Czech police charge two over Ponzi scheme hitting 5,000 clients

Czech police have charged two people with defrauding around five thousand clients. According to reports, the damage runs to billions of crowns. Both suspects have been remanded in custody by court order.

According to investigators from the National Centre against Organised Crime (NCOZ), the accused set up and took control of a group of about 70 interconnected companies no later than 2018. Through them they systematically collected money from investors.

Investors were lured with guaranteed annual returns of 6 to 15 percent. The money was raised mainly through the issue of bonds, shares and other investment instruments, said centre spokesman Jaroslav Ibehej. He added that the funds were not used for their stated purpose.

The promised projects received no investment. Instead, the money paid for the work of affiliated companies, personal expenses and payouts to earlier investors. In the view of the police, these are hallmarks of a so-called Ponzi scheme: to keep it running, new money had to be constantly brought in.

Officers searched homes and other premises in several places across Czechia, mainly in the South Moravian Region. They seized extensive paper and electronic evidence, around 50 computers used to mine cryptocurrency, and property belonging to the suspects.

As Ibehej explained, criminal proceedings have been launched against two people who, according to investigators, played a key role in managing the group of companies and the investors' money. Both have been charged with a particularly serious crime: fraud committed in complicity. The case is overseen by the regional prosecutor's office in Brno. If convicted, they face up to ten years in prison.

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Around Prague, based on reporting by novinky.cz