09/18/2024 | Press release | Distributed by Public on 09/18/2024 13:32
Washington, September 18, 2024 -
Today, the House Financial Services Subcommittee on National Security, Illicit Finance, and International Financial Institutions, led by Chairman Blaine Luetkemeyer (MO-03), is holding a hearing entitled "Protecting Americans' Savings: Examining the Economics of the Multi-Billion Dollar Romance Confidence Scam Industry."
Watch Chairman Luetkemeyer's opening remarks here.
Read Chairman Luetkemeyer's opening remarks as prepared for delivery:
"I want to welcome our witnesses to our hearing today, which is devoted to analyzing a pervasive threat to everyday Americans-Confidence Scams.
"Before we jump in, I would like to note that for today's hearing we will be referring to this scam as 'Confidence Scams' instead of its otherwise known term 'Pig Butchering.'
"The scammers targeting innocent Americans use this term because the scams 'resemble the practice of fattening a hog before slaughter,' and I personally believe we need to do away with referring to victims in this way.
"These scams rely on trust. Trust that is built over weeks, or months, but trust and confidence are paramount for this scam to be successful.
"I am sure we all have received a message from a confidence scammer. Since the COVID-19 pandemic the texts have increased dramatically. They can feel random, and are quickly deleted but can be as innocent as 'Peter, how have you been' or 'Hey John, are you still interested in grabbing a coffee?' Many would delete the message right away, but some reply correcting the individual and a conversation begins.
"For men, the scammer will pretend to be a woman, and for women the opposite is true. Scammers will spend weeks having innocent conversations, all the while building trust that they are who they say they are.
"My staff spoke to one victim who said, after months of daily interactions, 'I had zero doubt that Anna was Anna. I knew everything about her, and I knew without a doubt that she cared about me.'
"Once confidence is built and the victim is lulled into a false sense of security, the scammer will discuss how well their cryptocurrency investment portfolio is preforming.
"These scammers will go into great detail about how a close confidant or family member has inside information on future earning potential of crypto currencies.
"They will send screen shots and videos of their portfolio and promise that they can guide the victim to find the same levels of wealth. That is an important point.
"They never directly ask for money. The scammer instructs victims to send money to various platforms which are developed to look real and controlled by the crime boss. The victim believes they will always have control of their money, or so they think.
"Once the victim has bought in, their 'guide' will coach them through setting up their own crypto accounts or provide step by step instructions on wiring money to bank accounts in Southeast Asia. Scammers have become incredibly adept with U.S. banking regulations and will prep their victim with ways to avoid suspicion.
"One victim was told to tell the bank staff handling this wire transfer that the money was for purchasing goods from a Chinese supplier in Hong Kong.
"Victims may initially send small amounts to a cryptocurrency exchange, or only wire a small amount to set up their own fictitious trading account.
"To sustain the ruse, scammers will present false account information purportedly showing victims' investments are growing.
"Scammers may even allow victims to cash out a portion of their initial investment to maintain a semblance of authenticity. Scammers will continue to pressure victims to pull from their savings and liquidate retirement funds until there is simply nothing left to send.
"Those carrying out the scams know that crypto currencies hold the promise for wealth and diversification of one's portfolio. They use this promise to their advantage, but unbeknownst to the victim, none of it is real. The crypto they purchase is not real, and the returns shown never existed.
"Confidence Scams are a growing threat that, according to John Griffin, an economics professor from the University of Texas at Austin, has resulted in a $75 billion dollar windfall for Chinese criminal organizations from January 2020 to February 2024.
"Just last Monday, the FBI released the 2023 Cryptocurrency Fraud Report which stated that investment fraud amassed an estimated $5.6 billion in losses for 2023, a 45% increase from the previous year.
"Herein lies the problem, confidence scams are a pervasive issue that affect red districts and blue districts. These scams target the most vulnerable in our country, bleeding them of their life savings, and in some cases shattering families.
"It is abundantly clear that more education is needed. This is a scam that has largely flown under the radar because, often, the victims are embarrassed to come forward to say that they were tricked. It is incumbent upon Congress to sound the alarm and warn our constituents.
"That is why we are holding this hearing today. Testifying before us today is a diverse panel representing the state, local, and federal response to Confidence Scams. It is obvious that more can be done to confront this problem, and holding this hearing is an important first step."
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