Sarao is back in his bedroom

Flash Crash trader Navinder Sarao was so secretive about his wealth that his mother worked two jobs to make ends meet unaware that her son was sitting on a 50 USD million fortune, it has been claimed. Mr Sarao, who made up to 500,000 USD a day as a lone trader, did not want his parents to know what he did for a job, so instead of spending his money he lived in the family home and drove his parents’ ageing Vauxhall Corsa. Mr Sarao, 36, set up his own company in 2005, based at the semi-detached home in Hounslow, west London, where his family have lived since he was four. While he amassed his fortune and developed a spoofing trading algorithms, his mother Daljit, 63, worked at two jobs, one of them as a pharmacy assistant, to support her husband Nachhattar, 69, who is retired. Sarao is accused of making 50 million USD illegally by using a computer to manipulate prices on the Dow Jones Industrial Average in the US, helping to trigger the 2010 flash crash in which 1'000 billions USD was wiped off the value of the Dow in a matter of minutes. He was arrested in April 2015. He is now fighting extradition to the US after being charged there with 22 counts of fraud and market manipulation. Sarao was originally granted bail on a 7.6 millions USD security but it later emerged his assets were frozen by the U.S. leaving him unable to pay. He was released from jail in August 2015 after disclosing the existence of roughly 50 million USD worth of additional assets invested in Switzerland in the company IXE Group owned by Jesus Alexander Garcia Alvarez.

Jesus Alexander Garcia Alvarez was known at that time as the scion of a family of billionaire landowners and industrial-scale farmers with swaths of land around the world. He had arrived in Zurich from Latin America a few years earlier and had been working hard to build a reputation ever since. He created an image of innovator in agro business and commodity trading, with high business competences in sustainability, growth and poverty alleviation. Articles appeared in the Swiss media profiling the mysterious young man making waves among Zurich’s business elite, including pictures of Garcia wearing a poncho over his suit, arm outstretched across Bolivian salt plains he said he owned. One newspaper put him on its annual rich list. Garcia was invited on Bloomberg TV to talk about his family’s quinoa interests, then on CNBC to discuss the “white gold rush” for lithium. In October 2016, German magazine Brand Eins skewered what it portrayed as his outlandish claims about plots of land in Bolivia and Mexico and linked Garcia to Burton Greenberg, who’s serving eight years in a Florida prison for fraud. In fact, Mr. Garcia Alvarez’s declared assets in the agro business appear to be nonexistent in the extent he proclaims. IXE Group does maintain a substantial set of companies that are active in the agro business in several countries, but with the actual volume of activity that is 100'000 time less important than what is promoted in the media and officially declared (multi billions). For example IXE Group Bolivia is a small seller of used tractors, spare parts and camping equipment; IXE Agro USA appears to be only a small potato farm worth only 200'000 USD, ... There are very strong indications showing that most structures related to IXE Group are part of an alleged evolving scheme in support of activities focused on fraud, particularly using manipulated or forged bank guarantees and self-issued bonds. These structures were set up in conjunction with Mr. Garcia Alvarez’s business associates, including Burton Greenberg, who apparently have a long and sordid history of committing financial scams around the world, particularly in developing countries. Some of his accomplices are well known by the US authorities for their involvement in sophisticated financial frauds since 1997. In addition, apparently some of them are also known to the Italian authorities for money laundering and criminal associations. Garcia told Sarao he would get an annual 11 percent return, the people said, and assured Sarao that any money he handed over would be used only as collateral, not put at risk. The trader was again restructuring his business, this time around an Anguilla-based vehicle called International Guarantee Corporation. On Aug. 20, 2012, documents show, Sarao agreed to give about 17 millions USD to Garcia and his company. He later invested an additional $15 million, according to a person with knowledge of the matter. Even though they’d met on only a handful of occasions, he would describe Garcia to associates as a friend.

Sarao may have been particularly trusting, but he wasn’t alone in buying into the IXE miracle. Former employees interviewed by Bloomberg describe Garcia as charming and, on first meeting, impressive. He offered commissions to third-party agents to send prospective investors his way, ensuring a steady stream of business and creating a buzz around the firm. In 2014, Garcia signed a deal to acquire Banca Arner, a Swiss lender in decline after allegations that it had helped former Italian Prime Minister Silvio Berlusconi hide money. It was never paid and the deal was cancelled in summer 2015 (what a coincidence with Sarao revelation of asset in Switzerland). In August 2016, IXE announced it was buying Private Investment Bank in the Bahamas from Swiss firm Banque Cramer & Cie. The deal was scheduled to be completed in Feb 2017 but crashed in similar conditions of the deal with Banca Arner.

Meanwhile, Sarao is back in his bedroom.