For many victims but also for lawyers and authorities, the perpetrators behind the scams such as Option888, XtraderFX, Blue Trading, KayaFX, RoyalPIP, StoxMarket, KontoFX and many hundreds more are the operators of the respective website and domain. This is a wrong view or at least just part of the big picture. As a matter of fact, it’s a scam triangle with three major players – domain & website owner, boiler rooms, and payment services providers (PSP).
In almost all cases, the registered scam domains and their associated websites are operated by various shell companies with nominee directors and trustees (scammers call them “monkeys”). Those shell companies are registered offshore on the Marshall Islands, in Estonia (unfortunately an EU offshore country and paradise for scammers) or in London.
But the real perpetrators are the boiler rooms (call centers) and their agents. And the Payment Services Providers (PSP) involved in the payment facilitation:
- Fishing: fraud websites are fishing for new client-victims with marketing campaigns and fake ads!
- Stealing: the agents of the boiler rooms persuade registered clients (or prospects) to make new deposits with false representations, lies about returns and fake CVs.
- Laundering: Payment service providers facilitate the flow of money to the fraudsters.
- Payment gateway providers (like Wirecard or Payvision) use their software-as-a-service approach to enable the fraudsters to offer as many payment methods as possible for their fraudulent activities.
- Wirecard, Payvision and others very often offer their bank accounts for bank wires (like with Option888) and/or act as the acquirer for credit card payments (like with AlgoTech/BeAlgo) (Wirecard calls this “cross-selling its services”).
- Very often with Wirecard, for example, being the payment gateway provider, it also acts as a reseller – looking for third-party acquirers and taking the economic responsibility for these third-party acquirers.
- And there are the many shell companies that facilitate the transfer of the bank transfers to the fraudsters.
Fintech-based payment services are a complex and highly fragmented market segment. But whatever service is offered by these Payment service providers- all services for sure help to launder the stolen money.
The U.S. Precedent Yukom
In the United States, in the precedent case of Yukom Communications, the CEO of the Boiler Room organization, Lee Elbaz, and five boiler boom agents were found guilty or have pleaded guilty to fraud. Another 12 have been indicted. In the case of the OneCoin scam, the money-laundering lawyer and payment coordinator Mark S. Scott has been convicted and others will follow. All will receive imprisonment and fines. This is the right approach for law enforcement and funds recovery.
Without these boiler rooms and PSPs the scams would not be possible. Therefore, the victims and the authorities must hold the owners and managers of these boiler rooms and PSPs accountable. They are also jointly responsible for repaying the stolen funds. The standard excuse for boiler rooms and PSPs is that they didn’t know they were working for scammers. This is outright bullshit in the vast majority of cases due to public warnings by financial market regulators but also due to the available documents and personal relationships. Do not believe those excuses!
Sure, it’s more complex but let’s start with the scam triangle!
Sure, around the scams there are a number of other contributors such as software developers, Voice-over-IP providers, or marketing companies. It is indeed more complex but the scam triangle is a beginning to expose scams and prosecute their perpetrators.
The boiler room operators and PSPs must be held legally responsible and refund the stolen money to the victims. FinTelegram is working on this together with the European Funds Recovery Initiative (EFRI). Exposing those co-conspirators and scam facilitators is of utmost importance for funds recovery and the fight against future scams.
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