After the Herald sent questions, Wallace pulled personal profiles and for-sale listings by Prakash, Prasad and a third staff member from its website.
Wallace Real Estate chief executive Luke Nutting said he took the tax authorities’ allegations “extremely seriously” and was “disappointed” to only recently learn the “severity of the situation”.
“Staff recently hired by our business who have been implicated in the IRD’s ongoing investigation are no longer working at Wallace Real Estate,” he said.
“As soon as Wallace Real Estate learned of the seriousness of the allegations, we acted swiftly and decisively.”
Prakash and Prasad had previously used Hills Real Estate to advertise homes they were buying and selling as property flips through trading companies.
The move of 11 Hills staff to Wallace raised questions about whether the pair intended to trade homes they had listed for sale through Wallace.
Real estate agents in a liquidated firm are entitled to seek work with another business. However, agents typically don’t own homes they sell. They list them on behalf of others and earn a commission.
Property traders buy and sell homes themselves for a profit – and those sales attract GST.
The alleged failure to pay GST on house sales sits at the heart of the IRD’s $22m claim against four companies led by Prakash and Prasad.
Prakash and Prasad didn’t reply to a Herald request for comment.
However, Nutting said Wallace did not engage in property trading and its agents only worked on commission.
Wallace employed “licensed real estate salespeople” who were only permitted to act “in that capacity”, he said.
“Wallace does not operate or facilitate property trading businesses, nor do we structure sales through trading companies,” he said.
Wallace supervised its staff in accordance with the Real Estate Agents Act 2008, he said.
THE HILLS ARE MOVING – OLD FACES, NEW TEAM
The Herald first spotted Prakash and Prasad on Wallace Real Estate’s website on Tuesday.
By then, the Hills Real Estate website had been taken down.
Prakash and Prasad appeared on Wallace’s site and property sites such as OneRoof and Trade Me as licensed Wallace agents.
They had more than 40 for sale listings between them.
As many as 14 had last been advertised by Hills, suggesting the pair brought Hills listings across with them.
Some of the homes had previously been owned by trading companies now at the centre of the IRD investigation.
A third Hills staff member – previously listed on the Hills website as part of its management team – also appeared at Wallace with the job title of compliance lead.
Shortly after the Herald sent media questions, Prakash, Prasad and the third staff member were scrubbed from Wallace’s site.
However, the Herald then noticed eight other Hills staff were on Wallace’s website.
One former Hills staff member had taken over 10 for-sale listings that previously been under Prakash and Prasad’s names on the site.
A former Hills office manager was also listed as South Auckland office manager for Wallace, yet Wallace’s website didn’t mention a South Auckland office.
Most of their profile photos matched ones previously used on the Hills website.
When sent further questions, Nutting denied Wallace had taken over the Hills business.
“Wallace has not acquired, absorbed, or entered into any formal takeover arrangement with Hills Real Estate,” he said.
“It is common practice within the New Zealand real estate sector for licensed salespeople to move independently between agencies.”
He said “several former Hills salespeople chose to associate themselves with Wallace” after leaving their previous agency.
However, anyone “directly implicated in the IRD liquidation proceedings are no longer involved with Wallace in any capacity”.
“As soon as we became aware of the matters under investigation, we acted immediately to remove them from Wallace.”
The law does not prevent agents in a liquidated firm from working in another company.
A Real Estate Authority spokesman said the government regulator was aware of the staff changes.
“REA is aware that these licensees moved to Wallace Real Estate. We cannot make any other comment so as not to prejudice our processes or the rights of any parties,” the spokesman said.
This home at 53 Burundi Ave, Clendon Park had been owned by property traders Hills Real Estate and was repossessed by lenders and sold at auction earlier this month. Photo / Supplied
THE MONEY TRAIL
The High Court action against Hills Real Estate is the latest step in a wider probe into four companies linked to Prakash and Prasad that are already in liquidation.
The Herald last week reported that liquidators said the companies – Akrish Properties, NZ & Auckland Developments 2000, RN Properties, and Babasiga Homes – owed a combined $28m but had just $38,088 in their bank accounts.
That was alleged to include $22m in unpaid tax, with $19m of it missed GST.
Liquidators have frozen Prakash’s assets and were investigating potential overdrawn shareholder accounts and potential breaches of director duties.
They reported more than $730,000 in circular transfers between the companies and claimed the defendants had failed to hand over financial records on time.
A Herald analysis last year of a selection of property deals linked to the Hills team found homes were bought for about $54m and resold for nearly $60m, with some properties passing through up to 11 linked companies before reaching a buyer.