How did an American fraudster get an entrepreneur visa?

With debt in the vicinity of $30m, a history with the FBI and no investment in New Zealand, how did an American fraudster get an entrepreneur work visa? Nadine Roberts reports.

Colin Rath enjoyed the high life. Boats, racehorses, cars… and the illusion of wealth – especially in the New York playground he had made his property developing home. ​

But scratch a bit deeper, and the glitzy lifestyle and the multi-million dollar apartment buildings he claimed he owned, were a mirage.

“I don’t know how New Zealand let him in…” James* said (not his real name), a United States business associate who has known Rath all his life. “Why didn’t they do a Google search?” ​

American Alan Swimmer is equally perplexed. His lending firm, National Maritime Vessel Finance, is one of many banks and credit card companies Rath has not paid.

That was before he’d fraudulently filled in the immigration forms which would allow him to hide at the bottom of the world and go on to defraud the New Zealand tax system of $1.3 million, not to mention sink a woman’s dreams of financial security in retirement. ​

Myth built on lies

A simple Google search of Rath, his wife Pamela and his company Terrapin Industries Ltd explains why he was keen to leave the United States in 2014 on a luxury yacht.

Rath presented this as being a dream world trip. But the New York Supreme Court doesn’t lie.

Within half an hour Stuff could pull any number of court documents, all dated well before Rath applied to Immigration New Zealand (INZ), that outlined huge debts to multiple banks and credit companies.

Pamela was also listed on many of those defaulted loans.

By the time the family left the United States in 2014, they had racked up close to $30 million NZ in debt, according to James, and Rath had burnt all his friends and family. ​

After University, Rath had an unsuccessful foray into the Chicago trading world in the 90s, but Stuff’s investigations revealed he had to be bailed out of his debts by family and was forced to leave the city.

In a New York Times article in 2007 Pamela said he had moved to Connecticut to work in the family run direct-mail business in order to pay off his debt.

Later they would move to Manhattan to develop apartments on West 15th St – in a highly desirable area – purchasing one in 1996 and the other in 2003. Both were an abject disaster and the Rath’s were hugely unpopular in the neighbourhood when they announced they were intending on demolishing one of the historical houses.

The couple lost both houses to bank foreclosures.

In another New York Times article in 2015, after Rath self-published a book on the experience, he said he walked away in 2010 with nothing “but 27 debtors clamouring for absent millions”.

Always a self-promoter, Rath blamed it on being an outsider in New York and the failure of financial markets.

None of it was true.

Rath had burned through money, living it up in New York. Described as arrogant and egotistical by several acquaintances Stuff talked to, Rath took out loan after loan and online records show he transferred them between he, his wife and his company, in a confusing trail.

He also cleaned out his father, a successful businessman, who handed over $8m and was left with no home, no business and no retirement funds.

Stuff understands Rath’s father had to be looked after by a close family member in the last five years of his life, due to being destitute.

With zero credit facilities available, Rath embarked on a world trip and took out a $445,000 loan to buy the Persevere, a luxury yacht, which cost $682,000. It’s unclear where the rest of the funds came from.

Always keen to promote his lavish lifestyle, Rath wrote blogs for a yachting magazine, documenting the family’s journey.

“This is our trip of a lifetime – a life-change – and there was no going back,” he wrote in 2015. “We want to see the world with our kids while they are still young enough to enjoy it with us. Finally, we would have true independence with an open option to move anywhere we end up.”

All of it was online – his debts, his failed business and his global lifestyle.

“I just don’t understand New Zealand immigration,” James says.

Arrival in New Zealand

Rath, Pamela and his three children arrived in New Zealand on the Persevere in late 2015 and he began the process of getting an Entrepreneur Work Visa.

The visa encompasses a one year start-up stage in which the holder is expected to establish and commence the operation of an agreed business. It is granted under a points system.

Holders also need to invest an agreed amount of money within that first year. The more money you invest, the more points you can get.

If conditions are met, the visa is extended for two more years. Holders can then apply for residence.

Rath hired licensed immigration advisers Malcolm Pacific Immigration.

Under the Official Information Act, Stuff received 600 pages outlining INZ’s handling of Rath’s visa from 2017, including interactions with Malcolm Pacific Immigration. A further 1800 pages were withheld.

Rath’s application was littered with untruths. He denied ever being involved in business fraud or financial impropriety, business failure or bankruptcy.

He supplied documents through his licensed immigration advisor that supported his supposed wealth, though Stuff has only been allowed to view INZs emails stating he was a wealthy man and not the financial figures he presented to them. ​

He would eventually plead guilty to forging 14 documents to gain the visa, once the law had caught up on him.

Paperwork shows no further checks were done on what was represented as Rath’s US background, except for a mandatory Canadian and FBI police check Rath had to supply as a citizen of both countries.

The FBI check did not come back clean. Rath was charged, but details of why have been withheld.

That should have been enough for INZ to take a closer look. Instead, Rath explained it away, saying it was a historical charge from thirty years ago and as he had not been imprisoned, he didn’t deem it serious.

INZ looked past it. Under pressure from Rath’s immigration advisor, who told them he needed the visa in order to get Overseas Investment Commission (OIC) approval to purchase a vineyard in Waipara, Canterbury for $1.2m, Rath was given the green light. ​

Rath sold them and the OIC a vision, telling them he had plans to double turnover by opening a restaurant and café and said he had a mortgage to buy the property.

Rath said he had $500,000 offshore he would invest in the start-up phase of the visa. But by the end of year one that money hadn’t appeared – because Rath didn’t have it. ​

In May 2018 he explained there’d been a hold-up depositing the money because his yacht hadn’t sold, so INZ granted him a seven-month extension on the start-up phase.

He didn’t tell INZ he’d defaulted on the yacht loan and was broke. ​

Rath then tried to sell his yacht in Australia through DBY boat sales in Newport and found a buyer in Kiwi Suzie Bosher.

When Rath asked DBY boat sales to sell the yacht on his behalf, he submitted two forged documents – one of which stated the mortgage on the boat had been paid off, and another which was a forged US Coast Guard document that said the Persevere had been deleted from the ship mortgage register.

Without knowing that background, Bosher bought the boat and sailed it back to New Zealand in 2018. But it was seized at her marina berth in Westhaven, Auckland, almost three years later in February 2021.

She eventually ended up paying almost double what the boat’s price, in order to get it back.

In December 2018, when INZ raised questions about where the $500,000 was, Rath again explained it away. He told them the funds had been transferred from the sale of his yacht in Australia to New Zealand and had gone “straight into paying off the mortgage on the property”.

He even supplied an invoice that showed a settlement agreement for the boat.

Rath sent a loan agreement between himself, Waipara Winds and an undisclosed lender and submitted a trust account statement purported to be from his solicitor that showed receipt of the funds. ​

However, INZ requires holders to transfer money from their own offshore account to the New Zealand banking system before it gets used.

Rath couldn’t show that, because it didn’t happen. The entire transaction had been a lie, as had information in the loan documents. But INZ accepted his explanation and made another exception.

“I find the documentation on this transfer to be clear/transparent,” a senior immigration official said in an email.

Downfall

By Easter 2019, Fiddler’s Green Vineyard and Bistro was up and running and Rath was busy documenting all the capital work the family was doing on the property on the business Facebook page.

He knew it was important to show INZ he was driving a successful business. In reality, Rath drove customers away with his surly nature.

There were endless poor food reviews, and the business was barely functioning. Already in huge debt in New Zealand, let alone what was left offshore, Rath began to cook the books.

He filed false GST returns under the businesses’ company name Waipara Winds Limited between 2017-21. ​

But the end came when the Inland Revenue Department audited Rath after they learnt he was being investigated for fraud.

On a visit to the vineyard, investigators caught him trying to pass off a neighbours’ “spec house” as his own in order to cover for non-existent building expenses he had been claiming GST on.

With each false GST return, Rath filed fake payment schedules, a doctored USA bank account and altered and forged invoices, enabling him to claim $1.3m in refunds.​

In March this year Rath was sentenced to three and a half years in jail, but could be paroled by March.

He has subsequently pleaded guilty to using two forged documents including a US Coastguard form and obtaining $411,000 by deception, and will be sentenced in November.

“The big black hole”

One fraud investigator Stuff spoke to, who didn’t want to be named, called entrepreneur visas the “big black hole” of fraud.

So whose job is it to check the credentials of people like Colin Rath?

Malcolm Pacific chief executive and director David Cooper denies it was their responsibility.

“There is nothing in the code of conduct that tells us to authenticate anything.”

But if they become aware there may be fraud, they would “certainly investigate”, Cooper said.

His company no longer represents Rath.

Ministry of Business, Innovation and Employment national manager of regulation Duncan Connor says licenced immigration advisers are skilled people who have met immigration adviser competency standards and who follow a professional code of conduct.

Under the code of conduct a licenced adviser must not deliberately or negligently provide false or misleading documentation on behalf of a client.

MBIE, which also encapsulates INZ, declined to comment on the decision to grant the Entrepreneur visa on the basis liquidators are investigating Rath’s company.

James wonders if the saga says more about New Zealand’s processes than it does about Rath.

“I wonder if you’re a bit naive at all because you’re nice good people,”

“Forget it, because people like Colin Rath are going to clean you out.”