Old Money-Laundering Scam Proliferating on the Internet

TIMES STAFF WRITER

An old scam that promises to pay Americans millions to help Nigerian "officials" smuggle cash and valuables out of the African nation is multiplying again, thanks to the Internet.

Known as advanced fee or Nigerian 419 frauds--for the section of the Nigerian penal code they violate--have become more prevalent and successful in recent months, experts say.

"They've been doing it for years, but they just get better and better," said Don Masters, assistant to the special agent in charge of the Secret Service's Los Angeles office. "They went from mailing out individual letters to going through the Internet, where they mail out massive numbers of solicitations every day."

During the first half of 2001, about 230 complaints were received about Internet-based Nigerian money frauds by the National Fraud Information Center. That's up dramatically from 2000, when only 83 such scams were reported for the entire year, said NFIC director Susan Grant.

The growth of phone-based Nigerian frauds is far more modest, Grant said. The fraud center received 138 complaints about phone-based Nigerian frauds for all of 2000; it received 80 during the first six months of 2001.

"The Nigerian frauds using the Internet are definitely increasing at an alarming rate," Grant said. "Everyone in law enforcement is concerned about the rate at which this is growing."

The scam usually works like this: The victim gets a "confidential" letter or e-mail from someone outside the United States--typically in Nigeria or another African nation. (The Secret Service has seen these scams come from Canada, Europe and even the United States, Masters said, but it's most frequently perpetrated by someone in Nigeria or by a Nigerian expatriate.)

The writer claims to be someone--a government official or deposed leader, or the wife or child of a former military leader, for instance--who is trying to get millions of dollars in cash, gold and/or valuables out of the country.

The recipient is sometimes told that he or she was chosen "through confidential inquiries made from your country's chamber of commerce," according to several solicitations sent to Times reporters.

At first, targets of the scam are told that all they need to do is allow money to be transferred from the foreign nation into their bank accounts in the U.S. For simply being a recipient of the funds, the target supposedly will receive a generous commission on the transaction--usually 10% to 30% of an amount ranging from $10 million to $60 million, or anywhere from $1 million to $20 million.

Anyone who nibbles at the offer is likely to receive a plethora of official-looking documents by mail and eventually will be asked to fly to some distant locale--Canada, Ghana, Sierra Leone, to name a few--to meet with the purported official's representative.

That step is to ensure that the con artist has fully hooked his victim, Masters said. Though it appears that the idea is to gain access to the victim's bank account, the real scam is to get the victim to willingly send thousands of dollars supposedly to pay taxes, legal fees and money transfer charges needed to get the money out of Nigeria.

"If you've already spent $600 flying to [meet the con artist], what's another $2,000 when they tell you that they need it to pay a fee or bribe?" Masters said. "Especially when they tell you that's all they need to get the money out of the country and then you'll have $2 million."

Victims are simply led on, believing that if they send one more check to pay one last fee, the money will be released. But the fees don't stop until the victim is unwilling or unable to pay any more. At that point, the con artist disappears. The Secret Service says some victims have lost more than $100,000.

Officials say the crime is rarely reported because the scheme hooks the victim into a potentially illegal transaction.

If such a deal actually were to go through, any American who participated would be involved in money laundering--an illegal process in which the source of ill-gotten gains is obscured by passing the money through legitimate bank accounts, Masters said.

U.S. officials don't prosecute Americans who get involved in Nigerian 419 scams because the transactions never go through. But in one case last year, a judge ruled that a victim couldn't sue Nigerian officials to get his money back because the whole contract was illegal.

The Secret Service and the Nigerian government have teamed up to try to stop or at least slow the scam. But it continues to spread because U.S. victims buy into it.

"Unfortunately, there is a perception that no one is prone to enter into such an obviously suspicious relationship," a Secret Service advisory says.

"However, a large number of victims are enticed into believing that they have been singled out from the masses to share in multimillion-dollar windfall profits for doing absolutely nothing."

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Times staff writer Kathy M. Kristof, author of "Investing 101" (Bloomberg Press, 2000), welcomes your comments and suggestions but regrets that she cannot respond individually to letters or phone calls. Write to Personal Finance, Business Section, Los Angeles Times, 202 W. 1st St., Los Angeles, CA 90012, or e-mail kathy.kristof@latimes.com. For past Personal Finance columns, visit The Times' Web site at http://www.latimes.com/perfin.

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