LOS ANGELES — Three Southern California residents are among four defendants named in a seven-count indictment charging them with participating in a scheme to launder the proceeds of cryptocurrency investment scams and other fraudulent schemes involving millions of dollars in victim funds, officials announced Thursday.
Two of the defendants — Lu Zhang, 36, of Alhambra, and Justin Walker, 31, of Cypress — were arrested Tuesday. The other two defendants — Joseph Wong, 32, Rosemead, and Hailong Zhu, 40, Naperville, Illinois — are currently being sought by federal authorities, according to the U.S. Department of Justice.
The indictment filed in Los Angeles federal court charges the defendants with conspiracy to commit money laundering, concealment money laundering and international money laundering.
Zhang, Walker, Wong and Zhu allegedly conspired to open shell companies and bank accounts to launder victim proceeds of cryptocurrency investment scams — also known as “pig butchering” — and other fraudulent schemes. They allegedly transferred the funds involved in the fraud schemes to domestic and international financial institutions.
The alleged overall fraud scheme in the related pig-butchering syndicate involved at least 284 transactions and resulted in more than $80 million in victim losses. More than $20 million in victim funds were directly deposited into bank accounts associated with the defendants, the indictment alleges.
According to court documents, pig butchering fraud schemes — a term derived from a foreign-language phrase used to describe the crimes — consist of scammers encountering victims on dating services or social media, or through unsolicited messages or calls, often masquerading as a wrong number.
Scammers initiate relationships with victims and slowly gain their trust, eventually introducing the idea of making a business investment using cryptocurrency.
Victims are then directed to other members of the scheme operating fraudulent cryptocurrency investment platforms and applications, where victims are persuaded to make financial investments. Once funds are sent to scammer-controlled accounts, the investment platform often falsely shows significant gains on the purported investment, and the victims are thus induced to make additional investments. Ultimately, the victims are unable to withdraw or recover their money, often resulting in significant losses for the victims, according to the DOJ.
After their arrests, Zhang and Walker appeared Wednesday in court, where they both entered not guilty pleas. Zhang was ordered detained, and Walker was ordered released on bond. A trial was scheduled for Feb. 6 in downtown Los Angeles.
Each of the charges for conspiracy to commit money laundering, concealment money laundering, and international money laundering carry a possible sentence of up to 20 years in federal prison, prosecutors noted.
Source: Orange County Register
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