An Australian family whose disabled son lost about $250,000 in an investment scam after wiring the money to a New Zealand mule account plans to sue two major banks for $1.25 million for alleged failings and “gross negligence”. 

The banks are defending their actions and insist their fraud security measures are robust – despite an Australian watchdog ordering ANZ to repay the family’s losses in full for failing to detect the scam. 

Rajneel Prasad, 48, from New South Wales, suffered serious injuries in an accident years ago and is heavily medicated for pain. His family say he suffered resulting psychological problems, rendering him a vulnerable client of ANZ. 

In early 2022, Rajneel stumbled across a bogus investment website and was contacted by a man with a London accent purporting to be a Rabobank financial adviser. Rajneel was convinced to invest the proceeds of his term deposits in high-interest Rabobank bonds. 

He was instructed to wire A$245,000 to a Westpac account in New Zealand on April 5, 2022. Two weeks later, his family realised he’d been scammed and alerted ANZ and Australian police. 

ANZ immediately contacted Westpac and tried to recall the money but nothing was recovered. New South Wales police have been working with Interpol and New Zealand police to track down the suspects, who are thought to be based in New Zealand. 

However, because of a miscommunication – identified by the Herald this week – it has now emerged that both nations’ police forces believed the other was investigating the crime and the file is currently unassigned and inactive. 

Rajneel’s retired parents act as his caregivers. Father Suresh Prasad, 75, has been fighting for compensation and accountability for his son. 

The couple lodged a formal complaint about ANZ’s handling of the case, which was investigated by the Australian Financial Complaints Authority (AFCA). 

In November last year, the AFCA ruled Rajneel was a vulnerable customer who had been let down by his bank. The decision said ANZ was “on notice of a real or serious possibility” of the victim being defrauded and should not have processed the large money transfer without further inquiries. 

It emerged that Rajneel had made two earlier attempts to send the money to scammers the previous month. The first was identified as suspicious by ANZ and not processed. The second was processed but then reversed by the receiving bank. 

The AFCA ruled ANZ had not taken adequate steps before processing the final payment and it should compensate Rajneel in full. 

“It’s compensation for their negligence,” Suresh Prasad said. “They blindly transferred the money.” 

Australian retiree Suresh Prasad has been fighting for compensation and accountability on behalf of his disabled son Rajneel Prasad, who lost A$245,000 in an investment scam in April 2022. The family now plans to sue ANZ and Westpac banks for damages. 

Meanwhile, Suresh sought information from Westpac about the New Zealand account that received his son’s stolen funds. Australian police told him the account was in Bayfair, Mount Maunganui. 

Police correspondence obtained by the Herald shows that, after landing in the account, the money was transferred within 48 hours to five other New Zealand accounts. A Pāpāmoa company director is named as a potential suspect. 

Suresh wrote to Westpac asking who set up the receiving account and to which banks the stolen money was sent. Westpac refused to provide information, citing the Privacy Act. 

Suresh claimed Westpac was using privacy rules to protect the scammers at the expense of innocent victims, preventing the offenders from being held to account or the money being recovered. 

Australian police believe the stolen money was sent to an account at Westpac Bayfair in Mt Maunganui before being transferred to five different accounts within 48 hours. Photo / Google 

Suresh was also critical of Westpac for harbouring a mule account, allegedly set up by fraudsters to commit crime. He questioned the adequacy of Westpac’s anti-money laundering processes and due diligence. 

The family said the ordeal had been exhausting and upsetting. They blamed both banks for “gross negligence and professional incompetence”. 

They are now preparing civil proceedings – seeking damages of about $755,000 from Westpac and $500,000 from ANZ – because of Rajneel’s “protracted psychological trauma, anxiety, pain, repeated suicidal ideation and suffering”. 

ANZ refused to comment on Rajneel’s case, despite the family providing a privacy waiver. 

It said scams were insidious and the ways criminals were defrauding customers were constantly evolving. 

“ANZ is continually reviewing and adjusting our capabilities as new fraud and scams emerge and criminals change how they operate.” 

An Australian watchdog ordered ANZ to compensate the victim in full after ruling the bank had been "on notice" of the scam but failed to identify red flags before processing the huge money transfer. Photo / Doug Sherring 

ANZ tried to recover fraud losses but its success depended on when crimes were reported and whether money had been transferred to another bank, which was often done within minutes by cyber criminals to buy cryptocurrency. 

Westpac said it empathised with the victim but rejected suggestions it had been negligent, saying there was no previous fraudulent activity on the recipient account. 

It refused to confirm where the account was opened or by whom, saying it was prevented from sharing customer details by privacy laws. 

“As soon as we were alerted to the potential fraud, we took appropriate action, including conducting a thorough investigation, tracing funds to identify if any recovery was available and ensuring we complied with our relevant obligations.” 

Meanwhile, it has emerged that neither New Zealand nor Australian police are currently investigating the crime. 

New Zealand police said they acted on a request from Australian authorities in October last year and all relevant information had been passed to Australian investigators. 

NSW police said they initially conducted “extensive inquiries” after the victim reported the fraud in May 2022. 

But due to the “lengthy nature” of inquiries involving New Zealand parties, it was thought the family intended to report the matter directly to New Zealand police earlier this year in a bid to fast-track the investigation. 

“As such, any questions will need to be directed to New Zealand Police.” 

Suresh said he was appalled to learn the file had effectively been shelved by investigators. 

The criminals who perpetuated the fraud would be delighted to learn no one was working to bring them to justice, he said, and he wondered how many more victims had lost their life savings while police sat on their hands. 

“It’s quite alarming. The quantum of money they’ve harvested is incalculable.”