In this week’s episode of The Dark Side of Finance, CEO and co-founder of PAX Financial Group, Darryl Lyons, explores a chilling “pig butchering” scam that tragically ensnared a 75-year-old retiree. Through gripping narratives and detailed analyses, he reveals the psychological manipulations and deceptive tactics used by today’s financial criminals to build trust and manipulate their victims into devastating losses.
Key show highlights include:
- A detailed examination of the “pig butchering” scheme, where scammers build trust and manipulate victims into investing large sums of money.
- The heartbreaking story of a 75-year-old retiree who fell victim to a financial scam, thus losing his life savings in the process.
- An explanation of the psychological tricks and emotional manipulations scammers use to gain their victims’ trust and exploit their vulnerabilities.
- Practical tips and strategies to safeguard your finances and protect your loved ones from becoming victims of financial crimes.
Tune into this week’s episode and join us on this journey to uncover the truth behind financial crimes and arm yourself with the knowledge to stay safe. Keep your head on a swivel, and let’s navigate this dark side together. If you enjoyed the episode, be sure to share with a family member or a friend!
Transcript:
Hey, this is Darryl Lyons, CEO and co-founder of PAX Financial Group. And you’re listening to The Dark Side of Finance. This information is general in nature only. It’s not intended to provide specific investment, tax or legal advice. Visit PAXFinancialGroup.com for more information. So The Dark Side of Finance are stories of financial crimes, also known as fin-crimes.
And through these stories, you will learn about modern day thieves and their strategies so you can protect you and your family and your loved ones. And I’m going to share with you today one of the most disgusting scams that’s happening across the globe. Cringeworthy, heartbreaking. It’s called pig butchering and it happened to a 75 year old man in the Midwest.
Now, before I share his tragic story, I first need to set the stage and tell you what pig butchering is. It’s fattening a pig before slaughter, as we know. So, imagine someone you meet online. They entice you to invest. Say, I’ll never fall for that. But let’s say you decide, I’m going to give them $200 and just see what it does and if I lose $200, I’m fine. You put in $200, a few weeks later becomes $400. What do you do?
They are fattening you up to put more in and more and more. This is the racket. And they’re so skillful in it and I’ll explain some of the strategies. If they connect with you online, they’ll find a reasonable explanation of how they connected with you. They’ll develop a genuine friendship, and you will be skeptical.
Except their active duty. They’re retired. They’re a single mom. So you relax your shoulders and you trust them a little bit. They even show you a website that appears to be legit. You look around to see if there’s any clues for something that might be off. And no, it’s a pristine website, just like any other credible institution. And now you’re making 50% returns. 100% returns.
Your dreams are materializing. You can actually imagine the house, you’re going on Realtor.com and actually looking for vacation homes or thinking about retirement. So you put more money in. It started out with $2000, now it’s $20,000. It is the pig butchering scheme, it is sophisticated psychological manipulation at its best. And unfortunately, this happened to a 75 year old retiree who lived in the Midwest, and his name is not available.
But this tragedy was first reported by Phyllis Solomon from the Wall Street Journal on June 2nd, 2024. The connection happened online when this senior citizen responded to a LinkedIn request with a note saying, “I’m impressed with your profile.” Now, if you’re on LinkedIn, it’s a business site. You’ll get these requests all the time. “I’m impressed with your profile.”
Amazingly, this man lived with his wife for 40 years, but they just drifted apart. I assume he responded to somebody showing interest in him. I mean, she was dressed in a blue t-shirt and a red skirt, posing next to a bouquet of flowers. And after a few pleasantries on LinkedIn, she said, “Let’s go ahead and move our conversation to another app called WhatsApp.”
Now, this WhatsApp is a fine resource for communicating with people. But why move from LinkedIn to WhatsApp? Well, if LinkedIn identifies that you have set up a fraudulent profile, they’ll shut you down. And if you’re shut down, you can’t communicate. So, moving on to WhatsApp is a little bit safer for the con artist. So they begin the dialog between each other on this platform called WhatsApp.
Of course, he had never heard of it, but she was very patient and walked him through screenshots of how to set up a WhatsApp account. And she told him a story that she lived in San Francisco and worked for her wealthy uncle, and she had designer clothes and dined in fine restaurants, and even posed next to this luxury car.
Now she was divorced, she claimed, and came to the U.S. from China eight years ago. But here’s part of the con. She had trouble trusting men. At 37 years old, she claimed she did not need the money because of the wealth in her family, but she just longed for conversation and companionship. Her name was Violan Chin.
She had such an intriguing persona. And they identified common ground. Types of foods they liked. They talk about travel together, fitness, pets. They’ll find all kinds of common ground with these conversations. So, he’s still uncertain. He’s still like, this can’t be real. So let’s set up a few voice calls. So they get on the phone and chat a little bit.
They even do one video together. Still kind of timid about this relationship he thinks maybe a video will help me feel better. Maybe. I just want to see it’s just not a man on the other side. So sure enough they get on a video, but they didn’t stay long, but just enough for him to say, okay she’s actually a real woman.
She said, “I can’t stay long on the voice calls, nor can I stay long on the video. I’ve got a rush. I’ve got things to do for my wealthy uncle.” And he didn’t mind, he didn’t want to stay on long. He just needed enough to legitimize who she was. He was actually a little insecure because he’s older, insecure about his appearance and even having a messy house in the background.
So, that validation process of just a couple voice calls and a video conversation was all he needed. And through these conversations, she explained to him how her uncle makes most of the money trading gold future contracts. Now futures contracts. We know gold, but futures contracts are a contract to buy gold at an agreed price in the future. It’s a contract.
The definition of contract is offer acceptance and consideration. And so there’s this agreement that occurs. These are legitimate investment vehicles because these contracts can then be traded. Believe it or not. So these contracts are very sophisticated and typically done by institutions. But, she had a strategy on how to trade them through her uncle and her uncle was making a ton of money doing it.
So can you actually get these contracts as a retail consumer? Sure, you can get them to go to Charles Schwab, Fidelity, some other sites. You can get futures contracts. But of course they didn’t go through these platforms. Of course not. She recommended that if he was interested in these gold futures contracts, the way they do it is through this website, this platform called FUEX.
It’s the place that you go, that’s what she claimed, if you want to be a futures contract trader. Not knowing any different. She introduced him to this site and it is a spoofed site, is what they call them, completely looking legitimate. Completely. I mean, they spin. The level of detail they use for these sites is remarkable in a bad way.
And of course, he had never set up the site, but she did the same thing that she did for WhatsApp. She walked him through every single step. And so he made a deposit, $1,500 bucks. And now the scammers have just checked off the romance box in the finance box. Next step is to add zeros to it.
And they started to plan. These two started to plan their future together. They started to dream about life. Here’s what she said. “We will be very happy in the future. And maybe because I had a few glasses of red wine with my friend. That’s why I say this. But I really thank God for letting me meet you” and he responds, “I love you very much. I also thank God for having us come together in such an unusual way. I really believe we were meant for each other. I couldn’t have found a more perfect woman than you. I am the luckiest man on earth to find you.” And she was often trained to overcome objections, as if whenever he got insecure, nervous. Some of the things that she would do in this psychological manipulation issue would make him feel guilty.
She would say, “Got it, got it. You still don’t trust me? So you think you’re in danger?” Or she would say. “Your distrust of me once again made me feel the fickleness of men. Good night.”
Then she appealed to his dopamine. The excitement of investing. Watch your account go up. It’s exciting. So he said, I want to invest $5000. And somehow she pressed him to $15,000. The bank had some transfer limits that he had to call to get removed. And they saw this as a scam, and they encouraged him to do his due diligence.
But he pressed on and she taught him how to overcome bank objections. And when he got suspicious again, which would have happened periodically, or get nervous, she would flirt and she would push him and test him.
And he would invest $20,000. And she encouraged him and she says, “Can’t you do 200,000?” Her goal is to test his net worth. And then finally she asked him, point blank, “How much do you have in stocks and bonds?” And he said “$460,000.” And so with that information, she convinced him to sell $130,000 in stocks. She was setting him up and she even warned him, just like the bank.
Hey, they’re going to push back your financial advisor when you sell these stocks. He’s going to push back. Here’s how you overcome it.
Now she needs to elevate the trust factor. So she booked a trip to see him. Can you imagine how excited he was? But unfortunately, she had to cancel last minute, but that she still longed to be with him. She wanted a life with him together. Travel, food.
Now, at this time, he’s made three large deposits into this gold futures account of $300,000. But this is where the sophisticated part of the scam occurs. I guess an elevated sophistication. She said, I’m going to put some of my own money in these gold futures contracts so we can have this joint account together.
And then they have this joint account and then she wanted to buy a house. And so she said, “I need to withdraw some of the money from our joint account.” That had now grown to $700,000. She put $400,000 and he had put $300,000. And she says, “I need some money to buy a house.” And for whatever reason, she wasn’t in a position to withdraw it herself.
So she said, “Can you take out $700,000 from our FUEX account?” “Sure. No problem. I’ll take it out. We want to buy a house to live together.” And so he goes online and attempts to make this withdrawal because he can see the balance and he gets a notification. It says for security reasons, we cannot make a withdrawal at this time.
And he looks and he says, “I see the balance. I don’t understand. It’s my money. It’s our money. Why can’t I get it?” So she says, “You probably need to call customer service. I’m sure it’s just a glitch.” So he called customer service and of course, this is a sophisticated scheme. And they said, “Your account is frozen for security reasons. You will need to pay 640,000 to unfreeze it.”
Now, the idea is that this money is their money, but you still have to do it.
Now he’s getting really worried. Really, really worried. He sent her a text, a message through WhatsApp. “Please help me believe otherwise because right now I’m sitting here with a broken heart and no retirement money. So please do not let this happen.”
Violan said “I’ll help you unfreeze it. We’ll get through this together. I’m going to go to my uncle and borrow $485,000 to unfreeze it.” But remember, they need $640,000. So she needs him to chip in the rest. $155,000. So he goes and borrows $45,000 from the bank and takes out a home equity loan. Now, he personally has $716,212 into this account.
One of his last messages to her says. “Do me a favor and just shoot me. I’ve nothing to live for. No money, no family, no soulmate. Yes. I take responsibility for investing in a woman who hated me and just wanted my money. I spilled my heart to you every day and got nothing in return. You hid your true identity because I think you have done this to other people before. How else can you explain it?”
The money was gone. To make matters worse, Violan periodically reaches out to him to see if he has any money left to see if he’ll bite. Maybe through Alzheimer’s or dementia. And every day this man checks his account to see if his money’s there.
This is sophisticated psychological manipulation. This FOUEX platform was registered in the UK but has since been delisted. These sites are set up all the time and modeled after real ones. They’re run from camps in China, criminal syndicates in Southeast Asia and West Africa. They’re called scam dens. And believe it or not, Violan was likely a part of human trafficking herself and forced to develop a fake profile and given scripts to steal money.
These dens often have models for brief cameos. They want everything. They’re looking for the elderly. Who are between doctor’s visits. Who struggle. Kids don’t see them anymore. Flower beds are only doing so much. Back hurts. Prescription drug conversations with other people. There’s no excitement anymore. Here comes excitement. And so these sophisticated scam dens target our elderly, our seniors. If you ever think that you’re subjecting or you’re subject to this type of scam, report immediately to the FBI, they have an internet crime complaint center called IC3.
And they will send it to local law enforcement agencies. But here’s the challenge that we have today. Our local law enforcement agencies, even though it’ll be reported, the FBI. They don’t know how to handle, these things are sophisticated. From cryptocurrency scams, which we will talk about to these futures and the international relationships that exist. I will say this.
The good guys are beginning to catch up. They’re creating Cross-Agency task Force, where you work with local authorities, state, federal, internet and international crime fighters trying to recover money. But in this situation, the money’s gone. In some cases, they can recover money. This pig butchering scam is a mass transfer of wealth from the middle class to Southeast Asia.
In our next episode, we’ll discuss a domestic crime that some might say is just, it’s just a conflict of interest, but it includes a lottery winner and unfortunately, a suicide. Thank you for listening to the Dark Side of Finance.
Fin-crime, unfortunately, is near all of us. There are no guns. There are no masks. So keep your head on a swivel to protect you, your family and your loved ones. Have a good day.
Resources:
She Hooked Me’: How an Online Scam Cost a Senior Citizen His Life’s Savings – WSJ
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