LOS ANGELES – Three Southland residents and a fourth defendant have been 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, the Justice Department announced today.
Two of the defendants – Lu Zhang, 36, of Alhambra, and Justin Walker, 31, of Cypress – were arrested Tuesday morning.
The other two defendants – Joseph Wong, 32, Rosemead, and Hailong Zhu, 40, Naperville, Illinois – are currently being sought by federal authorities.
The indictment charges all four 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 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.
According to court documents, pig butchering fraud schemes (a term derived from a foreign-language phrase used to describe these 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.
After their arrests, Zhang and Walker appeared yesterday in United States District Court in Los Angeles, where they both entered not guilty pleas. Zhang was ordered detained, and Walker was ordered released on bond. A trial was scheduled for February 6, 2024.
An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Each of the charges for conspiracy to commit money laundering, concealment money laundering, and international money laundering carry a maximum statutory sentence of 20 years in federal prison.
This case was announced by United States Attorney Martin Estrada, Acting Assistant Attorney General Nicole M. Argentieri of the Justice Department’s Criminal Division, and Special Agent in Charge William Mancino of the U.S. Secret Service’s Criminal Investigative Division.
The U.S. Secret Service’s Global Investigative Operations Center is investigating the case.
The case is being prosecuted by Assistant United States Attorneys Maxwell Coll of the Asset Forfeiture and Recovery Section and Nisha Chandran of the Cyber & Intellectual Property Crimes Section, and Justice Department Trial Attorney Stefanie Schwartz. AUSA Coll and Ms. Schwartz are part of the Justice Department’s Computer Crime and Intellectual Property Section’s (CCIPS) National Cryptocurrency Enforcement Team (NCET), which is jointly prosecuting the case with the United States Attorney’s Office.
If you or someone you know is a victim, report it to the www.IC3.gov. In the report, please reference “Pig Butchering PSA” and include as much information as possible in the complaint including names of investment platforms, cryptocurrency addresses and transaction hashes, bank account information, and names and contact information of suspected scammers. Maintain copies of all communications with scammers and records of financial transactions.