Online investment fraudsters are becoming more devious and organized, making their increasingly sophisticated scams tough to detect for ordinary investors. A bust carried out by Europol and local European law enforcement on the perpetrators of the €645 million JuicyFields marijuana investment scam on April 11 is a prime example.
Europol estimates that 550,000 investors worldwide, most from Europe, were drawn into the scam. Using bank transfers or cryptocurrencies, around 186,000 participants transferred funds to JuicyFields from early 2020 to July 2022. The JuicyFields fraudsters used advertisements on social networks to lure victims to their websites. These offered crowdsourcing investment opportunities in the cultivation, harvesting, and distribution of marijuana plants to be used for medicinal purposes. For a minimum initial investment of €50 in a so-called ‘e-growing’ opportunity, investors were promised to be linked with producers of medical cannabis.
A “Ponzi” scheme is a type of investment scam where criminals promise high returns with little or no risk to investors. But instead of actually generating profits through legitimate business activities, the scammers use money from new investors to pay returns to earlier investors. Using classic “Ponzi” scheme tactics, the early small-time investors in JuicyFields were initially paid the promised 100 percent return on investment.
According to Europol: “An investor would make an initial investment of €50 and receive a pay-out doubling their money soon after. Motivated by these financial gains, many investors would raise the stakes and pay in hundreds, thousands, or in many cases even tens of thousands of euros.”
Europol added: “According to judicial estimates, the total damages resulting from fake investments in the advertised cannabis cultivation crowdsourcing platform amount to a staggering €645 million, but actual and unreported damages could be significantly higher.”
JuicyFields fraudsters had offices and full-time staff
The JuicyFields scam also went well beyond the usual parameters of creating a convincing-looking website. They painstakingly constructed the image of a legitimate real-world business complete with physical offices, full-time staff, and representation at legitimate cannabis industry events. But in July 2022 the criminals behind the scheme abruptly removed company profiles from social media networks and stopped users from logging in to their accounts, thus freezing cash withdrawals. A subsequent joint investigation led by German, French, and Spanish Police and supported by Europol, the National Crime Agency of the United Kingdom, and other law enforcement resulted in the nine arrests made last week, along with the seizure of various assets.
According to the US Federal Bureau of Investigation (FBI) and according to figures from the Internet Crime Complaint Center (IC3), investment fraud was once again the costliest type of crime in 2023. Losses to investment scams rose to $4.57 billion in 2023, a 38 percent increase over 2022. Victims aged 30 to 49 years old were the most likely group to report losses from investment fraud, while the elderly accounted for well over half of losses to tech support scams.
