Secret Service Counters Nigerian Scams

Nigerian-based confidence scammers are bilking American businesses and everyday citizens at such alarming rates that the U.S. Secret Service has set up shop in the oil-rich African nation to help stop rip-offs and other criminal activity at their source.

“Advance fee fraud” or “4-1-9” scams, after an old Nigerian criminal code for theft under false pretenses, have been around for at least a decade.

U.S. officials estimate Americans lose at least $100 million a year to these scam artists. That’s equivalent to what the United States has spent combating wildfires this year, what George W. Bush so far has received in campaign donations for his presidential run, and, as it turns out, roughly what the U.S. government will send to Nigeria in foreign aid this year.

The means for pulling these lucrative cons can be relatively low-tech. The perpetrators send out mass mailings to entice potential victims, by mail, fax and e-mail, with the expectation that a percentage of recipients will bite. In a typical swindle, a criminal will elicit payment from a victim, purportedly some type of government fee or tax, with the promise of a much bigger payoff down the road.

Small businesses, charity organizations, churches, elderly people with retirement funds — basically anyone suspected to have a pot of cash — are targeted.

The Secret Service, under its mandate to protect U.S. currency and financial institutions, has since 1995 been working with the U.S. Department of Commerce, and Nigerian and other foreign authorities to try to counter the operations, which range from the crude to quite sophisticated.

Last month, the bureau opened up an office in Lagos, Nigeria’s largest city. They’re sharing information, technical expertise and some resources to help Nigerian authorities battle advanced fee fraud and other Nigerian criminal activity, such as money laundering and counterfeiting.

How it Works

The scam generally works like this:

A criminal posing as a government official or national oil company executive sends a letter to the victim proposing a deal to transfer money — purportedly Nigerian government contract overpayments — to the victim’s bank account in the United States in exchange for a cut of the money.

If the victim agrees, the criminal or an associate, just before the expected big payoff, says a fee or bribe of some sort must be paid to make it happen, usually several thousand dollars — typically a fraction of the promised million-dollar payoff. The victim is encouraged either to bring the money to Nigeria or to hire a Nigerian “attorney” to make the last-minute arrangements.

After the victim pays the fraudulent fee, usually by wiring a bank transfer, the perpetrators ask for more fees. The victim is faced with the prospect of either losing the original fee payment or paying even more fees, hoping for the big payoff.

In this way, tens or hundreds of thousands of dollars may be swindled from a victim. The payoff, of course, never comes, because there never was any payoff to begin with.

“They may sound like old 1920s flimflams, but they still work,” says Jim Caldwell, a supervisor in the Secret Service’s financial crimes division.

Sophisticated Grifters

Indeed, just like in the 1973 hit movie The Sting, the “4-1-9ers” go to great lengths to make their phony operation seem believable.

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