Three Southern California men, along with a fourth defendant, have been charged with conspiring to open shell companies and bank accounts to launder funds from victims caught in cryptocurrency investment scams, a practice known as "pig slaughter," federal authorities announced Thursday.
Two of the men, 36-year-old Alhambra resident Lu Zhang and 31-year-old Cypress resident Justin Walker, were arrested by federal agents on Dec. 12, according to a report. Press release from the United States Attorney's Office, Central District of California.
Federal authorities are currently searching for the other two men, 32-year-old Rosemead resident Joseph Wong and 40-year-old Naperville, Illinois resident Hailong Zhu.
Hog butchering, a phrase derived from a foreign language term used to describe the same fraudulent scheme, occurs when thieves trick victims on dating services and social media platforms or through unsolicited calls posing as a wrong number to make commercial investments using cryptocurrencies.
After starting a relationship with their victims and establishing trust, the scammers direct them to other members of the scheme who are "operating fraudulent cryptocurrency investment platforms and applications, where victims are persuaded to make financial investments," the statement explains. .
Once victims deposit money into accounts controlled by scammers, the fraudulent investment platform will display fake financial gains intended to encourage victims to invest more money. Ultimately, victims cannot withdraw or recover any of their money.
“The overall fraud scheme at the related hog slaughterhouse syndicate involved at least 284 transactions and resulted in more than $80 million in losses to victims,” according to the U.S. Attorney’s Office.
More than $20 million in victim funds were allegedly deposited into accounts controlled by Zhang, Walker, Wong and Zhu.
The four men have been charged with conspiracy to commit money laundering, concealment of money laundering and international money laundering. Each of the charges carries a maximum statutory sentence of 20 years in federal prison.
Zhang and Walker appeared in US District Court in Los Angeles on December 13, where they pleaded not guilty to the charges. A trial is scheduled for February 6, 2024.
