WinCapita, previously WinClub and GiiClub, was a Finnish Internet-based pyramid scheme, that advertised itself as a private investment club engaged in currency trading. It is believed to have been the largest fraud in Finnish history. It operated mainly in Finland, with a smaller number of members also in Sweden. In March 2008, the company came under investigation by the National Bureau of Investigation after allegations of operating a Ponzi scheme and an aggravated fraud.[1] The operation is believed to have been a bucket shop type forex scam. Chief suspect Hannu Kailajärvi reportedly[2] admitted in a police investigation that the operation had been fraudulent, but later denied all charges in court.[3] Some of the five suspects are believed to be at large in Thailand.[4]
The operation collected about 100 million euros from more than 10,000 investors, probably the largest fraud in the Finnish history.[5][6]
A criminal trial against Kailajärvi and his female associate started in February 2011, with a verdict possibly due by the end of 2011.[3][7][8] The prosecution is seeking a minimum sentence of five years in prison to Kailajärvi.
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The company presented itself as an invitation-only foreign exchange investment club that required an initial investment of several thousand euros while promising up to 4-fold returns.[9] As a proof of concept for its members it offered an automatic "signal clock" software which was said to predict good times to buy or sell a currency. The main suspect later admitted during questioning that he had in fact once tried currency trading with a minor sum on his own account. The trade had resulted in a loss.
Members for the new club were acquired at presentation meetings, to which current members were encouraged to bring friends, who could then in turn be persuaded into investing in the club. The importance of respect and loyalty to the club were underlined in its rules.[10]
The "investors' club" was especially popular on several web forums. The few lucky ones on the top of the pyramid who got initially paid told success stories to others, spreading trust to the club. According to intermediary police report over 10,000 people invested a total of almost 100 million euros in the club. However, only a small fraction of those have filed a police report so far. (About 2,250 as of June, 2009, for a sum of 33 million euros[11][12])
The investment company had been in operation since 2005 under the name "WinClub". The company was registered in Panama.[13] It changed its name to WinCapita when a news channel reported in 2007 that the police were investigating a pyramid scheme.[14] The ongoing investigation had little effect on the club's membership, which continued to rise quickly. The club published reports to its members, where it claimed the media had made a mistake and the claims were out of line.[15] The operations continued as WinCapita until 7 March 2008. On this day, the web site of the company went offline[16] and the main suspect, Hannu Kailajärvi, consequently disappeared from the public.
Kailajärvi was arrested in early December 2008 in Nässjö, Sweden, where he had been hiding in a small cottage that had, according to the Swedish police, been acquired for him by a Sweden-residing person with a Finnish name.[17][18] Kailajärvi is believed to have dwelled at least half a year in the cottage - he told his neighbours that he was renovating the house for a famous Finnish opera singer. Swedish police found three mobile phones in the cottage, and an Internet connection had been installed.
Even after Kailajärvi's disappearance, many club members still had faith in the club, forwarding reassuring emails to each other. In March 2009 the biggest Finnish newspaper Helsingin Sanomat published an article[19] about the wild-running conspiracy theories surrounding WinCapita. Many people still believed that the club had been legitimate and that the police and the Ministry of the Interior were concealing evidence. It was stressed in the report that the main suspect Hannu Kailajärvi had already admitted in the questionings that the operation had been fraudulent.
In November, 2009, the investigation was ongoing, and the main suspect was held for trial in Finland.[20] Another suspect, who is thought to have had a more minor role in the scheme, was also being held after being arrested at the airport when returning from Thailand.
In late October, 2009 another suspect was arrested in the WinCapita case, this time by the Thai police.[21] He is said to have had a central role in the scheme. Warrant for his arrest was declared in absentia, and an Interpol red notice[22] was simultaneously issued.
The trial against the head suspect Hannu Kailajärvi and his female associate began in February 2011 in the Vantaa district court. The accused were charged with aggravated fraud and a money collection offence. The prosecutor is seeking a minimum of five years in prison for Kailajärvi and forfeiting about six million euros to the state as criminal proceeds. Compensation to the victims will be tried in a separate case after the criminal trial has concluded, as will the criminal case against those up to 600 individuals that have been suspected of locally advancing the club.[3][7]
A total of five people are suspected of involvement in the central organization of the scheme, but three of them are at large, and could face court proceedings later. The two charged indidivuals deny all charges, pleading that the proceeds were legally acquired as in any other business. The product that the company was selling was a "signaling system" that the members could use in their own currency trading. According to the defence the club did not involve itself in currency trading because the development of the automatic currency trading software had not finished.[3][7]
Claims for damages in the court proceedings total to 37 million euros. The main trial is expected to last until autumn 2011, with a verdict possibly due by the end of the year.[8]
