Mongrel Mob boss Frank Milosevic and son Slobodan reaped rewards of $2m from dealing drugs in Kawerau, says judge

“You traded a pernicious drug in what is well known to be an impoverished community, to people who could least afford it,” Judge Paul Mabey, KC, said to the elder Milosevic at his sentencing.

“That community needs protection from you.”

In Kawerau, a town of 6000 people already struggling to cope with unemployment and poverty, Operation Notus identified at least 600 people buying methamphetamine.

Their children would sometimes go without food or clothing, while Frank Milosevic collected jetskis, boats, a $90,000 ute, and a classic AC Cobra sports car.

Those toys were hauled away on the back of a truck when Milosevic and about 50 others were arrested in March 2018, with some neighbours clapping from their lounges.

The assets, as well as the Milosevics’ homes, cash and bank accounts, were restrained under the Criminal Proceeds Recovery Act.

Under the law, assets can be forfeited if the police can prove that someone profited from significant criminal activity. The police do not need a conviction to achieve this.

The burden of proof is the lower standard applied in civil cases – the “balance of probabilities” – rather than the higher criminal level of “beyond reasonable doubt”.

Frozen assets are held by the Official Assignee, a part of the Ministry of Business, Innovation and Employment that administers bankruptcies, until the High Court rules on whether they should be permanently forfeited to the Crown.

More than five years after the Milosevics were convicted of serious drug dealing, a parallel investigation into their financial affairs was heard in the High Court in March.

Evidence given by the police estimated that the “conservative” value of the rewards received by Frank Milosevic from his drug dealing was $1,096,997.

The figure was reached from two parts: the estimated value of the meth and cannabis proven to be controlled by Milosevic, and $323,807 in unexplained cash transactions over a five-year period.

Milosevic did not produce any evidence to challenge the police case, although his lawyer, Marie Taylor-Cyphers, argued the calculations were flawed in various ways.

Without an alternative analysis, combined with the reverse onus of proof in such cases, Justice Greg Blanchard said it was difficult to challenge the figure sought by the police.

He ruled that Milosevic received a benefit of $1,096,997 from significant criminal activity, and that his late wife, Irene Raki, knew about the offending.

“At the very least, she was wilfully blind,” Justice Blanchard said. “The receipt of significant amounts of cash would inevitably have caused her to question where the funds were coming from.”

To satisfy the profit forfeiture order of nearly $1.1m, the police asked the judge to release the proceeds from the sale of assets seized from Milosevic at the time of his arrest.

These were a Harley-Davidson motorcycle ($19,471), a Ford Raptor ute ($64,580), two Toyota vehicles ($10,298 and $27,329), a Kawasaki jetski and trailer ($4548), an Eliminator boat and trailer ($19,217) and a blue and white 6.5m boat ($4825).

Other frozen assets included a kitset AC Cobra convertible, valued at $10,000, and $116,252 sitting in bank accounts controlled by Milosevic.

The police also asked Justice Blanchard for approval to sell Milosevic’s home on Domett St.

This was opposed by Milosevic and his five children, who asked for the property, valued at $355,000, to be excluded from the profit forfeiture order on the grounds of undue hardship.

The property had been in the family for a long time. It belonged to Milosevic’s parents and was passed to him when his mother died in 1999.

His siblings agreed to Milosevic inheriting the home only on the proviso that, when he died, the property would remain in the family through his children.

Given his advancing years, Milosevic said he was unlikely to have any future earning potential on his eventual release from prison.

If the house were forfeited, he would not have anything to leave his children, which, in turn, would jeopardise their future financial stability.

In effect, Milosevic argued, this would penalise innocent family members rather than the culprit.

It would be particularly difficult for his youngest daughter, currently living at the property, who is the primary caregiver for her young son and earns the minimum wage as an apprentice.

While Justice Blanchard said he had “considerable sympathy” for Milosevic’s daughter and her son, he declined to exclude the Domett Ave home from the profit forfeiture order.

This was because the financial benefit to Frank Milosevic was so significant, and the offending would have had such a negative effect on the Kawerau community.

“The loss of equity in a home acquired from legitimate sources before the criminal activity, and the consequent prospect the respondent will need to rely on state assistance for housing, has been held not to constitute undue hardship,” Justice Blanchard said.

“This is because the risk of losing the home ought to have been contemplated at the time the respondent embarked on the criminal activity.”

Justice Blanchard made a separate profit forfeiture order against Slobodan Milosevic, who accepted the police estimate that he received a benefit of $905,608 from his drug dealing.

As with his father, police asked the judge to release the proceeds from the sale of assets seized from the younger Milosevic.

These were Toyota and Ford vehicles (sold for $16,865 and $16,970 respectively), a Sea-doo jetski ($6599), nearly $20,000 cash, and funds of $96,458 in bank accounts.

Police also asked Justice Blanchard for approval to sell Slobodan Milosevic’s home, also in Domett St.

This was opposed by Milosevic and his partner, who asked for the property, valued at $385,000, to be excluded from the profit forfeiture order on the grounds of undue hardship.

If the property were forfeited, Milosevic’s partner argued, her family would end up in emergency housing or homeless.

This would have a negative impact on her children’s education, and she feared that losing the home would lead to depression, gang affiliations, teenage pregnancies and even suicide.

“She says that the house is the only thing holding her family together,” Justice Blanchard said.

The judge pointed out that neither Slobodan Milosevic nor his partner paid the $120,000 purchase price for the property.

It was paid for by his mother, Irene Raki, and funded by nine cash deposits, which police said were likely to be the profits of criminality.

Justice Blanchard accepted that Milosevic’s partner would suffer hardship, but it would not reach the threshold needed to save the Domett St address from forfeiture, given the financial benefits of her husband’s drug dealing.

He noted that the couple accepted they had reaped more than $900,000 from drug dealing.

“Ms Milosevic stuck to the position that she had no knowledge whatsoever of any criminal activity by Mr Milosevic. However, I did not find her evidence to be credible. In my view, she knew of Mr Milosevic’s offending. At the very least, she was wilfully blind.

“Ms Milosevic could not have failed to notice the receipt of such a large benefit. The receipt of significant amounts of cash would inevitably have caused her to question where the funds were coming from.”

However, the long-running court case is not over yet.

Frank Milosevic’s lawyer, Marie Taylor-Cyphers, has confirmed to the Herald that she would lodge an appeal against the High Court decision.

That means the two properties on Domett St cannot be sold until the Court of Appeal has made a ruling, a spokesperson for the Office of the Official Assignee confirmed.

Jared Savage covers crime and justice issues, with a particular interest in organised crime. He joined the Herald in 2006 and has won a dozen journalism awards in that time, including twice being named Reporter of the Year. He is also the author of Gangland, Gangster’s Paradise and Underworld.