€2.38 million euros were paid up front for masks that never arrived. Two arrests have been made in the Netherlands, and more are expected, says Interpol.
Fraudsters are taking advantage of the coronavirus pandemic to scam authorities desperate to find protective equipment for their health workers, Interpol has warned.
The agency said this week that an international investigation had begun into a sophisticated fraud scheme involving massive government orders of face masks.
“There are the vultures, the predators out there who want to take advantage at this time of crisis,” Stephen Kavanagh, executive director of police services at Interpol, told Euronews.
Hijacked email addresses, cloned websites and international money laundering: the fraud scheme seems straight out of a television series. It was uncovered by banks and police across Germany, Ireland and the Netherlands, as part of a case coordinated by Interpol.
The agency said the operation has already led to the arrest of two suspects in the Netherlands, and more are expected.
How did the scam work?
In mid-March, as a number of European countries were going into lockdown due to the coronavirus pandemic, German authorities contracted two sales companies in Zurich and Hamburg to find €15 million worth of face masks.
But the buyers were up against a global shortage of medical supplies, and their usual business channels were drying up. So they followed new leads and placed an order with what appeared to be a legitimate Spanish supplier.
“Unbeknown to the buyers, the site was a fake and their legitimate email addresses had been compromised,” Interpol said in a statement.
In email exchanges, the company initially claimed to have 10 million masks, but the delivery fell through, and it referred the buyers to a “trusted” dealer in Ireland. That dealer in turn promised to put them in touch with a different supplier – this time a company in the Netherlands he assured would be able to provide the 10 million masks.
The German buyers agreed to an initial delivery of 1.5 million masks in exchange for an upfront payment of €1.5 million. They prepared for the delivery and even arranged a police escort to follow the masks on their way from the Netherlands to Germany.
But just before the delivery date, the buyers were told their payment had not been received, and that an emergency transfer of €880,000 straight to the Dutch supplier was needed to secure the order. The buyers made the wire transfer, but the masks never arrived.
“It turns out the Dutch company existed, but their website had also been cloned. There was no official record of the order,” Interpol explained.
When the buyers realised they had been scammed, they contacted their bank in Germany, which in turn contacted Interpol, setting off a race to intercept the funds and follow the money trail. Partner organisations Europol and Eurojust joined the chase.
Authorities in Ireland managed to identify an Irish company involved in the scam and freeze the €1.5 million in the account. While investigators in the Netherlands tracked down the €880,000 wire transfer: most of the funds had already been sent to the United Kingdom and all of them were destined for an account in Nigeria. The UK bank was able to recall the full amount and Dutch authorities have now frozen the funds.
“Those arrested in this case had no connections to the medical equipment industry. They were simply experienced fraudsters who saw an opportunity with the outbreak of COVID-19,” said Interpol Secretary General Jürgen Stock.
How do buyers get duped?
“I think we need to be really careful that we don’t judge those that fall prey to these very sophisticated frauds,” Interpol’s Stephen Kavanagh said in an interview on Euronews Now. “There were hijacks of email accounts, there were fake emails and websites created. And what happens is these sophisticated fraudsters will put people under pressure.”
He explained: “The health authorities are desperate to get protective equipment to nursing and medical staff, and to law enforcement more broadly. But what the fraudsters will do is use social engineering: they will say that we can’t go through the usual due diligence, that ‘it’s okay that you can’t access us on the normal website’, ‘we’ll use a different telephone number on this occasion’. And they will put those people under pressure.”
Interpol says this new wave of crime is not a European or American problem – it’s happening all around the world.
Europol has warned of a jump in cybercrime as fraudsters take advantage of the anxiety and the disruption caused by the coronavirus pandemic. This goes from malicious email attachments to cyber attacks holding hospitals and labs to ransom.
Kavanagh said police were also seeing organised crime moving into loan sharking for people short of money, or offering transport services or cleaning services where regular business has stopped amid nationwide lockdowns.
“What Interpol wants to highlight is that people need to be vigilant, they need to be sceptical every time they go into these large scale arrangements, and they need to be safe. They need to ask difficult questions. It’s better to probe potential business partners than trust them,” Kavanagh said.