Online trading fraud is a rapidly growing global problem. The Federal Bureau of Investigation (FBI) estimates that such scams stole about US$6 billion in the US and rich European nations alone in 2022. Tackling the gangs is difficult because they work across borders and change the forms of their deceptions frequently to evade detection.
In these types of crimes, victims are lured to click on enticing internet ads, which often borrow credibility from a well-known figure. A recent example targeted at Germany used fake news about Elon Musk quitting Tesla to run an AI investment firm.
They’re then pressured by phone and e-mail by syndicate workers to make an initial modest investment – around €250 or so – and increasing amounts after that. While investors may think they’re earning profits day by day, when they go to cash out, there’s no money.
One of the biggest centers uncovered by German prosecutors had more than 400 operatives in Kosovo. It scammed German victims out of some €32 million in less than three years.
For mainstream finance, online trading scams are becoming a reputational risk that’s no longer confined to the sidelines. Scammers have mimicked Deutsche Bank’s trading-platform Xmarkets, borrowing the name and its solid appeal to middle-class investors.
The brains behind the network of gangs running the scams have, in the past, picked on some very high-profile targets. One is Gery Shalon, the mastermind of one of the biggest-ever hacks on the US financial system. He had to return over $400 million as part of a deal with the US.
Shalon’s partners include fellow Israeli citizen Gal Barak, dubbed the “Wolf of Sofia” for building a scammer empire from the Bulgarian capital.
Employed to scam
Their call centers are run with multi-layered management, processes and accounting. They can have shiny offices, pay local taxes and offer seemingly legitimate jobs. The one run by Barak used to have a big recruitment banner at Sofia airport.
The job of the operatives is to contact customers who log on to one of the many websites – with names like “Zoomtrader” or “Option888” – and talk them into investing a relatively small amount of cash, with the promise of quick and easy profits. Clients are then handed over to other agents, who act as “investment advisers” and are trained to use techniques of psychological manipulation.
Customers are led to believe, through fake online software and the advisers, that their cash is invested in financial products ranging from currencies to stocks, bonds, crypto and even derivatives. Wins or losses can be generated on the website as needed, regardless of what the “real” markets are doing.
But their money is already gone. Some of the artifices are so convincing that some investors thought they have lost money due to market downturns.
Other than online trades, scammers also target vulnerable people in Europe through dating apps, such as a woman from Berlin who lost her life savings. When the 45-year-old was diagnosed with breast cancer in 2022, she signed up with an online dating platform to ease her mind from her illness.
She soon got to know what seemed to be a nice man of Asian descent and they started an intense chat relationship which comforted her. She didn’t question his explanation why the two couldn’t meet. He said he was in the wine business and had to be in New York frequently.
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