Last week, the US Securities and Exchange Commission unveiled a civil lawsuit against Michael Gastauer and his ‘innovative new bank’ WB21, accusing him of the fraudulent sale of $165m worth of shares in microcap stocks. Given Mr Gastauer’s turbulent personal history – in 2010 he was given a suspended sentence for commercial fraud and counterfeiting in Switzerland – this does not come as a shock to many. However, across the internet between 2016-18 people continued to sign up with the bank, believing the hype surrounding WB21. Here we look at some tell-tale signs of fraudulent behaviour which were found throughout WB21’s online footprint, and which would have been raised as serious issues within an Enhanced Due Diligence Screening.
Can you trust your source?
WB21’s social media presence is enough to ring the biggest alarm bell for any potential customers or investors. If you view their social media channels, as many people do when purchasing a new product or service, you’ll see a highly successful company making strides in the financial industry. They boast a booming client base and numerous award wins, and their apparent success is replicated in a small number of external news outlets. However, these external sources often take their information directly from the company’s own posts or press releases. This type of echo chamber is highly suspicious.
Digging a litter deeper on the awards so well-publicised on WB21’s social media channels yields almost no results posted by people other than the company itself. It would appear as though the company staged the award ceremonies and red carpet receptions for the benefit of their online presence.
The disconnect between a company’s active (content posted by themselves) and passive (content posted by others) online footprint is the first red flag in a string of red-flagged bunting stretching as far as the eye can see. It begs the question, is a company that creates a fraudulent image of itself online likely to be employing fraudulent tactics elsewhere?
The second red flag isn’t too far away, as we delve into the social media accounts run by the company. We start on Instagram, where the company has amassed 79.6K followers since their first post in July 2017. Impressive? Perhaps. However, a closer look shows us that the new company’s very first post gained them a staggering 2,565 likes, with their second achieving 2,663 likes. Impressive for a company with no prior online presence. What’s more, none of their subsequent posts got near 1,000 likes.
The comments are equally alarming and are clearly, blatantly and unashamedly bought from fake followers or even accounts that don’t follow the company at all. None of the comments bear any connection to the photo, as you can see below, and are written in multiple languages.
Comments on the second post are equally numerous and fraudulent, and the company clearly changed it social media strategy subsequently, with no future posts receiving more than 10 comments, in spite of their apparent success.
A similar trend can be seen on Twitter, where the company has 96.8K followers, yet a significant number of their tweets are not interacted with by a single user. Another huge disconnect that would raise another red flag through deeper due diligence.
Filtering Through the Noise
From suspect social media content to the rest of the company’s online footprint, suspicions arose further.
On the review website TrustPilot the company has an average of 2 stars from 98 reviews. Not a great start and digging deeper further confirms our suspicions. Amongst the 56 one-star reviews are people calling the company a scam, claiming to have lost hundreds of thousands of dollars and alleging fraudulent intent by the company. These reviews are lengthy and have the appearance of genuine feedback.
By contrast, the 5-star reviews are often brief (no more than 10 words) with very little substance. What’s more concerning is that almost every positive review has been posted by a faceless account with only one review to their name. It is highly suspicious that this many people created a profile on Trustpilot to leave reviews such as the below without some kind of incentive and/or malicious intent.
In addition to the content highlighted here are numerous people on forum sites such as Quora and Reddit speculating about the legitimacy of the company and their practices, many with first-hand experience. What’s more, the content cited here is what was found through an initial search; the tip of the iceberg.
Whilst traditional Due Diligence can offer a formal representation of a company’s (alleged) financials and (most) criminal convictions against them, only Enhanced Due Diligence can bring together every piece of the puzzle necessary to protect investors and customers from fraudulent companies and help to safeguard against reputational risk. It would appear as though many people have fallen victim to WB21’s scam and lost significant sums of money, when all the information they needed to prevent this was available through open sources.
Neotas believes due diligence is due an upgrade. By leveraging open source intelligence and human analytics, we uncover digital trails and help organisations to safeguard their investments, mitigate risk and evidence compliance. Request more info via firstname.lastname@example.org