It was a raid at corporate headquarters that marked the beginning of the final at the payment service provider Wirecard. At the beginning of June, the Munich I public prosecutor had the business premises in Aschheim searched. A few days earlier, the financial supervisory authority Bafin had filed criminal charges against Wirecard officials. It dealt with misleading ad hoc reports by the then Dax group in the weeks before the report of a KPMG special audit was published. After that, everything went very quickly: two weeks after the raid, the auditor EY refused his certificate because there was no evidence of alleged cash balances of 1.9 billion euros in trust accounts in Asia. On June 25, Wirecard filed for bankruptcy. Since then, the Munich public prosecutor’s office has been investigating ex-CEO Markus Braun and other managers, among other things because of suspected gang fraud.
But in fact, the raid in June 2020 was not the first that German investigators carried out at Wirecard. As a spokeswoman for the Munich I Public Prosecutor’s Office confirmed at Personal-Financial.com’s request, there were already “investigative measures in the context of legal assistance for the US Department of Justice” in 2015. The spokeswoman did not want to give more information on the occasion and the consequences of the raid, referring to the “press sovereignty” of the Americans in this process. In addition, “the requesting authority asked for strict confidentiality”.
According to internal documents of the public prosecutor’s office, the raid took place on
December 1, 2015. It was a “large-scale search operation” for money laundering, according to documents that Personal-Financial.com has. According to insiders, legal assistance to the US authorities was likely to have been in connection with illegal transactions for online casinos.
Tough action by the US authorities
A few years earlier, in October 2006, the American government had enacted the Unlawful Internet Gambling Enforcement Act (UIGEA) – a law that bans banks and credit card companies from processing gambling transactions in the USA in order to prevent illegal casinos online to turn the business off. Because the USA is the largest online gambling market in the world, some payment providers subsequently developed complex procedures that camouflaged such illegal transactions so that credit card providers such as Visa and Mastercard could not identify them. Some time later, the US Federal Police, the FBI, took massive action against the online gambling industry: In April 2011, they took the largest poker websites offline. Some managers were later sentenced to prison terms.
The fact that the Wirecard Group had been one of the leading service providers since the mid-2000s helping gambling providers outsmart US regulation was an open secret in the industry even then. In many cases, specially established fake internet shops for flowers or other products that appeared on the players’ credit card statements were used to camouflage payments. These were often checked by people from the Wirecard environment.
This business model and Wirecard’s longstanding illegal services for online casinos were specifically described and substantiated in a report by an analysis company called Zatarra Research & Investigations, which was published on February 24, 2016 – just under three months after the raid by the public prosecutor’s office Munich I carried out in Aschheim at the request of the US Department of Justice. Zatarra, named after a character from the novel “The Count of Monte Christo”, was a previously unknown company whose backers initially remained in the dark. Nevertheless, on the day the report was published, the price of Wirecard shares fell by more than 25 percent – also because the “Financial Times” journalist Dan McCrum reported on it. The company, which was listed in the TecDax at the time, defended itself by rejecting the allegations in the 100-page report as “completely untrue” and “defamatory”. They are the work of speculators who want to negatively influence the share price.
After the Zatarra report was published, the German financial supervisory authority initially initiated an investigation to examine possible market manipulation. After the report was published, several banks reported a number of suspicious transactions to Bafin, in which institutional investors and individuals entered into short positions in the weeks prior to the publication of the Zatarra report using short sales and derivatives such as put options – and after Publish a profit. In May 2016, the Bafin filed a criminal complaint with the Munich I public prosecutor’s office on suspicion of market manipulation. In its criminal complaint, which Personal-Financial.com has received, the supervisory authority named more than 30 suspicious investors, including from Great Britain, the USA and Israel. The amount of the profit of the short sellers, which, according to Bafin, was known at that time: almost 3.3 million euros.