In June 2021, a man identifying himself as Moshe Theodor McNigh befriended a Toronto woman on Facebook and began courting her.
He persuaded her to invest around $355,000 in Bitcoin through a site called Legacyfxtraders.online.
A few months later, the woman – who police are not naming out of fear for her safety – was contacted by Nigerian authorities, who told her she had been defrauded. The man she was chatting with, they said, was a Nigerian named Omonkhoa Precious Afure. Local police arrested him and seized his property, according to a press release.
Fortunately for the woman, her story ends relatively well. In December, after a ruling by Nigerian courts, police returned $225,000 of their money – “just before Christmas,” said John Armit, a detective with the anti-racketeering branch of the Ontario Provincial Police .
“It was a really special moment for us to hear that the funds were coming back … because that’s often not the case,” said Det. Officer Armit, who was part of a collaborative effort between Nigerian and Canadian law enforcement. “This is a testament to the hard-working investigators and also to the international cooperation.”
Fraudsters divert millions of dollars from the Canadian economy every year. Fraud victims reported total losses of $577 million to the Canadian Anti-Fraud Center in 2023, and 2024 will likely exceed that figure, with $574 million in losses reported as of the end of November.
Romance fraud is unique in that the number of victims is small, but each individual’s losses can be substantial. As of September, romance fraud victims reported $37.2 million in losses to the fraud center, making it the second most lucrative type of scam after investment fraud, at $228 million.
These figures probably represent only the tip of the iceberg; by one estimate, only 5 to 10 percent of frauds are reported to the center.
Erin West, who leads an initiative called Operation Shamrock that aims to disrupt cyber scams, calls the situation unprecedented.
“We’ve never seen any kind of scam get this big…We’re inundated all day, every day, with victims who have lost everything,” said Ms. West, a recently retired Santa Claus state attorney. in California. Clara County.
The scheme targeting the Toronto resident was a classic romance fraud with a modern twist.
In a typical romance fraud, the fraudster convinces the victim that they are in a relationship, then uses that collateral to siphon money from the victim. But the emergence of cryptocurrencies has added a new dimension to many of these frauds, which often include investment scams.
Fraudsters target lonely and sometimes elderly victims, spending days, weeks, or even months grooming them. They talk with their victims for hours a day, trying to learn as much as possible about the person, including the assets they own.
“The scammer presents himself as having a very high lifestyle,” Ms West said. “They just got a new Range Rover. They are going to Hawaii next week. Should they get an Hermès bag? »
Eventually, the scammer will tell the victim that their luxurious lifestyle is funded by cryptocurrency investments. They trick the victim into sending them money and the victim thinks these are legitimate investments. Fake websites are created with dashboards to convince the victim that investments are increasing.
“They think, ‘Oh my God, this really works.’ And so they’re persuaded to put all the rest of their money into this, and by the time they’re done, they’ve liquidated their retirement accounts, their kids’ college accounts, and then they realize that everything this was a fraud,” Ms West said.
These types of investment scams don’t always involve faking a romantic relationship. Sometimes the scammer forms a long-term friendship. The common element, Ms. West said, is that “it doesn’t end until they get every last penny out of the victim.” »
Some experts call these schemes “pig butchery,” a term derived from the practice of “fattening” victims by gaining their trust before “cutting them down” by stealing their funds.
The Association of Certified Fraud Examiners has designated pig butchery as the main fraud of 2024 in its year-end annual report. Researchers at the University of Texas at Austin recently found US$75 billion in cryptocurrency exchange accounts belonging to criminal organizations committing pig butchery scams.
“We’ve seen many victims who have lost more than their savings,” said Sammy Wu, head of investigations at the BC Securities Commission. “They would remortgage their house. They would invest millions of dollars.
The difference between a run-of-the-mill romance scam and a pig-killing scheme lies not only in the extent to which the victims’ resources are depleted. Although romance fraud can be perpetrated by an individual acting alone, the pig slaughter is “a large-scale industrialized attack carried out by Chinese organized crime,” according to Ms. West. Often, the people speaking with the targets are victims of human trafficking, holed up in compounds in Cambodia, Laos or the Philippines, who are forced to commit crimes.
Local intermediaries, called money mules, may be used to move funds. Some of them are knowingly complicit, while others may themselves be victims tricked into unwittingly transferring money to organized crime, Wu said. “You probably received text messages on your cell phone saying you can make $600 an hour working from home, right? A lot of them are just recruiting money mules,” he said.
Most victims aren’t as lucky as the Toronto woman who got most of her funds back. Cryptocurrency has made it easier for criminals to move money across borders and cover their tracks, as some virtual currency exchanges do not require customers to provide photo ID issued by the government.
“They really have no idea who is operating the cryptocurrency account, so the money trail is effectively stopped,” said Ashley Ferguson, an attorney at Investigation Counsel, a law firm specializing in recovery after fraud.
Cryptocurrencies such as Monero, designed specifically to protect privacy, pose an additional challenge, said Det. Agent Armit.
Given how difficult recovery can be, some regulators and law enforcement agencies are working to disrupt fraudulent schemes before they succeed.
The BCSC, for example, works with Internet service providers to shut down websites used to perpetrate securities fraud. In 2024 alone, the securities regulator managed to get 69 websites taken down.
And in December, the Ontario Provincial Police announced that its Project Atlas initiative had prevented $70 million in victim funds from falling into the hands of bad actors. Police identified crypto wallet addresses belonging to fraudsters and provided the addresses to crypto exchanges, who could then freeze the funds and kick the bad actors off their platforms.
“We need these types of projects where we bring together the private sector, the public sector and law enforcement in order to combat these crypto frauds,” said Det. Agent Armit.
