The Hellenic Police (ELAS) on Wednesday announced dozens of arrests in connection with an international financial swindle defrauding unsuspecting investors of millions. The bust, first announced on Tuesday, followed an investigation by the Attica Security Police Organised Crime and Trafficking in Persons Department.
In a press conference on Wednesday, Attica Security Police chief Christos Papazafiris said the masterminds of the fraudulent scheme were a 48-year-old Greek broker reputedly “specialising” in foreign exchange trades and a 53-year-old Greek businessman with activities based chiefly in Ukraine. The two set up a criminal ring that used a complex structure of offshore firms in foreign countries to defraud investors, earning estimated profits of at least 35 million U.S. dollars and three million euros since 2005.
Papazafiris said the leaders of the criminal ring were arrested on Tuesday during coordinated raids in various parts of Attica, along with three women aged 35, 39 and 48. All five are accused of forming and joining a criminal organisation, criminal fraud and legalising income from illegal activity.
An additional 18 people will also face charges in connection with the case, among 12 Greeks (that include three lawyers and some state employees), two Turkish nationals, one Russian and one Indian.
Police uncovered the ring’s activities while investigating a case of fraud and embezzlement linked to investments in foreign exchange. Its members used a complex system of local and offshore firms they secretly controlled, through which they claimed to make supposed foreign exchange “investments”. They would approach potential investors, selling the “specialist expertise” and “academic credentials” of the 48-year-old broker to persuade them to make very large investments by promising extremely generous returns, exceeding 3 pct a month.
They would then send their “clients” monthly updates reporting steadily rising profits, thus persuading them not to remove their capital and even to increase their investment, while also attracting new investors to join their scheme. They would then use the new cash to pay the supposed “profits” or even the total capital of the original investments, building up even greater confidence for their supposed services, while also charging large fees for them.
In this way, the organisation managed to keep the scheme afloat until May 2015, by which time all the capital entrusted to them had run out.
The ring’s activities were traced back to 2005, when the 48-year-old broker had set up a U.S.-based firm investing in foreign exchange. In 2010, along with the 53-year-old, he set up a similar firm in Wales that was also owned by his 48-year-old wife. In 2012, the ring transferred the base of the U.S. firm to the British Virgin Islands in 2012, converting it into a mutual fund. They then set up two more identical funds in the British Virgin Islands in 2012 and 2013.
The organisation also employed three lawyers that, in the capacity of legal consultants to the three firms, drafted fraudulent letters that they used to deceive investors. A large number of accomplices, including some state employees, then helped “launder” the money through bank accounts owned by some 60 offshore firms based in various tax havens and to conceal large sums from Greek authorities.
According to investigators, at least 190 million U.S. dollars and 1.5 million euros were moved through these accounts between 2012 and 2015. They suspect that the ring’s profits made were actually much higher, however, since many of the prospective investors entrusted them with cash, for which there is no record.
During raids on the homes, offices and other premises used by the suspects, police found a host of documents relating to the formation and running of the investment structures, contracts, agreements and a great many bank receipts. They also found 25 PCs and a large number of data storage devices.
All the individuals arrested will be led before the appropriate public prosecutor.