On 1 September 2020, Gal BARAK, a citizen of Israel, 33, was sentenced to 4 years in prison at the Regional Court of Vienna,  by the Senate of lay judges chaired by Judge  Christian Böhm for serious commercial fraud and money laundering (pursuant to section 147 (3) StGB and section 165 STGB in conjunction with section 28 (1) StGB).

The Austrian victims (also represented by the European Funds Recovery Initiative (EFRI)) were awarded full compensation by the Court, payable within 14 days.

The  rather low sentence is due to a partial confession of the defendant. Gal BARAK had admitted in the course of the proceedings that small investors never had a chance of making a profit as the trades got manipulated by the scammers.

The charges against Barak were brought on 8 July 2020 after almost three years of intensive investigation by Austrian law enforcement authorities in close cooperation with authorities of other European countries. Gal BARAK, his wife Marina BARAK and more than a dozen accomplices had been investigated. Barak was arrested in Bulgaria in February 2019 on the basis of an EU arrest warrant and extradited to Vienna at the end of 2019, where he has been detained ever since.

The charges against Marina BARAK in Vienna will soon become final. Further charges against his accomplices are in preparation.

After an eight-weeks the jury found GAL BARAK guilty to

1. to be one of the beneficial owners and operators of the fraudulent binary options, Forex fraud platforms (“Brands”) XTraderfx, SafeMarkets, OptionStars/OptionStarsGlobal Global, Golden Markets from 2016 to 2019;

2. manipulate trading software (which was admitted by the defendant), the court found that no real trading activity could be ascertained, so that these online trading platforms were obviously only pure fraud facades;

3. Instruct  Boiler Room employees in Sofia, Belgrade and Serbia, to target and defraud thousands of victims, looting monies from retirees and other individuals. The evidence showed that the boiler room people  – let by GAL BARAK – falsely claimed to represent the interests of investors when, in fact, the owners of the brands (xtraderfx, safemarkets,..) profited when investors lost money. The boiler room employees provided false names and qualifications and made false claims about  wether and how investors could withdraw funds from their accounts.

The operation of the fraud platforms or boiler rooms resulted in damages of at least 2.6 million EURO to at least 1,330 Austrian citizens.

 In the course of the court case it was also established that the deposits paid by the Austrian victims were used directly to finance the operating costs of the mafia-style fraud system. The remaining amount was transferred into the economic power of disposal of the defendant and his accomplices and was shifted to offshore constructions as described by the defendant – in a tax-saving manner.

Further proceedings ahead

It is the very essence of the nation-state based EU legal system that each European country must separately prosecute fraud committed against its national citizens.

According to the customer data found in the confiscated documents, the total damage of the fraudulent websites operated by Gal BARAK amounts to more than 200 million EURO. The approximately 35,000 victims of the fraud scheme operated by the convicted person are found in all jurisdictions except the USA, Bulgaria, Serbia and Israel. It is to be expected that similar charges will be brought against GAL BARAK in Germany, Switzerland and other European countries and that the respective aggrieved parties will be given the opportunity to seek justice and compensation.

It is proven that BARAK has run its cybercrime organisation with partners from post-communist countries such as Ukraine and Russia etc. In particular, the suspects include Gery “Gaby” SHALON, an Israeli of Russian origin who has been charged in the U.S. with extensive cybercrime offences.  In addition, the Russian Vladislav SMIRNOV, already suspected in Austria of money laundering in connection with Meinl Bank.

Further steps by EFRI

Thanks to the Austrian law enforcement authorities, for the first time European victims of such a fraud system are now actually getting their payments back. The money is still in Bulgaria in the bank accounts of various shell companies of Gal BARAK, but EFRI will take care of a fast processing of this repayment. With regard to the claims of the victims of GAL BARAK from the various European countries represented by EFRI, we will – also based on the documents from the criminal case now available to us – take the appropriate legal steps in the coming weeks.

The EFRI Initiative, based in Vienna, Austria, now represents more than 830 mainly European victims of online investment fraud worldwide, with total losses of more than €36 million. Currently, victims of cyber criminals have to realise on a daily basis that there is neither adequate prosecution nor redress for this type of crime in Europe. The European Union is not prepared for virtual crime, which knows no borders, because of its federal system of law enforcement. As a result, European retail investors are helplessly exposed to the mafia-like and global structures of cyber criminals. The EFRI Initiative calls on the EU authorities to urgently respond to this threat.

Pls find here the German version of the posting.

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