He said the business took money from customers through an intermediary company called Flo 2 Cash.
It used these funds to fulfil previous customer orders in what Patel said was a “Ponzi operation model”.
Tech Vault Enterprises was incorporated in April 2020.
Rahil Munir Tharani of Hamilton is listed as the sole shareholder and director.
“I’m not good at the moment,” Tharani told the Herald today. “I’m not right with my health.”
He added: “I don’t know about Flo 2 Cash. They’re a different entity.”
Patel said Tharani was “fully co-operating” with the liquidation.
“I’m the one who’s copping it right now in terms of people calling me up.”
Patel said a call centre was used to approach vulnerable people across the country.
He said one of Tech Vault’s customers was an elderly woman with dementia.
“The lady said ‘I don’t understand anything, why do you keep pushing it?’”
He added: “It’s white-collar theft. There are 51 customers. They’re from Invercargill right up north.”
Patel said Tech Vault hardly ever carried any stock.
It would take money from customers, then go to an appliance shop and buy goods for previous customers.
“We’ve seized their storage unit in Hamilton but National Storage won’t give us access because they’re owed rent.”
The 51 customers were owed $38,865.50.
“There’s quite a bit owing to IRD [Inland Revenue Department]. Unfortunately, that means that those customers who’ve paid that now become unsecured creditors,” Patel said.
Pritesh Patel is the liquidator.
The company was placed into liquidation on January 30 and Patel issued his first liquidator’s report yesterday.
“The business was in effect sliding backwards” by taking money through customers via Flo 2 Cash, he wrote.
It used these funds to fulfil previous customer orders.
He added: “It had inadequate systems in place to have a good financial control on deposits coming in and payments going out.”
Patel said the Commerce Commission investigation and subsequent newspaper articles caused the business to have diminished goodwill and a reduction in customers.
The liquidator had written to all creditors to immediately stop payments to Flo 2 Cash.
Unconscionable conduct
This is one of the first two Commerce Commission cases for alleged unconscionable conduct.
Patel said Tech Vault Enterprises had pleaded guilty at the first available opportunity.
The company was fined $60,000 at the Hamilton District Court and ordered to pay emotional harm reparation of $7500.
Patel sent a letter seeking the release of about $15,000 from Flo 2 Cash, who acted as intermediaries to collect deposits.
He said he had not heard back.
The Commerce Commission previously said it investigated Tech Vault, trading as HouseSmile, in relation to its compliance with the Fair Trading Act.
It said HouseSmile pleaded guilty to a breach of section 7, a prohibition against unconscionable conduct.
The commission has also filed proceedings against Brand Developers Limited, trading as The TV Shop.
John Weekes is a business journalist covering aviation and court. He has previously covered consumer affairs, crime, politics and courts.
Stay ahead with the latest market moves, corporate updates, and economic insights by subscribing to our Business newsletter – your essential weekly round-up of all the business news you need.