Illegally buying sensitive land and attempting to evade the Overseas Investment Act has resulted in combined penalties of $440,000 for two businessmen.
Australian citizen Daniel Klaus illegally bought 91 hectares of farmland in northern Hawke’s Bay for $4.5million with the assistance of New Zealander Michael (Mike) Newcomb. This is sensitive land and, due to the size and nature of the property, consent under the Overseas Investment Act was required for an Australian citizen to purchase it.
Mr Klaus held cryptocurrency he was seeking to convert into cash. He attempted to evade the requirements of the Overseas Investment Act through an arrangement with New Zealand citizen Mr Newcomb to form a New Zealand company (Let’s Go Property Investments Ltd.) and purchase the land via a non-cash platform using cryptocurrency. This was illegal under the Overseas Investment Act’s ‘Associate’ provisions.
After purchasing the land, the arrangement soured and Mr Newcomb pulled out of the company transferring all the shares to Mr Klaus. This transaction and the direct ownership of sensitive land by an overseas person without consent was also illegal.
Mr Klaus’s company subsequently sold the land to a New Zealand entity for $3.1 million.
Land Information New Zealand’s Compliance Unit became aware of the transactions and commenced an investigation. Both Mr Klaus and Mr Newcomb left New Zealand during the investigation.
LINZ took Court action against both men in-absentia for breaches of the Overseas Investment Act by illegally purchasing sensitive land without consent and attempting to evade the Overseas Investment Act.
Land Information New Zealand’s Leader, Compliance Susan Smith says, “The Overseas Investment Act is designed to protect New Zealand’s sensitive land and ensure any overseas investment will be in New Zealand’s interests.”
The Overseas Investment Act has strict ‘Associate’ provisions that make it illegal for an overseas investor to try and conceal their identity and evade consent requirements by having a New Zealand citizen make investments on their behalf.
“Mr Newcomb illegally acted as a front-person for Mr Klaus and by doing this breached the Overseas Investment Act”.
Both men remain outside New Zealand and did not appear in Court during the civil proceedings.
“Even if an overseas investor flees New Zealand, we will still take action against them in-absentia.”
The penalties imposed by the High Court are:
- Daniel Klaus must pay a civil pecuniary penalty of $350,000 and LINZ costs of $15,000.
- Michael Newcomb must pay a civil pecuniary penalty of $90,000 and LINZ costs of $15,000.
The High Court’s judgment is available at:
Enforcement action taken
Media contact
Email: media@linz.govt.nz