12-14-2023 4:15pm

Four Individuals Charged with Laundering Millions from Cryptocurrency Investment Scams Known as ‘Pig Butchering’

Anita Johnson-Brown Editor

Three residents of Southern California and a fourth defendant have been indicted on seven counts related to a scheme to launder the proceeds of cryptocurrency investment scams and other fraudulent schemes that resulted in millions of dollars in victim funds being stolen. The US Justice Department announced the indictment, which charged all four defendants with conspiracy to commit money laundering, concealment of money laundering, and international money laundering.

Two of the defendants, Lu Zhang of Alhambra and Justin Walker of Cypress, were arrested on Tuesday. The remaining two defendants - Joseph Wong of Rosemead and Hailong Zhu of Naperville, Illinois - are currently being sought by federal authorities.

According to the indictment, Zhang, Walker, Wong, and Zhu conspired to open shell companies and bank accounts to launder victim proceeds of cryptocurrency investment scams and other fraudulent schemes. They allegedly transferred the funds involved in the fraud schemes to domestic and international financial institutions. The overall fraud scheme involved at least 284 transactions and resulted in more than $80 million in victim losses. More than $20 million in victim funds were directly deposited into bank accounts associated with the defendants.

Pig butchering fraud schemes (a term derived from a foreign-language phrase used to describe these crimes) consist of scammers encountering victims on dating services or social media, or through unsolicited messages or calls, often masquerading as a wrong number. Scammers initiate relationships with victims and slowly gain their trust, eventually introducing the idea of making a business investment using cryptocurrency. Victims are then directed to other members of the scheme operating fraudulent cryptocurrency investment platforms and applications, where victims are persuaded to make financial investments. Once funds are sent to scammer-controlled accounts, the investment platform often falsely shows significant gains on the purported investment, and the victims are thus induced to make additional investments. Ultimately, the victims are unable to withdraw or recover their money, often resulting in significant losses for the victims.

After their arrests, Zhang and Walker appeared in the United States District Court in Los Angeles, where they both entered not-guilty pleas. Zhang was ordered detained, and Walker was ordered released on bond. A trial was scheduled for February 6, 2024.

The case is being investigated by the U.S. Secret Service’s Global Investigative Operations Center and is being prosecuted by the United States Attorney’s Office, the Asset Forfeiture and Recovery Section, and the Cyber & Intellectual Property Crimes Section.

Anita Johnson-Brown|The Los Angeles News