Torontonians reported more than $55 million stolen in investment scams over the past 9 months. Is ‘pig slaughter’ making things worse?

Start small: an initial investment of just a few hundred dollars.

“So the victim will see a little return,” says David Coffey, a detective with Toronto Police Services. Financial Crimes Unit. “That’s how it snowballs and that’s how people get hooked.”

Investment scams, in which victims are convinced to invest their money through fraudulent promises of high returns, have been around for decades, but it was only last year that police began tracking the total dollar value lost in the scheme in Toronto. .

Since May 2023, more than $57 million has been reported stolen in investment scams from Toronto residents, Coffey told CTV News. Of that loss, about 20 percent was reported this year.

However, according to Coffey, the figure likely underrepresents the true magnitude of the problem; “It is estimated that only five to 10 percent of investment fraud is reported,” she explained.

The figure comes amid the emergence of a new variation on the classic investment scheme, known as ‘pig slaughter.’ It’s a sort of hybrid between a romance and an investment scam, in which the victim is lured into investing their money in cryptocurrencies.

David Rotfleisch, a business lawyer in TorontoHe said he has met with more than a dozen potential clients since the beginning of the year who have fallen victim to the new version.

“It really bothers me every time I put one of these on,” Rotfleisch said. “And this week, there were three.

Despite its name, there are no pigs involved. Instead, ‘pig butchering’ refers to the time spent building a relationship with the victim – or fattening them up – before convincing them to invest. This stage of the scam can last weeks or months.

“It’s an apt description, but it’s a term coined by scammers: it’s something like ‘we’re fattening the pigs.’ “It’s offensive to the victims, but that’s what they call it,” Coffey said.

This latest version of scam has proven to be a problem in Toronto and around the world. In fact, Texas researchers estimated in February that More than $75 billion has been lost due to pig slaughter worldwide.

The ‘pig slaughter’ scam: What is it?

‘Pig butchering’ is believed to be behind an influx of seemingly random messages people around the world are receiving from unknown numbers.

The sender of the message will ask a mundane question and sometimes address the recipient with a name that is not their own. When the recipient responds, sometimes more conversation ensues, police say.

“The bottom line is that a relationship ends up developing,” Coffey said.

Message about pig slaughter

Once trust has been established, the victim is presented with the opportunity to invest.

“First, it’s $250 or $500, but then they say, ‘Well, now that you just won $1,000, give us another $5,000,’ and so on,” the detective explained.

At this point, the victim often remains unaware of the truth of the situation and, in some cases, is even excited to earn more.

But the money is not being invested, Coffey said.

“Over time people become captivated by the illusion of profits that do not exist. They are not being invested: they go directly into the pockets of these criminal organizations.”

Victims tend to realize that they are in trouble only when they try to withdraw their money: the correspondence dwindles, excuses begin to be discarded, and eventually the facade falls.

Over time, scammers will send the profits to centralized crypto exchanges and withdraw them for traditional money. Last November, the founder of Binance, one of the most popular exchanges, pleaded guilty to anti-money laundering criminal charges and sanctions and was ordered to pay $4.3 billion.

The victims of these types of scams are often not wealthy people looking to increase their earnings, as some might expect, Coffey explained: They are people without money, desperate for income and willing to use the little they have to acquire more.

The people sending the messages, on the other hand, are not necessarily the masterminds behind the crime; They are often victims of human trafficking themselves, the Austin study revealed. According to UN data, more than 200,000 people have been lured to resorts in countries like Cambodia and Myanmar with offers of high-paying jobs, only to be trapped and forced to start a scam abroad.

However, that is not the only method: another report published in February by cybersecurity company Sophosdiscovered that cybercriminals were selling ready to use ‘pig butcher’ scam kits, which include a web page that can connect to the victim’s crypto wallets and often an installed chat function that can be used to provide “technical support” to the victim.

Can the police tackle investment scams?

Because “pig butchering” is carried out online, often by perpetrators overseas, addressing it can be difficult for local police departments. Even the Toronto Police Service, the largest in the country, is “paralyzed” when it comes to responding to these types of scams, Coffey said.

“Once the money has been sent, I’m not going to say it’s impossible, but it’s very unlikely that you’ll ever see it again,” Coffey said. “It is a very, very, very sad and hard reality.”

If a criminal investigation is launched, while the complainant’s intention may be to recover their money, the police’s task is not to recover the loss, but to press charges, a process that becomes exponentially more difficult if the fraudster operates internationally. .

It’s a sentiment echoed by Tom Warren, cybercrime private investigator and founder of Net-Patrol International. In the time he has been investigating ‘pig slaughter’, Warren has lost up to $12 million in a single case.

“Of course not, not small departments,” he responded when asked if police departments are equipped to handle the avalanche of fraud facing Canadians. “Half the time, even with very simple forensic work, they have to go to the provincial or federal police department for help.”

“It’s just not possible; even larger departments, like Toronto, struggle with it in part because they don’t know enough about this type of technology to delve into it,” he continued.

According to Warren, without more investment and research, Canadian officials can only continue to react rather than prevent these types of scams.

he points to Singapore and its Cybercrime Command Commission as an example of strict online law enforcement across borders.

“Unfortunately, we are at a point where the federal government has to get involved. There needs to be some kind of commission that focuses solely on cyber issues, whether it’s cryptocurrency, breaches, child pornography or anything in between,” Warren said. “Because the current model no longer works.”

Cybercrime, scam

How to avoid ‘pig slaughter’

Due to the personalized nature of ‘pig slaughter’ and many other investment, romance or personal scams, it can be difficult to recognize beforehand.

If you receive a text message from an unknown number, immediately assume it’s from a scammer, police advised. Don’t click on unknown links and be wary of anyone contacting you claiming to be a government official or bank employee.

They suggest taking a breath and not committing to the message right away. First, spend some time thinking critically about your origin.

“Do your due diligence, right? And spend a little money doing it; consult with reputable people who work in investments or cryptocurrencies,” Warren said. “It’s not too expensive to talk to them.”

Potential investors should ensure that the companies they are going to do business with are authentic and trustworthy: the “easier” it is to make the investment, the more cautious they should be, says Coffey.

“We shouldn’t look for quick investment opportunities online,” he said. “If you do so, be aware that you are ultimately making yourself vulnerable and susceptible to this type of fraud.”

If you’ve already invested money, “you may run into problems,” Warren added. “Again, you probably won’t get your money back, but you really need to act fast.”

In 2023, the Canadian Anti-Fraud Center says it was aware of more than 4,010 cases of investment scams in which the theft of more than $309 million was reported. More than half of that amount is related to cryptocurrencies, he said.

With files from Natasha O’Neill of CTV News and Zeke Faux and Sana Pashankar of BNN Bloomberg.

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