Posted on: March 15, 2022, 06:46h.
Last updated on: March 15, 2022, 06:46h.
The case involving Wirecard’s massive fraud and embezzlement scheme continues to find more executives drop. The FinTech company was once linked closely to the gambling industry and its former CEO now officially faces charges for helping destroy the company.
A few years ago, it wasn’t possible to discuss the FinTech space or gaming payments activity without Wirecard’s name coming up. The Germany-based company skyrocketed to the top after it launched in 1999. On paper, it was worth billions of dollars. In reality, however, it wasn’t worth nearly as much.
After the true nature of the company’s status emerged, a trail of deceit, fraud and embezzlement appeared. German prosecutors are now officially going after one of the main culprits behind the activity, former Wirecard CEO Markus Braun.
Charges for Thieving CEO
The case against Braun and several cohorts has been years in the making. It took prosecutors 474 pages to lay out everything in an indictment that he and the others did wrong, according to media outlet Digital Journal. But, in the end, prosecutors felt they had put together enough evidence to charge Braun and two others.
Braun faces multiple charges of fraud, market manipulation and embezzlement “on a commercial scale.” Along with him, chief accountant Stephan von Erffa and Oliver Bellenhaus, who previously led the company’s Dubai office, face similar charges.
All three are facing prison if a court finds them guilty. Among other accusations, the trio facilitated the cooking of Wirecard’s books for three years, showing revenue from associated businesses that didn’t exist.
Braun, who has been locked up for two years, claims he’s innocent. He says he’s the real victim and that he is now destitute because of the debacle. However, previous investigations pointed to the possibility that he shifted assets to the control of others, such as his wife and sister, so they couldn’t be seized.
A Company Built on Fraud
In its prime, Wirecard had a valuation of around €23 billion (US$25.3 billion). The company had its start in serving the gambling and porn ecosystems and ultimately became a leader in the payments space. However, things began to fall apart in 2019.
It was then that the Financial Times uncovered certain financial irregularities coming out of the company’s Asian branch. The next year, an audit by Ernst & Young determined that €1.9 billion (US$2.1 billion) that appeared on the balance sheet was missing.
In reality, the money never existed. Braun and several others had done a great job of covering their tracks as they swindled investors, partners and clients. The man who led the Asian operations, Jan Marsalek, is still on the lam.
Reports have shown that Wirecard singlehandedly destroyed a financial bubble that included a number of companies. Some of these were banks, which had extended credit to the FinTech. Around €1.7 billion (US$1.87 billion) was written off as a result of Wirecard’s illicit activity.
The company had also sold over €1.4 billion (US$1.54 billion) in bonds. Like the other money and Marsalek, it might never reappear.