An Auckland man managed to embezzle nearly half a million dollars from his employer in an elaborate, years-long payroll swindle. 

Randwick Park resident Kahu Junior Stephens, 47, appeared for sentencing in Auckland District Court this week after almost a year of delays - with his lawyer having asked multiple times for extensions so the defendant could continue to raise money to pay back Tyco New Zealand Limited, which he eventually did in full. 

The South Auckland-based fire and commercial security business had employed Stephens for a decade before discovering a payroll irregularity in 2020 and confronting him in a disciplinary meeting. He was fired as a result. 

“The defendant admitted to the offending ... and said that he spent all the money on his lifestyle [and that] he did not buy any assets,” according to the agreed summary of facts for the case. 

In his role as warehouse distribution manager for the company, Stephens was responsible for one full-time employee and all temporary seasonal workers, processing the seasonal workers’ timesheets and providing their bank details to a recruitment company that paid them before invoicing Tyco for reimbursement. 

Court documents outline six separate schemes in which Stephens diverted funds to his own bank accounts, starting with a temporary employee who worked at the warehouse for nine months in 2015. Instead of reporting that the employee had left, Stephens kept him on the books for five more years and transferred pay cheques to his own bank account - accruing $83,560 in fraudulent wages. 

The former employee was surprised to discover in 2019, after a phone call from Inland Revenue, that he owed taxes on a job he had not worked in years. Stephens told him that someone else had been using his name on timesheets and that Tyco would sort it. The defendant paid $1241 from his own bank account to reimburse the former employee for the extra tax. 

Stephens also used family members in the embezzlement scheme, although it is not alleged they were aware of their involvement. 

Kahi Junior Stephens, who was arrested for embezzling more than $450,000 from his employer, appears in the High Court at Auckland after pleading guilty. Photo / Michael Craig 

His daughter was listed as working for the company from 2014 to 2020, his son from 2017 to 2020 and a nephew from 2014 to 2020 - even though he moved to Australia in 2016. It appears the relatives did work for the company at some point, but their actual periods of employment are unknown, authorities said. 

What is known is Stephens received payments of almost $200,000, either transferred out of their bank accounts, which he had access to, or paid directly to his own bank accounts. 

Another temporary employee worked at the company for a single week in July 2017, but he remained on the books for three more years. Wages totalling $118,882 were paid into an account belonging to the defendant’s son, documents state. During that same time, Stephens transferred $119,882 from his son’s account into his own. 

The total amount of pilfered payroll was $466,629.34, Judge Belinda Pidwell noted during the sentencing hearing this week. The company recovered $129,500 in a civil proceeding but an additional $307,129 in restitution was sought by prosecutors as part of the criminal case. 

“The motivation for your offending essentially came down to greed,” the judge said, adding that it appeared to have “snowballed over the years” as he got used to the ill-begot supplemental income and comfortable knowing that no one was catching on. 

“It was pre-meditated ... it was deliberate and persistent,” she said. “It’s not only your employer [that was victimised] but you used your relationship with your family members and placed them in a position where you breached that fundamental trust they had in you. That’s particularly egregious, in my view.” 

Stephens pleaded guilty in March 2023 to a representative charge of obtaining by deception, which carries a maximum possible punishment of seven years’ imprisonment. 

During a brief hearing in January, at which point he still owed $207,000, the judge had indicated home detention would be an unlikely outcome. 

But there were numerous factors that persuaded her otherwise this week, including credits for Stephens’ guilty plea, his remorse and motivation for change and the fact he had no prior relevant offending, which means his conviction will represent a serious fall from grace. “First and foremost,” the judge said, she had to “acknowledge the full amount of reparation” had been paid. 

Theft victims want to see defendants held to account but they also want criminals incentivised to pay back restitution in full, Judge Pidwell said, citing a higher court ruling in a previous white-collar case. His offending, she added, was serious and caused significant harm. 

“But you’ve gone a long way to addressing that harm,” she said. 

His home detention is slated to last one year. 

Craig Kapitan is an Auckland-based journalist covering courts and justice. He joined the Herald in 2021 and has reported on courts since 2002 in three newsrooms in the US and New Zealand.