Marschdorf Forensics


The Defrauded Fraudster

A financial services partnership with offices in several European financial centers was harboring suspicions that one of their senior partners was servicing a wealthy client without billing his fees through the partnership.

The physical and electronic files regarding the suspect partner’s mandates were accessible for investigation. This included files recovered with help of forensic recovery software.

The investigation of the not-deleted hard disk files brought to light that the partner was indeed servicing this presumably wealthy client, but had never rendered a bill. Maybe this was only a non-performing client relationship after all.

A look at the deleted files, which were made accessible with the help of forensic recovery software painted a different picture. The client-relationship revealed that the partner himself had fallen victim to a well-orchestrated advance fee fraud. The client, an apparent Hungarian and American national, had portrayed himself as a member of a persecuted group in decades past having won a judgement for damages from the US government to be paid in bearer bonds worth USD 500 million. A gag order had supposedly been made so that details of the judgement could not be made available. According to the client’s story, he merely had difficulties transferring physical securities from the United States to Europe. The client had offered the partner to become his exclusive wealth manager and representative for the process of transferring the securities to Europe. The partner proceeded to found corporations with the purpose of becoming the future vehicles for wealth management of the client. Trusting the client’s story, he accepted to become guarantor for a car purchase by the client of a performance vehicle worth more than $ 100,000. He also provided cash funds to the client for an amount in excess of $ 30,000 and a loan, for which the amount could not be determined from the recovered hard disk. While spending all his time on this mandate, the partner continued to receive high monthly drawdowns without generating any revenue for the partnership. He had literally spent more than half a year just on this file.

In-depth investigation revealed that the client was not an American nor a Hungarian citizen. He was an Israeli citizen living in Hungary, who had been in conflict with the law in Israel in the past. During an interview, it became clear that the partner had indeed believed the client’s story and was continuing to believe it despite confronted with investigation findings.

He resigned from the partnership, thus pre-empting his dismissal.