The Victim Experience: When Romance Leads to a Crypto Scam

The number of highly sophisticated crypto scams is growing, with Americans losing an estimated $5.6 billion to crypto-related scams in 2023, according to the FBI, a 45 percent jump from the prior year. And often crypto fraud is tied in with romance scams, with criminals targeting victims through texts, dating sites, social media, networking channels or other apps. While we all like to think we would be immune to such scams, research has shown time and again that everyone is vulnerable, even the most highly educated among us.

On this episode, we hear the firsthand accounts of Jules and Brian, two victims of romance crypto scams, who recently spoke at a FINRA Foundation conference on disrupting the cycle of financial fraud. They sat down with Kim Casci-Palangio, program manager of the Cybercrime Support Network (CSN), to share their experiences, the financial, mental and emotional toll they took, and their efforts to recover from their loss.

This audio was edited to remove personally identifying information about our victims.

Resources mentioned in this episode:

Cybercrime Support Network

Romance Scam Recovery Group

FINRA Foundation

FBI Internet Crime Complaint Center (IC3)

Non-Traditional Costs of Financial Fraud

Investor Alert: Relationship Investment Scams

'Pig Butchering' Scams: What They Are and How to Avoid Them

Crypto Investment Scams Infographic

Listen and subscribe to our podcast on Apple Podcasts, Google Podcasts, Spotify, YouTube or wherever you listen to your podcasts. Below is a transcript of the episode. Transcripts are generated using a combination of speech recognition software and human editors and may contain errors. Please check the corresponding audio before quoting in print.

FULL TRANSCRIPT

00:00 - 00:33

Kaitlyn Kiernan: The number of highly sophisticated crypto scams is growing, with Americans losing an estimated $5.6 billion to crypto-related scams in 2023, a 45 percent jump from the prior year. Often, crypto fraud is tied in with romance scams, with criminals targeting victims through texts, dating sites, social media, networking channels or other apps. While we all like to think we would be immune to such scams, research has shown time and again that everyone is vulnerable, even the most highly educated among us.

00:33 - 00:58

Kaitlyn Kiernan: On this episode, we hear firsthand accounts from two real life victims who spoke at a recent FINRA Foundation conference on disrupting the cycle of financial fraud. They share their experiences, the financial, mental and emotional toll they took, and their efforts to recover from their loss. As a quick note, this audio was edited to remove personally identifying information about our victims. Let's take a listen.

01:08 - 01:43

Kim Casci-Palangio: Thank you everyone for being here, listening to a special thank you to FINRA for inviting us. We're glad to be here to participate. My name is Kim Casci-Palangio. I'm from the Cybercrime Support Network and I run the Romance Scam Recovery Group. I'm here today with Jules and Brian, who are both participants in our program and who I thank for having the courage to come here today, to share their story, to make a difference, and to help you understand the human impact that this crime has. Jules, can you give us a brief overview of your experience?

01:43 - 03:22

Jules: So, it was the spring of 2022, COVID restrictions and things were starting to wind down. I was in the process of just finishing up the last few weeks of my undergraduate degree. So, with all the social isolation restrictions and then seeing that there's going to be some free time in my life not having the school responsibilities, I thought, well, gosh, this is a good opportunity to go online-I went on to Hinge-and maybe meet some people. I work a lot and so going out socially, it's challenging just to have that interaction, especially when COVID was going on.

So, that's why I decided to do the online site, Hinge. I personally have known multiple friends and family members who have been very successful in meeting people on these online sites. So I didn't think too much about it. I met somebody right off the bat. I thought he was a really interesting person. We had good correspondence and our communications were pretty much through text, and I was fine with that because again, I'm very busy. I don't have time to be sitting on the phone and talking. I don't like that. So, I was great with the texting relationship and mind you, I wasn't necessarily looking for a life partner or my love.

I was just looking for somebody that I could have a human connection with, somebody that I could communicate with, somebody that I could just share my day to day with. And this person was really kind. We had really good interaction. He portrayed himself being from the Seattle area, which is where I grew up. So, what he was communicating to me, it seemed legit. Pictures that he would share, just stuff of his day-to-day life in that area. So, it started with a friendship. It started with communication. It wasn't like, "hey, give me your money." It wasn't anything like that.

03:22 - 05:25

Jules: It was very insidious on his part. It was very manipulative on his part. I would say after a couple of weeks of regular communication with each other, he started slowly introducing the idea of investing into Bitcoin. I don't know anything about Bitcoin. I know that it's a decentralized currency. I know it's not tangible, and I know it's not anything that I was ever interested in. So, this cybercriminal was very convincing, laying out these promises of, hey, invest in this. You can pay off your mortgage. Hey, invest in this. You can pay off all of your student debt. And so, I was like, okay.

I had this idea in the back of my mind, this isn't really regulated. FDIC kept coming into my mind, even though this isn't an FDIC process. But I just was like, okay, he's showing me screenshots. He's giving me all this information that his experience with crypto was legitimate. He had thousands in his digital wallet. And I thought, okay, well, he seems trustworthy. He's a friend at this point, so why not? And then initially I started out with a little bit of money, like $1,000, nothing big.

I transferred the money to Coinbase and then from Coinbase, I would then trade the money into Bitcoin, and then I flipped it on to another site. It was called Coin Deal Kop, K-O-P. And that was the fake site. And that was the site that I was scammed on for trading all of this currency. So again, I started out with a little bit of money and then when I got my investments, it got bigger and I could withdraw it. It was tangible and I was like, okay, this is legit. So, it wasn't until I got into the larger dollar amounts and tried to then withdraw that money from my digital wallet at that time that I experienced this isn't real.

My first withdrawal, they were fine. They worked. Like I said, I got the money back. It was tangible, but it was on that last investment that I tried to withdraw it, and my account basically got frozen for needing to pay an income tax. I'm like an income tax. This doesn't make sense. You pay taxes to the government. Who am I paying this income tax to? So that was a red flag for me. Yeah. Just kind of went from there.

05:25 - 05:31

Kim Casci-Palangio: Thank you. Thanks for that explanation. How about you, Brian? Do you want to give a little background on your experience?

05:31 - 08:12

Brian: Hi everyone. Thanks for having me come and talk to you all. I think it's important that we get these stories out so you can understand the level that we're at right now with the impact that it happens to the survivors. I don't consider myself a victim. I'm a survivor. So, mine started-I'll tell you where I was emotionally. I was lonely. I just went through a divorce. It was about May of 2023, just moved out. I was teaching at a medical college and just decided that I wanted to get back to seeing patients again. I'm a PA. I worked with emergency medicine and fire department and so to me it's high pressure. I call adrenaline junkie. That's me. That's why I have no hair left. That's kind of the way it works.

But I felt alone. I just moved out of my house. My daughter was mostly with my ex-wife and I said, what am I missing? Why am I alone? What's wrong with me? So, I was approached by this person. She went by Julie Miller on LinkedIn, and she was asking for a friendship. She was asking for learning, education. So, I kind of thought that was kind of odd.

Why are you asking for education or learning? But I guess when you look at my LinkedIn account, that made sense. And I wish looking back at it, I just would have ignored it. But I thought, this is an opportunity. Why should I let this go? Everything has been kind of crappy lately. Why not give it a try? And in that time, the relationship formed with one text conversation and then moved to Telegram. I had a Telegram account, I had a LinkedIn account, and then we started exchanging, "what are you in to, what do you like? What do you do?" This and you just have this instantaneous connection.

Although I thought it was kind of odd because I've been using computers all my life. But where is the connection? When can I come see you? When can I come meet you? And was always no, no, no, we need to do this slowly and that kind of stuff or I'm shy. So, after that point, that's where the romance scam happened. They played upon my vulnerability. And I think there's two different types of vulnerability. There's the positive vulnerability.

When you're in a healthy relationship, you can open up, you can share, you can be supported. And they mimicked that by using my vulnerability for being so lonely. So that was the end to my letting my guard down, because I think of myself as pretty up on the current events. I know what's going on. I kind of never heard of any of these kind of scams, except the credit card ones and the gift cards. And so that wasn't the case. But her name changed from Julie Miller to Lee Yulin, and she said that her last name goes first in Chinese.

08:12 - 10:38

Brian: I'm like, all right, whatever. At that point, it started to move towards what are your goals when you want to buy a house? And I was told that I could retire early. I could have some financial security, which I already kind of had, but they said that it could be even more. You can pay whatever you want. And this is what the top 1 percent invest in. And her aunt was the financial planner out of New York and used a name and a real financial planner that you can actually go online and and say, oh yeah, she's a financial planner.

Okay, so maybe there's some truth to the story. At which point she said, "do you have any experience with crypto?" I said, "no, I dabble with it." I mean, I had a Coinbase account and everyone's talking about it, and I just saw it as another version of stocks, and I put whatever money I could lose and not a lot, but I put some money in there and it kind of sat and I played around with different cryptos. So, I had an idea of what it was and experience of what it was, but I really didn't get to know it until they started manipulating my financial sense, as I say, at which point it transferred to if you put more money into this account, which was a MEW account-MEW is another type of cryptocurrency.

So, I had to move it from Coinbase to MEW and MEW used USDT or Tether. So, you had to convert from USD to tether into that wallet, which was under my control. It was my account. They didn't want to know my password or anything, but I know that there's a little bit different security with cryptocurrency. So, at that point I accumulated up to $575,000 after they got me to borrow from my 401k, because they say we're going to borrow from your 401k. Everyone does this.

We'll be able to put it back within 60 days. You'll get it back. I guess I was a little gullible, but what can I tell you. So, at which point I was getting 1 percent every day, $6,000 a day. I was able to pull some back. I said, well, this is all mine. Great. Part of me was saying, why don't you go ahead and try and do that? Why don't you try to pull it back or just take it all back now and leave them alone? But it was too good to be true, I guess. At which point they moved it from the MEW wallet to what they called Coin Jar, which is another cryptocurrency. But the site was kind of quirky because not all the functionality on the site was working, but I didn't realize that until it was too late. Because once it went from my MEW wallet to the crypto Coin Jar, it was out of my control. So that's how they can move the money around quite easily.

10:39 - 10:52

Kim Casci-Palangio: Brian, staying in your story, you have a unique story because you were able to keep in contact with the scammers. You were able to give the FBI real time information. Can you talk about how that happened, what transpired?

10:53 - 13:12

Brian: So, it's interesting that it was the greed of the scammers that I realized that it was all a scam with the help of my parents. What happened was when the money went into Coin Jar, they then said, "We're done with this phase of the buy, sell short. You're making $80,000 at a pop. And it was just surreal. And you're up to $1.7 million." And I was like, boy, that's going to be kind of cool. But then they said, okay, take it back and put it into your MEW wallet. And that's when it was told that I was money laundering for someone, and they locked the account saying, I now need to pay $286,000 in USDT or Tether.

At that point, they said the scammers wanted me to get ahold of my parents or borrow the money or go. I said, "I'm not taking out any loans. You can go pound salt." But they said, well, talk to your parents. And that was their mistake. Because then once I talked to my parents, my parents said, "You're being scammed, Brian, stop." When my parents have a-you know, even though I'm 53-you know, they still have a unique way of getting to me and saying, this is not the case. You need to wake up. You need to do something to help protect yourself. If you ever want to see this money come back to you. So that night after I woke up to this-I call it the wake up phase- I called the FBI.

The FBI was fantastic. Kevin Conine from the Albany Cyber Division is fantastic. He came to my house the next day after I reported it into the IC3 database. I talked to someone that night on the phone. It was like midnight. Then they pointed me towards-I guess I'm elderly because I'm 50, well, I'm 51, whatever. I kind of think age is just a number, so whatever. I don't feel 50, I feel 20. Anyway. That's when they put me in contact with Kim and this great organization, but that came later.

So, in the middle of all this, I was able to wake up. I then came up with an idea that once [Special] Agent Conine came to my house, he told me about what pig butchering was. He told me, don't give them any more money, which I was like, you don't have to convince me, buddy. I'm not telling you. And he said that it's so important that you don't give them a reason to cut you off. He explained the whole concept and I started looking it up. And it was a couple nights later when I'm sleeping and woke up like, when you're coming out of the deep sleep into your early morning dream phase.

13:12 - 15:11

Brian: And that's when I came up with the idea that I'm not going down without a fight. And what can I do to do this? So, during my experience, I kept everything. That night I went and started taking screenshots. I have 5,000 screenshots that I got because I'm research oriented. I'm in the medicine world and I taught it in college, so I was using my research skills to keep a record of all of it. And at that point I realized there was a transfer address because Coinbase shut me down in the middle of this.

So, there was some kind of red flag I wish they would have followed through with and say, you're scammed and what are you doing? And someone would have reached out to me, but they don't. They just kind of say, we're not going to let you transfer any more money out. So, they gave me a wire transfer address to Vietnam. So, when I went to the bank, they said, "hey, this Vietnam, this doesn't come up on our scopes. You're not allowed to do it." And the scammers help figure out they use Bitstamp instead. That's how they got the majority of the money. But long story short, I started to lie to them, and I wasn't really proud of myself for doing this.

But I knew that this was survival now. And if I'm going to get anything back or any information, and I was also told by Special Agent Conine, you're not a confidential informant, you don't work for the FBI. Yes and yes, yes, sir, I get it. But I was able to figure out the system and how it worked. Understanding that once it left my address to theirs, it's gone. But I said I'm not giving you any money through crypto. I refused. You either need to give me more wire transfer addresses or you ain't getting squat. I said, well, we love you, blah blah blah. She left. It's a big scam. But I said, "okay, New York State locked down crypto." That's what I said. Governor Hochul said, no more crypto stuff. I lied to them, but I was like, they're lying to me. I'm lying back, so why not? And that's when I got five crypto addresses and they cut me off in October. So, this is the week when I woke up. Over a year ago this week.

15:11 - 15:18

Kim Casci-Palangio: And you got those addresses. But what happened after that with the police? You were able to give those to the FBI?

15:18 - 16:09

Brian: Yes. Every time I got one, I emailed it right to [Special] Agent Conine. I had his email, his phone number, and I knew that he was busy and that I'm not going to be allowed to know what the methods and the ways that the FBI work. I was hoping that they had some superpower, that they could just go and freeze everything. But it turned out that Agent Conine was able to track everything because I also was a participant in my own rescue. He asked me to put in a spreadsheet all of the transactions, all 47 of them, and not only did I put them on the spreadsheet, I also cross-referenced the actual screenshot of the transaction with that, and he was able to track it all. And when he went to Tether or USDT, USDT said, go pound sand. We're not going to freeze the money. So, the optimism and the hope and the everything got dashed away because Tether wouldn't play. And that was my experience.

16:10 - 16:25

Kim Casci-Palangio: Thank you, thank you Brian. I can't imagine the frustration going through all that and then having that as a response. Jules, how about your recovery journey? What resources were helpful to you? What resources were lacking for you?

16:25 - 18:04

Jules: So, once I finally realized that I was being scammed, that this was not a valid financial investment, it's an awakening because you're like, wow, I've just lost everything that I own and don't own. The way that this person got me to invest was by taking out personal loans, and it was personal loans under the guise of home improvement. So, the resources for me, I had to do a lot of digging. I wasn't in touch with the FBI like Brian was. I decided to go a different route and went seeking out attorneys for legal counsel and legal advice for what just happened.

With their help and with their guidance, I did reach out to the Seattle Secret Service field office. I did speak with one of the agents. I have some conversations with her. Seattle wouldn't pick up the case because unless it's a loss of $250,000 or more, it's not worth their time or resources to look into that. But my argument is this is a crime. Crimes. They shouldn't have a financial minimum. It's still a crime. So, then I was directed by the attorneys to reach out to the IC3 department with the FBI, which I did.

I was able to get all of my digital wallet information from the fake account and then give them that information. The attorneys did run a digital blockchain forensic analysis on all of the digital wallets that I used, and they were able to determine, like 75 percent of the transactions went into a good wallet, and then the 25 percent went to a bad wallet. So, with that, the resources that I found their attorneys were helpful. There's not a lot of communication from any of the departments, really that I reached out to.

18:04 - 19:42

Jules: I never heard back from the IC3. The attorneys did reach out to them as well and file. I never saw any correspondence from that. And so, at this point, it's really discouraging. It's demoralizing trying to reach out to family members and express, hey, this is what's going on, and having them rebuttal. I'm not going to get into that, but it's an experience. I was able to finally research and find the CSN network. My scam happened in 2022, and I was able to do a support group with these guys just this year.

nd so, it's an experience. It's very isolating. I know nobody who's gone through something like this. I can't talk to family members. I can't talk to friends. They don't know. They don't know what this is like. The only people that I could reach out to are the attorneys because they had some experience dealing with this, and there's not a whole lot of support from them other than retaining their services and just the stuff that they did. So, there's so much to all of this from my resources that I did find. I did find CSN to be the most effective because getting these emotions out, feeling this loss, feeling this despair, going through all of the stress and this depression, going through the worst financial crisis of my life.

Essentially, there's support with this group. There's people out there who are going through this, and it's finding that group and connecting with them, getting these emotions out, getting these experiences out, but doing it collectively, doing it in an environment that's safe where you're not getting scammed. So ,the resources were hard to find. I did a lot of digging. I didn't reach out to local law enforcement. I didn't think that would be worth my time. So yes, I am thankful that I was able to find you guys.

19:42 - 20:15

Kim Casci-Palangio: Thanks for sharing that, Jules. I know that that's something that we hear a lot. Law enforcement can't investigate every case that they receive, but there is that kind of shock when someone goes through this. And what do you do? You call the police, find the bad guy or report the crime or get some sort of restitution, and most often victims of this crime are met with, I'm sorry, there's nothing we can do. Or silence. Yes. And just that kind of shock that there's nowhere to go. Brian, what about you? What type of resources were helpful or lacking for you?

20:16 - 22:05

Brian: I was lucky my parents were with me the whole way. And my sibling. I have two brothers and a sister and they listened to what I had to say. They really can only listen. They couldn't really relate. My close friends, fellow firefighters, they all listened and were very supportive. But you're alone. I was extremely alone. How do I survive this stuff? You just take your emotions and you pack them down into your guts and you don't want to deal with it. It wasn't until the Cybercrime Pure Group, it really allowed me to feel again. So. But, uh, I'm telling you the biggest frustration right now that I'm facing-and it's the reason why I'm here-is that I want the understanding that the IRS is now making me relive all of this, because they took money out of my 401k rollover account, and if it wasn't for my accountant who- that resource is really very important-figured out that this is a Ponzi scheme and great.

You don't have to pay the $275,000, and you're supposed to think some people have to pay, but I still had to pay $49,000 for a 10 percent penalty. My accountant said that we're going to try and appeal, hopefully that agent that's reading my because it's going to get rejected. And the idea that the audit letter is going to come. My accountant says be ready for that. They can reject it. They can say, nope, you owe this money or will I ever see that $49,000 back? Because it's not that I'm trying to scam or take away money from the government, I just want some peace.

22:05 - 22:37

Kim Casci-Palangio: Thank you. Brian, I know you're expressing what we hear a lot. That re-victimization, that feeling. Like you said, it was a crypto investment. So, you were able to use the Ponzi scheme. But most romance scam victims are not able to do that. And the dollar losses can be huge for us. For our program, the dollar losses average about 178,000 a person. It's this is a big amount of money that people are losing. We only have about five minutes left. So, Jules, I want to ask you, what changes would you like to see made, whether that be by private industry or government that could make this better?

22:37 - 23:50

Jules: Right. It's been interesting listening to the different panels here and listening to how-and this is how my experience has been-to how everything is siloed. There's not this centralization for victims to reach out to one entity where these entities are talking to each other. It's very siloed and you're very alone and you don't get any response. And so, I would really like to see some better consumer protections in place. These scammers are smart, and we have a problem in this country when people are losing billions of dollars. These guys are finding ways to get through these loopholes to get this money from us.

People are losing everything-their houses, their retirements, all of it. So having stronger policies in place, these social media sites too, everybody needs to have some more accountability. These scammers prey on people on social media sites. So, where's the accountability for that? Where's the vetting for that? Where's the protections for that? We are both in health care and in health care we have a safety stop whenever we do a surgery. And there's so many points of contention along these ways. I went to the bank. The bank never once questioned these thousands of dollars of transactions I was doing. If you look at my account, that's not my history of banking. So where is the safety stop in that? Where's these consumer protections for these loopholes these guys are getting through?

23:51 - 24:36

Brian: And we don't want to take the wrong leg or the wrong kidney or the oops operated on the wrong knee. So we use a timeout. Uniformity amongst all the levels of, you know, some banks will do it, some banks won't. I had a patient that talked to me about their scam, but their manager saved them because the manager educated them right away, intervened. Got the family member on the phone. Boom. Stopped it right there. But Bank of America, I got different vibes. I was already feeling nervous already, and the manager said, are you sure you want to do this? But didn't go any further because there is a line that we can't cross because of the freedoms we have. But modernizing these ways of dealing with these types of large transactions.

24:36 - 24:38

Kim Casci-Palangio: You are talking about the IRS regulations?

24:38 - 25:15

Brian: How come the FBI can't freeze the funds? Tether just said, yeah, we're not doing it. So I mean, that was proven fraud. The agent did everything. Everything was there. They ignored it. The laws have to be updated. If you think about how technology has changed so much and our laws are still dealing with balance books, I'm using terminology from your realm, but it's like me doing paper charts. We don't write charts anymore. We do it on a computer. So those are the kind of things that I would hope, and I'm more than willing to share and advocate for other because I don't want anyone else to go through this.

25:15 - 25:42

Kim Casci-Palangio: No. And I just want to give an extra thank you to Brian and Jules. I know even just watching that video, I've seen that video dozens of times, and every time I watch it, I have to stop myself from my eyes filling up. These are real people. We can talk about statistics, but this is what this crime does to people. It is an emotional and a financial trauma that stays with you for the rest of your life. And I'm just so grateful that you came to share that.

25:43 - 25:48

Jules: Thank you. It's a very humbling experience.

25:49 - 26:21

Kaitlyn Kiernan: That's it for today's episode of FINRA Unscripted listeners, please be sure to take a look at the show notes for today's episode for more information about cybercrime, support network and information about crypto and romance scams. If we can all take the time today to share this information together, we might be able to save someone from falling victim. Today's episode was produced by me, Kaitlyn Kiernan and edited by John Williams. A special thanks to the FINRA Foundation team and the Cyber Support Network, and a very special thanks to Jules and Brian for sharing their stories.

26:26 - 26:54

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