KEY TAKEAWAYS
KEY TAKEAWAYS
From their base in ungoverned stretches of Southeast Asia, international criminal networks are prowling the Internet, seeking to defraud victims around the world with sophisticated and psychologically devastating scams. Gangsters operating out of Myanmar, Cambodia and Laos, relying on forced labor, have spread their tentacles through Asia, Africa and Latin America and increasingly within the United States, stripping gullible prey of at least $64 billion annually. Clearly, to eradicate such a global menace will require a coordinated international response. Even so, the United States is not internally powerless to confront this striking example of how conflict and corrupt governance in distant parts of the world can directly threaten Americans’ security and well-being.
The scale and scope of this mass scamming has essentially snuck up on law enforcement and policy makers given its pathbreaking geographic and organizational parameters. Effective action to counter the scammers will require a whole-of-government effort by the U.S. coordinating the work of government agencies, civil society and concerned international counterparts, beginning with Southeast Asia.
One such effort to address scamming in the U.S. is already underway, organized by civil society and government on an ad hoc basis to begin charting a comprehensive plan of attack. Known as Operation Shamrock, it is a first-of-its-kind public-private partnership whose goal is sharing information across diverse and multi-disciplinary stakeholders affected by the organized crime crisis emanating from Southeast Asia. Within the Shamrock alliance, working groups focus on specific strategies and tactics that include raising public awareness of the scams; educating bankers to look for red flags that indicate criminal activity; and boosting law enforcement capacity to assist victims and trace lost funds, thereby gaining better intelligence on precisely how the criminal groups operate. Acting as a non-governmental arm and laboratory for innovative responses to the problem, Operation Shamrock could be a valuable partner for a larger government program.
The epicenter of this scamming activity is located in the borderlands of Myanmar, Cambodia and Laos, where weak governance, vast swathes of largely unregulated territory, widespread corruption and armed conflict have provided virtually free license for the criminal networks to gain a solid foothold over the past decade.
A USIP study published this year found that what began as enclaves hosting illegal gambling has expanded in recent years into sophisticated scamming operations. The tightly guarded enclaves operated by the criminal networks house hundreds of thousands of forced-labor victims from around the world, enticed by false ads for well paid, high-tech jobs and trafficked into the armed enclaves by another set of criminal networks adept at moving people across borders under false pretenses.
While the transnational criminal networks originate predominantly from China, until recently Beijing did very little to disrupt these criminal groups overseas.
While the transnational criminal networks originate predominantly from China, until recently Beijing did very little to disrupt these criminal groups overseas. In many cases Chinese enterprises, government and party institutions played a role in deepening the gangs’ influence across Southeast Asia to further their own goals.
When the scam centers along the Chinese border began to proliferate during the pandemic, with the Chinese public as their major target, however, Chinese police cracked down on the syndicates targeting mainland China. The crime groups responded by globalizing their illicit activities, seeking victims on other continents including North America. While Africa, Central Asia, South Asia and Latin America have all been hit hard by the human trafficking employed to staff the scam centers, the United States is proving to be a particularly rich target for this malign activity.
The scams are unprecedented in their use of psychological manipulation, technology, social media and advanced financial technologies. Dubbed “pig-butchering” for the technique of figuratively fattening and ultimately slaughtering the victim, the scams aim to strip targets of all their assets — a process that of course inflicts deep emotional harm. New victims emerge every day in the U.S. reporting losses of hundreds of thousands or even millions of dollars.
Pig butchering works by luring potential marks into online investment or romantic relationships — or both —through common social media and internet sites. Scam actors will target victims by text message or social media and then engage in a psychological campaign to isolate the victim and develop a trust between victim and scammer. The process is similar to brainwashing.
Preying on the bond that develops, they induce Americans to deposit money into “cryptocurrency investment accounts” after showing them false data purportedly reflecting their return on investment. Then, believing that they have it all — a new love and an amazing way to make money — the victims are pushed into liquidating retirement accounts, college savings or other forms of assets. Some have even been manipulated into taking high interest loans to allegedly pay “taxes” on their fictitious reported gains. One such victim, an employee of a local U.S. bank, was even convinced to criminally divert bank funds into a scam investment scheme, causing millions of dollars in losses. Ultimately, victims are hit with a double punch: Their entire nest egg is gone and they have been betrayed by someone they may have loved and definitely trusted.
Some reported case studies illustrate particular manipulative techniques. An adult son received a call from his elderly mother in Florida asking him to help her pay the mortgage on her condo. “You don’t have a mortgage,” he told her. “I do now,” she said, explaining how her new love had helped her get a high-interest equity line against the home so that she could put it into a crypto investment. The son told the authors he then used his retirement funds to pay off that mortgage for his mother, two generations were struck by this crime.
Other manipulative techniques have even resulted in violent crimes in the United States — illustrating how these networks could undermine much broader forms of instability. In Ohio, AP recently reported a case involving a scam victim who shot and killed an Uber driver after a manipulative criminal convinced him that the driver was somehow involved in the scam. Meanwhile, a newer plague of custom scams in the United States and Europe also illustrate how the pig-butchering scamsters may impersonate law enforcement by acquiring knowledge of the family situations and legal and or political vulnerabilities of victims.
Reports to the FBI’s victim hotline (known as IC3) from 2023 alone show losses of $4.5 billion to online investment schemes and $650 million to romance scams, though we know this is only the tip of the iceberg, because victim shame leads to vast underreporting of the crime. Victims are embarrassed, isolated and frequently too humiliated to seek help. In the most extreme cases, people have been known to end their lives. Such losses are commonly thought to affect the elder population, but IC3 reports show people of all ages — indeed anyone with a cell phone — is vulnerable to these scams.
As the USIP study concludes, only a comprehensive, well-coordinated international effort, beginning with Southeast Asia, has any chance of containing this global menace. It cannot be effectively addressed on a county-by-country basis, because the criminal networks behind it are infinitely adept at outpacing law enforcement efforts and advancing new technological applications that reach beyond current capabilities.
Only a comprehensive, well-coordinated international effort, beginning with Southeast Asia, has any chance of containing this global menace.
However, with the United States increasingly rising to the top as a prime victim of this type of scamming, it also behooves U.S. institutions — law enforcement, cybersecurity agencies, civil society organizations and media — to organize a coordinated program to prevent and disrupt its impact on innocent U.S. citizens.
This is the goal of Operation Shamrock, which could serve as a model platform for a much wider U.S.-government led effort.
Operation Shamrock has assembled many of the stakeholders necessary for alerting the public to the threat of this criminal activity and mobilizing grassroots responses toward crafting remedial measures to disrupt the scams. Stakeholders engaged in the operation include social media, financial sector and banking industry representatives, cryptocurrency exchanges, law enforcement at all levels including international, NGOs and victim services providers. Operating mainly in the United States, but with international ties, Shamrock is a good example of the kind of multidisciplinary approach that must be replicated and expanded to check criminal scamming.
Building public awareness must be at the center of any strategy to combat scams. This crime won’t stop until we reach full American awareness of the threat. It warrants a massive campaign to educate the public about the dangers of engaging by text with people we don’t know. And it requires new efforts by the private sector to ensure that Americans using various social media platforms can do so safely. It also requires much greater partnership between banks, law enforcement and social media companies to prevent psychological manipulation from emptying bank accounts. Finally, it requires strong government leadership in building a whole-of-government approach that can advance robust international collaboration to disrupt these networks overseas. It’s time to cultivate a new normal of caution as a primary response to online communication.
Erin West is a deputy district attorney in Santa Clara County and the founder of Operation Shamrock.