A company owned by a property investment guru who allegedly encouraged buyers to use fake names, work in packs to drive down prices and target desperate homeowners facing foreclosure is being prosecuted by the Commerce Commission.
The commission has filed High Court proceedings against Ronovation Limited for alleged price fixing in Auckland's residential real estate market.
The move follows a Herald investigation into property investment coach Ron Hoy Fong.
In 2017 the Weekend Herald revealed a tutoring video by Fong was being supplied free to members of the Auckland Property Investors Association (APIA). ad
It encouraged investors to look for the "seven Ds" - targeting deceased estates, desperate homeowners facing foreclosure, developers on the brink of bankruptcy, divorcees and "dummies" who didn't know the value of their home.
The video, used to promote Fong's Ronovationz company, also advised people to work in packs to drive down prices, and give vendors false names when making repeat offers.
"Some places are already a bargain," Fong told viewers in the video. "That's simply because the vendor's a dummy. He doesn't know what it's worth."
The Commerce Commission launched its own investigation after Labour's then consumer affairs spokesman Michael Wood lodged a formal complaint about Fong's tactics.
In a statement today it confirmed legal action had now been launched against the company.
"Ronovation (trading as Ronovationz) was set up in April 2009 and conducted business advising members on how to acquire and improve investment properties in Auckland. By March 2018, Ronovation had over 400 paid members.
"The Commission alleges that Ronovation developed rules in September 2011 to govern the conduct of members, including rules that prevented Ronovation members from competing for properties.
"The Commission alleges the rules, which applied between September 2011 and September 2018, amounted to cartel conduct."
The commission said in a statement that the Commerce Act banned price fixing and agreements that parties "would not compete at auctions or on tenders" - commonly known as "bid rigging".
"Bid rigging, or collusive tendering, occurs when there is an agreement among some or all of the bidders about who should win a tender or auction. Bid rigging is a form of cartel conduct and is prohibited."
The Commission and Ronovation had entered into a settlement to resolve the proceedings, and a penalty hearing would be scheduled in due course.
"As this case is before the court, the Commission cannot comment further at this time."
After the Herald revealed the contents of Fong's tutoring videos, businesses pulled sponsorship arrangements with the APIA in droves.
ANZ said it was "appalled" by the tactics being advocated, which did not align with the bank's core values.
APIA president Andrew Bruce issued a public apology "for any offence" the video may have caused and his organisation immediately withdrew it.
"Clearly we don't want to see people being taken advantage of. Clearly we don't condone that sort of behaviour.
"Now that we've actually seen what is in that material we'll stop that immediately and an email will be going out to our members."