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The biggest fraud cases from around the world

While Jordan Belfort and Bernie Madoff make for appealing Hollywood characters, they all too often appear red-faced in real life court rooms

By: EBR - Posted: Friday, January 27, 2023

High profile fraud and embezzlement cases are not just a plot in movies but a real-life phenomenon unrestrained by time or borders.
High profile fraud and embezzlement cases are not just a plot in movies but a real-life phenomenon unrestrained by time or borders.

by Theodore Benakis

While Jordan Belfort and Bernie Madoff make for appealing Hollywood characters, they all too often appear red-faced in real life court rooms. High profile fraud and embezzlement cases are not just a plot in movies but a real-life phenomenon unrestrained by time or borders. Many bankers and entrepreneurs from all over the world have gone from fame to shame in recent years. In some cases, the trial is ongoing, with fraudsters on the run, while in other cases, even a guilty verdict has not been able to guarantee that fraudsters will pay their dues on time. What all cases have in common is suspected or proven fraudulent activity and a list of victims ranging from elite investors to ordinary citizens.

Here are the most scandal-ridden names that made headlines in recent years.

1. Germany - Markus Braun, Oliver Bellenhaus and Stephan von Erffa - €32 billion in economic damages

The scandal surrounding Wirecard, Germany’s “tech sector darling” is considered to be the biggest fraud and embezzlement case in the country’s recent history. Wirecard was one of the biggest German fintech companies but collapsed in 2020 after it was discovered that the company had been involved in accounting fraud for several years. In 2019, the media began to report on a number of irregularities in Wirecard’s financial statements. Wirecard’s management initially denied any wrongdoing, but the company was eventually forced to admit to the fraud and file for insolvency. Nearly €2 billion could not be accounted for. There is an estimated €30 billion in economic damage as a result.

Former Wirecard CEO Markus Braun has been charged with fraud, market-manipulation and false accounting, and former managers Olivier Bellenhaus and Stephan von Erffa are currently being tried. Jan Marsalek, former CFO, has been on the run since 2020 and is currently on the list of Europe’s most wanted fugitives. The scandal has wide implications, revealing the complacency of the institutional authorities at the time. The trial is ongoing and is expected to continue into 2024.

2. Russia - Ilya Yurov, Sergey Belyaev and Nikolai Fetisov – $900 million owed to bank

With controversial names such as the Ananyev brothers, and Boris Mints, Russia has no shortage of fugitive fraudulent bankers. Notoriously, former executives of the National Bank Trust (NBT), Ilya Yurov and his associates Sergey Belyaev and Nikolai Fetisov, lent massive sums of money, funded by deposits and loans of the bank’s customers, to offshore entities which secretly belonged to them, hiding NBT’s financial position from the Russian central bank, and leading to its collapse. Thousands of ordinary Russian taxpayers became victims of the scheme and lost the money on their accounts because of the trio’s massive fraud followed by the collapse of NBT.

NBT has been suing Yurov, Belyaev and Fetisov since 2016. In 2020, the High Court of Justice in London ruled that the trio should pay back the $900 million it owes but Yurov, who is now residing in London, and his associates, are using the media in an attempt to overturn the court ruling by influencing public opinion. The High Court has also froze assets of Yurov, Belyaev, Fetisov and their wives, including properties in the UK, Cyprus, Switzerland and Russia. While the court hearings are over, the case has entered its most vital stage with NBT working to recover stolen assets, a process the accused are attempting to avoid. The case is test for British law against political pressure.

3. United Kingdom - Lynden Scourfield, David Mills, Michael Bancroft – £1 billion in estimated losses

During the early 2000’s, Lynden Scourfield was in charge of the Impaired Assets Divisions at Halifax Bank of Scotland (HBOS). As a conditionality for the bank’s support, Scourfield would force small business owners, who constituted the bank’s clients, to appoint Quayside Corporate Services as their favored consultant, a company which was run by David Mills and Michael Bancroft. Through this set up, the corrupt group would steal customer money to fund luxurious goods, cruises, and sex parties.

Most of the fraudulent activity took place between 2002 and 2007, but the police investigation began in 2010. It wasn’t until 2017 that Scourfield was sentenced to 11 years and three months in prison, Mills for 15, and Bancroft for 10. The bank lost £245 million with because of the scandal with an estimated total of £1 billion in losses. It was taxpayers who bore the cost of the scandal on their shoulders and had to bail out the bank, but more recently, it was decided that eligible victims will be offered a compensation package of £3 million.

4. Switzerland - Pierin Vincenz and Beat Stocker- $1.7 million to be paid

In 2022, Pierin Vincenz, once celebrated as “banker of the year”, was sentenced to prison after being charged with embezzlement, fraud and forgery along with his business partner Beat Stocker. Under Vincenz’s supervision, Raiffeisen (not to be confused with Austrian- based Raiffeisen Bank International) became one of Switzerland’s largest banks- as well as its largest scandal. Vincenz and Stocker were accused of buying and hiding controlling stakes in companies which were then purchased by Raiffeisen, where Vincenz was CEO. Vincenz reputation has also been mired in moral calamity, after strip club visits were found on his corporate expense account.

In January 2023, the Zurich District Court released a lengthy report providing grounds for the reasons Vincenz and Stocker should be imprisoned for years. The case is ongoing and Vincenz’s lawyers are set to appeal at the end of January. Vincenz has been ordered to pay around 1.6 million francs ($1.7 million) in damages.

5. China- Lu Yi - $1.5 billion in frozen deposits

Customers of four rural banks in Henan, China had their deposits, which were worth millions of dollars, frozen after Lu Yi had taken control of the banks and fooled depositors with false promises of 18% annual returns. The financial regulator of Henan said that depositors would get their money refunded, after over 1,000 victims protested in front of a branch of China’s central bank.

Lu Yi is the suspected brain behind one of China’s most famous recent banking scandals which unfolded in 2022. Unlike many cases of banking fraud that involve urban or multinational banks, this is a rural scandal but one of painful impact. The scandal was so big that it led to mass protests organized by depositors who lost their money, and to the arrest of 234 fraudsters who were allegedly involved in the scam. Around $1.5 billion worth of customer deposits had been frozen.

6. United States – Sam Bankman-Fried, Caroline Ellison and Gary Wang - $8 billion in stolen customer funds

The United States is reputed for being home to prodigy entrepreneurs, but Sam Bankman-Fried, also known as SBF and previously hailed as a crypto genius, was charged with fraud, money laundering, and campaign finance violations after his crypto company FTX filed for bankruptcy. The 30-year-old founder has been accused of misappropriating $8 billion of stolen customer funds in what might be considered one of the biggest fraud cases of American recent history.

His associates Caroline Ellison and Gary Wang pleaded guilty to fraud in their efforts to cooperate with the authorities. Bankman-Fried, who has pleaded not guilty, was released on bail, but if found guilty, he could face up to 115 years in prison, not considering mitigating factors. The trial is set for October 2023.

 

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