The Vienna Cybercrime Trials are over for now. The honorable court today found the Israeli Gal Barak guilty of investment fraud and money laundering. He was sentenced to a 4-year-prison term. He was accused of being a principal of the international cybercrime organization E&G Bulgaria, through which he ran binary options and broker scams with his wife Marina Barak and a team of mostly Israeli co-conspirators. It is an extraordinarily important judgment in terms of general prevention and a strong signal to the scammer scene.
The case in a nutshell
According to the findings of almost two years of investigations by various EU law enforcement agencies, Gal Barak, together with his wife Marina Barak and a team of Israeli co-conspirators, is said to have operated the international cybercrime organization E&G Bulgaria, which was only one part of a larger worldwide cybercrime organization around the Israeli Gery “Gabi” Shalon, accused in the U.S., and the Russian Vladislav “Vlad” Smirnov.
E&G Bulgaria with its headquarters in Sofia, Bulgaria, has operated various binary options and broker scam brands such as XTraderFX, SafeMarkets, Golden Markets, CryptoPoint, or OptionStars and related boiler rooms in Bulgaria, Serbia, Bosnia-Herzegovina, Ukraine, and Georgia. Worldwide, tens of thousands of retail investors and consumers were thus cheated out of several hundred million euros between 2016 and 2019.
Gal Barak was first arrested in Bulgaria in early 2019 as part of an international law enforcement action. His German partner Uwe Lenhoff was arrested in Austria. In autumn Barak was extradited to Austria where he was charged with investment fraud and money laundering. On September 1, 2020, Barak was convicted in accordance with the charges.
The defense strategy
Barak’s defense team under Peter Lewisch of the Viennese law firm Cerha Hempel has chosen the defense strategy to make the victims the perpetrators. They would have known the risk at any time and would have taken it voluntarily and gladly. They would also have known that it was not really an investment, but betting and therefore gambling.
It was a very cynical defense and ultimately it failed. The evidence has condemned such a defense strategy to failure from the outset. The allegedly penniless Gal Barak paid €400,000 to his lawyers so far. It will cost him a lot more over the months and years to come.
Money for victims
The conviction of Gal Barak undoubtedly is a milestone in the fight and prosecution of financial scammers and boiler room fraud. And it is an important signal in terms of general prevention to deter potential scammers. But what about the restitution payments?
The authorities were able to freeze several million euros of Barak’s organization in the first place. These are to be made available to the victims for restitution payments once the court order is effective. But that will not be nearly enough. Neither financially nor in terms of justice and prevention.
Going for co-conspirators
The accomplices and facilitators of Barak and his organization must also be held accountable in the very best financial interest of the defrauded investors. At the forefront of this is the ING subsidiary Payvision, an Amsterdam-based payment processor which, despite the knowledge of the fraud, processed millions of stolen money for Barak’s companies until shortly before his arrest in early 2019. The then CEO Rudolf Booker generated a significant part of his payment volume from these scammers and knowingly and willingly helped them to launder money.
Payvision and Booker will therefore be called upon by the victims and their representatives such as the European Funds Recovery Initiative (EFRI). A very clear signal in the sense of prevention must be given in this respect as well.
The next steps
The Vienna Cybercrime Trials continue with charges against other people around Gal Barak. The indictment against Barak in Austria was only the beginning of further indictments in Austria but also in other EU countries. Barak will probably be charged in Germany in the next step, whereas his wife Marina Barak (formerly Marina Andreeva) and other persons will be indicted in Austria. Over the next few years, Barak and his cybercrime organization will probably see many courts and prisons. This is the least justice that can be given to desperate victims. They will still have to wait for their money. The authorities will have to find and seize these funds in the first place.
Stay tuned for our detailed case report!