On September 1, 2020, at the Vienna Cybercrime Trials (#VCT), the court found under the presiding judge Christian Boehm the accused Israeli Gal Barak guilty of (cyber) investment fraud and money laundering and sentenced him to four years in prison. In addition, the victims were granted the funds confiscated by the authorities. Law enforcement has been able to track and seize these funds thanks to a FinTelegram whistleblower. After Gal Barak, his wife Marina Barak has also received an indictment. She has appealed and thus it is not yet effective.
The milestones explained
Undoubtedly, the Vienna Cybercrime Trials and the first sentencing are a milestone in the fight against cybercrime in the EU. For some observers unfamiliar with the law, the four years were too short, given the tens of thousands of victims and the alleged damages of more than €200 million. These critics have to consider seven points:
- Transposing cybercrime: The indictment of the Vienna Office of the Public Prosecutor for Economic Affairs and Corruption (WKStA) has successfully transposed the general accusation of cyber financial crime into the concrete offenses of serious systematic fraud and money laundering. The offense or term “cybercrime” is currently not found in any EU criminal code.
- Maximum penalty: in Austria and most other EU jurisdictions the maximum penalty for financial crime is 10 years. A first-time offender without a previous conviction in the respective jurisdiction, however, is entitled to a much milder penalty. In addition, a confession has a mitigating effect and obliges the court to reduce the penalty further. In this respect, the four years are quite acceptable. Barak had no previous conviction and confessed and thus four years may be considered fair.
- Austria reference case: Barak was “only” charged with the victims in Austria where the damages of the “only” amounted to €2.6 million. Also in this respect, the four years in prison are quite reasonable. More important, however, is to have a reference case that can be further worked on and developed in other EU jurisdictions. The Austrian law enforcement has to credited for this.
- #VCT: thanks to Barak’s confession and the conviction, his co-conspirators and facilitators will be indicted in the #VCT. Next in line is Barak’s wife Marina Barak but most certainly it will not stop with her.
- Other jurisdictions: In other countries like Germany Barak will have to be charged separately. According to reports, Germany is preparing an indictment but also in other EU jurisdictions, an indictment seems very likely. If it comes to that, Barak might have to spend many more years in prison in different countries.
- Restitution Payments: With the conviction, the victims will have access to the confiscated millions of Gal Barak and this should be at least as important as the prison sentences. Even more important for the victims.
- Whistleblower Power: the investigation, prosecution, and conviction as well as the freezing of funds for the restitution of victims were only possible thanks to the cooperation of a whistleblower. This shows how important whistleblowers and whistleblower programs are in the fight against cybercrime.
Bringing home the money
The Austrian victims represented by the European Funds Recovery Initiative (EFRI) can be fully satisfied with this. However, some legal procedures are still needed to bring the funds frozen at the Bulgarian Investbank to Austria and make the restitution payments. These measures are coordinated by Elfriede Sixt, Principal of EFRI.