Investigation Report
Date: 16th March 2025
Investigator: Kishan Ram
Case Reference Number: AF405-CS5
I. Introduction
The Games Karner and Invest Consult Ltd case has highlighted significant financial fraud, tax
evasion, and money laundering schemes in the investment sector. Karner, a fraudster with a past
conviction, resumed his activities in anonymity, portraying himself as a seasoned consultant for
tech startups facing difficulties. By creating a network of false investment entities, counterfeit
intangible assets, and misleading financial dealings, he devised a plan enabling investors to
obtain bogus tax deductions while redirecting funds to himself.
This case analysis examines Karner’s methods of exploiting financial systems, avoiding
regulatory oversight by frequently changing locations, and employing fake suppliers and dual
cash accounts to conceal illegal activities. Additionally, it describes how investigators exposed
the scheme, resulting in Karner’s arrest and subsequent legal actions.
II. Executive Summary
The Karner and Invest Consult Ltd case reveals a massive investment fraud, tax evasion, and
money laundering operation. Karner, a former criminal with a background in financial deceit,
transformed himself into a consultant for internet startups facing difficulties. He pretended to
assist these companies in attracting investors by establishing a network of fake or inadequately
funded businesses, offering enticing returns and substantial tax deductions to investors.
His deceitful activities included:
• Deliberately exaggerating investment losses to enable investors to benefit from tax claims.
• Creating intangible assets like software and databases through non-existent or cooperative
suppliers.
• Maintaining dual cash accounts, with large amounts vanishing into a secondary account (Cash
Account B) managed solely by Karner and his close ally, Mary Pfister.
• Laundering money through a Bulgarian associate, Pjetr Chechov, who redirected most of the
withdrawn funds back to Karner.
• Avoiding legal jurisdiction by frequently moving company offices to hinder IRS investigations.
The fraud came to light when one of Karner’s shell companies failed to relocate promptly,
prompting an IRS audit that intensified the investigation. Authorities discovered fraudulent
financial records, fake suppliers, and suspicious money transactions, resulting in Karner’s arrest
and the downfall of Invest Consult Ltd.
III. Background
A. Context
The Games Karner and Invest Consult Ltd case transpired during a period of technological
advancement, characterized by the influx of substantial investor interest in internet startups.
Numerous small businesses sought funding, while investors eagerly sought to identify the next
significant technological breakthrough, rendering them susceptible to fraudulent schemes that
promised exorbitant returns and tax benefits.
Karner, a former convict with a history of financial fraud, exploited this environment by presenting
himself as a seasoned consultant assisting struggling startups in securing funding. He employed
intricate financial structures and deceptive accounting practices to fabricate intangible assets,
inflate company expenses, and generate artificial tax losses that investors could utilize as
deductions.
Regulatory oversight was fragmented, with various IRS offices handling separate cases, enabling
Karner to relocate company jurisdictions and evade investigations. The scheme also involved
international money laundering, complicating authorities’ efforts to track financial transactions.
As scrutiny intensified regarding investment tax deductions, investigators commenced uncovering
irregularities in Invest Consult’s operations.
This case serves as a stark illustration of vulnerabilities in financial oversight, tax enforcement,
and investor vigilance, providing valuable lessons for preventing future investment fraud and tax
evasion schemes.
B. Parties Involved
Name
Games Karner
Mary Pfister
Henry Braun
Pjetr Chechov
Investors
Tax Authorities (IRS & Other Agencies)
Honest Taxpayers
IRS Inspectors
Role
Perpetrator
Perpetrator
Perpetrator
Perpetrator
Victim
Victim
Victim
Investigator
District Attorney’s Office
Police & Private Investigators (including the CFE narrator)
Court System
Invest Consult Ltd
Market Maker
Various small internet startups
Fake suppliers
Authorities
Investigator
Authorities
Fraudulent Businesses
Fraudulent Businesses
Fraudulent Businesses
Fraudulent Businesses
IV. Investigation Details
A. Methodology
The investigation employed a comprehensive approach to gather evidence and information,
employing the following methods:
1. Financial Statement Analysis:
 Investigators thoroughly reviewed annual financial statements spanning the
past seven years.
 They identified anomalous patterns, including excessive intangible asset
write-offs and consistent losses resulting in bankruptcies.
2. Tax Audit and IRS Scrutiny:
 The Internal Revenue Service initiated tax audits due to suspiciously high
tax deductions claimed by investors.
 Inspectors scrutinized whether the startups possessed legitimate business
models or were deliberately structured for tax evasion.
3. Corporate Structure and Jurisdictional Analysis:
 Investigators closely monitored company relocations to various IRS offices
to delay audits.
 They recognized Karner’s tactic of relocating companies between
jurisdictions to evade detection.
4. Supplier Verification and Background Checks:
 Authorities conducted thorough checks on suppliers’ existence and
legitimacy.
 Many were unregistered or lacked records of conducting business with
Invest Consult.
 Furthermore, some suppliers were associated with Pjetr Chechov, a
concerning Bulgarian associate.
5. Bank Records and Cash Flow Analysis:
 Investigators identified dual cash accounts (Cash Account A and B).


They observed substantial transactions in Cash Account B that were
subsequently withdrawn in cash and linked to money laundering activities.
Bank records revealed funds flowing from Invest Consult to Chechov and
subsequently back to Karner.
6. Interviews and Testimonies:
 Employees, investors, and associated CEOs were subjected to questioning.
 Staff corroborated that only Karner and Pfister controlled Cash Account B.
 Business owners reported that investment funds were never deposited into
their accounts.
7. Intangible Asset Investigation:
 Investigators demanded proof of intellectual property and market research
purchases.
 However, no documentation, source codes, or databases were provided,
leading investigators to suspect that the assets were fabricated.
8. Forensic Accounting & Fraud Detection Software:
 Anomalies in accounting transactions were identified using forensic
accounting techniques.
 Patterns of false invoices, non-existent payments, and inflated losses were
detected.
9. Cross-Jurisdictional Cooperation:
 Authorities required Letters Rogatory to access information about foreign
suppliers.
 Some of Chechov’s companies were already under investigation by tax
agencies in other regions.
10. Legal Action & Court Proceedings:
 Evidence collected resulted in Karner’s pre-trial custody.
 The IRS denied investors’ tax deductions, prompting them to turn against
Karner and file complaints.
B. Findings and Analysis
1. Fraudulent Investment Scheme
 Invest Consult Ltd. was used to establish and support struggling internet
startups.
 These companies were marketed as the “next big thing,” but they lacked
viable business models and operational capabilities.
2. Tax Fraud through Fake Investment Losses:
 Investors were promised tax deductions based on fabricated business losses.
 Startups reported substantial losses, enabling investors to significantly
reduce their taxable income.
3. Fabricated Intangible Assets:
 Startups incurred substantial expenditures on intellectual property, market
research, and software services, but no tangible products were produced.
 Suppliers were either fictitious, unregistered, or incapable of delivering the
claimed assets.
4. Suspicious Suppliers and Money Laundering:
 Many suppliers were associated with Pjetr Chechov, a Bulgarian associate
of Karner.
 Payments were made to Chechov, and approximately 75-85% of the funds
were subsequently reverted to Karner.
 Some suppliers were unaware of transactions attributed to them.
5. Dual Cash Accounts and Missing Funds:
 Cash Account B held substantial funds but lacked legitimate business
transactions.
 Only Karner and Mary Pfister had access to this account.
 The funds recorded in Cash Account B were either never deposited or
swiftly withdrawn.
6. Evasion of IRS Scrutiny:
 Karner frequently relocated company jurisdictions to delay tax audits.
 Each startup was too small individually to attract immediate IRS attention.
 However, one company (Market Maker) was not relocated in time,
prompting the investigation.
7. Investor Complaints and IRS Intervention
 Following the IRS’s denial of tax deductions, numerous investors turned
against Karner.
 They filed complaints, disclosing additional details of the fraudulent
activities.
8. Karner’s Arrest and Court Proceedings
 Karner was apprehended and placed in pre-trial custody due to the
overwhelming evidence presented.
 Most CEOs of the small companies denied any involvement or pleaded
guilty.
 Chechov, the primary money launderer, passed away under unexplained
circumstances before further questioning could take place.
V. Conclusion
The investigation into Games Karner and Invest Consult Ltd uncovered a sophisticated tax fraud
and money laundering scheme that exploited investors, falsified financial statements, and
manipulated tax deductions. By establishing a network of failing startups, Karner deceived both
investors and the Internal Revenue Service (IRS) by fabricating intangible assets and fictitious
suppliers to generate artificial losses.
Despite his attempts to evade detection by frequently relocating company jurisdictions and
laundering money through dual cash accounts, a single oversight—the failure to relocate one
company—triggered a broader investigation. This oversight ultimately unraveled the entire
fraudulent network, leading to Karner’s arrest and financial losses for investors who were unable
to reclaim tax benefits.
This case serves as a stark reminder of critical weaknesses in regulatory oversight, tax law
enforcement, and corporate accountability. It emphasizes the urgent need for enhanced financial
oversight, improved investor due diligence, and strengthened IRS coordination to prevent similar
fraudulent schemes from occurring in the future.
Ultimately, Karner’s pursuit of financial deception and exploitation of loopholes resulted in his
downfall, demonstrating that even the most intricate frauds can be exposed through persistent
investigation and regulatory vigilance.
VI. Recommendations
Based on the findings, the following actions are recommended:
1. Enhance Due Diligence and Financial Oversight:
 Implement third-party verification of all investment funds prior to
approving tax deductions.
 Strengthen audits of intangible asset transactions to ensure proof of actual
business activity.
2. Enhance IRS and Regulatory Coordination:
 Improve data sharing between regional IRS offices to track companies
relocating jurisdictions to evade audits.
 Establish a centralized fraud detection unit to analyze investment patterns
across multiple states.
3. Tighten Investment and Tax Deduction Rules:
 Limit tax deductions for investment losses to companies with proven
operations and revenue-generating activities.
 Require businesses seeking tax benefits to undergo mandatory audits if
claiming high losses.
4. Monitor Suspicious Cash Transactions:
 Flag businesses that utilize dual cash accounts or engage in frequent large
cash withdrawals.
 Enforce strict reporting on cash movements, particularly for companies
dealing with intangible assets.
5. Improve Investor Awareness and Education:
 Launch awareness campaigns on investment fraud and tax shelter schemes.
 Encourage investors to verify companies’ financial statements, tax records,
and supplier legitimacy before investing.
6. Strengthen Supplier Verification:
 Establish a mandatory registry for suppliers of intellectual property and
consulting services.
 Verify Supplier Information - Cross-reference supplier details against
banking records and business registrations to identify potential fraudulent
entities.
7. Strengthen Anti-Money Laundering Measures:
 Implement stringent financial reporting requirements for international
transactions, particularly those originating from high-risk jurisdictions.
 Foster enhanced collaboration with international regulatory authorities to
monitor and combat fraudulent cross-border money laundering activities.
8. Enhance Legal Penalties for Corporate Fraud:
 Introduce more severe penalties for CEOs and financial officers involved in
fraudulent investment schemes.
 Hold board members and auditors accountable for their failure to identify
or report financial misconduct.
VIII. Appendices