Key Takeaways
- Operation Notus uncovered a methamphetamine and cannabis ring in Kawerau that served at least 600 buyers, many of whom were impoverished.
- Frank Milosevic profited an estimated $1,096,997 from drug dealing; his late wife Irene Raki was found to be at least wilfully blind to the illicit cash flow.
- Under the Criminal Proceeds Recovery Act, assets can be forfeited on a “balance of probabilities” standard, without requiring a criminal conviction.
- The High Court ordered the sale of seized vehicles, a jetski, boats, bank balances and the family home on Domett St to satisfy a nearly $1.1 million profit‑forfeiture order.
- Both Frank and his son Slobodan Milosevic argued that forfeiting the family homes would cause undue hardship, but the judge rejected the claims, noting the offenders should have anticipated the risk when they embarked on criminal activity.
- Slobodan Milosevic was also ordered to forfeit benefits of $905,608, with his partner’s claim of ignorance dismissed as not credible.
- Frank Milosevic’s lawyer has signaled an appeal, delaying the sale of the two Domett St properties pending a Court of Appeal ruling.
Background and Judicial Remarks
At the sentencing of Frank Milosevic, Judge Paul Mabey, KC, condemned the trader for “deal[ing] a pernicious drug in what is well known to be an impoverished community, to people who could least afford it.” He stressed that the Kawerau community needed protection from such exploitation. The judge’s remarks set the tone for subsequent proceedings, emphasizing that the harm extended beyond individual users to the broader social fabric of a town already burdened by unemployment and poverty.
Operation Notus and Community Impact
Launched in March 2018, Operation Notus targeted methamphetamine and cannabis dealing by members of the Mongrel Mob in Kawerau, a town of roughly 6,000 residents. Police identified at least 600 individuals purchasing drugs from the Milosevic network. The ripple effect was severe: children in some households went without food or clothing while Frank Milosevic indulged in luxury purchases—jetskis, boats, a $90,000 Ford Raptor ute, and a classic AC Cobra sports car. These assets were later seized, illustrating the stark contrast between the offender’s wealth and the deprivation experienced by many local families.
Asset Seizure and the Legal Framework
Following the arrests, the police restrained Milosevic’s assets under the Criminal Proceeds Recovery Act (CPRA). The CPRA allows the Crown to seize and ultimately forfeit property linked to significant criminal activity without needing a criminal conviction; the burden of proof is the civil standard of “balance of probabilities.” Frozen assets are held by the Official Assignee, a unit of the Ministry of Business, Innovation and Employment, pending a High Court decision on permanent forfeiture. This mechanism enabled the state to act swiftly against the proceeds of drug trafficking while the criminal case proceeded through the courts.
High Court Profit‑Forfeiture Calculation and Irene Raki’s Knowledge
More than five years after Milosevic’s conviction, the High Court heard a parallel investigation into his financial affairs. Police estimated the “conservative” value of the rewards Frank Milosevic received from his drug dealing at $1,096,997—derived from the estimated value of the meth and cannabis he controlled plus $323,807 in unexplained cash transactions over five years. Milosevic offered no counter‑evidence; his lawyer argued the calculations were flawed, but without an alternative analysis Justice Greg Blanchard upheld the figure. The judge also found that Irene Raki, Milosevic’s late wife, was at least wilfully blind to the offending, stating that the receipt of significant cash would inevitably have prompted her to question its source.
Frank Milosevic’s Seized Assets
To satisfy the profit‑forfeiture order of nearly $1.1 million, the Crown sought the release of proceeds from the sale of assets seized at the time of arrest. These included 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 ($4,548), an Eliminator boat and trailer ($19,217), and a blue‑and‑white 6.5 m boat ($4,825). Additional frozen assets comprised a kitset AC Cobra convertible valued at $10,000 and $116,252 held in bank accounts under Milosevic’s control. The total realizable value of these items contributed significantly toward meeting the forfeiture liability.
The Domett St Home Dispute – Frank Milosevic’s Argument
The police also requested approval to sell Milosevic’s family home on Domett St, valued at $355,000. Milosevic and his five children opposed the sale, claiming undue hardship. They noted the property had been in the family for generations, passed to him after his mother’s death in 1999, with a stipulation that it remain in the family through his children. Milosevic argued that, given his age and limited future earning prospects, losing the house would leave him with nothing to bequeath, jeopardizing his children’s financial stability. He emphasized the particular vulnerability of his youngest daughter, who lives at the property, cares for her young son, and earns only an apprentice’s minimum wage. Justice Blanchard expressed “considerable sympathy” for her situation but concluded that the financial benefit to Milosevic was too substantial to warrant exclusion. He held that the loss of equity in a home acquired legitimately before the criminal activity did not constitute undue hardship, because the risk of losing the home ought to have been contemplated when he embarked on drug dealing.
Parallel Case Against Slobodan Milosevic
A similar profit‑forfeiture order was made against Slobodan Milosevic, Frank’s son. Police estimated his benefit from drug dealing at $905,608. Seized assets subject to sale included Toyota and Ford vehicles ($16,865 and $16,970), a Sea‑Doo jetski ($6,599), nearly $20,000 in cash, and $96,458 in bank accounts. The Crown also sought to sell Slobodan’s Domett St home, valued at $385,000, which his partner resisted on grounds of undue hardship, warning that loss of the dwelling could push her family into emergency housing, harming her children’s education and increasing risks of depression, gang affiliation, teenage pregnancy, or suicide. Justice Blanchard acknowledged the partner would suffer hardship but deemed it insufficient to outweigh the financial gains from her husband’s offending. He rejected her claim of ignorance, finding her not credible and stating she was at least wilfully blind to the large cash inflows that would have prompted questions about their origin.
Appeal Prospects and Conclusion
Frank Milosevic’s lawyer, Marie Taylor‑Cyphers, has confirmed an intention to appeal the High Court’s decision. Consequently, the two Domett St properties cannot be sold until the Court of Appeal rules on the matter, a delay noted by a spokesperson for the Office of the Official Assignee. The case exemplifies how New Zealand’s proceeds‑of‑crime legislation enables the state to reclaim wealth derived from serious drug trafficking, even when offenders attempt to shield family homes on hardship grounds. As the litigation continues, the outcome will reinforce the balance between penalizing criminal profit and recognizing genuine familial hardship.
Jared Savage, a Herald crime‑and‑justice specialist with over a dozen awards and author of titles such as Gangland and Underworld, reported on these proceedings.