Crypto scammers sold Dubai properties despite facing charges

16 May 2024 , 12:53

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Crypto scammers sold Dubai properties despite facing charges

So-called CryptoQueen Ruja Ignatova and her security adviser, Frank Schneider, liquidated Dubai assets despite being charged in the U.S. for their alleged roles in a $4bn fraud. The whereabouts of both is unknown.

Several of Frank Schneider’s former associates in one of the biggest cryptocurrency scams in history were facing criminal charges, and some were on the run. But if the former Luxembourg intelligence officer was concerned that the net was closing in on him too, it didn’t affect his exercise routine.

A fitness app recorded Schneider’s March 21, 2020, bike ride around the circumference of the luxury Palm Jumeirah development in Dubai.

Schneider had purchased an apartment there for $2 million in early 2018. Ruja Ignatova, the alleged mastermind behind the massive OneCoin crypto scam, had bought a penthouse in 2015 in the same gated community –– an artificial array of islands shaped like a palm tree inside a circular halo.

Ignatova and Schneider had begun working together after Schneider left his job as a director of operations for Luxembourg’s spy service, and started his own corporate intelligence firm. Schneider allegedly aided in “evading law enforcement investigations” and helped in “managing the scheme’s proceeds,” according to a U.S. indictment against him.

By the time Schneider took his mid-day bike ride in 2020, Ignatova had disappeared –– some reports say she was murdered –– and OneCoin had collapsed, costing investors over $4 billion.

Schneider had not yet been publicly linked to the scandal when he purchased his apartment in 2018, a year after OneCoin collapsed. However, leaked Dubai property records show his and Ignatova’s properties were sold after they had already been charged with criminal offenses following OneCoin’s collapse, raising questions over Dubai’s enforcement of anti-money laundering rules.

Ignatova had purchased her 500-square-meter apartment through a shell company. A title deed obtained by OCCRP’s partner, paper trail media, shows the company sold the property in December 2019, by which time Ignatova was wanted by prosecutors in New York — and possibly even dead.

The view from inside Ruja Ignatova’s Dubai penthouse apartment, which was sold in 2019 — after she was wanted in the U.S.

Schneider had already been detained when his Palm Jumeirah flat sold for $2.3 million in January 2022.

The OneCoin catastrophe was well-known by the time the properties were sold off. Numerous media reports quoted victims describing in detail how Ignatova had duped them into buying her fake cryptocurrency. The BBC traced Ignatova’s rapid rise and spectacular demise in a popular podcast launched in September 2019 called The Missing Cryptoqueen, which included scores of interviews with victims.

Ignatova and Schneider were able to carry out the real estate deals despite a United Arab Emirates law in place since 2019 that requires realtors to run background checks on buyers and sellers of properties, and report any suspicious transactions to authorities.

“You need to know the customers you’re dealing with,” said Henry Wyad, Investigations Analyst at Themis, a U.K.- and UAE-based firm that helps clients manage financial crime risks. The law is “explicit” about this, and clearly covers both seller and purchaser, he added.

This permissiveness is not surprising, according to Alexander Yearsley, managing director of Edinburgh-based Martello Risk, who has conducted financial investigations and forensic auditing on Dubai.

He said a lack of enforcement had helped earn the UAE a reputation as a safe place to stash the proceeds of criminal activity.

“You’ve got the fact that there is an unbelievably light touch to regulation –– if you want to call it regulation. You literally can get away with whatever you want,” Yearsley said. “If the price is right, the politics don’t bother them.”

UAE officials — including at the ministries of interior, economy, and justice — and Dubai Police did not respond to detailed questions from reporters about the sale of properties belonging to Ignatova and Schneider. UAE embassies in the U.K. and Norway sent a brief comment saying that the country “works closely with international partners to disrupt and deter all forms of illicit finance.”

“The UAE is committed to continuing these efforts and actions more than ever today and over the longer term,” the statement added.

Escaped, Missing, Jailed

Prosecutors from the Southern District of New York had charged Schneider in 2019 with conspiracy to commit wire fraud and money laundering for his role in OneCoin. But the existence of the case against him was only made public in April 2021 when he was detained in France to face extradition to the U.S.

It is not clear if UAE authorities were aware of the U.S. charges against Schneider, but records obtained by OCCRP show he was able to sell his apartment while under house arrest in France.

But Schneider never was extradited to the U.S. In May 2023 he launched a daring escape from house arrest and disappeared.

U.S. prosecutors unsealed the indictment against Schneider in December 2022, and the court documents included an email address for him. OCCRP’s Luxembourg media partner Reporter.lu discovered the address was connected to a fitness app called Strava, which uses GPS to measure distance walked, run or cycled, and revealed Schneider’s March 2020 workout routine.

And according to Dubai records, Schneider’s most recent UAE ID data shows his residency was authorized through July 2023, which would have granted him lawful entry into Dubai at the time he escaped French custody.

An FBI spokesperson told OCCRP that Schneider “remains a fugitive.” But journalists discovered new clues linking Schneider to Indonesia, which does not have an extradition treaty with the U.S.

Schneider appeared as director of an Indonesia-registered company called White Orchid Management, described in registration documents as being set up in March 2020 to buy, sell, rent, and operate real estate.

On September 8, 2023 –– months after Schneider disappeared –– the shares of the company were transferred to his wife and son, and he left his position as director.

Schneider’s U.S. attorney, Joel M. Cohen of White & Case in New York, declined to comment, “because the matter is pending in court.”

Ignatova too has disappeared without trace. While OCCRP’s Bulgarian media partner, Bird, reported in February 2023 that Ignatova was likely murdered, her death has never been confirmed. In 2022, the U.S. Federal Bureau of Investigation declared Ignatova, who was born in Bulgaria and became a German citizen, one of its most wanted fugitives.

An FBI spokesperson said in an email that the agency “is aware of media reports regarding Ruja Ignatova’s death, however, until there is documented evidence that she is dead, the FBI considers Ignatova as alive, and she remains on the FBI Top 10 Most Wanted List.”

Meanwhile, Ignatova’s OneCoin co-founder, Karl Sebastian Greenwood, pleaded guilty to wire fraud and money laundering. In September 2023 he was sentenced to 20 years in prison, and ordered to forfeit $300 million.

As first revealed by the BBC’s The Missing Cryptoqueen podcast, Greenwood also held Dubai property, purchased before OneCoin launched. Records show that his villa was valued at $5.4 million when it was put on the market in 2022 as part of an unrelated lawsuit.

Victims’ Lawsuit

When OneCoin appeared in 2014, Greenwood and Ignatova hyped it as a cryptocurrency to rival the wildly-successful Bitcoin. But it was all a lie.

“Unlike legitimate cryptocurrencies, OneCoin had no actual value and was conceived of by Greenwood and Ignatova as a fraud from day one,” the New York Southern District U.S. Attorney’s Office said in a statement announcing Greenwood’s sentencing.

The deceit included simulating transactions through a fake blockchain, which was meant to function as a “digital ledger identifying OneCoins and recording historical transactions,” said the prosecutors. They added that “in reality, OneCoin lacked a true blockchain.”

But at least 3.5 million people around the world bought into the OneCoin dream. For almost all of them, the investment became a nightmare.

Although OneCoin collapsed nearly seven years ago, the hunt for co-conspirators continues. On April 24, prosecutors in New York announced the surprise arrest of William Morro, who allegedly participated in OneCoin’s money movements.

Meanwhile, OneCoin victims are still struggling to recover their investments.

A class-action suit against OneCoin leaders was announced in London in September 2023. Another class-action suit in the U.S., brought by a Tennessee woman who lost $103,500 in OneCoin investments, was withdrawn in October 2021. The plaintiffs conceded that it would be too difficult to recover the funds, because Ignatova remained missing, while her partners had been convicted.

Jennifer McAdam, the daughter of a coal miner in Ayrshire, Scotland, said she lost a family inheritance worth nearly 10,000 euros. She’s trying to recoup her losses through the London class action suit.

“The pain and suffering from losing all your finances, your home, your family, and your loved ones come alongside with trusting these fraudsters and their sophisticated scams,” said McAdam.

Even as McAdam was sinking her family savings into the cryptocurrency scam, the OneCoin fraudsters were able to purchase expensive real estate in Dubai.

“The world we live in is sadly full of very clever fraudsters and they will appear to you as sheep, but the reality is they are wolves disguised in sheep’s clothing,” she said.

Dan Mika (OCCRP) contributed research and reporting.

Thomas Brown