Chinese middleman Lawrence Cheng jailed for fleecing $1.5m through bogus trade deal scam
A Chinese middleman from Doncaster concocted a series of bogus trade deals involving everyday grocery items to fuel his double life as a rogue business financier. He moved $16 million in just three years, with deals worth hundreds of thousands of dollars each.
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A Chinese businessman who concocted a bogus $16 million trade deal scam involving A2 milk, bread and vitamins has been jailed.
Lawrence Cheng, 56, was sentenced in the County Court on May 19 to a minimum 18-months’ jail after pleading guilty to three charges of obtaining a financial advantage by deception.
Cheng committed his fraud while a director of CDIG Australia Co Pty Ltd – a subsidiary of China Dalian International Cooperation – between July 2010 and June 2013.
Cheng, from Doncaster, set up fake trade deals between Australian companies Matthews-Shiloh Proprietary Limited, Natural Health and Prestige Proprietary Limited, the court heard.
Cheng used the fake deals to secure funds from a $6 million Bank of China line of credit controlled by his “Chinese superiors” at the parent company.
The court was told Cheng placed bogus recurring orders to purchase A2 milk from Prestige, and bread from Natural Health, which was then onsold to Matthews-Shiloh.
The deals were worth $117,000 a pop and occurred dozens of times.
Cheng also set up bogus vitamin company “Fusion” as a front for scam vitamin deals.
In reality, Cheng was acting as a rogue business financier lending money to Matthews-Shiloh and collecting on the interest.
The fraudster swindled $16 million over three years but paid most of it back, so he was only charged with stealing $1,512,444.48, the court heard.
In July 2012, officers from the Chinese parent company became suspicious and an investigation was launched.
Company officials travelled to Australia in early-2013 for a meeting where it was revealed Cheng was a director of Matthews-Shiloh.
Police interviewed Cheng in April 2014 but he wasn’t charged until mid-2017.
The court heard Cheng ran Oriental Gourmet – a former Chinese restaurant business which also imported computers.
Cheng – who became an Australian citizen in 1991 – lost the family home due to his wife’s heavy gambling losses at Crown Casino.
He now volunteers with Manningham Council, and is involved in the Manningham Neighbourhood Watch program.
Judge Michael O’Connell said Cheng’s “deceptive arrangements” were “sophisticated”.
“This sort of offending is difficult to detect, particularly when such elaborate misrepresentations are made,” he said.
“It was said there was an opportunity to consider the dishonesty employed at the time you engaged in each transaction, yet you persisted.
“In my view, the total of the financial advantage obtained … viewed against a background of unauthorised use of millions of dollars of company funds constitutes conduct which must be deterred and roundly denounced.”
Cheng was jailed for a maximum three years.
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