Nigerian Con Artists Netting Millions in Advance-Fee Schemes

A Turkish businessman in the office of Bryan West, a vice president of Citibank in London, was excitedly describing the multimillion-dollar deal that had dropped on him out of the blue.

A Nigerian official he had never heard of had sent him a letter proposing a “confidential business relationship” that would net the Turk $8.4 million. All he had to do was let some civil servants in Nigeria transfer $28 million from a Nigerian bank to the Turk’s London bank account. The money, the letter explained, came from “an over-invoiced contract, executed, commissioned and paid for about two years ago by a foreign contractor.”

The writer explained that he needed outside help because, as a Nigerian civil servant, he was forbidden by law to operate a foreign bank account. Impressed by the official-looking stationery, bristling with appropriate government seals and stamps, the Turkish businessman had already sent his Nigerian correspondent $220,000 in “advance fees” to secure release of the funds.

“I told him it was a scam and sent him to the Metropolitan Police, and they told him it was a scam,” said West, a former chief superintendent of the London police. “But he didn’t want to believe it and said it was legitimate and put even more money into it. He never got his money back.”

It could have been worse. Over the past three years, 15 foreign businessmen have been killed after traveling to Nigeria and pushing too hard to recover money lost to Nigerian con men.

The Turk, it seems, had been victimized by what authorities call the “Nigerian advance-fee fraud,” an increasingly serious international swindling scheme that is draining hundreds of millions of dollars a year from thousands of victims in Britain, the United States and several other countries.

British authorities say it has reached “epidemic proportions” in London, where the Metropolitan Police have established a special Nigerian unit within their general fraud squad. Police here arrested 111 Nigerians in 1995 in connection with the scams--only a fraction of the number that they say are involved.

Joint Task Forces Seek to Combat Fraud

Letters such as the one that hooked the Turkish businessman are also flooding the mail in the U.S. Los Angeles is a major target, along with Atlanta, Baltimore, Boston, Chicago, Houston, Miami, New York, Newark and Washington. Joint task forces led by the Secret Service--and including postal inspectors and agents from the Customs Service, the Immigration and Naturalization Service and the Drug Enforcement Administration as well as from local and state police agencies--operate in those cities.

For years, the schemes had operated virtually undetected in the U.S. It was only after Secret Service officials attended a law enforcement seminar in London in 1994 that they launched a major enforcement program against the Nigerian operations. “We realized we also had a big problem,” said one agent.

Today, the Secret Service financial crimes division receives about 100 calls a day from Americans approached or defrauded in Nigerian cases. The division has collected more than 25,000 fraud letters and filed information from them into a database devoted to the schemes.

The calls are so constant that anyone telephoning the number of James W. Caldwell, the Secret Service agent in charge of investigating the fraud, will reach a voicemail message advising: “If in fact you received an advance-fee fraud letter, please fax a copy. . . . If you experienced financial loss, please leave a message at the sound of the beep.”

The Secret Service believes that the scams net several hundred million dollars a year in the U.S. and represent “a serious financial threat.” Authorities warn that money derived from the schemes is often used to support more violent crimes, especially those involving drug trafficking.

Arnette F. Heintze Jr., special agent in charge of public affairs, said the Secret Service will soon launch a nationwide publicity program to warn of the scams.

Although the vast majority of the 90,000 Nigerians living in the U.S. are law-abiding citizens, U.S. officials say, a relatively large number are involved in the advance-fee scams or several other schemes--including credit card fraud; bank fraud; check kiting; insurance fraud; entitlement fraud; fake identification, passport and visa fraud; marriage fraud to obtain citizenship; vehicle thefts; and counterfeiting of U.S. currency and corporate checks. In addition, Nigerians are major smugglers of heroin into the U.S., officials say.

But the advance-fee fraud is by far the most pervasive and lucrative.

Official-Looking Letters Sent to Victims

From Nigeria, con men mail or fax an estimated 3,000 official-looking letters a week, according to the London fraud squad. About half the material goes to Britain or the U.S.

The scams usually work like this: The con artist claims to be a government or bank official who has access to $10 million to $60 million held by a Nigerian company or government ministry as a result of an “over-invoiced contract”--that is, surplus money left over from a supposedly legitimate contract.

On official-looking stationery, the Nigerian offers to transfer the funds to the victim’s overseas bank account, giving the accomplice up to 30% of the money. If the letter draws a favorable response, the victim is informed that “transition fees” must be paid before the money can be released. Frequently, victims are strung along for months or more.

“It’s amazing that businessmen keep getting taken by these scams, but they do,” said London banker West. “It’s just a matter of the businessmen being blinded by greed and the Nigerians being just incredible professional fraudsters who must have been in training since kindergarten.”

Often the target is more vulnerable than greedy, according to Caldwell of the Secret Service. Many victims are elderly people or operators of small and middle-sized businesses who are looking for a way out of financial difficulty.

In another version of the fraud, Nigerians have swindled U.S. churches and charities, which have turned over hundreds of thousands of dollars in “advance fees” in expectation of receiving $25 million or more from a wealthy Nigerian who purportedly died and named them in his will.

The Nigerian government, voicing concern about the scams’ adverse impact on legitimate businesses and foreign investment in the country, occasionally advertises in foreign newspapers to warn of the fraud. The ads, by the Central Bank of Nigeria, blame the victims as well as the perpetrators of the fraud.

A recent ad in British newspapers declared: “The bogus ‘business’ proposals/deals which run into millions of U.S. dollars manifest fraudulent intentions . . . which should ordinarily put any responsible and law-abiding person on inquiry. However, driven by fraudulent tendency, greed and [the] urge to make quick and easy money at the expense of Nigeria, many of the so-called victims have continued to ignore warnings of the Central Bank of Nigeria to the effect that such transactions are bogus and fraudulent.”

Corrupt Nigerian government officials also play a large role in the schemes, according to a State Department official. Relevant ministries, he said, “help the perpetrators of some of these frauds get access to official telephones and official stationery.”

In the scheme, part of the ruse often is to persuade the victim to travel to Nigeria or a nearby country to meet with a government “official” to complete the deal.

According to a State Department report, one American was among the 15 foreign businessmen killed in Nigeria over the past three years in connection with the scams. The victim, James Breaux, a businessman then living in Switzerland, was shot and killed in Lagos, Nigeria’s commercial capital, in 1995.

The U.S. Embassy in Lagos reported that Americans have been held against their will in Nigeria after being lured there by con artists. The embassy reported that, in a four-month period last year, it helped repatriate 10 Americans who had been lured to Lagos.

Jonathan Winer, a State Department official, testified in Congress last year that Americans lured to Nigeria “very often . . . wind up in very bad circumstances indeed. We do have continuing recurrent hostage situations where our embassy has to intervene.”

Perpetrators of the fraud are seldom prosecuted. Fewer than 10% of the victims report the crime because they do not want to admit that they were defrauded or involved in what was a questionable or illegal proposition.

Nigerian Nabbed by FBI in Atlanta

Victims in the U.S., the Secret Service says, may fear that if they report the fraud they will be prosecuted under U.S. law as co-conspirators. They also may fear reprisals if they return to Nigeria to aid in prosecution.

Last year in Atlanta, the FBI arrested a Nigerian, Charles Nnabuief, who pleaded guilty to conspiracy to commit mail fraud in connection with an advance-fee scheme. Nnabuief was sentenced to 2 1/2 years in prison, to be followed by deportation.

“It was a fortuitous arrest,” said Thomas Johnson, a Secret Service agent working on a special fraud squad.

The most recent U.S. case came in Florida in December. Douglas Arthur Cole, 61, a businessman from Deerfield Beach, Fla., pleaded guilty in federal court in Fort Lauderdale to charges of wire and passport fraud and interstate transportation of stolen property while directing a huge Nigerian advance-fee scheme that authorities said had victimized two Americans and more than 100 others from other countries.

Cole, who posed as an auditor for the Central Bank of Nigeria and collected $2 million in checks for “advance fees” from victims, agreed to cooperate in the prosecution of other members of the fraud conspiracy, said Assistant U.S. Atty. Jeffrey H. Kay.

After investigating several cases, Kay said, he concluded that victims fall into three categories: “the greedy, those who think it is a legitimate business opportunity, and many people who are just naive and don’t have a clue.”

In some cases, the intended American victims have become co-conspirators with Nigerian con men. Erwin Berman, 64, of Hallandale, Fla., was sentenced last year to five years’ probation after pleading guilty to wire fraud. He agreed to help authorities arrest Nigerians who had persuaded him to pose as a Florida banker in a scheme that officials said netted about $20 million from 14 people, none of them in the U.S.

Berman told the court that he became involved in the enterprise after receiving correspondence from the Nigerians and telling them that he realized it was a scam but would participate in it for a percentage of the proceeds. As part of the scheme, businessmen in Singapore, Russia, France, Israel, Taiwan and Thailand wired large amounts of money to Berman in Florida, where he had established addresses for a fictitious bank.

Kay said that with Berman’s help, police lured two of the Nigerians to London, where police arrested them on fraud charges. Proceedings to extradite them to Fort Lauderdale for trial in federal court are pending in London. A third Nigerian charged in the scheme is in Nigeria.

Nigeria has repeatedly refused to extradite criminals to the U.S. In fact, a recent Justice Department memo notes that there are 36 cases on file of fugitives from U.S. law enforcement who are believed to be in Nigeria. Many of the crimes involve fraud and narcotics.

Lack of Cooperation by Nigerian Officials

The U.S. and other countries have protested Nigeria’s lack of cooperation. The State Department’s Winer led a delegation to Lagos in December 1996 and reported that Nigerian officials agreed to cooperate in fighting the scams, but they failed to do so.

In August 1995, the U.S., Britain and 33 other countries had sent a letter to Nigeria protesting its failure to do anything about the extradition issue or the advance-fee fraud.

“We got two replies from them,” Winer said. “First, they blame greediness of foreigners for falling for the fraud schemes and say, ‘We need your help; we don’t know what to do.’ Or they say they have done something about it, which is patently untrue.”

Because of Nigeria’s lack of cooperation, the country has been decertified by the State Department for U.S. foreign aid since 1993.

Victims have invariably failed when they tried to recover their losses. The Central Bank of Nigeria noted in its recent advertisement that so-called victims of the scams have frequently brought suits against the bank but always unsuccessfully.