THE WOLF OF SOFIA AND HIS CYBERCRIME NETWORK [PART 1 – INTRODUCTION]

The research for the article series about the “Wolf of Sofia” has been carried out over the last weeks together with our partners in Israel, Germany and the USA. All assertions made in the individual articles can be supported by the results of our own research or by documents examined by partners. This cybercrime network has existed for many years and can also be labeled as “cryptocrime pioneer”. The network of the “Wolf of Sofia” spans Israel, Europe, Russia, and the Caucasus as well as North America. The aim of this series of articles is to

• educate the public about the background of this global cybercrime network;
• gather additional information as well as
• protect investors from future fraudulent activities of those bad actors.

The Exodus from Israel

The title of this series has been inspired by the Israeli journalist Simona Weinglass of The Times of Israel, who since 2016 has written a series of articles on the fraud industry surrounding binary options in Israel. As Israel has gained an impressive reputation for being a center of international cybercrime in recent years, Simona titled her initial article “The Wolves of Israel: Israel’s vast, amoral binary options scam exposed”. The Wall Street Journal has also reported extensively on Israel and its cybercrime mentality. The work of Simone Weinglass is an important pillar of our research.

The fact is that the startup scene in Israel, with Tel Aviv as its center, has developed excitingly well and has produced many great projects with many talented entrepreneurs. On the other hand, it is also a sad fact that Israel is also home to some of the biggest cybercriminals. Gery SHALON, who set new standards with his cybercrime network, of course, has to be mentioned here. Bloomberg has published an interesting analysis of SHALON and his network.

Gery Shalon once was a well-known start-up entrepreneur in Tel Aviv. The son of a prominent politician from Georgia, Gery Shalon has elevated international cybercrime to previously unknown heights. He was arrested in Israel in 2015 and extradited to the USA in 2016 where he was charged and sentenced. After serving a prison sentence, he remained in the United States, where he coordinates his global cybercrime network. In Europe, Sofia is an important center for this network and the wolf of Sofia is the European governor.

THE WOLF OF SOFIA

Over the past couple of years, the powerful Israeli cybercrime network has expanded internationally and opened up new locations. While Gery (Gabi) SHALON is looking after the North American market after his release from prison, he has partners who take care of the EU markets and Russia.

One of these partners is the Israeli Gal BARAK who runs the European operation of this cybercrime network with its headquarters in Sofia, Bulgaria. Bulgaria is a member of the European Union and is known for its relaxed approach towards financial crimes. Hence, it’s no coincidence that Sofia is home to some of the biggest cybercriminals and their networks. Just to name the PONZI-scheme ONECOIN and its Bulgarian founder Ruja IGNATOVA.

However, because Bulgaria is an EU member, Bulgarian companies can also operate in other EU countries via the EU Financial Passporting Regulation. In a close relationship with his Bulgarian friend Marina ANDREEVA who allegedly acts as a sort for CFO for this network, Barak commands a vast illegal network of companies and people.

Gal BARAK has grown up with binary options in recent years. Through many fraudulent binary options sites such as SafeMarkets or OptionStarsGlobal, he has cheated on many thousands of investors in the EU. According to the information available to us, more than 100,000 investors were betrayed and lost more than USD 200 million. We know that investors, lawyers, and authorities are trying to find out Gal BARAK’s whereabouts. BARAK hides in Sofia and feels protected there by the authorities, luxury life included. For this, he pays considerable protection money to the responsible Bulgarian authorities, we hear.

We have documents showing that Barak is also the director of TRADOLOGIC, based in Sofia. BARAK was appointed Director in April 2017.

Since June 2017 he is also the director of the sole shareholder of TRADOLOGIC, the GLOBAL FINTECH SOLUTIONS. The largest shareholder of the latter is OLDYPAK CAPITAL where the notorious Russian hacker Vladislav SMIRNOV is registered as the company’s controlling person. SMIRNOV is responsible for the payment operations of the cybercrime network around Gal BARAK (read more on it below) and Gery SHALON. Barak himself directly holds 10% of GLOBAL FINTECH SOLUTIONS through his Hong Kong-based GM GLOBE LIMITED. Together with its partner SMIRNOV and its OLDYPAK CAPITAL, they control 56% of the company and thus TRADOLOGIC.

Gal BARAK relies not only on Tradologic for its own trading sites but also on the Israeli PANDA platform. The network’s US-based trading platforms, in particular, were operated with this solution. Among those US-focused and PANDA-powered trading platforms are StartlingCapital, BarkleyCapital, or GlenridgeCapital.

We will shortly publish a detailed report about PANDA TRADING SYSTEMS and its activities.

The Ring Leader and Mastermind

Among other things, Gery SHALON‘s network was also responsible for the hacker attacks on JP MORGAN and other US financial institutions (read this article on Haaretz). According to US prosecutor Preet BHARARA, SHALON’S network is said to have ripped off hundreds of millions of Dollars from investors. SHALON’s cybercrime network also has an exciting political dimension.

Gery SHALON is the son of Georgian deputy party leader and member of the parliament (MP) Shota SHALELASHVILI, who allegedly was responsible for laundering his son’s money over Georgia. This accusation was made in the Georgian Parliament and denied by SHALELASHVILI. A final ruling on this is still pending.

Gery #Shalon is a son of Georgian MP Shota #Shalelashvili from #GeorgianDream party. According to @WSJ Gery Shalon is alleged to have run a ‘criminal conglomerate’ that reaped hundreds of millions of dollars in illegal profits. https://t.co/qgSyDrgmBQ via @WSJ

— Davit Chikhladze (@Davit_CHI) June 7, 2018

https://platform.twitter.com/widgets.js

SHALON was arrested in Israel in July 2015, extradited to the United States in 2016 and indicted and sentenced to prison and fines in late 2015. Reports on this case worth reading can be found at Reuters and in The Times of Israel. In addition to his illegal online casino businesses, SHALON and its network have for years stolen customer data from US financial institutions, driving a “pump-and-dump” scheme with penny stocks. For example, they bought penny stocks at low prices, then sent emails on behalf of the financial institutions to their customers with purchase recommendations which created demand for those stocks. Shalon and his buddies happily sold their penny stocks at high profits. The unsuspecting customers have relied on the alleged recommendations of their bank and made losses.

According to the prosecutors, more than 100 million customer data have been stolen from JP Morgan and other financial institutions and used for these stock manipulations. SHALON was released after a prison sentence and the alleged payment of USD 403 million in fines and is apparently still in the US. Rumors are that he is working with the FBI.

The Dark Russian Money Network

The wolf of Sofia has other important partners besides Gery SHALON. One of them is the Russian Vladislav SMIRNOV (or Vladislav KHOKHOLKOV), another legendary cybercrime activist. This “Vlad” started his career with Leo KUVAYEV, who was convicted in the USA and Russia for cybercrime activities and sexual harassment of children. An interesting background report about KUVAYEV and his partnership with SMIRNOV (formerly KHOKHOLKOV) can be found here.

SMIRNOV is responsible for the payment operations in the BARAK and SHALON network and operates a number of payment networks such as NetPay or Dreams Pay in the Czech Republic. Additionally, SMIRNOV until recently operated illegal trading platforms such as BINEX (www.binex.ru) or GOLDENFX (www.goldenfx.trade) via BINEX Ltd, which is registered in Bulgaria. The Ukrainian Leonid OLSHEVSKi, Managing Director of BINEX Ltd, apparently works as a frontman for the Russian Vladimir SMIRNOV.

A further partner of Gal BARAK was sentenced in the USA because of Telemarketing fraud to a prison sentence of several years. The US prosecutor Preet BHARARA brought this to trial in 2012. Together with this partner, BARAK also has some quite interesting investments. About these investments and details on payment operations will follow shortly in a separate article.