The extradition of Israeli national Gal Barak to Austria marks a pivotal moment in Europe’s battle against online fraud. Barak, along with his German associate Uwe Lenhoff, was apprehended in early 2019 on charges of orchestrating international cyber scams that defrauded thousands of investors across the European Union.
Key Events Leading to Extradition
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January 2019: Uwe Lenhoff was arrested in Austria and subsequently extradited to Germany.
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Early 2019: An EU arrest warrant was issued for Gal Barak. Attempting to flee to Serbia, a non-EU country, Barak was detained at the border. After a brief detention in Bulgaria, he was placed under house arrest in Sofia.
Sofia: A Hub for Cyber Scams
Barak and Lenhoff established Sofia, Bulgaria, as the epicenter of their fraudulent operations:
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Gal Barak: Through companies like Tradologic and E&G Bulgaria, Barak ran multiple scam operations and illegal call centers, commonly known as boiler rooms.
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Uwe Lenhoff: Operated Winslet Enterprises EOOD in Sofia and co-founded the publicly listed Veltyco Group PLC in 2016. Funds from defrauded investors were funneled into Lenhoff’s Bulgarian entities, often via companies in Montenegro and Serbia.
Collaborative Fraudulent Activities
Despite running separate scams, Barak and Lenhoff collaborated extensively:
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Global Payment Solutions Podgorica DOO: Together with a local lawyer, they operated this entity in Montenegro to facilitate their schemes.
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Boiler Rooms: Joint operations in call centers enhanced their capacity to defraud investors efficiently.
Role of Payvision
The duo maintained a close partnership with Rudolf Booker’s Dutch payment service provider, Payvision:
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Up until their arrests, Payvision transferred millions into Barak’s company accounts at Investbank in Bulgaria, facilitating large-scale money laundering.
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Lenhoff has reportedly provided prosecutors with details about their cooperation with Payvision, potentially aiding in the recovery of stolen funds.
The ‘Scam Grasshoppers’ Phenomenon
The European cybercrime landscape is characterized by:
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Interconnected Scammers: Many fraudsters are familiar with each other, often exchanging victim data and utilizing the same payment processors and shell companies.
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Israeli Dominance: A significant number of these scammers are Israelis with strong mutual connections.
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Jurisdiction Hopping: Scammers frequently shift operations between countries like Sofia, Belgrade, and Podgorica, making it challenging for authorities and victims to track them.
U.S. Crackdown on Binary Options Scams
In the United States, authorities have indicted individuals linked to Israeli firm Yukom Communications:
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Over 20 suspects are accused of defrauding investors through platforms like BinaryBook and BigOption.
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Lee Elbaz, former CEO, has been convicted of investment fraud and faces a lengthy prison sentence.
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Owners Yossi Herzog and Kobi Cohen are also indicted and awaiting trial.
Ongoing Investigations and Legal Proceedings
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Uwe Lenhoff: Extradited to Germany, Lenhoff is undergoing intensive interrogation as authorities piece together the extent of his scam network.
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Gal Barak: His extradition to Austria was delayed by over 10 months due to legal maneuvers. During this period, with assistance from his wife Marina Barak (formerly Marina Andreeva) and partners Gery “Gabi” Shalon and Vladislav “Vlad” Smirnov, he allegedly continued his fraudulent activities.
Implications of Barak’s Extradition
Barak’s extradition offers EU authorities a crucial opportunity to:
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Gather detailed information through direct interrogation.
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Confront him with specific allegations.
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Identify and prosecute accomplices, financial service providers, and boiler room operators involved in the scams.
Seeking Justice for Victims
The extradition is a significant step toward:
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Holding scammers accountable.
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Potentially recovering funds for the tens of thousands of victims.
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Investigating the roles of payment service providers like Payvision, who continued facilitating transactions despite public warnings from financial regulators since 2015.
Unanswered Questions
Authorities aim to clarify:
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Barak’s connections with U.S.-indicted partner Gery Shalon and Russian associate Vladislav Smirnov.
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The involvement of joint ventures in Serbia, Bosnia-Herzegovina, and Montenegro in money laundering activities.
Tracing the stolen funds is essential to fully dismantle the network and provide restitution to the victims.