NZ News
Crown takes Mount Maunganui house, cash, Rolex, car after Hongxia May Chen hired illegal sex workers
Over the course of May Chen’s time as a madam, police believe she may have illegally employed as many as 150 women as sex workers and pulled in up to $1.8 million.
Chen operated brothels out of houses in Mount Maunganui and on Auckland’s Morningside Drive and Great North Rd as part of her escort business, Sun Entertainment.
But in mid-2021, Immigration New Zealand started getting tips the 38-year-old’s escorts weren’t working legally.
By the end of 2022, Hongxia (May) Chen had been sentenced to five months’ community detention for aiding and abetting women to breach a condition of their visa.
But that wasn’t the end of the matter.
Now, $1,117,000 worth of her assets have been forfeited to the Crown and in the process police have provided evidence to suggest her offending was greater than previously known.
It started with a tip about a brothel
In August 2021, as New Zealand was in lockdown, someone reported to police that a brothel was still operating out of the Mount Maunganui house, which Chen owned, despite the nationwide restrictions.
The house is a stone’s throw from retirement villages and sits on a main road that runs along the beachfront.
When investigators turned up, they discovered Chinese nationals working illegally as sex workers on expired temporary visas.
Immigration New Zealand had already, in May 2021, received information unlawful Chinese females were providing commercial sexual services in New Zealand and launched Operation Orion, which focused on Chen’s brothels.
It’s understood the women found in the Mount Maunganui brothel weren’t deported because of Covid-19 restrictions, but some months later one of them was detained after being found in a car with Chen in Alexandra.
The woman was discovered to have $11,000 in cash on her. Chen tried to claim the cash belonged to her and said she’d lent it to the woman.
Immigration New Zealand’s investigations continued, leading to search warrants in May 2022 at the Mount Maunganui address, as well as the house on Morningside Drive, Auckland, and Chen’s own residential address on Great North Rd.
All three addresses were working brothels with multiple internal rooms specifically used by workers to provide sexual services, and further unlawful Chinese women were found during those searches.
Judge says industry ‘already has issues with vulnerability’
Chen initially faced charges related to seven women but pleaded guilty and was sentenced on five charges, related to five women, of aiding and abetting a person to breach a condition of their visa.
Under the Prostitution Reform Act 2003, holders of temporary visas, or people unlawfully in New Zealand, may not provide commercial sexual services.
When spoken to by police, Chen claimed she had provided accommodation for women who could not afford it and admitted paying for and placing advertisements for those girls on an escorting site.
She also admitted supplying one of them condoms.
At sentencing in the Auckland District Court, Judge Kirsten Lummis noted an aggravating feature of the offending was that it hadn’t been a one-off and had taken place over the course of a year.
She also said it was an industry that “already has issues with vulnerability”.
Auckland District Court Judge Kirsten Lummis. Photo: Open Justice / Alex Burton / NZME
“This offending preys on further vulnerabilities in offering opportunities to women to stay here illegally,” Judge Lummis said.
However, she also took into account Chen’s lack of previous convictions in New Zealand and China.
Chen told the court she had been suffering a “high level of stress in her personal life at the time”, related to financial insecurity.
She reported being in dire need of income after her divorce.
“In the beginning, I worked for myself but … I wanted to help others have income.”
Judge Lummis sentenced her to five months’ community detention in November 2022.
Offending likely to have gone ‘beyond that proven by her convictions’
Now, her assets have been forfeited to the Crown.
In a decision dated 5 September, High Court Justice David Johnstone approved a settlement between Chen and the Commissioner of Police for assets with a total estimated value of around $1,117,000 to be forfeited.
Justice David Johnstone, pictured at an unrelated hearing in the High Court at Auckland. Photo: Open Justice / Michael Craig / NZME
These included the Mount Maunganui house, around $145,000 in cash, a Rolex watch found in a safe deposit box in Auckland and a vehicle.
But initially, the commissioner had also sought what’s called a “profit forfeiture”.
The matter had been on its way to a defended hearing and the commissioner filed material that indicated Chen’s offending went “considerably beyond that proven by her convictions”.
While the charges Chen was sentenced on in 2022 related to a handful of illegal workers, “numerous affidavits” contained evidence alleging that between 2018 and 2022 she had employed up to “150 women on temporary visas as sex workers”.
This was supported by 150 distinct profiles shown on an escort advertising website, registered to Chen, as well as police analysis of bank accounts associated with Chen, her company Sun Entertainment and her ex-husband.
Financial records indicated receipt of around $1.8m between 2016 and 2023, which could be attributed to sex work.
Based on this, the commissioner initially sought a profit forfeiture of just over $2m.
This was reduced to $1.5m, as it was confined to a more limited time period and to account for her doing some of the sex work herself.
The judgment said the commissioner considered amending the profit forfeiture application to include funds allegedly being held in Chinese bank accounts but decided against it because of the delays it could cause and other potential complications.
However, the original profit forfeiture sought, and still in dispute, was scheduled for a defended hearing in November.
But before that could go ahead, a resolution was reached.
Chen consented to the already restrained assets being forfeited and police abandoned their claim of profit forfeiture.
The High Court judgment said “broadly, Ms Chen has left New Zealand and wants to put this matter behind her”.
In being prepared to formally consent to the restrained property being subject to a forfeiture order, she “assists the commissioner to avoid the further cost of proceeding to judgment”, the judgment says.
Recognising this, the commissioner was prepared to forego the “limited prospect” of any further recovery.
“Consistency with the act’s purposes and the overall interests of justice requires that the settlement achieves a satisfactory balance between the objectives of potential profit elimination (and deterrence) and prompt and cost-effective resolution,” the judgment said.
Justice Johnstone accepted the parties’ submission that the settlement was consistent with this and approved it.
Forfeiture orders were made by consent for the Mount Maunganui property, proceeds of the sale of a 2016 Toyota Vellfire station wagon, around $145,000 in cash and the Rolex watch.
Immigration New Zealand welcomed the forfeiture of more than $1m in assets, saying it marked the final step of a “complex and sustained operation” into Chen and her company.
“This has been a significant and sustained operation involving multiple agencies over several years,” said Steve Watson, general manager immigration compliance and investigations.
“We do not tolerate this kind of offending. It undermines the integrity of our immigration system and puts vulnerable people at risk.”
Detective Senior Sergeant Stuart McGowan, of New Zealand Police’s asset recovery unit, said it was another “good example of an across-Government approach – Immigration and police – working together to hold offenders to account”.
“It is equally rewarding to have secured convictions and the subsequent seizure of illegally purchased assets from someone who preyed on and scammed vulnerable people,” he said.
Source: RNZ and NZ Herald
Latest News
Opportunities to mitigate multi-million-dollar RNZ budget blowout likely missed – experts
Multiple opportunities to identify and mitigate a multi-million-dollar budget blowout at RNZ appear have been missed, according to the former executive director at Audit New Zealand.
The public broadcaster on Monday revealed a near $12 million shock financial loss after a litany of financial blunders, which will now lead to sweeping job cuts.
The $11.8m loss is more than 25 times the $470,000 RNZ had expected to lose over the year to June.
CEO Paul Thompson took responsibility for the result, and said internal reports gave an inaccurate picture of the finances, meaning the scale of the loss only became clear in October.
RNZ’s former chief financial officer Hilary Parker resigned unexpectedly in early October.
The board said it would commission an independent review into what went wrong.
Independent contractor Stephen Walker, who left the Audit Office earlier this year, said the size of the loss was surprising, as was the length of time it took to identify it – months after the financial year ended.
Supplied / OAG
“Probably more of a concern is that they had seemingly been unaware that they were running up a significant deficit until they were in the preparation stage of their annual report in October.”
Walker said public entities typically produced monthly financial reports.
An interim audit also took place before the end of the financial year, he said, but if the organisation hadn’t identified significant losses at that stage, the auditor could also be in the dark.
“It seems that there’s a real weakness in forecasting and budgeting that’s occurred here and that the monthly accounts, when they’re produced, either haven’t identified these significant variances against budget or the magnitude of them really hasn’t come to light until right towards the end of the financial year,” Walker said.
“And really at that point, there’s no opportunity for the chief executive, the leadership team to take, and the board to take, any corrective action because the year has effectively been completed.”
Walker said the “significant miss” was difficult to account for given it was more than 10 percent of RNZ’s total funding.
He said based on RNZ’s annual report, financial complexity didn’t appear to be a factor.
“This $11.8m loss isn’t made up of one particular item … it seems to have been contributed to by a number of separate expense lines running over budget. So I don’t think it’s necessarily to do with complexity.”
Among the errors, RNZ wrongly counted $2m from land sales as income in its budget. Staff costs also came in $3.2m over budget, including $1.4m in redundancy payments.
Professor at Auckland University’s business school Norman Wong said based on media reports the issues identified were “significant and troubling”.
Supplied / University of Auckland
“But recognising the sale of land as income in their budget is a basic error that one would have expected to have been caught and corrected well before it got to this point.”
With funding reductions at RNZ over the past two years, Walker expected greater scrutiny of financial results.
“Virtually every public entity has had their annual budget reduced. And so you would expect … the leadership team on a monthly basis and board – I’m not sure how frequently the board will consider the information – but you would expect them to be interrogating the results on a regular basis throughout the year,” he said.
Walker said initiating an independent review was the correct course of action and that he’d want to understand what information the leadership team and the board were regularly receiving.
He said he’d “love to say” surprising financial results were rare, but conceded they occured on a semi-frequent basis during his time leading the Audit Office.
“The benefit of independent scrutiny by the Audit Office – and the auditors providing that support to the Auditor General – [is] that the reporting is fairly presented at the end of the year, whether it’s good, bad or ugly.”
rnz
Police say person who fired gun at officers still at large
New Zealand sides named for RLWC finals
Parliamentary Service working on extra chairs and offices for increased number of MPs
-
Latest News2 months ago‘Chilling’: Business groups speak out against National’s supermarket break-up plan
-
NZ News2 months agoTom Phillips report: The missed opportunities to find the children
-
Politics2 months agoNational vows to try to split Pak’nSave and New World
-
Latest News2 months agoCars bearing Chinese police markings stir unease in Auckland
-
Fiji News2 months agoPlans to have new Constitution by Dec 24th 2026
-
NZ News2 months agoCop who stole $68,000 can now be named as champion Muay Thai fighter Haimona Tamati-Te Paki
-
Politics2 months agoMBIE confirms botched biometric projects costs blown out to $50.7 million
-
Latest News2 months agoFive Karangahape Road venues lose their liquor licences after police intervention