CHAPTER 9
THE FENERO FUNDS
Had he not got into banking and tech, Gilbert Armenta would have been a first-rate MLM seller. The Fresno State University graduate was convivial, intelligent and flash. He loved money and appearance as much as Ruja did, turning up to meetings in his home city of Fort Lauderdale, Florida, in Salvatore Ferragamo shirts, statement watches and luxury cars. He wore his black hair jelled back in the old-school way. His background was also in emerging technology—in the early 2010s, he ran a large telecommunications firm in the Caribbean island of Curacao called “Curanet,” and later bought telecom companies in Latin America. Although generally charming, Gilbert had no trouble playing the alpha male if he thought it would help him. “He’s a big bastard and a liar,” recalled one former colleague from this period. “He has more talk than depth.”
Ruja knew a lot of people who worked in finance and banking, but Gilbert—who also owned two investment companies of his own called “Zala Group” and “Fates”—had acquired a majority stake in a small independent bank in the Republic of Georgia called JSC Capital. By the mid 2010s, Gilbert dealt in the gray zone of finance, including providing prepaid credit cards for pay-day loan companies, and payments solutions for online casinos based in the Caribbean. At some point in 2015, he started providing banking services for Ruja too. As the OneCoin money flowed in, Gilbert set up business accounts in his name, which received payments from OneCoin investors and used his own bank, JSC Capital, to provide prepaid Mastercards to promoters, in order to pay commissions.1 In September 2015 $85 million was wired from one of Ruja’s Dubai banks to Gilbert’s Zala Group account at Comerica Bank.2
Things didn’t stay professional between them for long. Even though they were similar and pigheaded, Ruja and Gilbert were drawn to each other, and, at some point—likely 2015—started an affair. He started attending OneCoin events and sat at the top table with Ruja and Sebastian at the corporate event in Macau (the same event that impressed Igor). Ruja asked Gilbert to find someone to help manage her rapidly growing personal wealth. Gilbert knew just the guy.
Mark Scott wasn’t an especially warm or likeable man. Fortunately, charm wasn’t advantageous in corporate law and he worked damn hard structuring deals for his clients. He was good at it too, and for a while represented the former tennis star Boris Becker. Mark had worked on Gilbert’s big telecommunications deals a few years earlier and the pair got on well.3 Mark had recently become a partner at the highly respected legal firm Locke Lord, and was planning children with his girlfriend, Lidia Kolesnikova. He was also looking for ways to make some decent money for himself.
When Gilbert told Mark about Ruja, she probably didn’t seem so dissimilar to many of the clients he’d worked for during his 25-year career. They very often wanted the same thing: to use whatever combination of offshore companies, corporate structures and low-tax jurisdictions that would legally protect their hard-earned money. New millionaires often get worried that if something goes wrong—a divorce, a lawsuit, whatever—their new-found wealth will go up in smoke. “She is a friend and client,” Gilbert told Mark in September 2015. “Please support her as family.” Mark and Ruja arranged a Skype call and he typed a highly unusual reminder into his calendar: “T[elephone] Call to discuss money transfer/laundering issues.”
“Asset protection,” Ruja told him. “The business is profitable and I have some personal assets that I want to protect from several risks.”4 She wanted her money turned into assets: company shares, funds, properties. Not just sitting in bank accounts like it had been in Dubai. Mark could help, but his fee was 10 percent of whatever he looked after. A big sum—but worth every bit if he could keep her money safe.
The phrase “investment fund” is commonplace in business, but most people don’t know what it means. Let’s say you suddenly find yourself with millions of Euros. There’s no point putting it in the bank since interest rates barely cover inflation. Instead, you might put it in a fund run by a professional who uses their know-how to invest your money in well-performing stocks, under-valued property, and exciting start-ups. Some investment funds are generic and bring in hundreds of millions of Euros from investors all over the world. Others are restricted to specific sectors, like energy or technology. A high net-worth individual might commit a few million to a fund, which the investment manager will draw from whenever he or she spots a good opportunity. According to the Standard & Poor Index, America’s 500 largest publicly listed companies have averaged 8 percent annual growth since the 1950s. A good investment manager like Mark would hope to beat that.
That was Mark’s idea: to set up four $100 million investment funds. That meant a lot of paperwork, and Ruja had made it clear she was in a rush. “Time is ticking,” she told him in January 2016. “How can we move please?” For added security, Ruja sent him an encrypted phone that was practically un-hackable, even for the FBI.
Mark’s firm Locke Lord also took on additional work for Ruja, managing some planned property deals in London. Between January and April 2016, Locke Lord billed Ruja $85,687 for their work on her property deals, but Mark’s investment fund plan wasn’t included: It was Mark’s personal project which he kept hidden from the firm. (Lawyers for Locke Lord emphasize that OneCoin had never been among its clients. They say Mark Scott’s work for OneCoin was not done on behalf of Locke Lord and that the company had not been aware of it until almost two years after he had left the company.)
The firm’s crypto specialist consultant Robert Courtneidge was privately hired by OneCoin to design a “road map” to help the company become recognized by the crypto sector. The road map boiled down to getting OneCoin accepted on open crypto exchanges and by merchants. Courtneidge recommended OneCoin be split into two distinct entities: “OneCoin” the cryptocurrency continued to be technically based in Dubai, but the MLM network—the promoters who actually sold the coin—became “OneLife” on June 11, 2016, and was incorporated in Belize. (According to Courtneidge, the reason for this change was that separating the coin from the MLM sales would help it become a competitor to Bitcoin—but in any case, if implemented by Ruja it made very little difference to the running of the business.)5
On January 31, 2016, Mark sent Ruja the first invoice of $425,000, an advance payment for “our new project,” he said, that would cover “all attorneys and CPAs [certified public accountants] I would require in different jurisdictions, plus travel and entity formation and dissolution expenses.” He also asked Ruja to stop using his Locke Lord email address.6 The four investment funds “would protect all your assets,” he assured her.
The invoice was paid in full within 24 hours.
A few days after she’d given Mark the green light, Ruja flew to London and set up camp at the penthouse suite in the Four Seasons Hotel on the exclusive Park Lane. Ruja loved the Four Seasons. The £1,000-a-night price tag was worth it for the black marble lobby and old-world elegance. She stayed for two weeks, only leaving in the hotel’s rental Rolls-Royce for the occasional meeting or dinner. (She did find time to arrange a PR photoshoot though. The photographer noticed a bodyguard outside her door, which was strange. He’d done shoots with Hollywood stars before. Even Will Smith didn’t have bodyguards at hotels.)
When Mark flew to London on February 9, 2016, to meet Ruja at the Four Seasons, the pair spoke in person for the first time. The “Fenero Funds,” as he called them, would comprise four $100 million funds—three registered to the British Virgin Islands and one to the Caymans.7 They would invest in struggling technology companies in the EU, mostly in the UK and Ireland. Although it would still be her money, Ruja’s name would not appear on the companies’ documents. Instead, the Fenero Funds would be owned on paper by a British Virgin Islands investment management firm that Mark was setting up called “MSSI International Consulting BVI,” which would in turn be owned by “MSS International Consulting,” a company in Florida that Mark had owned for years. Some purchases made with the funds would be held by companies he would set up in Ireland, which would also be owned by MSSI International Consulting BVI.8 Each fund, and each Irish company, would have their own bank account, all controlled by Mark.9
The tricky bit was actually getting the money in. The simplest way was to send the money in large chunks, of €5 or €10 million at a time—and Ruja had companies ready to help do it. Between February and March 2016, Ruja—via a Dubai formation agent—signed three service agreements with a set of companies collectively called International Marketing Services (“IMS”). IMS was owned by Frank Ricketts, a Ugandan-born white man in his late fifties who knew more about MLM rules and loopholes than anyone alive. He’d already been working with OneCoin—in fact, it was one of his German IMS bank accounts that had been reported to the German authorities in December 2015. Years before OneCoin he’d also worked with Sebastian at SiteTalk. According to these service agreements, IMS agreed to provide “implementation, logistics and establishment of new corporate structures and banking in worldwide juristictions.…” (According to Ricketts, Ruja took control of IMS “behind our back.”) 10
One of Gilbert Armenta’s companies, Fates, which already held significant amounts of her money, could also send some over. And Ruja asked Irina Dilkinska, her head of legal and compliance, to create a company called “B&N Consult” to move the rest.11 Once the money was transferred to Fenero Fund, Mark would be able to invest it however Ruja wanted.
Ruja must have been pleased with Mark’s plan. She’d finally entered the world of the superrich: a place where money never sits still, and clever people work 24/7 turning your cash into assets and shares to make you even richer. Mark headed back to Florida (and then on to the British Virgin Islands and the Caymans) to finalize the paperwork and start opening the bank accounts. But Ruja didn’t leave the Four Seasons after she finalized the Fenero Funds plan. She had other, even more important, business to attend to in London.