United States prosecutors have apprehended three individuals, Zhong Shi Gao, Naifeng Xu, and Feo Jiang, accused of orchestrating a complex fraud targeting banks and financial institutions.
The U.S. Attorney’s Office for the Southern District of New York disclosed the arrests, conducted by the Federal Bureau of Investigations (FBI), revealing a scheme spanning from 2018 to 2022 that netted over $10 million.
Between 2018 and 2022, Gao, also known as “George,” Xu, alias “Andy,” and Jiang, aka “Jeffrey” or “Brother Fei,” allegedly orchestrated a plan to pilfer millions from financial institutions.
Their modus operandi involved recruiting individuals, often foreign nationals temporarily residing in the U.S., to open bank accounts.
Control over these accounts was then transferred to the accused.
The trio and their associates then orchestrated fund deposits and transfers between controlled bank accounts.
They then filed fraudulent reports with the banks, falsely claiming unauthorized wire transfers.
This led the banks to temporarily credit the accounts with the transferred funds, doubling the initially deposited amount.
They then allegedly withdrew the credited funds as cash or converted them into cryptocurrency, moving them to foreign exchanges before the banks detected the fraud.
This manoeuvre resulted in nearly double the initial deposit being withdrawn, leaving the bank accounts with negative balances.
Gao, Xu, and Jiang face multiple charges, including bank fraud conspiracy, conspiracy to commit wire fraud affecting a financial institution, conspiracy to commit money laundering, and aggravated identity theft.
The first two charges carry a potential prison sentence of up to 30 years each, while the third and fourth counts could lead to a maximum of 20 years and two years, respectively.
U.S. Attorney Damian Williams issued a stern warning to fraudsters, emphasising that turning to cryptocurrency to conceal identities would not shield them from accountability.
The charges signify a collaborative effort by law enforcement to track down and prosecute those engaging in financial crimes through digital channels.
It was not revealed what crypto exchanges the trio were using to launder the money.
Incidentally, Damian Williams also happens to be the prosecutor behind FTX’s Sam Bankman-Fried trial, and is likely keenly aware of the nature of cryptocurrencies and the methods in which they can be exploited.
The prosecutor took office in late 2021 as the U.S. Attorney for the District of New York.
In a previous statement to fraudsters relating to Bankman-Fried’s conviction, he said:
“Think again, and cut it out. And if they don’t, I promise we’ll have enough handcuffs for all of them.”