Exclusive: The gambling records of a casino VIP inadvertently led police to find a familiar name written on a piece of paper which changed the course of the investigation.
Photos / Jason Oxenham, Michael Craig, Greg Bowker
The millions of dollars gambled at SkyCity by the "puppet master" behind one of New Zealand's largest drug smuggling syndicates ultimately led to William Yan forfeiting nearly $43 million to police.
The gambling records of Yixin "Lonna" Gan were analysed by detectives when police charged her with importing a 250kg shipment of pseudoephedrine, the key ingredient of methamphetamine, and seized more than $3 million of property.
The mother of three was later convicted as one of the main targets in the undercover investigation codenamed Operation Ghost and sentenced to 14 years in prison in October.
The Herald on Sunday can reveal Gan spent $15 million at Sky City in a 15 month period, as well as making large deposits into her casino account and transfers to other high-roller accounts.
One of these VIPs was Yingzi Zeng, a mother of two who lives in Auckland's eastern suburbs, who spent $38 million at Sky City in 15 months.
She often gambled with Gan in Auckland, as well as casinos in Australia, and the pair often transferred large amounts of money into each other's accounts.
It is not uncommon for VIPs to loan money to one another but the transactions - including a $1 million bank cheque on one occasion - drew the attention of the police investigating Gan.
No charges were ever laid against Zeng but the police froze $9 million of assets belonging to her family, including a Maserati and a late-model Porsche.
When detectives searched Zeng's home, they found a piece of paper with a familiar name which changed the course of the investigation.
Handwritten in Chinese, the note authorised the purchase of $1.85 million worth of shares in a company registered in the tax haven of the British Virgin Islands and was signed by Yang Liu.
That caught the attention of Operation Galaxy detectives, who also know him by other names - Bill Liu to his friends, Yong Ming Yan according to Chinese authorities and William Yan on his New Zealand passport.
William Yan paid police nearly $43m to settle a civil case. Photo / Greg Bowker.
Yan is close friends with Zeng and her husband Shui Yong Huang, who is also a wealthy businessman.
There is no suggestion Yan is involved in drugs but the resurfacing of his name in Operation Galaxy triggered a fresh look at the dormant allegations of fraud in China and his business dealings in New Zealand, culminating in another police raid on his penthouse in the Metropolis tower in August 2014.
Police seized more than $40 million of assets, including his 18.8 per cent stake in Mega, the online encryption service founded by Kim Dotcom.
The investigation also uncovered Yan's astonishing SkyCity records where he gambled $293 million over a 12-year period - despite being banned twice for two years and losing a total of $23 million.
Yan has said he made his fortune legitimately as a businessman and the two identities he came to New Zealand with, Yong Ming Yan and Yang Liu, are valid because he was fostered out by his birth parents in China.
Both sets of parents registered him as part of their household with different names and dates of birth, said Yan, and the Chinese Government considers him an enemy because he is associated with Falun Gong and is pro-democracy.
Court documents show Chinese authorities claim the 45-year-old "orchestrated several complex deceptions" in a $129 million fraud when he was the chairman of a pharmaceutical company in 2000.
Yan has consistently denied any wrongdoing in any jurisdiction, but struck a deal with the police as the final settlement of the civil case earlier this year.
Most of the settlement remains secret for now, except for some key details issued in a police press release.
"In accordance with the settlement, the High Court has made assets forfeiture orders in respect of property to the total value of $42.85 million," Detective Inspector Paul Hampton said in August.
"This is the single largest forfeiture that has occurred in New Zealand to date and is the first that relates to crimes alleged to have occurred in China.
"This settlement is a full and final settlement of the proceedings under the Criminal Proceeds (Recovery) Act without any admission of criminal or civil liability."
The payment of nearly $43 million means the frozen property belonging to Zeng and her husband Shui Yong Huang was also released.
"They were alleged to have assisted in money laundering and various property associated with them was restrained, including three Auckland properties, a Porsche and Maserati, and over $4.5 million bank funds," said Hampton.
Undercover cop infiltrates VIP lounge
Yixin Gan was one of a dozen frequent gamblers arrested in Taskforce Ghost, a undercover investigation which started in the VIP lounge of SkyCity casino and led police to dismantle a sprawling drug supply and distribution network.
Yixin Gan was a casino VIP later jailed as the 'puppet master' of a sophisticated drug ring. Photo / Jason Oxenham.
While there was no evidence of drug deals taking place inside the casino, a financial analysis by police focused on a number of VIPs and the flow of millions of dollars linked to drug transactions through the casino, according to the affidavit of Detective Inspector Bruce Good.
"From my experience and from numerous intelligence reports and organised crime investigations, SkyCity casino and particularly the VIP facilities are a recognised money laundering risk and an environment within which numerous drug distribution groups work, both alone, and alongside one another," Good wrote.
Police seized hundreds of kilograms of pseudoephedrine during Taskforce Ghost. Photo / Richard Robinson.
Police seized millions of dollars of drug money in Taskforce Ghost. Photo / Richard Robinson.
A spokesman for SkyCity declined to comment on Gan, but in a previous statement about Taskforce Ghost said SkyCity was "extremely comfortable" the casino had met obligations under anti-money laundering (AML) and problem gambling laws.
The spokesman said the casino could not comment on individuals targeted for privacy reasons and because of strict disclosure rules in anti-money laundering legislation.
But he confirmed "a number of those people did come to our attention on several occasions".
"We were cooperative with the police from the start of this investigation. We are extremely confident that we took all appropriate actions under AML requirements and also that we took proactive steps from a host responsibility perspective."
These steps - some of which predated Ghost - included staff interventions, interviews, monitoring and, in several cases, banning people from the casino.
Staff were also instructed to report immediately suspicious transactions to the Police Financial Intelligence Unit.
"Only a few of the group of players identified by police were regular visitors to the casino, and the level of their play varied widely," the spokesman said.
"In most cases their turnover was not out of the ordinary for local VIPs."
Taskforce Ghost started with an undercover agent infiltrating a drug syndicate who socialised at SkyCity. Photo / Chris Skelton.
$43m twist to controversial citizen saga
The $43m settlement by William Yan was the latest twist in a saga dating back to 2001 when he arrived in New Zealand.
He first made headlines for his links to the previous Labour government and the decision to give him a New Zealand passport, despite having multiple identities and an Interpol alert against his name.
Former Labour Minister Shane Jones overruled the advice of DIA officials, who said Yan did not meet the good character test for citizenship, following lobbying from Dover Samuels, a Labour MP at the time.
William Yan with his close friend Dover Samuels, a former Labour MP, after he was found not guilty of immigration and citizenship charges. Photo / Brett Phibbs.
Yan later stood trial in the High Court at Auckland in May 2012 on five charges relating to false declarations on immigration and citizenship papers.
Justice Timothy Brewer acquitted him despite saying the evidence "proves a situation that is highly suspicious".
The Auditor-General later investigated how Yan came to be granted citizenship, and criticised Jones, but found no evidence of wrongdoing.
The politician said he believed Yan would be executed if sent back to China.
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