International People Tracing

German Law Firm

“We have engaged Matrix on more than one occasion to trace the current whereabouts of individuals wanted in connection with a multi-billion Euro fraud. The information we have been able to provide them has invariably been minimal and out of date, however; they have managed to locate the individuals and delivered outstanding results. I have been impressed by their ability to trace individuals across multiple jurisdictions, the ingenuity of their investigative methods and their ability to meet tight deadlines. Overall, a very diligent and professional service. ”

Partner


Nigeria Asset Tracing

Nigeria, U.K. & U.S Asset Tracing

We were tasked to conduct asset tracing in Nigeria on an individual who, amongst other things, had been involved in an arms scandal and had run up several million pounds worth of debts.

The IP we were working for had limited funds to conduct an investigation, so we worked with them to agree a prioritised and sequenced approach to our investigation, so that it could be broken down into affordable phases.

Outcome

Our preliminary scoping identified three jurisdictions of interest; Nigeria, the U.K and the U.S. We identified links to two properties and over twenty potential corporate affiliations in Nigeria, ten corporate affiliations in the U.K. and a link to a property in the U.S. We also identified multiple links to properties in his daughter’s names, but the IP did not have the authority to pursue these.

Based on the cost of conducting investigations in each country and the ease of enforceability, we first focused on the property in the U.S. and were able to prove sole ownership of a USD $1.4m property in Washington DC. Having identified sufficient funds to ensure that the IP would recover their costs, we were then given the green light to commence investigations in Nigeria.

Although the ownership of the two linked properties proved to be opaque and many of the linked companies were insolvent, we did identify majority ownership of one company which was trading profitably and had assets of approximately USD $3m.

Asset Tracing in Nigeria with Matrix Intelligence

Prior to informing your legal team, the police and/or regulatory authorities, it is often beneficial to first understand what exactly you are dealing with. You can then make an informed decision as to how best to proceed.

Matrix Intelligence are specialists in conducting sensitive and discreet Asset Tracing, learn more about our service here. Please contact us with any further queries.


People Tracing

Private Client

“I engaged Matrix to trace an individual that had defrauded my family. I had little hope of finding them, as all I was able to provide was a name, last known address in the UK and a belief that they may now be living in the South of France. As it transpired, they very quickly found him living in the East of France. They surpassed my expectations and I was hugely impressed by their professionalism.”


Offshore Jurisdictions Investigation

The Opaque World of Offshore Jurisdictions

There is no universally agreed definition for offshore jurisdictions, or tax havens, and whereas the two are subtly different, they share many of the same characteristics and are often referred to as one and the same.

For the purpose of this article, we shall treat them as one, refer to them as offshore jurisdictions and simplify the definition by stating that they are jurisdictions which offer individuals and corporations little or no tax liability and a high degree of secrecy. Some intranational locations, such Wyoming in the United States are occasionally referred to as tax havens because they have special tax laws, however; these are very different and not generally regarded as locations within which criminal activity is conducted.

Offshore jurisdictions have been widely used since the 1930s and some of the most popular include: Andorra, the Bahamas, Belize, Bermuda, the British Virgin Islands, the Cayman Islands, the Channel Islands, Jersey, The Marshall Islands, Mauritius, Lichtenstein, Monaco, Panama, St. Kitts, and Nevis.

Not all offshore jurisdictions are identical and whereas some focus on financial services, others specialise in the provision of corporate and trust formation and management. Common characteristics are: minimal or no taxes, little or no sharing of financial information with foreign authorities, a lack of residency requirement or a physical business presence, a lack of transparency obligations and minimal requirements for reporting of information. Notably, according to the Tax Justice Network’s Tax Haven Index, the top three are all overseas British territories; the BVI, Bermuda and the Cayman Islands.

What are they used for and by whom ?

Offshore jurisdictions can be used for perfectly legally for activities such as tax avoidance, however; they are more synonymous with illegal activities such as tax evasion (non-residents evading tax in their actual country of residence) and money laundering (returning criminal/illegal money back into circulation). The prime reason they are attractive to criminals, is their inappropriately high level of client confidentiality and whereas there are several regulatory bodies that monitor tax havens, including the Organisation of Economic Cooperation and Development (OECD), the international Financial Action Task Force (FATF - the global money laundering and terrorist financing watchdog) and the U.S. Government Accountability Office, criminals can still operate within them with relative impunity.

Individuals and companies alike exploit offshore jurisdictions and as a general rule, the wealthier they are, the more embedded they are; with some having hundreds of offshore subsidiaries. In 2017, it was estimated that individuals had hidden $8.7 trillion and American Fortune 500 companies alone, almost $2.6 trillion. Whereas the majority of this money is clean, a sizeable amount could be considered dirty and is doubtless being laundered by criminals who are exploiting the secrecy of offshore jurisdictions for illegal activities such as money laundering. In sophisticated cases, they do so by utilising complex mechanisms, spanning several countries, with a chain of intermediaries and a network of shell companies, offshore structures and nominee arrangements to mask their activities and hide the identity of ultimate beneficial owners (the person/s who invest in, control, or otherwise benefit from an asset, such as a bank account, real estate property, company, or trust).

There are a range of estimates as to the cost of offshore jurisdictions to the world economy. It is estimated that legal corporate tax revenue avoidance cost governments between $500-600 billion and that between $1.5 - $2.8 trillion worldwide is lost annually to money laundering.

Changing Winds?

Although there are still many offshore jurisdictions with favourable conditions for criminal activity, the list is shrinking; albeit slowly. In recent years, some Swiss banks and financial institutions have cooperated with the U.S. to enter into deferred prosecution agreements. In 2016, several financial institutions in the Caymans held their hands up to being guilty of hiding client assets and tax evasion and also entered into deferred prosecution agreements. The attractiveness of Panama diminished with the leak of the Panama Papers (containing more than 11.5 million legal and financial records) and in 2020, Luxembourg brought in new reporting rules and agreed to cooperate with foreign governments.

Conducting Offshore Jurisdictions Investigation

Perhaps inevitably, most complex asset tracing investigations end up involving at least one offshore jurisdiction and sometimes multiple. Although their opacity makes it difficult to identify the UBO , it is not impossible; although it does require sensitivity (to avoid tipping off the criminals and enabling them to disperse their assets) and significant resource (time and money) to enable freezing orders and disclosure orders to be served. These tools can only be used if you have the correct information at the right time and crucially, if it’s admissible as evidence; the challenge of which varies between jurisdictions.

If you do need assistance tracing assets via offshore jurisdictions investigation, it is important to act with speed to locate and freeze assets, as tracing exercises rarely improve with age. If multiple offshore jurisdictions are involved, it is also crucial to assess the advantages and limitations of eac, so that the investigative effort can be prioritised.

Any investigation will inevitably require an element of Opens Source Intelligence (OSINT), however; this is unlikely to provide more than the basic information necessary to form an investigative strategy. To make any meaningful progress, Human Intelligence (HUMINT) and local source enquiries will be required. By employing a combined methodology, it is possible to uncover information on company structure, directors and ultimately, identify UBOs.

If you require offshore jurisdictions investigation Matrix Intelligence can assist. For free advice and a no obligation proposal, please contact us on 0203 873 1089 or email: info@matrix-intelligence.com.


UBO Investigation

Ultimate Beneficial Owners (UBOs) and Investigation of Complex Structures Worldwide

"Criminals employ a range of techniques and mechanisms to obscure their ownership and control of illicitly obtained assets. Identifying the true beneficial owner(s) or individual(s) exercising control represents a significant challenge for prosecutors, law enforcement agencies, and intelligence practitioners across the globe. - Egmont Group of Financial Intelligence Units.

The term “beneficial ownership,” describes someone who maintains ultimate control over an asset and enjoys the benefit without being the nominal owner of that asset. According to the Inter-American Development Bank (IADB) report, the specific definition of a beneficial owner of a legal entity are “always natural persons who ultimately own or control a legal entity or arrangement, such as a company, a trust, a foundation”.

The person whose name is formally registered as owner of an asset is not necessary the person who ultimately controls the funds. This is an important distinction because the focus of the investigation and anti-money laundering efforts should be on the ultimate owner who has the “control”. Investigating this person is a crucial step in identifying the source of wealth and global crackdown on fraud, corruption, money laundering and tax evasion.

Identifying beneficial owners has become increasingly important from a regulatory perspective. The Financial Action Task Force (“FATF”) is designed to establish global standards on money laundering and consistently raises expectations on beneficial ownership rules. For example, the US Financial Intelligence Unit, can now require the institutions to collate information on individuals who own more than 25% of a legal entity.

The Financial Action Task Force’s overall strategy is to increase the amount of information available on beneficial owners who carry out transactions through financial institutions globally. However, the most skilled and refined criminals are still able to take advantage of various corporate structure to conceal their beneficial ownership.

Corporate vehicles that hide beneficial ownership:

  • Shell Companies
  • Shelf Companies
  • Nominees
  • Fronts
  • Trusts
  • Charities and Non-profits

It is widely known that most sophisticated fraud investigations involve at least one shell or shelf company at some point in the process and that certain jurisdictions are popular locations to form the above structures. These jurisdictions often overlap with those labelled as “tax or secrecy havens.”

UBO investigation can be very difficult when conducting cross-border research. The starting point should be the corporate registry for a given jurisdiction, but the level of information that is available from such registries varies substantially between jurisdictions. The information can include details such as the company name, the name of the company formation agent, company directors or board members, and sometimes a physical address for the company.

Matrix focus is on identifying, retrieving and analysing all information that can provide leads:

  • about the individual’s asset holding structure, particularly with regard to off-shore and limited transparency jurisdictions;
  • that can be useful for development of human sources with knowledge of how a subject holds assets; and
  • who the ultimate beneficial owner is.

Corporate Registries – what can be retrieved by UBO investigation?

Each jurisdiction is different. An entire country may have a single registry, or numerous registries for various cities or districts. Therefore, the level of information that can be obtained changes significantly between jurisdictions.

According to the World Bank’s survey conducted globally the following information was usually available from the corporate registry:

  • The legal entity’s name and type
  • The date of the legal entity’s formation and dissolution
  • Articles of incorporation
  • A physical address
  • Details of the registered agent.

Some jurisdictions also have the following information in their corporate registries:

  • Names and addresses of the directors or officers
  • Names and addresses of the shareholders, members or other legal owners.;

The beneficial owner’s details are not collected or made public by too many corporate registries. However, in recent years, some jurisdictions have taken steps to apply registers of beneficial ownership:

  • United Kingdom
  • Latvia
  • Estonia
  • Denmark
  • Malta
  • Ireland
  • Luxembourg
  • Lithuania
  • Germany
  • British Virgin Island
  • Cayman Islands
  • Hong Kong
  • Singapore
  • Switzerland
  • Lichtenstein

Cyprus, the Netherlands, Hungary, Poland and Romania are in the process of adoption of national legislation of beneficial ownership registers and their implementation.

Despite this international progress, beneficial ownership information is still unavailable directly from the corporate registries of most jurisdictions, including the US.

Other UBO investigation difficulties of corporate registries is the fact that information in them can often be outdated and inaccurate. Many registries are not updated regularly, and most rely on the information provided by the person or company to provide correct information at the time of incorporation. So, once these tracks have been checked and analysed, the strategy may shift to external enquiries or human source intelligence (HUMINT).

In beneficial ownership investigations, Matrix can offer an in-depth local knowledge and experience to navigate through a given jurisdictions and we are able to focus the investigation to achieve the client’s ultimate objective.


Russia Asset Tracing

Cross-border Investigations & Asset Tracing in Russia & Former CIS Countries

Asset Tracing also known as Asset Tracking in any non-European or Offshore jurisdiction is always a complex process fraught with difficulty, especially when the assets have been deliberately concealed and never more so when we are dealing with Russia and the former CIS - Confederation of Independent States.

Russia Asset Tracing - Background

Russia has been an effective autocracy since Vladimir Putin took on the mantle of President in 2012 having formerly held the office from 1999 to 2008. A former intelligence officer, Putin recently secured his Presidency “for life” by effectively changing the Russian constitution to ensure that he remains in office until 2036 by which time he will be 84.

The CIS (former) the Confederation of Independent States had its roots in the old Russian Federation. When the USSR began to fall in 1991, the founding republics signed the Belavezha Accords on 8 December 1991, declaring that the Soviet Union would cease to exist and proclaimed the CIS in its place, and at the time as well as Russia, it was made up of Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, Ukraine, and Uzbekistan with Georgia joining in 1993. Eight of the nine former CIS member states still participate in the CIS Free Trade Area. (CISFTA)

Legal Structures

The Russian civil court system, as one would expect, is complicated. In effect it has two branches: the arbitrazh (commercial) courts, which handle commercial disputes and has exclusive jurisdiction over corporate matters, and the courts of common jurisdiction, which handle other types of cases mostly involving individuals and in some cases includes criminal actions.

Regulations governing Asset Tracking and recovery in Russia consist of international conventions, various legislative acts, governmental and presidential decrees and other sub-legislative acts; however these measures are draconian, some might say deliberately.

Compensation for damage in civil proceedings is allowed in Russia and may be sought against an alleged wrongdoer (either in contract or in tort). Depending on the nature of the injured party and the wrongdoer, the compensation claim, however, must be filed either with the arbitrazh (commercial) court (if both parties are legal entities) or with courts of common jurisdiction if individuals are involved.

Legal aspects of such claims are regulated by the Civil Code of the Russian Federation (Civil Code). Procedural aspects are governed by the Arbitrazh Procedure Code or Civil Procedure Code.

Where former CIS countries are concerned each former member country of course has its own legal structure and process for Asset Recovery, however they follow the format laid down by the Economic Court of the Commonwealth of Independent States.

The Court is empowered to consider the disputes in the fulfilment of economic commitments in accordance with international treaties within the framework of the Commonwealth of Independent States. The Court considers other disputes under the agreement of the participating states. It is also empowered to interpret international treaties and the acts of the CIS bodies.

Pursuing assets through the local systems is far from an easy task. While Russia belongs to the continental system of law, court rulings or precedents are not considered to be an official source of law meaning that the legal interpretation provided by higher courts is in turn of great importance to lower courts.

Cross Border Investigations

Needless to say, European investigators are seen as interlopers particularly in Russia and their activities are generally restricted, the same in most of the former CIS countries.

To carry out the necessary investigations required to trace assets in these jurisdictions Asset Tracing professionals have to rely on more traditional forms of intelligence gathering utilising both OSINT (Open Source Intelligence) and HUMINT (Human Intelligence).

Matrix Intelligence routinely operates within these jurisdictions and our cross-border investigations are exceptional, seamlessly obviating the restrictions normally associated with these type of inquiries. Utilising proprietary protocols, we can quickly deploy both OSINT and local HUMINT, via our network of long-standing and highly capable sources and there is little information in these jurisdictions which we are unable to uncover, including:

  • Subject whereabouts and movements.
  • Real estate & commercial property ownership.
  • Vehicle and vessel ownership.
  • Corporate affiliations and Ultimate Beneficial Ownership.
  • Source of wealth.

Having conducted extensive multi-jurisdictional and cross border complex investigations, we are experts at assisting with Asset Tracing and Recovery.

The outcome of this combined methodology is a balanced and highly-effective approach that enables our clients to have access to high-level, strategically-actionable intelligence and information that helps them to further their personal and commercial aims.

International Recourse

The formation of the new Russian federation under then General Secretary Mikhail Gorbachev saw previously unknown individuals who, through taking full advantage of privatisation - suddenly becoming super-rich spawning the birth of the so called Oligarch; a term coined from the Greek literally meaning "the rule of the few".

While the term Oligarch is normally attributed to Russians, their emergence was just as prevalent throughout the CIS and for the same reasons. These individuals amassed billions in a very short period of time which saw them emulating their western counterparts, amassing vast portfolios of property and assets outside of Russia and the CIS, particularly in London.

Of course, some of these assets were undoubtedly legally amassed; it opened the channel to many Russians and businessmen from the former CIS using London as a laundromat for a variety of ill-gotten gains.

Unfortunately, the UK welcomed this huge influx of investment from both legal and illegal sources with open arms in turn leaving it, particularly London, open to substantial financial abuses, as a new breed of “facilitators” turned it from the Global centre for finance into the epicentre for money laundering.

For Asset Tracing professionals this would seem an open treasure chest from which assets could be easily seized, however, like all wealthy businessmen such assets are held very much at arm’s length from complex networks of Trusts where assets are held by designated trustees, often lawyers through to offshore corporations where beneficial ownership is concealed by complex structures across many jurisdictions.

Unexplained Wealth Orders

The Criminal Finances Act introduces new measures to tackle Asset Recovery and money laundering in the UK. A key element of the Act is Unexplained Wealth Orders (UWOs) – an investigative tool to help law enforcement act on corrupt assets.

Where assets have been salted away in the UK, the UK national Crime Agency (NCA) can and does use UWOs to seize assets obtained by fraud or other nefarious means.

A recent example of the effectiveness of UWOs saw a £1.19 million Cartier diamond ring purchased by a jailed Azerbaijani banker seized by the NCA as part of an ongoing Unexplained Wealth Order case.

London - The Epicentre for Legal Excellence

Of course, hidden assets, where jurisdiction can be proved, can be pursued via the High Court in London; for many years a benchmark for legal excellence and template for many other jurisdictions around the World.

A current case heard in the family division sees a complicated and somewhat bizarre case involving asset recovery by plaintiff Tatiana Akhmedova of assets owned by her former husband Russian billionaire Farkhad Akhmedov.

In precis, the case has seen lawyers and asset tracing professionals challenge Mr Akhmedova´s fortune to seize sufficient assets to settle his divorce obligations.

Mr Akhmedov lost the case some time ago and was subsequently ordered to pay his wife in excess of £350m plus their art collection; worth at the time, about £90m, an amount equivalent to 41.5% of the family’s wealth. His numerous bank accounts, including those in Liechtenstein and the Isle of Man, were subject to a mareva injunction [a freezing order] issued by the High Court in London, however, to date not a rouble has been paid to his ex-wife.

While the case continues, it has proven that Asset Tracing Professionals can furnish intelligence and data not normally available to even top 500 legal firms and the deployment of Asset Tracking and Litigation support by specialist Intelligence firms is ever increasing.

Matrix Intelligence has substantial experience and a proven track record of Asset Tracing globally. We deliver reliable and actionable intelligence to lawyers, financial firms, corporate clients, third party funders and HNW individuals. While operating internationally, we have exceptional capabilities in Russia, the former CIS countries, Eastern Europe, the Middle East and throughout the world´s offshore banking jurisdictions.

To discuss Asset Tracing, Litigation Support please contact is in confidence to discuss exactly how Matrix Intelligence can assist with either you or your clients’ pursuit of recourse. You can contact our London office on +44 (0) 203 873 1089, send us an email to info@matrix-intelligence.com or visit our website at www.matrix-intelligence.com.


Fraud Investigation

Understanding and Preventing Fraud

An acceptable definition of fraud would be ‘a wrongful or criminal deception intended to result in financial or personal gain’. There are numerous types of fraud, outlined under a variety of legislation, but essentially, it entails the suspect demonstrating some form of dishonesty and/or deception.

The Fraud Act 2006 was brought in to update legislation and assist with tackling the growing array of frauds which were being facilitated by rapidly developing technology and to replace a plethora of offences outlined within the Theft Acts 1968, 1978 and 1996. It established a new general offence of Fraud, as being committed by either: false representation, failing to disclose information, or by abuse of position.

How wide a problem is it?

A 2019 report into the financial cost of fraud estimates that it costs the UK alone somewhere in the region of £130bn - £190bn a year and according to the Office for National Statistics, more people are likely to fall victim to fraud than any other offence. Citizens Advice believe that 75% of people have been targeted by a fraudster in the past 2 years and that 1 in 10 of us know someone who has actually lost money. In the financial year 2018/19, over 700,000 crimes were reported to Action Fraud (65% were registered by businesses and 35% by individuals), with victims losing in excess of £2bn. Unfortunately, the problem is worsening, with losses in the decade since 2009 having increased by 56.5%. Globally, annual losses are estimated to be as high as £3.89 trillion (80% larger than the UK’s GDP).

What are the common types of fraud?

It is virtually impossible to quantify the different types of fraud. Examples of commonly perpetrated frauds include: advance fee schemes (the victim pays money in anticipation of receiving a larger amount in return), identity theft (when a fraudster assumes someone else’s identity), Ponzi schemes (the payment of dividends to initial investors using the funds of subsequent investors) and investment fraud (duping investors with false claims).

At Matrix intelligence, we are often approached to investigate investment fraud. Sadly, the victim is often nearing, or has reached, retirement age and they have approached us because they have little hope for recourse through the police. That is not to denigrate the outstanding job that the police do, but it is simple recognition of the fact that they have insufficient resource to combat the problem. Whereas Action Fraud will record incidents of fraud, the police have to prioritise their efforts and unless the fraud is especially high profile, or high value, it is unlikely that there will be a positive outcome for the victim.

We are sometimes approached by victims of fraud directly, but more often it is by their lawyer. We always commence by conducting a preliminary investigation (at no cost to the victim) to ascertain the facts, however; whereas we can often successfully identify a path to identifying the perpetrator/s, it is often not financially viable to do so. Depending upon the value of their loss, we often have to manage expectations and explain to the victim that they would be throwing good money after bad and that even if we did identify the fraudster, they then still have to secure a conviction and then hope that there are assets which can be seized to recompense them via a full fraud investigation.

Technology and fraud

The problem with trying to combat fraud is that it is expensive to do so and criminals are continually adapting and evolving their techniques. The emergence of new technologies has enabled businesses and law enforcement to fight back, however; fraudsters are often better resourced and can exploit the same technologies to stay one step ahead. Additionally, whereas businesses may often readily identify the threat posed by fraud they often lack the appetite to apportion a suitable percentage of their budget to combat it.

Our increasing reliance on and use of technology also leaves us vulnerable to fraudsters, as business can now be transacted without any personal interaction and people are now more willing than ever before to transact business with someone they have never actually met. Leaving aside our vulnerability to cyber-crime and identity theft, fraudsters now have global reach and they can scale their operations to target individuals in multiple countries. Fraud investigation must move as quickly as the perpetrators in this respect.

How to prevent fraud

The only guaranteed way to tackle fraud is to prevent it in the first place. Remaining with the example of investment fraud, there are a number of red flags that investors should look out for, including: companies calling them out of the blue, being pressured into making a decision, repeated calls or emails, promised returns which seem too good to be true, being asked to keep the investment quiet, or the individual/company not being registered on the FCA website.

If there is any doubt as to the authenticity of an investment, then another recourse and perhaps the most effective, is to conduct due diligence to verify the credentials of the individual who has approached you. This goes beyond simply checking their LinkedIn profile, or searching for their name on a corporate website and more often than not, it requires the appointment of a corporate intelligence and investigations company.

Are you a victim and require fraud investigation?

If you suspect you may have been a victim and require fraud investigation, Matrix Intelligence can assist you by investigating the crime, identifying the individuals responsible and tracing any assets that may be recoverable. For free advice and a no obligation proposal, please contact us on 0203 873 1089 or email: info@matrix-intelligence.com.


Identity Theft Investigation

Identity Theft

Identity Theft Image by: GotCredit

Identity Fraud (or Theft) is the use of a stolen identity, or credentials, to pursue criminal activity, with the single aim of obtaining goods, services or cash by deception.

Its prevalence is increasing exponentially and the latest available global statistics suggest that it is now the most prevalent form of fraud; accounting for 20.33% of all reported incidents last year. In 2019, the UK saw its highest ever volume of recorded cases, with 364,643 incidents logged in the National Fraud Database; a 13% increase on the previous year. In the same year, there were 3.2 million identity theft and fraud reports received in the U.S., with losses estimated at $1.9bn. Data also suggests that one in five victims have experienced it more than once.

This crime targets unsuspecting individuals and corporations alike. It is multi-faceted and manifests itself in a plethora of guises. Once a fraudster has stolen a target’s identity they have the potential to make purchases, open bank accounts, obtain credit cards, secure personal or business loans and even take over existing accounts. They can also use the stolen data to obtain genuine identity documents, including passports and driving licences, which in extremis, can in turn be used to set up fraudulent corporate enterprises.

Leading the fight back in the UK is the finance industry, which is investing increasing sums in advanced security systems, such as firewalls, biometric security and multiple authentication, to protect its customers, however; whereas recent reports suggest that this is having a significant impact, criminals still successfully stole over £1.2 billion in the U.K. through identity fraud and scams in 2019.

The main reasons why identity fraud is increasing in prevalence, are our increased use of and reliance on technology, the fact that business can now be transacted without any personal interaction and the increasing sophistication with which criminals conduct their activities. The use of computers and handheld devices to conduct activities such as online banking, purchases, bookings etc., means we all now routinely part with confidential information, including: our addresses, dates of birth, passport numbers, banking coordinates etc. Unfortunately, we do so with varying degrees of caution and those that do so without taking robust security measures leave themselves exposed to identity theft.

People are now more willing than ever before to transact business with someone they have never actually met, without first conducting any form of due diligence to verify their identity and credentials. Whereas someone may believe they are engaging with a legitimate individual in London, they may just as easily be talking to a criminal in East Africa, or the Balkans.

The final reason for the growth in fraud, is down to the fact that it is an incredibly lucrative profession and criminals are increasingly investing to enhance the sophistication of their operations. Identity theft investigation must also move at a similar pace to it's perpetrators.

How to protect yourself or business against Identity Fraud

There are a number of relatively easy measures which can be taken to protect personal information and guard against the theft of our own identity, including obvious means such as the use of anti-virus software, firewalls and using robust and frequently changing passwords, however; guarding against fraud once someone approaches you having already stolen someone else’s identity is somewhat harder.

The only effective means of preventing yourself from becoming the victim in such circumstances, is to conduct due diligence to verify the credentials of the individual who has approached you. This goes beyond simply checking their LinkedIn profile, or searching for their name on a corporate website and more often than not, it requires the appointment of a corporate intelligence and investigations company.

Our recent Fraud Cases and identity theft investigation

At Matrix Intelligence, we regularly investigate cases of identity fraud.

A recent example involved a retired individual who was tricked into investing almost €1 million by individuals posing as a legitimate finance company and offering a “too good to miss” investment opportunity.

As is common in such crimes, the fraudsters only asked for a small initial investment and then having produced fake statements to show market-beating returns, they gradually convinced the individual to invest greater sums. When the victim had seen his funds nearly double, he decided to withdraw them and this is when the relationship turned acrimonious and he was informed that he could only withdraw his funds after a final investment of almost €200k.

When his lawyer approached us for assistance and we reviewed the case, we were able to identify numerous red flags from the victims initial encounter. Had we been engaged to conduct due diligence prior to the initial investment, the client would have prevented the financial ruin which ensued and the accompanying mental anguish.

Another recent example is a case of a fraudster obtaining goods by deception. In this instance an individual approached our client posing as a Director of a legitimate and well known British construction firm. He wished to buy some large items of plant and have them shipped directly to East Africa with the promise of a subsequent larger order if our client could deliver.

Unusually, the individual said they would only pay upon receipt of the items and although this was not our client’s normal practice, he googled the company and the individual and having satisfied himself that they were legitimate, he agreed.

Unfortunately, whereas the firm and individual were indeed well known, that is not who our client was talking to. The fraudster had impersonated a legitimate individual and obtained the goods by deception. Again, had our client conducted proper Due Diligence, he could have avoided the loss in the first place.

What to do if you find yourself a victim of Identity Fraud

If you suspect you may have been a victim of fraud and require identity theft investigation, Matrix Intelligence can assist you by investigating the crime, identifying the individuals responsible and tracing any assets that may be recoverable. For free advice and a no obligation proposal, please contact us on 0203 873 1089 or email: info@matrix-intelligence.com


Ponzi Scheme Investigations

Ponzi & Pyramid Schemes - what do they mean in modern society?

The word Ponzi Scheme derives from the name Charles Ponzi who was known to deceive his investors by proclaiming that his business plan was to sell international postal reply coupons. He stated that this would double the money of the investors within a period of 90 days.

A Ponzi scheme is a fraudulent act made by an individual or a group of individuals. It starts off with an individual usually the owner of the Ponzi scheme which uses his current funds to pay new investors, or by paying funds from current investors as a return to new investors. This creates an illusion to prospective and current investors that the business is doing well, however the scheme collapses when there are no new investors wanting to invest in the business.

A Pyramid scheme is similar to a Ponzi scheme. It is where prospective investors are offered a high amount of capital for their investment. However, this capital is given to prospective investors when there is a huge influx of new investors which invest. It is like an ongoing cycle where new investors will be promised a lot of capital up until membership decreases, then it is likely that the scheme will collapse as the promises can no longer be actioned.

Red Flags

These types of schemes can be hard to detect but one way to notice this fraudulent act is by spotting some red flags. For example, one of these would be where the investment returns seem too good to be true, almost euphoric like. Most Ponzi and Pyramid schemes promise low risk and high return where you only invest a small amount of money and are promised to receive a lot more back. However, this is not the case as it is a constant cycle of the owner of the scheme paying investors the money that they collect from new investors.

Another red flag would be if the Investment Statement shows the business will keep on growing, despite what the market trends are. This is highly unrealistic because such an investment statement is not an accurate reflection of the economy and the business world. For example, if there is a recession it is likely that people will be buying less and saving money, which would result in lower performance by a business. A good way to spot if the business you are investing in is in fact a Ponzi or Pyramid scheme is if there is an actual recession, this is because this is where many investors would like to back out from investing or potential investors would not want to invest in the business due to the economic downturn, it is seen as highly risky business. On the other hand, if there is an economic boom then business is more likely to be successful as it is known to be a growth period in the business cycle.

Furthermore, it is highly suggested that investors check if the stated business which they are investing in is registered with the FCA. This is a regulating body which authorise businesses, if the business has not been listed in the FCA register then it is unsafe to invest in them as it is likely a scam.

Recent examples of Ponzi and Pyramid Schemes

One example of a Ponzi Scheme is that of FinCeN files which were leaked. These files include a staggering number of 2,100 fraudulent activity reports/SARs. SARs are usually sent to legal authorities when a company/business sees that their customers are acting somewhat illegally. The leak of the FinCeN files sheds light to the fact that bank monopolies have allowed fraudsters to hide their money by using unidentified British companies. For example, one of the leaked files show that JP Morgan could have permitted a Russian Mafia boss to transfer an enormous amount of $1bn without questions being asked or an investigation being made.

A real-life example of a Pyramid Scheme is the “Give and Take Scheme” which had taken place in England and Wales, where 6 women were the fraudsters. Investors were told that they would receive a staggering amount of £24,000 when they were the top investors within the business. The investors were told to pay £3,000 and were told to ask two more investors they know to pay the same amount. Many investors had lost a huge amount of money and are now paying back the costs. David Gough who had participated in investing states that “it was made out to be completely legal, solicitors and barristers were involved”. This scheme gives the illusion that it is obviously too good to be true. After Ponzi scheme investigation the fraudsters were sentenced under the Unfair Trading Act 2008.

Ponzi Scheme investigation regarding Bitcoin and Cryptocurrencies

A recent concern is that Ponzi and Pyramid Schemes can be disguised through Bitcoin or through Cryptocurrency investments. As mentioned earlier, with banks many systems are put in place to investigate and identify fraudulent activities, such as SARs, KYC checks etc.

However, Bitcoin and Cryptocurrency trading is lower risk for a fraudster as they can get their money quickly. In SEC v. Shavers the fraudster had proclaimed an “investment opportunity” on a bitcoin website, where investors were promised to earn 7% interest each week. In reality, the fraudster used the bitcoins he received from new investors to transfer to prospect investors.

International reach targeting

Due to the easily accessible widespread internet financial transactions have become easier than ever. This has increased the ability of fraudulent investments such as Ponzi and Pyramid schemes worldwide since fraudsters can target investors around the world. For example, the leaders of a worldwide pyramid scheme Huang Dingfang and Cai Keyi had deceived potential investors, by stating that they were going to open Shell companies where the investors were told they’d received high returns. These investors were from Taiwan, Southeast Asia and Hong Kong. This outlines that fact that fraudsters can target investors from different countries as it makes their pyramid schemes more successful.

An example of how fraudsters can target high net worth individuals internationally via international reach targeting can be illustrated with the case of Daniel Fernandes Rojo Filho. Daniel had deceived investors by stating that his business relied upon him managing 50 gold mines. Although, this was merely a lie and in reality, he was running a Ponzi/ Pyramid scheme where he targeted investors in specific countries.

In conclusion, Ponzi and Pyramid Schemes are becoming more common in modern day society as it has become easier for fraudsters to use the world wide web to target investors and HNWs internationally. Due to the increase in e-commerce and bitcoin, Ponzi schemes and Pyramid schemes have become more accessible.

What to do if you find yourself a victim and require Ponzi Scheme investigation

If you suspect you may have been a victim of fraud, Matrix Intelligence can assist you with Ponzi Scheme investigation by identifying the individuals responsible and tracing any assets that may be recoverable. For free advice and a no obligation proposal, please contact us on 0203 873 1089 or email: info@matrix-intelligence.com