PAYVISION had no issues at all in onboarding shell companies (Part III)!

communication between GAL BARAK and Payvision

PAYVISION had no issues at all in onboarding shell companies (Part III)!

EFRI represents more than 910 European consumers who have been ripped off by investment scams, stealing EUR 49,8 mio of their lifetime savings. The harm done to hundreds of thousands of European consumers – mainly older and vulnerable people – during the past years by investment and boiler room scams is nothing short of shocking: massive financial losses, psychological distress, and mental illness resulting from such an experience. Unsuspecting European consumers lose their life savings to unscrupulous international fraud organizations. EFRI tries to support victims in getting justice.

No scams without payment processors and shell companies!

The investment scam tsunami sweeping Europe would be impossible without willingly enabling payment processors. The scammers’ fraudulent business is made possible, in part, by their lengthy, personal, and close relationships with enablers like lawyers, company builders, and payment processors.

The criminal files of the Vienna Cybercrime Trials (#VCT) show in great detail the extent and the specifics of such collaborations between scammers like Gal BARAK and licensed payment processors like PAYVISION B.V.

Profitable partnerships indeed

Gal BARAK was the head of an international cybercrime organization operating fraudulent online trading schemes, including OptionStarsGlobal, xtraderfx, safemarkets, goldenmarkets. The criminal organizations’ Bulgarian boiler rooms defrauded thousands of European consumers.

According to estimates of the Austrian law enforcement, Gal BARAK’s fraudulent organization stole more than EUR 130 Mio between 2016 up to the end of January 2019. 75% of the total volume of this money was transferred from the victims to the scammers via the Dutch licensed financial institution PAYVISION – a 100% subsidiary of ING Group N.V. Amsterdam. Rudolph BOOKER, founder and ex-CEO of  PAYVISION, has been BARAK’s acquiring institution of choice. PAYVISION was referred to Gal BARAK by Uwe LENHOFF – a German scammer – who died about a medical overdose in July 2020 in his arrest cell in Saarbrücken.

The Vienna Cybercrime Trials (#VCT) files show that late 2016, 2017, and early 2018 were the most successful times for BARAK’s fraud organization. Most of the victims’ deposits were made during these 20 months. This was also when BOOKER tried to sell its company successfully. He and his partners sold its high-risk merchant processing FinTech PAYVISION to ING Group N.V. at a valuation of EUR 360 Mio.

So, being a payment processor for fraudsters and scammers pays off.

However, as one can learn from the BARAK’s criminal files, it is often challenging to meet all the scammers’ requirements.

The KYC challenge with shell companies

PAYVISION BV is a Dutch financial institution licensed by the Dutch Central Bank (in Dutch: De Nederlandsche Bank “DNB”) to provide payment services in the European Economic Area (EEA). According to the Card Scheme rules, PAYVISION is authorized to process credit card transactions for European merchants.

For scammers, the requirement to have European companies shown as operating companies on their fraudulent websites always poses a challenge. Potential legal actions from victims and enforcement agencies make presenting offshore companies as operating companies on scam sites more advisable. Scammers learn quite early the rule that the more shell companies and offshore countries are involved in a scam, the lower the probability that European enforcement agents will act.

Legally onboarding new merchants requires the payment processors to do a proper Know-Your-Customer (KYC) check. Part of KYC is the due diligence of the potential merchant’s business, including a detailed review of its webshop. A proper KYC process quickly reveals irregularities with a webshop. Any applying E.U. merchants running websites showing offshore operating entities registered on The Marshall Islands, The British Virgin Islands, Vanuatu, St. Vincent and the Grenadines, Samoa, or other offshore destinations will raise red flags during onboarding.

Thus, scammers have to look out for “flexible” payment processors. Some payment processors regard KYC/AML guidelines and regulatory restrictions as nice-to-have recommendations.

Gal BARAK and Uwe LENHOFF have been lucky to find Rudolph BOOKER and PAYVISION BV. PAYVISION BV applied a very flexible approach in onboarding shell companies as merchants for fraud websites. For example, PAYVISION had no issues onboarding the Bulgarian shell company Markets Development EOOD  for card payments on the scam website OptionStarsGlobal.  New Markets S.A, Novasage Chambers, Level 2 CCCS Building, Beach Road, Apia, Republic of Samoa, publicly operated the OptionStarsGlobal website and addressed European victims. So PAYVISION processed illicit transactions for more than four years for the scam website OptionStarsGlobal, showing a company from the Republic of Samoa as the operating company and processing millions and millions of stolen money for this website.

Let us restructure the criminal organization!

After receiving a short instruction (four sentences on a slip of paper) from the Bulgarian merchant’s (a shell entity) Nominee Director to transfer part of the stolen money directly from the PAYVISION bank account to the bank account of the offshore entity, i.e., New Markets S.A. Novasage Chambers, Level 2 CCCS Building, Beach Road, Apia, Republic of Samoa, PAYVISION happily did so and transferred more than EUR 10 Mio to a company, they never had a merchant contract with. In the criminal proceedings files, the shell entity’s Nominee Director confirmed that he never had any contact with employees of PAYVISION himself. All was arranged by BARAK, i.e., the beneficial owner and ultimate perpetrator, a/k/a scammer, who directly linked to BOOKER.

At the end of January 2019, when PAYVISION had already canceled all the contracts with Gal BARAK because of the exposure media reports on Fintelegram, PAYVISION requested a general “restructuring” of the company structure. The respective documentation is available in the seized email communication. Part of the requested restructuring was to arrange for a European company to act as the operating entity for the online trading scam OptionStarsGlobal.

On January 28th, 2019,  Gal Barak informed his people that he succeeded in getting a 3rd-way arrangement with BOOKER/PAYVISION, so no further restructuring effort is required.

Due to Gal Barak’s arrest on January 29th, 2020, we never learned the details of the third-way arrangement between Gal Barak and Rudolf Booker/PAYVISION.