BERLIN: At the start, the job looked like a well-paid role in finance. It ended with a US$10,000-a-month (RM46,500) drug habit and a cell in a German prison.
That’s the story of Tal-Jacki Z.F, who was involved in an online trading fraud and confessed in 2021 to his part in cheating victims in Germany, Austria and other European countries of almost ¤9mil (RM45.5mil).
He was a cog in a machine, helping to set up and operate highly-professional call centres in Bulgaria, Serbia, Bosnia and Herzegovina and Georgia, with the aim of fleecing investors through slick online software that mimics the look and feel of legitimate trading.
Online trading fraud is a rapidly growing global problem. In the United States, the Federal Bureau of Investigation estimates that such scams stole US$3bil last year; Equivalent amounts are being harvested in rich European nations. Tackling the gangs is difficult because they work across borders and change the forms of their deceptions frequently to evade detection.
But as the damage has grown and tens of thousands of individuals lost their savings, the law enforcement response is stepping up. As Europe’s largest economy, Germany is among the key targets in the region, with prosecutors estimating that some US$1bil a year is being stolen there.
At the heart of these operations are call centres, dubbed “boiler rooms”. They’re high-pressure environments where the staff rarely know what they are getting into when they are hired, Tal-Jacki said in an interview from his secure rehabilitation facility not far from the German city of Munich. His face reflects the years of alcohol and drug abuse he says he’s been through.
In these types of crimes, members of the public first 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 boiler room 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.
“The client actually thought they had a real trade,” Tal-Jacki said. “It was legit. If you compared it to other websites, Bloomberg or whatever, you saw the same numbers.”
Many of Tal-Jacki’s former associates have been rounded up, but others are still very much in business and they’re being pursued by law-enforcement forces including German senior prosecutor Nino Goldbeck.
The 43-year-old has been spearheading cross-border efforts to catch the criminals and shut down scams.
In the past two years, he’s been on the road almost every other month to attend raids in countries like Albania, Bulgaria, Serbia and Kosovo. He’s notched up dozens of arrests, successes that have made a mark and helped to push the idea that a serious multi-national effort is needed to tackle adversaries who also work in a sophisticated manner across multiple nations.
One of the biggest centres uncovered by prosecutors had more than 400 operatives in Kosovo. It scammed German victims out of some ¤32mil in less than three years, according to court documents from the trial of one staff member in Saarbruecken, near the French border.
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 German investors. Ralph Hamers, former chief executive of Dutch bank ING Groep NV, was burned by investments into a payments business that was investigated for links to money laundering.
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. Court documents show he forfeited more than US$400mil as part of a deal with the US. He subsequently returned to Israel, his father said earlier this year.
Shalon’s partners include fellow Israeli citizen Gal Barak, dubbed the “Wolf of Sofia” for building a scammer empire from the Bulgarian capital.
Tal-Jackie said Barak hired him to build out a call centre. Initially, it wasn’t clear that the business was a criminal enterprise, so successful was the veneer of legitimacy.
Yet for Tal-Jacki, the atmosphere in the operation became more threatening over time, as Barak began moving around with armed bodyguards.
“One time the office didn’t bring the result that he expected,” Tal-Jacki said of Barak. “So he brought someone with the polygraph to check all the employees and check us if we are loyal to him.”
That triggered Tal-Jacki’s desire to get out of the business – of course provoking the ire of the boss. He began drinking two to three litres of whiskey and snorting two to three grammes of cocaine every day, occasionally also using heroin, his lawyer said at his trial.
He’s now in a closed mental institution because of his addiction.
The call centres 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 artefacts are so convincing that some investors don’t even realise they’ve lost their money in a scam. Just bad luck on the markets.
“In the end, the type of investment offered didn’t matter,” the Saarbruecken judges wrote. “The gang’s sole aim was to get as much customer money as possible to enrich themselves.” — Bloomberg