Mysterious businessmen from Russia and Brunei are being chased by members of Auckland’s Iranian community over alleged misrepresentations that led to hundreds of thousands of dollars in losses.

In the High Court in Auckland last month, Arefi Hassan and six other Aucklanders secured freezing orders against accounts connected with Goldex International Services (GIS) and two individuals, the Brunei-based Haji Abd Rahman Awg Haji Damit and the Russian Demin Sergey Vladimirovich.

According to the judgment delivered by Judge Sarah Katz, the frozen New Zealand-based accounts are suspected to contain $430,000. Sunday Star-Times understands this figure represents only a small portion of the plaintiffs’s alleged losses.

Source: Court orders gold trader’s accounts frozen

New Zealand prides itself on being one of the easiest places to do business in the world. It is cheap and easy to visit the Companies Office website and complete the paperwork for a company, open a bank account and start trading within 2-3 days. Because of this, we are more likely to have startup businesses and self-employment as long as people are aware that the benefits of limited liability are easily accessible to anyone over the age of 18 and with proof of identity.

The flip side of easy access to the Companies Registry is that New Zealand is a sitting duck for people who want to take advantage of the ease of doing business for less than entrepreneurial reasons. While the people involved in this incident are yet to be convicted of a crime, it is not a vote of confidence that the High Court froze their assets.

What is disturbing is that Mr Hassan claims to have “lost everything” from his investment, including his house. This implies that in order to invest in this amazing entrepreneurial opportunity the house was used as security for borrowing and the proceeds of some loan paid to Goldex International Services.

Putting aside the inability of investors to make good decisions, this is obviously nuts.

A) You never borrow against your house for an investment property.

B) You never put all of your eggs in one basket.

C) You never do anything or sign anything until you have done due diligence on everyone and every entity involved.

D) You don’t invest in anything unless you are clearly knowledgeable about finance and due diligence.

It sucks to see the loose company registration rules getting abused by foreign nationals. But this is the price we pay for New Zealand’s “Wild West” approach to commercial law. In order to get the benefit of lots of startups, we pay the price of a few duds along the way. We even get to help Iran and North Korea get shit done!

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