How Mark Scott used Apex Group to launder OneCoin funds
In his witness testimony at Mark Scott’s trial, Konstantin Ignatov claimed OneCoin took in over $2 billion.
In January 2019, US authorities pegged OneCoin losses at over $4 billion.
That money had to go somewhere. Today we examine exactly how Mark Scott shuffled hundreds of millions of euros for OneCoin’s owner, Ruja Ignatova.
As part of their money laundering case against Scott, the DOJ called on Paul Spendiff to testify.
Spendiff was the Head of Global Sales and Director of UK business for Apex Group. He is no longer with the company.
Spendiff describes Apex Group as a ” third-party management company”.
Spendiff met Mark Scott in May 2016, with respect to fund administration of Fenero Funds.
Within Fenero Funds Scott had set up smaller fund companies; Fenero Equity Investment LP, Fenero Switzerland Limited and Equity Switzerland Limited.
According to Spendiff, the Fenero Funds were a “British Virgin Island approved fund”.
Upon reaching out to Apex Group, Scott made it clear OneCoin funds were to be kept out of the US.
Mark had originally been going to engage with the New Jersey office of Apex Fund Services but had decided that — stated there was a preference to have the fund administration done outside of the U.S., preferably in Europe.
During their initial discussions, Scott failed to disclose that money flowing into the Fenero Funds was sourced from OneCoin investors, or that he was in fact working for Ruja Ignatova.
Q. During the period of time that Apex administered these funds did the defendant tell you that the money that was coming into the funds originated from an entity called OneCoin?
A. No, he did not.
Q. During that period did he disclose to you that the funds in — sorry, that the money in the funds belonged to a person called Ruja Ignatova?
A. No, he did not.
Scott stated he would be an “investment manager” through MSSI Consultants BVI Limited, a British Virgin Islands shell company he’d set up.
MSSI Consultants BVI Limited in turn was “owned” by MSSI, another shell company registered in Florida and 100% owned by Scott.
David Pike was named as an administrative assistant working within the Fenero Funds.
As testified by Spendiff;
Our plan was to set up four — ultimately four funds in the BVI. Each of them had a maximum investment size of a hundred million dollars.
That’s the legal maximum that that type of fund in BVI can have; that they would invest into European financial services — stressed European financial services and financial technology firms within Europe.
And that the investors would be wealthy European family offices that Mark had made connections with in his 25 years as a private equity and real estate lawyer.
To seal the deal, Scott cited having been
a partner at a U.S. law firearm called Locke Lord and bragged about a lot of other large U.S. and global law firms.
Irina Andreeva Dilkinska, who was officially head of OneCoin’s legal department and assisted Scott with money laundering, was tied to the Fenero Funds through B&N Consult Food.
Scott didn’t disclose anything about Dilkinska or B&N Consult Food to Apex Group.
By the end of May 2016, Scott, on behalf of Fenero Funds, and Apex Group entered into a fund administration agreement.
Over eight or nine weeks with Apex Group administrating Fenero Funds, Scott transferred just under €150 million EUR into it.
Of that amount, Apex Group removed “roughly 40 million … for investments”.
Q. So let’s talk a little bit about the payments. How many investments or investment projects did Fenero Funds undertake under Apex’s management?
A. I would say two.
Q. Two? What were they?
A. One was an initial investment and then a subsequent capital injection into a UK payments business. And the second was a loan made to a German lawyer — or an entity controlled by a German lawyer — which was roughly $30 million or 26, 27 million euros.
Q. In connection with what? Was there a clarity about what the loan was financing?
A. As I understand, the loan was to be subsequently lent into another entity which had an oil and gas interest in Madagascar.
Through B&N Consult EOOD, another Bulgarian shell company, Dilkinska laundered around €5 million EUR through Fenero Funds.
Dilkinska cited the source of the funds as her own “legal profession and business owner”.
A few weeks later IMS got on board (Frank Ricketts’ money laundering company), and through Manon Hubenthal transferred €14 million EUR.
Once again, Scott didn’t disclose to Apex Group that IMS, Manon Hubenthal or the funds invested were tied to OneCoin.
Frank Ricketts however did come up, in an email from Scott to Apex Group.
Scott withheld the connection to OneCoin, but did disclose Ricketts’ involvement through IMS Singapore PT and IMS GmbH, both shell companies.
IMS’ involvement triggered issues within Apex Group, prompting them to “request additional information about the corporation” and Hubenthal.
Scott never provided the requested information.
He did however misrepresent to Apex Group that IMS “worked for” Dilkinska’s B&N shell companies.
A service agreement between IMS GmbH and OneCoin’s Dubai shell company reveals Ricketts received 20% of funds laundered through IMS. A separate agreement for IMS Singapore PT stipulated a 1% fee.
Later down the track funds were laundered through Payment Card Technologies, represented as being a “financial car payments company” in the UK.
To facilitate this, Scott set up the shell company Fenero PCT Holdings and Najib Kassis – through which €7.3 million EUR was laundered.
Scott slipped up though, leaving Ruja Ignatova’s name on legal documents filed in connection to the transfer.
Apex Group failed to notice this at the time.
In July 2016 Scott was pushing a $30 million dollar loan transfer to Martin Breidenbach’s bank account.
This was two months after BehindMLM reported Breidenbach, a lawyer at the firm Breidenbach Rechtsanwalte, who published a legal opinion rubber-stamping OneCoin in 2014, was also a Director of the company.
To seal the deal with Apex Group, Scott sent them an email from Breidenbach.
Apex Group threw up some red flags and ultimately the loan was transferred to Breidenbach, but not into his bank account as originally planned.
Instead the funds were routed through CryptoReal.
CryptoReal was a shell company set up in Ruja Ignatova’s name, on the thin premise it was involved in oil exploration.
The money Breidenbach was sent was sourced from Barta Holdings – a Hong Kong shell company administered by Hui Chi Ming.
Despite Ruja Ignatova’s signature appearing on documents pertaining to the transfer, Apex Group executed the transfer.
Scott himself received “between two and three million euros” through Fenero Funds, from B&N Consultant (presumed to be a shell company set up by Irina Dilkinska).
Scott told Apex Group the funds were going to be used to
build back office infrastructure for his expanding financial services business.
Two weeks later Scott made another request for money, which Apex Group refused.
As recalled by Paul Spendiff;
The request came in with a series of other outstanding issues. There was a meeting of the team in Apex.
We decided to hold transactions until we conducted in-house due diligence on some of the entities, particularly Irina Dilkinska because she seemed to be heavily involved in structuring the firm.
We were uncomfortable with the investment manager making loans to himself a second time kwg in very short succession and we were uncomfortable with the amount of money coming in from IMS still purport be to be on the beneficiary of B&N so we felt it was reasonable to do additional due diligence.
Scott pushed back on Apex Group’s due-diligence attempts, stating
this type of audit would affect our relationship with the investor tremendously.
Nonetheless, Scott represented to Apex Group he ‘would endeavor to try to get that information for us.‘
While they waited on that, Apex Group
made the decision to do a complete review of the funds and the relationship with Mr. Scott.
We just, you know, enhanced due diligence, we just felt we wanted to get — we still didn’t feel we had a complete understanding of the complicated relationships between the different parties.
We felt we needed to understand that better.
On July 31st, Scott emailed Apex Group wanting to add yet another company into the mix.
This time it was Zhouloung Cai and Star Merchant Incorporated Limited in Hong Kong.
The amount Scott wanted to launder was €8 million EUR.
Over the course of ten minutes, Scott sent Apex Group three emails related to the requested transaction.
One of those emails was a chain, involving Irina Dilkinska and her OneCoin domain email address.
Q. So when you read this, what was your reaction?
A. We, we wanted to understand why Irina Dilkinska was involved in a transaction which he purported would be — had not indicated was anything to do with her.
And this was the first time we saw that she had a new e-mail address which was at OneCoin.eu.
Q: When you saw the Irina Dilkinska at OneCoin.eu e-mail that had been forwarded to you, what did you do?
A. I started researching OneCoin.
Part of that research saw Spendiff take a closer look at the email chains Scott had sent him. He then noticed Ruja Ignatova’s name and put two and two together.
Q. When you returned to the office on Monday, what action did you take?
A. We had an emergency meeting of the risk and compliance team at Apex.
Q. What decision did you make?
A. We decided to, well, there were a number of meetings as you can imagine, and discussions, and we decided to make a number of notifications to government agencies.
Q. When were those notifications made?
A. Quite complicated to make, so it might take some time. I think probably on Tuesday, the Tuesday of that week.
So I guess maybe the August the 1st to August the 3rd we completed a number of notifications.
These notifications were sent to UK authorities, who in turn forwarded them to US prosecutors.
Spendiff claims that after these notification were sent out, Apex Group was prohibited from tipping Scott off.
At this point Apex Group wasn’t pushing through Scott’s requested transfers, prompting him to fire the company.
When asked why Apex Group didn’t terminate Scott as a client, he stated;
We had a legally binding contract, and we couldn’t do any action.
We had to wait for seven days from the notification to the agencies before we did any action which might be constituted as tipping off.
Weary of being accused of tipping Scott off, phone calls between the parties were secretly recorded by Apex Group.
One such call, during which Scott ‘to expedite a number of payments that were outstanding which he had requested’, was played as evidence in court.
For provided services to Scott and OneCoin, Apex Group received $3500.