The fallout from the Juicy Fields bankruptcy continues to grow at breakneck speed since investors complained they could not access their funds in mid-July.
While there may never be a full explanation of what happened within the company and, more importantly, where investors’ funds are going, a clear picture of the scale and of the sophistication of this scam is now beginning to emerge.
A lawyer who specializes in this type of scam, who is in the process of mounting a class action suit for hundreds of Juicy Fields investors, believes that it is “by far the biggest scam in Europe for many, many years”, which bears all the hallmarks of the Russian mafia and which could cause the loss of more than 700 million euros.
This rapidly changing picture, in addition to the scale of the scam, reveals a much broader framework of complicity on the part of key individuals, companies and financial institutions that enabled it to take place.
Lars Olofsson, CEO of Swedish legal, investment and business management firm PRIO Startup, told BusinessCann that since a client asked him about Juicy Fields three weeks ago, he spoke to more than 1,500 investors “in one form or another”.
Lars Olofsson’s company, which is the source of a class action, has “specialized in this type of fraud” for more than ten years and is currently working on a number of similar cases, including the micropayment platform Plipp, the company telemarketing company Koncepta and weight-loss device vendor Victus Medical.
Last week, based on the number of investors in contact with him and the more than 500 bank transfers he had seen, Lars Olofsson estimated that around 30,000 people had lost money with Juicy Fields, investing on average between 10,000 and 12,000 euros.
A few days later, following a new influx of affected investors, this estimate was increased to 120,000 people worldwide, with most of the new victims having invested an average of 40,000 euros.
“It’s absolutely mind-blowing – and we’re hardened lawyers who’ve seen it all,” he said.
He pointed out that these numbers were based only on evidence of bank transfers he had seen, and therefore did not take into account the thousands of investors who also lost bitcoins, adding that “the average investor in crypto has (invested) twice as much as cash payments”.
Combining them, he estimates that investors are likely to have lost more than €700 million in investments, adding that it was “no less than €500 million”.
While the scale of the losses may come as a surprise, Lars Olofsson says the fact that Juicy Fields turned out to be a scam is no surprise.
“When I look at the business model, the seeds, the cultivation and the sale of these plants to the pharmaceutical industry, it doesn’t add up – the equation doesn’t fit. And then when I look further into the edit, there are all the marks of the design being a scam”.
All the distinctive signs of the Russian mafia
More precisely, Lars Olofsson affirms that, from his point of view, this affair is “100%” the work of the Russian mafia and that it bears all the marks of it.
First, a common theme in Russian mafia scams is the sudden disappearance of business, including websites, phone lines, email addresses and social media accounts, all of which are well documented in the spinoff from Juicy Field.
However, and crucially, they “leave behind people who are still communicating on different social media platforms”, informing investors that there have been temporary problems or technical difficulties and that their money will soon be returned to them. .
“They try to make people believe that they haven’t been scammed, that there are still people who respond and say reassuring things. This is one of the sophistications of the scam”.
Along with various correspondence to investors via social media over the past few weeks, Juicy Fields has reached out to investors over the past few days in an attempt to further cloud the issue.
The company’s communication reaffirms that the allegation that Juicy Fields is a Ponzi scheme “could not be further from the truth”, and that the fallout is the work of a dishonest actor, Friederich Graf von Luxburg .
Lars Olofsson says this statement, released on July 28, is almost a “copy-paste of announcements made in two other cases we have handled.”
These ongoing messages also serve to sow the seeds of “reasonable doubt” among prosecutors that there was “good intention, but someone swindled” the investors.
Another key indicator of Russian mafia involvement is Juicy Fields’ connection to Cyprus, where, according to an interview for Spanish online newspaper elDiario.es in May this year, the company had a bank account.
Cyprus is said to be the “preferred offshore country in Europe” for investment by the mafia and Russian oligarchs, as explained in a BBC report published earlier this year, which dubbed the island the “Mediterranean Moscow”.
The leaked documents now easily accessible in the various Juicy Fields Telegram groups also suggest that Paul Bergolts, Alex Vaimer and Vasily Kandinski, who former CEO Alan Glanse says were those who controlled the network, all held Russian passports.
However, according to Lars Olofsson, it is unlikely that these three people were more than lieutenants in the system, and had little to do with the design of the operation.
Who is an accomplice?
The class action, which is still in the research stage, will seek to hold those complicit in the fraud to account, rather than to recover the lost money that was paid into the Cypriot bank account.
“That money is gone. It is more or less impossible to know where it ended up and how it was distributed,” explained Lars Olofsson, adding that it is very rare that the real perpetrators of such sophisticated scams are arrested, tried and put behind bars. .
Instead, it takes aim at “enablers,” the people, companies and institutions that have helped Juicy Fields “directly or indirectly, people who have simply turned their backs and looked away.”
“I want to describe the environment in which this kind of scam and this kind of editing can operate. There are people and companies who should have reacted, who should have said that it is not good. »
“I can’t list them yet. But I would say I would be surprised if there were less than 20 different types of people in key positions, companies and so on. My ambition is to show how this scam could actually be carried out? Because there are so many people involved directly or indirectly. »
Although many key people, including the two former CEOs Alan Glanse and Willie van der Merwe, have issued statements claiming their innocence or general ignorance of what is really going on at Juicy Fields, Lars Olofsson believes that anyone “working for or representing” the company must have known it was a fraudulent business.
BusinessCann has contacted a number of organizations with which Juicy Fields claims to be associated or with which it has signed sponsorship agreements.
While many companies listed on the Juicy Fields website have released statements distancing themselves from the company, including Canna Healing and Sabores Púrpura, only Kannabyte has responded to this request for comment as of this writing.
A company spokesperson says Kannabyte “had a business relationship with Juicy Fields,” where it paid upfront to grow 500 medical cannabis plants and then found a buyer who could legally buy the flower in Colombia.
“Simply put, Juicy Fields essentially acted as a broker,” they added, clarifying that they did not own any stake in Juicy Fields and vice versa.
Asked if the company had reason to suspect Juicy Fields of being fraudulent, Kannabyte replied that its money laundering and know-your-customer due diligence did not reveal any red flag.
More importantly, she cites “several credible cannabis conferences around the world”, including ICBC, Mary Jane Berlin Expo, Kannasur, PTMC and many others, which have counted Juicy Fields among their sponsors, as a key reason for not not “doubt their credibility”.
“Kannabyte has suffered economically from the Juicy Fields fallout. We have outstanding invoices with Juicy Fields that have not been paid and which at this time are likely to remain unpaid. »
“Furthermore, the events occurring at Juicy Fields have required an enormous amount of time and resources from Kannabyte management as we try to figure out what exactly happened, what the next legal steps are. against Juicy Fields and as we try to be as responsive to our community, who want more information and are trying to figure out, like Kannabyte, exactly what happened at Juicy Fields. »
While Lars Olofsson says he aims to hold accountable anyone who has “turned his head and been complacent”, his immediate target will be the banks.
He said: “Banks are the main enabler of this scam. There are also a number of other facilitators, whether individuals or businesses. But my first target, the easiest fruit to pick from my point of view as a lawyer, is undoubtedly the banks. »
He is convinced that the security infrastructure used by international financial institutions to detect suspicious activity should have flagged Juicy Fields and prevented many of these transactions from taking place.
As the majority of transactions with Juicy Fields took place across borders, three banks were involved in each: the sending bank, the transferring bank and the receiving bank.
According to Lars Olofsson, these banks have a system for “the supervision and evaluation of these payments”, which uses complex and sophisticated algorithms designed to flag any suspicious activity.
As soon as suspicious activity is detected, these banks are required to file a Suspicious Activity Report (SAR) with their local government financial conduct authority. An average bank will deposit hundreds of thousands each year, which gives an idea of the sophistication of this system.
Based on the documents he has access to, Lars Olofsson estimates that around 95% of Juicy Fields’ transactions went through this system, but that “no more than maybe 2%” should have been approved.
“In my experience, and I specialize in international regulations and compliance, 98% or 99% of all transactions should have been picked up by this security system. »
“That’s why I need as much data as possible from all investors. I’m trying to find a specific transaction, then I’ll track that transaction in the system and see if it came up as suspicious activity, and why a SARS report wasn’t created. »