The banking system’s complicity in the Juicy Fields scam

This article was published in EL PAÍS FINANCIERO, a Spanish newspaper belonging to our editorial group.

Almost a month has passed since the Juicy Fields pyramid crash, which resulted in the scamming of tens of thousands of users. Since the first day of the events, information has been scattered, which has generated distraction and confusion among those affected. However, the investigation continues and each time new threads of the scheme are uncovered.

Swedish lawyer Lars Olofsson, the CEO of PRIO Startup Ltd. and who has a long career in the investment sector, has taken up the case of the victims. In an exclusive conversation with EL PAÍS FINANCIERO via e-mail, the expert shared some of the results of his investigations into this exit scam. In his opinion, everything points to the fact that the financial crime would not have been possible without the banking system, which he describes as the main target of his investigation.

On July 11, Juicy Fields users reported that their funds had been frozen. Prior to that, they reportedly received a notification from the technical service team announcing a workers’ strike. Since then, events unfolded that have led to the confirmation that this is one of the best prepared scams in recent years and the largest in the cannabis business.

Who is behind the Juicy Fields scam?

Theories of the culprits in the Juicy Fields scam abound. One of them points to the company’s managers (or at least a part of them) who would have tried to seize the rights of the company and froze the funds. The second theory, now completely ruled out, is hacking.

But there is another theory that puts the blame on Russian individuals. This media published a paper with the identity of the alleged citizens of the Eurasian country with information provided by the former CEO of Juicy Fields, Alan Glanse. Some of the affected users in Telegram groups do not believe this hypothesis and claim that the real scammers intend to “pin the blame” on “random Russians that no one will investigate”.

However, Olofsson believes that the possibility of Russian mafia involvement is very high and should not be ruled out. “Putting all the pieces together, and there are a lot of them, they all have the patented brand of how the Russian mafia works, the indications are very strong,” he warned. At the same time he confirmed that he has no conclusive evidence that the Slavic mafia is behind the case. But leaving no traces is one of the many qualities of that branch of organized crime.

Either way, the Juicy Fields scam remains unsolved. So far there is no total certainty as to who the scammers are and the abundant breadcrumbs seem to lead to dead ends. However, Olofsson’s theory leads to the main flaws that helped the fraudsters, consciously or not, point to the banks. They would have missed suspicious transfer alerts from a company publicly targeted by regulators in several countries as a possible fraud.

The Juicy Fields scam occurred with the complicity of the banking system

Logically, whoever wants to get money from users on an online platform needs bank accounts to receive it. You also have the option of receiving it through cryptocurrencies. In the case of Juicy Fields, its platform had both methods and as this media outlet reported, digital currency wallets experienced many movements.

But in the case of banks, the very nature of these institutions makes it impossible to access fund information. However, by tying up some threads, it is possible to conclude what was the level of participation, in magnitude and quantity, of the banking system. Precisely, this is one of the works being carried out by the aforementioned Swedish lawyer and on which he will provide updates in a few weeks, as he explained

To carry out their scam, the people behind Juicy Fields used various levers offered by the system. “Several companies, organizations and individuals have facilitated this. An operation like this could never operate in a vacuum. It needs all kinds of suppliers who directly or indirectly facilitated or looked the other way,” he says.

Regarding the company’s internal management team, the lawyer said that it is very difficult for them not to have known what was going on. “Some of them may have been ‘useful fools’, but looking at the operation and what has been done, no one in the management could have overlooked the scam,” he told to EL PAÍS FINANCIERO via e-mail.

He says that these managers were certainly ‘lieutenants’ of the people behind it. Those top bosses would never appear in public, but it is unlikely that their management workers and visible faces were not aware of it.

The banks got completely wet

But the notable aspect of this investigation is the role of the banks in helping (by omission, probably) to consummate the Juicy Fields scam. The expert states that to understand in context the role of these institutions, it is key to have an idea of how the banking system works when it comes to international transactions. In that sense, he points out that there are usually three banks operating in an international transaction:

He explains that all of those banks have “a system in place to detect suspicious activity” and all failed at this. “By my calculations, of all the thousands of transactions and statements that investors have given me, only 1% or at most 2% of the transactions issued have been rejected [by the detection system],” he expresses. That fact gave Juicy Fields the comfort of setting up the scam for years in the most surgical way possible.

“Although Juicy Fields was legally registered in countries such as Germany and the Netherlands, it did not possess the proper licenses to offer financial services and that was publicly denounced by regulators in several countries.”

“According to our long experience and extensive knowledge of how the system works, more than 95% of the transactions issued should have been rejected,” considers Olofsson. Put in simpler terms, the expert confirms that the banking system’s filters had the capacity to stop 9.5 out of 10 transactions to the Juicy Fields platform and failed to do so.

It must be assumed that the role of the BIC-SWIFT and the other two parties to the transactions is to be aware that the fund transfers are carried out within legality. The latter could have been easily verified through the advanced communication mechanisms linking the banks to the Dutch, German or Spanish regulators, which had Juicy Fields on the list of potential scams.

It should be taken into consideration that this company lacked licenses to operate with financial products. This should be considered as one of the main red flags in a case with a high probability of fraud.

SWIFT washes its hands

To verify Olofsson’s words, this media outlet has contacted the SWIFT portal’s media relations department. Based on the lawyer’s investigation, we asked why Juicy Fields’ operations were not stopped even though the company was blacklisted by regulators in Spain, Germany and the Netherlands.

From the aforementioned management it was answered that SWIFT is not responsible for monitoring or stopping that kind of movements. “SWIFT does not monitor or control the messages [money transfers] sent through its system. The information contained in these messages is issued and controlled exclusively by the sending and receiving institutions,” the response states.

They go on to state that “All decisions on the legitimacy of financial transactions under the applicable regulations rest with the financial institutions that manage them and their competent international and national authorities. According to these statements, one could intuit that the system is a passive entity, which contrasts with some information on its own portal, according to which in 2016 SWIFT would have launched its Customer Security Program (CSP).

The CSP would aim to stop a series of crimes “in close collaboration with financial institutions” and other groups. In any case, SWIFT’s response to this media outlet limits that intermediate courier bank to a hands-off role. Meanwhile, it places the responsibility for irregular transfers on the banks and regulators of member countries.

SWIFT is not just in the business of “letting the money go through.”

In further contact, Olofsson was consulted on the issue and the lawyer confirms that SWIFT, this “special purpose bank,” operates under the rules that any bank abides by. “Everyone who is part of any kind of money transfer must have a system in place to identify money laundering, terrorist financing or illicit activities,” he explains.

He adds that “SWIFT needs to have a monitoring system that detects the aforementioned elements.” In that sense, he concludes that “to say that SWIFT only lets money through is not at all correct”. On the other hand, he states that there is cooperation between local and international authorities with SWIFT’s monitoring activities.

With these elements on the table, it can be said that the Juicy Fields scam would not have taken place if the banking system as a whole had worked. Thus, taking for granted the response obtained from SWIFT, it can be determined that the negligence of the financial institutions of each country, which belong to the global system, played a fundamental part.

“It is obvious to me that a blame game has started and many of those involved in the banking system are muddying the water,” the expert adds.

“I’ve never seen anything like this”

Lawyer Lars Olofsson, who has decades of experience in the sector, says that this failure in the banking system is “something I have never seen before”. He also confirms that the Australian bank ISignthis (ISX), one of the alleged recipients of the victims’ money, is also part of the failures in the international transfer system that made life easier for the company’s exit scam.

According to information shared by media colleagues from the Oceanic nation with EL PAÍS FINANCIERO, this institution is listed on the Australian stock exchange and has a “controversial history”. In any case, Olofsson points out: “the bank you mention [ISignthis] is only one part of the situation and an operator in this business. So far I have identified more than 60 banks that have transferred money on behalf of their clients,” he stressed.

The expert reaffirms that, based on his experience and tons of information gathered, Juicy Fields is a scam everywhere you look. Regarding cryptocurrencies, as reported by this media in previous works, digital wallets were emptied in a process known as blending, which is very popular among hackers who steal large sums of cryptocurrencies.

In any case, both from bank accounts and cryptocurrency wallets, users’ money vanished. Much of it would have gone to Cyprus and once it arrived there, it should be considered lost, the expert stresses. Consequently, the lawyer says that his strategy is not to go after the money, but the institutions that facilitated (knowingly or by omission) the loss.

Juicy Fields was a scam from day one

Another of the points highlighted by the expert is that there is no room for interpretation about the Juicy Fields business. He assures that, from the first day of the company’s existence, it was nothing more than a fraud. To prove it, he lists a series of clues that can be taken as a basis for detecting this and other deceitful platforms.

In the first of these, he says, he applies the old saying “if it’s too good to be true, it’s not true”. In that sense, the fact that a platform offers disproportionate returns is already the first strong proof that it is a scam, and that applies to Juicy Fields as much as to any other platform with a similar business scheme.

“If I have a full trial investment opportunity with no risk and a 66% ROI in one month, why should I share this opportunity with anyone else? The easy thing to do would have been to go to any Venture Capital and ask for a €300 million loan at 10% interest, or to any of the big Hedge Funds. €300 or €400 million is coffee money to them,” says Olofsson.

He goes on to add that the powerful pharmaceutical companies in the sector (who were supposedly buying the company behind the platform) are very restrictive with their offers. If there really was such a possibility of profit, he continues, why wouldn’t they grow their own plants instead of buying them at high prices? “They could make the profit themselves and they have the capital!”, he remarks.

He judges that whatever argument is now being wielded to justify the shares, it is part of the scam. Likewise, another platform offering a bidding plan with similar profits is nothing more than a new scam.

A carefully thought out plan in detail

One aspect that jumps out with the Juicy Fields case, aside from it being the biggest cannabis industry scam case in its history, is that it is a detailed structured scheme. At this stage, it is where the consulted specialist points to a very likely involvement of the Russian mafia.

In any case, he highlights that those behind the exit scam worked in a tremendously sophisticated way. “Every detail is well thought out, there is no doubt about it. These criminals are using psychologists and professionals in human behavior,” he says.

“Whatever argument is now being wielded to justify the actions is part of the scam.”

In parallel, regarding the events, rumors and news linked to the subject, he explains that it is all part of the Juicy Filds scam. “Everything you see and read after the platform is shut down is an engineered part of the scheme. If you just disappear, people will understand that it was all a scam.”

Conversely, if you disappear leaving behind a group of people “posting any kind of statements that ‘it’s just a temporary problem’ or ‘this person or that person attacked us’ and so on…. Believe me, that’s part of the scam.”

In his opinion, with that kind of behavior they manage to mislead the authorities and if the authorities come to investigate them, they buy time by claiming that it is a problem that went wrong and they are working to fix it. “From a legal point of view they can say that they intended to act legally, but things went unexpectedly wrong,” he concludes.

“Juicy Fields 2.0” to appear in September

As an example of the above, a new update on the company’s mysterious address recently surfaced. In an alleged email distributed on social networks, the company assures that they are working to reinstate themselves and relaunch the platform. In parallel to the re-launch of the platform, they would return the funds to the affected investors.

At the same time that they make this new announcement, they attack Frederich Graf von Luxburg, who has disassociated himself from his ties with the company. The alleged founders of the company claim that this person approached them to offer them license processing services in Germany. Instead, he allegedly registered the companies in other countries in his name and tried to take over the accounts.

As a result, the Cyprus bank reportedly informed the company of von Luxburg’s intentions and, as a precautionary measure, the company decided to freeze the accounts. This seems to be the new chapter of Juicy Fields’ scam to buy more time. Creating an enemy and at the same time claiming that the funds are safe and there is a readiness to return them.

By August or September there would be new news for investors regarding the return of funds and the new platform. In other words, it seems that the company’s founders do not have enough with one pyramid, but are preparing the other one.

“The decision to suspend all business activities has unfortunately damaged JuicyFields’ reputation immensely, especially due to the fact that there has been a lot of speculation that the company has been running a Ponzi scheme. This is far from the truth,” states the purported statement sent to customers.

EL PAÍS FINANCIERO has not been able to verify the authenticity of this alleged statement.

Update on losses

Determining the amount of money snatched from investors by the platform is a complex task. Although the platform claimed to have more than 500,000 users, presumably not all of them placed money in the various schemes.

According to the aforementioned lawyer, some 120,000 people from different parts of the world would have lost money on the platform. Likewise, the total amount of the losses would amount to approximately one billion euros, according to data estimated by this media. This amount is equivalent to the amount estimated by the lawyer, who claims that about €700 million and not less than €500 million would have been stolen.