Europe – The Land of Milk and Honey for Cybercriminals?

The original article on Uwe Lenhoff and his cybercrime organization by Uwe Ritzer appeared in German the Sueddeutsche Zeitung on 15 May 2019. FinTelegram refers to the original version but has additions added. The EFRI co-founder Elfriede Sixt was interviewed by the Sueddeutsche Zeitung for the article.

The Uwe Lenhoff Cybercrime Case

The international special investigators assume in the Lenhoff cybercrime case that most of the investors’ money – minus relatively low costs, for example for the call centers – has flowed into the pockets of the cybercrime’s masterminds via an opaque network of companies. Tracks lead to tax havens like Samoa. The money was laundered through chains of companies, partly through the age-old trick of one company charging the other for marketing services that never existed.

The German Uwe Lenhoff is one of the alleged masterminds of this cybercrime organization. Lenhoff and his Israeli partner Gal Barak have been arrested in February 2019 on charges of financial crime, money laundering, and fraud. Lenhoff is the founder and main shareholder of the public Veltyco Group in the UK. The company’s shares have been hit hard by the arrest of its founder. At the time of the publishing of this article, the shares lost 28% and oscillate around GBX 2. Back in Sept 2017, at the hey-days of Lenhoff’s scam activities, Veltyco’s share price peaked at GBX 101, i.e. the company lost 98% of its market capitalization.

An Innocent Perpetrator

Uwe Lenhoff‘s Austrian lawyer says his client had nothing to do with any of this. At no time did he “cheat or mislead persons or instruct third parties to do so”. He cooperates with the investigating authorities from pre-trial detention and is “convinced that objectively conducted investigations can prove his lack of involvement in the accused criminal machinations and thus also his innocence”. His client, according to the defense attorney, had earned “substantial amounts in the online gambling field”, from which he “could live respectably”.

Two Ferraris Paid by Retail Investors

The latter is probably true; during a search of several hours of an apartment in Austria, where Lenhoff had spent several weeks with his girlfriend until his arrest, the investigators found tens of thousands of euros of cash in various currencies. There were two Ferraris in the garage. According to the prosecutor they have arrested a suspected cyber criminal in Uwe Lenhoff who illegally siphoned off millions of retail investors through the binary option schemes: Option888, ZoomTrader,.. Currently, Lenhoff is arrested in Austria because of the risk of flight and collusion. Lenhoff blames his former partners for the scams and fraud.

Funds Recovery

Meanwhile, more and more victims of broker scams are joining forces. EFRI, European Funds Recovery Initiative, is an international organization that provides support to defrauded investors and wants to help recover the stolen money from the perpetrators as well as the payment service providers involved in the scams. More than 700 injured parties have already registered with EFRI, says founder Elfriede Sixt.

The former Ernst & Young audit partner SIXT complains of massive deficits in criminal prosecution.

“Europe is a land of milk and honey for Internet fraudsters because it is not prepared for this new form of crime”

Elfriede Sixt – EFRI Founder, auditor, and CPA

A justified accusation, confirm insiders. Because while the Internet knows no national borders, the prosecutors are trapped in them. Even within Germany, there are no uniform standards for dealing with this kind of Internet fraud. One and the same offenses are recorded as different offenses in individual federal states. The non-cooperation between the European authorities has enabled international criminal organizations to rip off European small investors for their life-time savings for years now.

The cooperation of the police authorities is already very difficult within Germany because of the federal structures and it certainly doesn’t work across national borders,” says EFRI co-founder Sixt. The current case is a praiseworthy but rare exception. “By the time all official channels up and down have been followed, the fraudsters have disappeared.