Security & Fraud

Three Former Top Wirecard Execs Arrested In Alleged Fraud Scheme

Wirecard

Three former top executives of Wirecard AG were arrested Wednesday (July 22) as prosecutors allege they were part of a criminal enterprise to steal billions from creditors based on fake accounts, Reuters reported.

The ex-executives are suspected of conspiring to inflate revenues by creating faux business with third-party acquiring partners, Anne Leiding, spokeswoman for the Munich State Prosecutor’s Office, told reporters.

The alleged actions created a false impression of financial strength for the German payments company and enabled it to borrow €3.2 billion ($3.7 billion).

The billions borrowed are “in all probability lost” due to Wirecard’s insolvency, Leiding said.

“In reality it was clear, at the latest by the end of 2015, that Wirecard’s real business was losing money,” Leiding told reporters in Munich.

Once worth $28 billion, Wirecard collapsed last month after an audit by Ernst & Young revealed two missing deposits in Philippines banks totaling more than $2 billion.

Today, the insolvent company has a stock market value of €220 million ($255 million), the news service reported.

Last month, former CEO Markus Braun was arrested as the scandal unfolded on an accounting scandal that centers on a missing €1.9 billion ($2.1 billion) in deposits. He was charged with accounting fraud and market manipulation.

Braun has now been re-arrested; also arrested were Wirecard’s former chief financial officer and chief accounting officer. The arrests were made based on testimony from a cooperating witness, the prosecutor’s office said.

An investigative team is probing Braun and his unnamed suspected accomplices for organized commercial criminal fraud, breach of trust, false accounting and market manipulation, Reuters reported.

On Tuesday (July 21), Wirecard hired a forensic team to investigate the accounting scandal that led to its insolvency.

Earlier this month, one of the unnamed executives in the Wirecard scandal reportedly admitted guilt to the multi-billion-dollar fraud and money laundering case. The executive was the CEO of CardSystems Middle East, the largest unit under Wirecard’s command.

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