Lawyer Lynching Labelled “Show Trial”

~ Kiwisfirst

Judge Rhys Harrison

Political oppression against those who exercise their freedom to express critical views of judges is set to play out in Auckland District Courtroom 5.3 on 2 September 2013, where the New Zealand Law Society is seeking to have human rights barrister Evgeny Orlov debarred for privately criticising Court of Appeal Judge Rhys Harrison (pictured).

The prosecution has been five years in the making, has cost Society members almost $200,000 and is largely unknown to the public despite procedural appeals having gone to the Court of Appeal and Supreme Court.

The saga began when Mr Orlov made a private complaint to the Judicial Conduct Commissioner concerning what he considered to be racially tainted views of Maoris and foreigners by then-High Court Judge Rhys Harrison.

Though similar complaints have been made by others against Harrison, Mr Orlov’s complaint prompted then-Chief High Court Judge Anthony Randerson to write the Law Society on Court letterhead asking it to investigate Mr Orlov’s fitness as a lawyer.

The Law Society struggled but eventually came up with nine charges to levy against Mr Orlov. They all centre on “false and scandalous charges” Orlov allegedly made about Harrison in his JCC complaint.

Harrison and Randerson JJ both currently both sit on the New Zealand Court of Appeal.
In a mocking and meandering press release this week, Mr Orlov called the debacle a ‘show trial’, noting the Law Society intends to call no witnesses, while preventing him from calling Harrison or either of the two Judicial Conduct Commissioners as witnesses. Orlov draws a comparison with the 1899 Privy Council judgment ofMcLeod v St Aubyn which found; ” Contempt of Court may be committed by publication of scandalous matter respecting the Court after adjudication as well as pending a case before it. In England committals for such contempts have become obsolete: in small colonies consisting principally of coloured populations they may still be necessary in proper cases”.

Even for a colonial backwater, no witnesses and allowing no cross-examination seem a strange court process to prove ‘false and scandalous’ criticisms sufficient for a legal lynching.
Pertinently, Mr Orlov included a link in his press release to a New Zealand Law Society press release which publicly criticised a conviction in Fiji for quoting a report critical of its courts as “a serious restriction on the right to free speech”. In contrast, NZ Society members’ criticisms in Orlov’s prosecution have been few; generally directed at the financial costs being incurred despite few members knowing what the ‘false and scandalous’ allegations are at the core of the prosecution conducted in their names.

Another lawyer similarly attacked by the New Zealand Law Society sees the current policies of the Law Society being representative of broad apathy in the legal community which has turned to fear. He intoned, ‘ Feareverything, do nothing and, above all, be quiet’ is the adopted credo of lawyers in New Zealand.

The Orlov trial raises broader natural justice concerns by preventing inquiry (as scandalous) into the validity of a complaint he has made against a powerful State actor – a complaint which is not unique. Mr Orlov alleged Harrison J sanctioned Maori children being removed from their parents without hearing – oppressively awarding costs against him personally in violation of UN conventions for representing the parents in a claim alleging the Crown acted without due process. In another case, Harrison J ordered a known paedophile to be the custodial parent where the mother was a Russian bride being deported as a result of her marriage breakup. Investigate Magazine said earlier on this misconduct, ” The most stunning aspect of the whole story, however, is why on earth a man with Paul Copeland’s psychiatric history, a man who raped his own sister and tried to murder his wife with a bow and arrow, a man who enjoyed killing cats in the cruellest possible ways – why such a man would be allowed anywhere near a child“.

Judge Harrison’s brother Geoff Harrison was lawyer for that child.

Judge Harrison also criticised Mr Orlov for not being trained as a lawyer in New Zealand, seemingly justifying his complaint Harrison is xenophobic without any explanation from the Judge for this worrisome judicial comment.

Dr Frank Deliu, a U.S. and N.Z. trained lawyer, expresses similar views of Harrison and has provided the Judicial Conduct Commissioner seven sentencing decisions of Harrison J which cite their “host country” and crimes against “people of New Zealand” as factors in sentencing foreign-born New Zealanders. Dr Deliu is also being prosecuted by the NZ Law Society on the recommendation of Judge Randerson, although the charges are still being determined.

Mr Orlov’s press release invites interested parties to attend the “show trial” which is set to begin at 10 am. With no witnesses and a charge of making false allegations, he has billed it as colonial justice at its finest and asked attendees to accordingly wear black tie and evening dress.

Related Posts:

• Stasi law society April 25, 2014 Frank Deliu exposes Judicial Conduct Commissioner Omens of threat to…
• Law Society’s Political Abuse Called Out October 11, 2014 Hundreds of thousands of dollars of New Zealand Law Society…

The Inquiry into the Inquiry into the Inquiry into the Inquiry, how it all happened:

How it all happened - the Inquiry into the Inquiry into the Inquiry into the Inquiry:

Guest writer ~  Peter Matthewson

Once upon a time in a country not far away at all, an obese German multi-millionaire, together with his very attractive wife and their children, a household of manservants, maidservants and security guards, a pair of giraffe statues, 18 Mercedes Benzes, Cadillacs, Rolls Royces and other fancy carriages, and lots of computers, wide screen TVs and pretty pictures,moved into a palace in the Prime Minister’s electorate. To celebrate his arrival the German spent $600,000 on a big firework show for the city. The Prime Minister did not notice the big bang. But the Mayor of the city did. The German even invited the Mayor on a helicopter ride to a party at his palace,and gave the Mayor a lovely little gift of two matching $25,000 cheques for his re-election campaign.  Being a polite man the Mayor telephoned the German the next day to say thank you. However the Mayor was supposed to tell important people about this but he forgot, after all he had so many obese German multi-millionaires giving him helicopter rides to parties in palaces and pairs of $25,000 cheques.

Despite all the pairs of $25,000 cheques he got from obese German multi-millionaires, the Mayor lost the election. But never fear, the next year he was elected to the country’s Parliament, after a top secret talk with the Prime Minister in a cafe with lots of photographers and TV cameras to show pictures to tell all the people to vote for him.  But the German had not forgotten about the pair of $25,000 cheques, and when life in the country had started to go badly for him, he told on the ex-Mayor and now Member of Parliament, or MP for short. So the Police had to conduct an inquiry about the then-Mayor not telling the important people about the $25,000 cheques, however they believed him that he had forgotten. Being a talented man, the German wrote and recorded a rap song about it. As far as I know neither the ex-Mayor nor the Prime Minister bought the record, but neither did I.

Yea, I have jumped ahead of myself.  It turns out that the German was suspected of being a bit of a naughty boy. Before he came to our country he had been accused of taking lots and lots and lots of movies and TV programmes and music, and naughty videos and computer programmes from people who owned them, and loading them up in a cloud. This was rather naughty,although he wasn’t plotting to blow up the White House. Nevertheless some people in America were very upset and got their super-duper Police force, the FBI, to start an inquiry about the German.

But the FBI needed help to carryout their inquiry in our country, so they asked for help from our country’s Police and super high tech secret spy agency, the GCSB. Lots of people in our country had only learned there was a GCSB a couple of years before, when a little posse led by a man with a very long beard had popped one of their big balloons at Waihopai, a place most people had never heard of before the balloon was popped.  Anyway the Police and the GCSB were very excited at the chance to help the FBI with such an important inquiry. That didn’t happen every day. The GCSB jumped at the chance to use their super spying and listening gear, which they usually keep hidden under the big balloons at Waihopai. They assisted the Police by listening to all the German’s phone calls, reading all his emails, and seeing where he went in the cloud. They did all this for a month, helping the Police to know when the German would be home so they could pop round to arrest him.

And so it came to pass one day not long after Christmas,a time when the Prime Minister and the Mayor are away on holiday so there isn’t much news on the TV, the Police and the FBI made their move. At 6:45 in the morning seventy six Police and Armed Offenders Squad officers swooped on the palace and arrested the German. They took him away to a big prison run by a multi-billion dollar multi-national corporation,where despite the profits made by the multi-billion dollar multi-national corporation he was given no soap, toothpaste or toilet paper. What’s more the Police seized his eighteen luxury carriages and carried them away on the backs of trucks, along with his computers, his pretty pictures, and lots and lots of money.

This started a lot of arguing in the Courts. The FBI wanted to drag the German back to America, so he could face charges in Court there for loading stuff up in the cloud. The German didn’t want to go. After a few weeks a kind judge let him out of the jail. And Helen the big boss High Court Judge said it was illegal for the Police to search the palace with a warrant saying go have a look around and take whatever you fancy,so she let him have all this stuff back. But other arguments in the Courts continue to this very day.

But here is where the story gets really interesting. Someone told the Prime Minister that it was actually illegal for the GCSB to spy on the country’s citizens and permanent residents,which the German was by that time. So the Prime Minister said sorry. But he decided he wanted to know what was really going on at the GCSB, under their big balloons at Waihopai, so he called up a very clever woman named Becs, and told her to go and conduct an inquiry into the inquiry.

Becs went away and actually read the GCSB Act and lo, verily it did say quite clearly that it was illegal for the GCSB to spy on the citizens and residents of the country. She also had a good look round the office and under the big balloons at Waihopai. To her horror, she found out that not only had the GCSB spied on the German illegally, they had also been illegally spying on 85 other citizens of the country. Becs also found that, despite the impressive looking big balloons at Waihopai (well actually they look like a pair of big boobs) the GCSB was really a Mickey Mouse outfit. So Becs finished her inquiry into the inquiry and wrote an 85 page report all about it, which she gave to the Prime Minister.

The Prime Minister was truly shocked that the GCSB had been spying on citizens illegally, so he said unto his closest advisers “Oops! Quick, we had better pass a law in the Parliament to make it legal!” Which he did. But I am jumping ahead of myself again. Being a believer in democracy and open and transparent government, the Prime Minister decided that he should let all the people see what was in Becs’ 85 page report, at a press conference where he could be photographed holding the report and smiling reassuringly. But first he gave it to his closest and most trusted Ministers and advisers to read, while he went on a trip to China where he would have lots of photo opportunities to smile with rich and important Chinese people.

But while the Prime Minister was away treachery was afoot. Somebody leaked a copy of Becs’ 85 page report to a news reporter named Andy. She was chuffed to get it, and although it took much of the afternoon to read it she wrote a headline story all about it on the front page of the capital city’s morning newspaper. There was no photograph of the Prime Minister holding the report and smiling reassuringly. There was no photograph of the Prime Minister smiling with the Chinese Premier.

When the Prime Minister got back from China he was not smiling. In fact he was very cross, and desperate to know who had stolen his thunder by leaking the report to Andy. So he called a man named Henry (just plain Henry, not Henry VIII or Henry IX) and commissioned him to conduct an inquiry into the inquiry into the inquiry. He told all his ministers and officials that they had to give Henry whatever he wanted for his inquiry into the inquiry into the inquiry. Henry set about his task with great enthusiasm. Some of the Prime Minister’s manservants were very eager to help Henry. With the benefit of modern technology they were able to give Henry a log of all Andy’s movements through the swipecard electronic doors all around the Parliament for the previous three months. Presumably this included all the times she went to the parliamentary ladies’ loo, which is of course where ladies go for a leak. They also gave Henry all Andy’s emails, and he found that in the two weeks prior to her story in the newspaper Andy had exchanged 86 emails with Peter D (not to be confused with your present storyteller), who was one of the Prime Minister’s trusted ministers. They had even kept the emails going while Peter D was away in America on holiday. Unlike the German he wanted to go to America.

But Henry had a problem. Before he could officially read Andy’s and Peter D’s emails, he had to get Peter D’s permission. But despite what the Prime Minister had said about his ministers giving Henry whatever he wanted, Peter D refused. He went on the TV and made a passionate speech about privacy, saying “the sole reason why I did not disclose the full content of my emails was because of my strong belief that citizens, be they constituents, members of the public or journalists, ought to be able to communicate with their elected representatives in confidence if they wish, and we tamper with that right at our collective peril.”  Because he would not let Henry have his emails he had to resign as a Minister. When Peter D found out later that the Prime Ministers manservants had given Henry his emails anyway, he was “shocked beyond belief” and “extremely concerned and angry about this gross, unauthorised breach of personal privacy”. Remember those passionate words for later in the story.

Since Peter D wouldn’t let Henry officially read his emails, his inquiry into the inquiry into the inquiry ground to a halt and he could only write a 24 page report. He gave his 24 page report to the Prime Minister, even though it officially told him nothing. Henry’s 24 page report that told the Prime Minister nothing cost the country’s taxpayers about $42,000, even though he hadn't paid the Prime Minister's manservants anything for Andy's swipecard logs and emails. However the Prime Minister has not said anything much about that, even though his party usually does not like spending government money.

However a very important man called the Speaker, who stands up and says "order" while the Members yell insults at each other across the Parliament, was justifiably concerned that the Prime Minister’s manservants had given Andy’s swipecard  movements and emails to Henry. So he referred the matter to the Privileges Committee, a group of very important MPs, to conduct an inquiry into the inquiry into the inquiry into the inquiry. This very week the Privileges Committee all sat round a big table and called Henry in so they could ask him lots of hard questions and tell him off. This was a bit harsh since Henry really had been only trying to do what the Prime Minister wanted and find out who stole his thunder by leaking Becs’ report. Nevertheless one of the members of the Privileges Committee was a minister named Judy. Judy is probably not one of the Prime Minister’s most trusted ministers because she wants his job. So Judy fixed her steely eyes on Henry and said “It was quite a chilling experience to realise that ministers’ and staff’s emails, and their right to privacy, were treated with what I would say was a contemptuous attitude”. Then that very afternoon she voted for the Prime Minister’s bill to make it legal for the GCSB to spy on the citizens of the country.

For indeed, while all these inquiries had been going on, the Prime Minister had introduced his bill to make the GCSB spying on the country’s citizens legal, into the Parliament. Many of the people didn’t like the Bill, because like Peter D and Judy they valued their privacy. They were scared about the power the Bill gave to the GCSB, and to the Prime Minister who is in charge of the GCSB. Lots of very respected and clever people who know what they are talking about spoke out against the bill, including the Law Society, the Human Rights Commission, the Privacy Commissioner, a famous constitutional lawyer and the former director of the GCSB. The obese German multi-millionaire spoke out about it too. However the Prime Minister said that they were all wrong and tried to distract the people by talking about fish.

And so the fateful day of the final vote in Parliament came. Even with the ex-Mayor and Judy and all his other ministers and party members voting for the Bill, the Prime Minister still needed one more vote to pass it into law. So who should he turn to but Peter D. The reader will remember the impassioned speech he made to the TV camera when he wouldn’t let Henry officially read his emails, and the even more impassioned speech he made when he found out Henry had got them anyway. But even though the reader will remember, Peter D seemed to have forgotten. And so he gave the Prime Minister the one vote he needed to pass the Bill into law. Perhaps Peter D and the Prime Minister will have a nice private chat in a cafe with lots of cameras next time there is an election.

And that is how it became legal for the GCSB to spy on the citizens of the country, with warrants just signed by the Prime Minister and the Commissioner of Security Warrants, a nice retired judge chap the Prime Minister calls up when he wants to commission a security warrant. And here is where the story must end, before the GCSB starts reading it.

Don't spook the herd:

- Emmerson

So the GCSB Bill is supposed to spy on New Zealanders to protect our economic well being, but Fonterra managed to hide the contamination scandal from the government for about six months, while the government was more interested in what Kim Dotcom was doing and what Winston Peters text messages and Andrea Vance's emails said.

Meanwhile, revelations continue to astound the population, the latest being that Fonterra supplied contaminated milk product to a school.

Wellington protest against the GCSB Bill - 27 July 2013

The nationwide protests against the GCSB and TICS bills - and the implications of the TPPA and other recent and pending legislation were well attended - New Zealanders turned out in force for the Wellington event, which was covered by independent journalist Frank Macskasy and others.

Unfortunately the event was hijacked at the last minute by a couple of amateur "activists", Billy McKee (convicted recently of supplying large amounts of cannabis to undercover police) and Ariana Paretutanganui-Tamati (local political prostitute, formerly a Maori party hanger on, now representing the Mana party - who need to up their game if they want to be taken seriously).  This resulted in attendees being subject to this woman's interminable verbal drivel as she monopolised the microphone and monotonised the crowd with her boring, narcissistic political grandstanding.  Another result of the bullying of her and her 'supporters' was that the crowd was deprived of hearing from other speakers, including the EQC blogger, Marc Krieger, whose address to the protestors is printed below:

"My name is Marc Krieger and I am the EQC Truths blogger.  I too have been a victim of illegal government surveillance because of my willingness to expose official corruption and lawbreaking at EQC.  The New Zealand government illegally spied on me and found out that I was the blogger who exposed EQC’s incompetence, nepotism, and corruption through the EQC Truths blog.

I am unable to be present today in body, but I join you in spirit.  The New Zealand government holds itself to the world as a beacon of transparency yet, in actuality, the government is a bastion of darkness.  The New Zealand government breaks its own laws by spying on its own citizens.

Now the New Zealand government is trying to legalise in law what it has already sanctioned in practice.  The only way to stop the government is if we stand up together and unite.  Governments only get away with things because of the silent majority that fails to speak out and hold its leaders accountable.  To paraphrase FDR, “All that is necessary for the triumph of evil is that good men do nothing”.

Many of us make the mistake of believing that governments are innately benevolent.  Yet governments are responsible for the most heinous atrocities including the mass murder of millions.  The reason governments got away with murder is that they gradually and incrementally usurped the rights of the people because the people were too lazy or terrified to stand up.

In a small country like New Zealand, the opportunity remains for people to stand up and fight.  My message to all of you is to stand together to defeat this evil.  Otherwise, New Zealand will go down the slippery road to absolutely tyranny."

- Mr Krieger and myself were prevented from speaking, so were the group who had prepared the skit about Key and Banks tea party and the fuss Key made about being spied on by a journalist (Bradley Ambrose) (- who Key and Banks had invited to report on the tea party in order to manipulate the election protest and buy media attention).  The point of the skit was to show the crowd that charges must be laid against Key and others for spying illegally on 88 New Zealanders and other criminal actions for which they are legally culpable!  - Not to mention the hypocrisy and blatant double standards of all involved to date! 

Instead, the protest was hijacked by Mana Political Party acolyte Ariana Paretutanganui Tamati, also a relative of disgraced former MP Georgina Beyer, (aka Beyer the Liar), in a manner similar that of Jonathon Elliot and Hugh Barr who hijacked the asset sales protest on

the crowd were told at the last minute (after APT had made her malicious complaints to facebook and blocked me from commenting and posting) that the skit was cancelled and been replaced on the order of ceremonies with "a surprise activity" which turned out to be her rapturously clutching a naked effigy of Peter Dunne and mumbling more incoherent nonsense!

Here are a couple of video clips showing the numbers of the crowd, as well as demonstrating the boring and aimless rant of APT, and some screenshots showing the disgust of other independent witnesses - people following the event on facebook were well aware of the development of the attempts by these two to hijack the event and gain control of it for their own personal and political agenda.

The GCSB Bill will not pass all the way through Parliament this week as had been hoped by the Government. 

The Bill is now in its committee stages, where members of parliament are debating it clause by clause.

The National party and their supporters have been trying to rush this Bill through at every opportunity and prevented the committee from hearing from key submitters on the Bill such as Kim Dotcom, one of the 88 New Zealanders who the government has admitted illegally spying on - Transparency NZ believes there are considerably more than 88 and that the government has been engaging in wholesale collection of information - and DNA from the population for the benefit of foreign governments and corporate interests!

An urgent debate on the Fonterra contamination debacle has delayed the debate further.  The Government will have to wait at least two weeks to pass the controversial legislation now, thanks to the tenacity of David Shearer, Russel Norman and other opposition MPs.  The irony of Conman Key's insistence that the changes to the Bill are necessary to spy on Kiwi mum and dads in order to safeguard New Zealand's economic interests - while Fonterra are found to be mired in incompetence and corruption and seriously jeopardising our economic interests, and MoBIE allegedly didn't know about the botulism contamination for over three months.

Meanwhile - from the truth is stranger than fiction files - you couldn't make this stuff up - after changing his mind more times than fellow political prostitute Georgina Beyer and deciding to support the Bill, after the blatant blackmail and deceit regarding his emails with Andrea Vance, Peter Dunne has called Ariana and her seven supporters "irresponsible scum" for 'protesting' outside his house with a megaphone at eleven at night (- it's his neighbours I feel sorry for) saying that all New Zealanders have the right to privacy - how ironic.  And how typical of APT and her seven mates.  Preventing the very New Zealanders who have been spied on and the information used against them from being heard, and preventing the skit being performed, and preventing the protest being taken to the GCSB HQ on the 27th, in favour of a rambling monologue from a silly tart clutching a naked Peter Dunne doll and eight people making a noise outside some private residences one of which happens to be occupied by Peter Dunne - pathetic!

Fraudster Wayne Patterson - Andrew Kelly, guest author:

Andrew Kelly - Guest Author Blog:

My interest in fraud here in New Zealand dates back to September 2010 when I watched (in disbelief) a news item on Michael Swann's six-year long, $16.9 million false invoice fraud. The end result of which is the (now rewritten) six chapters of "Anatomy of Fraud" you'll find on this Blog. I must say a special thanks to my patient reviewer: Mark Piper. I hope you enjoy reading them as much as I did writing them.

Chapter 1: Benefit Fraud - Wayne Patterson

Over a three year period, Wayne Thomas Patterson (born November 1958) created 123 false identities.

Beginning in June 2003 he used these to fraudulently receive Sickness, Unemployment and Emergency Benefits, and New Zealand Superannuation payments from the Ministry of Social Development (MSD).

In all, he managed to steal over $3.4 million before his arrest in October 2006.

 

In November 2006, Patterson pleaded guilty to fraudulently receiving money from the MSD, and was sentenced in October the following year to eight years in prison.

Character's Background

Of the nine fraudsters' covered in this book, Wayne Patterson's the only one who can be described as a 'career criminal.' Originally an electrician by trade, he had a long history of dishonesty, theft and fraud stretching back to at least his teens.  Released from the first of many stints in prison in 1983, aged 23, Patterson decided to go 'international,' leaving New Zealand for Australia.  Where he was arrested two years afterwards and charged with 36 counts of fraud. A 'dry-run' for his later, larger MSD fraud this, as it was reported he'd assumed 43 false identities and conned the then Australian Social Security Department out of $500,000 AUD.

 

 

Sentenced to eight years prison, Patterson was extradited back home after only serving three. A pattern sadly repeated a few years after his 1988 release. Where, in the United States this time, he was arrested for felony larceny, felony fraud, and grand theft. But he'd certainly gone up in the world, this time around he'd stolen $2 million US.

 

Once more sentenced to eight years, again serving only three, he was deported back to New Zealand in 1994.

 

Four years later, Patterson was arrested while attempting to return to the United States on a false passport.

 

Then, in July 2002, following his third extradition, he was arrested by the New Zealand authorities for offences committed here before he'd left the country in 1998. Unfortunately, the author's [Andrew Kelly] been unable to find out what those offences were.

 

Regardless, sentenced to home detention, he was freed in June 2003.

Not wasting any time, Patterson's latest - last? - fraud began within days.

What Was He Like?

So what was Wayne Patterson like as a person? He was certainly a man with a mission: One Department of Corrections probation report refers to him, as a child, telling his father he wanted to be a millionaire. Personality wise, we have his next door neighbour stating: "He was a gentle fellow, kind of shy but pleasant and neighbourly. There wasn't an unkind word you could say about the fellow."

A feeling backed up by Patterson's landlord who said he was 'gobsmacked' after the arrest of a man he considered 'Mr Perfect.' Going on to state: "He's such a nice guy. Everyone liked him."

 

But then not everyone was such a fan. After his sentencing in October 2007, MSD Chief Executive Peter Hughes stated: "His chief pleasures appear to be tropical fish and gardening. With no friends, in a rented unit fortressed by high-tech security, his primary contact with the outside world was via internet chat-rooms."

 

To be fair, except for that 'high-tech security' comment, Hughes could be describing the lives of a fair number of people living in any big city.

 

Then Hughes went on to state Patterson: "Lived a lonely life few would envy." And maybe he was more on the money there?

 

During his summing up, the Judge had stated: "You appear from the information available to me to have little willingness to accept responsibility for your behaviour."

 

Which perhaps comes closest to summing up the real man behind a $3.4 million benefit fraud.

Patterson's System

So how do you fool the MSD into paying you over $50,000 a fortnight? This is the $3.4 million question.

 

Well, for a start, it helps if you aren't who you say you are. And you do that by proving you're someone else. Which is precisely what Wayne Patterson did when he provided the MSD with all the proof they asked for when he applied for each and every benefit. And his system, like most outlined in this book, while ingenious, was also straightforward.  

 

MSD Chief Hughes saying each false identity created was supported by an extensive array of equally fake paperwork. For a start, each had its birth certificate, one 'issued' from the correct office it would've been issued from, with a serial number from the series allocated at that time. Each used the correct period typeface, even the paper feeling and weighing entirely as it should.

 

Springing to his department's defence here, Hughes stated: "Our staff are trained to scrutinise these documents. They know to look for certain things, but they were very, very high-quality forgeries." This according to him anyway.

 

Now at first, Patterson applied for Sickness and Unemployment Benefits, before switching to Superannuation payments. Why the switch? Because sickness beneficiaries require doctors' visits, and the unemployed face regular face-to-face interviews. Whereas, for the pension, you're not expected to front up on anything like a regular basis.

 

A good example was covered by the trail Judge, who told the court that in July 2003, Patterson, using the alias 'Paul Wayne Lancaster,' applied for the pension at the Work & Income New Zealand (WINZ) office in Panmure, Auckland. To support his application, he'd handed over a birth certificate and a Community Services Card. The latter helping with the costs of health care and, in this case, obtained from the MSD the previous month.

 

'Lancaster' got his pension and, along with supporting allowances, these were paid into a Kiwibank Limited (Kiwibank) account under that name. 'Lancaster' continued to be paid right up until Patterson's arrest in October 2006. Which, of course, implies he'd had to, and had, managed to fool banks' into opening accounts as well.  

Just in case, he varied the ID's he presented. Using everything from forged Temporary Driver's Licences, real Inland Revenue Department (IRD) cards, and bank statements, to false Tenancy Agreements. At the time of his arrest, the following were uncovered at his flat: 137 Automated Teller Machine (ATM) cards, 125 IRD cards, 102 forged birth certificates, 79 Superannuation Cards, and 56 Community Service Cards. All helping to ensure Patterson was who he said he was. And not himself.

The Various Companies Involved

It's worth taking the time here to look at the companies set up by Wayne Patterson: Companies directly involved in his $3.4 million fraud.

New Zealand Companies

Patterson had set up two locally: Rodney Securities Limited, incorporated in October 2005, and United Gold Limited, incorporated in November 2005. Of the two, Rodney Securities is the most interesting.

 

It had two directors and shareholders: Patterson himself, and Graham Robert Johnstone.

And on all the official Companies Office forms, Johnstone's address is given as Gardener Avenue in New Lynn, Auckland. Now there's a Gardner Avenue in New Lynn, but no 'Gardener Avenue.'

And that's anywhere in Auckland.

 

Certainly no expert, but the author reckons the signatures for both Patterson and Johnstone were done by the same person. There's another Graham Robert Johnstone listed on the Companies Office website, but their signatures don't match at all.

 

Even more damning is the fact Patterson's neighbours, and his landlord, all knew him as 'Graham Johnstone.' So it's a pretty much given that both of Rodney Securities directors' were one and the same person.

 

Which begs the question: Why bother using a false identity when you're already using your own name?

Answers on the back of a postcard please! United Gold appears much more straightforward: Patterson its sole director, and he a joint shareholder with Rodney Securities.

 

Despite this intrigue, Patterson had both companies struck off in January 2006. Only three and two months, respectively, after he'd set them up.

The most likely reason? He'd decided to go offshore instead.

 

Offshore Companies

 

After reckoning 'local' wasn't the way to go, Patterson decided to go international.

In all, he'd register four offshore companies. Three of them, and their associated foreign bank accounts, set up with the help of Maritime International Limited.

 

A company based on the West Indian island of Antigua, Maritime Internationalisn't shy about offering: "The most complete and comprehensive selection of offshore companies, offshore asset protection and professional financial services available."

 

Patterson first contacted them through their website in April 2006: Three months after deregistering Rodney Securities and United Gold, and seven before his arrest.

 

The company's Wealth Management Director, Laura Mouck, said they'd requested a copy of his passport and proof of his address before setting up the companies, and that he'd been checked through an international database meant to flag criminals. And he'd come up 'clean.'

 

In addition to the three set up with Maritime International's help, Mouck said she was aware Patterson had set up a fourth company, independently, in Panama.

 

Mouck stating Patterson had: "Deposited funds into the [Austrian and Swiss] accounts personally, via wire transfers ... from New Zealand bank accounts."

 

In all, he'd set up four offshore accounts, and it's known he wanted to set up a fifth.

 

Invoices subsequently found in Patterson's flat detailed the purchase, and subsequent on-sale, of gold. Monies received were then transferred onto those foreign bank accounts.

 

Nothing more than a form of money laundering then.

Anything Unusual?

Besides the intriguing question of Graham Johnstone and Rodney Securities Limited, certainly another aspect of Wayne Patterson's fraud differed from all of the others covered in this book. All of 'his' money was obtained as cash. Physical dollars, that is.

 

Using those ATM cards the police found hidden, in a recess above his shower, as it happens, he withdraw monies from a string of ATM machines across Auckland city.

 

As a for instance here, when arrested, it's claimed he had around $13,000 in his Nissan Primera motorcar. Therefore, while others enjoyed their free time, Patterson was driving about the place withdrawing money from ATMs. This the single biggest 'downside' of his operation: Because he ended up with more cash than he appeared to know what to do with.

 

Shortly after his arrest, the media would be, and gleefully, reporting how 'stacks of cash' and gold ingots were found squirreled about his flat. And how more dollars were later discovered plastic-bagged up, and buried in Patterson's flowerbeds.

 

It's known he used makeup and disguises to exaggerate his age when forced to visit MSD offices. One policeman saying they'd found 'old man's clothes' in his flat.

 

Also discovered were approximately 100 PO Box keys, from locations all over New Zealand. This because, while MSD forms' specify applicants must supply a street address, you can supply a mailing address, and that could be a PO Box.

 

So all Patterson had to do then was fill out a form, pay a few dollars, and any mail sent to a PO Box would instead be forwarded on to a physical address.  His own in Colwill Road, Massey, West Auckland as it happens.

Show Me The Money

So what did Wayne Patterson do with 'his' $3.4 million then?

 

For one thing, he didn't spend it on buying property, like false invoice fraudster Michael Swann would do. Instead, throughout his fraud, Patterson lived in this $230-a-week, two-story, rented flat. Albeit plain-and-ordinary looking on the outside, its interior would be described as 'mansion-like'. Then again, he also had a 'lavish' ornamental garden.

 

That 'mansion-like' interior featured such indulgences as a top-end white leather lounge suite, and home theatre system, a marble ensuite, a ceiling mounted projector with a 3.6 metre screen, a home gym, and more art than he had places to hang it.

 

Patterson also spent an estimated $50,000 on his garden. Which included many rare and exotic plants, in addition to marble seats and imitation Easter Island statues.

 

Inside his rental, including that $13,000 found in his Nissan, the police discovered another $184,000 in cash.12 one- kilogram and 62 10-ounce gold bars and ingots were also discovered. And, out in that extravagant garden, police dug up a stash of plastic-wrapped cash to the value of $684,000. In $50 notes.

 

As an aside, it's never been adequately explained how the police knew to dig in the garden.

Anyway, in all, around $1.2 million was initially recovered.  

And the other $2.2 million? It later transpired Patterson had invested the bulk of this in those offshore bank accountsassociated with the four overseas companies he'd set up. 

MSD Chief Hughes perhaps summed it up best, stating: "With more money than he knew what to do with, Patterson began [in late 2005] dealing in gold to launder the cash in an attempt to conceal assets in foreign companies and bank accounts."

 

Now, besides dealing in precious metal, Patterson had also purchased a number of Apple Computer Incorporated, now Apple Incorporated, shares through his offshore companies.

A 'wise' investment, as we'll soon see.

 

Did Patterson have any longer-term goals?  Yes. Apparently he was thinking seriously about buying a cabin on The World cruise liner. This luxury liner serving as a sort of floating residential community for the wealthy. Now for that, Patterson would've needed some serious coin, as even a small-ish studio apartment would've cost him around $600,000 US then. With another $20,000 US a month in charges on top of that.

 

The MSD said documents found in his flat showed he apparently planned to stop defrauding when he got to $10 million. In December 2011, Patterson had been declared bankrupt. Not because of his fraud: But over $3.1 million he owes, in unpaid taxes, to the IRD.

 

Okay…

Missed Opportunities

With 20/20 hindsight, prior to Wayne Patterson's arrest in October 2006, were any real opportunities to catch him out earlier missed?

 

Yes. At least three: One before this, latest, fraud actually began; another shortly afterwards; and the third after his fraud had been exposed.  

 

The latter, involving a spreadsheet, will be covered later.

 

The first missed opportunity came when Patterson was placed on probation after his home detention ended in June 2003, when his Probation Officer had reported there was a 'high risk' he'd reoffend.

But no one had bothered to follow up on this. At all.

 

This was very unfortunate, especially in light of MSD Chief Hughes' later statement about what would happen after Patterson's release: "We will watch him closely. He will be under scrutiny like no one else in the country."

 

Perhaps prior would've been best. To the tune of $3.4 million.

 

The second missed opportunity came early on in his fraud when the MSD stopped a payment to one of Patterson's false identities due to some unreported discrepancy.

 

In common with so many other cases handled by them, it was thought that doing so would prompt the errant beneficiary to front up to a WINZ office.

 

But Patterson hadn't. And when he hadn't, no follow-up investigation was carried out. In the first case, a report that should've been followed up wasn't. In the second, an assumption had been made, but with no follow-through, a good opportunity was missed.

How Was He Caught Out?

So what tripped up Wayne Patterson in the end?  The happy outcome of a vigorous MSD fraud sweep? Can we put it down to a sharp-eyed internal auditor? Or did a diligent front-of-office WINZ employee note some inconsistency?

 

None of the above as it happened: An unsung Kiwibank employee noticed a pattern. A pattern of unusual transactions relating to 14 differentbank accounts into which benefits were being paid.

It was reported all were linked to a single, or perhaps two, 'Internet Protocol' (IP) address. An 'IP address' being a computer's physical address on the Internet. Where it sits, if you like.

 

And Kiwibank, obligated to report this to the MSD under the Financial Transactions Reporting Act 1996, did exactly that.

 

This'd been on September 26 2006. An important date this. An official MSD statement released over a year later stated: "Within a week [of September 26], the Ministry ... established that the [14] accounts related to false identities."  Using the characteristics of these 14, within another 48 hours the MSD had uncovered the majority of Patterson's later total of 123 false identities.

 

All good then. But why's September 26 important? Because, although it took more than a year after his arrest to come out, the MSD had missed a clear opportunity to get their hands on Patterson earlier: By seven days.  

 

A failurethat ended up costing the taxpayer $56,000. Because a further fortnight's payouts had to be made to ensure Patterson's suspicions weren't raised.  

 

All of this only came to light in October 2007. When, in Parliament, then-opposition Member of Parliament (MP) Judith Collins had formally asked Steve Maharey, Acting Minister for Social Development and Employment, why it'd taken from September 26 until October 3 2006 for the MSD to act upon Kiwibank's report.

 

When no meaningful reply had come back, Collins said it'd been because the MSD's Senior Fraud Investigator had received a phone call fromthe Department of Internal Affairs (the DIA,) six days after the Kiwibank report, offering assistance with the fraud investigation.

 

But that the investigator had hadto admit she didn't know what he was talking about, because she hadn't been able to open the spreadsheet attached to the Kiwibank email!  The spreadsheet that'd listed those 14 accounts.  Which, of course, nicely explains why that MSD statement began with: "Within a week..."

 

Now, for some inexplicable reason, this never rated even a mention in passing by the media.

 

But, despite the above, at least the MSD were now aware a substantive fraud had been committed.

What they didn't know, though, was the perpetrator's real identity.

Got You

So how did they finally get their hands on Wayne Patterson?  A year after his arrest, MSD Chief Hughes had said once he'd been notified of a substantial fraud, he'd established an MSD-led taskforce: "Drawing on the expertise from a range of organisations, we had assembled extensive information about the offender within a few days."  Good and positive action.

 

But there were initial setbacks. For example, the fraudster wouldn't be caught out through the covert surveillance of three ATM machines he was now-known to have used regularly.

 

This was tried, but the end result had been: "A security photo of the disguised offender." Patterson was no fool then.

 

Now that 'range of organisations' Hughes mentioned included the Police, The DIA, IRD, the Crown Law Office, several trading banks, and a forensic accounting firm.  

Notable by their absence was the Serious Fraud Office (SFO). More on this coming up.  The taskforce's breakthrough finally came 23 days after that Kiwibank email.

 

On October 19 2006, a bank account used by their target for his day-to-day living expenses was discovered.

 

And the next day, the perpetrator used an Eftpos card linked to that account to make a purchase at a petrol station. Security camera footage, this time, led to a vehicle registration andfrom that, they got a physical address.

 

Patterson was then put under close surveillance for the following six days, during which he was observed withdrawing large amounts from ATM machines, after which he returned home.

 

From that, it was surmised he must have large amounts of money hidden about his property.

On October 26 2006, the police executed a search warrant at Patterson's Colwill Road flat. The MSD finally had their man.

Sentencing And Prison

Wayne Patterson, $3.4 million benefit fraudster, had been arrested then. Initially held in Mt. Eden Prison, Auckland, in November 2006, he appeared in District Court charged with four counts of forgery, four of using forged documents, and one each of using a document with intent to defraud, and of dishonestly using a document.

 

Thankfully for the taxpayer here, Patterson pleaded guilty to all charges laid by the police.

Due to be sentenced by the same court in March 2007, this was later, inexplicitly, switched to the Auckland High Court, and set down for May.

 

However, May 2007 came and went, with no explanation ever being offered as to why sentencing didn't and couldn't happen then either.

 

Given what transpired later, the most likely reason was because the MSD were seeking further reparations from Patterson under the Proceeds of Crimes Act 1991.

 

And what of those assets? As MSD Chief Hughes would later state: "Within weeks [of his arrest] we had traced and frozen assets with overseas banks." This, of course, was just the beginning of a long convoluted process.

 

Anyway, Patterson was finally sentenced on October 12 2007. 11 months after his guilty pleas, and a full year after his arrest.

 

Regarding sentencing, the Crown wanted the starting point to be somewhere between nine years and a decade. Patterson's lawyer, meanwhile argued for nine.

 

The Judge, however, had other ideas: Deciding 11 years, six months was a more suitable starting point. The Judge going on to say he wouldn't be giving Patterson any 'discount' for remorse. But that he was entitled to a 30 percent sentence reduction due to his early guilty pleas.

 

Eight years then, with a non-parole period on the high side: Five years. 

 

After sentencing, Hughes stated Patterson was: "A very, very skilled man and if you could trust him I would hire him. You can't, and I won't."  Okay…

 

The Parole Board also shared Hughes' view: Patterson being declined parole in July 2012.  They labelling him an 'arrogant, egocentric man,' stating he saw: "The life of a big-league parasitic fraudster as more rewarding than the drudgery of ordinary honest toil."  The Board went on to say he was likely to continue as a fraudster if paroled. His next Board hearing is set for July 2013.*  If parole continues to be denied, Patterson won't be due for release until July 2015.

 

Now he initially served his time in the minimum- to low-security Tongariro/Rangipo Prison, in the central North Island.  A facility he was sharing with 'Ponzi scheme' fraudster, Stephen Versalko.

 

One interesting episode worth mentioning here: In April 2009, Patterson appeared in Taupo District Court on one charge of attempting to escape, and one of actually escaping, from custody.  The police said he'd slipped out of a holding cell while they were occupied with another prisoner, but had been recaptured 'within minutes.'  Pleading guilty to both charges, he was sentenced to three and six months respectively: Sentences cumulative on his prison term.  Now whether it was due to this escape attempt or not, it appeared he was then moved to the minimum- to high-security Whanganui Prison.  And at the Whanganui Prison, Patterson remains(2013).

Media Reporting

As expected, Wayne Patterson's $3.4 million benefit fraud made the headlines. So how did the media report on this case?

 

Initially their focus was very much on the 'bizarre life' of the man who'd been defrauding the MSD out of over $50,000 a fortnight.

 

Not unnaturally, a lot of column and screen centimetres were given over to the $539,000 in cash and gold the police found squirreled abut in Patterson's flat, and that further $684,000 found buried in his garden.

 

Then there were all those false identities Patterson had created.  The hundreds of ATM, IRD, Superannuation and Community Service Cardsand, of course, those 102 forged birth certificates.

All facts that became a common thread throughout the short time Patterson's fraud was reported in the media.

 

'Short' time because in the full year between his arrest in October 2006, and his sentencingin October 2007, very few new details were made publically available by the MSD.  They simply refused to comment until after Patterson's sentencing.

 

For example, after his arrest MSD Chief Hughes said he'd only be making a 'full disclosure' of the facts following Patterson's sentencing, stating: "This is a serious matter and the Ministry recognises it needs to be accountable. We will be accountable immediately after sentencing."

 

So, despite being labelled by the New Zealand Heraldas: "The biggest benefit scandal in New Zealand's history", when compared to other large frauds Patterson's was very much 'under-reported.'

 

His case only made the headlines during two periods: For less than a week following his arrest, and for just over a week following his sentencing.

 

The only statements made by the MSD between these two periods were reassurances that this case was unique, and that there were no holes in their systems.  The media simply reprinting these almost verbatim.

 

Despite the MSD being wrong on both counts: The size of Patterson's fraud about the only 'unique' factor here, and there had to have been holes in their systems, otherwise we wouldn't have been reading about him.

 

As stated, following his sentencing, the man made the headlines once more. Even rating a mention on the BBC news website. It was then details of his criminal past emerged, the politicians got involved, and some difficult questions were finally asked.  But never really answered.

 

It was at that time that both the MSD and the media began to paint a picture of an intelligent, misguided, lonely soul who'd somehow managed to fool the system but who was ultimately tripped up by his own greed.

 

A common theme when reporting large-scale fraud in New Zealand.  And the MSD went into full 'damage control mode': Them and Hughes issuing a number of press releases and associated sound bites.  Hughes, for instance, happily pointed out the hurdles faced by his Ministry, and the successes achieved, when uncovering and prosecuting benefit fraudsters.

 

The statistics also coming thick and fast here.  Followed up by the 'putting it into perspective' viewpoint so often used by organisations who'd found themselves the victims of large-scale fraud: "The money stolen by Patterson represented 0.008 percent of New Zealand's total benefit-spend," and so on.

 

One thing very much in the MSD's favour here was that they could announce the government would actually be making a 'profit,' due to this fraudster's 'astute' investments. More on this soon.

 

So, during that week following Patterson's sentencing, the MSD tried to seize the moral high ground.

It has to be said: They mostly succeeded. Due in no small part to no hard questions being asked of it by the media. For instance, that embarrassing spreadsheet debacle? This wasn't followed up by any major media outlet at all.

 

Interest did briefly revive following TV3's December 2009 Inside New Zealanddocumentary entitled "Catching the King of Benefit Cheats."  However, besides this, the reporting of a number of failed appeals and, of course, his name being mentioned every time benefit fraud's an issue?

Interest has pretty much waned in Patterson.

A Missed 'Conspiracy Theory'?

Anytime's a good time for a conspiracy theory!  Now it's a matter of record that in 1998, Wayne Patterson had been arrested attempting to enter the United States on a false passport.

 

It should therefore come as no surprise then, that the media initially reported a 'number' of New Zealand passports had been found when his flat was searched by the police on October 26 2006.

One of which was said, by unnamed 'officials' at the scene, to be in the name of 'Geoffrey Patterson,' with a photo of the man known to his neighbours as 'Graham Johnstone.'

 

Now shortly after Patterson's arrest, the Department of Labour, which administers the DIA, announced it'd be beginning a 'probe' into how he'd obtained these passports. 

Then, 10 days after his arrest, the DIA announced no passports had, in fact, been found.

Intrigued by this turnaround, in July 2012 the author put in a formal Official Information Act 1982 request to the DIA requesting details of this 'probe.'

 

The Passport Office General Manager responded, saying while the media may've reported a number of local passports had been found, they weren't aware of any such thing.

 

And that, in mid-October 2006, prior to his arrest then, the MSD had provided the DIA with a list of 'suspicious identities' used by Patterson in his offending. But a check by the Passport Office had found none issued under any of them.   Okay then.

 

The author next approached the New Zealand Police.   In their case an Official Information Act 1982 request asking for a listing or report of what the search warrant executed on Patterson's flat on October 26 2006 had found.  After some initial reluctance, it has to be said, in August 2012, the author received two 'NZ Police Job Sheet's outlining, in precise detail, what'd been uncovered at that Colwill Road address.

 

Fortunately/unfortunately there's no mention of any passport or passports being found. 

 

However, in the email accompanying those two documents, a police detective states: "I can confirm that only 1 x NZ Passport, in the name of Wayne Thomas PATTERSON, was located and seized from the address."

 

Something not listed as an exhibit in either of those Job Sheets.

 

Which must be considered unusual. Given that, for example, at '1149 hrs,' it's recorded a Logitec computer mouse and holder: "Located on the top lefthand corner of the desk in the office," had been located, photographed and seized. And labeled as 'Exhibit No: 39'!

 

Hum…  Still a conspiracy theory? The author will let the reader decide.

The Fallout

What of the political fallout?  After all, the MSD is this very high profile government department.

As entirely expected, the politicians weren't slow in coming forward here. The first of several embarrassing questions being asked in Parliament only four days after Wayne Patterson's sentencing in October 2007.   Not just ones concerning non-opening spreadsheets either.

 

Once more, it was then-opposition MP Judith Collins who was asking the hard questions of Acting Minister Steve Maharey.  Questions such as: "Why did the ministry not consult the Serious Fraud Office when it realised it was dealing with a fraud of well over $1 million?" A good question, especially given it was the MSD's policy to refer such significant frauds to either the SFO or police.

 

By way of an 'answer', Maharey tried deflection first: Pointing out the MSD-led investigationhad been 'Highly successful.'   One assumes he was referring to the prosecution and sentencing. Although, it was more likely he was referring to the money the MSD had made from Patterson's investments.

 

No surprise, Collins was having none of that and, quoting from a memo received from the SFO Director: "The role adopted by the ministry as the investigator, the prosecutor, and the political adviser of this significant fraud, in which it was also the victim, raises perception issues that would have been avoided had the police or the Serious Fraud Office been responsible for the investigation and prosecution."

 

This is interesting because, sometime after this, the author is unable to ascertain when exactly, the SFO ceased to prosecute benefit fraud. From their website, we now have the following statement: "Work and Income New Zealand (WINZ) will investigate allegations of beneficiaries fraudulently obtaining a benefit."

 

Back to parliament, and once more the Acting Minister pointed to a successful outcome, before moving on to the argument we will hear over and over in this book. He stated Patterson was: "A unique fraudster and outstanding in his own field - literally, because no one else has ever done this."  Simply not true.

 

Excepting for the few hard questions outlined, and all asked in Parliament, this was about it. As far as the author can ascertain: No heads rolled as a result, no wrists were even slapped.  Much worse perhaps: There seemed to be no demands this should've happened either.  That's from either the politicians or the media.

Seeking Reparations

Unsurprisingly, every defrauded organisation wants its money back.  The MSD proving no exception.

Now the initial amount of cash and gold recovered from Wayne Patterson's flat in October 2006 totalled around $1.2 million. Which wasn't too bad for a day's work.  However, as alluded to previously, the MSD would later announce the government would actually be 'profiting' from this fraud.

 

After his sentencing in October 2007, the MSD said Patterson had invested the bulk of their money in foreign bank accounts, and MSD Chief Hughes had stated: "Within weeks [of his arrest] we had traced and frozen assets with overseas banks."  This immediately netted them around $2.2 million: $1.1 million in the Austrian bank account, approximately the same amount in the Swiss one.  Therefore, along with that $1.2 million recovered from Patterson's flat, they'd at least gotten their $3.4 million back.  It got so much better though.

 

Because by May 2007, this total had grown from $3.4 million to around $3.9 million. And, in October that same year, it'd further increased to over $4 million and, in January 2008, again increased to over $4.3 million.  This marked increase was due to two factors.    Firstly, the price of gold had risen: Patterson bought it when it was around $400 US an ounce, it was around $600 US when sold.

Then there were those Apple shares.

 

Which Patterson had bought at $75 US a share in 2006. But then the company had launched the iPhone in the United States in June 2007: After which the shares had skyrocketed to $160 US each.

So by March 2008, Patterson's cash and investments totalled around $4.4 million. Thereby 'earning' the Government a cool $1 million!

 

Staggering when you consider, as outlined in the Preface to this book, that less than 10 percent of defrauded companies recovered all of their money. Let alone made a large profit.  Perhaps financial adviser and columnist Martin Hawes summed it up best when he'd stated: "He's perhaps been very skillful but took an awful lot of risk."  No argument here.

 

As he had when originally drafting this chapter: The author would be happy to end this section right here, with all the 'loose ends' nicely tied up.  Unfortunately it wasn't to be.

 

Because while the Government had, by 2012, already recovered $3.5 million, there are still unclaimed assets deposited in Austria.  Assets including those Apple shares. Which by then had leaped in value from $810,000 in 2007, to more than $3 million by August 2012.

 

In March 2009, the Government's bid to recover these from Wayne Patterson's Anglo-Irish Bank account had been rejected by the Vienna Regional Court.

 

To add salt to the wounds, Patterson was-and-is receiving the Austrian equivalent of legal aid to argue for his entitlement.  It gets worse.

 

When the Government appealed this ruling in 2010, the Court then ruled these assets should, in fact, be forfeited to the Austrian Government.  

Patterson promptly appealed himself, and that forfeiture was overturned. On the basis the New Zealand Government had already recovered more than the amount he'd stolen. So it remains.  And today (2013), the Government's relooking at its options.

The MSD Takes Action

The MSD's Annual Report 2011/2012 states: "This year our payment systems processed over 45 million transactions totalling $16 billion."  With this in mind, MSD Chief Hughes stated it's an impossible task to check every one of their million-plus clients because: "If we did that, it would take you several years to get on New Zealand superannuation."  An entirely fair statement.

 

What must be understood is that this $16 billion makes the MSD, in common with any other large financial service organisation, a prime target for fraudsters.  Hence Hughes' statement made after Wayne Patterson's 2006 arrest: "This is a serious matter and the Ministry recognises it needs to be accountable."

 

Of course, the MSD initially denied there were any holes in their systems. A government Minister at that time saying he had confidence in them to prevent and detect such cases.  Despite the, even then, overwhelming evident otherwise.

 

Given Hughes' later statement around Patterson being under very close scrutiny once he'd done his time: What did the MSD doto try and keep fraudsters like him away from that $16 billion?  First off, they did what most other financial services organisation did post a sizable fraud: They commissioned an independent review of their current controls.

 

The problem here is, such client-paid reviews have a way of painting a somewhat rosier picture then reality may, and the facts often, indicate. And this one was no different: Hughes saying it found that while the MSD had strong controls, these alone couldn't protect against a determined fraudster.

An all too common theme. Despite all that evident to the contrary. To their credit though, the MSD did take more positive action.

 

And one of the first things they did do was tighten up on the use of birth certificates as ID. These are now checked against a birth and death records database whenever anyone applies for a benefit.  Initially manually checked, in 2010 this process became a web browser-based service available via the DIA.

 

Manual or not, this led Hughes to perhaps over-optimistically state: "This will prevent false identities in the benefit system."  Besides database checks, a better form of photo ID was now required, and targeted training for frontline staff was put in place.  And an Intelligence Unit was also established to carry out fraud-related risk assessments.

 

In March 2008, Hughes briefed a parliamentary committee on Patterson's fraud, informing them he was now confident no similar-scale frauds could occur now because they'd spent around $1 million on measures making sure it couldn't.  Yes.

 

In the Office of the Auditor General's 2008 report to Parliament, the MSD were found to have: "Good systems, policies, and procedures in place to prevent, detect, and investigate benefit fraud."  But did go on to say they should make better use of their intelligence and data-matching functions in order to better identify areas of emerging risk and potential instances of fraud.  Good advice. And not just for the MSD.

 

Okay, forgetting entirely the part Kiwibank had to play, we have a sound bite from Hughes in 2007: "I am confident that it is a matter of when rather than if we catch benefit fraudsters as the case of Wayne Patterson so clearly demonstrates."

It'd be nice to think so.

Did Anybody Else Take Action?

While the MSD took action, Wayne Patterson's fraud, of course, touched a number of other organisations as well.  As stated, the MSD had tightened up on the use of birth certificates as ID, and that, initially, these had been manually checked against a birth and death records database.

 

In 2010, the DIA launched the 'Data Validation Service' (DVA): A web browser-based service setup to help both governmental agencies and private sector organisations combat identity theft.  This service allowing users to check whether personal identity information presented was consistent with information held by the DIA. Including that in its 'Citizenship, Passports, and Births, Deaths and Marriages' databases.

 

The DIA admitting this service had been, at least partly, developed in response to Patterson's fraud.

Alright, four years after the event.  During his October 2007 sentencing, the Judge noted Patterson had sometimes used forged temporary driver's licences as ID when opening bank accounts.

 

In response, Land Transport New Zealand (now the New Zealand Transport Agency) spokesman, Andy Knackstedt, said they'd certainly be 'looking into' how this could've happened.  

He also said that while they worked closely with both Immigration New Zealand and the DIA, a driver's licence was not designed to be an ID card.

 

Wasn't Knackstedt being just a little naive here? After all, 'designed' for it or not: A driver's licence is accepted as an ID card. In fact, their own 'Identification for driver licensing' factsheet says, in order to renew your licence, you have to front up with ID. And one of your choices is stated as being: "A New Zealand photographic driver licence that is current or has expired within the last two years."

 

Unfortunately, that 'looking into' hasn't resulted in any affirmative action to date.  Look at the case of then 17 year old student Marcus Lim's 2009 prosecution for selling forged photographic drivers licences to his fellow students for $100 each.

 

Then there were those limited liability companies Patterson had setup in the year before his arrest.

Forgetting the 'why' of both directors of Rodney Securities Limited likely being Patterson himself: How could a man, a 'career criminal' who'd done time for major fraud and theft, both locally and overseas, become a company director?

 

Obviously Companies Office doesn't perform anything approaching thorough background checks.

And not just them either. Hadn't Maritime International Limited checked him against an international database meant to flag criminals?

 

Given all of the above, one could argue that while the MSD spent some major dollars tightening up their own systems, policies, and procedures as a direct consequence of Patterson's fraud, no other government agency seemed too concerned?  And it's not just government agencies either.

 

Kiwibank, for instance, has never said a word.

Some Observations

While many of the points raised in this section may've been made before, the author felt they're worth reiterating here, as findings or observations resulting from a close analysis of the MSD's press releases, the court records, parliamentary debate papers, media articles and other sources. All of which are freely available online (see 'Bibliography').

 

Much of what follows is very much the author's opinion. Alright backed up by facts where and if at all possible.

 

The author also restricted himself to what he saw as only the most pertinent findings, a 'Top 5' in this case, the rest thought to be adequately covered in the body of this chapter.

 

A 'Career Criminal'

 

Wayne Patterson is a 'career criminal.' And alright, once released, he'll be: "Under scrutiny like no one else in the country."

 

So the MSD assure us anyway.  However, prior to his $3.4 million benefit fraud, wasn't he already well-known to the New Zealand authorities?  A several-times convicted fraudster who'd already stolen millions from welfare agencies in two countries. A man who'd perfected his system practically 'next door' in Australia?  A serial offender labelled a 'high-risk' prior to this latest fraud by the Probation Service, and likely to continue being one once released by the Parole Board?  A man who began his latest fraud within days of his home detention release in June 2003.

 

So why wasn't Wayne Patterson 'under scrutiny like no one else' back in 2003?  Was it a lack of resources: People, funding, and so on?  Was it a lack of process: No process equalling no scrutiny?

Or was it a lack of responsibility: The old-as-bureaucracy 'it's not my department' argument?  Given the evidence presented, the answer would have to be: All of the above.

 

Patterson's System

 

Wayne Patterson's system was simple and straight forward: Prove to the authorities you're someone you're not and get paid. Much simpler than straight identity theft.

 

Patterson stole no one's identity. He simply up and provided the MSD with all the, mostly forged, proof they asked for when he made an application.  A simple system made even easier once he'd established National Superannuation didn't require he physically front up on anything like a regular basis.  All of which helped ensure Patterson was who he said he was.  And not himself.

 

Here a quick check against the data held by the DIA would've uncovered his deceptionfrom the get go.  Okay, this's now being done, of course. Thanks, in part anyway, to his fraud.  Why wasn't this done before?

 

For much the same reason a crash barrier is only erected on that notoriously dangerous cliff road: Because a family of four drove over the edge last week.

 

No Serious Fraud Office Involvement

 

When the MSD established its taskforce to investigate a potentially large fraud, they included the Police, various other government agencies, a number of trading banks, and a private forensic accounting firm.  But not the SFO.

 

When later questioned in Parliament, the Acting Minister had said: "The protocol at the time was for the police to engage the Serious Fraud Office." Nicely laying the 'blame' for the SFO's non-engagement onto the police.   Who anyway played what can only be called a background role in the resulting case.

Regardless of any political ructions though, it was unusual that the SFO weren't involved. They should've been. Not least of all because the MSD's own policy said they should. 

It was only after Paterson's sentencing that the SFO declared WINZ would now: "Investigate allegations of beneficiaries fraudulently obtaining a benefit." Changing the rules after the fact doesn't alter the fact though.

 

One possible answer as to why the SFO weren't even consulted was the MSD, to spare itself embarrassment, decided to use its political 'muscle' to keep the investigation in-house.

Thereby better controlling the flow of information.  And, it has to be said, so successful was this strategy that by the time Patterson was sentenced, the public had pretty much lost interest.  Helped along by the fact the MSD had actually made a 'profit' of $685,000 by then.

 

Strong Controls No Help

 

Entirely due to Wayne Patterson's fraud, the MSD commissioned an independent review of its controls.  Such reviews pretty much always being carried out after an event.  And most often, as in this case, involving one of the 'Big 4' audit and accounting firms: Deloitte, Ernst & Young, KPMG or PwC.

 

The problem here is that such 'self-paid' audits most always result in similar findings: Strong controls found to be in place already, but that these couldn't protect against a determined fraudster.  

Then there's 2008's Auditor General's report, with its: "The Ministry has good systems, policies, and procedures in place to prevent, detect, and investigate benefit fraud."  However, in-place controls, systems, policies and procedures by themselves, and no matter how 'good' or 'strong,' will never ensure your systems have a reasonable chance of remaining anywhere near fraud-free.  A fact the author's very familiar with, given my background in information security.

 

No. History and common sense tell us this can only be achieved through the full and active cooperation of your staff, linked to some effective monitoring and 'old school' enforcement.

Remember that people will always cross that railway line or stop on the motorway, regardless of any warning sign or law saying otherwise.

 

Checks And Balances Lacking

 

As the prime victim, the MSD at least took some proactive measures to counter frauds like Wayne Patterson's.  But it took until 2010 for the DIA to set up its Data Validation Service. Which they themselves admitted had been partly developed in response to his fraud.  Albeit four years earlier.

 

Worse, the Transport Agency appeared to do nothing at all. Except naively state a driver's licence wasn't designed to be an ID card. Yet they'll still accept a current or already expired licence as proof of ID when you apply for a new one.  And there are many others who should've known better. Especially when it comes to doing in-depth enough background checks. Remember those 137 ATM and 125 IRD cards? So we have to include the major trading banks and the IRD as well.  At least.

 

Then there's Companies Office, also 'allowing' Patterson to use false IDs. There no real excuse for any of this. Not anymore. Not given the concern these days around identity theft, let alone fraud.

So while the MSD spent $1 million tightening up their controls and systems, it has to be said other government agencies and private organisations didn't appear too bothered.

'Master Fraudster' Or 'Mere Chancer'?

Opinion on Wayne Patterson, even within the MSD, appeared divided. At least it seemed this way, depending on the question being asked at the time.  For instance, when defending his Ministry, MSD Chief Hughes described him as: "A very, very skilled man," one who used: "His considerable intelligence on fraud schemes."

 

Contrast this with Hughes talking of Patterson the man: "His has been a life characterised by failure," who: "Lived a lonely life few would envy."  So which is it then? Skilled and intelligent, or lonely failure?  Arguing for the former, Patterson did create 123 different identities out of nothing. With enough history and supporting paperwork to fool multiple government agencies and major trading banks. 

 

Then he also managed to defraud $3.4 million, which he then invested well enough for the MSD to actually profit from his fraud.and, despite being a known fraudster, Patterson did get away with it for three years, three months.

 

The author’s in no position to argue on his loneliness, but can at least discuss 'failure'. That Patterson had done time, every time, he'd perpetrated a fraud.  And this time around: Wasn't it more the MSD's, and others', failings that allowed him to get away with it for so long?

 

Then hadn’t it also taken him over two years to work out he could launder 'his' funds offshore. Rather than bury them in his ornamental garden?

 

Additionally, wasn’t he now, far more than before, a 'marked man'?  When recalling this, and remembering all of the other evidence outlined in this chapter: It could be argued Wayne Patterson was more 'Chancer' than 'Master'.

 

A career criminal who, aware of its flaws, had exploited a system wide open to such exploitation.

Other Examples

Wayne Patterson's $3.4 million benefit fraud remains (2013) the largest ever in New Zealand history.

But there have been thousands of other local cases.  One pertinent fact: Benefit fraud cost New Zealand taxpayers' $23.4 million in the year to June 2012. It'd 'only' been $7.5 million in 2006, the year Patterson was arrested.  Alright, only a tiny percentage of the total MSD payout of over $16 billion, this is still $3.4 million too much.

 

Now the following are three of the more interesting examples of benefit fraud from the last few years.

Learn how Mike 'Milky' Gibson found himself in trouble over a good days work. How Peter Freedom did a runner, literally, with $28,000 of the MSD's money. And how pensioner Colin Diedrichs' double identity theft 'earned' him $447,000.

Michael Gibson

 

In 2009, Michael James Gibson, 53, pleaded guilty to six charges of making false statements to the Accident Compensation Corporation (ACC) and others between 2003 and 2008.  In January 2010, despite each charge carrying a maximum sentence of three months prison or a $5,000 fine, Gibson was sentenced to 200 hours community service.  Regardless of this case first being brought to the media's attention in July 2008.  When video had surfaced of Gibson, after claiming $100,000 in benefits for a back injury that prevented him from working, lifting boulders, cutting hedges, launching his boat, and doing building work.

 

Consequently, he was nicknamed 'Milky' by locals. Due to his obvious 'milking' of the system.

When questioned over why they'd refused to act by the media, an ACC spokesperson had said: "Sometimes [we] do take a long time because we have to get it right."

 

In response, they soon found themselves criticised by MP Rodney Hide for the lack of any action over Gibson's case, even after numerous complaints had been received.  Eventually, after spending tens of thousands of dollars on gathering evidence, ACC investigators found he had, in fact, engaged in activities contrary to statements he'd made to his doctor and ACC case managers.

 

Despite being convicted, he continues to receive ACC payments, as he's fully entitled to them.

Gibson said after the ruling he was pleased the nightmare was finally over, that the experience had been: "A waste of time and money."

 

Peter Freedom

 

In June 2011, Peter Freedom, 34, aka Petrus van Druten, was charged with one count of using a forged document, and one of misleading a WINZ officer.  When he failed to appear in court, an arrest warrant was issued.  There'd been little surprise, official or otherwise, at Freedom's nonappearance: He hadn't lived in New Zealand for two years by then.

 

Back in April 2009, he'd left for Australia, assuming his Unemployment Benefit would be cut off shortly afterwards, as was usually the case.  It wasn’t.  Instead he'd received nearly $28,000 between then and when it was finally stopped in January 2011. During that 19 month period he'd travelled extensively in Asia, Africa, Britain and Europe. Before settling in the Netherlands.

 

Freedom's benefit only ended because of a new MSD reform which required those on unemployment to reapply for it after 12 months.  And his trip only came to the media's attention after he'd contacted them in February 2011 to point out the MSD error, stating: "What started as an accident soon became an opportunity."

 

Freedom then went on to attack WINZ, and Social Development Minister Paula Bennett, in a whole series of YouTube videos.  The media, of course, made much of a welfare fraudster who travelled the world for two years courtesy of the local taxpayer.  But then WINZ were, partially anyway, at fault, too.

 

Freedom had lied on his initial benefit application about having another name. something his case manager found this out, but hadn't bothered to record.  Something that would've trigged an alert when he'd left the country in the first place.

Colin Diedrichs

 

In March 2012, retired gardener Colin Diedrichs, 82, was sentenced to three years, two months prison for assuming the identities of two dead children to claim $447,000 in superannuation payments over a 22 year period.  Meaning he can lay claim to the entirely dubious honour of committing one of the longest benefit frauds in New Zealand's history. Because there have been longer!

 

In a ploy first brought to the public's attention in Frederick Forsyth's1971 thriller "The Day of the Jackal", Diedrichsobtained the details of a two year old who'd died in 1935, and another from 1957.

Using these, he got birth certificates and passports in both boys' names, and then applied for superannuation benefits on their behalf. Only caught out when the DIA, using facial recognition software, found Diedrichs' photograph in more than one passport.

 

He deposited the defrauded money into 29 different bank accounts across a number of banks.

Some accounts were in his name, as he was also legitimately receiving superannuation, while others were in the names of the deceased.

 

When asked why he'd done it, Diedrichs stated: "To get more money I suppose." Despite this, he hadn't lived extravagantly. Witnessed by the fact the MSD, working with the police Asset Recovery Unit, have since recovered around $357,000 in cash and assets. The head of the MSD's fraud unit stated this type of fraud was: "Rare and cannot happen today."  One wonders though...

Bibliography

The author wishes to gratefully acknowledge the following (online) sources:

 

New Zealand Herald: Articles from 5th, 6th, 15th and 18th November 2006; 20th February, 17th March, and 12th and 13th October, and 4th November 2007;  and 6th, 19th and 31st March, 7th Septemberand 6th December 2008.

 

Stuff.co.nz: Articles from 12th (x2), 13th and 16th October 2007; 20th March and 15th September 2008; 1st January 2009 (x2); 19th April 2010; and 22nd August 2012.

 

Television New Zealand: Article from 15th September 2012.

 

The MSD's Media Release Archive: Releases dated 15th November 2006 and 12th October 2007 (x3).

 

Judicial Decisions Online: Rulings from 12th October 2007 (High Court); 6th March (Court of Appeal), 1st May (High Court) and 28th August  (Supreme Court) 2008; 10th December 2009 (High Court); and 12th March 2010 (High Court).

 

New Zealand Parliamentary Debates(Hansard): 'Questions for Oral Answer - Questions to Ministers' papers from 16th and 17th October 2007.

 

Companies Office: Copies of 'Certificates of Incorporation' for Rodney Securities Limited and United Gold Limited.

 

Bibliography For 'Other Examples' Section

 

Stuff.co.nz: Michael Gibson article from 14th August 2008

 

The Marlborough Express: Michael Gibson articles from the 25th November 2009; and 25th January 2010.

 

New Zealand Herald: Peter Freedom articles from 18th June, 19th and 22nd November 2011. Colin Diedrichs articles from 5th November 2011; and 15th February and 22nd March 2012.