A billion dollars, thousands of investors, two scams and one Australian businessman
Updated 4 Jan 2018, 9:23pmThu 4 Jan 2018, 9:23pm
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You've probably never heard of the man who created a global pyramid scheme and arranged for some of Europe's major football clubs to promote it to an audience of millions.
- Thousands of investors say they've been defrauded of about $1 billion by two global pyramid schemes — Power 8 and EuroFX
- Leaked corporate documents and insider testimony suggest Australian accountant Bryan Cook was responsible for funding, staffing and marketing these scams
- Cook denies responsibility for any fraudulent activity
But there are thousands of investors in China and Taiwan who know his name, and claim they've lost more than $1 billion in scams he created.
Bryan Leonard Cook, a 62-year-old accountant who returned to Australia after serving a jail sentence in Germany for market manipulation, denies responsibility for any fraudulent activity.
"I am an honest businessman," he told the ABC.
"I try and do the best I can correctly. I try and make sure there are proper contracts in place, and as far as I'm humanly possible, it complies with the law."
But former directors of Mr Cook's companies have a different view of the disgraced accountant.
"I think he should be answerable," said David Byrne, a British businessman who argues he was set up as the fall-guy in a cleverly organised foreign-trading scam created by Mr Cook.
"He was definitely a guy with the conductor's stick in his hand. He was definitely directing many of the operations."
The ABC has obtained leaked corporate documents and insider testimony that suggest Mr Cook was responsible for funding, staffing and marketing two global pyramid schemes.
The first was a fake internet-gambling company called Power 8, which secured high-profile sponsorship deals with big European football clubs — including naming rights for a Barcelona stadium.
The second was a fake foreign-trading platform that investors claim swindled over $1 billion. It was named EuroFX.
Investors calculate the scale of these two fraudulent schemes to be bigger than that which put Alan Bond in prison.
Several EuroFX marketers are currently serving prison sentences in mainland China, and those responsible for promoting Power 8 in Taiwan are awaiting verdicts on charges of fraud and money laundering.
Lawyer Houchih Kuo represents 300 victims in Taiwan who want to pursue Mr Cook in Australian courts.
"From the records we obtained, he seemed to be behind Power 8 at every stage, every turn," he explained.
"He should come here to see what they have done, to see what type of damage they have done to the people who invested in the companies he set up."
The promise of EuroFX
About two hours' drive from the North Korean border in the Chinese city of Shenyang, a woman sits in her apartment preparing homemade chemotherapy medicine.
Laid out on her coffee table are cheap plastic scales and canisters filled with white powders.
Wang Jie, 60, has lung cancer and it's spread to her bones. She can't afford hospital treatment any more.
"It's 10 per cent of what it would have cost me," she explains, funnelling the chemicals into a pill capsule.
It was the spiralling cost of treatment and a desire to see her son study abroad that convinced Wang Jie to participate in EuroFX, a scheme that was providing handsome returns for her friends.
She was invited to a seminar to learn how EuroFX worked.
A promotional video described EuroFX as an innovative foreign-trading platform. It was fronted by a British trader named David Byrne, who was lauded as a brilliant visionary.
In 2012, Mr Byrne was struggling to find steady work when he ran into an old associate who presented him with an opportunity.
He was introduced to Mr Cook, the chairman of London Capital, a boutique consultancy firm specialising in cross-border corporate structuring.
"He seemed to be a very relaxed, confident person who seemed to have a big plan," Mr Byrne said of Mr Cook.
Mr Byrne's job was to convince investors to deposit a minimum of $US100,000 to participate in EuroFX. As a Reuters investigation previously established, he promised returns of 12 per cent per month in return.
"I was literally to go out there and be the face of what was to be a great expansion," he said.
He hosted meet-and-greets in their impressive Heron Tower offices in the heart of London's business district, and spruiked the venture at glitzy gala dinners across Asian capitals.
There, Chinese celebrities would entertain guests before Mr Byrne took centre stage.
One of those who enjoyed the opulence was an Australian investor, Guan Ping.
"We were flown in first class, we were accommodated in five-star hotels," she told the ABC.
"Everyone was having these five-course meals all laid out, with abalone and the delicacies of South-East Asia."
Early warning signs go unheeded
Investors said they believed EuroFX would come under the protection of Western regulators, as it was a UK company listed on the NZ Financial Service Providers (FSP) registry.
Within six months of Mr Byrne coming onboard, the UK Financial Services Authority warned the public EuroFX was unauthorised to perform regulated financial activities.
Months later, investors' accounts were frozen and their money could not be withdrawn.
"For a long time, I desperately wanted this to work," Mr Byrne told the ABC, shaking his head.
"I think that desperation clouded my judgement to a degree. Maybe I didn't do a very good job."
Taking centre stage in Bangkok before hundreds of anxious investors, Mr Byrne smiled nervously before telling them the freeze was only for 90 days and the crowd should top up their accounts.
The "cooling-off period", as he described it, was to fulfil the company's "anti-money laundering regulatory requirements".
Then in an unusual conclusion to the speech, he recited a poem:
"Money and me, we're such a team. Money and me, inseparable we.
"Money and me, together we dream. Money and me, in harmony."
Mr Byrne exited the stage surrounded by giant spinning replicas of the Wall Street bull statue and smoke machines, with the Star Trek: Generations Overture at loud volume.
Later, he explained he didn't have experience pitching to an Asian market.
"I knew there were big cultural differences," he contends. "It was the type of thing I was told they did very differently."
In search of a missing fortune
Shanghai investor Shanbao Li watched the spectacle unfold, wanting to believe Mr Byrne wasn't lying. She had already invested $US350,000.
"So many people were tricking themselves. They didn't want to believe this was a scam," the 65-year-old said.
Six months passed and investors still could not withdraw their funds. So Ms Liflew to England to investigate.
She learned Euro Forex Investment Limited had been created by Mr Cook and reported the scam to UK authorities.
London's Metropolitan Police decided Chinese authorities were better placed to deal with the matter, an FOI disclosure to the ABC has revealed.
"I talked to a lot of investigators and discovered it was a fraud. When I got back to China the first thing I did was go to [the city of] Yiwu where there were the most investors. I went there to tell everyone," Ms Li said.
By this time, Mr Byrne had left the company and got a new job. But Ms Liwas determined to not let him forget the thousands of investors left in the lurch.
"I sent David Byrne a message," Ms Li explained.
"I said, 'I'm going to make sure you can't forget this for the rest of your life. Don't think you can cheat people and get away with it so easily. I definitely will get you'."
She notified police across China that thousands of investors have been defrauded in a massive scam.
When Mr Byrne returned to China on a business trip, he was soon arrested and detained by police, and told he may never leave China again.
"They said because people lost their lives it could be the death penalty or life in prison," he said.
Mr Byrne was interrogated for months. He showed police forensics his emails, receipts and contracts.
These documents, he said, showed he was working blind at the behest of Mr Cook and his associates.
Mr Byrne was finally allowed to return to London from China last year. He has offered to assist with any police investigation into where the money went and who was ultimately responsible.
"A paper trail — money will leave a trail," Mr Byrne said.
"They seem to have known that the way to set it up is to leave a little piece of each puzzle in different areas.
"If only the countries would talk to each other and find who is responsible ultimately."
How a pyramid scheme got its own stadium
In November 2013, just months after Mr Byrne resigned from EuroFX, Mr Cook set up a London Capital subsidiary in Spain.
It was soon renamed Power 8, and marketed itself as the next big thing in internet gambling.
Sponsorship deals were secured with Fulham FC and Everton FC by David Orchard, a consultant working for Mr Cook's London Capital firm.
For an undisclosed sum, Power 8 received advertising space at games and players' endorsements featured in advertisements for the 2014-15 season.
In Spain, a French consultant named Philippe Cappelle was contracted by Mr Cook to explore similar marketing opportunities.
He soon secured a deal with Barcelona's rival, RCD Espanyol, which including renaming their home ground "Power 8 Stadium".
A loan agreement, sighted by the ABC, shows Mr Cook loaned Mr Cappelle 6.6 million euros just days before the Espanyol agreement was announced.
Mr Cook was also instructing Mr Cappelle to include contract provisions that would enable Power 8 to prematurely end the deal, according to leaked emails obtained by the ABC.
"The rights of the sponsor to unilaterally terminate is insufficient," Mr Cook wrote to Mr Cappelle at the time.
"It has to include any negative press that we solely decide is causing harm to our brand."
Mr Orchard has confirmed to the ABC that another subsidiary of London Capital — this one in New Zealand — paid all the sponsorship fees.
The New Zealand subsidiary's sole director and shareholder was Mr Cook. However, he claims he had no idea what was going on behind the scenes.
"This is the first time I've ever heard of any money being at Power 8," he told the ABC. "This was never indicated to me."
Mr Orchard's lawyer has told the ABC that all the necessary due diligence and anti-money laundering checks were performed by the clubs' advisors.
But a leading British expert on sports sponsorship, Professor Simon Chadwick, questions whether most European football teams possess the time, resources and expertise to fulfil these obligations.
"Even those mid-table Premier League clubs like Everton, they're involved in this very constant short-term cash grab," Professor Chadwick explained.
"They are not as considered in the way they acquire commercial partners as they should be."
'I thought no-one could do a scam like this'
With its sponsorship of famous football teams, the otherwise unknown company Power 8 was marketed across China and Taiwan as an exciting investment opportunity.
At seminars in Taiwan, the company promised a $US50,000 investment in Power 8 would return 6 per cent per month, as well as the opportunity to go see Lionel Messi and Cristiano Ronaldo play against Espanyol.
The first investors had received good dividends, so word spread.
Melody Chiang Shuhui, a big football fan, spotted the Power 8 logo on players' jerseys and became interested after a friend told her about the company.
"I looked at those clubs' website, the Power 8 logo was there," the 54-year-old said.
"I thought no-one could do a scam like this."
Ms Shuhui invested about $US260,000 in Power 8.
Why Cook found himself in trouble
In June 2014, Mr Cook learned there was an arrest warrant against him as he was going through passport control at Zurich airport.
"I was taken into jail and about two weeks' later I was sent a document saying what I was supposed to have done wrong," Mr Cook said. "I was sent to Germany."
The warrant had nothing to do with EuroFX or Power 8.
Instead, German prosecutors were investigating Mr Cook for fraud and market manipulation on German stock exchanges, offences serious enough to keep him in pretrial detention.
Six companies listed by Mr Cook's London Capital were suspected of having their share prices fraudulently inflated, the financial regulator Bafin has told the ABC.
He was detained in Stuttgart's supermax Stammheim prison while the court deliberated. Mr Cook said he spent 23 hours a day locked in his cell.
"In Australia — for murder and terrorism, you don't even get that. But I was," he said.
In June 2015, Mr Cook was convicted of market manipulation, an offence for which he was sentenced to one year and nine months' imprisonment.
The ABC understands that ASIC is aware of Mr Cook's conviction and he has been disqualified from managing a corporation in Australia until 2020.
Why the football sponsorships collapsed
According to the frontman for Power 8, Mr Cappelle, London Capital's instalments for the Power 8 sponsorship deals stopped after Mr Cook went to prison.
Instead, money arrived from mysterious HSBC accounts belonging to Hong Kong companies he had never heard of.
These companies, according to the victims' lawyer Houchih Kuo, appeared to only exist on paper.
One of these bank accounts belonged to a shell company, called Alpha Import & Export (HK) Ltd.
The ABC has sighted transfer receipts, showing this was the very same account where EuroFX investors had been depositing their cash.
All funding dried up soon afterwards. The football clubs took down the Power 8 signage. The investors were left stranded.
In April 2015, Mr Cappelle signed an affidavit against London Capital and Mr Cook, declaring "a major scam has taken place throughout Asia amounting to at least 100m euros in losses for Asian investors in the Power 8 operation".
With respect to Mr Cook, he stated: "Funds promised do not arrive, contracts signed are not fulfilled, commitments are even ignored, emails remain unanswered."
Mr Cappelle died of a heart attack last year.
The companies were set up for others, Cook says
Mr Cook does not deny the companies he incorporates sometimes become pyramid schemes. He does not deny some investors have taken their own lives after losing everything to these scams.
"It's a tragedy," he nods.
What he does deny is his culpability in committing any serious financial crime. He says he creates companies, he didn't operate or profit from them, beyond his standard consultancy fee.
"We are a consulting firm that set up companies for people. End of story," Mr Cook said. "What people do with those companies is their business."
Mr Orchard told the ABC, via his lawyer, the EuroFX offices were paid for entirely by Mr Cook.
When the ABC asked Mr Cook who he set up EuroFX and Power 8 for, he was unable to remember.
"The EuroFX FSP [financial service provider] was set up at the request of, I believe, a woman back in early 2012," he said, adding that her surname could be "Alistair" but he's not sure.
On another occasion, Mr Cook suggested he set it up for someone else named "Thomas", but once again, he couldn't remember the details.
"I've never met nor do I know Thomas. The name was told to me," he said.
The lawyer representing Power 8 victims, Houchih Kuo, suggests there are irregularities in Mr Cook's story which should be held under judicial scrutiny.
"If he's really innocent, we'll test it in court," he said.
First posted 4 Jan 2018, 10:45amThu 4 Jan 2018, 10:45am