German Court Hands Down Prison Sentences to Members of Israeli Cybercrime Syndicate for Broker Scams

tamir
Thu, 29 Feb 2024 08:55:28 +0000
Boiler Rooms, Court Cases, Illegal Broker Activities, ticker, Chen Malka, Nimrod Blachman, Pavel Kotler, Yuri Dashevsky

In a landmark ruling underscoring the international legal community’s intensified crackdown on cyber fraud, a German court recently pronounced prison sentences on four individuals associated with an Israeli cybercrime syndicate. These individuals, hailing from Israel and Bulgaria, were implicated in orchestrating sophisticated broker scams that swindled tens of thousands of victims globally out of approximately €80 million. More indictments are expected in this case.

The Lenient judge

In October 2021, an international law enforcement operation arrested several cybercrime organization members that operated broker scams, such as FX Leader. In Israel, four people were arrested in Israel on charges of their involvement in the FX Leader cybercrime organization:

Pavel Kotler, 47, of Holon;

Yuri Dashevsky, 33, of Kfar Saba;

Nimrod Blachman, 33, hometown unknown; and

Chen Malka, 31, of Tel Aviv

They were extradited to Germany, where they are likely to be charged with investment fraud and money laundering as operators of scams.

The convicted, aged between 30 and 52, were found guilty of engaging in joint criminal enterprise fraud or complicity therein. The 37-year-old who facilitated the scam by renting server space was sentenced to five years in prison, while a 40-year-old boiler room manager in Sofia received a three-and-a-half-year sentence. A 52-year-old was sentenced to three years and nine months for his role in aiding and abetting the scheme. In 17 cases, he is said to have brokered accounts into which the alleged investments flowed. The 30-year-old received a suspended sentence of one year and nine months for his involvement in six instances of fraud.

Ultimately, the court also mandated the confiscation of assets from the convicted individuals, totaling several hundred thousand euros, alongside restitution payments to the victims.

Notably, these sentences fell below the prosecution’s requests yet exceeded what the defense had anticipated. The ruling pertains exclusively to fraudulent activities impacting victims within Germany and remains subject to appeal.

The prosecution had initially sought more severe punishments, while the defense had argued for leniency.

The offenders were instrumental in operating deceitful online trading platforms, including FX Leader, InvCenter, Interactive Trading, and QTeck, through which they pilfered more than €21 million from German nationals alone. The presiding judge highlighted that the global ramifications of their actions amounted to losses exceeding $80 million, with the proceedings in Göttingen focusing solely on the €21 million defrauded within Germany. Given the extensive international impact of the syndicate’s operations, the judge also alluded to the potential for subsequent charges in other jurisdictions.

Israeli Cybercrime Organisations in Europe

This case is part of a broader narrative of Israeli cybercrime networks that proliferated across Europe between 2015 and 2020, particularly in Bulgaria, Serbia, Ukraine, and Romania. These networks have evolved from binary options scams to sophisticated fraud involving cryptocurrencies and Contracts for Difference (CFDs) following regulatory clampdowns.

In a related development, Israeli national Gal Barak was sentenced in Vienna in September 2020 to four years imprisonment for his role in leading the E&G Bulgaria cybercrime organization. This group is accused of defrauding victims worldwide of over $200 million. Barak’s sentencing alongside key accomplices in Germany and Austria underscores the extensive reach and detrimental impact of these criminal endeavors.

Read our Gal Barak reports here.

The fraudulent schemes were characterized by the use of counterfeit price charts and fictitious profit displays, misleading victims into believing they were investing in legitimate financial instruments such as forex, stocks, cryptocurrencies, and gold. The court’s investigation into the ultimate beneficiaries of the stolen funds and the precise amounts received remains ongoing, with the presiding judge noting the sophisticated and organized nature of the criminal activities.

In their final statements, the defendants expressed remorse for their actions, with commitments to restitution and personal reform.