The world's second biggest economy, China's well-developed underground financial networks have caught the attention of foreign criminals who are using China to clean their dirty money and pump it back into the global financial system largely beyond the reach of Western law enforcement, an Associated Press investigation has found.
Gangs from Israel and Spain, cannabis dealers from North Africa and cartels from Mexico and Colombia have laundered billions in China and Hong Kong, slipping their ill-gotten gains into the great tides of legitimate trade and finance that wash through the region, according to police officials, European and U.S. court records and intelligence documents reviewed by the AP.
Gilbert Chikli, a convicted French-Israeli con man, understands China's allure. He is widely credited with devising a scam so successful that it has inspired a generation of copycats. Called the fake CEO, fake president or business email compromise scam, the fraud has cost thousands of companies, many of them American, $1.8 billion in just over two years, according to the FBI.
"China has become a universal passageway for all these scams," said Chikli. "Because China today is a world power, because it doesn't care about neighboring countries, and because, overall, China is flipping off other countries in a big way."
China's foreign ministry, central bank and police all declined repeated requests for comment.
Chikli made millions by impersonating top executives and intelligence agents and convincing employees at some of the world's largest companies to transfer money to his bank accounts, according to French legal documents. He told the AP he laundered 90 percent of that stolen money through China and Hong Kong.
"It's immense," he said in an interview at his sleek, three-story home in Ashdod, a port town on the Mediterranean.
A French court convicted Chikli last year of defrauding five companies of 6.1 million euros La Banque Postale, LCL bank, HSBC, Accenture and Thomson, a French technology company. He was also convicted of attempting to extract over 70 million euros from at least 33 others, including Barclays, American Express and the company that runs Disneyland Paris. He was sentenced in absentia to seven years in prison and fined 1 million euros.
Today he remains a wanted man, but lives openly in Israel, where authorities refused to comment on his case. Israel and France share no bilateral extradition treaty, but Israel has surrendered French citizens in some cases.
Chikli told the AP his preferred method for laundering money was import-export schemes. He would bounce stolen funds to front companies in Hong Kong, then have the cash withdrawn and used to buy merchandise in China. He'd purchase, say, 20 tons of steel, but bribe the vendor to give him a receipt for 100 tons. Then he'd sell the goods and send the money to Israel, where the false invoices made the entire sum look like legitimate trading profit.
"Give me the documents and everything is fine," he said.
Such trade-based money laundering is a growing concern to U.S. authorities. Three Colombians based in Guangzhou, China, led a global money-laundering network that moved over $5 billion for Spanish and Mexican drug cartels, according to a U.S. Justice Department indictment unsealed in September. The network allegedly spanned the United States, Colombia, Spain, Ecuador and Venezuela.
Like Chikli, they processed illegal profits through bank accounts in Hong Kong and China and cleaned the money by buying merchandise, often counterfeit, which they shipped and sold in Colombia and elsewhere, according to the indictment.
Chikli insists he no longer runs fake CEO scams, but a new generation of fraudsters is copying his technique. Like Chikli, they direct stolen funds to China and Hong Kong. The FBI traced fake CEO scam transfers to over 70 different countries. "At the very top of that list is Hong Kong and China," Jay Bienkowski, a supervisory special agent with the FBI in Washington, said in an interview with the AP prior to his retirement.
Police believe some of the networks now running fake CEO scams are collaborating with Chinese migrants in Europe to launder money, using a version of the ancient Chinese value transfer system called fei qian (FAY ch'ien), or flying money. In June, French police busted a similar operation in a Chinese wholesale district just north of Paris, where merchants are accused of laundering money for North African drug dealers.
"Non-Chinese criminal groups committing CEO frauds are sending money to China because Chinese criminal groups in Europe are giving them cash," said Igor Angelini, head of financial intelligence at Europol, the European Union law enforcement agency. "The scale of this phenomenon is quite substantial."
Director: Fake CEO scammer is seduction machine
Gilbert Chikli, 50, and his wife Shirly Chikli, 31, pose for a photo at their home in Ashdod, Israel. Chikli, a visionary fraudster, ripped off some of the world's biggest corporations and then laundered millions in China, which serves as a massive money laundering machine for foreign criminals.
The man who nearly stole over 70 million euros from France's business and banking elite is a serial manipulator who sees fraud not as a crime but as a way of life, according to those behind a new film based on the con artist's exploits.
"Je Compte sur Vous" released in English as "Thank You for Calling"is based on the exploits of the French-Israeli Chikli, who engineered rogue payments by phoning companies and pretending to be the firm's CEO or a French intelligence agent. Those behind the film, which was released in France on Dec. 30, describe Chikli as a chameleon of a man, a brazen charmer whose boasts suggest he has yet to abandon his criminal career.
"Chikli is an unstoppable seduction machine," said director Pascal Elbe in a recent interview in Paris. "For him it's a job, it's definitely not a con."
Chikli's heists were astounding in their daring. With a little background research and a well-placed phone call, Chikli could cajole or bluster his way into organizing the transfer of several hundred thousand, a million or even millions of euros to bank accounts in Dubai, Russia, China or Hong Kong. His victims put down the phone convinced they were speaking to their boss or to a genuine French spy. One spoke of being taken in by a man with "an extremely powerful tone of voice and self-assurance." Two more were convinced somehow to withdraw cash and hand-deliver it to bars in Paris. When tricks or charm didn't work, Chikli turned to bullying; another employee was threatened with losing her job if she didn't immediately organize the transfer of nearly $2 million to the U.K. The idea for the film came from producer Isaac Sharry, who bought the rights to Chikli's story when he was still in French custody and visited him in Israel shortly after Chikli jumped bail.
