The documents filed this week – which seek to recover less than half of the money from a seized crypto account that had allegedly been used to launder the proceeds – state that the victim was just one of many. — Photo by Sajad Nori on Unsplash
Cellphone users around the US have for months reported a growing barrage of puzzling text messages from people who appear to have the wrong number.
“Hey, what are you doing Monday?” a text might read. Or: “I have something to tell you.” The message could be even simpler: “I’m bored” or “Hello”.
Many people have been conditioned to understand such messages as opening salvos in complicated cons, just as they have with phone calls purporting to be from the IRS or emails regarding wealthy heirs stuck in overseas prisons. Yet the texts continue.
That’s because, authorities say, victims keep falling for this particular scheme – which combines aspects of romance and investment scams and is known as “pig butchering” because marks are fattened up before the kill. And when they fall for it, the haul can be massive.
Documents filed this week by the US Attorney’s Office in San Francisco – during International Fraud Awareness Week – show how the scam works. They describe how a 68-year-old Santa Clara man identified only as “RB”, who had recently divorced and was struggling through financial problems, received a text message in February from a number he didn’t recognise.
When he responded, the stranger said her name was “Janey Lee”, that she was a Houston clothing designer, and that she had the wrong number. The trap had been set, and “Lee” kept the conversation going via text before moving it to more secure channels: WhatsApp and Telegram.
“RB and Lee discussed personal information: their backgrounds, relationship statuses, businesses, and finances,” wrote government attorneys Galen Phillips and Chris Kaltsas in a civil forfeiture complaint, which seeks to recoup some of the lost funds. “Within weeks, this budding relationship became romantic in nature, with Lee repeatedly messaging RB about their future together.”
Before long, Lee got to work. She (or perhaps he) shifted the conversation to her success in trading cryptocurrency. By March, she had convinced RB to invest, too, helping him to create an account on the well-known trading platform Crypto.com, where he bought digital currency and sent it to “XTRA”, which appeared to be another legitimate crypto exchange.
“Following the initial investment, RB was able to view his fictitious ‘earnings’ on the XTRA website, which reported a 20% to 30% gain against his initial investment,” prosecutors wrote.
By April 22, RB had invested US$260,000 (RM1.21mil) through eight deposits. At that point, his account showed a value of US$487,000 (RM2.27mil) – an 87% bonanza in a matter of weeks. Three days later, the divorcee tried to withdraw US$100,000 (RM466,850).
“Instead of receiving his withdrawal,” the government lawyers wrote, “RB received a message from XTRA customer service saying that by May 2, 2023, in order to verify his account, RB needed to send his XTRA account an additional amount worth approximately 20% of his account balance.”
Fearing he’d been taken, RB called the FBI, but there was only so much investigators could do at that point. Agents raced to try to find the money.
The documents filed this week – which seek to recover less than half of the money from a seized crypto account that had allegedly been used to launder the proceeds – state that the victim was just one of many. At least three other victims, two in Texas and one in Florida, have reported sending a total of US$550,000 (RM2.56mil) to the fake crypto exchange. One of them lost half a million dollars.
“An investigation of the account revealed that it is part of an ecosystem of fraud that has impacted numerous victims with established losses in aggregate of US$1mil (RM4.67mil),” the US Attorney’s Office wrote. “Within eight months of the subject account’s opening in September 2022, the account had received nearly US$18mil (RM84.03mil) in cryptocurrency deposits, though the account holder has never deposited or withdrawn fiat money from the account.”
The government filing mentions no arrests, nor any suspects.
The Department of Justice says investment fraud is the most costly scam across the country, with US$3.31bil (RM15.45bil) in losses reported in 2022 to the FBI’s Internet Crime Complaint Center. Pig butchering and other crypto scams increased 183% from 2021 – to US$2.57bil (RM11.99bil) in reported losses last year.
“It’s human nature. People want company, and online romances have blossomed as more people use dating applications and social media to build relationships,” IRS officials said this week in an alert to consumers marking International Fraud Awareness Week that included the slogan “Don’t. Get. Butchered.”
“If you meet someone on a dating website or app and they urge you to invest in crypto,” the IRS said, “it is likely a scam.” – San Francisco Chronicle/Tribune News Service
