Examples of investment and other financial fraud
“Investment fraud – what to do?” is an enquiry we receive time and again. We can take on some of these enquiries for processing. Here are a few experiences:
- Ripdeal Northern Italy: Ripdeals are fraudulent barter transactions. In this particular case, the customer was offered an extremely advantageous exchange deal of Swiss francs for euros, in cash and so advantageous because it was not taxed money. The client did check the money handed over to him in the suitcase, but only hastily under time pressure. Later he discovered that only the top notes in each bundle were genuine, but the rest were counterfeit. Through extensive research, we obtained all the data on the gang of fraudsters, especially their whereabouts. We contacted them on the spot, showed them our material and told them that, unless they called us otherwise by a certain date “today”, colleagues would hand over the material to the public prosecutor’s office. We got back CHF 450,000 of the half million in instalments; then we lost track of it. At least the client got off lightly.
- International internet fraud with “trading deals”: The internationally operating gang of criminals promised large returns from so-called “trading transactions”. The client paid in over half a million over months; he had to transfer this in Bitcoin (this is to make tracing more difficult). We constructed a fake scenario by means of which we lured the criminals to Switzerland. We offered a larger sum, but they would have to pick it up in Switzerland because it was black money (fraudsters love this because they think they have the victims “under control”). The plan succeeded. Part of it was that we informed the police, and the criminals were arrested in an agreed scenario. Of course, we didn’t have the people behind it in front of us yet. Through the investigation and conviction in Switzerland, it may be possible to identify them.
- Fraudulent estate agent in Switzerland: The client bought a luxury villa. The real estate agent told him a sob story about needing CHF 100,000 in advance, which would then be offset against the commission. By chance, the client discovered that the 100,000 went into the real estate agent’s pocket and that the story had been made up without the knowledge of the seller. It was presented by the estate agent as an “outside commission”. Two legal opinions concluded that a lawsuit for double-crossing (german: “Doppel-Mäkelei”) would have a chance of success. However, it would also lead to high costs, years of trouble and possibly a certificate of loss in the end. With patience and professionalism, we uncovered the broker’s weak points. With countless dodges and the help of a good lawyer, he then wanted to avoid a lawsuit and refunded the 100,000.
- Romance Scam Switzerland/Europe: A woman maintained an apparent love relationship for a year with a man she had met in a chat. A meeting was allegedly not possible because he was in a ” psychiatric clinic in Bern” because of burnout and depression and could not leave this yet. His fake identity was very well-founded and cleverly constructed. To help him, the client transferred CHF 62,000 to him in instalments. We were able to prove all addresses, pictures, etc. of the fraudster as false and concluded that he had never stayed in Switzerland. We had evidence of a stay in Portugal or Belgium. A criminal complaint in Switzerland led to investigations. The public prosecutor’s office did not find the fraudster either. However, an alert was issued for him in RIPOL (Switzerland’s automated police search system) and ISS (Schengen Area Information System) and he will be arrested if he gets into a control.
- Internet fraud London. A Swiss client lost almost CHF 100,000 to an internet fraudster. We followed up all the clues on the internet and at the available addresses in the London area for a year. We succeeded in identifying a man in Germany who had worked for the fraudsters as a money courier and was thus guilty of money laundering. We put massive pressure on him locally so that he paid back the entire sum.
Procedure for debt collection in cases of fraud
The examples show that the procedure in fraud cases is basically not different from our general procedure: Analyse the case – Investigate – Develop pressure scenarios – Negotiate – Apply pressure scenarios.
There are also two special features:
- finding the criminals is often the most urgent investigative task. In the case of internet fraud, they hide from the outset. Others disappear after the crime. We use methods of analysis that we do not communicate and work with fake identities ourselves. We clarify clues about specific persons, places, bank accounts, etc. on the spot.
- The second peculiarity is that criminal offences are involved here, in addition to fraud often also Forgery of documents, embezzlement, disloyal management, etc. This brings new starting points, but also hurdles.
Criminal law aspects – victim co-responsibility
From a criminal law perspective, fraud is an intentional planned act by which the deceiver obtains a pecuniary advantage for himself or a third party that reduces the assets of another and in which he creates or maintains a misapprehension by false pretences (or by distortion or suppression of true facts). Deception is thus a central criterion for fraud. In Swiss criminal law, the hurdle is set higher. Here, malice is required. This means that the criminal must have achieved a structure of lies on the basis of which it was made particularly difficult or even impossible for the injured person to recognize the fraud. This could be the case, for example, if the criminal has professionally forged documents, hires accomplices who falsely confirm that they have carried out such transactions successfully and to their complete satisfaction, etc. It is important to note that a simple deception or lie is not sufficient to constitute fraud in (Swiss) law.
It is not always clear from the outset what fulfils the criterion of malice. This depends, among other things, on the status of the victim. For example, is it a commercial investor or a simple private person? In the first case, one would expect the investor to be able to recognize danger signals, to make creditworthiness enquiries and obtain references, etc. A “simple” private person is often not able to do this. If the injured person could have avoided his error by exercising a minimum of reasonable caution, there is victim co-responsibility and the public prosecutors would refuse to press charges.
We often file criminal charges in fraud cases, but we do not file them at first. We keep them in the back of our minds for discussions with the fraudsters. We incorporate our knowledge and the criminal law implications in such a way that it becomes clear what could happen without a settlement. Often the criminals prefer to negotiate with us and pay.
If a criminal complaint is filed and leads to an investigation, a charge, and a conviction, we have the following options:
- If the offender makes restitution (damage reparations), this has a mitigating effect on the sentence.
- There is also the possibility of making a so-called declaration of disinterest. Now, fraud is an official offence, which means that the authorities must investigate it. However, a declaration of disinterest can change the priorities and, in borderline cases, also lead to a discontinuation of the proceedings.
If the case goes to trial, the aggrieved person can constitute himself as a private plaintiff and, if convicted, will receive a civil title. Even after conviction, possibly with a prison sentence of several years, the debt collection process is not yet over. One can and must stay in contact with the offender, even if he is in prison. One must carry out the civil legal debt collection and observe when the offender regains income and assets.
Investment fraud what to do? A few immediate tips
- No further deposits of any kind! Even if the reasons and the “offers” seem so tempting or deterrent (“Otherwise the whole transaction will bounce”, “We can double the profit this way.” etc.).
- Block any access to devices such as laptops, tablets, smartphones or online banking, wallets etc. Give the fraudster an excuse (“My laptop had to be reset”, etc.) so as not to warn him prematurely.
- Often the advice is given to cut off all communication. This is not wise because it shows the deceiver that something might be going on against him. It is better to keep up the pretense of communication, give reasons for delay, etc., while taking countermeasures. We can often draw valuable conclusions from the communication observed in this way and already achieve investigative results.
- Communicate openly with partners, family members, etc.: Sometimes those affected by investment fraud have not told those around them, either because they want to “surprise them with high profits” or because they are ashamed of having fallen for a scam. Feelings of guilt and subsequent problems weigh even more heavily if they cannot be shared with anyone. Feelings of guilt are also pointless, because as a rule, there is no complicity on the part of the victim, but the only guilty party is the fraudster.
- Normally, one should not immediately go to the police or file a criminal complaint. By doing so, you may be giving yourself or the agents an option. Threatening with a lawyer and the police alone does not work with fraudsters.
- Seek professional help, specifically a specialized lawyer or a specialized debt collection company.
What if the scammers harass or even threaten you?
Fraudsters sometimes try to use manipulation or pressure to obtain further deposits or actions or to intimidate you. For example, victims receive countless emails with announcements, new offers, threats, and flimsy reasons. Pressure is also exerted via SMS, WhatsApp, and telephone. In one case, we experienced that the scammers threatened a personal visit to the victim’s home.
As a rule, however, fraudsters are not violent. The effective use of physical force is unlikely, although you should always be prepared for anything. Respond clearly, but not hostilely. Communicate that, depending on the situation, you will insist on a refund of payments made, that you will not make any further payments and that you will not respond to pressure. You are always available for a fair reversal. In the meantime, you should have already applied for professional help who can advise you and take on a mandate against the fraudsters.
The prevention of fraudulent transactions, especially capital investment fraud, is the most important point, even if not all cases of fraud can be prevented even with this. It is the essence of fraud that a web of lies is built up that is difficult or impossible to see through or verify, that documents are professionally forged and people, even experts, are skillfully manipulated. The subject is complex, and we will soon devote a separate article to the topic of prevention and investor protection.
We can make you the following offer for prevention: If you have a business offer or are faced with a transaction about which you have doubts, we will check the matter and advise you. Due to experience, fraud patterns can often be recognized beforehand. We pass this know-how on to you in the specific case. We charge an hourly fee to be agreed in advance for the consultation.