Wirecard Fraud: A Summary

In this video I am going to give you a summary of one of the largest frauds in history: the collapse of the German company Wirecard.

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ABC News – https://abcnews.go.com/International/wireStory/german-prosecutors-charge-fraud-wirecard-collapse-83432812

Financial Times (Jan 30, 2019) – https://www.ft.com/content/03a5e318-2479-11e9-8ce6-5db4543da632

Zatarra Research (2016) – https://viceroyresearch.org/wp-content/uploads/2020/07/final-main-report-zatarra-edited-3.pdf

Wirecard 2018 Financial Statement – https://ir.wirecard.com/download/companies/wirecard/Annual%20Reports/DE0007472060-JA-2018-EQ-E-01.pdf

Financial Times (Oct 25, 2021) https://www.ft.com/content/bcadbdcb-5cd7-487e-afdd-1e926831e9b7

KPMG report https://www.wirecard.com/uploads/Bericht_Sonderpruefung_KPMG_EN_200501_Disclaimer.pdf


A lot of people have been asking me to cover this story, and I have waited because more and more information kept coming out. Wirecard collapsed in 2020, and so we are now two years later, and we have a much better idea what happened. But you should be aware, this is still an ongoing story. A few months ago, the former CEO, Marcus Braun, was formally charged with fraud and will be going to trial this fall. He claims that he is innocent, and people deserve to have their day in court. But now is a good time to look back and review what happened at Wirecard.

Here is a summary of the fraud.

In 2016, a short seller Zatarra Research released a 100-page report containing evidence of fraud at Wirecard. It specifically calls out high ranking executives and members of the board for fraudulent activity and reports the stock to be worth $0. Short sellers are firms that bet that a company’s stock will go down. They have an incentive to smear companies, so that they can make money. You would typically read a report from a short seller with some skepticism.

Three years later, on Jan 30, 2019, The Financial Times published an article alleging fraud at Wirecard. The article claimed they received direct evidence from a whistleblower inside the company. It also provided specific details on how the fraud was taking place with foreign bank accounts in Asia. Specifically, they received a presentation that was given to top executives at Wirecard, including the CEO, Marcus Braun. The presentation explained how they were breaking the law and discussed topics like “falsification of accounts” and “money laundering.”

The whistleblower who came forward was Pav Gill, the internal lawyer for Wirecard’s Asia-Pacific Region. He had uncovered the evidence of fraud and brought it to management’s attention. Rather than correct the fraud, Wirecard executives forced Pav Gill to resign, and then continued to threaten and harrass him after he had left the company in order to keep him silent. That is when Pav Gill brought his evidence to the Financial Times.

After the Financial Times article, Wirecard stock started to drop. In a shocking decision, on Feb 19, 2019, the German financial regulator BaFin banned all short selling of Wirecard stock, only one month after the Financial Times article was published. People could only invest in the stock to make the share price go up, not down.

One month later, on Mar 28, 2019, Wirecard announced they are suing the Financial Times for defamation.

One month later, on April 14, 2019. BaFin filed a criminal complaint against two Financial Times journalists and ten short sellers, accusing them of “market manipulation.”

Ten days later, on April 24, 2019, Wirecard’s auditing firm, Ernst and Young, signed off on Wirecard’s 2018 Financial Statements, indicating there were no issues with Wirecard’s reported financials.

At that point, Wirecard said there was no problem. Their external auditors said there was no problem. And the German government said there was no problem, so much so, that they were trying to throw the reporters at the Financial Times in prison. So, for the most part, the general public accepted that there was nothing wrong.

But there were still concerns, and so Wirecard hired an independent audit firm, KPMG, to review the Financial Times allegations. One year later, on April 28, 2020, KPMG produced their report. The report said, “KPMG can… neither make a statement that the revenues exist and are correct in terms of their amount, nor make a statement that the revenues do not exist and are incorrect in terms of their amount.” In other words, KPMG confirmed that the Financial Times was right all along.

Two months later, on Jun 18, 2020, Wirecard’s auditors, Ernst and Young, refused to sign off on the financial statements. The next day, on Jun 19, 2020, the CEO Marcus Braun quit. Three days later, on Jun 22, 2020, Wirecard announces 1.9B Euros of revenues it had previously reported, never existed. Three days later, on Jun 25, 2020, Wirecard filed for the German version of bankruptcy, owing almost $4B to creditors.

It has been two years since the company collapsed. During that time, people have been investigating, trying to figure out what went wrong. The former Wirecard COO, Jan Marsalek has gone missing. Authorities suspect that he is hiding out somewhere in Russia. A German business partner in the Philippines, Christopher Bauer, was responsible for the majority of Wirecard’s revenues through the payment company PayEasy Solutions. Christopher Bauer was reported dead. Initially, the  government in the Philippines would not confirm Christopher’s cause of death. There is no body to examine, as he was quickly cremated. It has since been reported that the hospital confirmed that he died “due to natural causes.” Christopher Bauer was only 45 years old.

On Jan 29, 2021, Felix Hufel, President of BaFin resigns along with the second in command, Elisabeth Roegele. On Mar 14, 2022, the Former CEO, Marcus Braun, and two ex-managers were charged with fraud and false accounting. Their trial is expected to start this coming fall.

So, what exactly was the fraud? I need to emphasize again, that this is all alleged. I am sure we will find out more when this goes to trial. All we know for sure is that $1.9B Euros that Wirecard previously reported, did not actually exist. Here is what I think happened based on the information we do know. Wirecard set up multiple bank accounts in the Phillipines with a number of shell companies that were not real companies. They transferred money back and forth between these bank accounts. Every time they transferred money, they reported revenue. The money never existed in the first place. Now you might ask, if there was no money, how could they steal any money? Because what these executives did, was write financial statements that said they had all this money that did not exist. They then took those financial statements to the bank and said, “Look at how successful we are. We have all this money. And by the way, you can trust us, because our accounting firm signed off that our financial statements are correct.” The bank then loaned them almost $4B. That is how they stole the money. When the truth was revealed, the company collapsed, and it is unclear if any creditors are going to get their money back.

However, the fraud was not even the worst part. The worst part was the cover up and coordination between Wirecard, their auditor Ernst and Young, and the government regulator BaFin. It is important to understand the timeline. The Financial Times came out with their first article on Jan 30, 2019. Wirecard went bankrupt on Jun 25, 2020, a year and a half later. During that time, Wirecard and BaFin aggressively fought to silence anyone who was exposing the truth. One thing to keep in mind is that first article from the Financial Times was very thorough and well-written. They had firsthand testimony from a whistleblower. They had the evidence of a presentation, reviewed by the CEO, Marcus Braun, that detailed the fraud. This was not a vague smear campaign against the company. They provided a detailed case for fraud. For BaFin to read that article and respond by threatening to throw the Financial Times reporters in jail, rather than investigate the claims, is unbelievable. Especially when everything in that article turned out to be correct. It certainly looks like the German regulators are more interested in keeping corrupt rich people in power rather than ensuring that justice is done.

The other failure is with the audit firm Ernst and Young. Ernst and Young had been auditing Wirecard for many years. What is disturbing is that Ernst and Young signed off on the 2018 financial statements in April 2019 after the Financial Times article was released in Jan 2019. The audit letter attached to the 2018 financial statement said this: “The accompanying consolidated financial statements… give a true and fair view of the assets, liabilities, and financial position of the Group as at 31 December 2018.” Ernst and Young not only had the Financial Times article that contradicted this opinion, Ernst and Young had previously conducted their own investigation in 2016 following the allegations at that time. The 2016 investigation resulted in raising a number of red flags. At the time, Wirecard requested that Ernst and Young stop the investigation. Ernst and Young threatened not to sign the 2016 financial report unless the investigation was allowed to continue. For some unexplained reason, the investigation was stopped, the 2016 financial statements were signed, and nothing else was said about it. So, fast forward to 2019, when Ernst and Young signed the 2018 report, they had four months between when The Financial Times article came out and when they signed the report. They had four months to look into the allegations and look at their notes from their own investigation. Wirecard was a client with a history of allegations. It is unbelievable that Ernst and Young would sign off on the financial statements without some sort of asterisk telling investors that there were ongoing issues.

To be fair, the Former CEO of Wildcard, BaFin, and Ernst and Young all claim that they are completely innocent. They claim that they are the victims here. They claim that this situation was the result of a few executives at Wirecard who are now missing or dead. They claim that those executives fooled everyone. But it is hard to rationalize that explanation, when the Financial Times article came out and they didn’t do anything to address the concerns for a year and a half. Instead, they did the opposite. Wirecard, Ernst and Young, and the German Government all coordinated their efforts to take deliberate actions to protect their own interests at the expense of the public in one of the biggest fraud cases in history.


  • Jan 2016: short seller Zatarra Research alleges fraud at Wirecard
  • Jan 30, 2019: First article in the Financial Times
  • Feb 19, 2019: BaFin bans short selling of Wirecard stock
  • Mar 28, 2019: Wirecard announces they are suing Financial Times for defamation
  • April 14, 2019: BaFin files a criminal complaint against two Financial Times journalists and ten short sellers
  • April 24, 2019: EY signs off on Wirecard 2018 Financial Statements
  • Oct 21, 2019: Wirecard hires KPMG to conduct audit of Financial Times allegations
  • Apr 28, 2020: KPMG finds that Wirecard could not prove Financial Times allegations to be false
  • Jun 18, 2020: Auditor EY refuses to sign financial statements
  • Jun 19, 2020: CEO, Marcus Braun quits
  • Jun 22, 2020: Wirecard announces 1.9B Euros of revenues it reported never existed
  • Jun 25, 2020: Wirecard files for bankruptcy, owing almost $4B to creditors
  • Jan 29, 2021: Felix Hufel, President of BaFin resigns
  • Mar 14, 2022 – Former CEO and two ex-managers charged with fraud and false accounting

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Neither Zach De Gregorio or Wolves and Finance shall be liable for any damages related to information in this video. It is recommended you contact a CPA in your area for business advice.