The entry fee was €50. For that, investors in a medicinal cannabis crowdfunding scheme were told they were backing plants that, Eurojust says, were never bought.
The fraud ran from at least January 2020 to July 2022. In Germany, France and Spain alone, more than 4,500 victims have filed formal complaints. Victims in Germany and Spain say they lost at least €51.5 million, and Eurojust puts the total invested at close to €645 million. The Cypriot daily Phileleftheros reports it as the investors’ total losses.
About 550,000 people worldwide registered as online investors, most of them European. Around 186,000 sent money by cryptocurrency or bank transfer.
How the pitch worked
The organisers pretended to work with legitimate, licensed enterprises that would cultivate the plants. According to Phileleftheros, they promised to put investors in touch with pharmaceutical cannabis producers. Buying a plant, the platforms said, would soon bring high profits from sales to licensed traders. The company guaranteed a 100% return but never said how it would deliver one.
Eurojust describes a pyramid, or “Ponzi fraud”. Investigations in Germany and Spain, later joined by other countries, found investors had been paid back only in part. Most of the money went to affiliates, to keeping the scheme going and to extensive online campaigns. Laundering ran through a web of international enterprises. The scheme appears to have been run by a Russian criminal network with an affiliated German-based group.
Phileleftheros reports that more than 500,000 investors did at first receive returns. In July 2022 the group removed the company’s profiles from social media and shut users out of their accounts, which blocked withdrawals.
The takedown
Eurojust has supported the national authorities since 2022, including helping German, Spanish and French authorities set up and fund a joint investigation team. A Joint Action Day coordinated at Eurojust followed. Operations were also carried out in Estonia, Latvia, Italy, Malta, Poland, Portugal, the United Kingdom and the Dominican Republic at the request of German and Spanish authorities. French authorities made a decisive contribution by analysing crypto flows.
Europol led operational coordination from the outset. By Phileleftheros’s account, a police operation last Thursday involved 400 members of prosecuting authorities from 11 countries, and nine people were arrested. Across countries, authorities froze or seized €4.7 million in bank deposits, €1,515,000 in cryptocurrencies, €106,000 in cash and €2.6 million in properties.
The scheme left traces in Cyprus too. After a request for help from other countries, the Unit for Combating Money Laundering Crimes (MOKAS) identified bank accounts holding proceeds, and Phileleftheros says it froze a total of €4 million.
One of the main targets lived in the Dominican Republic. A team of Spanish police officers and Europol experts executed a search warrant at the home of a Russian national there.
The €645 million figure may understate the harm. Phileleftheros notes it is not ruled out that unreported frauds could correspond to a much larger amount.
Sources
- Eurojust helps tackle massive fraud of EUR 645 million – Diplomat magazine
- Pharmaceutical cannabis fraud traces found in Cyprus
Sources
- 9 arrests in EUR 645 million JuicyFields investment scam case
- Eurojust helps tackle massive fraud of EUR 645 million
