How I got scammed by p2b fraudsters – and how we’re fighting back

by Guest Author -

scammer

[Hey guys! Got a note from a reader of the blog living out in Italy and dealing with an investment mess right now (amongst other things, eek!), and after some back and forth I asked if he’d be willing to share his story as a warning that even the best of us can be scammed. Though there are always red flags looking back, of course! So hopefully this sticks in the back of your mind the next time you find yourself in a too-good-to-be-true situation too… Take it away, Moreno! And glad you’re at least personally safe and healthy over there! :)]

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Hi J,

I am writing you this note to let you and your fellow readers know what happened to me, as well as to more than two thousands investors around Europe.

After some budget scraping last year, I found myself with some extra money to store somewhere. I couldn’t let it stay parked in the bank account as interest rates in Italy are close to 0% and inflation would eat up your purchasing power day by day.

So it’s a no brainer: You-Have-To-Invest. Stocks, bonds, retirement plans, what else? I recalled the rule: diversify your investments. A golden rule, you will soon see why.

While blog-hopping I came across an article which was about peer to business lending. What the heck is peer to business lending? In a few words: a platform which collects money from investors and lends it to other companies to finance their projects. Where you basically purchase a “fraction” of the whole loan in return for a profit.

The projects are detailed on the website: residential construction, warehouses, logistics, renovation, fur processing, oil terminals, dolomite pits, etc. You can see the whole amount of the loan, pictures, description, and of course the juicy part: interest rates.

The typical range is from 17% to 22% per annum, with interest paid monthly and buy back guarantees in case the loan is not repaid by the company.

Wow! I am in!

Let’s start with Kuetzal.com, now off-line and the first platform in which I invested. Their website looked great. SSL certificate, FAQs detailing everything. Positive reviews everywhere, enthusiast bloggers, you can even find referral bonuses which grant you some extra bucks for your investments.

I register, send my ID and in a couple of days my identity is verified. They provide me with an investor ID and an IBAN account on which I have to transfer money to. I make a small deposit. The money is credited on my account, and I try to withdraw it, just to make sure they pay the money back. All smooth. The money goes back and forth from my bank account to them, and comes back when requested.

Now which project should I invest in? There is a promising “Shredder Machine” project coming soon. 24 months, 20% interest, buy back guarantee. The company wants to buy the expensive shredder machine to sub rent it. Perfect. I begin investigating the project.

The company to be financed exists: SIA VM Cargo Service. They have a website, in English, and a Gmail email contact. It’s still online: http://www.vmcargo.lv. I have a look with google maps street view but I cannot spot their logo anywhere at their address, however it looks like (from satellite images) a zone where trailers and trucks are parked. The shredder machine is a truck indeed. Good.

I decide to put €2000 euro in Kuetzal and invest in the shredder machine project. For three months interests are paid out regularly and I withdraw them to my bank account. The only change is Kuetzal replaces its CEO with a younger-than-previous one. Good money is pouring in, so I decide to invest another €2000 euro through a similar platform called Envestio.

Then the dream turns into a nightmare.

A mysterious and anonymous guy (nickname – Peer Duck) begins tweeting hints that some Kuetzal projects are a SCAM, including the shredder project I’m invested in.

My eyes start opening… Why have an English-only website if you work with Estonian and Latvian businesses? I send a note to their email address, but no answer. I do an image search on Google of their “our parking” picture and I find it is a stock photo. I should have done this before!!

On telegram group (a popular messaging platform we use here) the fire is spreading and the investors gather and try to organize themselves. They start collecting evidence and heavily work on due diligence. More red flags keep popping up everywhere.

Then an email from Kuetzal staff: “We have problems with AML and we cannot transfer money, be patient”, then another email: “We are winding down”.

This is the moment in which you realize how silly you have been. 20% interest? Who have you given your money to? An Estonian limited responsibility company, acting in a non regulated market?

Cool. You greedy genius…

So the damage was done, and I was left to figure out what to do next. I still had €2000 euro in Envestio, and I smelled something rotten there, too. I sell my Envestio projects with a 10% penalty and I request immediate withdraw of my money. I was one of the last people lucky enough to get their money back.

Envestio disappeared shortly after, much the same way as Kuetzal did. After the paid out interest and penalty I ended up with a profit of €3,45, and even more importantly my original €2000 investment. A better outcome than the €1984,27 loss from Kuetzal!

When I saw my Envestio money credited back to my bank account I felt like I could breathe again. I went back to the site to see which of my friends were still there, and it made me happy and sad at the same time. Kinda like being on one of the raft boats of the Titanic.

I immediately tried to figure out how to recover my money from Kuetzal and get justice. I knew I couldn’t do it by myself since I live in Italy and the companies were based in Estonia and/or Latvia, and they say they have borrowed money from the Baltics, Ukraine, Russia, and other locales.

Back on telegram I went to try and unite and fight back! There were groups already discussing Envestio but people were getting banned/censored when they rose concerns, so I created a new telegram group and tried promoting it around, eventually gathering more than two thousand people who were also victimized.

Meanwhile the mysterious Peer Duck and a blogger named Kristaps Mors deleted their posts because they were getting threatened (they live in Estonia), so I started getting nervous too having used my real name to create the telegram group and promote it. I decide to buy an anonymous SIM card and create an anonymous telegram account, just in case.

Then eventually a Spanish guy, Guillermo, who’s also a victim, along with another person who prefers to remain anonymous, stepped up and proposed to join together for a collective lawsuit. It’s a huge success, and I contact him to offer my help as well.

Soon a team is created: two Spanish, one Italian (me) and more from other countries contribute their time and knowledge to the common cause. We hired a law firm and incorporated two SVPs (the Estonian LTD) to represent all the claims of the victims.

Envestio and Kuetzal have been pushed to bankruptcy, and both civil and criminal investigations are currently ongoing. Every day new victims join the lawsuit, and so far comprise of more than two thousand people and a collective claim of €13M euros for both cases.

These days Estonia is experiencing a booming market for p2p and p2b investments due to its favorable tax system and technological environment (e-residency). They’re attracting investors from all over Europe, Russia and a number of other countries. Many legitimate platforms are available in the Baltics, and they offer great earning opportunities at an acceptable risk level.

However, institutional actors have been informed of what happened with Kuetzal and Envestio but have so far shown little interest or support in the case. Lack of regulation and institutional support in fraud cases poses a serious uncertainty for the investor seeking to invest in those countries who need to be aware of what’s going on.

At the end of the day it sucks losing €2000 you fought hard to save, but as much as you want to put the blame and hate on the ones scamming you, you soon come to realize that the real person you need to be angry with is yourself.

I feel like I just received a Masters course on how best to get scammed, and I got lucky that I only lost €2k when all was said and done.

Here are the main takeaways I’m walking away with:

  1. Differentiate. Always. How more appealing are those bonds now in coronavirus scenario? Didn’t they look like a waste of money when stocks where roaring?
  2. Don’t believe in fairy tales. No one is going to give you 20% interests with no risk. Full stop.
  3. Reread step #2
  4. Be paranoid. With these kinds of investments check everything. Don’t be shy. Pick up the phone and make a phone call. No answer? That’s your answer. Do not PRETEND it is going to be OK! Give up at the first red flag!
  5. Think through the What-If scenario. What if the platform fails? What options do you have at your disposal? Would it still be worth it?

I consider what is happening with our lawsuit a miracle. Gathering everyone together highly increases the chances of recovering something, but it has not been easy and requires a paramount effort. Better that I just paid attention to the red flags to begin with!

So, stay safe, healthy and with your eyes wide open ;)

Ciao,
Moreno

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UPDATE: “Since last time I wrote, two other platforms have stopped paying: Monethera and Grupeer. The latter should be about ten times the size (of impact) as Envestio. I was invested in there as well.”

{ 11 comments… read them below or add one }

1 Petra April 7, 2020 at 7:02 am

Note to all people: a 17-22% return is NOT going to happen.

If you see anybody promising you an almost-guaranteed-17% return or higher per year, it’s either a scam (biggest chance) or an idiot (smaller chance).

You do not want to send your money to a scammer, and you also do not want to send your money to an idiot.

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2 martinus April 7, 2020 at 11:39 am

You can fully expect to recover nothing from your lawsuit. The money will be long gone. My experience has been that when I’ve been beat “in the jungle” I’ve been beat. Even if you win a lawsuit collecting is difficult if not impossible. And unless your lawyer is working on a straight contingency fee basis you are probably throwing good money after bad.

The lesson, of course, is that when someone offers you a “guaranteed return”, unless it is a quality government guarantee (Argentina, for instance, is not a quality government), you are probably dealing with a Fraudster. And guaranteed returns from quality governments are the the 0.5% – 2.0% range these days.

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3 Mr. P2F April 7, 2020 at 12:00 pm

Thanks for posting this. All too often we let our guard down when with a little more thought we can see through the scam. Hopefully through this tale others will be more cautious with opportunities that are better than what they should be.

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4 Debt Free in RVA April 7, 2020 at 3:26 pm

Thank you to the author for writing this, and to J for posting it.

First off, my condolences and empathy to you for going through this! My grandmother was taken advantage by a scam, and so was her sister! As we approach Easter I know (and I think most of us know too) that these scumbags will get their reward one day… God will judge.

Second, my sympathies to what the country of Italy (my ancestry) is going through with COVID-19. I sure hope you all see the light soon, and the rest of the world too.

Third, thanks for taking the time to write this. It must have been very painful but was a good lesson for us all. I’m now even more suspicious of peer to peer or peer to business lending.

J Money and viewers – are there any good experiences with peer to peer or peer to business lending? i would be even more reluctant to attempt this today.

Anyway, in conclusion I do have to mention that for those of you mocking 20 + % interest – remember, that is what credit card companies charge!!! :-)

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5 J. Money April 7, 2020 at 5:06 pm

UGHH isn’t that the truth!

And it’s perfectly legal too!!!

Same with PAYDAY LOANS which charge even more!

There used to be a lot of P2P talk here back in the day – mostly positive – but haven’t heard much about it in recent years… Not sure if a lot of the places have since closed or people just got tired of talking about it? (Or the stock market was too hot and overshadowed?)

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6 Lukas from Financefreedom.eu April 7, 2020 at 4:13 pm

Ouch!
I risked 500€ with Envestio also, I had a weird feeling from the start, a p2p platform promising 17 to 22% returns. Sounds too good to be true. And as we can now say, it was.
Will most probably never see the money again and the scammers won’t face any “big” criminal charges. Or worse, a few months or max one-two-three years for tens of millions of euros. A great way to become filthy rich … Sad, sad times.

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7 Moreno April 7, 2020 at 5:55 pm

Thanks you all guys for the comments! To answer some: yes maybe there is something legit in peer to peer, but the whole market has to be regulated – the sooner the better. And ofc the legit ones interests rates are nominal 13% which is 8% – 9% real with the delays of loan repayments taken into account. And you still have the risk of loan originator’s default.

I consider myself lucky to have lost only 2k +3k (see below), for the numbers I see there are many in 5 figures amounts.

Recover money is one motivation, chasing fraudsters is the other :)

However, sadly, the storm is not over yet. Other platforms, Monethera, Grupeer, are allegedly falling down right now, after I contributed my experience to J$. For those interested or affected: you can contact me @morenji on telegram.

Stay safe and healthy! Stay at home until the other storm – the most important one – is over.

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8 Gianni April 8, 2020 at 10:29 am

The lawsuit is a recovery room fraud. They follow the money. All people leading the case are fraudsters

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9 Annie April 9, 2020 at 12:00 am

My mother invested in a scam, and she lost a year’s salary. It had promised her 10%/year. She thought it sounded reasonable. And then she lost over 100K. It’s sad, but I’m thankful she didn’t need that money to retire. But what a lesson to learn. The subsequent law suit got her about 4K back.

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10 Luis April 10, 2020 at 7:13 pm

I’m also victim of Grupeer. Unfortunately I have other experiences with scammers and lawsuits against them.

My advise is for everybody to report Grupeer (and others) to authorities in the countries they committed the crimes (fraud, money laundering, tax evasion…). Authorities do the hard work of investigating and that reduces our legal fees. Authorities (Financial Supervisors, Police…) can access bank accounts, communication, freeze assets, arrest people and summon witnesses.

In a civil lawsuit we can also do it but we have to convince the judge and that costs more legal fees.

If you want a list of authorities in Latvia and UK to whom you can report, please contact me in Telegram @Luisdem

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11 Luis May 3, 2020 at 1:53 pm

Are you from Portugal? I am…

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