[Economics] BBC investigation: the network of scammers that steals people's savings through fraudulent investments

[HeWhoRemains™]

A global network of fraudsters stole more than $1 billion from ordinary investors. The BBC Eye program identified a shadowy network of businessmen who appear to be behind this network.

First, you hear a phone ring. An elderly man answers.

The person he calls introduces himself as "William Grant", from the trading company Solo Capitals. He says that he has a "great promotion" to offer.

The old man sounds vulnerable and confused. "He doesn't interest me, he doesn't interest me," he says.

But William Grant is persistent. "I just have one question," he tells the old man. "Are you interested in making money?"

Jan Erik, a 75-year-old retiree in Sweden, is about to get scammed again. The call was made from the offices of Solo Capitals, an alleged Georgia-based cryptocurrency trading company.

The recording is difficult to listen to because the old man, Jan Erik, not only sounds confused, but tells the caller that he has already lost one million SEK (about US$96,000) in scams.

But the person he calls already knows. And he knows that makes the retiree a good target for a "repossession scam."

He tells Jan Erik that if he gives up his card details and pays a 250 euro deposit, Solo Capitals will use special software to track down his lost investments and get the money back from him.

"We will be able to recover the full amount," says William Grant.

It takes him a while to convince Jan Erik out of exhaustion. But after about 30 minutes on the phone, the retiree starts reading his credit card details.

The company saved the audio recording under the file name "William Sweden Swindled".

The BBC obtained the file from a former employee, but the company had made no effort to hide it. In fact, he had given it to new employees as part of the company's training package.

It was a lesson in how to con.

The fraud
For more than a year BBC Eye has investigated a fraudulent global trading network of hundreds of different investment firms that defrauded clients like Jan Erik out of more than $1 billion.

Our investigation reveals for the first time the scale of the fraud, as well as the identities of a shadowy network of individuals who appear to be behind it.

Police know the network as the Milton group, a name originally used by the scammers themselves but dropped in 2020.

We identified 152 companies, including Solo Capitals, that appear to be part of the network. They operate by contacting investors and scamming them out of thousands or in some cases hundreds of thousands of dollars.

An investment firm from the Milton group even sponsored a top-tier Spanish soccer club and ran ads in major newspapers, giving it credibility with potential investors.

In November, BBC Eye accompanied German and Georgian police in raids on call centers in the Georgian capital, Tbilisi.

On computer screens we saw row after row of British phone numbers.

We called several of them and spoke to British citizens who told us that they had just invested money.

On a desk was a handwritten note listing names and details useful to scammers: "Owner, no responsibilities"; "50,000 in savings"; "From Poland, British citizen"; "50,000 in shares."

Next to the name of a British man, a note read: "Savings under 10,000, very cowardly, should be ripped off soon."

Most victims sign up with companies after seeing an ad on social media. In less than 48 hours they usually receive a phone call from someone who tells them that they can get returns of up to 90% per day.

On the other end of the phone is usually a call center with many of the hallmarks of a legitimate business: a modern office with a human resources department, monthly goals and bonuses, days off, and contests for best salesperson.

Some call centers play background music. But there are also elements not found in a legitimate business: a written guide on how to identify a potential investor's weaknesses and use them against him.

From their first phone call, victims can be directed to regulated companies or sometimes unregulated offshore entities.

Some victims registered with regulated companies within the Milton group are directed by brokers to carry out transactions designed to lose money for the client and produce profit for the stockbroker, a practice that is illegal under UK regulations.

Some victims are told to download software that allows the scammer to remotely control customers' computers and perform transactions for them, which is also illegal.

According to former employees of Milton group companies, some customers think they are making real transactions, but their money is simply being diverted to other accounts.

"The victims think they have a real account with the company, but in reality there are no transactions, it's just a simulation," said Alex, a former employee who worked at an office of the Milton group in Kiyv, Ukraine.

To better understand how the scam works, the BBC posed as a potential investor and contacted Coinevo, one of the Milton group's trading platforms.

They connected us with an advisor who said his name was Patrick, who told us that we could make "70%, 80% or 90% profit in a single day." He told us to send US$500 worth of Bitcoin as a deposit to start trading.

Patrick pressured our covert investor to provide a copy of his passport, and after supplying a false copy, we were able to continue operating the account for approximately two months before Coinevo appeared to detect the forgery.

At that time Patrick wrote us an email insulting us and cutting off contact.

But the money from the BBC deposit was already in the system. We were able to track it as it broke up into small fractions and moved through many different Bitcoin wallets, all apparently associated with the Milton group.

Experts told the BBC that bona fide financial institutions do not funnel money that way.

Louise Abbott, a lawyer who specializes in cryptocurrency and fraud, examined the flow of money and said it was indicative of "large-scale organized crime."

Abbott noted that the reason the money was distributed to different Bitcoin wallets was "to make it as complicated as possible and as difficult as possible for you, the victim, or us, the lawyers, to find it."

the perfect target
Often the financial and social circumstances of the victims of these phone scams are used against them.

People who reveal large savings are persuaded to make large investments. With people who feel lonely, scammers are friendly.

Jane (whose name we changed for this story) had recently retired and was a perfect target.

She had just accepted voluntary redundancy and she had almost £20,000 (about US$25,000) which she thought, if she invested wisely, could supplement her pension for years to come.

In June 2020, during the first pandemic lockdown, Jane saw an online ad for a company called EverFX.

At that time EverFX was one of the main sponsors of the top-tier Spanish soccer team Sevilla.

The club's stars had advertised the platform on social media, and Jane found that it was regulated by the UK's Financial Conduct Authority (FCA).

Jane sent a message to EverFX through her website. They returned her call and connected her with someone she was told was a senior broker.

He told her that he was calling from Odessa, in the Ukraine, and that her name was David Hunt. His accent seemed to be Eastern European, she said, Jane, but she couldn't place it.

Hunt took an immediate liking to him.

"He really knew what he was doing, he knew how all the markets worked," he said. "I got right into this."

Soon they were talking almost every morning, and Jane began to reveal specific things she needed money for: expensive roof repairs on her house, a reserve for her pension.

Hunt used that information against her, according to Jane, telling her that certain transactions would "give her that ceiling" and "help her future."

Over the next few months Jane invested about £15,000 ($18,000). But her operations were not going well. Hunt advised her to withdraw the money from her and invest in a different platform, BproFX, where she could get better returns.

At that moment, Jane had complete confidence in David Hunt. "I felt like I knew him well and I thought he was protecting my interests," she recounted through tears. "So I agreed to make the switch."

What Jane did not know was that BproFX was an unregulated offshore entity based in Dominica.

Actually, EverFX being regulated in the UK did not stop it from defrauding British citizens. But the move to BproFX stripped Jane of even the few protections she might have under UK law.

The BBC found several victims who were convinced to move to unregulated companies in this way.

In September 2020 Jane agreed to invest £20,000 in BProFX, and Hunt advised her on various transactions over the following months. But she somehow kept losing money.

Other victims told the BBC they were scammed in the same way. Londoner Barry Burnett said he started trading after seeing an EverFX ad, but after some early gains, he suddenly lost more than £10,000 in 24 hours.

The stockbroker then pressured him to deposit another £25,000 to get out of his black hole.

"I must have gotten at least six calls in the space of about two hours," Barry said. "They begged me to put more money."

Jane faced similar pressure from David Hunt. "He told me that the more I put in, the more I would get back," he said.

Instead, both Jane and Barry finally decided to stop investing.

Barry had lost £12,000 (about $15,000); Jane, £27,000 (about $33,000).

"I'm horrified, like stunned," Barry said.

Both made dozens of phone calls to find out about their losses, but to no avail.

David Hunt stopped answering Jane's calls. She knew that she had lost everything.

"The day I found out was my birthday," she said.

"It was during the pandemic. My family had a little outdoor gathering and brought me a cake and I was trying to be happy but I felt so humiliated. I felt like I didn't want to be on the planet anymore."

It would be months before Jane could work up the courage to tell anyone what she had done.

putting the pieces together
The Milton group's operations were previously investigated by Swedish newspaper Dagens Nyheter and others, but the BBC set out to identify the main figures behind the global scam.

We begin by reviewing publicly available corporate documents to map the connections between the Milton group companies.

Five names appeared again and again as heads of Milton's business platforms or supporting technology companies: David Todua, Rati Tchelidze, Guram Gogeshvili, Joseph Mgeladze and Michael Benimini.

We checked the five names in the Panama Papers, a massive 2016 leak detailing offshore companies, and found that four of them - Tchelidze, Gogeshvili, Mgeladze and Benimini - were listed as directors or senior figures in a group of offshore companies or companies. subsidiaries that preceded the Milton group.

Many of these non-Milton companies can be traced back in some way to one individual: David Kezerashvili, a former Georgian government official who served for two years as the country's defense minister.

Kezerashvili was ousted as defense minister and later convicted in absentia of embezzlement of more than 5 million euros of government funds.

At the time of the conviction he was living in London and the UK he refused an extradition request from Georgia.

There were no publicly available documents linking Kezerashvili to this pre-Milton network. However, when we examined the Panama Papers, his name appeared again and again as the founder of the parent companies in the network or as one of its initial shareholders.

Behind the scenes, Kezerashvili seemed to be at the center of that web.

In regards to the Milton group, there was also no publicly available documentation linking Kezerashvili to the scam companies, and no evidence that he had any direct financial involvement in Milton's ventures.

But several former employees of companies linked to Milton told us in confidence that they had had direct dealings with

n Kezerashvili and knew that he was involved in the Milton group.

Kezerashvili has frequently promoted the platforms used in the scams on his personal social media accounts. And on LinkedIn, the site that connects companies with professionals, he has used his account almost exclusively to promote jobs and share posts about companies linked to Milton.

The BBC was able to find other evidence linking the former defense minister to the Milton companies.

Several companies owned by Kezerashvili used a private email server where the only other users were Milton group companies.

His venture capital firm, Infinity VC, owned the logo and web domains of companies that provided the technology behind the platforms used to scam.

Kezerashvili also owns an office building in Kiyv that housed both the fraudulent call center that sold EverFX and the tech companies that provided the software. These offices were raided by the police in November.

He also owns an office building in Tbilisi that housed some of the same tech companies.

When the BBC examined the social media profiles belonging to the four senior figures in the Milton group, it was clear from published images of weddings and other social events that they all had close social ties to Kezerashvili.

Kezerashvili is friends on Facebook with at least 45 people linked to the Milton group scams, and one of the four main figures identified by the BBC is his cousin.

The BBC tracked down Kezerashvili to his £18m London mansion and asked to speak to him, but were told he was not available.

He told the BBC through his lawyers that he strongly denied any involvement in the Milton group, or having obtained financial gain through scams.

Kezerashvili noted that, to his knowledge, EverFX was a legitimate business, and his lawyers argued that other connections we found to the people and technology behind the company "prove nothing."

online, but in some cases the operations are not real. (Joel Gunter/BBC)

Chelidze and Gogeshvili also strongly denied our accusations and said that EverFX was a legitimate and regulated platform.

Both denied knowledge of the Milton group or any connection between EverFX and the companies we identified, suggesting that those companies may have misused the EverFX brand and computer codes to mislead users.

Chelidze and Gogeshvili claimed that EverFX had never had a cryptocurrency portfolio and had no control over how its third-party payment processors channeled funds.

Mgeladze also denied our accusations. He told us that he has never owned any call center that has fraudulently sold investments and that he is not aware of the Milton group.

Benimini did not respond to our questions.

EverFX denied our accusations and stated that it is a legitimate and regulated platform where the risks are fully explained. He noted that Barry Burnett's case had been investigated and he was found to be liable for their losses.

In Jane's case, EverFX said her losses were due to her moving her money to an unrelated company.

The company also stated that it had fully cooperated with the UK Financial Conduct Authority and that there were no pending regulatory complaints in the UK.

The Sevilla football club only told the BBC that once its contract with EverFX ended, it had no further contact with the company.

Last year the amount of fraud crimes in the UK amounted to more than 4 billion pounds sterling (about US$5 billion), and online investment scams are believed to run into hundreds of millions of pounds a year.

But UK police have faced criticism from victims for what they see as a lack of action against scammers on behalf of British citizens.

Jane took various routes, in her country and abroad, in search of her lost retirement funds, but she got nowhere.

London police sought a report, but "it came to nothing," Jane said. Her bank couldn't help either, "other than to write a few letters."

"And really, why should they?" she said, shrugging sadly.

So she Jane did the only thing she could think of. She went to a dozen sites online and wrote reviews of the business companies that had scammed her.

"I just wanted to warn anyone who might fall for it," she said.

"I put a lot of effort into it. I hope someone sees it."

https://www.bbc.com/mundo/noticias-65242210