Lawyers for David Lyttle say police manipulated him into confessing he shot a close friend after a dispute over money.
Mr Lyttle, 53, is on trial in the High Court in Palmerston North, accused of murdering Brett Hall in May 2011.
Right from the start, police believed Mr Hall had been the victim of foul play, but with no evidence three years after his disappearance, police set up an undercover investigation targeting Mr Lyttle.
Undercover officers lured him into what they told him was a criminal group with promises of money and other incentives.
By the time the sting ended Mr Lyttle had made several admissions relating to killing Mr Hall and doing away with his body.
However, defence lawyer Christopher Stevenson criticised the sting, saying it targeted a financially struggling father of young children with promises of a big pay day and overseas travel.
"They had been involved in three months of effectively a scam on David Lyttle, pretending to be part of a big, organised criminal syndicate and promising him if he got in he'd have a fabulous new life... easy money. These police officers were lying to him."
Mr Stevenson said the Crown had told the jury his client had admitted "with little prompting" that he shot Mr Hall.
However, at first Mr Lyttle had said Mr Hall's disappearance had nothing to do with him, but it was made clear to him that was not an acceptable response, Mr Stevenson said.
"This whole three month scam or scenario had one aim and one only. The police had made up their minds it was David Lyttle.
"They were wrong, but they were intent on getting a confession. When he said it wasn't him, he was given a clear message that that response wouldn't get him into the organisation and the easy money, easy lifestyle would be taken way.
"At that point he said 'OK I did it.'"
Mr Hall could have gone missing in remote bush and searchers had not been able to find him.
He could also have been a victim of foul play in connection with his lifestyle, Mr Stevenson said.
"An inherently high-risk, dangerous lifestyle - P use, P dealing, cannabis dealing at a serious level with serious criminals, and either directly or indirectly associating with gang members."
Mr Hall had previously been the victim of intimidation in connection with drug dealing and it was known he stored vast quantities of cash and drugs at his isolated property, Mr Stevenson said.
The trial, before Justice Simon France and a jury of 10 women and two men, is expected to run for about 10 weeks.