Reuters has uncovered details about how the Spanish internet company Gowex fooled the world for ten years claiming it was making money by providing fake public wi-fi in cities around the world. Gowex chief Jenaro Garcia Martin used a series of tricks to fool company employees, investors and regulators which was finally found out last month.
Martin has been charged with financial crimes, including false accounting. Spain’s judicial system does not require a formal plea and Garcia Martin has not given one. But on July 14, he admitted manipulating the company’s accounts and explained how he used a network of about 20 shell companies to generate a paper trail of fake business and fake contracts that he used to raise capital.
Garcia Martin reported fake revenues from shell companies owned by relatives and his housekeeper among others, he told the court. He paid taxes on profits the company never made and when Spanish officials wanted to check a project where Gowex claimed to have provided public wi-fi using four-wheel drive cars. Garcia Martin used the Internet in his own car to make the project seem real.
All this was to try and make the jump to the Nasdaq and then people really would start buying his products. Gowex was once valued at more than $2 billion and has filed for bankruptcy; an investigating judge is examining if it has moved funds abroad. Martin told Reuters he knew he would be spending the next few years in jail, he said, but the experience of confinement would help him bounce back.
“I know I have to pay for it in prison and I seek no clemency. I continue to be the master of my destiny and for this my priority is to repair this damage and this is my next great project.”