MARINA BARAK – was her preliminary acquittal a misjudgement?

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Marina BARAK was the acquittal a misjudgment?

MARINA BARAK – was her preliminary acquittal a misjudgement?

When German and Austrian prosecutors arrested Gal BARAK (the Wolf of Sofia) in Sofia on January 29, 2019, Marina BARAK took over the management of the boiler rooms of the cybertrading platforms xtraderfx, OptionStarsglobal, and safemarkets. Some of the victims registered with EFRI transferred money to the scam platforms by mid-March 2019. According to the European prosecutors, this was only possible because Marina BARAK had in-depth knowledge of the work processes since September 2015, when she started working as a personal assistant for Gal BARAK.

Nevertheless, on July 15 2021, an Austrian judge found Marina BARAK not guilty of having been involved in the fraudulent activities of Gal BARAK. The acquittal is not yet final. The Vienna Economic and Corruption Prosecutor’s Office objected to this acquittal by filing an appeal for annulment on April 13 2022. The final decision is pending before the Supreme court in Austria. Pls find a summary of the status of the trial to answer the question wether the (not yet legally binding) acquittal of Marina BARAK was a misjudgement of the Austrian court?

 

Details about Marina BARAK

Marina BARAK (formerly Andreeva), born on 14.08.1982, has Bulgarian citizenship. According to her statements, she graduated from a business administration university and worked for several years in London at an international bank. In January 2015, Marina BARAK started working for Gal BARAK as a personal assistant in E & G Finance EOOD (in the future E & G). On her LinkedIn profile, Marina BARAK (formerly Andreeva) has identified herself as CFO of E & G. Marina BARAK has also been assigned the role of CFO in E & G’s internal employee lists. Her principal place of activity was at the headquarters of E & G Bulgaria in Sofia (near the boiler room employees).

In Sofia, Marina BARAK and Gal BARAK got married on June 7, 2019. At that time, Gal BARAK was under house arrest in Sofia, Bulgaria.

As of September 1, 2020, Gal BARAK was found guilty by an Austrian criminal court for severe commercial fraud and money laundering. Gal BARAK was sentenced to four years in prison in Austria. Gal BARAK and his accomplices run the fraudulent cybertrading platforms xtraderfx, optionStarsGlobal, safemarkets and others. The authorities estimate the total damage caused by these platforms at about 130 Mio Euros.

 

The Indictment

By indictment of June 16.2020 (modified on March 15, 2021), the prosecutor’s office applied for a guilty verdict for Marina BARAK following the provisions of §§ 146, 147 para3, 148-second case StGB (Austrian criminal Act) as a party to § 12 third case StGB and § 165 para 1 and paragraph 4 first case.

Marina BARAK is said to have contributed to the crime of the severe commercial fraud of her husband Gal BARAK at least from September 9 2015, to February 2019 in the operation of the cybertrading platforms safemarkets, OptionStarsGlobal/Optionstars, xtraderfx (formerly Cryptopoint), goldenmarkets  by carrying out the following activities:

  • Employment and personnel matters of call center agents
  • The signing of consulting contracts and other agreements
  • Administration of the call center operations, provision of equipment for the call center agents)
  • Management of salary, bonus and cash payments for call center agents.

Furthermore, Marina BARAK (formerly Andreeva), as an accountant or de facto financial officer, is said to have been mainly responsible for concealing the origin of the stolen funds of the fraud mentioned above systems. In particular, Marina BARAK is said to have channelled the stolen funds collected by PAYVISION BV, among others, using fictitious contracts or bogus invoices to shell companies owned by Gal BARAK and his accomplices.

In detail, Marina BARAK allegedly

  • has set up the offshore companies for the operation of the cybertrading platform and the handling of money laundering activities,
  • have recruited persons to perform straw man functions and have, among other things, induced them to submit account opening documents,
  • arranged the signing of  powers of attorney, enabling her to administer the companies as mentioned above and bank accounts
  • has arranged the bank transactions within the criminal organization
  • has concealed the actual basis for payment and the origin of the funds for multiple transactions based on bogus resp fictitious contracts and documents.

The evidence

The  indictment results from documents and evidence mainly collected in various house searches:

  • Extensive bank documents of the operating companies of the cybertrading platforms (all offshore companies with straw people) showed that Marina BARAK was entitled to administer the accounts of all these operating companies. Through the bank account of the operating company News Markets S.A. (the Republic of Samoa; straw men: Ventisislav MIHAYLOV), Marina BARAK moved almost 23.6 million euros of victims’ money in 1.5 years. Between February 2018 and February 2019,  Marina BARAK moved 34.45 million euros of victims’ money through the account of Gpay Ltd (straw man: Georgi KOMISAROV). For both companies, a bank power of attorney for Marina BARAK was issued by the straw men after opening the bank accounts; the straw men also deposited Marina BARAK’s phone number for contact and e-banking purposes.
  • Ventsislav MIHAYLOV had been appointed as the so-called “director” and sole shareholder of New Markes S.A. and came from the homeless milieu.
  • According to the bank documents, Marina BARAK had access to more than 14 central bank accounts in the money laundering cycle.
  • Marina BARAK made over EUR 4 million cash withdrawals from 8 different bank accounts from September 2015 to February 2019.
  • Marina BARAK has made hundreds of payments and approvals via her mobile phone using iTAN approvals (including payments to service providers such as Payvision B.V.).
  • Bank records of Global Marketing Solutions/G.M. Solutions, based in St. Vince, and the Grenadines, including two bank accounts in Mauritius, with references to an economic owner MARINA BARAK. In one of the two accounts of Global Marketing Solutions in Mauritius, a total of € 1.04 million flowed from March to August 2017.
  • Numerous Chat messages between Marina BARAK and Kfir LEVY (Call Center Manager in Sofia) reflecting discussions about open or planned collective transfers from the payment service providers Dreamspay/ PAYVISION B.V.
  • Chat messages evidencing that Marina BARAK took over the management of the boiler rooms the day after Gal BARAK’s death.
  • Chat messages showing Marina BARAK’s active role in the day to day management of the criminal organization.
  • Mail traffic from December 2018 shows that the banks froze bank accounts of the companies Rockerage, Key Power and Dynamics due to fraud allegations. Marina BARAK was subsequently involved in the drafting of necessary contracts and the signing of these bogus contracts by the straw men.
  • Chats and e-mail messages showing Marina BARAK  set up fake invoices resp fake contracts on her own.
  • Marina BARAK signed software license agreements and affiliate marketing agreements with service providers of the criminal organization in her capacity as an agent for the operating companies.

The Trial

At the trial, Marina BARAK pleaded not guilty.

She told the court that during the period from January 2015 to February 2019 (more than four years) she had no perceptions of the content of E & G’s business activities. She was not the financial officer.

Nor would she have had any perceptions of fraudulent activities. Concerning the media reports on Fintelegram  (published from summer 2018 onwards) about the fraudulent activities of Gal BARAK, her husband could plausibly explain that it would be exclusively defamation.

The straw men (e.g.: MIHAYLOV and KOMISAROV, STOSIC,..) who had issued her full power of attorney were unknown to her.

Concerning the bogus invoices, she acted according to her husband’s instructions and did not question them. However, she had assumed that the justification for the many offshore shell companies, straw men and the bogus invoices and contracts was tax-related.

She could not provide any information on the contracts and documents of E & G’s business activities, as she had nothing to do with the operative business resp. With the drafting of any contracts and vouchers due to her purely commercial activity.

The defendant also claimed to be currently unemployed, and except for a small real estate in Bulgaria worth about 150,000,– euros she has no assets.

The verdict

With the (not yet legally binding) verdict of July 15 2021, served on January 25 2022, Marina BARAK was acquitted of all charges by the jury under the direction of Judge Claudia Moravec-Loidolt.

The material findings made by the Presiding Judge on the objective and subjective side of the facts are as follows:

The evidence has shown, and so it was also found in the proceedings against Gal BARAK, that the fraudulent transactions were done in compliance with generally accepted business administration rules. 

As long as business activities and cash flows via so-called offshore companies are legally permissible, it cannot necessarily be concluded from the fact that offshore companies were founded and integrated into a business model that these were illegal transactions, as it is possible to legally use an offshore company for tax reasons, which the defendant assumed in case of doubt.

Marina Ivanova BARAK had nothing to do with the operationally fraudulent business of her husband and his accomplices. It did not contribute to their criminal acts through her (purely) commercial activity. She ensured the day-to-day course of the office and collected the first vouchers. With the deposits of customer funds and their management, she had nothing to do and no knowledge of them.

Marina BARAK was not involved in the operational business. She was not CFO.

CFO was Delzar Khalal. The defendant was responsible for administrative matters of E & G, issues that had nothing to do with the operation of the fraudulent cybertrading platforms.

She carried out the 173 cash withdrawals mentioned in the indictment from 2017 to 2019 exclusively on the instructions of her husband and used the cash payments exclusively for bonus payments to the employees.

Marina BARAK had nothing to do with the fraudulent operational business of her husband and his accomplices and did not contribute to their criminal acts through her commercial activity. 

She had nothing to do with customer complaints. Questioned about the substance of the matter, the defendant stated that she had known that these cyber trading platforms mentioned in the case existed. However, she did not know how they had been created; she did not see how the cybertrading platforms were advertised. She had also contributed nothing to the training of the agents and had nothing to do with their activity (she only paid the commissions).

She assumed that the establishment of offshore companies and the related transactions had tax reasons exclusively.

The powers of attorneys issued only enabled her to fulfil her function as a financial officer for the companies mentioned above.

She was not involved in the operational business. 

Her activity per se were profession-specific actions that she had carried out. They were not suspected acts.

She signed bogus contracts and bogus invoices on instructions without knowing their actual background.

The defendant carried out a regular administrative activity at E & G. Her activities were normal business activities as the business operations around the Cybertrading platforms were normal.

As long as offshore companies are legally allowed, they are not suspect per se, just as cash withdrawals are not suspect per se.

Although the court finds that Marina BARAK was the accountant of a severe criminal organization, the court is convinced that she was used by her husband Gal BARAK – in summary – as a willless tool for carrying out transactions using bogus invoices and sham contracts.

 

The appeal for annulment

On April 13 2022, the Vienna Public Prosecutor’s Office appealed for annulment of the above judgment, pointing out inconsistencies in the judgment findings. The public prosecutor accuses the court of having disregarded essential procedural results at the trial and being in contradiction to them.

For example, no explanation is given as to why the court of the first instance suddenly uses Delzar Khalaf to provide Marina BARAK’s own statements in her LinkedIn profile on her work as CFO, especially since he does not appear once in E & G’s employee lists.

 

So was the preliminary acquittal of Marina BARAK is misjudgment?

For sure  we were stunned by some of the criminal court’s findings:

The administration of the fraudulent activities was done in compliance with generally accepted business rules (sic!).

In the presence of an enormous number of bogus invoices, fake contracts, and dozens of offshore shell companies, it is just impossible to imagine that Marina BARAK administered the operation in compliance with generally accepted business rules or accounting rules

The legality of offshore companies (sic!)

Offshore companies only exist (legally) for economic purposes if they are companies with actual business operations, and only then do they achieve the desired tax savings. Without personnel and existing business operations, pure shell companies founded only for anonymization and money laundering are economically and for tax purposes irrelevant and illegal.

Business operations around the fraudulent websites were business as usual (sic!)

How far, with countless offshore shell companies and homeless as straw men, cash withdrawals in the millions, and steady creation of fake invoices and bogus contracts, the court can speak of business operations, as usual, is quite incomprehensible to us.

Marina BARAK was merely an accountant; she was not involved in any business transactions and had no idea about the kind of business. (sic!)

This statement also surprises us; how can proper accounting papers be established if there is no knowledge of the business.

Some of Marina BARAK’s statements seemed  a bit alien to life:

No idea about the dispute between Ilan TZORYA/GAL BARAK/Gery SHALON

Marina BARAK explained that she never discussed any professional matters with her husband at home. So she would have had no idea what the dispute between Tzorya and GABY SHALON and VLAD SMIRNOV was about. This dispute led to mutual criminal charges, several lawyers’ appointments attended by Marina BARAK and ultimately dismantled the fraud network.

Wealthlessness and unemployment

One of Vienna’s most sought-after criminal defence lawyers, Norbert Wess, defended Marina BARAK. The court neither discussed Marina BARAK’s monthly salary nor her ownership of different bank accounts with substantial balances during the hearings. How can a Bulgarian accountant afford one of the most expensive lawyers in Austria?

Missed evident information about the fraudulent activities

In our opinion, the judge failed to respond to the obvious indications that inevitably led to Marina BARAK knowing about the fraudulent activities in the company:

  • Existing customer complaints and criminal complaints
  • Business partners who were convicted and imprisoned cyber criminals like Gery SHALON
  • Countless public warnings from financial market supervisory authorities in Europe about xtraderfx, OptionStarsGlobal, safemarkets.
  • banks were freezing bank accounts over fraud allegations during four years of business operations.

In summary, we agree with the judgement that Marina BARAK was the accountant of the criminal organization around GAL BARAK. But we definitely think that the (not yet legally binding) acquittal of Marina BARAK was a misjudgment of the Austrian court. We believe that Marina BARAK belongs behind bars for a considerable period of time, mainly because no remorse or insight was recognizable during the trial.

 

 

What comes next?

In Austria, the judgment of the Supreme Court now remains to be seen. Marina BARAK was charged in Austria only for the damage to the Austrian victims. Thus, the upcoming decision of the ECJ in the case of Gal BARAK (see our story here) is also decisive for the further fate of Marina BARAK.

Suppose the ECJ decides in its upcoming decision that Gal BARAK can be indicted again in Germany; the German prosecutor will also indict Marina BARAK for being part of the criminal organization.

Courts also make mistakes. We hope that the Austrian Supreme Court will correct this one.

Pls read here in German.