ING subsidiary Payvision accused of pushing €131.2m in fraudulent payments
Update 12/11/20 08:47: The claimant has since provided more information around this case. Notably, they have updated the number of victims from 250 to 289.
ING subsidiary Payvision, a payments processing firm, is accused of facilitating fraudulent transactions worth €131.2 million.
A spokesperson at the Dutch bank confirmed to FinTech Futures that the European Funds Recovery Initiative (EFRI) has filed a claim against Payvision.
ING acquired the entirety of Payvision in October 2019
It alleges Payvision allowed 289 European consumers to lose out on millions in euros over a four-year period, from 2015 to January 2019.
EFRI wants the fintech to pay €10 million in restitution to those affected. This total is made up of two separate letters – one asks for €7 million, and the other for €3 million.
“We are studying the claim and cannot comment any further at this time, as it is our policy not to publicly discuss legal proceedings,” an ING spokesperson said.
ING’s acquisition of Payvision
EFRI’s co-founder, Elfriede Sixt, tells FinTech Futures it has filed the claim with Netherlands-based Hague Court of Appeal. It requests criminal proceedings against Payvision.
ING acquired 75% of Payvision’s shares in March 2018, at a valuation of €360 million. It bought the other 25% off Payvision’s management in October 2019.
Sixt claims the bank replaced Payvision’s board of directors following the completion of the acquisition.
She first published her story – years in the making leading up to the claim – through a blog post hosted on Risk & Compliance Platform Europe.
The alleged fraud
Rudolf Booker founded Payvision in 2002. He led the firm until April 2020 when his final stake in Payvision transferred to ING.
The payments fintech allows online shops to accept credit card payments and acts as an acquiring partner.
According to Sixt, who has seen the criminal cases against two boiler room beneficiaries – Uwe Lenhoff and Gal Barak – stolen money was processed by Payvision across 12 different scams.
Sixt says she worked with Austrian prosecutors and police to help apprehend the beneficiaries, figures who flitted between European countries until their eventual arrests.
Gal Barak is known as the “Wolf of Sofia”
Boiler rooms are outbound call centres. In this case, they traded forex with binary options to unsuspecting investors. Sixt says many of the victims, based largely across Serbia and Bulgaria, lost their entire life savings through the scams.
Statements by former Payvision CEO Booker appear in both Lenhoff and Barak’s criminal files, Sixt says, who also holds the payment slips provided by victims.
Four of these scams led to the arrest of Lenhoff in Austria in January 2019 for fraud. These included Option888, ZoomTraderGlobal, Tradovest and Lottopalace spanning 2015 to 2018.
Lenhoff was due to stand trial in Germany. Authorities found him dead in his cell in Saarbrücken four months ago.
Barak’s arrest occurred in Bulgaria. His charge centred around benefiting from two scams allegedly facilitated by Payvision – XtraderFx and OptionStarsGlobal. They span 2016 to 2019.
Known as the “Wolf of Sofia”, Barak received four years of jailtime in Austria in September.
Size of the scams
In all, Lenhoff turned over €55.6 million, and Barak €75.6 million. These takings came with the help of Payvision as the processor, claims Sixt.
This amounts to €131.2 million. Brooker said in statements now held by police that Barak received around 65%, and Lenhoff around 40%, of repayments.
This suggests the ING subsidiary took hefty commissions on the fraudulent payments. Later, Payvision allegedly introduced a single rate including commission and chargeback fees.
ERFI co-founder Elfriede Sixt has filed a claim with the Hague Court of Appeal
Based on these financials, the EFRI has calculated that ING – as Payvision’s parent – should pay at least €10 million to victims for the scam.
Shell companies signed contracts between Payvision and companies involved in the alleged scams. But all contact happened directly between Payvision and the benefitting firms, according to interrogation statements.
Sixt says Lenhoff and Barak’s arrests led to these revelations. She adds that it’s likely more scams can come to light.
Payvision terminated its contracts with fraudulent brands in December 2018. Sixt says Fintelegram reports published around that time prompted the terminations.
Business phone calls between Payvision’s Booker and Lenhoff continued until the end of January 2019. Lenhoff was arrested two days before the final call.
Barak and Lenhoff
Austrian police outed Barak and Lennhof in February 2019. It presented the news alongside the Austrian Federal Crime Agency in February 2019.
The pair are named leaders of an international cybercrime network worth €100 million a year through illegal online trading platforms.
Barak was the director of E&G Finances, a call center which employed Bulgarians but which was led by Israelis, according to The Times of Israel.
And according to investigative site Bivol, Petya Slavova’s Investbank supported Barak’s activities.
Us embassy diplomatic cables, leaked during the Wikileaks scandal, described Investbank as a “bad apple” in 2006.
The “Netherlands Wirecard”
The EFRI filed a money laundering complaint against Payvision in the summer of 2019. It has since sent an updated version to the Dutch Central Bank.
“We are requesting the restitution of the payments to the victims from Gal Barak and Uwe Lenhoff as enclosed from Payvision. So far, there is no response from them,” Sixt tells Risk & Compliance Platform Europe.
“Payvision is Netherland’s Wirecard, thus a company helping scammers in big style fraud.”
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A headhunter placed me through the ING interview process for the Payvision MD role. The third and last interview was with three board members. I told them they would need to flush about 10% of merchants as it was ‘pure garbage’. When challenged I explained it would be painful as the trash merchant base generated the majority of PV’s revenue, but they were ‘too hot to handle’ and the reset of the merchants were given near-free payments processing to camouflage the illegal flow. I was not invited back for follow-up interviews. If you have a turd, wipe & flush, don’t polish . . . And I warned them.