An international network of investment companies-shells that traps unsuspecting citizens attracts significant amounts by phone with lure investments with quick and easy returns. Also known as “phone scams from London”, this is not a new phenomenon. However, the pandemic, which sparked hours of cyberbullying and boosted household liquidity to some extent, has sparked an escalation of cybercrime.
The difficulty for authorities in all European Union member states is to link fraudulent data to foreign companies with offices in Eastern Europe and Israel and overseas headquarters, thus keeping this type of security intact this highly profitable activity. The financial losses of victims are estimated at hundreds of millions of euros. In many cases, small sums are deducted from many, with the result that the victims, due to the low amount of losses, are discouraged from going to court.
How the fraud circuit works
Social engineering, that is, oral manipulation, often functions as an extremely effective Trojan horse.
The context of the fraudulent circuit is specific. In more detail: a call center employee, usually outside the calling country, calls an unsuspecting citizen and tells him what he would like to hear. That is, with a very small initial capital, usually 250 euros, you can earn a lot by investing in financial products.
He refers him to a specialist technical consultant who explains how these financial products work. For example, investing in binary options or cryptocurrencies. If he correctly predicts the rise and fall of the price of a currency (Forex) or any other investment product he can gain a lot.
The investment advisor then invites his interlocutor to register on the investment platform that he points out to him and in many cases, after gaining his trust, he proposes to the unsuspecting citizen to install a remote access software on his computer. And this to help him, “since all actions are done under his full supervision” to register on the platform which is nothing but a fake website.
The unsuspecting micro-investor puts his money on a profitable platform. These are numbers without real contrast, which fluctuate, based on the pressure that the swindlers seek to exert on their victims. So someone who, for example, deposited 90,000 euros is with a profit of 300,000 and more.
But when the time comes for the liquidation of profits, their hostage-taking begins. Investors are informed that in order to collect their profits which, as they inform them at the time, constitute “black money”, I will have to pay a very high tax, usually to the British government. But most of them have no other money and as a result are often forced to borrow or sell assets.
How to locate their victims
They usually call through software, random phone numbers, with the employees of the so-called boiler rooms, ie companies with basic infrastructure a call center, to pressure their unsuspecting interlocutors to seize the investment opportunity. In many cases, this may be preceded by a Google ads, usually on highly recognizable websites. Sometimes, before accepting the phone call, the clients have registered their data in an investment platform which may belong to a licensed investment company.
We should point out and clarify that the content of Google ads listings is usually automatically adapted through cookies based on what a user usually searches on the internet. When the victims realize that they have been deceived and threaten to go to court, they argue that the money was lost because the investment did not pay off.
Fraud techniques
1. When the victim informs them by phone that he is not interested, no matter how many times they call him, then they usually refer him to a specialized financial advisor who manages to convince him. To prove his deep knowledge of the subject, sometimes before the start of the session, he predicts whether the decline in the price of a share will increase and is always confirmed when the trading begins.
These tricks create a relationship of trust with the victim which leads him to invest a lot of money in binary options. When the losses increase, as a sign of goodwill on his part, the specialized financial advisor offers cryptocurrencies as a gift at 1/3 of their price and the period when a Bitcoin is worth tens of thousands of euros.
In this way, the victim pays this amount to Bitcoin to acquire a certain small number of Bitcoins that he considered to have multiple values. When these virtual profits reach e.g. 300,000 euros and the victim asks to collect them, then they tell him that he will have to pay 26% tax that will be paid by the company to the British government. Lack of other money, they suggest to borrow at all costs something that is worth it since the profits are very large. After all this, the victim realizes that this is a fraud and addresses the authorities of the member-state in which he lives.
2. In many other cases, the shell company circuit uses money-mules. These are people who are recruited to transfer to third party accounts, usually in other countries, money obtained through fake investment websites, keeping a percentage as a commission.
3. In other cases, cryptocurrency accounts are created with the identities of the victims by extracting these data through accounts of utility companies, which were initially provided by the victims when they registered on these platforms. Often, the personal data of the victims are presented as slightly falsified, as the supposedly real identity of the brokers in order to bend the resistance of those who see something suspicious.
4. When the victims again try to counterattack, associates of the illegal investment companies call on the phone, through special software, using phone numbers that do not belong to them (spoofing). In this way they communicate with their victims claiming that they represent companies with the object of locating and returning, in return, the lost money. Quite often they pretend to be the police officers who have undertaken the investigation of fraud cases.
The results of their investigation
These constant mutations in the circuits of illegal investment companies make it difficult to trace them. Therefore, locating those who are actually behind the illegal investment companies is often, if not impossible, extremely difficult. For this reason, it is a common secret that law enforcement authorities are far removed from dismantling a multinational network that is also allegedly linked to cybercrime scams.
This kind of fraud is made easier through the internet and the system of offshore companies, which allows the establishment of companies that receive the stolen money. A pillar of the way these companies operate is the bombardment of vulnerable people with specialized proposals for high-yield investments, which usually concern financial products that are up to date.
Locating these companies is difficult because they are entities that change form easily and are far away from their victims. Call centers have been found in Albania and Ukraine calling people in Eastern Europe and South America. For this reason, to identify all these circuits requires extensive cross-border cooperation between the authorities.
To date, only the cooperation of the German, Bulgarian authorities and the Kosovo authorities, respectively, has led to the arrest in April 2021 of about 18 people, who were in several countries. They are mostly employees and executives in investment company call centers that used Israeli technology trading platforms.
