Tag: fraudulent platform

Barely a day goes without a scam of some kind popping up on our phones or in our email, trying to get us to download malware, reveal a password or pay for fraudulent goods. But there’s one bit of con artistry gaining traction that you definitely don’t want to fall for.

It’s called a “pig butchering” scheme, because the perpetrators will “fatten up” a victim to gain their trust before “butchering” them — typically by persuading them to invest large sums of money into a fraudulent investment, then making off with all of it.

Four men, three of them from Southern California, were recently charged in connection with such a scam, the U.S. Department of Justice announced Thursday. The DOJ alleges that the con cost victims $80 million.

Alham Lu Zhang, 36, of Alhambra; Justin Walker, 31, of Cypress; Joseph Wong, 32, of Rosemead; and Hailong Zhu, 40, of Naperville, Ill., were charged with conspiracy to commit money laundering, international money laundering and concealment money laundering, the DOJ said. Zhang and Walker were arrested and appeared in court Wednesday. If convicted, they face a maximum penalty of 20 years in prison.

Pig butchering scammers often find their victims on dating sites or social media, or by calling and pretending to have dialed a wrong number, federal officials said in the release. The scams are largely carried out by criminal enterprises from Southeast Asia, which use human trafficking victims to reach out to millions of people around the world, according to the U.S. Treasury Department. Scammers create relationships with the victims to gain their trust and, in many cases, introduce the idea of using cryptocurrency to make a business investment.

In cases involving cryptocurrency, victims are directed to fraudulent platforms to make investments, unwittingly sending their money to scammer-controlled accounts. The platform falsely shows significant gains on the investment, and the victims are then encouraged to pony up more and more. However, when they eventually try to withdraw their money, the scammers stonewall them — or just disappear with the funds.

In the case announced Thursday, the feds allege that Zhang, Walker, Wong and Zhu conspired to open bank accounts and shell companies to launder money from a cryptocurrency investment scam. The four are accused of making hundreds of transactions that caused the victims to lose more than $80 million — more than $20 million of which ended up in the defendants’ bank accounts.

According to FBI spokesperson Laura Eimiller, pig butchering scammers are patient and will build a relationship with daily small talk to make the victim feel comfortable. They may also send photographs portraying themselves as wealthy and successful. One sign that the romantic partner you met online may be a scammer is that the person is never willing or able to meet with you, always offering excuses and reassuring you they will visit soon.

The scammers usually introduce the investment opportunity by sharing their own success stories and saying they got wealthy through a particular investment platform, Eimiller said. They’ll share screenshots of their bank accounts with high balances and eventually pressure the victim to invest, presenting it as a “near guarantee” to make money — with the caveat that the victim should start with a small amount of money to see that it works.

The victim is sent a link to download a mobile app, or they’re directed to a website to open an account, according to Eimiller. The accounts, which the scammer will control, require them to upload their identification. Victims usually start with small amounts of money and get instant returns. They’re able to withdraw early on, which makes them believe the platform is legitimate.

Victims tend to increase their investment based on the returns they’ve seen, or they may be pressured to invest more by the scammers. They see reports of regular profits and eventually decide to make a large withdrawal. At this point, the hammer drops: They’re told that they need to pay taxes, about 15%-25% of their profits, and will need to find additional funds. Then they’re told that their account is frozen due to securities fraud or money laundering. They never get their (fictitious) earnings, nor will they recover the money they invested.

Eimiller advises against sending money to an investment platform just because someone you met online or over the phone advised you to do so.

“Most of these investment returns do not even mathematically make sense, but people want to trust those who pretend to be their friend, colleague or potential partner,” she wrote in an email. “And the use of third-party investment platforms seems to disarm people. In their eyes, they’re not giving their money to a stranger, they’re investing with what they are convinced is a legitimate investment company.”