US Govt Cracks Down On $5.3 Million Fraud, Traces Money To Hong Kong, Nigeria

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

A spoofed email in January 2023 tricked the union into transferring $6.4 million to a fraudulent account, subsequently routed through international banks and cryptocurrency exchanges.

The US authorities have seized funds from seven domestic accounts linked to the scheme.

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

Acting U.S. Attorney, Joshua S. Levy said, “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.”

The statement from Boston advised the public to report suspected cybercrimes, including cryptocurrency, romance, investment scams, and business email compromise (BEC) fraud, to USAMA.CyberTip@usdoj.gov.

The press release noted that the fraudulently acquired money was moved through several intermediary bank accounts, with portions transferred or attempted to be transferred to a cryptocurrency exchange or bank accounts 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.

A BEC scheme is a sophisticated fraud targeting entities using wire transfers, affecting businesses, governments, and individuals worldwide, with daily losses estimated at $8 million.

Criminals hack legitimate business email accounts through social engineering and malware.