The Com Man: Canadian ICO founder who led a rich and famous lifestyle with private jet trips, diamond watches and fast cars, arrested for alleged Ponzi scheme – Part 1

By Christine Duhaime | November 16th, 2019

Canadian ICO founder arrested; investors all over the world may be out at least $80 million

A Canadian from Montreal, Quebec, named Aziz Com Mirza, was arrested in Dubai on October 27, 2019, and is chilling in the Al Awir jail, on allegations of running a Ponzi scheme. Mirza founded a Canadian initial coin offering (“ICO”) which has since gone offline and investors of the digital currency say they are unable to get their investment back. According to information Mirza himself released, he got US$60 million from pre-ICO sales alone.

The ICO, called HabibiCoin, was pitched by Mirza as the first digital currency in the world created by the rules of Islamic finance, and was marketed specifically to the Muslim community in the US, Europe, Canada and the Middle East. Mirza called it the “Bitcoin of the Middle East”.

It was sold to the public online for $0.05 a coin from April 2018 until December 2018. It accepted Ether for payment and it also paid promoters to pump it on Telegram, Twitter and Instagram, which is a scheme common in the ICO space whereby people act in an investor relations capacity, encouraging the public to send investment funds and are paid commissions in return for investments they successfully pump. Such pumping of investments, even ICOs, is contrary to the anti-fraud and anti-touting provisions of the federal US securities laws and related rules.

According to Mirza, funds raised from the HabibiCoin would be used to develop real estate and thus by owning HabibiCoin, investors were told they would own a real estate interest that would pay them 15% – 25% commission on their investment.

The Com Man promised the coin would never go down. It went to zero

The white paper represented that the HabibiCoin was “asset backed”, e.g., backed by existing real estate, which Mirza represented, made it “more stable” than others. He promised investors in the white paper that the price of the HabibiCoin could never go down in value because of its alleged asset-backed nature.

But the HabibiCoin did go down – it is now worth $0.

It appears that the Ether sent to buy HabibCoin by investors was never converted into the so-called HabibiCoin, and nor was the digital currency listed on any exchange. Mirza represented in the white paper that upon investing, an investor could see in his or her Habibi wallet, the amount of coins invested. That didn’t happen either – there was no Habibi wallet created.

To sell the ICO, Mirza alleged he was a serial entrepreneur but this article says he is a serial scammer (see this article in the Gulf News) with over 50 investors who went public with stories of how they were duped into giving Mirza money for the ICO and for various alleged Ponzi schemes.

Investment clubs to ‘get rich quick’ ended in quick devastation for investors

One of the schemes was an investment club operated by Mirza and allegedly his brother, Rafaqat Mirza, aka Rocky. Over 300 investors say they were duped into investing £5,000 each and another 1,200 say they invested between £15,00 and £25,000 each, to join the club to learn how to get rich quick.

Instead, they went broke quick and the £20 million raised under that networking scheme evaporated partly into a shell company controlled by a third Mirza brother in Dubai.

Where did the millions go?

Where did the money go? 

Aziz Com Mirza was at least transparent about that. He took to Instagram and painstakingly showed the world where the money went before his account went dark.

Some of the money went to allow him to live in the expensive 160 story luxury Burj Khalifa condo building in Dubai. Some of the money went towards diamond watches, a garage full of the world’s most expensive fast cars, and private jet trips.

Tracing the money on social media

I can show you where some of the money appears to have gone according to the Com Man’s social media trail, below.

  1. One of the world’s most expensive buildings – here is a short video of Aziz Com Mirza driving visitors to his home in Dubai:

2. The world’s most expensive watch – here is his $1.2 million Hublot diamond watch:

3. Fast supercars – here he is in one of his Ferraris explaining that ‘dream chasing is nothing more than the science of chasing your dreams’. Investors paid him millions of dollars to hear investment catch phrases like that and learn how to be rich like him:

But one Ferrari wasn’t enough. Here are three in his garage in Dubai:

And why stop there – he also has Bentleys and Rolls Royces:

4. And then there are trips on yachts and private jets:

5. And wait, he has a horse called Sultan:

He invited a handful people on an empty big yacht in Dubai for a little cruise.

Dreams of making the world a better place

Aziz Com Mirza posted on Instagram that he had developed an “inner superhero”. In addition to soliciting funds for his ICO and network clubs, he solicited funds to allegedly feed millions of starving people in India every year. I heard from one Canadian who gave him thousands of dollars to feed the poor. He explains, below, from the comfort of a $500,000 Rolls Royce how he wants to leave the world better than he found it:

There are three other Canadians who helped sell the HabibiCoin, and one of them is good friends with a Toronto ICO founder and a Toronto anti-money laundering outfit that sells online forms for compliance.

I’m working on Part 2 and 3 of The Com Man which will cover the activities of the other Canadians involved in the fund-raising activities.

A number of people kindly sent me information for this story and if you have information, please reach out, especially if you have any of the Ether wallet addresses where investments from the public were sent. The Com Man is part of my financial crime textbook in the works.

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Iranian president alleges nothing being done in Iran to investigate corruption by politically exposed govt officials

By Christine Duhaime | November 10th, 2019

The president of Iran, Hassan Rouhani, delivered a speech over the weekend in Iran alleging massive corruption by senior government officials, and claimed that over $700 million is gone that was under the control of the Minister of Petroleum, Bijan Namdar Zangeneh, and a further $2 billion is unaccounted for in foreign countries in another case. He also alleged that the powerful judiciary in Iran is sweeping evidence of corruption by high ranking government officials (politically exposed persons) under the rug.

In his speech, Rouhani talked about the case of Babak Zanjani, who was convicted of laundering $2.7 billion out of Iran, some of it in Bitcoin and sentenced to death in 2016. Not only has Zanjani not been executed but Iranian foreign nationals subsequent to his sentence, shared pictures of him allegedly spotted in Istanbul and Dubai. The $2.7 billion missing is supposedly about 20% of the amount Zanjani removed to other countries. He would never disclose where the money was parked. Zanjani was closely tied to the Islamic Revolution Guards Corps and moved money, in part, for them. Zanjani had ties to Sajjad Alijani, a Bitcoin dealer in Iran. In 2012, he denied he moved money for the Iranian government but in 2016, admitted that was what his business was.

Rouhani accused the government of doing nothing to repatriate the funds Babak Zanjani removed from Iran as a PEP and is doing nothing to pursue another case where $947 million is missing.

His speech was quite unusual, given that the Iranian regime does not usually attack internally. This week, the US Department of Treasury sanctioned IRGC commander Mohammad Bagheri and the new head of the judiciary, Ebrahim Raisi, whose job is allegedly to address massive corruption by PEPs in Iran who have removed funds to other countries.

It’s probably no secret that Iranian PEPS move their money and families to Vancouver, Canada, partly because Canada is a sanctions avoidance safe haven arising from the fact that Canada has not staffed its sanctions enforcement capabilities and there is a belief among some banks that correspondent banking rules do not make them subject to US sanctions law in respect of US dollar transfers.

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Interpol holds emergency meeting over Ndrangheta

By Christine Duhaime | November 9th, 2019

Interpol convened an emergency meeting a few weeks ago during its annual congress in Chile, to address information about how the Ndrangheta became the world’s largest and most powerful transnational criminal organization, and address strategies to counter their continued position of power.

With operations in 30 countries, and its controlling families in Toronto, the Ndrangheta has become the main drug trafficking organization in the world, with ties to Mexican and Columbian drug cartels. For quite a number of years, the Ndrangheta have controlled shipping ports in a number of countries to enable drug movements.

Italian journalists traveled to Toronto, Italy and Hong Kong to explore the growth of the Ndrangheta globally (a clip here), which is available to read on the La Republica website here (paywalled).

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Italian police shut down darknet market allegedly run by a teenager that listed for sale drugs, weapons, fake ID and “bank drop” money laundering services, including to Canadians

By Christine Duhaime | November 9th, 2019

Canadians among top users of seized darknet drug and weapons site

The Italian Guardia di Finanza has arrested three individuals in Italy who are alleged to have operated the darknet site on TOR called the Berlusconi Market.

The Berlusconi Market had over 100,000 illegal goods and services listed for sale such as illegal drugs, fake ID products, guns, explosives, child pornography, stolen credit card numbers and stolen bank account credentials. Its three main countries of customers were US, Canada and Australia. It accepted only Bitcoin, Monero and Litecoin for payment.

Canada is one of the leading jurisdictions for the operation and use of darknet marketplaces, and appears to be the only country in the world with a digital currency exchange (in Vancouver) that facilitates Bitcoin trades on TOR for users in any country in the world, including Iran, irrespective of sanctions.

One of the top vendors, for example, on the Berlusconi Market was a vendor named “ming-dynasty” in Canada.

Teenage computer engineering student was darknet mastermind

The Berlusconi Market was shut down by the police. Its mastermind was allegedly a teenage computer engineering student named Luis di Vittorio, who is 19-years-old.

In May 2019, Italian police arrested a prolific user of the site and seized 2.2 kg of cocaine, ketamine, and MDMA and 41 Bitcoin. The user was also an admin on the Berlusconi Market, which led to the arrest of the other admins.

In addition to Luis di Vittorio, Giannicola Ruscino and Gianluca De Martino were also arrested on allegations that they are the co-owners of the site. Berlusconi Market processed $2 million in transactions per year, a low amount compared to the Canadian owned darknet site that operated for several years in Quebec.

Money laundering “bank drop” services for sale

The Berlusconi Market even listed for sale the services of vendors all over the world who would conduct what are called “bank drops”, which are money laundering services whereby the proceeds of crime are dropped in bank accounts for a third party for a commission in order to obfuscate the source and the movement of funds.

As the investigation unfolds, it will be interesting to see who in Canada offered for sale or bought “bank drop” money laundering services. Considering the connection to Italy, it may be safe to presume those services were Toronto-area based.

Bitcoin digital currency exchange used by darknet site seized

During the operation, commercial premises of a digital currency exchange were seized in Barletta, Italy, which the admins presumably used to buy and exchange Bitcoin. Darknet operators and its users ultimately must exit out through a digital currency exchange in order to cash out and so they tend to have several accounts at multiple digital currency exchanges to spread the risks across countries and areas. One of those is always, according to known typologies, in their real name.

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First of its kind PEP lawsuit? Lebanese lawyer sues Minister of Foreign Affairs for money laundering and taking state assets

By Christine Duhaime | November 9th, 2019

A Lebanese lawyer, Maitre Marwan Salam, has sued the Lebanese Minister of Foreign Affairs, Gébran Bassil, for corruption, money laundering and enrichment from state assets.

Massive protests have been taking place in Lebanon for several weeks over political corruption. Last month, the New York Times reported that the Lebanese prime minister, Saad Hariri, had sent a South African bikini model a wire transfer of $16 million and bought her two luxury cars. She earned $5,400 per year modelling. They met at a resort in the Seychelles where she was paid to attend and entertain rich men for a weekend.

Bassil and Hariri are government officials, and politically exposed persons in anti-money laundering law, meaning that they are at high risk for money laundering. They are at high risk because statistically it is PEPs who tend to use their positions of power to move state assets, including the proceeds of corruption, to another country, usually a safe haven island whose sole business is the protection of the identity of beneficial owners of trusts and corporations so that they can get bank accounts to move money without transparency.

The lawsuit seems to be the first PEP lawsuit of its kind.

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Canadian jailbird was able to traffic in fentanyl internationally using Bitcoin, US authorities say, and launder money from jail

By Christine Duhaime | November 9th, 2019

A Canadian incarcerated near Montreal, Jason Berry, is facing extradition to the US over charges that, from jail, he trafficked fentanyl all over the world.

According to the extradition request, the fentanyl sold by Berry caused the death of several Americans, as well as Canadians from overdoses.

Berry is serving a 12 year sentence for previous drug trafficking offences. According to the charges, he used a cellular phone that was smuggled into prison to run the operation, access the darknet, place orders in China, move around his Bitcoin from exchanges, receive Bitcoin from drug buyers and send it to sellers in China.

Berry is alleged to have had accomplices who took care of the shipments from China and out to drug buyers. You can read more at the Journal de Montreal here.

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Money laundering things on Instagram … a small warehouse of hundreds of millions of dollars in cash perhaps connected to Canada

By Christine Duhaime | November 9th, 2019

In the last five years, social media has emerged as one of the most important sources for financial crime investigations, particularly for red flags for money laundering, such as identifying patterns of wealth that are inconsistent with income, and in making connections between members of organized crime.

On one Instagram account, we located a person who posted a video of a small warehouse full of cash in Dubai – so much that it would be equal to hundreds of millions of dollars. When we asked if it was money laundering, the user replied on Instagram to us: “Yes…

Us: “Money laundering?”

Instagram user: “Yes…”

A few hundred million in laundered cash.

And later, he posted another video filling up a bathtub with cash.

Cleaning cash in a bathtub.

And in case you’re wondering, the Instagram account holder is from Azerbaijan but lives in Istanbul and Dubai and seems to be a diamond wholesaler.

And in case you are also wondering, yes, he has a base in Canada.

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Cars, jets, casinos, mansions: 4 red flags for money laundering

By Christine Duhaime | November 5th, 2019
Private jet trip advertised for whopping US$80k one way!

Lots is often written about red flags within a sector to spot money laundering but not much is written about cross-sectoral red flags that can help investigators identify potential money laundering, where the combination of factors in different sectors may increase the probability of the incidence of money laundering. These red flags are about image – they speak to typologies consistent with a need for the overt demonstration of wealth. The following are four quick red flags that together, may indicate money laundering:

  1. A person enters a Vancouver casino with wads of cash and gambles with it, not concerned about losses and often with one or two colleagues who equally have wads of cash, especially coupled with evidence that the person has no employment income going through their bank account, or they may have consistent employment income but the amounts they are gambling at a casino exceed their reported employment income.
  2. A person appears on private jet manifests for international travel, usually with others, and like the casino activity, that person has no reported employment income consistent with the ability to pay for private jet trips internationally. We once worked on an investigation for a file and obtained flight manifests for a specific purpose but it helped provide evidence for a different purpose altogether which we wouldn’t have had otherwise, so don’t discount the value of researching whether a person hired private jets to travel and more importantly, who flew with them.
  3. A person rents or leases expensive fast cars, often paying for the car rentals in cash and as above, there is no reported income to support the ability to fund expensive luxury vehicles.
  4. A person moves into a multi-bedroom mansion and there is no reported income to support the expense.

As you build your case as an investigator, depending upon the type of investigation, obtaining PZT footage of the person gambling with records of how much they and the people they were with brought into the casino is a first step.

Depending upon your agency, private jet manifests are also straight forward and fast to obtain. The manifests are important because they tell you who the person does business with closely, which may lead to being able to trace money between those parties. Private jet agencies make their prices available for the public so once you have manifests, you can tell how much they paid for private jet trips.

There are not that many exotic car rental and lease agencies in most cities and so this is fairly straightforward, especially if you have already obtained car plates to identify the car model and make when you appear at the rental agency to seek records. Keep in mind that those who rent private jets aren’t likely to hail a cab when they land at their destination; rather they are likely to have rented an expensive exotic car at the airport so that their image of wealth is maintained.

Housing is more difficult to obtain information, especially if the housing is rented but not impossible because usually the home owner is the direct landlord and they can provide copies of rental agreements.

The final step is assessing the luxury lifestyle spending of the person versus their employment income. Even at a rudimentary level, the salaries of most positions are publicly known and do not vary to a large degree and so investigators can tally up the monthly spend on cars, jets, casinos and mansions and see if it corresponds with employment income. If they are not consistent, then there may be red flags for potential money laundering.

Also check for a criminal record in jurisdictions where the person studied or previously had a job. If the person has a criminal record, the risks are more elevated, and if they have been de-risked by a bank, it means that a financial crime team formed an assessment that they were high risk for financial crime.

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Iran says its money laundering problem is in the billions of dollars

By Christine Duhaime | November 4th, 2019

The Foreign Minister of Iran, Mohammad Javad Zarif, today said that Iran’s money laundering problem was in the billions of dollars, and he implied that federal government agencies in Iran benefited from money laundering in Iran and were lobbying to ensure that the FATF’s recommendations were not adopted into Iranian law.

Although Zarif did not cite any examples of money laundering, he did say that the prosecution of the Sultan of Coins, and his execution, was an example of money laundering. The so-called Sultan of Coins was a currency exchanger named Vahid Mazloumin, who was executed in Tehran for financial crimes for currency conversations and for having two tons of Iranian gold coins in his possession, whose provenance was elusive. The sentence was criticized because holding gold in Iran is not a crime.

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Growing protests over corruption in global hot spots means increased risks of the movement of proceeds of corruption from PEPs to the West

By Christine Duhaime | November 3rd, 2019

2019 seems to have been a record year for mass protests by citizens marching against national corruption – at least 10 countries have had massive protests in the last few months, many of which are ongoing.

Corruption at the national level is perpetrated by politically exposed persons (“PEPs“) who have access to the country’s coffers, and are often paid bribes for contracts, for work or favours, and who then use their positions of power to exit proceeds of corruption to other countries.

A Europol Report on Trends published in 2015, noted the increasing threat associated with wealth disparity (e.g., the rich getting richer) which they predicted would cause citizens to be more willing to accept criminal activities that target the wealthy if those crimes deprive the rich of their wealth, or that even the playing field.

The protests have a few things in common: calls for an end to corruption; addressing hunger; and the rising costs of living – all tied to wealth disparity. On the financial institutional side, the protests will accelerate the need for PEPs to move their ill-gotten gains to safe countries. For Canada, the highest risk is proceeds of corruption from Iran entering Canada through MSBs registered in Vancouver and Ontario, which follow a well-known process of laundering money for wealthy Iranian PEPs through Dubai.

Iran

Protests in Iran tied to corruption (and worsening economic conditions) have been ongoing for two years, and ramped up in early 2019. Iran has a significant wealth disparity issue with a few select PEPs who are very wealthy that live in North Tehran, and the rest who are not. Inflation grew by 30% in one year and the lack of federal banking regulations is impacting the economy, as are sanctions. Many Iranians are unemployed and one third of Iranians have no access to drinking water.

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