One of the country’s biggest banks has struck an $80,000 financial settlement with a Kiwi couple who lost $323,000 in an elaborate investment scam – offering a “goodwill payment” to resolve the dispute.

The Herald can reveal the stolen cash has been tracked to the account of an Australian “money mule”, who claims he was an “intermediary” for investors and is now under investigation by New South Wales police.

Private school principal Mark Geraets accused Westpac of negligence after he and his wife Yvonne lost their life savings in March last year.

Geraets claims a recorded phone call between him and Westpac shows the bank gave him “false confidence” that his investment proceeds were being safely transferred to an account set up under his own name.

In reality, the account name wasn’t checked, the money was sent to a “mule” account under a different name and the supposed investment was a sham.

After realising they’d been duped, the couple alerted police and Westpac. The bank recovered $123,000 but $200,000 of the couple’s money was lost.

Westpac denied liability and refused to compensate the Geraetses, arguing they “created and authorised” the huge money transfer and the bank was following their instructions.

“Our findings did not show any evidence to suggest that the bank’s security relating to your online banking has been breached,” an email from Westpac’s financial crime unit stated.

After being knocked back by Westpac, the couple took their case to the very top, writing to the bank’s chief executive Catherine McGrath.

In a reply, McGrath said she was sorry about the victims’ experience. While she admitted parts of the UK’s banking system were “further advanced” than New Zealand’s, she was confident Westpac had acted appropriately “and exercised our duty of care”.

The couple then complained to the Banking Ombudsman, with the watchdog launching an investigation last year.

‘I just don’t think they checked’

Mark Geraets had been contacted by a man posing as an HSBC portfolio manager who convinced him to invest in Victoria State Government bonds with the National Australia Bank (NAB).

Geraets made a $323,000 online money transfer on March 8, believing he was sending the money to an Australian account in his own name and says he discussed this during a verification phone call with Westpac the following day before the payment was released.

“Can you tell me who you are sending the money to please?” the staff member asked.

“I am sending it to M.H. & Y.J. Geraets,” Geraets replied.

“Great, yeah that is fine, I can see that,” the staffer said.

Geraets claimed the conversation led him to believe the bank had verified the receiving account name, and claimed Westpac failed to carry out proper due diligence.

“I just don’t think they checked.”

Mark and Yvonne Geraets lost $323,000 in an investment scam after transferring their money via Westpac to an Australian account.

However, a Banking Ombudsman investigator contacted Geraets in December to say the inquiry’s preliminary findings had largely cleared Westpac of fault.

Banks had a “strict duty” to follow customers’ instructions, but must act with “reasonable skill and care”.

If a bank detects warning signs of a scam it must make inquiries and warn the customer about the risk of fraud before processing the transaction.

“In the absence of such warning signs, however, a bank is not obliged to question any transaction to protect a customer from scams or fraud,” the investigator wrote.

Banks were also not obliged to match payee account names and numbers when making international transfers.

The inquiry found no evidence that Westpac had breached its obligations, though the bank “could have done better” in some areas, including during a phone call with Geraets.

“In these circumstances, we think there is an opportunity to consider whether there could be a facilitated resolution of your complaint involving a goodwill payment.”

Westpac offers $80,000 ‘full and final’ settlement

Following negotiations, Westpac agreed to pay the couple $80,000 “in full and final settlement to all matters raised” to resolve the complaint.

“We acknowledge the Geraets’ frustration through what has been a difficult time,” the bank wrote.

In a statement yesterday, Westpac said it had nothing further to add.

Geraets told the Herald the payment meant they had now recovered about two-thirds of the lost money, which was a “huge relief”.

“Everyone said – the police, the bank, the ombudsman – the chances of getting anything back was very unlikely. So getting $200,000 back has been absolutely tremendous.”

Mark and Yvonne Geraets lost $323,000 in March last year in a sophisticated investment scam.

Geraets said banks needed to better monitor accounts for mule activity to protect customers and stamp out scams.

Meanwhile, NSW police have tracked Geraets’ stolen money to an NAB account in Sydney.

A detective told Geraets the account was only opened a few weeks before the stolen money was transferred on March 11.

Bank records showed the money was sent to two other accounts in numerous A$40,000 ($44,200) payments over the next eight days, with $6976 taken by the mule as “salary”.

The account was eventually frozen with a remaining balance of A$85,000. Geraets said the 54-year-old mule had now been interviewed by Australian police.

“He claims he was approached to orchestrate or assist in an international investment organisation – what an idiot, it’s all bulls***.

“He’s agreed to that and all he had to do was be an intermediary step for these people who were investing. All he thought he was was a transition guy.”

Police were now assessing whether to pursue criminal charges, Geraets said.

“Cops said while it’s so incredibly obvious that this guy knew what he was doing and was bloody stupid, the responsibility is on them to prove it.”

- NZ Herald