SA investor loses $2.5m in cryptocurrency scam as police reveal the inner workings of investment cons
The websites look real, offering exclusive opportunities and helpful staff, but it’s a scam. Police expose how fraudsters conned South Australians out of more than $6m.
Police & Courts
Don't miss out on the headlines from Police & Courts. Followed categories will be added to My News.
The websites look legitimate – professionally built, boasting testimonials, staff profiles and even a login page for individual user accounts.
But each site is a ticking time bomb.
Investment scams, one of the most insidious cons that draw in educated and sophisticated investors, have cost South Australians $6.287m so far this year.
In one case, a local victim lost more than $2.5m after being strung along for months.
International scammers are waiting until hopeful investors, putting their life savings on the line, have parted with their money and then with the press of a button the sites disappear.
In a single moment the funds are gone along with any trace of the website.
The worst pain for many victims is the loss of generational wealth, as life savings are wiped out – impacting families for decades as they rebuild.
Inside investment scams
The scammers often target potential victims via social media, funnelling them toward a web inquiry before making contact via a phone call.
They build trust over the phone in order to hook their victims, directing them to their complex realistic websites, allowing victims to “log in” to their fake accounts in order to maintain the charade.
They also employ representatives to manage clients and, in some cases, pay back dividends to maintain the scam.
Many scams transact in cryptocurrency, where fake trading apps or fictitious coins are proffered.
Those scams add an extra level of complexity because cryptocurrency can be highly volatile and fluctuate rapidly while being notoriously difficult to trace.
In an era of new cryptocurrencies being released nearly daily, a successful advertising campaign can ensnare hopeful investors into buying coins which never exist.
Some scammers even target their victims a second time, offering a service to recover their funds for a fee, pocketing the money as a final insult.
Millions gone without a trace
Australians have lost almost $200 million to investment scams so far in 2023, including $6.287 million in SA across 324 reports, scamwatch data reveals.
Cyber Crime Investigation Section Senior Sergeant Adam Serafini said investment scams were “one of the bigger impacting scam types” in the state.
“We’ve seen losses upwards of $2.5 million,” he said.
“These scams can go on sometimes for 12 months, particularly if victims don’t query it and take everything at face value.
“It’s only when they start querying ‘when do I get a return’ or when the returns start drying up that they start asking questions, and put pressure on the scam operators, and that’s when they disappear.”
Sergeant Serafini said the scams often originated in overseas locations with some African countries like Nigeria being known hotspots.
One of the most notable investment scams is the Capel Court case – where the fake yet realistic website that aligned itself with legitimate banks – nabbed millions of dollars from everyday Australians, including investors in SA when it disappeared.
The targets: Cashed-up men 65+
Most victims in Australia have been men aged over 65 – an age group which is often more cashed-up yet less technologically savvy.
Scammers exploit that vulnerability, wheeling out cutting edge website design and, in the case of Capel Court, pretending to be linked to a major Australian bank.
“They create full websites where you think you’re looking at an account with your funds – but it’s fictitious,” Mr Serafini said.
“It might have dividends being paid back for the first couple of months before it stops.”
Clawing back the loses
Officer in charge of Finance and Cybercrime Investigation Branch Superintendent Adam Rice said cryptocurrency was also notoriously hard to claw back.
“It’s often overseas where we have limited power to recover money,” he said.
While difficult, it’s not impossible to recover funds, such as the Capel Court scheme where police had been able to freeze and recover about $100,000 which had been transferred to scammers overseas – but it took a long time to get the cash back.
“The sooner it’s reported, the more likelihood there is of getting your money back,” he said.
“Unfortunately we get victims reporting 12 or 18 months after they’ve started and they’ve been contributing over that length of time.
“There’s a really slim chance of getting that money back.”
Superintendent Rice encouraged investors, particularly those considering cryptocurrency, to do their research.
“It’s a commodity that’s so easily moved and hard to trace and unregulated,” he said.
“You are dealing with a product that’s very, very mobile, that law enforcement struggle to recover.”
He said it was essential for investors to do their homework and be cautious of unsolicited offers and high pressure sales tactics.
Teens caught in eastern suburbs with trailer full of stolen goods
Two teenagers have been nabbed after they were spotted allegedly acting suspiciously on a demolition site with a trailer crammed with stolen items.
Watch the videos: Chilling police interviews with SA criminals unpacked
They are among the most confronting, shocking and, at times, damning evidence filed in criminal trials – now an expert weighs in on the moment cops catch on camera.