Financial Fraud Perpetrated

by | Jun 6, 2024

Investment scammers reaped a $6 million windfall from unsuspecting northwest Ohio victims. The FBI is warning residents of this cybersecurity threat.
View Article Here

THE “PIG BUTCHERING SCAM”A financial slaughterhouse

ig butchering scams originated years ago in the Far East.

In 2022, ProPublica published an investigation that showed Chinese crime syndicates were using human trafficking victims from China, Thailand, Cambodia and Vietnam to pull off the scam. Rather than a hog being fattened for slaughter, scammers emotionally fatten up their victims – by building a personal relationship, earning their trust, introducing them to lucrative investment opportunities  – then financially slaughtering them.

“They usually contact individuals through dating apps, social media sites, sometimes text messages or phone,” FBI Special Agent Matt Swansinger said. “Over time, what happens is you build this relationship, then here comes the investment pitch. And that investment pitch is usually, ‘I’ve got relatives who invest in cryptocurrency’ or ‘I know somebody who invests in cryptocurrency and has a way to make money quick.’”

According to data that the FBI provided to 11 Investigates, Americans lost $4 billion in investment scams in 2023. The FBI told our 11 Investigates team that the total increased more than 50 percent last year compared to 2022.

The introduction to the scammer happens when the victim responds to a text, a friend request, a direct message on a social media app or even a direct phone call.

Ever received a phone call or text where the person says, “Hi, is this Jim? … or Jane? … or Bill?”

That could be someone trying to get you to respond.

In the pig butchering scenario, the scammer has already done their homework, possibly looked at your public social media posts.

“If you have hobbies or any kind of interests that are out there (on social media), they may use that as a hook to get into you,” Swansinger said. “That’s how they end up building the rapport and that friendship with you, and that’s when they will make the pitch for the investment.”

It is not a week-long process. In researching and talking to people for this story, there have been instances of a scammer developing a relationship for months before pitching the investment opportunity.

A common pitch is in cryptocurrency, something the average person isn’t too familiar with. But the scammer will carefully walk the victim through the steps and show them trading boards – some real, some fake.

An effective tactic in the pig butchering scam is that the scammer will initially ask for a small amount of money – $1,000, for example – then wire it back to you, with significant gains. This is real money that lands in the victim’s bank account and can be withdrawn.

But then it escalates, “Look at all the money you made with that small amount. Imagine if you gave more.”

Gary Harden, a local transactional tax attorney, has worked with three people victimized in northwest Ohio. Their total losses amount to close to $6 million. He is involved because there are tax implications when a person cashes out an IRA or 401(k).

“They were all intelligent people. One was a doctor, one a lawyer, another an educator,” Harden said. “So they’re all well-educated, and yet somehow, rather surprisingly, they fell victim to this scam.”
View Article Here