The CEO of Sandstone, a company that was allegedly hired indirectly by the Maltese government to manage fallout over the assassination of Daphne Caruana Galizia, has been arrested in France over links to a $4 billion cryptocurrency Ponzi scheme.
Frank Schneider, head of the so-called corporate intelligence firm was arrested as he tried to cross the border into Luxembourg on 29 April.
Having previously worked as a spy for authorities in Luxembourg, Schneider’s name reportedly popped up during the OneCoin fraud trial in New York in 2019.
OneCoin was a Ponzi scheme masquerading as a legitimate cryptocurrency company that made off with some $4 billion dollars.
Criminal investigations and trials are ongoing in the US despite the founder of OneCoin, Ruja Ignatova, disappearing in 2017.
Four years later, Schnieder was arrested by a French SWAT team and is being held on suspicion of cryptocurrency fraud and money laundering. It’s expected that he will be extradited to the US in the coming days.
But Schnieder is no stranger to being on the wrong side of the law.
While working for SREL, the Luxembourg intelligence services, he was prosecuted for violating laws on data protection and privacy, along with two others employees.
It was alleged he had recorded Jean Claude Juncker, then Head of the Luxembourg government, without his knowledge. He was acquitted of the charges but left to start Sandstone in 2008. The company is co-owned by Nadhmi Auchi, an Iraqi billionaire.
It’s through Sandstone that he reportedly hired UK PR firm Chelgate, who, with the cooperation of British law firm Carter Ruck, lobbied the UK government for the benefit of OneCoin. Following their attempts, the UK Financial Conduct Authority (FCA) revoked a securities fraud warning that they had previously issued against OneCoin.
The crypto company then used the FCA’s revocation as “evidence of its legitimacy” to potential investors, further compounding the effects of one of the biggest digital asset heists in history.
But Schneider and Sandstone’s relationship with Chelgate wasn’t new. In 2020, news portal EUobserver published an investigation where they revealed that Chelgate had helped the Maltese government with the UK inquiry into “fake news”.
They had also paid a handsome sum to the reputation managers to make then-prime minister Joseph Muscat look good throughout the EU following the assassination.
The investigation alleged that Chelgate then hired Sandstone to put together a report on Caruana Galizia’s assassination. The report was leaked to the media and excerpts from it stated that there was reason to believe the President of Azerbaijan Ilham Aliyev and the President of Russia Vladimir Putin had conspired to assassinate the journalist, by way of a Chechen assassin.
Chelgate also reportedly briefed European media outlets about Caruana Galizia, planting seeds of misinformation and full-blown conspiracy theories about her and the circumstances of her death.
Terence Fane-Saunders, the executive chairman of Chelgate published a blog post where he lamented that his company had fallen prey to attacks by “misinformation merchants”. In the post, he denied working with Sandstone, commissioning Sandstone to create the report, or even having seen the report prior to it being leaked.
Following the publication of the investigation, Sandstone sent a letter to the portal demanding all journalistic sources be made public and the article be “corrected”. The portal offered a right of reply but no agreement was made.
Sandstone then proceeded to file a SLAPP lawuit in Luxembourg which was promptly rejected by the prosecutor, and announced plans for another in Belgium that is yet to materialise.
A recent investigation by The Shift found that the Maltese Office of the Prime Minister spent hundreds of thousands at the very least, on PR, reputation management, and communications advisors since 2013.