SANTA ANA, Cali. (DDN) – Three persons, including two Chinese nationals, were arrested on Tuesday for allegedly using shell businesses to launder more than $13 million in investment scams known as “pig butchering.”
Mingzhi Li, 24, aka “Zheng Lin,” and Zeyue Jia, 23, aka “Jiao Jiao Liu,” both of downtown Los Angeles, and Jun Shi, 55, of San Gabriel, made their first appearances in U.S. District Court in Santa Ana on Tuesday afternoon, according to a news release from the Department of Justice.
The scam involves crooks targeting victims who are “gradually lured into making increasing monetary contributions, generally in the form of cryptocurrency, to a seemingly sound investment before the scammer disappears with the contributed monies,” according to the FDIC.
In this case, Shi is accused of forming the companies Magic Location Trading LLC and Stone Water Trading LLC in 2022 to act as “money service businesses formed for the purpose of remitting funds on behalf of third-party customers to other entities,” despite the fact that they were never registered with the Financial Crimes Enforcement Network or the State of California, as required by federal law, according to prosecutors.
Li and Jia’s bank accounts “received funds from investment fraud victims” through dozens of wire transactions, with Stone Water receiving more than $7.6 million and Magic Trading receiving $5.4 million, according to authorities.
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Prosecutors claim the trio then transferred the money to other accounts or overseas, transmitted it to persons, or used it for personal needs, despite the fact that victims could see their bogus investments in “commodities such as gold contracts or virtual currency such as Bitcoin” on the internet via a mobile app.
“Once funds are sent to scammer-controlled accounts, the purported investment platform often falsely shows significant gains on the purported investment, and the victims are thus induced to send more money for additional investments,” according to the statement.
That money, however, was gone.
The DOJ used the example of a 72-year-old man from Minnesota who “invested” in a digital platform named Enkuu by transferring $75,000 to Stone Water and $250,000 to Magic Trading the following month.
“He later was unable to withdraw any of his money from ‘Enkuu,'” prosecutors claimed.
Li and Jia, both Chinese residents who arrived to the United States on expired student visas, have been held without bond. Shi was released on a $20,000 bail.
Each is charged with operating an unregistered money-transmitting company, which carries a potential punishment of five years in federal prison.
The arraignment is slated for March 17.
Reference: Chinese nationals took $13M in ‘pig butchering’ scam: DOJ
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