US charges 80 in world-spanning romance scam and email fraud ring

The US Department of Justice (DOJ) on Thursday unsealed a sprawling, 252-count, 145-page federal indictment charging 80 defendants – most of them Nigerian nationals – with conspiring to steal millions of dollars through online frauds that targeted businesses, the elderly and women.

Federal authorities cited the case of one of those romance-scam victims during a news conference on Thursday.

Identified only as “F.K.” in the indictment, the Japanese woman first met the fraudster who would come to bleed her of hundreds of thousands of dollars on an international social network for digital pen pals.

F.K. thought she was corresponding with a captain in the US Army captain, “Capt. Terry Garcia”, who was stationed in Syria. Over the course of 10 months, Garcia described in daily emails his scheme to smuggle diamonds out of the country.

F.K. borrowed money from her sister, her ex-husband and her friends to help out her fake boyfriend, but in the end, there were no diamonds.

She wound up $200,000 poorer and on the verge of bankruptcy. From the federal complaint:

F.K. was and is extremely depressed and angry about these losses. She began crying when discussing the way that these losses have affected her.

The indictment was unsealed after law enforcement arrested 14 defendants across the US, with 11 of those arrests taking place around Los Angeles. Two of the defendants were already in federal custody on other charges, and one was arrested earlier last week. The hunt is still on for most of the remaining defendants, who are believed to be abroad – mostly in Nigeria.

The conspirators allegedly used various online fraud schemes, including business email compromise (BEC) frauds, romance scams, and schemes targeting the elderly, to defraud victims of a total $6 million. The suspects also allegedly tried to get at another $40 million.

According to the criminal complaint, which was also unsealed on Thursday, the two heads of the conspiracy were Valentine Iro, 31, of Carson, California, and Chukwudi Christogunus Igbokwe, 38, of Gardena, California, both Nigerian citizens. They were basically brokers of bank accounts, the indictment alleges: co-conspirators would allegedly contact Iro and Igbokwe in order to set them up with bank and money-service accounts that could receive the funds they allegedly scammed out of victims.

Once the conspirators managed to talk victims into sending money, Iro and Igbokwe allegedly ran a massive money-laundering network that relied on a network of money mules who used a Nigerian banking application to transfer funds from their US bank accounts in naira (₦) – the currency of Nigeria. They moved money from Nigerian bank accounts they controlled to the Nigerian bank accounts specified by Iro and Igbokwe.

The two alleged ringleaders would set up bank accounts with a specific business name, if necessary, to trick companies into making payments. Besides cooking up accounts with fake business names that mirrored the names of legitimate companies, members of the conspiracy would also routinely file fictitious business name statements with the Los Angeles County Registrar/Recorder’s Office. Those statements would then be presented to banks when the fake accounts were opened.

Law enforcement arrested two defendants who they claim were money mules: Jerry Ikogho, 50, of Carson, California, who was taken into custody on the Sunday preceding the unsealing of the indictment, and Adegoke Moses Ogungbe, 34, of Fontana, California.

The US is charging each of the 80 defendants with conspiracy to commit fraud, conspiracy to launder money, and aggravated identity theft. A number of the defendants also face fraud and money laundering charges. Some of the defendants are also facing charges of operating illegal money transmitting businesses.

Iro, Igbokwe and Chuks Eroha, 39, are also facing charges for attempting to destroy their phones when the FBI executed a search warrant in July 2017. Iro also is charged with lying to the FBI in an interview conducted during the search. Eroha is believed to have fled to Nigeria shortly after the FBI executed the warrant.

Increase in reported romance scams

During Thursday’s press conference, Paul Delacourt of the FBI’s Los Angeles office warned about the escalating danger of romance scams.

Earlier this month, the FBI’s online crime division – the Internet Crime Complaint Center (IC3) – issued a warning about the rising number of faux lover-boys and -girls who are turning to online dating sites to run romance or confidence frauds. Besides talking marks into sending money, a rising trend for these con artists is to try to talk them into becoming money mules or drug runners, the FBI said.

We’ve seen plenty of these scams in past years: FBI numbers show that in 2017, more than 15,000 people filed complaints with the IC3, alleging that they were victims of romance/confidence frauds and reporting losses of more than $211 million. The following year – 2018 – that number skyrocketed by more than 70%: the number of victims filing complaints increased to more than 18,000, and they reported more than $362 million in losses.

Based on the number of victims, this type of fraud was the seventh most commonly reported scam last year. Money-wise, it was the second costliest scam in terms of losses reported by those victims. It’s ensnaring every type of victim, regardless of age, education or income bracket, the FBI says, though the most targeted demographics are the elderly, women, and widows or widowers.

Modus operandi

This is how these swindles go: First, the conman or woman gets their victim’s trust. Then, they try to convince them to send money, whether it’s for an airfare to visit, to ostensibly bail them out when they claim to have gotten arrested en route, to prove they can be trusted, to buy a home for the heartthrob they’ve never met, or for any other of an endless litany of sob stories.

It works. It works far too often.

BEC scams

Romance scams are only one of the ways that this massive conspiracy made its profits. As court papers describe, BEC was also a big money machine

BEC scams and the amount of profits they’re netting crooks are exploding. In its 2018 Internet Crime Report, the FBI said that it received 20,373 BEC/email account compromise (EAC) complaints, reflecting losses of over $1.2 billion, last year.

The scams typically involve legitimate business email accounts that have been compromised, be it through social engineering or computer intrusion, to initiate unauthorized transfers.

They’re getting increasingly sophisticated. From the FBI’s 2018 Internet Crime Report:

In 2013, BEC/EAC scams routinely began with the hacking or spoofing of the email accounts of chief executive officers or chief financial officers, and fraudulent emails were sent requesting wire payments be sent to fraudulent locations. Through the years, the scam has seen personal emails compromised, vendor emails compromised, spoofed lawyer email accounts, requests for W-2 information, and the targeting of the real estate sector.

We saw an example of an EAC scam in the real estate sector earlier this year when we learned about a woman getting swindled out of $150,000 from the overseas sale of her house in Australia.

More recently, a North Carolina county fell for a BEC scam, to the tune of $1,728,083. It could have been even worse: Cabarrus County managed to claw back some of a total $2,504,601 it paid to a scammer posing as a contractor working on building a new high school.

The crooks used social engineering to pose as Branch and Associates, which is a general contractor that’s working on building a new school for the Cabarrus County Schools District.

Everybody’s a target

Clearly, the fraudsters are going after anybody and everybody, be it women looking for love on dating or pen-pal sites, the elderly or companies they can social-engineer money out of. In Thursday’s press conference, US Attorney Nick Hanna said that fraud networks are now targeting individuals and businesses alike:

In the BEC scams, the fraudsters will often hack a company’s email system, impersonate company personnel, and direct payments to bank accounts that funnel money back to the fraudsters in Nigeria. In the romance scams, victims think they are developing a dating relationship, when in fact they are just being tricked into sending money to the fraudsters.

Hanna said that authorities believe this is “one of the largest cases” of its kind in US history.

To learn more about romance scams, watch Alice and Duck discuss how crooks recruit money mules from dating sites.

(Watch directly on YouTube if the video won’t play here.)