‘Magnitudes More Serious’: Chinese Money Laundering Baron Fails to Stay Out of Jail

The Auckland woman sent some millions of dollars to China for the importation of drugs.

The office in Auckland from where Ye Hua laundered at least $18 million in drug profits for a cartel with links to suppliers in China. Google Maps/Screenshot

An Auckland woman given New Zealand’s longest sentence for money laundering—seven and a half years—has failed in her bid to remain out of jail until her appeal is heard.

Ye “Cathay” Hua, aged 58, was jailed after a jury found her guilty of 15 out of 19 money laundering charges covering at least $18 million (US$11.9 million) which she had washed through her currency exchange business, Lidong Foreign Exchange, on behalf of an international drug cartel.

In November, Judge David Sharp deferred the start of Ms. Hua’s sentence by 10 days on humanitarian grounds at the request of her then-lawyer, who cited her need to arrange her affairs due to vulnerable and dependent family members.

Ms. Hua appealed against her conviction and sentence, and another deferral of imprisonment was granted by the District Court.

Then, a few days before Christmas, her new legal team applied for bail to continue into the New Year. That too was granted by the court.

That deferral expired on Jan. 17, and Ms. Hua handed herself into the Department of Corrections.

But two days later, her lawyers were back in court, this time seeking a writ of habeas corpus, which would have declared her imprisonment unlawful, arguing that she had the right to stay out of prison until her appeal was determined.

They claimed that since she was on bail when her sentence started, she was entitled to remain on bail pending the determination of her appeal.

However, Justice Ian Gault dismissed that application.

‘More Serious Than Any Other Case’: Prosecutor

Most of her charges covered money allegedly sent overseas into foreign currency or converted into bitcoin.

“By value, Ms. Hua’s offending is many magnitudes more serious than any other case which has been before a court in this country,” Crown Prosecutor Sam McMullan said.

The prosecution’s case was that Ms. Hua worked for a cartel headed by former Auckland Grammar School student Xavier Valent, aged 34, who in June last year was subject to one of only three life sentences handed out in New Zealand for importing, manufacturing, and supplying a range of Class A and B drugs including methamphetamine, MDMA, cocaine, and meth precursor ephedrine.

During Mr. Valent’s trial, Crown Prosecutor Fiona Culliney said the quantity of drugs brought into the country by the syndicate—believed to be at least hundreds of kilograms—was without precedent.

Cartel Was Successful in Evading Detection

Mr. Valent’s operation succeeded in evading detection for some time, leading to devastating consequences.

“Lives were ruined, families were destroyed, and all at [his] hands,” Mr. Culliney said.

Because she was awaiting trial, Ms. Hua was not named.

Still, the prosecutor said a “single money remitter in Auckland” had sent $26 million in drug profits to Mr. Valent’s personal accounts, some to his mother’s account, and some to a trust associated with others. Other transfers were made to various other international accounts, including many in China.

At Mr. Valent’s sentencing, the judge suggested that some of those payments were made to the suppliers of the drugs he imported into New Zealand.

A secret witness at Ms. Hua’s trial told the court that Mr. Valent would tell her when to expect one of his associates to arrive at her Lidong office in Newmarket, dubbed the “money shop” or “Newmarket money lady” in messages obtained by police.

Prosecutors said Ms. Hua repeatedly ignored red flags, including the fact the money was sometimes wet or covered in powder, and arrived in supermarket bags delivered by suspicious-looking people.

Hua Caused ‘Massive Harm’: Transparency International

“Hua’s corrupt activity enabled and emboldened the drug syndicate headed by Xavier Valent to cause massive harm to communities in New Zealand and overseas through the peddling of methamphetamine, MDA, cocaine, and ephedrine,” said Transparency International New Zealand Julie Haggie.

“During the period when the drug syndicate was most active, there was a doubling of methamphetamine deaths and hospitalisations in New Zealand.”

The sentencing judge for Ye (Cathay) Hua noted that there is no professional licensing regime for money emitters, leaving the sector vulnerable to corruption.

It also simplifies regulatory detection avoidance by closing a company in the spotlight and setting up another.

Many cases handled by the Department of Internal Affairs involve Chinese migrants running small businesses that service international money transfers. These entities sit within high-risk areas identified by the Department as an investigative priority.

“According to news reports, Hua’s legal team claimed that their client was naive. Whether that was the case or not, greed seems to be the primary motivator,” Ms. Haggie said.

In a second offense, the Department of Internal Affairs (DIA) prosecuted Ms. Hua’s company, Qian DuoDuo Limited, the company trading as Lidong Foreign Exchange, after it moved almost $95 million from China to New Zealand without having enough information to trace transactions back to the originator.

It was fined $356,000 by the High Court in Auckland.

In that instance, the judgment noted that no money laundering had been shown or was alleged to have occurred through the company.

However, it failed to conduct due diligence as required under the Anti-Money Laundering and Countering Financing of Terrorism Act by not checking customers properly, which meant it could not trace where the transactions came from.