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Securities fraud in the billions hits Germany

Billions of Euros in securities fraud damages the German economy. An investigation by the non-profit journalist team Correct!v  reveals in just one case the counterfeiting of more than 500 million Euros in German-government bonds.

The counterfeiters lease the forged securities to firms which attempt deposit the bonds as collateral for investment loans. Once deposited as security for a loan, the forgeries can go undetected until the bonds change ownership.  This mode of fraud is being used by criminals around the world.

Nobody knows how the volume of related loss worldwide. But just the cases investigated by Correct!v involving the convicted con artist Marco Russo have revealed a volume of forged bonds exceeding a billion Euros.

In China the world’s largest solar-energy firm Suntech unknowingly deposited 560 million Euros in Mr. Russo’s forged German government bonds with a state-owned Chinese bank. Mr. Russo also forged 200 million euros in bonds for a deal with the international temporary worker firm, Trenkwalder. The Austrian firm identified the fraud, and pressed criminal charges.

In late 2013 Mr. Russo founded the YUMA Finance AG in Hanover, a firm which targets business with German clients.

The system rarely leads to arrest, because so many people profit: banks which gain business, and victims who seek a big deal, and the con artists who demand large advance fees.                     

The investigation of the Russo case shines light on the global system of financial fraud. Under this system, money streams through a worldwide chain of middlemen and shell companies.

The trustees work in Italy, Spain, Switzerland, England and Germany. They transact deals seemingly without limits with firms across the globe. They found and close companies faster than the oversight authorities can follow.

The fraud victims come from Australia, Austria, Spain, the U.S.A. or China. The Correct!v investigation found evidence that Mr. Russo’s team of criminals gained access to information from the central accounts office of the European bond clearing house, Euroclear.

In May Mr. Russo was convicted of fraud and sentenced to four and one-half years in prison. Other members of his team are on trial in Madrid. But the business continues. Instead of sitting in jail, Mr. Russo is often in Germany running the YUMA Finance AG, and meeting with friends in Hamburg, Munich and Hanover.

According Correct!v information, the financial oversight agency BaFin opened an investigation into activities at YUMA Finance AG in August. But the German authorities have a difficult time protecting clients. Con artists like Mr. Russo advertise primarily services in a grey area of financial business which is largely unregulated.