Lawless Planet – Europe Had a Plan to Reduce Carbon Emissions. Scammers Fleeced It for Billions

Podcast: Lawless Planet
Host: Zach Goldbaum
Date: December 15, 2025

Episode Overview

This episode of Lawless Planet exposes the story behind one of the biggest environmental frauds in European history: how scammers exploited the European Union’s cap and trade system, designed to reduce carbon emissions, to steal billions through VAT fraud. Host Zach Goldbaum—alongside journalist Jessica Camille Aguirre—uncovers the mechanics of the scam, the personalities involved, and the systemic failures that enabled “the fraud of the century.” The episode explores what happens when mechanisms intended to save the planet become loopholes for financial crime.

Key Discussion Points & Insights

1. The Origins: Gregory Zaoui’s Journey from Petty Fraud to Carbon Markets

• Gregory Zaoui begins his criminal path stealing VAT on imported goods like Levi’s jeans, exploiting cross-border tax exemptions ([00:51]–[10:45]).
  • Quote:
    • “It’s like in the movie Forrest Gump...” – Gregory Zaoui ([01:32])
• While serving time in prison, his cellmate, obsessed with green energy, plants the seed for Zaoui’s future in clean energy—albeit with old tricks ([00:35]–[03:01]).
• After prison, hoping to “go legit,” Gregory enters the solar panel business, but temptation strikes when he discovers VAT can be skimmed from trading digital carbon allowances.

2. Cap and Trade: Hopes, Loopholes, and Design Flaws

• EU Cap and Trade system introduced in 2005, rooted in the Kyoto Protocol, intended to make polluters pay and incentivize carbon reductions ([03:58]–[08:02]).
  • Explanations by Jessica Camille Aguirre, who investigated the fraud:
    • “What cap and trade does is it puts a price on the ability to emit one unit of carbon.” ([06:56])
    • The system’s digital, intangible nature made it uniquely vulnerable:
      • “One of the scammers told me that it was easier than sending an email.” – Aguirre ([12:24])

3. VAT Fraud Unleashed: Gregory’s Scheme Goes Industrial

• Zaoui exploits VAT exemption for cross-border carbon credit trades:
  • Buys credits VAT-free abroad, sells in France with VAT, pockets the tax ([11:38]–[12:47]).
  • Early scam yields €6,000 profit from a €30,000 transaction.
• Zaoui recruits Kevin El Ghazwani, the family friend who once bailed him out, to scale up schemes using multiple shell companies with hired frontmen ([13:53]–[15:43]).
  • Notable quote:
    • “He knew this was going to be such a huge cash cow... money raining from the skies.” – Aguirre ([13:53])
• The simplicity and opacity of the digital market allowed VAT scams at unprecedented scale:
  • “There was no need for even the pretense of moving something... it was essentially like a serial number that could be traded from me to you.” – Aguirre ([12:24])

4. “The Brain,” Betrayals, and the Carbon Turf Wars

• As profits grow, Zaoui is double-crossed by El Ghazwani, who teams up with another fraudster, Gustav Daphne, behind his back ([16:00]–[22:52]).
  • Daphne is described as a “Casanova-type... bombastic and very suave and entirely offensive, but also somehow charming”—showing the colorful personalities in this criminal underworld ([17:47]).
• The scam becomes a “feeding frenzy,” with millions laundered through various commodities—gold, metals, natural gas ([20:39]–[21:25]).
  • Scammers flaunt their wealth, booking entire luxury stores, buying mansions, and living extravagantly.
  • Quote:
    • “They bought a lot of cars. They invested in real estate all over the world... booked out the entire Hermes store in Paris multiple times to allow his lover to shop there in privacy.” – Aguirre ([21:25])
• Hidden behind shell companies and digital facades, even the scammers themselves struggle to know who they’re dealing with ([24:00]).
  • “...people were betraying each other and helping each other at the same time without ever knowing it.” – Aguirre ([24:00])

5. Detection, Collapse, and Aftermath

• France’s state-owned bank gets suspicious of VAT reimbursements going to far-flung accounts ([24:53]).
• After months of warnings, authorities uncover that 80–90% of carbon trades are fraudulent: “the scale of fraud is unprecedented” ([25:18]–[26:06]).
• Drastic action: the government makes all carbon allowances VAT-exempt—collapsing the market almost overnight:
  • “Recall that at the time, it was likely the case that about 90% of the market was fraud. So the market totally collapsed.” – Goldbaum ([26:53])
• Totals: €1.6 billion stolen in France, over €5 billion (possibly €10 billion) EU-wide ([27:15]–[30:52]).
  • “This was by far the biggest fraud that Europe had ever seen... making millions of euros every day.” – Aguirre ([30:52])

6. Fallout for the Perpetrators

• Gregory Zaoui, Kevin El Ghazwani, and Gustav Daphne are eventually arrested and sentenced—6, 7, and 9 years, respectively ([31:14]).
  • Zaoui turns on his old partners to reduce his sentence:
    • “He basically hands Daphne over to the French police.” – Aguirre ([30:16])
• Most of the stolen money remains unrecovered ([32:45]).
  • “They've recouped a very small proportion of what’s gone missing.” – Aguirre
• Zaoui now restricted from business, writes a book, launches a one-man show, and runs (unsuccessfully) for office; his personal life lies in ruins ([33:02]–[33:42]).
  • “His relationships have crumbled. He is estranged from the mothers of his children. He seems to be pretty lonely.” – Aguirre
• Daphne flees to Israel, now invests in crypto ([33:42]).

7. Systemic Lessons & Stark Realities

• The cap and trade system’s complexity and lack of oversight made it uniquely susceptible to manipulation.
• At root, it enabled pollution-as-usual under a different name:
  • “Trading credits that represent change instead of actually changing.” – Goldbaum ([34:37])
• On paper, the Kyoto Protocol worked; in reality, it didn’t move the needle on global emissions—up 44% since 1990 ([35:39]).
  • “It plays into this desire that we have to concoct mechanisms by which we can delude ourselves...” – Aguirre ([35:06])
• True planetary change can’t be achieved with systems that only look good “on paper.”

Notable Quotes & Memorable Moments

• Zaoui’s “Forrest Gump” Moment:
  “He was to me what Bubba was to Forrest Gump for shrimp, but in this case, it was for renewables.” – Gregory Zaoui ([01:32])
• On the Cash-Grab Mentality:
  “Their gluttony was so on display and it was so explicit and it was so gleeful.” – Jessica Camille Aguirre ([03:39], repeated at [34:12])
• On the System’s Fatal Flaw:
  “One of the scammers told me that it was easier than sending an email.” – Aguirre ([12:24])
• On the Purpose of Cap and Trade:
  “Trading credits that represent change instead of actually changing.” – Zach Goldbaum ([34:37])
• On Complexity and Alienation:
  “These steps that try to alienate us... make us feel stupid for not understanding these complex systems... a way to undermine a common language...” – Aguirre ([36:58])

Important Timestamps

• 00:35 – Zaoui’s cellmate champions green energy (Forrest Gump analogy)
• 03:58 – Introduction of the cap and trade system and its flaws
• 07:54 – The logic and incentives behind cap and trade
• 11:38 – Zaoui’s discovery of VAT in carbon trading
• 12:24 – Digital nature of carbon allowances makes fraud easy
• 15:43 – Building shell companies and frontmen for the scam
• 17:47 – Introduction of Gustav Daphne, the flamboyant co-fraudster
• 21:25 – Display of scam profits: luxury, excess, and impunity
• 24:53 – Bank and authorities begin to detect the fraud
• 26:32 – Authorities make trading VAT-exempt, collapsing the carbon market
• 27:15 – Totals: billions in VAT stolen, market impact
• 31:14 – Sentences for the conspirators
• 32:45 – Most stolen money remains unrecovered
• 34:12 – Broader implications: the system’s failure
• 35:39 – Comparison: paper success vs real-world emissions

Summary

This episode pulls back the curtain on how a plan meant to curtail European carbon emissions became “the fraud of the century.” Through vivid storytelling, interviews, and context, it shows how the carbon market’s design was both a literal and metaphorical playground for seasoned scammers. The story of Zaoui, El Ghazwani, and Daphne is as much a cautionary tale about environmental capitalism and regulatory naivete as it is a crime thriller. The conclusion questions whether market-driven solutions—so easily gamed—are enough to face the planetary climate crisis.