Saturday, June 15, 2024

Eurojust helps tackle massive fraud of EUR 645 million

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Diplomat Magazine
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DIPLOMAT MAGAZINE “For diplomats, by diplomats” Reaching out the world from the European Union First diplomatic publication based in The Netherlands. Founded by members of the diplomatic corps on June 19th, 2013. "Diplomat Magazine is inspiring diplomats, civil servants and academics to contribute to a free flow of ideas through an extremely rich diplomatic life, full of exclusive events and cultural exchanges, as well as by exposing profound ideas and political debates in our printed and online editions." Dr. Mayelinne De Lara, Publisher

Eurojust has assisted national authorities across Europe in tackling a massive fraud involving fake investments in cannabis plants for medicinal use. Two linked criminal organisations that advertised the scheme online and laundered the profits, which are estimated to be approximately EUR 645 million, have been dismantled. In a coordinated action, nine suspects have been arrested. Eurojust supported authorities in Germany, Spain and France in setting up a joint investigation team (JIT) into the fraud.

In Germany, France and Spain alone, over 4 500 victims have lodged formal complaints against the fraudsters, who set up a crowd-funding programme to raise a minimum of EUR 50 per investor for the development of medicinal cannabis plants. In reality, no cannabis plants were ever bought, although the organisers of the scheme pretended to work with legitimate and licensed enterprises that would cultivate them. The fraud ran from at least January 2020 to July 2022.

The entire scheme had the character of a pyramid or ‘Ponzi fraud’ and promised extremely high returns on investment. Investigations in Germany and Spain, later followed by counterparts in other countries across Europe, showed that investors had been only partially paid.

Most of the invested money was used to pay affiliates, keep the scheme running and expand the fraud through extensive online campaigns. For this purpose and to launder the proceeds, a web of international enterprises was used. The scheme itself appears to have been run by a Russian criminal network, with an affiliated German-based crime group.

Victims in Germany and Spain claim to have lost at least EUR 51.5 million, but the total investment is estimated to be close to EUR 645 million. In total, around 550 000 participants worldwide were registered as online investors, most of them European citizens. Around 186 000 participants transferred funds, either via cryptocurrencies or bank transfers.

Since 2022, Eurojust has been extensively supporting the national authorities, including assisting the German, Spanish and French authorities in setting up and funding the JIT. This led to a successful Joint Action Day coordinated at Eurojust.

At the request of the German and Spanish authorities, in recent days operational actions against the criminal networks were also carried out in Estonia, Latvia, Italy, Malta, Poland, Portugal,  the United Kingdom and the Dominican Republic. The French authorities made a decisive contribution to the analysis of crypto flows during the investigations and took part in searches in Germany and Spain on the action day.

Europol supported this massive cross-border investigation from the outset, taking the lead in operational coordination and providing tailored analytical support. Furthermore, Europol shared results of the financial investigations as well as other intelligence with the involved countries. On the action day, Europol deployed officers with mobile offices to various locations worldwide.

During the action days, over thirty places were also searched and for several millions of Euros in crypto assets and bank accounts were frozen. Also real estate properties, luxury vehicles, artwork, cash and various luxury items were seized, as well as large numbers of electronic devices and documents.

The operations were carried out on the ground at request of and by:

  • Germany: Public Prosecutor’s Office Berlin; Criminal Investigation Department Berlin (LKA)
  • Spain: Central Investigative Judge no. 6 at the Audiencia Nacional; National Police (Policia Nacional – UDEF Central Brigade against Economic Crime, Financial Fraud Group)
  • France: Paris’ Prosecutor’s Office JUNALCO (National Jurisdiction against Organised Crime); Gendarmerie National (Research Section Rennes)
  • Estonia: Office of the Prosecutor General; Police and Border Guard Board
  • Latvia: Prosecutor General’s Office; International Cooperation Department and Economic Crime Enforcement Department of the Central Criminal Police Department of the State Police
  • Italy: Postal Police Service of the National Police – Operational Section for Cyber Security, Macerata, and Operational Centre for Cybersecurity of Marche
  • Malta: Malta Police Force – International Relations Unit
  • Poland: Public Prosecutor’s Offices of Jelenia Góra, Lublin, Warsaw, Warsaw Praga and Wrocław; Central Bureau for Combating Cybercrime
  • Portugal: Central Public Prosecutor’s Office Lisbon (DCIAP); Judicial Police (Policia Judiciária)United Kingdom: National Crime Agency
  • United Kingdom: National Crime Agency
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