By Clare Sibthorpe
A Sydney woman allegedly laundered millions of dollars of illegal tobacco funds through fraudulent mortgages linked to an international crime ring.
The arrest of 36-year-old Xiaoli Xue on Thursday led police to the alleged discovery of $2.5 million worth of cigarettes, $28,000 worth of loose-leaf tobacco, more than $100,000 in cash, a luxury Mercedes GLC 300, an illegal gambling den and an unlicensed tattoo parlour.
Financial Crimes Squad detectives have charged 36-year-old Xiaoli Xue (left) over an alleged $7 million money laundering syndicate.Credit: NSW Police
In June 2024, financial crime detectives from NSW Police’s state crime command formed Strike Force Karawina to investigate the alleged laundering of illegal tobacco funds through property by an organised crime syndicate from South-East Asia.
The investigation allegedly discovered Xue laundered nearly $7 million through seven fraudulent mortgages since 2020. She was allegedly granted 10 loans at various banks through fraudulent documents that inflated her income.
Xue is accused of laundering the funds, the majority of which stemmed from the illegal tobacco trade, on behalf of the wider crime network through mortgage repayments.
At about 12pm Thursday, strike force detectives arrested Xue in Berala and took her to Auburn Police Station, where she was charged with 20 offences including dishonestly obtaining a financial advantage by deception, knowingly dealing with the proceeds of crime with intent to conceal and conveying tobacco products with the intent to defraud.
She was refused bail to appear at Burwood Local Court on Friday, where she was granted strict conditional bail.
Xue allegedly applied for and was granted 10 loans using fraudulent documentation since 2020.Credit: NSW Police
Following her arrest, police – with the help of the NSW Health Tobacco Control Unit and the Australian Border Force – raided three properties in Berala and Auburn.
They allegedly seized $2.5 million worth of cigarettes, $28,000 worth of loose-leaf tobacco, $104,465 cash and a Mercedes GLC 300 worth $110,000.
Police also allegedly found an illegal gambling den and unlicensed tattoo parlour linked to the criminal syndicate at the Auburn residence.
Xue was charged with 20 offences relating to the alleged syndicate.Credit: NSW Police
In opposing bail at Burwood Local Court, the police prosecutor expressed concern Xue could flee the county due to her alleged international ties through illegal tobacco importation.
He said a co-accused had not yet been located and further raids were expected.
But her lawyer John Kahn argued she had strong community ties as a mother whose husband, son and parents lived in Sydney, that she was a primary carer of her son, that she had no criminal record and she had been in Australia since 2007.
“She has no reason to flee to another jurisdiction - this is her home,” he told the court, adding the police facts were “quite complicated and lengthy” and much of them did not relate to his client.
“In my submission, this is very much an overcharging of charges against my client,” he said.
“Yes, the allegation is clear that there were false documents filed, but what is the proceeds of crime?”
Khan said the only relevant facts to the proceeds of crime charges related to $37,000 cash and $300 worth of tobacco and vapes allegedly found at her house, adding the more than $2 million worth of tobacco and most of the cash was found at other residences.
Magistrate Jennifer Price granted Xue bail on a $100,000 surety and strict conditions, including daily reporting to police, not speaking to other witnesses, surrendering her passports, not going near international departure points, being of good behaviour, having only one mobile phone and not using any encrypted platforms.
“The prosecution appears to have some strength but the devil will be in the detail for some of the charges,” Price said.
“There is no evidence to suggest she would not be compliant with her bail conditions”.
Commander of the Financial Crimes Squad, Detective Superintendent Gordon Arbinja, said the arrest disrupted a sophisticated money laundering operation.
“The alleged use of fraudulent mortgages to launder nearly $7 million is clear indication of the lengths to which these criminal enterprises will go to conceal their illegal activities,” Arbinja said.
“This arrest sends a strong message that we will not tolerate criminals who undermine the integrity of our financial system.”
Executive Director of Legal and Confiscations at the NSW Crime Commission, Nicole Lawless, said Xue’s assets had been frozen, and civil proceedings launched in the Supreme Court will result in an order for the alleged proceeds of crime to be returned to the state if successful.
Xue will next face court on April 30.