German Prosecutors Arrest Two More Former Wirecard Executives, Ex-CEO Back In Custody

Prosecutors in Germany arrested two more former executives of bankrupt payment processing firm Wirecard AG on Wednesday while re-arresting the company’s former chief executive officer.

Officials in Munich said they suspect the former executives of forming an organized criminal enterprise designed to cheat creditors out of billions of euros based on fake accounts.

Wirecard’s former Chief Executive Markus Braun, along with the former chief financial officer and chief accounting officer are now being held in custody.

Under German privacy laws, the latter two executives could not be named – Braun was named since he is already a well known public figure in Germany.

Prosecutors plan to charge them with organized commercial criminal fraud, breach of trust, false accounting and market manipulation.

Anne Leiding, a spokeswoman for the Munich State Prosecutor’s Office, said the three are alleged to have conspired to inflate company revenues by forging nonexistent business with third-party partners. This misconduct created a false impression of a financially strong company which eventually allowed Wirecard to borrow some 3.2 billion euros ($3.7 billion) from various banks.

“In reality it was clear, at the latest by the end of 2015, that Wirecard’s real business was losing money,” Leiding said.

In June, Wirecard filed for insolvency after $2 billion was missing from its books, which auditor Ernst & Young attributed to massive fraud.

A fourth former Wirecard executive, who headed a subsidiary in Dubai, was arrested in early July.

Business Insider reported that another Wirecard executive, former Chief Operating Officer Jan Marsalek, might have escaped to Russia and allegedly has close ties to the Russian government.

The Russians have refused to cooperate with a request from Europol to find Marsalek.

"What has all of us concerned, not just law enforcement but intelligence and counterintelligence operations as well, is that it appears that Mr. Marsalek has close ties to Russian government officials and possibly organized crime that were not obvious before but have become more clear as his past travels [to Russia] are investigated," an Italian official told Insider.

Marsalek was fired by Wirecard on June 18 and then disappeared.

"The latest update that has been circulated inside Europol says [Marsalek] is believed to have fled to Russia via Belarus on a private plane between June 18 and June 20," said an Italian law enforcement official. "