Kroll and Jones Day accused of conspiracy to protect Wirecard

Law firm Jones Day and corporate intelligence group Kroll are facing accusations of an unlawful conspiracy and “campaign of harassment” to protect Wirecard, the now collapsed German financial technology group, in a lawsuit filed in the UK High Court.

The claim by short seller Matt Earl alleges that Jones Day and Kroll used hacked and stolen communications as a pretext for “overt surveillance” and “specious legal threats” designed to harass, distress “and ultimately to deter him from reporting on Wirecard’s criminal activities”. 

Earl is a prominent UK short seller at investment firm ShadowFall. His case concerns events in 2016 and 2017, when he was the primary author of a series of anonymous reports published under the name “Zatarra” and the “VisMas Files”, which accused Wirecard of fraud, money laundering and regulatory offences.

The lawsuit comes as campaigners and lawyers seek reforms to counter what they call strategic lawsuits against public participation (Slapp) tactics that exploit the threat of lengthy and expensive legal proceedings to silence and intimidate journalists, critics and watchdogs owing to the costs in defending such cases.

Kroll said it “denies Mr Earl’s claims in full”, and that it “acted entirely in accordance with all applicable laws and regulations”. It said it would fight the legal action and that “it was not — and of course would never be — involved in any way in any hacking, intimidation or other illegal acts”.

Jones Day did not respond to requests for comment.

Wirecard used multiple professional services firms in London to defend its reputation and investigate perceived opponents before the company collapsed in June 2020, when its accounts were exposed as fraudulent.

After its collapse, internal Wirecard documents became available that shone a spotlight on how the company responded to its critics, details normally shrouded by legal privilege and client confidentiality.

By August 2016 Kroll had tracked down Earl and taken a covert photograph of him at a London Underground station. In October 2016 Jones Day described potential legal measures against Earl in a memo to Wirecard.

Earl’s suit said his public anonymity “posed a problem for the aggressive litigation strategy” designed by Jones Day, which had only identified Earl from “extensive and unlawful surveillance” conducted by Kroll.

Earl’s identity was exposed on December 6 2016 in an anonymous dossier published online with the title “Zatarra RIP”. It included “verbatim extracts of Skype conversations”, other communications that were obtained unlawfully, and photographs that included one of Earl opening the front door to his house, according to the claim.

The RIP report accused Earl, without evidence, of membership of a “criminal insider trading and market manipulation organisation”.

Kroll said Wirecard used other investigative companies and that “naturally, as Kroll was not aware of their engagement by Wirecard, it is unable to comment on the propriety, or otherwise, of their conduct”.

Aviram Azari, an Israeli private detective, last year pleaded guilty in the US to involvement in a hacker-for-hire scheme used to target journalists and critics of Wirecard. There is no suggestion Kroll or Jones Day were aware of his actions.

Earl’s claim alleges that Kroll and Jones Day used the RIP publication to justify “overt surveillance” of his family home “calculated to cause distress”, and make unfounded legal threats “designed gratuitously and improperly to intimidate”. 

Alleging conspiracy, Earl’s claim said there was “a self-evident” synergy between the legal strategy developed on behalf of Wirecard by Jones Day, the “campaign of harassment” by Kroll, and publication of the report that identified him.

The claim said the actions of Jones Day and Kroll “corroborates the inference” that the Zatarra RIP report was written by Wirecard or individuals instructed by it, and that Kroll and Jones Day knew or suspected their client was involved.

Earl’s claim also said that in legal correspondence Jones Day misrepresented its knowledge of him before the publication of the RIP Zatarra report, in violation of UK regulatory principles that required solicitors to act with integrity. The claim said it “will rely upon the misrepresentations as evidence of consciousness, on the part of the defendants, of the wrongfulness of their conduct”.

His claim additionally alleged other misrepresentations and breaches of regulatory principles by Jones Day, and that he incurred significant expense responding to their “hostile, unreasonable and oppressive correspondence”.

The Solicitors Regulation Authority last year reminded UK firms of appropriate conduct during disputes and issued a warning notice about Slapps.

Earl also claims misuse of his private data, and in addition to aggravated damages is seeking full disclosure of all of his private information held by Kroll and Jones Day.

Kroll said it would take steps to have all of Earl’s claims “dismissed at the earliest opportunity”.