The names of four men arrested near Tel Aviv last month amid a series of raids targeting alleged fraudulent investment schemes have been unsealed by a Jerusalem court, ahead of their possible extradition to Germany.
Pavel Kotler, 47, of Holon; Yuri Dashevsky, 33, of Kfar Saba; Nimrod Blachman, 33, hometown unknown; and Chen Malka, 31, of Tel Aviv were being held on suspicion of binary options, forex and cryptocurrency fraud against German citizens.
The four were among 15 people detained by police in an October 20 raid on a Petah Tikva call center initiated by German police, who launched an international blitz on Israel-linked investment frauds last month, along with the FBI.
The arrests were carried out at the request of German prosecutors, who said they plan to ask for the men to be extradited to stand trial in Germany.
A Jerusalem Magistrate’s Court judge initially acceded to requests from the four men’s lawyers that their names not be publicized so as not to damage their reputations, but the gag order has now been lifted.
The men are accused of being part of an organized gang that from 2015 to 2019 allegedly ran the websites IntegraOption, SolidCFD, TradeSolid, BitCapitalMarkets, GetFinancial, ProCapitalMarkets, NordCapitalMarkets, ProfitsTrade, FXPace, AccepTrade and GainFinTech.
According to the public prosecutor’s office in Bamberg, Germany, these websites are all connected and were run by these four men and their associates over the internet and from call centers in Israel and in Tbilisi, Yerevan and Chisinau — the capitals of Georgia, Armenia and Moldova, respectively.
On October 19, Israeli police reportedly detained and questioned a lawyer who was thought to have taken part in the management of the websites run by the suspects in the Petah Tikva call center, according to Israel’s Posta crime news website. The questioning was reportedly carried out at the behest of German police.
Seven individuals who were part of the same group as those in Petah Tikva were arrested in Georgia on October 19, according to an October 27 press release issued by the public prosecutor in Bamberg, Germany. Three of the people arrested in Georgia were women.
In addition, in 2019 the group allegedly ran the alleged recovery room scams FXLaws and Tradelegal in which they offered to help victims of scams recover their money — for a fee. These websites allegedly took victims’ money without helping them, German prosecutors charged.
The suspects allegedly persuaded people around the world to invest money in forex, binary options, and other financial instruments. But instead of actually investing customers’ money as promised, the suspects allegedly used the money to run their call centers and platforms as well as for their personal use.
German victims alone lost several million euros to these sites, German prosecutors said. The sites targeted people all over the world, suggesting the losses to alleged victims worldwide were much higher. The 11 websites German prosecutors said were controlled by the suspects were powered by two platforms: SpotOption and Tradologic.
As of October 20, Germany had not yet submitted official extradition requests, but Israeli prosecutors told the Jerusalem court that it plans to do so promptly. A lawyer for one of the suspects said on Monday that all four suspects are under arrest for 20 days as the court awaits Germany’s extradition request.
Since the beginning of October, there has been a spate of raids and arrests of alleged forex and crypto fraudsters in Israel, Ukraine, Cyprus, Georgia, Bulgaria and the Philippines at the behest of German law enforcement, along with the FBI. Almost all of them targeted groups of alleged scammers that were led by Israeli nationals.
A call center in Tel Aviv
Germany’s October 15 legal assistance request to Israeli police does not name the call center or call centers that Kotler, Dashevsky, Blachman and Malka worked for. Israeli police claim that the call center they raided on October 20 was in Petah Tikva.
But documents seen by The Times of Israel show that at least three of the websites allegedly operated by the suspects were run from a different call center, known as GM Software Solutions, on Hamasger Street in Tel Aviv.
Until May 2017, Chen Malka owned GM Software Solutions, according to Israel’s corporate registry. Multiple lawsuits against the company by former employees show that it ran the websites TradeSolid, IntegraOption and SolidCFD.
Since 2005 Israel has been a hub of internet fraud involving fake online trading or investment websites. Israeli authorities have largely ignored the fraud, allowing it to blossom into a full-fledged industry that has employed thousands of people and stolen billions of dollars from Internet users worldwide.
Initially, these fraudulent websites offered forex trading. By 2013, many of the forex operatives began offering trading in a financial instrument known as binary options. After binary options websites were outlawed by the Knesset in 2017, as a direct result of reporting by The Times of Israel, many of the same operatives created websites that offered fake forex, CFD and cryptocurrency trading. Some moved part of their operations abroad.
While Israeli police have over the years arrested a handful of these operatives, almost none have been prosecuted. Similarly, while Israeli media have reported on individual investment scams, they have often depicted these as lone-wolf operations, failing to explain that they are part of a massive, interconnected industry.
In recent years, law enforcement in the United States, Germany, Austria, and to a lesser extent Canada have, unlike their Israeli counterparts, investigated, indicted and convicted some of these Israeli alleged investment fraudsters.
Nimrod Blachman’s lawyers respond:
Attorneys Eitan Finkelstein and Lia Plus, who represent Blachman, sent The Times of Israel the following response.
“The defendant was a tax-paying, salaried employee whose entire role was to acquire leads so that the platform could be marketed to investors. His role in the company was secondary and focused on acquiring leads. He was even fired from the company a year and nine months ago before the beginning of the coronavirus pandemic.
“The defendant had no awareness that there was a problem of legality concerning the conduct of investors vis-a-vis the companies that used the leads, if there was in fact a problem of legality, because it is entirely legal to invest in cryptocurrencies or forex. The other people involved made a clear presentation to him that everything was legal. They had no interest, if the accusations against them are correct, to share that [information] with him. On the contrary.
“As mentioned, the accused has not worked in this field for close to two years and has not been in touch with the others during this entire period. He is cooperating during questioning and we are certain that it will soon become clear that he does not have a part in this affair.”
Chen Malka’s lawyers respond:
Attorneys Sivan Russo and Uri Korev, who represent Chen Malka, sent the Times of Israel the following response:
“Our client Chen Malka left the company about five years ago at the end of 2016 and since then has not been involved in the company’s activities. Accordingly, the court determined that the question of Chen’s release from jail should be considered. Chen cooperated during his questioning and provided a full statement and we believe that after the evidence is examined it will become clear that Chen was not involved in any fraud towards anyone.”
Lawyers for the other two suspects did not respond to emails from The Times of Israel.