Scammers are flexible people and locate their boiler rooms and companies where it is most convenient for them. In this respect, the so-called “scam hotspots” coincide with the low-wage countries within and outside the EU. FinTelegram has made a comparison in this respect. As is well known, the illegal boiler rooms behind the Israeli binary options schemes were operated in Serbia, Bosnia-Herzegovina, Albania, Kosovo and Bulgaria. Where labor costs are lowest.
The exploitation of cheap labor
The average income in Serbia, Bosnia-Herzegovina, and Montenegro in a Purchase Power Parity (PPP) comparison is currently still far below the average of the EU countries. Measured by the Euro standard, the three countries show the following net average monthly income (Source Wikipedia):
- Kosovo: €374
- Albania: €393
- Serbia: €460
- Bosnia-Herzegowina: €468
- Montenegro: €512
These numbers compare to some of the younger (and still economically weaker) EU member states as follows (Source: Reinis Fischer):
- Bulgaria: €457
- Lithuania: €693
- Hungary: €765
- Estonia: €957
- Slovenia: €1,062
The old and economically better situated EU member states, on the other hand, pay much higher net average salaries and are, therefore, too expensive places to employ boiler rooms agents or marketing people:
- Germany: €2,270
- Austria: €2,324
The Israeli invasion in Belgrade
Belgrade’s central location and its low labor costs have resulted in the Israeli boiler room operators and managers having moved to Belgrade on a massive scale. According to information provided by a responsible official, around 7,000 work permits were issued in 2017/18. These Israelis conquered the “new” financial capital in the Balkans and erected dozens of illegal boiler rooms. Officially, these boiler rooms were referred to as call centers or brokers. Young, well-educated and ambitious Serbian employees were hired with attractive conditions. They became part of the global Israeli binary options fraud industry. Simone Weinglass of the Times of Israel called these Israeli perpetrators and scammers the Wolves of Tel Aviv.
One of the big Boiler Room operators in the Balkans was the Israeli Gal Barak with his E&G Finance and E&G Bulgaria. He has operated several boiler rooms in Sofia, Belgrade, and Sarajevo together with local partners. Parogan DOO in Belgrade, for example, was one of the big boiler room operations in Europe. Its agents attacked retail investors in Germany, Italy, Spain, United Kingdom, Austria, or France with binary options, CFDs and crypto schemes.
In 2017 and 2018, hundreds of well-trained employees worked in these boiler rooms at the lowest cost. They probably didn’t realize they were part of a criminal organization as boiler room agents. Barak and his companies have generously paid protection money to the local authorities and thus received protection from the police.