In one of the largest forfeiture actions in the history of the US Department of Justice (DOJ), federal authorities seized about $15 billion worth of bitcoin obtained from alleged fraud and money laundering schemes that used trafficked workers to defraud victims in the US and around the world.
Last month, a federal court in Brooklyn unsealed an indictment charging a multinational businessman with money laundering and wire fraud conspiracy for directing the scam that stole and laundered billions of dollars. Federal authorities accused Cambodian and UK national Chen Zhi, founder and chairman of Prince Holding Group (Prince Group), of directing Prince Group’s operation that held individuals against their will in compounds in Cambodia that engaged in cryptocurrency investment fraud and “pig butchering.” Prosecutors said the $15 billion in seized bitcoin is traceable to the crimes. Zhi is reportedly still at large.
According to the announcement, Zhi was directly involved in managing the barbed wire compounds that “functioned as violent forced labor camps,” where trafficked victims would induce individuals by phone, social media, or messaging apps to “invest” in online crypto investment scams.
The term “pig butchering” is used to describe investment fraud that involves scammers creating fake online personas to lure victims into fraudulent investment schemes by building trust, often using romantic gestures, before “slaughtering” them and stealing their money.
Attorney General Pamela Bondi said, “Today’s action represents one of the most significant strikes ever against the global scourge of human trafficking and cyber-enabled financial fraud. …By dismantling a criminal empire built on forced labor and deception, we are sending a clear message that the United States will use every tool at its disposal to defend victims, recover stolen assets, and bring justice to those who exploit the vulnerable for profit.”
“This historic indictment and forfeiture complaint send a strong message to fraudsters everywhere that we will pursue you no matter where you are, no matter who you are, and no matter your insidious methods, and we will never stop fighting for victims,” said United States Attorney Joseph Nocella.
Zhi and a network of Prince Group’s executives used their political influence and paid bribes to public officials in multiple foreign countries to protect their criminal activity. Zhi and his co-conspirators allegedly used some of the criminal proceeds on luxury travel, entertainment and to purchase yachts, jets, vacation homes, and artwork, including a Picasso painting.
In parallel with the indictment by DOJ, the Department of the Treasury designated Prince Group as a transnational criminal organization and announced sanctions against Zhi and associated entities. Sanctions were also announced by the United Kingdom’s Foreign Commonwealth and Development Office.
Pig butchering is a popular scam. US law enforcement sources estimate victims in the US have lost billions of dollars to pig butchering scams and other virtual currency investment frauds. Multiple federal agencies have warned the public about pig butchering. In 2023, the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued an alert to call attention to this type of scam and reminded financial institutions of their reporting requirements under the Bank Secrecy Act (BSA). Pig butchering scams have been linked to two of FinCEN’s priorities, anti-money laundering and countering the financing of terrorism (AML/CFT).
Whistleblowers Can be Key to Detecting Fraud and can Earn a Financial Reward
Often, whistleblowers with inside information are the best tools federal prosecutors have to uncover pig butchering and related fraud schemes. Depending on the nature of the fraud, these scams can be reported to several different whistleblower programs.
First, the DOJ Corporate Crime Whistleblower Pilot Program offers rewards for information related to some crimes involving financial institutions, from traditional banks to cryptocurrency businesses; foreign and domestic corruption involving misconduct by companies; and health care fraud schemes involving private insurance plans. Awards under the DOJ pilot program are capped at $50 million no matter how much money might be recovered by the government.
The Commodity Futures Trading Commission (CFTC) also has a whistleblower program that offers individuals financial rewards, job protection, and confidentiality for blowing the whistle on conduct that may violate the Commodity Exchange Act (CEA). The CEA governs a wide range of commodities, including financial instruments, as well as the trillion-dollar swaps market.
The Securities and Exchange Commission (SEC) also has a whistleblower program for reporting securities law violations, including accounting fraud, mispricing of stock, insider trading, money laundering, cryptocurrency fraud, Ponzi or pyramid schemes, theft or misuse of securities, market manipulation, and violations of the Foreign Corrupt Practices Act (FCPA). SEC whistleblowers can earn a financial reward if the Commission orders more than $1 million in sanctions as a result of the whistleblower’s information and are entitled to confidentiality and protection from job retaliation. Both the CFTC and the SEC have issued alerts warning about pig butchering scams.
Phillips & Cohen has expertise representing whistleblowers in reporting scams like pig butchering. The Phillips & Cohen partners include the first Chief of the SEC Office of the Whistleblower, Sean McKessy, Christopher Ehrman, who led the CFTC’s whistleblower program for over a decade, and the attorney with the most awards under the SEC/CFTC whistleblower programs, Erika Kelton.
The whistleblower attorneys at Phillips & Cohen understand the complex nature of pig butchering and other scams and will fight to protect your rights. Contact Phillips & Cohen for a confidential review of your potential case.