Watch It Burn

Watch It Burn


A good scammer sees opportunity everywhere, including their own downfall. In 2006, the police showed up at Gustav Daphne’s house in Beverly Hills. They had come once before, when a neighbor complained about his trash. Daphne happened to be swimming in his pool at the time, and because he is French, he came to the front door in a tiny little bathing suit. The police were appalled; they gave him a reprimand about storing his garbage more tidily and scurried away.

This time was different. The cops came straight into the house. There were a dozen of them, wearing bulletproof vests. They took him outside in handcuffs and put him in a car. Maybe he was paranoid, having built a multimillion-dollar empire on fraud and deceit, nurturing connections with international criminal rings, but at first he thought that he was being kidnapped. When he saw the jail, he was relieved.

The feeling was short-lived. The jail was cleaner than those in Europe where he’d been held, but after a couple of hours he demanded a cigarette and was informed that smoking was prohibited. OK, he thought. There must be a way. There’s always a way. He would find the right people, negotiate the right conditions. He had to smoke! He loved to smoke. He loved it more than anything, except for women. He loved women! And smoking, and art, and shopping.

He found someone in the prison whom everyone called El Gordo, a Mexican guy who could hook people up with anything. Daphne asked for cigarettes and was given an address on the outside where he would need to have $300 delivered. This was not a problem. He didn’t crave money, but it was useful, so he accrued it. His mansion had once belonged to a silent film star; he sometimes commuted by helicopter. There wasn’t much Daphne couldn’t afford.

After Daphne’s cousin drove a Bentley to a shady neighborhood and made the cash drop on his behalf, Daphne went back to El Gordo to collect his cigarettes. El Gordo looked at him, then gave him a nicotine patch. “No smoking in prison,” El Gordo said.

By the time Daphne was extradited to Europe to face money laundering charges, which was the reason he’d been arrested in the first place, he had kicked his cigarette habit. He felt great. He was buoyant with health. He boarded a plane to Switzerland in handcuffs, was whisked to a prison near the Alps, and was put in a cell. Waiting for him there was a pouch of tobacco. He resisted for a few hours. Then he smoked the whole thing.

Eventually, Daphne was sent to a prison in France, where he could get anything he wanted: magazines, special meals, the Israeli cigarettes he preferred. His lawyer could also bring him things. So when he saw a segment on TV about climate change policy, he asked his lawyer to bring him more information about France’s plans to reduce emissions. Daphne had a preternatural ability to sniff out criminal prospects, and he’d caught a familiar whiff.

When Daphne read the materials his lawyer provided him, he learned about Europe’s carbon-emissions trading system, the first of its kind in the world. It had grown out of the Kyoto Protocol, the landmark international agreement to reduce global emissions. Sure enough, Daphne told me, he saw the blueprint for what would become his next illicit enterprise. As soon as he’d finished his time in prison, he began gaming the new emissions-trading system.

The scam would help Daphne accrue even more money, and it would make him famous. In the media he cut a dashing figure, partying with celebrities and oligarchs. He maintained his slim physique by avoiding carbohydrates like they were venom and dressed in blazers cut from blue velvet or embroidered with shimmering brocade flowers. He liked to wear a diamond-encrusted Chopard sun pendant on his partially bared chest and was rarely photographed without one of his hundreds of pairs of Tom Ford sunglasses, all aviator-style with gradient lenses. Always, it seemed, he had a cigarette hanging out of the side of his mouth.

Reporters dubbed Daphne the “prince of carbon,” but it wasn’t just his flamboyant charisma that elevated him to criminal royalty. So did the nature of his new fraud. Daphne was scamming the fight against climate change by exploiting a policy flaw that left billions for the taking.

No one was ever sure who was working with whom, who might be screwing someone else over, or who had started the whole thing.

I should say here that Gustav Daphne is a pseudonym. He remains a wanted man in France, so when I traveled to meet with him at his gated villa in Tel Aviv, he agreed to speak on the condition that I not use his name—any of his names. (He has a few aliases.) He kept saying what a bad idea it was to talk to me. He had turned over a new leaf, he insisted, and like a freshly avowed ascetic, he nurtured a few simple pleasures: taking his impeccably trained Belgian Malinois on sunset walks along the beach; going horseback riding with his daughters. He tried to steer clear of trouble, though it occasionally sought him out. A few weeks before we met, some masked guys on a motorcycle drove by firing guns at his home; when I visited, the front door was being replaced.

Still, his name is all over the French media. I warned him that, at least in some circles, a pseudonym would be a pretty weak shield for his identity. That was OK with him. He said that he wanted to put the past behind him and focus on his new ventures, like crypto investing. So, no name.

During my visit, Daphne took calls from his lawyers and asked favors of his wife and flirted with acquaintances over WhatsApp. He wore his Tom Ford sunglasses indoors and out. He showed me his art: a large Kandinsky painting in the foyer, a few Chagalls downstairs. The villa had some burly guys on staff and a cleaner from Sri Lanka who picked up after two fluffy indoor dogs that liked to avail themselves of the plush white carpets.

All this is part of Daphne’s downsized lifestyle. He used to have a bigger mansion, with a swimming pool and a tennis court, a gym and a movie theater. He once parked his yacht in the glittering harbors of the Côte d’Azur. But he has fashioned a new life for himself in Israel, which has yet to grant France’s request for his extradition.

Daphne wanted me to know that to him the carbon scam was a negligible chapter in a long and successful criminal career. It wasn’t his most lucrative scheme; it wasn’t even the first opportunity he’d pursued in the lumpish market of environmental interventions conceived by a civilization in ecological peril. Plus, he was just one of many people who ripped off the emissions-trading system.

Daphne and other scammers’ pillaging of Europe’s carbon market constitutes what the media have called “the fraud of the century”—billions of euros were stolen in a matter of months. The shadowy scheme attracted established crime rings and amateur hucksters alike, many of whom knew each other. But the scam lent itself to duplicity: No one was ever sure who was working with whom, who might be screwing someone else over, or who had started the whole thing. Its web reached the boxing rings of Las Vegas, the offices of Germany’s biggest bank, the caves along the border of Afghanistan and Pakistan where Osama bin Laden was hiding, and the gilded restaurants of Paris, where it also left blood spattered on the streets. It pulled in a playboy demi-celebrity, an Afghan refugee, a flashy street hustler who couldn’t accumulate enough bling, an immaculate businessman who hobnobbed with the queen of England, the doyenne of Marseille’s underground, and a man some people called the Brain.

The Brain’s real name is Grégory Zaoui, and he claims that the entire scam was his idea. Even though the fraud sprouted across Europe, Zaoui insists that he was the only person smart enough to have planted the seed. Daphne, he says, gets far too much credit for his role in ripping off the carbon market.

Zaoui is stout and broad chinned, with thick eyebrows and a sweep of dark hair. When he was involved in the carbon scam, he took pains to remain understated. He favored dress shirts in pale blue or white. Even when he was photographed alongside some of the highest-ranking politicians in France, including a president and a prime minister, his demeanor was almost retreating. When he spent money, he did it quietly; he twice rented out an entire Hermès store in central Paris so his girlfriend could shop in privacy. Journalists described him in terms they would never use for Daphne: discreet, cerebral, analytical. Even though they grew up within miles of each other, Daphne and Zaoui couldn’t be more different.

When Zaoui was hauled in front of police, some 15 years ago now, he said that he’d been betrayed. He went into the business with the wrong person, he claimed, which meant that his scheme was doomed from the start. Someone he’d once considered among his closest friends double-crossed him so wickedly that he never really reaped the rewards he deserved for being a carbon fraudster.

Zaoui agreed to meet me in Paris last May, at a restaurant in one of the city’s most luxurious hotels, the Lutetia, where a Coca-Cola costs 12 euros and an army of valets swarm the entrance. He arrived late wearing sweatpants and a raincoat, and he was in a frazzled state because he’d misplaced his card for the city’s charging stations, which he required to replenish the battery on his electric scooter. When he settled in, he wanted to set the record straight about his and Daphne’s respective roles in Europe’s carbon fraud. Until now, he told me, no one had truly understood the relationship between them. “He is the prince,” Zaoui told me. “But I am the king.”


Ever since he was a kid, Daphne was dissatisfied with the status quo. His parents moved from Algeria to a village one hour outside Paris in 1962, at the end of the Algerian War of Independence, when the pieds-noirs staged a mass exodus from the land their forebears colonized. In Daphne’s eyes, his parents were irredeemably middle-class; they cherished stability and predictability, eating the same thing for dinner on certain nights of the week (Mondays: steak and beans) and vacationing at the same place in the south of France every year during the same two weeks in August. They went to synagogue, but their suburban neighborhood was eclectic, and they were the only Jewish family who lived there. Daphne’s father was a tailor and his mother a teacher, and they saved for the kids’ bar mitzvahs and weddings by pinching pennies. They could afford the occasional luxury, but only because they were frugal. It drove Daphne crazy.

When he was 12, Daphne began purloining sleeping pills from his grandmother to trade for stuff other kids wanted to buy, including hashish. He was bombastic and impatient with school; he was more interested in exploring the larger world, which mostly meant Paris and its nightlife districts. Daphne began buying and studying the French financial newspaper Les Echos, and eventually he purchased stock in a mining company that experienced a quick jump in value, thanks to a contract it secured to help build the tunnel under the English Channel. With the money he made from trading, Daphne bought a pony.

When he was 14, he went to live with a girl in Paris, and a year later he began paying for his own apartment. His parents decided to send him to a private Jewish school in a suburb, and soon he saw opportunities for the kind of hustle he needed to support his lifestyle. He continued selling hashish and developed minor scams, silly ones. Sometimes he went around asking the girls at his school for money to buy a chocolate croissant, then pocketed what they gave him. It was easy—they were so nice, and they had so much money they didn’t care. He made 100 francs a day, about $12.

Daphne was a hopeless romantic, so he followed a love interest to university, where he studied pharmaceutical science. Then he met another woman, who was attending the Sorbonne, so he went there. He transferred to a third university, met his future wife while chasing another woman through Israel, and brought the former back to Paris. Eventually, she got pregnant and he realized that he needed to get his life together. Romance wasn’t going to pay the bills.

In the 1990s, he got a job at an insurance brokerage. He worked hard. He identified groups of people who needed coverage they weren’t getting elsewhere and made them offers. He was charming, persuasive. “People adopt me very easily,” Daphne told me. He can’t go to therapy, he said, because therapists have a bad habit of falling in love with him.

Daphne was successful. Eventually, he struck out on his own and opened insurance offices in Paris and Bordeaux. Things were going well, not outlandishly so, but his family was comfortable. Then one day some new clients walked through the door. They wanted to insure their cars, including fleets of Lamborghinis, and their lavish apartments. Daphne drew up their policies, and soon he was going with them on vacation, lounging on their yachts. He claims to have had no idea they were part of the international cocaine trade. He was just a man selling insurance and enjoying a little respite with his clients when he could get it.

Then came the moment that indelibly marked him. As Daphne tells it, he was minding his own business when law enforcement came for him and dragged him to court. He was accused of providing the traffickers with insurance certificates for items that weren’t covered by real policies and given a three-year sentence. While proceedings were still underway, he lost all his clients and his company fell apart. He swears that he was innocent, that the certificates had come from someone else, yet the government blew up his whole life. He wasn’t even 30.

Daphne vowed to show prosecutors who they were messing with. He dreamed of revenge. “If you ask me today, I can say it was stupid,” he told me. “But at that time, given the context, I said, ‘OK, I will fuck them.’ ”

By the time Zaoui was 16, he had more cash than the value of his parents’ house, and he bought himself tickets to the French Open.

A little more than 30 miles east of Daphne’s childhood home, in a rough neighborhood on the outskirts of Paris, Grégory Zaoui was also born into an immigrant family—in his case, Algerian-Tunisian. Adored by his mother and coddled by his aunts, Zaoui was a homebody. He hated the long separation from his family while he was at school. He could spend hours alone playing make-believe. One year he got a toy Range Rover from his aunts and developed an obsession with fast cars. He loved Star Wars and dreamed of being famous one day like the people who appeared on television.

On the cusp of adolescence, with virtually no friends, Zaoui began to envy what other kids had that his family didn’t. He became embarrassed by his parents’ economy Renault, and he fixated on the idea that he needed nice clothes and certain kinds of shoes. Sometimes he stopped eating; he fell into depression. Still, he nurtured ambitions. He started to do well at school and wanted to become a lawyer, then run for president.

After his bar mitzvah, Zaoui transferred to a Jewish school outside Paris—not the same one Daphne attended—and started to think that this feeling he had, of being outside things, of being apart, could be solved with money. Money wasn’t just the means to acquire the material goods he admired. It was also a path to freedom and a way to become exceptional. With his bar mitzvah cash, he purchased his first pair of Weston loafers.

His best friend from synagogue had parents who imported Levi’s wholesale, and Zaoui began to buy the jeans up. He resold them at his school at a comfortable markup, netting a few thousand francs per month. The ease of making money this way was a revelation. With the help of his mother, he began selling jeans more widely—he kept his merchandise stacked in his bedroom. At night he worked the coat check at a club in Paris that his father managed. He bootlegged movies on a VCR at home and sold those too. He started a delivery service using his scooter. By the time he was 16, he had more cash than the value of his parents’ house, and he bought himself tickets to the French Open.

Soon enough, Zaoui began importing jeans on his own and saw a way to increase his profit margin even further. In Europe, a value-added tax is typically levied at every point of sale in a supply chain. When Zaoui sold a pair of jeans, he charged the purchase price plus the state-mandated VAT, and was then supposed to surrender the VAT to the government. If he pocketed the VAT instead, he got richer. Quietly, Zaoui got into the game of VAT fraud.

Zaoui married young, but shortly after learning that his wife was pregnant with their first child, he was caught by customs and sentenced to two years in prison for his tax scheme. He was released in 1996—he served only a month on account of his good behavior—and made it home in time for his daughter’s birth. He planned to keep his future enterprises aboveboard, but after taking out loans to open a restaurant that failed, he found himself doing some import business on the side and once again pocketing the VAT.

At a certain point, Zaoui linked up with a hustler named Mardoché “Marco” Mouly, who ran scams with his brother. The Moulys paid off Zaoui’s restaurant debts and brought him in on a new company that purchased mobile phones from England, transported them to Denmark for sale, and skimmed off taxes in the process. Soon, Zaoui was making as much as 100 million francs per month from his office in the chicest neighborhood in Paris. While Marco Mouly spent the money he earned at cabarets, Zaoui considered himself a family man: He bought his loved ones Rolexes and Chanel bags.

Within a few years, the authorities became suspicious of Zaoui’s business and, in 2004, he was arrested again and sentenced to three years in prison. He appealed the decision and asked to be released while he awaited a ruling from the court. The judge granted his request on the condition that Zaoui post bail at 75,000 euros. Zaoui didn’t have that kind of cash on hand; his money was tied up in Denmark. By then he had three young children at home, aged eight, six, and three. It was early December, and Hanukkah was just beginning. Because it would take more than a week to transfer his money to France, Zaoui would have to spend the holiday in a prison cell, without his family.

Then Zaoui’s mother visited him with good news. “Be happy,” she said. “Your friend, he knew you had to get out, so he brought us a cashier’s check for 75,000 euros, which we just deposited with the court. Soon you’ll be out.” Zaoui left the visiting room and packed his things. When he was released, his wife was waiting for him with a driver, and they went directly to a toy store, where he bought piles of gifts. That night he dined at home, lit the first candle of the menorah, and played with his children.

Zaoui never forgot the generosity of the man who lent him cash. He was a buddy of Zaoui’s wife’s cousin; they had bonded previously over a shared passion for cars. By coming through so unexpectedly, the man secured a place in Zaoui’s heart. One day Zaoui would repay him, this friend named Kévin El Ghazouani.

Like Daphne, the groundwork of Zaoui’s participation in carbon fraud was laid behind bars. While Zaoui was waiting for bail money, he shared a cell with a man who installed solar panels in the south of France. The man told Zaoui to get out of mobile phones; the future was in businesses that protected the environment. All day every day, the guy went on and on about it: There was money to be made in solar panels, heat pumps, geothermal energy. “Remember the movie Forrest Gump,and Bubba?” Zaoui said. “This guy was like Bubba, but with ecological commercial systems instead of shrimp.”

By the time he was released, Zaoui was convinced that getting into one of these green business ventures was worth a try. He started his own solar-panel installation company. He went to trade shows. At one of them, in 2005, he learned about Europe’s emissions-trading system, which launched that year.

Any neoclassical economist will tell you that the whole problem with the environment, the reason there’s air pollution and shitty water and pesticide contamination and industrial runoff, is that these things aren’t priced into any market. So when it started to become clear that climate change constituted a global crisis, economists proposed creating markets for emissions. In the 1990s, Europeans were adamantly against the idea; they wanted industries to be taxed directly for what they pumped into the environment. But in meetings leading up to the Kyoto Protocol, American negotiators championed a suite of so-called flexible mechanisms, including carbon markets, and prevailed. (Infamously, the U.S. then refused to ratify the agreement.) European policymakers came around and created a cap-and-trade system that would eventually cover nearly half the emissions in the EU, including those produced by the energy sector, manufacturing, and airline travel.

The way the system was supposed to work was simple enough: The EU would set an annual cap on its overall emissions, then issue various emitters a certain number of EU allowances. Each EUA would entitle its holder to emit one ton of carbon. If a company had extra EUAs at the end of the year, meaning that it hadn’t emitted all the carbon it was allowed, it could put them up for sale, and companies that had too few EUAs could buy them. Companies could also purchase carbon offsets, which basically meant investing in sustainability measures in other countries.

The plan was for Europe to issue fewer EUAs year over year, so it would become progressively more expensive to emit carbon. The logic was that by leveraging the laws of supply and demand, industries could be pushed into less carbon-intensive production methods. Companies that decarbonized quickly would have more excess EUAs to sell, and companies that moved too slowly would pay an increasingly hefty price for the allowances they needed.

What made the market interesting to scammers was the potential for VAT fraud. To understand the scheme they cooked up, it’s important to know two things: Because economic policies in Europe are aimed at facilitating trade across borders, VAT is waived on sales between EU member states. Also, since governments only want to tax the value added at each stage of the economic process, they credit or reimburse the buyers of certain products for the VAT paid to suppliers.

For example, let’s say Albert in Austria sells apples to Bernard in Belgium for 90 euros, with no VAT attached because it’s a cross-border transaction. Bernard peels the apples and sells them to Carla, also in Belgium, for 100 euros plus 20 percent VAT. Carla makes applesauce and sells it to Daniel, also in Belgium, for 150 euros plus 20 percent VAT. In a functional system, Bernard would give the Belgian government the 20 euros he collected from Carla, and Carla would pay the 30 euros she collected from Daniel, minus the 20 euros she paid to Bernard, because the government sought only to tax the value Carla added to the product by converting peeled apples into applesauce. In a complex VAT-fraud scheme, almost all the buyers and sellers in this chain would be owned by a single entity operating in the background. Law enforcement refers to this kind of operation as a carousel.

VAT fraud has existed since the inception of Europe’s tax system. Mobile phones became popular targets for scammers because the devices are small, easy to ship, and have a relatively high value. Criminals imported phones from other EU countries, sold them to consumers with VAT tacked on, pocketed the tax, and disappeared before anyone was the wiser. Or they used carousel schemes, pretending to sell phones through a chain of businesses created for the express purpose of fraud and requesting VAT reimbursements from governments at each point of sale. According to European law enforcement, VAT fraud involving mobile phones alone has siphoned billions of euros away from public budgets.

When I learned about this kind of scam, I imagined truckloads of phones moving around Europe and ghost shipments languishing in dark warehouses. In some cases, though, VAT scammers dealt in fake goods: The only things real about their schemes were the fleets of empty vans driven around to generate sham import and export records.

The carbon market presented an unprecedented opportunity for VAT fraudsters. An EUA was just a serial number on a computer. It could be transferred with the push of a button on platforms that operated like stock exchanges, and it could be bought and sold by anyone—companies in carbon-heavy industries, as well as traders and bankers speculating on price fluctuations for EUAs.

One day in 2006, shortly after the carbon market debuted, Zaoui picked up the phone and called the headquarters of Powernext, a trading platform based in Paris. The volume of EUA sales was basically null at the time. Regulators had issued too many allowances, which made them almost worthless, and traders were avoiding the market because there wasn’t much money to be made. Still, Zaoui saw promise.

In a story he has repeated to anyone who will listen, Zaoui confirmed on the call with Powernext that French companies could join the exchange. What about ones registered in other European countries?

“Yes,” came the answer.

“And non-European foreign companies?”


Finally, Zaoui asked if there was a French VAT on the trade of EUAs.

“Of course.”

Every time an allowance changed hands in France, the seller was supposed to collect VAT. Because there was no value added in the process—the EUA wasn’t made into applesauce—the buyer would get a VAT reimbursement. To defraud the system, then, someone could set up a carousel: buy EUAs VAT-free from outside France, sell them on Powernext with VAT tacked on, and get reimbursed.

Unlike VAT fraud with mobile phones, no empty vans were required. The carbon market rendered even the pretense of real-world trade unnecessary because its product was an absence, an unemitted ton of gas. All someone needed to exploit the system was a good internet connection that allowed them to make trade after trade among the entities in their carousel. As one scammer told me, “It was easier than sending an email.”

Daphne’s wife asked him to exude respectability when they were scheduled to meet with the school’s director. He arrived in a stretch Hummer.

While Daphne appealed his conviction for forging documents for the cocaine traffickers, he began to build an empire. He knew about VAT fraud in mobile phones, so like Zaoui and many other scammers that’s where he focused his efforts. His fortune was favored, as it so often had been, by a mix of happenstance and the force of his unabashed personality. During a trip to London—he was allowed to travel during the appeals process—he was drinking chamomile tea in the Four Seasons when he noticed a man wearing a green tie that had Nokia phones printed on it. He couldn’t stop staring; what a strange sartorial choice. He struck up a conversation. Soon, the man became one of Daphne’s most important UK partners in his VAT scheme.

By the time the French judge upheld Daphne’s conviction and increased his sentence to four years, Daphne was already living in Israel, and there was no way he was returning to France. He made contacts and built extensive networks of people willing to help him import and export fake goods, and he traveled around the world despite the risk it carried. On Mondays and Tuesdays, he went to London; on Wednesdays, he was in Madrid; on Thursdays and Fridays, he traveled to Marbella to oversee business in Malaga and Seville. Every Friday, he would fly to Tel Aviv to celebrate Shabbat with his family.

In 2005, Daphne moved to Los Angeles and set his family up in Beverly Hills. He swam in his pool and smoked in his mansion. He made a big donation to a private school to secure admission for his children. Daphne’s wife asked him to exude respectability when they were scheduled to meet with the school’s director. He arrived in a stretch Hummer.

Los Angeles was fun, but it didn’t last long. The year after he arrived was when the police came for him, and El Gordo wouldn’t give him cigarettes, and he was extradited to Switzerland. The money laundering charges he faced there were eventually dropped, but he still had to serve out the remainder of the French prison sentence he’d tried so hard to avoid. If there was a silver lining to the whole thing, it was learning about the carbon market. Daphne was able to plot out his new scam while counting down the days to his release.

Daphne told me that he was initially interested in a different program born of the Kyoto Protocol. Called REDD, it allowed polluters in developed countries to offset carbon emissions by paying developing countries not to cut down trees. Like the carbon market, REDD relied on nonexistent products—essentially, pledges to leave forests and their stores of carbon untouched. But how to verify that these pledges were serious or to measure their success? In truth, many people didn’t care. To Daphne, it seemed that REDD involved transactions in which the least amount of information was preferable, trades in which what appeared to be the case was more important than what really was. The whole thing relied on an attractive idea, and scrutinizing it too closely threatened to upend it. “So much bullshit,” Daphne said.

But what was bad for the planet was good for him. While in prison, Daphne kept the front companies from his mobile phone scheme alive, paying roughly 10,000 euros per month to compensate each of the straw managers that owned them on paper. When he saw that the companies might be useful in exploiting climate-change mitigation products, including EUAs, he made some inquiries. “A few months before I was released, I talked to this guy,” Daphne said. He wouldn’t say the man’s name on the record. “I told him about the companies, and we talked about the EUAs, the Kyoto Protocol and everything.”

They agreed to work together, and Daphne’s new partner hired some accountants and registered three companies on Powernext. But these weren’t Daphne’s old fronts.

“What were the three companies?” I asked him.

Alors, now we have a problem,” he replied. Because they were companies that Grégory Zaoui claimed were his.


Once Zaoui confirmed that the EUAs were subject to VAT, he made an experimental trade, buying 30,000 euros’ worth of VAT-free EUAs from the Netherlands, then selling them with VAT included. It worked exactly as he had hoped. Just like that, he was 6,000 euros richer. He couldn’t believe how easy it was, and how dumb. “How did they come up with this stupid idea of applying a VAT on an asset that is immaterial?” Zaoui remembers thinking.

Now all Zaoui needed was a backer, someone whose money he could use to buy the allowances necessary to get the whole scheme rolling. He first reached out to one of his existing business partners, a powerful woman named Christiane Melgrani, who ran a fraud ring in Marseille. Zaoui and Melgrani were close; when one of his children was born, she traveled to Paris and gave his wife a gift of 50,000 euros. But by the time Zaoui was ready to game the carbon market, Melgrani had been arrested for an unrelated scheme. Worse still, a chunk of Zaoui’s money that was tied up with Melgrani through some Spanish bank accounts became inaccessible.

Zaoui knew that his scheme was a guaranteed moneymaker, so he figured he’d be doing a favor to anyone he went into business with. He remembered the man who’d bailed him out of jail in time for Hanukkah, Kévin El Ghazouani. Who better to do a favor for? Zaoui contacted El Ghazouani. “I’m going to bring you something where you’re going to make more money than you’ve ever made in your life,” Zaoui told him. “But at the outset, you have to invest a few hundred thousand euros.”

According to Zaoui, El Ghazouani came over to his office, on a quiet avenue near the Champs-Élysées, to talk. Zaoui told him that they’d have to be patient, waiting in the wild like crocodiles. In 2008, the EU would issue fewer carbon allowances, driving EUA prices up and finally creating more trading volume. When that happened, Zaoui would use one of the companies he already owned, Marceau Trade, as his main front. “And then, tac!” Zaoui said. He slapped his hands together like a crocodile’s jaw.

El Ghazouani didn’t say yes right away. He thought about it for a few days, then came back to Zaoui’s office. “Here’s my proposal,” he said, according to Zaoui. (El Ghazouani didn’t respond to my requests for comment, and his lawyer declined to talk.) El Ghazouani didn’t want to become a partner with Zaoui in Marceau Trade; he didn’t know how the company was set up or whether it had liabilities. He wanted to use other companies. According to Zaoui, El Ghazouani had already created four: Crépuscule, V&A Corporation, Azimat, and Golden Vector.  “I’ll bring in some of my own managers, and we’ll do everything,” El Ghazouani told Zaoui. “We’ll start with a blank sheet of paper, and since we’ve got a lot of time because it’s not going to start right away, we’ll do it together.”

Zaoui and El Ghazouani agreed to split the profits evenly and got to work. Zaoui told me that they established one new trading company together—they named it Energy Stock Market—and made Crépuscule a brokerage that could both trade directly and make trades on behalf of the other entities on the Powernext platform. (Registering a brokerage in France involves an arduous application process, but Zaoui had gone through it with Marceau Trade and knew what to do.) Their companies were registered both in France and abroad, allowing the men to take advantage of VAT-free cross-border trades. El Ghazouani recruited people to “lead” the companies, poor guys from the suburbs of Paris who worked in restaurants, as trash collectors, as delivery drivers—men who would agree without hesitation to put their name on a piece of paper in exchange for a chunk of money.

In the spring and early summer of 2007, before they’d even started making trades, Zaoui and El Ghazouani would meet up in the morning and go to a cybercafé or a McDonald’s with free Wi-Fi—Zaoui told me they wanted to work from public IP addresses that couldn’t be linked to them. To make their businesses seem legitimate, they logged on to Powernext every day and sent emails from company addresses. The men got along well. El Ghazouani was slightly younger than Zaoui, and he hailed from Morocco, where he’d made money in a luxury car service. Although he’d recently married a former Miss Europe, he maintained the lifestyle of a bachelor. Meanwhile, Zaoui’s marriage was falling apart—his wife wasn’t interested in the wealth and power that obsessed him, and for months Zaoui had been having an affair with a TV personality who was wildly jealous and absorbed far too much of his time.

Zaoui had the sense that everything was building toward an apogee. “I knew that the beginning of 2008 was going to be explosive,” he said. “I was sure of myself. I had no doubts.”

The sense of imminent change seemed to suffuse his whole life. One day, Zaoui was headed home on his motorcycle when he saw a woman who was walking in the same direction he was riding. He couldn’t see her face, only her long hair swinging as she walked. He could tell that she was beautiful by the way she held herself. As he passed her, he turned to catch a glimpse of her face and saw that it was a woman he’d known in his adolescence.

Her name was Chirelle, and they’d had a fling on the beach one summer when he was a teenager. He had seen her again, years later, after he got married. He was rich by then and had taken all his cars with him on vacation to Cannes: his Ferrari, Mercedes, Porsche, Rolls Royce, all loaded on the back of a truck. When a valet at a casino pulled Zaoui’s car for the night—a Lamborghini Murciélago he’d modified so the engine was extra loud—everyone in the vicinity turned to look, and there was Chirelle, staring at him with her big green eyes. They hadn’t spoken then, just looked at each other as he got into his car with his wife and drove away.

Now Zaoui circled the block on his motorcycle, stopped next to Chirelle, and took off his helmet. She recognized him right away. “Are you hungry?” he asked her. They went to eat around the corner, at a restaurant run by the famous chef Alain Ducasse, and when he got home that night Zaoui knew that he wanted to spoil Chirelle like no man had ever spoiled a woman. He bought her a Bugatti in green, like her eyes. When she asked him what he did for work, he replied, “I work for the protection of the environment.”

It was late summer 2007 when everything changed. Zaoui and El Ghazouani had been seeing less of each other, meeting only once a week or so. One morning, Zaoui went to a café and tried to log on to the accounts of one of their firms. He got a message saying that his password was incorrect. He tried a second time, and when it failed again he became suspicious. There were only two people in the world who had access to the accounts, and he was one of them. He called El Ghazouani. “What’s going on?” he asked.

They agreed to speak in person. According to Zaoui, at the meeting El Ghazouani divulged that he’d overinvested. “I’m up to 300,000 euros,” he said. “I can’t keep it up anymore.” Without telling Zaoui, El Ghazouani had made a deal with someone else, giving them control of the companies. He made it sound like he was in dire straits, like he needed the money the deal would generate so badly that he didn’t have a choice.

Zaoui found it all baffling. If they’d just waited until the carbon market picked up, they would have made a fortune. Zaoui wondered if El Ghazouani was lying, but the two men had been through so much together, and Zaoui still felt fondness toward his friend. They debated what the companies were worth, and Zaoui demanded a cut of what El Ghazouani said he’d netted from offloading them. Eventually, El Ghazouani paid him 80,000 euros.

Losing the companies was a major setback, but Zaoui was still sure he was onto something big, so he tried to focus on the road ahead. He wanted to register a new brokerage that would only make deals for other trading companies, never skimming the VAT directly off trades of its own. In the event that other scammers began defrauding the carbon market, something Zaoui was confident would happen, he would offer his brokerage’s trading services for a commission.

The problem was that he lacked capital. He needed more than the 80,000 euros he’d received from El Ghazouani. He wanted investors, people who were serious about his vision. Zaoui reached out to people who had money at their disposal. One of them was Daphne.

The two men knew each other in passing from the world of mobile phone VAT fraud. Daphne remembered Zaoui showing up for dinner one night in Beverly Hills. They moved in the same circles, knew the same people. El Ghazouani had talked to Zaoui about Daphne, rhapsodizing about his business acumen.

By the time Zaoui called Daphne, it was early 2008. Daphne had gotten out of prison on parole and fled France, returning to Israel. According to Daphne, Zaoui said he’d “found something amazing,” and Daphne told him that he’d retired from scamming to spend time on things that brought him pleasure, including a stable where he kept racehorses. “I don’t work anymore at all. I don’t want to do anything. I’m with my horses,” Daphne said. Zaoui pressed him: “It’s really amazing. I need two million euros, please. Just trust me.” Daphne remained a firm no.

Undeterred by his streak of bad luck, Zaoui kept looking for funding. He eventually borrowed some from an acquaintance, which he used to found a company called Coer2 Commodities. As he predicted, the carbon market grew. In fact it exploded. As Europe reduced the number of allowances available to trade, the price of EUAs went up, and the market attracted more attention. The average trading volume in late 2008 was less than two million allowances per day, which represented an equivalent number of metric tons of carbon. Just a few months later, it was up to seven million per day. It reached 15 million in late May 2009, and early June saw a record of nearly 20 million. Many of these trades happened on BlueNext, which succeeded Powernext in late 2007 and grew to become the continent’s largest carbon exchange.

Broadly speaking, the value of the global carbon market, in which the European cap-and-trade system was by far the largest player, more than doubled between 2007 and 2009, reaching $144 billion. As the U.S. housing-market implosion ignited a worldwide financial crisis, it seemed as though EUAs offered a plush little haven in a global minefield of bad investments. “Unlike other markets, the carbon market hasn’t collapsed despite the fact that carbon as an asset is still somewhere between infancy and childhood,” Yvo de Boer, the executive secretary for the United Nations Framework Convention on Climate Change, said in March 2009.

What politicians had yet to realize was that the market was rife with fraud. As word spread through criminal networks about the easy money to be made from allowances, scammers all over Europe—and in some cases outside it—flocked to carbon-trading platforms. Once she was out of prison, Christiane Melgrani joined the fray. Zaoui’s old business partner Marco Mouly did, too, bringing along a glamorous Parisian playboy named Arnaud Mimran, who was later implicated in two murders and convicted of a kidnapping related to his carbon dealings. Many fraudsters sought relationships with big banks that could broker trades on carbon exchanges. Mohammad Safdar Gohir, a Brit who submitted more than 100 million euros in VAT-reimbursement claims to German authorities, called his contact at Deutsche Bank his “golden goose.” Some scammers funneled their spoils into terrorism; evidence of profits from a VAT scheme were found in a cave once occupied by Osama bin Laden.

In Zaoui’s view, some of the newcomers were sloppy. He made sure that his new brokerage was aboveboard, at least on paper. By poaching more than a dozen traders and bankers from serious financial firms, he manufactured a veneer of respectability; many of his employees had no idea he was involved in fraud. To bolster its image further, his firm expanded to include legitimate trading in crude-oil futures, gold, natural gas, and metals. Its analysts gave quotes to news agencies like Reuters. Zaoui told me that he made 80,000 to 100,000 euros a day from legal business alone.

Meanwhile, he was quietly doing what he had long plotted: taking commissions from companies that used his brokerage’s services to skim VAT from carbon trades. Zaoui estimated that he made hundreds of millions of euros from his illicit business, although he wouldn’t provide precise figures or share details about where all the money wound up. He was convinced that the cunning of his approach would shield him from ever getting caught. “I made a colossal profit as a broker, and what I did behind the scenes, nobody knew,” Zaoui told me. “The best way to go unnoticed is to be noticed. Like Goebbels said, ‘The bigger the lie, the more people believe it.’ ”

In the summer of 2008, Zaoui got a call from Igal Abikzer, the man who had first introduced him to Kévin El Ghazouani. “You know El Ghazouani is making a mockery of you,” Abikzer told Zaoui, according to legal documents.

Abikzer proceeded to share what he knew: El Ghazouani never offloaded the companies he ran with Zaoui. He retained control of the firms, including Crépuscule, so that he could run the VAT scam that Zaoui claimed was his idea. El Ghazouani had dumped Zaoui and was now in cahoots with someone else: Daphne. “Everyone in Israel knows,” Abikzer said.

Abikzer had come by these details inadvertently. One day, he called a friend in Israel who at that precise moment happened to be with Daphne. During their conversation, Abikzer heard a computer in the background receive a Skype call. Daphne answered, and it sounded to Abikzer like El Ghazouani was on the other end of the call. “Reconnect the computer. It disconnected,” he heard El Ghazouani say.

As soon as Abikzer hung up with his friend, he called El Ghazouani. “What’s up?” Abikzer asked. “Did your computer reconnect?”

The question seemed to catch El Ghazouani off guard. “Yeah, yeah, it works,” he replied.

After that, Abikzer learned that El Ghazouani was going around making fun of Zaoui for his misplaced trust, his naiveté. For Zaoui, the betrayal was grating. So was the revelation that Daphne had lied to him about being retired from scamming.

But there were things Zaoui didn’t know—things that surely would have angered him even more. Daphne told me that when Zaoui asked him for money in 2008, he had already set up a small apartment as an office in Tel Aviv and recruited a team of guys he knew to orchestrate carbon trades and funnel the stolen VAT to overseas accounts. Daphne was also using at least some of the companies Zaoui thought only he and El Ghazouani were running. “He was calling me, but he didn’t know I was already in,” Daphne said of Zaoui. “My God, they are so stupid, these guys.”

Daphne claimed that Crépuscule was his company from the start, something that as far as I knew he had never said publicly before. He told me that he established it long before carbon fraud was even possible; he initially used it to steal VAT from phone sales. Daphne still wouldn’t give me the name of the friend he went into business with while he was in prison, but based on what he was saying about Crépuscule, the man had to be El Ghazouani. And if Daphne and El Ghazouani were scheming together all along, that meant an unwitting Zaoui was working for Daphne when he set up Crépuscule as a brokerage on Powernext.

Zaoui suspected that El Ghazouani had betrayed him out of greed: Daphne had more money than Zaoui did, and a bigger profile in the fraud world. As for Daphne, Zaoui developed a different theory about his motives. “I was always with beautiful women, I had beautiful cars, I was with people in the artistic world. I didn’t hang out with thugs,” Zaoui told me. “I was naturally brilliant and it pissed him off. And then he stole from me.”

Zaoui said that once he learned the truth, he vowed to avoid doing deals with companies linked to Daphne and El Ghazouani, if he could help it. It’s a war, he told himself. But as the carbon market accelerated and the number of trading entities ballooned, it became increasingly difficult to discern who was connected to what. One person I spoke with in the French justice system, who asked that their name be withheld because they weren’t authorized to comment on the record, told me that it was impossible to know the depth of the carbon scammers’ collaboration or deception. When it came to Zaoui, Daphne, and El Ghazouani, “Sometimes they worked together, sometimes they didn’t—it depended on the company and the moment. It’s a jigsaw puzzle.”

In the fall of 2008, Zaoui confronted El Ghazouani in Paris. They met at a spot called the Milk Café in the Second Arrondissement, an opulent business neighborhood on the Right Bank. Any lingering affection Zaoui had for El Ghazouani was long gone. He was furious. “Listen, I know what you’ve done,” Zaoui said. “It’s a shame, because we could have made a lot of money.”


The first entity in Europe to sound the alarm on carbon fraud seems to have been the Caisse des Dépôts et Consignations, or CDC, France’s state-owned bank. It was releasing millions of euros in VAT reimbursements to bank accounts set up in countries that weren’t signatories to the Kyoto Protocol, and its employees got suspicious. According to Marius-Cristian Frunza, a prominent European VAT-fraud expert, between October 2008 and the following June, the CDC sent 13 statements of concern about 35 companies to Tracfin, the French government agency that analyzes financial data for fraud. During the same time period, BlueNext sent at least nine additional alerts.

Tracfin had relationships with various financial institutions, including banks, private companies, and trading platforms; it was able to take tips from whistleblowers and keep their identities secret. After following up on reports from the CDC and BlueNext, Tracfin decided to take the matter to the customs police, who began to tease apart the carbon market’s layers of shell companies and straw managers, preparing cases they could take to court.

By June 2009, French authorities realized that VAT fraud was rampant. At a loss for what else to do, they announced that EUAs would now be exempt from VAT, and they shut down carbon trading for two days. Still, no one in the government was willing to admit that the country’s public coffers had been looted, and badly. “There is a risk of VAT fraud, so as a preventative measure we are changing the VAT regime,” a representative of the French Budget Ministry told Reuters. “There has been no evidence of VAT fraud. It is only a rumor … but it could have potentially hurt BlueNext’s ability to compete, so we had to react.” Overnight, France’s carbon market crashed.

When the French accounting office tallied how much money VAT fraudsters had stolen, it came to 1.6 billion euros. Among the worst offenders were the people behind Crépuscule. Data put together by Frunza show that the company made trades amounting to 65 million metric tons’ worth of carbon—the same volume moved by financial giants Société General and Deutsche Bank, representing half the allowances distributed to French industries. All told, Crépuscule’s trades were worth 827 million euros, and prosecutors would soon claim that those same trades had been used to pilfer some 150 million euros in VAT.

Zaoui was pissed off. Why should he be held accountable for carbon crimes committed by a company that, in his view, had been stolen out from under him?

On December 8, 2009, the police came to Zaoui’s apartment in Paris. His dogs, Anakin and Bugatti, started barking, and he immediately knew who was on the other side of the door. He texted Chirelle: “6 in the morning, cops raid.” Then he flushed his SIM cards down the toilet—all except one, which he dropped on the bathroom floor. Zaoui ripped up some work papers and flushed them too. It took two minutes for him to open the door, still in his underwear. The police drove him to Coer2’s offices on Rue du Faubourg Saint-Honoré, where they went through various computers.

A few days into custody, when Zaoui had a chance to review the files in the case against him, he realized that he was being investigated for Crépuscule’s crimes. The police had connected him to the company through phone taps related to mobile phone VAT fraud, but El Ghazouani had also been picked up for interrogation, and Zaoui believed his ex-friend had given the police his name and intimated that he was the brain behind the entire operation. Zaoui was pissed off. Why should he be held accountable for carbon crimes committed by a company that, in his view, had been stolen out from under him?

At the time, France kept fraud suspects in a prison called La Santé. Zaoui could only shower three times a week, and the cell he shared with three other men was tiny, less than 100 square feet. One of the men, also suspected of being a carbon scammer, knew Daphne. Zaoui asked the man if he had a phone number for Daphne, and one Friday night Zaoui called his rival in fraud.

“Listen to me,” he told Daphne. “I don’t want any money. I’m not asking you for money to pay my lawyers or anything. I’m in this situation where this case isn’t mine, and you know that very well. You took the companies over through Kévin. Now Kévin is blaming everything on me.”

Daphne was silent.

“I am just asking you for one thing,” Zaoui said. “Get me out of here. Tell me the story I need to tell. A name, something to get me out.”

What Daphne heard was a threat: If someone else didn’t come forward and take the fall for Crépuscule, Zaoui was going to tell law enforcement everything he knew.

“Ah, OK, Grégory Zaoui. I’ll call you back,” Daphne said lightly. Zaoui had contacted him on a phone registered in Daphne’s legal name. After hanging up, Daphne grabbed one of his other phones, a burner, and called Zaoui back.

“Listen, you son of a bitch. First of all, you call me from jail? It’s not very nice,” said Daphne. “Second of all, you can go as far as you want. If you want to push, I can find a lot of things against you beyond this case. So cool down.”

But Zaoui didn’t back off. He was miserable in prison. The only thing that could keep his spirits up was Chirelle’s visits. She made him laugh and forget where he was. They had sex surreptitiously in the visiting room. A few months into his detention, they found out that she was pregnant, a miracle baby. Zaoui had to get out of La Santé.

During another interrogation, Zaoui told the police about how El Ghazouani had betrayed him. “I will explain to you how we get from El Ghazouani to the person in Israel,” he said, referring to Daphne. He gave the police Daphne’s name and one of the aliases he used to travel. He gave them Daphne’s phone numbers, his addresses, the names of his businesses. Zaoui told them about a bar Daphne owned in Tel Aviv and about his posh villa. Zaoui told them everything.

There is a photograph of Daphne, at his eldest son’s bar mitzvah in 2010, striding along an empty patio next to a gleaming swimming pool. He’s wearing white snakeskin boots and immaculate white slacks, a tuxedo shirt under a purple satin evening coat with long tails. His gold-trimmed Tom Ford sunglasses shade his face. Behind him the lights and sound system of an enormous stage tower above lavish outdoor sofas. In the image, Daphne looks circumspect, as though he’s taking in the fruits of his labor and finding them wanting. A man surrounded by opulence, dissatisfied.

Money to Daphne began to seem like hot water to a frog—once immersed in it, he constantly adjusted his sense of what was normal. He felt like he was living someone else’s life, and it wasn’t what he’d imagined. “There is no wow to buying a car, there is no wow to buying a house, there is no wow to buying a building or taking a private plane,” Daphne told me. Being rich in the movies was a montage of glitz set to a thumping soundtrack. In reality there was just an ever more inflated set of expectations. When he began his criminal career, Daphne thought money would give him the freedom to do whatever he wanted, a repudiation of his narrow, predictable childhood. It wasn’t a path to recognition so much as an expression of self-love. “I love myself so much—I’m fucking in love with me. I have to confess, I watch myself in the mirror and I love me,” Daphne said.

This was the driving force of his criminal schemes; it didn’t much matter what the targets were. If he thought about it, he considered most of what he defrauded to be bullshit, systems corrupted by money and entangled in problems too complicated to solve.

After France discovered what the VAT scammers, including Daphne, had done with the emissions-trading system, other European countries began uncovering carbon fraud, too. Europol eventually reported that, across the continent, the total amount ripped off by carbon scammers was five billion euros. Frunza kept his own score; he thinks the actual figure is closer to ten billion. Whatever the total loss was, BlueNext didn’t survive it—the exchange was shuttered in 2012.

Markets are inherently fragile, rooted as they are in a common delusion, and the carbon market was especially chimerical because so many participants knew that they were profiting from a farce of their own making. They were trading for the sake of trading, fabricating the impression of value and demand where none existed. “In some countries,” Europol reported, “up to 90 percent of the whole market volume was caused by fraudulent activities.” As scams were exposed, the few bones of the market that remained tied to reality barely held. One national investigator told me that fraud placed the market in existential peril from which it took years to recover. (The market is now estimated to be worth 751 billion euros; at the beginning of 2024, one ton of carbon was trading at an average of 80 euros.)

When I asked Daphne if he thought that fraud had affected Europe’s efforts to slow climate change, he told me the carbon market was engineered to be ripped off, that the scams had actually helped give it countenance. Thanks to fraud, there was a period when the market was ballooning with money. “If there was no scam, and I’m not saying that the scam was good, but if there was no scam, the volume would have been almost zero,” Daphne told me.

In other words, better to have an empire of chicanery than an insignificant backwater hamlet. To Daphne, there was no real virtue in the market itself. What was the point of trying to reduce European emissions when China and the U.S. weren’t addressing theirs, and when climate solutions—wind turbines, electric cars—came with problems of their own? It made no difference if the carbon trades were real or fake. It only mattered that they took place, and that every trade was money made. Virtue here didn’t exist, but something else could.

In 2012, Israeli police began pressuring Daphne to testify against a gangster for a matter unrelated to carbon scamming. They picked him up for questioning and to let him know they had their eyes on him. They tried to scare him, asking if he’d like to be sent back to France for violating his parole, if he’d like to be molested in prison. He said sure, maybe he’d enjoy it. The police didn’t appreciate his sense of humor.

The pressure only grew after that, and Daphne eventually decided that it was better to serve out a sentence in France than be lorded over by Israeli law enforcement. He arrived in Paris on January 9, 2014. When his plane landed at Charles de Gaulle airport, he had only a few essentials with him: a fur vest, a crocodile-skin bag, a Richard Mille watch, a few thousand euros. The police were waiting. When he saw them, he took out his passport. “Yep, it’s me,” he said.

But the authorities wanted him for more than his parole violation. Daphne was also a target of an investigation focused on Crépuscule, and there was a warrant for his arrest. He stood accused of running the brokerage’s carbon scheme and being its main beneficiary. El Ghazouani and a handful of intermediaries and straw managers were also investigated and arrested. Zaoui was indicted, too. If he thought that providing information about El Ghazouani and Daphne would save him from prosecution, he was wrong: French authorities said he was the mastermind of Crépuscule’s operation. That meant he would be tried alongside the men he said had betrayed him.

In some ways, the Crépuscule defendants were the exception. Prosecuting carbon fraud was difficult. Even when a case could be built against a scammer, bringing it to court could be an ordeal—many fraudsters fled the countries where their crimes took place or never lived there to begin with. In some cases, attempts to seek justice stalled out through the vagaries of international extradition. Mohammad Safdar Gohir, who lived in Dubai and London while he ran scams through Deutsche Bank, was arrested in 2014 in Las Vegas, where he had gone to attend a boxing match. He remained in a U.S. jail for more than a year as his lawyers tried to impede the process of extraditing him to Germany.

Much like the people who stole it, the money skimmed from European coffers disappeared into international webs of shell companies and bank accounts. Governments recovered only a fraction of what was stolen. Sometimes they would track down money at a bank in, say, Singapore or Hong Kong, but by the time a formal request was made the money would be long gone. Someone in the French justice system told me about a case in which investigators traced 100 million euros around the world, following it to Tel Aviv, only to arrive at a dead end: It had been withdrawn in cash from a local bank.

The Crépuscule case moved slowly. Daphne spent over a year in pretrial detention at Fresnes before he was released with an electronic bracelet, which was removed at the end of 2015. After that he was required to make regular visits to court. While he waited for the trial to begin, Daphne kept an opulent hotel room near the Champs-Élysées.

As for Zaoui, he stayed in Paris until a new investigating judge assigned to the case, believing he had more assets than originally thought, retroactively raised his bail. Zaoui decided that he couldn’t stay. He fled to Los Angeles with Chirelle, where they lived in West Hollywood. Zaoui reveled in his proximity to the movie business, with its palpable glamour. He and Chirelle finally got married; he was still wildly in love with her. When he rode his motorcycle down LA’s wide avenues, he felt like anything was possible.

Zaoui knew that his happiness couldn’t last—he’d violated his bail to go to the U.S., after all—but he still wasn’t prepared for what came next. When Chirelle’s U.S. visa expired, she returned to Paris in early 2016. There, French police arrested her on charges related to another fraud investigation. Zaoui was in Israel with their five-year-old daughter at the time. His lawyers in France told him that if he surrendered himself, Chirelle would be released. Her family put pressure on him; they were afraid of what might happen to her behind bars. So Zaoui got on a plane, went to France, and turned himself in.

A few weeks later, Chirelle came to see him in prison. He had been moved to Fresnes, which was, in Zaoui’s opinion, disgusting. It was freezing cold. It had mice. He went to give her a hug, and she pushed him away. She was angry; she blamed him for what happened. She had spent more than 40 days locked up, and Zaoui could see that the experience had left an indelible mark on her. “It wasn’t the woman I’d known,” Zaoui told me. “She had been transformed.”

France, Zaoui told me, could never put together a clear picture of the scam he’d orchestrated after El Ghazouani’s betrayal, so prosecutors pinned Crépuscule on him.

The Crépuscule trial finally began in May 2017 and lasted several weeks. When the convictions came down, El Ghazouani received seven years in prison, Daphne got nine, and both men were fined one million euros. (On appeal, Daphne’s sentence would be increased to ten years. He was also convicted of involvement in a separate carbon-fraud operation and given six years.) As for the straw managers and intermediaries, most of them got between one and four years. The court couldn’t determine who started Crépuscule; it could only confirm that the company was created in 2002.

Zaoui was sentenced to six years and fined 300,000 euros. He quickly went into hiding in Paris. He would never go back to Fresnes, he vowed, but he knew that La Santé was being renovated and would soon have more amenities, including a phone and a refrigerator in every cell. Zaoui waited until the facility reopened, and then he turned himself in.

He thought that being in the renovated prison, which had a visiting room with a bed where couples could be intimate, would help save his relationship. But when Chirelle was scheduled for her first visit, she never showed. Zaoui waited alone in the visiting room for nearly an hour. In French prisons, they have a name for that: parloir fantôme, ghost parlor.

Zaoui remained in prison another three years. Chirelle never came to see him. After getting out, he tried to move on with his life. Under the conditions of his release, he couldn’t open a new business, and he’d have to pay a portion of his income to the French state until his fine was paid off. He wrote a book and staged a one-man show about his carbon-fraud scheme. He ran for national office and lost.

Zaoui doesn’t sleep much anymore. He goes to bed around midnight and wakes up around four. His parents have passed away. He doesn’t see his children often; he’s estranged from Chirelle. There isn’t much to fill his days. He isn’t happy. But at least the specter of imprisonment isn’t lurking over his shoulder. “Freedom,” he told me, “doesn’t have a price.”

Zaoui was never prosecuted for his work with Coer2. France, he told me, could never put together a clear picture of the scam he orchestrated after El Ghazouani’s betrayal, so prosecutors pinned Crépuscule on him instead. (He was also sentenced to six years and fined 200,000 euros for his involvement in a 385-million-euro carbon scam run by Christiane Melgrani; police connected him to the crime through the SIM card that fell on the floor in his apartment when they came to detain him.) “I’ve never felt jealous of any of the other carbon scammers,” Zaoui told me. “I had a feeling of injustice. I was on trial for something that wasn’t mine. If it had been mine, intellectually I would have accepted it. I would have said, OK, I’ve done some stupid things, I’ve been caught.”

In his mind, El Ghazouani and Daphne fucked up. He suspects that they thought Israeli IP addresses would protect them from scrutiny, so they didn’t cover their tracks as well as they should have. Zaoui never would have let that happen. He didn’t with Coer2. He knew how to engineer an elegant scheme. It rankles him that he went down for what he considers other people’s bad decisions. “I don’t know how the profits were distributed. Maybe they brought in other partners, I don’t know, I wasn’t there. The profit must have been between 100 and 120 million euros,” Zaoui told me. “If I had been in charge, as I had set it up, I would have taken 500 million.”

Inside Daphne was panicking, but outwardly he gave the impression of an apoplectic rich guy refusing to be inconvenienced.

Unlike El Ghazouani and Zaoui, Daphne wasn’t in court when he was convicted in the Crépuscule case. When the authorities hinted that his sentence wouldn’t be as light as he hoped, he decided to flee France. It took five days for him to obtain a passport with a pseudonym and organize transportation out of Europe. His plan was to sail from Italy to Israel on a 150-foot yacht. But he began to suspect that a friend who was helping him, who at the time was in touch with French authorities about another matter, might sell him out. Daphne didn’t want to alarm the friend by canceling the yacht, so he quietly called a Russian acquaintance and asked him to send a private jet for him instead.
“Where do you want to go?” the Russian asked.

“I don’t know, just organize a plane and I will see,” Daphne said.

He had dinner that night with the friend he suspected might betray him and went along with the plan, confirming that they would meet on the beach the next day to board the yacht to Israel. Instead, Daphne left the hotel at 6 a.m. and spent more than an hour walking the streets, hoping to lose anyone who might be tailing him. When he finally felt safe, he hailed a taxi, which took him to a small airport for private jets. As requested, his Russian friend had delivered a plane for him.

The pilot took Daphne to Greece, where border officials had questions: Why, for example, didn’t he have any exit stamp in his passport? They told him to wait while they checked on some things. Daphne got nervous, and he realized that there was only one strategy available to him. He began acting indignant. “What do you mean?” he shouted, feigning fury. “Call the embassy! Call the embassy!” Inside Daphne was panicking, but outwardly he gave the impression of an apoplectic rich guy refusing to be inconvenienced. The Greeks relented and let him through. He could feel his legs shaking as he left the airport.

Daphne traveled to an island idyll off the Greek coast. He met a woman, a hotelkeeper, and became infatuated with her; he stayed three weeks before he got bored and called the Russian again, asking him to send a boat. The boat that arrived was a yacht with an eight-person crew. Daphne worried that it would look suspicious for a man to be alone on a boat with a large crew, so he called a friend and asked him to come along, and to bring a couple of girls who knew how to keep a low profile. They came, but the girls weren’t at all inconspicuous; they wanted to tan naked on the deck. Daphne, exasperated, sent them all back to shore.

“Just go,” he told the ship’s captain, who kept trying to stop so Daphne could experience the beauty of Mykonos or the sunsets at Santorini. “Go! Putain.”

Daphne wanted to sail straight for the island of Cyprus, where he could meet another Russian friend who might help him. When they arrived, however, the captain refused to take him to the Turkish side of the island; he insisted that he drop Daphne off in Limassol, the one place Daphne had been warned not to go, because agents and police from all over the world seemed to congregate there. No matter what Daphne offered, the captain wouldn’t change his mind. Daphne called his friend on the island and asked to be picked up discreetly at the port in Limassol. As Daphne made his way through customs, he heard a guttural revving. His friend had arrived with two Ferraris and a cadre of bodyguards. Hardly discreet.

“Take me to the Turkish side, please!” Daphne implored his friend. But the friend wanted him to see his house. He wanted them to play Ping-Pong. He said that he had a surprise for Daphne and presented four girls. Finally, days later, they made their way to the Turkish side of the island, which was full of casinos where people kept recognizing Daphne. He rented a house, hoping to go unnoticed, and had someone bring him his Israeli passport. Then he looked for an Israeli contact who would sail 170 miles to Cyprus and pick him up. The process took months.

When the guy Daphne had hired showed up in the azure waters off the Cypriot coast, he couldn’t believe his eyes. The boat was tiny, a little wooden barge. It didn’t even have a cabin. “Did you make this yourself?” Daphne asked. Yes, actually, he had. Daphne clambered aboard and they set off at a pace Daphne thought was slower than swimming. He took a nap, and when he woke up three hours later, they were still in Cyprus.

They inched toward Israel for three days and three nights. UN boats patrolled the waters constantly; the Cypriot and Lebanese coast guards, too. Even now, Daphne wishes he could find it funny, but no—it was awful. He hated it, waiting to see what fate had in store for him, whether his efforts to flee had been enough. In those long hours before his salvation, before he reached the shores of the Holy Land, before he knew his future, it was just him and a sailor in a handmade boat. The big blue world stretched out on either side of them, as though it were infinite.

Reporting for this story was supported by the McGraw Center for Business Journalism at the Craig Newmark Graduate School of Journalism at the City University of New York. 

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