Work and Income continued to pay an illegal immigrant a $360-a-week sickness benefit despite him being banned from re-entering the country.
Salam Mansoor Abdelabbas Al-Bawi was in Germany when the High Court, in February, rejected his appeal against a ministerial decision to revoke his citizenship and passport.
Despite the former Iraqi having a son living here, he has been refused re-entry, the New Zealand Herald reports.
Al-Bawi came to New Zealand in 2000 and was granted refugee status under the name John Joseph, despite having residency in Denmark.
In 2008, he admitted lying to New Zealand authorities in order to gain refugee status, residency, citizenship, and a passport.
Despite February's High Court ruling, Al-Bawi continued to receive a benefit of $360 a week, until the Herald's inquiries alerted Work and Income.
Work and Income said his benefit was stopped on Thursday but would not say how long he had been paid. It was investigating the case.
Al-Bawi came to the attention of local police in 2005 after a bank became suspicious of a $US76,000 ($NZ93,000) withdrawal.
His fingerprints were sent to Denmark where his real name was revealed and that he had a violence conviction, not declared on arrival here, where a man was beaten after signing a debt notice.
New Zealand police also alleged Al-Bawi had previously received $200,000 from someone in Lebanon and that he spent up to $11,500 a month on toll calls.
They say Al-Bawi also managed to obtain a Danish passport under his Joseph name.