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Condemn me if you can - Un article sur notre membre Mikov & Attorneys

Un article sur notre membre Mikov & Attorneys a été publié dans l'édition de Capital. 
Veuillez retrouver ci-après l'ensemble de l'article en anglais.

Condemn me if you can
How the Bulgarian institutions confronted a lawyer who defends naive victims of financial schemes all over the world

Konstantin Mikov is 40 y.o., law graduate from the Montesquieu University in Bordeaux. Specializing in European financial law, he has represented victims of online financial fraud within the EU for the past five years.

He said he represented "more than 200 victims who lost tens of millions of euros". The profile of his clients is unexperienced investors, often retirees, who bet their savings, captivated by the promises of profits in the forex or cryptocurrency markets.

Most such schemes are international and combine licensed and unlicensed platforms or payment institutions in different jurisdictions (Konstantin Mikov quotes Cyprus, Malta, and Israel, but also Hong Kong, Australia, etc.), and the proceeds often reach offshore companies (Bermuda, Belize, Vanuatu, etc.) in order to erase the traces.

In general, victims of fraudulent schemes with investments in financial instruments rarely manage to get a chance to recover their money. There are many varieties, and it is usually a relationship with a completely fake brokerage company, at least somewhere in the chain, and the people behind it may at some point simply disappear with the money and start somewhere else and under a different name.

“Some time ago I represented a couple of retirees from Luxembourg who had lost their savings of 1.6 million euros, which they inherited. The fraudsters even made them take a loan of several hundred thousand euros to "recover" their losses. It took a year to solve the case ", says lawyer Mikov. In another case, he represents more than 20 clients who lost a total of more than 1 million euros in a scheme involving a Cypriot-Israeli broker. When Konstantin Mikov began to initiate the protection of his clients, he received an anonymous threat. "Subsequently, I was able to identify the true identity of this person and I have filed a complaint with the prosecutor's office," he said.

However, a case with a specific platform, which is licensed in Cyprus, creates a number of headaches for lawyer Mikov. He has nearly 50 customers who have lost about 1.5m euros. The amount itself is large, although, for a forex trader with the scope of the Cypriot platform in question, which also has offices in London, Johannesburg, and Sydney, it is hardly a leader. However, the aggressive reaction of the company can be explained by the danger of losing licenses due to systemic violations, especially in Australia.

In this case, it is a site offering personal investment/portfolio management services to wealthy French people, under the name La Maison du Placement (LMDP). It attracts mostly  elderly "clients" without much financial (and often computer) knowledge with promises of guaranteed monthly profits. They are required to have a power of attorney for "professional brokers" to manage their funds, with some entrusting their entire savings to them. LMDP opened accounts in their name in the Australian company and started trading on their behalf. For a while, they received regular reports on how their wealth was growing, but when they wanted to withdraw their investments, they found that their balance sheet was almost zeroed by losses in the financial markets through contracts for difference.

The suspicion is that LMDP operates a classic scheme, in which the losses for the client are from transactions that provide profits for the broker itself. And also, that this cannot happen without the participation of the Cypriot company. However, this is of course difficult to prove, and if this path is followed, it usually leads to cumbersome criminal proceedings, which are rarely effective.

The strategy of the lawyer Mikov is instead seeking a refund for his clients not in France or Cyprus, but in Australia through complaints to the local financial ombudsman AFCA. It comes with prescriptions that can be appealed, but if confirmed, they become mandatory. In one case closed so far, AFCA did not find evidence that LMPD had acted as an agent of the Cypriot company or that they had any other connection, even though it had provided the client with marketing materials and claimed before him that he was acting as his representative. However, the prescription is to recoup the amount invested, as the Cypriot company had to consider that it was not appropriate for its client to trade in complex and risky financial instruments. And this opens the door to many more similar cases.

Unlike the typical boiler room scheme, however, the Australian subsidiary of the Cypriot company cannot simply disappear and stop paying, as it is an important part of the company's business in Asia with its license.

Probably this is the reason for the response against lawyer Konstantin Mikov. If he manages to find the weak link in the tangle of international jurisdictions to protect the interests of his naive clients, then his opponents also manage to find a place to oppose him - in Bulgaria.

At the end of last year, an investigation was launched against him by the Sofia District Prosecutor's Office, a civil lawsuit was filed in the Sofia District Court, and a signal was filed with the Sofia Bar Association to initiate disciplinary proceedings against him. He is used to being questioned by the police to explain why he reported on behalf of his clients in ... Australia.

Such cases, aimed at denying critics or activists, are not uncommon and even have the name SLAPP (Strategic Lawsuit Against Public Participation). Often their strategy and goal is not necessarily to be won, but simply to keep the person busy with its protection for years, which would take time and money.

It is absurd that none of his actions in defence of his clients are aimed at a Bulgarian institution, but he was attacked in Bulgaria, which is obviously recognized as a weak point in the system.


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