Petr Dubinsky

Police Break Up 1.5 Billion Crown Ponzi Scheme

The police accused one person of fraudulently luring a total of 1.5 billion crowns from more than 4,000 investors. He faces up to ten years in prison for it. This was stated in a press release today by the spokesman of the National Center against Organized Crime (NCOZ) Jaroslav Ibehej. The accused is the executive of a company whose name the headquarters does not want to publish yet.

According to the NCOZ, the perpetrator committed fraud through a so-called non-public alternative fund. “According to our conclusions, the fund in question should have worked on the principle of the so-called Ponzi scheme, where investors are credited with fictitious profits, which are paid not from investment income but from newly acquired deposits. and the payment of high commissions for acquiring additional clients, “the spokesman described.

The police, in cooperation with the Financial Analytical Office, seized assets worth approximately one billion crowns. The accused is being prosecuted at large. The case is supervised by the Olomouc High Prosecutor’s Office.

The headquarters encounters a similar type of crime repeatedly, today it warned against it again. “NCOZ criminal investigators recommend to citizens increased caution and vigilance in connection with investments of funds in products that promise unusually high value – especially those that are not subject to regulation by the Czech National Bank,” Ibehej emphasized.

The NCOZ also drew attention to the growing number of cases in which people were deceived by investment fraudsters in its annual report for last year. According to the headquarters, offenders who promise a significant appreciation of money by investing in the stock exchange or real estate market are using the missing offers of legal options and products to increase the value of middle-class savings.

A typical element of investment fraud is the so-called Ponzi scheme, named after the fraudster Charles Ponzi, who persuaded thousands of people to invest in prepaid money orders. “If something is too good to be true, it’s usually a Ponzi scheme,” the headquarters said in the annual report.

Last year, for example, the NCOZ resolved a case concerning the company JO Investment, where it has so far registered over 2,000 victims and damage exceeding one billion crowns. Another case is Saving Funds Limited with hundreds of injured clients who believed in promises to increase their savings by seven percent or more a year. The New Zealand-based company itself did not have a banking license and did not formally report its activities.