Illustration by Daniel Medina

By Eric Salzman

The smartest guys in the room fall for the same scam twice in less than 5 years

THE SCHEME: Fraud and Money Laundering

THE COMPANY: Stenn Technologies

THE NEWS: For the second time in five years, a scam involving sexing up a boring, centuries old financing business blew up in the faces of some of the world’s largest banks

You know the old saying. Fool me once, shame on you. Fool me twice…

In December, “fintech” supply chain financier Stenn Technologies and its subsidiaries Stenn Assets UK Ltd and Stenn International Ltd, collapsed, spanking investors and lenders such as Citigroup, Nexis, BNP Paribas, HSBC and private equity firm Centerbridge. Just a month prior to the blow-up, Stenn was viewed as a fintech unicorn with a robust $1 billion book of business, poised for strong growth.

As we’ve seen time and again, a unicorn can quickly die when a company’s business model screams fraud to anyone bothering to look.

Stenn Technologies claimed to use artificial intelligence and state of the art technology to analyze credit and money laundering risk in order to turn a low margin, supply chain financing business into an awesome, high return, low risk securitized product.

Here’s a quick explanation of supply chain financing:

1. A company delivers its product to a buyer and the buyer promises to pay in a few months’ time, creating an accounts receivable.

2. The company that has the accounts receivable sends it to the supply chain financier (Greensill Capital or Stenn Technologies).

3. The supply chain financier pays the company cash for the receivable minus a discount which is another business practice called factoring.

4. The buyer pays the financier the full amount of the receivable on the due date.

Supply chain financing is nothing new. It was probably around when Marco Polo set out for the Orient.

If it sounds boring, that’s because it is, or at least is supposed to be. Lex Greensill’s Greensill Capital changed that a decade ago.

Through fancy structuring, as well as four private jets, Greensill created a byzantine circular loop where money flowed around the world, much of it to Greensill favorites like steel maker Sanjeev Gupta and then back again. The operation was continuously funded by either GAM, Credit Suisse, SoftBank as well as Greensill’s own German bank, Greensill Bank AG. After a while, as more money poured into Greensill from eager investors, the company began to essentially just lend money out, mostly to Gupta while calling the transactions “future receivables.”

Greensill Capital collapsed under the weight of fraud in 2021, costing its big investors mentioned above billions. Matt reported on the story here in 2021.

Greensill’s receivable notes (the fancy structuring) were insured by a number of insurers, the biggest being Japanese insurer Tokio Marine. The insurance made investors comfortable because, if Tokio Marine insured it, the notes have to be money good, right?

Wrong.

At one point, Tokio had nearly $8 billion of exposure to Greensill deals. How insurers got comfortable with insuring receivables to a blizzard of shell companies that all seemed to point back to Gupta and Lex’s pockets is anyone’s guess, but when Tokio finally did a good look under the hood, they cried insurance fraud and Greensill came crashing down. Credit Suisse investors alone lost $10 billion.

At this point, we need to hear from Lt. Commander Montgomery Scott, better known as Scotty.

So now, we’re at the shame on you portion of the story.

Astoundingly, Stenn Technologies was able to pull off a similar scam just a couple of years later, posing as a fintech company, supposedly using the latest in technology to do global supply chain financing faster and better than everyone else in the business.

The victims are new, but given the high publicity of Greensill’s failure, you’d figure they would catch on.

According to Bloomberg News, “Stenn’s main backers were Citigroup Inc., BNP Paribas SA, Natixis and HSBC Holdings Plc while Barclays Plc, M&G Plc and Goldman Sachs Group also backed the transaction.”

Private equity firm Centerbridge invested $50 million in capital and valued the company at $900 million in 2022.

In 2022, TechCrunch described the secret sauce that Stenn was supposedly using to bring a 13th century business into the modern age.

Stenn — which applies big data analytics, taking a few datapoints about a business (the main two being what money it has coming in and going out based on invoices) and matching them up against an algorithm that takes some 1,000 other factors into account to determine its eligibility for a loan of up to $10 million; and on the other side taps a network of institutions and other big lenders to provide the capital for that financing.

Perhaps this multi-factor algorithm was super cool when they showed it to investors and lending partners. The only problem was Stenn, in the words of a business crime attorney who spoke to Bloomberg, “has all the hallmarks of both fraud and money laundering.”

Greensill might have been a bit hard to figure out with large, respected insurance companies insuring their notes.

But anyone who took the time to investigate Stenn Technologies by simply looking at the data they pumped out to investors weekly would have seen the scheme for what it was.

While it appears the previously mentioned institutional investors didn’t bother to investigate, Bloomberg did and the results were darkly hilarious.

Some of Stenn’s biggest suppliers were tiny companies in Thailand and Hong Kong with little in common yet corporate filings for all of them list the same Russian name as a backer. One in Singapore was accused by the U.S. of enabling payments to Russian naval intelligence and sanctioned in August. Tracing a group owned by another Russian investor that was supposedly shipping millions of dollars of goods to corporations in Switzerland and Canada led to a derelict Prague building with boarded-up windows.

Bloomberg contacted the largest 50 firms that were supposedly the buyers for what Stenn’s suppliers produced, and the bulk had no idea who Stenn Technologies or these suppliers were! A spokesman for Edion Corp., one of the biggest electronics retailers in Japan, told Bloomberg, “we have absolutely no knowledge of this matter. We really have no idea what it’s about.”

Essentially, the data produced by Stenn highlighted thousands of bogus transactions on a weekly basis to investors, lying about who was paying and who was receiving billions of dollars of funds. According to Bloomberg, investors received these details with the name of the suppliers and buyers included. Therefore, at any time, investors could have done a sanity check on these obscure suppliers to see who they were, or in this case, weren’t.

HSBC finally caught up to what Stenn was doing. Again from the Bloomberg report:

HSBC triggered Stenn’s downfall when it lodged an application to the UK courts, alleging that its officials had uncovered ‘deeply troubling issues on a large scale.’ The
invoices at the heart of the deal weren’t ‘genuine debts’ and payments to suppliers weren’t coming from ‘blue-chip companies’ but from bogus firms with similar names, according to the complaint filed by the London-based bank.

Investors are facing a potential loss of $200 million, although it could be a lot more as $978 million in invoiced-financed notes are outstanding, Bloomberg reports.

There is a bright side to Stenn’s collapse though. A senior trade finance official told The Sunday Times:

“The saving grace here is at least it’s smaller than Greensill.”

Well played.

Sam Cooper

In striking remarks delivered days after Canada’s federal election, former longtime Liberal MP John McKay suggested that threats from President Donald Trump helped propel Prime Minister Mark Carney to power—and warned that Canada is entering a period of “existential” uncertainty. He likened the threat posed by Trump’s second term to the peril Taiwan faces from China’s Xi Jinping.

“This was the most consequential election of my lifetime,” said McKay, who did not seek re-election this year after serving as a Liberal MP since 1997. “I would always say, ‘This is the most important election of your lifetime,’ and usually I was right. But this time—I was really right. This one was existential.”

Explaining his assertion, McKay added: “I was thinking of the alienating and irritating comments by a certain president that Canada should become the 51st state. We should actually send President Trump a thank-you card for his stimulus to Canadian patriotism, which has manifested itself in so many different ways. Who knew that shopping at Loblaws would become a patriotic act?”

The Toronto-area MP, who has made several visits to Taiwan over the past two decades, drew a controversial comparison between how Taiwan faces the constant threat of invasion and how Canada is now confronting an increasingly unreliable United States under the influence of Trump-era nationalism.

McKay was the first speaker at an event co-hosted by the Government of Taiwan and the Macdonald-Laurier Institute, focused on the People’s Republic of China’s growing use of “lawfare”—legal and bureaucratic tactics designed to pressure Western governments into accepting Beijing’s One China Policy and denying Taiwan’s sovereignty. While China’s claims over Taiwan may appear to have gained tacit acceptance at the United Nations, U.S. expert Bonnie Glaser later clarified that Beijing’s position is far from settled law. The issue, she said, remains open to interpretation by individual governments and is shaped by evolving geopolitical interests. Glaser, a leading authority on Indo-Pacific strategy, added that subtle but meaningful shifts during both the first and second Trump administrations are signaling a quiet departure from Beijing’s legal framing.

“Our institutions are being bullied—that they will be denied involvement with the U.N. unless they accept that Taiwan is a province of China,” Glaser said.

McKay, framing most of his comments on the past election, argued Canadians now face subtle but real consequences when engaging with American products and institutions. He argued that Canada can no longer assume the United States will act as a reliable partner on defense or foreign policy. “Maybe a few weeks or months ago, we could still count on the security umbrella of the United States,” he said. “That is no longer true—and the Prime Minister has made that abundantly clear.”

Predicting that Prime Minister Mark Carney “may be a very unpopular politician within six months,” McKay warned Canadians to prepare for a period of sacrifice and difficult decisions: “We’re not used to asserting our sovereignty. Taiwan lives that reality every single day.”

Citing Canada’s pivot toward new defense arrangements—including the recent purchase of over-the-horizon radar from Australia instead of the United States—McKay said the country is entering a new era of security realignment. “New alliances, new consequences, new changes,” he said. “This will create some real disturbing issues.”

He contrasted China’s strategic approach with the erratic behavior of the United States under Trump: “President Xi conducts the trade war like a chess match—methodical, searching for new alliances. Our supposed security partner conducts it like flip-gut,” McKay said, referring to a children’s game he plays with his grandchildren. “Sometimes the piece turns over, sometimes it falls off the table. But the one guarantee is—there is no guarantee.”

Another speaker, Professor Scott Simon of the University of Ottawa, took a far sharper stance on Beijing’s role in the increasingly volatile geopolitical environment, describing China as part of a “new axis of evil” engaged in cognitive warfare targeting both Taiwan and Canada.

“We have to be part of the alliance of good,” Simon said. “China is part of that axis of evil. We have to be honest about that.”

Drawing on recent global crises—including the war in Ukraine and the October 7 Hamas attacks on Israel—Simon argued that democracies like Canada have lulled themselves into a false sense of security by believing that trade and engagement would neutralize authoritarian threats.

“For the past 40 years, we’ve been very complacent,” he said.

Expanding on Beijing’s tactics, Simon said: “They’re active against the Philippines, South Korea, Japan—and Taiwan is only part of it. What they’re using now is a combination of military threats—what we often call gray zone operations—but also cognitive and psychological warfare, as well as lawfare. And they use these techniques not just in Taiwan, but in Canada. And so Canada has to be a part of countering that lawfare.”