$13M Pig Butchering Scam: Three Arrested for Money Laundering

On February 25, three individuals, Mingzhi Li (also known as “Zheng Lin” 林正), Zeyue Jia (aka “Jiao Jiao Liu” 刘娇娇), and Jun Shi, were detained for allegedly laundering over 13 million through shell companies in a complex investment fraud known as “pigbutchering.” The trio is accused of operating an illegal money-transmitting company, a felony punishable by up to five years in federal prison. Liand Jia, who entered the United States on an expired student visa, is suspected to be illegally present in the nation and has been ordered detained without bond. Shi, on the other hand, was released after posting a $20,000 bail. Their arraignments are planned for March 17 in the United States District Court in Los Angeles.

$13M Pig Butchering Scam: Shell Companies Exposed

The scam relied on two shell firms, Magic Location Trading LLC and Stone Water Trading LLC, which Shi formed on December 7, 2022. These entities, located at the same downtown Los Angeles address, purportedly operated as unlicensed money service enterprises. They enabled the movement of cash for third-party consumers without complying with federal rules, such as registration with FinCEN or the State of California.

Li and Shi, under the aliases “Zheng Lin,” and “Jiao Jiao Liu,” established bank accounts in the United States for Magic Location and Stone Water, respectively. Victims of investment scams contributed millions of dollars to these accounts. Law enforcement found 242 wire payments of 7.6 million to Stone Water and 60 transfers worth 5.4 million to Magic Location. The cash was subsequently moved to offshore accounts, domestic firms, and individuals, or spent on personal costs.

Fake Platforms Launder Millions via Unlicensed Transfers

The victims, many of whom were duped via dating apps, social media, or unwanted messaging, thought they were investing in genuine sites. Scammers sometimes pretend to be love interests to gain victims' confidence before introducing them to fake investment offers. Victims were driven to fraudulent platforms, where they were convinced to send funds for investments in commodities such as gold or virtual currencies such as Bitcoin. These platforms would show phony earnings, tempting victims to spend even more money. However, once the money was transferred, the victims were unable to retrieve their money.

A 72-year-old Minnesota man was lured by a Chinese woman on WhatsApp to invest in a platform named “Enkuu.” In August 2023, he transferred $75,000 to Stone Water and thereafter sent $50,000 to Magic Location. Despite the platform's considerable returns, he was unable to withdraw any assets, incurring a total loss of $325,000.

The “pig butchering” fraud, dubbed for its way of fattening victims before the fatal blow, is becoming more common. Authorities advise the public to stay careful and to confirm the legality of investment possibilities, particularly those presented through unwanted contacts or online interactions.

Authorities Warn: Pig Butchering Scams on the Rise

This case demonstrates the rising threat of financial fraud in the digital era, emphasizing the necessity of regulatory compliance and public knowledge in combating such schemes.