Bank insiders involved in alleged $178m Ponzi scheme

The accused ringleaders of a large-scale fraud and money laundering scheme allegedly used stolen personal information to apply for home and business loans with the help of trusted industry insiders to defraud several major banks and financiers of $178 million over seven years.

Police allege that 38-year-old Bing “Michael” Li and 34-year-old Yizhe “Tony” He ran a major crime syndicate before they were arrested by Strike Force Myddleton detectives in sweeping raids across Sydney on Wednesday.

NSW Police’s financial crimes squad and the NSW Crime Commission launched Strike Force Myddleton last January to investigate the syndicate’s alleged targeting of automotive companies to purchase non-existent luxury cars. Police said the fraud extended beyond car financing to business and home loans to targeting several major financial institutions.

“The fraud since this time has extended,” Detective Superintendent Gordon Arbinja, commander of the financial crimes squad, said.

“The syndicate have branched out into other areas – mainly personal, business and home loan scams affecting financial institutions within NSW.”

The syndicate had been able to facilitate the alleged fraud, which police believe involved stolen or fake identities being used to lodge loan applications, with the help of trusted people working in banks and within the motor vehicle industry. The alleged frauds allowed the loans to be serviced for a “certain amount of time” before defaulting, Arbinja said.

“For all its complexity, this syndicate operated quite effectively and it was quite simple. It’s basically a Ponzi scheme,” Arbinja alleged.

Li, who police allege directed the activities of the syndicate, was arrested in Barangaroo and taken to Day Street police station. He was charged with 87 offences, including knowingly directing the activities of a criminal group, knowingly dealing with the proceeds of crime and dishonestly obtaining financial advantage by deception.

Li, who Arbinja said was living an “opulent lifestyle” in an $18 million Barangaroo penthouse apartment, was also charged with various firearms and drug offences. He was paying $37,000 a month in rent.

“We did ask one of the alleged offenders what they did for a living, and ... he told investigators that he was a professional gambler,” Arbinja said.

He was arrested in Seaforth and charged at Manly police station with 107 offences, including participating in a criminal group and contribute criminal activity, dishonestly obtaining financial advantage by deception, and knowingly dealing with the proceeds of crime.

Arbinja said the syndicate is believed to have been operating for seven years and had been operating 91 bank accounts that $178 million had moved through.

“We suspect that all these monies are the proceeds of crime,” Arbinja said.

Police had identified 53 fraudulent loan applications allegedly made using “fictitious or stolen” identities, Arbinja said. Sometimes the same identity was used more than once.

Arbinja said police believed there were a number of “insiders in various financial institutions across NSW” and that more arrests were expected to be made.

“We will identify more people. We will not hesitate, and we will charge people with these offences,” Arbinja said.

On Wednesday, officers executed 10 search warrants across Sydney, raiding properties in Barangaroo, Seaforth, North Ryde, Macquarie Park, Sylvania Waters, Camperdown, Mortdale, Haymarket, Martin Place and the CBD.

Police say they seized goods worth $4 million during the raids, including two Bentleys, a Ferrari 360, a number of luxury watches and cash in Australian and American dollars, Euros and Chinese yuan. A firearm, two tasers, body armour and a small quantity of prohibited drugs were also seized during the searches, police said. Police allege Li and He committed $16.9 million worth of fraud between them.

“What we’re alleging is that the two syndicate members that were arrested yesterday operated these accounts totalling $178 million,” Arbinja said.

The NSW Crime Commission, which previously froze $18 million worth of assets linked to the syndicate, froze a further $20 million worth of goods on Wednesday. Six other people allegedly involved in the syndicate have previously been arrested and remain before the courts.

Li was remanded in custody until Friday, when he will apply for bail in Downing Centre Local Court. He did not apply for bail in Manly Local Court and was remanded in custody until his next appearance at Downing Centre Local Court on September 23.

Investigations under Strike Force Myddleton are ongoing. Anyone with information about the syndicate is urged to contact Crime Stoppers on 1800 333 000.

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