PRESS RELEASE
Four Individuals Charged with Laundering Millions from Cryptocurrency Investment Scams Known as ‘Pig Butchering’
Thursday, December 14, 2023
For Immediate Release
U.S. Attorney’s Office, Central District of California
LOS ANGELES – Three Southland residents and a fourth defendant have been named in a seven-count indictment charging them with participating in a scheme to launder the proceeds of cryptocurrency investment scams and other fraudulent schemes involving millions of dollars in victim funds, the Justice Department announced today.
Two of the defendants – Lu Zhang, 36, of Alhambra, and Justin Walker, 31, of Cypress – were arrested Tuesday morning.
The other two defendants – Joseph Wong, 32, Rosemead, and Hailong Zhu, 40, Naperville, Illinois – are currently being sought by federal authorities.
The indictment charges all four defendants with conspiracy to commit money laundering, concealment money laundering, and international money laundering.
Zhang, Walker, Wong and Zhu allegedly conspired to open shell companies and bank accounts to launder victim proceeds of cryptocurrency investment scams – also known as “pig butchering” – and other fraudulent schemes. They allegedly transferred the funds involved in the fraud schemes to domestic and international financial institutions.
The overall fraud scheme in the related pig-butchering syndicate involved at least 284 transactions and resulted in more than $80 million in victim losses. More than $20 million in victim funds were directly deposited into bank accounts associated with the defendants.
According to court documents, pig butchering fraud schemes (a term derived from a foreign-language phrase used to describe these crimes) consist of scammers encountering victims on dating services or social media, or through unsolicited messages or calls, often masquerading as a wrong number. Scammers initiate relationships with victims and slowly gain their trust, eventually introducing the idea of making a business investment using cryptocurrency. Victims are then directed to other members of the scheme operating fraudulent cryptocurrency investment platforms and applications, where victims are persuaded to make financial investments. Once funds are sent to scammer-controlled accounts, the investment platform often falsely shows significant gains on the purported investment, and the victims are thus induced to make additional investments. Ultimately, the victims are unable to withdraw or recover their money, often resulting in significant losses for the victims.
After their arrests, Zhang and Walker appeared yesterday in United States District Court in Los Angeles, where they both entered not guilty pleas. Zhang was ordered detained, and Walker was ordered released on bond. A trial was scheduled for February 6, 2024.
An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Each of the charges for conspiracy to commit money laundering, concealment money laundering, and international money laundering carry a maximum statutory sentence of 20 years in federal prison.
This case was announced by United States Attorney Martin Estrada, Acting Assistant Attorney General Nicole M. Argentieri of the Justice Department’s Criminal Division, and Special Agent in Charge William Mancino of the U.S. Secret Service’s Criminal Investigative Division.
The U.S. Secret Service’s Global Investigative Operations Center is investigating the case.
The case is being prosecuted by Assistant United States Attorneys Maxwell Coll of the Asset Forfeiture and Recovery Section and Nisha Chandran of the Cyber & Intellectual Property Crimes Section, and Justice Department Trial Attorney Stefanie Schwartz. AUSA Coll and Ms. Schwartz are part of the Justice Department’s Computer Crime and Intellectual Property Section’s (CCIPS) National Cryptocurrency Enforcement Team (NCET), which is jointly prosecuting the case with the United States Attorney’s Office.
If you or someone you know is a victim, report it to the www.IC3.gov. In the report, please reference “Pig Butchering PSA” and include as much information as possible in the complaint including names of investment platforms, cryptocurrency addresses and transaction hashes, bank account information, and names and contact information of suspected scammers. Maintain copies of all communications with scammers and records of financial transactions.
Contact
Thom Mrozek
Director of Media Relations
thom.mrozek@usdoj.gov
(213) 894-6947
Updated December 14, 2023
PRESS RELEASE
Four Individuals Charged for Laundering Millions from Cryptocurrency Investment Scams
Thursday, December 14, 2023
For Immediate Release
Office of Public Affairs
A seven-count indictment was unsealed yesterday in Los Angeles charging four individuals for their alleged roles in a scheme to launder the proceeds of cryptocurrency investment scams and other fraudulent schemes involving millions of dollars in victim funds.
Lu Zhang, 36, of Alhambra, California; Justin Walker, 31, of Cypress, California; Joseph Wong, 32, Rosemead, California; and Hailong Zhu, 40, Naperville, Illinois, are charged with conspiracy to commit money laundering, concealment money laundering, and international money laundering. Zhang and Walker were arrested and made their initial appearances in federal court yesterday.
According to court documents, Zhang, Walker, Wong, and Zhu allegedly conspired to open shell companies and bank accounts to launder victim proceeds of cryptocurrency investment scams, also known as “pig butchering,” and other fraudulent schemes. They transferred the funds to domestic and international financial institutions. The overall fraud scheme in the related pig-butchering syndicate involved at least 284 transactions and resulted in more than $80 million in victim losses. More than $20 million in victim funds were directly deposited into bank accounts associated with the defendants.
According to court documents, “pig butchering” fraud schemes (a term derived from a foreign-language phrase used to describe these crimes) consist of scammers encountering victims on dating services, social media, or through unsolicited messages or calls, often masquerading as a wrong number. Scammers initiate relationships with victims and slowly gain their trust, eventually introducing the idea of making a business investment using cryptocurrency. Victims are then directed to other members of the scheme operating fraudulent cryptocurrency investment platforms and applications, where victims are persuaded to make financial investments. Once funds are sent to scammer-controlled accounts, the investment platform often falsely shows significant gains on the purported investment, and the victims are thus induced to make additional investments. Ultimately, the victims are unable to withdraw or recover their money, often resulting in significant losses for the victims.
If convicted, Zhang and Walker face a maximum penalty of 20 years in prison.
Acting Assistant Attorney General Nicole M. Argentieri of the Justice Department’s Criminal Division, U.S. Attorney Martin Estrada for the Central District of California, and Special Agent in Charge William Mancino of the U.S. Secret Service’s Criminal Investigative Division made the announcement.
The U.S. Secret Service’s Global Investigative Operations Center is investigating the case.
The case is jointly prosecuted by the U.S. Attorney’s Office for the Central District of California and the Computer Crime and Intellectual Property Section’s (CCIPS) National Cryptocurrency Enforcement Team (NCET), which was established to combat the growing illicit use of cryptocurrencies and digital assets. CCIPS’ NCET conducts and supports investigations into individuals and entities that enable the use of digital assets to commit and facilitate a variety of crimes, with a particular focus on virtual currency exchanges, mixing and tumbling services, and infrastructure providers. The NCET also works to set strategic priorities regarding digital asset technologies, identify areas for increased investigative and prosecutorial focus, and lead the department’s efforts to collaborate with domestic and foreign government agencies as well as the private sector to aggressively investigate and prosecute crimes involving cryptocurrency and digital assets.
CCIPS/NCET Trial Attorney and Assistant U.S. Attorney Maxwell Coll for the Central District of California, CCIPS/NCET Trial Attorney Stefanie Schwartz, and Assistant U.S. Attorney Nisha Chandran for the Central District of California are prosecuting the case.
If you or someone you know is a victim, report it to the IC3.gov. In the report, please reference “Pig Butchering PSA” and include as much information as possible in the complaint including names of investment platforms, cryptocurrency addresses and transaction hashes, bank account information, and names and contact information of suspected scammers. Maintain copies of all communications with scammers and records of financial transactions.
An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Updated December 14, 2023
Four men indicted in $80 million ‘pig butchering’ scheme
PUBLISHED THU, DEC 14 202312:08 PM EST
UPDATED THU, DEC 14 202312:19 PM EST
KEY POINTS
Los Angeles federal prosecutors said four indictments and two arrests had been made in an international “pig butchering” scheme.
So-called pig butchering is an increasingly prevalent scam that preys on isolated individuals to bilk their life savings with promises of friendship and love.
Victims often take out loans or tap into savings to send funds to scammers they believe are their friends or romantic partners.
In this article
Federal prosecutors have disrupted a so-called pig-butchering scheme that cost victims more than $80 million, the U.S. Department of Justice announced Thursday.
Four men have been indicted and two arrests have been made in one of the most sweeping enforcement actions yet on a type of scam that costs U.S. citizens hundreds of millions every year.
Lu Zhang, Justin Walker and Joseph Wong, all California residents, allegedly conspired with Illinois resident Hailong Zhu to launder the illicit proceeds of their scam, according to prosecutors. Zhang and Walker were arrested and appeared in Los Angeles federal court Wednesday.
Pig butchering, from the Chinese phrase sha zhu pan, is an increasingly widespread scam that involves cold-messaging victims and attempting to build a rapport with them. After developing a bond, scammers convince victims to send significant sums of money to fake investment platforms, supposedly to teach the victims how to make massive profits trading crypto or other assets.
The exchanges are fraudulent, and the gains are falsified. Eventually, the scammers pick up shop and flee, sometimes with millions of dollars in profits.
The defendants allegedly used shell companies registered in California to funnel their profits to domestic and international bank accounts, according to the complaint. The conspirators set up accounts at numerous banks, including Bank of America and JPMorgan Chase, and had victims send transfers to those accounts, prosecutors alleged.
From there, the money would move to domestic accounts in their own names, to international accounts in Hong Kong or a Bahamas bank linked to money laundering and a well-known U.S. dollar stablecoin, Tether
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