Online currency-trading scam costs Irish investors millions
By Greg Harkin
Monday March 05 2012
POLICE forces in three countries are investigating a foreign currency investment scam which has cost dozens of Irish clients millions of euros.
The scheme, run from an office in Barcelona, was portrayed as a "safe bet" which allowed people to speculate on the currency markets. However, the online site through which it was being run -- fx-root.com -- suddenly ceased "trading" last November.
Investors told the Irish Independent that they have lost sums of up to €250,000 each, despite a "guarantee" that they would never lose more than 15pc of their investment.
The scheme was recommended to Irish clients by independent financial adviser Mark O'Sullivan, who runs O'Sullivan Financial in Letterkenny, Co Donegal.
It was being run by British and Dutch nationals based in Barcelona. Cash deposited by Irish investors went to an account at the OTP Bank in Bratislava, Slovakia.
After the scheme ceased trading, Mr O'Sullivan flew to the Spanish city to confront the people running it. However, he found their offices empty.
Friends said Mr O'Sullivan was "personally devastated" that a scheme he believed to be legitimate had closed down and taken millions of euros of his clients' money. Donegal investors paid 5pc commission to Mr O'Sullivan on their gains.
Mr O'Sullivan declined to comment when contacted by the Irish Independent at his office on the Port Road in Letterkenny.
However, the close friend said he was "personally gutted" that the scheme was a fraud.
The friend added: "Mark is working every hour God sends to try to rectify the situation. He invested in it himself and lost money."
Now gardai, police in Barcelona and crime investigators in Slovakia are working together to investigate the scam.
The Irish Independent has seen documentation which shows how the people behind the scam moved large amounts of investors' money through bank accounts in Germany, the Czech Republic and Slovakia using a fake company in Panama.
The fraud was "highly sophisticated", according to garda sources. Clients who invested their money were told that the Barcelona company could buy and sell foreign currency on the international markets.
But it now appears that the fraudsters didn't invest the money at all. They created an online site, complete with an iPhone app, where investors could 'see' how their investment was supposedly 'working' 24 hours a day.
But the graphics which had been uploaded to the site were fake. The crooks even showed losses on occasion, so investors wouldn't get suspicious.
Several Irish investors visited the offices of the company in Barcelona to satisfy themselves it was legitimate, before putting money into the scheme.
However, when Mr O'Sullivan travelled to Barcelona last November, the men behind the scheme had fled the offices. A "for rent" sign was hanging in the window of the premises.
"It has been a nightmare for me," said one man who invested heavily in the scheme. "I knew there were risks involved, as there are with any investment scheme.
"There was a 15pc loss safety net put into my policy, so that if my investment suffered that kind of loss, it gave me the option of stopping and pulling out.
"If this had been a legitimate company which went bust, you have to write it off. But the fact that it was a fraud all along is hard to take in."
Another investor told the Irish Independent: "They were clever operators. They would show gains some days and losses on other days, but always enough of a gain to keep you happy.
"Of course, now we know that there was no investment at all. It was all made up to make it look like the real thing."
Several British victims of the fraud sought an injunction in Slovakia to freeze the assets of the company there -- but the bank account was empty.
Four Irish victims have lodged formal complaints with Spanish police.
- Greg Harkin
Irish Independent
