Australian citizen Daniel Klaus unlawfully purchased 91 hectares of farmland in northern Hawke’s Bay for $4.5 million. He did the deal with assistance from a New Zealand citizen, Michael Newcomb.
Court documents indicate that Klaus, who held cryptocurrency he intended to convert into cash, tried to avoid the Act’s requirements by setting up a New Zealand-registered company and enlisting Newcomb as a local associate to help complete the purchase through a non-cash arrangement.
The arrangement was found to violate the Act’s “associate” provisions, which are designed to stop overseas investors from using local nominees or front persons to bypass consent requirements.
Following the purchase, the partnership broke down, and Newcomb left the company, transferring his entire shareholding to Klaus.
This resulted in Klaus holding direct ownership of sensitive land without the required consent, constituting a further breach of the Act. The property was subsequently sold to a New Zealand entity for $3.1 million.
Land Information New Zealand (LINZ) initiated an investigation after discovering the transactions. However, both men left New Zealand during the investigation.
LINZ subsequently pursued court action against them for breaches of the Overseas Investment Act in their absence.
“The Overseas Investment Act is designed to protect New Zealand’s sensitive land and ensure any overseas investment is in New Zealand’s interests,” LINZ compliance leader Susan Smith said.
“Mr Newcomb illegally acted as a frontperson for Mr Klaus, and by doing this, breached the Overseas Investment Act.”
The High Court ordered Klaus to pay a $350,000 civil penalty plus $15,000 in costs, while Newcomb was ordered to pay a $90,000 penalty and $15,000 in costs.
“The penalties imposed by the High Court are a clear reminder that attempts to evade the law will be pursued, even if individuals are no longer in New Zealand,” Smith said.
Both men remained overseas and did not appear before the court.