How agents investigate pig butchering and other scams

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0:48 To a scam. Let's talk about scams. It's the must listen show for anyone who wants to protect themselves and their loved ones from scams. Every Tuesday am Pacific time on K four HD Radio, Joyce Petrowski, founder of Rose, and her guests will provide valuable insights and practical tips on how to recognize and protect yourself from scams. And now here is your host, Joyce Petrowski. Good morning, My name is Brian Watson, community Outreach specialist for Rose Resources Outreach to Safeguard the elderly. I am filling in for Joyce Petrowski this morning. She's gonna be out next week as well, and then Joyce will be back.

1:36 And so welcome to Let's talk about scams. We have a guest today and I'll introduce him in a second. And the title of the show today is how Agents investigate pig butchering and other scams. So we like to bring on people that are subject matter experts, and today that is the case as well. So today's guest is Chris for Share. He's a special agent with IRS Criminal Investigation. He was in the studio a second ago. Let's see if he's still there there is excellent. Can you can you hear me? Christopher? Yes? I can? Can you hear me? All right?

2:18 Beautiful, thank you, So let's introduce you properly. So Christopher is graduated from the University of Wisconsin in two thousand and seven with a degree in finance investments in banking. He worked in the private sector until about twenty seventeen, and then he was hired by the FBI as an intelligence analyst and then in twenty twenty, he became a special Agent with IRS Chriminal Investigation. He is currently assigned to IRS's Criminal Investigations Phoenix Financial Crimes Task Force, and he's also a member of the FBI's Phoenix Iber Task Force.

3:01 He's worked a variety of cases including paycheck protection program fraud, healthcare fraud, money laundering, and crypto investigations, and that's why we have him here today. I'm proud to say that Christopher is a former colleague of mine at the Phoenix Field Office with IRS Criminal Investigation. We worked together for about three years before I retired. Christopher has a reputation for both being very smart and hard working, and I thought it would be good to tap into his technical expertise today. So good morning Christopher, Good morning Brian, thanks for having me. Hey, so, how long have cryptocurrency ATM's been in existence?

3:45 So they originated back in the mid twenty tens. I think twenty thirteen was when the first one was installed that I was in Canada. The first one in the US appeared in twenty fourteen, and they've really ballooned. In number since that time. Today there are over thirty thousand ATMs within the United States, approximately six hundred of them are here in the state of Arizona. So tell me how they work. So, a crypto ATM is very similar to you know, what most of us understand is an ATM where you go and get cash using your debit card. So it's a physical machine, and you typically find these in convenience stores, gas stations, liquor stores, but you can you can walk up to these machines and you have two options. Typically you can put in cash or you can use a debit card to purchase typically bitcoin, but they also there are some machines that allow you to buy other cryptocurrencies, such as ethereum, So you can just put in your cash and you tell it where you want the bitcoin to go. So, if you have a wallet, let's say at coinbase, you can typically get a QR code that you would scan on the bitcoin ATM, and that's basically

5:16 telling the machine, Hey, this is where I want the crypto to go once I purchase it. So how much do they charge to use them? Are there any fees associated with using a cryptocurrency ATM? There are definitely fees, and they are high. They're much higher than purchasing crypto via coinbase, for example, these ATM machines are going to charge you anywhere typically between ten twenty twenty five percent of what you're purchasing, So the fees are very high compared to maybe one or two percent that you would pay purchasing through you know, coinbase or finance. So the fees are.

5:56 I'm sorry about that, Sorry to step on you. So if I'm at home, I could I could purchase cryptocurrency through my laptop or through my own phone, couldn't I? For sure? You could, you know, using a laptop, you can go to Coinbase. I'm using Coinbase a lot, but there are many exchanges that would offer this service. They all have apps, you know, that you can download onto your phone, so you could use your phone, you know, just laying in your bed, you can sit. There and purchase cryptocurrency if you want. Typically you would have your bank account tied to your virtual currency account, and then that would allow you the ability to purchase whatever cryptocurrency you want. You know, Bitcoin is by far the most popular, Ethereum is also huge, but there are literally thousands of different coins that you could purchase.

6:49 Now. These ATMs that are located at convenience stores and liquor stores and malls and all over the place, And you said, there's six hundred of them in Arizona alone. Can you withdraw cash from these ATMs? Or they don't work that way at all? I don't know if all of them work that way, but some yes, you definitely can. You can actually sell cryptocurrency and obtain cash. What which scams involve the use of cryptocurrency ATMs by the scammers. So cryptocurrency in general is involved in almost every type of crime you can think of in today's world. Using ATM specifically, you're going to see a lot of impersonation scams or imposter scams, which we can get into. There's you know, the romance fraud, investment fraud where people are convinced to, you know, purchase cryptocurrency, and that's one way that the scammers facilitate that they direct the victim to these different atm you know kiosks where you can just put in as much cash as you want to purchase crypto.

8:09 In those cases, the QR code is typically provided by the scammer to the victim, and the victim is probably being told, you know, this is going to go into your personal account. Here it's going to be safe. This is your account. Just scan this code. However, the victim goes up there scans the code. Little little do they know it's going right to the scammer's wallet and they're probably never going to see that money again. So if someone has been scammed, what should they do. Let's say, you know, they they fell for the jury scam and they were convinced they owed money and they were given a QR code, They put money into the machine.

8:50 They lost a few thousand dollars, they don't have it went to the scammer's wallet. What should that victim do? I would say the most important part right away is to contact local PD. Make sure they contact a police department and get a report written up and hopefully you know that victim, will you keep your receipt because you will get a receipt from that ATM that's going to have very important information. That's going to allow law enforcement the ability to trace those funds, to see where they went in an attempt to perhaps freeze them and try to get that money back for the victim. So reporting it as soon as possible is very important. Because the crypto can move, you know, can hop around real quick.

9:38 It doesn't take long. So the quicker you can report it, the better chance you have of trying to get that money back. There's also you know, you can report it to you know, local PD. You can report it online. Another good avenue is going to be IBM's Internet Crime Complaint Center better known as IC three. I would encourage victims to report it there. Report all the information that you can, all the identifiers that you can give them. The more the better in terms of you know, who were you contacting, what phone number were you using, what name did they use? You know, what wallet address did your funds go to? Because then the FBI, you know that that gives other law enforcement agencies one specific you know depository, let's say, where we can search for, you know, these types of crimes. Because most of the time, you know, there's not just one victim, There's gonna be many victims that are being scammed by this same group of scammers.

10:39 So if you can try to lump that all together and see what information you know, each victim has reported, you know that gives you a better chance of being able to identify who's behind it to try to get your money back from. Your experience, Where are most of these scams emanating from. These scams are typically. Being conducted by large, you know, transnational criminal organizations based in other countries. So think you know, Nigeria, China, Cambodia, Myanmar, Russia, They're really they're they're.

11:21 All over the world. Unfortunately, there are huge scam compounds in Myanmar, for example, that have thousands of people basically being forced to scam people. That's a story we can get into if you'd like. But there are these huge scampounds, scam compounds where yeah, that's all they do all day is try to you know, scam victims, and most of the victims are in the US, and most of them are six years of age or older. So let's let's talk about pig butchering. What is it and where did that name come from? So pig butchering, the name came from a Chinese term which I'm not going to even try to pronounce because I'm not.

12:10 Sure how to pronounce it. But it originated back in the late twenty tens, it's my understanding, you know, twenty eighteen nineteen, And it really involves a type of investment scam or romance fraud where the scammer tries to build a relationship with the victim. It starts out, you know, just slow, friends. It can take months of just building trust with these victims, and then eventually the scammer is going to bring up a cryptocurrency investment opportunity. And by that time, these victims are just so convinced that this person on the other end of the computer or whatever is you know, their friend, and they wouldn't lie to them, and they have trust in them. So slowly you start, you know, the victims start sending in funds buying cryptocurrency. The scammers have built elaborate websites that look pretty legitimate, where you can see your balance, you can watch your money grow, and in the beginning, the scammers will actually allow you, the victim, to withdraw some of your funds to provide you know, another just to make it more legitimate, right you can.

13:34 Maybe maybe they'll let you take out a thousand bucks. However, as you see your balance grow and all of a sudden you've made several hundred thousand dollars, you know you're going to want to take that money and maybe buy you know, a new car, a new house, what have you. When you try to get that money back. They're going to tell you that, you know, there's fees that you have to pay, or there's taxes that you have to pay in order to get that money out. So I think the first thing that a victim would say was, well, why don't you, you know, use the games that I've made to pay those fees and to pay those taxes. And they will tell you that, you know, that's not how it works. You need to send in additional funds to pay these these fees. It's basically one, you know, a last ditch effort for them to squeeze just a little bit more out of the victim. And then once you know that that doesn't happen, or the victim refuses to pay any more money, the scammer disappears. You're never going to hear from again from them again, and they have all your money.

14:33 Well, it's I know a little bit about pig butchering, and I definitely learned a few things there. I like that part about the taxes is one last way to get the last bit out. That's that's amazing. So let's say someone did fall victim to a pig butchering scheme and they lost all this money can they get money back from money they put in a crypto currency ATM. So if it involves an ATM, it's really dependent on the state that you're in, as well as you know, did you report how quickly did you report that this scam took place, because I know there's some instances where you know, there's state law that says these crypto ATMs have to reimburse victims as long as they reported it, you know, within a certain time period, say thirty days, and so they have that police report and they can show that to the bitcoin ATM operator. But typically, you know, maybe you're able to get some of the fees back.

15:43 So you know, if you lost, if you put in two hundred thousand dollars, you know, maybe you can get some of the fees back that you paid when you. Know, bought all that crypto. I've heard of that, But in terms of you know, getting your two hundred thousand dollars back, that's pretty far in between. It's it's not a great chance of happening. Right And like you you shared, this is a long play scam. They build trust and it's over a long period of time where you've sent in that money and it can be moved multiple places, and it's so hard to track. What do you what do you tell victims that have lost money? You know, I'm sure you've met people face to face or on the phone that have lost money and what are these scams?

16:32 You know? What do you tell them? Yeah, it's I have. And unfortunately it's a difficult conversation to have because it's, you know, like we talked about, right, the scam. They've been talking to this person for months, possibly over you know, over a year, who knows, so they have this relationship with this person. They it's very hard for them to believe that they've been scam So a lot of times the conversations that I have to have with them involve me trying to convince them that they're victim of a scam, that the person that you've been talking to isn't who you think they are. They're literally just trying to get more money out of you, So, you know, you try to convince them of that. You definitely make sure to tell them you don't don't send in any.

17:25 More money trying to seem contact. I mean, I know, again, it's hard to stop talking to someone that you've probably been having conversations with every day for months, So I get that. It's it's difficult, and you know this, this happens to everyone. It happens to doctors, it happens to lawyers. It's it doesn't just happen to you know, it can literally happen to anybody. It doesn't matter the age. I know, the elderly are certainly more vulnerable and their targets because likely you know, they have at their point of the in their point of life, right, they have probably a significant retirement savings account for example, So the scammers know that the elderly have a nest egg of some sort where someone in their twenties, you know, fresh out at college, they probably don't, so you're not going to get huge returns out of a younger person. So they definitely focus on the elderly.

18:26 But yeah, it's and like you said, it is hard to You can trace the funds, see where they go and hope that you're able to freeze them, but you know, the money moves so fast and it ends up overseas in someone's account in a country that probably isn't going to be you know, willing to work with US law. Enforcement without mentioning any specific cases. What are some examples of dollar amounts that have been lost in cases that you've either reviewed or are aware of. Yeah, a couple probably two years ago. Now, this is just a good example. I was contacted by someone he was retired recently, but he lost seven hundred and fifty thousand dollars where he was just sending you know, fifty to one hundred thousand dollars at a time towards the end because he had so much trust in who he was talking to. So it's you know, it can vary. Obviously, some people catch it earlier on where maybe they've only lost you know, ten twenty thousand dollars, which is still significant for some people, right, but I have seen losses of.

19:46 Over a million dollars. Wow, And I mean it completely ruins their life, right because you can't get that money back. You think you're making all this money and crypto and you're going to have you know, just so much to buy when you get those funds, and you just you'd never see it again. So it forces people to you know, file bankruptcy, have to go back to work, maybe if you're retired. So it's it's a really sad situation. Unfortunately. Have you ever had a victim that absolutely refused to believe that they were truly a victim?

20:26 Yes. I was actually just talking to a colleague this morning about a situation that he was involved in. He was talking to a victim, and she believed that she was talking to a celebrity, and she was just one percent convinced that it was it was really him and she wasn't being scammed. She was just unwilling to really answer the questions that he had for her in terms of, you know, when did you start talking to him? What communication like, what phone number is he using? And all that. She was very hesitant, wouldn't give up the answers, and she just refused that she was being scammed.

21:13 Wow. What agencies investigate cryptocurrency related scams? I would say cryptocurrency related, Like I said earlier, it's involved in almost everything these days. Even if the main scam is you know, cash or a wire transfer, a lot of the times that still ends up in cryptocurrency. So I would say that every agency is working crypto in some fashion, you know, working scams, crypto focused scams specifically. You know it's going to be FBI, I, R, s CI, secret service. But then you're going to have agencies like the DEA, right they focus on drugs, but is also a major component of the drug trafficking world these days.

22:06 So even the DA is going to have crypto cryptocurrency experts on their teams. And then you know there's going to be other agencies. Such as the SEC, the FTC that will also look into different scams. And then I mean stay in local PD. They're they're all over it. As well, because, like I said, if if you are being scammed, first thing you should do is I would encourage people to contact local PD so they get contacted all the time. They also know how to do many of the same things that we would do, right trying to take the identifiers that are given to them by the victim and try to trace that money to see where it went, to see if they can freeze the funds and try to get it back for the victim.

22:48 So that. Segues right into my next question is what tools do you have as a law enforcement agent to down this money and to identify where it went. So thankfully we do have some really good tools. Primarily, I would say the biggest thing are going to be blockchain explorers, so if you're familiar with companies such as Chain Analysis or TRM labs, they make these tools that allow us to So, like I said, when you get an ATM receipt, it's going to have a wallet address on it. What we can do is plug that wallet address into these explorers and.

23:33 It'll show us. You know what it'll show basically give us a picture of that wallet, and we're able to trace those funds to see where they're going. And then you know the biggest. Thing that it also does then is it gives us attribution, so it may go into a wallet and then get sent to binance. And if that's the case, then you know us as law enforcement. Another tool that we have is subpoena power, So if we have an open investigation, we can issue a subpoena to finance to have them tell us who owns that wallet at Finance where these funds went into.

24:13 So those are huge. Within I R S c I, we have cybercrime Units or ccus. We have two of those, there's one in Los Angeles and one in Washington, D C. And they kind of specialize in large uh cyber cases, including cryptocurrency. So you know they're the true experts. I'm not a part of that team, but they work the very large investigations and they do their best to stay on top of the most recent tactics and tools that these scammers are using. So earlier in the show, you had mentioned freezing funds. How does that work?

24:55 So if if you. End up realizing that the funds the victims sent are at coinbase, we as law enforcement are able to reach reach out to coinbase and ask them to freeze those funds because we know that it's scam related. Typically they are willing to do that for us, and then we follow up with you know, official legal process like a seizure warrant to get the funds back. So you know, I would say another another tool that we have is that's important is building relationships with all different kinds of partners law enforcement but also the private sector, including all these different exchanges, because if you have you know, if you have a good contact there, that's just it just makes it quicker and more efficient for us to you know, get our hands on those funds to be able to freeze them. And you know, if we can freeze them while they're with in exchange that cooperates with law enforcement, the better chance we have of getting the money back for our victim.

26:04 What are the telltale signs of a pig butchering scheme? You know, like at our nonprofit, we're in the prevention business. We want to stop people from getting scammed in the first place, so they don't even have to contact law enforcement. Would what would be. Those signs that people should spot at the beginning that would save them all this aggravation and loss of money. So, pig butchering scams typically start with unsolicited text messages or some sort of unsolicited contact, maybe an email. So if you receive a text message, is a text message from a number that you don't recognize, or if you receive a phone call from someone that you know, it says spam you know, don't answer it. Don't answer it, don't reply to the text message. And the scammers are good because the text message is usually some sort sort of question where it kind of makes you feel bad if you don't respond. You know what I mean by that is it's going to say something to the effect of, hey, do you still want me to pick you up tomorrow for the party? You know, something like that, So you actually feel bad if you don't respond, So it makes you want to say, hey, sorry you have you have the wrong number, you know, I just want to let you know, well that right there, they just bade it.

27:28 You know, they got you on the hook because then they come back with, you know, just conversation. They try to build conversation and they're very good at at getting people to talk to them, and that's how this starts. So definitely look out for these, you know, just unsolicited text messages or emails. You know, don't click on any links that you're not familiar with. Those are those are going to be the big things in the beginning. And if you do start talking to someone and all of a sudden they say, hey, let's move over to WhatsApp or signal, right one of these encrypted messaging apps, that's another. Sign Okay, just don't fall for that, right.

28:12 Because then and then at what point, how do they bring up the idea of investing in cryptocurrency. Yeah, so, like like I said, this, it's. Not gonna happen quick, Okay, they will build this relationship over weeks or months just and it'll be daily conversations. You know, just what are you doing today, what do you have going on? What are you doing after work? What do you do for work? Right? They and they're not all. Some are romance related, right. There might be a pretty girl on the other end talking to a gentleman victim. But they're not all romance scammed. There are also just friendships that are built and by the time the scammer knows and they have the comfort right with their victim, and then all of a sudden, they're just going to bring up like, Hey, my uncle, he's an investor and he's built this you know, cryptocurrency algorithm that is just amazing at knowing when to buy and sell, and we've made so much money. I just since we know each other so well and we've become friends, I kind of want to offer this to.

29:26 You if you're interested. Wow. They're not going to be pushy at first, but they'll keep bringing it up, and eventually, you know, the victim is going to see how this person is living. You know, maybe they're driving around in Eventley, maybe they have a great penthouse suite, you know, in New York or something, right, and that just makes the victim want that life as well. Typically so eventually they'll start investing. Wow, they're so creative and There's so many different ways that I've heard that people approach, and that's the way you just describe it. There was a slightly different angle, and I appreciate you sharing that. So let's say you have a friend or a family member who you suspect is being dragged into a pig butchering scheme. How do you extricate them before they lose everything?

30:22 I mean, it's tough because you need to have a difficult conversation with them, right, you really need to. I mean, I. Being in the position that I'm met in, I've seen this scam play out. I know the signs, so I have the education and the knowledge that I can share with them to hopefully convince them that it's a scam, right, that this is happening all over the world, that I've seen the signs, I know that this is not real. So it's just it's doing your best to convince them that the relationship that they've built with a scammer is fall You know, you can show them news articles, right, you can see how how this thing plays out, and hopefully that convinces them, hey, this is exactly what I'm going through, Like maybe I am being scammed. So it's really just when work in your magic and try to convince them that what's happening is is not true.

31:21 No. I know someone here in Arizona and she had a family member who thought Keanu Reeves was going to come visit her, and she asked for my help and and I and I did the same thing you just suggested. I went online and found multiple articles where people had fallen for a scheme claiming that Keanu Reeves was interested in spending time with them. And it worked, you know, because she could see it from you know, a neutral source, you know. So it's it's absolutely amazing. Chris Christoper, I want to give you the last word. Anything else I haven't asked you about today that you want to share with our audience.

32:07 You know. I think the biggest thing is everyone needs to be their own investigator. And what I mean by that is you need to be able to really research, do some research on what's taking place in your life. You know, if you're if you're. Thinking that something is a little bit off, you know, look into it a little bit more like take your time, do not rush. That's one thing that I don't think I brought up at any point yet is there's usually a sense of urgency that especially when it comes to the ATM related scams. Right, the scammer is trying to quickly make the victim go to the ATM and put in money as soon as possible.

32:56 So if something like that's happening, you just take your time. Okay. There there is no warrant for your arrest if you don't pay some fine in crypto like that is not a thing. So just take your time, think things through, discuss it with family members if you're comfortable doing that, you know, if you haven't, I think a good rule of thumb is to not send money to someone you've never met, you know, face to face, or someone you're not familiar with. Okay, no government agency is going to make you pay some sort of fine or fee in cryptocurrency.

33:39 That's just not going to happen. So, like I said, just try to be your own investigator because unfortunately, there's not enough of us. Okay, I wish there were more, as you know, right, there's there's never enough of us. There's never enough funding, so we can't help everybody, but we can do our best to try to educate and get the word out there so people don't fall for victims such as these. Thank you, so before we closed out, I just want to tell everybody what we're doing. Next week on the show. We have another guest. It's my new friend Rachel, who I met at a senior expo, and Rachel is going to share her story where she actually was contacted by a scammer and she was being directed to one of these cryptocurrency ATMs and she was going down the path of getting scammed and there were some red flags that popped up, some morning signs, and she was able to get off that path.

34:39 So she's going to be. Very brave and share her story next Tuesday morning. So I'm looking forward to that. Christopher, I want to thank you for spending your time with us today and I want to thank you for sharing your expertise and your knowledge. And you covered this topic extremely well. I'm not so That's why I brought you on because I saw you on a TV show last year up in the Phoenix area talk about pig butchering and your you explain it so well. I think everyone's a little bit smarter after listening to you today, I hope. So I really appreciate it. Brian, this is fun. It's great seeing you.

35:21 All right, everybody, thank you for watching. Let's talk about scams. We'll see you next Tuesday morning. Have a great day. Well that's all the knowledge for this episode. Tune in every Tuesday at eight am Pacific time on kfour HD Radio at KFOURHD dot com as Joyce explores a variety of knowledge. So you have the power to make scam protection your healthy habit, and until then, feel free to reach out to Joyce and let's talk about scams.