Police expose new overseas pyramid scam fronted by Scottish shell firm

The 24-year-old was last week formally accused of fraud after heading what local media in Belarus have described as a classic pyramid scam using a Scottish limited partnership or SLP called New Assets Union or NAU.

The Shevelenko case comes after The Herald late last year revealed another SLP had been used at the heart of a far bigger get-rich-quick scheme affecting hundreds of thousands of people from Spain to Kazakhsan.

Transparency campaigners have described SLPs, still openly advertised globally as an alternative to tax haven shell firms, as “Britain’s home grown secrecy vehicle”.

Mr Shevelenko is accused of running his pyramid from February 2015 through till April 2016. He recruited investors in a series of slick YouTube videos. In one later video he arrives on camera in a Mercedes Benz and explains he cannot answer 200 phone calls a day because he is too busy making money. A happy client arrives in a new BMW, thanks Mr Shevelenko profusely for his help while waving a bundle of cash US dollars in to the camera.

Law enforcement agencies in Belarus said he carried carried out no real world economic activity. Instead, they allege, Mr Shevelenko hired plush hotels to hold seminars for investors who were only paid from the income of new individuals recruited in to the scheme.

(Mr Shevelenko, from one of his Youtube promotion videos)

A spokesman for the Investigative Committee, the main law enforcement body which prepares material for the court system, laid out the scheme. “In order to attract more investors, the young man spread demonstrably false information that his project was making money from binary options and bookmaking, as well as from wholesale sale of Chinese goods and letting.”

Investors were rewarded for bringing their friends and family in to the scheme. Anyone signing up 100 people was told they would get an iPhone.

Mr Shevelenko is currently in prison pending his trial for “large-scale fraud”. Authorities in Belarus, where there are no juries, routinely reveal the case against those they accuse of criminality.

New Assets Union LP has all the hallmarks of a classic secrecy vehicle. It was formed in November 2015 with two entirely opaque partners, from an unknown jurisdiction but with the same names and agents as companies from the Caribbean island of Nevis. The SLP itself was registered at a branch of Mailboxes Etc in Glasgow’s West George Street until it was dissolved in April 2017.

Pyramid schemes mushroomed in the former Soviet Union after the collapse of Communism and have enjoyed an internet-fuelled renaissance in recent years.

Web-based schemes have been using British or other “offshore” firms as respectable fronts and laundering mechanism. Last year the UK’s Financial Conduct Authority and other watchdogs issued warnings about a business called “Questra World” which used as SLP as a front. Belgium’s regulator said it resembled a pyramid scam while authorities in Kazakhstan accused local operators of the scheme of fraud.

New horror as ghost companies return from the shadows as zombies

Analysis by David Leask and Richard Smith

SOMETIMES shell companies are called ghost firms. Such businesses rarely come out of the shadows they haunt, rarely reveal their true owners or real accounts. But, unlike, real spectres they can at least be killed. Or so we thought.

Now there is a new horror: zombie SLPs. For a decade or more SLPs – Scottish limited partnerships – have been a ghost firm of choice for organised criminals, money-launderers and tax evaders around the world.

Today The Herald reveals how one – New Assets Union – was used as a core vehicle for an alleged pyramid scam in Belarus. That SLP is now dead, dissolved last year just weeks before, it would have to declare a person of significant control, an owner. Will it stay dead? Probably, but not necessarily. That is because SLPs can be revived. They are not just ghost firms. They are revenants.

(Scotland, re-imagined as a tropical tax haven island)

More than a year ago The Herald revealed an SLP was still trading – providing armed guards close to a war zone – after it was officially dissolved.

But there are also more official zombie SLPs, ones which un-dissolve themselves, with the same corporate registration and little trouble.

Take Mainhold Products. This SLP, registered at the same Edinburgh address as hundreds of other similar entities, was dissolved in 2015. Its only potential digital footprint: a firm with the same name appears to have done business with a chain of Russian pharmacies.

Then, just this month, it came back from the dead. On whose authority? Mainhold Products’ general partner simply filed a new address, in Glasgow’s Byres Road, and a new, unspecified term for the partnership to exist.

The general partner is called Inhold Ltd. It does not say where it is incorporated. The three signatures on the incorporation, dissolution and reinstatement filings are nothing like each other. Its initial registrant is a nominee based in Latvia who has signed paperwork for numerous entities about whose activities he has declared he knows nothing. The SLP has declared an owner: an Uzbek citizen.

There is no suggestion or evidence of wrongdoing by Mainhold. But the SLP should get UK authorities thinking. There is a huge legacy of dissolved SLPs. How are we going to keep track of whether they are living or dead?