How We Came to Immigrate
How and Why We Came to Immigrate, to Invest in a Forestry Trust, and to Start, Then Liquidate, a Business
Things do not change; we change.
- Henry David Thoreau
Note: If you arrived at this page because you're searching for information on how to immigrate to New Zealand, you might also want to visit Moving Down Under: How to Get In...
We first arrived in Auckland for a 30-day vacation on Thursday, 24 June 1993. We decided within 2 days that we might like to immigrate. We called an immigration agent in Auckland and explained our situation. He told us we qualified as business investment migrants. We talked it over for several more days. When we arrived in, and saw the beauty of, Wellington, we felt it was the place we most wanted to live. On 7 July 93, we filled out and lodged an immigration application with Mr Stephen Reidy, the local immigration specialist recommended by the Wellington Chamber of Commerce.
Before leaving Wellington, we rented a mail box at the Te Aro post office so we’d have a NZ address to use for forwarding mail from the US. We also gave Reidy a cheque for a down payment on a berth at Chaffers Marina for the boat we had decided to acquire. We’d recently received an offer of this boat in trade for California acreage we owned. Since a new marina was just being built in Wellington’s central business district, it seemed perfect for us to immigrate in the boat. Reidy said most Kiwis’ ancestors had come by boat. He forwarded our cheque to his friend Donald Best, chief executive of Lambton Harbour, and said he would arrange details.
We left NZ Thursday, 22 July 93, landing in Los Angeles. We drove from there to North Carolina. On 20 August 93, we assisted the movers who picked up our household goods from storage in Huntersville. The goods were to be stored for one month, then shipped to us in Wellington. From there, we drove to Comstock, Texas where we executed a trade for our home there as part of the purchase price of the boat. From there, we drove to San Francisco where we finished the purchase of Lady Fair, a 67-foot motor yacht.
We mailed our complete immigration application (all 120+ pages) to Cherry Hankin at the New Zealand Consulate’s office in Los Angeles on Friday, 10 Sept 1993. Her office received it the following Monday. However, she told us on the phone that it would be weeks before they’d have a chance to even check it for completeness. We couldn’t wait that long to depart and still be likely to miss the first hurricane of the season, so we stocked, stowed, and sailed on 10 October 1993, arriving in Whangarei on Thursday, 25 November 1993.
We had been in constant contact with Reidy during this time, except for the periods we were at sea. He surprised us when we finally got to Wellington: he met us with a tugboat shooting water cannons, a reporter, photographer, and a party.
It eventuated that, to avoid import duty, an immigrant must have owned his/her boat for a year. We discovered only after our arrival that, if we officially entered the country with the boat, we owed a considerable amount in taxes and customs duty. Reidy, knowledgeable of all laws and regulations pertaining to immigration, had not known that. At his suggestion, on 19 January 1994, we deposited our qualifying investment funds into what seemed to us the most secure of those he handled — the Flat Rock Forests Trust (FRFT). We were afraid we would be forced to leave NZ because we hadn’t enough money left for the taxes and duty. However, Reidy had told us that depositing our money even before we received residency would show our commitment and might enable him to secure an exemption for us. We invested our funds but we didn't get an exemption. At the time of our investment, the Trust had $13,390,935 in assets per Forme Consulting. (Four years later it was worthless, though we were told by Stephen Reidy in writing just after New Year's in 96 that the Trust was under AMP Trustee status and thus required AT ALL TIME to hold clear asset value of NZ$10 million. He said it had that.)
On 27 January 94, we formed our company, Loka Limited, though we were unable to do business until we actually received residency (almost 17 months later). We rented a storage locker in the Overseas Passenger Terminal (OPT) so we’d have a place to store our household goods, which had been stacked on the Customs dock for 2 months. Pengally’s delivered everything to the OPT Friday, 28 January 1994.
We also discovered that our berth’s pilings needed strengthening to accommodate a boat of our size and weight — for that the boat needed to be away from the dock for some time. Since we were unable to begin work until we got residency and couldn’t afford the duty and taxes due if we stayed, we spent several months in Fiji until our year was up. (We had little choice at that point.) We thought we could use the time to get to know NZ’s neighbours better.
We first departed from Wellington on Tuesday 22 March 1994, headed for Tonga. The following Saturday, we put in at Opua, forced back when we were 250 miles at sea by Tropical Cyclone Tomas, which was followed by Tropical Cyclone Usha. We arrived in Auckland on Tuesday, 29 March, and again left NZ from Auckland on Tuesday, 5 April.
Meanwhile, a man in Reidy’s office in Wellington collected and forwarded our mail to us while we were away. We briefly visited Tonga on the way to Fiji and then stopped over at Vanuatu on the way back to New Zealand. We intended to leave Vanuatu mid-September, but were unexpectedly delayed by severe mechanical difficulties on our boat. (We encountered endless problems during our months of cruising, partly because we hadn’t selected the boat with that action in mind.) We left Port Vila headed for New Zealand, two weeks late, on 3 October 1994. We arrived in Opua one week later. Due to a protracted period of high winds, we were unable to reach Wellington until November. There was no one waiting to greet our arrival this time.
We were dismayed to find our residency delayed again "while a policy was formulated" regarding Jeff’s chronic hepatitis C (a condition we had told Reidy about in our very first conversation and he had said it would cause no problem in immigrating). On 1 February 1995, we discovered our visas had expired — we had been focussing on getting residency and hadn’t realised the expiration date had passed. We applied for an extension the next day and were grateful when this extension was granted on Thursday, 9 February. (For more on getting this extension, see "What's Important Here?") Reidy then advised us to engage a different immigration specialist. Through the second specialist, we finally received residency on 7 June 1995, 2 years after we first applied. Only then could we legally work, and only then, we belatedly learned, did the 2-year qualifying period for our investment actually begin.
But no matter — all our troubles seemed over. My husband Jeff wasn’t offered a job right away (no degree, off work for 2 years, middle-aged, from another culture), so he started his own networking and systems integration consulting business. Not long afterward, he landed a contract to design and install one of the largest networks in NZ — for NZ Police. Our company grew to 5, then 10, then 15 people. We moved into larger premises — into what was then called Microsoft House, the building that until recently had been owned by Swansboro Holdings Limited (directors Reidy and Simcock); this was where the Trust Manager currently had their offices. (Swansboro had borrowed the money for the down payment from the New Zealand Development Trusts, the umbrella trust over Flat Rock.) Reidy became the chairman of the board of our company (he owned no stock and had no operational oversight or control other than that bequeathed by various Companies Acts).
We couldn’t quite afford a house, so we still lived on our boat, but it was berthed right in town, just outside Te Papa. You could see it from the windows of our office.
A few months later, the IT Director for NZ Police resigned. The INCIS project was already on a somewhat shaky foundation, so this provided an excuse for IBM and Police to stop everything and for each to blame the other for the mistakes made up to that point. Our peripheral (still under budget and on schedule) network installation was dragged to a halt as well. We made ends meet while we repositioned ourselves in the market, going into considerable personal debt in the process. Thank goodness our 2 years would be up soon and we could get our trust money back to underpin our business! Or so we had imagined at the time.
But something was going seriously wrong in the trust. Our investment was supposed to be low-risk, but seemed to be hæmorrhaging money. Not only had we not been receiving dividends (which we had planned to use to maintain the boat), but the unit price (asset value) had begun dropping precipitously - far more than we felt could be explained by any drop in log prices, or fluctuations in exchange rates. If we removed our money early, we’d have to top it up and reinvest it within 48 hours or else lose residency. Then, we’d have 2 weeks to leave the country in the boat. We didn’t have the funds to top it up, nor was the boat in shape to travel. The second immigration specialist and I each wrote to the Minister of Immigration [Max Bradford] asking if Jeff and I could terminate our qualifying period early, since our money had been on deposit longer than two years, our investment seemed to be grossly mismanaged, and was diminishing rapidly. The Minister said no.
We decided to investigate the reasons for the Trust’s large loss in asset value, and to try and identify and pursue any and all available remedies. We engaged legal assistance, forensic accountants, and a retired Trustee, over a period of 16 months in an attempt to force the Trustee and/or manager to make redress. As our case drew to completion, and just prior to initiating legal action against the trustee, the bankers for the Trust "pulled the plug". Countrywide, holding debentures over all of the Trusts assets, called in receivers. One of the receivers told me in a phone conversation that there would be no assets left for the unitholders. Newspapers printed articles about the trust’s financial woes and our bank read one such article. They pulled our company’s line-of-credit because it was secured by our forestry trust units. Suddenly, we were trading in insolvency, and forced to sell what we could of the company (annual turnover $3.5 million), and put what remained into liquidation.
We found jobs for most of our employees. We were unemployed for several months and unable to afford further legal counsel regarding our investigation of the Trust. I was cut off from legal assistance, unemployed, with time on my hands, so I thought I’d investigate the Trust myself. I went to the Companies Office and learned how to look up company documents. I went to Land Information New Zealand (LINZ) and learned how to look up title documents. I correlated the two files and compared the results to annual returns and minutes of unitholder meetings I had received through the past few years...
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For news articles on the Flat Rock Forests Trust, forestry, the Serious Fraud Office, one immigrant family's experiences, immigration
specialists, fraud, juries, logging, and more, check out the News Table of Contents. Or
you may wish to visit the Forestry Trust Table of Contents to read how a unit trust went
bust. Or the Topics Table of Contents which offers a different approach to lots
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