THE fallout from the collapse of Juicy Fields has continued to develop at breakneck speed since investors first complained of being unable to access their funds in mid-July.
Though there may never be a full explanation for exactly what happened inside the company, and more importantly to investors’ funds, a clear picture of the scale and sophistication of this scam is now beginning to emerge.
One lawyer specialising in such scams, who is in the process of building a class action lawsuit for hundreds of Juicy Fields investors, believes this is ‘by far the largest scam in Europe for many, many years’, bearing all the hallmarks of the Russian mafia and potentially seeing more than €700m lost.
This rapidly developing picture, aside from the sheer scale of this scam, reveals a framework of far wider complicity from key individuals, companies and financial institutions in allowing it to take place.
Lars Olofsson, CEO of Swedish legal, investment and business management company PRIO Startup, told BusinessCann that since being asked about Juicy Fields by a client three weeks ago, he has now spoken to more than 1,500 investors ‘in one form or another’.
According to Mr Olofsson, who is building the class action lawsuit, his company has been ‘specialising in these kinds of frauds’ for over a decade, and is currently working on a number of similar cases, including micropayment platform Plipp, telemarketing company Koncepta, and weight-loss equipment seller Victus Medical.
Last week, based on the number of investors in contact with him and the more than 500 bank transfers he had seen, Mr Olofsson estimated that around 30,000 people had lost money with Juicy Fields, investing an average of between €10,000 and €12,000.
Days later, following a further influx of affected investors, this estimate was raised dramatically to 120,000 worldwide, with many of the new victims averaging investments of €40,000.
“It’s absolutely mind-blowing – and we are hardened lawyers who have seen it all,” he said.
He noted that this was based purely on the evidence of bank transfers he had seen, so didn’t take into account the thousands of investors who have also lost Bitcoin, adding that ‘the average crypto investor has (invested) twice as much as the normal money payments’.
With these combined, he estimates that investors are likely to have lost more than €700m in investments, adding it was ‘no less than €500m’.
While the scale of the losses may be surprising, Mr Olofsson says the fact Juicy Fields turned out to be a scam was not.
“When I look into the business model, the seeds, the farming and selling these plants to the pharmaceutical industry, it just doesn’t add up – the equation doesn’t wash. And then when I look further into the set-up, there are all trademarks of how a scam is designed.”
All the Hallmarks of the Russian Mafia
More specifically, Mr Olofsson says that from his point of view, this is ‘100%’ the work of the Russian mafia and bears its hallmarks down to a T.
Firstly, a common theme among Russian mafia scams is understood to be a sudden disappearance of the company, including websites, telephone lines, email addresses and social media accounts, all of which are well documented in Juicy Field’s fallout.
Crucially, however, they ‘leave behind people who are still communicating on different social media platforms’, informing investors that there have been temporary issues or technical difficulties and that their money will soon be returned.
“They try to make people think that yes, I haven’t been scammed, there are still some people who are answering things and they are saying some assuring things. That’s one of the sophistications of the scam.”
Alongside various correspondence to investors via social media over the past few weeks, which BusinessCann detailed here, Juicy Fields has been contacting investors over the past few days in an attempt to further muddy the waters.
It claims that speculation Juicy Fields is a Ponzi scheme ‘could not be further from the truth’, and the fallout has been the work of a rogue actor, Friederich Graf von Luxburg.
Mr Olofsson claims this statement, issued on July 28, is almost a ‘copy and paste of announcements done in two other cases we have managed’.
These ongoing messages also serve to sow the seeds of ‘reasonable doubt’ among prosecutors that there ‘was some good intention, but someone scammed’ investors.
Another key indicator of Russian mafia involvement is Juicy Fields’ connection to Cyprus, where, according to an interview for the Spanish online newspaper elDiario.es in May of this year, the company had a bank account.
Cyprus is reportedly the ‘favourite offshore country in Europe’ for the Russian mafia and Russian oligarchs to invest, as detailed in a BBC report earlier this year, dubbing the island the ‘Mediterranean Moscow’.
Leaked documents now readily available across various Juicy Fields telegram groups also suggest that Paul Bergolts, Alex Vaimer and Vasily Kandinski, who according to former CEO Alan Glanse were the ones in control of the network, all held Russian passports.
However, according to Mr Olofsson, it’s unlikely that these three were any more than lieutenants in the scheme, and will have had little to do with the design of the operation.
Who Is Complicit?
The class action case, which is still in the research phase, will aim to hold those complicit in the fraud accountable, rather than recover the lost money which was paid into the Cypriot bank account.
“That money is gone. It’s more or less impossible to find out where it ended up and how it’s been divided,” Mr Olofsson explained, adding that it’s very rare for the real perpetrators of scams of this sophistication to be caught, put on trial and put behind bars.
Instead, he is targeting ‘facilitators’, individuals, companies and institutions who helped Juicy Fields ‘directly or indirectly, people who have just turned and looked the other way’.
“I want to describe the environment this kind of scam and this kind of set-up can work in. There are individuals and companies that should have reacted, that should have said that this is not good.
“I can’t list them yet. But I would say that I would be surprised if there are less than 20 different kinds of individuals in some kind of key position, and companies and so on. My ambition is to show how this scam could actually be done? Because there are so many people involved directly or indirectly.”
Despite numerous key individuals, including two former CEOs Alan Glanse and Willie van der Merwe, releasing statements arguing their innocence or general ignorance about the real goings-on at Juicy Fields, Mr Olofsson believes anyone ‘working for or representing’ the company must have known this was a fraudulent enterprise.
Furthermore, he believes any companies or individuals who worked with Juicy Fields amid its relentless marketing efforts, another apparent hallmark of the Russian mafia, should have flagged the company during due diligence practices, or at least recognised a number of warning signs.
BusinessCann has reached out to a number of organisations that Juicy Fields claims to be associated with or that have signed sponsorship deals with.
While numerous companies listed on the Juicy Fields website have issued statements distancing themselves from the company, including Canna Healing and Sabores Púrpura, only Kannabyte responded to our request for comment at the time of writing.
A company spokesperson says that Kannabyte ‘had a commercial relationship with Juicy Fields’ whereby it would pay upfront for the cultivation of 500 medical cannabis plants, and would then be responsible for finding a buyer that could legally purchase the flower from Colombia.
“In simple terms, Juicy Fields basically functioned as a broker,” they added, making it clear that they hold no stake in Juicy Fields or vice versa.
Asked if the company ever had any reason to suspect Juicy Fields was fraudulent, Kannabyte suggested that its ‘anti-money-laundering (AML) and know-your-customer (KYC) due diligence’ threw up no red flags.
More crucially, it cites the ‘several credible cannabis conferences around the world’, including ICBC, the Mary Jane Berlin Expo, Kannasur, PTMC and many more, that featured Juicy Fields as a sponsor as a key reason not ‘to doubt their credibility’.
“Kannabyte has suffered economically from the fallout of Juicy Fields. We have outstanding invoices with Juicy Fields that have been unpaid and at this moment will likely go unpaid.
“Furthermore, the events that are happening at Juicy Fields have required a tremendous amount of time and resources from Kannabyte’s management as we try to figure out exactly what happened, what legal next steps we can take against Juicy Fields and as we try to be as responsive as possible to the e-growing community, who wants more information and tries to understand, similarly to Kannabyte, what exactly occurred at Juicy Fields.”
While Mr Olofsson says he aims to hold anyone who ‘turned their head and were complacent’ accountable, his immediate target will be banks.
He said: “The banks are the major facilitator for this scam. There are also a number of other facilitators, both individuals and companies. But my first target, the lowest-hanging fruit from my point of view as a lawyer, is definitely the banks.”
It is his belief that the complex security infrastructure used by international financial institutions to detect suspicious activity should have flagged Juicy Fields and prevented many of these transactions from taking place.
As the majority of transactions with Juicy Fields will have happened across borders, three banks will have been involved in each, the sending back, transferring bank and the receiving bank.
According to Mr Olofsson, these banks have a system for ‘the supervision and assessment of these payments’, using complex and sophisticated algorithms designed to flag any suspicious activity.
Once something suspicious is detected, it is mandatory that these banks file a suspicious activity report (SAR) to their local government’s financial conduct authority. An average bank will file hundreds of thousands of these each year, giving some impression of the sophistication of this system.
Mr Olofsson believes that around 95% of Juicy Fields transactions will have passed through this system, based on the documents he has access to, but ‘not more than maybe 2%’ should have been approved.
“In my experience, and I specialise in international regulations and compliance, 98% or 99% of all the transactions should have been caught in this security system.
“That’s why I need as much data as possible from all the investors. I’m trying to find a specific transaction, and then I’m going to follow this transaction through the system and see if this came up as suspicious activity, and why a SARS report was not created.”