The FBI’s email scam ring bust shows how the Nigerian billion-dollar global fraud has evolved

August 23, 2019
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A series of arrests by the Federal Bureau of Investigations in the US has nabbed one of the “most prolific” rings of Nigerian fraudsters operating in the country.

While 14 arrests have been made, a 252-count federal grand jury indictment unsealed on Thursday (Aug. 23) named 80 defendants charged with defrauding victims of up to $10 million in one of the “largest cases of its kind in US history.”

The fraudsters used a variety of cyber fraud methods to attempt to steal $40 million in total from victims in 10 countries as well as the US.

The unsealed indictment shows the evolving tactics of online fraudsters which has seen them continue to dupe unwitting victims despite numerous awareness campaigns about the online scams. In the past, internet scams associated with Nigerians (known locally as “Yahoo Boys”) were dominated by romance scams through dating sites as well as phony email business propositions from infamous “Nigerian princes,” their current tactics appear to have changed.

Business email compromise

Through business email compromise (BEC), fraudsters use hacked email accounts to convince businesses or individuals to make payments that are either bogus or similar to actual payments owed to legitimate companies.

As part of the scam, fraudsters learn about key personnel in companies who are responsible for the payments as well as the protocols necessary to perform wire transfers in various companies and then target businesses that regularly perform wire transfer payments, Paul Delacourt, FBI assistant director in charge of the case said in a press briefing.

The scams have become so rampant in the first seven months of 2019 alone, the FBI received nearly 14,000 complaints reporting BEC scams with a total loss of around $1.1 billion—a figure that nearly matches losses reported for all of 2018.

In another recent high profile case, following a 13-month long investigation, the FBI arrested Nigerian Obinwanne Okeke in an $11 million BEC fraud case. Before his arrest, Okeke had posed a successful entrepreneur and was featured on a Forbes 30-under-30 list as well a BBC Focus on Africa program.

With long-running romance scam tactics through dating websites already well-known, fraudsters gone as far as impersonating US soldiers and then seek lovers on social media. Invariably, victims who fall for impostors are asked to make “repeated and ever escalating payments,” US officials say.

In some cases, rather than being asked to send money,

victims of romance scams are deployed as money mules whose banks accounts used to move illicit funds or are talked into opening accounts on behalf of criminals. US law enforcement have recently received complaints of such scams in all 50 states in the US, authorities also say.

Bad rep

The high profile arrests have also triggered extreme reactions among Nigerians at home and abroad, many of whom daily experience the cost of national stereotyping that comes with the well-covered activity of online fraudsters, particularly with the wide spread of email scam attempts.

These costs range from increased scrutiny for visa processes, a lack of trust when attempting to do business internationally and being restricted from using international payment platforms. The fraud stereotype is also often pushed back as an unfair generalization, with successes within Nigeria’s startup and tech ecosystem cited as contrary evidence. A few have even claimed the international criminal behavior is no more than a “hustle”.

But the bigger challenge is with the country’s law enforcement and justice systems which are seen as either being unable to tackle the problem or unwilling to do so.

US officials say the busted ring was led by US-based operatives who facilitated the scams by opening US bank accounts where victims were directed to deposit money. Operatives then laundered the stolen funds through these accounts, ultimately funneling them to Nigeria and pocketing the proceeds. The lead operatives received and laundered at least $6 million in stolen funds, US officials say.

Beyond the arrests that have already been made, the US is working with foreign counterparts to arrest 57 more indicted subjects. And citing previous success with extraditing Nigerian citizens to the US in the past, Hanna says the US to seek to extradite indicted defendants believed to be in Nigeria. The defendants face charges ranging from money laundering to identity theft and will likely face “decades in federal prisons” if convicted.

But that’s likely all the justice victims will ever get. “A large majority of victims do not get their money back ever,” Delacourt noted during the briefing. Alongside the FBI’s investigations to deal with the scams, Delacourt emphasized the need to educate potential targets about contemporary fraud tactics to prevent the scams at source. In his words: “We cannot arrest our way out of this problem.”

(Quartz Africa Weekly)

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