$5.3m fraud: US hunts scammers, traces funds to Hong Kong, Nigeria, others

The US government has filed a civil forfeiture action to recover $5.3 million linked to a business email compromise (BEC) scheme that defrauded a Massachusetts workers union.

In January 2023, a spoofed email led the union to transfer $6.4 million to a fraudulent account.

The funds were then routed through various international banks and cryptocurrency exchanges.

US authorities have seized money from seven domestic accounts connected to the scheme.

These were stated in a Wednesday press release obtained from the United States Attorney’s Office, District of Massachusets website on Thursday.

“BEC fraud schemes present a serious threat to businesses and individuals nationwide, causing significant financial and emotional harm to victims by exploiting trusted communication channels they rely upon every day.

“Today’s civil forfeiture action demonstrates that when victims report such misconduct to the authorities there may be steps we can take to recover stolen funds.

“We hope today’s action helps restore some level of stability and justice for those impacted by fraud,” said Acting U.S. Attorney Joshua S. Levy.

Issued in Boston, the statement also admonished that “members of the public who believe they are victims of a cybercrime – including cryptocurrency scams, romance scams, investment scams and business email compromise (BEC) fraud scams – should contact USAMA.CyberTip@usdoj.gov.”

According to the press release, the fraudulently obtained funds were then transferred through a series of intermediary bank accounts, with some funds transferred, or attempted to be transferred, to a cryptocurrency exchange or various bank accounts located in Hong Kong, China, Singapore, and Nigeria.

“The United States filed a civil forfeiture action today to recover approximately $5,315,746 alleged to be proceeds of a business email compromise (BEC) scheme targeting a Massachusetts workers union, as well as property involved in money laundering.

“The complaint alleges that in January 2023, a workers union located in Dorchester received an email requesting a change of payment information from someone it believed worked at an investment consulting firm.

“The complaint also alleges that the email came from what initially appeared to be the consulting firm’s true email address but was in fact a spoofed email address that had been changed by one letter. The spoofed email instructed the workers’ union to make a $6,400,000 transfer to a different bank account than had been previously arranged, which the workers union did, in fact, do.

“The spoofed email, however, was a fraudulent communication intended to mislead the workers union into unwittingly transferring funds to an account controlled by someone other than the intended recipient.

The fraudulently obtained funds were then allegedly transferred through a series of intermediary bank accounts – with some funds sent or attempted to be sent, to a cryptocurrency exchange and various bank accounts located in Hong Kong, China, Singapore and Nigeria.

“Investigators were able to trace proceeds of the scheme to seven domestically held bank accounts, the contents of which were subsequently seized by U.S. authorities,” it read.

PUNCH Online reports that this announcement implies that the US government is taking legal action to recover funds allegedly obtained through fraudulent means.

It involves cooperation between various law enforcement agencies and prosecutors to pursue the case.

The statement also highlights the legal process involved in civil forfeiture, indicating that the government must provide evidence to prove its case before any forfeiture can be ordered by the court.

Other parts of the statement read, “Acting U.S. Attorney Levy; Acting Assistant Attorney General Nicole M. Argentieri of the Justice Department’s Criminal Division; and Andrew Murphy, Special Agent in Charge of the United States Secret Service, Boston Field Office made the announcement today.

“The civil forfeiture action is being prosecuted by Assistant U.S. Attorney Matthew M. Lyons of the Asset Recovery Unit along with Trial Attorneys Jasmin Salehi Fashami and Adrienne E. Rosen of the Justice Department’s Money Laundering & Asset Recovery Section.

“The accusations in the complaint, and the description of the complaint, constitute only allegations that certain property is subject to forfeiture.

“The United States must prove, by a standard of preponderance of the evidence, that the property is subject to forfeiture. If the United States prevails, the court will order all interests of any potential claimant forfeited.”

A BEC scheme is a type of sophisticated fraud scheme targeting businesses that use wire transfers as a form of payment.

BEC schemes affect large global corporations, governments, and individuals, with current global daily losses estimated at approximately $8 million.

Criminals compromise legitimate business email accounts through various hacking schemes, including social engineering and the use of malware.

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