German Crooks Clean up with Investment Scams
February 4, 2003
Successful and creative fraudsters in Germany are coming up with increasingly convincing investment scams and, disturbingly, Germans are falling for them in huge numbers. According to the German Investor Protection Association (DASB), more and more people with limited resources are investing in dubious "get-rich-quick" schemes, lured by deals that promise fast returns and a way out of financial difficulties in a time of economic recession.
In fact, the Federal Criminal Investigation Office (BKA) says that over €20 billion ($2.1 billion) have been defrauded from the German public in the past year. Experts from the DASB predict that figure could increase to €30 billion by the end of this year. DASB President Klaus Nieding believes that 2003 will be a boom year for investment racketeers.
Current world affairs seem to be the main inspiration behind a new wave of confidence tricks that swindlers have been putting into action over the last few months. The speculation surrounding a possible war in Iraq has been particularly fertile ground for those intent on defrauding investors.
Post-Saddam Iraq business opportunities
Schemes such as the "Iraq Funds" promise lucrative business opportunities in a westernized, post-Saddam Iraq. The promise of riches from non-existent business initiatives in a new pro-democracy, free market economy has already attracted many investors, according to DASB sources in the German daily Berliner Zeitung.
At home in Germany, the current economic situation has spawned a number of scams that promise to help navigate a 'legal' route through the government's new tax plans while paying huge dividends. The subjects may be contemporary, while the methods are tried and tested. "It is a usual trick, use current events to start conversing with potential victims," said Klaus Nieding in the Berliner Zeitung.
Fraud cops tangled in money webs
However, while some schemes are discovered, it is often difficult to trace the leads back to the perpetrators. Tax declarations are a main source of evidence when it comes to tracking fraudsters. So, many racketeers specialize in laundering money and transferring it back to Germany by way of other countries. With such networks covering the tracks left by the money, it is very hard for the authorities to bring the major players to justice.
"(Investigations) hardly bring any big cases to the courts," admitted the head of the DASB. He fears many people will continue to be duped by tricksters who, on the whole, will remain free.
That's why Niedrig says it is urgently necessary that the authorities deploy more personnel and finances. "The offenders drive around in Ferraris, while the investigators just have scooters."