International criminal networks based in the anarchic regions of Southeast Asia prowl the Internet, seeking to defraud victims around the world with sophisticated and psychologically devastating scams. Operating from Myanmar, Cambodia and Laos, gangs rely on forced labor to spread their tentacles across Asia, Africa and Latin America, including within the United States, extracting at least $64 billion annually from gullible victims. Clearly, eradicating such a global threat will require a coordinated international response. Even so, the United States is not powerless domestically to confront this striking example of how conflict and corrupt governance in distant parts of the world can directly threaten the safety and well-being of Americans.
A busy market area in Thailand near the border with Myanmar on Nov. 26, 2021. (Lauren De Sicca/The New York Times)
The scale and scope of this massive fraud, given its monumental geographic and organizational reach, is beyond the control of law enforcement and policymakers. Effective action against the fraudsters will require a whole-of-government effort by the United States, beginning in Southeast Asia, to coordinate the efforts of government agencies, private society, and relevant international organizations.
One effort to combat fraud in the United States is already underway, with private sector and government ad hoc organizations beginning to develop a comprehensive attack plan. The effort, known as Operation Shamrock, is the first public-private partnership designed to share information among the diverse, multi-stakeholders affected by the organized crime crisis emanating from Southeast Asia. Within the Shamrock Alliance, working groups are focusing on specific strategies and tactics, including increasing public awareness of fraud, educating bankers to look out for red flags that indicate criminal activity, and strengthening law enforcement capacity to assist victims and trace lost funds. This will provide better information on exactly how criminal groups operate. Serving as a non-governmental organization and laboratory for innovative responses to the problem, Operation Shamrock could be a valuable partner for larger government programs.
The evolution of fraud in Southeast Asia
The epicenter of this fraud is in the border regions of Myanmar, Cambodia and Laos, where vast areas of weak governance and largely unregulated areas, rife with corruption and armed conflict, have given criminal organisations virtually free to establish a foothold over the past decade.
What began as illegal gambling hubs has in recent years expanded into sophisticated fraud operations, according to a USIP investigation published this year. Highly secured hubs run by criminal gangs house hundreds of thousands of forced labor victims from around the world, lured by false advertisements for high-paying, high-tech jobs and trafficked to their armed hubs by other criminal gangs skilled at moving people across borders under false pretenses.
International criminal networks primarily originate from China, but until recently Beijing has done little to disrupt these criminal groups overseas.
Although international criminal networks primarily originate from China, until recently Beijing has done little to disrupt these criminal groups overseas. In many cases, Chinese businesses, government and party agencies have played a role in strengthening the influence of criminal organisations across Southeast Asia to further their own objectives.
However, fraud centers along the Chinese border have proliferated during the pandemic, with Chinese nationals becoming the primary targets, leading Chinese police to crack down on syndicates targeting mainland China. Criminal groups have responded by globalizing their illegal activities, seeking victims on other continents, including North America. Africa, Central and South Asia and Latin America have all been hit hard by human traffickers employed to staff fraud centers, but the United States has proven to be a particularly attractive target for this nefarious activity.
The damage caused to American victims
The scam is unprecedented in its use of psychological manipulation, technology, social media, and advanced financial techniques. Nicknamed “pig slaughter” because of the way it metaphorically fattens its victims and ultimately slaughters them, the scam aims to strip its targets of all their assets, not to mention causing deep psychological damage in the process. New victims emerge every day in the United States, reporting losses of hundreds of thousands, or even millions, of dollars.
The pig slaughter is accomplished by luring potential targets into an online investment, a romantic relationship, or both, through popular social media and internet sites. Scammers target their victims through text messages and social media, and launch psychological campaigns to isolate the victim and build trust between victim and scammer, a process similar to brainwashing.
Preying on the bonds that form, they induce Americans to deposit money into “cryptocurrency investment accounts” by showing fake data that purports to reflect investment returns. Then, believing they have it all – new love and a great way to make money – victims are pushed to liquidate retirement accounts, college savings, or other forms of assets. Some are even manipulated into taking out high-interest loans to pay “taxes” on the reported fictitious profits. One such victim, an employee of a regional US bank, was persuaded to criminally divert bank funds into a fraudulent investment scheme, causing millions of dollars in losses. In the end, the victim is hit with a double whammy: all their savings are lost, and they are betrayed by someone they may have loved and trusted without question.
Several reported case studies illustrate specific manipulation techniques. An adult son received a call from his elderly mother in Florida asking for help paying the mortgage on her condo. “You don't have a mortgage,” the son said. “You do now,” the mother replied, explaining that her new boyfriend had secured the house with a high-interest equity line that she could then use to invest in cryptocurrency. The son told the author that he then used his retirement savings to pay off his mother's mortgage. This crime spanned two generations.
Other manipulative tactics have translated into violent crime in the US, illustrating how these networks can undermine broader instability. The Associated Press recently reported on a fraud victim in Ohio who shot and killed an Uber driver after manipulative criminals tricked him into believing the driver was involved in a scam. Meanwhile, a new wave of customs fraud in the US and Europe also shows how scammers looking to slaughter pigs can pose as law enforcement, with knowledge of their victims' home situations and legal and political vulnerabilities.
It has been reported that in 2023 alone, losses to the FBI's Victim Hotline (known as IC3) will total $4.5 billion from online investment schemes and $650 million from romance scams, but we know this is just the tip of the iceberg. Victim stigma leads to a massive under-reporting of crimes. Victims often feel ashamed, isolated, and so humiliated that they are unable to seek help. In the most extreme cases, some even take their own lives. While it is commonly believed that these losses affect the elderly population, the IC3 report shows that people of all ages – anyone with a cell phone – can fall victim to these scams.
Countering the threat
As the USIP study concludes, only a comprehensive and well-coordinated international effort, beginning in Southeast Asia, can contain this global threat: it cannot be effectively addressed on a national level because the criminal networks behind it are adept at far outpacing law enforcement efforts and advancing the application of new technologies that exceed current capabilities.
Only a comprehensive and well-coordinated international effort, beginning in Southeast Asia, can contain this global threat.
However, as the United States increasingly rises to the top as a primary victim of this type of scam, it is also incumbent on US institutions, including law enforcement, cybersecurity agencies, civil society organizations, and the media, to organize a coordinated program to prevent and thwart the impact on innocent US citizens.
This is the goal of Operation Shamrock, which could serve as a model platform for a broader U.S. government-led effort.
Operation Shamrock brought together the many stakeholders necessary to alert the public to the threat of this criminal activity and mobilize a grassroots response to develop corrective measures to stop the scams. Stakeholders involved in the operation include social media, financial and banking sector representatives, cryptocurrency exchanges, law enforcement at all levels including international organizations, NGOs, and victim service providers. Operating primarily in the United States but with international ties, Shamrock is a great example of the multi-disciplinary approach that needs to be replicated and expanded to stop criminal fraud.
Raising public awareness must be at the heart of any strategy to combat fraud. This crime will not stop until Americans are fully aware of the threat. We need a massive campaign to educate the public about the dangers of texting with strangers. We also need renewed efforts from the private sector to make the various social media platforms safe for Americans who use them. We also need more collaboration between banks, law enforcement, and social media companies to prevent psychological manipulation from draining our bank accounts. Finally, we need strong government leadership to develop a whole-of-government approach that can drive strong international cooperation to thwart these networks abroad. It is time to foster a new normal of vigilance as our primary response to online communications.
Erin West is a deputy district attorney for Santa Clara County and founder of Operation Shamrock.
PHOTO: A busy market area in Thailand near the border with Myanmar, Nov. 26, 2021. (Lauren De Sicca/The New York Times)
The views expressed in this publication are those of the authors.
Publication Type: Analysis
