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Xiaoyu Lu looked like a wealthy businessman living the Kiwi dream.
The married father of three lived in a $ 1.7 million house near Auckland’s Half Moon Bay Marina, drove a $ 300,000 Mercedes and had a $ 160,000 Rayglass Legend boat parked on his lawn.
But on October 14, a few months after he celebrated his 40th birthday, the police knocked on Lu’s door.
The police allege that his business was laundering money derived from the drug trafficking of others and, in addition to acquiring expensive assets, they claim that he transferred 24 million dollars in cash to bank accounts he controlled in China.
Troels Sommerville / Things
Police allege that Xiaoyu Lu was observed having two meetings with convicted drug importer Preston Radford in the parking lot of the Bucklands Beach Yacht Club.
After the police raid on October 14, police arrested six people and seized more than $ 5 million in assets, including a $ 420,000 Lamborghini Huracan and six other luxury cars – three properties valued at least $ 3.3 million and Lu’s jackpot. Police also arrested a woman in her 30s, who has name suppression, and two of Lu’s associates, Leixiang Zhu and Yixuan Sun.
Lu told police that his income came from the sale of Bitcoin, his parents in China, and personal savings. The police have accused him of providing a financial service without being registered, 28 counts of money laundering and obtaining by deception. He has denied the charges and is awaiting trial.
All of the accused have pleaded not guilty and a trial date has not yet been set. Stuff understands that the police case against Lu and others is the result of Operation Brookings.
Georgia May Gilbertson / Stuff
Detective Superintendent Iain Chapman says the group allegedly laundered drug money.
Coming to attention
Operation Brookings was launched on January 15, 2020 after Lu came to the attention of police in August 2018 during an undercover investigation into a Christchurch-based methamphetamine import syndicate. Police allege that he was observed having two meetings with convicted drug importer Preston Radford and that both times he received $ 100,000 as payment for a Bitcoin transaction.
Police claim to have uncovered a sophisticated operation designed to allow Lu to transfer and conceal large amounts of criminal funds in the cryptocurrency Bitcoin for criminals involved in drug trafficking. Lu reportedly advertised his service through the localbitcoins.com platform. Police allege that he used a registered money services company to transfer about $ 24 million to bank accounts controlled by him in China.
The police case against Lu is that he also needed to launder his own earnings. Police claim he did this by buying expensive luxury cars and motorcycles, putting them under other names. The property was another avenue.
Police allege that Lu started trading Bitcoin in New Zealand under the profile name “nzshaun2015” in 2015. He advertised his services as: “Best deal in Auckland and New Zealand! Online Banking and Cash Deposit Contact Hours – Anytime. I can do anything you want. I would like to sell Bitcoins at a good price in New Zealand. “
His profile registered more than 3000 exchanges.
The houses and the cars
Police cataloged several luxury car and property purchases, often paid for in multiple small amounts to avoid reporting requirements.
In March 2018, Lu bought a property in Half Moon Bay for $ 1.7 million. Police claim the $ 100,000 deposit came from his mother’s bank account and the balance of a home loan of more than $ 1 million.
NZ POLICE
This Lamborghini Huracan, valued at about $ 420,000, was seized as part of Operation Brookings.
Police allege Lu falsely told the bank that he made $ 23,000 a month from a job in China. On April 24, 2018, Lu transferred $ 596,000 to settle the purchase of his mother’s bank account. The police claim that the funds in his mother’s bank account come from her money laundering activities.
Between September 17 and 20, 2018, Lu made 29 payments from various bank accounts to pay for a $ 420,000 Lamborghini. He used the same method to buy Mercedes Benz cars. One of the cars was in his mother’s name, although she did not have a valid New Zealand driver’s license, according to police.
One of the Mercedes Benz cars was purchased in September 2020 for $ 288,888 and Lu used it most days. Police allege that Lu registered the car in the name of a man who had previously been living in New Zealand on a visitor visa, but was not living in the country at the time.
During the search of his home in October, police say they found a safe on the floor in the office with around $ 200,000 in cash.
The clandestine meetings
Between June 18, 2019 and May 17, 2020, police allege that Lu had a series of meetings in Auckland in which he received large amounts of cash from a man. In some of the meetings, Lu received cash to pay for the Bitcoin transactions.
On May 26, 2020, Lu flew into Christchurch Airport with Zhu and rented a car to go to Auckland. The police were watching. They claim they saw Lu and Zhu meet a woman in the airport parking lot. She handed him a black shopping bag and immediately left the airport.
The next day, Lu and Zhu returned to Auckland and boarded a ferry at Picton. Police searched the rental car while on the ferry and found the black bag in the trunk. Inside the bag was about $ 100,000 in cash collected in bundles of $ 20 and $ 50 bills.
NZ POLICE
Seven luxury cars were seized as part of Operation Brookings.
Arrests
Police arrested six people during morning raids in Te Atatū, New Lynn and Half Moon Bay on October 14.
Zhu said he was Lu’s partner and traveled to Christchurch with him, but denied money laundering. Regarding the motorcycles, he said that he appropriated them because Lu did not have a motorcycle license.
Detective Superintendent Iain Chapman told a news conference that the arrests were the result of an ongoing investigation into money laundering by the Financial Crime Group.
The money came from drug trafficking and the alleged money laundering service had been disguised “within a semi-legitimate business,” Chapman said.
“To a large extent, the money was injected into financial networks within New Zealand, but we were seeing a significant amount of money sent overseas to China.”
Chapman said the action would send a “really clear message” to organized crime groups.
People who carry out this type of activity “are motivated by financial greed and have no concern about the crime that has generated the funds from which they benefit.
“These arrests serve as a warning to anyone involved in money laundering activities.”
NZ POLICE
The luxury vehicles were seized by police after a money laundering investigation in Auckland.
Lu’s attorney said she would not comment on the allegations, while Sun’s attorney said she “vigorously denies the allegations.”
“She is confident in the New Zealand jury trial system and looks forward to presenting her defense and clearing her name.”
Zhu declined to comment.
