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PG reveals details of ‘pig butchering’ online crypto investment scam

ACCUSED … Fourteen of the people charged in connection with an international investment scam involving cryptocurrency investments, during their first appearance in the Windhoek Magistrate’s Court. Photo: Werner Menges

Prosecutor general Martha Imalwa has revealed details of an online investment scam, known as “pig butchering”, which saw 15 people arrested in Namibia in October 2023.

Imalwa reveals the details in a sworn statement filed at the Windhoek High Court in a case about cryptocurrency worth about N$2 million. The funds have now been declared forfeited to the state in terms of Namibia’s Prevention of Organised Crime Act.

The cryptocurrency is the proceeds of an investment scam that involved the creation of fake identities on internet platforms, online communication with scam victims to gain their trust and to invest money in cryptocurrency, Imalwa says in her statement.

She also recounts that after targeted investors’ funds were moved from cryptocurrency trading platforms to fraudulent online platforms under the control of a criminal syndicate, “the scam culminates in a sudden and devastating loss”.

A total amount of 112 334 units of the cryptocurrency Tether – the equivalent of about N$2.06 million – held in two accounts on a cryptocurrency exchange based in The Seychelles were declared forfeited to the state in an order issued by judge Boas Usiku in the High Court last week.

In the order, the attorney general of Seychelles is also directed to pay the forfeited cryptocurrency into a Prevention of Organised Crime Act asset recovery account of Namibia’s Ministry of Justice.

Imalwa, who applied for the forfeiture order, says in her affidavit in the case that on a balance of probabilities, the funds in the two accounts are the proceeds of unlawful activities, namely fraud, racketeering offences and money laundering.

In September 2023, the Namibian Police received information that a Namibian close corporation, Raylon Investment, was carrying out illegal activities by defrauding people through online investments, Imalwa says.

During an investigation by the police, it was established that more than 150 people were employed by Raylon Investment in an office building in Windhoek, where the employees were working only during night hours, between 16h30 and 07h00 the following morning, Imalwa says.

Raylon Investment’s employees were accommodated at a house at the Auasblick area of Windhoek and their freedom of movement was restricted, Imalwa also says.

Also during the investigation, the police established that Raylon Investment’s sole member is a Namibian man who was previously employed by Chinese citizens in Windhoek. His identity document was used to register the close corporation and open a bank account in its name.

The man has told the police he did not know about the existence of Raylon Investment.

SCAM FROM ASIA

The police investigation “revealed a widespread online investment scam involving the syndicate and Raylon Investment”, according to Imalwa.

The “pig butchering scam” originated in Asia around 2019 and has since spread globally, the prosecutor general says.

“The scam involves a three-stage process: find, raise and slaughter,” Imalwa explains in her affidavit.

“The ‘find phase’ focuses on investors’ identification. Scammers target potential investors on dating sites and social media, creating profiles that portray them as wealthy and successful individuals to attract those seeking love and companionship.

“The ‘raise phase’ involves building trust and promoting investment. The relationship deepens and the scammers, posing as romantic partners, introduce the concept of investing and their supposed success in cryptocurrency. They share their stories of financial independence and offer to guide the investors to achieve similar results,” Imalwa continues.

“The ‘slaughter phase’ is the point of exploitation and loss. The investor is persuaded to invest substantial amounts of money into fraudulent cryptocurrency platforms controlled by the scammers. These platforms often mimic legitimate ones, displaying fake profits to further investment.”

But then, once the victim’s cryptocurrency investment is deemed to have grown fat enough, it gets slaughtered: “As the investor commits more financially, the scam culminates in a sudden and devastating loss. The investor’s funds disappear, and the harsh reality of being defrauded sets in.”

FAKE PROFILES

Imalwa says evidence collected from a cellphone of one of the people arrested in Windhoek in October 2023 showed that the syndicate used artificial intelligence (AI) to create personalised videos of individuals and manipulate their appearance to match stolen identities used in fake profiles created to carry out the scam.

During their investigation, the police took witness statements from more than 50 people who were employed by Raylon Investment and some of those witnesses have detailed how investors were defrauded of the equivalent of more than N$12 million, Imalwa says.

One witness told the police he created fake accounts under a woman’s name on social media sites on the internet. The witness said he and fellow employees “engaged with American and European men, posing as divorced women and forming emotional connections”, says Imalwa.

She adds: “This involved ‘hot chat’ with explicit sexual content and compromising pictures.

“After establishing trust with the investors, they introduced them to options trading, leading them to invest substantial amounts of money.”

The 15 people arrested in connection with the scam include nine citizens of the People’s Republic of China, three Namibians, a Singaporean and a Cuban national.

All of the accused have been released on bail since their arrest.

The 15 accused, who are charged with fraud, racketeering, money laundering, trafficking in persons and other offences, have to appear in the Windhoek Magistrate’s Court again on 31 March.

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