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Eurojust co-ordinated successful action against €175 million fraud committed by international criminal network

The Hague, 28 September 2011

On 27 September, judicial authorities and police officers in eight countries ran a joint operation, supported and co-ordinated by Eurojust, against a worldwide criminal network committing financial fraud, forgery, money laundering and swindling.

Yesterday, Eurojust co-ordinated a worldwide action led by the Dutch Prosecution Office against international financial fraud committed by a Dutch company, Quality Investments B.V., and its international affiliates. The company and its directors are suspected of involvement in a criminal organisation, committing financial fraud, forgery and swindling.

In the past 24 hours, Dutch financial investigators, and authorities in all involved countries, made house searches and arrests simultaneously at 27 locations in the Netherlands, Belgium, Spain, the UK, Turkey, Switzerland, the USA and Dubai.

Real estate and other goods, valued at millions of Euros, such as luxury automobiles, expensive watches, yachts, and an airplane were seized worldwide.

BACKGROUND
According to the Dutch authorities, this fraud is a so-called Ponzi scheme. A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors, rather than from any actual profit earned by the individual or organisation running the operation. The Ponzi scheme usually entices new investors by offering returns that other investments cannot guarantee, in the form of short-term returns that are either abnormally high or unusually consistent. The perpetuation of the returns that a Ponzi scheme advertises and pays requires an ever-increasing flow of money from investors to keep the scheme going.

In this case, via Quality Investments B.V., and its affiliates, the victims’ money was invested in a US fund that bought second-hand life insurance policies. These life settlements offered the possibility to advance future insurance benefits. In that way, individual insurance policies were sold to the fund and became its property. The fund promised to pay out a portion of the future benefits to the victims. However, the US fund received the entire amount of the policies at the end of the life insurance terms.

The suspects promised that a full refund of the invested money would be paid at the end of the term, and also promised that the money was insured with a different, reputable insurance company. However, the solvency of this insurance company, Provident Capital Indemnity ltd, based in Costa Rica, was not guaranteed. The director of Provident Capital Indemnity ltd was arrested in January 2011. Quality Investments B.V. also promised that the life settlements remained the property of the company, but via a complex construction, the money was controlled by a private company owned by one of the suspects.

Between July 2007 and yesterday, Quality Investments B.V. sold fraudulent investment products to 800 wealthy investors, especially in the Netherlands and Belgium, and also in other EU countries, for a total of € 175 million. The minimum investment was € 50 000 in the Netherlands; in that way, the criminals avoided financial controls and licences by the Netherlands Authority for the Financial Markets (AFM).

Yesterday, four key members of the criminal network were arrested in the Netherlands, Switzerland and Turkey. The authorities made searches in five private homes, three companies and two lawyers’ offices in the Netherlands. Simultaneous searches also took place in Belgium, Spain, the UK, Switzerland, Turkey, the USA and Dubai in nine private homes, two companies and a lawyer’s office.

Eurojust co-ordinated, in real time, the searches and arrests from its co-ordination centre in The Hague. During the searches, a considerable amount of information was gathered. The action was successful due to excellent co-operation with the Virginia Financial & Securities Fraud Task Force (USA), and among the authorities of Belgium, Germany, the UK, Denmark, Malta, Cyprus, Switzerland, Spain, Turkey, Bermuda and the United Arab Emirates.

By this international action, the authorities are committed to safeguarding the money of the victims. For this purpose, the Dutch authorities will organise an information session for the victims of Quality Investments B.V.

For more information, please contact:

Mr Joannes THUY, Spokesperson - Head of Press & PR Service
EUROJUST, Maanweg 174, 2516 AB, The Hague, the Netherlands
Tel +31 70 412 5508
E-mail: jthuy[AT]eurojust.europa.eu