The Continuing Threat of Online Scams

One of the largest threats over the past several years according to the FBI has been the threat of a scheme known as “pig butchering.”[1] Pig butchering describes an online scam that started as a romance scam, an investment scam, a cryptocurrency scam, or one of many other scams, but the nefarious activity continues. What differentiates pig butchering is that the scam continues until the victim has given all their money to scammers and, in the end, loses everything.

Two years ago the United Nations issued a report[2] outlining how unsuspecting workers were being tricked by fraudsters into applying for job in eastern Asian countries such as Myanmar, Cambodia, and others.   Once the workers travel to these countries their passports are confiscated.  They are then forced to work for organizations engaged in social engineering schemes and ultimately in pig butchering. The workers are often confined to an office building, resort, or hotel, and sometimes confined to a single floor or room in a building.

The report also describes in graphic detail some of the punishments the workers receive if they fail to produce results:

there is reportedly inadequate access to medical treatment with some disturbing cases of victims who have died as a result of mistreatment and lack of medical care. Reports commonly describe people being subjected to torture, cruel and degrading treatment and punishments including the threat or use of violence (as well as being made to witness violence against others) most commonly beatings, humiliation, electrocution and solitary confinement, especially if they resist orders or disobey compound rules or if they do not meet expected scamming targets. Reports have also been received of sexual violence, including gang rape as well as trafficking into the sex sector, most usually as punishment, for example for failing to meet their targets.[3] (emphasis added)

The reason for the renewed warning is the number of internal arrests, sanctions, and other government warnings which have recently been announced. In Mumbai a woman was recently arrested for recruiting and sending workers to Cambodia in a fraud trafficking scheme.[4] The woman was offered referral fees for sending workers on an international journey to countries like Cambodia and Myanmar to engage in what the workers believed was a job opportunity.

The United States recently announced sanctions against a Cambodian business tycoon for engaging in human trafficking for cyber scams.[5] The sanctions were based on a US State Department report[6] which included some very specific findings:

The government did not investigate, prosecute, or convict government employees complicit in human trafficking crimes. Corruption and official complicity in trafficking crimes at many levels of government remained significant concerns, hindering law enforcement action and perpetuating impunity during the year. Observers reported some local authorities, law enforcement, and security forces directly facilitated trafficking crimes by colluding with criminal networks. 

…

Traffickers also exploit Cambodians and foreign nationals in forced criminality in online scam operations run by locally operated PRC national organized crime syndicates in call centers located in Cambodia. Increasingly, these traffickers use the Internet and social media to fraudulently recruit adults and children from Cambodia, the PRC, and other countries in Asia, Africa, Europe, the Middle East, and the Western Hemisphere, for high-paying technical jobs abroad and subsequently force them to engage in online gambling, cryptocurrency, Internet romance, and telephone scams, primarily in large commercial compounds in Cambodia. Traffickers often lure foreign victims to Cambodia with false job offers, only to subject them to forced detention and criminality. … Traffickers subject these workers to punishment for poor performance and disobedience, including, but not limited to, physical abuse and torture, sexual abuse, pay docking, and debt bondage, and may “resell” those who cannot meet sales quotas or repay recruitment debts to other criminal networks for forced labor in similar fraud schemes, domestic servitude, or sex trafficking. NGOs estimate as many as 100,000 workers are exploited in forced labor in these compounds in Cambodia, (emphasis added).

The Cambodian tycoon owns a series of physical hotels and resorts which were cited as having been used for engaging in the activity. Specific activity at the locations includes:

People were beaten, abused with electric shocks, forced to pay ransoms for their own freedom or sold to other online scam gangs, the Treasury Department said. 

They noted that at least two human trafficking victims have jumped to their death from buildings at the O-Smach Resort. 

With the complicity of government officials, corruption of politicians and investigators, online scams will continue to haunt US based individuals and organizations. These scammers will continue to target individuals and businesses.

Although the term pig butchering itself refers to stealing from individuals, the social engineering schemes are also a threat to businesses as the scheme will often target wealthy individuals such as executives and owners of companies.  In a recent criminal case a former CEO of a Kansas Community Bank was sentenced to 24 years in prison for looting a bank of $47 million USD.[7]  The CEO had fallen victim to a pig butchering scam but had access to the bank’s money after his money had been lost.  According to the indictment, he also stole from a local church and an investment club and his daughter’s savings account.  The loss to the bank was due to “11 outgoing wire transfers between May 2023 and July 2023 totaling $47.1 million” of the bank’s funds.

Individuals can avoid online crypto scams by:

• Verifying identities;
• Practicing skepticism of online investment opportunities;
• Not sharing personal information, including positions, net worth, or investment ideas online;
• Reporting suspicious behavior; and
• If in doubt, report the behavior or police, your bank, or other government officials.