Wage subsidy cases in the courts

MSD is committed to pursuing criminal and civil prosecutions to recover wage subsidy funds where necessary.

We have a pipeline of wage subsidy cases that are currently before the courts. Here are the cases we have taken through the courts to sentencing in recent months.

Dishonest wage subsidy application leads to community detention

Yasmin Patten - 29 August 2023

A woman has been sentenced to three months’ community detention for fraudulently claiming about $7000 in COVID-19 wage subsidies.

Yasmin Rose Patten appeared for sentencing in the Tauranga District Court on 29 August 2023 having admitted one charge of dishonestly using a document in connection with the COVID-19 Wage Subsidy Scheme.

On 6 April 2020, Patten submitted a fraudulent wage subsidy application claiming she was working as a sole trader when she was not. The application was successful, and she was paid $7,029.60.

After receiving the funds, Patten made several high-value purchases, including on a $3000 money card from The Warehouse and $2000 spent at a shopping centre in Tauranga.

Judge Christina Cook said Patten needed to be held accountable for her offending given the breach of trust involved.

Patten was sentenced to three months’ community detention, six months’ supervision and ordered to pay $7,029.60 reparation.

Community detention for $85k wage subsidy fraud

Sarah Hale - 1 August 2023

An Auckland woman has been sentenced community detention for receiving almost $85,000 in wage subsidy payments she was not entitled to.

Sarah Leigh Danielle Hale appeared in the Manukau District Court for sentencing on 6 July 2023 having admitted one charge of receiving and one charge of dishonestly using a document in connection with the COVID-19 Wage Subsidy Scheme.

On 9 April 2020, Hale fraudulently claimed that she was self-employed on a wage subsidy application in her own name. Between 8 and 17 May 2020, MSD also received four fraudulent wage subsidy applications made in the name of a registered company that supplied Hale’s bank account details.

In total, Hale received $84,355.20 of wage subsidy payments that she knew she should not have. All the funds were subsequently spent or withdrawn in cash.

When interviewed by an MSD investigator, Hale provided a copy of Facebook messenger conversations with a friend that showed she knew what she was doing was wrong, and that she was not entitled to the funds.

Hale was sentenced to six months’ community detention and 12 months’ supervision.

Fake employees used in wage subsidy fraud

Te Rito Athrenos-Wise and Abbey Raroa - 1 August 2023

Two people have been sentenced for wage subsidy fraud that involved listing fake employees on the application forms.

Abbey Raroa and Te Rangihaeta Te Rito Athrenos-Wise both appeared in the Auckland District Court on 14 August 2023 for sentencing on two representative charges of dishonestly taking or using a document and one charge of receiving, relating to the COVID-19 Wage Subsidy Scheme. Athrenos-Wise is also known as Te Rito Henry Miki and Teri.

Between 14 April 2020 and 6 May 2020, Athrenos-Wise dishonestly submitted four wage subsidy applications on behalf of two companies totalling $67,536.40. Raroa was the sole director and shareholder of one of these.

Neither company was eligible for the wage subsidy because they were not operating prior to the applications being submitted, and none of the people listed in the applications were actual employees.

Raroa received the wage subsidy funds, spending some on day-to-day living expenses, alcohol, and retail purchases, as well as transferring about $30,000 to her personal account.

Between 24 March 2020 and 19 May 2020, Athrenos-Wise made two further wage subsidy applications totalling $85,725.60. Both were declined without payment.

When interviewed by MSD, Raroa admitted she knew the company she was the director of was not entitled to the wage subsidy and said she didn’t question why such large sums of money had been paid into its bank account. Athrenos-Wise declined to make a statement.

Judge Debra Bell sentenced Athrenos-Wise to 22 months’ imprisonment, cumulative on a sentence currently being served for other offences. Raroa was sentenced to six months’ community detention.

Jail for almost $200,000 wage subsidy fraud

Nathan Downey - 1 August 2023

A man has been sentenced to 20.5 months in prison for defrauding taxpayers to the tune of almost $200,000 in COVID-19 wage subsidies.

Nathan Peter Irvie Downey appeared for sentencing in the Manukau District Court on 25 August 2023 having admitted 13 charges of dishonestly taking or using a document.

Between 23 March and 24 August 2020, Downey submitted 19 fraudulent wage subsidy applications for Protective Systems Limited (PSL). At the time, he was the sole director and shareholder of the company, which uses contractors to provide painting and fireproofing services.

Thirteen of the 19 applications were successful, totalling $196,076.

Several people were named as employees of PSL on the applications, including Downey. However, subsequent checks by MSD found that PSL had no employees and was not a registered employer. It also transpired that some of the people named in the applications did not exist.

The company’s bank statements showed it paid $74,363.73 to contractors during the period Downey received the wage subsidy funds, and about $17,896.15 of that went to his personal bank account. The company was generating varying degrees of income during this period.

Downey spent the remaining $121,712.27 on company and personal use, including online gambling, adult entertainment clubs, and fast food.

Downey made several other unsuccessful wage subsidy applications totalling $66,781.20. Between March and June 2020, he was also receiving the wage subsidy as a full-time employee of a company run by his mother.

Judge Mina Wharepouri noted that the offending involved a high level of planning and premeditation, with Downey taking “whole hog advantage” of the system.

The offending was “more exploitative” than some other types of fraud given the Wage Subsidy Scheme was intended to address a national emergency, the Judge said.

Downey was sentenced to 20.5 months’ imprisonment.

He has filed an appeal against his sentence, which will be heard in the High Court at Auckland on 15 September 2023.

Jail sentence for “calculated” wage subsidy abuse

Richard Blackburn – 10 May 2023

A Lower Hutt man has been sentenced for what a Judge has described as premeditated, calculated, and prolonged abuse of the COVID-19 Wage Subsidy Scheme.

Richard James Blackburn, 39, appeared in the Hutt Valley District Court on 10 May 2023 for sentencing on four charges of obtaining by deception and six charges of dishonestly using a document in connection with the wage subsidy.

Over a 17-month period from March 2020 until August 2021, Blackburn made 10 dishonest applications. Some were made on behalf of a company, using the names of people who were not employed by him, while others listed Blackburn as being a sole trader when he was not.

Four of the false applications were approved and he received $89,041.60. He was also unsuccessful in trying to claim a further $25,823.

Bank records indicate the money he received was spent on day-to-day living costs. A significant amount was withdrawn in cash and could not be traced.

Judge Stephen Harrop described Blackburn’s offending as premeditated and repeated, with “a degree of sophistication”.

“This was not some one-off, spur-of-the-moment lapse where, under some pressure of one kind or another, or perceived pressure, you decided to do something dishonest. This was deliberate, calculated and it went on for a long time,” the Judge said.

“These things are not easy to detect and the whole community suffers when someone offends in this way because, obviously, the money could and should have been used for other very deserving purposes.”

Blackburn was given a 12-month prison sentence and ordered to pay $10,000 reparation.

Dead person’s name used in failed wage subsidy claim

Michael Mckenzie and Alicea McKenzie – 10 May 2023

A man received home detention for a wage subsidy fraud that involved using a deceased person’s name to apply.

Michael Joseph Mckenzie, 39, appeared in the Tauranga District Court on 10 May 2023 for sentencing on seven charges of dishonestly using a document. He appeared alongside his partner at the time, Alicea Mae McKenzie, 38, who had also pleaded guilty to one of those charges.

Between 14 and 15 April 2020, they helped each other make two dishonest wage subsidy applications that saw $29,488.80 paid into Mr Mckenzie’s bank account.

Mr Mckenzie went on to submit four more dishonest wage subsidy applications that netted a further $23,918.40, taking the total funds received to $53,407.20.

He then made 41 applications that were declined, including two in the name of someone who had passed away. Had those 41 applications been successful, he would have received $252,917.60.

Judge Melinda Mason said Mr Mckenzie took advantage of a situation where the country was really trying to band together.

“This was a scheme that was actually providing for us all really at a time when the country was facing difficulty, and everyone expected everyone to act in a trustworthy way.”

Mr Mckenzie was sentenced to 11 months’ home detention and ordered to pay $38,662.80 reparation. Ms McKenzie was sentenced to three months’ community detention and ordered to pay $14,744.40 reparation.

Home detention for wage subsidy fraud

Logan Cochrane – 8 May 2023

A Hawera man has been sentenced to home detention for fraudulently claiming more than $50,000 in wage subsidy funds.

Logan James Cochrane appeared in the Hawera District Court on 14 November 2022 for sentencing on two charges of dishonestly using a document in connection with the COVID-19 Wage Subsidy Scheme and COVID-19 Leave Support Scheme.

Between 27 March 2020 and 29 September 2020, Cochrane dishonestly submitted 34 applications to the Ministry of Social Development for wage subsidy and leave support payments.

The dishonest applications were all made using Cochrane’s personal bank account number and the details of a Taranaki company, without its authority.

He received a total of $50,378.80 for ten of these applications. The other 24, totalling $108,700.80, were all declined without payment.

Judge Tony Greig said a pre-sentence report showed Cochrane was gambling and using methamphetamine at the time, which explained his actions.

“It is said that you are disappointed in yourself that you resorted to dishonesty to fund your lifestyle.”

Cochrane was initially sentenced to six months’ home detention and ordered to repay $14,000 of the wage subsidy funds he received within 28 days. However, after failing to pay that reparation, he was resentenced and his home detention was increased to seven and a half months.

Home detention for wage subsidy “abuse of trust”

Shannelle Hohipa-Kahuroa – 5 April 2023

A Gisborne woman has been sentenced to home detention for fraudulently obtaining more than $63,000 in wage subsidy funds.

Shannelle Jan Oraina Hohipa-Kahuroa appeared for sentencing in the Gisborne District Court on 5 April 2023 having admitted three charges of dishonestly using a document in connection with the COVID-19 Wage Subsidy Scheme.

Between 24 April 2020 and 20 August 2021, Hohipa-Kahuroa made eight applications to the Ministry of Social Development (MSD), seeking a total of $161,851.20 in wage subsidies.

Seven of the applications were in her own name. The other was in the name of a fruit-picking company that had been removed from the Companies Register in December 2019.

She was paid a total of $63,266.40 for two of the applications. The rest were declined.

MSD’s investigation established there was no evidence of the required revenue decline and none of the employees named were actual employees of either Hohipa-Kahuroa or the fruit-picking company at the time.

Hohipa-Kahuroa used most of the wage subsidy funds she received for her own personal use, including to pay off various personal debts and purchase a vehicle.

Judge Warren Cathcart said this sort of fraud had much wider ramifications for the community, given its potential to undermine confidence in the Wage Subsidy Scheme.

“The entire scheme rested heavily on the honesty of the applicants who were making the requests. Here you abused that trust for financial gain.”

She was sentenced to eight and a half months’ home detention and ordered to repay the outstanding wage subsidy funds.

“Fraud on all taxpayers” leads to home detention

William Cosgrove – 15 February 2023

An Auckland man who fraudulently obtained wage subsidy funds that he spent on fast food and gambling has been sentenced to 10 months’ home detention.

William James Cosgrove appeared for sentencing in the Auckland District Court on 15 February 2023 having admitted seven charges of dishonestly using a document in connection with the COVID-19 Wage Subsidy Scheme.

Between 17 April 2020 and 16 March 2021, Cosgrove submitted 21 dishonest wage subsidy applications to the Ministry of Social Development (MSD). Six of these applications were successful, totaling $28,029.60.

Cosgrove used the details of existing companies without their authority. None of the wage subsidies he received were ever paid to the employees listed on the applications.

He spent some of the funds at fast food outlets, service stations, on gambling websites, and a “considerable amount” at SkyCity.

Judge Kirsten Lummis said Cosgrove’s abuse of the wage subsidy had not only eroded trust in the scheme, but it was also “a fraud on all taxpayers”.

“The wage subsidy scheme was a lifeline for businesses and, as has been observed in other cases, this type of offending strikes at the heart of the community in crisis and warrants a stern response.”

Cosgrove was sentenced to 10 months’ home detention and ordered to pay $2000 in reparation.

First person sentenced for wage subsidy misuse

Saleem Abdul – 7 October 2022

An Auckland man has been convicted for wrongly receiving almost $19,000 in wage subsidy payments.

Saleem Abdul appeared in the Auckland District Court for sentencing on 7 October 2022, having admitted three charges of receiving payments that he was not entitled to through the COVID-19 Wage Subsidy Scheme. He was convicted and discharged.

Between 16 April and 7 July 2020, three applications that listed Abdul’s bank account, but not made in his name, were approved. A total of $18,745.60 was paid into this account.

Between 4 May 2020 and 22 January 2021, Abdul used the funds to buy furniture and whiteware, send remittances to his family in India, and pay off personal loans.

Ministry of Social Development (MSD) investigators subsequently contacted the people and businesses whose names were used on the applications. All confirmed they had no knowledge of them.

Abdul denied making the applications but accepted that he knew the payments were from MSD and he was not entitled to them. He has since repaid the money.