15 Plead Guilty to International Cyber Fraud Conspiracy

Fifteen defendants have pleaded guilty for their roles in an international multimillion dollar scheme to defraud Americans through fake online auctions, according to the US Justice Department.

According to court documents, the defendants participated in a criminal conspiracy that involved large-scale online auction fraud. Romania-based members of the conspiracy posted fake ads on online auction and sales websites such as Craigslist and eBay for expensive goods such as automobiles that did not exist.

Members of the conspiracy would convince American victims to send money for the advertised goods by fabricating persuasive stories, such as posing as a military member who needed to sell the item before deployment. The ill-gotten money would then be converted to bitcoin for laundering purposes.

Among the 15, Romanians Bogdan-Stefan Popescu, Liviu-Sorin Nedelcu, Vlad-Calin Nistor, and Beniamin-Filip Ologeanu each pleaded guilty to one count of RICO [Racketeer Influenced and Corrupt Organizations] conspiracy.

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According to court documents, Popescu operated a car wash in Bucharest, Romania, where he managed co-conspirators in the RICO enterprise and oversaw an operation in which he knowingly negotiated fraudulently obtained bitcoin through various deceptive ways.

For example, Popescu would sometimes receive cryptocurrency from co-conspirators who obtained the funds through online fraud scams and then transfer the cryptocurrency to other conspirators, such as Nistor. Popescu would then direct Nistor to exchange the cryptocurrency for a fiat currency, and then deposit the fiat currency into bank accounts held in the names of various employees and family members.

“Today’s modern cybercriminals rely on increasingly sophisticated techniques to defraud victims, often masquerading as legitimate businesses,” Assistant Attorney General Brian Benczkowski of the Justice Department’s Criminal Division said in a statement. “These guilty pleas demonstrate that the United States will hold accountable foreign and domestic criminal enterprises and their enablers, including crooked bitcoin exchanges that swindle the American public.”

Court documents show that Nedelcu worked in conjunction with others to post fake advertisements for goods online. To maintain the appearance of legitimacy, Nedelcu created fictitious entities through which he purported to sell vehicles. Once he and his co-conspirators convinced victims to purchase falsely advertised goods, they sent the victims invoices for payment that appeared to be from legitimate sellers, such as eBay Motors.

In addition to providing money laundering services, Popescu emailed co-conspirators usernames and passwords for accessing IP [internet protocol] address anonymizing services, and sent email addresses and passwords to use for posting fraudulent advertisements. Popescu also assisted members of the RICO conspiracy in persuading victims to send in money by connecting them with other members who would pretend to be eBay customer service representatives over the phone.

The Justice Department said that once he received a payment, Nedelcu and his co-conspirators engaged in a sophisticated money laundering scheme to convert the payment into bitcoin.

Nistor was the founder and owner of Romania-based Bitcoin exchange Coinflux Services SRL through which he exchanged cryptocurrency into local fiat currency on behalf of the Romania-based members of the conspiracy. According to plea documents, Nistor exchanged more than $1.8 million worth of bitcoin for Popescu.

Ologeanu worked with others in the conspiracy to post advertisements for goods to auction websites, including eBay and Craigslist. Once Ologeanu convinced victims to purchase and provide payment for falsely advertised items, he would contact US-based conspirators to convert the victim’s payment into other forms of payment and transfer part of it back to himself in bitcoin. Ologeanu also purchased fraud proceeds from other co-conspirators, typically in the form of prepaid debit cards, to be laundered by US-based co-conspirators.

The 15 defendants have yet to be sentenced.

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Tags: Bitcoin, Bogdan-Stefan Popescu, Cryptocurrency, Department of Justice, Fraud, guilty plea, RICO, Romania

Not even the apex of the COVID-19 pandemic was enough to scare financial advisers into fearing for the fate of the markets.

Between March 16 and April 24, when the pandemic was tearing across the globe and much of the world was under lockdown orders to shelter in place, Natixis Investment Managers surveyed 2,700 financial professionals in 16 countries, including a pool of 300 wealth managers, investment advisers, and brokers in the United States.

Despite the panic and uncertainty gripping most of the world at the time, and the comparisons to the Great Recession, the survey’s respondents said they felt 2020 would turn out to be less like 2008 and more like 2018. Despite seeing losses as high as 34% within the first few weeks of the crisis, the financial professionals surveyed forecast a loss of only 7% for the S&P 500 and 7.3% for the MSCI World Index by year’s end. By comparison, the S&P tumbled 37% and the MSCI plunged 40.33% in 2008.

The survey respondents’ outlook was more optimistic for the US than elsewhere, as financial professionals were significantly more pessimistic about stock performance in Hong Kong, Australia, Italy, and Germany, where they expect double-digit losses for the year.

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One of the reasons for the optimism regarding the US markets was the respondents’ faith that the economic relief packages passed by Congress would have their desired effect.

“Advisers in the US seem to be giving an initial vote of confidence to the swift and dramatic actions taken by Fed and Congress in response to the pandemic, as well as the resiliency of the US economy,” David Giunta, CEO for the US at Natixis Investment Managers, said in a statement.

And the volatility of the markets indicates that investors believe it’s time to take a hands-on approach to investing, as 81% of the financial professionals surveyed said they believe the current environment favors active management over passive management. Additionally, 70% said they believe investors have a false sense of security in passive investments, while 78% said they don’t believe investors understand the risks of investing passively.

“The dramatic rise in volatility underscores the important role that active managers and financial advisers play in helping their clients navigate uncertainty, capitalize on opportunities, and remain focused on their long-term investment goals during these unprecedented markets,” Giunta said.

According to the survey, volatility and the threat of a recession are seen as the main risks to portfolio performance and the market’s outlook as 65% of US respondents cite volatility as a top concern, while 64% say they are most worried about a recession. Some 43% say uncertainty surrounding geopolitical events poses a risk to their portfolios, while 25% expect the US presidential election to be a factor. And in a major shift away from the risk concerns cited in previous years’ surveys, only 22% said they were concerned about low yields.

The responses to the survey seem particularly optimistic considering that 46% of respondents said they felt that markets were already overvalued at the time, while 92% said they believe the prolonged bull market had made investors generally complacent about risk. And as long as the markets are rising, 48% of respondents say their clients resist portfolio rebalancing.

“The market downturn—and expected recovery—serves as a lesson in behavioral finance, even if learned the hard way through real losses and missed goals,” said Dave Goodsell, executive director of Natixis’ Center for Investor Insight. “Financial professionals can show their value by talking with clients in real terms about risk and return expectations, helping them build resilient portfolios, and showing them how to keep emotions in check during market swings.”