Police swoop on alleged $150m Sydney tobacco syndicate

Four men have been arrested and charged over their alleged involvement in what police say is a sophisticated money laundering syndicate accused of washing more than $150 million linked to the lucrative illicit tobacco trade with the help of foreign university students.

Investigators from the Australian Federal Police, NSW Police, the Australian Border Force and the financial crimes watchdog, the Australian Transaction Reports and Analysis Centre, swooped on more than a dozen homes and storage units across Sydney on Monday, seizing 10 tonnes of illicit tobacco, more than $200,000 in cash and a money counting machine.

Police will allege the syndicate has links to the importation and distribution of illicit tobacco and had been laundering ill-gotten gains for several organised crime groups. The AFP and NSW Police jointly established Operation Avarus-Mustang, targeting the syndicate and the groups it was allegedly laundering money for, in May this year.

AFP Detective Superintendent Peter Fogarty said the syndicate was believed to have been operating for at least two years and was “crime agnostic”, allegedly laundering money for criminal groups earning income from the drug trade, commissioned acts of violence and theft.

On Monday morning, Haihao He, who police allege is a senior member of the syndicate, was arrested at his Dundas Valley home and charged with three counts of dealing with the proceeds of crime worth more than $1 million. Police will allege the 38-year-old laundered $23 million, alleged to be the proceeds of crime, for the syndicate through bank accounts linked to fraudulent businesses.

Senior members of the syndicate allegedly recruited people – known as “straw directors” – to register the businesses and open the accounts, which police allege syndicate members then took control of to receive large amounts of cash into them.

The cash was allegedly moved through a series of accounts used to launder the funds, which were transferred into overseas accounts before being redirected back to local bank accounts linked to foreign companies to appear as legitimate business payments. He is accused of managing several of the “straw directors” recruited by the syndicate. He was refused police bail to face court on Tuesday.

Police allege the financial records of businesses linked to the syndicate show little or no legitimate business expenses, including rental, insurance or tax payments. Several bank accounts linked to the syndicate have been frozen and will probably be restrained as the proceeds of crime. The syndicate had paid university students, likely including foreign nationals, to act as the company directors, Fogarty said.

During a bail application on Tuesday, prosecutor Devesh Gopal said He posed an “unacceptable risk” of fleeing to another country, including China, where he is a citizen. He is also an Australian citizen and has been living in Australia for 17 years, the court heard.

“There is an avenue for him to flee to another jurisdiction and a jurisdiction in which there is no real prospect of him being extradited from,” Gopal told the court.

Gopal said He had “criminal associations” and access to funds that would help him flee the country. He had been receiving Centrelink payments since the “collapse” of his company, his barrister, Anthony Parsons, told the court.

Parsons said his client had used the proceeds of the sale of two homes in Sydney to fund a gambling addiction. He’s wife and four children, aged between eight and 12, as well as a mortgage on the home he was arrested in reduced his risk of fleeing, Parsons said.

Magistrate Daniel Covington refused He bail to appear in Downing Centre Local Court on February 4.

One of He’s fellow syndicate members, accused of laundering more than $7.8 million alleged to be the proceeds of crime, was arrested on November 14 and charged with dealing with proceeds of crime worth more than $1 million.

The 29-year-old man was also charged with a number of firearms offences after a revolver was allegedly found at a Merrylands home along with 15 rounds of ammunition, four mobile phones, bank cards and documents. He was refused bail at Parramatta Local Court and remanded in custody to reappear in the same court on January 23.

Two other syndicate members were charged with a raft of offences after raids on properties in Burwood, Auburn and Wentworth on Monday.

A 26-year-old man, Xudong Yao, was arrested in Burwood and charged with dealing with the proceeds of crime and failing to comply with a digital evidence order after police seized $108,000 in cash, more than a million illicit cigarettes, two kilograms of loose-leaf tobacco, a Rolex watch and electronic devices. Yao did not apply for bail in Burwood Local Court on Tuesday.

On the same day, police stopped a truck in Chester Hill allegedly carrying about a million illicit cigarettes. The seized cigarettes are worth more than $2.1 million on the street, police said. Police believe the cigarettes were destined for tobacconists selling the illegal products across Sydney.

The truck driver, Wucheng Su, 32, was charged with possessing more than 50 times the commercial quantity of illicit tobacco and dealing with the proceeds of crime. Su did not apply for bail in Bankstown Local Court on Tuesday and was remanded in custody to appear in court on December 17.

NSW Police organised crime squad commander Peter Faux said legislation introduced this year allowed detectives to “target organised crime entities that think that they can use illicit tobacco as a form of making proceeds of crime”.

“Tobacco has been an opportunity for the underworld to make money,” Faux said.

Under the new laws, an individual convicted of selling illicit tobacco faces a maximum penalty of seven years’ imprisonment or fines of up to $1.54 million.

“This should be a clear message to those who are involved in the illicit tobacco industry that it’s highly likely that there can be, and there will be, consequences,” Faux said.

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