald’s role in the cocaine import plot.
“The conspiracy offending was a discrete offence. You and your co-offenders had progressed some steps into the plan. It was not at that point fanciful,” Justice Harvey said.
“A boat had been purchased and fitted out for its task. Although you were then imprisoned, and the plan was never implemented, it was not impossible for it to come to fruition.”
The additional three years in prison was then reduced to one year because of discounts for McDonald’s guilty pleas (25 per cent), remorse and rehabilitation (20 per cent) and difficult upbringing (20 per cent).
“As a child you were subject to regular physical and emotional abuse and ongoing neglect. You describe your siblings as nearly always being ‘hungry, wet and cold’,” said the judge.
McDonald was a gambling addict who had also accrued $40,000 debt from a failed business venture in 2018.
“I agree that your background has contributed to your actions in attempting to resolve your financial issues in, unfortunately, an illegal way.”
The end sentence for McDonald was set at 14 years and nine months in prison. He will be eligible for parole after serving seven years and four months.
Others charged in Operation Van are expected to stand trial next year. The alleged ringleaders, Duax and Shane Ngakuru, are still overseas but have been arrested by law enforcement recently.
Shane Ngakuru was arrested by Thai police llate last year and has been extradited to the United States. Duax Ngakuru was arrested by Turkish police on immigration offences and is expected to be deported to New Zealand.
A disregard for authority could be why those attending court are thumbing their noses.