AN ALLEGED criminal network accused of defrauding victims out of nearly €2 million through fake investment schemes has been dismantled in Madrid, with 11 people arrested.
The group allegedly ran a sophisticated pyramid scheme using fraudulent online investment platforms and social engineering tactics to lure victims with promises of quick and high returns.
Investigators say the organisation operated from the Madrid region and used more than 30 bank accounts to move the money obtained through the fraud to make it harder to trace.
Two properties were searched in Morata de Tajuña and Pozuelo de Alarcon, where officers seized gold bars, precious stones, €13,000 in cash, computers, mobile phones, storage devices, five vehicles and a simulated handgun.
The investigation began in April last year after a victim reported losing more than €500,000 through what appeared to be a legitimate financial investment platform.
After analysing thousands of banking transactions, investigators uncovered what they described as a ‘Ponzi scheme’.
Money from new investors was allegedly used to pay fake returns to earlier clients in order to create the illusion of success and reliability.
Authorities also discovered that part of the money was allegedly used to buy gold bars and precious stones as a way of laundering the proceeds of the scam.
The investment platform used by the network was later identified as a cloned entity that was not authorised to provide financial services.
The 11 detainees are being investigated for alleged crimes of ongoing fraud, money laundering and membership of a criminal organisation.
The Guardia Civil has urged the public to verify investment companies through the Bank of Spain or the National Securities Market Commission (CNMV) before transferring money.
Officials also warned that unusually high returns and pressure to act quickly are often signs of investment fraud.
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