- The four men conspired to set up shell companies and bank accounts
- Almost 300 transactions were carried out as part of the scheme
- They incurred losses of more than $80 million
Yesterday an LA court unsealed a seven-count indictment charging four individuals for their roles in a scam to launder income from cryptocurrency investments and other fraudulent schemes. Victims were cheated out of millions of dollars, the US Department of Justice wrote on its website.
Lu Zhang, Justin Walker, and Joseph Wong from California and Hailong Zhu from Illinois have been accused of international money laundering and conspiring to commit and conceal money laundering. The first two were arrested and charged and appeared in federal court for the first time yesterday.
They stole money via pig butchering
The court files indicate that the four men conspired to set up shell companies and bank accounts to launder the income from cryptocurrency investment scams, which they committed via a complex pig butchering operation. Almost 300 transactions were carried out as part of the scheme, incurring losses of more than $80 million.
The perpetrators transferred the funds to US and international financial institutions. They deposited over $20 million in victim funds into their bank accounts directly.
Fraudulent crypto investments
Pig butchering fraud schemes start when criminals meet victims on social media, dating sites, or through unsolicited calls or messages. In some cases, they claim to have dialed the wrong number. The criminals initiate relationships with the potential victim and slowly gain their trust. With time, they suggest a business investment, in this case using cryptocurrency.
The details of pig butchering
The victim is then directed to one or more accomplices, who run fake cryptocurrency investment apps and platforms. They are convinced to deposit some funds, which are sent to an account the scammer controls.
The app or platform frequently and deceptively shows the victim has made a profit on the supposed investment. They are then encouraged to deposit more funds to increase their profit, which is a percent of the transferred amount.
When the victim tries to withdraw their profit, they are unable to do so. What’s more, they can’t even recover their initial transfer.
Defendants Walker and Zhang face up to 20 years in prison if convicted. Wong and Zhu remain indicted and are not officially facing charges yet.
Contributors
